Download McKenna 1991 `Marketing is everything`, Harvard Business Review

An analysis of marketing products and services on
the Internet
George Maybury
School of Computing
Dublin Institute of Technology
Kevin Street, Dublin 8, Ireland
[email protected]
Abstract
The Internet provides a fundamentally
different environment for international
marketing. The purpose of this paper is to
examine this new environment and to discuss
the approaches to international marketing via
the Internet. Marketing decisions and obstacles
a company will face in a global environment
are also considered and finally this paper
determines the effect the Internet has had on
the marketing mix.
Keywords: Internet; International
Marketing; Marketing Mix
1. Introduction
This paper examines the issues involved in
marketing on the Internet. The concept of
Ecommerce and its connections with
marketing are also considered.
This paper is based on an extensive
examination of relevant literature in
commercial and electronic and technical
journals and publications as well as an
exhaustive search through quality web sites.
The history of the Internet and the role
marketing plays in Ecommerce is considered in
section 1. In section 2, the paper will discuss
the decisions marketers would have to make in
order to conduct business on the Internet. In
section 3 the principal problems in marketing
via the Internet are examined. The evolution of
the marketing mix for the Internet is discussed
in section 4. Finally in section 5 a series of
conclusions are outlined.
This paper will be of interest to those who
need an introduction to marketing on the
Internet and Ecommerce and how it functions.
The paper is intended for marketing and IT
managers in all industries who are conducting
business online. Industry sectors that will find
this paper beneficial include retailers,
publishers, travel and tourism, distributors and
government.
1.1 The Internet
The Internet has become an increasingly
popular and versatile tool for marketing.
Frequently touted as a revolutionary force for
business, it is rapidly becoming a fundamental
and
often
necessary
vehicle
for
communications and transactions between
marketers and consumers, and between
businesses (Coupey, 2001). Its benefits will
become even more pronounced, however, as
the range of innovative possibilities for
marketing is recognised and leveraged to
develop coherent and effective marketing
strategies (Sterne, 1999). Despite its relative
recent introduction into day-to-day life of most
consumers,
the
Internet
has
grown
dramatically, rapidly outpacing projected use
in terms of the number of users worldwide. For
instance, an average of user surveys compiled
in 1999 by Nua Internet Surveys projected a
worldwide user population in 2000 of 250
million people. By September 2002 however,
similar surveys indicated a user population of
605.60 million.
World Total
605.60 million
Africa
6.31 million
Asia/Pacific
187.24 million
Europe
190.91 million
Middle East
5.12 million
Canada & USA
182.67 million
Latin America
33.35 million
Figure 1 Internet Population Source Nua
Internet Surveys
_____________________________________________________________________
2
An analysis of marketing products and services on the Internet – George Maybury
__________________________________________________________________________________
Companies that use the Internet to market their
products come in all sizes, ranging from
multinational corporations to home-based
entrepreneurial
businesses.
Marketing
applications of the Internet are equally varied
(Coupey, 2001). For example, a company
might use the Internet merely to handle
catalogue requests. Another company might
make its entire product line available through
an Internet site, as well as through traditional
means. Retailers such as Barnes and Noble, a
book retailer and Wal-Mart use this approach.
Yet other companies might market their
product solely through a virtual storefront on
the Internet, like Amazon. The types of online
activities are influenced by the goals of the
company, and by its experience with Internet
technologies (Eid and Trueman, 2002).
1.2 Marketing and the Internet
The current emphasis of the Internet as a
technology for commerce reflects the
symbiotic nature of the relationship between
technology and marketing (Coupey, 2001).
McKenna argues that,
“Technology and marketing have now not only
fused but have also begun to feed back on each
other. The result is the transformation of both
technology and the product the reshaping of
both the customer and the company.
Technology permits information to flow in both
directions between the customer and the
company. It creates the feedback loop that
integrates the customer into the company,
allows the company to own a market, permits
customisation, creates a dialogue and turns a
product into a service and a service into a
product.”
Many marketers have focused on the Internet
as an interactive media to inform consumers
about their products and services and, in many
cases, to sell products and services online.
Interactive media such as the Internet enable
flexible communications in real time between
marketers and consumers, by technological
means, such as computers (Eid and Trueman,
2002).
The interactivity differentiates the
Internet from the communications technologies
of television, radio, and print, traditionally
used by marketers. In addition, interactivity
enables marketers to tailor information to meet
the needs of different customer targets. This
personalisation is based on the two-way
communication between consumer and
marketer, which is made possible by the
Internet (Eid and Trueman, 2002).
Business strategies that include the Internet are
often characterised as electronic commerce.
Electronic commerce (Ecommerce) is a label
that encompasses a wide variety of business
activities, including those activities most
typically associated with marketing (Coupey,
2001). Because Ecommerce is often described
as the completion of buying and selling
transactions online, it is easy to confuse
marketing and Ecommerce. In this paper,
Ecommerce is defined more broadly as:
“The sets of activities undertaken by
organisations to enable and facilitate the
buying and selling of goods and services
through electronic, paperless, information
systems technologies”.
Marketing is viewed as a subset of activities
that may be conducted within the more general
realm of electronic commerce. Figure 1.1
demonstrates the role marketing plays within
Ecommerce.
Ecommerce
Accounting
Finance
Human
Resources
Information
Systems
Marketing
Engineering
Manufacturing
Figure 1.1 Marketing activities as a subset of
Ecommerce activities
1.3 The History of the Internet
The seeds for the growth of the Internet were
sown in the 1960’s at the height of the cold
war. The US administration was looking at a
way to maintain communication in the
aftermath of a nuclear attack. Scientists at the
Advanced Research Project Agency (ARPA)
of the US Department of Defence teamed up
with the Rand Corporation, a military think
tank, which was developing such a network
(Sterne, 1999).
