E-Commerce in a Web 2.0 World

Abstract

This paper details the usage of online communities to influence consumer price sensitivity for expensive, medium, and low cost products by formulating a research instrument, which is accomplished through an extensive literature review of price effects prevalent in the online domain. The research study further examines the impact of reference price effect, difficult comparison effect, price quality effect, and switching cost effect on consumer price sensitivity and proceeds to segment consumers into groups which demonstrate similar characteristics. Organisations benefit by identifying the strategically significant consumers in each category and target them appropriately rather than investing in a blanket promotion program. The objective is to enable organisations to identify consumers demonstrating future profit or relationship potential and devise strategies to impact price sensitivity by responding to price search intentions, improving product perceptions, improving consumer experiences, informing consumers about new schemes, and improving product perceived value. Most valuable consumers are those who depict consistent behaviour across all three product typologies. Valuable consumers identified through a customer portfolio analysis can be leveraged by hosting appropriate content in an online business community and subsequently using customers engaged through business online communities as important sources of competitive advantage. Due to these benefits, online business communities may generate more profitable sales than transactional marketing methods.