Marketing Opportunity
Content
Introduction
M arket in ing g opportunit opportuni t ies in t he digital di gital w orld
G. Reza Reza K iani
The author G. Reza Kiani is Resear Research ch Associate at Henley M anagement College, Greenlands, Henley-on Thames, Oxfordshire, UK. E-mail: E-mail: [email protected] [email protected] Abstract With t he birth of the World W ide Web, the current decade has w itnessed itnessed tremendous evolution in the media environment, and indicates that electronic electronic comm erce, erce, defined as the electronic electronic exchange of inform ation, g oods, services services,, and payments, has finally come of age. Despite Despite the fast-grow ing popularity o f electronic commerce and presence presence of m any companies on the virtual market, the opport unities offered by this new environment are still unknow n. Man y marketers still approach the Web based on the tradit ional mass comm unication m odel. The The paper addresses addresses the opportun ities offered by the W eb to marketers. Its approach considers considers the Web as a tw o-way communication model in which four different comm unication states can take place. The The paper also suggests the necess necessity ity of n ew concepts and models for m arketers to m anage their Web sites, sites, and then presents the opportunities supportin supportin g the m arketers’ arketers’ objectives in the new environment.
Internet Research: Research: Electronic Electronic Netw orking Applications and Policy Policy Volume 8 · Number 2 · 1998 · pp. 185–194 © M CB Un iv ersi ty Press · ISSN 10 66 -2 24 3
T he greatest inv inventio ntion n of mankind ind is lan language; an invention in which all kinds of people people have have contribu contributed ted over a long long time timeand that enabl enable es them to communi communicate catetheir feelings ingsand thoughts. I f that that is the the case case, the second greatest test invention ntion is is comin coming g of age age; that is the InternaInternational communication network, whose last manifest festa ation is i s theWorld Wide Wi de We Web (WWW (W WW). ). L anguage guage gives human b beings eings the possib possibililit ity y of communication munication and the Web is is removing removing its its biggest physica physicall barr barrier, ier, that that is is distance distance. T his second second invention which is the result of thousands of inventions and discoveries is a continuous growing and developing phenomenon, as language is. M ore and more busi busines nesse ses are discovering ri ng the WWW WWW asa fundamental communica communicati tion on tool used used to conduct conduct daily dail y busin busines ess. Larg L arge e and small companies companiesare embracing mbracing the Web to communicate with curr curre ent and potential potential customers abroad through the Internet Internet with the same cost and ease as in their countries (e.g. T heProje Projec ct 2000 Group[ Group[1 1]; Arms Armstron trong g and H agel, 1996; 1996; C yber Atlas A tlas,, 1996; H agel and L ansing, 1994; 1994; Ham H amil illl and Greg Gregory, 1997; 1997; H offman and and N ovak ovak,, 1996; Ra R ayport and Sviokla Sviokla, 1994; 1995; 1995; Que Q uelch lch and K lein, 1996; Schwartz, 1997). Businesses can create and transmit advertisements on the Web that can be accessed by anybody with a computer equipped with appropria appropri ate software. software. Such Such a conveni convenience ence and marketing marketing efficiency efficiency, both for the adverti advertise ser and the potential potential customer, customer, is making the Web popular popul ar for marketing practices all over the world. According to Rayport and Sviokla (1995), “E very busines business s today competes competes in two worlds: worlds: a physical physical world world of resources resources that that managers can see and touch and a virtual world made made of infor informa mati tion. on. T he latter has has given given rise to the world of electronic lectroni c commerce.” rce.” T he Interne rnet and the the Web, the the fas fastest grow rowing ing and and most most innova i nnovati tive vecomponents of that that particul particularly, arly, have have some some unique and powerful characteristics that make them central to a paradigm shift in marketing (e.g. Armstrong and Hag H agel, 1996; Blattberg Blattberg et al. G lazer, a l. , 1994; Glaze 1991; 1993; 1993; H offman offman and Nov N ova ak, 1996; K ierzkow ierzkows ski et a l. , 1996; 1996; M artin, 1996; 1996; Pine Pi ne,, 1992; Rayport and Sviokla, 1995; Schwartz, 1997). T he shif shiftt from from “one-way” “one-way” to “two-wa “two-way” y” infor informa mati tion on flows between producers and
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consumers (Blattberg et a l. , 1994), from the conventional “One-to-M any” communication model to the “M any-to-M any” model (Hoffman and Novak, 1996), from “supply-side” to “demand-side” thinking (Rayport and Sviokla, 1995), and the shift to the “fifth phase” of marketing evaluation, characterised by “differentiated products in decentralised markets” (Blattberg et al. , 1994). Figure 1 showsthis paradigm shift in different aspects.
A model to approach the ma rketing opportunities T he appearance of the new marketingenvironment is aligned with the evolutionary progress of the marketing functions from a mass-market model, One-to-M any using the word of Hoffman and Novak (1996), to more interactive individualisation of goods, services and interactions. According to Blattberg et al. (1994, p. 27), in the new environment, marketers are able to consider consumers individually, customise their servicesand products, and “establish dialogues with consumers” rather than talk “at” them. T his is dueto the unique and powerful characteristics of the WWW.
Figure 1 The new m arketing paradigm shift in diff erent directions: from marketplace to m arketspace From One-To-M any communication model Mass marketing M onologue Branding Supply-side thinking M egabrand
To
Sources
Many-To-Many communication model
Hoffman, and Novak (1996)
Individualised marketing
M artin (1996)
Dialogue
Blattberg and Deighton (1996)
Com m unication
M artin (1996)
Demand-side thinking
Rayport and Sviokla (1995)
Diversity
M artin (1996)
Cent ralis ed m arket
Dec ent ralis ed m arket
Blattberg, et al. (1994)
Customer as a target
Customer as a partner
M cKenna (1995)
Segm entations
Com munities
Armst rong and Hagel III (1996)
T heopportunities which the Web, as a two-way communication channel, provides can be discussed in four logical situations: company-toconsumer; consumer-to-company; consumerto-consumer; company-to-company. Figure 2 illustrates the logical pattern of the communications among companies and consumers through the WWW. In an interactivemedia, a marketing activity can employ one or a combination of the above communication patterns. T he important point here is that what causes the powerful opportunity in an interactivemedium, relativeto one-way medium, is the ability to provide a mutual communication. Given this, the above categorisation attempts to clarify all possible communication patterns. I follow this categorisation to see how marketing can benefit from the new opportunities provided by the WWW, from these four angles. F igure 3 illustrates the logic of these communication patterns by emphasising the mutuality behind them.
M arketing opportunities on the Web Company-to-consumers T his side of the communication on the Web viewsthe content delivery. According to M organ (1996), marketers can use interactive media to provide higher services and lower cost by delivering up-dated product- and non-product-related information. Comparing the WWW with traditional marketing communication channels, according to Ellsworth and Ellsworth (1997), the Web is a faster, less expensive, highly immediate communication, round the
Figure 2 Various possible solutions in a tw o-w ay communication m edium
Consumers
Company
Source: the author
Source: Kiani (1997)
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Consumers
Company
Consumers To Consumers
Company To Consumers
Consumers To Company
Company To Company
Marketing opportunities in the digital world
Internet Research: Electronic Netw orking A pplications and Policy
G. Reza Kiani
Volume 8 · Number 2 · 1998 · 185–194
Figure 3 Illustration of different comm unication patt erns in interactive environment
Company
Consumers
Consumers
Other companies
Source: the author
clock and global. It offers wider and deeper material and richer advertisement content. To deliver an advertising content to consumers, the Web can do the things that the traditional mass media advertising cannot. T he basic advantages to businesses using the Web are described within the following sections. A ddressabilit y Hammond et al. (1995) suggest that “One of the
benefits of I nternet advertising is that each time a user connects to a Web site, the site provider has arecord of the user’s electronic address, so companies can build lists of early adopters who ‘browse’ theInternet”. T he Web is able to contact the customer uniquely in time and space. T henew interactive communication system, “the fifth medium” (newspapers, magazines, radio, and television are the other four), has one important advantagewhich is “memory”. According to Stewart and Ward (1993), what an individual hasacquired, in terms of information, products or services, can becaptured for future use by the marketer. Blattberg and Deighton (1991) argue that addressable marketing is not new; the mail and telephone have been also the addressable tools in marketing for many years. What is new is low-cost and high-speed electronic management of the dialogue. T he cost of holding a consumer’s name, address, and purchase
history on-line has fallen by a factor of 1,000 since 1970 and is continuing to fall at this rate. Electronic marketers can do what a salesforce can with much more flexibility and better memory. According to Blattberg and Deighton (1991), addressability of the Web providesthe opportunity for marketing to create individual relationships, managing markets of one, and addressing each in terms of its stageof development. In essence, it represents the opportunity to customise and tailor either the product or the marketing effort to one consumer at a time. On seeing an advertisement, a consumer would be able to press an icon to request more information or to order the product or service. T herefore, marketers could monitor all such activities to assess which kinds of advertising, in which kinds of venues, work best with which kinds of subscribers (Hagel and L ansing, 1994). According to K ierzkowski et al. (1996), addressable communication gives the marketer two important opportunities, which are to: learn about an individual consumer in the course of continued interaction; and deliver either a personalised service or product, or a communication about the availability of such a personalised service or product. T hey point out one of the on-line publications, as an example, which delivers a personalised on-line newspaper compiled on the basis of a user’s specified interests, “published for a circulation of one”. Blattberg and D eighton (1991) identify the fundamental impacts of this strong ability of the Web on the marketing rules: • A databaseof transaction histories will be the primary marketing resource of many firms, determining what kind of product they can deliver and what market they can serve. F ar more directly than the traditional media, customers will shape the firms that serve them. • M arketing will bemore accountable. T he unit of measure will be the lifetime value of each customer to the firm. M arketing efficiency will be measured by changes in the asset value of the firm’s customer base over time. • Distributors’ steady erosion of manufacturer power will slow and may even reverse, as manufacturers take back functions from
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other channel members and use electronic data systems to administer them. • Niches too small to be served profitably today will become viable as marketing efficiency improves. Communications will reach small or diffusetargets with increasing precision, and feedback on marketing actions will become more accurate. • T he discipline of marketing will begin to feel more like engineering. M arketing managers will need to learn statistical modelling of dynamic systems if they are to interpret market responses to interactive marketing initiatives.
