Advertising

PURPOSES OF ADVERTISING To in form 1. Advertising serves to inform the public of the availability of a new product or service which is being sold in the market, e.g. advertising a new brand of toilet soap or announcing the opening of a new hairdressing salon. 2. This is aimed at creating a demand for the new product. The new product has to be made known to the public before the goods are actually available for sale. The advertisement also serves to induce the wholesalers and the retailers to stock up the new goods. 3. This type of advertising is called informative advertising. It is not only restricted to new products but is also used to inform people of new uses of a product, of how a product works, of new price changes, of names and addresses of retailers selling a certain product, or even of a new bus timetable. 4. What is important is that it makes no attempt to persuade but merely informs the public of the availability of the product, its uses and advantages, price, quality, terms of sale, etc. 5. under informative advertising the following goods and services are advertised: - Advertising in Trade and Technical Journals: These advertisements contain technical information about goods. - Advertising of Particular Events: Trade fairs, exhibitions, concerts and sporting activities are examples of such advertising. In this type people are informed about such events and are persuaded to attend such events. - Advertising of Employment Opportunities: In this type people come to know about the various employment opportunities available. To persuade 1. Advertising also serves to persuade the public to buy some goods or services, e.g. a company seeks to induce the public to buy its particular brand of detergent in preference to others or a travel agency advertises the better quality of service it can provide to its customers. 2. This type of advertising is called persuasive advertising. It not only informs but also persuades the public into purchasing the advertised product by using subtle techniques. It aims at extending the demand for the good or service advertised. In other words, an Page

1

Commerce – Students’ Guide Department of Business and Computing

advertiser aims to increase the sale of its product. By selling more, a firm increases its revenue and might pay a lower unit cost as goods are produced on a larger scale. The net profit of the firm would then increase if these benefits are greater than the costs of advertising. To remind 1. Advertising also serves to remind consumers of existing products; that the product may be needed in the near future and where the product can be bought. 2. It is necessary for the advertiser to draw the attention of consumers to his product constantly and to keep away from other competitive brands which may be heavily advertised. 3. It aims to keep the name of the product before the public. For example, a newspaper advertisement may carry a picture of a bottle drink or a bus may carry the name of a firm. They say nothing but serve a useful purpose in reminding the public of the name of the product or service. Many products are branded to distinguish them from similar products. Brand names are registered so other competitors cannot copy them. Some brand names are so well known that advertisements often show only the brand name and the product itself is not mentioned. 4. This type of advertising is called reminder advertising. A related form of advertising is reinforcement advertising which seeks to assure current purchasers that they made the right choice. 5. Reminder advertising aims at sustaining the demand for the good or service advertised.

BENEFITS OF ADVERTISING 1. Advertising increases profits and therefore the producer can lower the price of his goods. 2. Advertising helps in providing information to the customer of a particular product. 3. Advertising helps in launching new products. 4. Advertising helps to introduce new products, thus improving the standard of living. 5. It is believed that advertised goods are of better quality than other goods. 6. Advertising maintains the price of newspapers at a reasonable level. 7. It helps to increase sales. 8. It provides employment opportunities. 9. It helps to create goodwill for the firm. 10. It gives wide choice to customer. 11. It helps the salesman in their efforts of promoting sale. 12. New product can find market only through advertising 2

Prepared By: Emmanuel George

Advertising 13. Advertising provides employment opportunities

SOCIAL ASPECT OF ADVERTISING Positive: 1. It generates employment. 2. It yields revenue for the public media which is indirectly an income for the government. 3. It educates the society. Negative: 1. Ads can mislead the customers to try out the lice goods. 2. Ads can turn the society towards flair for sex, and violence. 3. Ads can lead to waste of resources.

DANGERS OF ADVERTISING: To consumer: 1. Consumers are misled by advertisements. 2. Customers may have difficulty in choosing a brand. 3. Customers may make unnecessary purchase. 4. Customers may be irrational in buying. To producer: 1. Production costs increase. 2. The expenditure may not be justifiable. 3. The manufacturer may incur financial loss, if he engages in competitive advertising. Reasons why consumers need protection against some forms of advertising: •

Advertisements may be misleading.