Paul Baran, a Rand Corporation scientist
conceived a new way of connecting computers.
He used the idea of a fishnet, where
information could flow along any path rather
than from point to point. The RAND
Corporation devised a concept that was as
unique in computing as it was in management:
A network that should be built that was
expected to be unreliable and without a central
_____________________________________________________________________
3
An analysis of marketing products and services on the Internet – George Maybury
__________________________________________________________________________________
point of control (Sterne, 1999). Data would
flow freely around downed lines and missing
components. Packet switching was born. The
Internet owes its main technical advantage to
its military origins. The idea was shelved by
the Department of Defence but it provided the
foundation upon which the Internet was built
(Sterne, 1999).
In 1969 four American Universities took the
idea and developed the Arpanet. The purpose
was to share information and resources
between Stanford University, UCLA, the
University of California at Santa Barbara and
the University of Utah. The network was a
success from the start and email was developed
in 1972 (Sterne, 1999). However the main
traffic was news and personal messages not
long distance computing. In 1973 the Internet
went global hooking up with the University of
London and the Royal Radar Establishment in
Norway.
The original standard for communication was
the Network Control Protocol (NCP) which
was superseded by Transmission Control
Protocol / Internet Protocol (TCP/IP).
Networks that make use of this protocol
became known as internets. Joined together
they form the Internet. Tim Berners Lee
created the World Wide Web (WWW) in 1991.
He created software that allowed users to
exchange information, at CERN, the European
particle physics laboratory near Geneva
(Sterne, 1999).
Section 1 of the paper outlines the current state
of marketing on the Internet.
The role
marketing plays within Ecommerce is also
examined. Finally a brief history of the Internet
and the World Wide Web is discussed. In the
next section decisions marketers must make
when using the Internet are outlined.
2. Adopting Marketing Decisions to
Internet
Internet marketing is an increasingly important
part of communication. Companies advertise
services, take and place orders, and
communicate with each other around the world
over the Internet. To accommodate this market
and address this new technology companies
need to make some decisions regarding price,
branding,
distribution,
territory,
and
organisation structure, among others.
2.1 International Price
Internet means global presence. A Web page in
Dublin is seen also in Santiago, Chile. That
means prices for products in developed
markets will also be seen in the developing
market. Matching the right price to a specific
territory has been a critical factor in successful
businesses (Palaumbo and Herbig, 1998). But
now, with the Internet, specific territories hold
no meaning.
What about selling on the Web for a discount?
Is this discounted price available within the
firm's normal distribution chain? If not, there
may be problems. One way to avoid this
situation is to display a product's price based
on the buyer's location (Sterne, 1999).
2.2 Global Branding
As a Web page is seen in several countries, the
new challenge facing companies is the
management of a global brand and corporate
name or logo (Palaumbo and Herbig, 1998).
Consumers may become confused if a
company and its subsidiaries have different
Web sites each communicating a different
format, image, message, and content.
Therefore, a company should define clearly its
policies about branding on the Internet (Sterne,
1996). One example is 3M, an American
company, which has one site for its entire
product line, has a focussed corporate identity
and firm control over the marketing actions of
its divisions and subsidiaries. Other companies
with a single brand name, which facilitate
tighter co-ordination around the globe, have
allowed their subsidiaries to create their own
Web pages (Palaumbo and Herbig, 1998).
Developing one site for each brand, while
costly, should be considered when the brands
have distinct images within markets (Quelch
and Klein, 1996).
2.3 Territory
If sale forces are organised by territory, a firm
needs to adopt some new sales policies
because territory is senseless on the Internet.
So, one might contemplate to close a deal and
take the order by a firm's Web site and then
send it to a distributor or dealer closest to the
customer. Or one could include the
distributors' list on the Web site. Thus, the
Web page promotes the firm's products as well
as shows where they can be acquired (Sterne,
1999).
_____________________________________________________________________
4
An analysis of marketing products and services on the Internet – George Maybury
__________________________________________________________________________________
2.4 Channel Conflict
If the sales are performed through a
distribution chain, a company could be
competing with them by selling directly via the
Internet. Therefore, one needs to find a way to
work with them that allows a company to trade
directly without cutting distributors out of any
business (Sterne, 1999).
2.5 International Distribution
When a firm uses the Internet, it receives
orders from several places around the world. If
it is not already selling internationally, this
could be a problem (Palaumbo and Herbig,
1998). Thus, it is important to design a
logistical system that allows a firm to deliver
its products across nations efficiently and
inexpensively before soliciting orders from
abroad.
2.7 Increase of Competition
Companies already marketing in foreign
markets will face a more aggressive and
diverse competition abroad, since the Internet
reduces the cost of entry, diminishes the
competitive advantage of economies of scales,
and makes it easier for small companies to
compete worldwide (Quelch and Klein, 1996).
Thus, it is essential to anticipate these changes
in the market so adequate strategies will be in
place to meet competition and position the firm
in its foreign market(s) adequately before new
competitors arrive.
2.8 Means of Payment
Although international trade relies essentially
on letters of credit as a mean of payment, it is
not simple or inexpensive for individual
customers that want to buy. While there are
other means of payment more adequate for the
Internet, such as credit cards, debit cards, and
money orders, they do present some risk
(Palaumbo and Herbig, 1998).
Thus, it is crucial to decide by which
instrument one will be paid. Among the
variables to consider are:
•
•
•
•
it should have worldwide use and
recognition;
it should be easy to obtain for a
customer;
it should be simple to use;
it should be secured.
While one of the best instruments for
international payments is the credit card, it still
possesses some impediments and problems for
international trade. Alternate methods must be
found of putting purchasing power on the
Internet into the young consumers hands.
