Pricing and Branding on the Internet

By Garth Saloner, Kostas Sgoutas, A. Michael Spence
2000 | Case No. EC8 | Length 25 pgs.
This case study provides numerous on-line examples that either support or challenge the theory that prices on the Internet will decline and brand loyalty will be threatened. As the theory goes, intense competition to try to acquire and retain online customers combined with low consumer search costs and the financial markets’ tolerance for aggressive spending on customer acquisition will drive online prices down to marginal cost. The issue of brand evolution on the net is just as controversial, with some experts predicting increased brand significance as others forecast the demise of product-centric brands and the rise of information-centric brands that focus on understanding and satisfying the consumer’s needs. The second perspective is predicted to lead to the rise of a new group of intermediaries that advocate consumers’ needs and facilitate transactions by efficiently matching buyers and sellers. The case delves further into pricing and branding issues by looking at, Barnes & Noble,,,, and Talus Solutions.
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