The Internet: Application in Marketing - Research Paper Example

The Internet: Application in Marketing 2007 The Internet: Application in Marketing Introduction Since the advent of trade in the infancy of human civilization its routine has never been transformed as profoundly as after the emergence of Internet and advent of e-commerce. In just less than one decade the Arpanet initially created as a limited access academic and research network into a global tool of communication, advertising, entertainment, and business known as the Internet. The network offered so many new opportunities for both consumers and businesses that some of them still remain unexplored or not properly used up to date. Ordering products and services online, exchange of product information, availability of literally any information about the product, possibility to negotiate directly with the seller and closely monitor the marketing processes, and control demand - these are only a few of them (Chaffey et al. 2006). The spread of e-business dates back late 1990s (the term itself was first coined in one of the IBM's accounts in 1997) has marked a new era in trade and service. Most often e-commerce is defined as a buying or selling process supported by electronic means in the electronic marketplace most conventionally via the Internet. For example, Tassabehji (2003) defines e-business as 'the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners' (p.5); Choi (1997) proposes the following definition: "the ability to perform transactions involving the exchange of goods or services between two or more parties using electronic tools and techniques" (p. 11). However, despite certain variations these and other available definitions emphasise the opportunities the commercial usage the Internet offers to the businesses in dealing with their external environment. Nowadays, large transnational businesses, major domestic enterprises, and increasing numbers of small companies highlight development of electronic business and transactions opportunities as their key priority (Chaffey et al. 2006). The impact of recent Internet developments on businesses is huge and mostly positive. Given the steady ongoing development of e-commerce and electronic transactions one may reasonably conclude that electronic methods of doing business have no drawbacks or that the advantages far overweigh the drawbacks. However, there are several factors that make many experts express much less enthusiasm about the statement that the Internet has created the perfect flawless market. The below overview of the advantages and challenges involved in electronic commerce represents an attempt to understand the range of issues related to using the Internet for business. Opportunities The Internet offers a wide range of opportunities for marketing products and services across the purchase cycle: An advertising medium: use of large-format displays or advertisements on media sites to create awareness of various brands and products. A direct response medium: use of sponsored links to generate sales. A platform for sales transactions: selling products and services online. A powerful distribution channel. A customer service mechanism: the Internet allows the customers easily find the response to almost any question even without participation of the customer service. A relationship building medium: an instrument of interaction with the customers which enables the company to better understand the needs and requirements of their target audience (Chaffey et al. 2006, p.5). These opportunities translate to several essential advantages the Internet has over traditional forms of doing business being almost free from many limitations associated with the traditional forms of commerce. The benefits provided by e-commerce can be grouped into several classes according to the following criteria: easiness and comfort for the customer (1); possibility of extra savings (2); existent friendly customer service (3); special business solutions and commercial profits (4); easy access to a global market (5). 1. Easiness and comfort for the customer. Market researchers believe that e-commerce is characterised by a friendlier attitude toward customers in terms of comfort, easiness of access and fast of order and shipping (Birch, Gerbert, & Schneider 2000). The Internet technology enables the person browsing a global market sitting near his/her computer either in the office or at home. That implies not only sheer comfort but also provides a sufficient economy in transportation, savings of time and access to the goods and services without any queues. This option is extremely attractive for the customers in remote areas with no access to supermarkets and services of the metropolitan areas. Relative easiness and speed that requires no extra efforts or payments from the customers' side are the most apparent benefits of the Internet. Real time or almost real time data allows tracing changes in the market very quickly and respond adequately. 2. Extra savings. The Internet facilitated market makes goods and services cheaper and more accessible by enabling the sellers and customer to avoid extra spending for renting expensive floor spaces, numerous employees, aggressive and costly advertisements, etc. The nature of electronic commerce eliminates intermediate sellers and helps establish direct communication between salesmen and consumers. This leads to significant price reduction in many spheres where intermediate sellers traditionally used to keep their agency fees (for example, real estate sector, automobiles and trips) (Kambil 1995; Birch, Gerbert, & Schneider 2000). 