The nature of decisions to be made by
marketers when using the Internet is
considered in section 2. Decisions must be
made about price, branding, distribution and
organisational structure among others. In
section 3 the paper describes the principal
problems in marketing via the Internet.
3. Principal Problems in Marketing
via Internet
The Internet promotes a more global view. A
person can explore a Web site in India looking
for a supplier, exchange e-mail with a
customer in Japan, and promote a business in
the UAE. This international presence creates
several new challenges or obstacles because
the Internet has expanded the firm's business
reach to several new potential markets
worldwide, where cultural, legal, and social
systems differ from those to which one is
accustomed (Palaumbo and Herbig, 1998). The
main problems in this new environment are as
follows:
3.1 Cultural aspects
Cultures of different countries must be taken
into account when marketing on the Web,
among these differences are:
3.1.1 Language
One of the biggest issues around global
communication is language. Since the Internet
has its roots in the USA, it has grown as a
predominantly English-speaking medium
(Sterne, 1999). The more the Internet becomes
a widespread vehicle of global communication,
the more those who do not speak English may
be at a disadvantage. Therefore, in an
international setting language can be a barrier
to expand business to foreign markets.
To overcome the obstacle of language,
companies are building their Web pages based
on multi-language options. This means that it
is possible for the customer or receiver to
choose a language by clicking on an icon.
There are some obstacles in translating some
languages to the computer. For example, the
_____________________________________________________________________
5
An analysis of marketing products and services on the Internet – George Maybury
__________________________________________________________________________________
Chinese and Japanese languages are difficult
owing to the large number of local dialects.
Moreover, the importance of vocal intonations
in these spoken languages may further impede
the transfer of business dialog from voice to
text
(Palaumbo
and
Herbig,
1998).
Additionally, difficulties with language usually
arise through carelessness, which is manifested
in a number of translation blunders. The old
saying, "If you want to kill a message, translate
it," is true. For example, Chanel No. 5 would
have fared poorly in Japan had it been called
No. 4, because the Japanese for four also
sounds like the world of death (Czinkota and
Ronkainen, 1996). Other problems are related
to the capability of language to convey
different shades of meaning and how different
cultures read.
Although computer companies are now
improving technology, which automatically
translates information into the receiver's
language (Croft, 1995), dealing with the
language problem invariably requires the use
of local assistance. One of the simplest
methods of checking and control is backtranslation: the translating of a foreignlanguage version back to the original language
by a different person than the one who made
the initial translation (Palaumbo and Herbig,
1998).
3.1.2 Images
Selling worldwide, a company needs to be
careful in using gestures in global marketing
because gestures have different meanings
around the globe (Palaumbo and Herbig,
1998). For instance, while the finger circling
means "okay" for an American culture, it is
considered vulgar or obscene in Brazil and
Germany. It is also considered impolite in
Greece and Russia, while in Japan, it means
money; in southern France zero or worthless
(Axtell, 1996).
The use of nude or sensual images is not
acceptable in some Asian and Islamic cultures.
For example, in the UAE strict censorship has
been placed on the Internet and other forms off
communication. In Japan to preserve the purity
of Japanese womanhood, it is common practice
to hire foreign models to make this kind of
advertising (Czinkota and Ronkainen, 1996).
If an advertisement violates the moral code of
a country, the risks can be penalties, fines,
damages and conceivably a ban on the
company's products or services. Even though
the risk of being dragged into court is low
when a company has no direct investment in
that country, some countries may seek to
enforce their law through extradition
proceedings (Lewis and Feldman, 1996).
Therefore, it makes sense to evaluate the
global impact of any kind of advertising and
promotional material before launching a
marketing campaign on the Internet.
3.1.3 Colours
Colours across nations have different symbolic
values. For example, in America a blue ribbon
is awarded for first place. In England, first
place gets a red ribbon. Black is the colour of
mourning in America, while white is the colour
of mourning in the Orient (Sterne, 1999). Thus,
if a firm is expanding internationally its local
business by the Internet, it needs to think in a
more global way.
3.2 Privacy
Studies show that the level of personal
information and concern with privacy varies
across countries. An attempt to define whether
the three relevant value dimensions of
Hofstede
(power
distance,
uncertainty
avoidance, and individualism) influence the
level of personal information privacy concern
in a society, did not reveal any significant
relationship between the overall level of
information privacy concern and any of the
three value dimensions (Milberg et al., 1995).
Another study examined the consumer privacy
issue in England and the USA over the past 33
years. A major cross-cultural difference was
that Americans have expressed more concern
about interactional privacy issues such as
intrusions into individuals' lives through the
receipt of direct mail and telephone
solicitations. The British have been primarily
concerned with informational privacy issues,
such as the collection and exchange of
information about the individual (Petrison and
Wang, 1995).
Although among cultures privacy has different
meanings and importance, one must be aware
that in the Internet community there is a
general agreement that it should not be used
for such marketing purposes as direct
advertising and mailing. Violating this rule
frequently causes Internet users to react with
anger and to "flame " the violator by sending
unpleasant retaliatory e-mail massages
(Gattiker et al., 1996).
_____________________________________________________________________
6
An analysis of marketing products and services on the Internet – George Maybury
__________________________________________________________________________________
For a marketer, therefore, it is important to
understand well what people in a specific
society mean by invasion of privacy, because
different attitudes about privacy require a
different marketing approach.
Given this setting, one of the best Internet
marketing approaches is the "soft sell".
Depending on the kind of business, one might
try (Bredenberg, 1995):
•
•
•
•
•
participating helpfully in newsgroups
while casually letting people know
what one does;
tacking a "signature" with contact
information at the end of the e-mail
message and discussion group
postings;
placing lead-generating messages in
electronic malls (cybermalls) and
directories;
preparing e-mail sales messages to
send out to those who express interest
in products or services;
setting up a Web site that offers
useful information along with
information about a company's
business.
