Pricing and the Internet:: Frictionless Commerce or Pricer's Paradise?

Are firms competing in a new world of frictionless e-commerce or is the Internet a pricer's paradise? It is not safe, at the moment, to say that the Internet is lowering online prices, decreasing price dispersion and increasing online customer price sensitivity. The strategic issue for firms pricing on the Net is avoiding the 'commodity trap' and taking advantage of the 'other side' of information transparency. Firms should increasingly rely on finer segmentation of their customers and resort to dynamic and smart pricing, product and price versioning and bundling. Multichannel and customer lifetime value pricing will become strategic issues.