Marketing on the Internet

Marketing on the Internet

Sam Choon Yin (March 2005)


            In the last five weeks or so, I have been reading about and teaching Internet Marketing and Service Marketing.[1] These modules were offered to students in Xian as essential units in the Higher Diploma program. Both modules were taught for the first. I was fortunate in the sense that these modules were related thus reducing time spent to prepare for these modules.

            For example, the Internet serves as a useful medium to transmit information or materials that can be digitised. What goes into the service process essentially are information or possession rather than the consumers themselves. In the latter in fact, customers have little direct involvement in the service process. For instance, application to join as a member in a service company simply requires the applicant to key in his/her personal information and the rests of the tasks are taken care off behind the scene. The service process is as a result intangible. In Service Marketing, we learn that such a process can be categorised as information processing (as opposed to people processing, possession processing and mental stimuli process).

            Furthermore, in many instances, Service Marketing touches on the use of the Internet as a potential supplementary service which businesses can utilise and do better than their competitors. The Internet has also been cited in Service Marketing as an important tool to raise labour productivity in service firms.

            But Internet Marketing has its own distinctiveness. First, the Internet is not something that everyone is capable of using, and like to use. Thus, when we talk about market segmentation, specific issues like familiarity with the Internet and technical considerations must be taken into account. For example, light users of the Internet may correspond with web design that is easy to browse. The web should be used to display information and perhaps not necessarily contain complicated software to supplement the core service. Also, in view of the low switching costs, buyers are likely to move into web sites offering similar products should they find a company’s web slow to respond or download. In this respect, maintaining excess capacity through the use of broadband width may be critical. Users once dislike your website in their first few visits, may never return.

            Second, the Internet represents a useful tool to enhance the company image and online brand. Many companies use the Internet as a supplementary service to promote their brands (like Disney) and categorise the many business units they have into a common source using hyperlinks. The web could also serve as an avenue to inform customers about their dealers which customers can visit (this is commonly used by computer manufacturers and book publishers). Furthermore, the Internet provides an additional avenue to earn revenue. Of course, option of purchasing online is one way. Usually, the product can be sold at a lower price online than offline. The reason being that the company can enjoy savings in printing of catalogues and use of less time and labour to handle customer transactions. Savings to the company can be passed on to the consumers in the form of lower price. Essentially, the Internet serves as a useful add-on to company’s physical store located somewhere.

            Third, the Internet introduces several new challenges to service managers.

    • The Internet allows for a combination of one-way communication to full interactivity. This is unlike traditional methods of promotion where information is normally transmitted ‘onto’ consumers who basically receive the same information. We may call the latter mass standardisation. Today, individualised interaction between the firms and consumers is possible. The challenge to managers is to develop such personalised services and at the same time seeing that ethical considerations (like non-violation of privacy and avoidance of spam e-mails) are taken into account.
    • The other challenge pertains to the need to provide real time communication. The Internet after all is place and time independence meaning that the company website could be accessed by anyone around the world anytime of the day (although it is possible for companies and government to block certain websites from being accessed). Such a feature raises the adequate service level (defined as the minimal service level consumers are willing to receive without going away dissatisfied) requiring the service firms to provide responses and solutions at a quicker time than before.

The Internet nevertheless provides excellent opportunities for firms to deliver their products. The number of people with Internet access has grown from 2.3 million in 1995 to over 300 million in 1998. The number of Internet host (computers linked to the Internet) grew from 1 million in 1993 to 20 million by mid 1997 and 30 million by mid 1998. In China, around 94 million people (or 7.2 percent of the population) have accessed to the Internet (according to a report prepared by the China Internet Network Information (CINIC in January 2005).[2] The potential to access the global market is greater than ever although in the case of China, there is still much room to grow. Even firms like restaurants and hairdressing could or have utilised the Internet to allow for booking of services online and provide pertinent information to their consumers (like operating hours, prices, confirmation of booking, changes and updates of latest products). The importance of the Internet can be seen in the reluctance of governments to tax electronic commerce transactions fearing that doing so may endanger the growth of the Internet (with the exception of certain places like the state of California).

[1] To prepare for classes, I have relied heavily on two books:

         Lovelock, Christopher; Joachen Writz and Hean Tat Keh, 2002, Service Marketing in Aisa: Managing People, Technology and Strategy, Prentich-Hall, Singapore.

         Dann, Susan and Stephen Dann, 2004, Strategic Internet Marketing, Second Edition, John Wiley & Sons, Australia.

[2] On the possession of websites, it was found that 88 percent of the websites have their offices in North China, East China and West China where the economy is more developed. The Northeastern, Southwestern and Northwestern parts of China only have 11.2 percent of the country’s websites (She, Shaomin, 2005, Narrowing the digital divide, China Daily, 25 March 2005).