•

Advertisements may contain false information.

•

Goods may be incorrectly labeled.

•

Some advertisements may be dirty and unsuitable.

•

Some adult advertisements may be shown at inappropriate timings.

3

Commerce – Students’ Guide Department of Business and Computing

TYPES OF ADVERTISEMENTS Persuasive Advertising In this type the advertiser tries to persuade the public to buy his product, by explaining the various good qualities that the product possesses over other products. Competitive Advertising This is carried out by different producers of different brands of the same product. Each producer tries to compete with other producers in trying to capture the market. The advertiser uses techniques that are persuasive and aggressive to achieve his target. Example, the advertiser claims that his product is best in terms of quality/performance/durability. Example: Biggs Butter is best.

Informative Advertising In this type information is passed on to the consumers about availability of products, changes in fashion and how to use the products. Under informative advertising the following goods and services are advertised: -

Advertising in Trade and Technical Journals: These advertisements contain technical information about goods.

-

Advertising of Particular Events: Trade fairs, exhibitions, concerts and sporting activities are examples of such advertising. In this type people are informed about such events and are persuaded to attend such events.

-

Advertising of Employment Opportunities: In this type people come to know about the various employment opportunities available.

Generic Advertising (Collective) When all the producers in one industry combine to advertise their product, it is called generic advertising. These advertisements are usually sponsored by trade associations. The producers group together to share the costs and to promote the product hoping to increase the overall sales of the product. Example: Drink more tea.

4

Prepared By: Emmanuel George

Advertising

ADVERTISING MEDIA: Type of medium Advantage (a) Newspaper 1. There is a wide target audience. It

Disadvantage 1. It has a short life span

is read by many people.

2. The advertisements have to compete

2. Circulation cost per exposure is

with other advertisements for the

low. It is one of the cheapest media of

readers attentions.

reaching a large number of

3. The written advertisement message

prospective buyers.

can reach only the literates.

3. It is suitable for products or

4. Advertisements are many and varied

services in general demand, e.g.

such that it takes effort to find

films, electrical appliances.

advertisement one is looking for.

4. It enables the advertiser to present

5. The paper quality is low compared

the products in some details, e.g.

with those used for magazine.

technical details about a car.

6. As an advertising medium the

5. The advertiser can have the choice

newspaper doesn’t have the same

of national or regional coverage.

impact as the television.

6. Unlike advertisement in the magazine which must be submitted weeks ahead, advertisements in the newspaper can be inserted or cancelled at shorter notice. 7. The advertiser can obtain response from the readers by providing telephone numbers or by means of coupons or contest. 8. Newspapers have the capacity to accept a large number of advertisements compared with the (b) Magazine

limited time on television. 1. The paper quality is better

1. It is inflexible, as advertisements

compared with that used for the

must be placed weeks before the date

newspaper.

of the publication.

2. An advertisement in the magazine

2. There is limited readership as the

enjoys a longer life span than that in

readers are specific.

the newspaper.

3. It is infrequent as the magazine is

3. The targeted audience of the

published only periodically.

5

Commerce – Students’ Guide Department of Business and Computing

advertisement can be reached mare

4. As an advertising medium, it doesn’t

easily. E.g. a firm selling computer

have same impact as television.

software could advertise in a computer magazine or a firm selling cash register can advertise in a trade journal. 4. As the advertising message is directed at the intended audience there will be less wasteful circulation. 5. It is suitable for advertising messages which are long and have to (c) Radio

be read in a leisurely manner. 1. The advertising message can be

1. There is lack of visual elements and

reached large number of people even

as such, they are less effective when

in remote areas.

visual impact is needed.

2. It is much cheaper to produce

2. Its life span is very short compared

advertisements of this medium than a

with the newspaper and the magazine.

television commercial.

