The document discusses several key aspects of business operations that are impacted by the internet, including order fulfillment, response time, inventory management, distribution channels, and profitability/productivity. Specifically, it notes that continuous inventory controls updated electronically are best for online selling, direct distribution channels without intermediaries can reduce costs, and the internet has led to both disintermediation and re-intermediation of distribution channels. Overall, the internet allows for increased productivity through streamlined supply chains and elimination of unnecessary steps, boosting profitability for businesses.
Effects of the_internet_on_consumers_and_businesses
1. EC02.01 Explain the Effects of the Internet on Businesses-A Marketing Review 1
Effects of the Internet on
Consumers and Businesses--A
Marketing Review
Before we can consider
the present and future...
We must first understand our past...
2. EC02.01 Explain the Effects of the Internet on Businesses-A Marketing Review2
Order Fulfillment:
In the relationship between buyer and seller, there
are many activities that transpire between the buyer's
selection of the product and the shipment of the
selected product to the buyer.
Selecting the merchandise
Responding to the order
Checking to make sure the order has been fulfilled
Packing
Shipping
Billing for the merchandise
Note: the above steps do not necessarily follow in that order
3. EC02.01 Explain the Effects of the Internet on Businesses-A Marketing Review3
Response Time
This refers to the amount of time it takes a
seller to respond to a customer's inquiry for
purchase or service. It also applies to any
post-purchasing responses such as
customer service.
The success of many businesses is
determined by this factor. Customers do not
like to wait nor do they want to be ignored!
4. EC02.01 Explain the Effects of the Internet on Businesses-A Marketing Review4
Inventory Management
Much of the determination of a good response time
relies on how well a seller manages the product
inventory. It also has a major bearing on a
business's profitability. Some of the factors to
consider in inventory management are:
Cost of Storage
Stock on hand
Just in Time Inventory
Tracking Inventory
5. EC02.01 Explain the Effects of the Internet on Businesses-A Marketing Review5
Stock-On-Hand
Too small-
decreases response
time
Too large-increases
storage cost
Too large-increases
cost of inventory
6. EC02.01 Explain the Effects of the Internet on Businesses-A Marketing Review6
Just-in-Time Inventory
Products
manufactured
"as needed"
Reduces
inventory costs
May reduce
response time
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Tracking Inventory
Determines ability to
respond to customer
inquiry
Determines ability to
anticipate and respond
to inventory
needs/updates
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Inventory Controls
The management of inventory requires that a
business maintain up-to-date data on the
product stock. In the case of manufacturing,
this may mean keeping track of materials in
addition to product.
This process is called "inventory control."
The inventory controls used are determined
by the type of inventory and the demand for
that inventory. Two types of inventory control
frequently used are: Manual and Continuous
9. EC02.01 Explain the Effects of the Internet on Businesses-A Marketing Review9
Manual Inventory Controls
Counting and collecting information
manually or by hand.
Is done periodically due to expense
Status of stock-on-hand may not be up-to-
date.
NOT well-suited to online selling
10. EC02.01 Explain the Effects of the Internet on Businesses-A Marketing Review10
Continuous Inventory Controls
managed with electronic database
is updated INSTANTANEOUSLY
status of stock-on-hand is current
is best choice for online selling!
Many Retail Stores Use a
Continuous System that is
updated automatically at the
checkout
11. EC02.01 Explain the Effects of the Internet on Businesses-A Marketing Review11
Distribution Channels
Distribution Channels The product has been
manufactured. What's next? How does it
reach the consumer? This is where Product
Distribution Channels are important. Product
Distribution Channels refer to all of the
steps in the movement of products or
services to the consumer. Two primary
methods of accomplishing this are:
Indirect Distributions Channels
Direct Distributions Channels
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Indirect Distribution Channels
Require an intermediary such as a retail
distributor to add value
Product cost is increased-"markup"
Travel Agents are just one type of
Intermediary
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Direct Distribution Channels
Company produces goods or services
Delivers directly to consumer
Does not use intermediary
No added cost--product better value
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Intermediation
An Intermediary is somewhat like a
"middleman" in the process of Product
Distribution. An intermediary is a business
person such as a broker, or sales
representative, who negotiate transactions
between the seller and the buyer. There are
two events that can effect the distribution
channels for a business:
Disintermediation
Re-Intermediation
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Disintermediation
The process of losing distribution channels
when they are no longer needed
Are a response to buying trends such as
online shopping.
Can cause decrease in cost of product.
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Re-Intermediation
the process of adding a level of the
distribution system.
response to trends in consumption,
technology, pop-culture, etc.
an entrepreneur's "dream"--many are
exploiting new markets made possible by
the Internet
E-Check is an example.
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Disintermediation & Re-
Intermediation Examples
Stock markets have
experienced
disintermediation by
eliminating the need for
the traditional
brokerage.
Stock Markets have
experienced re-
intermediation with the
advent of online trading.
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Profitability and Productivity
What is the number one goal of any
business?
Make money! In the world of marketing there
is a direct relationship between productivity
and earning profit. Economists say that we
are more productive now than ever due to our
advances in technology.
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Profitability & Productivity
Profitability--the ability to make a profit after
expenses are deducted from sales. Expense
variables include
facilities & utilities
equipment
inventory
distribution
wages
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Productivity
Productivity--the amount of output for each
hour of work. Increased productivity:
Deters inflation of prices and wages
Is achieved through elimination of
unnecessary steps in the supply chain
Is often attributed to increases in technology
and the growth of the Internet.
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Resources
Inventory Management
http://www.inventoryops.com/articles.htm
Inventory Controls http://www.small-business-stock-
control.com/stocktheories.htm
An e-Commerce and Marketing Dictionary of Terms
http://www.udel.edu/alex/dictionary.html
Facts for Consumers—Electronic Check Conversion
http://www.ftc.gov/bcp/conline/pubs/credit/echeck.ht
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