An interim Report On

E-Marketing Vs Traditional Marketing

Under the Supervision of Prof. L. Shridharan

Submitted By: Group No. Priya Khemani (06) Himja Reddy (14) Prashant Kumar Shukla (25) Rahul Gupta (35) Pulkit Mathur (41)

________________________________ IBS, Hyderabad

Table of content

1. 2. 3. 4. 4a. 4b. 4c. 4d. 4e. 4f.

Background of the problem Statement of the problem Approach to the problem Research Design Type of Research Design Information needs Data collection approach (for both Secondary & Primary data) Sampling Plan & Techniques Data Analysis Plan / Approach Finalized Questionnaire (after pre-testing)

3 4 5 5 6 7 7 7 7 8

1. Background of the problem

Marketing is an important strategy for businesses and it contains numerous effective tools. Advertising has played a major role in both B2B and B2C marketing. Typically advertising is used to inform, persuade and remind consumers as well as to reinforce their attitudes and perceptions. Advertising in India has undergone a world of change in the last 20 years and has become one of the fastest growing sectors of the economy. The ratio of advertising expenditure to GDP is about 0.4%1. This is substantially lower in comparison to the developed economies as well as developing economies. As the Indian economy continues to develop and the media reach increases, the advertising expenditure to GDP ratio is expected to increase over the next 5 years. Traditional marketing which has been in use for many years is gradually being replaced by E marketing. When we think of traditional marketing methods or advertising we think immediately of ads in the newspaper, page space in a variety of publications, maybe radio air-time or even TV coverage. In todays marketplace, internet marketing offers a plethora of options. Whether you choose social media, email campaigns, online ads, web video, or any of the other internet tools at your disposal. Print media industry is projected to grow by 5.6% over the period 2009-13, reaching to Rs.21300crore in 20132 from the present Rs. 16200crore in 2008. The relative shares of newspaper publishing and magazine publishing are not expected to change significantly and are expected to remain the same at around 87% in favor of newspaper publishing3. Radio advertising industry is projected to grow at a CAGR of 18% over 2009-13, reaching Rs. 1900crore in 2013 from the present Rs. 830crore in 20084; more than double its present size. Given the trends of increased internet usage, internet advertising is projected to grow by 32% over the next five years and reach an estimated Rs. 2000crore in 20135. However, compared to the Rs 400crore of E marketing spend in India, print and TV ad spends are way higher at Rs 17,000crores, which is 40 times that of internet advertisements spends6 .The scope for reaching a consumer using internet medium can be best gauged by the trend on Google, social media sites like Facebook, Twitter , MySpace, Orkut etc where in the maximum searches regarding laptops and phones originate from India. Also with tours and travel sites like Make My Trip.com and IRCTC wherein the trend for pop up advertisements has been on a rise. Online advertising has been used in various products ranging from electronics to automobiles and services from financial to movie ticket booking services. With the rise in purchasing power of people and advent of technology, analysts expect that with the rise in usage of mobiles, the mobile advertising in India which is currently Rs 40crores, expected to grow to Rs 500crores by 20117. Choosing between internet and traditional marketing depends on your product, 3

marketing objectives and target customers and also most importantly the budget. Companies need to compare the cost with the visibility the 2 types of marketing techniques would provide. Traditional marketing can't match the speed, low cost and instant feedback you get with internet marketing. But traditional marketing will always be relevant, even essential, People are comfortable and familiar with it, it helps in building customer relationships by face-to-face interactions thus you can learn a lot about potential clients. With the changing times, the cost of marketing through the traditional techniques has been rising. Thus a comparative analysis of the cost associated with traditional methods to the effectiveness of the same needs to be done.

2. Statement of the problem:

We need to realize the major differences between Traditional and E Marketing. Which of the 2 approaches is most used and most effective? Also which would create a long lasting effect on the minds of the consumer? With respect to India, even with the boom in technology, approximately 68% of our population resides in rural areas8 where 31% of the population is unaware of internet9. Thus No matter what is the Marketing budget, companies need to choose the right blend of activities and make people more aware about their business and to make their presence felt in the market.

3. Approach to the problem:

This study has been done using both qualitative data and quantitative data. Quantitative Data regarding the trends in the marketing strategies has been collected from various websites and articles. For our research regarding the effectiveness of the 2 techniques firstly a focus group study has been conducted as a preliminary research technique to explore peoples ideas and attitudes it helped in getting more in depth knowledge about the research problem and also how people comprehend the problem. During the discussion we noted that people talked about following things.1 Medium of marketing 2.Type of product 4.Their own perceptions 5.Different sectors in market.6.Kind and intensity of reach online and traditional marketing have, these data helped in designing a questionnaire .

4. Research Design:
The study has been conducted at IBS Hyderabad and due to large population size and also time constraint. We have adopted simple random sampling technique.

