Chapter Case Study FINDING THE BEST PRICE: BIZRATE VERSUS EBAY Economists point to auction Web sites such as eBay as the best means to represent the value of any given product, because the price is determined solely by the value that the consumer attaches to it. That is, the value of the item is accurately Teflected in the price paid. Thus, the prices paid for items on eBay must be some of the lowest prices available, right? Recently, various Internet search engines, such as www.shopzilla.com, www. pricegrabber.com, and www.pricescan.com, have gained popularity. Perhaps one of the most popular is www.bizrate.com Do auction Web sites or price search engines really give consumers the lowest price? To address this question, we performed searches using both Bizrate and eBay for two specific products a Sony model DSC-H9 Cyber-shot digital camera and a Yamaha home theater receiver, model RX-V861. At bizrate.com, we found nine stores that sold the Yamaha home theater receiver at prices ranging from a low of 5400 to a high of 5678. For the Sony camera, we found three stores offering it at prices from $326 to $629 At eBay, the prices for the Yamaha home theater receiver started at $419 and moved up to $599, the Sony digital camera prices ranged from 5305 to 5430 Thus, it appears from analyzing these two products alone that the lowest pric- es are available through both channels, but the high-end prices are lower at eBay eBay displays similar products together on the same page, which may explain why the range of prices found on eBay is narrower than tirat on Bizrate Bizrate eBay Product Sony digital camera Yamaha home theater Low $326 High 5629 5676 Low 5305 High 5430 5419 5599 Pricing Concepts for Establishing Value Chapter Thirteen Questions 1. How has the Internet changed price competition for well-known, branded products? 2. Would the nature of price competition on the internet be different if we had looked for commodities or esoteric luxury products? 3. Do you think this accessibility to detailed price comparisons has reduced price competition, such that all sellers price at the same level? 4. What assumptions do you tend to make about a product that seems priced very low? Very high