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PRICING STRATEGIES OF ONLINE RETAILERS: Applicability of Porter’s model of generic strategies

The United States Supreme Court made a decision in 2007 which provided a greater tolerance for vertical resale price maintenance (RPM). A vertical RPM is a minimum price maintenance agreement in which a manufacturer maintains a price floor at which distributors or retailers might sell their product. Since this vertical minimum RPM agreement, it is possible that online retailers might refrain from using their low-cost structure to underprice their competition. Continue reading