ARTICLE IN PRESS

International Journal of Information Management 25 (2005) 203–213

www.elsevier.com/locate/ijinfomgt

Usage and effectiveness of online marketing tools among

Business-to-Consumer (B2C) firms in Singapore
Thompson S.H. Teo
Department of Decision Sciences, School of Business, National University of Singapore, 1 Business Link,
Singapore 117592, Singapore

Abstract

This study seeks to identify the extent of usage and perceived effectiveness of various online marketing
tools among Business-to-Consumer (B2C) firms in Singapore. The findings reveal that there are some
significant differences between the extent to which websites utilize the various online marketing tools and
the perceived effectiveness of such tools. Implications of the results are discussed and the results should be
useful in helping B2C firms decide on the appropriate marketing tools to implement.
r 2004 Elsevier Ltd. All rights reserved.

Keywords: Online marketing; Business-to-consumer; Websites; Singapore

1. Introduction

Businesses are increasingly using the Internet for commercial activities. The ubiquitous nature
of the Internet and its wide global access has made it an extremely effective mode of
communication between businesses and customers (Rowley, 2001). The growth of Internet
technology has enormous potential as it reduces the costs of product and service delivery and
extends geographical boundaries in bringing buyers and sellers together. The Internet also allows
small businesses to access markets and to maintain a presence that help them to compete against

Corresponding author. Tel.: +65 6874 3036; fax: +65 6779 2621.
E-mail address: bizteosh@nus.edu.sg (T.S.H. Teo).

0268-4012/$ - see front matter r 2004 Elsevier Ltd. All rights reserved.
doi:10.1016/j.ijinfomgt.2004.12.007
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industry giants. In fact, the Internet has changed the face of marketing with its instant yet
personalized reach to a global audience.
Although more and more firms are realizing the importance of leveraging on the Internet to
conduct their businesses, corporate leaders are finding it difficult to keep up with fast moving
markets and the customer conditions that are the hallmark of the Internet (Aldridge, Forcht, &
Pierson, 1997). Literature on Web theory is scant because it is a relatively a new area and the
technologists at the forefront of Web design are typically not sufficiently academically inclined to
formulate the relevant theories (Day, 1997).
While previous research has examined Internet usage (Teo, Lim, & Lai, 1999), online shopping
(Teo & Yu, 2004), commercial websites (Gonzalez & Palacios, 2004), website design (Kim, Shaw,
& Schneider, 2003), and website effectiveness from the consumers’ perspective (Bell & Tang,
1998), there is a general lack of research on specific online marketing tools and the effectiveness of
these tools. Hence, this study seeks to fill this gap in the literature by examining the extent of usage
of various online marketing tools by Business-to-consumer (B2C) firms and their perceived
effectiveness.

2. Digital marketing model

The conceptual framework used in this study is based on the Digital Marketing Framework
introduced by Kierzkowski, McQuade, Waitman, and Zeisser (1996). The Digital Marketing
Framework revolves around five essential elements for success in digital marketing, namely,
attract users, engage users’ interest and participation, retain users, learn about their preferences
and lastly, relate back to users to provide customised interactions. Each of the five elements entails
several issues and practices that determine marketers’ success in their online marketing efforts.

3. Method

The questionnaire comprises items describing various online marketing tools used in the five
elements: attract, engage, retain, learn and relate of the Digital Marketing Framework. For each
item, the extent of usage and effectiveness is rated on a five point Likert scale ranging from (1) not
used to (5) extensively used; and (1) not effective to (7) extremely effective.
The questionnaire was pretested with ten working adults employed in the B2C industry. The
questionnaire was amended iteratively by adding more explanations or definitions of certain terms
deemed to be ambiguous by the respondents. The final questionnaire was sent via mail to online
marketing managers or CEOs of 400 B2C firms generated from three search engines Lycosasia
(www.lycosasia.com), Yahoo Singapore (www.yahoo.com.sg) and Catcha (www.catcha.com).
Three weeks later, a second mailing was done. Twenty-two firms declined participation citing
reasons such as the lack of plans to carry out online marketing and the busy schedules of
managers. Eliminating these firms, a total of 92 out of 378, or 24.3 percent of B2C firms
responded to the study. A non-respondent bias test indicated no differences between respondents
and non-respondents. After preliminary findings were obtained, in-depth interviews with 12 firms
surveyed were carried out to gain more insights into the research findings.
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4. Results

