Infrastructure, e-business, e-commerce and the use of social media for business purposes
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How can the digital economy make markets easier to access?
It opens up channels that connect buyers and sellers all over the globe so good can be bought more easily
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What is structural change?
A reallocation of resources; where demand is falling, some producers will exit the market and where demand is rising, new entrants will set up businesses to meet the demand
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How has the digital economy brought about structural change?
It has altered the face of the traditional high street and given more power to buyers and consumers
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How have price comparison sites increased the power of the consumer?
Consumers can identify the best deal and maximise their spending power
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What have retailers had to do since price comparison sites were introduced?
They have had to review their pricing strategies or develop other ways of achieving competitive advantage
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What is viral marketing?
A strategy that spreads product information from person to person as individuals respond to the message and pass it on to their friends via social media
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What is social media?
It is based on digital communication devices through which users create on-line communities to share information
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What is micromarketing?
Businesses target small groups of consumers via social media with personalised recommendations or promotions
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Why is market segmentation easier for businesses that are online?
It makes it easier to identify small groups of potential customers and keep in touch with them by analysing its users' buying and browsing history to generate individual recommendations
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How do businesses that are only online create a competitive advantage?
Storage costs are lower than rent for a high street shop so they can decrease prices and they can carry a wider range of products, including those for very niche markets
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How are traditional retailers finding ways to adapt and retain customers?
Keeping shops open so that the customers can look at their stock and get face-to-face advice before deciding what to buy and encouraging online ordering
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How is recruitment easier for businesses now?
They can use sites such as LinkedIn that provide information about users' skills, training can be done online and contacts can be made all over the world
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What does 'The Long Tail' describe?
That retailer online can offer very niche products alongside the traditional bestsellers, as previously it would not have been worthwhile stocking them due to limited demand but the revenue from niche markets may outway the revenue from the hits
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How have wider geographical markets developed for many businesses?
Because online access makes it possible to gather customers worldwide, as it may help smaller businesses grow through economies of scale as location is not as important
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How are costs, prices, profit and loss affected by the digital economy?
Businesses can reduce fixed costs by choosing a low cost location where they can recruit unskilled or semi-skilled workers for low pay which will undercut businesses on the high street
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How has the digital economy created and destroyed firms in a new business environment?
Start-ups that have lead to creative destruction have flourished and the competition may have kept inflation down
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Other cards in this set
Card 2
Front
What does the digital economy consist of?
Back
Infrastructure, e-business, e-commerce and the use of social media for business purposes
Card 3
Front
How can the digital economy make markets easier to access?
Back
Card 4
Front
What is structural change?
Back
Card 5
Front
How has the digital economy brought about structural change?
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