3.3 Censorship
Freedom of speech supporters and various
kinds of social watchdog groups have long
been fighting over sexual, religious, political,
and moral content in books, magazines, TV,
movies, music, and radio. So far, on-line has
been left out because it was just too
insignificant (Palaumbo and Herbig, 1998).
However, with the phenomenal public
adoption of the Internet, on-line is now
recognised as a pervasive and influential
medium. That means it has become a threat
(O'Leary, 1996). In February 1996, after
President Clinton signed into law the
Communications Decency Act, which contains
a provision, that blocks indecency on-line,
graphic displays of sex and nudity on the
Internet became illegal (Wagner, 1996). Yet, a
federal court in Philadelphia overturned this
Act in June of 1996. However, an increasing
number of governments around the world seem
intent on erecting barriers to free cyberspace.
They are restricting network access, limiting
content and even criminalizing some form of
communication (Nemey, 1996). For instance,
in China the government decided to regulate
the Internet and force all on-line traffic through
an official channel for monitoring. The
regulation forbids transmission of information
considered harmful to state security or public
order (Martin, 1996). As an example, in
September 1996, the Chinese government
blocked over 100 sites on the WWW. The ban
covered, among others, American newspapers,
Tibetan exiles, the Taiwanese government, and
The Economist (Martin, 1996). In Germany,
government authorities are attempting to ban
neo-Nazi Web sites and sex-related Usenetnewsgroups. In Singapore, users must register
to access political and religious sites. In the
UAE, the concern is sexually explicit material.
Finally, in Malaysia, the government is trying
to monitor use by students critical of
government policies (Lovelock, 1996).
It is inevitable that some governments will try
to restrict and regulate the Internet. But in the
long run, most such efforts will fail because
the Internet is a worldwide, borderless network
beyond the control of any one government.
Besides, the Internet is protected by its sheer
size. Millions of messages, millions of World
Wide Web sites and thousands of newsgroups
all cannot be monitored. And at last, the wide
use of encryption will make government
controls virtually impossible to enforce.
3.4 Security
One of the most common worries with creating
efficient and trustworthy on-line commerce
concerns the security of financial transactions,
which occur over the network. Credit cards
provide the most obvious answer. Yet an
unscrupulous system operator could view an
unencrypted message containing the card
number as it passes by an encapsulated
package. Thus, there is certainly a relative risk
involved in this type of transactions (Notess,
1995). Nevertheless, as experience shows, the
probability of this is low because of the vast
amount of information flowing over the
network and the general lack of time available
to system administrators. But, as long as
consumers doubt the safety of the transfer,
there is a problem for selling on-line.
In the last few years, the vast majority of
payments to Internet marketing and advertising
were made by telephone, fax, or the US postal
service (Gelormine, 1995). However, as
security features have been developed the
number of purchases using credit cards has
been increasing. As Angell says
"Credit cards are the transactional lifeblood of
today's customer-merchant relationship, so it
is no wonder that 90 per cent of the people
_____________________________________________________________________
7
An analysis of marketing products and services on the Internet – George Maybury
__________________________________________________________________________________
who shop on-line use credit cards for their
purchases" (Angell, 1996).
way toward financing the legal clearance
process (Lewis and Feldman, 1996).
Among these security features which allow
merchants to send encrypted or encoded
messages through the Internet are: NCSA's
Mosaic software, the secure transaction
capability built into the Netscape browser and
server, and the unified standard from Visa and
MasterCard
called
Secure
Electronic
Transactions (SET) which promises to bring
the full force of credit and debit card
transactions to the Internet by the end of 1996
(Angell, 1996). In a further development,
electronic money will allow online commerce
between business and individuals that do not or
cannot accept credit cards (Gelormine, 1995).
3.6 Intellectual Property
3.5 International Law
On the World Wide Web, duplication is an
inherent part of the system. When somebody
links a company's Web page, a copy of it has
been made on the one's computer. Hence, it is
very easy to replicate, copy or steal words,
graphs, software, or a full presentation from a
Web page (Palaumbo and Herbig, 1998).
Although the mode of making copies has
changed by Internet, the law has not changed.
Companies still have to take legal action to
protect themselves, and they still have to prove
harm to use those legal actions. Thus, while it
may be easy to copy on the Internet, it is illegal
(Sterne, 1999).
As the Internet has gained so much attention
and so many users, the law in the USA and
other countries will have a greater role in
controlling the type of information that can be
posted and accessed. Some companies take the
position that if advertising has been cleared in
the USA, it will probably be acceptable in
other target countries. That may not be true.
Since the Internet as a means of
communications is going more and more
global, many governments including those
from Australia, Canada, France, Sweden and
the USA and the European Commission, are
looking to the global harmonisation of law on
intellectual property as part of their plans for a
national information structure (Hurley, 1995).
For example, some countries, such as
Germany, prohibit comparative advertising and
could challenge the advertisement and initiate
an action to ban the material. Other countries
such as France have strict language
requirements; since 1994 a law obligates that
all goods advertised in France must be
translated into French names and now new
linguistic forces are invoking that all
information based on French Web sites will be
in French (Coleman, 1997). The UK also has
specific statutes covering advertising for
investment opportunities, credit facilities and
the provision of financial information, in
addition to self-regulatory guidelines. Lastly,
other countries, such as those that have
adopted versions of the European International
Code of Advertising Practice of the
International Chamber of Commerce (the ICC
Code), may regulate the decency of a particular
advertisement (Lewis and Feldman, 1996).
