Section 3 Marketing Flashcards
What is the role of marketing?
- Identify customer needs
- Satisfy customer needs
- Maintain customer loyalty
- Gain information about customers
- Anticipate changes in customer needs
- If marketing department is successful, it could enable the business to meet some of the business objectives
What are the main market changes?
- Consumer fashion and tastes change
- Change in technology
- Change in income
- Demographic changes
How can businesses respond to market change?
- Maintain customer relationships
- Improve its existing product
What is a mass market?
A mass market is where there is a very large number of sales of a product.
What is a niche market?
A niche market is a small, usually specialized, segment of a much larger market.
What are the advantages of a mass market?
- Total sales in these markets are very high
- The business can benefit from economies of scale
- Risks can be spread
- Opportunities for growth of the business due to large potential sales
What are the disadvantages of a mass market?
- High levels of competition between businesses selling similar products
- High costs of advertising and promotion
- Standardised products or services are produced
What are the advantages of a niche market?
- Small businesses may be able to sell successfully in niche markets
- The needs of consumers can be more closely focused on and therefore targeted.
What are the disadvantages of a niche market?
- Niche markets are usually relatively small and therefore have limited sales
- Usually, businesses in a niche market specialise in just one product. So if the product is no longer in demand the business will fail.
What is market segmentation?
Market segmentation is when a market is broken down into sub-groups which share similar characteristics.
What are some ways to segment a market?
- By socio-economic group
- By age
- By region/location
- By gender
- By use of the product
- By lifestyle
What is a market?
A market is the total number of customers and potential customers, as well as the sellers for that particular good or service
What is marketing?
Marketing is identifying customer wants and satisfying them profitably.
What is a customer?
A customer is a person, business or other organisation which buys goods or services from a business.
What is customer loyalty?
Customer loyalty is when existing customers continually buy products from the same business.
What are customer relationships?
Customer relationships is communicating with customers to encourage them to become loyal to the business and its products.
What is a market share?
A market share is the percentage of total market sales held by one brand or business.
What is a consumer?
A consumer buys goods or services for personal use - not to re-sell.
What is market research?
Market research is the process of gathering, analysing and interpreting information about a market.
What is the role of market research?
The role of marketing research is to try and find out answers to these questions:
- Would customers be willing to buy my product?
- What price would they be willing to pay?
- What price would they be most likely to buy my product?
- What feature of my product do customers most like or dislike?
- What type of customer would buy my product?
- What type of promotion would be effective with these types of customers?
- How strong is the competition and who are the main competing businesses?
What can market research find out?
Market research can find out:
- Quantitative data - gives us some form of numerical data
- Qualitative data - gives us non-numerical answers in the form of judgements or opinions
What are the market research methods?
- Primary research - the collection and collation of original data via direct contact with potential or existing customers
- Secondary research - uses information already been collected by others
What are the primary research methods?
- Questionnaire
- Online surveys
- Focus groups
- Interviews
What is a questionnaire?
A questionnaire is a set of questions to be answered as a means of collecting data for market research.
What are the advantages of a questionnaire?
- Detailed qualitative information can be gathered about the product or service
- Customers’ opinions about the product or service can be obtained.
- They can be carried out online
- To encourage people to fill in the questionnaire, vouchers can be offered or participants entered into a prize draw
What are the disadvantages of a questionnaire?
- If questions are not well thought out, the answers to them will not be very accurate
- Carrying out questionnaires can take a lot of time and money
- Collating and analysing the results is also time-consuming.
What are online surveys?
Online surveys require the target sample to answer a series of questions over the internet.
What are the advantages of online surveys?
- Fast, with quicker response times than other forms of survey
- Cheaper than interviews or postal questionnaires
- Easy to complete for the participant
- Data collected can be quickly presented and analysed using IT tools.
What are the disadvantages of online surveys?
- Absence of interviewer to explain open-ended questions or to ask follow-up questions to gain more detailed information
- Cannot reach potential respondents who do not have access to the internet
- Scope for fraud - some people will just answer an online survey to gain any incentives being offered and not give honest answers
What are focus groups?
Focus groups are where groups of people agree to provide information through a group discussion with a researcher present.
What are the advantages of focus groups?
- They provide detailed information about consumers’ tastes and preferences.
- Interaction between members of the group can help the business understand the reasons for people’s opinions.
- Quicker and cheaper than individual interviews.
What are the disadvantages of focus groups?
- They can be time-consuming and expensive if conducted by a specialist market research agency.
