ajaz_eco_204_2012_2013_chapter_16_Market_Power

the lesson interactivity is squandered for many

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Unformatted text preview: t, ignored their potential for strategic pricing—and offered few lessons on how to do interactive pricing well. There was an early assumption among many early e-tailers that they had to compete on price—a preoccupation that led to some famously brutal price wars and directly brought about the demise of many Internet pioneers, says McKinsey's Zawada. M any Internet companies pursued tactics that were ultimately self -defeating, including competing on unsustainably low prices, setting identical prices across all customer groups and failing to change prices in response to changing demand, even though that would have been easy. The result: E-tailers spent marketing dollars in ways that had little direct bearing on 88 ECO 204 Chapter 16: Analysis of Firms with Market Power (this version 2012-2013) University of Toronto, Department of Economics (STG). ECO 204, S. Ajaz Hussain. Do not distribute. profitability. Many e-tailers failed while Americans increased online spending 66 percent in 2000, to $44.5 billion, according to a recent report by the Boston Consulting Group. Ad...
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