MKTG302 Digital Marketing- Internet Economy

1. Some firms choose to generate revenue by selling or licensing their proprietary software. Other choose an open systems approach and distribute it free of charge. What do you think drives this decision?

2. According to your textbook, eToys.com suggests that multichannel retailers are more likely to experience long-run success in the Internet economy than pure-play Internet retailers. Take a position on this conjecture and defend your positions.

Answers

1: There are various reasons that drive the reasons for monetarization of software. There are some companies that would want to keep their software free and then there would be some which wants to make money form their software. For example, Selenium is open source code testing software that could be used for free. However, there is another software on similar line, UFT (Unified Functional Testing) form HP that is not free. One of the reasons that drive this decision is the underlying objective associated with the development of software (Bowie & Paraskevas, 2014). HP developed UFT with a single objective of profit realization and therefore it is sold as a licensed version in the market. On the other hand, Thought Works developed selenium with the purpose of helping the community and therefore the software is available for free in the market. There could also be other reasons like existing competition in the market, type of software, etc. If the objective of the organization is to increase the user base, then the monetization of software may not be a good strategy (Lewis & Whysall, 2014). For example, software like FB are freely available for as the objective of the company is to acquire more and more users. For FB, monetization happens through advertisement and therefore, the software is freely available for the end users. However, for the software where there is no option for advertisement the income happens through licenses only. For example, the commercial software are sold to business with licenses as there is no scope of advertisement as these software are not end user facing.

2: I think it is very difficult to comment about the long-term success of Internet retailer and multichannel retailer. However, I would agree that multichannel retailer may have an edge over the pure-play Internet retailer. There are various products that the customers would want to see and feel before they buy the product and this personal touch is limited in Internet retailing. It is true that there are various advantages of Internet retailing over the multichannel retailer like cost and efficiency (Verhoef & Kannan, 2015). However, there would always be a customer base who would want to store in physical store before. With multichannel retailer, retailers can actually focus on the benefits of both the channels of online and offline. It is important to mention that multichannel retailer is not only about focusing on the physical retailing. Basically, the idea of multichannel retailer is to make the maximum benefit of an integrated approach between Internet retailing and multichannel retailer (Lewis & Whysall, 2014). Therefore, it would be a good idea for players like eToys.com and other players to focus on multichannel retailing.

References

Bowie, D., Paraskevas, A., & Mariussen, A. (2014). Technology-driven online marketing performance measurement: lessons from affiliate marketing. International Journal of Online Marketing, 4(4), 1-16.

Lewis, J., Whysall, P., & Foster, C. (2014). Drivers and technology-related obstacles in moving to multichannel retailing. International Journal of Electronic Commerce, 18(4), 43-68.

Shih, B. Y., Chen, C. Y., & Chen, Z. S. (2013). Retracted: an empirical study of an internet marketing strategy for search engine optimization. Human Factors and Ergonomics in Manufacturing & Service Industries, 23(6), 528-540.

Verhoef, P. C., Kannan, P. K., & Inman, J. J. (2015). From multi-channel retailing to omni-channel retailing: introduction to the special issue on multi-channel retailing. Journal of retailing, 91(2), 174-181.