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Is Online Marketing More Effective For Organizations Today 1

Is Online Marketing More Effective for Organizations Today

Table of Contents

CHAPTER: LITERATURE REVIEW..................................................................................3


2.1. Introduction:........................................................................................................ 3
2.1 Marketing:............................................................................................................3
2.1.1. Role of Marketing:............................................................................................4
2.2. Traditional Marketing:..........................................................................................8
2.2.3. Types and Techniques of Traditional Marketing...............................................9
2.2.4. Traditional Marketing Communication Tools:.................................................11
2.3 Introduction of the Internet Marketing, ..............................................................12
2.4. Online Marketing...............................................................................................13
Inherent Characteristics of Internet:.........................................................................16
2.6. Functions of Online Marketing:..........................................................................18
2.6.1. Transaction Chanel:........................................................................................18
2.6.2. Communication Chanel...................................................................................19
2.6.3. Distribution Chanel:........................................................................................19
2.7 Traditional Marketing and Online Marketing; Organisation Perspective:............20
2.7.1 Cost.................................................................................................................21
2.7.2. Capability.......................................................................................................21
2.7.3. Communication:.............................................................................................22
2.7.4 Control.............................................................................................................23
2.7.5 Customer Satisfaction/Service ........................................................................24
2.7.6. Competitive Advantage..................................................................................24
2.7.8. Marketing Promotions..................................................................................25

2.7.9 Liability:........................................................................................................... 26
2.7.10 Rebirth of marketing: ...................................................................................27
2.7.11 Reasons for the popularity.............................................................................27
Is Online Marketing More Effective For Organizations Today 2

2.8. Reaction of Customers to Online Marketing:.....................................................28


2.8.1. Tools and Features of Internet Marketing:......................................................30
2.8.2. Monitoring, Managing and Measuring Marketing Promotions.........................36
2.9 Need for Online Marketing:.................................................................................37
2.10.1 Social media marketing.................................................................................43
2.11 Summary:......................................................................................................... 46
Appendix-A............................................................................................................... 48
References................................................................................................................49

Figures and Tables

Figure 1: Role of Marketing.........................................................................................5


Figure 2: Marketing Relationships..............................................................................7
Figure 3: Traditional One to many Marketing model..................................................8
Figure 4: Many to Many Marketing model...................................................................9
Figure 5: The 10 C's of Internet Marketing...............................................................17
Figure 6: Customer Relationship Management and Internet Marketing....................28
Figure 7: Integrated Online Marketing Communication............................................29
Figure 8: Growing Internet Users..............................................................................48
Figure 9: Activities of Social Media Users.................................................................48

Table 1: Suitability of Online Marketing Tool............................................................35


Is Online Marketing More Effective For Organizations Today 3

CHAPTER: LITERATURE REVIEW

2.1. Introduction:

After an introduction to the study, in the first chapter, the current provides a review of

extant literature related to the subject. The chapter begins with a brief discussion of internet

marketing. The focus is mainly on the definitions and clarification of concepts. The literature has

been reviewed to assess the role that marketing plays for both the customers and the

organizations and how internet marketing has changed it. Use of present-day empirical studies

has been made and a wide range of researches have been reviewed on the subject matter.

2.1 Marketing:

The pure marketing concept is that:

If the firm that senses, serves and satisfies individual wants is always doing what's best
for consumers and society in the long run It find out that the pure marketing concept over
looks possible conflicts between consumer short run wants and consumer long run
welfare (Armstrong and Kotler, 2000, p. 21).

Marketing as a concept has several definitions however more or less they revolve around

customer or the stakeholders marketing is said to be The management program that aims at

maximising the returns to the stakeholders of the company by formulating and implementing

strategies for the establishment of trust with the customers along with creating a consistent

differential advantage. Through this definition we get to know about the main focus of marketing

in corporations and the policies that they use for this focus’s fulfilment (Wright, 1999; Cant,

2006). The basic purpose of marketing is to anticipate, identify and satisfy the needs and wants

of the customers and also does so at some profit (Wright, 1999).


Is Online Marketing More Effective For Organizations Today 4

The aim of marketing is to increase as much as possible the returns to the shareholders of

the business enterprise, as measured by its capital growth and long term dividend stream. The

particular contribution that marketing makes to the company lies in the construction of strategies

with the help of which one can select the right kind of consumers, establish healthy relationships

with them and thus achieve an edge over its competitors (Doyle, 2008; Wright, 1999).

Marketing needs long term associations with its selected customers because they are the

only source that makes the growth and profitability of a company faster and effective and this is

termed as Relationship marketing today (Kurtz et al., 2010, p. 91).

2.1.1. Role of Marketing:

With the increased competition, companies going global, extending their product lines,

scarcity of resources, more advanced and similar products, technological changes; all these

factors and many more are creating numerous challenges for the companies (Webster, 1992) to

attain customers and capture new markets or more share or maintain even the same share in

existing markets.

The changing factors have changed the role of marketing over time. A century ago,

marketing was for promotion, later the four P’s and four C’s were developed as marketing

functions. In 19th century customer oriented marketing evolved. Following that as the

competition became fiercer the strategic marketing came into use and the existing times are

known as the relationship marketing era where the focus is on attaining and retaining customers

for long term (Donaldson and O'Toole, 2008).


Is Online Marketing More Effective For Organizations Today 5

One major role of marketing is communication and the field is known as marketing

communication or marketing promotion. In this role, it is assumed that to sell a product

companies first need to make the customers aware of its existence. Then customers also need to

have some information about the company. Even if they know about the company and the

product, they might still not buy it so a little convincing and persuasion is also important. All of

the above tasks come under marketing communications and not just these any concept of

marketing makes use of marketing communication (Lancaster, 2006).

Figure 1: Role of Marketing

Source: Donaldson and O'Toole (2008), The Marketing Concepts


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A study by Webster, (1992) is important in this regard which covers some of the major roles

played by marketing including its role in the economic and social process.

Marketing is said to be directly related to the economic and social research since the roots

of marketing are said to be in promoting the agricultural sector. Marketing was studied for

pricing and the markets in which to sell the products. The marketing further included

environmental aspects like other commodities, the institutions. Thus as said by Webster, (1992):

Marketing was traditionally seen as a set of social and economic processes rather than
as a set of managerial activities and responsibilities (till 1948).

The role of marketing was redefined in 1948 when Alexander, (1948) and later many

other authors started calling it one of the key business activities. This was when the managerial

aspect of marketing evolved. The definition and role of marketing further evolved when few

studied started calling customer satisfaction the main functions of marketing (e.g. Levitt, 1960).

