E-commerce, Platforms and Digital Business Models

Introduction and Context

E-commerce is the exchange of goods, services, information, or digital products through electronically mediated channels. It includes much more than an online shop. A contemporary e-commerce business may combine a website or application, social media, search advertising, payment services, logistics providers, customer-review systems, data analytics, and third-party sellers. Digital marketing therefore operates within a wider commercial system in which customer acquisition, transaction design, trust, fulfilment, and retention are closely connected.

The distinction between a conventional online retailer and a digital platform is particularly important. A retailer usually purchases or owns inventory and sells it to customers. A platform primarily enables interactions between two or more groups, such as buyers and sellers, hosts and guests, drivers and passengers, or advertisers and audiences. Some firms combine both models. Understanding this distinction helps marketers select appropriate objectives, metrics, communications, and governance practices.

An e-commerce journey is also broader than the traditional purchase funnel. Customers may discover a product on a social network, compare prices on a marketplace, read reviews on an independent site, complete payment through a mobile wallet, receive the product from a third-party fulfilment centre, and seek support through a messaging service. The marketing challenge is to create a coherent experience across these touchpoints while preserving profitability and customer trust.

Learning Objectives

By the end of this chapter, you should be able to:

1. Explain the stages and characteristics of an e-commerce customer journey.
2. Distinguish online retail, marketplaces, platform ecosystems, and direct-to-consumer models.
3. Explain subscription models, network effects, switching costs, and platform governance.
4. Describe the roles of digital payments, reviews, fulfilment, and customer service.
5. Apply basic e-commerce metrics to marketing decisions.
6. Evaluate the opportunities, risks, ethical issues, and strategic implications of platform-based business models.

1. The E-commerce Customer Journey

The customer journey is the sequence of experiences through which a person moves from a need or problem to discovery, evaluation, purchase, use, and possible repeat behaviour. The journey is not necessarily linear. Customers can enter at any stage, move backwards, abandon the process, or interact with several firms before purchasing.

1.1 Main journey stages

At the discovery stage, marketers seek reach and qualified traffic. At evaluation, the quality of product information and independent evidence becomes more important. At conversion, friction is often created by slow pages, compulsory registration, unexpected delivery costs, limited payment methods, or unclear returns policies. After purchase, fulfilment and support influence satisfaction as strongly as the promotional message.

A useful principle is that every promise made in marketing creates an operational obligation. A promise of same-day delivery requires suitable inventory, carrier capacity, accurate address data, and effective exception handling. Marketing and operations cannot be managed as separate systems when customers judge the firm by the complete experience.

1.2 Friction and trust

Friction is any obstacle that increases the effort, uncertainty, time, or perceived risk of completing a task. Examples include confusing navigation, repeated data entry, poor mobile design, hidden charges, or an unclear returns process. Trust reduces perceived risk. It is supported by transparent pricing, secure payment indicators, credible reviews, reliable fulfilment, accessible customer service, and consistent brand behaviour.

Removing friction does not mean pressuring customers. Ethical conversion design gives customers enough information to make an informed choice. Dark patterns—such as disguising advertising as neutral content, making cancellation deliberately difficult, or preselecting unwanted add-ons—may increase short-term conversion but damage trust and can breach consumer-protection requirements.

2. Principal E-commerce Business Models

2.1 Business-to-consumer retail

In business-to-consumer (B2C) retail, a firm sells products or services directly to individual customers. The firm may own inventory, set prices, manage merchandising, and control the customer relationship. Marketing commonly involves search engine optimisation, paid media, email, social commerce, affiliate marketing, and loyalty programmes.

The principal advantage is control over the assortment, brand presentation, customer data, and service experience. The disadvantages include inventory risk, warehousing costs, customer-acquisition expense, and the need to build traffic independently.

2.2 Business-to-business commerce

Business-to-business (B2B) e-commerce serves organisational buyers. Transactions may involve multiple decision-makers, negotiated prices, tenders, credit terms, product specifications, and integration with procurement systems. B2B journeys are often longer than B2C journeys, although digital self-service can simplify repeat purchasing.

B2B marketers should distinguish users, influencers, buyers, approvers, and economic decision-makers. Content must address operational value, compliance, implementation, total cost of ownership, and risk—not merely product features.

