Title: A pricing model for a new product sold over the internet

Authors: Salem Y. Lakhal, Souad H'Mida

Addresses: Faculty of Business Administration, University of Moncton, Moncton, NB E1A 3E9, Canada. ' Faculty of Business Administration, University of Moncton, Moncton, NB E1A 3E9, Canada

Abstract: One of the problems engendered by the internet would be an increase of the price|s sensitivity resulting from an easier, less expensive comparison. This paper proposes a pricing model based on formal propositions, based upon mathematical analysis, which would allow a firm to maximise its value-added, competitive advantages perceived by customers, and its market share for a product distributed to a global market via internet. Our framework study is based on any new product upon which the customer is able to estimate a value, which is based upon a product|s attributes compared to those of substituted or concurrent products. The conclusion is: in order to maximise simultaneously the value-added, the market share and the competitive advantages perceived by the client, the firm should share with the client the potential competitive advantage. The sharing mode depends on the demand curve of the product and on the aggressiveness of the competition.

Keywords: e-commerce; competitive advantage; product value; market share; pricing policy; electronic commerce; online shopping; internet; new product pricing; pricing model; product attributes; product features.

DOI: 10.1504/IJIMA.2005.007504

International Journal of Internet Marketing and Advertising, 2005 Vol.2 No.1/2, pp.56 - 77

Available online: 30 Jul 2005 *

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