4a. Type of Research Design:

 Focus Group Interview: It is a more elaborate exploratory pilot study. In this we gather six people from IBS College for a group dynamic session. We found they were talking about some points which are 1 Medium of marketing 2.Type of product 4.Their own perceptions 5.Different sectors in market.6.Kind and intensity of reach online and traditional marketing have.  Survey: This is the most common method of gathering primary data. A survey is a research technique in which information is gathered from a sample of people using a questionnaire. Task of designing questionnaire is an essential part of research design. We did our survey in IBS Hyderabad questionnaires were distributed among students moreover we made online questionnaire also to gather more and more responses.  Secondary Data Studies: These are the data that have been previously collected for some project other than the one at hand. For eg: The researcher who assembles data from a census of population or the survey of current business is using secondary sources. We have adopted a PDF in which author has done analysis by meeting peoples from different sectors like fashion industry, retail company for well known brands, children clothing store etc.

4b.Information needs:
How marketing strategy varies with type of product, target segment and cost? Marketing is effective when we reach the target customer group, so it is important to know what medium of information our consumers use such as Newspaper, Television, Radio, and Internet. We would require information on different type of products and their marketing strategies. We need to understand the consumer perception about internet marketing and its influence on their buying behavior. At the same time we need to ascertain the reach of internet marketing with respect to Indian consumers. We need to identify the marketing medium which is more effective in creating loyal customer base along with providing reliable information.

4c. Data collection approach:

We have used primary as well as secondary data. In primary data we have used focus group interview. Three focus group interviews were conducted with IBS Students with 6 students in each group. Survey through online questionnaire would be circulated amongst the students and working executives. Secondary data we have used internet publications, articles and company websites.

4d. Sampling Plan & Techniques:

    Respondents: Students of IBS and Working Executives. Sample Size: 100-120 Students. Sampling technique: Simple random sampling Research method: Survey through Questionnaire

4e. Research Objective:

To understand how the way of marketing (Traditional/Online) depends on the nature of the product and type of customer. 5

4f. Data Analysis:

Kaiser- Meyer- Olkin Test (KMO) KMO test is used to check the adequacy of the Sample Size. In other words, it assesses the adequacy of the correlation among the variable to be eligible for factor analysis. Generally, a score of more than 0.5 is considered to be appropriate, so in our case, the score is 0.63180275. So we are moving ahead with Factor Analysis. Factor Analysis No of Factors: In factor Analysis, we first need to identify the number of Factors. There are many ways through which we can identify the no of factors. One of the tables is Eigen values of Correlation Matrix (Table2). Here, the number of the Eigen values which is more than 1 is the no of Factors which we will use in factor Analysis. Here is the table of Eigen Value. Eigenvalues of the Correlation Matrix: Total = 16 Average = 1 Eigenvalue Difference Proportion Cumulative 1 3.18416470 0.21320505 0.1990 0.1990 2 2.97095965 1.29874246 0.1857 0.3847 3 1.67221719 0.36902342 0.1045 0.4892 4 1.30319377 0.24499185 0.0814 0.5707 5 1.05820192 0.10133872 0.0661 0.6368 6 0.95686320 0.02133752 0.0598 0.6966 7 0.93552568 0.15299988 0.0585 0.7551 8 0.78252580 0.10198172 0.0489 0.8040 9 0.68054408 0.08075603 0.0425 0.8465 10 0.59978805 0.05780882 0.0375 0.8840 11 0.54197924 0.16593596 0.0339 0.9179 12 0.37604328 0.04986253 0.0235 0.9414 13 0.32618075 0.06868122 0.0204 0.9618 14 0.25749953 0.05174550 0.0161 0.9779 15 0.20575402 0.05719488 0.0129 0.9907 16 0.14855914 0.0093 1.0000 Table 1: Eigen Value We can see in the above screenshot that there are 5 Eigen Value which is more than 1 so the Number of Factor in our case is 5.

Scree Plot: The Scree Plot is the graphical Representation of Eigen values against the number of factors and is yet another way to determine the number of factors to be retained in the factor-analysis. The first kink at the specific number in the Scree plot is actually the number of factors in the factor analysis. Here is the screen shot of Scree Plot. 6

Graph 1: Scree Plot We can notice 5 Tiled in the below given Scree Plot so we are moving ahead with 5 Factors. Bifurcations of Variables based on Factor Pattern: We will convert the correlated Variable into Factor with the help of Factor Pattern (Factor Loading). We will now check the Factor loading and the one who is contributing maximum will be the part of that Factor. Here is the Snapshot of Factor Pattern.

