PAPER ON

INTERNET MARKETING

Submitted by,
Aniketh Roy Choudhuri(1225112105) P.Anil Kumar(122512342) Master of Business Administration(MBA) 1st year

GITAM INSTITUTE OF MANAGEMENT (GIM) GITAM UNIVERSITY

ABSTRACT
Marketing is an important strategy for businesses and it contains numerous effective tools. Traditional marketing has been in use for many years and now a days internet has brought new ways of doing business for companies and that has affected marketing. The aim of this study is to find out the emerging trends in Internet marketing and to find out what marketing tools are more effective for some chosen companies in the industrial sectors. The information gathered in this study was obtained through qualitative research from textbooks, websites, articles and interviews in magazines, even gathering statistics. The Internet is a powerful tool for strengthening relationships by offering customers content and time value, internet Marketing has opened new trends and opportunities for marketers.

INTERNET MARKETING
INTRODUCTION:
When companies start business, their main goal is to make profit and accomplish a successful growth. Therefore different strategies are used to sell products or services that they offer. Companies try to create, promote and sell products or services that could satisfy their target customers. Marketing is a strategy that can make a business grow and thereby become more powerful. The major driver of these changes is technology in the recent years. These changes shape the possibility and conduct of business. Marketing is especially tied to communication and transportation revolution. As the tools and reach of marketing increase, the job and responsibilities of marketers have evolved with them. Marketing is considered to be a process of exploring, creating, and delivering value to satisfy the needs and wants of a target market at a profit (Philip Kotler 2003, Marketing Management). His key stages are production, sales and brand management. Each of these is strongly motivated by technological opportunities, which permit new methods and new opportunities. The "4 P's" of the marketing mix (Product, Price, Place, and Promotion), marketers were offered opportunities to exploit each aspect of those elements and thereby satisfy their customers needs and wants. As the new technology of the Internet develops, it reinforces the new marketing emphasis - which in many ways is a return to business at the turn of the century. In todays technology driven world, a new fast paced digital economy is emerging. In the near future, it wouldnt be surprising to see that there are companies that exist only inside computer networks (Marc Smith and Peter Kollock, 1997). Most business transactions will be made electronically, directly from the producer to the consumer, bypassing the supply chain. In the digital marketing environment, the consumer becomes an integral player in the

development of the product. In fact, a consumer might build the product himself from a wide array of parts provided by the company. It is e-commerce that is changing the way products and services are conceived, manufactured, promoted, priced, distributed and sold. The reason being that it is much cheaper; it allows vast coverage and helps in serving the customer better. Growth of Internet usage and E-commerce: According to the research report of Goldman Sachs, India has emerged as the second largest Internet market in Asia after China with 100 million users in 2005. It estimates that Indian Internet Users will increase by 130% compounded annual growth rate (CAGR) from 0.5 million users recorded at end of 1998. Also the figures of the number of Internet Service Providers (ISPs) is expected to increase by leaps and bounds and March 2006 sees at least 30 private international gateways. As per preliminary findings of the NASSCOM survey, the total volume of E-commerce transactions in India was about Rs.131 crore in the year 1998-99. Out of this volume, about Rs.12 crore were contributed by retail Internet or Business-to-Consumer transactions, and about Rs.119 crore were contributed by Business-to-Business transactions. The survey also revealed that E-Business transactions in India are expected to exceed Rs.300 crore during 19992000. Out of this, about Rs.50 crore could comprise of retail transactions. For Business-to-Business transactions, Indian industries are expected to reach online penetration of 2% by 2003 and 8% by 2008.

INTERNET MARKETING MIX:

Internet is used as a communication channel as a part of direct marketing. It has had a large impact on marketing since it was invented and realized to be an effective marketing tool. But the meaning and usage of it has changed through the years. In the beginning it has been used mainly for communicating to customers through e-mailing and getting response from them. It has helped the companies to