- Discussion could be biased if some people on the panel are influenced by the opinions of others.
- Can be dominated by just a few people so the researcher will need to be experienced to deal with this.
What are interviews?
Interviews involve asking individuals a series of questions over the internet.
What are the advantages of interviews?
- The interviewer is able to explain any questions that the interviewee does not understand.
- Detailed information can be gathered about what the interviewees like and dislike about the product.
What is a product-orientated business?
Businesses produce the product first and then try to find a market for it. This is riskier and less common today.
What are the disadvantages of interviews?
- The interviewer could lead the interviewee into answering in a certain way, resulting in inaccurate results due to interviewer bias
- Interviews are very time-consuming to carry out and therefore they are often an expensive way of gathering information.
What is a market-orientated business?
Businesses carry out market research to find out what customer wants before a product is developed and produced - requires businesses to have a marketing budget
What is a marketing budget?
A marketing budget is a financial plan for the marketing of a product or product range for some specified period of time.
What is sampling?
A sample is the group of people who are selected to respond to a market research exercise such as a questionnaire.
What is a random sample?
A random sample is when people are selected at random as a source of information for market research.
What is a quota sample?
A quota sample is when people are selected on the basis of certain characteristics (such as age gender or income) as a source of information for market research.
What is the need for sampling?
When deciding whom to ask to fill in a questionnaire or survey or whom to interview, a sample has to be selected. This is because it would be too expensive and time-consuming to try to include all the relevant populations in the research.
What are the advantages of secondary research?
- Cheaper way of gathering information than primary research as data collection has already been done by others.
- It can be used to help assess the total size of a market by finding out the size of the population and its age structure.
- Newspapers may carry vital economic forecasts if you are trying to assess when a recession is coming to an end and your sales are likely to increase again.
- It is usually quicker to obtain secondary data than to undertake primary research.
What are the disadvantages of secondary research?
- Data may be outdated as it may have been collected several years ago
- Data is available to all businesses including your competitors
- Data may not be completely relevant as it was not collected with the needs of one business in mind
What are the main internal sources of secondary data?
- Sales department records, pricing data, customer records, sales reports
- Opinions of distribution and public relations personnel
- Finance department
- Customer service department
What are the main external sources of secondary data?
- Government statistics
- Newspapers
- Trade association
- Market research agencies
- Online sources
What are government statistics?
Government statistics are a detailed source of general information about such things as the population and its age structure.
What are newspapers?
Newspapers may have useful articles, for example, information about the general state of the economy and whether customers are expected to increase or decrease their spending in the near future.
What is a trade association?
If there is a trade association for the industry, it often provides information for the businesses in that industry.
What are the factors influencing the accuracy of market research data?
- How carefully the sample was drawn up
- The way in which the questions in the questionnaire were phrased to ensure honest responses
- The sample selected
- The size of the sample
- The wording of the questions
- Who carried out the research
- Bias
- Age of the information
What are some ways to present data from market research?
- A table or tally chart - usually used to record the data in its original form
- A chart - shows the total figures for each piece of data or the proportion of each piece of data in terms of the total number
- A graph - used to show the relationship between the two sets of data.
What is the marketing mix?
The marketing mix is a term which is used to describe all the activities which go into marketing a product or service.
What are the 4 elements of the marketing mix?
- Product
- Price
- Promotion
- Place
What are the costs and benefits of developing new products in the marketing mix?
The product itself is the most important element in the marketing mix. Without a product that meets customer needs, the rest of the marketing mix is unlikely to be able to achieve marketing success.
What are the main types of products?
- Consumer goods
- Consumer services
- Producer goods
- Producer services
What is a consumer good?
These are goods which are bought by consumers for their own use.
What is a consumer service?
These are services that are bought by consumers for their own use.
What are producer goods?
These are goods that are produced for other businesses to use.
What are producer services?
These are services that are produced to help other businesses.
What is the role of product decisions in the marketing mix?
- The product needs to satisfy consumer wants and needs. If it does not then it will not sell.
- The product also needs to be of the right quality so consumers are willing to pay the price for it.
- The product must not be so difficult to make that the costs of production are greater than the price charged for it.
- Design of the product is very important as the quality needs to be appropriate for the brand image.
What is the USP?
The USP (unique selling point) is the special feature of a product that differentiates it from the products of competitors.
What is the brand name?
The brand name is the unique name of a product that distinguishes it from other brands.
What is brand loyalty?
Brand loyalty is when consumers keep buying the same brand again and again instead of choosing a competitor’s brand.
