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Pricing and Branding on the Internet Rob Rochester.

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Presentation on theme: "Pricing and Branding on the Internet Rob Rochester."— Presentation transcript:

1 Pricing and Branding on the Internet Rob Rochester

2 Traditional retailers Relied on brand recognition as there most powerful competitive advantage. Relied on brand recognition as there most powerful competitive advantage. One of the largest areas of investment in traditional companies.One of the largest areas of investment in traditional companies.

3 “Surprisingly, branding and marketing matter a lot more on the web than technology does. More over, customer loyalty has prevented rampant commoditization of products. Price matters, but not to the exclusion of consumer concerns like brand trust and service” – Clinton Wilder, senior writer at InformationWeek “Surprisingly, branding and marketing matter a lot more on the web than technology does. More over, customer loyalty has prevented rampant commoditization of products. Price matters, but not to the exclusion of consumer concerns like brand trust and service” – Clinton Wilder, senior writer at InformationWeek

4 The online customer Shoppers expect to save between 20%-30% from standard retail prices when shopping online. Shoppers expect to save between 20%-30% from standard retail prices when shopping online. Customers are willing to “shop around” online to try to find a deal.Customers are willing to “shop around” online to try to find a deal. Customers expect an around-the- clock fire sale Customers expect an around-the- clock fire sale

5 Online Branding The trust a strong brand inspires increases in the online environment. The trust a strong brand inspires increases in the online environment. PrivacyPrivacy TrustTrust Many new emerging branding models. Many new emerging branding models. Every company is trying to adapt to the quickly changing markets.Every company is trying to adapt to the quickly changing markets.

6 Amazon “customer, customer, customer. I think everything falls out of that. It’s especially true online, because the balance of power shifts away from the company and towards the customer.” “customer, customer, customer. I think everything falls out of that. It’s especially true online, because the balance of power shifts away from the company and towards the customer.”

7 Amazon.com Internets most powerful merchant Internets most powerful merchant Positioned itself as a convenience brand with…Positioned itself as a convenience brand with… Books Books Videos Videos Music Music Auctions Auctions Gifts Gifts Home improvement Home improvement Allows amazon.com to have multiple meanings to multiple customers.Allows amazon.com to have multiple meanings to multiple customers.

8 Amazon Personalization Personalization The ultimate objective is to give each customer his or her own, unique storefront.The ultimate objective is to give each customer his or her own, unique storefront. Through extensive interaction. Through extensive interaction. Creating additional value for its customers.Creating additional value for its customers. Able to leverage it’s brand recognition and consumer trust to extract a premium over most of its competitors. Able to leverage it’s brand recognition and consumer trust to extract a premium over most of its competitors.

9 Amazon

10 Barnes & Nobel Strong physical presence made them hesitate to invest fully in the market. Strong physical presence made them hesitate to invest fully in the market. Fear that a failure in the online world would jeopardize there brick-and-mortar company.Fear that a failure in the online world would jeopardize there brick-and-mortar company. All ready had a strong brand. All ready had a strong brand.

11 Barnesandnobel.com Launched Barnesandnobel.com Launched Barnesandnobel.com years after Amazon.com2 years after Amazon.com Selling Selling BooksBooks MagazinesMagazines CD’sCD’s VideosVideos SoftwareSoftware Online music store (1999)Online music store (1999) Did very little to tie Barnes & Nobel to Barnesandnobel.com Did very little to tie Barnes & Nobel to Barnesandnobel.com Conflicting return policiesConflicting return policies Differing pricesDiffering prices

12 Buy.com Grabbed attention by guaranteeing the web’s lowest price on everything its family of websites sold. Grabbed attention by guaranteeing the web’s lowest price on everything its family of websites sold. SoftwareSoftware GamesGames MusicMusic VideosVideos BooksBooks Computer hardwareComputer hardware Broke a 15 year-old first year sales record Broke a 15 year-old first year sales record 120 million in revenue in million in revenue in 1998 a

13 Buy.com Guarantees to beat prices of its top three competitors in each product categories by 10% Guarantees to beat prices of its top three competitors in each product categories by 10% Selling below cost if necessarySelling below cost if necessary Used products to acquire customers Used products to acquire customers “The world’s lowest price”“The world’s lowest price” Used to traffic people to the site. Used to traffic people to the site. Charge a premium for advertising.Charge a premium for advertising. Fits well with the current “get a deal” mentality adopted by many of the internet customers. Fits well with the current “get a deal” mentality adopted by many of the internet customers.

