Internet Marketing: The importance of using the internet as a marketing tool
Introduction
The purpose of this paper is to not only point out the importance of the internet as a marketing tool but also to highlight the implications of the web on business decision-making processes. The internet has provided a rare opportunity for companies throughout the world to move their operations beyond the physical constraints of the traditional product distribution channels creating an enormous wealth of possibilities for businesses to exploit (Kiang and Chi). Today, the web today has more than 77% rates of penetration in most advanced markets with the emerging markets such as China, Brazil, and India accounting for the top ten list of the sheer number of internet users (Tourism Intelligence International). As of 2010, there were about two billion internet users in the world with a growth rate of more than 18% per year. Moreover, the Internet provides ample opportunities to connect potential customers all over the world 24/7 and generate a significant amount of money. For instance, in 2010, Amazon generated over US$34 billion in sales whereas Google pulled in over US$29 billion within the same timeframe (Tourism Intelligence International). This article thus focuses on the use of the internet as a storefront where goods and services are offered to consumers. The contention of the discussion is that Internet Marketing can play a significant role in the success of business. It, therefore, reviews the benefits of online marketing in a bid to stress the importance of online business opportunities.
Background Information
As hinted at above, the foundation of the internet has offered a healthy foundation for the world economy to thrive. For example, because of the Internet, advertising has been achieving much success such that according to the 2011 IDC estimates, global expenditure on Internet advertising surpassed the USD 106 Billion mark (Kursan and Mihic). Internet Marketing (IM) (sometimes digital marketing or e-marketing) refers to the application of the internet to sell products and services via e-commerce to achieve the marketing objectives of an organization (Fleischner). Although predictions vary, Business-to-Consumer (B2C) was not popular not until 1991 when the National Science Foundation lifted the restrictions placed for the commercialization of the internet. The following years saw increasing trend in online shopping and 1995 following the success of the venture in the prior years and the potential the internet presented to businesses, Amazon was introduced (Tourism Intelligence International). The floodgates opened after Amazon. In 1996, spending on the internet totaled $301 million in the U.S alone and in 1997; online advertising became a full blown industry worth billions of dollars (Tourism Intelligence International). In the 2000s, the global expenditure in Online Marketing and advertising activities rose to new highlights (Table 1 and Chart 1). The increase in the online business activities stems from the growth in online population (Chart 2).
Information as retrieved from (Statista)
Source: (Statista)
Chart 2: Graphical representation of the growth of internet users
Source: (Miniwatts Marketing Group)
It is further projected that global spending on digital media is to rise at a compound rate of 5.1% per annum – from $1.6 trillion in 2015 to $2.1 trillion in 2019. In this growth, digital marketing is expected to account for about 75% of business expenditures of most companies in the period commencing 2014-2019 (Chief Marketing Officer [CMO] Council). The CMO Council further projects that by 2018 Internet advertising is poised to be largest advertising segment above the TV and other media. With the increased use of portable internet devices, about two-thirds of the global revenue growth from advertising and consumers will come from digital content (Chief Marketing Officer [CMO] Council).
The benefits of Internet Marketing to an Organization
In light of the above figures, it is impossible to underestimate the importance of IM on the success of an organization. There are several benefits of using IM. First, from the perspective of e-commerce and the need for an organization to develop efficient marketing strategies, the internet provides better and deeper insights into a rich source of information about customer behavior, their potential impacts on the business as well as their buying decisions and trends. The internet also offers the company an opportunity to develop relations with clients, provide information about products and an avenue to create an image.
