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Situational Analysis

• Analyse methods of determining the size and structure of markets and of segmenting particular markets.

• Evaluate strategies of promoting sales at different sales at different product types and services and identify the interrelationship to broaden company strategies.

• Evaluate the extent to which the Internet aids modern working practices.

• Demonstrate a critical awareness of the scope of e-commerce and its benefits in business and its practical and commercial limitations.?

Today the concept of business is not limited to the traditional norms and ways. With the advancement in technologies and the era of internet dominance, it is found that the internet retailing is gaining increasing trust. E-commerce is penetrating into the market and the organisations rapidly. It has quite an impact on the lives of the people and boundaries between nations, and the information systems are fading with the same pace. A wide opportunity is present to the consumers as well as the marketers. The consumers can find and buy items from overseas with just a click and companies can broaden their market scope. Also, it is found that due to the efficiency of the service, the consumers are finding it increasingly trustworthy and satisfactory to resort to e-commerce sites than by going to traditional shops. Thus, the following paragraphs will discuss the consumer segments and the strategies to utilize this trust in marketing of important brands (Reedy and Schullo, 2004).

The situational analysis is done to understand the external and internal environmental force of the e-commerce market. The external force is further divided into micro and macro environmental forces and is described through PESTLE and Porter's 5 forces respectively. This analysis provides the competitive advantage (Lee and Huh, 2010).

Political- The political force is only fostering the growth of e-commerce sites as it is cheaper and faster, and the government has little access over what is being done in the internet websites.

Economic- The cheap access to the internet, the recent recession and the trend in globalisation has roused the interest in the e-commerce site. But the downsizing of many companies and rising oil price has lead to huge shipping cost, this in turn lead to lower consumer spending (Abdallah and Maghrabi, 2009).

Social- The fast speed internet and the access of internet-enabled gadgets to a greater section of the population have increased the popularity. Also, e-commerce is found to be cost effective as it does not require travelling and hence is considered a huge benefit.

PESTLE Analysis

Technological- The largely available internet enabled phones, laptops and tabs along with the apps and latest software have made e-shopping as easy as clicking.

Legal- Apart from some Cybercrime regulations and the industry standards the legal forces are minimal in causing any effect.

Environmental- The sustainable opportunity due to the absence of construction wastage and large billing paper and energy consumption, the concept of e-commerce is totally eco-friendly.

The micro environmental forces are defining the competitive advantage.

Bargaining power of suppliers- The e-retailers depends upon many suppliers and distributors for the delivery of raw materials and finished products. Thus the companies have quite an influence on deciding the costs and improving features, but maintaining such a supply base is hard, and thus the suppliers possess much power to change their rates.

Bargaining power of customers- Since these companies have a huge international customer base, all these people are buying individually. Thus they are unable to form association or groups, and hence they wield very less power over the companies.

The threat of new entrants- There are a lot of new firms entering into the e-commerce business every day. It requires less time and finance in setting up and hence is a very interesting ground. But, the already established companies do not find any stiff competition from the new markets. Having a trademark is essential to protect one's business, and innovation is the strategy to be applied.

The threat of substitutes- The physical shops, stores and the TV shops are the substitutes that are present but they are tedious processes, and it is hard to compare the prices and hence does not provide much competition.

The threat of rivals- The competition is neck to neck among the largest selling e-retailers with each company vying to be the ultimate consumer choice. It is the strategy to provide the best rates and convenience and unique set of products to fight the completion.

The type of retailers is the brick and mortar traditional retailers, the online rivals and the indirect companies. The low entry prices and the low costs, thousands of small and medium sized enterprises are gaining access to the e-retailing business. Even large establishes physical stores have opened their internet portals to distribute and conduct transactions. Companies like Amazon and e-bay are at loggerheads with even Wal-mart gaining access. Hence, there is a need to create consumer trust on the brand to drive the consumers away from another brand (Järveläinen, 2013). This trust could be the outcome of customer satisfaction established due to excellent service or delivery or due to the lower and comparative process offered than the market. Finally consumer satisfaction and trust could be the result of the range of items and varieties available. Hence, a competitive advantage of the e-commerce sites than the physical stores are its huge product range displayed together or the ease of convenience and the attractive prices and offers. Also, attention should be paid while choosing suppliers and distributors to form long-term strategic partnerships. Further assessment of the competitors and the strengths and weaknesses will provide some added edge (Abyad, 2011).

Porter's 5 Forces

The target market is to be designed after deciding the positioning strategy. The price of the product, the competitive advantage will decide which target market is to be selected. The target market is to be selected through some steps (Alessandra, 2006).

Demographic- the age and Social Economic Class of the people who are to be targeted through the marketing strategies.

Psychographic- the mindset and the product choices of the people will decide whether they are to be targeted.

Behavioural- the consumer behaviour and brand trust developed will decide who are to be marketed through the activities (Tan and Wei, 2006).

Hence, the target market comprises of the people who have belief in the company. This belief could be fostered through the company reputation and size. Once a trust is build, the marketing activities done through a range of media vehicles will influence the consumers in making the purchase decision (Jones and Leonard, 2008).

Strategies are thus formulated which determines the ways e-commerce retails could be marketed among the specific target segment and position it in the market to gain competitive advantage.

Firstly, the retailers of groceries and miscellaneous articles could promote themselves through advertisements on the broadcast and print media. Using the social media is also effective. But the people who will buy this product cover all the available segments and hence are widely distributed and thus creating a single page is not enough. Linking the sites with different social Medias and other websites is also essential to tap the market (Collier, 2013).

