MICRO ECONOMICS CASE STUDY

PRICING AND BRANDING ON THE INTERNET

Submitted by-
Shefali Saxena PG20211025
Ananya Gupta PG20211026
Akshat Jain PG20211027
Sagar Yadav PG20211028
Katyayni Soin PG20211039

Amazon.com

Background
Amazon.com is an online retailer, e-book reader manufacturer, and web services provider that
has become synonymous with electronic commerce. The company's headquarters are located in
Seattle, Washington. Its web services business entails renting data storage and processing power
through the Internet, also known as "cloud computing."

Evaluation of case
1. As indicated, Amazon.com has been able to extract a premium over most of its competitors by
using its brand awareness and consumer confidence. But on average, three of the eight online
book shops studied by MIT have lower prices than Amazon.com.
2. Despite record sales, high brand recognition, and signs of premium extraction, Amazon's
losses have been growing.
3. Amazon finds itself in the paradoxical situation of extensively investing in brick-and-mortar
warehouses as it develops horizontally. Despite the recommendations of several analysts, it is yet
to reveal an offline consumer strategy.

Solutions
1.Now since Amazon is well aware of their target customers and its competitors they must
engage in keeping their seller ratings high.
2.Realistic solutions which we think can be proposed is to firstly keep a balanced inventory.
3.E-commerce expansion in Asia and the Pacific
 BARNES & NOBLE

KEY PROBLEMS:

1. users were concerned about their privacy and security in the online environment and were
not able to trust the online stores easily.
2. not able to trust the retailers will deliver the promised service or product.

BACKGROUND:

The bricks and mortar bookseller Barnes and Noble launched barnesandnoble.com in may 1997
as its internet arm. Media matrix ranked barnesandnoble.com as 4 th largest e-commerce site in
June 1999. It sells books, magazines, CDs, videos and software and opened a music store in July
1999. They plan on the products that can be digitized.

EVALUATION OF CASE:

1. Brand recognition is the most powerful competitive advantage that traditional retailers such as
Barnes & noble have against their competitors.
2. can offer lower prices online because they do not incur high costs associated with operating
retail stores and purchases from online stores can’t be returned at the physical store.

SOLUTION:

1. customers should be rest assured that their personal information will not be misused.
2. Trusted retailers should be there so that customers can give chance to the online stores.

BUY.COM
Key problems:

1. Buy.com sold his goods at cost or below cost.Its cost of goods sold was $401.2 million
and its net revenue was $397.6 millon .
2. Due to his low-price strategy reliance on advertising revenue has raised some skepticism.
and the decline in response rates are pushing advertisement prices down .
3. Buy.com`s demographic primarily consists of bottom feeders who only care about price
and is thus less attractive to advertisers.
Background:

Buy.com`s roots are in computer hardware sales. This website which was originally named
Buycomp.com was founded in 1996 by SCOTT BLUM. In November 1998 Blum acquired
Speedserve, a web retailer of books and videos, from Ingram entertainment and quickly began to
expand his company`s offerings. And the company changed its name to Buy.com.

Evaluation of case:

1. Poor reputation for order processing, order fulfilment and customer service.
2. Customers were outraged when Buy.com posted prices for much but cost then rescinded
the worth for units not available.
3. Buy.com selling his goods at cost or below cost.

Solution:

1. Focus on proper order processing, only take orders when goods are in stock , and give
proper services to customers. Also take some feedback also from customers.
2. Don`t decrease products price too much because many people thinks lower prices means
cheap quality product and service

MobShop
Key Problems:
1. Chicken and Egg Problem: Suppliers are not willing to give aggressive pricing until you
can show there is the demand there. Buyers will not come until they see there is a good
pricing scheme and a value proposition for them.
2. Competition coming from other online merchants: price competition on the Internet has
become fierce and many companies have used setting low prices as a customer
acquisition strategy.
Background:
MobShop was among the first innovators in web-based online group- buying companies. The
website was named Accompany.com and was founded in October 1998. This San Francisco,
California-based company aimed to provide group-buying services in the United States and
changed its name to Mobshop.com in March 2000.
Evaluation of case:
1. by illustrating the relationship between order quantity and price using the price trajectory,
it gave potential buyers more information about how their orders would facilitate the
price drop, creating the motivation for additional orders.
 2. The “Click-and-Tell” feature on the web site leveraged the word-of-mouth effect and let
potential buyers recruit new customers for the company.

Solutions:
1. Focus on one side of cooperation first: Target product or service provider or target customers
Example – Uber: The company started by attracting the drivers which was much safer for
business than attracting passengers with no one to take them to the destination.

2. Grow the business on the B2C side: Taking target customer's pain points seriously. Show the
customer how you solve the problems rather than just tell them.

Priceline.com

Background:
Priceline.com enables brand-flexible consumers to save on goods and services.Priceline.com is
currently applying its “demand-collection system” to 3 distinct product categories: a travel
service, a private finance service, and an automotive service.

EVALUATE THE PROMBLEM:

1. It has been observed that this relatively unfriendly consumer product is appropriate for the
targeted price-sensitive demographic.
2. Fear of cannibalization and of putting downward pressure on prices affects the shape of the
buyer product. Potential to absorb a high percentage of sales for airlines, the vendors would sell
ticket.
Solution:
1. By creating one to one to one market opportunities, which helps and create a customer friendly
usage
2. Although it has its own set market to aim at, it should focus building and make the market
wider to target at, and overcome the fear of cannibalization.

Mysimon.com

Background
MySimon.com, a completely owned subsidiary of CNET Networks, is one of the most popular
online comparison shopping sites. MySimon is a free service that makes money through
advertising and merchant affiliates. Merchants can pay a fee to have their name or icon
emphasized in search results by joining MySimon's BOLD (Building Online Demand) program.

Evaluation of case
1.While intelligent agents like mySimon are unable to scan the full Internet for practical reasons,
they are the closest to providing the online buyer with "perfect information." However, the
impact of price comparison engines on the evolution of e-commerce is debatable.