The economics were already being studied by scholars in relation to marketing and one aspect

was gaining popularity related to customer satisfaction and it was the maximization of profit

(Anderson 1982; Webster, 1992). As the transactions and exchanges related to business were

studied, the role of marketing became more prominent (Johnston and Lawrence 1988). The role

became defined in this aspect further and thus was used and implemented at the corporate and

strategic level in 1970s. many companies started taking marketing as a part of the long term

planning for the organisations. However at that time, the approach to it was centralised and in till

1980s it was accepted as Strategic Business Unit. From just an economic role the marketing

function was recognised is related to other benefits for the organisations and the operational units

were open for profit and loss responsibility. With increased competition all over the world, better
Is Online Marketing More Effective For Organizations Today 7

specialised products, the I.T boom etc made customers release that more than the origin country,

the product promises (Brand, company), communication and value (satisfactions, 4Ps) etc were

more important.

Figure 2: Marketing Relationships

Source: Webster, (1992).


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2.2. Traditional Marketing:


The traditional marketing makes use of mass media like television, radio, newspapers etc.

The approach was illustrated as follows by Hoffman and Novak (1996)

Figure 3: Traditional One to many Marketing model

In Traditional marketing, the medium allows for only one way communication. The same

marketing content is used for suppliers as well as customers mostly. On the other hand when the

medium is internet, the model allows for many to many marketing communications (Hoffman

and Novak 1996).

When internet is used as a medium, the customers and companies can interact with the medium

directly as well as the other customers and companies. The customers can further add to the

medium and be a part of the marketing. The communication using such a model is not just from

sender to receiver but in all possible directions.


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Figure 4: Many to Many Marketing model

The second non traditional, many to many communication marketing model has been made

possible by using a computer mediated environment. The online marketing not just focuses on

how to provide effective communication through the internet as a medium but also on how to

shape the experience and value for the customers online.

2.2.3. Types and Techniques of Traditional Marketing

Universally marketing as a management process is said to perform eight main functions

(Perreault et al., 2009; Kurtz et al., 2009):

• Buying: To sell the products, the markets must first buy raw material or the goods and

modify to what is demanded by the customers. This function of marketing involves

studying of consumer preferences, consumer behaviour etc.


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• Selling: If the company has what the customer needs then it must also make some efforts

to sell to the customers or in other words, make the customer buy it through persuasion,

convincing etc. Selling further involves the use of various marketing communication

tools such as advertising, public relations, sponsorship, sales promotion, personal selling

etc.

• Standardising and Grading: This is both for quantity and quality control of the product.

This is more important in service marketing since the quality of service is what actually

makes the marketing effective or ineffective. For tangible as well as intangible products

there are often standards and quality criterion set by the governing bodies or institutions

as well.

• Transporting: this involves the physical transfer of the product to where it is easily

accessible to the customer. Distribution of the product and access for the customer is very

important factors in marketing and that is why the four P’s of marketing also has the

placement factor.

• Storing: This is again related to the physical distribution of the product. The products are

stored by the retailers, wholesalers and even in warehouses etc by the company.

• Financing: This is also a marketing function since the buyers also need to have funds in

order to have an inventory. Similarly, customers might need to buy product on credit. So

marketers need to manage all the finance related to their marketing activities.

• Risk taking: Risk is an important part of business and marketers often use research to

minimise the associated risk with a product.


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• Security Marketing Information: Accessing and then securing the useful information

related to customers, buyers, sellers, markets etc is again an important function of

marketing. They need this information to know about the potential customers, existing

markets and potential target markets etc (Perreault et al., 2009; Kurtz et al., 2009).

2.2.4. Traditional Marketing Communication Tools:

Communication is no doubted one of the most important aspects of marketing. There are

some essential elements for the purpose of communication in marketing and are known as

marketing communication mix or marketing communication tools. There are as such no agreed

upon finite number marketing tools but several studies have highlighted various important

marketing communication tools:

Author (date) Marketing Communication tools

Lancaster and Massingham (1993). and Lane Advertising, sales promotion, public relations,
and Russel (2001), Fill (2002) personal selling.

Belch and Belch (2001) Advertising, sales promotion, public relations,


personal selling, direct marketing, internet
marketing.

Smith and Taylor (2002) Advertising, sales promotion, public relations,


personal selling, direct marketing, exhibitions,
packaging, point of sale, word of mouth, e-
marketing, corporate identity.

Smith(1998) Advertising, Sales promotion, public relations,


merchandising, personal selling, point of sale,
direct marketing, packaging, sponsorships,
exhibitions, word of mouth, corporate identity.

Shimp (2003) Mass Media Advertising. Online advertising,


sales promotion, store signage, packaging,
direct mail opt in email, publicity, event and
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cause sponsorship, personal selling.

Duncan(2002) Mass Media Advertising, Sales promotion,


public relations, merchandising, personal
selling, point of sale, premiums, direct
marketing, trade shows, customer service,
packaging, licensing, internal marketing, e-
commerce, events and sponsorships.

Source: Egan. (2007). Marketing communications, p. 18.

2.3 Introduction of the Internet Marketing,

The World Wide Web is now being recognized by the advertisers as a worthwhile

addition to the ‘tool box’ of their advertisement media. The usage of internet is increasing day by

day and the web users are starting to value this medium as a valuable tool for gaining knowledge

regarding services and products (Kehoe et al., 1998). Even for branding, this medium is offering

a wide spectrum of opportunities (Ryan, 1999). The Ford Motor Company for instance, recently

upgraded its websites for its division of Lincoln Mercury since the managers of the company

observed that the car buyers were starting to rely more and more on the internet for buying

automobiles in addition to other products (Guilford, 1999). Internet users are increasingly buying

products from the online markets, since this market is so big; it provides one with ample choice

and variety. According to the Boston Consulting Group(1999), at the beginning of the 19th

century, the electronic commerce was anticipated to increase remarkably This potential of the

online market along with the huge propagation of both commercial as well as non-commercial

websites is compelling the advertising agency personnel and marketers to find new ways for

directing internet users towards their own respective websites and once they visit the website,

then offer them such strong messages that they keep on coming back (Sheehan and Doherty,

2001).
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2.4. Online Marketing

Internet marketing can be defined as:

The process of building and maintaining customer relationships through online activities
to facilitate the exchange of ideas, products, and services that satisfy the goals of both
parties (Rafi et al., 2002, p.6).

The program of internet marketing constitutes a process. This process is further divided into

seven parts: framing the opportunities that a market holds; Formulation of an effective marketing

strategy; customer experience building; formation of customer interface; formation of a

marketing program; controlling the customer information and evaluating the outcome of the

whole of the marketing program (Rafi et al., 2001).

The present day world is a place of neck breaking competition for every company which wants

to survive in the market and continuously gain promotions. Keeping this in focus, for every

single company, the promotional trends have become a matter of serious concern. When the

trends of the market change then so do the promotional tactics of companies. With the inception

of the Internet Marketing, the strategies of promotion that were once used: hoardings and

banners have now entered the cyber world with slogans and brand marks. With the help of web

promotion, the companies promote their products’ sales and purchase and this phenomenon is

termed as internet marketing (Jensen, 2008).

