Marketing Explain Why and How the Internet Essay

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Marketing

Explain why and how the internet is partially reversing the fixed price concept of retailing?

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The world economy is based off the law of supply and demand. This is when producers will set the prices for various goods and services, based upon the price that consumers are willing to pay for a particular product / service. In the marketplace, this will determine how much is being charged for various good and services, as competitors will set their prices based upon the overall demand. This is significant, because when you have large amounts of demand, it will influence the price as producers can charge more for a particular product / service. Competition serves as a way of providing a range of prices for the general public. Where, different businesses are setting their prices based upon what their competitors are charging. However, over the last several decades this concept has been evolving thanks in part to globalization. What is happening is a variety of businesses have opened, that offer fixed price retailing. This is when a business will offer a large assortment of products for a sale at a discount prices such as: dollar stores. ("My Dollar Store," 2006) the internet is reversing this concept by offering a larger assortment of products that are cheaper and more of a variety. This is forcing many fixed priced retailing locations, to begin using the internet as a way that they can offer larger discounts to the public. At which point, they will offer special discounts at various traditional retail locations. The way that that the internet is changing the concept of fixed price retailing is: by forcing those businesses to offer more products to consumers through the internet. Then, provide larger discounts at select retail locations to increase the overall profitability of the store. This is changing the concept of retailing, by forcing these businesses to offer larger discounts and more products to consumers. As a result, the overall availability of low priced goods and services have increased, because of a larger supply as well as more choices that consumer have. (Gay, 2006)

How would you explain the concept of "price elasticity" to a co-worker?

TOPIC: Essay on Marketing Explain Why and How the Internet Assignment

Price elasticity measures the how responsive consumers are to changes in the price of different products or services that are offered. ("Price Elasticity of Demand," 2010) Where, it will quote in percentages the overall changes in the demand that are occurring, plotted in a linear chart. Under this concept demand is considered to be limited, meaning that the more a particular producer or distributor of product raises the price, the less demand they will see. While those producers, who lower their prices dramatically will see an increase in demand. The problem with both extremes is: that they reduce the overall profits, by not providing an effective mechanism to determine if the price is set at the most appropriate level, to maximize productivity. Where, one extreme sets the price to high, which will stifle demand, as consumers will go to cheaper competitors to purchase the products or services they need. Conversely, a producer / distributor could set their prices to low, which will fuel a sharp increase in demand. The problem with this strategy is: that they can not make any money because they have completely reduced their profit margin. In either situation, the producer / distributor could possibly face financial ruin if they do not have an accurate reading, as to where to most effectively set prices. As a result, the concept of price elasticity of demand was developed. This would allow the producers and distributors to understand the most effective level of pricing, by providing a way to determine this. What happens is: when there is a reading of 1.0, it means that the price is set perfect relative to the demand. Anything above or below this number is moving to one of the extremes, which will reduce the profit margins. ("Price Elasticity," 2010)

Explain the concept of a hybrid channel distribution system.

A hybrid channel distribution system is: when there are multiple distribution systems, used by one business, to deliver a variety of products or services to the general public. This is most commonly used by large multi-national organizations that have operations in numerous countries around the globe. (Simona, 2006) for example, Coca Cola sells their products in numerous markets around the world. The problem is: that delivering these products to the different markets can be challenging. This is because many countries have various trade barriers and a culture of the way business is conducted, within a particular country. To effectively deliver these different products to consumers around the globe, the company will use a hybrid channel distribution system. Where, within each country are a series of local bottlers / distributors, who will deliver a variety of products to different markets. In some, cases they will take the product and adapt to the market that it will be sold in. Where, the bottler may include cultural symbols and language, to provide an effective way for consumers in a particular market, to identify with the product. As a result, the company will have a centralized system for working with the various bottlers / distributors; but will then augment this strategy for each specific market / region that the various products will be sold. (Grashw, 2009)

In designing a marketing channel system, the marketer must understand the service output levels desired by target customers. Channels provide five service outputs. List and briefly describe each of these outputs. List an example for each level.

The five service outputs, used in a marketing channel system would include: bulk breaking, waiting time, variety, customer service and information provision. (Kotler & Lane, 2009) Bulk breaking is: when you are allowing the customer to buy the desired quantity of the product or service that they require. Where, large bundles of particular product are broken up and they are sold as one individual unit. This causes the price to increase, because distributors can charge more and justify the cost of bringing this product to their location. An example of this would be: when a retailer purchases a large bulk amount of razor blades for a deep discount. To increase their overall profit margins, they will sell each pack individually and raise the price. Waiting time is how long it takes from the point that the customer needs the item to the time that it is received by the retailer. Most businesses will try to maintain high inventory levels of those items that could be purchased through what is known as impulsive buying. The shorter the time frame that the customer can receive the item, the less planning and more spontaneous decision they will make about purchasing it. A good example of this can be seen when someone is paying for something at the grocery store and they purchase a candy bar. The fact that they did not have to plan to purchase it, reflects how readily available it was, resulting in an impulsive sale. Variety is when the business has a large assortment of products to choose from. This helps to give the consumer more choices, lower prices and better quality. A good example of this would be when someone is trying to decide if what kind of sandwich they would like to order at McDonalds. In this case, the large assortment of: sandwiches at different prices are variety, giving the customer more of a choice. Customer service is when you are improving the overall customer experience. A good example of this would be when Wal Mart has courtesy clerks welcoming customers as they are coming into the store. The idea is to provide better service to customers than competitors. This allows each customer to have a more personal shopping experience. Information provision is when you are educating customers about the various characteristics of a particular product. A good example of this would be: when someone is looking at purchasing a new car. The salesman's job is: to ensure that the customer has all of the information about the vehicle and to answer any questions. (Kotler & Lane, 2009)

Most companies set annual quota. Quotas can be on dollar sales, unit volume, margin, selling effort or activity and product type. Compensation is often tied to the degree of quota attainment. What problems does the setting of quotas present to both the company and to the sales representative?

The biggest problem with setting quotas is that all or nothing attitude is taken. This means that some people will be concerned about meeting the quotas by any means necessary. (Gay, 2006) This is problematic, because when an organization begins to stress meeting the quotas at all costs, many individuals will do exactly that. What happens is: the overall amounts of pressure become so extreme, that many employees are placed in the uncomfortable position of meeting their quotas or being fired. This forces many who normally not engage in any ethical violations to begin to cut corners… [END OF PREVIEW] . . . READ MORE

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