Since the introduction of the World Wide Web in 1990 it has grown from a means of communicating for physicists to having more than forty million users.
This tremendous growth and interest in the Internet can only mean that great opportunities lie ahead for companies and their products. Digital marketing is changing how businesses are able to get their product to the consumer. It is allowing the channels of distribution to become shorter. In order to understand the channels of distribution and how they are becoming shorter, the concept must be explained.The traditional channels of distribution consist of the product, producer, wholesaler, retailer, and the consumer. This means that first there is a product. Then there has to be someone to produce the product. The product is usually produced in mass quantity.
Then the wholesaler purchases the product from the producer and then sells it to the retailer at an increased price. The retailer then advertises the product to promote it to the consumer. The retailer also sells the product to the consumer at an increased price. This process makes for very long channels with increased costs of the products.Digital marketing has changed the flow of distribution channels.
It has done this by allowing the channels to become shorter. Products may pass directly from the producer to the consumer, via a digital marketer. This means that instead of having multiple channels in distribution there might just be three. Producer, virtual marketer and consumer. It could also be just producer and consumer (Kleindl, Brad, 1996:10).
One of the ways that digital marketing can shorten the channels of distribution is by eliminating the retailer and the intermediate wholesaler.The producer will be able to deliver the product directly to the consumer with the help of the digital marketer and the shipper of the product. This means decreased time periods and also allows the producer to produce the product on an as needed basis. If this were the case then the costs associated with warehousing product would be decreased. Also there would not be any waste. Another benefit of digital marketing is that it is a truly interactive environment. In the past the effective methods of advertising have been print, television and radio (among others).What this means is that digital marketers will be able to provide information to prospective buyers and the buyers will be able to provide commentary back to the marketer as to what they like and don t like about the product.
An example of what digital marketing means to a company can be shown by Wal-Mart. In August Wal-Mart launched their online web site. This site contains over 1,500 Wal-Mart items and over 2,000 Sam s products. These products are not found in the stores. With the help if digital marketing Wal-Mart has a very real chance to expand its customer base.
The first day of the site being open for open on the Internet they had about one million Internet users stop by their site in one day. They will be able to offer upscale items at hefty discounts. Because of the interactive facet to digital marketing Wal-Mart will be able to count the value of the advertising as they have not been able to do in the past with print ads. When a consumer sees something they wish to purchase they just put a request in for the product, pay via credit card and the product arrives forty-eight hours later, thanks to UPS (Discount Store News, August 1996:1).