Second, the internet represents, perhaps one of the most efficient medium for communication between the business and clients. It serves the important role of attracting potential customers and retaining the existing customer base and, in that way, help manage both the long and short-term business-customer relationships. Today, this advantage has evolved into a business marketing tool that offers organizations access to technological advancements and direct communication link with customers, as well as enabling businesses, manage and quickly and continuously updates the client's database. Peterson, et al. (1997), identifies several unique features of the internet regarding communication: the interactivity and the ability to provide information on demand, provision of perpetual information superior to printed media, and capacity to store numerous amounts of data in a cost-effective manner. Because of its availability 24 hours a day, seven days a week, the internet can also provide information to both the firm and the customers on a timely manner. This attribute means more interaction, quicker responses, better customer service, and more revenues (Tourism Intelligence International). As a plus, the use of the internet allows for easy follow-up on suppliers and customer needs and adjusting marketing strategy accordingly (Kursan and Mihic). Another benefit of using the internet in marketing is the ability to gather information about customers as well as suppliers that marketers can use for the development of new products (Kursan and Mihic). Through the ‘push technology, the internet can allow business organizations to not only personalize adverts for each segment of its customers but to identify prospects as well.
Third, studies show that the virtual platform offers small companies endless potential benefits to help them compete with improved visibility against corporate giants. According to the American Business Journal, small firms that adopted the Internet experienced 40% faster growth rate than those that do not (Yannopoulos). For example, niche-based micro businesses, that is, enterprises that deal with specialized (unique) products within a limited geographical locality can use the internet to reach a much bigger customer base such as the Virtual Vineyards company (a wine shop that only has a presence online (Kiang and Chi).
Fourth, the use of the online platform can also help a firm in easing transaction processing (Andrews and Trites, 1997), thereby decreasing paperwork (Long, 1997), and reducing the need for professionals (Sandilands) hence reducing business operation costs (Kiang and Chi). For Business-to-Business(B2B) transactions, the use of the internet help shorten the time for inventory processing thus reducing overheads for handling excess inventory, eliminates storage costs, utilities, and space rental. Fifth, the internet allows for swift and timely adjustment to market conditions meaning that a firm can customize sales and promotion strategies to individual customers, allowing for flexible pricing (Kiang and Chi). The relative ease, hustle-free and low-cost entry for firms getting into IM is also one of the most important reasons for considering the internet as an alternate marketing channel for businesses (Kiang and Chi).
Lastly, Internet marketing has significant effects on the marketing mix of firms – product, price, place, and promotion (Yannopoulos). Product decisions revolve around product characteristics and packaging that appeal to customers. Internet-based technologies create substantial cost savings related to production and distribution of digital commodities (Yannopoulos). Cost reductions arise from economies of aggregations that allow large distributors to sell bundled products at a low, flat monthly fee (Yannopoulos). Moreover, digital marketing is a cheaper method than conventional marketing tools media such a televisions, radios, and print (Rai and Sharma). Online marketing has also prompted the creation of digital goods such as music, software, and videos (Yannopoulos). This innovation has boosted sales for traditional vendors because they can now serve a wider market because of their customization ability. Industry-wide implications on internet marketing continue to make inroads in modern societies (Rai and Sharma). An example is the banking sector that uses the internet to conduct basic transactions such as checking account balances or facilitating money transfers for online purchases. Internet marketing offers vast opportunities for using recommendation systems where marketers suggest relevant products to customers based on past purchases of previous customers or keywords supplied by online users on popular search engines such as Yahoo! and Google (Yannopoulos). This system boosts sales since customers may make impromptu purchases of additional products that appeal to them. For established companies with good reputations such as Amazon, internet marketing strengthens their brand in the online market. Branding stems from the preference of consumers for “renowned and reputable retail companies” due to the fraud risks surrounding online transactions and the sensitivity of credit card information (Yannopoulos).
