Search Engines

[Hor Jin Ying]

Hi Mr William, I have some enquiries regarding TCM about how Search engine reduce search cost which are marketing cost for sellers. 

Can I explained it in this way:

Marketing cost are necessary investment made by sellers in looking for potential buyers. Hence, through search engine, firms can target their customers more specifically. When customers uses the search engine, relevant results will be displayed to them. And among the results, there will be the a link related to the firm product. 

It reduces the marketing cost as firms do not have to broad cast or advertise their message to open public just to attract the attention of their target segments but instead can target them more specifically. To add on, they can use Google adwords!

How search engine reduce contract and control cost and thus reducing risk of opportunistic behaviour 

Can I explain it this way?

Customers are able to evaluate the product online and also check out the reviews and feedbacks of other people to see if the seller and their product are good or not. As the reviews are done by other customers, it encourages transparency and trust. Hence, reduces the risk of opportunistic behaviour                        

                      

[William Toh]

Your explanations are generally fine, but you are not focused.  One moment you talked about sellers' point of view.  The next you discussed from the buyers' point of view.

Search engines reduce sellers' search costs only if they managed to be listed on the top of the search results for the specific keywords they are targeting, because their potential buyers are then most likely to click on their links.

Search engines generally do not reduce sellers' contracting and control costs much.  You can argue that search engines reduce sellers' contracting costs if they take the time to study the trending keywords/keyphrases of users and use that information to plan better products and services which appeal to more people.  Or you can say that site-level search engines allow customers to help themselves find descriptions of the products that they want to buy, so this automation reduces the company's contracting costs.

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