A Study of the Internet as a Marketing Tool in the 21st Century - Essay Example

A Study of Internet as a Marketing Tool in the 21st Century Abstract The advent of internet has made every processes involved in international business transactions a lot easier and quicker. From marketing to selling and even posting of payments, Internet had made it available 24 by 7, 365 days a week. Because this, many businesses, that are working internationally, ventured into utilizing internet as part of their business strategies. Through proper planning and effective implementation, the use of Internet in business operations generates higher profitability for most. Introduction With the advent of today’s technology, the use of Internet is becoming more of an income-generator than just a lifestyle. This is the very reason why the so-called “E-business” is growing remarkably. Electronic business (e-business) is defined as the business which is conducted through the Internet. It involves not only the buying and selling of certain products but also servicing the customers and collaborating with various business partners (Alexandrou, 2002). IBM is one of the internationally known companies who has mastered the use of this method and has found it to be very effective. From online marketing and promoting of the products (thereby gaining access to a wider array of customers), to selling (which also involves invoicing), that all play a significant part in the internet based business processes prove that e-business is indeed becoming a trend nowadays making all transactions available on-line. With the continuous penetration of Internet to most international companies, it is perceived that Internet has indeed revolutionized international business wherein transactions take place in real time and psychic distance is no longer a consideration. This paper highlights the overall impact of Internet to the businesses nowadays, particularly those which are performing internationally. Specifically, this tackles: The concept of Internet business (which is coined as ‘e-business’ and ‘e-commerce’) The advantages and disadvantages of going into internet-based business The security and credibility issues that the company addresses when using Internet as part of the business strategies Analysis The Business through Internet Using internet as part of the business involves the process of gathering information, communicating and trading with customers and suppliers electronically. This is the very reason why e-commerce and/or e-business are always linked with the advent of Internet. More and more companies now believe that if a company fails to take chance in e-business means nothing less than going out of business altogether. This is because company owners are now aware of the fact that consumers are willing to spend on with internet-based businesses as much as $1.3trillion (as predicted by the International Data Corporation). More so, it has been estimated that the business-to-business market for products and services online rose from $131billion in 2000 to $1.5trillion in 2003 (Shipside, 2000). Aside from IBM, other noted companies who have been successful in their e-business approach are: Linux and its pay-per-use approach of application service providers or ASPs. The company has opted to have their online products (the soft wares) available for rentals. The growth of ASPs is considered to have provided a great impact in business computing (Shipside, 2000). The Amazon.com, one of the largest sellers of books that now offers books thru online (Shipside, 2000). They also facilitate shipment of books to international buyers. Ebay.com who has been known as one of the major ‘marketplace’ that is able to sell many types of items. This company has found to have been earning an average of $9b per annum (Bricklin, 1999) AOL.com has had a very good stock valuation because of its over 53 million online visitors a month (Shipside, 2000). Expedia and other travel websites. Many passengers and airline officials can attest that travel web sites are becoming a powerful force in airline ticketing and hotel reservations (Bricklin, 1999). The Method of Online Selling and Invoicing When moving to e-business the very first questions that the company must address are: how to go about it, how to sell online and how to produce the invoices for the customers, and of course, how to ensure that the customers are credible and are able to pay for the items. There are several approaches that ‘experienced’ companies follow in order to maintain a smooth flow in their online selling and invoicing methods. These are: Online Selling Methods Web-based solutions Catalogue solutions Integrated solutions Web-based online selling is just like an online shop with which the company maintains a website where the products are listed according to category. In this approach, everything is handled through the company’s web browser. Most companies pay the Application Service Providers with the annual subscription to cover hosting costs. This approach is very flexible and can be used by any operating system and can be accessed anywhere (“Why selling online makes sound business sense”, 2003). Catalogue e-business solutions, on the other hand, are software packages that are designed to run on company’s or warehouses’ main PC. It means that the manager of the company’s branch or warehouse can update information from their normal desktop PC. This ensures convenience and familiarity (“Why selling online makes sound business sense”, 2003). Online selling through integrated solutions for requires the business to have an internal accounts system where the online shop accesses to update stock or product pricing. This then guarantees that the company is effectively managing the online shop thereby promoting efficiency, control and reporting (“Why selling online makes sound business sense”, 2003). Online Payment and Invoicing Electronic Fund Transfer Remittance Data via E-mail Electronic Data Interchange (EDI) Invoice & Remittance Credit cards Others One way of online payment and invoicing is through Electronic Funds Transfer (EFT). Other business with existing accounts with the company can automate their payments through this method. To initiate this, businesses just need to communicate with their banks regarding the payment (where, how much, and to whom a payment should be sent). The bank will then electronically send the payment to the company’s bank. This method offers a number of benefits including reduction of time consumption, reduction of check-processing costs and simplification of remittance and payment processing (“Manage Invoice and Payments”, 1995). Remittance Data via Email is a remittance