Chapter 10: Price – The Online Value
1. Introduction to Pricing in E-Marketing
• Topic Overview: Pricing is a crucial marketing mix component, directly
impacting a company's profitability and market positioning. In the context
of e-marketing, pricing strategies can be more dynamic and transparent
due to the digital environment, where consumers have easy access to price
comparisons and information.
• Example: Lazada Malaysia frequently adjusts its pricing strategies during
major sales events like 11.11 and 12.12, offering significant discounts and
flash sales to attract more customers. This dynamic pricing strategy helps
Lazada remain competitive in the e-commerce market.
2. Factors Influencing Online Pricing
• Topic Overview: Several factors influence online pricing, including
competition, cost structures, consumer demand, and perceived value. E-
marketers must also consider the transparency of online pricing, as
consumers can easily compare prices across different platforms.
• Example: GrabFood in Malaysia sets its pricing based on various factors,
including the delivery cost, restaurant pricing, and consumer demand
during peak hours. To remain competitive, GrabFood often offers
promotions or discounts during off-peak hours to encourage more orders.
3. Pricing Models in the Digital Environment
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• Topic Overview: There are various pricing models used in e-marketing,
including:
o Cost-Plus Pricing: Setting prices based on production costs plus a
markup.
o Value-Based Pricing: Setting prices based on the perceived value
to the customer.
o Dynamic Pricing: Adjusting prices based on real-time demand and
market conditions.
o Freemium Pricing: Offering basic services for free while charging
for premium features.
• Example: Spotify Malaysia uses a freemium pricing model, where users
can access basic streaming services for free with ads but need to pay for
a premium subscription to enjoy ad-free listening and additional features
like offline downloads.
4. Price Transparency and Consumer Behavior
• Topic Overview: Online pricing is highly transparent, allowing consumers
to compare prices across different sellers easily. This transparency can
increase price sensitivity, where consumers base their purchasing
decisions on price.
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• Example: Consumers in Malaysia often use price comparison websites
like iPrice to find the best product deals. Companies like Senheng, an
electronics retailer, must ensure their online prices are competitive to
attract price-sensitive customers who actively compare prices before
purchasing.
5. Psychological Pricing in E-Marketing
• Topic Overview: Psychological pricing strategies take advantage of how
consumers perceive prices. Techniques include odd pricing (e.g., RM9.99
instead of RM10), bundling, and price anchoring to influence purchasing
decisions.
• Example: McDonald's Malaysia uses psychological pricing by offering
meal bundles at slightly reduced prices compared to purchasing items
individually. This strategy encourages customers to perceive the bundled
meals as better value, increasing the likelihood of purchase.
6. Discounting and Promotions
• Topic Overview: Discounts and promotions are common in e-marketing,
especially in competitive markets. These strategies can drive traffic,
increase sales, and clear out inventory, but they must be used carefully to
avoid eroding brand value or profitability.
• Example: Shopee Malaysia frequently runs discount campaigns, such as
"Shopee Shake" and voucher giveaways, especially during festive seasons
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like Hari Raya. These promotions boost sales and increase user
engagement on the platform.
7. The Role of Data in Pricing Decisions
• Topic Overview: Data analytics plays a significant role in setting and
adjusting prices in the digital environment. E-marketers can use consumer
behaviour, market trends, and competitor pricing data to make informed
pricing decisions.
• Example: Zalora Malaysia uses data analytics to track consumer
behaviour and preferences. By analysing this data, Zalora can adjust
prices dynamically based on time of day, user location, and previous
purchasing behaviour, ensuring competitive pricing and maximising sales.
8. Ethical Considerations in Online Pricing
• Topic Overview: Ethical pricing involves setting prices that are fair and
justifiable. In e-marketing, price discrimination, surge pricing, and
deceptive pricing practices can raise ethical concerns. Companies must
balance profitability with fairness to maintain consumer trust.
• Example: During the COVID-19 pandemic, there were concerns about
price gouging for essential items like hand sanitisers and face masks in
Malaysia. Platforms like Lazada and Shopee implemented measures to
prevent sellers from inflating prices unfairly, ensuring ethical pricing during
the crisis.
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Conclusion
Chapter 10 highlights pricing complexities in the digital marketplace, where
transparency, competition, and consumer behaviour play critical roles. By
leveraging data analytics, psychological pricing strategies, and dynamic pricing
models, e-marketers can optimise pricing to attract customers while maintaining
profitability. The examples from Malaysian companies demonstrate how local
businesses are navigating the challenges of online pricing, using innovative
strategies to meet consumer expectations and stay competitive in a rapidly
changing market.
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