14 Mobshop An Internet-based network that leverages the power of the internet to aggregate demand for products and services to pool consumers purchasing power. An Internet-based network that leverages the power of the internet to aggregate demand for products and services to pool consumers purchasing power. Sells products for e-tailors.Sells products for e-tailors. Chipshot.com Chipshot.com GolfDiscount.com GolfDiscount.com Electronics.net Electronics.net Roxy Roxy Shades.com Shades.com Superbuild Superbuild Reel.com Reel.com Fogdog sports Fogdog sports Participating suppliers can reach an exponential number of customers without incurring additional incremental acquisition cost. Participating suppliers can reach an exponential number of customers without incurring additional incremental acquisition cost. Attracts traditionally hard and expensive consumers, inexpensivelyAttracts traditionally hard and expensive consumers, inexpensively

15 MobShop Matches buyers with buyers Matches buyers with buyers Allows buyers to get the products they are looking for under wholesale.Allows buyers to get the products they are looking for under wholesale. The more people on a buy cycle the greater the reduction in the price. The more people on a buy cycle the greater the reduction in the price. Helps clients do this by giving them a “tell a friend” optionHelps clients do this by giving them a “tell a friend” option Helps suppliers by allowing them to work with larger purchasing parties. Helps suppliers by allowing them to work with larger purchasing parties.

16 Priceline.com Patented “name your price” model. Patented “name your price” model. TravelTravel Home financeHome finance Automotive servicesAutomotive services First mover advantage. First mover advantage. “priceline.com has chosen to sell a substantial number of tickets below its cost in order to increase airline and adaptive marketing revenues, build a record of successful transactions and enhance the priceline.com brand” “priceline.com has chosen to sell a substantial number of tickets below its cost in order to increase airline and adaptive marketing revenues, build a record of successful transactions and enhance the priceline.com brand”

17 Priceline.com Priceline.com was willing to sell some of their tickets for a loss because… Priceline.com was willing to sell some of their tickets for a loss because… Traffic to siteTraffic to site Reinforced brandingReinforced branding Much less investment then traditional branding Much less investment then traditional branding Used an innovative model to capture the market. Used an innovative model to capture the market. 30% of airline and hotel rooms tickets go unsold30% of airline and hotel rooms tickets go unsold Capitalized on this allowing both priceline and the airlines and hotels to benefit. Capitalized on this allowing both priceline and the airlines and hotels to benefit.

18 PriceLine.com

19 mySimon.com Comparison shopping site Comparison shopping site Empowers consumers to find the best prices for any product on the web.Empowers consumers to find the best prices for any product on the web CNET acquired mySimon 2000 CNET acquired mySimon Choose to keep mySimon.com a segregated brand from CNET Choose to keep mySimon.com a segregated brand from CNET Acquisition gave CNET a fast way to integrate content. Acquisition gave CNET a fast way to integrate content. Product reviewsProduct reviews Consumer feedbackConsumer feedback

20 mySimon.com “…we want to integrate rich media with comparison shopping to create more shareholder value.” “…we want to integrate rich media with comparison shopping to create more shareholder value.”

21 CNET

22 Conclusion Companies will struggle to keep a steady revenue stream and ahead of their competition until the online markets slow down and people have time to adapt. Companies will struggle to keep a steady revenue stream and ahead of their competition until the online markets slow down and people have time to adapt. Changes dailyChanges daily Many companies are selling products for under cost and validating this with branding. Many companies are selling products for under cost and validating this with branding. Cheaper than traditional branding costCheaper than traditional branding cost At this point its hard to tell which strategy will be the best for creating a powerful brand online. At this point its hard to tell which strategy will be the best for creating a powerful brand online. New models are developed all the time.New models are developed all the time.


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