What is brand image?
Brand image is an image or product which gives it a personality of its own and distinguishes it from its competitors’ brands.
What is the importance of brand image?
- Developing a strong brand involves creating a unique and identifiable name, design, symbol or other feature that differentiates a product/service or company from its competitors
- Brand image can help a business to add value as customers are often willing to pay higher prices for brands they recognise and trust
What is packaging?
Packaging is the physical container or wrapping for a product. It is also used for promotion and selling appeal.
What is the role of packaging?
- Promotes the brand image
- Protects the product
- Make the product easy to use
- Labelling - legal and ethical elements
- Make the product easy to transport/stand in shops
What are the main stages of the product life cycle?
- Development
- Introduction
- Growth
- Maturity
- Saturation
- Decline
What is development in the product life cycle?
- The prototype is tested and market research is carried out before the product is launched onto the market.
- There are no sales at this time.
What is introduction in the product life cycle?
- Sales for a product grow slowly at first because most consumers are not aware of its existence.
- Informative advertising is used until the product becomes known
- Price skimming may be used if the product is a new development and there are no competitors
- No profits are made at this point as development costs have not yet been covered.
What is growth in the product life cycle?
- Sales start to grow rapidly.
- The advertising is changed to persuasive advertising to encourage brand loyalty.
- Prices are reduced a little as new competitors enter the market and try to take some customers
- Profits start to be made as the development costs are covered.
What is maturity in the product life cycle?
- Sales now increase only slowly
- Comptetition becomes intense
- Pricing strategies are now more competitive or promotional pricing
- A lot of advertising is used to maintain sales growth
- Profits are at their highest
What is saturation in the product life cycle?
- Sales reach saturation point and stabilise at their highest point
- Competition is high but there are no new competitors
- Competitive pricing is used
- A high and stable level of advertising is used
- Profits start to fall as sales are static and prices have to be reduced to be competitive
What is the decline in the product life cycle?
- Sales of the product decline as new products come along or because the product has lost its appeal
- The product is usually withdrawn from the market when sales become so low and prices have been reduced so far that it becomes unprofitable to produce the product
- Advertising is reduced then stopped
What is the product life cycle?
The product life cycle describes the stages a product will pass through.
What is an extension strategy?
An extension strategy is a way of keeping a product at the maturity stage of the life cycle and extending the cycle.
What are the main extension strategies?
- Introduce new variations e.g. child version
- Sell into new markets e.g. other countries
- Make small changes to the product e.g. colour
- Use a new advertising campaign
- Introduce new improved versions of the old product e.g. iPhone 4, 5, 6, etc.
- Sell through different channels e.g. internet
What are the main pricing methods?
- Cost-plus pricing
- Competitive pricing
- Penetration pricing
- Price skimming
- Promotional pricing
What is cost-plus pricing?
Cost-plus pricing is a pricing strategy that involves working out the average cost per unit of a product and then adding a percentage markup.
What are the benefits of cost-plus pricing?
- The method is easy to apply.
- Different profit mark-ups could be used in different markets.
- Each product earns a profit for the business.
What are the limitations of cost-plus pricing?
- Businesses could lose sales if the selling price is higher than competitors’ prices.
- A total profit will only be made if sufficient units of the product are sold.
- There is no incentive to reduce costs - any increase In costs is just passed on to the customer as a higher price.
What is competitive pricing?
Competitive pricing involves setting prices in line with your competitors’ prices or just below their prices.
What are the benefits of competitive pricing?
- Sales are likely to be high as the price is at a realistic level and the product is not under or overpriced.
- Avoids price competition, which can reduce profits for all businesses in the industry
- Often used when it is difficult for consumers to tell the difference between the products of different businesses.
What are the limitations of competitive pricing?
- If the costs of production for a business are higher than those of competitors
- A higher quality product might need to be sold at a price above competitors’ prices to give it a higher quality image
- In order to decide what this price should be, detailed research would be needed into what prices competitors are charging
What is penetration pricing?
Penetration pricing is when the price is set lower than the competitors’ prices in order to be able to enter a new market.
What are the benefits of penetration pricing?
- Often used for newly launched products to create an impact with customers
- It should ensure that sales are made and the new product enters the market successfully
- Market share should build up quickly.
What are the limitations of penetration pricing?
- The product is sold at a low price and therefore the profit per unit may be low
- Customers might get used to low prices and reject the product if the business starts to raise the price after the product’s early success.
