E-marketing affect consumer behavior - Essay Example

To What Extent do barriers to growth of E-marketing affect consumer behavior INTRODUCTION: E-marketing offers a very cost effective way to reach a large potential market with a diversified range of users using the Internet actually forming a kind of subculture within the population, each of which with certain characteristics such as income and educational levels, with more users in urban and metropolitan rather rural areas. E-marketing has 4 P's: 1) Permission, 2) Privacy, 3) Profiling and 4) Personalization. Permission is considered the key to successful E-marketing, which involves receiving and maintaining permission from customers. Permission based E-marketing is considered good business practice. Privacy mainly concerns what E-marketers do with the personal data once they receive it and how they can keep it from unwarranted attention. With identity theft on the rise and the average person becoming more concerned with privacy matters, those marketers that can safeguard their customers' sensitive details will be a better position to win more loyal customers. E-marketing is also considered an effective promotional tool because of its inherent profiling ability. This refers its ability to collect and accumulate demographic, psychographic, and historical data and implement promotional programmes to accommodate and satisfy this information. Personalization is what makes E-marketing most powerful. In addition it is also important for the right marketing person to fully understand his customers' needs and desires and his own industry before launching any offerings (Hofacker, 2001). More challenges and risks are involved in global markets. Diverse issues have been identified as barriers for the success of global e-marketing communications: variations in technological and commercial infrastructure across countries, system compatibility issues, diversity of local regulations (privacy and security laws, censorship, taxes, tariffs, etc,), security concerns and customers trust, competitive factors in global markets, customer support in foreign markets and so forth. LEGAL and ETHICAL ISSUES: Online privacy and security issues: Security concern is one of the main reasons Web users give for not purchasing over the web. The internet as a contemporary data highway on which the global information society may be built is known for many security risks. Thus the vast development of new information infrastructures will increase our dependability and might lead us to a vulnerable information society based on insecure technologies. Many consumers worry about online security. They fear that unscrupulous snoopers will eavesdrop on their online transactions or intercept their credit card numbers and make unauthorized purchases. In turn, companies doing business online fears that other will use the Internet to invade their computer systems for the purposes of commercial espionage or even sabotage. There appears top be an ongoing competition between the technology of internet security systems and the sophistication of those seeking to break them. Online privacy is perhaps the number-one e-commerce concern. Most e- marketers have become skilled at collecting and analyzing detailed consumer information. Marketers can easily track Web-site visitors and many consumers who participate in the Web site activities provide extensive personal information. These may leave consumers open to information abuse if companies make unauthorized use of the information in marketing their products or exchanging databases with other companies. Many consumers and policy makers worry that marketers have stepped over the line and are violating consumers' right to privacy. The key issue of privacy, which is concerned with human rights, data protection and the use of E-marketing and security to protect online personal information is clearly built on the pillar of trust, and is affected by legislation that takes development in the E-business world into account. The awareness and assessment of privacy issues as part of an organization wide privacy strategy remains important to ensure that an organization's liability is limited as much as possible to avoid litigation. An organization privacy should aim to strike a balance between adopting effective E-business practices and maintaining the privacy of individuals whom the activities affect (Klosek, 2000). Effects of online privacy and security issues on consumer behavior: The major issue which affects the consumer behavior is lack of online privacy. As per various researches majority of consumers does not feel reluctant to provide their personal information, like full name, address, email id and so on. They do not even bother to go through the privacy policies stated on the site. Neither the business nor the consumers effectively address the online privacy issue which is the reason why a large number of online fraud cases is detected throughout the world. It is a loss both to a good and true organization and to the individual consumers. Online privacy and security issues minimizes and at times eradicates the trust of the customers in an organization and they start seeking other purchasers and also other modes of shopping. Effective strategic measures needs to be formulated and implemented by a firm to address this issue (Cranor, 1999). Measures Required: The internet is a public network of networks that can accessed by any computer equipped with a modem - so like with any public network, the communication path is non physical and may include any number of eavesdropping and active interference possibilities. Also it is an open forum where the identity of the communicating partners is not easy to define. Thus, as Ed-Gerck nicely said "the internet communication is much likely anonymous postcards, which are answered by anonymous recipients." However, these postcards, open for anyone to read - and even write in them - must carry messages between specific end points in a secure and private way. In response to such online privacy and security concerns, the federal government is considering legislative actions to regulate how Web operators obtain and use consumer information. Governments are considering an online privacy bill that would require online service providers and commercial websites to get customers' permission before they disclose