Technology and the Marketing Mix (Cambridge International IGCSE Business)
Introduction to E-Commerce
Spec point — "• Define and explain the concept of e-commerce • The opportunities and threats of e-commerce to business and consumers • Use of the internet and social media networks for promotion"
Introduction to e-commerce
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E-Commerce is the trade of goods and services over the internet
- Businesses can trade through their own websites
- Alternatively, platforms such as Amazon, Ebay and Etsy offer the chance for small businesses to sell their products online
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The rise of e-commerce means customers increasingly pay online using credit/debit cards with the result that contactless payment systems (such as Apple Pay and Paypal) are growing in popularity
Opportunities & Threats of E-Commerce
Opportunities and threats of e-commerce
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E-commerce can make life more convenient for customers and is a source of competitive advantage
- It also provides the potential for small businesses to reach large audiences
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However, setting up an e-store can be costly and some consumers may be concerned about security risks of purchasing online
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The opportunities and threats of e-commerce can be considered for both the business and the consumer
Opportunities and threats of e-commerce for business
| Opportunities for business | Threats to business |
|---|---|
| - Websites offer a direct and cheap promotional method for businesses - Businesses can easily make online purchases of supplies and materials from other businesses - An easy-to-use and well thought out website can encourage customers to buy more - Dynamic pricing techniques can easily be implemented so profit can be maximised during periods of high demand | - Competition comes from many businesses around the world, allowing customers to easily switch brands - Large warehouses and efficient stock control systems are essential to fulfilling online orders - E-commerce is not suitable for businesses selling personal services such as beauty services or home improvements - The lack of face-to-face contact with consumers means businesses miss out on instant and useful market research feedback |
Opportunities and threats of e-commerce for customers
| Opportunities for customers | Threats to customers |
|---|---|
| - Competition drives prices down and allows customers to easily shop around and compare prices - Electronic payment using credit and debit cards is relatively easy - E-commerce is convenient as it allows customers to shop from anywhere in the world - Customers can buy from worldwide retailers, so have increased choice | - Poor connections or technical difficulties can sometimes deter or stop customers from using the website to make purchases - Customers in low income countries may not be able to access the products due to poor infrastructure, limiting potential market size - Many consumers are concerned about identity theft or fraudulent use of credit cards if they buy goods online - Products cannot be handled or tried out before purchase, which means customers frequently return them because they are unsuitable |
Using the Internet and Social Media for Promotion
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Social media marketing targets promotional activity at users of online communities such as Facebook, Twitter Instagram and YouTube
- Businesses share interactive posts containing images, sound and video at very low cost
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Viral marketing Is a strategy where businesses use online platforms to promote their products by creating content at specific times, which can easily be shared and commented on by social media users
- E.g., During the COVID-19 pandemic, Coca-Cola and McDonald's ran campaigns that emphasised community, which aligned with the public's need for social support
Examples of social media communities
Examples of social media platforms
- Interacting with customers on social media builds relationships, drives repeat business from existing customers and attracts new customers as content is shared with other users
Evaluating the use of social media promotion
| Advantages | Disadvantages |
|---|---|
| - Billions of active users on platforms allows businesses to reach a vast audience - Deliver promotional content to specific groups based on demographics, interests and behaviours, which increases the chances of reaching the target audience - Regularly and easily create and share content, which increases brand visibility and exposure - Social media marketing does not generally require a large budget | - Effort and time is needed to create quality content, manage multiple platforms and engage with the audience - Public feedback and reviews, which can include negative comments or complaints, can be viewed by all social media users - Social media platforms frequently update their algorithms, which may affect the visibility and reach of content - Capturing users' attention amidst the large volume of competing content is challenging |
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As social media platforms evolve, businesses must also adapt their social media strategies to keep up with the latest trends
- E.g.,Instagram has been a popular platform for businesses to promote their products through influencer partnerships.
- More recently many businesses have shifted their focus to promoting their brands through short video content on platforms like TikTok
The influence of technology on sales, costs and the marketing mix
E-commerce
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Influence on sales:
- A powerful tool for expanding the customer base and increasing sales
- Amazon has enabled many businesses to sell their products online and reach a global market
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Influence on costs:
- Has helped businesses reduce overhead costs by eliminating the need for physical storefronts
- Zappos saved $10 million in operating expenses by closing its call centre and focusing on online customer service
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Influence on the marketing mix:
- Offers businesses new channels for advertising and promotion
- Shopify has customisable storefronts, email marketing tools, and search engine optimisation (SEO) capabilities
Social Media
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Influence on sales:
- Powerful tool to increase sales by building relationships with customers and generating leads
- Glossier has leveraged social media to build a loyal customer base on Instagram with 1.5 million monthly visitors
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Influence on costs:
- Cost-effective alternative to traditional advertising channels
- Fast-food chain Wendy's has increased advertising on their Twitter account, while reducing advertising expenditure in the national press
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Influence on the marketing mix:
- New channels for building brand awareness and engaging with customers has transformed promotion for many businesses
- Instagram allows businesses to share and live stream content
Digital communications
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Influence on sales:
- New channels for reaching customers and closing deals include the use of email marketing
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Influence on costs:
- A cost-effective alternative to traditional communication channels
- Increasingly WhatsApp is used to support customer service allowing employees to work from anywhere, reducing the need for call centres
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Influence on the marketing mix:
- The product element of the marketing mix has been enhanced as product information and customer service can be communicated online
- Mailchimp provides businesses with customisable email templates and sales tools
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