The Promotion and Marketing Differentiators of Online Companies - Case Study Example

Promotion of Strategic Human Resource Management Practices - Internet Companies Introduction Human resource Management is, perhaps, the oldest and most widely researched subject in management. Yet, as technologies change, cultural diversities occur and people's expectations undergo fundamental shifts towards newer and newer dimensions. For instance, professionals are gaining more say in the running of organizations. In the workplace setting, the new and reasonable means for boosting HRM practices and making it more effective is through electronic commerce (Margolis, 1999). Undoubtedly, it has changed the way in which selling is undertaken, including the way suppliers and vendors interact. It has accorded both parties with increased cost-efficiency and has allowed greater expansion of business scope (PC Week, 1999). By means of more dovetailed customer centric approaches, competitive advantage has been redefined. For instance, data from consumers are being garnered by online vendors to be able to more effectively cater to their needs. The substantial information permits these entities to design high impact promotional strategies. E-trading has been effectual in leveraging on price (Munk, 1999). The notable availability and the ease of e-trading have been the features that lead to its acceptance and increasing popularity. Moreover, this suggests being very cost-efficient, obviating the need for overhead attributed to rent and labor. Cutthroat competition in brick and mortar businesses and the big fixed expenses have welcomed online trading (PC Week, 1999). The wide range of offerings in both products and service are welcomed and has won the loyalty of customers. The information that they have garnered from consumers online have also allowed sellers to optimize on cost. Another benefit has been the fact that it permits them to save much time (Mellahi & Johnson, 2000). It is for these reasons that sellers have seriously considered setting up online stores, resulting in the establishment of cybershops and many more of this kind (Mellahi & Johnson, 2000). On the other hand, brick-and-mortar sellers have felt the tension from online competition and constantly run the risk of being bankrupt or being tagged obsolete (PC Week, 1999). The World Trade Organization has suggested that organization need to be engaged in the highly competitive e-trading lest they be outmoded by competition. These entities are involved with software, printed news, magazines, music, and film. Varied industries have also gone into the online retailing bandwagon in lieu of these benefits (Leong, 1999). The current study aims to describe the promotion and marketing differentiators of online companies that are utilized by online vendors which the consumers patronize. The following sub problems shall be addressed in the research: 1) What are the drivers of carrying out an online purchase' 2) How do consumers assess online sellers with which they have dealt with in terms of the following strategies: a) Ease of clicking a button rather than dialing a website number b) Varied products c) Wide market networks and synergistic partnerships d) Selling more digital instead of physical offerings e) Projecting oneself to be a well-renowned global brand f) Maintaining a good, long-term relationship with its on-line clients g) Having attractive promotional offers 3) Among these promotion strategies, which will garner significant correlations with consumer satisfaction in general' Review of Related Literature Online Strategies and Competitive Advantage Strategic frameworks have been integrated of late, especially those focusing on crises or situations with markedly high uncertainty. The ultimate goal was to avoid impending failure in such difficult circumstances (Urban, Carter, Gaskin, & Mucha, 1986). Conventionally, those who have become successful early on allow their long-term survival; in contrast, those who have failed in the beginning are likely to close shop early on. Such victory causes organization to uphold strategic HR practices (of what they have used to achieve their current status), leading to further opposition of change (Wernerfelt & Karnani, 1987). However, there are clear obstacles that hinder the company from reaching success. For example, as the organization and environment change, the effectiveness of the overall strategy is reduced. Modifications in such strategy may only be a result of the ineffectiveness of the current strategy. Due to this resistance, there may be serious negative outcomes that may result before the company actually forms the resolve of changing its strategy. Another consideration is the distinct means of applying the strategy. This