system commonly used by small and medium-sized businesses. In this method, the buyers (or the small companies who have ordered the products) will email the remittance data to the company’s designated email address in a text or spreadsheet file containing the check number or electronic Transaction Control Number (TCN), code number of the product bought and the payment amount. The email may or may not also include special instructions such as if paying by Electronic Funds Transfer, or the check number if paying by check. This method assures a great reduction in implementation costs. More so, this does not require any programming and can be integrated with the company’s current spreadsheets used to processing payables (“Manage Invoice and Payments”, 1995). The benefits of using Electronic Data Interchange (EDI) are maximized by most large connected business with established accounts payables with the company. They integrate the seller’s invoice data via electronic methods. Large companies with multiple transactions can also enhance and simplify their invoicing process by using EDI. This method helps the buyers and the seller (the company) consolidates invoices for every transaction into a weekly or daily EDI invoice file. It also reduces paperwork and data entry work, check-processing costs and keying errors (“Manage Invoice and Payments”, 1995). Meanwhile, non-business buyers, with or without account with the company can purchase and pay with their credit cards. There are three possible ways a consumer can use his/her credit card. He/she can either bill the transaction directly to the credit card, or he/she can write your credit card number on the transaction number or use the credit card when he/she went personally with the company shop/warehouse (“Manage Invoice and Payments”, 1995). There is a two-way benefit by using the credit card. The buyers can then maximize the benefits of their credit cards while the merchant is assured of the ability (thru the credit limit) of the buyer to pay for the item. Other possible means that the company can send the invoice of online sales and the customer can pay is thru automatic debit from the customer’s bank account (wherein the customer will be arranging to the bank for the automatic debit of the customer’s invoices). Another possible mean is thru mail wherein the company can send the paper invoices to the customer’s address and in return the customer will send the checks via mail. The last method that a company can use is payment transaction via telephone. The customer can give the company permission over the phone to debit the payment to his/her bank account (“Manage Invoice and Payments”, 1995). All these online selling and invoicing methods are designed to help the company in managing invoice processing resulting to printing and storing invoices in a more convenient and timely manner. Advantages and Disadvantages Benefits and Social Impact of Combining Internet with Business Operations Despite the early technological limitations of the Internet, companies were still quick to recognize the value of the Internet and the World Wide Web in particular as a medium to reach out to customers all over the world (Hoque, 2000). The impact of electronic business will be pervasive, both on companies and on society as a whole. For those companies that fully exploit its potential, electronic commerce offers the possibility of breakpoint changes - changes that so radically alter customer expectations that they re-define the market or create entirely new markets. All other companies, including those that try to ignore the new technologies, will then be impacted by these changes in markets and customer expectations. Equally, individual members of society will be presented with entirely new ways of purchasing goods, accessing information and services, and interacting with branches of government. Choice will be greatly extended, and restrictions of geography and time eliminated. The overall impact on lifestyle could well be comparable to, say, that of the growth in car ownership or the spread of the telephone (Definition of E-business, 1997). The boundaries of electronic commerce are not defined by geography or national borders, but rather by the coverage of computer networks. Since the most important networks are global in scope, electronic business enables even the smallest suppliers to achieve a global presence and to conduct business world-wide (Definition of E-business, 1997). Electronic business enables suppliers to improve competitiveness by becoming "closer to the customer". As a simple example, many companies are employing electronic commerce technology to offer improved levels of pre-and post-sales support, with increased levels of product information, guidance on product use, and rapid response to customer enquiries. The corresponding customer benefit is improved quality of service (Definition of E-business, 1997). With electronic interaction, customers are able to gather detailed information on the needs of each individual customer and automatically tailor products and services to those individual needs. This result in customized products comparable to those offered by specialized suppliers but at mass market prices. One simple example is an on-line magazine that is tailored for the individual reader on each access to emphasize articles likely to be of interest and exclude articles that have already been read (Definition of E-business, 1997). Electronic business often allows traditional supply chains to be shortened dramatically. There are many established examples where goods are shipped directly from the manufacturer to the end consumer, by-passing the traditional staging posts of wholesaler's warehouse, retailer's warehouse and retail outlet (Definition of E-business, 1997). One of the major contributions of electronic business is a reduction in transaction costs. While the cost of a business transaction that entails human interaction might be measured in dollars, the cost of conducting a similar transaction electronically might be a few cents or less. Hence, any business process involving "routine" interactions between people offers the potential for substantial cost savings, which can in turn be translated into substantial price reductions for customers (Definition of E-business, 1997). In addition to re-defining the markets for existing products and services, electronic business also provides the opportunity for entirely new products and services. Examples include network supply and support services, directory services, contact services (i.e. establishing initial contact between potential customers and potential suppliers), and many kinds of on-line