Internet Marketing Study Essay Example

and researchers in information sharing since the 1970s, the introduction of World Wide Web (WWW) browsers in 1994 garnered widespread attention. The web's user-friendly interface, coupled with its capability to exhibit graphics and multimedia content, met the business community's need for a more accessible rendition of the Internet. This revolution can be likened to how Apple Macintosh and Microsoft Windows transformed desktop computing.

The long-awaited potential of the electronic marketing channel is now available but not immediately recognized. Due to people's belief in what they read, US businesses have overwhelmingly adopted the Internet's presence. There are around 50,000 companies and over 1.75 million web pages (equivalent to one computer screen of information, text, and graphics) accessible for Internet users according to estimates. The good news is that these pages are accessible worldwide 24/7 and can be updated daily. Given the opportunity offered by the Internet, media coverage is certainly justified.

Most of the web pages were created by companies wanting an online presence rather than those supporting a broader communication strategy. However, marketing on the Internet offers several advantages. These include interactivity, where visitors can engage with the website through graphics, text, and various features like downloading information, leaving comments, watching videos, listening to programs, making purchases, and requesting products or services. The only limitation is the availability of resources to support the website. Another positive aspect is one-on-one communication where individuals can ask specific questions and receive answers online without being limited by traditional distribution channels or customer ownership concerns. Manufacturers can also interact with end users and collect valuable market feedback at minimal cost.

The Internet offers the most genuine form of direct marketing, which

requires guided interaction. Similar to any information gathering project, Internet interactions should have a limited response section and an open dialogue section. Additionally, inquiries and comments can be efficiently addressed through direct and cost-effective email responses. The flexibility inherent in Internet locations allows information providers to modify any aspect of their online presence at any given time.

The Internet offers a dynamic and immediate solution for modifying media presence, unlike other forms of media with lead times. Changes can be made instantly, eliminating lingering typos or outdated information. One of its unique aspects is the minimal cost associated with communication, in contrast to a full page ad in a magazine.

Two full pages cost almost double the price. However, opting for a two-page package over a single page on a yearly contract results in a lesser cost per unit but a considerably higher overall cost. In the online realm, a home page (the first page viewed by visitors) incurs expenses, which encompass investments in technology and programming as well as connection costs. The number or complexity of additional pages does not considerably increase the cost. All pages remain online continuously throughout the year until the company decides to remove them.

The telephone is a recent example of a media with potential for widespread use. A recent study by The Gartner Group indicates that the majority of costs for developing an electronic marketing campaign occur during the initial stages of organizing, developing, and executing the campaign. Integrating additional channels such as email communications, alongside a web presence, only slightly increases costs (by 10%-20% per channel). The study also suggests that businesses that become electronic marketing merchants can expect

to recoup their investments within 12 to 24 months, with a probability of 0.8. This probability is based on the assumption that top management support is present, as a significant change in business activity requires this support.

Challenges in Internet Marketing: One of the challenges the Internet encounters in marketing is security. There is a significant concern about the lack of security on the Internet, particularly regarding the threat of hackers infiltrating secured areas of corporate Internet servers. However, firewall technology is highly effective in preventing such breaches, and continuous efforts are made to enhance defensive measures. While this issue primarily relates to server security, there is also a perceived risk in transmitting proprietary information over the internet.

The main focus is on the theory of securing credit card communication in electronic marketing. Currently, there have been no reported cases of online credit card fraud. It's important to understand that using a stolen credit card is considered fraudulent, regardless of how the criminal acquires the card number. Concerns about credit card fraud have not affected the use of credit cards in traditional direct or retail sales situations. However, in theory, it is possible for a thief to intercept data packets during high-speed internet transmission.

High-tech criminals can easily access and utilize data, but the risk is not significantly high. It is common for business professionals to give their credit cards to restaurant staff and leave a signed slip or share numbers over phone lines without hesitation. Similarly, the internet does not pose a greater threat.

The issue will be further alleviated with the increasing use of encrypted transaction software. In April 1995, a security standard was agreed upon

by major Internet players such as IBM, AOL, Prodigy, Compuserve, and Netscape, among others. It is expected that standardized encryption software developed by these and other companies will be released this fall. Both parties involved in an Internet transaction must have Internet access and the knowledge of how to use it. Setting up an Internet site is not beneficial for a company if its customers cannot access the information. However, fortunately, this issue is rapidly disappearing.