may cause a difference and make it difficult to pick out which ways are the most beneficial. In comparison, economic theory may direct the process (Cady,1985). Differentiators of Successful Online Vendors A number of Dot.com retail companies suffered business failures in the year 2000. These businesses either closed shop, filed for bankruptcy or risked being delisted from the stock market. In what has become the one of the new millennium's biggest business irony, numerous queries have been put forth against online trading: who were the winners in this crisis' Who were the companies who did it right' What were their products and what are the company profiles' More importantly, what could be learned from the experience of both gainers and losers' (The Economist, 2001). In order to answer these questions, the researcher delved into a study made about dot.com retailers in December 2000. They have used measures such as increment in stock price during the initial public offering and stock alternatives - 1-800contacts.com was ascertained the winner among all the dot.com retailers on that year (Dot-com deathwatch: welcome to the valley of the damned.com. 2001). Dot.com Failures: The Beginning of the End' A critical year for the dot.com retailers, the year 2000 was started with much promise as the market capital of several retailers outran those of well-known companies. However, a stock market adjustment occurred in Spring of the same year; venture capitalists and other financiers started demanding for profits, just months after investing in the dot.com retail companies. Firms such as Living.com, Pets.com, Garden.com, Valueamerica.com and a host of other dot.com retailers switched from overnight successes to overblown has-beens (Mahajan, Srinivasan & Wind, 2002). Fortune Magazine's first issue in 2001 featured " In Memoriam" for then 135 dot.com companies that either closed down or declared bankruptcy, as stated in the article "Dot.Com Deathwatch: Welcome to the Valley of the Damned.com" (2001) Several reasons that brought the businesses' downfall were speculated by popular press. Among the supposed explanations were: the marked enthusiasm for the Net technology by the investors, uncertain revenue potential and soaring expenses on customer acquisition. It has also been noted that there were no effective evaluation techniques that focused on market value and management expertise. This has been discussed in the documentations "From Dot.Com to Dot.Bomb" (2000) and "How Much Are Your Eyeballs Worth'" (2000) and "It's the Business Model" (2001). Fortune Magazine reported in 2001 that 135 dot.com retailers faced bankruptcy or closed down in the year 2000 ("Dot.com Deathwatch, 2001). Seemingly continuing until 2001, a Webmergers.com research suggests that a significant number of internet organizations have shut down. This has transpired within the first quarter of that year. With the Dot.com industry gloom in 2000, the researcher had the following questions: Was there a firm who made it' Were there any stock market winners rewarded' In order to answer these, the researchers have studied 48 public Dot.com sellers which was completed in 2000. Stock options underwater and stock price increase and decrease since the IPO were utilized for profiling the financial performance of Dot.com sellers. Below are summaries of results in major study findings. A single winner emerged in 2000; from the conceptual framework winners were hypothesized as Dot.com retailers who offer: 1) digital products; 2) search goods; 3) existing products and 4) product customization. The researcher also theorize that winners are inclined to have 5) broad experience in the offline field and also possesses a 6) big number of alliances; the study's sole actual winner, 1-800contacts.com was not able to validate propositions 1, 4 and 6. this scenario implied that the stock market was in favor of dot.com sellers who offer physical products, search goods, existing products, offline experience without product customization. No dependency was seen on alliances for its success. It encouraged Dot.com retailers who utilized Internet technology as another channel to add up on its roster of channels. It rewarded an offline retailer that understood then conventional business. Added to that, the 10 other dot.com retailers with offline experience were less impacted by the stock market. 