QUESTION 1a) What experiences have you had with shopping online?
I do a lot of online shopping with StrawberryNet. StrawberryNet is the world's leading provider of discounted designer skin care, make-up, cosmetics, perfume, fragrances, cologne and hair care. It has the largest supply of products from a range of top brands. Apart from StrawberryNet, I prefer the interactive experience of physical going it to an actual store.
b) Describe a good experience.
I was informed by a friend that StrawberryNet sells discounted beauty products. I went online and saw that they sold the product that I use at a discounted rate. The process of submitting my order and paying by credit card was quick and simple. I received my products within three days instead of the estimated seven days. Furthermore, I received a ten percent discount for being a first-time customer which added to my delight.
c) What did you like about the online store you used?
I liked the prices and the diverse product range. They were quality brands at minimal costs.
d) Describe a bad experience.
I have heard a lot about eBay, so I decided to give it a try. I browsed through the products and clicked on a hair straightener that I liked to view the product specifications. I decided I didn’t like the product, so I closed out of the window. A week later I got an email from eBay saying I had been blocked from the website as I didn’t pay for my order. I didn’t even realise I had it in my checkout trolley!
e) What problems did you have with the online store?
Being a first-time user, I didn’t fully understand the process of purchasing online. Therefore, I made the mistake of ordering a product that I did not intend to purchase. There should have been some sort of introductory page to assist first-time customers.
f) What features make an online store more appealing?
The features that make an online store more appealing are page design, simplicity, colour and images suited to the product/service, a shallow site structure, highly interactive (e.g. changing the colour of the text when the mouse is placed over a text menu option), and high security for transactions and for the disclosure of personal information.
g) What features make an online store less appealing?
The features that make an online store less appealing are having too many graphics or being text intensive, poor typography, a deep site structure that can make navigation difficult, broken links and no after-support systems (e.g. telephone numbers, email address and FAQs).
h) Should we expect to see the prices of goods and services rise or fall due to the migration of consumers online?
I believe that as customers become more price transparent due to the ease of searching and comparing products and services, the prices of goods will decrease. Buyers will have the power to negotiate prices and demand higher quality.
QUESTION 2
Please discuss the following statements and indicate if you agree with them or not. Please note there may not be a right or wrong answer.
a) The dispersion of prices (that is, the spread between the lowest and highest price for a particular product) will narrow.
As search costs are lower in Internet markets and consumers are more readily informed of prices, then it can be assumed that the dispersion of prices will be narrow.
b) The importance of brand names will decrease.
I believe that importance of brand names will always remain high. Brands produce customer loyalty, and as a result, build trust. A customer that has a positive experience with a particular brand, whether it be online in in the physical world, are less price sensitive and therefore retailers are more able to charge a price premium.
c) Price competition will make all products cheaper.
Depending on the brand, retailers can charge a price premium if they have loyal consumers. However, due to the ever increasing amount of online businesses and the growing awareness of consumers in regards to price, buyers have a bargaining power.
d) Digital markets will become dominated by a handful of mega-sites, like Amazon.com.
Although mega-sites have experience and vast resources to be dominant players in the digital market, small businesses that have a niche, such as Netflix, may hold a competitive advantage as they are able to cater to a specific need that other large businesses cannot.
e) How do you think the balance of power between buyers and sellers will change?
I believe the balance of power will be with the buyers in a market due to their price transparency and low search costs for products and services. They will go with the seller with the lowest price product that is comparable with other similar products.
f) Prices are clustered online.
Depending on the brand, I believe that retailers will prices their goods/services relative to other products. Therefore, I think there will be numerous clusters for different product categories and product types.
g) Online prices are elastic (i.e. Immune to change up and down with demand).
As the Internet has served to increase market efficiency, I believe that prices are elastic to cater to demand. Retailers can alter their prices instantaneously due to the nature and ease of technology. They can use web analytics to monitor and predict future demand, and therefore adjust prices accordingly.
h) Online prices are generally transparent (the extent to which prices for a given product or service are known by buyers in the marketplace).
Prices on the Internet have become highly transparent as buyers compare a range of products and services. Prices should be clear to consumers because if they want to purchase a particular product, they must provide their credit card details. Accordingly, they would want to know how much they are being charged.
QUESTION 3
a) What types of m-commerce services does your cell phone provider offer?
I have recently purchased an iPhone4 through Vodaphone. The types of m-commerce services it provides are:
• Content purchase and delivery: E.g. The sale of ring-tones, wallpapers, and games.
• Location-based services: E.g. Local weather and GPS.
• Information services: E.g. News, sports scores, financial reports and traffic reports.
• Mobile banking: E.g. CommBank.
• Mobile browsing: E.g. Safari.
b) Which of these services do you use?
I predominantly use mobile browsing (via Safari) and mobile banking (through CommBank). It is extremely useful due to the ease and convenience of accessing important details through a mobile device.
c) What types of transactions do you perform through your cell phone or other wireless device?
I generally use CommBank through the Safari web browser on my iPhone. It is a site that I trust and I can access it anywhere at any time.
d) What types of transactions would you like to perform, but are currently unable to?
I don’t have the knowledge about other transactions that are available to me. However, due to the high cost associated with data usage and data transfer speeds, I prefer to use the Internet on my laptop when I can.
e) What is your opinion of wireless advertising/mobile marketing?
I think that mobile marketing is a good thing, and it just demonstrates that we are progressing and making use of new technology. It provides information to customers who are time and location sensitive, personalises information to promote goods and services, and generates value for all stakeholders.
QUESTION 4
Conduct your own research about ‘The Long Tail’, and state your opinion in favour or against the theory. It is also worth reading about Pareto’s Principle, the 80/20 Rule. How do the two relate to each other?
I am in favour of the theory of ‘The Long Tail’. I believe that due to the nature of digital markets, sellers have the ability to expand their catalogue, therefore being able to cater more to individual tastes and needs. For example, Professor Michael Rappa makes a good point about the catalogue differences between Blockbuster and Netflix. Although Netflix entered the industry as a relatively small online business against the industry giant Blockbuster, they were able to gain greater market share due to their extensive catalogue. They had a larger number of products available (as depicted by the ‘X’ axis) compared to just a limited number of the “popular” products that Blockbuster had (as depicted by the ‘Y’ axis). If you plot both the X and Y axis over time, you will notice the sheer length of the X axis, even if only one product in the category of each was purchased.
I believe that my example of Blockbuster relates more to Pareto’s Principle of the 80/20 rule. They stock their most popular DVDs (the top 20 percent) and disregard the remaining 80 percent. This is because they cannot physically stock all 100 percent of DVDs.
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