The Logic of Networks Consumer- Essay Solution

The Logic of Networks Consumer

(4558 words)

Introduction

Consumer behavior is perhaps one of the most interesting aspects of marketing because it deals with the individual characteristics of consumers. It is basically the buying behavior of the final consumers which are the individuals and households who buy the goods and services offered in the market for their personal consumption (Kotler & Armstrong, 2001). The main concern in marketing in relation to this aspect is whether consumers actually respond to the marketing strategies employed for the product (Best, 2004) which also gives rise to the model of consumer behavior within which most market researches circle around.

A good consumer behavior model was introduced by Kotler & Armstrong (2001), which discusses the process with which the consumers respond to the different product features, prices and advertising. The starting point consists of the stimulus-response model wherein marketing-focused factors, which involve product, price, place and promotion and other stimuli, which include outside factors in the market environment, enter the “black box”. This contains the individual buyer characteristics and decision processes. The third component of the model involves the actual responses to the marketing efforts, which can translate into product choice, brand choice, dealer choice, purchase timing and purchase amount among others. It is fitting the end goal of marketing which is to gain consumer loyalty (1997,1997; 1986).

The logic of networks consumer behavior can be incorporated through certain industries that move towards a shift of modern information age like for example, in lieu to the textbook industries, books that are sold on the internet as it can be purchased through internet transactions and order processes that involves the buying and selling of certain book items, one example could be, Amazon. COM as the company sells books through on-line ways as the logic of networks being one of Castells concept reflects how Amazon. COM is reinventing its mode of business through selling books on-line.

Moreover, there can be deep connection amid how societal process is prepared and the values that the processes exemplify. There has been uneasy version of structural as well as cultural logic fixed in countless project reflecting incorrectly exacting agenda of the members and what really drives the development of the network society. Thus, the network society is a logical attainment in its rights and flexible structure as modified to mirror observed findings. For Castells, the worth of theory lies in the capacity to aggravate and arrange empirical learning as for him, there show important unwillingness to give something in conditions used in explicit ways. Aside, it can come in that such places then provides approaches to community within range of welfare upon the offering of links that attach such field as what is argued of the dynamics along the network culture. Thus, if you go to Amazon. COM website, the flow of networking is simple you can just click the intended information of the book you want to buy and can read some of reviews regarding the contents of the book and you can also search inside the book before deciding to purchase it on-line, the realization behind the formation of textbooks and Amazon’s other services offered are powered by the information society as it discusses the value of network logic within a desired information flow.

Discussion

Consumer tend to believe more on the product that they have been exposed to if the consumers have been exposed to more information on the stimuli. As consumers are exposed to more and more stimuli, they are more influenced on the product, therefore, effectively making them buy the product. Let’s take for example e-commerce.

E – commerce, or electronic commerce consists of a variety of commerce over an electronic system, one more commonly used is the Internet. Most common of commerce available is the buy-and-sell of any product with the use of an electronic modem. In such a trade, items sold and bought via Internet is usually physical items, which involves physical aspects of trade. But it is not always true that only physical items can be used in the trade. With the modernization of technology and the advent of the Internet, more and more items are now included in e-commerce. Again, those items may or may not be physically solid items. They may be passes, or may even be things that can only be utilized with the use of the Internet.

With the advent and the expansion of the Internet, commerce that involves the use of the Internet has continued to flourish. Things such as electronic funds transfer, supply chain management, e-marketing, online marketing, online transaction processing, electronic data interchange (EDI) have felt a boom since the continuous flourishing of the Internet (Wikipedia, 2007).

The law does not currently recognize an e-commerce transaction as being inherently different from a non e-commerce transaction. However, due to the online nature of e-commerce, particular aspects of the law apply differently where a transaction takes place online. This section will briefly consider those aspects of the law that apply to both online and offline transactions. This will be followed by an introduction to those areas of the law that has particular application in the case of e-commerce. Much of the value in an idea for an e-commerce website can be tied up in the Intellectual Property Rights (IPO’s). It is essential, particularly when trying to attract seed money from venture capitalists, that these IPO’s are delineated and transferred to the trading vehicle. They may be owned by a number of different people and so IR assignments will need to be executed at an early stage. In any event businessmen notoriously underestimate the value of IPO’s. Appropriate steps must be taken to protect this value and to take steps to safeguard any brand name and associated goodwill.

