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Strategies for Effective Pricing and Marketing in Information-Based Markets

This guide explores essential lessons in pricing and marketing of information products. Understand the dynamics of commodity markets and the importance of aggressive yet non-greedy pricing strategies. Learn to differentiate your offerings through personalization and market research, allowing for tailored products based on customer insights. Discover approaches like one-to-one marketing, dynamic pricing, and differential pricing to maximize profitability while addressing consumer behavior and preferences. Find out how to leverage information's unique value to enhance your competitive edge without compromising brand integrity.

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Strategies for Effective Pricing and Marketing in Information-Based Markets

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Presentation Transcript

  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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