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ention of receiving quantity discounts. Users of the merchants with more opportunities to get new
group buying websites are encouraged to spread the customers. Mcintosh (2010) also depicted that group-
word about deals they like using email, or social buying websites could be considered as one of the
networking sites like Facebook, Twitter etc. Though new social promotion strategies for merchants to
not being responsible for emergence of group buying make advertising and reach new customers.
sites, social media facilitates these sites to Group buying intermediaries seek to aggregate
communicate rapidly with an ever-increasing number dissimilar buyers (who can connect distantly and
of people. asynchronously) via internet by providing them with
price-based incentives for volume purchases. In
Concept of group buying addition, offering quantity based discounts is a
The core idea kept by online group-buying activity is simple but effective way of promotion, especially in
to “globally locate, encourage and enable” potential today’s highly competitive markets. From the sellers
buyer who tends to buy a particular goods or services viewpoint, quantity based discounts help them attract
in a certain time duration to “join forces in a buying customers, increase sales, and coordinate the
group” to achieve a specific purchase in which all the distribution channel to maximize joint profit. From
bidders would win together rather than compete the viewpoint of buyers, quantity based discounts
against each other (Van Horn et al., 2000). provide a huge incentive to form associations and
Researchers also relate group buying concept with take gain of lower prices without ordering more than
consumers’ price sensitivity and price consciousness. their actual demand. Internet based group-buying
Price sensitivity and price consciousness is one of the methods are being extensively used for both
typical characteristics of consumers. When business-to-business (B2B) and business-to consumer
consumers try their best for a lower price, those (B2C) transactions.
consumers are defined as price-sensitive (Wakefield
and Inman, 2003). In the marketing literature, price Group buying and dynamic pricing mechanisms were
consciousness is expressed as a buyer’s the keys of these businesses, but the difference in
“unwillingness” to pay a higher price for a product some other components led to various facets of these
and/or “the exclusive focus” on paying lower prices business models (Kauffman and Wang, 2001). The
(Sinha and Batra, 1999). Price sensitivity refers to the concept of online group buying commenced in USA,
extent to which individuals perceive and respond to but today it is present not only in U.S. but in other
changes or differences in prices for products or markets too. There existed some entrepreneurs who
services (Wakefield and Inman, 2003). Edelman et al. had strong confidence in group-buying auctions
(2010) believed that the discount voucher provided websites throughout the world. Group buying is
by online group-buying websites could be regarded becoming one of the popular internet business
as a marketing tool for advertising. Merchants hope models, it is considered as a novel way of creating
that by using this marketing tool more people would economies of scale (Li et al., 2004) for sellers.
be aware of the merchants’ existence and provide the
85
group buying websites are encouraged to spread the customers. Mcintosh (2010) also depicted that group-
word about deals they like using email, or social buying websites could be considered as one of the
networking sites like Facebook, Twitter etc. Though new social promotion strategies for merchants to
not being responsible for emergence of group buying make advertising and reach new customers.
sites, social media facilitates these sites to Group buying intermediaries seek to aggregate
communicate rapidly with an ever-increasing number dissimilar buyers (who can connect distantly and
of people. asynchronously) via internet by providing them with
price-based incentives for volume purchases. In
Concept of group buying addition, offering quantity based discounts is a
The core idea kept by online group-buying activity is simple but effective way of promotion, especially in
to “globally locate, encourage and enable” potential today’s highly competitive markets. From the sellers
buyer who tends to buy a particular goods or services viewpoint, quantity based discounts help them attract
in a certain time duration to “join forces in a buying customers, increase sales, and coordinate the
group” to achieve a specific purchase in which all the distribution channel to maximize joint profit. From
bidders would win together rather than compete the viewpoint of buyers, quantity based discounts
against each other (Van Horn et al., 2000). provide a huge incentive to form associations and
Researchers also relate group buying concept with take gain of lower prices without ordering more than
consumers’ price sensitivity and price consciousness. their actual demand. Internet based group-buying
Price sensitivity and price consciousness is one of the methods are being extensively used for both
typical characteristics of consumers. When business-to-business (B2B) and business-to consumer
consumers try their best for a lower price, those (B2C) transactions.
consumers are defined as price-sensitive (Wakefield
and Inman, 2003). In the marketing literature, price Group buying and dynamic pricing mechanisms were
consciousness is expressed as a buyer’s the keys of these businesses, but the difference in
“unwillingness” to pay a higher price for a product some other components led to various facets of these
and/or “the exclusive focus” on paying lower prices business models (Kauffman and Wang, 2001). The
(Sinha and Batra, 1999). Price sensitivity refers to the concept of online group buying commenced in USA,
extent to which individuals perceive and respond to but today it is present not only in U.S. but in other
changes or differences in prices for products or markets too. There existed some entrepreneurs who
services (Wakefield and Inman, 2003). Edelman et al. had strong confidence in group-buying auctions
(2010) believed that the discount voucher provided websites throughout the world. Group buying is
by online group-buying websites could be regarded becoming one of the popular internet business
as a marketing tool for advertising. Merchants hope models, it is considered as a novel way of creating
that by using this marketing tool more people would economies of scale (Li et al., 2004) for sellers.
be aware of the merchants’ existence and provide the
85