Pricing decisions determine the prices of commodities that a firm sells. On this front, internet marketing has increased accessibility to pricing information, enabling customers to compare the offers of several vendors. The result is intense price wars among online vendors, leading to lower prices (Yannopoulos). The ever-increasing number of suppliers on the internet has shifted the bargaining power to consumers by enhancing choice and variety. However, research shows that majority of online shoppers – 84%, 76%, 81%, and 89% of toys, electronics, music, and book buyers – purchase products from the first site they visit rather than actively search for best price deals in competing sites (Yannopoulos). The majority of these consumers also return to the same site when making subsequent purchases. Thus, companies must strive to offer excellent customer service to encourage repeat sales. Online auction sites such as eBay provide “real-time bidding pricing” that enables firms to attract customers they previously deemed too geographically dispersed to participate in traditional auctions (Yannopoulos). Marketing on the internet also facilitates pricing research by enabling marketers to test marketing decisions in real-time through surveys, contests or sample products (Yannopoulos; Kiang and Chi). For this reason, they can set and adjust prices with greater accuracy. A vast wealth of information accrues to online marketing from multiple sources such as cookies or databases containing buying history of consumers. Enterprise can use such information for market segmentation, and the discovery new, profitable niches that offer first-mover competitive advantages (Yannopoulos).
Internet marketing acts as both a delivery medium and a retail store by providing greater shopping convenience to customers and shortens the delivery period for digital products and services (Yannopoulos). Digital marketing as a promotion tool combines the advantages of direct selling and advertising, thus maximizing the marketing experience (Yannopoulos). It encompasses a broad range of marketing strategies such as websites, ads and public relations, relationship marketing, websites, marketing research, and mobile and ubiquitous marketing, (Epstein and Yuthas). These tools offer avenues for marketers to assess whether their marketing campaigns are working and quickly channel funds to the more productive media placements (Fleischner). A traditional approach used by online retailers is the pay-per-click method, which them to pay a marketing fee based on the competitiveness of an ad title or a keyword when a user clicks a link (Fleischner). Rather than waste funds on a broad range of tools, firms can only select and maximize the ones that best suit the needs of the organization.
Websites are by far the most widely used tool. Its popularity stems from its ability to establish a favorable image through mission statements, stock market performance reports, and product information, that impress customers and cultivates trust (Fleischner). Search marketing involves activities that direct consumers to locate enterprises, products, and brands using search engines (Epstein and Yuthas). Based on the location of key terms on the site, the number of sponsored links it contains, and the frequency of visitations to the site by users through similar search terms, the rank of websites as they appear on the search list is determined. Those higher on the list or located on the first page of the search results stand higher chances of getting user visitations than those lower or on the subsequent pages on the list of search results. For this reason, companies must enhance the visibility of their websites by selecting key terms that uniquely identifies their products. Awareness creation occurs through banner ads and press releases on online articles (Epstein and Yuthas). Relationship marketing tools such as email, blogs, chat, instant messaging serve as avenues for interactive communication with customers, personal selling, and post-sale services. Marketing research is a critical determinant of the nature and breadth of business intelligence that online firms and marketers can generate. Online vendors can effectively monitor customer searches, their access patterns, and the time they spend in different areas of the site (Epstein and Yuthas). Such data inform pricing and product decisions for better sales.
Summary of results
Conclusion
The emergence of the internet, coupled with rapid globalization, has revolutionized the way contemporary enterprises conduct business. The stiff nature of competition in both the national and international scene necessitates the adoption of internet-based marketing strategies to better reach existing and potential customers dispersed across vast geographical locations. Internet marketing fills this need by offering cheaper and faster means of communicating with customers and other stakeholders, increased visibility of small firms against corporate giants, and insights into the marketing mix of online retailers or marketers. If enterprises appropriately implement and align internet marketing with business goals and traditional marketing strategies, they can achieve exceptional business performance and expansion.
Recommendations
In light of these results, companies should integrate internet marketing in their marketing strategy to expand their customer base. They can create comprehensive multimedia features that grasp the attention of internet users and nudge them to visit their websites. Features such as merry sounds, animations, and attractiveness of sites may leave soft and warm feelings in a customer and encourage repeat visits and/or sales (Rai and Sharma). Second, companies can exploit the marketing opportunities offered by the social media. Social networking sites contain more than a billion users who are potential customers to online retailers and marketers. The platform can support a broad range of marketing activities such as providing product information, advertising job openings, facilitate customer feedback, and develop a brand image.
Works Cited
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