3. Friendly customer service. Multiple opinion polls demonstrate that customers also appreciate virtual marketplace due to numerous friendly services that can hardly be available in the traditional market. Sellers of goods and services who operate in the cyberspace provide ultimate services at each step when customers make their choice, and even after the purchase is made (Chaffey et al. 2006). 4. Special business solutions and profits. The Internet provides several valuable solutions for marketers, brokers and suppliers such as immediate access to the necessary web-resources and possibility of making necessary transfers and transactions to and from any part of the world almost in no time. The Internet has completely transformed the routine of the stock markets (Chaffey et al. 2006). It enables brokers to buy shares of various companies online and monitor the dynamics on the world markets. Besides, it has reduced the possibilities of speculations as far as the markets are rather interpenetrated in the modern world. The system of modern e-commerce includes online market researches, all-round assessment of virtually any data, gathering of clients' database etc. These features made the Internet especially advantageous for the business where access to information generates profits (Veverka 2000). Another essential advantage of the Internet is emergence of new systems of money transfer. Availability of these services has had serious effects on the patterns of modern business through introduction of new methods of transferring assets and products. These have accelerated development of the anaemic economies in different countries, and became one of the most serious factors that stimulated development of the global economy (Birch, Gerbert, & Schneider 2000). 5. Access to a global market. Modern cyberspace has no national boundaries: it allows businesses from across the globe to develop their market activities in many parts of the world simultaneously. Accessibility of products for the customers from various parts of the world, coupled with the possibility of permanent monitoring of situation in the global market turns the Internet into arguably the most important instrument for modern businesses. The Internet has stimulated development of transportations and lowered the prices of carriers while consumers received immediate and full access to the tickets and services of any carrier in the world leaving agents and distribution margins. And finally, the advantages associated with the Internet have stimulated businessmen to modify the traditional segment of their activities (Choi et al. 1997; Edwards 1998; Tassabehji 2003). Challenges While the advantages of the Internet technology are very significant, it also poses several serious challenges with fraud being the first one among them. From the very beginning, the Internet has become a fertile field for fraud. Moreover, relative easiness of cheating in the cyberspace adds to the fact that the Internet industry is a young medium and many countries do not have relevant legislation up to date to cover crimes committed via the Internet. Even developed countries such as the UK, the US, European Union have limited and often contradictory legislation which leaves a number of opportunities to avoid adequate punishment for crimes committed in the cyberspace. The essence of the most popular type of Internet fraud is taking advantage of trustful audiences. Probably, anyone whom ever used the Internet has come across numerous offers of 'miraculous' medicines for incurable diseases (magnetic therapy devices and shark cartilage said to cure cancer, AIDS, and arthritis) or business opportunity scams (deceptive promotion of high-tech ventures involving investments in Internet 'shopping malls'), pyramid frauds, etc. These types of fraud are the most popular methods of cheating on consumers (Pitofsky 2000). Since the Internet technology is absolutely unique, they have invented several extremely sophisticated fraudulent schemes which are extremely difficult to deal with. A couple of examples are quite enough to understand the complexity of effective prevention of such frauds. For example, in FTC v. Audiotex Connections, Inc. the site offered users to download a special viewer program which would allow them to access free images and wallpapers. While the software did provided the access, it also hijacked users' Internet connections, and connected them to a high-priced international long distance telephone system that routed calls through Canada to Moldova and then back to the United States (CV-97-0726, 1997). In another illustrative case, the FTC convicted a person of unauthorized copying several Web sites, including those of Paine Webber and the Harvard Law Review. The accused person inserted coded instructions in those copied sites redirecting their users to various adult sites which he maintained. The users found themselves trapped at the new site: using his extensive knowledge of the Internet technology the accused mouse-trapped the users, and they were directed to the adult sites against their will. Pereira' profits increased significantly due to the increased value of advertising space on his adult sites, which owed a debt to thousands of users whom were directed there without their consent. Unfortunately, Pereira resided in Portugal, while those whom provided him with materials for his adult site resided in Australia, which made it extremely difficult for the United States to reach him, although absolute majority of Pereira's victims were American citizens (99-1367-A 1999). The second case brightly illustrates the problem that may arise out of the difference between national legislations: when the seller and the consumer reside in countries with absolutely different legislations which