Quote:
Originally Posted by Andrew H.
It doesn't have to be, but it usually is because that's what customers are most interested in.
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Certainly price is a primary factor in any buying decision, particularly so when a product such as a book is to all intents and purposes identical between different resellers. However, as mentioned previously there are other factors that can and are taken into consideration. Quality of service, delivery time, availability etc being some of them.
I have myself, been out to a bricks and mortar bookshop and bought a book that was the next in a series I was reading. I paid more for the book than I might have done had I bought it on online for the simple reason that I wanted to purchase it that day and not have to wait for delivery as I would have, had I bought on from an online reseller.
That is just one of the factors that consumers will consider when making purchases.
Quote:
Originally Posted by Andrew H.
No, you don't understand predatory pricing. It is perfectly fine and 100% legal to have prices so low that they drive the competition out of business.
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Having a Masters Degree in Business Administration I think I understand enough of pricing strategy to be able to make an informed assessment of it. I would not in any way set myself up as an expert in this area, but I do have sufficient knowledge and understanding to be able to comment on it.
I have not made any comment on the legality of the the strategy Amazon are currently following, so I'm not quite sure why you've even raised this. The legality of predatory pricing is not at question here—the ethical and moral business practice of doing it are, whether it's provable or not, and I believe I made comment to that effect in a previous post.
Quote:
Originally Posted by Andrew H.
What predatory pricing actually is is selling your products *at a loss* to unfairly hurt your competition. (And this expressly doesn't include loss leaders, which retailers have used for a century). There's plenty of evidence that Amazon has not engaged in predatory pricing, and no evidence that they have.
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Whilst it is entirely your prerogative to believe whatever you want to, I would disagree somewhat that there is no evidence to suggest that Amazon are not engaging in the practice of predatory pricing with the distinct intention of putting competitors out of business. It appears I am not the only one who seems to think this:
With the launch of the Kindle, Amazon promoted a low baseline price of $9.99 for most e-books. That meant that Amazon was selling virtually all newly published e-books at a loss. For example: A new book with a hardcover list price of $29.95 would be given an e-book price of $23.95 — 20 percent less to account for the publisher’s savings in printing, binding and distribution. The publisher would sell that e-book to Amazon for $12, and Amazon would retail it for $9.99, taking a $2 loss.
Why would Amazon do this? Observers have proposed several motives. Perhaps Amazon aimed to entice heavy readers to the newfangled Kindle; the customer could tell herself she’d make up the cost of the device in savings on the books themselves. Others have suggested that cheap e-books were loss leaders that drew customers back to Amazon over and over again, presumably so they’d go on to purchase high-margin items like TVs.
The most popular theory by far holds that Amazon intended from the start to totally dominate the e-book marketplace. By using its wealth to subsidize the sale of e-books at a loss, it could drive any competitors out of the market. Bricks-and-mortar chains like Barnes and Noble and online start-ups like Kobo (both of which would introduce their own e-reader devices) or device-neutral rivals like Google would simply not be willing or able to bleed cash as long as Amazon could. And because the Kindle is a “closed platform” — Kindle e-books can only be read on Kindle devices or apps — the more Kindle e-books a customer owned, the more reluctant she’d be to switch to a different device.
Source:
http://www.salon.com/2013/07/01/ever...ook_price_war/