krämer-kalka how digital disruption changes pricing strategies … changes... · 2020-03-05 ·...
TRANSCRIPT
![Page 1: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/1.jpg)
HowDigitalDisruptionChangesPricingStrategiesandPriceModelsTobepublishedinKhare,A.,Stewart,B.&Schatz,R.(eds.),PhantomExMachinaDigitalDisruption’sRoleinBusinessModelTransformation.Springer2016AndreasKrämerandRegineKalkaAbstractThedigitizationoftheeconomyleadstosignificantchangesinthewaycompaniesdeterminetheirprices.Technologicalchanges(availabilityoftheInternet,digitizationofproduction,productinnovations)basicallyinfluencethecorporateenvironment,sincethebasisforpricingcanbeimproved.Companiescancollectandanalyzemorerelevantinformationandhenceoptimizetheirprices.However,thesecausesacceleratecompetitivereactions.Ontheonehand,consumerbehaviorchanges(moreinformationisavailableonline,search-enginesandpricerobotshelptofindbestoffers),ontheotherhand,marketstructuresbecomefragile(marketentrybarriersfornewcompetitorsarelowered,traditionalproductsarecannibalizedbydigitalproducts).Duetothesefactorsthepricingstrategymustundergoacompleterethink.Inaddition,thishasconsequencesforthetypesofpricingmodelsappliedinthedigitalage.Inthiscontext,thispaperfocusesonfourpricingmodels.Firstly,thedigitizationmakesitpossibletoofferproductsandservicesforfreetotheconsumer(FacebookandGoogleareparticularlyprofitableexamples),whileatthesametimeothersourcesofrevenuestreams(here:advertisingrevenue)aregenerated.Secondly,freemiummodelsareespeciallypopularwithstart-ups,whicharealsofreeofchargeforabasicservice,butforupgradedservices(fullrangeoffeatures,noads)userspayafee.LinkedIn,DropboxorSpotifyareprominentexamplesofthispricingmodel.Thirdly,subscriptionmodelshaveastrongboost.Sinceproductioncostsdropwhennewbusinessmodelsarebasedondigitization,subscriptionmodels(likeNetflix)–whichhavealongtradition–becomemoreattractive,nowadays.Fourth,pricingmodelswithflexibleprices,whicharedependentondemandandcustomerprofilewillbediscussed.Dynamicpricinghasagrowingimportanceinonlinetrading,butisalsobeingappliedmorefrequentlyinretailstores.Thispaperexaminestheimplicationsofdigitizationonstrategicandoperationalpricingdecisionsandshowsexamplesfromvariousindustries(retail,media,music)andenterprises.Thelimitsoftechnologicalchangesarealsodiscussed,mindfulofbothaspectsthecompanyperspectiveandtheperspective(andperception)ofthecustomer.Keywords:BigData,freemium,dynamicpricing,one-to-one-pricing1.0 GoodreasonstorethinkthecurrentpricingstrategyAfrequentlystatedkeyobjectiveofpricingstrategiesismaximizingsellers’profitsbycapturingconsumers’heterogeneousproductvaluationsandaccountingforcompetitionandcannibalization(Kimetal,2009;Simon,2013).Furthermore,consumers’willingnesstopayandreactionstodifferentpricingstrategiesmaynotbepurelyrationalbutratherdrivenbybehavioralaspects,suchasperceptionsandpreferences.Therefore,consumers’perceptionsofdifferentpricingmodelsmaybeanadditionalopportunityforcompaniestodifferentiatethemselvesfromcompetition(byapplyingapreferredorinnovativepricingmechanismthatisnottypicalfortheindustry).Today,formostbusinessesandmarketscustomerloyaltyandcustomerrelationshipmanagementhavebecomekeycompetitivefactors.Duringtheprocessofoptimizingpricesitisoftenassumed
![Page 2: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/2.jpg)
thatthemarketiscomposedofsingletransactions,missingtheperspectiveofadynamiccustomerrelationshipwiththecompany.ThereforeKrämer(2015)proposesawideneddefinitionofoptimalpricing.Thisshouldincludethecustomer’swillingnesstopayaswellastakingintoaccounttheeffectsoncustomerloyalty,andfuturegrossmarginsgeneratedbyindividualcustomersintermsofcustomerlifetimevalue.Thereareseveralmajorfactorsmotivatingacompanytorethinkit’spositioninganditspricingstrategy:(1)excesscapacitiesraisethequestion,whethertherearewaystosignificantlyincreasesales.Inadigitalcompanytherearealmostnocapacityconstraints(atleastintheshortrun).(2)Managersincreasinglyfacetheriskofcommoditization.AsarecentstudyofRolandBerger(2014)shows-60%ofmanagersbelievetheyarecaughtina"commoditytrap"(asituationwhereevencomplexproductsandservicesaredowngradedto"commodities",withlimiteddifferentiationandacompetitionthatisprimarilyprice-based).Therefore,decisionmakersarelookingfornew(unconventional)waytosetprices.(3)Inmanynewmarkets,loweringpricesmakesthemarketgrowmorequickly.Thelowerthepriceis,thestrongertheadditionaldemandeffect.Forfirmsthatdonotfeartheriskofrevenuecannibalization,radicalpricereductionscouldbeanoptiontoattractnewdemand(KrämerandBurgartz,2016).Asaconsequence,itisstatedthatmanagersinmarketingandsalesincreasinglyseethemselvesexposedtostrongerpricecompetitionandevenpricewars(Bertini,2014).Essentially,therearefourpricingmodelsthatcharacterizethedigitalworldandhavethemselvesledtoacertaindisruptioninpricing:(1)Thefree(nocharge)offering,(2)thefreemiummodel(createdfrom“Free”and“Premium”),(3)thesubscriptionmodeland(4)dynamicpricing.Thediscussionbelowwillfocusonthesemodels.Nevertheless,otherpricingmethodshaveevolvedintheInternetage,whichare,however,lesswidespread(Figure1).Figure1–Impactofachangedcorporateenvironmentonpricingmodels
Onetrendistowardsparticipativepricing,whichgivescustomersmoreoptionstoacquireagreaterinfluenceonthesettingofprices(KrämerandBurgartz,2016 ;BertiniandKoenigsberg,2014).Themostprominentexamplesofparticipativepricingmechanismswithhorizontalinteractionareauction(classicauctions,reverseauctionsandexchanges)negotiations,inwhichthebuyerandsellerhaggle
Positioning and pricing
strategy
Technology
Data Consumer Behavior
Competitive Pressure
For Free (no charge
B2C) Freemium Subscription