4.1. Demographic profile of respondents

Table 1 summarizes the demographic characteristics of respondents. The majority (77.6%) hold
managerial positions. The high hierarchical level provides some assurance of the validity of the
sample as higher level respondents are more likely to be knowledgeable about the firm’s online
marketing strategies.
A high proportion of the respondents’ firms are involved in the retailing of consumer products
such as home & furnishings, computer/electronics, fashion apparel, food/groceries, and toys/gifts/
flowers, and they account for 71.7%. Seventy-five percent of firms accept orders via their websites
and the most popular mode of payment accepted is by credit cards (30.8%). A majority of 70.7%
firms has physical stores. These are ‘‘click and mortar’’ firms, which are engaged in both the
physical and online retailing of goods. More than half of the firms (51.1%) have an average
annual revenue of less than S$100,000. The average (mean) set up cost of websites reported by the
respondents is S$42,225 while the mean annual maintenance cost is S$10,231. These figures are
not very helpful in describing a distribution in which the set-up costs range from S$500 to
S$500,000 and maintenance costs from S$50 to S$150,000.

4.2. Online marketing tools

Paired samples t-tests were carried out to compare the mean value of the online marketing tools
under each phase (Attract, Engage, Retain, Learn and Relate) of the Digital Marketing Model
with their effectiveness (Tables 2–6).

4.2.1. Tools to attract customers

Table 2 indicates the tools used by respondents to attract customers and their perceptions of the
effectiveness of each tool. The most popular tool is using mnemonic branding which involves
using the firm’s name as the URL. This is probably the most basic tool to increase Web traffic as it
allows users to find the firm’s website easily without having to browse through search engines.
The second most popular tool to attract customers is to list the firm’s URL in search engines or
Web directories. The search engines usually categorize the websites by product, which helps to
facilitate online shopping. Increasing the firm’s Web presence by allying with portals and search
engines will no doubt pave the way for brand building by first raising the awareness of customers.
In a similar vein, the marketing director of a firm involved in retailing women’s apparel
commented:
Forming strategic alliances with major portals like Yahoo extensively is a most effective way to
channel traffic to the websites which is an important step to building up brand equity.
Marketing Director
It is also interesting to note that B2C firms do not favour banner ads or ‘‘click-throughs’’.
Besides, offline advertising and promotions are popularly used. The more conservative use of
online advertising such as banner ads may be a good hindsight of B2C firms as online advertising
has been reported to be failing (Cohen, 2000). It is also suggested that offline promotions can
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Table 1
Demographic profile of respondents

Demographics Number Percent

Job designation
CEO/director/vice president 24 27.0
Sales/marketing manager 21 23.6
Business development manager 7 7.9
Other managers 17 19.1
Marketing executives 17 19.1
Others 3 3.4
Online business product category
Home and furnishings 16 17.4
Computer/electronics 14 15.2
Fashion apparel 13 14.1
Food/groceries 12 13.0
Toys/gifts/flowers 11 12.0
Travel related services 11 12.0
Books/CDs 8 8.7
Departmental stores 5 5.4
Auctions 1 1.1
Others 1 1.1
Accept orders via website
Yes 69 75.0
No 23 25.0
Modes of payment
Credit cards 28 30.8
Not applicable 23 25.3
Cash, cheques and credit cards 12 13.2
Cash on delivery 6 6.6
Cheques and credit cards 6 6.6
cash and cheques 5 5.5
Cash and credit cards 4 4.4
Cash, cheques, credit cards and others 3 3.3
Cheques 2 2.2
Others 2 2.2
Average annual revenue
oS$100 000 47 51.1
S$100 000 to oS$500 000 12 13.0
S$1 million tooS$50 million 8 8.7
S$500 000 tooS$1 million 6 6.5
S$50 million tooS$100 million 2 2.2
4S$100 million 2 2.2
Others 15 16.3

Note: N ¼ 92 and missing values have been excluded.