important personal information. That would include financial, medical, ethnic, religious, and political information, along with social security data and sexual orientation. Many companies have responded to consumer privacy and security concerns with actions of their own (Hemphill, 2002). Other Ethical and Legal issues: Beyond issues of online privacy and security, consumers are also concerned about Cyber- crime, including fraud, forgery, espionage, identity theft, investment fraud and financial scams. Cyber-crime is defined, in its most general sense, as any crime involving computer technology and the Internet. However, once we are in cyberspace then things become more shadowy, and even newer crimes are introduced such as cyber stalking. However, United Nations has clarified some of these issues in its document United Nations Manual on the Prevention and Control of Computer-related Crime, where such activities as computer sabotage, unauthorized access, unauthorized copying, and the like are included. From the first sentence therein: "The burgeoning of the world of informational technologies has, however, a negative side: it has opened the door to antisocial and criminal behavior in ways that would never have been previously possible." (Casey, 2004). Fraud: One might think that as long as one's credit cards are "safe" in the wallets or purse, that no criminal can use them. The internet has changed all that. In point of fact, criminals use cyberspace to target, obtain, and sell credit card data to those who would counterfeit these cards. These counterfeiters use custom-built hardware and software to embed data on plastic cards with magnetic strips. However, this is only one small facet of the total fraud industry. Last year alone, the federal Internet Fraud Complaint Center (IFCC) received nearly 50,000 complaints related to Internet fraud that resulted in a total consumer loss of more than $17 million. The IFCC reports that nearly 43 percent of reported incidents involve online auctions. Fraudulent activities are most often conducted through Web pages and e-mail, with 70 percent involving e-mail transactions. Financially motivated distributed denial of service attacks (DDoS) have also increased. These attacks, which frequently involve a large number of innocent agent machines, threaten to deny customers access or deny service to online materials and services unless victims pay a substantial sum. Many attacks have affected online transaction-processing services; the British Association of Real time Gambling Operators reported, for example, that their members have paid over $73 million to extortionists between January and June 2004. This trend is growing at a alarming rate world wide and is becoming a major focus of international law enforcement resources. While there have been numerous studies investigating the impact of self- confidence on consumer decision-making and behavior very little is known about the nature as it applies to e-commerce and especially one's willingness to provide personal information online. In fact, the construct of confidence can have different meanings depending on the context. The feeling of confidence in one's ability has been characterized as essential for any behavior to take place because this belief serves as a form of self-assurance. With regard to using the Internet, personal confidence in one's ability to successfully understand, navigate and evaluate content should alleviate doubts when providing information online corresponding with heightened beliefs about data collection practices. These beliefs formed reflect a consumer's perceived capability in using the Internet to accomplish tasks. Subsequently, as Internet confidence (i.e., beliefs) increases, then attitudes towards the object of those beliefs will also increase. Effects: As discussed earlier, more and more individuals are getting trapped under online fraud because of lack of awareness among them. This fraud results in lost both to the individual consumer and to firms at a large extent. The "trust" and "loyalty" factor gets diminished and disappears among the consumers and this will lead them to either choose other purchasers or to a larger extent choose other mode of shopping (Shefter, 2000). Despite these challenges, companies large and small are quickly integrating online marketing into their marketing strategies and mixes. As it continues to grow, online marketing will prove to be a powerful tool for building customer relationships, improving sales, communicating company and product information, and delivering products and services more efficiently and effectively. CONCLUSION: E-marketing continues to offer great promise for the future. For most companies, online marketing will become an important part of a fully integrated marketing mix. For others, it will be the major means by which they serve the market. Eventually, the 'e' will fall away from the e-business or e-marketing as companies become more adapt at integrating e-commerce with their everyday strategy and tactics. One challenge is web profitability- surprisingly few companies are using the Web profitably. The other challenge concern legal and ethical issues - issues of online privacy and security, Internet fraud and the digital divide. Despite these challenges, companies large and small are quickly integrating online marketing strategies and mixes (Reibstein, 2002). REFERENCES: Adamic, L. A. and B. A. Huberman (2000). "The Nature of Markets in the World Wide Web." Quarterly Journal of Electronic Commerce. Ansari, A. and C. F. Mela (2003). "E-Customization." Journal of Marketing Research. Arnott, D. C. and S. Bridgewater (2002). "Internet, Interaction and Implications for Marketing." Marketing Intelligence & Planning Bauer, H. H., M. Grether, et al. (2002). "Building Customer Relations over the Internet." Industrial Marketing Management Bellman, S., E. J. Johnson, et al. (2002). "Defaults, Framing and Privacy: Why Opting In-Opting Out." Marketing Letters. Birch, D. and M. A. Young (1997). "Financial Services and the Internet - What Does Cyberspace Mean for the Financial Services Industry" Casey, Eoghan. Digital Evidence and Computer Crime. 2nd ed. London: Academic Press, 2004. McKnight, D. H. and N. L. 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"E-loyalty: Your Secret Weapon on the Web." Harvard Business Review Read More