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Research Associate Kostas Sgoutas, MBA 2000, prepared this case under the supervision of Professor Garth Salonerand Professor A. Michael Spence as the basis for class discussion rather than to illustrate 台湾MBA学位论文either effective orineffective handling of an administrative situation. Margot Sutherland, Executive Director, Center for ElectronicBusiness and Commerce, Graduate School of Business managed the development of the case. Research support bythe Boston Consulting Group is gratefully acknowledged.Copyright © 2000 by the Board of Trustees of the Leland Stanford Junior University. All rights reserved. To order copies orrequest permission to reproduce materials, email the Case Writing office at: cwo@gsb.stanford.edu or write: Case Writing
Office, Graduate School of Business, Stanford University, Stanford, CA 94305-5015. No part of this publication may bereproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means - electronic,mechanical, photocopying, recording, or otherwise - without the permission of the Stanford Graduate School of Business.
Version (C) 03/20/01
GRADUATE SCHOOL OF BUSINESS
STANFORD UNIVERSITY
CASE NUMBER: EC-8
APRIL 2000
PRICING AND BRANDING ON THE INTERNET
It’s a great time to be a consumer. You have more power than you could possibly
imagine.1
Kate Delhagen, Forrester Research
In Internet retailing, abundant information, reduced transaction costs, and unlimited“shelf space” promise to increase the consumer’s purchasing power. Online buyers expect theWeb to be an around-the-clock fire sale, with the next bargain just a click away. This “getting adeal” culture is pervasive among Internet shoppers. According to a recent survey, more than halfof online shoppers expect a 20-30 percent discount from the standard retail price when buying anitem that would normally be priced between $30 and $500.2 “If you’re a consumer and you’rethinking about any kind of researched purchase, you’re leaving thousands of dollars on the tableif you don't at least look online” says Kate Delhagen, an online retail analyst with ForresterResearch.Low consumer search costs, the financial markets’ tolerance for aggressive spending on customeracquisition, and the Internet’s lower entry and operational costs cause many to expect thatcompetition will intensify. Prices will decline and brand loyalty will be threatened as bothInternet start-ups and traditional retailers try to acquire and retain customers. At the limit, intensecompetition and perfectly informed consumers will drive prices down to marginal cost.Empirical evidence on the impact of the Internet on pricing and branding has been mixed. MIT’sSloan School of Management studied pricing for books and CDs. On the one hand, the resultsshowed that Internet prices average 9-16% less than conventional channel prices.3 On the otherhand, however, price dispersion on the Internet may suggest that search costs are not minimal orthat factors other than price influence consumers’ decisions. The same study by MIT concluded,
“...there are substantial and systematic differences in prices across retailers on the Internet. Prices
1 David Bank, “A Site-Eat-Site World,” Wall Street Journal, July 12, 1999, p. R8
2 Bob Tedeschi, “Using Discounts to Build a Client Base,” https://www.nytimes.com, May 31, 1999
3 Erik Brynjolfsson and Michael D. Smith, “Frictionless Commerce? A comparison of Internet and conventional reta本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。