2 of them only risked removal from the listing with stock price less than USD1.00. Dot.com retailers without offline experience suffered the most as 6 declared bankruptcy and 13 had value of less than USD1.00. Amazon.com's profile, who was the firm that got hit the least by the stock market among the group of firms, is almost identical to the winner except that it does not have offline experience and has a large number of alliances. The same characteristics are also true for the 6 firms that filed for bankruptcy and the pure-clicks dot.coms. Pure-click dot com retailers of digital products were hit greatly by the stock market. Majority of the firms were at risk of removal from the list as stock prices hit below USD1.00. However, for digital products category, travel-related services are seen to perform well on the internet. Travel retailers online provide an existing product which is considered search good can be digitized for the customers. Also, online travel retailers can customize products as their customers satisfy. Looking further, online travel captures 4 out of 6 aspects of the hypothesized profile: digital, search good, existing and customized. Though they were not considered winners, analysts see promise in their business ("Where the Net Delivers", 2001). A consistent finding in the study was that the investing community was not prepared for the Internet age. Though it was accepting of the alternative channel, digital products and customization was not well-received in the stock market. Does this mean a demise of the Internet in sales' Definitely not. In a marketer's perspective, two major pillars can guide the change for firms and consumers alike. Guided by two economic principles of consumer behavior, the Internet promotes efficiency in transaction and information. Implying that the consumers are for economy, putting weight on frictionless commerce and seamless transactions. Though it is not certain whether the principles apply universally to all consumers and products customers are not all for affordability, but also for quality, delivery, customer service, brand name, etc. (Brynjolfsson & Smith, 2000). Wind and Mahajan (2000) infers that an individual can either be a traditional or cyber consumer. Total reliability on the information and transaction efficiency may produce higher dot.com seller failures due to rejection on value propositions of the dot.coms by the consumers. Proliferation of offline experience as a key determinant of financial success also tells that the investing community believes that understanding of the retail business is tantamount to the success of dot.com retailers. Suggesting the possibility of real players still cautious in entering retail. It is also speculated that global retailers like Wal-Mart are ready to take on the opportunities provided by the Net. The reason for the assumption are derived from the strength of Wal-Mart in the following areas: Prominent brand name; knowledge of the local market; broad experience in IT for product transactions; being cost-efficient in supply chain management; and the ability to experiment with the Net without pressure from capitalists and the finance community ("Will Wal-Mart.com Get it Right This Time', 2000) Meanwhile, Amazon.com did well compared with the pre-click dot.com retailers. It needs to combine well with its offline partners in order for its value proposition to be welcomed by hybrid consumers (Wind & Mahajan, 2002). Press reports tell that Amazon.com may be venturing in tie-ups with offline outlets. Also, it has took over the website of Borders, a bookseller based offline, accessing their offline stores as well (Amazon to take over Borders.com", 2001). They are also exploring the possibility of partnering with big offline outlets like Wal-Mart ("Amazon, Wal-Mart Might Partner, 2001) and Best Buy ("Amazon, Best Buy Partnership", 2001). Definitely, mergers between retail giants like Amazon and Wal-Mart is a possibility in the near future. Methodology Research Design The current study employs a descriptive-correlational research design. It is descriptive in nature because it aims to "provide further insight by describing the variable of interest." (http://cas.uah.edu/wrenb/mkt343/resdesigns_files/frame.htm). It is also correlational because it intended to establish the relationship between each online promotion strategy and overall customer satisfaction. The quantitative method: In a quantitative study, the researcher is interested in collecting evidence so that a statement can be made about the outcomes of broad experiences (Bogdan & Biklen, 1992). Researchers using this approach adopt an objective approach to the social world (Cohen & Manion 1994). The philosophy of this approach is that knowledge and facts are objective and that complex problems can be best understood if they are reduced into simpler component parts. This perspective expresses itself most forcefully in a search for universal laws which explain and govern the reality which is being observed (Easterby-Smith et al, 1991). Quantitative methods have a number of attractions for the inexperienced researcher. The main attraction is that they appear to be more clear cut, with more obvious boundaries around the data collection phase. 