1.Critically examine the globe – hex strategies for the Indian government.
2. Comment on this statement. “Often neither the least expensive strategy nor the
most expensive may be the most productive strategy”.
3. Comment on this statement from a retailing perspective “Today’s works are
slowly altering their work”. Place environment by their behaviour.
4. Will the time come when most consumer purchases are made with self-scanner?
Explain yours answer
1. Critically examine the globe – hex strategies for the Indian government.
THE STRATEGIES FOR THE INDIAN GOVERNMENT--BEING
*proactive and planned participation
*export led growth strategy
*safeguard against unreasonable import
*import of raw material
2. Comment on this statement. “Often neither the least expensive strategy nor the
most expensive may be the most productive strategy”.
FOR THE MOST PRODUCTIVE STRATEGY
Developing Organizational Objectives and Formulating Strategies
Objectives are what organizations want to accomplish—the end results they want to achieve—in a given time frame. In addition to being accomplished within a certain time frame, objectives should be realistic (achievable) and be measurable, if possible. “To increase sales by 2 percent by the end of the year” is an example of an objective an organization might develop. You have probably set objectives for yourself that you want to achieve in a given time frame. For example, your objectives might be to maintain a certain grade point average and get work experience or an internship before you graduate.
Objectives help guide and motivate a company’s employees and give its managers reference points for evaluating the firm’s marketing actions. Although many organizations publish their mission statements, most for-profit companies do not publish their objectives. Accomplishments at each level of the organization have helped PepsiCo meet its corporate objectives over the course of the past few years. PepsiCo’s business units (divisions) have increased the number of their facilities to grow their brands and enter new markets. PepsiCo’s beverage and snack units have gained market share by developing healthier products and products that are more convenient to use.
A firm’s marketing objectives should be consistent with the company’s objectives at other levels, such as the corporate level and business level. An example of a marketing objective for PepsiCo might be “to increase by 4 percent the market share of Gatorade by the end of the year.” The way firms analyze their different divisions or businesses will be discussed later in the chapter.
Strategies are the means to the ends, or what a firm’s going to do to meet its objectives. Successful strategies help organizations establish and maintain a competitive advantage that competitors cannot imitate easily. PepsiCo attempts to sustain its competitive advantage by constantly developing new products and innovations, including “mega brands,” which are eighteen individual brands that generate over $1 billion in sales each.
Firms often use multiple strategies to accomplish their objectives and capitalize on marketing opportunities. For example, in addition to pursuing a low cost strategy (selling products inexpensively), Walmart has simultaneously pursued a strategy of opening new stores rapidly around the world. Many companies develop marketing strategies as part of their general, overall business plans. Other companies prepare separate marketing plans.
A marketing plan is a strategic plan at the functional level that provides a firm’s marketing group with direction. It is a road map that improves the firm’s understanding of its competitive situation. The marketing plan also helps the firm allocate resources and divvy up the tasks that employees need to do for the company to meet its objectives. The different components of marketing plans will be discussed throughout the book and then discussed together at the end of the book. Next, let’s take a look at the different types of basic market strategies firms pursue before they develop their marketing plans.
Figure 2.12 Product and Market Entry Strategies
The different types of product and market entry strategies a firm can pursue in order to meet their objectives.
Market penetration strategies focus on increasing a firm’s sales of its existing products to its existing customers. Companies often offer consumers special promotions or low prices to increase their usage and encourage them to buy products. When Frito-Lay distributes money-saving coupons to customers or offers them discounts to buy multiple packages of snacks, the company is utilizing a penetration strategy. The Campbell Soup Company gets consumers to buy more soup by providing easy recipes using their soup as an ingredient for cooking quick meals.
Product development strategies involve creating new products for existing customers. A new product can be a totally new innovation, an improved product, or a product with enhanced value, such as one with a new feature. Cell phones that allow consumers to charge purchases with the phone or take pictures are examples of a product with enhanced value. A new product can also be one that comes in different variations, such as new flavors, colors, and sizes. Mountain Dew Voltage, introduced by PepsiCo Americas Beverages in 2009, is an example. Keep in mind, however, that what works for one company might not work for another. For example, just after Starbucks announced it was cutting back on the number of its lunch offerings, Dunkin’ Donuts announced it was adding items to its lunch menu.
Market development strategies focus on entering new markets with existing products. For example, during the recent economic downturn, manufacturers of high-end coffee makers began targeting customers who go to coffee shops. The manufacturers are hoping to develop the market for their products by making sure consumers know they can brew a great cup of coffee at home for a fraction of what they spend at Starbucks.
New markets can include any new groups of customers such as different age groups, new geographic areas, or international markets. Many companies, including PepsiCo and Hyundai, have entered—and been successful in—rapidly emerging markets such as Russia, China, and India. shows, there are different ways, or strategies, by which firms can enter international markets. The strategies vary in the amount of risk, control, and investment that firms face. Firms can simply export, or sell their products to buyers abroad, which is the least risky and least expensive method but also offers the least amount of control. Many small firms export their products to foreign markets.