thousands of items, such as compact discs or books. T he cataloguecan also beassociated with relevant free information and services for the consumer who visits the page. For example: “BM G’s Classical M usic”[2] differentiates itself from other compact disc catalogues by providing considerable information on composers, instruments and periods. A user can search information, say about M ozart symphonies, and then be offered a selection of available discs” (O’K eefe, 1995). Another good example in this respect is Amazon Bookstore[3] offering a lot of relevant and interesting information such as: best-sellers, award winners, titles in the news, and comments of various sources on the book which customers are probably interested.
Flexibility
As many authors (e.g. H agel and L ansing, 1994; O’K eefe, 1995) noted, the Web, for marketing, is A ccessibi li ty much more flexible than the traditional mass T heWWW provides the opportunityfor commedia. A Web pagecan be considered as an panies to increasetheir hours of business on a electronic billboard, electronic advertisement, or global spectrum. Instead of a typical eight-hour electronic catalogue that provides information on day, businesses have increased their opportuniproducts or services plus contact information for ties by providing 24-hour access for branch interested consumers. But a virtual advertiseoffices, business contacts, and shoppers – access ment or catalogue is much flexible than a physical that is important in conducting business across advertisement or catalogue. It can gather fresh different time zones or internationally. Expandand updated information based on the direct ing access indeed increases the number and feed-back received from consumers. A virtual coverage of potential customers. catalogue can be gradually developed and organCompared with the traditional media, access ised based on the actual interest of consumers. opportunities on the Web are equal for all playSome advantages of virtual catalogues compared ers, regardless of size. It is especially beneficial to to their physical counterparts are: a company can smaller companies which want to expand their immediately add new items to a catalogue, withbusinesses globally, but do not have the capital out waiting for the next catalogue printing; items and resources to do so. According to Rayport which sell out but cannot be replenished can be and Svikla (1995), the virtual value chain reremoved immediately – this is especially useful defines economies of scale, allowing small firms for items whose supply is naturally limited, such to achieve low unit costs for products and seras antiques or rare automobile parts; catalogues vices in markets dominated by largecompanies. can be customised for specific customers and T he Web access delivers a company with an locations; paper catalogues are expensive to opportunity to implement highly cost-effective change, while electronic catalogues are not; and vehicles, not only for their own marketing and massdistribution of large paper cataloguesis customer support needs, but also for positionexpensive, while electronic catalogues can be ing themselves globally. M oreover, the Web distributed globally with almost no charge. helps ease doing businessoverseas by avoiding T hecataloguecan belinked to inventory regulations and restrictions that companies data, so that the user can see if an item is immemust follow when they arephysically present in diately available or not. M uch more information other countries. in a better presentation about products or services can be provided for consumers. Consumers-to-company T he consumer can be provided with search T hetwo-way communication environment facilities to locate items quickly . T his is espeturns traditional principles of mass-media ciallyuseful for producing catalogues with advertising assuming a passive and captive 18 8
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Internet Research: Electronic Netw orking A pplications and Policy
G. Reza Kiani
Volume 8 · Number 2 · 1998 · 185–194
consumer. Consumers can actively choose whether to approach firms through their Web sites (Benjamin and Wigand, 1995; Blattberg et al. , 1994; H offman and N ovak, 1996; K ierzkowski et a l. , 1996). According to Blattberg et al. (1994), the customer is now an active participant, and a partner in the production. T herefore, motivation of consumers to response and interact is a key point of virtual marketing in such a marketing environment. According to Benjamin and Wigand (1995, p. 62), “C onsumers’ full access to the market will also be an issue that policy makers need to explore”. In other words, “in an interactive, two-way, addressable world, it is the consumer – and not the marketer – who decides with whom to interact, what to interact about, and how to interact at all. M arketers haveto earn the right to the digital relationship, and they haveto do so by continuously enhancing the value they offer consumers” (K ierzkowski et a l. , 1996, p. 20). M arketing today has learned that the probability of purchase by a repeat buyer is much greater than that by a randomly mailed household who has never been a customer. Once an individual or firm becomes a customer, the marketer begins to collect information to manage the relationship. For example, identifying the products already being bought and determining the customer’s response to a specific promotion. “Profiling” allows firms to learn more about the consumers’ interests and products or services desired (Blattberg et a l. , 1994). As such, the opportunity for customer interaction, asHoffman and Novak (1996) suggest, is unprecedented. T he opportunity can be utilised in numerous ways, for example: the design of new products; the development of product and marketing strategy; and the innovation of content. According to Blattberg et a l. (1994), for many firms participation of customers in the process of production is impossible, because the ability to identify the customer and tailor the product or service does not exist. C ompanies have to create the ability now if they want to have repeat buyers. To date, the customer repeats purchases due to the product or service offers good value, not because it meets his or her specific needs. To meet individualised user needsefficiently, Blattberg et al. (1994) argue that the firm must
be able to create modular products or services which allow the user to then participate in the development of the specific product using a menu of options. For instance, when purchasing a washing machine, consumers want numerous options: capacity, placement of door, style, colour and so on. T he company should be able to assemble these components quickly and at low cost so that the customer can have the product or service desired at a reasonable price. In this respect, Blattberg and Deighton (1991) suggest that production skills of firms are needed to tailor product to specific customers. As the product or service becomes customised, the consumer faces serious problems to identify the product or service s/he desires. To deal with this difficulty Blattberg et al. (1994) suggest that it will be necessary for the firm to develop integrative informationprocessing systems to simplify the consumer’s decision process. T he system should allow the customer to enter specific desired characteristics and trade-offs and then design the product. If the product costs too much, the consumer can look at the related options to reduce it. I n this respect, questioning the consumer must be done in simple terms and the expert system must convert the information into a product (e.g. insurance policy) desired for the consumer. Consumers-to-consumers According to K ierzkowski et al. (1996), many consumer marketers approach interactive media in the same way that they might approach traditional media involving one-way communication from the marketer to the consumer, while interactive media allows marketers to establish a dialogueand benefit from many possibilities which this media can provide. Although almost all pre-eminent marketing authors (e.g. Blattberg and Deigton, 1991; K ierzkowski et a l. , 1996; M cK enna, 1995) believe that in the new marketing approach, the customer is seen as an individual market not as part of a segment from many authors’ view points we can see a new form of segmentation in the market. T his is not to say that the new marketing paradigm hasnot focused on individual customers, but it is to say that the segmentation approach is not perishing at all. What is happening is a replacement with a new form of segmentation. Armstrong and Hagel (1996) suggest
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Volume 8 · Number 2 · 1998 · 185–194
that commercial success in the on-line market will belong to those firms that organiseelectronic communitiesto meet multiple social and commercial needs. According to K ierzkowski et al. (1996, p. 17), “T he more consumers invest time and develop familiarity in interacting with others, the less likely they are to start building these virtual relationships again elsewhere. T his explains the growing emphasis among digital marketing application developers on communities of interest”. Armstrong and Hagel (1996) categorised the various types of electronic communities into four distinct categories: communities of transaction facilitate buying and selling of services and products and deliver the relevant information (e.g. car caring); communities of interest bring together participants who interact with one another on specific topics (e.g. gardening); communities of fantasy where they create new environments, personalities, or stories; and communities of relationship around certain life experiences that often are very intense and can lead to the information of deep personal connections (e.g. cancer forums). Usually marketers focus narrowly on consumers’ needs within the parameters of their product category; at best, a marketer may analysea few related categories. But what should be done is to analyse the business of companies in unrelated industries that are targeting the same customers. T heconcept of interactivitycan be clarified better by the notion of the on-line communities. Armstrong and Hagel (1996) noted the examples showing the interactivity of consumers in on-line communities. I n an Internet-based community for parents, for instance, parents can turn to the community for advice on such matters aswhether an infant should be put on a schedule for meals and sleep. T his “Parents’ place”, which is linked with someother relevant and exciting sites, also has a shopping mall equipped with catalogues, stores, and services such as on-line diaper ordering. Price and selection being equal, it is more likely that parents will shop at “Parents’ place” than at a competing site that allows only for transactions. However, in marketing, electronic communities will slowly emerge as a dominant paradigm in the near future. I n this respect, one that is well routed in physical shopping is thenotion of clubs. People come together in clubs to purchase
