Many companies are making a transition from traditional ways of doing business to modern ways of doing business – over the internet. These companies are applying the ‘direct model’, and not always as a supplemental approach but as their only approach too sometimes (Kotler & Armstrong, 2009). Direct marketing is growing at an exponentially fast rate. According to the Direct Marketing Association, U.S. companies spent $161 billion on direct marketing last year, accounting for a whopping 48 percent of total U.S. advertising expenditures (Kotler & Armstrong, 2009).
Advantages and Disadvantages of Electronic Selling
While browsing through different websites to shop for products, I saw the benefit of seeing and comparing prices for the same kind of products made by different companies. To do this physically would be impossible, while over the internet, all it took on my part was to open different websites on different tabs and compare prices by switching these. In other words, the experience was more convenient and easier. Also, it was relatively more private, as compared to shopping physically in shops crowded with people. This is of course assuming that no cookies and relevant technologies are monitoring and tracking your internet activities.
Another good thing about these websites is that they can be accessed at any time of the day or night in the comfort of our homes and offices. Therefore, it becomes more convenient in this sense also. Another positive point to be made about these websites are that there is a huge variety of products. This is especially true for companies registered with the Halls of Malls. All these websites have an unlimited selection of goods available for us, as there are no costs of doing so for these businesses. It would be impossible for physical stores to offer such a selection. Not just this but also that the experience was immediate in the sense that interaction allows you to contact sellers directly and order right then and there. Also, the interaction between buyers and the company goes to a whole new level with websites such as Land End’s services like ‘Your Personal Model’.
Finally, another thing I noticed about these online companies is that their websites give an instant introduction to the companies themselves, and give buyers an abundance of comparative information. Good catalogs or websites often provide more information in more useful forms than the most helpful retail salesperson can (Kotler & Armstrong, 2009, pp. 448).
On the other hand, what I thought was bad about this whole experience of browsing through different e-tailer’s websites was that there was an overload of information. This ultimately leads to confusion and frustration and results in buying nothing or delaying the buying process.
Also, for customers who are conscious of privacy and about customer information being used and shared, this experience is rather an offense than a convenience. Such customers think that the reason why companies adopt such models is to collect information about them. Another reason why direct marketing may become frustrating is that it may feel like it’s being forced upon customers, with the constant push advertisements that the customers are forced to deal with.
Traditional Selling Versus Electronic Selling
There are many differences between the two kinds of approaches. The basic difference lies in the fact that there is physicality involved in a brick and mortar while there is none in an online store. This means that a traditional store is bound by physical boundaries. There are only a limited number of products that can be stored in it. While in an online store, a wide, unlimited range of products can be displayed because no warehousing or storage costs are involved. A traditional store is also easier to expand to meet customer requirements. For example, Amazon.com started as an online book store but now sells many other products (Harvey, M. J., 2009).
Another difference between the two kinds of stores is that the kind of interaction is different. In a physical store, you can personally meet the store supplier and salespeople. This means that service becomes a big aspect of the overall experience. However, in direct marketing, customers get to interact with cyber agents or different software. It is not the same as interacting with real people. Sometimes cyber agents don’t have answers that retailers have. Physical stores often become part of a community and a daily experience for customers. The concreteness and the atmosphere of such stores cannot be matched by online stores (Sisson, D, 2003).
Another important factor involved in any buying process is getting a feel for a product. For example, most automobile companies allow test drives while apparel stores have to try rooms where customers can try on clothes to see if they like the fabric, cut, or whether the color suits them or not. In other words, tactile cues can drive the decision to buy (Sisson, D, 2003). In an online store, this is not possible. However, various software such as Your Personal Model can replicate this experience, but only to an extent. Nobody has perfect information in such a case to create a model that would look just like you. Therefore, the immediacy experience can be replicated online but only to a very small extent.
Another part of a traditional buying process is arriving at a value that the customer feels is appropriate for a certain product. This is achieved by bargaining for a price that both the seller and buyer agree to. Bargaining for an item’s price is not an option at most websites.