This new way of promotion is not only an easy way to promote one’s sales but it has also proved

to be cost effective. With the aid of Internet Marketing one does not need to contact ad agencies

or spend money on hoardings, posters and pamphlets (Gretzel et al., 2000).


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By simply putting up a web page regarding one’s product on the official website, one can do all

sort of promotions for the company’s sales. With the easy accession of internet everywhere,

Internet Marketing has gained great success and credibility (Jensen, 2008).

From rural to urban areas, a customer sitting anywhere across the world can reach one’s

promotional page and can be influenced easily. The various processes that are carried out in an

organization have been largely affected by internet. Solely due to the versatile range of

possibilities that online communications provide, marketing has been able to flourish in the e-

world this easily (Krishnamurthy, 2006). Thus in the promotional mix of a company, the online

marketing communications has contributed a significant part (Adegoke, 2004). Even though in

the beginning, online marketing communication was mainly confined to the implementation of

official websites, but today, its success has inspired everyone to avail this wonderful facility. As

shown by the extant literature, numerous activities constitute online marketing communication

today (Jensen, 2008).

A process is involved in an online marketing program just like any other old marketing

program. There are seven stages included in the process of an internet marketing programs (Rafi

et al. 2001) and these are: setting up a business or corporate unit strategy, frame the opportunity

available in the market, design a marketing strategy, formulate the experience of the customers,

design the marketing program, graft the interface of the customers and the final step is to

evaluate the outcome of the whole marketing program. It is however mandatory to ensure the

consistency and sequence of these steps. The various stages of the process must be well co-

ordinated. Even though the online marketing program can be viewed and analysed in a simple

linear manner yet a marketing strategy maker may have to jump back and forth during the

implication of the seven stages. Till the extent of a firm’s ability to monetize this loyalty,
Is Online Marketing More Effective For Organizations Today 15

probably both the parties would be content in terms of advertisement revenue. But in case a

company is unable to meet the financial obligations to the shareholders, employees or suppliers

then there is the likeliness of the exchange going out of balance. The customers would no doubt

still be content with the services they get from the company but the revenue model of the

company would become incapable of sustaining itself. Thus in order for the exchange to

continue smoothly, both the firm and the customers must be satisfied (Rafi et al., 2001).

2.4.1 History of Online Marketing:

Before there was the internet, the only ways to market a product were quite simple; TV,

print and radio. Marketing was a one-way street, mostly because there was no way for consumers

to talk back. Word did get around, but at a snail’s pace (Safko and Brake, 2009, p.4,).

In 1993, Internet Marketing served as a tool only used for data transfer and emailing and

the large business sectors had clearly declared it useless for marketing. Netscape the ISP, decided

to go public on the internet in 1995 and with this exploration of the company’s commercial

potential, it opened a whole new world for marketing and advertisement. The main reasons for

the internet to gain the title of the most convenient marketing tool is its wide accessibility, cost-

effectiveness, ability to measure and compare spending and easy reach etc. After this, the gates

to online marketing officially opened to everyone. In 1996, the total spending on online

advertisement in the U.S. was approximately $301 million. This figure, even though remarkable

if compared to the zero dollars spent the previous year, yet seemed negligible to the amount that

was spent on online marketing the whole year, which was $175 billion. In 1997, internet

marketing gained the position of an industry worth $1 billion (Mango Network, 2009).
Is Online Marketing More Effective For Organizations Today 16

According to PWC, a growth of 22 per cent was recorded in India in 2006 for the

advertisement industry which contributed Rs. 196 billion in 2007 and Rs. 161 billion in 2006. In

the four years from 2004 to 2007, a cumulative growth of 20 per cent was recorded for the

advertising industry on the overall basis. Though within the sector, the different segments of the

industry continue to grow at their respective rates, the highest of which was recorded to be of

online advertisement, which also happens to be the smallest portion of the industry. In one year

the difference of growth was recorded to be 69 per cent, albeit from Rs. 1.6 billion recorded in

2006 to Rs. 2.7 billion recorded in 2007 (Mango Network, 2009).

Inherent Characteristics of Internet:

Some Inherent Benefits Of Internet As A


Medium

1. Anonymity

2. Easy access twenty four hours

3. Database Interface

4. The reduced costs and benefits are also


transferred to the customers.

5. Space.

6. Asynchronous communication.
Is Online Marketing More Effective For Organizations Today 17

7. High level of interaction

Source: Schubert and Selz, 1999.

2.5 Online Marketing and the Customer Relationship:

The process of marketing and the customer relationship development starts as soon as a

product is launched online. Consistent feedback from the viewers and response of other people

for this feedback will start a chain process. This is a self-sufficient phenomenon, which

efficiently helps in increasing the number of customers. This also helps to develop social

marketing strategy in a better and effective way (Charlesworth and Esen, 2006). Last but not

least the website should have an email capturing mechanism, as it help to update viewers by

sending them emails about a product.

Figure 5: The 10 C's of Internet Marketing


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Source: Gay, Charlesworth and Esen, (2006), The Ten C’s of Internet Marketing, Online

Marketing: a Customer-Led Approach, p. 17.

2.6. Functions of Online Marketing:

The three main broad categories of activities of marketing are transaction, communication and

distribution channels (Peterson et al., 1997) When these functions are performed online; there is

a lot of overlapping of traditional marketing functions.

2.6.1. Transaction Chanel:

• As a transaction channel, online marketing again has several benefits over the traditional

marketing. There is visibility online and online channels are more easily accessible. This

increases the potential customer base for the company (Long, 1997).
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• Cross-selling is easier online and it can help in improving the sales and revenues (Eichhorn

and Helleis, 1997)

• When the transactions are done online, there is less paperwork required, it is less complex

and even the transaction costs are reduced (Andrews and Trites, 1997; McKim, 1997).

• Dealing with the customers online provides the management flexibility to customize the sales

and promotion to each customer (Hawn, 1996).

2.6.2. Communication Chanel


• As a communication medium the online marketing allows for exchange of information

between the buyers and sellers. It is easy for them to interact, communication and organize

information online (Peterson et al., 1997)

• It is easier for the companies to assess the needs and wants of the customers using different

online research methods and thus in product development.

• Internet marketing has also allowed for easy customization and relationship building with the

customer (Gardner and Roos, 1997; Hawn, 1996).

2.6.3. Distribution Chanel:

• Internet marketing greatly facilitates the distribution channel and in case of electronic goods,

the transfer of ownership is even easier. It helps by reducing storage costs, large inventories

and unnecessary space usage etc (Avery, 1997).


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• It reduces the commissions and costs during supply chain operations by handling major

portion of work online (Edwards et al., 1998)

• Functions of internet marketing to be a transaction and a distribution channel are bets for

companies that deal in financial services, online banks, online ticketing, telemedicine, digital

goods etc.

