17 price discrimination disintermediation essentials

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Unformatted text preview: tal • Digital markets reduce • Information asymmetry • Search costs • Transaction costs • Menu costs • Digital markets enable • • Dynamic pricing • 9.17 Price discrimination Disintermediation Essentials of Business Information Systems Chapter 9 E-Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet The Benefits of Disintermediation to the Consumer The typical distribution channel has several intermediary layers, each of which adds to the final cost of a product, such as a sweater. Removing layers lowers the final cost to the consumer. Figure 9-2 9.18 Essentials of Business Information Systems Chapter 9 E-Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet Key Concepts in E-commerce: Digital Markets and Key Digital Goods In a Global Marketplace Digital • Digital goods • Goods that can be delivered over a digital network • E.g. Music tracks, video, software, newspapers, books • • Costs of delivery over the Internet very low • Marketing costs remain the same; pricing highly variable • 9.19 Cost of producing first unit almost entire cost of product: marginal cost of producing 2nd unit is about zero Industries with digital goods are undergoing revolutionary changes (publishers, record labels, etc.) Essentials of Business Information Systems Chapter 9 E-Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet Internet Business Models • Pure-play models: Based purely on Internet • Clicks-and-mortar models: Extensions of bricks-andmortar businesses • Communication and Social Networking • Some new business models take advantage of Internet’s rich communication capabilities • • • 9.20 Social networking sites Social shopping Can provide ways for corporate clients to target customers through banner ads and pop-up ads Essentials of Business Information Systems Chapter 9 E-Commerce: Digital Markets, Digital Goods Electronic Commerce and the Internet Internet Business Models • Digital content, entertainment, and services • Ability to d...
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