The number of Internet users is quickly growing, with a growth rate that doubles the current count of 30-35 million users in one year. Currently, there are 3.8 million daily users who access the World Wide Web (WWW). Additionally, it is expected that this number will double this year because private online services have released web browsing software. These services include America On-line with 2.5 million users, Prodigy's 1.5 million subscribers, and Compuserve's 2.8 million users.

Furthermore, the internet enables easy access to the Web for the 4 million IBM OS/2 Warp users and approximately 80 million Microsoft Windows 95 users. Time: The Internet is a constant, global mode of communication where all viewers witness the same content simultaneously, regardless of their time zone. A viewer in Australia can view something in the future while communicating with a company based in Boston, which experienced it in the past.

The East coast marketers facing difficulties communicating with the West coast would benefit from this positive aspect. However, companies desiring real-time communication must be prepared to do so round the clock, which presents a negative issue. When considering the concept of cyberspace, all surfers can be present at the same virtual location simultaneously, regardless

of their physical location. From an end-user perspective, the location is on their desktop, regardless of where the information originates. For English-speaking surfers, location holds no significance as English is the current language of the internet. However, if a surfer seeks non-English content, location becomes important.

Information providers in many other countries offer information in their own language, which can pose challenges for marketers. However, the global delivery services of UPS, FedEx, and DHL at affordable rates are assisting in resolving this issue. Monetary conversion can be managed through credit card issuers. However, the internet as a medium has certain limitations. It requires users to be literate, think somewhat abstractly, and have access to or own a desktop computer. These individuals are not considered disadvantaged in any society.

They are typically individuals who utilize technology in their daily lives. This demographic is highly sought after by retail marketers and can be easily reached through the Internet by business marketers who already use technology and desktop computing in the workplace. Internet access is essential for both cases. Netiquette, the unspoken guidelines for online communication, determines how marketing professionals should behave in this environment.

The current IYF (In your face) techniques go against the rules of netiquette. According to netiquette, personal access to information and privacy of actions are extremely important. Additionally, unsolicited communication is not acceptable. For Internet marketers, this means they must be receptive and make marketing materials easily accessible online. Instead of initiating targeted communication, they should encourage proactive action from customers. Traditional direct mail over the Internet is only acceptable if the end-users have requested it.

The Current Paradoxes in Internet Marketing

The Internet is facing numerous paradoxes

that seem to hinder its rapid growth as a marketing medium. These contradictions include: 1. The demographic paradox. Marketers hesitate to target consumers on the Internet due to the lack of adequate demographic data on Internet buyers. Conversely, collecting demographic information requires conducting online market research activities, which are typically incorporated into a broader marketing campaign.

How does a sports event generate a scoring system when all participants are spectators? Additionally, until 1995, the merchandise available on the Internet was mainly aimed at males, including computer parts, software, and accessories. Recent data suggests that only men engage in online purchasing.

According to studies, the majority of users are men. However, the number of female end-users is increasing rapidly. It is important to allow the Internet some time to attract women shoppers before stereotyping becomes prevalent. Additionally, there is growing concern about the overall number of buyers in the marketplace. Although few Internet marketers are discussing it, the numbers appear to be on the rise. The Internet Shopping Network recently shared in an industry newsletter that 5% of its 10,000 daily visitors are making online purchases.

The ongoing studies by the Hermes Project at the University of Michigan Business School, in collaboration with the GVU Center at the Georgia Institute of Technology, have discovered positive results about World Wide Web usage. According to these findings, 18% of survey respondents have made online purchases totaling more than $50 in the previous six months. Additionally, there is a security paradox related to protecting credit card information on the Internet. This paradox arises from how the media portrays online credit card usage as vulnerable. However, it is important to note that no

instances of credit card misuse resulting from transmission over the Internet have been reported.

Only one incident of credit card abuse has occurred on the Internet. In this particular case, a hacker successfully stole tens of thousands of credit card numbers from Netcom, an Internet connection provider located on the west coast. It is crucial to highlight that this theft did not happen during the transmission of credit card numbers over the Internet; rather, it took place because the stolen card information was stored on Netcom's server. Fortunately, none of the stolen card numbers were unlawfully utilized.

4. The Internet cost paradox is often asked whether phone line charges will increase when talking to someone in Hong Kong. The answer is no, as costs remain the same whether communicating with China or a neighboring building using the Internet. The user incurs no additional expenses for worldwide communication beyond the initial fixed connection to the Internet.

This situation goes against the expectations set by formal training and practical experience as the expenses associated with Internet marketing can be substantial. Establishing a powerful online presence can cost anywhere between $5k to $200k, depending on the desired level of visibility. These costs encompass expenditures for hardware, software, personnel, and connection charges, regardless of whether they are managed internally or outsourced. However, once these financial obligations are fulfilled, the ongoing expenses become negligible.

