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Marketing Challenges Essay

1102 words - 5 pages

Marketing Challenges in a New Economy
There is a new trend in today’s economy that does not involve large chain suppliers, retailers or wholesalers. This new trend involves companies that allow owners to rent out their physical assets to increase their income. This new business practice puts the producer directly in contact with the consumer to conduct business. This new trend in the consumer marketplace is known as the share economy. This paper will discuss how this new concept of the share economy has had an effect on the traditional economy and whether the shared economy is creating new value for the consumer or if it is just replacing existing business.
The share economy concept ...view middle of the document...

1). E-commerce is a large aspect in the growth of the new share market economy. People that are participating in this new market use the Internet to conduct business and reach consumers.
One example of a company that has used the Internet to participate in share economy is Airbnb. Airbnb allows for individuals who want to rent out their home or room in their home can register as a host on Airbnb.com. Individuals who are looking to take a vacation can rent from the hosts registered on the website. Technology or e-commerce has enabled these types of transactions to happen between buyers and sellers. With this ease of conducting business there has been an impact to the traditional economy. One impact that e-commerce has had on the economy is the impact of productivity and inflation. According to Willis (2004) businesses and consumers that use e-commerce benefit from a reduction in costs in terms of time and effort required to search for goods and services and to complete transactions. In the example of Airbnb, sellers are able to offer lower prices to rent out their homes because there are no additional costs or overhead for the seller, such as employees that a hotel has to compensate. This reduction in cost can then be passed down to the consumer.
Another area that the share economy concept has had an effect on is channel disintermediation. Finch (2012) defines channel disintermediation as when intermediaries from the supply chain or channel of distribution are bypassed or eliminated from the purchasing process. In the share market economy, the bypassing or eliminating of these middle-man parties leaves more visibility for consumers when reviewing pricing and brands. This visibility is even more greatly promoted with the increase of online transactions. Visibility is given to consumers through social media apps, such as Facebook and payment options are more direct with options such as PayPal and other smartphone apps (Geron, 2013, para 9). The impact that this visibility has had on the traditional economy is that “transparency reflects the degree to which market participants know the prevailing prices and the characteristics or attributes of goods or services on offer” (Clemons, 2002, p. 74). In the example of Airbnb and other share economy companies the transparency of the costs of...

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