- Might not be appropriate for a brand product with a reputation for quality.
What is price skimming?
Price skimming is where a high price is set for a new product on the market.
What are the benefits of price skimming?
- Skimming can help to establish the product as being of good quality
- High research and development costs can be rapidly recouped from the profit made on the product at the high price
- If the product is unique, a high price will lead to profits being made before competitors launch similar products
What are the limitations of price skimming?
- The high price may discourage some potential customers from buying it
- The high price and high profitability may encourage more competitors to enter the market
What is promotional pricing?
Promotional pricing is when a product is sold at a very low price for a short period of time. It would be used when a business wants to price a product at a low price for a set amount oft time to increase short-term sales.
What are the advantages of promotional pricing?
- It is useful for getting rid of unwanted inventory that will not sell
- It can help to renew interest in a product if sales are falling, for example during an economic recession
What are the limitations of promotional pricing?
- The revenue will be lower because the price of each item will be reduced
- It might lead to price competition with competitors so the business might have to reduce prices again.
What is price elastic demand?
- Price elastic demand is where consumers are very sensitive to changes in price.
- A product with an elastic demand curve would have a higher change in demand than a change in price
What is price inelastic demand?
- Price inelastic demand is where consumers are not sensitive to changes in price.
- When a product would have a lower percentage change in demand than a percentage change in price
What is the role of place decisions in the marketing mix?
- Place = Distribution
- Businesses have to decide on how to get the product to the customers
- If the product is not available to consumers in convenient locations, this may cause the consumers to look for competitors’ shops.
What is a distribution channel?
A distribution channel is the means by which a product is passed from the place of product to the customer.
What is distribution channel 1?
Producer -> Consumer
(Direct to consumer)
What are the advantages of distribution channel 1?
- It is suitable for products such as certain types of food products, which are sometimes sold straight from the farm
- There is a lower price if sold directly to consumers
- Products can be sold by mail order catalogue or the internet
What are the disadvantages of distribution channel 1?
- Impractical for most products as the consumers probably do not live near the factory and could not go there to buy the products
- Not suitable for products which cannot easily be sent by post
- Very expensive to send products by post therefore it may not be cost effective
What is distribution channel 2?
Producer -> Retailer -> Consumer
What are the advantages of distribution channel 2?
- Producer sells large quantities to retailers
- Reduced distribution costs compared to selling directly to consumers
What are the disadvantages of distribution channel 2?
- No direct contact with customers/Loss of control
- The price is often higher than ‘direct selling’ as the retailer has to cover its costs and make a profit
What is distribution channel 3?
Producer -> Wholesaler -> Retailer -> Comsumer
What are the advantages of distribution channel 3?
- Wholesaler saves storage space for small retailer and reduce storage costs
- Small retailers can purchase fresh products in small quantities from wholesaler because they have a relatively short ‘shelf life’ before they deteriorate
- Wholesaler may give credit to retail customers so they can take the goods straightaway and pay at a later date
- Wholesaler may deliver to the small retailer thus saving on transport costs
- Wholesaler can give advice to small retailers about what is selling well
What are the disadvantages of distribution channel 3?
- May be more expensive for the small shop to buy from a wholesaler than if it bought straight from the manufacturer
- Wholesaler may not have the full range of products to sell
- Takes longer for fresh produce to reach the shops
- Wholesaler may be a long way from the small shops
- The consumer price is often higher than direct selling as both the wholesaler and retailer have to cover costs and make a profit
What is distribution channel 4?
Producer -> Agent -> Wholesaler -> Retailer -> Consumer
What are the advantages of distribution channel 4?
- Manufacturers may not know the best way to sell products in other markets
- Agents will be aware of local conditions and will be in the best position to select the most effective places in which to sell
What are the disadvantages of distribution channel 4?
The producer has less control over the way the product is sold to customers
What is a retailer?
Retailers are sellers of products to the general public (consumers) that operate in outlets (shops)
What is a wholesaler?
Wholesalers are businesses that purchase large quantities of products from the producer and then break the bulk of the purchases into smaller units for resale, mainly to retailers
What is an agent?
An agent is an independent business or person that is appointed to deal with the sales and distribution of a product or range of products.
What are the main methods of distribution?
- Departments stores
- Chain stores
- Discount stores
- Superstores
- Supermarkets
- Independent retailers
- Direct sales
- Mail order
- Internet/e-commerce
How do you select the right distribution channel to use?
By answering these questions:
- What type of product is it?
- Is the product very technical?