'Researchers undertaking a quantitative study may find that it temporarily occupies their waking hours, but it is less likely to invade their way of life.' Johnson & Russo (1984) However, there are also disadvantages. To meet the requirements of the underlying philosophy of this approach the research instrument must be scientifically respectable. Bogdan & Biklen (1992) asserts that the development of the research instrument must incorporate 'rigorous design, administrative control and clerical accuracy'. Also, if there is to be any subtlety of analysis it will be necessary for the research to be ideally large scale. Easterby-Smith et al (1991) suggest samples of 100's or 1000's are required if reliable results are to be produced. 'the main requirement in quantitative research design is to provide a fair chance of being proved wrong, and to avoid the incorporation of bias which would tend to confirm the researcher's a priori hypotheses' (Bogdan & Biklen, 1992). It is suggested by Easterby-Smith et al (1991) that the quantitative philosophy leads to a preference for the use of written multiple choice questionnaires and surveys, and the statistical analysis of the results. Samples of Study The respondents of the current investigation were chosen using purposive sampling. This has been carried out using the following inclusion criteria: 1) must have experience interacting with an online vendor (not necessarily with buying an online product); and has explicitly expressed willingness to participate in the study. Mack, Woodsong, MacQueen, Guest & Namey (2005) purport that purposive sampling is a type of non-probability sampling. It is distinguished with the utilization of judgment and the strong intent to garner an "objective" sample. The investigator attempt to ensure this through proportionate stratification of the sample. An outcome is that there is a significant probability for error. Finally, this type of sampling does not necessitate the use of random sampling. Thus, it may not be as valid to generalize conclusion using such a sampling technique (Mason, 1997). All online consumers within the country are eligible respondents. Purposive sampling is a popular research recruiting method, as the sample size does not have to be determined at the beginning of the project. It is also an advantage for this study, as the sample size will be constrained by time and available resources (Mack, Woodsong, MacQueen, Guest & Namey, 2005). This study has used purposive sample to select participants. This was based on respondents' willingly to participate and being available during the semester to complete the surveys. Instrumentation The main instrument that will used for this paper is a questionnaire (see Appendix A). This tool has been self-constructed by the researcher. Item 1 of the tool is a dichotomous (yes-no) item, asking if the respondent has ever purchased an online product. The next item inquires about the top 3 reasons for buying products on line; this is followed by a related question which asks about why they do not purchase online. The succeeding questions deal with the various promotion strategies, namely, comfort offered by clicking instead of dialing a number from the website; diversity of product offerings; extent of market networks and alliances; offering more digital than physical products; being a strong global brand; maintaining good, long- term relationship with its on-line clients; and having attractive promotional offers. Finally, the last item is an evaluation of their overall satisfaction with these online services. Except for the first three items, the remaining items will be rated using a 4- point Likert scale which measured the respondent's level of agreement on the item, with 4 indicating very strong agreement to 1, which indicates very strong disagreement. The use of a 4-point instead of a 5-point scale is to definitively determine the respondents' inclination - the presence of a neutral option may incline them to be "safe" and to choose the middle way instead of selecting a definitive preference. Procedure The first step was a thorough review of related literature, which entailed consultation of secondary sources, included books, academic journals and Internet sources. Afterwards, the researcher proceeded with the construction of the questionnaire, and will distribute these to 80 purposively selected respondents. Data will then collated and statistically analyzed using frequencies, percentages, and Pearson correlation coefficients. Recommendations will be put forth for the enhancement of vendors' online promotion strategies as differentiators. The data collection period will occur over a period of ___ days. The