New Technologies in Marketing
Lecture 7: Price in the digital age &
B2B e-commerce
Dr. Erik van Raaij
e.m.vanraaij@city.ac.uk
http://www.staff.city.ac.uk/~raaij
© Dr Erik van Raaij
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Pricing basics
• ‘Price’ is not just about the price tag
• Decisions about price determine how the value surplus is
shared between buyer and seller
• In B2B marketing, prices are seldom fixed. The internet
has a profound impact on how prices come about,
particularly in business markets.
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Impacts on prices and profits
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Increased price transparency
Lower costs in the absence of branches and middlemen
Downward pressure on price
New pricing models
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Net pricing strategies
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Price discrimination
‘Free’ products and services
Versioning
Bundling
Dynamic pricing
– Auctions
– Reverse auctions
– Yield management
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Business models (B2B)
• Electronic storefront
• Net marketplace / exchange
– Sell-side, buy-side
– Vertical, horizontal
• E-distributor
• B2B service provider
– Traditional, ASP
• Matchmaker
• Infomediary
– Audience broker, Lead generator
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Potential benefits of B2B e-commerce
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Lower admin costs
Lower search costs for buyers
Lower inventory costs
Lower transaction costs
Increased production flexibility
Imporved product quality through increased cooperation
Reduced cycle time
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Net marketplaces
• Evolved from automated order entry systems and EDI
systems
• Expected to account for 10% of US inter-firm trade by
2005
• Vary in terms of bias, ownership, pricing mechanism(s),
scope/focus, access.
• Examples:
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Covisint.com: vertical industry-owned consortium
Grainger.com: horizontal sell-side e-distributor
CommerceOne.net: third party horizontal marketmaker
GePAuction.com: GE Plastics open auction
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Private industrial networks
• A.k.a. ‘collaborative commerce’
• Web-enabled networks to support transorganisational
processes, e.g., SCM
• Example: Wal-Mart’s Retail Link network, connecting over
8,000 suppliers to Wal-Mart
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Key topics for lecture 7
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Dynamic pricing
B2B e-commerce
Net marketplaces
Private industrial networks
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Readings for lecture 7
Required reading:
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O’Connor & Galvin, chapter 10.
Laudon & Traver, E-Commerce, pp.77-82.
Supplementary readings:
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Those with an interest in B2B e-commerce could start with Laudon & Traver
(2002), E-Commerce, chapter 12, as well as Chaffey et al. (2000), Internet
Marketing, chapter 14.
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About peer reviewing
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Balanced
Constructive
Honest
Well-structured
To-the-point
• Try to write a review that you would like to receive
yourself!
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