Internet marketing is highly appealing on a larger scale. Another cost paradox also exists. Based on the Gartner Group study, both corporate purchasing agents and consumers anticipate that products and services from online vendors will be cheaper than those from traditional channels due to the absence of retail or distributor

expenses. However, online vendors aim to recover the initial costs of implementing the service and believe that the added convenience of electronic commerce justifies a higher price. This belief is risky and, as indicated by the study, unfounded.

5. As the demand for statistics and user information continues to increase, successful individuals rarely share their secrets for success in a competitive world. Would you? The pioneers of Internet marketing are staking their claim without revealing their strategies. One thing is indisputable.

According to a study by the Gartner Group, it is crucial for every internet server (host) to be programmed to track its contact with users. This tracking helps determine the true measure of an electronic marketer by providing detailed information on who looked at what, when, and for how long. Surprisingly, many vendors are not currently capturing this information.

6. The presence paradox. Companies and individuals of all kinds are creating websites on the World Wide Web and finding themselves dissatisfied with the lack of outcomes. To succeed in internet marketing, it is essential to have a comprehensive strategy that incorporates various channels in electronic and traditional realms. Regrettably, many fail to establish any strategy, goals, or expectations before diving into an online presence. Achieving desired results requires setting objectives and employing a comprehensive internet marketing strategy involving multiple channel applications in both electronic and traditional areas.

Regrettably, there was a lack of strategy, goals, or expectations prior to creating the company's Internet presence. It is important to achieve set goals rather than solely taking action. However, the responsibility for the company's Internet activities currently lies with their technology professionals, which is inappropriate. This can be likened

to assigning the accounting department to handle advertising.

7. According to O'Reilly & Associates, 72% of surveyed Internet users utilized the Internet to gather information about products before making purchases (as reported in Communications Week, April 17, 1995, p.29). Interestingly, when it comes to paying for these products, users generally opt for conventional offline methods. Respondents of the survey revealed that they typically restrict their online purchases to products like software and music CDs, which are the predominant items available for online purchase. This highlights another paradox: the lack of online ordering options from internet advertisers results in a low volume of online orders.

It appears that this report overlooks the logistics involved in the statistics. People refrain from ordering online due to their inability to do so. Additionally, even when presented with the chance to make online purchases, individuals abstain because they have not yet been accustomed to doing so. To familiarize customers with online buying, retailers must provide the option of ordering online.

According to a study conducted by ActivMedia Inc., 21 percent of the surveyed websites stated that they had generated sales of over $10,000. The study forecasts that web sales will amount to $118 million between September 1994 and August 1995. An interesting point to note is the mental paradox in the planning process. This process aims to create a better present than the past, but it heavily relies on managers' cognitive abilities to gather information, make predictions, and adapt accordingly due to the unpredictable nature of the future.

The Internet, as it stands now, is not a part of the mind's framework. To truly comprehend and utilize the Internet, one must think outside

the box. It is a completely new realm that necessitates a completely new approach. For managers to effectively plan, they must have a well-informed grasp of cyberspace. However, the dilemma lies in the fact that there is currently no all-encompassing explanation of the Internet for managers to integrate into their thought process.

Unlike the children's story, the sky is not falling, it is being organized into a new entity, which future spectral analysis will reveal in detail. The problem is we can't wait for the analysis and must move into this new marketplace with educated assumptions, long-range strategy, and realistic expectations.

Conclusion

Making a Plan

It is our hope that recognizing the aforementioned issues involved with Internet marketing will be the first step in eliminating the problems and helping the reader move on with this exciting direct marketing opportunity. The numbers and potential are very promising.

A recent report titled "Electronic Marketplace 1995: Strategies for Connecting Buyers and Sellers" by SIMBA Information Inc. reveals a 27% increase in revenues from the electronic transfer of tangible goods between 1994 and 1994. The report highlights that revenues during this period reached $362 million, encompassing all electronic mediums such as response TV and kiosks. The report indicates that the majority of transactions in the electronic marketplace are conducted through private on-line services, with business and consumer on-line marketing efforts generating sales that represent 90% of the market, equaling $324.9 million in 1994. Despite the Internet accounting for only 6% of transactions in 1994, the study predicts that it will become the second largest electronic marketplace by the year 2000, with revenues reaching approximately $950 million.

The Internet market is currently grappling with the question

of how to resolve the previously mentioned issues and achieve the projected profits by the year 2000. The solution lies in educating ourselves about this emerging technology.