The segmented retailers like apparel retailers or book stores and furniture's can target their audience through clear methods. Many social media sites like Facebook, Twitter and Pinterest provide opportunities to conduct surveys and understand the consumer behaviour and choice.

The number of clicks and visits in the page or the number of shares and reviews will deliver the popularity of the e-commerce companies. The social media provides exclusive platforms to introduce new companies and market their products. Paid advertisements of online stores are a common practice. Marketers even make use of games and quizzes to introduce offers and discounts and conduct sales promotion through the social media platforms.

As it is seen from the above studies that consumer trust is the factor that is increasingly used by web retailers as a competitive advantage against traditional retailers (Webshaper.com.my, 2015). Thus the strategies derived by web retailers to build consumer trust are:

Competitor Analysis

1. The first strategy is to create a good looking website, with smooth navigation system. It will attract customer and will perceived as costly and valuable (Cabezudo, Arranz and Cillan, 2008).

2. Using of a reputed payment gateway service, that is easily recognized by customers and is convenient will be effective in amplifying the image. E.g. PayPal, Visa.

3. The websites must get a third party security certificate or a trust mark that will convince the customers that the portal is safe and secure. The logo of the certificate like McAfee and VeriSign will serve the purpose (Nahari and Krutz, 2011).

4. Transparency should be maintained at all level. The contact information should be clearly provided with images and site maps. This way the authenticity of the company will be established.

5. There should be clear return and cancellation policy, and the price must be shown clearly.

6. All the queries and replies to the email are to be given personally. Having a content blog would be effective.

7. The companies should add customer reviews and testimonials and integrate with social media so that a link is provided with the number of person visiting the profile.

8. An authentic domain name should be bought and keywords are to be placed so that they are search engine friendly.

9. Finally the government internet regulations and policy should be followed strictly to provide the customers with the best service.

Conclusion

The internet is the most user friendly system today. Retailers and entrepreneurs are using this to their advantage to build consumer trust to gain competitive advantage. The competition is huge yet it is easy to tap the market and sale their products. The wide number of features and options make the process easy. Even the environmental forces are effective in providing the best kind of opportunities to the e-marketers. Social media platforms, apps and the search engines provide a wide berth for marketing. Hence, despite of the potent risks and threats, it is a beneficial sector to invest in.

References

Abdallah, W. and Maghrabi, A. (2009). Do multinational companies have effective transfer pricing systems of intangible assets and e‐commerce?. Int Journal of Commerce & Mgt, 19(2), pp.115-126.

Abyad, A. (2011). Consumer Trust in E-commerce. MEJB, 6(3).

Alessandra, A. (2006). Reach out to your customers. [S.l.: Electronic & Database Pub.].

Cabezudo, R., Arranz, A. and Cillan, J. (2008). Designing Effective Websites: The Moderating Role of User Internet Experience. Journal of Internet Commerce, 6(1), pp.35-60.

Collier, M. (2013). Social media commerce for dummies. Hoboken, NJ: Wiley.

Järveläinen, J. (2013). Co-created effective, agile, and trusted eServices. Berlin: Springer.

Jones, K. and Leonard, L. (2008). Trust in consumer-to-consumer electronic commerce. Information & Management, 45(2), pp.88-95.

Lee, C. and Huh, J. (2010). Website trust evaluation as cognitive information processing and the moderating role of situational involvement and e-commerce knowledge. International Journal of Internet Marketing and Advertising, 6(2), p.168.

Nahari, H. and Krutz, R. (2011). Web commerce security. Indianapolis: Wiley Pub.

Reedy, J. and Schullo, S. (2004). Electronic marketing. Mason, Ohio: Thomson/South-Western.

Tan, G. and Wei, K. (2006). An empirical study of Web browsing behaviour: Towards an effective Website design. Electronic Commerce Research and Applications, 5(4), pp.261-271.

Webshaper.com.my, (2015). Top 10 ways to Build Trust for your Online Store - E-commerce Learning Centre. [online] Available at: https://www.webshaper.com.my/learn/top-10-ways-build-trust-online.php [Accessed 7 Aug. 2015].

Cite This Work

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My Assignment Help. (2016). Analyzing Market Size And Structures, Sales Promotion Strategies, And E-commerce Benefits In Business. Retrieved from https://myassignmenthelp.com/free-samples/consumer-trust-in-e-commerce.

"Analyzing Market Size And Structures, Sales Promotion Strategies, And E-commerce Benefits In Business." My Assignment Help, 2016, https://myassignmenthelp.com/free-samples/consumer-trust-in-e-commerce.

My Assignment Help (2016) Analyzing Market Size And Structures, Sales Promotion Strategies, And E-commerce Benefits In Business [Online]. Available from: https://myassignmenthelp.com/free-samples/consumer-trust-in-e-commerce
[Accessed 24 February 2024].

My Assignment Help. 'Analyzing Market Size And Structures, Sales Promotion Strategies, And E-commerce Benefits In Business' (My Assignment Help, 2016) <https://myassignmenthelp.com/free-samples/consumer-trust-in-e-commerce> accessed 24 February 2024.

My Assignment Help. Analyzing Market Size And Structures, Sales Promotion Strategies, And E-commerce Benefits In Business [Internet]. My Assignment Help. 2016 [cited 24 February 2024]. Available from: https://myassignmenthelp.com/free-samples/consumer-trust-in-e-commerce.

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