Relationship:
-commitment
-bond or connection between firm and customer
Weak: open market
Strong: family
Types:
Intellectual- evaluate pros and cons and decide between A and B
Emotional-makes you feel good, something you’ve bought since you were little
Why?
-lead customer to anticipate the positive feeling from remaining loyal to the seller
-trust the seller will provide good value
-feel that the brand represents who they are
-promote the seller to friends, family and acquaintances
-seek out and actively read the seller’s promotional material
Pricing on the internet:
-auction creates dynamic pricing
-cost plus
-competitive
-demand
-EDLP
-loss leader
-luxury
-fairness
-high low
Dynamic pricing
-one of the most significant contributions the internet and the 2 I’s have made to pricing strategy
-internet had enhanced dynamic pricing in 2 ways:
-decreased menu costs
-interactivity
Auction types
-English (ex: e-bay)
-reverse-price English auctions (put out a proposal for 100 tons of iron, take the lowest bidder)
-Dutch (starts at a high price then comes down)
-first place sealed bid
-reverse first place sealed bid
-group buying
-exchanges
RFP – prescreening the person who offers the bid, can sell this information
Relationship Stage (pricing levers)
Awareness (promos, bundling, frenzy, prestige, price as a sign of quality, hi-lo, dynamic, EDLP)
Exploration/Expansion (promos, justify, loyalty)
Commitment (promos, tiered loyalty programs, wide variety of pricing programs, affiliates, profit-enhancing opportunities)
Dissolution (discontinue pricing process, adversely affect profit programs, reconfigure loyalty programs)