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Advantages of dynamic pricing over fixed pricing - Essay Example

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Firms associated with E-commerce firms and their clients have embraced that dynamic pricing is a favorite internet shopping.This is to some extend ironical because dynamic pricing essentially practiced price discrimination …
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Advantages of dynamic pricing over fixed pricing
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Download file to see previous pages 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 ...Download file to see next pages Read More
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