1. A decrease in prices is inevitable in an online marketing environment. Do you agree or disagree?
I agree that a decrease in prices is inevitable in an online marketing environment. The Internet is changing pricing for ever (Chaffey & Smith, 2008). Offline marketing activities such as television and magazine/newspaper ads can be very costly. Not only do you need to pay for the actual advertising space, but you also need to pay for the production costs (http://web-2-you.com/). Therefore more and more companies are turning to online marketing.
Many online companies enjoy lower margins by cutting out the middleman. However, pricing is under pressure through continual trends towards commoditisation (new products and services entering the market) and price transparency (both the buyer and the seller know the price). Online pricing gives customers more power which leads to further decrease in prices (Chaffey & Smith, 2008). They are easily able to compare prices at the click of a button.
2. Disintermediation will ultimately lead to channel conflict. Discuss.
According to Chaffey & Smith, disintermediation can be defined as "the removal of intermediaries such as distributors or brokers that formerly linked a company to its customers." By cutting out the middleman, companies can sell direct to their customers and also cut the costs of doing business. However, this can lead to channel conflict. For example, the direct contact component of a sales department may have to compete with other sales channels, such as a telephone, online and mail campaigns. To prevent channel conflict, partners sometimes enact agreements such as deal registration (http://searchitchannel.techtarget.com/).
3. What are the five elements of promotion and what are some examples of combining online/offline promotion?
Advertising
Online: Interactive display ads
Offline: Ad in magazine/newspaper
Public relations
Online: Online editorials/social networks
Offline: "Real life" venues such as conferences and events
Word of mouth
Online: Viral/email a friend
Offline: Speak to a friend in person
Sales promotion
Online: Online loyalty schemes
Offline: In-store rewards such as discount on next purchase
Packaging
Online: Virtual tours/real packaging is displayed online
Offline: View packaging in catalogue/store
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