Question #1
Priceline, Amazon, eBay, and Groupon make their money online through charging transaction fees to customers and sellers. Priceline’s business model is to allow customers to name their own price to sell unsold hotel rooms and seats on flights for those companies that utilize their services. Amazon receives most of their revenue through charging commission fees to its third-party sellers. They have expanded their services by offering additional services such as video rentals, memberships to their Prime program, and their Kindle sales. eBay makes its money through charging fees to its sellers for transactions. Fees are charged to list items for sale and once the item is sold, an additional commission fee is charged. Groupon, a social buying site makes its money by offering deals that are targeted to various geographic areas. The businesses that offer the deals pay a commission to Groupon who sells the deals via their website.
Even though Facebook is a free social networking site for members who join, the company makes its money through selling advertising to third-parties. The advertising is then displayed to the targeted demographic that the advertiser has specified. Additionally, Facebook makes money by partnering with third-parties who charge customers for participation in games or for making in-game purchases.
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LinkedIn is a professional social media network, which is free to join for a basic membership. The company offers an upgraded membership for a fee that allows members to access additional services. Additionally, the company sells advertising to third-parties that is geared toward business professionals.
Google offers a free service to its customers as an Internet search engine, but has expanded its business to include advertising by third-parties that are geared toward the user’s browsing histories. The company has expanded through strategic acquisitions of other companies and through its business interests with the Android operating system with mobile phones, the new Chromebook, and mobile apps.
All the aforementioned companies have expanded into mobile Internet, which has broadened their exposure and revenues. This is in response to the shift of consumers using the mobile Internet over its previous use from the desktop. This can be seen as a strategic move by all to secure their positions in the market.
Question #2b
Internet marketing has become an important part of the marketing mix for most companies to convey their messages to customers. Websites can be compared to what companies previously accomplished through brochures, but they can be much more extensive by offering video and audio components to the advertising message. Email marketing is now the equivalent of direct mail marketing. Banner ads are paid advertisements on websites that are comparable to paid advertisements that are placed in newspapers and magazines. Companies are able to tailor their messages to reach the demographic they are targeting through the preferences that are shown by the consumers’ tracked history on the Internet.
The Internet is the fastest way to reach customers with a company’s message. Social media is responsible for most of the word of mouth advertising. Advertising on television is becoming obsolete as viewers skip over commercials. Social media is not a fad, but the way advertising is headed for the future and companies need to pay attention to what their online image is and what people are saying about them online.
Jeff Korhan states that social responsibility is going to be the new currency as the economy comes out of its recession. Instead of addressing social issues as an afterthought, companies now should address social responsibility upfront as their new strategy to gain the following of socially conscious consumers. Productive companies are those that have found a balance between being socially motivated and profit motivated. Businesses need to contribute to the community by adding value first and then realize the profits later.
Question #3
Wells Fargo has increased its Internet presence and offers a full service website that allows customers to bank online and access the various banking products they offer. They have taken advantage of the trend toward mobility as it offers mobile apps for customer to gain access to their accounts and services. One of the mobile services they offer is the ability for customers to deposit checks with their cellphones. Currently, Wells Fargo is the fourth largest bank in the United States considering assets and market capitalization. The bank is estimated to have one out of every three households as a customer. In order to compete in the new economy, businesses need to transition along with and increased technological presence to remain competitive.
Wells Fargo has increased its web presence through social media outlets such as Facebook and YouTube to connect with customers. They have their own channel on YouTube where they feature a wide variety of videos about the company, their products, and offering advice to consumers. The Facebook page for Wells Fargo has almost half a million followers. The company posts information that would be considered of interest to their customers and potential customers.
- De La Merced, Michael. (2011). Is Groupon’s business model sustainable? Retrieved by http://dealbook.nytimes.com
- Leonard, Heather. (2013). BII Mobile insights: Which companies are making money in mobile? Retrieved from http://www.businessinsider.com/
- OneSource. (2013). Wells Fargo & Company. Retrieved from http://globalbb.onesource.com/
- Sorkin, Andrew. (2011). Groupon’s latest value raises doubt. Retrieved from http://dealbook.nytimes.com/
- WellsFargo. (2013). About us. Retrieved from https://www.wellsfargo.com
