What is the Internet?

 

CHAPTER TWO

LITERATURE REVIEW

What is the Internet?

The Internet has received great deal of attention in media and many companies have set up an Internet presence. Companies are moving to use the Internet as a way of segmenting markets and doing something that ordinary promotional media cannot: reaching consumers across the country and around the world interactively and on demand. The potential applications of the Internet are being expanded every day, and companies which are the first to exploit these opportunities will have a tremendous advantage over oriented competitors. Even though the Internet’s popularity is growing among businesses, there is still a great deal of confusion about the Internet and what it has to offer the business world. The Internet is network of computer networks. It is made up of two and half million host computers and is growing at the rate of over two million new users each month (Eager, 1994) and internet is highly efficient way of accessing, organizing and sharing information as introduction of the World Wide Web service has changed everything.

The World Wide Web

The World Wide Web (WWW) is relatively new Internet service based on hypermedia. Hypermedia enables users to navigate the Internet using a point and click interface similar to those used on Macintosh and Windows-based computer systems. The most popular browser at the time of writing is Netscape Navigator. WWW browsers eliminate the need to learn complex computer commands. All the reader needs to do is start the browser and point and click on the topics of interest displayed. The browser translates the clicks to computer commands, freeing the user from the need to learn the arcane operating system. Promoting one’s products on the Internet can be cost-effective way to reach potential consumers worldwide. But once a WWW site is online, companies must wait for consumers to come to them as unsolicited advertising such as mass e-mailing is frowned on in the Internet community. The waiting time for customers can be shortened considerably by giving the site address in traditional promotional materials, by joining electronic malls and by arranging with the operators of related sites. Willing consumers can call toll-free numbers, send e-mail messages and fill out online forms to order merchandise or request information. The Internet is fast moving and rapidly changing environment. With the advent of the WWW and user-friendly browsers, marketing business are making the leap online and visualizing cost-effective media vehicle to reach customers.

 

Marketing applications of the World Wide Web  

The interactive brochure

Interactive brochures range from simple information provided in a text-only form as called flat ads, to highly sophisticated multimedia productions, with full scale audio, video and interactive capabilities. Flat ads, single page electronic flyers, are often the first step into an eventual multimedia format. They allow companies to get an initial feel for the marketplace. Even these relatively simple sites on the Internet send a message to current customers, potential customers and competitors that a company is on the cutting edge (Sandberg, 1995). Some Internet sites provide users with multimedia materials, including sound bites, video clips, allowing access to detailed product information.

The virtual storefront

Perhaps the shopping experience on the Internet can best be achieved by visiting one of the many cyber-malls. Online shoppers rang up some 0 million worth of sales and sales are expected to top billion (Chatsky, 1995). Locations such as the Branch Mall, the Internet Shopping Network provide from 30 to 100 links to participating Internet retailers. Many of these malls are made up of small florists, travel agencies, and card shops, but even big name retailers are getting in on the act (Sandberg, 1995).

  

Although the majority of large companies have well-established physical distribution systems, virtual storefronts have a great leveling effect, instantly transforming small companies into worldwide distributors by providing a source of direct sales. It is difficult to determine the size of a company by its World Wide Web page.

The information clearinghouse

Another category of use of the World Wide Web is as an information clearinghouse. Some companies wish to provide a place to exchange information with customers and other researchers, such as those in academia. The establishment of an information clearinghouse on the WWW can assist businesses in this endeavor, information clearinghouse is place where product questions can be asked and answered online, meetings and conferences can be announced, and research findings can be shown and explained. Current technology allows participants to have real time video and audio interaction via the Internet. These virtual meeting places and discussion groups can bring people with similar interests together for meetings and discussions instantly and at very little cost to the sponsor.

The customer service tool

The use of the WWW as a customer service tool can take a variety of forms. Netscape, one of the World Wide Web browsers, has no built-in help feature; all of its help is provided online via the WWW. When the user asks the program for help, the software gets the current help file from the company’s WWW site. There allows the help files to be expanded and updated without requiring an upgrade to the program itself. Just because a company engages in a variety of WWW activities, does not mean that its site will be better or more successful than one which makes use of only one. The key difference may lie in the quality of the implementation.