2.3 Direct-to-consumer models

A direct-to-consumer (DTC) business sells through its own digital channels rather than relying entirely on wholesalers or retailers. DTC can provide closer access to first-party customer information, greater control over brand communication, and more direct opportunities for retention. It also transfers responsibilities to the producer, including acquisition, payment, fulfilment, returns, and customer service.

DTC is not automatically more profitable. A business must compare the additional gross margin retained with the cost of acquiring traffic, operating technology, holding inventory, and servicing customers. DTC can be especially effective where the product is differentiated, repeat purchase is possible, or a community and content strategy reduce dependence on paid advertising.

2.4 Marketplaces

A marketplace connects independent sellers with buyers. Examples include general merchandise marketplaces, accommodation platforms, app stores, freelance platforms, and food-delivery platforms. The marketplace may provide search, ranking, payment, identity verification, dispute resolution, reviews, and logistics.

The marketplace often earns revenue through a commission or transaction fee, seller subscription, listing fee, advertising, payment processing, logistics, or a combination of these. Its strategic problem is to attract and retain both sides of the market. Buyers want selection, competitive prices, and reliable service; sellers want demand, fair visibility, manageable fees, and access to customers.

A marketplace must address the “cold-start” problem: without sellers there may be little value for buyers, and without buyers sellers have little reason to join. Early strategies may include subsidising one side, recruiting a carefully selected supply base, focusing on a narrow geographic or product niche, or providing tools that create value before the network is large.

2.5 Platform ecosystems

A platform ecosystem consists of a core platform, participating user groups, complementary products or services, rules, data flows, and technical interfaces. A mobile operating system, for example, may connect users, application developers, advertisers, device manufacturers, and payment providers.

The platform owner creates value partly by setting standards and enabling interactions. Complementors increase the usefulness of the platform, while the platform provides access, infrastructure, discovery, and governance. However, platform power can create dependency. A seller may lose visibility when ranking rules change; a developer may face new fees; or an advertiser may experience reduced measurement after privacy changes.

3. Network Effects and Platform Strategy

A network effect exists when the value of a service changes as participation changes. A direct network effect occurs when users benefit from more users of the same type. A messaging service becomes more useful when more relevant contacts use it. An indirect or cross-side network effect occurs when growth on one side increases value for another side. More sellers can make a marketplace more attractive to buyers, while more buyers can attract more sellers.

Network effects should not be confused with simple growth. A platform can become larger while becoming less valuable if quality declines, fraud increases, or search becomes congested. Network effects depend on relevance, trust, liquidity, and governance.

Important platform concepts include:

• Liquidity: the likelihood that a suitable interaction can occur within an acceptable time and place.
• Multi-homing: participation in more than one competing platform.
• Switching costs: financial, technical, learning, or relational costs of changing platforms.
• Interoperability: the ability of systems to exchange data or function together.
• Platform governance: the rules, enforcement mechanisms, ranking systems, and dispute processes that shape participation.

Platform marketing must therefore consider both acquisition and ecosystem health. A campaign that rapidly attracts low-quality sellers may increase listings but reduce buyer trust. Similarly, excessive discounting may create transactions without producing sustainable demand.

4. Revenue and Unit Economics

A platform or e-commerce firm needs a revenue model that is compatible with the value it creates. Common models include product margin, transaction commission, subscription, advertising, listing fees, licensing, payment fees, and service charges.

For a marketplace, gross merchandise value (GMV) is the total value of transactions processed during a period. GMV is not the same as revenue because the platform may pass most of the transaction value to sellers.

The take rate is the proportion of GMV retained as transaction revenue. This relationship assumes that GMV and the take rate are measured over the same period and that the take rate is applied consistently. Refunds, taxes, shipping charges, and promotional subsidies may require separate treatment according to the organisation’s accounting policy.

For example, if monthly GMV is £200,000 and the average take rate is 8%, transaction revenue is:

£200,000 × 0.08 = £16,000.

A basic conversion rate can be expressed as:

The denominator must be specified. A session conversion rate is not directly comparable with a unique-visitor conversion rate. The measure is most useful when the time period, channel, device, attribution method, and definition of a completed order are consistent.

Customer acquisition cost (CAC) is commonly estimated as:

CAC should include the costs included by the organisation’s chosen management definition—for example, paid media, agency fees, and relevant sales costs. It should not be compared with customer value unless the same customer definition and time period are used.