Firms can also license, or sell the right to use some aspect of their production processes, trademarks, or patents to individuals or firms in foreign markets. Licensing is a popular strategy, but firms must figure out how to protect their interests if the licensee decides to open its own business and void the license agreement. The French luggage and handbag maker Louis Vuitton faced this problem when it entered China. Competitors started illegally putting the Louis Vuitton logo on different products, which cut into Louis Vuitton’s profits.
The front of a KFC franchise in Asia may be much larger than KFC stores in the United States. Selling franchises is a popular way for firms to enter foreign markets.
Franchising is a longer-term form of licensing that is extremely popular with service firms, such as restaurants like McDonald’s and Subway, hotels like Holiday Inn Express, and cleaning companies like Stanley Steamer. Franchisees pay a fee for the franchise and must adhere to certain standards; however, they benefit from the advertising and brand recognition the franchising company provides.
Contract manufacturing allows companies to hire manufacturers to produce their products in another country. The manufacturers are provided specifications for the products, which are then manufactured and sold on behalf of the company that contracted the manufacturing. Contract manufacturing may provide tax incentives and may be more profitable than manufacturing the products in the home country. Examples of products in which contract manufacturing is often used include cell phones, computers, and printers.
Joint ventures combine the expertise and investments of two companies and help companies enter foreign markets. The firms in each country share the risks as well as the investments. Some countries such as China often require companies to form a joint venture with a domestic firm in order to enter the market. After entering the market in a partnership with a domestic firm and becoming established in the market, some firms may decide to separate from their partner and become their own business. Fuji Xerox Co., Ltd., is an example of a joint venture between the Japanese Fuji Photo Film Co. and the American document management company Xerox. Another example of a joint venture is Sony Ericsson. The venture combined the Japanese company Sony’s electronic expertise with the Swedish company Ericsson’s telecommunication expertise.
Direct investment (owning a company or facility overseas) is another way to enter a foreign market. For example, In Bev, the Dutch maker of Beck’s beer, was able to capture market share in the United States by purchasing St. Louis-based Anheuser-Busch. A direct investment strategy involves the most risk and investment but offers the most control. Other companies such as advertising agencies may want to invest and develop their own businesses directly in international markets rather than trying to do so via other companies.
Figure 2.14 Market Entry Methods
Diversification strategies involve entering new markets with new products or doing something outside a firm’s current businesses. Firms that have little experience with different markets or different products often diversify their product lines by acquiring other companies. Diversification can be profitable, but it can also be risky if a company does not have the expertise or resources it needs to successfully implement the strategy. Warner Music Group’s purchase of the concert promoter Bulldog Entertainment is an example of a diversification attempt that failed.
The strategic planning process includes a company’s mission (purpose), objectives (end results desired), and strategies (means). Sometimes the different SBUs of a firm have different mission statements. A firm’s objectives should be realistic (achievable) and measurable. The different product market strategies firms pursue include market penetration, product development, market development, and diversification.
3. Comment on this statement from a retailing perspective “Today’s works are
slowly altering their work”. Place environment by their behaviour.
Consumers and Changing Retail Markets
• The Changing Retail Market Structure
• The Increasing Use of Technology in Stores
• The Internet and the Consumer Marketplace
• Technology's Role in Changing Financial Services
• The Growing Presence and Changing Forms of Advertising
Most expenditures by consumers for goods and services occur through retail transactions. This retail spending accounts for between 50 and 55 percent of households' consumption (mortgage and rent payments are not considered to be retail expenditures), while retail trade represented 6 percent ofGDP in 2001 . Of the many factors that have transformed retail markets over the past two decades, one of the most significant is technological change.
the changing retail market structure,
the increasing use of technology in stores,
the effect of the Internet on how consumers get information about and buy goods and services,
the manner in which technology has changed how people access and spend their money, and
the growing presence of marketing in society.
2.1 The Changing Retail Market Structure
The retail market structure has changed considerably in recent years. A number of large retailers have established a significant presence, bringing with them new approaches to doing business, such as use of the "big box" retail format, everyday low pricing, and advanced logistic systems. Several retailers are transforming themselves to compete successfully with these large newcomers, while in some sectors, local independent retailers have disappeared altogether. In the short term, consumers have benefited from the lower prices and added convenience associated with the changed retail market structure, but, at the same time, the retail environment has become more homogenous and concentrated.