3. Audience attention is low when

3. The use of sound such as music

broadcasting is being used to provide a

and oral makes radio a livelier

background for other activities.

advertising medium than static medium such as newspaper and magazine. 4. The advertising message can reach the target market effectively through special interest programme such as children’s or women’s programmes. 5. With radio sets that are portable or fitted in motor vehicles, radio (d) Television

6

message can be received widely. 1. The advertiser can demonstrate the

1. It is not suitable when detail

product with realistic sound s, colors

information is required. The newspaper

and movements because of effects.

and the magazine are better advertising

The television is one of those media

media if more information is required by

that have high persuasive impact i.e.

the prospective buyers.

the ability to stimulate consumers.

2. It is not suitable if the target audience

2. The television commercials can

is small due to high cost.

Prepared By: Emmanuel George

Advertising reach a large number of viewers as

3. There is high absolute cost – the cost

they have wide exposure.

in producing an airing television

3. Advertisements can be repeated to

commercial is very high and requires

the point where a large number of

big budget.

viewers have seen the advertisements 4. The life span of a given advertising to create an effective and lasting

message is short unless it is recorded.

impact.

5. There is less audience selectively as

4. The advertisement can be directed

television commercials tend to reach

at national or regional audience.

mass audience, whereas the magazine

5. The time chosen for airing an

can be more selective.

advertisement can suite the target audience, e.g. Toys can be advertised during children’s programme. 6. There is high audience attention and personal impact. 7. The use of the product can be demonstrated and explained. 8. The viewers can be invited to respond immediately by dialing a telephone number. (e) Cinema

(f) Direct mail

1. High audience attention is received

1. There is limited coverage as it is

as there are fewer distractions

limited to film goers.

compared with house viewing of

2. It is less popular with the event of

television.

videotapes, which are used to

2. Its wide screen gives extra scope

demonstrate and advertise the use of

for more dramatic and realistic impact

household products at shopping

compared to television.

centers.

3. Advertisements on films make full

3. It is a non-interactive medium, as the

use of the audiovisual effects with

audience cannot respond immediately.

movements and colors. 1. Audience selectively is practiced as

1. It is limited only to the literate.

the advertising message will be

2. It is limited to the mailing list the firm

mailed only to selected target groups.

can secure.

2. Flexibility can be exercised.

3. Cost of direct mail per prospective

3. There is no competition with the

client is relatively high. It suffers from

same medium.

the stigma of being classified as ‘junk

4. Wasteful circulation is kept to a

mail’.

7

Commerce – Students’ Guide Department of Business and Computing

minimum as it reaches only the (g) Outdoor

market it is intended for. 1. There is an impact of large size and

1. There is no audience selectivity.

hoarding and

colors.

2. There are creative limitations as

sign e.g.

2. Flexibility can be exercised.

messages are limited to simple, short

signboard, neon

3. There is high repeat exposure.

and clear statements.

lights, poster

4. It is a low cost medium.

3. No audio- kinetic impact can be

5. Low competition is expected.

made.

6. The advertising message can reach

4. It is open to vandalism, especially the

(h) Pamphlet

a large number of people. 1. There is intensity of market

posters. 1. It may fall into the hands of those not

and sample

coverage within a certain area.

interested in the product.

2. There is an advantage of personal

2. There is limited circulation as they

impact.

have to be handed to person to person.

3. Advise and explanation can be (i) Traveling

given when necessary. 1. It is effective because it brings

1. The coverage is limited to certain

salesman

products to the homes of consumers.

areas.

2. Salesmen can demonstrate the

2. Salesman may not be welcome in by

uses of the product to the consumers.

home owners. 3. High cost of employing sales

(j) Window

1. It is attractive to shoppers and

personal can be incurred. 1. It can reach only shoppers and

display and

exhibition visitors.

exhibition visitors.

exhibition

2. Uses and advantages of product

2. The frequency of holding an

can be explained and demonstrated.

exhibition is not high.

