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Lessons

Lessons. Analyze and understand how much you invest in producing and selling your information In a commodity market, be aggressive not greedy Differentiate by personalizing Conduct market research Use market information to sell personalized products to customers

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Lessons

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  1. Lessons • Analyze and understand how much you invest in producing and selling your information • In a commodity market, be aggressive not greedy • Differentiate by personalizing • Conduct market research • Use market information to sell personalized products to customers • Analyze the profitability of selling to groups

  2. The Ambiguous Value of Information • Once you have information, you can sell it without divestiture • There is no cost to reproduce information • Some information has lock-in RESULT: Aggressive Pricing

  3. The overuse of money-off, added- product promotions re-educates the consumer about the brand’s lack of value.How do you justify a price premium? • -www.throughtheloop.com

  4. Hip Pricing Concepts • One-to-one marketing • Dynamic Pricing • Differential Pricing

  5. One-to-One Marketing • Takes full advantage of the information that is readily available about consumers from their clickstream • Examples: Peppers and Thompson • British Airways • Pitney Bowes • CMGI • Streamline, Inc.

  6. Does One-to-One Work? • It costs a lot to track information • 100,000 customers = 100,000 websites • Ex. Engage technologies • One-to-One ignores the 80/20 rule… doesn’t effectively price segment • Rewards without altering behavior

  7. Smarter Spin-offs • Cross-promoting (bundling) • Collaborative filtering • What do you think of this book?

  8. Dynamic Pricing • Will account for 40% of B2B transactions by 2004 (now 15%) • Electric Companies (Puget Sound) • Amazon • Gasoline, commodities • Manugistics, KhiMetrics

  9. Differential Pricing • Setting different prices to capture more consumer surplus • Coupons… Ameritrade, Virtual Vineyards • Loss leaders Netscape Navigator

  10. Differential Pricing- Brick&Mortar • Railroads • Airlines • Credit Cards • Cars • Education (financial aid) • Movie Tickets • Private Lighthouses

  11. Differential Pricing- Internet • Ubiquitous • Coupons, cross promotions • Auctions

  12. Comparison Shopping • mySimon, etc. • Amazon: Don’t sponsor a forum.

  13. Problems with Price Discrimination • Victoria’s Secret vs. Staples • Women: cars, razors, salaries • Can you discriminate without differentiating?

  14. What is the value of fixed prices? • B2B Chemical Exchange • Automobile sites • www.Haggleware.com

  15. Poll If Amazon.com shows different prices on the same book to different users, it is [200 votes total] a valid use of data mining (62) discrimination - should stop (83) OK, if explained to users (50) don't know (5) 31% 42% 25% 3%

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