Sunday, 11 September 2011

Week Six

Ok so this week has been another week in the online learning environment.

a)      What experiences have you had with shopping online?
I have purchased:
·         Clothing
·         Books
·         Movies and music (itunes)

b)     Describe a good experience
A good experience I have had is the purchasing of books from Amazon. The prices are always competitive, and the delivery has always been reliable and to the date which the seller informed me the books would be arriving.  
Another good experience is purchasing music from itunes. The systems that itunes have in place makes the whole transaction so easy. From search, to payment and retrieval of the purchase, the transaction is easy.
c)      What did you like about the online store you used?
In both of the above cases, I liked the visual aspect of the sites (seeing the covers of the music or books), and the recommendations. This has meant that I have been able to find similar books and music etc that others have also been interested in, and this has lead to an addition purchase for me in alot of cases.
d)     Describe a bad experience
A bad experience I have had is purchasing jeans from America. I purchased two pairs of jeans of the exact same size and brand, when they arrived one pair fit and the other pair didn’t. The jeans were cheaper to buy from America than Australia, but to post them back and have another pair sent which did fit would have meant that they were more expensive than purchasing in Australia. If I had purchased in store – I would have been able to try the jeans on, and would not have had this issue.
e)      What problems did you have with the online store?
The problems with purchasing the jeans online was that the sizes were not reliable, which makes purchasing clothes online in general a very difficult experience. I have not purchased clothing online since, as if they do not fit, the benefit of the clothes being cheaper is lost.
f)       What features make an online store more appealing?
For me, I like easy systems, as few a processes as possible to make a purchase, and I like to see pictures of what I am buying, regardless of what it is that I intend to purchase.
g)      What features make an online store less appealing?
Confusing purchase processes, for example unable to find the checkout or where or how or too many options for payment.
The sites which operate on an infomediary business model such as we discussed last week make an online store less appealing for me. I don’t like the intrusive questions which are asked and are made mandatory before I can make my purchase. Quite often, if a site asks me too many questions which are not related to the immediate purchase, I will leave the site without buying anything.
h)     Should we expect to see the prices of goods and services rise or fall due to the migration of consumers online?
In my opinion, the prices should continue to fall due to the migration of consumers online. As the demand increases for purchasing products and services online, more merchants will enter this market. For this reason, there will be more competition among sellers, thus decreasing prices.
More merchants are also becoming aware that there are less overheads when selling online, such as no rents to pay (besides the domain or online shop) and consumers willing to pay the postage costs in most cases.

Question 2
a)      The dispersion of prices will narrow
It is hard to say whether the dispersion will narrow. I think in the short to medium term the dispersion will not narrow. As the article suggested dispersion of prices on line is not much different from those in the bricks and mortar retail market. This is largely due to the following facts:
·         Product heterogeneity.
·         Buyer trust in online sellers.
·         Efficiency.
·         Ill informed buyers.
·         Buyers concern for time effective shopping.
It is interesting to think that the article we have been reading from was written in 1999. More than a decade on I believe the principles behind the reasons for the dispersion of prices are as relevant today as they were in 99. The article spoke a lot about the fact that these E-markets were immature. This is one area that, I guess, has changed over the past decade although as the markers mature the technology they use continues to surpass them and create room for further growth and development. It is for this reason i think that the dispersion will remain the same or simular for at least the short-term. I think a huge factor in the dispersion will be the further development of the semantic web. As the web becomes smarter and search becomes more dynamic, the search costs will decline and the result may be a more informed consumer and therefore the dispersion of prices may in turn narrow.       
b)     The importance of brand names will decrease
I don’t agree with this one. Brands have been important to modern cultures for such a long time and their importance transcends the purchase process and the purchase methods. I am not saying that I agree with it but brand names influence social standing, self esteem and inturn purchases regardless of the sale medium.     
This short film is an interesting look at brand names, it is around 15min long (but very funny) and is probably rated at least M15 (frequent course language) but as you watch you will see that brands are forever burned into our psyche. It is interesting to see the characterisation of  brands and the metaphoric way that certain brands have been portrayed. well worth a watch!   