3. Products can be shown to targeted audience 4. can give further information 5. Products can actually be seen and examined (k) The internet

8

1. It is an interactive medium where

1. The coverage is limited only to those

the user can key in input and obtain

who surf the internet and visit the

response immediately.

website.

2. The medium uses multimedia to

2. The advertising message placed has

create realism in advertisements.

to compete with many other messages

3. The advertiser can place the

for attentions.

Prepared By: Emmanuel George

Advertising advertisements in a popular website or he can create his own home page. 4. The advertising message has longer life span than a television commercial or a radio message as the user can always go back to the website previously visited. 5. The advertising message can reach selected target groups. 6. The cost of advertising in this medium is relatively low compared Catalogues

with the television. 1. can give full details

1. maybe expensive to

2. can be shown in colors

produce/circulate

3. can show all the products in one 2. may reach only a selected group catalogue

3. limited to the literate

4. can be referred to repeatedly

FACTORS AFFECTING THE CHOICE OF MEDIA The choice of advertising media depends on the following factors: Nature of the product or service 1. The medium chosen must fit the product or the service to be advertised. Goods, especially new ones that require explanations and demonstrations are best advertised at trade fairs and exhibitions. Alternatively, salesmen can visit homes to demonstrate the use of household appliances, etc. Women's clothes are best shown in fashion shows or women's magazines. Services such as self-service petrol kiosks and Automated Teller machine (ATM) services are best demonstrated over the television network as television commercials combine sight, sound and movement which can create a more dramatic impact than the other media. Besides, television commercials can reach a large number of viewers. Target market 1. Target market refers to the group of people that the advertisement is aimed at. Groups of people may differ in terms of income, age or sex. The medium chosen must fit the target group, i.e. the group of people who will likely buy the product or service. For example, if you are trying to reach the female market, then women's magazines may be appropriate. If you

9

Commerce – Students’ Guide Department of Business and Computing

are trying to reach to children, then you may select television as the medium especially during children's programmes. Extent of market: Local, national, international 1. If wide coverage is needed for a certain advertisement, the national newspaper will be a more appropriate medium than the local newspaper. However, the local newspaper will be useful for tapping the local market, e.g. selling used car or renting a room or a house. Television is probably the most popular medium for disseminating any advertising message to the mass market which includes both the literate and the illiterate. For example, advertisers can reach the world market through live telecast of football or boxing which has international appeal. Cost 1. The cost of using the medium should be considered in relation to the budget or the amount of funds available and the circulation of the medium. For example, a small firm intends to advertise the sale of used cars but it has allocated a small budget for this purpose. As such, we can rule out television as a choice as the cost of advertising on television is very high. Instead, the firm may put a small advertisement in the newspaper. 2. The advertiser should also weigh the relative benefits of the media with their relative costs when making a choice. Although the cost of advertising on television may be high, the size of the audience it will reach is great, resulting in lower cost per exposure. 3. The standard criterion for comparing media is cost per thousand, i.e. the cost of reaching 1000 members of the target audience. Cost per thousand enables the advertiser to compare the cost of different media, such as television versus radio or magazine versus newspaper. Flexibility 1. Flexibility refers to the ease with which the advertiser can change the advertisement so as to adapt to different conditions and circumstances. As a medium, the magazine generally has less flexibility than the newspaper. As the former requires the finalized layout weeks before publication, the advertisement in the magazine cannot be changed easily, whereas the advertisement in a newspaper can be changed days before its publication. Radio provides greater flexibility as the advertiser can change the advertisement more easily, even on the day the advertisement is aired. Noise 1. The 'noise level' refers to the level of distraction for the targeted audience. The noise level for an advertisement in the newspaper is great, meaning that other advertisements in the 10

Prepared By: Emmanuel George

Advertising newspaper as well as news reports distract the reader's attention from the advertising message. On the other hand, television commercials encounter a lower level of distraction because the commercials are aired one at a time and can capture the viewers' attention. Compared with the newspaper and the television, the cinema encounters the lowest level of distraction as a medium - an advertising message can capture the full attention of the audience in a cinema. Lifespan The lifespan of an advertisement refers to the length of time an advertisement will be on display. Different media have different life spans. For example, a radio or a television commercial has short lifespan - it will last only for a few seconds. Listeners cannot replay the commercial unless they record the programme. On the other hand, an advertisement in the newspaper or the magazine has a longer lifespan as the advertisement can be read and reread several times. It can also be filed and passed on to other people.