announcement of the research will be made to the students of the university. It is anticipated that respondents are less likely to guess the objectives of the study, and so less likely to exhibit socially desirable responses in order to "please" the investigator. Measures were made to ensure that respondents will not be biased in sharing information. Participants will be told that the completion of the surveys will take about 10 minutes. Each participant will be asked to sign a consent form once the investigator is confident that the individual understands the research process and what is expected of him or her. Participants will be encouraged to complete the questionnaire within their dormitories, although when necessary survey questionnaires can be completed in their own time and returned to the researcher in a sealed envelope. Each questionnaire booklet will be identified only with a participant number. On completion of the study participants will be thanked, and be briefly informed of the study's objectives, and asked not to reveal these to students who may still wish to participate. Participants will also informed that the outcomes of the investigation shall be disseminated to them once they are available and following submission of the final dissertation. Data Analysis The present study utilizes a correlational research design, specifically determining bivariate correlation between the etiology and anatomical site of the injury and postural characteristics. In bivariate correlation, the degrees of the association between two variables in assessed. Such a relationship has a degree as determined by its magnitude, presented as a figure ranging from -1.0 and +1.0. This is dubbed as the correlation coefficient. When the value of the coefficient is zero, this suggests the absence of an association. Moreover, as the absolute value increases towards -1.0 or +1.0, the relationship also grows stronger. The direction of the relationship is denoted by the sign; that is, either positive or negative. A -1.0 or a +1.0 correlation are both considered "perfect correlation". When scores on one measure increase, while scores on the other variable decrease, this indicates a negative relationship. Meanwhile, if both scores move correspondingly - either increasing or decreasing together - then this denotes a positive correlation (Davis, 2005). Bivariate correlation shall be used to establish relationships between the online promotion strategy and overall customer satisfaction with their vendor's online services. References (The) Economist (US). (2001). 2000 Amazon's amazing ambition. The Economist, 354 (8159), 26 February. "Correlation and regression analysis for curve fitting." Retrieved on August 15, 2005 from http://helios.bto.ed.ac.uk/bto/statistics/table6.html#Correlation%20coefficient Amazon, Best Buy in Partnership Talks (2001). Retrieved January 8, 2006, from http://www.e-commercetimes.com Amazon, Wal-Mart Might Partner (2001) Retrieved January 3, 2006 from http://www.e-commercetimes.com Balasubabramanian, Sridhat &Vijay Mahajan, (2001). The Economic Leverage of the Virtual Community. International Journal of Electronic Commerce, 5 (3): 103-138 Bogdan, R. C. & Biklen, S. K. (1992). Qualitative research for education: An introduction to theory and methods. Boston, MA: Allyn and Bacon. Cady, J.F. (1985). Marketing strategies in the information industry. In Buzzell, R.D. (ed.) Marketing in the electronic age. Boston, MA: Harvard Business School Press. Cohen, L. & Manion, L. (1994). Research methods in education. London: Routledge. Davis, J. (2005). Correlational research methods. Retrieved on January 12, 2005 from http://clem.mscd.edu/'davisj/prm2/correl1.html Dot-Com Deathwatch: Welcome to the Valley of the Damned.Com. (2001, January 8). Fortune, 52. Easterby-Smith, M., Thorpe, R. & Lowe, A. (1991). Management research: An introduction. London: Sage Publications. Gurpreet, D.,'' Coss, D.'& Hackney, R.'(2001).'Interpreting the role of disruptive technologies in e-businesses, Logistics Information Management, 14,'(1/2),163-170. How Much Are Your Eyeballs Worth' (2000, January 8). Fortune, 38 It's the Business Model, Stupid! (2001, January 8). Fortune, 54 Johnson, E.J. & Russo, J.E. (1984) Product familiarity and learning new information. Journal of Consumer Research, 11, 542-550. Leong, C.T. (1999). Firms want to e-commerce. The Straight Times. Mack, N., Woodsong, R., MacQueen, G., Guest, P. & Namey, N. (2005). Qualitative research methods. London: Mcmillan. Mahajan, V., Srinivasan, R. & Wind, J. (2002). The Dot.Com Retail Failures of 2000: Were There Any Winners'. Journal of the Academy of Marketing Science, 30 (4): 474-486. Margolis, B. (1999). An Amazon.Com storey lessons learned! Direct Marketing, 62 (761), 