 

Marketing applications Diagram

Advertisement Effectiveness

Conventionally, advertising has been one of the major forms of communication between a firm and its clients. Wells et al. (1995) reported eight basic types of advertising designed to reach a diverse audience with varied objectives. In order to serve the desired role and function most effectively, advertisements may use many different types of media and vehicle for different target groups. With the advent of technology, the Internet posits itself as one of the very few media alternatives that can be used for almost all advertising purposes across all possible market segments. Businesses can create and transmit advertisements on the Internet that can be accessed by anybody with a computer equipped with appropriate software. Such a convenience and marketing efficiency, both for the advertiser and the target audience, is making the Net popular for marketing practices all over the world. In addition, the Net has the capability to compile statistics regarding how many people viewed each advertisement and for how long each viewer actually looked at an advertisement. This helps companies track down the effectiveness of their advertisements in terms of the number of direct purchases – a much more effective mechanism than the existing ones for magazine advertisements or television commercials. Furthermore, advertising on the Net on an average, costs merely a third of what it costs in the magazines and business journals, and a fraction of the price associated with television ads. This opens up avenues, particularly for smaller firms, to reach their potential clients more cost-effectively. 

Market research and analysis

Although marketing on the Net can benefit companies of all sizes, smaller organizations may have the maximum gain. The enterprises across countries have rushed to connect to the Net and should be able to communicate within the global village as effectively as major transnational corporations. The Internet furnishes direct customer contact, combined with the appropriate market and technical reference material, which gives organizations greater ability to identify earlier shifts in product and customer trends and to test new value propositions in response. This enables managers to recognize product and market opportunities sooner and to adopt more effective product, price, distribution and further promotion strategies relative to the customers’ needs.

Issues in using the Internet

There are several pros and cons associated with using the Internet for marketing purposes.

Global opportunities

The Net access delivers a company with an opportunity to implement highly cost-effective vehicles not only for their own marketing and customer support needs, but also for positioning themselves globally. It is especially beneficial to smaller companies who want to expand their businesses globally, but do not have the capital and resources to do so. In addition, the Internet helps ease the red tape surrounding the prospect of doing business overseas, thus avoiding regulations and restrictions that companies’ must follow who are physically present in other countries and who advertise in international journals. 

Accessibility

Companies who use the Internet, not only for advertising, but for e-mail and customer ordering, increase their hours of business on a global spectrum. Instead of a typical eight-hour day, businesses have increased their opportunities by providing 24-hour access for branch offices, business contacts and shoppers access that is important in conducting business across different time zones or internationally.
Utility

Providing appropriate form, place and time utility may result in a competitive advantage for the marketers. Especially, the Net furnishes product and service information to current and potential customers when they want it and hence increasing the chances of trial/purchase/repurchase.

Security

The Net has very little security and any company using the Net risks disclosure of proprietary information. The Internet was originally designed for a free flow of communications – regulation and security were not considered when it was conceived and developed. However, with its increasing use for marketing and advertising, there is ample concern for security in terms of copyrights and other proprietary information. Anyone can go into the Net and change, manipulate or discard information, including advertisements. Although there are some basic safeguards to prevent this sort of practice, at best it can be described as inadequate (Business Europe, 1995). 

Advertisement over the Net reduces managers’ control considerably. Users of the Internet are difficult to target. Although 50 percent of the users are 25 years or younger, there is still another 50 percent of users from ages 25 and up. It is possible to reach all age groups, yet targeting certain age groups may be difficult. First of all, it cannot be measured applying the conventional methods used for television or magazine advertisements. For example, television has the Nielsen ratings and magazines focus on specific interests of different segments. To date, the Net is broad and unknown, a company cannot possibly determine easily who or where to advertise on the Net. Furthermore, there are so many resources on the Internet; it is probable that users will not see a company’s advertisement at all unless they are prompted to search for certain products/services offered by that company.

Advertising Integration

Advertisers can buy advertisement space on the Net through a service provider, a private company set up to be a gateway to the system for a set of clients. Organizations can find individual consultants as easily as looking in the Yellow Pages. Many of these small firms actually advertise their services on the Internet. These specialized agencies will do everything from setting up, maintaining and promoting their clients’ advertisements (Crain’s Chicago Business, 1994). Users need software such as Netscape, which gives them the capability of seeing the advertisement in full color, graphics, sound and video images. Netscape also helps users locate shopping networks through a user-friendly, Windows-compatible environment (Computer World, 1994). 