model Dynamic pricing
“Pay-What-You-Want” /”Name-
Your-Own-Price” Auctions Provision /
Commission
Posted prices / typical discounts
Corporate Environment
Price models with top focus
(prevailing)
Other price models
Digitization Commoditization
New business models Risk of price competition
IoT
Bundling and non-linear
pricing
![Page 3: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/3.jpg)
overthepricefortheproduct;eBayiscertainlythemostprominentexample.Pay-What-You-Want”(e.g.openbooks.com)and“Name-Your-Own-Price”(e.g.priceline.com,bandcamp.com)arebothcharacterizedbythebuyersettingthefinalprice(Kimetal.,2009).Thesubjectiveevaluationofwhetherthepriceisadequatefortheperformanceandrepresentsfairvalueisthemainfactorinfluencingthefinalprice.2.0 PrevailingpricemodelsforthedigitaleconomySubsequently,firstapricingmodelispresented,whichisparticularlyextremeinitsdesign:amodelwherethepriceoftheproductorservicesiszero.Basedonthismodelanextensionisconsidered,theso-calledfreemiummodel.Incontrast,modelssuchassubscriptionfeeanddynamicpricingaremoredrivenbytheobjectiveofexploitingtheconsumers’willingnesstopay.Thisisparticularlytrueforanextremeformofdynamicpricing,whichusescustomerdataandprofilesinordertodevelopanapproachforone-to-onepricing.2.1 ForfreeAkeyobjectiveofinnovativepricingmodelsistoactivatelatentdemand.Toofferutilizationofaproductorservicewithoutbeingchargedseemsparticularlyeffectiveforattractingnewcustomers.Oneissue,oftenpointedoutfrombehavioraleconomicsisthatbenefitincreasesdisproportionatelyduringthetransitiontoazero-priceoffer("forfree").Ariely(2014,p.107)describesthisphenomenonasfollows:"Zeroisalmostanotherworld.Thedifferencebetweentwocentsandonecentissmall,betweenonecentandzerocents,however,enormous."Onestrategy-perfectlyexecutedbyGoogle-istochargethirdparties.Thefirststepwastoofferanoutstandingsearch-engineforfreeandtogeneratevaluetothecustomer,whichledtoanenormousflowoftraffic.In2015,mainlyduetoadvertisingAlphabet(Google)earnedprofitsofalmost$16bnaftertaxes,basedon$75bnrevenues.WhenGmailintroduceditsfreeservicein2004itprovided10timesmorestoragethanYahoo,theleadingprovideroffreee-mailatthetime.Yahoo,theleadingprovideroffreee-mail,respondedtoGoogle’sentrybymatching,andthenexceeding,Gmail’sfreestorageoffer.AnotherexampleisFinnishtelecommunicationscompanyBlyk,whichoffers200freecell-phoneminutesamonthto16-to-24-year-oldswhofilloutasurveyandagreetoreceiveads.Blykthensellsaccesstoitscustomers,,andinformationaboutthem(DyerandHatch,2011).Anotherstrategymaybetoofferaproductfreeofchargeinthemarketinordertocreateanewmarket(forexample,asalaunchaction)ortostimulateadditionaldemandinoff-peakperiods.Megabus,aleadingsupplierofintercitybustripsusedthistrickwhenenteringtheGermanmarket(Krämer,JungandBurgartz,2016):itproposedtosupply20,000freeticketstogetintothemarketinJanuary2016(onlythepaymentofatransactionfeewasrequired).Bla-Bla-Car,aFrenchstart-upcompany,whichofferscarride-sharinghasafreeofchargeserviceinGermany,whileinFranceaprovisionalmodelwasestablishedoncethemarkethaddeveloped.Basically,theofferofafreeserviceseemsparticularlyattractiveforthestartofthelife-cycleofaproduct(launchingoftheproductfree,andlatercharginganormalprice),anextremeformofPenetrationStrategy.However,therearecounterexamplesaswell.ThusWhatsApp,theleadingsupplierofmessengerservices,announcedearlyin2016itwasabandoningits99-centsubscriptionfee.Obviously,thesubscriptionsystemintroducedin2013hadbecomeratherabarrier,preventingthecompanyfromgrowingfastenoughduringitsglobalexpansion(thevolumeofusersexceededthethresholdof1billionin2016).However,thecompanypledgednottointroduceads,andinsteadhopestofindawaytomakefirmspaytoconnectwithcustomersusingtheapp.Othercompaniesusefreeservicesasanintegralpartoftheirproductrange.GermanRail(DB)providesfreetraintravelforchildrenuptotheageof14,ifaccompaniedbytheirparents.Onthe
![Page 4: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/4.jpg)
onehand,suchanofferalwaysincludestheriskofrevenuecannibalization,ontheotherhand,risksarelimitedhere.Furthermore,thefreetravelofchildrenleadstoanon-linearpricingofthefamilyjourneyandtherebyimprovesthecompetitivepositionofDB.Obviouslythemainadvantagesofofferingproductsandservicesforfreearetheattentiongainedandtherapidgenerationofcustomersbyreducingoreveneliminatingtheirfinancialrisks.Byusing“pricingforfree”companieshaveapowerfulmarketingandaneasysalespromiseandcanachieveagoodmarketpositionintheshort-term.But,ofcourse,therearerisks,whichneedtobetakenintoconsideration.Consumerscouldhavetheattitude“whatcostsnothingisworthnothing”.Thisattitudedependsonthesubjectivevalueoftheproductand/orservices,andhastobeevaluatedbythecompanywithregardtotheirbrandidentityandportfolio.MoreoverastudyofShampan´erandArielyshowedthatinthezeropriceconditionstestpersonsweremorelikelytochoosealessattractiveproductthantopayareducedpriceforahigherqualityandmoreattractiveproduct.Bytestingseveralpossiblepsychologicalantecedentsofthiseffect,theyfoundoutthattheaffectisthemostlikelysourceandconclude“Ingeneral,thisresearchjoinsalargercollectionofevidence,showingthatzeroisauniquenumber”(Shampan´erandAriely,2006).Themostimportantdriverofthesuccessofthispricingmodelistofindawaytocrossfinancethezeropriceproduct.Asshown,themostsuccessfulstrategiesareeithertochargethirdparties,tocreateanewmarket,ortouseitasintegralpartoftheproductrange.2.2 