Discussion 2
Katie Cordova
BUSI 620
September 7th, 2016
4.) What are the advantages and disadvantages of estimating demand by virtual shopping?
The new advances in technology have intensely changed the commercial market place.
Consumers are able to directly access any company’s online store and instantaneously make
purchases. These changes in convenience, in comparison to ‘brick and mortar’ stores, have
radically altered the nature of shopping. Cullen (2009) illustrates how companies have the
capability to produce a virtual storefront, and they are not limited by geographic location or time.
In addition, companies are capable of increasing their market by merely increasing their market
span whereas conventionally this could be extremely expensive and time consuming. Likewise, it
is also easier for virtual companies to create a brand image over website design, product
packaging, and marketing tactics (Cullen, 2009). Though the virtual marketplace has abundant
benefits, there are also problematic challenges for companies such as estimating demand.
Habitually, demand could be estimated based on its elasticity and the characteristics of
complementary and substitute goods. These methods can still be used, but identifying the
elements of a product’s demand has become more difficult. Virtual shopping has nurtured a much
more competitive marketplace because online shoppers are capable of instantly comparing prices
of all competitors before making a purchasing decision, while at physical stores this process of
comparing prices would be much more time consuming. Although research progressions in this
area have assisted companies to estimating demand, there are still several disadvantages of
estimating demand in the virtual marketplace. For example, the online marketplace is continually
changing and companies can’t merely open a store in a primary geographical location and be
successful. Virtual stores must contemplate several aspects to estimate demand such as the
amount of competitors, the degree of price rivalry, the success of numerous advertisement
approaches, and trending URL and keyword searches. These dynamic characteristics make it
challenging for a virtual store to efficiently acquire factors of demand (Cullen, 2009). In
addition, price comparison websites have been established to aid consumers compare prices, and
these websites are not always truthful and can skew a company’s product demand (Baye et al.,
2004). It is important to identify the market is continuously changing. As technology continues to
further develop and the increase of virtual shopping continues to rise, buying trends will also
change. There will always be advantages and disadvantages to these advancements in technology
and in order to succeed a company must keep up with the latest advancement.
5.) How important is saving for a household and the economy? How much should be saved?
Saving money is more beneficial and important for a household, as some of the
opportunities for a house hold to save also help the economy. In a household, individuals save
money to prepare themselves for future events and unexpected emergencies. In general,
individuals should set aside money from each paycheck to tap into in case an emergency
transpires. This is true, “especially with the unemployment rate still high and people taking
longer to find jobs. That’s why many financial experts are now recommending having 8-12
months of necessary living expenses rather than the traditional 3-6” (Carter, 2012). An individual
can also save by investing in the economy and government. By investing in the economy and
government, individuals are able to stimulate the economy but with a risk on themselves. Before
an individual chooses to put savings into any investments, it is advised that they should contact a
References
financial investment expert. The economy can best emulate by individuals spending their money,
but as Dunleavey (2008) references, the economy can wait and people should stimulate their
savings first. “One of the oldest chestnuts in personal finance is, ‘Pay yourself first.’ Knocking
down high-interest debt and building emergency savings would top that list” (Dunleavey, 2008,
C6).The economy can be enthused by varied households savings, but generally a household must
initiate the saving process.
Baye, M. R., Morgan, J., & Scholten, P. (2004). Price Dispersion In The Small And In The
Large: Evidence From An Internet Price Comparison Site. J Industrial Economics
Journal of Industrial Economics, 52(4), 463-496. doi:10.1111/j.0022-1821.2004.00236.x
Carter, E. (2012). 10 common money management mistakes that you’re probably
making.Forbes.Retrieved from
http://www.forbes.com/sites/financialfinesse/2012/08/29/10-common-money-
management-mistakes-that-youre-probably-making/
Cullen, J. (2009).
Http://www.cimaglobal.com/Documents/ImportedDocuments/cid_mag_supply_chain_au
g09.pdf. Retrieved September 07, 2016
Dunleavey, M. P. (2008, Jun 28). Economy can wait; stimulate your savings.New YorkTimes
(1923-Current File).Retrieved fromhttp://search.proquest.com/docview/897120882?
accountid=12085
Salvatore, D. (2013).Managerial economics in a global economy(7th ed.). New York,NY: Oxford
University Press
