By:

Ted Karlsson and Christer Kuttainen

Leyland Pitt

Stavroula Spyropoulou

Presentation by: Deni Riyandi (29009016) & Erdi Novanto (29009017)

Consumer :

Decision

OFFLINE ONLINE

The internet and pricing strategy:When a new form of retailing, in this case is

internet, enters the market, it begins by offering lower prices and accepting lower margins by offering fewer services (McNair, 1958)

The effect of communications technology on markets is to make them more efficient (Coase (1937), Downes and Mui (1998))

Elimination of intermediaries means that they do not raise the price of the products without adding value (Verma and Varma, 2003)

Prices of books and CDs on the internet were 9-16 per cent lower than in conventional stores (Smith and Brynjolfsson, 2001)

Dell Computer ( Magretta, 1998) , first-mover advantage

Amazon.com (September 2002), sold DVD at different prices to different customer and refunded those customer

how important a motivator is price in online purchasing environments to customers where other factors are also considered in the decision making?

does the relative importance of price differ between online and physical channels for a particular product bundle?

Using experimental rather than sample survey

Using Conjoint Analysis methodsDesigned to focus on 5 attributes:

◦ Price of textbook◦ Buyback policy◦ Ease of returns◦ In-stocks status◦ accessibility

• Use online and offline questionnaires• Sample: undergraduate business and

engineering students at a large Swedish University

• Consist of 16 profiles• Using ten-point Likert scale

• 1 = Definitely not buy• 10 = Definitely would buy

Data analyzed by the SPSS Conjoint module

Online Purchasing Offline Purchasing

Price is the most importance attribute (35%)Followed by delivery time (27%)Buyback policy (19%)Returns (9%)Place of delivery (8%)

Respondents insensitive to a price increase between 500 SEK and 550 SEK

Distance to the store was the most important attribute (27%)

Followed by delivery time (25%)Price (22%)Buyback (19%)Returns (7%)

Price matters to consumers in online environment

There is a difference in the trade-offs that consumers make when shopping online and when in conventional stores

The study may not generalisable to shopping situations in other parts of the world

The study only considered the purchasing of textbooks

Can not sure is there still any important purchase variables

The research more of an experimental than a survey

It could be easily replicated in other students-as-consumer environments in other countries

The attribute of brand is entirely absent from this study

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