FreemiumThedigitizederahasnotonlyspawnednewbusinessmodelsandproducts,butalsonewpricingmodels.Duringthelastdecade“freemium”—acombinationof“free”and“premium”-hasbecomethedominantbusinessmodelamongInternetstart-upsandsmart-phoneappdevelopers.Users,whoarejustinterestedinabasicproductorservice,receiveitforfree.Ifaservicewithhigherqualityispreferred,theusercanoptforasubscriptionfee.Nowadaysonlinemusicprovidersofferthepossibilityoflisteningtoanalmostunlimitedrangeofsongssimplybyfreeregistrationforanonlinemusicaccount.Thechallengefortheprovider,whichcoversthecost,istofindawaytocross-financesuchoffers.Oneoptionistoembedadvertisement;anotherisafreemiumapproach,apopularpricingmethodduetoitsuser-friendliness.Today,wefindvariousInternetservicesbasedonthefreemiumconcept–suchasLinkedIn,Dropbox,orSkype(Kumar,2014)andthemajorityofthesmart-phoneappsarebasedonthisconcept.Thereareobviousadvantagesofafreemiumstrategy.First,freefeaturesareapotentmarketingtool,whenbasicfeaturesofferedforfreemeetfundamentalconsumerneeds,suchas:freemusic(Spotify),freecloud-basedstorage(Dropbox)orfreecalls(Skype),andfreeservicesareconveyedinthesocialnetworksasaninstrumenttodistributenewservicesquickly.Secondly,itallowsnewventurestoscaleupandattractauserbasewithoutexpendingresourcesoncostlyadcampaignsoratraditionalsalesforce.Forventurecapitalistsitisanattractiveproposaltoseeabusinessgrowathighspeedandatthesametimegeneraterevenues.Herethesubscriptionfees,typicallychargedmonthly,comeintoplay,sincetheybecomeasustainablesourceofrevenue.Dropboxattracted200millionuserswithasimpleservice.Providedacustomerhasausernameandpasswordandthusauniquelogin,twogigabytesofcloud-basedstorageisprovidedforfree.Ifusersperceivethestoragevolumeastoolimited,theycanpay$9.99amonth(or,alternatively,$99ayear)for100GBofstorage.Hencethebusinessmodeltargetsatleasttwodifferentcustomersegments.Thefirstsegmentissatisfiedbytheadequacyofthefreeversionforbasicdocuments,thesecondsegmentneedsmorespacesincecustomersuseDropboxprofessionallyorbackuplargefiles(music,photos).Byacceptingthesubscriptionfeepeoplebelongingtothesecondsegmentcreateacashflowthatisnecessarytocross-financethefirstsegment.Althoughthereisacertainwillingnesstopayeveninthefirstsegment,Dropboxleavesthefullconsumersurplusontheuserside.
![Page 5: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/5.jpg)
Oneimportantsuccessfactorforthefreemiumconceptis,therefore,toincreasetheconversionrate(orreducethecorrelationbetweenuserswhopaynothinganduserswhopaythesubscriptionfee).However,ahighconversionratecouldalsobecounterproductive(Kumar,2014).Acceptingthatoneofthebenefitsofafreemiummodelistheabilitytogeneratetraffic,meansthatasignificantbasiccustomervaluedeliveredforfreeisrequired.Additionally,thesuppliermustfindawaytomakeitsservicedistinctiveandcreateadditionalvalue.Anotherimportantpointiseasilyoverlooked:thelargenumberofuserswhodonotpayforperformance,notonlygeneratecostsbutarealsoanasset,fortheyincreasethecompany´sgoodwill(animportantfactorwhenmeasuringcompanyvalueisthecustomerbase).WhileSkypeattracts400millionusers(manyofwhombecomepayingcustomers)Flickr,thefreephoto-sharingsite,hasamuchsmalleruserbaseandalowconversionrate.ThispartiallyexplainswhyeBaypaid$2.6billionforSkype(in2011Microsoftevenpaid$8.5billionincashtoacquireSkype;thenumberofusersamountedto660millionatthattime),andYahoopaidlessthan$30millionforFlickr.Furthermore,theselleralsohasunlimitedpossibilitiestogaininsightintotheirconsumersbyobservingtheusagebehaviorortounderstandcustomerbehaviorbetter(forexampleSpotifycanidentifywhatkindofmusicaspecificsegmentsprefersorsharesandcategorizescustomersbasedonthoseinformation,andcanusethesamedatatodefineupsellcampaigns(LinkedInoffersafreepremiumaccountortheoptiontouseLynda.com,aservicethatprovideseducationalvideos,foralimitedperiodoftime).2.3 SubscriptionThesubscriptionsmodelincludingayearlyormonthlypaymentdoesnotconstituteatrulynewformofpricing.Evenbeforethedigitalage,companiesusedsubscriptionseithertogeneratecustomerloyaltybyofferingsubscriptions,ortoachieveabasicutilizationofproductionandmarketingcapacities.Theunderlyingpricelogicofflatprice,however,hasasignificantdisadvantageinanon-digitalworld.Consumptionmustbelimitedatallcosts.Innewspapersandmagazines,agivencirculationdefinesthislimitation.Correspondinglimitationsforservicebranchessuchasfitnessstudiosortelecommunicationswouldhardlybefeasible.Anexampleforakindof“natural”limitationisembodiedbyhellofresh.de.Theonlinefoodservicesendstheirmembersweeklycookingboxesfilledwiththeingredientstoprepareaspecificrecipeforapriceflatpermonth.Dollarshaveclub.comfollowsthesameconceptsendingtheirmembersspecificallychosenblades,shavesandcreamseachmonthforamonthlyflat-rate.Thefrequencyofthedeliverycanbeadjustedandthemembershipcaneasilybecancelledpermonthforboththeseonlineshops.ThehighmarketshareofthepublictransportinSwitzerlandisnotonlyduetoeasyaccessbytrainandbusaswellasoutstandingnetworkandquality,butalsoduetotheproliferationofthe“General-Abonnement”(GA),whichguaranteesunlimiteduseofbusesandtrainsinSwitzerland.Currentlyabout6%oftheSwisspopulationownthisnetworkcard.Asignificantproportionofthetotalpublictrafficisallocatedtothisticket.Consequently,theGAallowsthepublictransportsystemtopredictquiteaccuratelywithrespecttodemand,buttherecouldalsobecapacityconstraintsiftheGAisutilizedintensively.Theexamplealsoshowsthatnoeffectivelevyofwillingnesstopayispossiblewithflatpricing.Forthosewithlowtrainusethereisaslightdiscountcomparedtotheregularprice,whilstaverystronguseresultsinanextremelyhighdiscount(Kalt,BongaertsandKrämer,2013).InGermany,theBahnCardisawell-knownmarketingelement(5millionusers)toincreasetraintrips.CustomersofDeutscheBahnpayayearlycardprice(subscriptiondiffersacrosstargetgroups)andgetaccesstoa50%discountontheusualfullflexfare(BahnCard50),25%discountonfullflexandsaverfares(BahnCard25)respectively.