items where the transaction costs make individual purchase prohibitive (e.g. some stocks and bonds), or to learn more about products and have options to purchase unusual or attractively priced selections (e.g. car or antique clubs). Such clubs can naturally find a homeon the Web. M anufacturers could develop such clubs as a way of getting closer to consumers, or sponsor existing clubs (Armstrong and Hagel, 1996). Company-to-company T herule of the game in the interactive media is changed and it is expected more co-operation will takeplace among companies in the future. T henew environment will bring some forms of interdependency among companies which can be matched better with virtual circumstances. According to K ierzkowski et al. (1996), the most significant challengefor digital marketers will be to manage the interdependencies between their digital marketing efforts and the rest of the organisation and existing outside partners, such asdistributors and retailers. In such this complex environment a key success factor in corporations is having the set of core competencies needed for excellence. T hat set of competencies is often too much for one firm, therefore companies need partners. T heWWW facilitates partnering. In such circumstances, a small company can be part of a group that gives it access to more customers or new markets. T he company appears to have larger size or greater capability and hence be more likely to gain a sale (M artin, 1996). At the present time the main purposeof companies in communicating on the Web is to increasetraffic to their sites. T hereare three different ways to make traffic in a Web site: link “from” other sites; link “to” other sites: and going under one roof. L ink “ from” other sit es
Businesses in physical shopping malls benefit from the traffic flow of multitudes window shopping. T he same can be true on-line. To be most effective, a Web site should be used in conjunction with several activeforms of marketing which it will be examined briefly below: • To advertisethe web site to Web search engines that index the Web, such as Yahoo[4], L ycos[5], Altavista[6], and Info Seek[7]. T here are some services providing a
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Marketing opportunities in the digital world
Internet Research: Electronic Netw orking A pplications and Policy
G. Reza Kiani
Volume 8 · Number 2 · 1998 · 185–194
way to submit information to many of the indexes (e.g. “Submit it”[8] provides the service to submit information to about 15 of the most important indexes). • To advertise to theindustry-wide linking Web pages and any industry-related pages. For example, the members’ lists of the trade association. Several on-line craft centres, for example, offer free links to other crafters, such as “Virtual T radeShow”[9]. • To becomeactive in the many Internet news groups and mailing lists; the groups that are most likely to be frequented by the potential customers groups. L ink “ to” other sit es
How to advert ise in the “market space”: the rules of the gam e One of the earliest and still most commercial activities on theInternet is advertising. U ntil the early 1990s, applications on the Internet were essentially non-graphical, and all Internet-based marketing activities were performed by sending plain text messageson the Internet. T he birth of the WWW in 1993 offers opportunities which were unimaginable during the text-based era of the Internet. T he WWW allows hypertext navigation (so-called point-and-click) as well as graphical displays. M arketing activities on the Internet are no longer limited to plain text messages (Poon and J evons, 1997). Despite all the exciting marketing potential offered by the Web, according to K ierzkowski et al. (1996), many marketers approach interactive media in the same way they might approach traditional media like television, magazines, or even direct marketing channels. T here are fundamental differences between these two media. T he traditional media involves one-way communication from the marketer to customers, which is highly unfocused, while interactivemedia allows marketers to establish a dialogue with individual consumers. T hus, marketersmust carefully consider the ways in which advertising and communication models can be adapted and reconstructed for the interactivemedium (H offman and Novak, 1996).
Unlike direct and traditional massmarketing, digital marketing requires consumers to voluntarily visit a WWW site. H ence, marketers in this environment need actively to attract users. According to K ierzkowski et al . (1996), linking to other sitestypically is one of the ways to make the site more interesting and to attract more potential consumers. It can bedone by linking to sites giving more relevant information to the products or services like the type of information or news which may be of consumers’ interest such as “What is New”, weather reports, T V programs, or entertainments services like “What’s Cool”. A number of well-financed corporate Web sites offer an entertaining fare which changes constantly. While most small businessWeb marketers cannot afford to compete; they havethe Models for advertising on the Web chance to provide up-to-dateinformation about T heabilities of the new marketing medium the industry, and keep their sites fresh by linking implies the necessity of new models for marketing in the new environment. T he new marketing to some other sites (K ierzkowski et al . , 1996). models should consider all opportunities which G oing under one roof the interactive media can provide for marketers T he emergence of virtual malls and bazaars can and be well-matched with the new marketing be seen as an opportunity for companiesto be paradigms. Some authors responded this necesgathered virtually under one roof to benefit sity and provided new conceptual frameworks from the traffic flow of mall and bazaar visitors for marketing communication on the Web (e.g. (H offman et a l. , 1995; O’K eefe, 1995). Berthon et al. , 1996a; 1996b; K ierzkowski et al. , M alls and bazaars take the business that fits 1996; Pitt et al . , 1996). their particular policy. Some admit particular K ierzkowski et al . (1996) present a model industriesand somehavea wider policy to around five recommendations which they admit businesses. T he “I nternet M all”[10], as believe are essential factors for success in digital an example, has located about 3,000 businesses marketing. T hese are: under one roof. (1) A ttr act users . T he policy of “build it and T hereis no published report to prove signifithey will come” might work in the marketcantly the effects of the above methods in effiplace but it does not in the marketspace. ciency of a site to date. T he consumers should be attracted to the 19 1
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Internet Research: Electronic Netw orking A pplications and Policy
G. Reza Kiani
Volume 8 · Number 2 · 1998 · 185–194
site. T his needs someconsiderations such Berthon et al. (1996a; 1996b) developed a new as having a mnemonic “address” for the concept, named “C onversion efficiency”, to site, and linking from other sites. assess the efficiency of a commercial site. T he (2) Engage users’ interest and par ti cipation . concept is based on an implicit model which Having attracted users, marketers should recommends some considerations necessary for engage users’ interest and participation to commercial advertising on the Web. T he model achieve an interaction or a transaction. T his presents five sequential stages/phases suggesting can happen by providing customers with the flow of surfer activity on a Web site. T hese convenience-oriented content, communities stagesare: awareness, attraction, visit/contact, of interest, links to other sites, and so on. purchase and re-purchase (Figure 4). (3) Retain users and ensure they return to an appli - cation. Once the consumers have been drawn Discussion to the site and they have been engaged with suitably interactive and valued content, the T headvertising objective is to say the right marketer must make sure that they keep things to the right people and have them perreturning to the site. T his can take place by ceive what is said. T hree main dimensions are keeping the site “fresh” through continuously renewing content and/or providing content involved in this definition, ascan be seen in Figure 5. T hese are: message, the meaning that that is inherently changeable on an ongoing the advertiser intends to transmit to the audibasis, such as weather reports. (4) L ear n about their pr eferences. T his is the stage ences; format, those advertising attributes that attract the consumer’s attention; and context, or at which marketers should learn about media which givessomespecific opportunities consumer demographics, attitudes, and to advertisers in attracting the audiences and behaviours. D emographic and attitudinal information may come in the form of e-mail transmitting the message to them (F igure 5).An communications to marketers, opinions advertisement, in order to be successful, needs volunteered on bulletin boards or informato be considered strongly in all dimensions. In tion gathered in surveys, questionnaires, or other words, the message should be supported registration processes. Behavioural inforby an appropriate format and a right useof mation can be gathered from transaction opportunities offered by themedium (Figure 6). records or “click-stream” which track how Every medium has its own ability and needs users behave in a site. its own requirements. T he literature strongly (5) Relate back to them t o provi de the sort of cus- supports the view that the rules of the game in tomi sed int eracti ons. T his represents the virtual marketing are quite different from those opportunity to customisethe interaction of the traditional mass communication systems and tailor either the product or the market(K iani, 1997). Despite that, many advertisers ing effort to one consumer at a time. As a still approach the Web based on the traditional two-way and addressable communication mass communication model (the pattern shown channel, interactive media provides an unprecedented opportunity for marketers to in Figure7). Considering the opportunities provided by “relate” to a consumer. T his may takeplace by gathering the necessary information from the Web, marketers should use them rightly to an individual consumer and delivering either achievetheir objective. T hus, understanding and supporting each objective is an essential requirea personalised service or product, or a comment for advertising on the WWW. Some exammunication about the availability of such a personalised service or product. ples, in this respect, are provided in Table I. Figure 4 Five-phase model of m arketing on t he Web Aw areness
Attraction
Visit/contact
Source: adapted from Berthon et al. (1996a and 1996b)
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Purchase
Re-purchase
Marketing opportunities in the digital world
Internet Research: Electronic Netw orking A pplications and Policy
G. Reza Kiani
Volume 8 · Number 2 · 1998 · 185–194
Table I M arketing objectives on the Web and examples of supportive features
Figure 5 Three main dimensions of advertising
O bje ct iv es
Context
Exa m ple s o f su pp or tiv e fe at ure s
Awareness
Format
Message
Figure 6 The pattern of successful advertising Context
Format
Message
Figure 7 Traditional approach of advertising in a new medium Context
Format
Message
Summa ry a nd conclusions Never before has it been so easy to access information on a worldwide basis, and never before have so many people been exposed to and used a single information-sharing system. T he increasing popularity of the Web has generated significant interest in the development of electronic commerce. T his new marketing environment can be viewed from four different anglesto undergo the opportunities provided for marketers. T heseare: company-to-consumer, consumer-to-company, consumer-to-consumer and company-to-company. T he opportunities offered by the Web in each communication situation were discussed.
Anno uncement : throu gh lett erheads, business cards, brochures, packages, new spapers, m agazines and TV M nemon ic-ness of address: its similarit y to the company name Attraction Hyperlinks from other sites: search engi nes addressing the site, searchable in dexes addressing t he site and hotlinks from ot her sites Content length of document: the high er content (texts, images, backgrounds, animat ions, frames, sounds and video) the less speed to be dow nloaded by visitors Bandwidth of the connection speed Visit/engage Information: about products and company Facilit ies: Java, search engin es, sound, vid eo and animation Purchase Order facilities: ordering form , mail, fax, call phon e and e-mail Payment facilities: cash/cheque, credit card and direct account Delivery/booking facilit ies: mail, fax, call phone and e-mail Re-purchase Freshness: communities/clubs/user-to-user communication, “ What’s New ” and “ FAQs” (frequently asked questions) Hyperlink to ot her sites Custom isation: collecting user’s inform ation , demographic information, customer needs, optional menu and diag nostic requiring user input
T he objective of marketersin establishing a Web site differs from one organisation to another. Some marketers might want their Web site to make the audienceaware of or interested in, their products or brands while some others might wish to sell and resell their product through the Web sites(Pitt, 1996). H ence, it is vital that business leaders and marketers understand the potentials of the virtual market and the opportunities offered by this new environment and use them effectively to support their objective.
Notes
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1 Undertaking several researches in Internet m arketing the Project 2000 Group m akes a particularly importan t contributio n to the literatu re in the area. The Project’s homepage is hosted at t he URL: [http://ww w 2000. ogsm.vanderbilt.edu] 2 ” BMG’s Classical M usic’ is hosted on the Web at the URL: [http://classicalmus.com]
Marketing opportunities in the digital world
Internet Research: Electronic Netw orking A pplications and Policy
G. Reza Kiani
Volume 8 · Number 2 · 1998 · 185–194
3 “Amazon Bookstore” is hosted on the Web at the URL: [http://www.amazon.com]
Hamill, J. and Gregory, K. (1997), “ Internet m arketing in th e internation alisation of UK SM Es” , Journal of Marketing Research , No. 13, pp. 9-28.
4 Yahoo is available at the URL: [http://ww w.yahoo.com]
Hamm ond, K., Pluim, D. and Eynde, K.V. (1995), “ Interactive mass media a review of evidence and expert opinion from the USA and UK” , working paper No. 95-801, Centre for M arketing, London Business School, November, p. 28.
5 Lycos is available at the URL: [http://ww w.lycos.com] 6 Altavista is available at the URL: [http://ww w.altavista. com] 7 InfoSeek is available at the URL: [http://ww w.infoseek. com] 8 “ Submit it” provides the service to submit information to about 15 of t he most impo rtant ind exes. It is hosted on the Web at t he URL: [http://ww w.submitit.com] 9 “ Virtual Trade Show” is hosted on the Web at the URL: [http://www.vts.com]
Harrington, D. and Reed, G. (1996), “ Electronic comm erce (finally) comes of age” , The M cKinsey Quarterly , No. 2, pp. 68-77. Hoffm an, D.L., and No vak, T.P. (1996), “ M arketing in h ypermedia comput er-mediated environm ents: conceptual foundations” , Journal of Marketing , July, pp. 50-68 . Hoff ma n, D.L., Novak , T.P. and Chat terjee, P. (1995), “ Commercial scenarios for the Web: oppo rtunit ies and challenges” , Journal of Computer-Mediated Communi- cation , Special Issue on Electronic Com merce, Vol. 1, December, is hosted on the Web at t he URL: [htt p:// shum.huji.ac.il/jcmc/voll/issues3/vollno3.html]
10 The “ Internet M all” is hosted on the Web at the URL: [http://www.iw.com/imall]
References and further reading Arm strong, A. and Hagel, J. III (1996), “ The real value of online communities” , Harvard Business Review , MayJune, pp. 134-41.
Kiani, G.R. (1997), “ New g ame, new rules: w ill traditional mentality work in the m arketspace?” , Management Research News , forth coming issue.
Benjamin, R. and Wigand, R. (1995), “ Electronic markets and virtual value chains on t he information superhighway” , Sloan M anagement Review , Wint er, pp. 62-72.
Kierzkow ski, A., M cQuade, S., Waitm an, R. and Zeisser, M . (1996), “ M arketing to the digital consumer” , The M cKinsey Quarterly , No. 3, pp. 5-21.
Berthon, P., Pitt, L. and Wat son, R.T. (1996a), “ M arketing communication and the World Wide Web” , Business Horizons , September/October, pp. 24-31.
M cKenna, R. (1995), “ Real-time m arketing” , Harvard Business Review , July-August, pp. 87-95 . M artin, J. (1996), Cybercorp: The New Business Revolution , Amacom, American M anagement Association.
Bertho n, P., Pitt, L. and Wat son, R.T. (1996 b), “ The Worl d Wide Web as an advertising medium: to ward an understanding of conversion efficiency” , Journal of Advertising Research , January/ February, pp. 43-5 4.
M organ, R.F. (1996), “An Internet m arketing framew ork for World Wide Web (WWW)” , Journal of Marketing Management , Vol. 12, pp. 757-75.
Blattberg, R.C. and Deighton, J. (1991), “ Interactive marketing: exploiting the age of addressability” , Sloan Management Review , Fall, pp. 5-1 4.
O’Keefe, B. (199 5), M arketing and Retail on the World Wide Web: The New Gold Rush is hosted on the Web at th e URL: [http://www.rpi.edu/~okeefe/nikkei.html]
Blattberg, R.C. and Deighton, J. (1996), “ M anage marketing by the customer equity test” , Harvard Business Review , July-August, p p. 136-44.
Pine, B.J. (1992), M ass Custom isation , Harvard Business School Press, Boston, M A.
Blatt berg, R.C., Glazer, R. and Litt le, J.D.C. (1994), “ Intr oduct i on ” , The Marketing Information Revolution , Harvard Business School Press, Cambri dge, M A, p. 1. Cyber Atlas (1996), “ Demographics and market size” , is hosted on the Web at the URL: [htt p://w w w.cyberatlas.com] Ellswort h, J.H. and Ellswort h, M .V. (1997), M arketing on the Internet , Wiley, New York, N Y. Glazer, R. (1991), “ M arketing in an informat ion-intensive environment : strategic implications of know ledge as an asset” , Journal of Marketing , No. 55, pp. 1-19. Glazer, R. (1993), “ M easuring the value of inform ation: the information-intensive information” , IBM Systems Journal , No. 32, pp. 99-110. Hagel, J. III and Lansing, W.J. (1994), “ Who ow ns the customer?” , The M cKinsey Quarterly , No. 4, pp. 63-75. Hagel, J. III and Rayport, J.F. (1997), “ The comi ng bat tle fo r customer information” , Harvard Business Review , Januar y-February, pp. 53-6 5.
Pitt, L., Bertho n, P. and Wat son, R.T. (1996), “ From surfer to buyer on the WWW: w hat m arketing managers might w a n t t o k no w ” , Journal of General M anagement , Vol. 22 No. 1, Autum n, pp. 1-13. Poon, S. and Jevons, C. (1997), “ Internet-enabled int ernational m arketing: a small business netw ork perspective” , Journal of M arketing M anagement , No. 13, pp. 29-41. Quelch, J.A. and Klein, L.R. (1996), “ The Internet and int ernational marketing” , Sloan M anagement Review , Spring , pp. 60-75. Rayport, J.F. and Sviokla, J.J. (1994 ), “ M anagi ng in t he marketspace” , Harvard Business Review , NovemberDecember, pp. 141-9. Rayport, J.F. and Sviokla, J.J. (1995), “ Exploiti ng t he virt ual value chain” , Harvard Business Review , NovemberDecember, pp. 75-85. Schwartz, E.I. (1997), Webeconomics , Broadw ay. Stewart, D.W. and Ward, S. (1993), M edia Effects on Advertis- in g , Lawren ce Erlbau m A ssociates, Hillsdale, NJ.
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M arket in ing g opportunit opportuni t ies in t he digital di gital w orld
G. Reza Reza K iani
The author G. Reza Kiani is Resear Research ch Associate at Henley M anagement College, Greenlands, Henley-on Thames, Oxfordshire, UK. E-mail: E-mail: [email protected] [email protected] Abstract With t he birth of the World W ide Web, the current decade has w itnessed itnessed tremendous evolution in the media environment, and indicates that electronic electronic comm erce, erce, defined as the electronic electronic exchange of inform ation, g oods, services services,, and payments, has finally come of age. Despite Despite the fast-grow ing popularity o f electronic commerce and presence presence of m any companies on the virtual market, the opport unities offered by this new environment are still unknow n. Man y marketers still approach the Web based on the tradit ional mass comm unication m odel. The The paper addresses addresses the opportun ities offered by the W eb to marketers. Its approach considers considers the Web as a tw o-way communication model in which four different comm unication states can take place. The The paper also suggests the necess necessity ity of n ew concepts and models for m arketers to m anage their Web sites, sites, and then presents the opportunities supportin supportin g the m arketers’ arketers’ objectives in the new environment.
Internet Research: Research: Electronic Electronic Netw orking Applications and Policy Policy Volume 8 · Number 2 · 1998 · pp. 185–194 © M CB Un iv ersi ty Press · ISSN 10 66 -2 24 3
T he greatest inv inventio ntion n of mankind ind is lan language; an invention in which all kinds of people people have have contribu contributed ted over a long long time timeand that enabl enable es them to communi communicate catetheir feelings ingsand thoughts. I f that that is the the case case, the second greatest test invention ntion is is comin coming g of age age; that is the InternaInternational communication network, whose last manifest festa ation is i s theWorld Wide Wi de We Web (WWW (W WW). ). L anguage guage gives human b beings eings the possib possibililit ity y of communication munication and the Web is is removing removing its its biggest physica physicall barr barrier, ier, that that is is distance distance. T his second second invention which is the result of thousands of inventions and discoveries is a continuous growing and developing phenomenon, as language is. M ore and more busi busines nesse ses are discovering ri ng the WWW WWW asa fundamental communica communicati tion on tool used used to conduct conduct daily dail y busin busines ess. Larg L arge e and small companies companiesare embracing mbracing the Web to communicate with curr curre ent and potential potential customers abroad through the Internet Internet with the same cost and ease as in their countries (e.g. T heProje Projec ct 2000 Group[ Group[1 1]; Arms Armstron trong g and H agel, 1996; 1996; C yber Atlas A tlas,, 1996; H agel and L ansing, 1994; 1994; Ham H amil illl and Greg Gregory, 1997; 1997; H offman and and N ovak ovak,, 1996; Ra R ayport and Sviokla Sviokla, 1994; 1995; 1995; Que Q uelch lch and K lein, 1996; Schwartz, 1997). Businesses can create and transmit advertisements on the Web that can be accessed by anybody with a computer equipped with appropria appropri ate software. software. Such Such a conveni convenience ence and marketing marketing efficiency efficiency, both for the adverti advertise ser and the potential potential customer, customer, is making the Web popular popul ar for marketing practices all over the world. According to Rayport and Sviokla (1995), “E very busines business s today competes competes in two worlds: worlds: a physical physical world world of resources resources that that managers can see and touch and a virtual world made made of infor informa mati tion. on. T he latter has has given given rise to the world of electronic lectroni c commerce.” rce.” T he Interne rnet and the the Web, the the fas fastest grow rowing ing and and most most innova i nnovati tive vecomponents of that that particul particularly, arly, have have some some unique and powerful characteristics that make them central to a paradigm shift in marketing (e.g. Armstrong and Hag H agel, 1996; Blattberg Blattberg et al. G lazer, a l. , 1994; Glaze 1991; 1993; 1993; H offman offman and Nov N ova ak, 1996; K ierzkow ierzkows ski et a l. , 1996; 1996; M artin, 1996; 1996; Pine Pi ne,, 1992; Rayport and Sviokla, 1995; Schwartz, 1997). T he shif shiftt from from “one-way” “one-way” to “two-wa “two-way” y” infor informa mati tion on flows between producers and
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consumers (Blattberg et a l. , 1994), from the conventional “One-to-M any” communication model to the “M any-to-M any” model (Hoffman and Novak, 1996), from “supply-side” to “demand-side” thinking (Rayport and Sviokla, 1995), and the shift to the “fifth phase” of marketing evaluation, characterised by “differentiated products in decentralised markets” (Blattberg et al. , 1994). Figure 1 showsthis paradigm shift in different aspects.
A model to approach the ma rketing opportunities T he appearance of the new marketingenvironment is aligned with the evolutionary progress of the marketing functions from a mass-market model, One-to-M any using the word of Hoffman and Novak (1996), to more interactive individualisation of goods, services and interactions. According to Blattberg et al. (1994, p. 27), in the new environment, marketers are able to consider consumers individually, customise their servicesand products, and “establish dialogues with consumers” rather than talk “at” them. T his is dueto the unique and powerful characteristics of the WWW.
Figure 1 The new m arketing paradigm shift in diff erent directions: from marketplace to m arketspace From One-To-M any communication model Mass marketing M onologue Branding Supply-side thinking M egabrand
To
Sources
Many-To-Many communication model
Hoffman, and Novak (1996)
Individualised marketing
M artin (1996)
Dialogue
Blattberg and Deighton (1996)
Com m unication
M artin (1996)
Demand-side thinking
Rayport and Sviokla (1995)
Diversity
M artin (1996)
Cent ralis ed m arket
Dec ent ralis ed m arket
Blattberg, et al. (1994)
Customer as a target
Customer as a partner
M cKenna (1995)
Segm entations
Com munities
Armst rong and Hagel III (1996)
T heopportunities which the Web, as a two-way communication channel, provides can be discussed in four logical situations: company-toconsumer; consumer-to-company; consumerto-consumer; company-to-company. Figure 2 illustrates the logical pattern of the communications among companies and consumers through the WWW. In an interactivemedia, a marketing activity can employ one or a combination of the above communication patterns. T he important point here is that what causes the powerful opportunity in an interactivemedium, relativeto one-way medium, is the ability to provide a mutual communication. Given this, the above categorisation attempts to clarify all possible communication patterns. I follow this categorisation to see how marketing can benefit from the new opportunities provided by the WWW, from these four angles. F igure 3 illustrates the logic of these communication patterns by emphasising the mutuality behind them.
M arketing opportunities on the Web Company-to-consumers T his side of the communication on the Web viewsthe content delivery. According to M organ (1996), marketers can use interactive media to provide higher services and lower cost by delivering up-dated product- and non-product-related information. Comparing the WWW with traditional marketing communication channels, according to Ellsworth and Ellsworth (1997), the Web is a faster, less expensive, highly immediate communication, round the
Figure 2 Various possible solutions in a tw o-w ay communication m edium
Consumers
Company
Source: the author
Source: Kiani (1997)
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Consumers
Company
Consumers To Consumers
Company To Consumers
Consumers To Company
Company To Company
Marketing opportunities in the digital world
Internet Research: Electronic Netw orking A pplications and Policy
G. Reza Kiani
Volume 8 · Number 2 · 1998 · 185–194
Figure 3 Illustration of different comm unication patt erns in interactive environment
Company
Consumers
Consumers
Other companies
Source: the author
clock and global. It offers wider and deeper material and richer advertisement content. To deliver an advertising content to consumers, the Web can do the things that the traditional mass media advertising cannot. T he basic advantages to businesses using the Web are described within the following sections. A ddressabilit y Hammond et al. (1995) suggest that “One of the
benefits of I nternet advertising is that each time a user connects to a Web site, the site provider has arecord of the user’s electronic address, so companies can build lists of early adopters who ‘browse’ theInternet”. T he Web is able to contact the customer uniquely in time and space. T henew interactive communication system, “the fifth medium” (newspapers, magazines, radio, and television are the other four), has one important advantagewhich is “memory”. According to Stewart and Ward (1993), what an individual hasacquired, in terms of information, products or services, can becaptured for future use by the marketer. Blattberg and Deighton (1991) argue that addressable marketing is not new; the mail and telephone have been also the addressable tools in marketing for many years. What is new is low-cost and high-speed electronic management of the dialogue. T he cost of holding a consumer’s name, address, and purchase
history on-line has fallen by a factor of 1,000 since 1970 and is continuing to fall at this rate. Electronic marketers can do what a salesforce can with much more flexibility and better memory. According to Blattberg and Deighton (1991), addressability of the Web providesthe opportunity for marketing to create individual relationships, managing markets of one, and addressing each in terms of its stageof development. In essence, it represents the opportunity to customise and tailor either the product or the marketing effort to one consumer at a time. On seeing an advertisement, a consumer would be able to press an icon to request more information or to order the product or service. T herefore, marketers could monitor all such activities to assess which kinds of advertising, in which kinds of venues, work best with which kinds of subscribers (Hagel and L ansing, 1994). According to K ierzkowski et al. (1996), addressable communication gives the marketer two important opportunities, which are to: learn about an individual consumer in the course of continued interaction; and deliver either a personalised service or product, or a communication about the availability of such a personalised service or product. T hey point out one of the on-line publications, as an example, which delivers a personalised on-line newspaper compiled on the basis of a user’s specified interests, “published for a circulation of one”. Blattberg and D eighton (1991) identify the fundamental impacts of this strong ability of the Web on the marketing rules: • A databaseof transaction histories will be the primary marketing resource of many firms, determining what kind of product they can deliver and what market they can serve. F ar more directly than the traditional media, customers will shape the firms that serve them. • M arketing will bemore accountable. T he unit of measure will be the lifetime value of each customer to the firm. M arketing efficiency will be measured by changes in the asset value of the firm’s customer base over time. • Distributors’ steady erosion of manufacturer power will slow and may even reverse, as manufacturers take back functions from
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other channel members and use electronic data systems to administer them. • Niches too small to be served profitably today will become viable as marketing efficiency improves. Communications will reach small or diffusetargets with increasing precision, and feedback on marketing actions will become more accurate. • T he discipline of marketing will begin to feel more like engineering. M arketing managers will need to learn statistical modelling of dynamic systems if they are to interpret market responses to interactive marketing initiatives.
thousands of items, such as compact discs or books. T he cataloguecan also beassociated with relevant free information and services for the consumer who visits the page. For example: “BM G’s Classical M usic”[2] differentiates itself from other compact disc catalogues by providing considerable information on composers, instruments and periods. A user can search information, say about M ozart symphonies, and then be offered a selection of available discs” (O’K eefe, 1995). Another good example in this respect is Amazon Bookstore[3] offering a lot of relevant and interesting information such as: best-sellers, award winners, titles in the news, and comments of various sources on the book which customers are probably interested.
Flexibility
As many authors (e.g. H agel and L ansing, 1994; O’K eefe, 1995) noted, the Web, for marketing, is A ccessibi li ty much more flexible than the traditional mass T heWWW provides the opportunityfor commedia. A Web pagecan be considered as an panies to increasetheir hours of business on a electronic billboard, electronic advertisement, or global spectrum. Instead of a typical eight-hour electronic catalogue that provides information on day, businesses have increased their opportuniproducts or services plus contact information for ties by providing 24-hour access for branch interested consumers. But a virtual advertiseoffices, business contacts, and shoppers – access ment or catalogue is much flexible than a physical that is important in conducting business across advertisement or catalogue. It can gather fresh different time zones or internationally. Expandand updated information based on the direct ing access indeed increases the number and feed-back received from consumers. A virtual coverage of potential customers. catalogue can be gradually developed and organCompared with the traditional media, access ised based on the actual interest of consumers. opportunities on the Web are equal for all playSome advantages of virtual catalogues compared ers, regardless of size. It is especially beneficial to to their physical counterparts are: a company can smaller companies which want to expand their immediately add new items to a catalogue, withbusinesses globally, but do not have the capital out waiting for the next catalogue printing; items and resources to do so. According to Rayport which sell out but cannot be replenished can be and Svikla (1995), the virtual value chain reremoved immediately – this is especially useful defines economies of scale, allowing small firms for items whose supply is naturally limited, such to achieve low unit costs for products and seras antiques or rare automobile parts; catalogues vices in markets dominated by largecompanies. can be customised for specific customers and T he Web access delivers a company with an locations; paper catalogues are expensive to opportunity to implement highly cost-effective change, while electronic catalogues are not; and vehicles, not only for their own marketing and massdistribution of large paper cataloguesis customer support needs, but also for positionexpensive, while electronic catalogues can be ing themselves globally. M oreover, the Web distributed globally with almost no charge. helps ease doing businessoverseas by avoiding T hecataloguecan belinked to inventory regulations and restrictions that companies data, so that the user can see if an item is immemust follow when they arephysically present in diately available or not. M uch more information other countries. in a better presentation about products or services can be provided for consumers. Consumers-to-company T he consumer can be provided with search T hetwo-way communication environment facilities to locate items quickly . T his is espeturns traditional principles of mass-media ciallyuseful for producing catalogues with advertising assuming a passive and captive 18 8
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Volume 8 · Number 2 · 1998 · 185–194
consumer. Consumers can actively choose whether to approach firms through their Web sites (Benjamin and Wigand, 1995; Blattberg et al. , 1994; H offman and N ovak, 1996; K ierzkowski et a l. , 1996). According to Blattberg et al. (1994), the customer is now an active participant, and a partner in the production. T herefore, motivation of consumers to response and interact is a key point of virtual marketing in such a marketing environment. According to Benjamin and Wigand (1995, p. 62), “C onsumers’ full access to the market will also be an issue that policy makers need to explore”. In other words, “in an interactive, two-way, addressable world, it is the consumer – and not the marketer – who decides with whom to interact, what to interact about, and how to interact at all. M arketers haveto earn the right to the digital relationship, and they haveto do so by continuously enhancing the value they offer consumers” (K ierzkowski et a l. , 1996, p. 20). M arketing today has learned that the probability of purchase by a repeat buyer is much greater than that by a randomly mailed household who has never been a customer. Once an individual or firm becomes a customer, the marketer begins to collect information to manage the relationship. For example, identifying the products already being bought and determining the customer’s response to a specific promotion. “Profiling” allows firms to learn more about the consumers’ interests and products or services desired (Blattberg et a l. , 1994). As such, the opportunity for customer interaction, asHoffman and Novak (1996) suggest, is unprecedented. T he opportunity can be utilised in numerous ways, for example: the design of new products; the development of product and marketing strategy; and the innovation of content. According to Blattberg et a l. (1994), for many firms participation of customers in the process of production is impossible, because the ability to identify the customer and tailor the product or service does not exist. C ompanies have to create the ability now if they want to have repeat buyers. To date, the customer repeats purchases due to the product or service offers good value, not because it meets his or her specific needs. To meet individualised user needsefficiently, Blattberg et al. (1994) argue that the firm must
be able to create modular products or services which allow the user to then participate in the development of the specific product using a menu of options. For instance, when purchasing a washing machine, consumers want numerous options: capacity, placement of door, style, colour and so on. T he company should be able to assemble these components quickly and at low cost so that the customer can have the product or service desired at a reasonable price. In this respect, Blattberg and Deighton (1991) suggest that production skills of firms are needed to tailor product to specific customers. As the product or service becomes customised, the consumer faces serious problems to identify the product or service s/he desires. To deal with this difficulty Blattberg et al. (1994) suggest that it will be necessary for the firm to develop integrative informationprocessing systems to simplify the consumer’s decision process. T he system should allow the customer to enter specific desired characteristics and trade-offs and then design the product. If the product costs too much, the consumer can look at the related options to reduce it. I n this respect, questioning the consumer must be done in simple terms and the expert system must convert the information into a product (e.g. insurance policy) desired for the consumer. Consumers-to-consumers According to K ierzkowski et al. (1996), many consumer marketers approach interactive media in the same way that they might approach traditional media involving one-way communication from the marketer to the consumer, while interactive media allows marketers to establish a dialogueand benefit from many possibilities which this media can provide. Although almost all pre-eminent marketing authors (e.g. Blattberg and Deigton, 1991; K ierzkowski et a l. , 1996; M cK enna, 1995) believe that in the new marketing approach, the customer is seen as an individual market not as part of a segment from many authors’ view points we can see a new form of segmentation in the market. T his is not to say that the new marketing paradigm hasnot focused on individual customers, but it is to say that the segmentation approach is not perishing at all. What is happening is a replacement with a new form of segmentation. Armstrong and Hagel (1996) suggest
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that commercial success in the on-line market will belong to those firms that organiseelectronic communitiesto meet multiple social and commercial needs. According to K ierzkowski et al. (1996, p. 17), “T he more consumers invest time and develop familiarity in interacting with others, the less likely they are to start building these virtual relationships again elsewhere. T his explains the growing emphasis among digital marketing application developers on communities of interest”. Armstrong and Hagel (1996) categorised the various types of electronic communities into four distinct categories: communities of transaction facilitate buying and selling of services and products and deliver the relevant information (e.g. car caring); communities of interest bring together participants who interact with one another on specific topics (e.g. gardening); communities of fantasy where they create new environments, personalities, or stories; and communities of relationship around certain life experiences that often are very intense and can lead to the information of deep personal connections (e.g. cancer forums). Usually marketers focus narrowly on consumers’ needs within the parameters of their product category; at best, a marketer may analysea few related categories. But what should be done is to analyse the business of companies in unrelated industries that are targeting the same customers. T heconcept of interactivitycan be clarified better by the notion of the on-line communities. Armstrong and Hagel (1996) noted the examples showing the interactivity of consumers in on-line communities. I n an Internet-based community for parents, for instance, parents can turn to the community for advice on such matters aswhether an infant should be put on a schedule for meals and sleep. T his “Parents’ place”, which is linked with someother relevant and exciting sites, also has a shopping mall equipped with catalogues, stores, and services such as on-line diaper ordering. Price and selection being equal, it is more likely that parents will shop at “Parents’ place” than at a competing site that allows only for transactions. However, in marketing, electronic communities will slowly emerge as a dominant paradigm in the near future. I n this respect, one that is well routed in physical shopping is thenotion of clubs. People come together in clubs to purchase
items where the transaction costs make individual purchase prohibitive (e.g. some stocks and bonds), or to learn more about products and have options to purchase unusual or attractively priced selections (e.g. car or antique clubs). Such clubs can naturally find a homeon the Web. M anufacturers could develop such clubs as a way of getting closer to consumers, or sponsor existing clubs (Armstrong and Hagel, 1996). Company-to-company T herule of the game in the interactive media is changed and it is expected more co-operation will takeplace among companies in the future. T henew environment will bring some forms of interdependency among companies which can be matched better with virtual circumstances. According to K ierzkowski et al. (1996), the most significant challengefor digital marketers will be to manage the interdependencies between their digital marketing efforts and the rest of the organisation and existing outside partners, such asdistributors and retailers. In such this complex environment a key success factor in corporations is having the set of core competencies needed for excellence. T hat set of competencies is often too much for one firm, therefore companies need partners. T heWWW facilitates partnering. In such circumstances, a small company can be part of a group that gives it access to more customers or new markets. T he company appears to have larger size or greater capability and hence be more likely to gain a sale (M artin, 1996). At the present time the main purposeof companies in communicating on the Web is to increasetraffic to their sites. T hereare three different ways to make traffic in a Web site: link “from” other sites; link “to” other sites: and going under one roof. L ink “ from” other sit es
Businesses in physical shopping malls benefit from the traffic flow of multitudes window shopping. T he same can be true on-line. To be most effective, a Web site should be used in conjunction with several activeforms of marketing which it will be examined briefly below: • To advertisethe web site to Web search engines that index the Web, such as Yahoo[4], L ycos[5], Altavista[6], and Info Seek[7]. T here are some services providing a
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Volume 8 · Number 2 · 1998 · 185–194
way to submit information to many of the indexes (e.g. “Submit it”[8] provides the service to submit information to about 15 of the most important indexes). • To advertise to theindustry-wide linking Web pages and any industry-related pages. For example, the members’ lists of the trade association. Several on-line craft centres, for example, offer free links to other crafters, such as “Virtual T radeShow”[9]. • To becomeactive in the many Internet news groups and mailing lists; the groups that are most likely to be frequented by the potential customers groups. L ink “ to” other sit es
How to advert ise in the “market space”: the rules of the gam e One of the earliest and still most commercial activities on theInternet is advertising. U ntil the early 1990s, applications on the Internet were essentially non-graphical, and all Internet-based marketing activities were performed by sending plain text messageson the Internet. T he birth of the WWW in 1993 offers opportunities which were unimaginable during the text-based era of the Internet. T he WWW allows hypertext navigation (so-called point-and-click) as well as graphical displays. M arketing activities on the Internet are no longer limited to plain text messages (Poon and J evons, 1997). Despite all the exciting marketing potential offered by the Web, according to K ierzkowski et al. (1996), many marketers approach interactive media in the same way they might approach traditional media like television, magazines, or even direct marketing channels. T here are fundamental differences between these two media. T he traditional media involves one-way communication from the marketer to customers, which is highly unfocused, while interactivemedia allows marketers to establish a dialogue with individual consumers. T hus, marketersmust carefully consider the ways in which advertising and communication models can be adapted and reconstructed for the interactivemedium (H offman and Novak, 1996).
Unlike direct and traditional massmarketing, digital marketing requires consumers to voluntarily visit a WWW site. H ence, marketers in this environment need actively to attract users. According to K ierzkowski et al . (1996), linking to other sitestypically is one of the ways to make the site more interesting and to attract more potential consumers. It can bedone by linking to sites giving more relevant information to the products or services like the type of information or news which may be of consumers’ interest such as “What is New”, weather reports, T V programs, or entertainments services like “What’s Cool”. A number of well-financed corporate Web sites offer an entertaining fare which changes constantly. While most small businessWeb marketers cannot afford to compete; they havethe Models for advertising on the Web chance to provide up-to-dateinformation about T heabilities of the new marketing medium the industry, and keep their sites fresh by linking implies the necessity of new models for marketing in the new environment. T he new marketing to some other sites (K ierzkowski et al . , 1996). models should consider all opportunities which G oing under one roof the interactive media can provide for marketers T he emergence of virtual malls and bazaars can and be well-matched with the new marketing be seen as an opportunity for companiesto be paradigms. Some authors responded this necesgathered virtually under one roof to benefit sity and provided new conceptual frameworks from the traffic flow of mall and bazaar visitors for marketing communication on the Web (e.g. (H offman et a l. , 1995; O’K eefe, 1995). Berthon et al. , 1996a; 1996b; K ierzkowski et al. , M alls and bazaars take the business that fits 1996; Pitt et al . , 1996). their particular policy. Some admit particular K ierzkowski et al . (1996) present a model industriesand somehavea wider policy to around five recommendations which they admit businesses. T he “I nternet M all”[10], as believe are essential factors for success in digital an example, has located about 3,000 businesses marketing. T hese are: under one roof. (1) A ttr act users . T he policy of “build it and T hereis no published report to prove signifithey will come” might work in the marketcantly the effects of the above methods in effiplace but it does not in the marketspace. ciency of a site to date. T he consumers should be attracted to the 19 1
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Volume 8 · Number 2 · 1998 · 185–194
site. T his needs someconsiderations such Berthon et al. (1996a; 1996b) developed a new as having a mnemonic “address” for the concept, named “C onversion efficiency”, to site, and linking from other sites. assess the efficiency of a commercial site. T he (2) Engage users’ interest and par ti cipation . concept is based on an implicit model which Having attracted users, marketers should recommends some considerations necessary for engage users’ interest and participation to commercial advertising on the Web. T he model achieve an interaction or a transaction. T his presents five sequential stages/phases suggesting can happen by providing customers with the flow of surfer activity on a Web site. T hese convenience-oriented content, communities stagesare: awareness, attraction, visit/contact, of interest, links to other sites, and so on. purchase and re-purchase (Figure 4). (3) Retain users and ensure they return to an appli - cation. Once the consumers have been drawn Discussion to the site and they have been engaged with suitably interactive and valued content, the T headvertising objective is to say the right marketer must make sure that they keep things to the right people and have them perreturning to the site. T his can take place by ceive what is said. T hree main dimensions are keeping the site “fresh” through continuously renewing content and/or providing content involved in this definition, ascan be seen in Figure 5. T hese are: message, the meaning that that is inherently changeable on an ongoing the advertiser intends to transmit to the audibasis, such as weather reports. (4) L ear n about their pr eferences. T his is the stage ences; format, those advertising attributes that attract the consumer’s attention; and context, or at which marketers should learn about media which givessomespecific opportunities consumer demographics, attitudes, and to advertisers in attracting the audiences and behaviours. D emographic and attitudinal information may come in the form of e-mail transmitting the message to them (F igure 5).An communications to marketers, opinions advertisement, in order to be successful, needs volunteered on bulletin boards or informato be considered strongly in all dimensions. In tion gathered in surveys, questionnaires, or other words, the message should be supported registration processes. Behavioural inforby an appropriate format and a right useof mation can be gathered from transaction opportunities offered by themedium (Figure 6). records or “click-stream” which track how Every medium has its own ability and needs users behave in a site. its own requirements. T he literature strongly (5) Relate back to them t o provi de the sort of cus- supports the view that the rules of the game in tomi sed int eracti ons. T his represents the virtual marketing are quite different from those opportunity to customisethe interaction of the traditional mass communication systems and tailor either the product or the market(K iani, 1997). Despite that, many advertisers ing effort to one consumer at a time. As a still approach the Web based on the traditional two-way and addressable communication mass communication model (the pattern shown channel, interactive media provides an unprecedented opportunity for marketers to in Figure7). Considering the opportunities provided by “relate” to a consumer. T his may takeplace by gathering the necessary information from the Web, marketers should use them rightly to an individual consumer and delivering either achievetheir objective. T hus, understanding and supporting each objective is an essential requirea personalised service or product, or a comment for advertising on the WWW. Some exammunication about the availability of such a personalised service or product. ples, in this respect, are provided in Table I. Figure 4 Five-phase model of m arketing on t he Web Aw areness
Attraction
Visit/contact
Source: adapted from Berthon et al. (1996a and 1996b)
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Purchase
Re-purchase
Marketing opportunities in the digital world
Internet Research: Electronic Netw orking A pplications and Policy
G. Reza Kiani
Volume 8 · Number 2 · 1998 · 185–194
Table I M arketing objectives on the Web and examples of supportive features
Figure 5 Three main dimensions of advertising
O bje ct iv es
Context
Exa m ple s o f su pp or tiv e fe at ure s
Awareness
Format
Message
Figure 6 The pattern of successful advertising Context
Format
Message
Figure 7 Traditional approach of advertising in a new medium Context
Format
Message
Summa ry a nd conclusions Never before has it been so easy to access information on a worldwide basis, and never before have so many people been exposed to and used a single information-sharing system. T he increasing popularity of the Web has generated significant interest in the development of electronic commerce. T his new marketing environment can be viewed from four different anglesto undergo the opportunities provided for marketers. T heseare: company-to-consumer, consumer-to-company, consumer-to-consumer and company-to-company. T he opportunities offered by the Web in each communication situation were discussed.
Anno uncement : throu gh lett erheads, business cards, brochures, packages, new spapers, m agazines and TV M nemon ic-ness of address: its similarit y to the company name Attraction Hyperlinks from other sites: search engi nes addressing the site, searchable in dexes addressing t he site and hotlinks from ot her sites Content length of document: the high er content (texts, images, backgrounds, animat ions, frames, sounds and video) the less speed to be dow nloaded by visitors Bandwidth of the connection speed Visit/engage Information: about products and company Facilit ies: Java, search engin es, sound, vid eo and animation Purchase Order facilities: ordering form , mail, fax, call phon e and e-mail Payment facilities: cash/cheque, credit card and direct account Delivery/booking facilit ies: mail, fax, call phone and e-mail Re-purchase Freshness: communities/clubs/user-to-user communication, “ What’s New ” and “ FAQs” (frequently asked questions) Hyperlink to ot her sites Custom isation: collecting user’s inform ation , demographic information, customer needs, optional menu and diag nostic requiring user input
T he objective of marketersin establishing a Web site differs from one organisation to another. Some marketers might want their Web site to make the audienceaware of or interested in, their products or brands while some others might wish to sell and resell their product through the Web sites(Pitt, 1996). H ence, it is vital that business leaders and marketers understand the potentials of the virtual market and the opportunities offered by this new environment and use them effectively to support their objective.
Notes
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1 Undertaking several researches in Internet m arketing the Project 2000 Group m akes a particularly importan t contributio n to the literatu re in the area. The Project’s homepage is hosted at t he URL: [http://ww w 2000. ogsm.vanderbilt.edu] 2 ” BMG’s Classical M usic’ is hosted on the Web at the URL: [http://classicalmus.com]
Marketing opportunities in the digital world
Internet Research: Electronic Netw orking A pplications and Policy
G. Reza Kiani
Volume 8 · Number 2 · 1998 · 185–194
3 “Amazon Bookstore” is hosted on the Web at the URL: [http://www.amazon.com]
Hamill, J. and Gregory, K. (1997), “ Internet m arketing in th e internation alisation of UK SM Es” , Journal of Marketing Research , No. 13, pp. 9-28.
4 Yahoo is available at the URL: [http://ww w.yahoo.com]
Hamm ond, K., Pluim, D. and Eynde, K.V. (1995), “ Interactive mass media a review of evidence and expert opinion from the USA and UK” , working paper No. 95-801, Centre for M arketing, London Business School, November, p. 28.
5 Lycos is available at the URL: [http://ww w.lycos.com] 6 Altavista is available at the URL: [http://ww w.altavista. com] 7 InfoSeek is available at the URL: [http://ww w.infoseek. com] 8 “ Submit it” provides the service to submit information to about 15 of t he most impo rtant ind exes. It is hosted on the Web at t he URL: [http://ww w.submitit.com] 9 “ Virtual Trade Show” is hosted on the Web at the URL: [http://www.vts.com]
Harrington, D. and Reed, G. (1996), “ Electronic comm erce (finally) comes of age” , The M cKinsey Quarterly , No. 2, pp. 68-77. Hoffm an, D.L., and No vak, T.P. (1996), “ M arketing in h ypermedia comput er-mediated environm ents: conceptual foundations” , Journal of Marketing , July, pp. 50-68 . Hoff ma n, D.L., Novak , T.P. and Chat terjee, P. (1995), “ Commercial scenarios for the Web: oppo rtunit ies and challenges” , Journal of Computer-Mediated Communi- cation , Special Issue on Electronic Com merce, Vol. 1, December, is hosted on the Web at t he URL: [htt p:// shum.huji.ac.il/jcmc/voll/issues3/vollno3.html]
10 The “ Internet M all” is hosted on the Web at the URL: [http://www.iw.com/imall]
References and further reading Arm strong, A. and Hagel, J. III (1996), “ The real value of online communities” , Harvard Business Review , MayJune, pp. 134-41.
Kiani, G.R. (1997), “ New g ame, new rules: w ill traditional mentality work in the m arketspace?” , Management Research News , forth coming issue.
Benjamin, R. and Wigand, R. (1995), “ Electronic markets and virtual value chains on t he information superhighway” , Sloan M anagement Review , Wint er, pp. 62-72.
Kierzkow ski, A., M cQuade, S., Waitm an, R. and Zeisser, M . (1996), “ M arketing to the digital consumer” , The M cKinsey Quarterly , No. 3, pp. 5-21.
Berthon, P., Pitt, L. and Wat son, R.T. (1996a), “ M arketing communication and the World Wide Web” , Business Horizons , September/October, pp. 24-31.
M cKenna, R. (1995), “ Real-time m arketing” , Harvard Business Review , July-August, pp. 87-95 . M artin, J. (1996), Cybercorp: The New Business Revolution , Amacom, American M anagement Association.
Bertho n, P., Pitt, L. and Wat son, R.T. (1996 b), “ The Worl d Wide Web as an advertising medium: to ward an understanding of conversion efficiency” , Journal of Advertising Research , January/ February, pp. 43-5 4.
M organ, R.F. (1996), “An Internet m arketing framew ork for World Wide Web (WWW)” , Journal of Marketing Management , Vol. 12, pp. 757-75.
Blattberg, R.C. and Deighton, J. (1991), “ Interactive marketing: exploiting the age of addressability” , Sloan Management Review , Fall, pp. 5-1 4.
O’Keefe, B. (199 5), M arketing and Retail on the World Wide Web: The New Gold Rush is hosted on the Web at th e URL: [http://www.rpi.edu/~okeefe/nikkei.html]
Blattberg, R.C. and Deighton, J. (1996), “ M anage marketing by the customer equity test” , Harvard Business Review , July-August, p p. 136-44.
Pine, B.J. (1992), M ass Custom isation , Harvard Business School Press, Boston, M A.
Blatt berg, R.C., Glazer, R. and Litt le, J.D.C. (1994), “ Intr oduct i on ” , The Marketing Information Revolution , Harvard Business School Press, Cambri dge, M A, p. 1. Cyber Atlas (1996), “ Demographics and market size” , is hosted on the Web at the URL: [htt p://w w w.cyberatlas.com] Ellswort h, J.H. and Ellswort h, M .V. (1997), M arketing on the Internet , Wiley, New York, N Y. Glazer, R. (1991), “ M arketing in an informat ion-intensive environment : strategic implications of know ledge as an asset” , Journal of Marketing , No. 55, pp. 1-19. Glazer, R. (1993), “ M easuring the value of inform ation: the information-intensive information” , IBM Systems Journal , No. 32, pp. 99-110. Hagel, J. III and Lansing, W.J. (1994), “ Who ow ns the customer?” , The M cKinsey Quarterly , No. 4, pp. 63-75. Hagel, J. III and Rayport, J.F. (1997), “ The comi ng bat tle fo r customer information” , Harvard Business Review , Januar y-February, pp. 53-6 5.
Pitt, L., Bertho n, P. and Wat son, R.T. (1996), “ From surfer to buyer on the WWW: w hat m arketing managers might w a n t t o k no w ” , Journal of General M anagement , Vol. 22 No. 1, Autum n, pp. 1-13. Poon, S. and Jevons, C. (1997), “ Internet-enabled int ernational m arketing: a small business netw ork perspective” , Journal of M arketing M anagement , No. 13, pp. 29-41. Quelch, J.A. and Klein, L.R. (1996), “ The Internet and int ernational marketing” , Sloan M anagement Review , Spring , pp. 60-75. Rayport, J.F. and Sviokla, J.J. (1994 ), “ M anagi ng in t he marketspace” , Harvard Business Review , NovemberDecember, pp. 141-9. Rayport, J.F. and Sviokla, J.J. (1995), “ Exploiti ng t he virt ual value chain” , Harvard Business Review , NovemberDecember, pp. 75-85. Schwartz, E.I. (1997), Webeconomics , Broadw ay. Stewart, D.W. and Ward, S. (1993), M edia Effects on Advertis- in g , Lawren ce Erlbau m A ssociates, Hillsdale, NJ.
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