The importance of small businesses to consumers' interaction with the marketplace
A number of positive characteristics are associated with small and medium-sized businesses, such as the capacity to respond quickly to changing consumer needs given flat management structures and flexibility and more personalized service for customers. During the course of past consultations on the Competition Act, it has been underscored that "the protection of small and medium-sizedbusinesses is considered one of the derivative benefits of maintaining and encouraging competition, rather than a separate goal of competition legislation" . From a consumer perspective, it is also believed, however, that transacting with small businesses "exposes the consumer to many challenges and potential market failures in such areas as choice, complaints and redress, information, consumer education, selling practices, repairs and warranties and protecting their consumer interest in general" (
The big box store concept has resulted in changes all along the retail industry's supply chain, from manufacturers, subcontractors, and distributors, to related sectors such as packaging. Given the scale of the contracts offered by big box retailers, the latter have been in a position to put significant pressure on suppliers to innovate as a means to remain competitive. Industry observers have noted how some manufacturers' relationships with big box retailers have lead to a modified, streamlined supply chain:
In the past, manufacturers created complex product lines, and the costs associated with such variety were simply passed down through the supply chain — to the wholesaler, then to the retailer, and finally to the customer. Big box retailers, however, have squeezed the inefficiencies out of the system by occupying the leading edge of supply-chain automation. They often require a dramatic restructuring of the way manufacturers supply products to market
Beyond automation-based efficiencies, there are other ways in which large retailers are affecting relationships with suppliers:
Retailers in many industries have become bigger in sizes (sic) (e.g. chain stores, big box stores)… Retailers have also started to develop in-house brands so that they do not completely rely on upstream manufacturers' supplies. These changes may have helped retailers increase their bargaining power over suppliers. The retailers with bargaining power are also likely to impose vertical restraints on manufacturers. Examples of these restraints include slotting allowances, listing fees, up front payments, exclusive supply, refusal to stock (or delisting), minimum supply levels, and minimum advertising requirements. The question is whether these restraints are efficiency enhancing and/or anti competitive.
In summary, while large retailers' buying power can lower prices, it may also influence what products find their way to store shelves and, therefore, may have longer-term impacts on consumer choice.
Consumer clearly enjoy many of the features of big box stores, including added convenience, longer hours of operation, one-stop shopping, and free and ample parking. Public opinion data from 2003 indicated that a majority of Canadians find that big box retailers provide convenient one-stop shopping (72 percent) and lower prices (68 percent).
But there are disadvantages to big box stores, including crowds, traffic congestion and, particularly for older consumers, very large spaces that can be exhausting and disorienting to navigate. Perhaps the greatest perceived shortcoming of big box stores is a lack of personal service.
Greater concentration in the retail market
With the growing presence of large retailers over the last decade, Canada has witnessed increasing concentration in some retail sub-sectors, as measured by the market share of the top four corporations. In fact, between 1998 and 2001, the three most highly concentrated retail sub-sectorsin Canada (food, prescription drugs and general merchandising)all became more concentrated .While comparative statistics are hard to find, there is some evidence to indicate that parts of Canada's retail sector are more concentrated than comparable sub-sectors in some of our closest trading partners. For example, in 1998 the largest supermarket chain in Canada had a market share of 31.1 percent (, far exceeding the market share of the largest food retailer in the U.S. (5.8 percent) and Great Britain (15.4 percent) (Hughes 1996). Interestingly, the two least concentrated retail sub-sectors in Canada (household furnishings and appliances, and apparel) became even less concentrated between 1998 and 2001.
While data about store closures nationwide do not exist, the impact of selected big box stores on the retail structure in the Greater Toronto Area (GTA) has been analyzed. Between 1993 and 2002, the closure rate for smaller stores located within five kilometres of a selected big box retailer ranged from 26 to 55 percent.
An earlier study in the GTA found that in the first years of competition, the closure rate in a retail category was high as the weakest street retailers were forced out of business and that even retailers several kilometres away experienced small losses ins ales in some sectors . Canadian consumers are well aware of these impacts: a public opinion poll in 2003 found that 74 percent of Canadians believed that the arrival of big box stores resulted in fewer independent local stores.
The implications of a more concentrated retail sector extend to the street level, with more homogeneity and less diversity, as independent retailer shave traditionally provided "a social, cultural and economic focus for their surrounding neighbourhoods" . A case can be made that big box stores may result in a less community-oriented retail sector. For example, the GTA study reported a noticeable impact of independent store closures on the "quality" of the shopping experience in the streets of Toronto. While the situation might be mitigated somewhat by a shift to restaurants, high-endcoffee shops, and personal and business services outlets, independent clothing and hardware stores generally made way for low-end dollar stores and doughnut shops .
The CSCA also notes that power centres (and power nodes), which are becoming more common in suburban areas, are less community-oriented than traditional shopping centres, many of which are located in older urban or suburban areas and are struggling to compete with the new formats. In general, shopping centres traditionally offer a wide range of community-oriented services, such as medical clinics, post offices, licensing offices and libraries, and local events, such as art fairs and antique shows. Power centres (and power nodes) do not commonly offer these services.
Small businesses are particularly worried about the market dominance of large retail competitors and their potential ability to dictate terms in the supply chain. However:
[for] consumers, the tough negotiating stance with suppliers may mean better prices at the stores. In today's competitive environment, with fewer but larger players, being aggressive with suppliers in negotiating… discounts means retailers can pass those savings along to consumers .
To date, evidence suggests that the current level of concentration has not harmed consumers in any significant way. In analyzing the closure rates of smaller stores (as a result of competition from big box retailers) in the GTA, CSCA concludes:
The statements that can be made about competition are somewhat complex. There are fewer banners playing in these spaces. But most of these large players are aggressively competing in terms of what they carry, the prices they charge, the hours of business, etc. So there are fewer competitors, who are more competitive.
It appears that consumers are largely unaware of the concentration in the retail sector. While they are aware of the demise of local independent stores, as noted above, the same public opinion research reveals that Canadians believe there is more choice of grocery stores than there was five years ago, even though the market in reality has become more concentrated. Generally, this opinion holds true after controlling for age, community size, household income and other socio-demographic variables. Researchers from CSCA believe that one probable reason behind consumers' opinion about choice is the increase in the number of banners (store names) that each chain has in areas such as the grocery sector.