![Page 6: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/6.jpg)
ThesubscriptionmodelisnotonlyusedbyindustrygiantslikeNetflixbutalsobypromisingstart-upslikeTheHonestCompany.LaunchedbyactressJessicaAlba,thee-commercecompanyTheHonestCompanycouldcollect100milliondollarsinSeriesDfundinginAugust2015-withanaverageratingof1.7billionUSdollars.Thebasicideaisamonthlyfeeforaconstantsupplyofecologicalproductsforbabiesandsmallchildren.Thesafetyofcapacityconsumptionand/orproductuseisoneadvantageofthesubscriptionmodel,whilstalsobeinganefficientinstrumentforcustomerloyalty.Itcanbeespeciallytargetedatheavyusersanduserswhoprefertohavecertainpricesecurity.Atthesametimethemodelincludesanentrancehurdle.Therefore,communicatingthekeyvalueisoneofthemainsuccessfactors,andthecustomerloyaltyismainlybasedonacontractuallevel.Inaddition,importantelementsofemotionalandnon-rationalcustomerloyaltymustbekeptinfocusandhavetobeexpanded.Finally,thereisanultimateriskfortheprovideriftheconsumptiongrowthisstrongerthanexpected,accompaniedbyanincreaseinthevariablecosts.2.4 DynamicPricingAstheeconomistPaulKrugmanhaspointedout,dynamicpricingismerelyanewversionoftheage-oldpracticeofpricediscrimination(Krugman,2000).Partiesinvolvedincommercehaveexperimentedwithvariablepricingsincethebeginningofcommerceitself.Yet,whatisnewabouttoday’sformofpricediscriminationisthatcurrenttechnologyhasmadedynamicpricingnotonlywidelypossible,butalsocommerciallyfeasibleandfaster.Overthepast15years,technologicaldevelopmenthasprogressedfurther.Digitalcompaniesoffercustomeraccountsinwhichalltheessentialdataisrecorded,theyknowaboutthesearchbehaviorofcustomersandtheirpreferences,evenbeingabletodiscerntheprobabilityofthemterminatingtheirrelationshipwithafirm.Incomparisontothepreviousthreemodelsthedynamicpricingisnottoberegardedasanacquisitioninstrumenttoattractnewcustomers.Itismoreageneralruleandthefactthatpricescanvaryduetospecificfactorsisnotopenlycommunicatedtoconsumers.Sinceforpricingmanagersthelimitationsofanundifferentiatedpostedpriceareclear,theyareworkingwithawidetoolboxtoadjustprices.Acommonformofdynamicpricingisvariationofpricesovertime.Ondaysortimeslotsinwhichthecompaniesexpectaclientelewithmorepurchasingpower,thepriceswillbeincreasedandcorrespondinglyreducedintimesofweakdemand.Thesearenormsthatconsumershaveexperiencedovermanyyearsforservicessuchasairlines,hotelsorcarrentals.Thesecompaniesstronglyrelyonyieldmanagementsystems,whichtrytoimprovecapacityutilizationandoverallrevenuesbyadjustingavailablepricestodemand(seeCross,HigbieandCross,2011;HinterhuberandLiozu2013).Morerecently,othersectorsliketheretailsectorarealsodiscussingtheincreasinguseofdynamicpricing.Afurthermoreextremeformofdynamicpricingistosetpersonalizedprices,inwhichdataanalystshelpcompaniesidentifythecharacteristicsofthepurchasingenvironmentorthecustomer’sprofileandbehaviorsimpactingtheirwillingnesstopay.IntheUnitedStates,forexample,TheWallStreetJournalfoundthatofficesuperstoreStaplesadjustedpricesasdidHomeDepot,andOrbitzthepopularonlinetravelcompany.InGermany,astudyverifiedthatacompanysupplyinglensesonlineofferedcustomersalowerpricewhenacquiredviaGoogle-ShoppingAdstothewebshopcomparedtothepriceviaadirectvisittothewebshop.Consequently,thedirect,andobviously,loyalvisitorpaysahigherpricethanacustomerprobablycomingforthefirsttimetothewebshop(Kobrück,2015).TheInternet,Bigdataanddigitizationenablefirmstotechnicallyincorporateinformationintotheirpricesettingwiththehelpofalgorithmssuchas
![Page 7: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/7.jpg)
• Time-based-pricing:pricesrisesystematicallywhenincreaseindemandisforeseeableand
alternativelyfallwhenadecreaseindemandisforecast.Attractiveness,weather,schoolvacationse.g.canbeinfluencefactors
• Competitive-based-pricing:thecompetitor’spricechangescaninfluencetheownpricingpolicy
• Distance-based-pricing:thedistanceacustomerislocatedfromthenextbricks-and-mortarstore
• Browsing-basedpricing:thecustomer’sbrowsinghistoryprovidesknowledgeofitswillingnesstopay
• Past-behavior-pricing:thecustomer’stransactionsandhencehisloyaltyinthepast(product,priceetc.)determinethecurrentprice
• Devices-based-pricing:theuseofthetechnicaldevice(typeofsmartphone,PC,Laptop,Tablet),whichgeneratedthequery,influencestheprice
• Demographically-based-Pricing:thecustomer’sageandgenderallowsanestimationofhiswillingnesstopay
• DynamicMerchandising:pricesadjustmentasatoolforstockandinventorymanagement.OnlinebusinesseshaveexperimentedwithtailoredofferssincethedawnoftheInternetera.Amazonwasoneofthefirsttomoveinpricediscrimination.In2000,Amazon.comInc.infuriatedmanycustomerswhenitsoldDVDstodifferentpeoplefordifferentprices.Amazoncalleditmerelyatestandultimatelyrefundedthepricedifferencetopeoplewhopaidmore.(Valentino-Devries,Singer-Vine&Soltani,2012).JeffBezossaidinanewsrelease:“Wehavenevertestedandweneverwilltestpricesbasedoncustomerdemographics,”founderAmazon.comspokesmanBillCurrysaidthetestswereusefulindeterminingapricepoint—therightbalancebetweenhowmuchAmazon.comcouldchargeandstillmaintainagoodsalesvolume.Nevertheless,becauseoftheconsumeroutcry,Amazon.comendeduprefunding6,896customersanaverageof$3.10each,oratotalof$21,377.60.Despitethepubliccriticism,therewereeconomistswhojustifiedAmazon’sactivitiesasfair.Forexample,WeissandMehrotra(2001,Nr.21)argued:"Proponentsofpersonalizedpricingcontendthatpricesbasedonvalue,andnotcost,benefitnotonlycompanies,butalsothoseconsumerswhoareofferedrelativelylowerpricedgoodsandservices,sincethesecustomerspayonlyasmuchastheyvaluethegoodsorservices".Therearedoubts,however,thatthemajorityofconsumersregardsuchbehaviorasfairandacceptable(KrämerandKalka,2016).Attheenditisthedecisionofthecompany,whetherthestrategicfocusofthecompanyistobuildupcustomerrelationshipandloyalty(thisisachievedthroughahighcustomerbenefit,theso-called"valuetothecustomer")orwhetherthefocusisratheronashort-termmaximizationofcashflows("valueofthecustomer").Inthiscase,acompanyisaimingtoextractasmuchoftheconsumersurplusaspossible(BongaertsandKrämer,2014).Here,thefourpricingmodelspresentedabovehaveaverydifferentfocus.Inthetrade-offbetweenthe‘valuetothecustomer’andthe‘valueofthecustomer’decision,thepricingmodelforfreeisinfavoroftheconsumer(Figure2).Inthiscase,theproviderrequiresadifferentsourceofliquidity.Asiswidelyknown,Google’sdecisionwas(in2000)todefinerevenuefromadvertisingandanalytics,ase.g.fromtheB2BbusinessbasedonAdwords,astheeconomiccoreofitsbusinessmodel(BernasekandMongan,2015).
