Abstract

The growth of the Internet market has been extraordinary, strategically changing the nature of business interactions (Jarvenpaa and Todd, 1996/97). Many Internet retailers have adopted competitive pricing strategy, such as discount pricing strategy to increase sales and to obtain competitive advantage (Spiller and Lohse, 1997/98; Higinbotham, 2000). Web-sites are used as a communication medium for providing business information, such as corporate, price and product information. Despite of the popularity of the Internet, there are few studies to guide a company’s decisions about the extent of its involvement in the Internet market and to identify effective Web-design factors for encouraging customers’ positive decisions. In this research, we identify factors that determine the choice of the Internet market strategy and explore critical factors for effective Web design. Major research questions to be addressed in this study include: (1) what market factors should a firm takes into account in deciding whether to sell its product solely on the Internet or make it also available in traditional market? (2) what are the factors that influence a firm’s decision to have just a Web presence as opposed to engage in e-commerce and customer service? and (3) how do the Web-design factors for discount pricing impact customers’ price perception and attention, and consequently their willingness to buy? We posit that pricing strategies would be an important factor that can have significant influences on the choice of Internet market strategy, implementation tactics, and customers’ price perception and attention.

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