Economics Theme 2 1.4

Question 1

What is the digital economy

Answer 1

One collective term for all economic transactions that happen on the internet

Question 2

What are examples of the digital economy

Answer 2

Social media, Sms messages, online advertising, Search engine optimisation, Viral marketing

Question 3

What is E-commerce

Answer 3

E commerce is when buyers and sellers meet to trade in a virtual market place e.g internet

Question 4

How does the digital economy market information

Answer 4

Through viral marketing, social media and price comparison websites

Question 5

What are the use of price comparison websites

Answer 5

Makes it easier for customers to compare rices thereby forcing businesses to be more competitive due to ease they can access comparative information
e.g go compare, trivago

Question 6

What is the use of viral marketing

Answer 6

It is using social media to encourage the spread of promotional activities and increases brand awareness
Uses blogs and forums

Question 7

What is the use of social media

Answer 7

The use of virtual communities to communicate with actual and potential customers

Question 8

What is micro marketing

Answer 8

Micro marketing is a marketing strategy focusing on advertising on a small group of consumers within a niche market

Question 9

Why do they use micro marketing

Answer 9

They are specifically targeted so that the marketing is more cost effective
The customer experiences a more personalised level of marketing making them look as though they understand the needs and wants of the customer
Leads to greater success allowing them to add value to the product therefore a higher price can be charged

Question 10

What is the e-commerce

Answer 10

The process of buying and selling goods and services over the internet

Question 11

Why is online retailing prefered (customer)

Answer 11

can shop 24/7
Breaks down geographical barriers

Question 12

Why is online retailing prefered (firm)

Answer 12

Lowers overhead costs
Allows access to the wider market

Question 13

What is online distribution

Answer 13

The distribution of media content digitally opposed to physically
News,music, firms etc can be accessed via internet without a copy

Question 14

How does having digital skills help with recruitment

Answer 14

As firms become more digitised traditional jobs are being made redundant

Question 15

What is the long tail

Answer 15

The long tail is a theory from Chris Anderson. He suggested that a product with low demand can still create an effective market given a large enough distribution channel.
Due to digitalisation they are able to supply a range of products they wouldn’t be able to do otherwise

Question 16

What are the benefits of the digital economy

Answer 16

The digital economy allows businesses to be able to stock thousands of niche products. As physical stores only stock products with high demand.
Digital economy allows them to target wider geographical markets as they dont require physical presence

Question 17

What is the impact of the digital marketing econmy

Answer 17

The digital econmy has opened up global markets with 24/7 exposure
Firms were able to reduce cost due to not having to have physical presence in the market
Able to charge lower prices

Question 18

How has the digitalisation led to firm destruction

Answer 18

Because other buisnesses have been slow to adapt and not recognised the market requirements e.g rise of netflix and the fall in blockbuster