2.7 Traditional Marketing and Online Marketing; Organisation Perspective:

In last few years concept of marketing is entirely changed, those people who are aware of the

benefits of online marketing are using it to build trust and increase their brand popularity, which

inevitably leads to high sale rate. From the perspective of an organisation, internet marketing has

several benefits over the traditional marketing in terms of cost, capability, communication,

customer satisfaction competitive advantage etc. These have been briefly discussed as follows:

Traditional marketing Online marketing

Tries to dominate the market Creates a community in the market

Loudly shouts First listen and then whisper

Only me Me and you

Pushes a product Pull in public with message

Controls strictly Allows freely


Is Online Marketing More Effective For Organizations Today 21

Only leads Increase relationships

Source: Kabani, 2010, p, 30- 38.

2.7.1 Cost
Internet as a marketing medium has gained popularity in last few years, now no other low

cost method of brand-promotion available, which is as reachable as it. It overall decreases the

marketing budget also offer a low travel cost, and increase collaboration between the enterprise

(Bai and Chen, 2010).

2.7.2. Capability
The internal characteristics of the internet marketing makes it very different from

traditional marketing (Bauer et al., 2002), e.g. the information can be transferred easily, it can be

addressed directly, constant availability, integration, efficiency, flexibility, individuality,

interactivity, all these factors that are inherent for internet marketing can be used by companies

to shape customer relationships (Bai and Chen, 2010)

When the traditional marketing tools are used the flow of information is not so easy and

the customers as well as the companies have to follow some proper channels. Consistency,

validity and access to information is necessary in marketing (Howard, 1983) which the

traditional marketing channel often lack (Bai and Chen, 2010)

Working through links, it is a revolutionary concept, brand accepted by many individuals

in a culture. Many musical bands and movie makers have become more popular and have
Is Online Marketing More Effective For Organizations Today 22

reached to the less interested audience quickly; winning their hearts and incorporating them in

their fans list using online marketing (Borges, 2009, p. 450).

2.7.3. Communication:
Internet marketing allows businesses as well as the customers to co create a highly effective

network worldwide, and dramatically increase the client trafficking. Comparison with the other

available products is easy, and testing against another product increase the popularity of a

genuine provider or marketer.

Some main characteristics that all OMC tools contain in common are the following:

Freedom from Spatial and Temporal Restrictions: Regardless of one’s location, the accessibility

of internet in every corner of the globe has removed the barriers of distance and thus a consumer

can access information wherever and whenever he / she want (Jensen and Jepsen, 2008).

Hypertextuality: At minimal charges one can update information very easily and often. The links

between different websites allow the consumers to surf the net seamlessly and explore and

investigate as much as they desire.

Many-To-Many Interaction: The networking sites and online communities allow people to join

public forums, share views and gain information and the opinions of others. All this has been

made possible through internet.

Personalization: The ability to interact with others and share / transfer information with one

another has been made possible only through the efficiency and interactivity of internet. At a

very sustainable cost, it allows one to share individualised information and communicate with

others regardless of one’s own or the other party’s location (Jensen and Jepsen, 2008).
Is Online Marketing More Effective For Organizations Today 23

It is easier for the marketer to catch a user who is freely browsing the internet rather than dealing

with a whole bunch of people. Therefore whenever a marketer comes across such a typical

situation, he / she start talking to the user about the product or service to be advertised. In this

situation, the user also listens intently since he / she feels privileged to be addressed exclusively

(Bai and Chen, 2010).

2.7.4 Control
In online marketing the customer do have more control over the marketing communication since

they can easily share their reviews, opinions, comments etc or forums, chat rooms, online

discussions etc. The online environment is such that it gives control to the customers even and

this again adds positively to their relationship with the companies (Bai and Chen, 2010).

The organisation has control in terms of cost, effectiveness of marketing strategy, information

sharing, getting feedback etc. The company can compare and control various online marketing

tools and can easily find out flaws in their campaigns.

Appeal to Targeted Interest:

Transmitting a specific concept to a specific group of users is the basic notion of internet

marketing. A conventional marketing practice would involve putting up endorsements in public

so as to attract the attention of both the groups: the targeted audience as well as the uninterested

audience, by making it generally visible to everyone. But in internet marketing, the marketers

aim at the targeted audience only. In this manner the effectiveness of the marketing activities

increases many folds.


Is Online Marketing More Effective For Organizations Today 24

2.7.5 Customer Satisfaction/Service


Two parties, which are involved in the whole process of marketing, are marketer and customer.

Customer or consumer is the main entity directly affected by the product. Either the customer is

pleased or angered is his response after using a specific product. The outcome and responses

from both customer and the provider helps in development of an interdependent relationship.

Thus, it fulfils the concept of “relationship marketing” (Tracy L Tuten, 2008, p.5,). As

mentioned above, the customer has more control in online marketing, their queries and feedback

are handled easily on the internet and thus if executed properly internet marketing can help

provide customer satisfaction and better services to the customer.

2.7.6. Competitive Advantage


According to Kiang et al. (2000), there are four basic advantages of internet marketing over the

traditional marketing:

1. Value can be added to the product more easily online (quick delivery, timely feedback,

fast response rate, customisation etc).

2. Easy access. (Penalosa, 1997)

3. Specialization in goods (Janal, 1997)

4. Easier to place and process orders online (Andrews and Trites, 1997).

5. Delivery on the internet is also instantaneous.

The marketing team of any organisation is always looking for new, innovative idea to grab

the attention of the public. Whenever planning out a strategy and implementing it, only the

creativity of the marketing team counts. For the personalisation and customisation of

advertisements, internet marketing is required for the construction of a specified target audience
Is Online Marketing More Effective For Organizations Today 25

on the base of personal tastes, geographical locations and contemporary trends over the internet

browsing.

2.7.8. Marketing Promotions


The marketing communication tools or marketing promotions that are used in traditional

marketing like the advertisements, personal selling, sponsorships, sales promotion etc are all

modified to some extent to use in online marketing.

For promoting one’s products and sales online the OMC tools that a company can use include e-
learning, online competitions, online samples, coupons, sweepstakes and contests along with
other context-based services and affiliated programs (Jensen and Jepsen, 2008).

In associated programmes the website of the host business is connected to the website of the

marketer. Whenever this link is clicked on by a visitor the host gains commission (Papatla and

Bhatnagar, 2002) in a similar manner as a manufacturer gives commission to a selling agent. E-

learning is gradually taking the classroom learning’s place in a large number of firms

(Schweizer, 2004).

Online sponsorships combine the effectiveness of both the sponsorship in traditional marketing

as well as the media sponsorships. This doubles the opportunities and aspects and improves the

marketing strategy overall (Drennan and Cornwell, 2004).

Viral marketing is said to be the online version of word of mouth and much fast that the word of

mount so called viral in nature (Barratt, 2001). When talking in terms of online marketing, it is

usually deliberate and the companies user several agents including emails, pictures, publishing

reviews etc.
Is Online Marketing More Effective For Organizations Today 26

With the growing adoption of broadband, the marketing events online have become possible.

