Chapter 16 – Technology and the Marketing Mix

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Cambridge IGCSE Business Studies

Chapter 16: Technology and the Marketing Mix

Technology can affect all four Ps of the marketing mix. This chapter explains how businesses use websites, social media, viral marketing, e-commerce and dynamic pricing, as well as the opportunities and threats created for businesses and consumers.

Technology and 4PsSocial mediaViral marketingOwn websiteE-commerceB2B e-commerceOnline threatsDynamic pricing

Topic 1: Technology and the Four Ps

Technology changes product, price, place and promotion, but the marketing mix still needs to fit together.

1. How Technology Affects the Marketing Mix

Technology can affect all four Ps of the marketing mix.

Product

Businesses can develop or improve products using new technology.

Example: adding new features to smartphones.

Price

Businesses can use online information about demand and customer behaviour to change prices.

Place

The internet allows businesses to sell products directly to customers through e-commerce.

Promotion

Businesses can promote products using websites, social media, sponsored links, blogs and online advertising.

Technology affects product, price, place and promotion

Topic 2: Online Promotion

Digital channels can help businesses reach customers, update information and encourage sharing.

2. Social Media Marketing

Social media marketing is the use of social media networks to create and share content in order to achieve marketing and branding objectives.

Examples include

Social media marketing and viral marketing

3. Benefits of Social Media Marketing

Important benefits include:

  1. Targeting customers: Businesses can target particular groups of consumers.
  2. Low cost: Advertising through social media can be cheaper than traditional advertising methods.
  3. Quick updates: Businesses can respond quickly to changes in prices, products and customer preferences.
  4. Large reach: Social media can reach customers who may be difficult to reach through traditional advertising.

4. Limitations of Social Media Marketing

Important limitations include:

  1. Customers may find adverts annoying: This could create a negative image of the business.
  2. Not everyone uses social media: Some potential customers may not see the advertisements.
  3. Negative information can spread quickly: Messages may be changed, shared or used negatively, creating bad publicity.

5. Viral Marketing

Viral marketing occurs when consumers are encouraged to share information online about a business or its products.
Example: A customer shares a company's promotional video with friends, who then share it with other people.

Benefit

Information can spread to a very large number of potential customers quickly.

Risk

The business may lose control over how the message is shared or interpreted.

6. Advertising on a Business's Own Website

Businesses can also advertise through their own websites.

Benefits

  • No additional advertising cost once the website exists.
  • The business has control over the content.
  • Prices and product information can be updated quickly.
  • Large amounts of information can be provided.

Limitations

  • Customers must first find the website.
  • The website may appear low in search results.
  • Designing and updating a professional website can be expensive.

Topic 3: E-commerce

E-commerce creates opportunities and threats for both businesses and consumers.

7. E-commerce

E-commerce is the buying and selling of goods and services online using computers or mobile devices connected to the internet.

Examples include customers

Businesses can also purchase from other businesses online. This is known as business-to-business (B2B) e-commerce.
E-commerce opportunities and threats for businesses and consumers

8. Opportunities of E-commerce for Businesses

  1. Access to a wider market: Businesses can sell to customers nationally and internationally. A business may reach countries where it has no physical shops.
  2. Lower costs of reaching customers: A website can promote products worldwide without opening shops in many different locations.
  3. Easier ordering: Orders can be placed online and sent directly to warehouses for dispatch.
  4. Shops may not be needed: Some businesses can reduce the number of physical shops they operate.

9. Threats of E-commerce for Businesses

  1. Increased competition: Customers can quickly compare products and prices from many businesses. This makes it easier to switch to competitors.
  2. Website costs: A professional website can be expensive to design, maintain and update.
  3. Distribution costs: Individual orders have to be packed, transported and delivered. This may increase costs.
  4. Less direct contact with customers: The business may lose useful face-to-face feedback from customers.

10. Opportunities of E-commerce for Consumers

  1. Convenience: Customers can shop without leaving home.
  2. Easy comparison: Customers can quickly compare prices, products and services.
  3. Wider choice: Consumers can buy products from businesses located in other countries.
  4. Lower prices: Greater competition between online businesses may result in lower prices.

11. Threats of E-commerce for Consumers

  1. Cannot physically examine products: Customers cannot always see, touch or try on the product before buying.
  2. Security risks: Consumers may worry about credit-card fraud and identity theft.
  3. No personal contact: Customers cannot easily ask sales employees for advice.
  4. Internet or technical problems: Poor internet connections or computer-system failures can prevent purchases.

12. E-commerce: Business vs Consumer

BusinessConsumer
Can reach global marketsGreater choice
May reduce need for shopsConvenient shopping
Faces more competitionCan compare prices easily
Website and delivery costs may be highCannot examine product physically
Less face-to-face customer contactPossible security risks

Topic 4: Choosing Technology Carefully

E-commerce and dynamic pricing should be applied to the business situation, not assumed to be always better.

13. E-commerce Is Not Suitable for Every Business

Not all products and services are suitable for online selling.

E-commerce may be less suitable when customers expect:

Examples include: hairdressing, some customised products and certain personal services.
Exam point: Do not assume: "E-commerce is always better." The best method depends on the product, customers, costs and need for personal service.
E-commerce suitability and dynamic pricing

14. Dynamic Pricing

Dynamic pricing occurs when businesses change prices according to the level of demand.
High online demand→Price may increase
Low online demand→Price may decrease

Technology makes dynamic pricing easier because businesses can monitor online demand quickly.

Key Definitions

TermMeaning
Social media marketingUsing social media content and advertising to achieve marketing and branding objectives
Viral marketingEncouraging consumers to share information online about products
E-commerceOnline buying and selling of goods and services
B2B e-commerceOnline transactions between businesses
Dynamic pricingChanging prices according to changes in demand

What Students Must Know for the Examination

Students should be able to:

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