Week 4

Week 4 Questions

1) A decrease in prices is inevitable in an online marketing environment. Do you agree or disagree?

I agree that it is mostly inevitable but it all depends on what market the product is in.

This is due to price transparency, customer knowledge of the product increases which will make them look for the product at the best price. This will in turn cause the products to drop durastically in price as to compete, standardisation becomes a factor here. While this then becomes a good result for the consumer as they now have low prices coming from across many different companies and the ability to pick and chose from whom they choose is becoming bigger than ever, companies feel the pinch as profits diminish as the ability to effectively compete in the market becomes harder.

Price reduction can also be good for the business as they will attract more customers and increase sales with consumers looking for a good quality product at a competitive price. Innovation is now becoming more important than ever as being the market leader is harder to achieve these days. Competition will increase also due to this.

2) Disintermediation will ultimately lead to channel conflict. Discuss.

There are 4 steps involved in a purchase. The first 'place' as it is known as in the process is Place of purchase. This first place involves being categorised as one of 5 sites

-seller controlled sites

-seller orientated sites

-neutral sites

-seller orientated sites

-seller controlled sites

Place 2 has 3 processes in it. A. Distintermediation which is the removal of an intermediary, or middleman, from a transaction or communication. B, Reintermeditation which is the emergence of new types of middlemen who act as brokers, who unite buyers and sellers, and C. Countermediation which is the creation of a new intermediary inside an established company.

Place 3 is Channel Conflicts. This occurs when a significant threat arises from the introduction of an internet channel is that while disintermediation gives the opportunity for a company to sell direct and increase profitability on products, it can also threaten existing distribution arrangements with existing partners.

The channel conflicts may be dependent on:

1. A communication channel only

2. A distribution channel to intermediaries

3. A direct sales channel to customers

4. Any combination of the above

the fourth place is that of virtual organisations

does disintermediation cause channel conflict. The answer is up to the individual but personally I think it contributes. A establsihed company may be looking at expanding into the web but while costs are cut the usual ways of operation may be disturbed and thesefore operations may be pushed inwards and conflict may occur due to this.

3) What are the five elements of promotion and what are some examples of combining online/offline promotion?

Online promotion uses communication via the internet. It may take the form of links from other sites, banner adverts or targeted emails messages. Offline promotion uses traditional media such as tv or newspaper advertising and word of mouth to promote a companys web site

1. Advertising - Interactive display ads, pay per click search advertising

2. Selling - Affiliate marketing and chat and virtual sales staff

3. Sales Promotion- Incentives, rewardsm online loyalty schemes

4. Public Relations- Online editorial, e-zines, newsletters, social networds, links and virals

5. Direct Marketing- exhibitions, word of mouth, virtual tours, sponsoring, events, sites