ANALYSIS OF GIVEN SITUATIONS IN THE CHOICE OF ADVERTISING MEDIA 1. Natro is an established company. It intends to market a new brand of instant noodle, Ramee, to people of all walks of life and at national level. The company has found out that a significant proportion of the target group consists of the illiterate and that watching television is more popular than listening to radio among the target audience. The company has allocated a big budget for this purpose. State, with reasons, which advertising medium you would recommend. Natro could use the television as the advertising medium. Reasons for choice (a) Since the target audience consists of people of all walks of life, the medium chosen should be able to reach mass target group. With this point in mind, we can rule out the magazine, the direct mail and the other media that can reach only a small number of people. (b) However, it has been pointed out that a significant proportion of the target group consists of the illiterate. As such, an advertising message in the newspaper may not reach this group of audience. (c) It has been found that watching television is a more popular pastime than listening to radio. We can assume that television commercials will be able to reach a bigger target audience than radio commercials. (d) Natro is an established company and it has allocated a big budget for the purpose of marketing this new brand of instant noodle. Assuming that the company can bear the cost of

11

Commerce – Students’ Guide Department of Business and Computing

advertising Ramee on television, the following are the advantages of advertising on television over the other media: (i) Instant noodle is a product of general demand as it is likely to be consumed by most people. Television represents the best choice as it can reach a large number of audience including children, the illiterate and those who do not read the newspaper. (ii) Television commercials combine sight, sound and movements which can create a more dramatic impact than the other media. (iii) Advertisements of Ramee on television can be repeated to the point where a sufficient number of viewers have seen the advertisements to create an effective and lasting impact. (iv) The advertisements can be aired at the national level. (v) There is high audience attention. (vi)The time chosen for airing the advertisement for Ramee can suit the target audience, e.g. during snack or meal times. 2. An established company intends to market an expensive camera. The prospective buyers are likely to be photograph enthusiasts. The general public is probably not interested in this product due to its high price and the use of this camera requires high level of competency. The camera has several new features which need to be explained to the prospective buyers. State, with reasons, which advertising medium you would recommend. The company could use an up-market magazine, a popular photography magazine or a journal/magazine subscribed by photography enthusiasts as the advertising medium. Reasons for choice (a) Since the target group is exclusively limited to those who are rich and are very interested in photography, radio, television and other media that can reach mass audience can be ruled out, or it will be a waste. (b) As the new features need to be explained to the prospective buyers, radio and television can be ruled out. On the other hand, print media such as the newspaper or the magazine may be more suitable as the media allow the features to be explained in great detail. Advertisement in a magazine can be directed more specifically to the target audience, i.e. photography enthusiasts who can afford to buy the expensive camera whereas advertisement in a newspaper is directed to mass audience. As the advertising message is directed at the intended audience, there will be less waste. (c) The up-market magazine will be able to address to those people who have sophisticated and expensive tastes. (d) The high quality of production in the magazine will enable the advertisement to bring out the outstanding features of the camera. 12

