InternetPricingModels.pptVIP

Outline A taxonomy of Pricing Models Seller vs buyer posted pricing models Product categories: Airline tickets, hotels, car rentals, vacation packages, and cruises. Perishable inventories (e.g., yield management) Price fairness is less of an issue Marginal costs are close to zero Will grocery products work? Rules: Customer bids, waits up to 1 hour. If bid is accepted, ticket must be purchased. If not accepted, customer must wait 7 days to re-enter bid. Restrictions: Cannot specify time of flight, connection city or airline. Refund Policy: No Refunds/Exchanges. Hotels, Rental Cars: Yes Loyalty Miles or Points: No Rules: Customer can see fare and has 30 minutes to accept offer. Customers will be locked out for 72 hours if they reject offer. Restrictions: Cannot specify time of flight, connection city or airline. Refund Policy: No Refunds/Exchanges. Hotels, Rental Cars: Yes Loyalty Miles or Points: No Rules: Customer gets fares, number of tickets available and how long offer is valid. Customer can purchase ticket then or be notified if price falls to desired rate. Restrictions: Can’t specify airline. Refund Policy: No Refunds/Exchanges Hotels, Rental Cars: Yes Loyalty Miles or Points: Available for some airlines. Rules: Will search fares globally. Customers will be able to purchase tickets at Qixo for 1% on top of price found at searched site. Restrictions: None. Refund/Policy: Depends on site policy. Hotels, Rental Cars: Yes Loyalty Miles or Points: Available for some airlines. Observations Emergence and co-existence of new pricing mechanisms (e.g., , , and etc.) Unsubstantiated claims made by new pricing mechanism designers (e.g., “auction is the selling format of the future”, “priceline gives power back to the buyers”) Shift in balance of power ? Buyer plays a bigger role in price setting process Menu costs are very low so dynamic price customization is now practical (with customer information) (e.g., ) Erosion of “ignorance premium” A Taxonomy of