CHAPTER 16 TECHNOLOGY & THE MARKETING MIX

E-Commerce is the use of the internet and other technologies used by businesses
to market and sell goods and services to customers. Examples of e-commerce include
online shopping, internet banking, online ticket-booking, online hotel reservations etc.

Websites like Amazon and e-Bay act as online retailers.

Online selling is favoured by producers because it is cheaper in the long-run and they
can sell products to a larger customer base/ market. However there will be increased
competition from lots of producers.

Consumers prefer online shopping because there are wider choices of detailed products
that are also cheaper and they can buy things at their own convenience 24×7. However,

1
there is no personal communication with the producer and online security issues may
occur.

However, e-commerce means an entire new type of marketing strategy is also required
– online promotions, new channel of distribution, new pricing strategies (since price
competition in e-commerce is very high and demand is very price elastic). It requires a lot
of money to set up – online websites, promotions, web developers and technicians to run
and maintain the system etc.

The internet is also used for promotion and advertising of products in the form of
paid social media ads and sponsors, pop-ups, email newsletters etc. It helps reach target
customers, is relatively cheap and helps the firm respond to market changes
quicker (since online ads can be easily altered/updated rather than billboards and TV
ads).

But it can alienate and chase customers away if they see it too frequently and find it
annoying. There is also the risk of the adverts being publicised negatively if it has
annoying or offensive content that customers quickly criticise (since content is more
easily shareable online).

Technology has had a significant impact on the way that businesses market their products
and services. The speed at which technology develops means that successful businesses
need to be flexible and adapt to change, so that they can respond quickly to customers.

Technology affects the marketing mix – product, price, place and promotion – in various
ways.

The impact of digital communication systems on the marketing mix

Digital communication can have a significant impact on the marketing mix of a business:

Products can be adapted and accessed easily in a format that is convenient to

Product
the customer.
Money saved by using digital communication can help a business to keep its
Price
prices low.
Customers can access services regardless of where they are, eg through mobile
Place
banking apps.
Businesses can email newsletters, track customer behaviours on social media
Promotion
and their website, and advertise online.

2
E-commerce can affect all four areas of the marketing mix:

Customers can download digital products (eg music tracks or e-books)

Product
immediately after payment.
Customers can compare prices across online sellers easily, so prices need to
Price
be competitive.
Selling online provides another way for customers to make a purchase at any
Place
time, wherever they are.
Promotional offers or ‘flash sales’ are easy to implement through an e-
Promotion
commerce website.

Social media can also influence all four areas of the marketing mix:

Product information can be shared using video demonstrations where

Product
appropriate.
Price Cost savings may enable a business to lower its prices.
Businesses can interact with customers around the world, regardless of
Place
location.
Social media is a cost-effective way of targeting promotions at specific groups
Promotion
of customers.

Payment methods may have a less direct impact, but they can still affect the marketing
mix of a business:

Product Online payment methods allow digital products to be purchased easily.

Any fees incurred through the use of specific payment methods need to be
Price
accounted for when setting the price of a product.
Place New payment methods have facilitated the ability to sell products online.
Businesses can promote the fact that they offer a variety of ways for a
Promotion
customer to pay, eg cash, card, PayPal.

3
Opportunities of ecommerce for businesses:

Increased Market
If you have a physical store, you are limited by the geographical area that you can service.
With an ecommerce website, the whole world is your playground.

Reduced costs
One of the most tangible positives of ecommerce is the lowered cost. Ecommerce results
in lower advertising and marketing cost, lower personnel cost by automating of checkout,
billing, payments, inventory management, and other operational processes. Further,
there is no need to invest in real estate as an ecommerce merchant does not need a
prominent physical location.

Create Targeted Communication

Using the information that a customer provides in the registration form, and by placing
cookies on the customer's computer, an ecommerce merchant can access a lot of
information about its customers purchasing habits. This, in turn, can be used to
communicate relevant messages. An example: If you are searching for a certain product
on Amazon.com, you will automatically be shown listings of other similar products. In
addition, Amazon.com may also email you about related products.

Better information
There are limitations to the amount of information that can be displayed in a physical
store. It is difficult to equip employees to respond to customers who require information
across product lines. Ecommerce websites can make additional information easily
available to customers. Most of this information is provided by vendors, and does not cost
anything to create or maintain.

Threats of Ecommerce for businesses:

Exposure to increased competition

A bigger market for ecommerce business means more competition. The business might
not be able to compete with other business in the field and might not flourish. In order to
remain competitive they might have to operate on very thin margins which many
businesses might not be able to sustain for long.

Technical challenges
There can be lack of system security, reliability or standards owing to poor
implementation of e-Commerce. Software development industry is still evolving and
keeps changing rapidly. In many countries, network bandwidth might cause an issue as

4
there is insufficient telecommunication bandwidth available. Special types of web server
or other software might be required by the vendor setting the e-commerce environment
apart from network servers which will involve huge investments.

User resistance
User may not trust the site being unknown faceless seller. Such mistrust makes it difficult
to make user switch from physical stores to online/virtual stores.

