(fa/sa) "Competitive Pricing through Advertising Savings"
Online cd sales have less costs to offset than brick and mortar locations.
Online there is no inventory, no real estate associated costs, less employee costs, et cetera so, in theory, online cd sellers can deeper discount than brick/mortars and receive similar margins.
Now all etailors have to direct traffic to their sites. They aren't located on retail strips or on pedestrian thoroughfares, so they have to advertized to attract customers.
This is a high "cost" for online companies. To offset this cost, online etailors typically can't discount deeper. In reality, many online etailors to offset high advertizing costs, end up breaking even or losing money on their actual sales. Consequently, the big boys buy.com and amazon to generate additional revenue, like you suggest, by selling space on their sites for advertizing, since their sites generate high traffic.
However, this "volume" model hasn't seemed to work efficiently enough to offset lost margins especially since as more sites come on line and consumers have more choices, advertising space becomes dilluted.
Now tsig's "my card" model doesn't depend on the "volume" model. Tsig doesn't spend money on the costly means of direct advertizing like television, et cetera that have largely proven thus far to be ineffective anyway. Since tsig saves on this expense, theoretically they don't have the "costs" of advertising to recoup from sales.
Consequently, tsig's pricing can be more competive without losing their margins, since theoretically tsig has less traditional costs to offset compared to either brick/mortars, click/mortars, or other etailors.
With tsig's "my card" model, tsig actually generates revenues from its marketing strategy. Tsig's marketing strategy also retains the customer becuase of the duration of the discount for a number of purchases. Thus unlike other etailors, additional advertising doesn't have to be expended to get the customer back for their next purchase.
Hope this long winded explanation helps.
Sincerely,
z |