Prepared By: Emmanuel George

Advertising (e) An advertisement in the magazine enjoys a longer life span than the newspaper. (f) The advertising message in the magazine can be read in a leisurely manner. It can be read and re-read. It can also be filed for future reference. 3. Miss Wong Meilin intends to advertise for the sale of her used car a three-year old Honda Civic. She thinks the prospective buyers will probably be those in the same town that she is staying now. She does not intend to spend a lot of money on the advertisement Can you advise her on the medium she should choose to place the advertisement? State the reasons for your choice of the medium. Miss Wong Meilin could use the 'Classified Ad' column in a local newspaper as the advertising medium. Reasons for choice (a) The cost of advertising in a local 'Classified Ad' column is very low compared with other media. (b) The target market is focused as those who are interested to buy used cars will look up the 'Classified Ad' column. (c) The advertisement in a newspaper can reach a large number of target audiences. (d) Advertising in a local newspaper is generally cheaper than in a national newspaper. (e) The target audience is likely to be those living in the same town as Miss Wong. 4. Mr. Ramasamy intends to sell Indian shawls at a special price by post. A shawl is a large piece of woolen cloth which is worn by women over their shoulders or head, or which is wrapped around a baby to keep it warm. Mr. Ramasamy thinks that the prospective buyers are largely Indian women and he has obtained a list of names and addresses of those Indian women who will likely buy this product. If you were Mr. Ramasamy, which medium will you choose to market your special offer Indian shawls? State your reasons for the choice. Mr. Ramasamy could use the direct mail as the advertising medium. Reasons for choice (a) As the product is demanded only by a specific group of people, the media chosen must address only an exclusive group. So, media such as radio and television which address mass audience will be a waste. On the other hand, as direct mail reaches selectively, i.e. the prospective buyers and not the general public, this medium will have minimum waste. (b) As Mr Ramasamy has already obtained the list of names and addresses of those who will likely buy the product, this list will facilitate in the use of the direct mail, i.e. information about the product can be sent to those on the list and order can be obtained by post, phone or

13

Commerce – Students’ Guide Department of Business and Computing

facsimile transmission. (c) There is no competition for the same medium. (d) As the product is a special offer item, Mr. Ramasamy is not prepared to spend a lot of money on advertising through other more expensive media.

METHODS OF APPEAL Devices and methods of appeal e.g. music, colours, famous people and emotions. “SEARCHE” Social acceptance: A consumer could make more friends if a particular brand of deodorant is used. Economy: Bike manufacturers advertise their products highlighting the less fuel consumption and more mileage. Ambition and success: The customer can be persuaded that if he buys a particular brand of cloths he could get a better job. Romance: If a woman buys a particular cream she could become more beautiful and attractive. Comedy: If an advertisement is amusing the product shown will be remembered by the consumers and therefore they might buy it. Hero worship: A well-known personality can be used to advertise the product. It is hoped that consumer will buy the product because of the appeal of the p e r s o n a l i t y. Easy life: Buying a new brand of washing machine will give the consumer more leisure.

SALES PROMORTION Sales Promotion, element of the marketing process that can close the sale of good or services to a potential customer by providing the incentive to buy. Sales promotion, advertising, and salesmanship are the major techniques used in merchandising products to 14

Prepared By: Emmanuel George

Advertising the public. Salesmanship often takes the form of a face-to-face encounter between the buyer and seller; the presentation is set up to convince customers that the product on sales is essential to their satisfaction. The lack of personal feedback between buyer and seller is sometimes considered a drawback of the advertising approach. Selling by telephone, although it is significantly less effective than selling, is still considered an important method of merchandising. Since the 1980s, a growing promotional technique has been use in-home shopping programs on cable television channels and computer networks.

DISTINCTION BETWEEN ADVERTISING AND SALES PROMOTION Advertising aims at persuading customers whereas sales promotion aims at promoting sales. Advertising is done through indoor and outdoor advertising media whereas sales promotion is done through gifts, price reductions, special offers, point of sale, offers, sponsorship and trade fairs and exhibitions. Sales promotion might be carried out for a specific period whereas advertising needs to be carried out through out the life of the product.

