Re: Pricing Strategies, was directories Re: Pricing Strategies, was directoriesThe costs of finished goods (shirts or camping equipment from L.L. Bean)
don't vary whether you buy them in the L.L. Bean outlet store, through a
catalog, or on the phone. There's no change in the shipping cost (unless
you're shipping digitized information). You still need a warehouse, order
pickers, etc.
I'm no expert in transaction costs (and I can't find my copy of Katie
Muldoon's {Catalog Marketing}) but I'd say an average transaction
cost for a catalog order is under $5. If an Internet order costs, $2 or $4
or even 50 cents, it's still not going to knock off very much of the total
cost of the goods purchased, shipping, or inventory infrastructure.
What I think the Internet offers is the opportunity for you to
peruse a catalog whether or not one was mailed to you, you threw it out,
or you can't find it, or your kids have it in their room. Unlike calling
the 800#, you'll have pictures (unless ATT ever gets a videophone to work,
and yes I believe eventually videophoning will be available through this
medium of the Internet).
(I do think this is different for publishing. Digital delivery offers
publications the opportunity to save on printing and postage. However,
most periodicals are "subsidized" by advertising and the publication cost
is niggardly anyway.)
Internet sales offer convenience and availability whether or not you're in
the U.S. and able to use L.L. Bean's 800#. That's what the USP is for
Internet sales of goods for the consumer market. (Business-to-business
marketing is probably different.)
I'm about to write a paper on "Building Your Internet Business Case" for a
series we're doing called "Capitalizing on the Internet" and it will use
the concepts of direct marketing -- test, measure, evaluate -- as the
basis of makiing sound decisions.
Richard Layman
Computer Television Network
rlayman@cap.gwu.edu