A simplified contribution calculation is:

This is not the same as accounting profit. It excludes fixed costs unless they are explicitly allocated. It is useful for evaluating promotions and channels because a campaign can generate revenue while reducing contribution.

Worked example: evaluating a campaign

An online retailer sells a product for £60. Variable product cost is £24, fulfilment is £7, payment cost is £2, and variable service cost is £1. The contribution before marketing is therefore:

£60 − £24 − £7 − £2 − £1 = £26.

If a campaign costs £2,600 and produces 100 new orders, acquisition cost per order is £26. The campaign breaks even on contribution before fixed costs, assuming every order is incremental and there are no returns. If 10% of orders are returned and the retailer incurs an average net return cost of £8 per returned order, expected return cost per order is 0.10 × £8 = £0.80. The adjusted contribution is £25.20, so the campaign would not fully recover its acquisition cost. This example illustrates why returns and fulfilment assumptions matter in performance marketing.

5. Subscription and Recurring-Revenue Models

Subscription businesses charge customers repeatedly for continued access to a product, service, membership, or replenishment programme. Models may be based on access, usage, a tier of benefits, curated delivery, or automatic replenishment.

Subscriptions can improve revenue predictability and support retention planning. They can also increase customer convenience and reduce repeated purchase effort. Risks include involuntary renewal, customer fatigue, low perceived value, excessive discounting, and difficult cancellation. Transparent renewal dates, clear pricing, reminders where appropriate, and easy cancellation are essential to responsible practice.

Important subscription measures include active subscribers, new subscriber additions, voluntary churn, involuntary churn, average revenue per user, renewal rate, and contribution margin. Churn must be defined carefully. A monthly customer churn rate might be calculated as:

This definition assumes that the denominator is the beginning-of-month active customer base and that “lost” customers are clearly identified. A cohort analysis—tracking customers who joined in the same period—often reveals retention patterns more accurately than a single aggregate rate.

6. Digital Payments and Checkout

Payment is both a commercial and technical component of e-commerce. Common methods include cards, bank transfers, digital wallets, buy-now-pay-later products, stored-value accounts, and local payment schemes. The appropriate mix depends on market, device, customer segment, transaction value, risk, and regulatory requirements.

A payment system must address authentication, authorisation, settlement, fraud prevention, data security, refunds, chargebacks, and reconciliation. Strong customer authentication or equivalent controls may be required in some jurisdictions, while privacy and payment-security rules govern how customer information is handled.

Payment choice influences conversion. Customers may abandon a transaction if their preferred payment method is unavailable, authentication fails, the payment page appears untrustworthy, or the final amount differs from expectations. At the same time, a frictionless payment flow must not remove meaningful consent or conceal credit costs.

Marketers should monitor payment authorisation rates, checkout abandonment, fraud losses, refund rates, chargebacks, and payment cost. Optimisation must balance conversion with risk: accepting every transaction may increase fraud and future losses, while excessive controls may reject legitimate customers.

7. Reviews, Reputation and Trust Systems

Reviews reduce information asymmetry because buyers can learn from the experiences of previous customers. Ratings, written comments, photographs, questions and answers, seller-response behaviour, and verified-purchase indicators can all influence evaluation.

Reviews are not automatically reliable. They may be biased toward unusually positive or negative experiences, manipulated, incentivised without disclosure, or affected by selection effects. A platform should therefore use clear review policies, detection systems, appeal processes, and transparent explanations of moderation decisions. Firms should not suppress legitimate negative feedback merely because it is commercially inconvenient.

Review design also affects marketing measurement. A high average rating with very few reviews may not carry the same evidential weight as a slightly lower rating supported by substantial, recent, and relevant feedback. Marketers should examine review volume, recency, category-specific themes, sentiment, and links between complaints and operational failures.

Reputation is an ecosystem asset. Poor seller conduct can damage a marketplace even when the platform did not manufacture the product. Governance mechanisms—identity verification, seller standards, complaint handling, refunds, product-safety controls, and sanctions—protect the value of the network.

8. Fulfilment, Returns and the Post-purchase Experience

Fulfilment includes inventory allocation, order processing, picking, packing, dispatch, transportation, delivery, tracking, and exception management. Options include in-house fulfilment, third-party logistics, dropshipping, fulfilment by a marketplace, click-and-collect, and digital delivery.

Marketing decisions affect fulfilment. A promotion can create demand spikes that exceed warehouse or carrier capacity. Free delivery may increase conversion but reduce contribution. A broad product assortment may improve customer choice while increasing inventory complexity. Delivery promises should therefore be based on operational capability rather than aspiration.