information services (Definition of E-business, 1997). Disadvantages and Threats The possible disadvantage of going electronically is Internet hype. Because many people are now aware that Internet is one of the most powerful means of reaching larger number of people, there have been lots of marketing propaganda and unsolicited mails being passed over the net. This somehow creates instability on people’s trust over Internet and on businesses connected with the Internet. Moreover, moving into online selling, if not planned and properly implemented, has also its ups and downs. The possible barriers to successful online selling include (Klimley, 2002): Absence of company infrastructure Apprehensions about too much competition Lack of expertise of the company personnel Too costly for small businesses Incorporation of Marketing Strategies in a Internet Business to Business (B2B) Environment Marketing and other effective promotional strategies plays a very important role in creating a good impact for the prospective consumers. In today’s time, many marketing strategies are focused mainly in attracting the consumer’s attention by creating a good impression. This is the very reason why various forms of media have been used so as to promote extensively the products. More so, there are a number of marketing mixes which most companies try to use regularly so as to ensure high profits. Consumers’ expectations and subsequent satisfaction level are often shaped by marketing strategies. Marketing mixes, such as advertising thru Internet use, serve as a source of information and motivation for the consumer before the purchase is made, and continue to inform prospective, current, and past customers even while a product is in use. As such, marketing present the focal product or service in the best light. There are many strategic and creative approaches that a marketer might take toward presenting a product offering using marketing communications with the overall effect of displaying benefits while creating and managing consumer expectations. For the most part, purchases (whether provoked by marketing strategies directly, indirectly, or not at all) have outcomes that are satisfying, with the performance of the product or service measuring as expected. However, when the service or product performance is below acceptable standards, customers suffer from the disappointment of their suboptimal consumer experience, what might be called a product-harm crisis (Dawar and Pillutla 2000), with the consumer blaming the company for the experience (Laufer, Silvera, and Meyer 2005). This is reflected in the loss of time, money, and other costs associated with an unexpectedly inequitable exchange. If the purchase outcome somehow goes awry, negative thoughts and feelings, such as dissatisfaction, anger, and regret, might be expected to follow. Thus, it should not be forgotten that with any endeavor to deeply understand the consumers and their buying behaviors, any business, who’s focal point of marketing strategy is the use on internet to maximize business to business (B2B) relationship, can easily get a grasp on how they should position their products and their marketing or promotional ideas. They will also be able to know how to seek for their target market and eventually be in contact with that target market. Merchandisers will also be able to reach their prospective consumers, understand their needs and provide that need in a fashionable way they can. This, of course, will provide them better summary of profits. While Internet advertising and other forms of relationship marketing strategies are generally meant to stimulate purchase or at least trial among prospective customers, many ads are seen by current product users; in fact, the purpose of the message itself might be to serve as a reminder to accelerate repurchase (e.g., a new version of this product is available and I should try it; or, that reminds me, I'm running low on this product) or initiate the search process. There are also examples of expressly post-purchase marketing communications, such as thank you letters from salespeople to their customers confirming the wisdom of their purchase, and television ads from movie studios urging customers to see a movie for a second time. Relationship marketing strategies such as this do not occur only before a purchase is made. Post-purchase marketing communications are prevalent in the mass and direct media (such as the Internet), and recent research includes consumer interaction with Internet advertising as related to past consumption activity (Braun and Loftus 1998). Many marketers pay hundreds of thousands of dollars towards research to carefully target their most inviting and responsive consumer segments. Conclusion Indeed, the Internet has transformed most international business. The companies can offer goods and services through the internet any time of the day, as a result, broader scope of audience and consumers are reached regardless of the time and place. It has been proven that there is a bigger marketing opportunity for different businesses, especially those internationally operating businesses, when they maximize the use of Internet. Once more and more consumers get to put high trust on the processes involved in internet-operated business, for sure more and more companies will invest in putting up their own internet business sites. Having more businesses putting venturing into internet business will create high competition, but this will also build up higher confidence from the consumers in using the internet as part of their buying process. Recommendation Internet is already considered as part of every people’s life. By this fact alone, it cannot be denied that going to e-business will be a sure-win strategy for more companies, especially those that cater to basic human needs. It is then strongly recommended that more companies go into the Internet business. This will not only ensure higher productivity for the company itself but also higher level of confidence from the consumers because there will be lesser apprehensions to using the Internet sites to buy or purchase their needs. It is also recommended that further study is conducted which will highlight the various payment methods considered when going online. With this study, it can be ascertain whether there are specialized transaction procedures being done by the already existing e-businesses to ensure that the right, legal and authorized transactions can be done. References: “Advantages of E-business”. 2001. Alexandrou, Marios. 2002. “E-business definition”. viewed: Braun, Kathryn A., Rhiannon Ellis and Elizabeth F. 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