How Web Gives Company a Competitive Advantage, Essay Example

The competition has been growing intense due to globalization which translates to lower pricing power and profit margins. But the internet can help a company increase its pricing power and profits by developing stronger customer loyalty. Unlike traditional marketing channels such as TV and newspapers where the communication is primarily one-way, internet allows two-way communication. Thus, a company cannot only transmit marketing messages to customers but can also receive feedback upon which it can act to increase customer engagement and loyalty.

Internet has particularly been a blessing for smaller companies who have limited resources. First of all, internet makes it possible for smaller companies to quickly setup operations because unlike the real world, e-shops do not require huge time and financial investments in retail facilities. Similarly, smaller companies cannot only save on marketing expenditure by utilizing internet marketing channels but also have greater control over their marketing strategy execution. In addition, it is possible for them to measure the effectiveness of their marketing messages and even collect valuable intelligence from the customers regarding potential improvements to current product line or future product development.

One of the benefits of globalization has been expanded international market opportunities but international business carries significant risks due to differences in culture, consumer lifestyles, and business practices. But internet makes it possible for companies to not only expand into international markets more cheaply and quickly but it also helps reduce the risk of failure. Thanks to social media, companies can build brand awareness among international consumers without ever leaving the country. Internet marketing intelligence can also help the company assess potential interest from international customers and gather data from them to develop more effective marketing mix. But even if a company doesn’t pursue international expansion, the market size in home country is also expanded without any need for heavy investment in nationwide physical distribution network.

One of the greatest and most valuable marketing tactics a company can use on the internet is word-of-mouth marketing and there are two major reasons. One reason is that news spreads really fast on the internet and we often refer to such news as ‘viral’. Thus, any extraordinary product/service and/or customer service experience by a consumer can provide valuable exposure and brand credibility to a company. There is a reason companies actively monitor social media activity of their customers because they know the benefits of good experience as well as the huge costs a negative experience may impose. Another reason word-of-mouth marketing has a huge potential on the web is the high degree of trust and confidence individuals place on friends and family members. Users on social media are connected to hundreds of other people if not thousands, most of whom they personally know. Thus, endorsement of any product/service by an individual increases the credibility of that particular product/service in the eye of his family members and friends. In markets where numerous companies may be competing for customers’ attention, word-of-mouth marketing helps a company stand out from the competition.

It is clear that internet can help a company gain a competitive advantage, especially small companies with limited resources. One of the greatest benefits internet provides to marketers is the ability to have two-way conversation with customers and better understand their product/service experiences and needs. At a time when customers have increasingly wider choices, it is important for companies to differentiate themselves. Similarly, internet may also help the company significantly expand its reach and market size with minimum risks, especially in international markets.