Returns are part of the product experience, not merely a cost centre. A clear and fair returns policy can reduce perceived purchase risk. However, returns create reverse-logistics costs, stock valuation issues, environmental impacts, and potential fraud. Product descriptions, sizing guidance, visualisation tools, packaging quality, and accurate delivery expectations can reduce avoidable returns.

Useful operational measures include order cycle time, on-time delivery rate, order accuracy, cancellation rate, return rate, refund time, and customer-service resolution time. These measures should be connected to customer outcomes. A fast delivery that arrives damaged is not a successful fulfilment experience.

9. Marketing in Platform Ecosystems

Marketing within a platform requires two perspectives. The firm may market its own products to customers, and it may also need to market the platform to sellers, developers, creators, or service providers. These groups have different motivations and information needs.

Marketplace sellers may use sponsored listings, platform search optimisation, promotional tools, fulfilment services, and analytics dashboards. Their visibility may depend on price, availability, relevance, delivery performance, seller rating, advertising bids, and customer outcomes. Because ranking systems influence commercial opportunity, changes should be documented and communicated where feasible.

Attribution is complex in ecosystems. A customer may see an external advertisement, search within a marketplace, read reviews, visit a brand website, and purchase through an application. Last-click attribution assigns disproportionate credit to the final interaction and may undervalue earlier influences. Marketers should compare attribution methods, use controlled experiments where possible, and interpret platform-reported results critically because the platform may measure both media delivery and conversion.

First-party data can support personalisation, retention, and service, but it must be collected and used lawfully and fairly. Consent, purpose limitation, data minimisation, security, access rights, and deletion obligations vary by jurisdiction. Personalisation should not become discriminatory pricing or exploit sensitive characteristics.

10. Illustrative Case: GreenBasket’s Marketplace Transition

Background

GreenBasket is a fictional illustrative case involving a regional retailer of household refill products. It originally sold through physical stores and a basic website. Management considered joining a large marketplace to gain reach while also developing a DTC subscription service for repeat purchases.

Problem

The retailer faced three problems: paid search costs were rising, customers had limited awareness of the brand, and repeat purchases were irregular. The marketplace offered immediate access to demand but would charge a commission and provide less direct control over customer data. A subscription could improve retention but might create excess stock if customer usage varied.

Analysis

GreenBasket mapped the journey from search to delivery and identified three major friction points: incomplete product specifications, uncertain delivery dates, and a complicated repeat-order process. It also analysed unit economics. Marketplace sales generated a lower margin because of commission and fulfilment charges, but they could introduce new customers. DTC sales retained more revenue but required greater spending on traffic and service.

The business segmented customers by purchase frequency and product category. High-frequency customers were offered a flexible subscription with skip, pause, and cancellation options. Occasional customers received replenishment reminders rather than an automatic plan. The marketplace assortment was restricted to products with stable inventory and low return complexity.

Approach and solution

GreenBasket used the marketplace for discovery and trial, while packaging and post-purchase communications—within applicable rules—directed customers toward education, product-use guidance, and its own loyalty proposition. It improved product pages with clear ingredients, usage instructions, delivery estimates, and independently managed customer questions. It introduced a review-monitoring process that categorised complaints into product, packaging, delivery, and expectation issues.

Operationally, the retailer set inventory thresholds before running promotions and excluded products from advertising when stock could not support the promised delivery period. It compared marketplace contribution with DTC contribution rather than judging channels only by revenue. Subscription messages emphasised control and convenience rather than artificial urgency.

Outcome

In the illustrative scenario, marketplace activity increased product discovery, while the DTC programme produced stronger repeat-purchase economics among customers who used the products frequently. However, some low-priced orders were unprofitable after commission, fulfilment, payment, and returns. The firm therefore reduced blanket discounting, improved product bundles, and used channel-specific assortment decisions.

Learning points

1. Reach is not equivalent to profitable demand.
2. Marketplaces can be useful acquisition channels but create dependency and fee exposure.
3. Subscription design should reflect customer usage rather than merely the seller’s desire for recurring revenue.
4. Reviews and fulfilment data reveal operational problems that advertising data may conceal.
5. Channel decisions should be based on contribution, retention, customer experience, and strategic control together.

