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1 

How many competitors are there at a point in time? They suggest a product’s mark-up 

should be increased when the number of rivals falls and decreased when the number of 

rivals increases. They also recommend that since the identity of competitors online will 

differ from traditional offline rivals it is important to include key online competitors.

2 

What is the position in the product life cycle? A product’s mark-up should be decreased 

over its life cycle or when new versions are introduced.

3 

What is the price sensitivity or elasticity of a product? They suggest continuously 

experimenting to learn changes in the price sensitivity of a product.

4 

At what level is pricing set? The optimal mark-up factor should be applied at the product 

rather than category or firm level based on price testing at the product level. They also note the 

variation of conversion rates and clickthrough fees from paid search engines and aggregators at 

the category or product level, which makes it important to have  micro-  management of pricing.