Companies can use these for product launch, presenting company information, increase

awareness, inform customers of latest trends, train customers etc (Duncan, 2002). An example is

the success of the Victoria Secret’s fashion show when the server broke down because of the

way higher number of actual viewers than expected (Strauss et al., 2003)

Promotion of sales online is almost the same as that of traditional marketing and includes

discount coupons, online contests, giveaways, samples etc. The aim of these promotional tools is

to increase the sales, ensure repeated access by customers and to encourage the interest and

involvement by the targeted customers (Pickton and Broderick, 2004).

The internet marketing was readily accepted by the customers and today internet marketing is

one of the rapidly growing marketing methods. To develop Customer relationship, trust,

satisfaction and commitment are very important rudiments (Garbarino and Johnson, 1999).

Internet has information on a number of topics and since it can help in easy transfer of

information many scholar suggest it as an excellent promotional tool (Ainscough and Luckett,

1996) and useful for developing customer relationship (Bauer et al., 2002).

In Internet Marketing the traditional concept of marketing has been preserved, just the marketing

technique has become more technological. It can be rated in the following manner:

2.7.9 Liability:
A stakeholder is always interested in the profitability only. For checking revenues, one must

keep track of the undertaking on a regular basis. Due to the technology factor, internet marketing

assists one by way of automating the generation of reports and their analytics to the admin

officers so as to check the liability of the ongoing strategy. With internet marketing, not only can
Is Online Marketing More Effective For Organizations Today 27

one concentrate on more than one project but also manage multiple tasks at the same time (Bai

and Chen, 2010).

2.7.10 Rebirth of marketing:


As youth is the main workforce of a country and people under 25 are very much accustomed to

use internet, so many business men and entrepreneurs us this revolutionary process to hire more

and more people and to sell their goods. In other words truly it is the rebirth of marketing

phenomenon. As people of all ages and all walks of life tend to stay on internet for longer

periods therefore, they collectively create a big audience, which substantially increase the sale of

a product, as they generate real and measurable results (Borges, 2009, p.55,).

2.7.11 Reasons for the popularity


This media has become very successful and famous in a short span of time, because many

techniques and procedures can be used to advertise a product. For instance; classified ads, ads

attached with emails, display ads etc. Moreover; videos can also be used for this purpose. As

internet helps people to search more relevant sites this will gather all the interested viewers. As

now people like to spend most of their time sitting on internet, it is easier to catch their attention

here. In addition to that, people are shifting from traditional media (television, radio) towards the

modern media so its best place to follow the audience here, (Tracy L Tuten, pp-6, 2008).
Is Online Marketing More Effective For Organizations Today 28

Figure 6: Customer Relationship Management and Internet Marketing

2.8. Reaction of Customers to Online Marketing:


As mentioned before the internet gives much more control to the consumers. This is

because of the ease of communication and access to information. The customers can

communicate with not just the company but also the other customers and companies. The

customers have access to wide range of tools online to know about the company e.g. they can

research, ask companies, read articles, visits websites etc. They can contact a number of related

bodies e.g. through email, forums, and discussions, chat etc. Also the internet stores everything

so they can easily access the data and views online (Gurau, 2008).
Is Online Marketing More Effective For Organizations Today 29

Internet Marketing

One to one communication • Email.

One to many • List based email, websites, web pages, articles directory.

Many to Many • Discussion forums, chat rooms.

Source: Hoffman et al., 1996.

Through internet marketing the companies can acquire, store and process the feedback and data

related to the customers. The data and feedback can be used and analysed more easily in internet

marketing and can help in the customisation and develop highly targeted marketing campaigns

e.g. targeted newsletters, automatic email responses, promotional news, online event marketing

etc (Gurau, 2008).

Figure 7: Integrated Online Marketing Communication

Source: Gurau, (2008).


Is Online Marketing More Effective For Organizations Today 30

2.8.1. Tools and Features of Internet Marketing:


The marketing communication tools that are used in traditional marketing like the
advertisements, personal selling, sponsorships, sales promotion etc are all modified to some
extent to use in online marketing. These tool used as online marketing tools are explained briefly
as follows:

1. Online Advertisements:

For the purpose of advertising online, the main tools used are micro-sites, display advertisings

and search engine optimization. With internet marketing, the companies can display their

advertisements online in the form of banners, interstitials, pop ups etc. According to many

studies such online advertisements have proved to be much more effective and competitive as

compared to the traditional offline ones (Kitchen and de Pelsmacker, 2004; Roberts, 2003;

Briggs, 2002). A research by Smith (2005) on online advertisements revealed that recently they

have become the most popular way of online marketing and one if the preferable advertising

medium for companies.

2. Public Relations and Publicity Online:

In the online virtual world, by publicity and public relations refer to management, monitoring,
control and support of the media relations of the companies and brands online. Viral marketing,
online sponsorships, online media relations and online events are the tools used for online
publicity and better public relations.

The key to management of public relation online is to provide important information, using a

more internet friendly tone rather than the usual corporate one, also give importance to non

corporate issues online and monitor the communities to learn and control the view online

(Macleod, 2000).

3. Online Sales Promotion:


Is Online Marketing More Effective For Organizations Today 31

According to Belch and Belch (2004), internet sales promotion is either consumer or trade

oriented. Online activities that are meant to induce a purchase constitute of online coupons,

contests and rebates along with other similar programmes whereas e-learning training programs

are most of the time trade oriented. According to Pickton and Broderick (2004), these activities

aim at augmenting sales and promote involvement and revisits.

One of the marketing tools that has also increased the interest of the customers as well the sales

for the companies is the online auction system. Jupiter communications have predicted that in the

next four coming years the online customers would be spending around seven billion in these

online auctions (Collett, 2000). Some research organizations even predict a higher growth to

almost about nineteen billion (Freedman, 2000)

An online auction system, just like public relations vastly has an impact on the brand image and

sales of the company (Porter, 2001). For customers, the genuine information regarding the

delivery options and pricing can be particularly helpful while making a purchase decision. In

comparison to the traditional style of websites of companies, auction sites offer an edge to the

companies for their promotional opportunities. Irrespective of the objective of the provision,

however, a major part of the sales promotion is in the form of reduced pricing or special pricing

for a particular product which is always possible due to an online auction (Porter, 2001) The

potential of sales promotion of the online auctions are deeply affected by the overall promotional

offering of a firm in the excitement of the bidding procedure, the special deal of reduced pricings

that are offered during the bidding process can serve as an accelerator in the selling of goods. In

comparison to a game, competition or sweepstakes offers of a typical sales promotion program,

in an online auction the customer gets to be actively involved in the brand activities and actually

attain high attention and excitement levels (Freedman, 2000)


Is Online Marketing More Effective For Organizations Today 32

4. Online Direct Marketing:

Another popular tool in online marketing is the direct email marketing. This is also one of the

most used methods by the marketers online. One can call it an alternative form for the online

world for personal selling since it allows for customisation and targeting of particular segments

and niches. The method however is found to be much more effective, cheaper, flexible, fast and

easier than personal selling (Kitchen and de Pelsmacker, 2004).