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Table 2
Matched pair t-tests for attract

Variables Usage mean (S.D.) Effectiveness mean (S.D.) t-value

Please indicate the extent to which of the following items are used to attract customers to your website and your perception
of the effectiveness of each item.
Mnemonic branding 3.82 (1.25) 3.82 (1.15) 0.00
Listing in search engines 3.42 (1.38) 3.52 (1.16) 0.80
Adequate bandwidth 3.13 (1.27) 3.45 (1.09) 2.55
Promotions 2.98 (1.41) 3.53 (1.25) 4.25
Piggyback advertising 2.98 (1.41) 3.18 (1.09) 1.75
Affiliate program 2.73 (1.42) 2.99 (1.12) 2.25
Banner ads 2.16 (1.11) 2.44 (0.99) 2.59
 po0.05 (two-tail).

Table 3
Matched pair t-tests for engage

Variables Usage mean (S.D.) Effectiveness mean (S.D.) t-value

Please indicate the extent to which of the following items are used to engage your customers attention in the website and
your perception of the effectiveness of each item.
Informative and useful content 4.11 (0.94) 3.90 (0.95) 2.58
Transaction capabilities 3.41 (1.32) 3.57 (1.18) 1.67
Unique content 3.05 (1.36) 3.41 (1.29) 2.78
Creative programming 2.73 (1.25) 3.15 (1.18) 3.72
Lucky draws/contests 2.24 (1.39) 2.68 (1.29) 3.59
Create virtual communities 1.91 (1.18) 2.52 (1.22) 5.17
Multilingual website 1.64 (1.13) 2.47 (1.30) 7.04
Forums/discussion groups 1.53 (1.00) 2.22 (1.12) 6.93
 po0.05 (two-tail).

Table 4
Matched pair t-tests for retain

Variables Usage mean (S.D.) Effectiveness mean (S.D.) t-value

Please indicate the extent to which of the following items are used to retain your customers and your perception of the
effectiveness of each item.
Dynamic content 3.63 (1.23) 3.96 (1.08) 2.79
Security features 3.22 (1.46) 3.64 (1.26) 3.32
Rapid information loading time 3.12 (1.31) 3.62 (1.15) 4.27
Privacy statements 2.98 (1.58) 3.35 (1.31) 3.07
Hyperlinks to related sites 2.82 (1.39) 3.01 (1.27) 1.79
Loyalty programs 2.50 (1.53) 3.08 (1.30) 4.09
Provide online order tracking 2.35 (1.49) 3.00 (1.34) 5.63
Create switching costs via communities 2.07 (1.20) 2.56 (1.12) 5.35
Interactive functions 1.61 (1.13) 2.33 (1.18) 6.68
 po0.05 (two-tail).
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Table 5
Matched pair t-tests for learn

Variables Usage mean (S.D.) Effectiveness mean (S.D.) t-value

Please indicate the extent to which of the following items are used to learn about customers’ preferences and your
perception of the effectiveness of each item.
Information capture 3.05 (1.41) 3.33 (1.20) 2.41
Feedback via online surveys 2.71 (1.49) 3.23 (1.25) 3.81
Webpage tracking devices 2.61 (1.55) 3.25 (1.28) 5.42
Feedback via open-ended survey forms 2.49 (1.46) 2.96 (1.29) 3.05
Gather information about new potential customers 2.41 (1.37) 3.20 (1.20) 6.26
Cookies 2.12 (1.28) 2.88 (1.32) 7.75
Holding virtual focus groups 1.40 (0.91) 2.24 (1.11) 7.96
Supporting chat groups 1.36 (0.79) 1.95 (1.02) 5.53
 po0:05 (two-tail).