Analyzing the long-term effects on consumers of increased concentration in the retail sector is complex, currently subject to different views, and certainly difficult for individual consumers to assess.
Foreign and large retailers have brought about a number of significant changes in consumer shopping. While many academic studies in the last decade have focused on the business perspective of the Canadian retail landscape, more research on the effects on consumers of the increasing number of foreign and large retailers would be useful, including quantitative research on prices, product selection and choice of suppliers.
Other research could include the effect of the homogenization of the shopping experience on regional cultural identities (including a review of the impact of the increasing number of franchise store operations), the effect of the growing non-Canadian retail presence on Canadian identity, the impact of the demise of local independent stores on access to culturally specific goods and services for a diverse population, the effect of innovative retail formats on security (e.g. food security andjust-in-time inventory management), the rise of private label brands and their impact on consumers, the effect of power nodes on consumer choice for transport-challenged and low-income shoppers and inner city dwellers, and the environmental impact of big box stores and of regional and suburban shopping.
2.2 The Increasing Use of Technology in Stores
The development of various kinds of in-store technology in recent decades has led to new in-storeservices. These technological innovations include the widespread use of bar codes and point-of-serviceprice scanning, related tools such as interactive kiosks, as well as emerging applications based on radio frequency identification (RFID) tags. With these technologies, retailers can manage stock in a more efficient and effective manner and, at the same time, allow customers to conduct transactions or obtain product information and service with minimal assistance from store employees. And, according to a recent survey, Canadians are willing to shop at stores with in-store self-service technology.
The new in-store technology undoubtedly provides a number of benefits to consumers in the form of greater efficiency and cost savings in the distribution system. It also potentially enhances consumers' control over the way they shop, and particularly how product information can be obtained in the store. When this technology is linked to computer-based loyalty programs (in which customers provide information concerning their shopping habits by using a magnetic strip-encoded loyalty card that is "swiped" at the time of purchase), customers can be rewarded for making purchases in the form of discounts on later purchases or free products. These developments also raise significant concerns, however, particularly concerning the ability of retailers to collect, process and track the purchasing habits of consumers. Changes in the in-store shopping experience may also prove challenging for those who are less adept at dealing with new technologies, thereby contributing to the so-called "digital divide."
Bar codes and scanners: cost savings to retailers and a wider range of products
The use of Universal Product Codes (UPCs), commonly known as bar codes, on products is one of the most significant technological innovations in the retail sector in the last 20 years . UPCsmade their first appearance on product packaging in 1974 and are now found on nearly 90 percent of consumer products sold in Canada. Together with electronic data interchange systems, bar codes have facilitated the introduction of just-in-time delivery in supply chain management. This, in turn, has meant significant costs savings that can be passed on to consumers in the form of lower prices. In theU.S. grocery industry alone, it is estimated that bar codes provide savings of $17 billion per year (). Bar code technology improves the management of voluminous supplies and gives consumers a wider range of products in a store. Furthermore, with the enhanced sales information provided by bar codes, suppliers and retailers have explored advanced planning and forecasting tools. For one U.S. drugstore chain, use of these tools has resulted in a 65 percent reduction in the problem of stores running out of stock which has benefited consumers and retailers alike.
Faster and more accurate checkouts
UPC-related technology has also led to the increasing use of price scanners at the checkout, and right from the early days of their use, customers recognized the benefits in terms of time savings. Ongoing improvements in this technology have further cut waiting times at the cash register, which is especially important when shopping at large high-volume retailers. With Wal-Mart's 65 million transactions each week, for example, cutting just one second off each transaction represents global time saving of 18 000 hours (NCR Corporation 2004). Barcode technology also benefits consumers by generally improving data entry accuracy. A 1996 study in Canada found an average error rate of 6.3 percent, which was at the lower end of findings in other studies (4 to 16 percent rate of error) when cashiers entered prices manually .
Use of the bar code/scanner system has not been without some problems, however. In the 1990s, for example, Quebec retailers discovered that provincial legislation that required them to affix price labels on every product created "huge problems, particularly for big box stores and grocery stores that … relied on electronic shelf labels" (Wintrob 2002). One Quebec retail association said not only was the obligation to label "time-consuming and disruptive... it wasn't supportive of new scanning technologies on the market" (Wintrob 2002). At the same time, government and consumer studies continued to document errors with automated price scanning. Major Quebec retail associations persuaded the Quebec government to exempt retailers that did not price label individual products from the legislation requiring them to do so, if they instituted a policy entitling customers to a discount of up to $10 if a consumer discovered a price discrepancy at the cash register (Wintrob 2002).