A common direct marketing tool is e-mail but other possibilities such as text based services and

micro-sites are also available (Kitchen and de Pelsmacker, 2004). The conjunction of a micro-

site along with e-mail marketing is called “landing pages” whereas content based services deal

with time and location based services such as content customised direct messages that are

situation specific too. For instance, when a person receives a message of promotion on one’s cell

phone while passing by one’s favourite restaurant (Strauss et al., 2003). Except personal selling

which was an aspect of the traditional marketing, online marketing covers and enhances all

functions of marketing. Instead of commercials, there is direct mail system in online marketing

(Hoffman and Novak, 1996).

5. Online Personal Communications:

Online games, online communities and personalization are the three main tools of online

personal communications. Web personalization promises to overcome the dilemma of the


Is Online Marketing More Effective For Organizations Today 33

stagnant capacity of humans to digitize content. Several advanced means of personalization are

available yet another way is to use the manual decision making system based on user

demographics gathered with registration. The advanced methods include filtering systems that

are collaborative. Such systems are also known as recommended systems(Jensen and Jepsen,

2008).

According to Rheingold (1993), an online community can be defined as ‘the voluntary

associations of people with common purposes or interests”. According to Jepsen (2006), online

communities are important sources of information for pre-purchasing searches. These

communities are also marketer-driven along with being user-driven (Jensen and Jepsen, 2008).

Online games that serve as OMC are also known as advergames. Online games are implemented

in three ways: media partner sponsorships where a part of a game or the existent game is sold;

embedded where advertisements are embedded in the game and custom where the game has been

customized to meet the needs of the customers (Jensen and Jepsen, 2008).

Another important tool other than the company websites for their products is the micro sites.

These are smaller sites that are specifically made for a particular brand or product of the

company and only show the relevant information. These sites are helpful in campaigns such as

competitions, new product strategies and new product launches etc. The aim of this site sis to

increase the interaction with the targeted customers (Kitchen and de Pelsmacker, 2004).

6. Online Relationship Communications:

For the establishment of strong and long lasting customer-brand associations online
communities, direct e-mailing, online games and web personalization option are the most
effective OMC tools (Jensen and Jepsen, 2008).
Is Online Marketing More Effective For Organizations Today 34

A lot of customers are suspicious about electronic commerce and its functional mechanisms, its

non-transparent procedures and impacts, and also the quality of the various products and services

offered in an online market (Kraeuter, 2002). However, the online auction systems like that of

eBay and now various other online businesses help customers better evaluate the products online.

The internet marketing gives the customers because they can easily share their evaluation and

their experience with particular products very easily online (Avery, Resnick and Zeckhauser

1999).A research by Forrester that almost half of the online buyers see these ratings and

evaluations before shopping from a particular retailer or trying a specific brand (Chen and Xie,

2004). The establishment and maintenance of customer relationships is the sole purpose of

marketing. The focal view of the company is likely to shift from gaining the attraction of the

customers to the acquisition of loyal customers with long term customer-brand associations. For

this purpose, the strategy of marketing involves three steps: awareness of the customers; their

exploration of the products and services and then their commitment to the brand.

Online Market:

Internet marketing means dealing with the levers of the cyber world. But one must also bring

into account the fact that the success of internet marketing has a possibility of resting with the

old fashioned offline vehicles of marketing. Such as the ads that are run on the TV or radio etc.

Exchange:

The phenomenon of exchange comes in between offline and online marketing programs. In the

online markets, brands have to be very particular about their cross-channel exchanges. An online

marketing plan is to be evaluated on the basis of its general exchange impact and not merely its
Is Online Marketing More Effective For Organizations Today 35

online exchange impact. These cross-channel exchanges are making the firms more and more

sensitive about the independent effects of offline and online marketing programs.

Goals Satisfaction of the Brand and the Customers:

When a customer uses a particular service or product of a company is satisfied with the results he

is getting then in such a situation one can say that as a result of the establishment of the

customer-brand relationship, both the parties are satisfied. The customer is satisfied by the

facilities he / she is getting and the firm is satisfied with the loyalty the customers are providing

to the brand with.

Table 1: Suitability of Online Marketing Tool

Communication production (source)

Marketer User

• Search engine marketing • Brand Communities


Control on • Displaying advertisements • FAQs on WebPages
Distribution of
communication Marketer • Micro sites • Web personalisation

• Tracking orders and


online survey

• Email • user driven online


communities
• Viral Marketing
• Non marketer
User • Websites websites
• Online pull media

Source: Jensen and Jepsen, (2008)


Is Online Marketing More Effective For Organizations Today 36

2.8.2. Monitoring, Managing and Measuring Marketing Promotions


The monitoring, management and measurement of online marketing is much more easier

than that of traditional marketing. These have been discussed as follows:

Monitoring:

As discussed before, with internet marketing, the companies can get the feedback

instantaneously. Through the number of hits on a website, the leads, the number of

participations, increase in sales etc all are various methods to monitor the internet campaigns of

the company. The companies can even monitor the sales cycles and easily know when there is a

need for a change in the marketing program.

Management:

The company can management its online marketing campaigns through lead scores. Due

to the automated nature of internet the companies can manage a number of campaigns at a time.

Depending on what sort of online promotion tool would be appropriate for the targeted market,

the company can also easily know if it is spending its marketing budget wisely. The handling and

management of customer queries, receiving theirs as well as providing them feedback is also

easier in online marketing.

Measuring:

The impact of various marketing campaigns can easily be measured through online sales,

number of clicks/visits on the company’s sites, the followers and fans, customer ratings, online

marketing insights, customer feedback etc. The company can also measure its parallel campaigns

and know which one is better suited to the particular product promotion.
Is Online Marketing More Effective For Organizations Today 37

2.9 Need for Online Marketing:

Even though the hype that was created with the advent of internet marketing has died down yet it

is a common belief that internet marking is here to stay since it has become a downright

necessity for the survival of companies. Internet marketing forms a remarkably significant

component of the arsenal of marketing of any company or organization (Rafi et al., 2002).

Not only has internet provided the other advertisement media with a tough competition but also,

it has opened an ever bigger window for marketers. For the users who work, internet

consumption has become the most consumable medium as compared to the other marketing

spectra. For some types of product, the internet has become a downright necessity for its

marketing. For instance it has been reported in a survey conducted by a research firm, J.D Power

and Associates that while buying a car, more than 62 per cent buyers first consult the online

market (Rafi et al., 2002).

It took almost eighty years for telephone to become a common phenomenon in the world

whereas internet did so in a time span of only four years. This became possible because the

digital technology has provided the consumers and business interactions transactions with such

efficient channels that internet became almost a facility, mandatory to have.

