Retailing Business Activity - Term Paper Example

Retail Logistic Retailing is a business activity that involves selling products/services to s for their non-commercial, individual or familyuse. Normally, retailing is the last stage of the distribution process ((ICMR), Marketing Management, 2004). In services retailing, the consumer does not get ownership of a product. However, he has access to a service such as travel agents. There are other retailers who offer a combination of both goods and services. For example, a video parlour rents video CDs as well as sells them. Strategies for services retailing differ from those for retailing of goods. The service sector is growing faster than the goods and manufacturing sector globally. Service retailing can again be subdivided into rented goods services, owned goods services and non-goods services. Very often, emails are found, which are least expected, in the inbox. These are commercial mails that promote a product or a service and generally ask you to click on a specific link given in the mail. If the person is interested, then he/she will visit that site, otherwise he can just delete the mail from the inbox. This is one of the popular online marketing strategies that marketers are adopting to reach potential customers. Technology has become the predominant element in many businesses. IT has added to the capabilities of companies enabling them to set new standards in business. The power of the Internet has transformed everything. E-commerce has redefined markets, industries and the way one does business. The growth of online marketing has just begun and it is at an early stage of evolution. The Internet has not only revolutionized personal lives, but has even transformed the world of business to a great extent. Every company today, irrespective of whether it is a dotcom company or not, has a presence on the net. The Internet has become an effective medium for reaching potential customers all over the globe. The rapid increase in the growth on online marketing can be attributed to many factors. Goods, services and ideas can move across continents efficiently at the click of a mouse. Anyone can link up with anyone else, anytime and anywhere in the world. With the advent of e-commerce, the rapid growth of the Internet and online transactions taking place at all times of the day and night, today’s markets, businesses and customers never sleep. This is not only a new challenge for global businesses attempting to serve a client base that spans time zones, but also for local enterprises that can no longer afford to restrict themselves to traditional hours of doing business (Strategy formulation Forum, 2006). Online business is growing with the assistance of new powerful technologies like satellite communication, mobile telecommunications, interactive voice recognition, data mining, digital signatures, virtual private networks, and portable computing. The aim of these technologies is to benefit a firm’s online marketing efforts, in terms of both cost and value. Now-a-days, e-solutions are becoming the most sought after products around the world. Considering the interest shown by the government in the growth of the online market, e-commerce in most parts of the globe is likely to witness a significant jump over the next few years. Local innovations can bring down the cost of hardware and software will come down drastically, and will pave the way for the use of e-business even by small businesses. Mobile computing is also going to provide a major impetus to e-business. The idea of getting the Internet access through television is also appealing to consumers. If internet is available through television, rural consumer too will be able to shop online. The growth on online marketing in recent times has been phenomenal. It is, however, important recognize the factors that led to this growth. Ecommerce times, an electronic new website, conducted a research by interviewing some well known analysts about the most important factors that have enabled the growth of electronic business. The results of this study showed that the fundamental factor that led to the growth of electronic business was the invention of semiconductors for chip building, which transformed the computer industry radically. This technology has resulted in a market worth $1 trillion per annum1. Another factor was the development of secure encryption standards for safe transfer of information over the web. Electronic mail is another important factor that has contributed greatly to the growth of online marketing. Innovative technologies developed by e-commerce sites for business enhancements like Amazon’s one click is another factor that has aided in boosting online marketing2. The Internet can be used to reduce marketing costs. It should not be viewed as just another advertising medium. It can help business by streamlining operations, reducing costs, forging customer relations, and generating revenues. E-business can create value for organizations if they continuously use new technology to improve upon their marketing system and if customer expectations are continuously met. The internet can be used to build long-term relationships with customers. The Internet can be integrated into an organization’s marketing and communication plan and can be used to build brands. If it is used in combination with other distribution and media channels, it can contribute significantly in brand building. For example, in order to drive viewers to the Reebok website, the company introduced a fictional character, Terry Tate, as a representative of its website, www.rbk.com, in its commercials in the 2003 Super bowl. Within weeks, 2, 50,000 new users had registered at the website. These new users were included on Reebok’s mailing list and were regularly informed and updated about Reebok activities and products. This helped to increase the customers’ involvement with the company and its products. The Terry Tate commercial was also shown as a news item on CNBC and this immediately increased traffic on www.terrytate.reebok.com. Thus, by integrating once medium, i.e., the Super bowl event, with another medium – the website, Reebok increased the duration for which a viewer was involved with the Reebok brand, and so increased the brand’s value for the customer. Convention marketing channel partners must be appreciated. With the internet, a producer can directly reach the consumer. But he should not isolate his other channel partners. He must try to use the Internet to build business for himself and for his distributors. With the evolution of the Internet, the customer has become more knowledgeable. Companies must recognize the fact that most consumers