legislation should be used to cover possible arguments between them This issue is especially vital these days when globalization has already turned the world marketplace more compact than ever, but no international legislation has been produced yet to reflect this highly important transformation. Threat to privacy and confidentiality is another major challenge posed by the Internet: this issue has dominated much of the debate on the perspectives and restrictions of consumer participation in the online marketplace since the late 1990s (Ferraro 1998). Admittedly, this concern is a reasonable one: the recent technological developments make it possible to collect, store, and freely manipulate personal information. The fact that only a small percent of users are aware of the data collecting techniques used in the cyberspace adds significantly to the privacy concerns expressed by the average user. The private information may be of great value, and cheaters use several methods to retrieve it without consent. Since any type of electronic transaction requires private information or code, there is a reasonable concern about safety of the transmitted financial information. Unfortunately, statistical data on computer-based crimes is steadily growing: no flawless protection has been invented up to date to ensure security of information transmitted via the Internet. By now, the situation in the field of privacy has improved as a result of new developments and protective software, yet the concern remains. And finally, some experts express one more concern which seems rather vague and irrelevant these days, but may become the primary problem tomorrow. The electronic commerce introduces a variety of absolutely new opportunities and challenges that have no equivalent in the past. Therefore, no one can issue a reliable prediction on the long-term developments in the field of e-commerce. Although there is little doubt that absolutely majority of these developments will benefit participants in the global market, reasonable concerns exist to claim that some of them may be negative. Thus, Robert Pitofsky formulates this threat as follows: "for all its [internet revolution] promise, it may widen the divide between the have's and have not's, between nations and even within nation states. As we celebrate the promise of the digital revolution, we must also acknowledge the threat it poses to individual welfare and to the stability of international order" (p.2). Conclusion The practice of e-commerce the essence of which is conducting business via the Internet has changed the very principles of both the trade and services. Firstly, e-commerce has abolished the established principle of vis--vis communication between a customer and a salesman, providing, hence, easier access to available goods and services. Secondly, e-commerce has widened people's access to previously unavailable goods and services making people remote in place potential consumers of top-level commodities and services. As a result, the audience of potential consumers has grown substantially; this in turn has contributed to faster development of accessible services and increased their variety. Thirdly, the onset of e-commerce has made the process of purchase or selection of services extremely convenient as now a client may choose optimal accessible option literally sitting near computer and browsing the Internet. Electronic commerce is reasonably perceived as exceptionally beneficial for both businesses and consumers: no nation or alliance of nations has ever had such unique opportunities for doing business throughout the history of human civilization. Yet, with all the advantages, the customers' trust in e-commerce is fundamental to its eventual success. Unfortunately, this vitally important element continues to raise many questions and concerns which are also justified. When many participants in the market are not sure that their financial information is properly protected and not revealed under any circumstances, the virtual marketplace will never live up to the huge expectations that have been enthusiastically discussed since the emergence of the Internet. However, even the existing concerns about the perspectives of the Internet as the perfect market place the truth is that emergence of the Internet have already revolutionized the traditional forms of doing business in virtually every aspect. References Birch, A., Gerbert, P., & Schneider, D. 2000, The age of E-Tail: conquering the new world of electronic shopping, John Wiley & Sons Inc. Chaffey, D. Mayer, R. Johnston, K., & Ellis-Chadwick, F. 2006, Internet Marketing, 3rd Edition, Pearson education. Choi, S.Y., Stahl, D.O., & Whinston, A.B. 1997, The Economics of Electronic Commerce, Macmillan Technical Publishing. Edwards, P (1998) Making Money in Cyberspace. New York: Penguin Putnam Inc Ferraro, A. 1998, 'Electronic Commerce: The Issues and Challenges to Creating Trust and a Positive Image in Consumer Sales on the World Wide Web', First Monday Vol. 3, p. 6. Kambil, A. 1995, 'Electronic Commerce: Implications of the Internet for Business Practice and Strategy', Business Economics Vol. 30, No. 4, pp.27-34. Pitofsky, R. 2000, Electronic Commerce and Beyond: Challenges of the New Digital Age, Address at the Woodrow Wilson Center Sovereignty in the Digital Age Series [available online at http://www.ftc.gov/speeches/pitofsky/rpwilson2.htm] Tassabehji, R. 2003, Applying E-Commerce in Business, Sage Publications. Veverka, M. 2000, 'Plugged In: Wal-Mart gets serious about the Web, Amazon shrugs, but maybe it should watch its back', Barron's Vol. 80, Issue 2: p.37. No. 99-1367-A (E.D. Va. filed Sept. 14, 1999) CV-97-0726 (E.D.N.Y. filed Feb. 13, 1997) Read More