Both these kinds of stores also differ in pricing. Online stores are changing the way pricing is done. At any point, a business may choose to simply give away a free-of-charge service that others sell. An example is Microsoft when it started to include a “free browser” with Windows software. Such businesses generate income through other means, such as by selling ads or products and services related to the giveaway item. Such strategies can help businesses attract customers (Harvey, M. J., 2002). However, in a physical store, as mentioned above, pricing could be a haphazard process (bargaining) or it may be fixed.
In conclusion, most physical stores market their products by creating an ambiance by offering good service, having an attractive infrastructure, placement of the products, offering test products and much more. Online stores can try and emulate this by implementing a variety of software. But this emulation is always only to an extent, and cannot match up to the overall experience of shopping in a physical store.
Internet as a Distribution Medium for Different Kinds of Products
Selling over the internet is more appropriate for certain kinds of goods as compared to other goods. This is because the nature of all products is different. There are some products that customers want to have a feel for because they do not know what to expect. This is true for products that are not consumed every day and are special purchases, such as a car. Customers want to get a feel for the car by taking a test drive. Or these could also be products that you frequently purchase but are distributed in such great variety that customers do not know what to anticipate. An example of such a product is apparel. You buy clothes frequently but you can never guess how they would look on you until you try them on in actuality.
So for products such as these, the internet is not an ideal medium. This is because these are the kind of products customers feel they need to try on before they can purchase them. Other products that you buy frequently and know what they are going to be like, such as groceries, are more appropriate to be bought over the internet. Another example is books and music. These are goods that need to be purchased quite frequently, but in any case, customers would not know how good a read a book is going to be or how catchy a tune would be until you purchase it. The cost of such goods is usually lesser online. For example, buying music on iTunes is relatively less costly when compared to an entire CD bought in a traditional music store.
Therefore, online sellers can reduce the risk of selling online by offering services for goods such as clothes and cars by developing interactive software that would give a feel for the product, even to an extent. Online sellers can save on costs because goods do not have to be packaged. This can be used to make goods more cost-efficient for the customer.
In conclusion, the Internet is a more appropriate medium for selling goods if customers know what to expect, if it makes the goods more cost-efficient, or if the goods have to be bought in any case and are more convenient to buy online. Physical stores are ideal for goods that need to be tried on before they can be purchased.
Analysis of Online Interactive Features/Services
Online stores cannot give customers the same experience as traditional stores because there is no concept of physicality in direct marketing. So what they must do, in order to offer customers an experience and getting them to keep coming back, is to provide services online. These services are obviously in the form of HTML as the websites themselves and never completely match up to the real experience. However, they provide online customers with some 3D interactivity so they feel like there is some concreteness to their online buying process.
Land End’s services such as Your Personal Model and Shop with a Friend are classic examples of such online services. Your Personal Model allows customers to create a model with the dimensions that customers give the software according to their body measurements. This model can then be used to try on different clothes to see if the cuts and colors will flatter the customer. This certainly gives more of a feel for the product than if such products are bought online with no such feature. This is a very effective marketing strategy for such products.
Shop with a Friend, on the other hand, is another interactive software that gives customers a shopping experience as if they were shopping with a friend. This is when either a real salesperson is assisting you online or a program is developed in a way that it gives the impression to customers of it being a real person. Such technologies are offered to customers in the form of live customer service. These are used to guide the customers and to give them a feel of the real shopping experience.
Many companies apply this model so that they can interact with their customers on a one-to-one basis and offer value-added services to them. Now, some companies provide such third-party services for online sellers. Customer support services are outsourced to such companies that greet customers, provide live customer support to all the visitors that visit the website, and in the process, they try to increase the company’s prospective and existing customers (Web Greeter, 2009). An example of such a company is Web Greeter (Web Greeter, 2009).
