Drivers of price Premium in e-markets

Abstract

The drivers of the price premium or profit are identified by examining changes in the effect of price perception on customer purchases in electronic market. Product pricing has been considered to be the main factor that influences online customers' purchase decision in the E-Market (Electronic Market). Online customers enjoy low search cost with the help of Internet technology, and often practice comparison shopping. Many Internet retailers have offered untenably low prices to attract customers based on the assumption that customers would buy products from the retailer who offers the lowest price. Changes in effect of price perception on customer purchases imply changes in customer price sensitivity or the weight attached to the price perception leading to purchase. The reputation of vendor enable customers to perceive fewer risks and lower cost of disappointing purchase when buying from the vendor.