The Internet and the World Wide Web will have a fundamental influence on the pricing strategy of firms. Similarly, the technology will open many doors to buyers hitherto closed by the effects of time, cost, and effort. In this chapter, we have illustrated the effects of the new technology on price from two perspectives. First, the technology has the potential to change the shape and structure of the firm's customer base. At worst, it will flatten the customer base, turning the majority of a firm's customers into transactional traders who buy the spot. However, used wisely, it has the potential for migrating a significant number of a firm's customers up the value triangle, narrowing the customer base, and enabling the firm to build relationships with customers that negate the impact of mere price alone.
Second, the new media has the potential to move customers along the exchange spectrum in ways, and at rates, that have not hitherto been experienced. Technology may combine with market forces to reduce the vast majority of a firm's transactions to the level of commodity trades, leaving managers with little opportunity to make prices. A far more optimistic scenario, however, sees managers using the technology in combination with other marketing strategies to seduce the customer into a mutually valuable relationship. The chapter identifies the effects of technology and the forces in the market that have the potential to flatten and homogenize customer base triangles and shift customers disproportionately towards the commodity end of the exchange spectrum. The chapter also finds a number of approaches available to managers to put the brakes on these processes, and indeed, use the new technology to accelerate more effective pricing strategy.
Marketers have always viewed price as one of the instruments of policy in the marketing mix--a variable which, theoretically at least, can be manipulated and controlled according to circumstances in the business environment and the nature of the target market. In practice, however, many pricing decisions are not taken by marketers, and are based more on issues such as cost and competition than any notion of customer demand. Seen pessimistically, price decision making has been, and may continue to be, a mechanistic process of calculating costs and attempting markups, or a knee jerk reaction to market conditions and competitive behavior. A more optimistic view might be that pricing decisions can be as creative as those taken with regard to the development of new products and services, or the development of advertising campaigns. Indeed, pricing may be the last frontier for marketing creativity. Ignored or utilized mechanically, the Internet and the Web may be the vehicles that destroy the last vestiges of managerial pricing discretion. In the hands of the wise, these vehicles may be the digital wagons that carry pricing pioneers to the edge of the cyber frontier.
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