11. Challenges, Governance and Contemporary Developments

Competition and dependency

A platform may simultaneously provide infrastructure and compete with participating businesses. This creates concerns about self-preferencing, access to commercially sensitive data, ranking fairness, and sudden changes to fees or policies. Businesses that depend on a single platform should maintain diversified acquisition channels, retain portable customer records where lawful, and monitor changes in platform terms.

Privacy and cybersecurity

E-commerce systems process identity, contact, payment, behavioural, and sometimes sensitive information. Threats include account takeover, payment fraud, phishing, data breaches, fake reviews, and unauthorised tracking. Governance requires access controls, secure development, incident response, staff training, vendor oversight, and compliance with applicable privacy and consumer-protection law.

Artificial intelligence

AI can support product recommendations, demand forecasting, customer-service triage, fraud detection, search ranking, product-description generation, and review classification. Its use requires human oversight, quality testing, monitoring for bias, protection of confidential information, and clear accountability. An AI-generated product description that invents specifications can create legal, financial, and safety risks. AI should augment responsible decision-making rather than obscure it.

Sustainability and inclusion

E-commerce can improve access and convenience but may increase packaging, delivery emissions, returns, and electronic waste. Firms can reduce impact through right-sized packaging, consolidated delivery, accurate product information, repair and resale schemes, and responsible returns processing. Inclusive design should consider disability access, language, connectivity, device limitations, and payment access. Accessibility is both an ethical obligation and a practical way to serve a wider market.

12. Best-Practice Framework for Digital Commerce

A practical e-commerce plan should:

1. Define the customer problem and the role of each channel.
2. Map the complete journey, including post-purchase activity.
3. Select a business model whose economics match the value created.
4. Make prices, fees, delivery, renewal, and returns transparent.
5. Design for mobile usability, accessibility, security, and speed.
6. Measure conversion together with contribution, retention, and service quality.
7. Treat reviews as feedback and governance information, not only promotional content.
8. Coordinate marketing promises with inventory and fulfilment capability.
9. Diversify critical platform dependencies and document policy changes.
10. Use data and AI lawfully, transparently, and with human accountability.

Chapter Summary

E-commerce is an integrated system involving discovery, evaluation, conversion, payment, fulfilment, service, retention, and advocacy. Marketplaces and platforms create value by enabling interactions among multiple participant groups, but they must solve cold-start, trust, liquidity, governance, and dependency problems. Direct-to-consumer models provide greater control but shift acquisition and operational responsibilities to the producer. Subscription models can support predictable revenue and convenience when they provide continuing value and fair customer control.

Digital payments, reviews, delivery, returns, and customer service directly affect marketing outcomes. Metrics such as conversion rate, GMV, take rate, CAC, contribution per order, and churn are useful only when their definitions, denominators, costs, and assumptions are explicit. Successful digital marketing therefore requires coordination between communication, technology, commercial strategy, operations, data governance, and ethics.

Key Terms

E-commerce: Commercial exchange conducted through electronically mediated channels.

Marketplace: A platform that connects independent sellers or providers with buyers.

Platform ecosystem: A platform, its users, complementors, technologies, rules, and data relationships.

Direct-to-consumer (DTC): Selling directly to end customers through channels controlled by the producer or brand.

Network effect: A change in service value resulting from a change in participation.

Liquidity: The likelihood that an appropriate transaction or interaction can occur successfully.

Multi-homing: Participation by a user or business in more than one platform.

Switching cost: The cost or difficulty of moving from one provider or platform to another.

Take rate: The proportion of marketplace transaction value retained as platform transaction revenue.

GMV: Gross merchandise value; the total value of transactions processed in a defined period.

Conversion rate: The percentage of relevant visitors or sessions that complete a defined action.

Customer acquisition cost (CAC): Attributable acquisition and sales cost per newly acquired customer.

Contribution margin: Revenue remaining after specified variable costs, before excluded fixed costs.

Subscription: A recurring-payment arrangement for continuing access, delivery, or benefits.

Churn: The loss or cancellation of customers or subscribers during a specified period.

Fulfilment: The processes involved in preparing, dispatching, delivering, and sometimes returning an order.

Chargeback: A payment reversal initiated through a payment provider, often following a disputed transaction.

Dark pattern: An interface design that manipulates or obstructs informed customer choice.

Platform governance: Rules, ranking, enforcement, dispute, and participation systems used to manage a platform.

