How the Internet Changed Pricing Decisions for Marketers

The internet brought about tremendous opportunities for all business and marketers that could utilise it, there is no doubt.

With this expansive access to seemingly unlimited knowledge, the customer also gained a lot of power. Now, more than ever, a customer can compare prices from more businesses, anywhere in the world if they wish.

Any business with a functioning website has the potential to be found and compared with the largest businesses from their market. If they have a competitive price or differentiating factor such as ‘free shipping’ they have the potential to thrive in the online marketplace.

To continue from the psychological pricing of the last post, reducing a price from $30,000 to $29,990 now serves the additional purpose of appearing in search engines. A filter can reduce a customer’s search to their relevant products and a common method is a price range, this $10 change can allow the car to fall into the search filter of ‘$25,000-$29,999’ and remain in consideration.

This is also applicable for all other promotional methods as ‘summer clearance sales’ can be completely missed unless advertised well on social media platforms. The internet has also given coupons a new life and a great means of spreading the word of companies through campaigns such as Uber’s ‘refer a friend and you will both get $10 off your next trip’.

The internet has given the customer the power of knowledge. While this can be seen a bad thing for organisations, it is also an opportunity to give the customer the knowledge that you exist. Even if your physical existence is on the other side of the planet.


Hooley, G, Piercy, N, Nicoulaud, B & Rudd, J 2017, Marketing Strategy & Competitive Positioning, 6th Ed., Pearson, Harlow, UK.


Five key Methods for Offering Promotional Prices

There are various methods to draw in customers with promotional offers. But what is best for you and your business?

There are 5 predominant methods that are used in various situations and they must be considered carefully before going out and simply offering a 20% discount.

Loss Leaders

With some risk involved, long-term rewards can be plentiful. By offering a product for sale at a loss, more customers will be drawn in to get the discounted item. This is a useful method where more offerings can be made once the individual has reached the point of sale and profit can be made when they are drawn to another product.

An example of this that occurs on a daily basis is in printers. A company like Brother can afford to sell printers at such a low price because a lifetime of ink to fill that printer will return a profit for them.


We have all seen seasonal sales. At the moment in Australia, the ‘end of summer sale’ is an extremely common occurrence in most retail shops. This serves the purpose of drawing in customers and also clearing outdated stock to make room for new shipments.

There are plenty of stores that constantly have some sort of sale. This can be a means of selling cheaper products without them appearing as a lower quality when a company can still make a profit when selling them at such a low price.

Cash Rebates

These promotional offers come in the form of cash back offers and items like coupons. The benefit of coupons is that not all are distributed are used and that another product is usually required to activate the coupon offer. Cash rebates have a much higher rate of use so must be carefully calculated to avoid operating at too much of a loss.

Reduced Interest

A competitive factor in the market now is the offer of improved finance deals in the market of larger, expensive items.
A common example I frequently see is Harvey Norman’s (furniture and electrical goods store) ’24-month interest-free’. This is a strong incentive to buy the product now, knowing they have 2 years before the product will cost them more than the actual set price as a result of paying interest on the loan.

Psychological Pricing

By reducing the product by a matter of cents or dollars, the psychological reduction can seem significant. $29,990 seems far cheaper than a $30,000 car purely because of the psychological barrier of the increase in that thousand columns. In reality, you are only saving enough to get 24 McNuggets, which in the vehicle market, is next to nothing.

This has also become a more important factor as a result of the internet which will be explained in the next blog.


Hooley, G, Piercy, N, Nicoulaud, B & Rudd, J 2017, Marketing Strategy & Competitive Positioning, 6th Ed., Pearson, Harlow, UK.

Marketing Strategy: How to Set Your Price for a Product

The difference between profit and bankruptcy. Pricing can mean everything and be the difference between success and failure.

There are a few methods commonly used by different organisations, all serve a purpose and have potential depending on the product and market the organisation operates in.

Cost Plus

This method of pricing is the simplest approach as it doesn’t require a broad understanding of customer behaviour or needs. It is simply taking the total cost of production and adding on a percentage to make the sale of the product profitable.
While having benefits with its simplicity, it fails to account the customer’s perceived value of the product. This results in the potential of losing out on a greater profit margin if the customer perceives it highly or it could result in fewer sales from being marked up too high for their perceived value.

Going Rate

This is the most common pricing method for commodities such as petrol, where price fluctuates with the price set in the broader economy. They can vary from this rate based on factors such as location.

Perceived Value

While this method requires significant levels of research and is much more complicated than the cost plus method it can result in much more accurate sales predictions.
This process involves identifying what customers would value a product through various research methods. This then allows the organisation to make the most of potential profit or reduce the risk of no sales from setting the price too high.

Sealed Bids

This is a method most commonly used in large building projects or construction and has somewhat of an auction type structure but in a race to the bottom.
The organisation funding a project would assess the suppliers competent in delivering and from those who are a bid would be put in. With the funding organisation most likely picking the supplier who can deliver at the cheapest price.
This bidding approach is a complicated process as far as analysing how to best enter the situation but can be very beneficial for an organisation to have suppliers ‘racing to the bottom’.


Hooley, G, Piercy, N, Nicoulaud, B & Rudd, J 2017, Marketing Strategy & Competitive Positioning, 6th Ed., Pearson, Harlow, UK.