Sales and marketing research

Advertising is not the only benefit to using the Internet. It also serves as a huge database for research and demographic data. Each transaction that takes place on the Net can be tracked to the user. Therefore, pertinent information about the purchaser can be collected to develop target-marketing strategies. Of equal importance, the Internet’s discussion boards and electronic mail provide marketing with a means to communicate directly with its customers. The capability provides organizations with the ability to identify product opportunities, changes in the competition, unaddressed customer needs, shifts in value propositions and host of other indispensable information points that are difficult to obtain through more traditional and more costly means. So far, World Wide Web has proved to be the most popular medium for market intelligence as networks provide customer support, research, and product development ideas through e-mail, discussion boards, and demonstration facilities. Equally important to business needs is that the Internet provides an effective two-way communication vehicle through which marketing may test ideas and concepts while minimizing the investments needed to launch either pilot programs or full-scale product introductions (Internet Business Center, 1994).

Developments in information technology have ceaselessly had profound marketing implication which poses both tremendous opportunities and challenges for international marketing. The Internet has become established as a global channel through which both existing and potential customers can be targeted and through which organizations can both publicize and present commercial offerings (Evans and Wurster, 2000) and predicted growth of e-commerce revenues, the Internet’s presence is commanding. The Internet has become established as fully-fledged global marketing and communications channel, and can deliver many aspects of any organization’s global marketing strategies ranging from database building and customer acquisition to providing customer service, forming relationships, building loyalty and installing advocacy in existing customers (Czinkota and Ronkainen, 1990). The global nature of the Internet, combined with the nature of the communication that it can convey, makes it a perfect vehicle for international marketing (Nicovich and Cornwell, 1998; cited in Richardson, 2001, p. 148). The marketing potential of the Internet has been realized by organizations over the past few years, with its popularity as a medium to target consumers increasing and many academics predict it will increase in the future (Hamill, 1997; Mack, 2000; Hoffman et al., 2000). It has been argued that the Internet’s ability to connect end users with producers directly will eventually eliminate wholesalers and distributors, and reconfigure the supply chain of many consumer goods and services.

A further implication that the Internet has upon global marketing strategies is that it enables organizations to pay greater attention to customer service and is radically changing the way in which organizations do business. Hoffman et al. (2000) (www.ascusc.org) argues that the Internet opens up a new communications channel with customers, allowing companies to develop or cement relationships with them. Web sites can incorporate customer service facilities into their activities, providing customers’ world-wide with a focal point for their queries, thus increasing customer interaction (Sinden, 2001). However, Internet creates open communication links through emails, bulletin boards and corporate Web sites, facilitating collaboration with range of customers from various backgrounds.

Cultural and language barriers

The Internet may reduce the size of the world in one sense but it does not eradicate the presence of fundamental cultural and language differences. Marketers still have to remain alert to the attitudes, norms, customs and values of the inhabitants of different countries when formulating their online global marketing strategies (Peterson et al., 1997). Thus, due to the inherently global nature of the Internet, organizations should evaluate the global impact of any online advertising and promotional material. Predominantly, the language of the Internet is English, the longstanding belief in international marketing, supported by the former German chancellor Willy Brandt, is that marketing should always take place in the language of the target market (www.globalreach.com) (Dunlap, 2001).  

Global reputation management

From a marketing perspective the use of the Internet as a communication medium can have detrimental consequences for organizations. Bailey (1999) is an advocate of this view and draws attention to the reality that everybody who has access to the Internet has the power to become a publisher and the ability to communicate with a vast audience through numerous channels including emails, Web sites, chat systems and newsgroups. Gurak (1997, p. 16) states that its ability to “compress time and space, flatten traditional hierarchies and facilitate participatory action”, when combined with its wide user base presents the Internet as a new avenue for political action and makes the Internet a breeding ground for controversy. The emergence of the Internet has brought with it an increasing degree of corporate accountability, with myriad of official and unofficial watchdogs eager to reveal to the world any inconsistencies within corporations’ actions (Janal, 2000). The ability of the internet to deliver and obtain information in a flexible, effective manner at relatively low costs is very attractive. However, not many research projects have focused on how young people use the internet and the effects on the time spent with other media activities.

Markets

The Internet has made difference to global business operations. Air travel, for example, accounted for billion of the total billion spent on travel on the Internet in 1999, according to a marketing-strategy company called PhoCusWright (The Economist, 2001; (Renton, 2000). The Internet has proved to be the perfect messenger for niche interests, serving individual tastes and diverse geographical demands. The key to the success of niche net businesses is first and foremost brand awareness, but the promotional spend necessary to achieve brand recognition among the online clutter is now challenging the resources of the smaller enterprise, at least through traditional promotional mechanisms (Barkham, 2000).

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