In a very short time span, the internet has become the mainstream tool of marketing and business

operations. There are a large number of firms and organizations today, for whom it would

become impossible to continue their affairs if the internet went out of order (Rafi et al., 2002).
Is Online Marketing More Effective For Organizations Today 38

Today it has been seen that if a company ignores the interactive medium of internet, then there is

a chance that their demise would knock at their door soon. A number of large breakdowns have

though undermined the technology driven, customer focused and innovative marketing practices

of organizations private and public, large and small. Yet in ways unimaginable, this new medium

has changed the interactions of buyers and sellers. According to Bandyo-padhay (2002), today’s

organizations focus more on consumers rather than their own products, and this is a consequence

of the consumer power drive which is the ultimate root of the changes that have occurred in the

business world. Technology has allowed the consumers to become more in-control of their lives

but not always has it lead to consumer-driven marketing applications. The companies and firms

that resist the urge to take their products and services online must face any potential or real

technology gap that will come with the target market (Rafi et al., 2002).

The business plans of new companies have compelled the already established firms to reconsider

their business models and strategies. Thus one may conclude that internet is imposing a new

corporate culture, which everyone will have to follow in order to stay in league with the world.

This culture is purely energized by the perceived and existing benefits of the internet technology.

Now the marketers deal with tasks such as how to utilize the log files of customers in a way that

would benefit their products or services. They have to be careful of the fact that what is the

nature of the general customer and what is important for him / her. Nowadays a successful

business is always particular about staying close to the needs of its customers by using

appropriate means in which neither the customer feels exposed nor do they feel being probed. If

one knows how to use the technology, then this technology can make his / her life very easy.

Marketing practices are increasingly being modified by internet and technology. It seeks to stay
Is Online Marketing More Effective For Organizations Today 39

engaged with the current, the past and the potential customers. Digital technology is present in

all those sectors where ‘e’ is involved such as ecommerce, e-marketing, e-market, e-business etc.

But there still are many marketers and policies who do not realize the benefits that internet holds

and they lack the vision to comprehend the optimum potential of internet (Rafi et al., 2002).

The B2B relations (business to business), the B2C relations (business to customer) sectors as

well as the supply and manufacture chains between the distributors and partners have been

largely affected by Internet. Administrative procedures have been streamlined by e-procurement

while driving down the costs and similarly, customer interactions have become more relevant as

a result of effective e-CRM (electronic customer relationship management). Direct marketing is

the phenomenon in which the customers and companies can interact one-on-one and this

phenomenon became common only with the assistance of internet (Rafi et al., 2002).

MARKETING APPLICATIONS OF ONLINE MAKRETING:

The online medium provides one with ample opportunities for the promotion and marketing of

their products and services across the purchase cycle. A few companies such as BP and easy jet

have shown the applications of online marketing since they illustrate how firms can use the

internet communications like websites, email marketing and third party websites for their causes

as:

It can be used as an advertisement medium, for instance, BP and its subsidiaries like

Castrol Limited use interactive ads and large format displays on media sites for brand awareness

and the awareness of products such as their lubricants and fuel etc.
Is Online Marketing More Effective For Organizations Today 40

Internet can be used as a platform for sales transactions. For instance, flights are sold online to

both the business travellers and the consumers.

The internet can largely be used as a direct correspondence medium. Sponsored links are used by

easy jet when a user is looking for a flight on a search engine to prompt them to visit the website

of easy jet directly. And similarly a news letter sent to the customers would encourage them to

visit the easy jet website and generate their sales.

The online market is the lead generation method. For example when content about selecting the

best available fuel for corporate cars is offered to business car management by BP, internet can

come in use for the identification of interest from a manager of a car fleet.

The internet is a useful customer service mechanism. For instance, on the website of easyjet.com,

the customers can serve themselves by reviewing the FAQ pages.

The online market is an eminent distribution channel. For the distribution of digital products,

internet is often used specially for companies who have to sell digital products like online music

resellers or publishers of video content or written content.

It can be used as a medium of relationship establishment. Internet serves as a medium where a

firm can interact with its customers. This way the customers can get to know about the products

and services the company has to offer and the company in turn gets to know about the needs and

demands of the customers.

The scope of internet marketing is increasing day by day. The number of internet users is

increasing at a very fast pace which make it one of the mainstream communication medium

(Figure 8: Growing Internet Users). According to one of the studies by EIAA (2008), that 33% of
Is Online Marketing More Effective For Organizations Today 41

the people cannot live without using internet. The normal use of internet for people in Europe is

12.1 hours in a usual week. About 55% of the people do online research before deciding to buy a

brand.

The early 1990s was the time when internet’s ‘big bang’ occurred. During that time almost 15

million dollars per year were being used by the subsidy offered by NSF. The government of U.S.

announced that it was eliminating the subsidy along with the acceptable use policy. The next

year the internet backbone provided the commercial operations to become operational.

After this, another fundamental breakthrough was occurred in the form of the World Wide Web.

Web servers and Web browsers were also amongst the important breakthroughs of software,

back in 1990s. The usage of multimedia and internet was made easier with these remarkable

innovations. These wonderful innovations allowed one to very easily mix up sound, pictures and

even video or text all together. For every individual, it was very easy to use internet while it also

promised great opportunities and explorations.

Firms and organizations found it a very significant communication source. The further

advancements of internet formed a whole new mechanism for establishing relations with the

customers. All the marketers of the world readily seized up this innovative tool for their work.

Companies could find themselves capable of creating great marketing material at cost-effective

rates and that too, without putting in a lot of effort. The spectrum of competition has widened

with the opening of this new window, where now any and every company can compete with the

others on an equal footing. For customers too, the internet served as a great blessing since it

allowed them to find their desired products very easily. And then the customer-brand association

was concerned, which flourished till a level, never achieved before; all because of internet. A
Is Online Marketing More Effective For Organizations Today 42

whole new revolution thus came in the name of internet. The internet today is thriving on

extremely strong trends f technology along with powerful marketing strategies and principles.

In 1995, websites still did not have all those features that one may take for granted in a site

today.

All websites constituted little dynamic content customised for everyone’s use and some pioneer

websites contained database retrieval abilities. But features like video streaming, sound

streaming, security mechanisms, tables, frames, styles, encryptions etc were absent. But even in

the absence of many features, the internet still proved to be very fascinating. Providers, users,

investors and everyone else could see a lot of doors opening in the near future, and the internet

kept its promise. Search engines, social networking websites and business cycles were soon

introduced.

A virtuous web cycle was introduced, in which users as well as firms participated equally. The

sheer desire to know that what the next great thing would be, everyone was making contributions

to this cycle, regardless to the existence or non-existence of a proper business plan. This virtuous

web cycle then lead to the fast growth of consumer usage, access and content online. From

January 1994 till January 1999 the growth rate of internet hosts was reported to have increased

from 2.2 million users to 43 million. $6 per cent of these people joined the internet in 1986. The

internet usage growth was ultra dramatic in the developed countries and today the number of

users from all over the world is only 4 per cent lesser than the world adult population.