Table 2: Rotated Factor Pattern Online advertisementssource of information Traditional medium over online- 0.64987 FMCG. Traditional medium over online- 0.64791 Real estate Online information-clarity of 0.64160 thoughts Online medium- Impulse buying 0.53044 Traditional medium over online- -0.52944 Education Traditional Medium -Better -0.65701 Knowledge of Product Online medium - more attractive -0.19322 Online medium-opportunity to -0.17958 contribute in product development 7 Factor1 Constant 0.74388 Factor2 Factor3 Factor4 0.36797 -0.17290 0.12540 -0.28865 -0.13976 0.04275 Factor5 -0.06331 -0.29929

-0.17463 0.07637 -0.19632 0.05454 -0.07145 0.04970 -0.21653 0.13921 0.27281 0.43557 -0.23663 -0.13760 -0.12644 -0.22434 -0.39485 0.04917 0.16624 0.87151 0.85804 -0.13944 0.03509 0.05968 0.07381 0.01776 0.20906 -0.29642 -0.02949 -0.07656

Factor1 Online medium- more effectively 0.04927 caters target customer Traditional medium over online- -0.02500 Toures and Travels Online medium- Cheaper prices -0.10065 Online marketing- Wider reach to -0.12094 customer Time spend on internet -0.07196 Traditional medium over online- 0.15366 Consumer electronics

Factor2 Factor3 Factor4 Factor5 0.82190 0.22489 -0.20427 0.06506 0.08403 0.84636 -0.02702 0.05621

-0.03361 -0.87251 -0.13481 0.02363 -0.01115 0.02402 0.86993 -0.01660 -0.14643 -0.08585 0.19710 0.71330 0.07661 0.07414 -0.20706 0.60651

Here we have allocated the Variable to the factor based on the Factor Loading. Factor Loading means how much a variable is contributing to a Factor. For example the online advertisements- Constant source of information is contributing maximum to Factor1 so we have allocated this to factor 1. In the same way, we allocated other variables to the respective Factors based on the Contribution. Here is the Table given showing the allocation of Variable.

Factor Factor 1

Variables Online advertisements- Constant source of information Traditional medium over online- FMCG. Traditional medium over online-Real estate Online information-clarity of thoughts Online medium- Impulse buying Traditional Education Traditional Medium -Better Knowledge of Product Online medium - more attractive Online medium-opportunity to contribute in product development Online medium- more effectively caters target customer Traditional medium over online-Toures and Travels 8 medium over online-

Factor 2

Factor

3 Factor 4 Factor 5

Online medium- Cheaper prices Online customer Time spend on internet Traditional medium Consumer electronics over onlinemarketing- Wider reach to

Naming of Factors Based on the Variable: Factor 1: Market Maven

Factor 1 combines the following four variables. Variable Online Constant information Traditional medium over You use traditional medium of information over internet online- FMCG. for FMCG. Related Questions advertisements- Online advertisements are a constant source source of

Traditional medium over You use traditional medium of information over internet online-Real estate for Real Estate.

Online information-clarity Online information leads to clarity of thoughts about of thoughts products

Online medium- Impulse Online medium of information leads to impulse buying buying Traditional medium over You use traditional medium of information over internet online-Education for Education.

Traditional Medium - Traditional medium of information provide a better Better Knowledge of knowledge about the product than online medium. Product

Factor 2: Internet Maniac

Name of Variable Related Questions Online medium - more Online medium is more attractive than traditional attractive medium Online medium- Online medium gives consumer an opportunity to take opportunity to contribute in part in product improvement and new product product development development through feedback and suggestions Online mediumeffectively caters customer more Online medium caters to the need of target customer target group more effectively than traditional medium

Analysis: This factor reflects that consumer finds online medium more attractive than tra

Factor 3: Price Conscious

Name of Variable Related Questions

Traditional medium over online-Tours You use traditional medium of and Travels information over internet for Tours and Travels. Online medium- Cheaper prices Online medium offers product at cheaper prices than traditional medium

Factor 4: Wider Reach

Name of Variable Online marketingcustomer Wider reach Related Questions to Online marketing reaches to a wider range of customer

Factor 5: Tech Savvy

Name of Variable Time spend on internet Related Questions If Yes, how much time do you spend on Internet Traditional medium Consumer electronics over online- You use traditional medium of

information over internet for Consumer 10

Electronics.

4g. References 1.http://www.ideasmakemarket.com/2011/01/effect-of-advertisingon-consumer.html 2.http://managementhelp.org/marketing/advertising/methods.htm 3.http://smallbusiness.chron.com/examples-advertisingexpenditures-11991.html 4.http://www.entrepreneur.com/article/54436 5.https://adspeed.com/Knowledges/1104/Blog/How_much_charge _advertising_website.html 6.http://www.surveysystem.com/sdesign.htm 7.http://www.smashingmagazine.com/2009/06/29/45-incrediblyuseful-web-design-checklists-and-questionnaires/ 8.http://smallbizbee.com/index/2011/07/29/a-marketing-strategythat-works-shaping-consumer-perception/ 4h. Finalized Questionnaire:

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