Table 6
Matched pair t-tests for relate

Variables Usage mean (S.D.) Effectiveness mean (S.D.) t-value

Please indicate the extent to which of the following items are used to relate to your customers and your perception of the
effectiveness of each item.
Personalized communications about product/service 3.45 (1.28) 3.80 (0.95) 2.95
Customized product/service 3.14 (1.43) 3.60 (1.11) 3.63
Emails to update about new products 3.03 (1.51) 3.52 (1.17) 3.83
Customized webpages 2.86 (1.55) 3.08 (1.29) 1.68
Linkages to core business 2.16 (1.20) 2.75 (1.19) 5.07
Real time interactions 2.03 (1.24) 2.85 (1.19) 5.79
 po0.05 (two-tail).

actually pump up an online response rate (Kayar, 2000), which is probably the case for B2C firms
engaging more extensively in offline promotions and piggyback advertising to attract customers to
their websites.
A business analyst of one of the firms involved in telecommunications commented.

Strategies to attract customers to the website are extremely crucial to raise the awareness of
both the website and the products carried by the firm. Our firm makes use of various
advertising media, especially piggyback advertising, to attract customers to the website and to
promote ‘‘soft products’’ such as icons and ringtone downloads. This form of online marketing
strategy to attract customers has proved to be effective in helping our firm build up its online
brand equity.

Business Analyst
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The results of the paired samples t-tests show that there is a significant difference (po0.05)
between the extent of usage of four items (adequate bandwidth, promotions, affiliate programs
and banner ads) to attract customers and their perceived effectiveness. The extent of usage of
items like mnemonic branding, search engines and piggyback advertising and the effectiveness of
the respective items are quite comparable, indicating that the items are used to the extent which
they are valued to be effective. However, for such items as adequate bandwidth and promotions,
there appear to be some discrepancy between the extent of usage and perceived effectiveness. B2C
firms may be limited in their capital expenditure, which restricts them from further improving the
bandwidth of their websites. For promotions and banner ads, the firms could be channeling their
marketing expenditure somewhere else instead of promoting the websites. The websites may be
used purely as corporate homepages, which do not require much advertising and promotion.

4.2.2. Tools to engage customers

As shown in Table 3, creating virtual online communities, forums and discussion groups are not
popularly used by B2C firms as tools to engage customers. Many B2C firms (such as those
retailing food and groceries) may be targetting the mass market and thus do not see the benefits of
establishing online communities of interest in their brand building efforts.
According to Doren, Fechner, and Green-Adelsberger (2000), a whole spectrum of promotional
techniques is available for firms establishing their presence on the Internet and the extent of usage
depends very much on the level of commitment a firm wants to make. Focusing on Web content
involves adopting creative programming and providing interesting and unique information as well
as transaction capabilities to facilitate online purchases.
Results indicate that there is a significant difference (po0.05) between the mean extent of usage
of almost all the items to engage customers and their perceived effectiveness. This is probably due
to the restriction of the marketing budget allocated for the design and maintenance of the websites
which thus do not allow for features such as lucky draws and multilingual content to engage
customers in the websites. In other words, some tools, though perceived to be effective, may not
be used to a great extent due to budget constraints. This is evident from the following quote:
There are many ways to enhance a website. However, cost and bandwidth considerations
usually limit our range of options.
Marketing Director