The anti-piracy laws carry over internationally, especially as all countries that partake in this are also affected either socially or economically by the outcomes of these laws. Bunt’s article “Bootlegs and Imports: Seeking Effective International Enforcement of Copyright Protection for Unauthorized Musical Recordings” (1999) focused highly on analyzing the reason for formulating the international anti-piracy laws, one of which is to ensure the cash-flow that helps the performers and the workers of the entertainment industry, including the producers, directors, writers, performers, and others, as well as help them continue with their revenues and aid with other matters that will boost other projects that they may have. New recording technologies have heightened these international laws, as well as the introduction of globalization and the free-trade economy wherein countries are allowed to exchange their products; with travel and giving of data now becoming easier and faster, and thus resulting to more inclinations of films to become transported and distributed, and indeed smuggled, to other countries despite the imposition of laws and regulations that will help in regulating the transfer and the distribution of these films. In the analysis of the different treatises that countries have undertaken in an effort to help their several entertainment industries including film, one of the problems that these organizations have is the lack of members or co-operation between the members, and as such countries or industries are forced to abide by the sometimes lax or strict rules that have been imposed upon them, and unless firmer methods of finding bootleg copiers as well as sterner punishments are handed to the offenders, then there is the high possibility that this practice will continue on; yet the author offered another method which artists, performers, and other members of the entertainment industry may be able to deal with this problem, and it is through finding ways in compromising with the copiers and finding a way to globally deal with the situation through knowing the effects and the methods that the copiers and the distributors follow and be able to use these for themselves as part of their empowerment method.

Environmental Analysis

In order to analyze the microenvironment, PEST Analysis is used. PEST analysis is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning.

The microenvironment includes Political and legal forces, Economic forces, Sociocultural forces, and Technological forces. These are known as PEST factors.

Strengths

Majority of the goods that are sold via e-commerce are low priced sue to low cost of operations. Also, e-commerce is more convenient to customers. Consumers could avoid the long checkout lines, crowded parking lots, and traffic. There are many choices of shopping methods; browsing the aisles, using product search, and choosing from a shopping list customized from frequently bought products. They could shop 24/7 since the stores are open for 24 hours in 7 days. The store also offers variety of selection from fresh to processed food and whatever shoppers would need.

Threats

However, despite the strengths, the store has also its weaknesses. One of which is inventory inefficiency in which they would experience stock outs. Moreover, with the presence of superstores, their current marketing strategies have been overshadowed. In addition, low performance of workers also has negative effect on the efficiency of the store.

Opportunities

E-commerce has also some opportunities. With the problem of information dissemination, an opportunity to acquire new technology for more efficient operations can now be possible. Also, e-commerce has been already known by the people as a store open in 24 hours they have the advantage over it. In addition, the company also got the most strategic locations of their stores. Moreover, e-commerce can still expand their business and open some more stores especially in China which got the opportunities of expansion with its large market.

Weaknesses

With the lax government regulations in trade, more international competitors are entering the trends. However, the lack of knowledge in computers and the internet would gradually slow down the trade.

PEST Analysis

Political

Economic

Economies of scale are achieved when more units of a good or a service can be produced on a larger scale, yet with (on average) less input costs. Alternatively, this means that as a company grows and production units increase, a company will have a better chance to decrease its costs. According to theory, economic growth may be achieved when economies of scale are realized.

While cost reduction efforts appear to be extremely popular among companies attempting to strengthen their competitive position, the effect of traditional cost reduction strategies on company productivity is less clear, and may in some cases be detrimental to long-term financial performance.

Particularly during times of economic recession, it is important for companies to identify cost-reduction strategies that create long-term benefits for the company. It is hypothesized that reducing unit costs through the use of volume and learning economies of scale can provide significant productivity benefits to a company, provided policies regarding flexibility and innovation do not create barriers to strategy implementation.

The importance placed on increasing company productivity has gained considerable momentum in recent years as companies struggle to keep pace with increased competitiveness and consumers’ increasing awareness of product quality. Since company productivity is generally defined as a ratio of output to input (for example, revenues divided by costs) management strategies for improving productivity have usually included some form of cost-reduction effort.

While many of these efforts are necessary and indeed enhance company productivity, some cost reduction strategies actually reduce the company’s ability to be less able to provide customer service, to react quickly to changes in customer tastes, to maintain an innovative approach to process/product design and marketing and to simply maintain product output levels at some adequate level of quality.

Socio-cultural

Many people will be delighted with the advent of e-commerce. Thru e-commerce, cultures, as well as finances can be brought together by simply being logged on to the internet. Trade between nations will include the trade of ideas, thus, making a great impact, not only on the global economy, but on the global and international culture as well.

Technological

With regards to the technology, the world has undergone a process of rapid modernization over the last ten years, investing in an extensive renewal of its transport, telecommunications and banking infrastructure. All main economic centers now have good transport links. Furthermore, physical contact need not be the case when dealing in the internet.