3.7 Telecommunication Infrastructures
In any event, a marketer will be able to take
advantage of the global reach of the Internet by
paying attention to other countries' laws. A
reasonable approach is to pick the key overseas
markets for the brand and clear the advertising
and promotion in those countries. The money
saved by using the Internet rather than
broadcast or even print media should go a long
The common use of faxes, e-mail, and the
Internet is moving the virtual workplace closer
to reality in the USA. But other countries,
including those of Western Europe, do not
enjoy the same standard of telecommunication
service (Palaumbo and Herbig, 1998). Thus, a
company should not expect to find across
nations the same easy electronic access that
exists in the USA. This reality presents
obstacles to global expansion initiatives via the
Internet. For instance, while Western Europe
has adequate technology, it lags behind the
USA in services and pricing. As a result, even
a highly developed country like Ireland
charges a great deal for telecommunication
services, which can be spotty and
unpredictable (Toops, 1996).
There are a number of other examples around
the globe. There are currently only 1.7 phones
per 100 people in Africa where connectivity is
often hampered by poor state-owned
telecommunication infrastructure outside main
cities (Danowitz et al., 1995). In China, the
first 64-kilobit link to the outside world was
only installed in 1994, and most of the links
between research organisations within China
are of even lower capacity (Swinbanks, 1996).
_____________________________________________________________________
8
An analysis of marketing products and services on the Internet – George Maybury
__________________________________________________________________________________
In Mexico, consumers often have to wait more
than a year for phone service installation.
Similar
situations
prevail
throughout
developing countries in Eastern Europe, Asia,
Latin America, and Africa (Quelch and Klein,
1996). In Malaysia, there is just one Internet
access provider (IAP) with around 23,000
subscribers in 1996. That base is growing at a
rate of 22 per cent per month. In Singapore,
there are three IAPs and a subscriber base
similar to that of Malaysia (Pillai, 1996).
Therefore, companies will have to wait until
these
countries
invest
in
better
telecommunications
infrastructures
and
promote internal competition before they can
take full advantage of the opportunities the
Internet offers for global commerce.
3.8 Personal computers' availability
In the developed world the use of Internet is
growing at a fast pace due to the relatively low
cost of PC ownership. This is not the same for
other
countries,
especially
developing
countries, where it is not affordable yet to have
personal computers at home. Hence, in
developing countries the potential target
market would be limited to industrial
customers or to the wealthiest segment of the
population for some time.
3.9 The Credit Cards' use Worldwide
Credit cards are the most useful tool as a way
of payment by Internet. However, its use and
popularity are not equal across nations, for
example:
•
•
•
•
In the USA: it is the perfect means of
payment because credit cards are
widely accepted and easy to obtain.
They pay about 18 per cent of bills.
In Germany: there is a cultural-bound
problem in the use of credit cards.
Cash has long been the king; only 1
percent of their purchases are paid by
credit cards (Herbig, 1997).
In Japan: the most common credit
card issued by the Japan Credit Bank
is not very acceptable worldwide
(Herbig, 1997).
In Chile: there are two types of credit
cards. One of them, the most
common, is for buying goods or
services domestically only. The other
one is valid for international
purchases.
Since the use of credit cards as a means of
payment is not universally available in all
countries around the world, a company should
develop other means to receive payment.
The challenges facing marketers on the
Internet is considered in Section 3. The global
nature of the Internet creates new obstacles
because cultural, legal and social systems
differ worldwide. In section 4 the evolution of
the marketing mix for the Internet is examined.
4. The Evolution of the Internet
Marketing Mix
Internet marketing has changed some elements
of the marketing mix. Marketing on the
Internet is a very different process from
traditional marketing. The key to a more
successful marketing effort on the Internet will
be an interactive strategy. However, this part
focuses on marketing mix dimensions that may
be facilitated through the use of the Internet.
4.1 Product
A product is any thing that can be offered to a
market for attention, acquisition, use, or
consumption that might satisfy a want or need
(Kotler, 1991).
The management of the product mix refers to
the development and commercialisation of new
products, as well as to decisions, which
determine the length of their cycles, namely,
product rejuvenation and renewal, or
elimination decisions (Eid and Trueman,
2002). The Internet leads to faster discovery of
customer needs, greater customisation of the
products to the customer needs, faster product
testing, and shorter product life cycles
(Avlonitis and Karayanni, 2000). The
international marketers who use the Internet
should have in-depth understanding of the
foreign marketing environment to assess the
relative advantages of their own products and
services (Quelch and Klein, 1996).
As part of a good marketing plan, a company
must design new or improved products that
meet the customer’s current or latent needs,
find an effective way to bring that product to
the customer, and provide after-sales support
(Eid and Trueman, 2002). The Internet can
dramatically improve the entire process. This
is especially true if the product being offered
can be transformed into a digital product. But
even if the product is not digital, many
companies can still take advantage of the
_____________________________________________________________________
9
An analysis of marketing products and services on the Internet – George Maybury
__________________________________________________________________________________
Internet to streamline their businesses (Wilson
and Abel, 2002).
4.2 Price
As discussed previously in section 2.1 the
Internet has many influences on the price
strategy. However, the Internet will lead to
increasing standardisation of prices across
borders, or at least to narrowing the price
differentials as customers become more aware
of prices in different countries (Poon and
Jevons, 1997). MacPherson, a Webmaster for
laboratory
equipment
exchange,
an
information resource for the sale of used
scientific equipment, explains:
“The companies that advertise through my
services have to recognise that there are
international
consequences
to
their
promotions. For example if a company were to
offer a 20 per cent discount on some products
to my readers, readers all over the world
would see this deal. But in some countries
where you have distributors or do not need to
discount to get business, the special offer is a
problem”.
(Quelch and Klein, 1996)
Furthermore, Smart agents, software
programmes that can search the
Internet for products meeting pre-specified
criteria, and may further combat attempts at
price discrimination by uncovering different
prices (Eid and Trueman, 2002). Taken
together, these factors suggest that the Internet
will lead to increased standardisation of prices
across borders, or at least, narrower price
spreads across country markets.