Security/ Privacy
It is always a challenge for ecommerce business to ensure security or privacy on online
transactions. Further these businesses are prone to cyber-attacks where hackers would
want to steal valuable consumer data and financial information.

Touch and feel factor

Lack of touch or feel of products during online shopping might limit the sale of certain
goods on the internet. Consumers might still be interested in touching and feeling the
product before they purchase it. This might limit the market for ecommerce businesses.

Internet access and cost

Ecommerce needs access to a safe and secure high speed internet access. Internet access
is still not cheaper and is inconvenient to use for many potential customers like one living
in remote villages.

Opportunities of ecommerce to consumers:

Convenience
An online store is open 24 hours a day. Customer can do transactions for the product or
enquiry about any product/services provided by a company anytime, anywhere from any
location.

Lower cost
Products available through ecommerce are usually lower in price as the seller does not
have to invest in maintain physical stores and high inventory. This benefit is usually passed
on to the consumers as lower prices. Further E-Commerce increases competition among
the organizations and as result organizations provides substantial discounts to customers.

Easy to locate the right product

It is no longer about pushing a shopping cart to the correct aisle, or scouting for the
desired product. On an ecommerce website, customers can click through intuitive
navigation or use a search box to immediately narrow down their product search. Some

5
websites remember customer preferences and shopping lists to facilitate repeat
purchase.

Eliminate Travel Time and Cost

It is not unusual for customers to travel long distances to reach their preferred physical
store. Ecommerce allows them to visit the same store virtually, with a few mouse clicks.

Consumers can make informed decision

There are limitations to the amount of information that can be displayed in a physical
store. It is difficult to equip employees to respond to customers who require information
across product lines. Ecommerce websites can make additional information easily
available to customers. Most of this information is provided by vendors, and does not cost
anything to create or maintain.

Further, Ecommerce facilitates comparison shopping. Consumers can browse multiple

ecommerce merchants and find the best prices.

Threats of ecommerce for consumers

Frauds
For the buyer, reliability can be an issue. We live in an era where online storefront
providers bring you the ability to set up an ecommerce store within minutes. The lowered
barriers to entry might be a great attraction to the aspiring ecommerce fraudsters. This
could lead customers to restrict their online purchases to famous ecommerce websites.
Security
When making an online purchase, you have to provide at least your credit card
information and mailing address. In many cases, ecommerce websites are able to harvest
other information about your online behavior and preferences. This could lead to credit
card fraud, or worse, identity theft.

Ecommerce Lacks That Personal Touch

Usually most of the physical retailers have personal touch with their consumers. As a
result, shopping at those retail outlets is reassuring and refreshing. This might be lacking
in online purchases.

Delay in getting the goods

In Ecommerce transactions, even with express shipping, it takes a while to get the goods
to the consumer. Sometimes the goods might be delayed due to unavailability, or
postal/courier delays. Moreover, if there is an urgency to get the product at the same
time then Ecommerce might not be the best option. For example, candy that you want to

6
eat now, a book that you want to read tonight, a birthday gift that you need this evening
and so on.

Cannot test the product before purchase

In many cases, customers want to experience the product before purchase. Ecommerce
does not allow that. If a consumer wants to buy a music system, he cannot play it online
to check if it sounds right!

Returning items
There are times when a product is to be returned to the store. Ecommerce makes it very
difficult. Usually the process is cumbersome and expensive.

Use of the internet and social networks for promotion

Recently, more and more businesses are using internet to promote their products. Also
known as Internet advertising, it involves the use of Internet to deliver promotional
marketing messages to consumers. It includes email marketing, search engine marketing,
social media marketing, many types of display advertising (including web banner
advertising), and mobile advertising.

Using social media to market your business

Social media are internet services that let you interact with others and share and create
content through online communities. Social networking websites allow individuals to
interact with one another and build relationships. When companies join the social
channels, consumers can interact with them and they can communicate with consumers
directly. That interaction feels more personal to users than traditional methods of strictly
outbound marketing & advertising.

The most popular social media website include Facebook, Twitter, YouTube, blogging
websites such as Wordpress and Tumbler.

Social media present great marketing opportunities for businesses of all sizes. Businesses
can use social media to:
 promote the name of their brand and business
 tell customers about their goods and services
 find out what customers think of their business
 attract new customers
 build stronger relationships with existing customers

7
Advantages of using social media
Social media marketing has many advantages:
 broad reach - social media can reach millions of people all around the world
 ability to target particular groups - many forms of social media (e.g. Facebook,
Foursquare) allow businesses to target specific groups, often in particular locations
 free or low-cost - many forms of social media are free for business, and paid options
are usually low-cost
 personal - social media allow you to communicate on a personal basis with individual
customers and groups
 fast – you can quickly distribute information to many people
 easy - you don't need high-level skills or computer equipment to participate in social
media. The average person with a standard computer should have no difficulty

Risks of using social media

Marketing through social media also has its risks. These include:
 Wasted time and money for little or no tangible return
 The rapid spread of the wrong kind of information about your business (e.g. incorrect
information accidentally posted by you, negative reviews posted by others)
 Legal problems if the business don't follow privacy legislation and the laws regarding
spam, copyright and other online issues