c)      Price competition will make all products cheaper
My feelings about this one are based on the answer I gave for the first part of this question. Just as the price dispersion may not necessarily narrow because of a multitude of factors, the same could be said for over all prices and wether they will go up or down. There are so many factors that come into the price that one consumer is willing to pay for any given product. I think the simple fact that the overheads for online markets are generally so much lower than those of traditional outlets that there will be a drop in the cost of shopping online in comparison to shopping in-store.    
d)     Digital markets will become dominated by a handful of mega-sites like
I think that this is a real possibility. And in some ways is already starting to happen. Sites such as iTunes, Amazon and EBay are already taking so much of the market share and I think it is because of their ability to reach the broadest cross section of users in relation to the computer literacy of those users. If we look at all of these sites they are all simple to use and have built up a trust with online shoppers. As was stated by Smith, Bailey &  Brynjolfsson (1999) a recent Xerox study that found that just 5% of the websites online receive nearly 75% of the hits.    
e)      How do you think the balance of power between buyers and sellers will change
There is an assumed answer here I think. That being, that with the increase of choice online and the huge reach a buyer now has, that the balance of power will shift to give the consumer more power, the power to ‘choice’. I think that while this is true, the basic fundamentals of marketing and customer service will still remain the drivers of success for any business. That essentially the power will remain with the sellers who market themselves well and make the consumer feel that they need what the seller is selling.       
f)       Prices are clustered online
To answer this question I just started to look on line for different products to buy and from what I have seen I don’t think that prices are clustered online. The obvious main reason for the diversity is again, the product heterogeneity. A search for flat screen televisions reveals a price range from $200 to $1000’s but there are so many different products displayed that it is difficult to draw comparisons between prices.     
g)      Online prices are elastic
I really don’t think that any price regardless of the medium is truly elastic. Demand has always been and always will be the driver for price.
h)     Online prices are generally transparent.
I don’t think that I could say prices online are transparent. This is such a massive topic to be discussed in one paragraph. The word ‘prices’ in this context is impossible to generalise in such a manner as to draw a conclusion on the transparency of such. The simple fact that the product and service range online is so extensive gives rise to a comparatively extensive answer. I do think that if the products are known and understood by consumers, that there is some degree of transparency, due to the ability to compare prices of homogeneous products.
Question 3
a)      What types of m-commerce services does your cell phone provider offer?
Telstra – the ability to check how much data I am using through my mobile phone through an application (Bigpond) on my iphone. I can also download many free things or watch free TV which Telstra has in combination with other partners (eg. Sunrise). I can check my bill and my account details. This is the extent of what Telstra – i.e. my cell phone provider – offers.  

b)     Which of these services do you use?
I regularly check how much data I use on my mobile, to ensure that I do not go over the amount allocated per month – this is about all I use through the cell phone provider.

c)      What types of transactions do you perform through your cell phone or other wireless device?
·         Internet banking
·         Ebay
·         Google maps
·         Email
·         Facebook
·         Checking weather

d)     What types of transactions would you like to perform, but are currently unable to?
I would like to be able to look at a restaurant online, check availability of bookings at the present or future time, make a booking, view the menu and wine lists, and have the option of pre-ordering food. This can be done to an extent now (bookings via email etc), but not often in real time.

e)      What is your opinion of wireless advertising/mobile marketing?
In the case of SMS marketing, I find it intrusive and annoying and I have never taken up any offer made in an SMS.
In the case of mobile marketing on your mobile. When I decide to transact through my mobile, I am generally going to do one thing and I know what it is I am after. Along with this I am busy (hence using my mobile as opposed to going to a computer), therefore leading to me not generally undertaking any offers which come up on my mobile. When I transact through my desktop computer things are much different and I sometimes take an interest in the advertising which I am shown.

Smith, M., Bailey, J. & E, Brynjolfsson (1999). Understanding Digital Markets:
Review and Assessment Paper 140

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