- How often is the product purchased?
- How expensive is the product?
- How perishable is the product?
- Where are the customers located?
- Where do the competitors sell their products?
What is promotion?
Promotion is the process of passing information onto consumers about the rest of the marketing mix. The information includes the info about the product, the price, and where and how the product can be bought.
What are the aims of promotion?
- To inform people
- To introduce a new product to the market
- To compete with competitors’ product
- To create a brand image
- To increase sales
- To improve the business image
What are the two main types of promotion?
Advertising (Above the line) vs. Sales Promotion (Below the line)
What is advertising?
Advertising paid for communication with potential customers about a product to encourage them to buy it. Advertising can either be persuasive or informative.
What is informative advertising?
Informative advertising is where the emphasis of advertising or sales is to give full information about the products.
What is persuasive advertising?
Persuasive advertising is advertising or promotion which is trying to persuade the consumer that they really need the product and should buy it.
What are the steps of the advertising process?
- Set objectives
- Decide on the budget
- Create advertising campaign
- Select the media to use
- Evaluate effectiveness of campaign
What is the target audience?
The target audience refers to people who are potential buyers of a product or service.
What is the main types of advertising media that businesses can use?
- Television
- Radio
- Newspapers (national or local)
- Magazines
- Posters/billboards
- Cinema, DVD and Blu-ray discs
- Leaflets
- Internet
- Other forms of publicity
What are the advantages of television in advertising?
- The advert will go out to millions of people
- The product can be shown in a very favourable way making it look attractive
- It reaches the biggest number of consumers and can reach a target audience at times when buyers are likely to watch
What are the disadvantages of television in advertising?
- Very expensive form of advertising
- Young consumers often download films/music and may not watch many television programmes
What are the advantages of radio in advertising?
- Cheaper than television
- Usually reaches a larger audience
- Often uses a memorable song or tune so that the advert will be remembered
What are the disadvantages of radio in advertising?
- Cannot put across a visual message
- Quite expensive relative to other methods of advertising
- The advert needs to be remembered, the customer cannot look back at a hard copy at the advert
- Not as wide an audience as television
What are the advantages of newspapers in advertising?
- National newspapers are often bought by particular customers and therefore the newspaper in which the advertising is placed can be selected to target a particular group of people
- A large number of people purchase and read national newspaper
- Local newspapers are relatively cheap to place adverts in and are a cost-effective way to advertise
- Adverts are permanent and can be cut out and kept
- A lot of information can be put in the advert
What are the disadvantages of newspapers in advertising?
- Newspaper adverts are often only in black and white and are therefore not very eye catching
- Many young people do not purchase/read traditional newspaper
What are the advantages of magazines in advertising?
- Effective way to reach the target population if there are specialist magazines which cover a particular activity
- Magazines adverts are in colour and therefore can look more attractive
What are the disadvantages of magazines in advertising?
- Magazines are often only published once a month or once a week
- Advertising in magazines is relatively more expensive than newspapers
What are the advantages or posters/billboards in advertising?
- They are permanent
- Relatively cheap
- They are potentially seen by everyone who passes them
What are the disadvantages of posters/billboards in advertising?
- Can easily be missed as people go past them
- No detailed information can be included in the advert
What are the advantages of Cinema, DVD, and blu-ray discs in advertising?
- Can give visual image of the product and show the product in a positive way
- Relatively low cost
- Can be very effective if the target audience goes to see particular films
What are the disadvantages of Cinema, DVD, and blu-ray discs in advertising?
- Seen by only a limited number of people who go to watch the film or buy the DVD or Blu-ray disc
What are the advantages of leaflets in advertising?
- Cheap method of advertising
- Given out in the street to a wide range of people
- Direct mail
- Sometimes contain a money-off voucher to encourage the reader to keep the advert
- The adverts are permanent and can be kept for future reference
What are the disadvantages of leaflets in advertising?
- It may not be read
- Direct mail, also called “junk mail”, can be annoying and put the customers off buying the product
What are the advantages of the internet in advertising?
- A large of information can be placed on a website which can be seen by a vast number of people at home and abroad
- Orders can be made via the website
- Direct mail sent via email is cheaper
What are the disadvantages of the internet in advertising?
- Internet searches may not highlight the website and it could be missed
- In some countries internet access is limited
- There is a lot of competition from other websites
- Security issues may discourage the customers from buying online
What are the forms of using other forms of publicity in advertising?
- Very cheap form of advertising (delivery vehicles, T-shirts and on the sides of bags from shops, etc.)
