Online Marketing and Electronic Commerce
Online Marketing and Electronic Commerce
The most recent and fastestgrowing form of direct marketing involves online channels and electronic commerce. We discuss these channels in detail in the next section.
online marketing (inline marketing is conducted through interactive online computer systems, A farm of direct
which link consumers with sellers electronically. A modem connects the marketing conducted
consumers computer or TV settop 'Web machine' with various services through through interactive on
telephone lines. There are two types of online marketing channel: commercial line compute!' services,
online services and the Internet
t&hich provide iwo'way systems that link
Commercial online services offer online information and marketing services crmsimners with sellers
to Subscribers who pay a monthly fee. The bestknown online services are electronically.
America Online, CompuServe and Prodigy, with more than 8,000,000, 2,500,000 aad 1,000,000 subscribers respectively, 39 These online services provide
commercial online subscribers with information (news, libraries, education, travel, sports, refer services
ence), entertainment (fun and games), shopping services, dialogue opportunities Companies that offer
(bulletin boards, forums, chat boxes) and email. With a few clicks of the mouse online information,
button at their home PCs, subscribers can order thousands of products and entertainment, shopping
services electronically from dozens of major stores and catalogues. They can also and other marketing
do their banking with local banks: buy and sell investments through discount services to subscribers
brokerage services; book airline, hotel and carrental reservations; play games, •M./W pay the company a
quizzes and contests; check Consumer Reports ratings of various products; monthly fee. They make
use of their own receive the latest sports scores and statistics; obtain weather forecasts; and
dedicated networks and exchange email messages with other subscribers around the country.
operate their own After growing rapidly through the mid1990s, the commercial online services computers whiah ore
are now being overtaken by the Internet as the primary online marketing connected to the
channel. In fact, all of the online service firms now offer Internet access as a Internet, thus offering
primary service. The Internet is a vast and burgeoning global web of computer somevohat better security
networks. It was created by the US Defense Department during the 1960s, than the Internet.
initially to link government labs, contractors and military installations. Today, this huge, public computer network links computer users of all types all around the world. Anyone with a PC, a modem and the right software can browse the
Internet to obtain or share information on almost any subject and to interact with
other users, 20
Forms of Direct Marketing • 965
Internet usage has surged with the recent development of the userfriendly World Wide Web World Wide Well access standard and Web browser software sueh as Netscape
(WWW or the Web) Navigator, Microsoft Internet Explorer and Mosaic. Now, even novices can surf the
A pan of [he internet Net with fully integrated text, graphics, images and sound. Users can send email,
that uses a standard exchange views, shop for produces, and access news, food recipes, art and busi
computer language to ness information. The Internet itself is free, although individual users must
allow documents
usually pay a commercial access provider to be hooked up to it. containing text, images,
sound and video to be sciif across the Internet.
Rapid Growth of Online Marketing
In recent years, several large Internet marketing systems have failed because of a lack ol' subscribers or coo little use, or because consumers found the buying
procedures baffling and returned to the familiarity of conventional buying chan nels. The online information and shopping services industry has its roots in the United States. Although still in their infancy, Internet usage and online marketing are growing explosively. According to a recent study, 23 per cent of people 16 or older in the United States and Canada more than 50 million people have used
the Internet in the last month, up from just 1 million people in late 1994, An ad ditional 12 per cent of adults use commercial online services such as America Online and CompuServe. Currently, there are some 105 million Internet users globally. Figure 22.1 shows Internet usage (users as a percentage of population)
for the top ten countries in the world. Internet usage is estimated to be increasing at a rate of 12,000 new users per day, and some analysts predict that there will be more than a billion users, with Internet transactions totalling 850 billion, by the year 2000.
Although most of the world's online marketing takes place in the United States and the Internet is still some way from becoming a major promotion
medium, European marketers can no longer ignore the technology, 31 There may
now be as many as 4 to 6 million Web sites worldwide, and this number is growing
by as many as 400 new sites each week. 22 Figure 22.2 shows that Internet users go
online for a number of reasons, ranging from browsing, work and education to entertainment, and not just for buying things. In time, the biggest opportunity will
Figure 22.2
Main Uses of the Internet
he for sales or service delivery across national borders. For example. 27 per cent
df the sales of the US Internet bookshop Amazon.com are abroad, frequently to customers who would otherwise be unable to find the book they were looking for." Virgin Radio, which launched Europe's first online radio station, offers a live
audiofeed direct to the computers of Internet users visiting the radio station's Web site. The service (www.virginradio.eo.uk) is a live relay of Virgin via the Internet, which can be accessed from anywhere in the world. It uses stateofthe
art RealAudio software, which allows the users to download free from the Virgin Radio site. Rut instead of downloading (he file to the computer and then replaying it, using RealAudio allows them to hear the material played to them direct over the Net. 24
Just as television hurst on to the media scene and dramatically revolutionized marketing 40 years ago, so the explosion of Internet usage heralds the dawning of electronic commerce
a new world of electronic commerce. Electronic commerce is the general term for A general term for a
a buying and selling process that is supported by electronic means. Electronic buying and setting
markets are 'market spaces' in which sellers offer their products and services process that is
electronically, and buyers search for information, Identify what they want and supported by electronic
place orders using a credit card or other means of electronic payment. For means. example, a reporter wants to buy a 35 mm camera. She turns on her computer,
logs on to the Shopper's Advantage Web site, clicks on cameras, then clicks on 35 mm cameras. A list of all the major brands appears, along with information about eaeh brand. She can retrieve a photo of each camera and reviews by experts. Finding the camera she wants, she places an order by typing in her credit card number, address and preferred shipping mode.
The electronic commerce explosion is all around us, as more and more busi nesses begin to recognize the vast potential of electronic technology (sec Marketing Highlight 22.2). A recent study found that 39 per cent of all Net users have searched for product information online prior to making a purchase. Fifteen per cent of Net users have purchased a product or service online, and the percentage is growing daily. Early attempts to develop online shopping and elec
tronic shopping malls had been held hack by consumers' concerns about security, fraud and missing or damaged products. But consumer confidence is expected to grow, as improvements in technologies, standards and services are being achieved to make online transactions a mainstav of twentvfirst centurv commerce. 25
Forms of Direct Marketing • 967
Figure 22.3
Demographics of Internet Users