be able to target their potential customers more personally and knowing more about them has helped in knowing how to approach different customers to get to their needs(Philip Kotler, 2003). Nowadays the concept of Internet marketing has extended and opened more opportunities to companies in their marketing. The website of the companies online has got a lot of attention and has become a very common media for presenting the company, its offerings and image. Internet has become a strong marketing tool in itself which can be compared separately to other marketing tools. This growth can be seen both on a technical level and accessibility of it for customers. Today many people have access to the Internet. 65% of all male and 53% all female population of Sweden use Internet daily(http://www.scb.se). With this large amount of possible customers, the companies have access to a larger audience. The technical development of the Internet and computers has made it possible for businesses to communicate their message and image with no limitations. Internet is a new marketing tool that can be used by companies in order to reach their customers (Hoffman and Novak, 1995). Internet marketing is defined as the application of the Internet and related digital technologies to achieve marketing objectives and support the modern marketing concept ( Chaffey, 2000). Internet marketing is often presented as a new theory of marketing however some argue that basic concepts from the traditional marketing are still valid. The basics of marketing mix are still applicable and Internet offers new opportunities to adapt them (Chaffey, 2000).

Product:
The Internet leads to faster discovery of customer needs, greater customization of the products to the customer needs, faster product testing, and shorter product life cycles. ( Rivad Eid, 2002) Internet offers the opportunity of developing new products or services. To develop a product, there is a need for research on customers needs. Internet provides the opportunity of offering a core product that satisfies the customers fundamental needs, but it also enables the companies to offer additional services such as interactivity or more information about the companys core product. On Internet, a picture or description will replace the physical product offered in the traditional marketplace or in stores. Providing a complete and relevant product information is crucial in order for the customers to get a realistic picture of the product and to make the product offered more attractive ( Hoffman, Lindgren, 1999). Since customers can not touch, feel or try the products chosen on Internet, companies that have online shops should offer warranties for products sold (PuiMun Lee,2002). This practice increases customers confidence thereby their willingness to buy on Internet. Companies that have an online store should offer services of high quality to their customers. Services offered on internet by a company should reflect the following factors in order to satisfy customers: reliability, responsiveness, competence, ease of use, security, and product portfolio (Zhillin Yang, Minjoon Jun, Robin T Peterson, 2004).

Price:
Compared to the other elements of the marketing mix, Price is the most flexible element since it can be adapted quickly to the markets demand than other elements. Price on the Internet has become very competitive. There are two reasons for that ; one is price transparency on the Internet as it is much quicker and easier to compare prices by visiting companies websites or by using price

comparison sites (Hagel & Armstrong, 1997). The other reason is the ability to reduce costs such as store space and staff costs. In this sense, Internet is considered as the most cost-effective marketing tool (D P S Verma ,2003). Internet offers new methods of payment. The online payment that uses mostly credit cards is seen as an efficient, convenient and flexible payment method for both companies and customers (Fang He and Peter P Mykytyni, 1997). In fact, customers are the ones who fill all the needed information such as their personal and credit card information. This helps companies to save money and time by reducing administration work. Moreover, customers have the possibility to pay their bills at any time and any place they wish if only they have access to the Internet (Fang He and Peter P Mykytyni, 1997). However, security and privacy issues make customers less confident when using this method.

Place:
The Place element of the marketing mix traditionally refers to where the product is distributed to customers. Internet offers a new way for distributing products through online selling. Allen and Fjermestad argue that the Internet has the greatest implications for Place in the marketing mix because it has a large market place (Allen and Fjermestad, 2001). People can make a purchase decision anywhere they are thanks to online selling (Allen and Fjermestad, 2001). With Internet, companies can expand from local market to both national and international markets. Internet can also be used to exploit new markets (Chaffey,2000). Companies can gain the advantage of the low cost of advertising internationally without the necessity of a supporting sales infrastructure in different countries.

Promotion:
The Promotion element of the marketing mix refers to how marketing communications are used to inform customers about an organization and its

products. Internet can be used to review new ways of applying each of the elements of the communications mix which are advertising, sales promotions, PR and direct marketing by using new media such as the web and e-mail (Chaffey, 2000). Internet offers a new, additional marketing communication channel to inform customers of the benefits of a product and assist in different stages of the buying process. By using promotional tools on the Internet such as online offers, frequently updated information and direct e-mail reminders, companies can encourage customers to visit their sites example of it is the eBay. Internet Advertising: It is a form of advertising that uses the Internet to deliver messages about a company and attract customers. It can be done in two ways: by creating a website which can help a company to deliver all information to the potential customers or by using banner advertisements which can lead the visitor to the relevant website. It is critical for a companys website to be well designed and informative in order to attract many visitors in the target group ( Rowley, 2001). 1. Sales promotion: With Internet, marketers have a great opportunity to offer sales promotions such as competitions or price reductions to those who visit the companys website. This can encourage the customers to visit that website again and this way of interacting with the customers provides the means for the company to build a long term relationship with their customers (Chaffey, 2004). 2. Public relations: Internet is a new medium for Public Relations (PR). Internet offers companies the opportunity to publish the news directly while in traditional marketing they would wait for periodical publications (Chaffey, 2000). They can use Blogs, Podcasts / Internet radio shows, online newsrooms and media kits.

Direct marketing: Internet provides companies with a new tool for direct marketing and advertising that may be cost effective and provide maximum delivery to targeted customers. By using e-mail addresses, the company can establish a continuous dialogue with customers. THE INTERNET MARKETING TOOLS AND STRATEGIES: There are many different technologies to facilitate your Internet marketing strategy. Some of the most common and effective tools are: Search Engines and Directories: Search engines are one of the most popular means of finding web sites, second only to following links on web pages. Search engines help people find relevant information on the Internet. Major search engines maintain huge databases of web sites that users can search by typing in keywords or phrases. Advertise your message: Web directories/search engines are information, gateways that have high traffic and are good for displaying advertisement banners. They are used to find Internet information and for this reason, appeal to broad target groups. E-zines (Online magazines): These publications are focused on specific topics and may be a way to reach a target audience interested in that subject. Some companies have gathered the e-mail addresses of potential customers and used these lists to send out product information specific to client interests. Seven good reasons to establish an E-Zine 1. Establishes Trust 2. Brings Visitors Back 3. Establishes You as an Expert 4. Keeps Current & Potential Customers Up to Date on New Products & Services

5. Builds Relationships 6. Allows You to Build an Opt-In Email Marketing List 7. Keeps Your Website Fresh in Visitors' Minds E-mail: Ethical methods of gathering e-mail addresses are through on-line registration built into your corporate Web sites, or requests for information forms that request submission to your opt-in lists. An alternative is to purchase lists of customer e-mail addresses indexed by special interests from a private company such as 'Postmaster Direct'. Online customers are becoming increasingly selective about their relationships, the brands they trust, and what they consider relevant. While most marketers are aware of privacy issues and the risks of Spam, there is still need for improvement. Email marketing campaign management is still fairly unsophisticated even at the largest of organizations. Marketers have to think about the drivers of customer response and purchase. Over time, as more is learned about your customer buying behavior, you can will isolate campaign and program characteristics that drive your customer or visitor response and action. Isolating the behavior of high value customers, business customers, or the minority of customers who prefer to buy online will be critical. For example, new online buyers get referrals when shopping online, while experienced frequent buyers prefer search engines. Affiliate Marketing: Affiliate Marketing enables you to increase online sales by promoting your products and services through a network of Affiliate sites on a payment-by-results basis. It also provides the opportunity to generate additional revenue by exploiting your site's own content to promote the products and services of other online Merchants. A Merchant recruits content sites to partner with them as Affiliates in exchange for commissions. A common third party provider such as Commission Junction can be used.

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The Merchant provides their advertising banners and links to their Affiliates and assigns a commission for each click-through to their site, subscription to their service, or purchase of their products that is generated from those links. Affiliates place the tracking code for these ads and links on their Web sites. This allows click troughs to be tracked online and commissions to be calculated. If a product or service is purchased, the customer pays the Merchant directly and the Affiliate is paid a commission for that transaction. The dating giant adultfriendfinder.com has used this strategy to the maximum and has earned millions of dollars by proper implementation of this strategy. Banner Advertising: Banner advertising can play an extremely important role within your website strategy. One can use banner advertising as a means of promoting its own products and services, raising awareness, or as a way of generating revenue by selling advertising space on your own website. Purchasing Advertising: There are currently two widely recognized methods of purchasing banner advertising. The rates for these are usually quoted on a cost per thousand basis or (CPM). The rates you pay can vary tremendously as there is currently no standard price model - so be prepared to negotiate! Pay-Per-Impression: This method of purchasing banner advertising is based on a charge for the number of times someone sees your banner. There are no guarantees as to how many visitors will come to your site as a result of seeing your banner; you are simply paying for the number of times your banner is displayed. Websites that offer such programs include paypopup.com and adclicksor.com Pay-Per-Visitor: This method of purchasing banner advertising is based on a charge for the number of times someone visits your site as a result of clicking on your banner. This is a better method of purchasing banner advertising as you are only paying for results, although expect to pay a premium.

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Pay-Per-Click: The revenue model of the Internet giant google.com has its very own service which offers certain share of the profit that it makes by the click-thru that a website generates from its ad sense codes. The revenue model is known as google adsense and almost every successful website uses this model to make profits. The Google adsense ads can be seen on websites like Times of India, Moneycontrol.com, ManagementParadise.com and a lot many other reputed websites. Branding: While CTR and cost per sale relate to direct marketing objectives, another way of looking at banner ads is as "branding" tools. They create brand awareness, and a brand image in the viewer's mind, whether or not the viewer clicks on the ads. Branding is very difficult to measure, but can be very powerful. The average click through ratio on banners is just under 1%, although with a well planned and executed advertising campaign using effective banners you can increase this to as much as 15%, but be prepared to work at it. It is a good idea to have a number of different banner ideas so that you can carry out small test marketing campaigns with each one until you find those that work best. There are a number of key issues that must be considered when designing a successful banner: It must have an attention-grabbing headline. It must be simple and get your point across. It must invoke action (i.e.: "Click here") It must download quickly. It must be placed effectively on a web site. Any campaign is limited by the amount of advertising you can do depending on the size of your budget. Therefore it is important that you target your market carefully so as to maximize advertising spend on effective banner campaigns.

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Rich Media Advertising: Looking for ways to make online advertising more compelling, and hopefully thereby more acceptable, marketers have increasingly been turning to streaming advertising. In effect another kind of rich media advertising, streaming advertising comes in two basic forms. First, it can either be part of a streaming audio or video program on the web. With many people now listening to web radio or watching web broadcasts, this makes perfect sense. After all, everyone is accustomed to getting commercials on their TV or car radio. The other channel for streaming advertising is essentially an infomercial. Consumers can download a streaming clip for a product or service from a marketer's website. Two new studies recently released suggest that the streaming advertising market is going to boom now and in the years to come. The giant ad selling company mediaturf uses this method for providing content to advertisers. Conferences: By their nature conferences are organized for special interests. Advertising in conference literature, print and electronic, is an excellent way to contact target markets. Collaborative Marketing: Team up with other business to Cross-promote - e.g. setting up links from one corporate Web site to another or offering special promotions in partnership with complementary goods or services. Advertise - share advertising: Participate in joint sponsorship of events, initiatives, informational Web Sites, mailing lists, bulletin board systems, directories, etc. Link exchange with trade/professionals associations to support credibility of firm, provide further market information to customers, build their awareness and prepare them for the action of purchasing (Paul M.A. Baker). Sales Promotion: Employing methods to stimulate sales through immediate or delayed incentives to the customer. If the incentive is attractive, the price: value ratio is adjusted favorably enough to affect a sale. This strategy should integrate

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with the overall marketing mix to balance extra sales with long-term profit motives. Examples of sales promotion strategies are: Sampling - offering product samples, electronically. Bonus offers - offering additional goods or services when making single purchases (e.g. buy-one-get-one-free). Limited time offers - attracting visitors to return to a Web site. Games with prizes: Useful to keep people coming back to Web sites. Cross-product sampling: When a customer makes a purchase they have an opportunity to try out another companys product/service. Also, the customer may have the opportunity to try out more than one companys product/service while testing another. Useful for complementary products/services. Feature pricing: providing special pricing to those that order electronically. Cross-promotions with other companies products/services - Buy a companys product/service and get a coupon for another companys product/service.

INTERACTIVE ORDER PROCESSING

Interactive Order Processing is basic for e -commerce in order to be presented online businesses to customers authentic brands, easy services; practical purpose of e-commerce organized the whole process with specific order. Digital Marketing is not just about posting new tweets or uploading videos to your site. Its about creating an experience for your customers that helps move them down the purchase funnel. Before you can start stacking your piles of cash from your E-commerce site I will explain to you the process of purchasing online. 1. Interactive Order Processing:

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2. Set up an IMA (Internet Merchant Account) a. Set up an account with a Payment Service Provider (PSP) 3. Set up an account with a Payment Processing Company (The Gateway) that eliminates the need for an IMA or PSP. Examples: PayPal or Google Checkout. There are many companies to choose from. Be selective with your choice because the drawback for these one stop processing companies is that they can hold your money for long periods of time and charge high fees for the processing! Watch the video below to learn how to setup a Google Checkout Account. 4. Payments are validated for proof of funds and fraud (Takes about 30 seconds after the customer clicks the final payment button) 5. The fund are approved or disapproved and a Order Confirmation Appears on the Customers screen. 6. Email the Order Confirmation 7. Delivery 8. Post Delivery Feedback (email questionnaire or survey) My recommendations: Enclose your check out screen to avoid shopping cart abandonment. Why you should enclose the check out process for customers to have a clear sense of whats to come next, no distracting links and increase sales! Order Confirmation should have details about the products purchased, shipping dates, order confirmation and something telling them what to do next like check your email for the confirmation or it is safe to exit the page. Also the Email confirmation should come right away giving all the details about the transaction even the last 4 numbers of the card that was used.

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AMAZON CUSTOMER RELATIONS AND INTERNET MARKETING:

In July 2010, Amazon announced that e-book sales for its Kindle reader outnumbered sales of hardcover books for the first time ever during the second quarter of 2010. Amazon claims that, during that period, 143 e-books were sold for every 100 hardcover books, including hardcovers for which there is no digital edition; and during late June and early July sales rose to 180 digital books for every 100 hardcovers. Amazon MP3, its own online music store, launched in the U.S. on September 25, 2007, selling downloads exclusively in MP3 format without digital rights management. (In addition to copyright law, Amazon's terms of use agreements restrict use of the MP3s, but Amazon does not use DRM to enforce those terms.) Amazon MP3 was the first online offering of DRM-free music from all four major record companies. In January 2008, Amazon began rolling out its MP3 service to subsidiary websites worldwide. In December 2008, Amazon MP3 was made available in the UK. Amazon's Honor System was launched in 2001 to allow customers to make donations or buy digital content, with Amazon collecting a percentage of the payment plus a fee. The service was discontinued in 2008 and replaced by Amazon Payments. In 2011, Amazon announced that it was releasing a Mac download store to offer dozens of games and hundreds of pieces of software for Apple computers. Amazon Prime membership also provides Amazon Instant Video, the instant streaming of movies and TV shows at no additional cost, as of February 2011. In November 2011, it was announced that Prime members have access to the Kindle

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Owners Lending Library, which allows users to borrow certain popular titles for free, up to one book a month, with no due date. An Amazon.com exclusive is a product, usually a DVD that is available exclusively on Amazon.com. Some DVDs are produced by the owner of the film/product, while others are produced by Amazon.com itself. The DVDs produced by Amazon are made using their Create space program, in which DVDs are created, upon ordering, using DVD-R technology. The DVDs are then shipped about two days later. Amazon launched Amazon Web Services (AWS) in 2002, which provides programmatic access to latent features on its website. Amazon Web Services (AWS) was first launched as a public beta of Amazon Elastic Compute Cloud running Microsoft Windows Server and Microsoft SQL Server. This was later expanded to several operating systems, including various flavors of Linux and Open Solaris. In March 2006, Amazon launched an online storage service called Amazon Simple Storage Service (Amazon S3). An unlimited number of data objects, from 1 byte to 5 terabytes in size, can be stored in S3 and distributed via HTTP or Bit Torrent. The service charges monthly fees for data stored and transferred. Also in 2006, Amazon introduced Amazon Elastic Compute Cloud (Amazon EC2), a virtual site farm, allowing users to use the Amazon infrastructure to run applications ranging from running simulations to web hosting. In 2008, Amazon improved the service by adding Elastic Block Store (EBS), offering persistent storage for Amazon EC2 instances and Elastic IP addresses, and offering static IP addresses designed for dynamic cloud computing. Amazon introduced Simple DB, a database system, allowing users of its other infrastructure to utilize a highreliability, high-performance database system.