What are the disadvantages of using other forms of publicity in advertising?
- May not be seen by customers in the target market
What is sales promotion?
- Sales promotions are incentives such as special offers or special deals aimed at consumers to achieve short-term increases in sales (below-the-line promotion)
What are the main sales promotions?
- After-sales service
- Free gifts/coupons
- Loyalty cards
- Presentations
- Competitions
- Free samples
- product placement
- BOGOF offers
What are the advantages of sales promotion?
- Can promote sales during low levels of demand
- Encourages new customers to try the product
- Encourages customer to buy your product rather than the competing brand
How do you choose the methods of promotion using the marketing budget?
It depends on:
- Cost
- Market type
- Product type
- Stage in the product life cycle
- Competitors promotions
- Legal factors
Which type of promotion should be used?
It depends on:
- The stage of the product life cycle
- The nature of the product itself
- The cultural issues involved in international marketing
- The nature of the target market
What are public relations/sponsorships in promotion?
- This refers to promoting a good image for the business and its products
- Public relations can take many forms, from sponsoring events such as football matches to publicity stunts where employees or owners of the company take part in a sponsored activity for a good cause or to raise awareness.
What is social media marketing?
Social media marketing is a form of internet marketing that involves creating and sharing content on social media networks in order to achieve marketing and branding goals.
What is viral marketing?
Viral marketing is when consumers are encouraged to share information online about the products of a business.
What is an e-commerce?
E-commerce is the online buying and selling of goods and services using computer systems linked to the internet and apps on mobile phones.
How does technology impact product in the marketing mix?
The product may be changed due to new technology in the market.
How does technology impact promotion in the marketing mix?
Promotion may mainly involve using social media sites, etc.
How does technology impact price in the marketing mix?
The internet can be used to find out consumer habits, which can be useful for dynamic pricing.
How does technology impact place in the marketing mix?
Consumers can purchase online (E-commerce)
What are the advantages of using social networking sites for marketing?
- Target specific demographic group
- Guarantees target market sees advert
- Speed in response to market changes - updated regularly
- Cheap to use
- May reach group difficult to reach any other way
What are the disadvantages of using social networking sites for marketing?
- Adverts annoying to consumers
- Have to pay for pop-ups
- Lack of control of advertising if used by others
- May be altered or used in a bad way
What are the advantages of using your own website for marketing?
- No extra cost if the website is already setup
- Control of the advertising
- Can change advert quickly and up to date
- Interactive adverts can attract more potential customers
- Can provide more information
What are the disadvantages of using your own website for marketing?
- Potential customers may not see the website
- Relies on customers finding the website
- Design costs of a website can be expensive
What are the opportunities of e-commerce for businesses?
- Websites can be used to promote the company and its products worldwide much cheaper
- Selling online makes dynamic pricing easier for businesses
- Orders can be taken over then internet and sent directly to the company warehouse
- Consumers might be encouraged to purchase more products than they intended by attractive and easy-to-follow websites
- Businesses can also make online purchases of supplies and materials from other businesses (B2B)
What are the opportunities of e-commerce for consumers?
- No need to leave to go shopping
- Comparisons between prices and products or services offered can be easily made by surfing from one website to another
- Payment by credit or debit card is very easy
- Consumers can now easily access products and services from businesses located abroad
- Consumers can buy some for prices much lower than they would be without the competition of e-commerce
- Customers can buy parts or components from manufacturers without the addition of retailers profit margin
- Packaging and transport costs have fallen due to competition on the internet
What are the threats of e-commerce for businesses?
- Competition between businesses is very high due to many businesses offering e-commerce
- Website design must be very clear, attractive and easy to operate
- Transport costs per product sold are likely to be higher than selling through traditional shops
- No face-to-face contact with customers
- Consumers in most countries have the legal right to reject goods bought through e-commerce because they haven’t seen, touched or worn the good
- A large warehouse and efficient inventory control system are essential to fulfil consumers’ orders accurately and efficiently
- E-commerce is not suitable for businesses that sell personal services
What are the threats of e-commerce for consumers?
- Consumers need access to the internet so low-income countries most likely can’t access the internet
- Computer systems failures or weak internet connections can result in frustrated consumers who can’t access websites or make purchases
- Products cannot be seen touched or tried on plus sending products is often inconvenient
- No face-to-face contact with sales staff so its difficult to find more information
- Many consumers are concerned about identity theft or fadulent use of credit cards if they buy goods online
