4.8. E-commerce

  • E-commerce
    • Also known as internet marketing
    • Involves conducting commercial transactions electronically on the internet
  • Impact of e-commerce on the marketing mix
    • Product
      • Higher customization and broader product range to suit wide variety of individual and cultural preferences in the global market
      • Less packaging is required as it is not needed for added promotion
      • Detailed information and digital versions
    • Price
      • Price transparency leads to higher competition as prices can now be compared easily
        • Competition-based pricing is more likely to be adopted
      • Cuts intermediation costs
      • Near instantaneous price adjustments to suit sudden changes in demand or urgent needs
    • Place
      • 24/7 accessibility and global reach
      • Added convenience for consumers
      • Shorter and lessened channels of distribution reduces operating costs
    • Promotions
      • Quicker and cheaper communication
      • Allows interactive promotions
      • Relevant markets can be targeted easier
  • Types of e-commerce
    • B2B – Business to business
      • Caters to needs of business, transactions and distribution
      • e.g. Alibaba, ECPlaza
    • B2C – Business to consumer
      • Sells directly to customers and provides other necessary services
      • e.g. Tmall, Amazon
    • C2C – Consumer to consumer
      • Customers trade with each other for either good and/or services
      • e.g. Taobao, eBay, Craigslist
  • Benefits and costs
    • Businesses
      • Benefits
        • Relatively inexpensive when considering the total size of the potential market reach
        • “Big data” collection in order to gain more insight on consumer habits in making purchases
        • Rising general technological capabilities of consumers worldwide helps assure more potential customers
      • Costs
        • Limited ability for consumers to physically interact with the products can cause
          • Uncertainty in their decision to purchase
          • Higher levels of dissatisfaction due to unmet expectations and can lead to product returns
          • e.g. fitting and size of clothes of online clothes vendors
        • Consumer fears of internet security and fraud lead to more caution
        • Additional shipping charges as well as tax not shown in the product’s listed price can turn consumers away
    • Consumers
      • Benefits
        • Extremely convenient and accessible
        • Prices, depending on the type of product, can potentially be lower than in traditional stores
          • e.g. digital versions of media
        • Added opportunity of re-selling used and/or rare products
        • Digital products can arrive near-instantaneously when downloaded
      • Costs
        • Privacy and security issues
          • Possibility of fraud, scams, etc.
        • Support services may not be sufficient
          • Limited immediate interaction with the business
        • May not be completely accessible in some areas

Kim De Leon4.8. E-commerce

Leave a Comment: