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Effectiveness of Internet

Marketing
A Management and Consumer Perspective

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Content
Introduction
Methodology
Background Literature
Findings of the Study
Discussion and Recommendations
Conclusion
Questions
Methodology
Consumer Sample
294 consumers working at a tertiary
institution consisting of 1096 staff
84.7% academic staff, 15.3% non-academic
73.8% used the Internet daily
Data was collected using web based
questionnaire
Salient feature 0.7% used the Internet for
purchases
Management Sample
79 managers responded out of 180 organisations
Companies that were included in the sample had
an Internet presence
Mail questionnaire was administered
Salient feature is that the Internet made a
contribution to cost saving
Managers were generally satisfied with the results
achieved from having an Internet presence
Background & Literature
Review
The Internet

• mechanism for information dissemination


• medium for collaboration and interaction
Fastest Growing Technology
54

44
35 34
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Time Taken for Technology to Reach 25% Market Share


Recent Quotations from Experts

There is a move from bricks and mortar to


clicks and mortar
There are those on the Net, those who are
thinking about being on the Net and those
who are out of business
Radebe – businesses that are not online in
three years will soon be out of business
Internet Statistics
US business to business trade will amount
to 6 trillion dollars by 2005
In 1999, South African consumers spent
R2.7 billion online and B2B trade amounted
to R3.9 billion
Businesses can break geographic barriers
and reach some 40 million overseas
customers
Business Value of E-Commerce

Revenue
Other
Generation
2%
18% Cost Saving
35%

Marketing
13%
Customer
Service
32%

Value Generated for America’s Top 100 Companies


Reasons for Being on the Internet

To establish a presence
To network
To reach a highly desirable demographic
market
To reach specialised markets
Internet Marketing
The Marketing Equation

Need + =
Need Satisfaction Profit
Identificatio
n
Need Identification – Online Surveys

Quicker
Less intrusive
Can be answered at leisure
Respondent has more time to apply his/her
mind
More accurate
Responses are returned almost immediately
Need Satisfaction

The Internet provides masses of information


during the buying decision process
The information search is quicker due to the
multitude of search engines
Provides price information for price sensitive
consumers
Information places control in the hands of the
consumer
Marketing Mix - Product
Customers do not purchase the product, they
purchase the benefit
The Internet makes it possible to extol the benefits
of their products and services at low cost
Detailed specifications, instructions and alternate
uses are available online
The challenge is getting the consumer to the site
Marketing Mix - Price
Cost recovery is still paramount
The Internet may lead to price equalising
rather than price cutting
Pricing is more transparent
Instant price comparisons are readily
available
Due to price transparency, sellers have to
develop strong online brands to compete
Marketing Mix - Place
Cybermarketing is selling in market space rather than
at a market place
Virtual stores are mushrooming every day
The Internet brings stores and manufacturers closer to
the consumer
The physical distance between buyer and seller are
immaterial
Direct selling due to the Internet is more viable
Customers save and businesses generate higher
margins by cutting out the middle man
Marketing Mix - Promotion

The Internet is a new channel for marketing


communications
Online promotions are no different from
normal promotions except that taste and
smell are as yet not available
The Internet makes it possible to advertise
large volumes of multimedia information to
a select audience with instant feedback
Findings of The Study
Internet User Profile
Theory suggests that Internet users are college
educated, earn or have the potential to earn high
salaries
The typical user in this study was
Asian male
Aged 25-34
Held postgraduate qualification
Earning in excess of R4000 per month
Use the Internet Daily
Consumer Reasons for Using the Internet

Banking Other
10% 3%
Communication
Entertainment 35%
18%

Research
34%
Reasons for Using the Internet & Gender

Variable Mean Sd
Banking Male 0.833 1.399
Female 1.744 2.072
Communication Male 3.603 1.529
Female 3.732 1.144
Reasons for Not Shopping
Online

Variable Mean Sd
Lack knowledge and confidence 3.276 1.732
Afraid of non-delivery 2.452 1.782
Afraid to use Credit Card Online 2.356 2.202
Too Costly 1.353 1.272
Potential Product Purchases

Food & Groceries


6%
Computer &
Large Appliances
Electronics
10%
35%

Other
21%

Cosmetics &
Toiletries
28%

Other: sport equipment, books and music


Reasons for Banking Online

Variable Mean Sd
24 Hour Convenience 4.247 0.716
Quicker 4.012 1.436
Better Personal Safety 3.383 0.582
Cheaper 1.048 0.463
Other 0.444 1.140
Reasons for Not Banking Online

Slower Other
11% 4%
Lack Knowledge
More Costly
& Confidence
14%
42%

Unsafe
29%
Business Use of the Internet

Income
Other
Generation
4% Cost Saving
12%
31%

Marketing
24%
Customer Service
29%
Factors Leading to Cost Saving

Factor %
Reduced Communication Costs 33%
Reduced Printing Costs 22%
Advertising 17%
Overheads 16%
Other 12%
Increase in Traditional Advertising Cost
48

28

19

0-9% 10-19% 20-29% 30-39%


Impact of Online Promotions

50

12.5 12.5 12.5 12.5

Total Failure Poor Average Successful Very Successful


Overall Impression
60.7

22.8

12.7

1.3 2.5

Extremely Dissatisfied Dissatisfied Acceptable Satisfied Extremely Satisfied


Obstacles to Optimal Use of the Internet

Untapped Niches
Fear

Literacy

Segmentation
Advertising

Site
Appearance
Optimisation Strategies
Fear
Awareness programs
Promote Online Shopping/Banking
Upgrade security and publicise it
Literacy
Government intervention at schools
Segmentation
Proper research
Clearly identify target markets
Free training for target market
Optimisation Strategies
Niches
Identify untapped niches
Provide free services such as training
Advertising
Done offline to direct traffic online
Offer incentives eg. Lower banking charges
Site Appearance
Attractive, free of clutter, , simple address, secure
Fast loading, with useful information
Is Internet Marketing Effective?
From a consumer perspective No, it is not
A potential niche market of over 1000 people are
being overlooked
From a management perspective Yes, it is.
Organisations are seeing improvements in sales,
cost cutting and customer service
Managers are generally satisfied with the Internet