In comparison with electronic management, Baxter, an e-company, developed a powerful new type of partnership with its hospital customers. Baxter develops a strategy which is the vendor-managed inventory system, then called the Stockless System in managing its customer’s inventories within their hospital facilities. The hospital specifies its stock requirements for each ward; an on-site Baxter employee counts the stock in each ward each day or every few days; the employee enters this information into a hand-held device and transmits it to Baxter’s warehouse, where a replenishment order is derived; at the warehouse, the order is picked into ward-specific containers; that order is delivered the next day or in a few days directly to the ward, and the Baxter employee puts the stock away; finally, Baxter invoices the hospital. Baxter’s Stockless System created a powerful new channel that changed the ground rules for all other hospital supply companies. However, in the long run, the shift to service competition led to significant sales increases as conversions to Baxter products naturally occurred. The company also gained significant first-mover advantage as it tied up key accounts with this new channel.

Moreover, integrated logistics systems seek to manage inventories through close relationships with suppliers and transportation, distribution, and delivery services. A goal is to replace inventory with frequent communication and sophisticated information systems to provide visibility and coordination. In this way, merchandise can be replenished quickly in small lot size and arrive where and when it is needed (Hand field 1994; 1993). Firms that use advanced process technology to increase flexibility and involve manufacturing managers in strategic decision making alter the role of logistics in firm success (1998). An e-commerce management move can reduce overall inventory while maximizing customer service by efficiently redistributing stock within the supply chain using effective postponement and speculation strategies (1998; 1993; 1991).

New logistics technology gives businesses a complex way to make things easier for their customers and suppliers. Within logistics industry, e-commerce system is recognized as one that takes advantage of technology to decrease storage and increase efficiency. The e-commerce’s supply and shipping networks exemplify the latest trend in logistics, that is, visibility. Companies with the money and foresight are making sure their inventories can be traced and tracked throughout their entire logistical operations, even if their systems are entirely outsourced. Executing a supply chain with full visibility gives companies better information to work with and a more agile system.

e-commerce has a better control of their operation which has reduced safety stocks and has operate faster to get cash-to-cash conversion cycles. By producing custom products at a rapid pace, the computer manufacturer receives payments from customer before it pays suppliers. Companies can do this only if there’s a short window between receiving an order and shipping it.

In addition, e-commerce’s customers can also keep track of their order status. They can trace their computer as is moves through assembly and testing, and can track its shipment due to the technology of major shipping companies.

The pulse of e-commerce’s execution effort centers on increasing business velocity and eliminating waste. e-commerce employees are constantly focused on driving down backlogs, promoting best practices, and creating synergies among adjacent processes as seen in cross-functional initiatives such as the design-for-manufacturability effort between manufacturing and R&D. This initiative successfully promoted product designs that are easier to assemble.

In the case of Procter and Gamble (P&G), the company first partnered with Wal-Mart to develop a pioneering continuous replenishment system. Through this system, P&G replenishes Wal-Mart’s facilities without purchase orders based on the retailer’s product movement data. Based on this experience, P&G systematically shifted its strategic focus toward supply chain-based service innovation–and in the process transformed both the consumer products and retail industries. P&G also developed a careful account selection plan as part of an innovative product supply model. The company developed operating partnerships with major customers capable of linking electronically, taking full-truckload deliveries, and engaging in joint business process reorganization programs. Smaller accounts were shifted to master distributors, which in turn were selected for their ability to partner effectively with P&G.

P&G, for its part, developed operations capabilities in two key areas (2001). First, it created a sweeping new set of industry-change programs such as ECRU (efficient consumer response), CRP (customer requirements planning), and streamlined logistics. These programs required a solid new understanding of channel economics and the impact of supply chain innovation. Second, the company developed sophisticated IT ties to coordinate its product flow, enabling it to raise service levels to meet the needs of the new system.

With regards with e-commerce’s, management competency of the company comprises of four qualities which includes demand management, internal collaboration, leveraging partners, and financial fundamentals (2004).

e-commerce’s direct model enables the company to excel at demand management. The process of selling directly to customers and building product to order creates opportunities for true real-time collaboration and synchronization between manufacturing and sales. By being in direct contact with the market, e-commerce can quickly see changes in customer demand. Synchronization allows e-commerce to respond more quickly to customer demand than its competitors can. Additionally, this true internal collaboration allows for highly accurate forecasts.

Another key aspect of e-commerce’s success is its ability to collaborate internally. This competency is driven by a culture that values information sharing and empowers all employees. At e-commerce, “direct” refers not only to how the company sells but also to how team members communicate and attack issues (2004).

Moreover, e-commerce’s culture and processes not only help the company collaborate internally but also help it leverage its business partners. e-commerce leverages its partners by linking suppliers’ planning and execution activities with e-commerce’s systems. The company uses information technology to gather and share a constant stream of data on supply and demand trends. On the supply side, e-commerce gathers real-time information about the inventory levels of its suppliers at various positions in the supply chain.