Shortly after, the new national Scanner Price Accuracy Voluntary Code was developed by major retail associations, working in cooperation with the federal Competition Bureau, to apply to retailers in all jurisdictions except those which, like Quebec, have specific legislation requiring individual price labelling (). As with the Quebec initiative, this voluntary code sets the terms whereby a consumer is compensated when a scanner price error occurs for a non-priced item. In such a case, the item is either offered without charge or with a discount, depending on its price. However, relying on consumers to track the prices of individual items and subsequently verify these prices at the cash register may be problematic in certain circumstances. For example, when many purchases are made (e.g. a week's worth of family groceries), there may be pressure to quickly process the transaction, thus limiting a consumer's opportunity to review each item's price. A number of emerging technological developments may also prove challenging in this respect. With checkout scanners capable of reading multiple bar codes simultaneously (NCR Corporation 2003), it could become even more difficult for people at checkout lines to verify that all items have been scanned at the correct price. Automated self-checkouts,which have been introduced in some Canadian stores over the past couple of years, may present similar challenges.
Other in-store information tools
Interactive consumer information kiosks are another application of information-processing technology in stores. Kiosks are self-standing structures that often include a computer and touch screen for capturing and displaying information and, in some cases, processing orders. These devices are based on 1980s touch technology, and new applications have grown rapidly since the late 1990s with the Internet (Mulroney 2000, E15). Kiosks have appeared in a number of retail environments in various forms and have facilitated consumers' shopping experience. Examples of such kiosks include gift registries ( music sampling stations (
These projected applications are seen as setting the stage for "significant shifts in power between consumers, retailers, manufacturers and on-line merchants… for example, widespread use of wireless handhelds may turn every bookstore on earth into a showroom for Amazon.com" (Microsoft Research 2000). Furthermore, "the most mundane but essential element of shopping, the label, raises interesting new political issues in a world of wireless devices,"since the ability to both read object tags and connect to the Web for additional information could one day make "it possible for consumer decisions to be influenced at the point of sale by a range of viewpoints that are not now
Protecting privacy and personal information
New product information technology allows for more than just better inventory and accounting. It gives retailers a powerful marketing tool for analyzing sales based on variables such as location, season, hour, price and promotions (Nantel 2003). Combined with consumer information profiles (available, for example, through loyalty card programs), data gleaned from bar code systems tell retailers what types of consumers are buying certain products and in what circumstances. Information that a retailer obtains through a customer loyalty card program can be very extensive .When a company can cross-reference both the socio-demographic profile of its customers (age, sex, etc.) and their spending patterns (transaction information about products or services purchased), it can personalize its marketing communications in a way that is likely to be less costly and more profitable than traditional mass media methods (Nantel 2003).
The prospect of using RFID tags also raises a number of questions about the potentially pervasive nature of the two-way communication made possible with the tags. For instance, concerns have been voiced about the extent of information on customers' behaviour that RFID tags could communicate even after the consumer has left the retailer's premises. Such privacy concerns have been heightened by some recent reports of RFID tests planned or conducted by businesses. In a trial run by a U.K. supermarket chain, for instance, it was reported that "the store was automatically taking photographs of shoppers when they picked up a package of Gillette razor blades from the shelf" (Canton 2003, C3). A similar test was reported at a U.S. Wal-Mart store (Wolinsky 2003). Another retailer was boycotted when it revealed that it was considering placing millions of RFID devices in its clothing products to help track inventory (Chai and Shim 2003). Analysts have noted that while"any new technology has certain risks, more controls are needed with wireless information access because an open signal is inherently less secure" (reported in Germain 2003). This has led advocates to demand the mandatory labelling of products containing RFID chips, for example
Loyalty cards: What is consumers' personal information worth?
Loyalty programs represent another noteworthy retailing trend of the past two decades, in whichproduct-scanning technologies (using chip-based cards)have played a key role in the development of the most popular programs. These programs offer free items, discounts and various forms of benefits to consumers. However, when asked if they are aware that many of these programs collect, use and disclose information about an individual's purchasing habits so that companies can target them with new products and services, a majority of those participating in the programs said they were unaware (54 percent)or only vaguely aware (16 percent) of these practices (Ekos Research Associates 2001). Therefore, it is not evident that consumers are making informed decisions when subscribing to loyalty programs, and some analysts have questioned whether consumers actually receive sufficient value for the personal information they give to business.
"Digital divide" also a risk
As retailers increasingly adopt self-service technologies (such as self-checkout counters in grocery stores), customers who are less comfortable with these options may face substandard service. Age is often considered a barrier to a consumer's adoption of new technologies. Survey results indicate that while 77 percent of Canadians ages 18 to 34 would be at least somewhat likely to shop in stores that offer self-service technologies, the acceptance level falls to only 45 percent among those 55 years of age or older .
While bar codes are now in common use in retailing, the ongoing evolution of scanning technologies will require further consumer-focused analysis of how they are likely to either facilitate or challenge consumers' self-checking of prices. Furthermore, it would be useful to pursue analysis of the impact of these emerging technologies, particularly to better understand how they change retail competition and the ways in which some of the savings might be passed on to consumers. The most significant research subject, however, is privacy, since the RFID debate fits within a broader one in which, as noted in the context of a California state legislative hearing, "the major questions relate to sharing of digital information, however that information is collected" .