METHODS OF SALES PROMOTION Free samples This is the best way of introducing a product. It is very expensive as samples are given to every household. Price reduction Customers often expect household articles to be offered at reduced prices. Some producers distribute coupons to customers. The customer can use these coupons for part payments. Competition Sometimes competitions are held. Customers have to purchase several packets of the producer’s goods to enter the competition. Free gifts Gifts such as glasses, caps or cups may be given to customers if they buy the producer’s goods. Point of sales In a trade fair or exhibitions, the producer of a product has a stall where the salesmen do a free product demonstration and at the spot, sale is done with offers and gifts. Sponsorship

15

Commerce – Students’ Guide Department of Business and Computing

The manufacturer or a wholesaler or a large scale retailer come forward to sponsor a musical programme, or a film, or a drama, or a sport event on a public media like TV, Radio, National daily etc., by incurring all the expenditure to conduct the programmes. The manufacturer or a wholesaler or a large scale retailer advertise their product/service while a film, or a drama, or a sport event on a public media like TV, Radio, are either telecast or broadcast so that they can draw public attention. Special offers During festivals many traders announce special offers. These offers carry a special discount or a free service during a specific period of time. Customers tend to buy more when there are offers. Example, during New Year eve, manufacturers announce 20 – 30% special offers on certain range of consumer goods like home appliances, consumer durables and fabric items. TRENDS IN ADVERTISING

DIGITAL BILLBOARDS This is an advertising media. In this media, very large screens are used to display the advertisement. Digital billboards are placed in busy streets so that the advertised messages can be reached to large number of people. The information about the product is given orally to passersby.

Internet This is the recent development in communication. Through World Wide Web, information can be browsed. Nowadays, advertisers wish do advertise through Internet as ads can be seen by millions through out the world. The internet

1. It is an interactive medium

1. The coverage is limited only to

where the user can key in input

those who surf the internet and

and obtain response

visit the website.

immediately.

2. The advertising message

2. The medium uses multimedia

placed has to compete with many

to create realism in

other messages for attentions.

advertisements. 3. The advertiser can place the advertisements in a popular website or he can create his own home page. 16

Prepared By: Emmanuel George

Advertising 4. The advertising message has longer life span than a television commercial or a radio message as the user can always go back to the website previously visited. 5. The advertising message can reach selected target groups. 6. The cost of advertising in this medium is relatively low compared with the television.

E-COMMERCE E-Commerce, abbreviation for electronic commerce, usually defined as the conduct of business online, via the internet. Until recently, e-commerce was limited mainly to large companies and their suppliers, who connected their computer together to speed up ordering and payment system. Today, millions of people are involved in e-commerce on the internet when, for example, they visit World Wide Web sites to buy books or CDs, order flowers or pizzas, or check their bank accounts. In the narrow definition of e-commerce, the term covers the buying and selling of goods and services using computer communications. Successful e-commerce ultimately leads to some form of payment, and ideally this will involve “electronic fund transfer” (EFT): in other word, the payment will be made via an electronic message, not in physical form such as cash or a cheque. Advantages of E-commerce to the customers 1. Online catalogues can be viewed 2. Their is much bigger choice for products 3. Products review can be obtained before we buy the goods 4. Orders can be placed 24 hours a day 5. Goods or services are usually cheaper on internet as the middlemen are cut 6. Once the customer has placed an initial order, the customer details are stored and makes shopping online very fast 7. You can buy goods and services from anywhere in the world

17

Commerce – Students’ Guide Department of Business and Computing

Advantages to the traders 1. Global marketing is easy 2. Can offer goods at highly competitive price 3. Payments can be collected easily and fast through online 4. Middlemen are not required so the selling cost can be cut down 5. Traders can provide or demonstrate any product information through online Disadvantages to the customers 1. The product seen on online may not be matching with the product specification 2. No customer and trader direct dealing Disadvantages to traders 1. Increase through sales is too difficult as the accessibility to internet for the customer is too narrow 2. Absence of customer personal service can discourage online shopping 3. The sales cost through online shopping can be more when compared to direct 4. selling

18

Prepared By: Emmanuel George