2.1.4 The digital economy Flashcards
What are the types of market information in the digital economy?
- viral marketing
- social media marketing
- price comparison websites
Explain them
Viral maketing is using social media to try increase the awarness of a brand and increase its recognition.
Price comparison websites are available to consumers and allows them to compar eprices between firms when deciding on the purchase of a good/serice. This incentives frims to be more competitive so that the price comparison websites will favour them showing the lower prices.
What is micromarketing?
Micromarketing is taregting a specific type of consumers in a niche market so that the marketing is more cost-effective. The consumer will feel as though it is a mor eprsonalised method of marketing as more time is spent and focused on the specific needs of the consumers
What is online retailing and distribution?
The method of selling goods and services over the interent (ecommerce). Removes the need of a brixton-mortar shop as a physical location is not required. This will lower their costs but also online retailing allows for a wider market to be accessed whilst oprating 24/7 offering greater opportunities to businesses. Breaks down geographical barriers and multi-distribution channel strategies may be used to service to the customer.
What impacts does a firm using online retailing have on its workers?
The increasing use of online distribution and retailing means workers must be digitally competent and have high level digital skills. The increase in use of online retailing, the more traditional jobs become redundant. Though there are still skill shortages with workers and the rapid digital change means training of workers is required so frims can keep up in markets.
What does the long tail mean?
A phrase used to depict how products with low demand can still create an effective market if given a large enough distribution channel. As ecommerce/online distribution dosnt require a physical set up stock management isnt required and can still stock on goods with low demand.
Explain the wider geographical market?
Ecommerce allows for a wider geographial target audience as no need for a physical set up in a specific location. This geographical barriers are removed and can target anyone. Although targeting new geographical areas may cause for geographical research on the markets in those areas which could icncrease costs. If effective market research done however, costs will be covered by the higher profits.
How has eccomerce affected firms?
The digital marketing economy has opened up a global
market to firms giving 24/7 exposure and convenience
Firms have been able to reduce costs due to no need
to have a physical presence in the market
This has enabled them to charge lower prices and be more competitive in the global markets.
How has ecommerce led to firm creation and destruction
Those firms who have been unable to adapt to the new digital market economy have had to exit the markets due to not recognising the change of pace in the market.
Though the digital age has caused firm creation and some existing firms to flourish as they have been able to adapt to the new market changes and have trained workers to be digitally competent.
Firms include Amazon, Netflix
