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Unique Properties of the Internet (Promoting Market Efficiency (4 effects…
Unique Properties of the Internet
Customer Relationships & Personalisation
Personalization permits cross-selling & one-to-one marketing
Internet facilitates large quantities of data concerning customer preferences & habits
Such info can be collected online by means of cookies, programs that load onto the site visitors hard drive & monitor their internet travels.
The level of customer intimacy may result in more targeted/niched e-commerce offerings, which cater for very specific needs
Or by monitoring the stream of clicks
Internet as an Equalizer
Cost efficiencies associated with setting up a website as opposed to a traditional bricks-and-mortar places of business permit small firms with limited capital to set up a business & even trade on a global level
Social media also make info independent of formal channels
The concept of net neutrality has ensured that all providers are equal on the internet
No piece of info should be prioritized over another
Interactivity
Internet permits consumers to provide feedback to e-commerce firms, facilitating customization & customer relationship management (CRM)
Internet deviates from traditional mass media model of one-to-many communication by permitting many-to-many communication
Customer Control
Level of control is not permissible in traditional one-to-many mass media models
Perceived behavior control: where customers can selectively moderate & fine tune their exposure to info goods
Can ignore links at will & will only explore info that is of interest to them
Consumer are not satisfied to wait until a new show is aired
Customers visit a website & they determine their navigation sequence
Promoting Market Efficiency
4 effects that lead to enhanced info availability
Communication Effect: More info can be communicated in the same unit of time, reducing transaction costs
Well-known informed buyers & sellers make rational decision that lead to optimal prsices
Electronic Integration Effect: Tighter links can be established between buyers & sellers
Rests on the premise of perfect info
Electronic Brokerage Effect: Electronic market places permit buyers & sellers to congregate & compare offers
Electronic Strategic networking effect: Links & networks can be forged to foster cooperation & strategic alliances between firms in the value chain
Disintermediation
Lead to more efficient markets & many traditional intermediaries may be bypassed resulting in cost savings to end consumers
Internet provides a cost effective forum for buyers & sellers to meet
Restructuring The Value Chain
Network markets involve complex chains of relationships between firms
Horizontal markets are created when competing firms work cohesively to develop new technology
Vertical markets established when e-commerce interfaces are used to build strong partnerships & coordination between producers, middlemen & customers