Internet Selling and Regulations
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How has the Internet affected price considerations?
What regulatory considerations must be taken into account when setting a price?
How do you understand the different stages in an organization's primary product in the product life cycle?
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Solution Summary
This solution discusses how the Internet affects price considerations, the regulatory considerations that must be taken into account when setting a price and how to understand the different stages in an organization's primary product in the product life cycle. Supplemented with an exceptionally information article on distance selling regulations with multiple regulatory links included within the article.
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Please see the response attached (also presented below Posting 5111.doc), as well as one supporting article for your consideration. I hope this helps and take care.
1. How has the Internet affected price considerations?
Pricing regulations apply to the Internet, as well as face-to-face sales. For example, Yahoo has specified that merchants must agree to abide by the regulations set by state and federal governments, and has other specific selling and pricing regulations. In other words, sellers (i.e., companies) must agree to comply with pricing considerations set by state or federal governments, as well as those set by Yahoo (i.e., fair shipping costs, reasonable pricing ranges, complying with any pricing regulations that set caps on maximum mark-ups, etc.). For example, Yahoo states that the seller must engage in reasonable and advertised shipping practices. You may not charge excessive shipping fees or engage in any unreasonable or unadvertised shipping practices (http://help.yahoo.com/help/us/adcentral/productsubmit/productsubmit-02.html). In other words, merchants must agree to practice ethical marketing strategies, including fair pricing.
One author argues that the Internet affects price discrimination, which is usually regarded as desirable, since it often increases the efficiency of the economy. That is why it is frequently promoted by governments, either through explicit mandates or through indirect means. On the other hand, price discrimination often arouses strong opposition from the public there is no easy resolution to the conflict between sellers' incentives to price discriminate and buyers' resistance to such measures (i.e., Internet). Governments will likely play an increasing role in controlling pricing, although their roles will continue to be ambiguous. Sellers (i.e., Internet, etc.) are likely to rely to an even greater extent on techniques such as bundling that will allow them to ...
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