More than fifty per cent users regard internet as a necessity of life today. Even amongst children,

the usage growth of internet has been very rapid. Considering all these facts, the marketers are

taking advantages of this large consumer access for the promotion of their products and services.
Is Online Marketing More Effective For Organizations Today 43

2.10 From Static Internet Marketing to Social Media marketing:

On August 23, 1999, Blogger launched as one of the earliest blog-publishing tools. At that time,

social media was considered a niche activity on the fringes of the Internet but today, breaking all

boundaries, Blogger is the 16th most popular site on the internet, playing host to millions of

blogs, and still growing. Within 3 years, Facebook has grown to over 200 million users, and

Wikipedia has replaced Britannica as an encyclopaedia. Few would consider the Seattle-based

company Starbucks that has forever changed the way people look at a cup of coffee, to be

paranoid but they actually are, thanks to their employees and a blog that enables their customers

to interact with them.

2.10.1 Social media marketing


Social media marketing is a modern concept of promoting a service, brand, or products on a plate

form, where people can communicate; share their experiences, perceptions and opinions with

other people. Examples are boards, blog posts, some famous social networking sites, for

instance; YouTube, twitter, Facebook etc. Once people visit a website with the advertisement of

a product or a service they share it on the other famous websites, and hence this chain process

increase the number of viewers of that product ( Kabani, pp-30 to 38, 2010). Social Media

marketing is one of the fastest growing methods of marketing today. Social media marketing has

changed the way companies market online. Anything launched by the company or brand can get

evaluation and consideration from a number of customers in matter of seconds. According to one

study by Anderson Analytics, (2009), 12% users of social media sites promote their own

businesses online, 18% promote other companies, 46% evaluate and post a review about a brand
Is Online Marketing More Effective For Organizations Today 44

or a company while 52% started following a company or a brand by becoming its fan (Appendix

A,Figure 9: Activities of Social Media Users)

1. Six Degrees:

The first social media site was launched in 1997 by the name of Six degrees. It allowed

users to build contact lists, create profiles, and list their friends. By1998 an additional feature of

surfing friend lists was added. These features attracted millions of users. However, by the year

2000 Six degrees was closed down due to failure of it becoming a sustainable business.

From 1997 to 2001 a number of social media sites emerged namely Friends, Asian Avenue,

BlackPlanet, and MiGente. All these social networking sites had common features; personal

profiles, friend lists and diary pages. The launch of Ryze in 2001 allowed people to help leverage

their business networks. Along with Ryze arose three other social media sites; Tribe, LinkedIn

and Friendster. These social media sites believed that they would be able to prosper side by side

without having to compete with each other (Festa, 2003). This proved to be a wrong assumption;

Ryze was unable to achieve mass popularity, Tribe gained a passionate niche user data base,

LinkedIn became a powerful business service and Friendster was a considered as a failure.

Over the years many social networking spaces emerged but majority of them succumbed

to the grips of failure. There however were exceptions. The three significant social arenas that

evaded the jaws of failure are Facebook, MySpace and Twitter.

2 Facebook:

Facebook remains one of the most successful social media sites present. As of July 2010

the number of its active users amounted to more than 500 million (Facebook Statistics, 2010).

Facebook was not a wonder from the beginning. Like all other social media sites it had to
Is Online Marketing More Effective For Organizations Today 45

struggle. Facebook started as an intra Harvard social networking site in 2004. It linked together

different colleges within Harvard. It then expanded to include different schools. The users of

Facebook were required to have an email address that associated them to their respective

institutions. This meant that Facebook remained as a private and somewhat secure online

community. By 2005, Facebook had expanded to include high school students, professionals

within corporate organizations and then virtually anyone who had access to the internet.

The factors that have contributed to Facebook’s success as a social media site are trusted

identity, clearly defined networks, its exclusiveness and presence of continual engagement to its

users (Shih, 2009). Facebook users were required to have email addresses that identified them to

their respective institutions. This measure insured the identity of users and allowed them to be

tracked to their institutions if needed.

These email addresses also enabled users to distinguish each other on the basis of the

networks they belonged to. The incorporation of institutional email addresses prevented

Facebook to be diluted by strangers and allowed it users to connect with each other on the base

of commonality. The second factor propelling it to success was Facebook’s exclusiveness.

Unlike other social media sites Facebook grew slowly and included institutions one at a time into

its networks. This meant that Facebook servers did not become overloaded and neither did its

users experience any technical difficulties. This slow implementation of Facebook into

institutions made Facebook become more desirable and exclusive. Now Facebook is open to

users from all over the world, its early exclusiveness helped it achieve its worldwide recognition.

The third factor is the continual engagement it provides to its users. The system of news feed,

controlled privacy, uploading and sharing of photos and videos, ability to comment friend’s

profiles have given it the edge over its predecessors. The most important development in terms
Is Online Marketing More Effective For Organizations Today 46

of user’s continual engagement was the inclusion of external applications with consent of the

users.

The concept of Internet Marketing is almost the same as the traditional marketing; the only

difference comes in the medium of conduction of its activities. Customer relationships, when

built and maintained through internet and the goals of both the firm as well as the customers are

satisfied then this phenomenon is termed as internet marketing. Further, five aspects of internet

marketing have been elaborated:

2.11 Summary:

The chapter presented an overview of the concepts, theoretical views and studies that

have been conducted on the subject of Internet marketing. The function of marketing was

reviewed as a whole in this chapter along with an explanation of various traditional marketing

methods’ and tools. The tools of marketing such as advertisements, personal selling, sales

promotion, direct marketing etc all have been discussed when modified to be used in internet

marketing. Overall the study of literature revealed that for any online operating organization, the

internet and some of its particular characteristics have made the implementation of OMC very

efficient and inevitable. The vast storage capacities, interactivity options and the transparency of

internet has enabled organizations to take up a positive attitude in their online communication

activities along with combining fluency and consistency with customization and

flexibility(Gurau, 2008). The inherent characteristics of internet make it the perfect channel for

transaction, distribution and communication (Peterson et al., 1997). Recently the online

marketing has advanced from static to dynamic in the form of social media marketing. The
Is Online Marketing More Effective For Organizations Today 47

increased use of social media sites such as Facebook, twitter, Dig and BlogSpot etc and all have

greatly increased the scope of internet marketing. The increasing number of internet users and

social media sites users has made internet and especially social media marketing a mainstream

communication and a preferred marketing method. The next chapter of the study.....
Is Online Marketing More Effective For Organizations Today 48

Appendix-A

Figure 8: Growing Internet Users

Figure 9: Activities of Social Media Users

Source: WSI, (2010), Internet Marketing Trends Report 2010 United States.
Is Online Marketing More Effective For Organizations Today 49

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