![Page 8: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/8.jpg)
3.0 CaseStudy:DynamicpricingatAmazonThee-commercegiantAmazonisusedasacasestudyforthereviewpricingstrategiesintheDigitalAge.Thefirststepexplainsthespecialcharacteristics,whichmaketheAmazon’sbusinessmodelunique.Inthesecondstep,acoreelementofthebusinessmodelwillbeinvestigatedindetail:thecustomer-centricorientationofthecompany.BasedonanempiricalanalysisinGermany(onlinesurvey,Sep.2015)thecompetitiveedgeoftheInternetretailerisinvestigatedfromacustomerperspective.ThepricesofarandomsampleofproductsatAmazonareanalyzedbasedontypicalformsofpricediscriminationthatareusedinonlineretail.Finally,thecustomer'sperspective(reviewdifferentformsofpricevariationonAmazon)isintroduced.Figure2–Pricingmodelsofthedigitalageandcustomervalue
3.1 KeyelementsofAmazon’sbusinessmodelFoundedin1994,amazon.comisaleadinge-commercefirm,engagingintheretailsaleofconsumerproducts,sellingmerchandiseandcontentpurchasedforresalefromvendors,aswellasthoseofferedbythird-partysellersthroughretailwebsites,suchasamazon.com.Amazondidnotinventtheonlinestore,butthecompanyrecognizedthepotentialtotransformthewayconsumersshopbybuildingthenextgenerationplatformandinfrastructurethatgivescustomersunprecedentedchoice,scopeandvalue.Fromthebeginningthebusinessmodelwaspurelycustomer-centric.Bybuildingtheonlineshoppingplatform,Amazonradicallyreinventedthetraditionalretailbusinessmodelandthefundamentaldynamicsofhowconsumersshop.Whilethecompanystartedasabookseller,itlaterbeganmanufacturingandsellingelectronicdevices(includingKindlee-readers,Firetablets,FireTVs,andEcho,aswellasFirephones).Thecompanyiscontinuouslylookingforscale-effects.Therefore,Amazonactsasaresellerforhigh-demandproductsbutalsoasamulti-sidedplatformforlong-tail(lowdemand)products,whichareavailableonthesitefromindependentsellers.AnactivitylesserknowninthepubliceyeisthatAmazonoffersAmazonWebServicewhichencompassesfulfilment,publishing,digitalcontentsubscriptions,advertising,andco-brandedcreditcardagreementsservices.AWSindeedhasafirstmoveradvantage.Itwasbuiltfromthecompany’scoretechnologyinfrastructureandmakesweb-scalecloudcomputingcheaperandmoreaccessibleandturnedouttobeveryprofitable.Since2004AmazonhasoffereditsloyaltyprogramPrime,anannualmembershipprogramwithafeeof$99(U.S.)peryear($79in2005).Theloyaltyprogramprovidesfreeshippingofvariousitems;
Value-of-the-customer (B2C)
low
Valu
e-to
-the
-cus
tom
er (B
2C)
high
high
lo
w
For free
Freemium
Dynamic Pricing
How profitable is the company across its customer base? How much does a provider exploit the willing-ness to pay of individual customers, thereby reducing the consumer surplus towards zero?
What is the perceived customer benefit, which is generated by the product and service of the provider? In case of a “No-charge” scenario the full economic surplus remains at the customer
Subscription
Typical posted price
![Page 9: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/9.jpg)
accesstounlimitedstreamingofmoviesandTVepisodes;andotherservices.Itwasestimated,thatatthebeginningof2016,AmazonPrimehasreached54millionmembers.Primemembershipisanefficientgrowthtoolsinceittendstocausesubscriberstostopshoppinganywhereelse.ConsumerswhoknowAmazonareawarethatpricesindicatedontheplatformarecompetitive.WhencustomersdecidetobecomeaPrimemember,shippingcostsarenolongeranissue.SubscribersautomaticallydefertoshoppingatAmazonfirstbecausetheyknowshippingisfreeandfast,duetoexpressservice.AmazoncoversalltheshippingonPrimeorders.A2011investigationestimatedthattheaveragePrimememberused$55worthofshippingand$35indigitalcontentannually.Inotherwords:Amazonwas“losing”$11annuallybycollectingits$79membershipfee(Tuttle,2013).Butthisdidnotincludethemaintriggerofthecustomerrelationship.Amazon’sshareofthewalletisstronglyincreased,aswellascustomerloyaltyandthereby,futurecontributionmarginsacrossitscustomerbase.Foryears,Amazonhasbeenobsessedwithgrowth.Totalrevenuestripledfrom$34bn(2010)to$107bn(2015).Amazonmadecleardecisionlongagototradeoffshort-termprofitagainstlong-termcashflow.Itskeystrategyistobeabletocapturethelargestmarketshareandscalepossiblethatwillallowittodrivedowncostsandincreaseprofitabilityinthefuture.ThisisreflectedinAmazon’sfinancialperformanceindicators.In2012and2014,Amazongeneratedlosseswhileatthesametimerevenuesstronglyincreased.In2015thepriceearningsratioamountedtomorethan500,comparedto250forAlphabetand20forApple,themostvaluedfirmsintermsofbrandvalue(seeFigure3).Evenin2015whenAmazonprofitsaftertaxesraisedto$0.6bntheoverallreturnonsaleswasonly0.6%.RetailgiantWal-Martreached3.4%atthesametime(profitsof$16bnrelatedtorevenuesofapproximately$485bn).Figure3–Amazon.com:Financialperformanceindicators
3.2 BuildingcustomerequitybasedontrustandcustomercentricityAsSimons(2014)stated,Amazondevotesmaximumresourcestopleasingconsumers,evenifthatmeanssellersorcontentproviderssometimesfeelshort-changed(sellerswhosestore-frontsarehostedontheAmazonplatformhavebeenknowntosueAmazonformoreresources).ThisisasideeffectofcustomercentricityinnovationsuchasPrimefree-shipping,detailedproductreviews(includingnegativeones),look-inside-this-book,andthelistingoflower-pricedproductsfromonsite
Year Revenues ($bn )
Profits after taxes ($bn )
Profits in % of revenues
2010 34.2 1.152 3.4%
2011 48.1 0.631 1.3%
2012 61.1 -0.039 -0.1%
2013 74.5 0.274 0.4%
2014 89.0 -0.241 -0.3%
2015 107.0 0.596 0.6%
Price-Earnings Ratio of leading Internet Companies Amazon.com: Revenues and Profits (2010-15)
Am
azon
.com
: Los
ses
Am
azon
.com
: Los
ses
0
100
200
300
400
500
600
700
800