In the Business-to-Business arena, it is
expected that the bargaining power of
customers is likely to be increased since they
will become aware of alternative products and
services. Besides, the ease of use of the
Internet channel makes it easier for customers
to swap between suppliers. It should be noted
that there are still barriers to swapping since
once a customer invests time in understanding
how to use a web site to select and purchase
products, he or she may not want to learn how
to use another service. It is for this reason that
a company that offers a web-based service
before its competitors has a competitive
advantage (Chaffey et a., 2000).
The final issue in the price dimension is the
currency rates. White states that shopping on
the Internet needs to be convenient. Therefore,
consumers are unlikely to search for
information on currency conversion rates.
Companies who wish to market their products
internationally may consider adding a link
from their web pages to a currency converter
or provide an approximate conversion rate for
each country to which they are prepared to
make sales (White, 1997).
4.3 Promotion
Promotion refers to all the various ways an
organisation undertakes to communicate its
products’ merits and to persuade target
customers to buy from them (Kotler, 1991).
The effect of using the Internet on the
promoting strategy of companies has emerged
in many studies (Eid and Trueman, 2002).
Undoubtedly, the use of the Internet allows
sales departments to have an interactive
communication with the customers. Poon and
Jevons (1997) stated that hard-selling and
advertiser-push promotion strategies do not
work well on the Internet. Global advertising
costs, as a barrier to entry, will be significantly
reduced as the Internet makes it possible to
reach a global audience more cheaply (Quelch
and Klein, 1996). However, there are many
online promotion techniques. Paying to place
links on pages with audiences that mirror or
include a company’s target customers is less
expensive than traditional media. In addition,
free advertising on other sites can often be
exchanged for mutual links (Sterne J, 1999).
Postings on Internet discussion groups on
topics relevant for specific products or markets
are another way for marketers to attract visitors
to their sites. On the other hand, there are
many offline promotion techniques such as
traditional forms of advertising, e.g. word of
mouth (Wilson and Abel, 2002).
However, there is a critical issue for the
marketers who use the Internet in their
marketing. The new challenge facing
companies is the management of a global
brand and corporate logo. Consumers may
become confused if a company and its
subsidiaries have different Web sites each
communicating a different format, image,
message, and content. Therefore, a company
should define clearly its policies about
branding on the Internet (Eid and Trueman,
2002).
An example mentioned in section 2.2 is 3M,
which has one site for its entire product line,
has a focussed corporate identity and firm
control over the marketing actions of its
division and subsidiaries (Palumbo and Herbig,
1998). On the other hand, developing one site
_____________________________________________________________________
10
An analysis of marketing products and services on the Internet – George Maybury
__________________________________________________________________________________
for each brand-while costly and limiting to
cross selling is preferable when the brands
have distinct markets and images. For example
Procter & Gamble has reserved 110 domain
names, although they are currently using a
small number of them (Eid and Trueman,
2002).
information on how the products are shipped
and precautions taken to ensure their quality on
arrival, which is the policy that has been
adopted by Internet companies such as
Amazon. Quality guarantees and/or special
consideration for international returns or
refunds may also be necessary.
Finally, Bennet (1997) stated that advertising
on Web pages other than the firm’s own is
possible (and increasingly common), but might
not be well received. Customers merely wish
to be presented with the hard facts about the
subject matter of the pages they read. Note
moreover that more and more business
establishes WWW presence, searching for
potential suppliers will become impossible
without the aid of high-quality directories to
guide people towards relevant sites.
Undoubtedly, the Internet has reduced many
distribution issues. According to Wilson and
Abel (2002)
4.4 Physical Distribution
Physical distribution is the place aspect of the
marketing mix. Marketing channel can be
defined as interdependent organisations
involved in the process of making a product or
service available for use or consumption
(Kotler, 1991). The Internet, by connecting
end-users and producers directly, will reduce
the importance of traditional intermediaries in
international marketing (i.e. agents and
distributors). To survive such intermediaries
will need to begin offering a different range of
services (Eid and Trueman, 2002).
Their
value-added will no longer be principally in
the physical distribution of goods but rather in
the collection, collation, interpretation and
dissemination of a vast amount of information
(Poon and Jevons, 1997). Quelch and Klein
(1996) stated that a hospital in Saudi Arabia,
for example, can put out a request for proposal
for equipment over the Internet, secure bids,
select a supplier without going through local
brokers and distributors, and have the products
delivered directly by DHL or Federal Express.
Few buffer inventories will be needed in the
worldwide distribution system and less
working capital.
However, if intermediaries can perform a
different mix of services, made necessary by
the Internet, they will continue to play critical
roles and extract value (Eid and Trueman,
2002). . The distribution system of the
company must have some capabilities, for
example, twenty-four-hour order taking and
customer service response capability and
regulatory and customer-handling expertise to
ship internationally. White (1997) stated that
companies
should
consider
providing
“The Internet is borderless and the opportunity
to sell over the net in a standardised way
eliminates many natural barriers to entry”.
Any business connected to the Internet can
retrieve other businesses products by ordering
them from their websites. Companies no
longer have to devise long and expensive
distribution channels to bring their products to
the customer (Eid and Trueman, 2002).
However, the marketing mix and its four Ps
constitute a production-oriented definition of
marketing, and not a market-oriented or
customer oriented one. The four Ps model does
not explicitly include any interactive elements.
Furthermore, it does not indicate the nature and
scope of such interactions (Eid and Trueman,
2002).
The paper draws attention to the evolution of
the marketing mix for the Internet in this
section. Marketing on the Internet is a very
different process from conventional marketing.