4.2.3. Tools to retain customers

Table 4 shows that to retain customers, firms need to offer dynamic content to keep their sites
fresh, and to install security devices to protect their customers’ privacy and interests as well as
facilitate rapid information loading time of website. Loyalty programs, online order tracking and
creating switching costs via communities, and having interactive functions are used to a lesser
extent. One possible reason is that B2C firms may not find it affordable or worthwhile to utilize
such tools, especially smaller firms such as start ups and Small to Medium-sized Enterprises
(SMEs).
The following statements support the explanations.
Our firm relies more on word of mouth or referrals rather than the website for new or repeat
business. Thus, we do not make use of the various Web features to encourage customers to
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return to the website since the nature of the service provided does not allow the firm to rely on
the website for sales.
Senior Designer
In fact, the quality of the service provided is vital to retain customers rather than making use of
Web features.
Director
Table 4 reveals that almost all items indicate a significant difference (po0.05) between the
extent of usage of tools to retain customers and their perceived effectiveness. The scores of
perceived effectiveness are higher than usage for several reasons. First, firms may be restricted in
the design and maintenance of the websites and are thus unable to provide fresh content on a
regular basis. Second, many firms may not have sufficient budget to invest in sophisticated third
party fraud detection services to help reduce their exposure to online fraud. Third, firms may lack
the technical expertise to improve the design of their webpages and may also lack the funds to
improve the speed of their servers.

4.2.4. Tools to learn about customers

From Table 5, the results indicate a significant difference (po0.05) between the mean extent of
usage of all items to learn about customers and their perceived effectiveness. Items such as
webpage tracking devices, allowing for feedback via open ended online forms and gathering
information about new potential customers are not used as extensively as they are perceived to be
effective. The potential of the various items is not reaped probably due to the lack of capital or
technical expertise to effectively implement the tools. For example, there could be a lack of IT
expertise and resources in the firms to introduce more sophisticated Web features such as webpage
tracking as well as feedback via online surveys to learn more about customers’ preferences.
The comments given by respondents are provided in the quotations below.
Our firm attempts to learn more about customers via their call centers or customer service
centers rather than online surveys. This is mainly attributable to the fact that most customers
prefer a more personal contact with the customer service officers and demand immediate
responses to their problems or queries. Hence, the call centers become the more effective way to
learn about customers’ preferences through their feedback and complaints. Also, physical
contact with customer service is crucial to building brand equity for the firm.
Business Analyst
Online surveys, especially those which promise a freebie upon completion of the survey, are
highly unreliable. Hence our firm prefers to seek direct feedback from offline customer service
especially after purchase.
Marketing Director

4.2.5. Tools to relate to customers

Table 6 indicates that the most extensively used tools to relate to customers include
personalized communications with customers about products or services and providing
customized products or services. The B2C firms, though retailing in mass merchandise, may
still be able to add a personal touch by updating customers on the arrival of new products or
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services that satisfy their particular needs or interests. This kind of value added services will no
doubt help the firm to relate to customers and differentiate the firms’ image from its competitors.
Providing a personalized service is the most basic strategy for a firm to relate to customers as
revealed by the following quotes.
Our firm has even strived to customize the website for customers through the membership
enrolment scheme so that the website is familiar with members’ particulars to facilitate their
online transactions.
Marketing Director
Our firm takes note of the gift preferences of our customers in their profile and shifts our target
market from men to women, enabling us to come out with flowers tailored for men during
Valentine’s Day.
Business Development Manager
The results also indicate a significant difference between the mean extent of use and the
perceived effectiveness for most items (Table 6). Most firms may agree that providing customized
and personalized products and services can best cater to customers’ needs and is thus effective in
building up the websites’ online brand equity. However, many firms may find it difficult or even
costly to cater to the preferences of each and every customer, such as those retailing common
necessities such as food and groceries. These firms may also have limited information and
knowledge about their customers’ tastes and preferences on which they can base their
customization strategy.

