Existing – pros:
Existing physical chains are better to go online because it is already established. The marketing plan, process and strategy are ascertained, as well as the suppliers, target markets and distribution channels. There is knowledge of the optimum marketing mix, profitable market segments and allocation of costs and staff. Research on buyer behaviour and SWOT analysis has been conducted and product ranges have been decided. With all this finalized, going online is a straight-forward task for an existing business as they can simply apply this knowledge and preparation into creating an online supermarket without completely starting from scratch.
An existing physical chain with an existing brand is better to go online because of its already founded success from having an established brand personality and brand equity. Branding invites customers, aiding with the process of going online. Having already gained a personality, familiarity with a company’s qualities make consumers comfortably accept their virtual supermarket. Its brand equity gives their products commercial value, developing a loyal consumer base that will follow them into the online world.
Established physical chains may benefit from going online by using this platform as an opportunity to improve their marketing strategy. Underperforming supermarkets can advertise their virtual store and enhance their promotion by highlighting the benefits of online shopping to gain more customers. Well-performing supermarkets can change their marketing strategy to optimize their performance. Going online, a company can adopt dynamic pricing to enhance the flexibility of their prices to attract consumers or conduct new market research on areas like online consumer behaviour and online consumers product preferences to further understand their target market.
Existing – cons:
Going online for existing physical chains increases the workload for employees and intermediaries. Establishing an online supermarket requires additional employees, workspace, equipment and inventory, as well as further collaboration. Employees will need to be trained and workspaces, equipment and inventory will need to be maintained, resulting in longer work hours. Increase collaboration with employees and intermediaries is an added effort, causing issues overtime as channel conflicts occur. Vertical channel conflict can happen between levels of a marketing channel and horizontal conflicts can happen between the same level of a marketing channel.
Acquiring additional staff and resources increases costs for existing chains to go online. New employees and overtime hours need to be paid as well as the new workspaces, equipment and inventory. Plus, the intermediary and distribution channel expenses.
Existing physical chains carry risks by going online. The development of a marketing plan and strategy for a virtual supermarket will determine its success. Careless planning and poor execution generate problems for companies. For example, targeting the wrong market segment reduces consumers, affecting the success of the company. Perhaps a physical chain chose to promote their online store to Generation Xers in their 50s and 60s. This is a wrong decision because the older demographics prefer physical shopping in comparison to the Generation Y, who are more internet savvy. Configuring their marketing mix to promote to younger generations can help resolve this matter.
Issues arise from errors in e-commerce applications. A human error could cease the transactional process of an online store, ultimately making it unusable. If not fixed immediately, consumers may not come back and think the company is unreliable and negligent, damaging its reputation. Similarly, a lengthy recovery or failure to reciprocate from accidents like a fire or earthquake will result in the same faith. Consumers would turn to competitors rather than wait for refurbishments to finish. Changes in the lifestyle today suggests that consumers dislike waiting to acquire goods, thus negatively impacting the business.
Startup – pros:
Startup companies are better to go online because it allows them to easily adapt to current market trends. Online retailing is becoming more prominent, especially to the younger generation making it an excellent project to pursue. Setting up online immediately pull consumers to the startup chain. Adapting other trends like web marketing and the use of web communities benefit startups as well. Web communities facilitate online interaction between consumers and can be utilized to identify consumer buying behaviours, such as good preferences and the reason for purchase. Web marketing allows for cost-effective marketing using existing media platforms, encouraging users to forward marketing promotions via social media or email. This yields significant media exposure and new consumers into the business.
Startups benefit from going online due to their novelty, differentiating them from known physical chains. Offering fresh merchandises and modern atmosphere invites consumers to inspect and purchase from startups. Part of the purchase decision process is for consumers to seek information and find alternative goods. Through this they will encounter startup companies that deliver to their needs. Moreover, entering the perfectly competitive market presents the company with a significant market segment to choose from since this market contains many sellers and buyers. Unsatisfied market segments are excellent target markets for startups because they can easily claim it and satisfy their wants and needs since no competitor fulfils them.
Startup companies have low consequences setting up online. They have no reputation, brand equity and few customers. Therefore, when a startup weakens, their reputation is not badly damaged compare to well-known physical chains. Brand equity is not gained so no commercial value is lost and having few customers means it is not inconveniencing many. These concerns are small, thus when a startup decides to rebuild, their positioning is not crucially destroyed. They can garner consumers without knowledge of their failures and continue to upgrade their brand equity to gain additional value and a better reputation.
Startups – cons:
New companies are disadvantaged by existing successful competitors. Competitors have a well-known brand personality, good brand equity, large customer base, resources and experience. Startups lack in these. However, to compete with competitors they can focus on their market orientation to gain a competitive advantage by observing and delivering to external marketing environments instead of just internal environments.
Startups have no established brand personality and brand equity, making it difficult to convince consumers of their worth. To obtain these additional benefits, new companies can conduct market research such as qualitative research. Researching improves marketing activities by finding consumers outlook on goods and buying methods. This is relevant and important in gaining psychological responses from consumers, helping startups learn what consumers want in a brand and how they see value in it. Solutions are achieved by going through the market research process.