This paper focuses on the marketing mix
dimensions that are facilitated by the use of the
Internet. Finally, in section 5 conclusions are
outlined.
5. Conclusions
The Internet offers big opportunities for all
companies, especially for small and mediumsized organisations, looking to market their
products and services internationally (Sterne,
1999).
The use of this vast computer network can
substantially minimise a firm's printing and
postage costs since with one flat monthly fee a
company can send as much e-mail as it wants,
wherever it wants (Coupey, 2001). In addition,
there is no need to pay substantial amounts to
rent a mailing list to reach potential customers
or to purchase an expensive advertisement in a
magazine, since the Internet offers features like
a Web page, which performs such tasks.
_____________________________________________________________________
11
An analysis of marketing products and services on the Internet – George Maybury
__________________________________________________________________________________
In short, the Internet's tools allow companies,
regardless of size, to reach international
markets at reasonable cost. It means that these
tools have eliminated the prohibitive cost of
entry, enabling small companies to play in the
same playing field as large multinational
companies (Eid and Trueman, 2002).
Before going global by the Internet a company
should make some marketing decisions and
redefine its organisation, since the Internet's
environment has changed the rules of
traditional business. As outlined in section 2
these important marketing decisions include:
international prices, global branding, territory,
channel conflict, international distribution,
organisational structure, competition, and
means of payment.
As discussed in section 3 the Internet allows a
company to reach foreign markets, leave its
usual business environment and move into new
markets where cultural, legal, and social
systems differ widely. What is adequate for
one market could be illegal or not work in
another. Hence, a company with a presence in
this cyberspace will face new problems given
the diversity of markets. Among these
problems outlined earlier are: cultural
differences, privacy, censorship, security,
international law, intellectual property,
telecommunications infrastructure, personal
computers availability, and credit cards use
worldwide.
Although the list of challenges and problems to
marketing on a global scale through the
Internet may seen large, many companies are
successfully using this new medium to market
their products or services, promote their
philosophy, and increase awareness of their
brand(s) all over the world (Eid and Trueman,
2002). They have adapted their sales effort in
such a way as not to offend the ad-resistant
Internet community, they have accommodated
cultural differences into their Web pages, and
modified their organisational structures for the
Internet marketing's age.
In section 4 of the paper the effect the Internet
on the marketing mix is described. The
conclusion was reached that marketing on the
Internet was a different process then
conventional marketing. Further investigation
is required in order to access what approach
will work best in this global environment.
Finally, it is intended that this paper will
provide a satisfying contribution to the
understanding, the knowledge and the practise
of marketing on the Internet.
6. References
Adam, S, Mulye, R, Deans, K and
Palihawadana, D (2002) “ E-marketing in
perspective: a three country comparison
of business use of the Internet” Marketing
Intelligence & Planning Vol 20, No 4 pp
243-251
Angell, D (1996), “Laying the track”, ISDN
for Dummies, IDG Books Worldwide.
Apfelthaler, G and Navaratne, G (1999) “ Is
there a WWW? E-commerce as the new
paradigm for distribution and market
entry?” Presented at The 1999 Irish
Marketing Teachers Association Annual
Conference
Arnott, D and Bridgewater, S (2002) “
Internet, interaction and implications for
marketing” Marketing Intelligence &
Planning Vol 20, No 2 pp 86-95
Avlonitis, G and Karayanni, D (2000). “The
Impact of Internet Use on
Business to Business Marketing:Examples
from American and European
Companies”.
Industrial
Marketing
Management Vol29, No5, pp.441-459.
Axtell, R. (1996) “Do’s and taboos around the
world”, Business America, Vol. 116 No.
11
Bitner, M and Zeithaml, V (2000) “ Services
Marketing Integrating Customer Focus
Across the Firm” McGrawHill 2nd Edition
International Edition
Bradshaw, D and Brash, C (2001) “Managing
customer relationships in the e-business
world” International Journal of Retail &
Distribution management Vol 29, No 12
pp 520-529
Bredenberg, A
(1995), “Seven myths of
Internet
marketing”,
Zip/Target
Marketing, Vol. 18 No. 9
Bussgang, J
(1996), “The Internet is
revolutionizing business, but who is
setting the rules?” Harvard Business
Review, May-June, pp. 125-33.
Chaffey, D.,Mayer, R., Johnston, K. and EllisChadwick, F. (2000). “Internet
_____________________________________________________________________
12
An analysis of marketing products and services on the Internet – George Maybury
__________________________________________________________________________________
Marketing: Strategy, Implementation, and
Practice”. England, Prentice
Hall.
Chen, S (2001) “Strategic Management of eBusiness” Wiley
Coleman, F (1997), “A great lost cause:
France vs. the Internet”, US News and
World Report, April, pp. 57-9.
Coupey, E (2001) “ Marketing and the
Internet,
Conceptual
Foundations”
Prentice Hall
Croft, B. (1995), “Opening windows to the
world”; Communication World, Vol. 12
No. 11
Czinkota, M and Ronkainen, I (1996), Global
Marketing, Dryden Press, pp. 41-50.
Danowitz, A , Nassef, Y and Goodman, S
(1995), “Cyberspace across the Sahara:
computing
in
North
Africa”,
Communications of the ACM, December,
pp. 23-8.
Darby, R, Jones, J and Al Madani, G (2003) “
E-commerce marketing: fad or fiction?
