chapter 4 - effects of the digital market economy Flashcards
asymmetrical information
when one party in a transaction possesses more info than the other
digital distribution
the delivery of distribution of digital media content such as audio, videos etc
digital economy
refers to the use of information technology to create or adapt market or consumer products and services
micro marketing
advertising is focused on a small group of consumers
viral marketing
where firms cause viewers of a promotion to share it with friends creating a campaign for the firm which may end up going viral
the long tail
a business strategy that allows companies to realise significant profits buy selling low volumes of hard to fund items to many customers instead of only selling large volumes of a reduced number of popular items
2 ways price comparison websites effect firms
- increase quantity of knowledge consumers have about a good or service
- helped to reduce some of the asymmetry of info
what are the characteristics of ‘head’ items
- High impact
- popular
- few in numbers
- mainstream
what are the characteristics of the ‘long tail’ items
- low impact
- niche
- many in number
- obscure
6 advantages of physical stores
- physical environment
- passing trade possible
- service easier to offer
- physical touch
- instant gratification
- opportunities
4 disadvantages of physical stores
- footfall location
- sphere of influence is limited to travel time
- Higher numbers of staff needed
- struggle to compete on price against online
7 advantages of online firms
- global market access
- reduced fixed costs
- EOS
- reduced retail employment
- storage is cheaper
- able to expand niche market potential
- 24/7 access
6 drawbacks of online firms
- distribution costs
- return goods
- consumers cannot physically touch
- online fraud
- it access
- staff skills and knowledge needs to be higher
