Advantages of dynamic pricing over fixed pricing - Essay Example

Advantages of dynamic pricing over fixed pricing Firms associated with E-commerce firms and their have embraced that dynamic pricing is a favorite internet shopping. This is to some extend ironical because dynamic pricing essentially practiced price discrimination where different prices charged to different customers varied for the same product or service. The advantaged groups are the internet savvy because they can manipulate algorithms that sensitize them to be price sensitive, therefore the dynamic pricing may set lower prices for them. Dynamic pricing is very advantageous as it allows sellers to use large amounts of information that directly assist them to make decision (Hartline 85). The seller therefore makes informed business decisions. The seller is also able to increase the price within the threshold of the buyer’s upper limit because of the availability of the historical data to the buyer. This makes the seller increase the profit margins. The fixed pricing is less advantageous compared to the dynamic pricing, as the price of commodities is inflexible to meet the changing demands. The sellers are not in position to maximize profits in case of buffer seasons. The dynamic pricing has limitations. For example if the potential buyer proves the track record of price sensitivity and becomes well informed of the product’s market price, he may force the dynamic pricing to offer better deal. The critical information about the buyer considered by the sellers like current inventory, supply chains, and competitors’ pricing may affect the price charged to the buyer as at that time. This incidence makes the seller realize no very little or no profits (Hartline 158). A firm practicing dynamic pricing program may sometimes offer discounts to grouped purchases due to excess inventory hence benefitting the buyer more. Dynamic pricing may make upcoming or infant business deteriorate or become insolvent due to increased unhealthy on-line competition from the established businesses. Consortia e-marketplaces These are electronic market places differentiated from other configurations. They mainly focus on the provisions of the internal efficiencies and collaborative benefits of supply to chain members (Rendell 214). Consortium e-marketplaces have many accrued benefits for the organizations that use its services. The market future for the consortia e marketplaces is to influence other organization to join the service. The benefits of participating in consortia e-marketplaces are distinct for buyers and the suppliers (Adrian 189). It improves operational efficiency for the, managerial efficacy, and strategic effectiveness for both the buyer and the supplier of any organization which is deeply integrated in its services. Therefore, it is considerably wise to endorse my organization to this service to obtain the international competition. To evaluate the exchange validity of the consortia e-market place I would analyze critically its function and analyze the operational strategy. Consortia e-marketplaces are joint ventures that operate independently from their producers and have a completely different operation with an independent CEO and management board. The consortia e-marketplace emerges typically in vertical supply chain where such situations like the purchasing side consolidates for dominant players and community supply has fragmentation or is unreliable (Adrian 289). In this situation, the consortia e-marketplace intervenes and become the reliable source for the community products. The consortia e-market place also may emerge where the existing supplier sources products from a small company. The consortia CEO selects a new market place and contracts the market for the existing supplier. This analysis shows the importance my organization may accrue for joining the consortia e-marketplaces. Enterprise resource planning ERP is a method of using computer to link the various functions like accounting, inventory control and the entire company. This method intends to facilitate information sharing and decision making on the enterprise for wide planning basis. Large manufacturers and companies have enjoyed the ERP management system since mid and late 1990s. The earliest ERP system invented consisted of a mainframe computer that integrated only the highest authority of the organization in question (Day 587). Since then most of the large companies have installed the enterprise resource planning system that has allowed them to manage the operations in a single basis but in an integrated corporate system. The ERP system has improved the efficiency in the management of most of the business entities. Encouraged by its provisions most of the business around the world have invested more than $ 300 billion during the past one decade (Chakravarty 568). The ERP system has been very helpful to the large business enterprises, as it has helped them to forecast the demand for a product then order the necessary amount of raw materials and keep track of inventory a production schedules (Rendell 249). The system also ties together varied processes in the company by compiling the data from across the company an event that would be very costly to the company. The system has eased the management work of any company by sharing data from these processes from other corporate software system (Day 596). The system has allowed the companies to replace the tangle of complex computer system with a single integrated system. The ERP subsumes the separate management systems into a single seamless system. Advantages and disadvantages of location-based e-commerce services The emergence of the internet and wireless telecommunications has paved way for the plethora data services for mobile handset users. This has been mainly successful in the e-commerce development in the location-based services. This service uses a range of positional techniques that operators can offer new services and improvements (Mehta 307). This service has numerous advantages to both the supplier and the customer. The customer gets a fast access of internet through their hand set devices. The gadget is able to determine the type of transaction for an economic value conducted through the terminal uses of wireless telecommunications. The service proliferates the use of huge digital wireless telecommunication network across the world hence offer an attractive business opportunities. It also optimizes internet standards for the constraints of wireless environment and hand held terminals that bridge the gap between the buyer and the seller. The service also generates revenue for the country through mobile marketing and the transactions involved. E-commerce location based face challenges like network connection failure in some parts of a country that hinder the communication process. Therefore, the method is not very reliable. An individual cannot also switch of the gadget in case he does not want to be disturbed (Mehta 412). There is also a challenge of Bandwidth restrictions and network topology especially in case of mountains and valleys. The mobile phones are also prone to error than the wired telecommunication. Different tariffs may differ in terms of charges hence the company may be prone to deceit from unfaithful workers. Smart cards and credit cards in changing financial future Smart card is a device embedded with integrated circuit, which is equivalent to memory chip thus only read electronically. To read the information in a smart card one flashes radio frequency interface waves. This is an international standards system commonly called plastic money. Credit card functions as a mode of payment, which the cardholder uses to pay foe goods or services. The emergence of the knowledge on the use of plastic money with respect to credit card and smart card there has been changes in the financial sector. People no longer use liquid cash to clear debts (Arnold 157). Many players are expecting the event to spread further as many developing countries are yet to adopt this. In the near future, the issue of liquid cash may never exist as we revolutionize to this emerging trend. Work cited Adrian, Coronado. Customer-Driven Supply Chains: From Glass Pipelines to Open Innovation Networks. Tokyo: Springer, 2012. Print. Arnold, Curtis. How You Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line. London: FT Press, 2008. Print. Buccafurri, Francesco. E-Commerce and Web Technologies: 11th International Conference, EC-Web 2010, Bilbao, Spain, September 1-3, 2010, Proceedings. Tokyo: Springer, 2010. Print. Chakravarty, Amiya. Managing Business Interfaces: Marketing and Engineering Issues in the Supply Chain and Internet Domains. Tokyo: Springer, 2005. Print. Day, Marc. Gower Handbook of Purchasing Management. Hampshire: Gower Publishing, Ltd., 2002. Print. Gervasi, Osvaldo. Computational Science and Its Applications - ICCSA 2005: International Conference, Singapore, May 9-12, 2005 ; Proceedings. Tokyo: Springer, 2010. Print. Hartline, Michael. Marketing Strategy. New York. Cengage Learning, 2010. Print. Khosrowpour, Mehdi. Encyclopedia of Information Science and Technology, Volumes 1-5. Hershey: Idea Group Inc (IGI), 2005. Print. Mehta, Toral. Uddi: Building Registry-Based Web Services Solutions. Prentice Hall Professional, 2003. Print. Rendell, Jim. The Skinny On Credit Cards: How to Master the Credit Card Game. Westport: RAND Media Co, 2009. Print. Read More