2.3 The Internet and the Consumer Marketplace
A growing number of PEOPLE are using the Internet for a variety of consumer-related functions. The Internet provides many potential benefits, including added convenience and greater access to information as well as goods and services. It has also had an important impact on traditional pricing methods, although there is limited evidence currently available regarding its overall impact on prices. Some concerns have arisen about the accuracy of information on the Internet, the security of transmission of personal and financial information and other consumer protection issues, such ascross-border redress in the context of electronic commerce. Furthermore, not all consumers share equally in the benefits of the Internet, since some are unfamiliar with, or do not have access to, computer technology.
Convenient access and anonymity can be a dangerous combination!
However, the convenient access and anonymity of the Internet can prove to be a dangerous combination for young Canadians. Surveys show that more than half (52 percent)of children searching the Internet have accidentally ended up at a pornographic Web site, usually when looking for something else or typing in the wrong URL(Ibid., 63). More than a quarter (26 percent) have deliberately visited pornographic Web sites (Ibid., 64). Some 45 percent have been exposed to a violent or gory Web site (Ibid., 66) or received unwanted sexual comments (46 percent) (Ibid., 76). Parental supervision of their children's Internet activities can be a difficult challenge.
While Canadians' primary online activity continues to be the use of e-mail, an increasing proportion of those online have been using it for consumer activities.
The Internet gives the consumer the edge
Information empowers consumers, helping them in the negotiation process. Researchers note that, from a consumer's perspective, "one of the most important advantages of Internet-based electronic shopping environments relative to traditional, bricks-and-mortar retail settings is the drastically reduced cost of search for information about market offerings" The Internet provides instant access to product information (description, price, availability) and can facilitate rapid and extensive searches that would otherwise not be possible. Economies of scale justify higher investments in time spent researching product and retailer information for expensive products. Not surprisingly, then, a number of high-cost consumer retail sectors have been adjusting to consumers'newfound information edge, even though final transactions still occur mainly in the merchant's bricks-and-mortar site ().
The Internet has changed the way cars are bought
More and more consumers are turning to the Internet for information about vehicles.
Compared to looking through a catalogue or visiting a retail store, the Internet offers consumers a number of advantages. For one thing, the online marketplace is available 24 hours a day, seven days a week, which is very convenient for today's generally time-constrained households. Furthermore, the Internet enhances consumer choice in a number of ways. For example, consumer scan often examine far larger inventories than are available at store locations. And given Canada's geography, by using a Web site, consumers can easily interact with specialized non-chain sellers across Canada, or internationally. This helps consumers looking for hard-to-find items that are unavailable in their immediate vicinity. Furthermore, certain online business models have emerged to facilitate consumer-to-consumertransactions well beyond what was once feasible. For example, while not all offers may be from individual consumers, 14.4 million articles were available through eBay's online auction Web site (on November 23, 2003), which is many times more than what one could find in newspaper classified ads.
The Internet is affecting traditional modes of pricing
For centuries, bartering was the mode of pricing used in transactions, but with the industrial revolution and mass production, fixed prices became necessary to manage the enormous increase in both volume and variety of products sold over far larger geographic regions . As the Internet develops, however, dynamic pricing that varies by transaction is expected to become more pervasive. Consumers are already exposed to some forms of dynamic pricing, for example, of airline tickets, for which prices of otherwise identical tickets may vary depending on when a consumer buys them. Dynamic pricing on the Internet may offer consumers benefits when they plan their online purchases in order to obtain the optimal price, and they can do so from home. The Internet may affect pricing in other ways as well. Perhaps the best example is in the music industry. The ability of the music industry to package and sell sets of songs in albums (when consumers are interested in only one of the songs), and to control the post-purchase reproduction of those songs, has been put to the test by technologies associated with the Internet. This has prompted the music industry to adopt different packaging and selling strategies .
Internet music pricing will never be the same…
The music sector has been heavily affected by technology. Industry profits have suffered, originally due to Napster, and more recently as a result of other peer-to-peer file-swapping services. Millward Brown Goldfarb states:
44 percent of 18–24 year olds with Internet access say they download music at least once a week. The legal action that resulted in the shutdown of Napster has not slowed the increase in file swapping in recent years. While music companies claim that file swapping infringes on their copyrights, most young Canadians have no moral qualms about downloading music files without paying for them (.
From a pricing perspective, the music industry has reacted to this in a number of ways. For example, Apple's iTunes has had success: this $0.99-a-tune system avoids monthly subscription pricing and instead responds to market research indicating that U.S. consumers prefer a price per download (Blackwell 2003). The industry has also attempted to adapt with significant price cuts on CDs in an effort to boost traditional sales (Hamilton 2003). In summary, while the music industry'spost-Internet business model has yet to be finalized, one emerging trend is that "the main currency of the record industry is becoming the song instead of the album" .
While consumers have accepted less traditional forms of pricing in some instances, at least one assessment of the Internet's general impact on prices is ambiguous. This empirical study notes:
The review of the literature tends to indicate that the Internet has had a major impact on business practices, but there is no convincing evidence that prices are considerably cheaper on the Internet even for commodity products. Many companies are avoiding the price sensitivity trap by resorting to marketing tactics such as concentration on niche markets [and the] creation of brand image and trust… ().