First-party data: Data collected directly by an organisation from its own interactions with customers or users.

Review Questions

Short Answer Questions

1. What is the difference between an online retailer and a marketplace?
2. Define a network effect and give one example.
3. Why is GMV not necessarily equal to marketplace revenue?
4. Identify two sources of checkout friction.
5. Why are fulfilment and returns relevant to digital marketing?

Long Answer Questions

1. Explain the stages of an e-commerce customer journey and discuss how marketing priorities change at each stage.
2. Compare direct-to-consumer, marketplace, and subscription models in terms of control, revenue, costs, and customer relationships.
3. Explain how reviews, payment systems, and fulfilment jointly influence trust and conversion.
4. Discuss the strategic benefits and risks of network effects for a platform ecosystem.
5. Explain why marketers should evaluate campaigns using contribution and retention as well as revenue and conversion.

Analytical / Application Questions

1. A marketplace records GMV of £500,000 and an average take rate of 10%. Its transaction-related operating costs are £32,000. Calculate transaction revenue and explain why the result should not automatically be treated as profit.
2. A retailer is considering a subscription plan for customers with irregular usage. Analyse the customer-experience, operational, ethical, and financial risks, and recommend design safeguards.
3. A platform’s seller complaints increase after a ranking algorithm is changed. Develop a governance and marketing-response plan that addresses transparency, fairness, seller communication, customer trust, and measurement.

Multiple Choice Questions with Answers

Question 1

Which feature most clearly distinguishes a marketplace from a conventional online retailer?

A. It uses a website or mobile application.

B. It connects independent sellers with buyers.

C. It accepts digital payments.

D. It provides product information.

Correct Answer: B. It connects independent sellers with buyers.

Question 2

A marketplace processes GMV of £200,000 and applies an 8% take rate. What is its transaction revenue before other adjustments?

A. £1,600

B. £8,000

C. £16,000

D. £25,000

Correct Answer: C. £16,000

Question 3

Which action is most likely to reduce checkout friction ethically?

A. Hiding delivery charges until after payment details are entered.

B. Making account creation compulsory for every purchase.

C. Providing clear total pricing and several appropriate payment options.

D. Preselecting an additional paid service.

Correct Answer: C. Providing clear total pricing and several appropriate payment options.

Question 4

What is an indirect cross-side network effect?

A. A service becomes more useful because users of the same type increase.

B. More sellers increase marketplace value for buyers, and more buyers attract sellers.

C. A firm reduces its advertising budget as sales increase.

D. A customer uses two devices to access one account.

Correct Answer: B. More sellers increase marketplace value for buyers, and more buyers attract sellers.

Question 5

Which metric is most directly concerned with customers who stop a subscription?

A. Churn rate

B. Take rate

C. Order accuracy

D. Gross merchandise value

Correct Answer: A. Churn rate

Question 6

Why should GMV not be treated automatically as marketplace revenue?

A. GMV measures only advertising impressions.

B. The marketplace usually retains the entire transaction value.

C. Much of the transaction value may be passed to sellers.

D. GMV excludes all customer payments.

Correct Answer: C. Much of the transaction value may be passed to sellers.

Question 7

Which practice best supports trustworthy review systems?

A. Removing all negative reviews.

B. Publishing only reviews written by employees.

C. Using transparent policies, verification, moderation, and appeal processes.

D. Ranking products solely by the number of reviews.

Correct Answer: C. Using transparent policies, verification, moderation, and appeal processes.

Question 8

A product sells for £50 and has variable costs of £20, £6, £2, and £1 for product, fulfilment, payment, and service respectively. What is contribution per order before marketing?

A. £21

B. £29

C. £35

D. £79

Correct Answer: B. £29

Question 9

Which statement best describes a direct-to-consumer model?

A. A producer sells only through wholesalers.

B. A producer sells through channels it controls directly.

C. A platform permits only peer-to-peer transactions.

D. A customer pays for access to several unrelated services.

Correct Answer: B. A producer sells through channels it controls directly.

Question 10

Why must marketing promises be coordinated with fulfilment operations?

A. Advertising determines accounting depreciation.

B. Promotions can create demand that exceeds inventory or delivery capacity.

C. Fulfilment has no effect on customer satisfaction.

D. Operational data cannot be used in marketing decisions.

Correct Answer: B. Promotions can create demand that exceeds inventory or delivery capacity.