Marn (2000) suggests that the Internet can be used to test new pricing policies. For
example, if a company wants to know the sales impact of a 3 per cent price increase, it
can try this on every 50th visitor to the site and compare the buy rates.
The Internet introduces new opportunities for dynamic pricing, for example, new cus-
tomers could be automatically given discounted purchases for the first three items. Care
has to be taken with differential pricing since established customers will be unhappy if
significant discounts are given to new customers. Amazon trialled such a discounting
scheme in 2000 and it received negative press and had to be withdrawn when people
found out that their friends or colleagues had paid less. If the scheme had been a clear
introductory promotion this problem may not have arisen.CHAPTER 5· THE INTERNET AND THE MARKETING MIX
Figure 5.10Alternative pricing mechanisms
Buyer setsTendered
saleFixedSeller setsRetail saleBuyer setsTendered
sale Seller setsReverse
(Dutch) auctionBuyer setsTraditional
auctionBoth setsNegotiationVariablePricing
optionSingle
transactionMultiple
transactionsDynamic pricing
Prices can be updated
in real time according
to the type of customer
or current market
conditions.