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Also in 2007, Amazon launched Amazon Vine, which allows reviewers free access to pre-release products from vendors in return for posting a review, as well as a payment service specifically targeted at developers, Amazon FPS.

CONCLUSIONS AND BENEFITS:

Internet Marketing is a hot topic especially in these days of instant results. The reason why i-marketing has become so popular is because they provide three major benefits to potential buyers: 1. Convenience: Customers can order products 24 hours a day wherever they are. They dont have to sit in traffic, and a parking space, and walk through countless shops to find and examine goods. 2. Information: Customers can find reams of comparative information about Companies, products, competitors, and prices without leaving their office or home. 3. Fewer hassles: Customers dont have to face salespeople or open themselves up to persuasion and emotional factors; they also dont have to wait in line. Internet Marketing also provides a number of benefits to marketers: 1. Quick adjustments to market conditions: Companies can quickly add products to their offering and change prices and descriptions. 2. Lower costs: On-line marketers avoid the expense of maintaining a store and the costs of rent, insurance, and utilities. They can produce digital catalogs for much less than the cost of printing and mailing paper catalogs. 3. Relationship building: On-line marketers can dialogue with consumers and learn from them.

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4. Audience sizing: Marketers can learn how many people visited their on-line site and how many stopped at particular places on the site. This information can help improve offers and ads. Clearly, marketers are adding on-line channels to find, reach, communicate, and sell. I-marketing has at least five great advantages. First, both small and large firms can afford it. Second, there is no real limit on advertising space, in contrast to print and broadcast media. Third, information access and retrieval are fast, compared to overnight mail and even fax. Fourth, the site can be visited by anyone from any place in the world. Fifth, shopping can be done privately and swiftly. The Internet is a powerful tool for strengthening relationships. By offering customers content and time value, E-Marketing has opened new vistas for marketers. The greatest feature of the digital economy is that it enables the EMarketer to eradicate main traditional barriers before entering new markets (Chaffey, 2001). These barriers include economies of scale and geographic positioning. The innate strength of an E-Market comes not from the seamless flows of goods and services from the producer to the customer but in the geometrically increasing returns from converging ideas and technological change the strength of online communities has never been so great, and companies have used them to develop new markets. But the beauty of the Internet is that it offers constant opportunities for product enhancement based on continuous customer feedback (Chaffey, 2004). Companies who have turned their business processes to incorporate these customer responses have been able to leverage the power of the Web to gain competitive advantage.

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ACKNOWLEDGEMENT: We would like to thank Dr. Rajeshwari Panigrahi(Associate Professor, GIM) for her helpful advice and guidance. REFERENCES: Books: Dave Chaffey et al. (2000), Internet Marketing: Strategy, Implementation and Practice,Pearson Education Limited Hagel, J. & Armstrong, A.G. (1997), Net Gain - Expanding Markets through VirtualCommunities, Boston, MA: Harvard Business School Press Leedy, Paul D. and Ormrod, Jeanne Ellis, (2005) Practical research planning and design,8th edition, Pearson Merrill Prentice Hall, New Jersey Philip Kotler (2003), Marketing Management, Eleventh edition Robert K. Yin (1994), Case study research: Design and Methods, Second Edition, Sage Publications Articles: Allen, E. and Fjermestad, J, E-commerce marketing strategies: a framework and case analysis, Logistics information Management, Vol.14, number , 2001, pp14-23 Donna L. Hoffman, Thomas P. Novak, Marketing in Hypermedia ComputerMediated Environments: Conceptual Foundations, Working Paper No. 1 (Revised July 11, 1995) D P S Verma, Gaytri Varma, on-line pricing:concept, methods and current practices, Journal of Services Research, Gurgaon, Apr-Sep 2003, Vol. 3,Iss. 1,pg. 135-156 Jennifer Rowley, Remodeling marketing communications in an Internet environment, Internet Research, Bradford, 2001, Vol. 11, Iss. 3, pp. 203(10 pp) Pui-Mun Lee, Behavioral Model of Online Purchasers in E-Commerce Environment Electronic Commerce Research, Boston, Jan-Apr 2002,Vol. 2, Iss. 12, pg. 75-86

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Ulrika Hoffman,Ulrika Lindgren, Marketing on Internet, Lule, June 1999 Websites: www.scb.se

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