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New pricing approaches (including dynamic pricing and auctions)

In addition to the auctions described above, the Internet introduces new opportunities for 

dynamic pricing

, for example new customers could be automatically given discounted pur-

chases for the first three items. Care has to be taken with differential pricing since established 

customers will be unhappy if significant discounts are given to new customers. Amazon 

Commoditisation

The process whereby 

product selection 

becomes more 

dependent on price than 

on differentiating features, 

benefits  and   value‑  added 

services.

Dynamic pricing

Prices can be updated 

in real time according to 

the type of customer or 

current market conditions.

Figure 8.22

Price elasticity of demand for a relatively elastic product

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