Service Design, Competition and Market Segmentation in Business Information Services with Data Updates
39 Pages Posted: 17 Jul 2006
Date Written: March 22, 2005
Abstract
Business information services are intermediaries that collect, collate, package and distribute information of value to professional users. We consider two technologies that such intermediaries may use for delivering information. First, a packaged design that uses physical media like CD-ROMs to distribute information. Second, an online service that delivers such information via the Internet or other online networks. We model a market where subscribers may choose between "self-service", where they collect and collate information directly from sources, and a third party service provider who provides either a packaged design or an online service.
Subscribers are indexed by their volume of usage for the service. In a duopoly, we show that providers with online or package technologies will serve different market segments. The package provider's limited ability to provide current information, combined with decreasing search costs in an online service will make a package provider increasingly vulnerable to being driven out of the market by the online provider.
Keywords: Industrial marketing, pricing, segmentation, competitive strategy, computers, databases, Internet, Non-cooperative games, competition, information goods
Suggested Citation: Suggested Citation