5. Implications and conclusions

Overall, the Digital Marketing Framework is useful for examining the usage and effectiveness
of various marketing tools. The first element of the Digital Marketing Framework involves how
to attract customers to the firms’ websites. The results indicate that this can be achieved by using
mnemonic branding such as having a mnemonic URL or Web address, which is easy and intuitive
for customers to find and remember.
Firms aiming to establish a strong online brand could strive to make innovative use of both
traditional and less conventional tools, including online and offline marketing tools, to raise the
awareness of their products and services. For their Web marketing efforts, firms could increase
their accessibility by getting listed in many search engines and portals, which are primary
gateways to the Internet. They could also invest in their technical infrastructure to ensure
adequate bandwidth to handle more customers.
Instead of using online banner ads, firms could make use of offline advertising such as TV and
mobile ads (on taxis, buses, etc) to reach a larger audience. Firms can also leverage on offline
assets via piggyback advertising such as placing the firm’s URL in shopping bags or posters.
According to Carpenter (2000), this is essential to develop customer familiarity with the Web-
based version of the brand, which is highly relevant and crucial for most B2C firms with ‘click &
mortar’ businesses.
The second element of the Digital Marketing Framework relates to engaging users’ interest and
participation, after attracting them to the website, so as to achieve an interaction or a transaction.
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To accomplish this, firms can make use of creative programming to provide interactive media as
well as content deemed valuable to customers. Besides having informative and useful content,
having transaction capabilities such as shopping carts and online ordering forms can also engage
customers’ attention by facilitating sales and enquiries.
The third element in the Digital Marketing Framework relates to customer retention strategies.
The results suggest that it is important to keep website sites ‘‘fresh’’ by continuously renewing
content and/or providing dynamic content (e.g., stock quotes and weather reports) as customers
may visit a website and even be engaged once out of curiosity but will not return there without a
reason.
In addition, the installation of sufficient security features is crucial to build up the website’s
reputation for reliability. In fact, Elliot and Fowell (2000) found that consumer concerns
about security pose significant constraints on the growth of online shopping. Having
privacy statements also serves to guarantee the privacy of customers’ personal information so
that they are more inclined to revisit the websites and make purchases. Enabling rapid
information loading time is also an essential strategy to retain customers. While results indicate
that loyalty programs are used to a limited extent, they can also help foster customer loyalty
and retain customers as is evident in their success in the physical world (e.g., airlines’ frequent
flyer programs).
Interactive media open up a host of opportunities for relationship marketing as it allows
marketers to track and learn more about consumer demographics, attitudes and behavior. Results
indicate that firms capture invaluable information via customer feedback and webpage tracking
devices in order to learn more about customer preferences. Gathering new information which
firms do not yet hold from customers provides them with the opportunity to cross-sell and up-sell
new products and services.
After obtaining the relevant information about customers, the last element of the Digital
Marketing Framework revolves round providing customized interactions and delivering value to
customers. Relating to users can be in the form of providing products or services tailored to
customers’ wants and providing personalized communications (e.g., via e-mails) about the
products or services of interest to the customers. Providing customized products and personalized
services can instill a feeling of uniqueness in customers. This feeling of uniqueness helps
differentiate the brand from others and increase customers’ involvement with the brand.
In conclusion, the results indicate that some marketing tools are not widely adopted by
websites. Some plausible reasons include budget limitations, lack of IT expertise and the different
objectives of firms setting up a website in Singapore. The majority of the firms surveyed are ‘click
& mortar’ firms which may focus more on their physical business instead of plunging headlong
into the online business. In fact, e-commerce is still considered to be in its infancy stage in
Singapore as compared to more advanced countries like the USA. Internet shopping, despite its
enormous potential, has not really taken off yet in Singapore as evidenced by the survey done by
IDA (Computer Times, 24 May 2000). Hence, many B2C firms prefer to opt for the low risk, low
cost and low payoff form of Web presence at this stage.
In addition, results indicate that many firms are not fully maximizing the potential of some
online marketing tools and Web features even though they are perceived to be effective. Hence,
firms should carry out a review of their Web objectives and reallocate both financial and human
resources to their online businesses to better align the resources with their online marketing plans.
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They can then fully maximize the potential of the Internet to build up a strong online presence,
which can contribute to overall growth of the firms.

Acknowledgement

The author would like to thank Jek Swan Tan for her assistance in data collection.

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Thompson S.H. Teo is Information Systems Area Coordinator and Associate Professor in the Department of Decision
Sciences at the NUS Business School. His research interests include the strategic uses of IT, e-commerce, adoption and
diffusion of IT, and strategic IT management and planning.