In connection with this, e-commerce developed a set of new operations capabilities in five crucial areas (2005). First, it created the flawless make-to-order system that has been widely noted. Secondly, e-commerce worked at length to build an effective supplier management function in order to shorten component lead times and maintain the absolute quality standards required by the just-in-time operation. Third, e-commerce developed the “sell what you have” system that was essential to matching supply and demand. Fourth, it instituted an extraordinarily crisp set of product life cycle management capabilities that yielded great cost reductions and strategic advantage. Fifth, the company worked with its suppliers to shorten their product life cycles, extending the e-commerce business model to the whole channel. Together these operating capabilities formed a cornerstone for e-commerce’s business model.

Finally, e-commerce’s entire supply chain is focused on fundamental business performance. Operating margin and not just profits or growth rate is the number that e-commerce cares about most to ensure long-term profitability.

e-commerce’s renowned direct sales model is regularly cited as the key reason for its overall competitive prowess. At e-commerce, supply chain management is truly viewed as a strategic capability; it drives coordination with, and in many instances it includes, activities such as marketing, sales, finance, and information technology.

Conclusions and Recommendations

A differentiation strategy may be more applicable for a first-mover firm. Differentiation enables the firm to cater to customers’ unfulfilled needs. A differentiation strategy enables the firm to identify and capitalize on a broad array of possible opportunities. This strategy provides customers with perceived value through offering novelty and uniqueness. The true nature of the customer’s needs in the emerging market is still being flushed out. The early lead from being a first-mover provides the firm with a price umbrella thereby enabling it to charge a premium price and recover its development costs before imitators enter. Such a strategy would follow Porter’s (1996) variety-based positioning, which relies primarily on firm capabilities and to a relatively lesser extent on

There are many advantages that accrue to first-movers, such as the response lags of followers, the time to build economies of scale, the ability to build switching costs for customers, obtaining preemptive access to channels of distribution and other scarce resources, the ability to become the industry standard, and the added time to benefit from learning effects (1994).However, the sustainability of competitive advantages is low here. Since the firm did not start out by first identifying customer’s needs (A) as is practiced in needs-based positioning, customer loyalty is likely to be low. Opportunities abound for rivals to entice customers away and thereby disrupt the status quo. Customer needs are amenable to redefinition and reinterpretation (by enterprising rivals), thereby overcoming the switching cost advantages enjoyed by the first-mover. Again, the `fast-cycle’ resources that are typically employed here are not accompanied by isolating or shielding mechanisms that protect the firm’s resources or accompanying competitive advantages.

By contrast, a cost leadership strategy may be more applicable to a close-follower. The lower costs (derived from superior process skills) enable the imitator (following a cost leadership strategy) to neutralize the early entrants’ experience curve cost advantages. In addition, these lower costs may also induce some customers to switch, thereby overcoming the advantages of customer switching costs built up by the first-mover.

Close-followers employ a needs-based positioning approach (Porter, 1996). Customers are looking for specific attributes, and the firm has configured its capabilities to meet them. Consequently disruption, of this firm’s competitive advantages is difficult, unless rivals figure out how to supply the same products or services at an even lower price. Even if they do succeed in figuring out alternative methods, these rivals may not be able to accumulate all the required value-adding activities in a relatively short time period.

Finally, a late-entrant could employ either a differentiation-focus or a cost-focus strategy, depending on the nature of the customer segment and the specific tactic it is pursuing. This is a needs-based positioning approach (Porter, 1996), which is possible because by this time in the growth cycle of the product, customer segments and their needs have become more clearly defined.

With the needs-based positioning approach suggested here, the customer segment’s needs are fairly specific and defined. Moreover, the firm has configured its value-adding activities towards meeting these needs. It is difficult for rivals to easily disrupt these competitive advantages. In some instances, the firm may even be catering to customer segments that by virtue of their geographic isolation or by virtue of the idiosyncratic nature of their demand, offer the firm the advantages of slow-cycle resources (Williams, 1992).

The strategy of the firm is predicated upon the firm’s internal resources and capabilities. In addition, these capabilities also strengthen the firm’s capacity to disrupt markets and gain temporary competitive advantages. They are also relevant for implementing the three generic strategies. Thus, matching the appropriate business strategy with internal resources and capabilities provides the firm with a temporary competitive advantage. Stringing together a series of such temporary advantages can enhance a firm’s long-term competitiveness. However, the sustainability of temporary competitive advantages is dependent on a combination of the customer needs that are being fulfilled, the firm’s resources and capabilities, and the existence of isolating mechanisms in the industry or business environment.

Firm competencies are immutable, since the firm has irrevocably sunk resources into developing these capabilities. Moreover, for a company to be successful, business strategy must be based on these capabilities. In the external environment, the intensity of competition is not completely under the firm’s control. Since competitive advantages for the firm will depend on the match between its strategy (i.e., mode of competing based on its internal resources and capabilities) firms must endeavor to achieve the best fit between their preferred business strategies and these exogenous mandates from the market.