Marketplace Elements

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In a perfect world where everyone is striving for the most benefits overall then yes the dispersion of prices will narrow. I say this because there is a lot of economical factors involved in the dispersion of prices. The type of product, the exactness of the product being compared, ease of navigation of website, etc. If all of these factors were easily controllable and relatively similar in each case, then dispersion will decrease. Until that point, there will always be someone trying to trick an unassuming consumer into a ‘good buy’ through favorable advertising and giving a certain impression.

 

The importance of name brands has been driven by the perception that the consumer has certain status if they own an iPhone for example. There will be “Apple Fanboys” who will always buy the new phone and not even consider any other option because they want to be perceived as cool and trendy. Admittedly the original product was revolutionary and changed the market forever.

However, you can now see that Apple are taking advantage of this customer base by making their products less user friendly, like removing the headphone jack or requiring mac book owners to have an attachment to use HMDI, both of which benefit Apple as they can then sell these products.

For the smart shopper, brand names never really mattered even back ten years, it is the new variety of choice that makes it more obvious that there are good products outside of Apple and Samsung. However, some brands will always have a loyal customer base that ‘love’ their products and will buy them for the status that comes with the brand.

 

While the competition between Amazon.com, Barnes and Noble and Borders may be driven to attempt to beat each others’ prices, the reality is much different. If a customer is looking for a niche product and can afford to spend a lot of time searching for the cheapest price, then they will be able to find the cheapest price. However, if a consumer is in a hurry or is happy enough with the first price they find, often they will not search any further for a cheaper price. This highlights the importance of user friendliness as well as appropriate advertising to make sure the consumer is aware that cheaper prices may exist. If they are content with a price they had in their mind before conducting the search, then find said price in the first or second result then the consumer is unlikely to continue to search.

 

Mega-sites like Amazon.com are constantly looking to diversify their business outside of their roots. Amazon.com run their book section of the company at a tiny margin. It is not really their concern anymore. The trick will be if they can find a winner in a market, like their shop assistant free supermarket, because currently they are running on a pretty lean budget. Digit markets will be dominated by the mage-sites only because of their reputation as a household name. In 40 or 50 years, there will still be this type of company probably taking advantage of me by then because the mega-site will have a huge advertisement budget and will be well known. There will always be the smaller sits battling it out to the cheapest and most efficient but mega-sites will be the majority of the market.

 

Well, compared to even ten years ago, the buyer is generally more informed about the product they are looking at. I know, for myself, I do a heap of research before I go into a store to make sure there is no way the salesperson can get the jump on me. It will continue trending this way as more consumers become more informed as they realise how easy it is to do research and save themselves some money through 10 minutes work. The seller will be at the mercy of the buyer because of competition.

 

Prices of products may appear to be clustered but that comes from the advanced tracking of our data and history that make advertising more specific to what a consumer is searching for. Without this tracking, the only way the prices may be clustered relatively closely would be through use of a website such as shopbot.com.au. This website compares prices from all sources it can find. Outside of these options, it would seem naive to assume prices are clustered.

 

Online prices benefit from having a large user base. This allows most sites to absorb cost incurred when they are getting beaten by a competitor. A strategy may be to under cut the price of the competitor and then charge extra for accessories that are not necessarily must haves but can be branded as such. The idea is to recoup the loss and then some more with these extra items that are often their brand so they maximise revenue.

 

Referencing the above paragraph, a seller may use this trick to achieve more revenue. Such as having to pay to book  your seat on airplane because it is a ‘good’ seat or whatever they try to brand it as. While the companies website may have said for this price ____, it’s the little ‘extra add-ons’ that they make money on, such as printing cost for the ticket, and processing charges. Whereas, websites that run as comparison, tend to include these add-ons in their advertised price as to not mislead the customer. It boils down to how established a website is in a market to whether or not they can get away with sneaky stuff like this.

 

 

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