Nevertheless, some research suggests that the Internet has led to lower prices in the United States for certain types of goods and services
Industries most likely to experience increased price competition are those that have historically been able to charge higher prices because consumers found it difficult or expensive to compare prices. I would not be surprised to find similar results in markets for other financial services, such as auto insurance or mortgages, although no such evidence yet exists. Our hope is that this work will spawn additional studies examining price effects in other markets .
The Internet also has provided more opportunities for consumers to communicate among themselves regarding their experiences with and opinions of products, companies and business practices. Consumer sharing of feedback about products has been encouraged and promoted by some retailers; for example,Amazon.com publishes consumer reviews of books on its Web site. It also has taken place on Web sites beyond the immediate supervision of the retailers concerned. The Internet holds considerable promise as a way for consumers to communicate their views to fellow consumers and others, although it is difficult to predict the exact form this communication may take.
Evaluating the information found on the Internet
With the Internet, consumers can easily and quickly retrieve more information than ever before, but this increased access presents challenges. Anyone with a computer and modem can become an electronic publisher on the Internet, disseminating information to a global audience. So while this new medium explodes with information, it also poses a problem: How do you evaluate the quality of the information?Just because a document appears online does not mean it contains valid information. Rather, online information demands very close scrutiny.
The challenging task of addressing cross border consumer protection issues
Governments are developing harmonized responses to facilitate cross border online consumer sales. governments are also working with industry and consumer groups to develop consumer protection e-commerce guidelines and voluntary codes for use by online merchants, and federal-provincial-territorial ministers responsible for consumer affairs approved a voluntary code of practice .
Issues related to complaint handling and dispute resolution
When dealing directly with foreign vendors, Canadians are exposed to greater risks than when buying from a Canadian retailer. Foreign businesses operate under different laws and different court systems, potentially making redress complicated and costly. Furthermore, a consumer's provincial/territorial consumer protection agency may not be able to help much when the vendor is located abroad, that is, when there is no physical representative of the business in the consumer's area, so there are, for example, no permits to revoke. When dealing directly with foreign vendors, consumers also must ensure that products meet Canadian safety standards and related laws. Gathering product information can be all the more complex when the vendor is in a country substantially different from Canada.
The "digital divide"
The term "digital divide" refers to the inequality of access to the Internet among the general population, and thus the inability of many people to take advantage of its benefits. Several factors are associated with lack of access to the Internet, with the most prominent being age, income and primarylanguage.
Given the Internet's already substantial impact on the interaction of consumers with the marketplace, more research will be required as applications using this technology evolve. How the pricing of various goods and services may be changing as a result of Internet use is one topic that needs attention.
2.4 Technology's Role in Changing Financial Services
Automated banking machines (ABMs), point-of-sale debit cards and online services are three examples of how various new technologies are revolutionizing the way consumers access and spend their money. But while many Canadians have enjoyed more convenient access to their money, there are costs, liability risks and other consumer protection concerns associated with these technologies. Furthermore, as financial institutions continue to offer new and diversified technological options, some questions have arisen regarding how well consumers who rely on (or prefer) traditional in-branch banking services are served.
Automated banking machines
Compared to 20 years ago, consumers have significantly greater access to their money, partly due to an increasing number of ABMs.
The use of debit cards
Besides getting their money from ABMs, Canadians have also adopted frequent use of point-of-saleterminals since Interac Direct Payment (IDP) became available nationally in 1994 .
The use of online banking
The use of online banking has also increased recently.
Added convenience, but not without some cost and risk
Convenience has certainly been the main reason for the rapid adoption of debit cards by Canadians. Many people use debit cards for a number of everyday transactions
Computer banking continues to grow rapidly while telephone banking has stagnated, likely due to the ease with which more complicated transactions can be done via the Internet. Electronic bill payments (via computer, phone or direct withdrawal) have overtaken traditional methods (mail, teller, utility office). It is entirely possible that these traditional methods will no longer be available in the future as more and more people become comfortable with e-banking .
These online payment mechanisms give consumers more choices of payment methods than ever before. However, some questions have arisen regarding the liability structures associated with these services. For example, the user agreement for one popular service explicitly states that consumers who accept online payments are subject to a substantial penalty when the buyer makes a credit cardcharge-back. The online seller could potentially lose the full payment and be charged a large fee after shipping out the product. Each service has its own particular rules and conditions, so consumers need to be thoroughly familiar with them in order to use the services appropriately.
2.5 The Growing Presence and Changing Forms of Advertising
Consumers are exposed to increasing amounts of advertising, and this advertising sometimes takes new forms, aided by technology. Advertising can benefit consumers by providing useful information to help them make marketplace decisions and by promoting competition and greater choice. However, the pervasiveness of advertising — in schools, on the Internet, on bus shelters and billboards, and even in public washrooms and on garbage receptacles — challenges conceptions of public versus private space in communities. Sometimes, such as with product placements in television programs, marketing techniques maybe so subtle that it may not even be clear to a consumer that advertising is occurring. On the other hand, the intrusive character of some Internet marketing techniques — unsolicited e-mailsand pop-up boxes, for example — have also raised concerns.
Businesses' promotional activities are increasingly underestimated when only advertising revenue trends for the above-mentioned mass media are considered.