243. Mason, J. (1997). Qualitative researching: An introductory text. New York, Sage. Mellahi, K. & Johnson, M. (2000). Does it pay to be a first mover in e.commerce' The case of Amazon.com. Management Decision, 38(7),' 445-452. Munk, N.C. (1999). Title fight. Fortune, 193 (12), 84-94. PC Week (1999). Bezos: Amazon is about value. PC Week, 8 March,16. Urban, G.L., Carter, T., Gaskin, S. & Mucha, Z. (1986). Market share rewards to pioneering brands: An empirical analysis of strategic implications. Management Science, 32, June, 645-59. Wernerfelt, B. & Karnani, A. (1987). Competitive strategy under uncertainty. Strategic Management Journal, 8, 187-94. Where the Net Delivers: Travel. (2001, June 11). Business Week, 120 Will Wal-Mart Get it Right This Time' (2000, November 6). Business Week, 104-112. Wind, J. & Mahajan, V. (Eds.) .(2000). Digital Marketing. New York: John Wiley. Appendix A - Questionnaire QUESTIONNAIRE 1) In the past, have you bought a product online' ' Yes ' No 2) What are your top 3 reasons for buying online' Please check three options: ' Competitive prices ' Convenience ' Easy handling of placement /cancellation ' Impulse buying/out of curiosity ' Personalized recommendations ' Promotional offers ' Service (aftersales, money back guarantee) ' large selection of merchandise ' Other reasons 3) What are your top 3 reasons for not buying online' Please check three options: ' Cannot trust retailer (delivery/refund) ' Lack of security ' Limited merchandise/range ' Prefer to touch and feel before purchasing ' Pricing more expensive ' Too tedious to make a purchase ' Uncertainty about merchandise ' Other reasons For the following questions, indicate your level of agreement to the statement by encircling the number that corresponds to your choice. 4) I buy from my online service provider because of the comfort offered by clicking instead of dialing an indicated number. 4- Strongly Agree 3- Agree 2- Disagree 1- Strongly Disagree 5) I buy products from my online service provider because of the diversity of the products they offer. 4- Strongly Agree 3- Agree 2- Disagree 1- Strongly Disagree 6) I believe that my network service provider's extent of networks and alliances is a major strength. 4- Strongly Agree 3- Agree 2- Disagree 1- Strongly Disagree 7) My online service provider is effective in marketing online products because it offers more digital products than physical products. 4- Strongly Agree 3- Agree 2- Disagree 1- Strongly Disagree 8) My online service provider is an effective online marketer because of its highly customized products. 4- Strongly Agree 3- Agree 2- Disagree 1- Strongly Disagree 9) My online service provider is effective in being a global brand. 4- Strongly Agree 3- Agree 2- Disagree 1- Strongly Disagree 10) My online service provider has proven itself effective in maintaining good, long-term relationships with its online clients. 4- Strongly Agree 3- Agree 2- Disagree 1- Strongly Disagree 11) The company has attractive promotional offers. 4- Strongly Agree 3- Agree 2- Disagree 1- Strongly Disagree 12) Indicate your overall satisfaction with your online service provider's services. 4- Strongly Satisfied 3- Satisfied 2- Dissatisfied 1- Strongly Dissatisfied ***END OF SURVEY. THANK YOU FOR YOUR PARTICIPATION.*** Appendix B - Informed Consent Form INFORMED CONSENT FORM PRINCIPAL INVESTIGATOR PROJECT TITLE: Differentiators of Successful Internet Companies SCHOOL CONTACT DETAILS The current research explores differentiators of successful Internet companies. As a participant, you are asked to answer sets of questions as honestly as you can. It is of value to this research that your experiences be expressed, as the information can be used to broaden knowledge on the topic. It is expected that the questionnaire will take about 10 minutes to complete. As a participant you have the right not to answer any questions you do not wish to, the right to withdraw from the study at any time without penalty, and the right to confidentiality and anonymity in regards to the information you provide (a participant number will be used). The outcomes of this research will be used for a ''''''.. dissertation. At the completion of the dissertation you are able to contact the primary investigator to obtain overall results, or a copy of the entire research dissertation . The aims of this study have been clearly explained to me and I understand what is wanted of me. I know that taking part in this study is voluntary and I am aware that I can stop taking part in it at any time and may refuse to answer any questions. I understand that any information I give will be kept strictly confidential and that no names will be used to identify me with this study without my approval. Name: (printed) Signature: Date: Read More