How and why are sales increased in the process? These services are clearly used as marketing tools. These are used to provide value-added service to the customers so that customer retention can increase and so the customers keep coming back. The customers will only come back if they thought that the service provided in an online medium was exceptional. When they are treated in a special manner, and when they feel like they are important to a company, they will buy from such a company also.
In conclusion, because these features are used as marketing tools, they greatly reduce the risk of selling online. If more companies started offering such services, maybe the line between appropriate and not-so-appropriate goods that can be sold online will disappear. These are goods that were discussed in previous sections. Apparently, Land End sells garments – goods that were labeled in the previous sections as inappropriate goods to be sold online. However, providing its customer support services allows it to sell these goods more effectively. Therefore, such services will certainly change the way these kinds of goods are sold.
Advantages and Disadvantages of Direct Marketing to Halfsed
There is a good and a bad side to everything. Just like that, if Halfsed decides to go online, there will be many advantages but at the same time, it will also experience disadvantages. Before we discuss the advantages, it is important to note the nature of the products that Halfsed markets. Halfsed is a clothing company and so sells apparel. This is a kind of product that customers would like to have a feel for before they purchase it. They would like to feel the fabric, see the colors in actuality and try on the clothes to see if the cuts flatter them. The market situation of Halfsed must also be noted. It sells via a single intermediary, a departmental store. Therefore, its distribution and market are very limited.
If Halfsed goes online, the immediate advantage it will experience will be an increase in its market. The internet is a medium that distributes goods to and reaches out to all customers the world over. It will allow Halfsed to offer its clothes to a global customer base (Isos, 2007). This will be exceptionally beneficial for this company because it sells a product that customers buy in every region and culture.
Selling goods over the internet will allow Halfsed to sell its clothes directly to the customers will eliminate middlemen. This will result in fewer problems related to having an intermediary sell your products such as conflicts of interest, higher costs, and the likes. By marketing its products directly to the customers, rather than through a single departmental store, Halfsed will also be better able to match up to its competition. It will also give the seller complete freedom, and it will decrease the distribution costs of having an intermediary.
Selling goods through the Internet will allow Halfsed to display its entire collection rather than a few selected pieces that must be shown at the departmental store. Also, updating this selection would be rather easy as compared to updating the product placements, and selection in physicality in the departmental store.
Another advantage is cost reduction (Exclusive Ecommerce, 2009). Halfsed is a relatively small clothing company. Therefore, the profits it makes are little and the fixed costs it incurs are greater. By going online, Halfsed will experience a reduction in costs and might just see increased profits. Finally, by directly marketing its clothes to the customers, Halfsed will have the advantage of allowing 24/7 access and service.
The disadvantages that Halfsed will face involve lack of experience in the area. Since Halfsed has no prior experience of marketing its clothes directly to the customers, doing it suddenly over a new medium may be difficult. The only activity that Halfsed is involved in is manufacturing clothes. The departmental store is responsible for marketing them in the form of attractive placement, window displays, store service, etc. Therefore, Halfsed has no marketing experience and might find the process overwhelming.
Another disadvantage that the company will face is of lack of an actual shopping experience for garments. As mentioned earlier, apparel is preferred to be bought only after it has been tried on or tested, and this is especially true for jeans. First of all, if Halfsed goes online, it will not be able to provide this experience to its customers. Secondly, if it decides to include customer support services on its website so that it can emulate this experience, it will have to incur additional software marketing costs or might even have to outsource these services to a third party. This would involve investing time and money in looking for a suitable third party, arranging for the perfect agreement, and maintaining a friendly working relationship with them.
Another concern that this point raises is that if Halfsed goes online, its customers will not get to try the products. This might result in a loss of existing core customers. Losing such customers can be very costly for any company in terms of lost lifetime value attained from them. Also, retaining customers is a slow and costly process, and so must be done wisely.
Recommendations
I would suggest Halfsed adopt the direct marketing model as a business approach because it currently has a very limited market. It sells designer jeans. Many other such companies sell their products online. To match up to such competition, it will also have to adopt newer ways of staying in the marketing and maintaining and ideally growing its market share.
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