Advertising benefits consumers
Advertising brings a number of consumer benefits, such as lower search costs, since information is conveyed about many more products than is possible for consumers to see when they shop. Many Canadians rely on flyers and newspaper advertisements as well as radio and television ads to alert them to low-price sale items. Advertising may also facilitate consumers' understanding of a product's attributes, although consumers must realize that advertising is not always objective and impartial. Brands, created by marketing efforts, simplify consumer choice in that they suggest to buyers which products are high quality and which are inferior.
Fast and slow: connected devices and the changing face of retail
The pace of change in the next few years will be fast, and retailers must be ready to respond to consumers' raised expectations and their desire for quicker, more convenient, cheaper and more personalised commerce
4. Will the time come when most consumer purchases are made with self-scanner?
Explain yours answer"
Self checkout systems and technology from NCR are large parts of what make NCR the global leader in the retail self service and point of sale. Thisself checkout solution provides the shopping convenience consumers want and the built-in investment protection you need. With self-checkout from NCR, you can attract customers and keep them coming back.
Self checkout customers
Customers use self checkout lanes for speed and more control of their shopping experience. Our self checkout systems feature intuitve interfaces and animated instructions so the customer always knows what to do next.
Self checkout is preferred
We know consumers are more likely to do repeat business with a retailer that provides self-checkout technology. The NCR SelfServ Checkout reduces checkout wait times up to 40%, greatly enhancing the shopping experience.
Maximize operating efficiencies
The NCR SelfServ Checkout allows personnel to be redeployed from front-end checkout duties to valuable in-aisle functions. Redeploying employees ultimately increases your overall revenue per labor hour.
Flexible self checkout
The self checkout technology from NCR feature an open architecture to seamlessly integrate into your existing point of sale applications. Our self checkout machines are designed to be efficiently implemented, deployed and maintained in virtually any retail environment.
Intuitive User Interface
• 15” high-resolution color LCD touchscreen
• Integrated hi-fi audio
• Lead-through animation
• Multi-path screen flow
• Human factors-designed non-barcoded item look-up
• “Follow me” lights provide additional visual cues
Self Checkout Theft Prevention
• Security scale for weight verification
• Item integrity via self-learning and self adjusting weight database
• Reversing takeaway belt
• Electronic Article Surveillance integration available for Sensormatic and Checkpoint devices
• Audio and visual prompts alert shopper and FastLane attendant of error
• Store intervention light above lane displays lane status
Self-checkouts are a transaction system that has experienced a surge in popularity over the past few years.
Consequently, more businesses are choosing to integrate this system.
Here are some pros and cons of self-checkouts so you can decide if they’re the right fit for your company.
Efficiency and Speed of Checkout
Perhaps the biggest advantage is the added speed with which customers can checkout and pay for their purchases. Rather than dealing with long lines that get backed up by customers waiting to pay, people can quickly make purchases by ringing up items themselves. This can be especially helpful during peak sales times when stores experience rushes with a large influx of customers. This can reduce the length of checkout lines and wait times, which should keep customers happy while minimizing the stress on employees.
Self-Checkouts Take Up Less Space
Because multiple kiosks can be placed into a relatively small area, stores can take care of customer transactions with minimal space. In some cases, up to six kiosks can take up the same amount of space as a single traditional checkout area with a cashier. While this may not be important to massive retail chains with large floor space, it can be helpful for smaller stores where space is at a premium.
Fewer Employees to Pay
Paying the salaries of multiple cashiers can quickly add up. During slow times when few to no customers are checking out, cashiers aren’t completing any tasks and are essentially being paid for nothing. Utilizing a self-checkout system can considerably cut back on cashiers because a single employee can monitor several kiosks at one time. This means lower overhead costs while still providing customers with the service they need.
While many people who are tech savvy can navigate their way through self-checkouts with ease, it can be problematic for others. Sometimes bar codes and coupons don’t scan properly, products require age verification, or customers need assistance; in these types of instances, lines can become backed up. Even with a relatively intuitive navigation menu and audio instructions, this system can be frustrating to some shoppers. Besides this, many customers don’t feel comfortable with the process or simply don’t want to do the work of checking themselves out.
Potential for Theft
Although most systems are equipped with some form of anti-shoplifting technology, there is often a higher likelihood of theft occurring. Because employees are unable to monitor customer transactions as closely on self-checkouts, it’s easier for customers to steal. Some examples would be replacing bar codes of high priced items with lower priced items or just not scanning an item or two. When caught, it’s possible for customers to plead ignorance or blame it on an equipment malfunction.
Lack of Personal Interaction
Despite the efficiency of this system, many customers prefer to have a one-on-one interaction with cashiers. Rather than dealing with a faceless machine, these customers enjoy a brief conversation with employees and the personal attention they receive. In some cases, this can result in some customers taking their business elsewhere if no traditional checkouts are provided.
While there are valid arguments both for and against self-checkouts, the statistics suggest the self-checkout system is here for the long haul. According to this type of checkout is more popular among the younger demographic (35 and under). The popularity gradually decreases with older generations, who are a bit more set in their ways. Perhaps the best way to appease customers is for businesses to offer a combination of self-checkouts and traditional ones with cashiers.