2009 2010 2011 2012 2013 2014 2015
Amazon.com
Alphabet
Apple
PE-ratio
![Page 10: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/10.jpg)
competitors.Whilecompetitorshaveoftencriticizedthesepractices,Amazonhascontinuedtoimproveitscompetitivepositionandsuccessstoryduetounparalleledcustomerloyaltyandstratosphericstockvaluations.Primewasintroducedin2004,asaresultofAmazonsearchingfortherightloyaltyprogramformanyyears.AnAmazonsoftwareengineernamedCharlieWardfirstsuggestedtheideaofafree-shippingserviceviaasuggestionboxfeatureonAmazon’sinternalwebsite.OnedirecteffectthatcomeswiththePrimemembershipisanincreaseinspendingatAmazon.ConsumersshiftbudgetsfromotherretailerstoAmazon,leadingtoastrongsalesgrowth.ItisestimatedthatPrimemembersincreasetheirpurchasesonthesitebyabout150percentaftertheyjoinandmayberesponsibleforasmuchas20%ofAmazon’soverallsalesintheU.S.AccordingtoastudybyRBCCapitalMarket,39%ofPrimemembershadexpenditureofmorethan$200inthepast90daysandfor25%expenditurewasbetween$101and$200.Whilealmost67%ofprimemembersspentmorethan$100in90days,thecorrespondingfigurefornon-Prime-customerswas28%.AstudyconductedbytheauthorsreviewedinwhichelementscustomersseeAmazon´sperformancesuperiortoitscompetitors.Duringthesurvey500consumersfromanageof18yearswereinterviewedinGermany(OnlineStudy,September2015).FromtheperspectiveofAmazon’scustomersthemostimportantperformancecharacteristicsarethewideproductrange(85%)andfastdelivery(80%),followedbyaclearaccount(55%).Astonishingly,thefactor"lowprice"ranksonlyinfourthplaceinthetopperformancewith53%(Figure4).ThisreflectsthefactthatGermanconsumersarenotprimarilyfocusedongettingthelowestpossiblepriceonAmazon,butratherthatserviceelementsreceiveclearpreference.ParticularthecustomeraccountthatprovidestransparencywithrespecttoitspreviousordersisseenasbeneficialbyAmazoncustomers.Figure4–Amazon’sUniqueSellingProposition
ThesefindingscorrespondtotheresultsofastudythatcomparedAmazon’spricingwiththatofitsmaincompetitors(BoomerangCommerce2015)andshowthatAmazonisn'talwaysthecheapestplacetoshop.Thegiantonlineretailerusesitsvastcomputingresourcestomonitorandanalyzethepricesofmanythousandsofitemssoldbycompetitors.Popularitemsarequicklydiscounted,whileitemsthatarelessattractivemayactuallycostmorethantheydoonrivalsites.Inalmosttwothirdsofallobservedproductsinvestigatedinthestudy,Wal-Mart’sproductswereexactlythesameprice
Wide product range
Fast delivery
Clarity of account (My Amazon)
Cheap prices
Free Shipping
Good product information
Quick response to customer inquiries
Customer orientation (fairness)
Prime Services
Other
85%
80%
55%
53%
47%
45%
38%
34%
31%
3%
All Amazon customers USP´s of Amazon
1) What makes Amazon special / Where is Amazon superior to the competition?
84%
78%
53%
52%
41%
44%
34%
29%
19%
3%
Amazon customers without Prime
90%
89%
64%
54%
74%
50%
56%
58%
91%
3%
Amazon customers with Prime
![Page 11: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/11.jpg)
asonAmazon.de;forproductsthatarecoretoAmazon,Wal-Martturnedouttobelesscompetitiveandviceversa.CustomerswithPrimestatusbasicallyshowasimilarpreferencestructure.However,resultsindicatethatPrimemembersparticularlyvalueservicessuchasfreedeliveryandotherprimefeaturesprovidedexclusivelyforthem.Inadditiontotheinformationprovidedtocustomersabouttheiraccounts,Amazonstillhasavarietyofcustomer-specificinformation.AsVillas-Boas(2014)pointsout,salesarerecorded,asarebrowsingand‘clickthrough’patternsforeachpersonalcomputeraccessingAmazon.com,whichenableAmazontounderstanddemandmuchbetterthanthecompetition.Amazondoesthisbytrackingnotonlywhatcustomersbought,butalsowhatelsetheylookedat;howtheynavigatedthroughthesite;howmuchtheywereinfluencedbypromotions,reviews,andpagelayouts;andsimilaritiesacrossindividualsandgroups.Sincethebusinessmodelwasfullydigitally-driven,customeranddataanalysishavebeencorecompetenciesofAmazonfromthebeginning,providingalltheinformationneededtopursueallkindsofpricediscrimination.Competitivepricingrequiresdata,intelligence,andstrategy,playedathighspeedandatahighlevel.3.3 ResearchonpricediscriminationatAmazon.deAccordingtoastudyconductedbypricemonitoringproviderMinderest,itwasfoundthatAmazonmademorethanonemillionpricechangesonValentine'sDayalone(Minderest,2015).Foreachproduct,pricesfluctuatedwithinafewhoursbyupto240%.Thereasonforthisvariationinthepriceisthealgorithmof"DynamicPricing",whichiscurrentlybeingdevelopedbyAmazon.Aspreviouslymentioned,thistoolwillmaximizeprofitsdependingonthemarketpriceandeconomicviability.Changescanbemadeinashortperiodoftimeinordertoincreasecompetitiveness.Todate,Amazonistheleaderinusingthisbusinessintelligencetool.Toillustratethiswithaclearexample-thecamera"NikonD610SLR"wastrulyremarkableasthepricefluctuatedbetweenEUR700andEUR1.687.ThismeantadifferenceofEUR987or240%.Thesesavingscouldhavebeenachieved,ifthecamerahadbeenorderedonFeb12at10:00am,insteadofonFeb13at9:26pm.WhetherpricesatAmazonvaryornot,howstronglytheydiffer,andwhatformsofpricedifferentiationareapplied,wasreviewedbasedonanexperimentalstudy.Here,pricesforselectedproductswererecordedonthewebsitesofAmazonandcompetitors,andcompared.Thiswasdonesimultaneouslybyusingdifferenttypesofdevices.Inthisway,itcouldbeexaminedwhether,forexample,customerswithiOSdeviceswereshownhigherpricesthanconsumersusingothertypesofdevices.Theinvestigationalsoincludedananalysisofmid-tolong-termpricedevelopments,whichwasexecutedusingthewebsitewww.mein-wunschpreis.com.Theresultsshowedsignificantfluctuationsinpriceinthelong-term,e.g.byupto300EURforthecamera(NikonD610)aswellasforthecoffeemachine(KrupsNespresso3006X).Incontrast,littlepricevariationswereevidentontheindividualconsumerlevel(Figure5).However,variationsinpricewereobserved,e.g.,ononedaythecoffeemachinewasofferedcheaperwhenrequestedviasmartphonewithoperatingsystemiOScomparedwithothertypesofdevices(includinglaptopwithiOS).3.4 CustomerperspectiveonAmazon’spricediscriminationWhilethepricemonitoringaimedtogenerateobjectiveresultsintermsofpricevariationsinonlineretailandtodetermineformsofpricedifferentiation,aconsumersurveyexaminedhowtheAmazoncustomersevaluatedifferentformsofpricediscrimination.First,duringthesurveyaformofdynamicpricingwaspresentedinwhichthesellerchangesthepriceofaproductaccordingtodemand.Consequently,pricesforoneandthesameproductmayvary,sometimesbeinghigher,sometimeslower.Inthiscasethecustomer’sperceptionwasratherindifferent,theshareofrespondentsthat