Management competency in mastering
emerging technology. An international
case analysis in the UAE” Logistics
Information Management Vol 16, No 2 pp
106-113
Deitel, H and Deitel, P (2001) “ E-business
and e-commerce for managers” Prentice
Hall PTR, Upper Saddle River, NJ 07458
Dholakia, N, Fritz, W, Dholakia, R and
Mundorf, N (2002) “ Global E-Commerce
and Online Marketing Watching the
Evolution” Quorum Books
Eid, R and Trueman, M (2002) “ The Internet:
New International Marketing Issues”
Management Research News Vol 25, No
12 pp 54-67
Ellsworth, J and Ellsworth, M (1995) “
Marketing on the Internet Multimedia
Strategies for the WWW” Wiley
Feinberg, R and Kadam, R (2002) “ E-CRM
Web service attributes as determinants of
customer satisfaction with retail Web
sites” International Journal of Service
Industry Management Vol 13, No 5 pp
432-451
Gattiker, U, Janz, L and Kelley, H (1996),
“The Internet and privacy: do you know
who is watching?” Business Quarterly,
Vol. 60 No. 4
Gelormine, V. (1995), “ Selling
Cyberspace”, Success, Vol. 42 No. 4
in
Greene, T. (1996), “Maximum results”, Direct
Marketing, Vol. 59 No. 3
Herbig, P and Palumbo, F (1998) “
International marketing tool: the Internet”
Industrial Management & Data Systems
Vol 98, No 6 pp 253-261
Herbig, P (1997), Handbook of Cross-Cultural
Marketing, Haworth Press.
Hurley, D (1995), “Property and privacy in
Cyberspace”,
OECD
Observer,
October/November, p. 19.
Jobber, D (1998) “Principles and Practise of
Marketing” 2nd Edition Mc GrawHill
Kotler,
P.
(1991).
“Marketing
Management:Analysis,
Planning,
Implementing,
& Control”. New Jersey, Prentice Hall,
Englewood Cliffs.
Lewis, R. and Feldman, J. (1996), “Before you
advertise on the “Net, check the
international marketing law”, Bank
Marketing, May, pp. 40-2.
Lovelock, P. (1996), “Asia meets the Internet”;
China Business Review, Nov/Dec, pp. 267.
Martin, J (1996), “Political barriers cannot
stop the Internet”, Computerworld, March,
p. 37.
McDonald, M and Wilson, H (2002) “ The
New
Marketing
Transforming
the
Corporate
Future”
ButterworthHeinemann Elsevier Science
McKenna (1991) ‘Marketing is everything’,
Harvard Business Review, Jan pp. 65-84
Milberg, S., Burke, S., Smith, J. and Kallman,
E. (1995), “Values, personal information
privacy, and regulatory approaches”,
Communications of the ACM, Dec, pp.
65-74.
_____________________________________________________________________
13
An analysis of marketing products and services on the Internet – George Maybury
__________________________________________________________________________________
Nemey, C (1996), “Net freedom limited
abroad”, Network World, July, pp. 1-10.
Notess, G (1995), “Shopping, security, and
shareware”, Database, Vol. 18 No. 5
O’Leary, M (1996), “Parents empowered in
online culture wars”, Online, Sep/Oct, pp.
50-1.
Peters, L (1997) “ IT enabled marketing: a
framework for value creation in customer
relationships” Journal of Marketing
Practise: Applied Marketing Science, Vol
3, No 4 pp 213-229
Petrison, L and Wang, P (1995), “Exploring
the dimensions of consumer privacy: an
analysis of coverage in British and
America media”, Journal of Direct
Marketing, autumn, pp. 19-37.
Pillai, B. (1996), “The Orient Express”,
Communications International, May, pp.
77-80.
Poon, S and Jevons, C (1997). “Internet
Enabled International Marketing:
A Small Business Network Perspective”.
Journal of Marketing Management
Vol 13, pp.29-42.
Quelch, J. and Klein, L. (1996), “The Internet
and international marketing”, Sloan
Management Review, pp. 60-75.
Resnick, R
(1994), “Cyber sales”, PC
Magazine, Vol. 13 No. 7
Rowley, J (2002) “Reflections on customer
knowledge management in e-business”
Qualitative
Market
Research:
An
International Journal Vol 5 Num 4 pp 268280
Smith, P and Chaffey, D “ eMarketing
excellence, The Heart of eBusiness” The
Chartered Institute of Marketing
Sterne, J
(1996), “World Wide
marketing”, Editorial, Wiley
Stone, M, Woodcock, N and Machtynger, L
(1999) “Customer Relationship Marketing
Get to know your customers and win their
loyalty” Kogan Page
Shwu-Ing, W (2002) “Internet Marketing
Involvement and Consumer Behaviour”
Asia Pacific Journal of Marketing and
Logistics
Swinbanks, D. (1996), “Internet fever arrives
in Japan, worries in China”, Research –
Technology Management, July/August,
pp. 7-8.
Toops, L (1996), “Technological challenges
face insurers abroad”, Best’s Review
(Life/Health), June, pp. 56-61.
Triolo, P and Lovelock, P. (1996), “Up, up,
and away – with string attached”, China
Business Review, November/December,
pp. 18-19.
Turban, E (2002) “ Electronic Commerce A
Managerial Perspective” Prentice Hall
Wagner, M (1996), “Tempers flare over Web
censorship”, Computerworld, Feb, p. 6.
White, G.K. (1997). “International On Line
Marketing of Foods to US Consumers”.
International Marketing Review Vol 14,
No 5, pp.367-384.
Wilson, S.G. and Abel, I. (2002). “So you want
to get involved in Ecommerce”.
Industrial Marketing Management Vol 31,
No 2 , pp.85-94.
Zimmerman, J (2003) “Marketing on the
Internet, Your Seven Step Plan for
Succeeding in e-Business Now That the
Hype is Over” 6th Edition Maximum Press
Copyright © 2003
George Maybury
Web
Sterne, J (1999) “WWW Marketing Integrating
the Web into Your Marketing Strategy” 2nd
Edition, Wiley
Stone, M and Woodcock, N (1995)
“Relationship Marketing” Marketing in
action series Kogan Page
_____________________________________________________________________
14