can compare prices of products from various companies within minutes on the Internet. Therefore, the companies can either compete on price or convince the user of superior quality, but under all circumstances, they must aim to deliver what they promise. There has been a rapid penetration of online marketing in recent times. This can be attributed mainly to the increased usage of online services by people, and the greater importance being given to e-retailing and associated service by governments. The increasing popularity of the Internet with marketers, and e-commerce applications for businesses, is due to the specific advantages associated with e-retail marketing. The advantages are: E-retail marketing efforts reach a large customer base. In fact, marketing can be done on a global basis using the Internet and it enables marketers to reach potential customers around the world. E-retail marketing allows customers to shop online at their convenience from their home or workplace. E-retail marketing allows firms to provide customers with video clips and statistics thereby giving them ample scope to compare products and services with those of competitors. In online marketing, there is a direct interaction between the marketer and the customers. Thus, both the user and the seller have a closer relationship. Maintaining an e-retail store does not have traditional costs associated with maintenance of a conventional store. For instance, costs related to real estate, shelf space, interiors, insurance premiums, etc. are almost absent in online marketing. Online marketing allows marketers to count the exact number of customers visiting the site. This will allow the marketer to devise his promotional strategy accordingly. However, online marketing does have certain disadvantages. People are still not accustomed to shopping online. For instance, a grocer trying to sell his goods online may find it difficult to attract customers who want to touch and feel the goods before buying them (Precedent, 2003). Marketing of apparels, flowers and carpets have faced many difficulties in selling their products online and many have to withdraw from the business. It may take some more time for customers to get used to shopping online. Another difficulty faced by e-retail marketers is associated with the use of credit cards. Certain economies like India are still reluctant to give their credit card details for online purchasers. This is significantly hampering the growth of the e-retail business in the country. In an e-retailing setting, the efficient utilization of inventory, storage space, and labour is paramount to achieving high levels of customer service and company profits. To optimize the storage space and labour, a retailer will split the warehouse into two storage regions with different densities. One region is for picking customer orders and the other to hold reserve stock. As a consequence, the inventory system for the warehouse is a multi-item two-stage, serial system (Russell Allgor, 2004). For e-retailers, which operate with no physical stores, the efficient utilization of inventory, storage space, and labour is paramount to achieving high levels of customer service and company profits ((ICMR), Operations Management, 2003). To optimize the storage space and labour, an e-retailer splits the warehouse into two storage regions with different densities. One region is for picking customer orders and the other to hold reserve stock. Consequently, the inventory in the warehouse flows in a serial, two-stage fashion (Russell Allgor, 2004). The emergence of global on-line B2B marketplaces greatly widens the choices available to customers (Gulati R, 2000). By reducing the costs of information exchange, customer choices expand in terms of the number of sellers that they can deal with, and the countries and time zones from which they can connect with sellers. While the traditional reasons for a buyer to choose a particular seller—such as reputation, price, quality, and transportation costs—are likely to remain important influences on buyers’ choices, on-line marketplaces create interesting issues on at least two dimensions: one is seller location, especially in industries in which the possibility of digitized content and delivery exists (Zaheer, 2001). The rapid increase in growth of online marketing can be attributed to many factors. Goods, services and ideas can move across continents efficiently at the click of a mouse. As the penetration of the internet has increased significantly in the last decade, marketers are using online advertising and marketing techniques to increase their reach at the global level (ICFAI Center for Management Research, 2003). This can be attributed to the increased usage of online service by people and significant importance being given to e-retail business and associated services by governments. A firm has to design its business processes effectively in order to succeed in e-retailing. Firms can employ various methods of online advertising to expand their online business. Some of these methods are – forums, newsgroups, bulletin boards, web communities, emails and web-casting. Bibliography 1. (ICMR), I. C. (2004). Marketing Management. Hyderabad: ICMR. 2. (ICMR), I. C. (2003). Operations Management. Hyderabad: ICFAI Center for Management Research (ICMR). 3. Gulati R, G. J. (2000). Get the mix of bricks and clicks. Harvard Business Review p:107-114. 4. ICFAI Center for Management Research (ICMR). (2005). International Marketing and International Business. Hyderabad: ICFAI Center for Management Research. 5. ICFAI Center for Management Research. (2003). Business Strategy. Hyderabad: ICMR (ICFAI Center for Management Research). 6. MMC Learning. (2007, June 2). Marketing Communications. Retrieved April 2, 2008, from MMC Learning Incorporation.com: http://www.multimediamarketing.com/mkc/marketingcommunications/ 7. Precedent. (2003, March 23). Marketing Communication Strategy. Retrieved April 2, 2008, from Precedent.com: http://www.precedent.co.uk/what-we-do/strategic-thinking/marketing-communication-strategy 8. Russell Allgor, S. G. (2004). Traditional Inventory models in an E-retailing setting. Amazon.com MIT. 9. Strategy formulation Forum. (2006, June 21). Strategy Formulation. Retrieved March 19, 2008, from Encyclopedia of Management: http://www.referenceforbusiness.com/management/Sc-Str/Strategy-Formulation.html 10. Value based management.net. (n.d.). 7Ps - Extended Marketing Mi. Retrieved April 14, 2008, from Value based management.net: http://www.valuebasedmanagement.net/methods_booms_bitner_7Ps.html 11. Zaheer, S. Z. (2001). Market Microstructure in a Global B2B Network. STrategic Management Journal , 859-873. Read More