![Page 12: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/12.jpg)
agreed(25%top-2ratingonascaleof1to6)wasovercompensatedbycustomerswithnegativeratings(34%).Although,onehastoappreciatethatthisignoresthefactthatacertainproportionofconsumerswillprobablynotnoticeanypricedifferencesinpractice.Only23%oftheAmazoncustomersagreedtothestatement“WhenIsearchonAmazon,Icanbesuretogetofferedthelowestpossibleprice”(12%ofnon-customers).Figure5–ResearchonAmazon’spricediscrimination
Secondly,anotherformofdynamicpricingwasdiscussed;describingascenariowheredifferentpricesareofferedtoAmazoncustomers,dependingonhowtheyareshoppingandwhichdevicetheyuse.44%oftheAmazoncustomersbelievethatAmazoncannotaffordtooffercustomersdifferentpricesdependingonwhetheraPCorasmart-phoneisused.Morethan50%thinkthiswouldbeareasonnottopurchaseonAmazoninthefuture.Figure6–ThecustomerperspectiveonpricediscriminationatAmazon(KrämerandKalka,2016)
coffee machine
camera
Price variation over time (coffee machine and camera) Price variation across individual consumers
I do not see any problems if the prices vary depending on the customer
I have personally experienced that the products prices have been changed for inquiries when different types of devices were used during a search
For the customer price security is a clear competitive advantage of Amazon
When I search on Amazon, I can be sure to get offered the lowest possible price
Amazon can not afford to offer customers different prices, depending on whether a PC or a Smartphone is used
If so, that would be a reason not to use Amazon for purchasing any longer
1) In Internet blogs is discussed that Amazon customers get different prices displayed, depending on how you are looking for and from which device. Do you agree to the following statement or not?
13%
15%
47%
23%
44%
54%
25%
18%
35%
40%
29%
24%
63%
67%
18%
38%
27%
22%
Amazon-customers Amazon-Non-customers
Agreement(top-2) Disagreement(low-2)
15%
20%
34%
12%
39%
81%
15%
16%
36%
31%
31%
11%
69%
64%
30%
57%
30%
8%
Agreement(top-2) Disagreement(low-2)
Statements regarding the price differentiation at Amazon1)
![Page 13: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/13.jpg)
Astheanalysisshows,dynamicpricingbasedonrapidpriceadjustmentsovertimedependingondemand,islessproblematicfromthecustomer’sperspective.However,alargemajorityofAmazoncustomersfeeluncomfortableinthedynamicpricingworldbasedonthecustomerprofilesthatisifpricesvaryforindividualcustomers.Ifcustomerscomprehendthataretailermisusedtheirpersonaldatafora“better”pricing,customerconfidenceasoneofthebiggestcompanyassetsispotentiallyforfeited.Thenthedamageforthecompanycouldbeworsethanthebenefitsofaone-to-onepricing.4.0. Outlook:ChancesandlimitationsofpricinginadigitalworldDigitaldisruptionwithitsnewtechnicalpossibilities,BigData,changesincustomerbehaviorandcompetitivepressurehaveimplicationsforpositioningandthepricingstrategiesandmodelsofenterprises.Fourpricingmodelsarepredominatelyimplementedinthenewdigitalworld,whichhaveredefinedtherulesofthegameinpricing.Eachofthemfollowsotherobjectives,opportunitiesandrisks.Theuseandvaluedepends,ofcourse,onthespecificproductandcustomercharacteristics.Withreferencetothe“forfree”and“freemium”model,successfactorsaremainlytobeseeninthere-andcrossfinanceinstruments,whereasthe“subscription”modelfocusesonoptimizingcapacityutilizationwhilstkeepinganeyeonthevariablecosts.Thesethreemodelsaredrivenprincipallybytheobjectiveofquicklyacquiringnewcustomersandbuildinguployaltyamongusers.Incontrast,thefourthmodel“dynamicpricing”isnotopenlycommunicatedtothecustomersandtriestofullyexploitwhatthetargetgroupiswillingtopayfortheproductorservicesduetotime,behavior,customerprofile,useddevicesandsoon.Withthehelpofalgorithms,differentapproachescanbeusedinalmostrealtimetochangepricesinordertomaximizeprofits.Whilethefirstthreemodelscannotbecombinedwitheachother,itistheoreticallypossibletocombinethe“dynamicpricing”modelwiththe“freemiumaswellaswiththe“subscription”model,becauseanoffsettingeffectisnotforeseen.Nevertheless,psychologicaleffectsalwayshavetobeconsideredifthecompanywantstocreateavaluefororofthecustomer,especiallywithregardtotheone-to-onepricingpolicy,whichsomecompaniesseeasthebiggestopportunityforthefuturepricingonthebasisofbigdata.Whenevaluatingchancesandrisksofneworchangedpricemodels,keyelementsmustbetheperceptionandpsychologicalpriceevaluationbythecustomeraswellasthepotentialdamagetothebrandimage.Ifthecustomerfeelsunfairlytreated,themainrisksofallfourmodelsarecustomerdissatisfactionandcustomerchurn,bothleadingtonegativeeffectsforthecustomerlifetimevalue.5.0 ReferencesAriely,D.(2010).Predictablyirrational,revisedandexpandededition:Thehiddenforcesthatshapeourdecisions.NewYork,NY:HarperPerennial(GermanTranslation).
Bernasek,A.,&Mongan,D.T.(2015).Allyoucanpay:Howcompaniesuseourdatatoemptyourwallets.NewYork,NY:NationBooks.
Bertini,M.(2014).Pricewarsandthemanagerswhostartthem.BusinessStrategyReview,25(4),14–17.
Bertini,M.,&Koenigsberg,O.(2014).Whencustomershelpsetprices.SloanManagementReview(Summer),55,57–66.
Bongaerts,R.,&Krämer,A.(2014).Value-to-Value-SegmentierungimVertrieb.StGallenMarketingReview,4,12–20.
![Page 14: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/14.jpg)
BoomerangCommerce.(2015).Introductiontopriceperceptionindex(PPI):Achievingcompetitivepricingwithoutracingtothebottom.Availablefromhttp://www.boomerangcommerce.com/resources/
Bryce,D.J.,Dyer,J.H.,&Hatch,N.W.(2011).Competingagainstfreeproducts.HarvardBusinessReview,89(6),104–111.
Cross,R.G.,Higbie,J.A.,&Cross,Z.N.(2011).Milestonesintheapplicationofanalyticalpricingandrevenuemanagement.JournalofRevenueandPricingManagement,10(1),8–18.
Hinterhuber,A.,&Liozu,S.(2013).Innovationinpricing:Introduction.In:A.Hinterhuber&S.Liouzu(Eds.),Innovationinpricing(pp.4–23).Abingdon.
Kalt,M.,Bongaerts,R.,&Krämer,A.(2013).Value-to-Value-SegmentierungimpraktischenEinsatz.PlanungundAnalyse,40(6),21–24.
Kim,J.Y.,Natter,M.,&Spann,M.(2009).Paywhatyouwant:Anewparticipativepricingmechanism.JournalofMarketing,73(1),44–58.
Kolbrück.(2015).DynamicPricingimGraubereich:WennderStammkundederDummeist.Availablefromhttp://etailment.de/thema/marketing/Dynamic-Pricing-im-Graubereich-Wenn-der-Stammkunde-der-Dumme-ist-3569(accessedMarch18,2016).
Krämer,A.(2015).PricinginaVUCAworld:Howtooptimizeprices,iftheeconomic,socialandlegalframeworkchangesrapidly.InO.Macketal.(Eds.),ManaginginaVUCAworld(pp.115–128).NewYork,NY:Springer.
Krämer,A.,&Burgartz,T.(2015).Customervaluecontrolling:Combiningdifferentvalueperspectives.BusinessandManagementStudies,1(2),11–19.
Krämer,A.,&Burgartz,T.(2016).ControllingvoninnovativenPreismodellen-amBeispielPay-What-You-Want.Controlling,28(6),325-333.
Krämer,A.,Jung,M.,&Burgartz,T.(2016).Asmallstepfrompricecompetitiontopricewar:Understandingcauses,effectsandpossiblecountermeasures.InternationalBusinessResearch,9(3),1–13.
Krämer,A.,&Kalka,R.(2016).DynamicPricing—verspieltAmazondasVertrauenseinerKunden?AvailablefromAbsatzwirtschaft.dehttp://www.absatzwirtschaft.de/dynamic-pricing-verspielt-amazon-das-vertrauen-seiner-kunden-75271/?utm_campaign=NEWSLETTER_sondernewsletter&utm_source=newsletter&utm_medium=email(accessedMarch18,2016).
Krugman,P.(2000).Whatpricefairness?NewYorkTimes,October4,2000,atA35.
Kumar,V.(2014).Making“freemium”work:Manystart-upsfailtorecognizethechallengesofthispopularbusinessmodel.HarvardBusinessReview,92(5),27–29.
Minderest.(2015).Minderestregistriertmehrals1MillionPreisänderungenbeiAmazonamValentinstag.
PressreleasefromFebruar24,2015.
RolandBergerStrategyConsultants.(2014).Escapingthecommoditytrap:Howtoregainacompetitive
edgeincommoditymarkets.Munich.
Shanpan’er,K.,&Ariely,D.(2006).Howsmalliszeroprice?Thetruevalueoffreeproducts.Working
Papers,FederalReserveBankofBoston,No.06-16.
Simon,H.(2013).Preisheiten:Alles,wasSieüberPreisewissenmüssen.Frankfurt:Campus.
![Page 15: Krämer-Kalka How Digital Disruption Changes Pricing Strategies … Changes... · 2020-03-05 · How Digital Disruption Changes Pricing Strategies and Price Models To be published](https://reader033.vdocuments.net/reader033/viewer/2022050106/5f448f875572294e8e70eda0/html5/thumbnails/15.jpg)
Simons,R.(2014).Choosingtherightcustomer.HarvardBusinessReview,92(3),48–55.
Valentino-Devries,J.,Singer-Vine,J.,&Soltani,A.(2012).Websitesvaryprices,dealsbasedonusers’information.TheWallStreetJournal,December24,2012.
Villas-Boas,S.B.(2014).Bigdatainfirmsandeconomicresearch.AppliedEconomicsandFinance,1(1),65–70.
Weiss,R.M.,&Mehrotra,A.K.(2001).Onlinedynamicpricing:Efficiency,equityandthefutureofe-commerce.VirginiaJournalofLawandTechnology(Summer),6,1–15.
Tuttle,B.(2013).AmazonPrime:Bigger,MorePowerful,MoreProfitablethanAnyoneImagined.Availablefromhttp://business.time.com/2013/03/18/amazon-prime-bigger-more-powerful-more-profitable-than-anyone-imagined/.