Advantages and Disadvantages and Growth of Mobile & Internet Marketing

Effectiveness of Internet Marketing

A Management and Consumer Perspective

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Content

Introduction

Methodology

Background Literature

Findings of the Study

Discussion and Recommendations

Conclusion

Questions

Methodology

Consumer Sample

294 consumers working at a tertiary institution consisting of 1096 staff84.7% academic staff, 15.3% non-academic 73.8% used the Internet dailyData was collected using web based questionnaireSalient feature 0.7% used the Internet for purchases

Management Sample

79 managers responded out of 180 organisations

Companies that were included in the sample had an Internet presence

Mail questionnaire was administered

Salient feature is that the Internet made a contribution to cost saving

Managers were generally satisfied with the results achieved from having an Internet presence

Background & Literature Review

The Internet

• mechanism for information dissemination

• medium for collaboration and interaction

Fastest Growing Technology54

44

35 3430

2622

15 137

Airlin

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Automob

iles

Teleph

one

Video

Micr

owav

e

Televis

ionRad

io PC

Cellph

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Inter

net

Time Taken for Technology to Reach 25% Market Share

Recent Quotations from Experts

There is a move from bricks and mortar to clicks and mortar

There are those on the Net, those who are thinking about being on the Net and those who are out of business

Radebe – businesses that are not online in three years will soon be out of business

Internet Statistics

US business to business trade will amount to 6 trillion dollars by 2005In 1999, South African consumers spent R2.7 billion online and B2B trade amounted to R3.9 billionBusinesses can break geographic barriers and reach some 40 million overseas customers

Business Value of E-Commerce

Cost Saving35%

Customer Service

32%

Marketing13%

Revenue Generation

18%

Other2%

Value Generated for America’s Top 100 Companies

Reasons for Being on the Internet

To establish a presence

To network

To reach a highly desirable demographic market

To reach specialised markets

Internet Marketing

The Marketing Equation

+Need Identification =Need Satisfaction Profit

Need Identification – Online Surveys

Quicker

Less intrusive

Can be answered at leisure

Respondent has more time to apply his/her mind

More accurate

Responses are returned almost immediately

Need Satisfaction

The Internet provides masses of information during the buying decision processThe information search is quicker due to the multitude of search enginesProvides price information for price sensitive consumersInformation places control in the hands of the consumer

Marketing Mix - Product

Customers do not purchase the product, they purchase the benefit

The Internet makes it possible to extol the benefits of their products and services at low cost

Detailed specifications, instructions and alternate uses are available online

The challenge is getting the consumer to the site

Marketing Mix - Price

Cost recovery is still paramountThe Internet may lead to price equalising rather than price cuttingPricing is more transparentInstant price comparisons are readily availableDue to price transparency, sellers have to develop strong online brands to compete

Marketing Mix - PlaceCybermarketing is selling in market space rather than at a market placeVirtual stores are mushrooming every dayThe Internet brings stores and manufacturers closer to the consumerThe physical distance between buyer and seller are immaterialDirect selling due to the Internet is more viableCustomers save and businesses generate higher margins by cutting out the middle man

Marketing Mix - Promotion

The Internet is a new channel for marketing communicationsOnline promotions are no different from normal promotions except that taste and smell are as yet not availableThe Internet makes it possible to advertise large volumes of multimedia information to a select audience with instant feedback

Findings of The Study

Internet User Profile

Theory suggests that Internet users are college educated, earn or have the potential to earn high salaries

The typical user in this study wasAsian male

Aged 25-34

Held postgraduate qualification

Earning in excess of R4000 per month

Use the Internet Daily

Consumer Reasons for Using the Internet

Communication35%

Research34%

Entertainment18%

Banking10%

Other3%

Reasons for Using the Internet & Gender

Variable Mean Sd

Banking Male

Female

0.833

1.744

1.399

2.072

Communication Male

Female

3.603

3.732

1.529

1.144

Reasons for Not Shopping Online

Variable Mean Sd

Lack knowledge and confidence 3.276 1.732

Afraid of non-delivery 2.452 1.782

Afraid to use Credit Card Online 2.356 2.202

Too Costly 1.353 1.272

Potential Product Purchases

Computer & Electronics

35%

Cosmetics & Toiletries

28%

Other21%

Large Appliances10%

Food & Groceries6%

Other: sport equipment, books and music

Reasons for Banking Online

Variable Mean Sd

24 Hour Convenience 4.247 0.716

Quicker 4.012 1.436

Better Personal Safety 3.383 0.582

Cheaper 1.048 0.463

Other 0.444 1.140

Reasons for Not Banking Online

Lack Knowledge & Confidence

42%

More Costly14%

Slower11%

Other4%

Unsafe29%

Business Use of the Internet

Cost Saving31%

Customer Service29%

Marketing24%

Income Generation

12%

Other4%

Factors Leading to Cost Saving

Factor %

Reduced Communication Costs 33%

Reduced Printing Costs 22%

Advertising 17%

Overheads 16%

Other 12%

Increase in Traditional Advertising Cost

28

48

5

19

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

Impact of Online Promotions

12.5 12.5

50

12.5 12.5

Total Failure Poor Average Successful Very Successful

Overall Impression

12.7

1.3

60.7

22.8

2.5

Extremely Dissatisfied Dissatisfied Acceptable Satisfied Extremely Satisfied

Obstacles to Optimal Use of the Internet

Site Appearance

Advertising

Segmentation

Literacy

Fear

Untapped Niches

Optimisation StrategiesFear

Awareness programsPromote Online Shopping/BankingUpgrade security and publicise it

LiteracyGovernment intervention at schools

SegmentationProper researchClearly identify target marketsFree training for target market

Optimisation Strategies

NichesIdentify untapped nichesProvide free services such as training

AdvertisingDone offline to direct traffic onlineOffer incentives eg. Lower banking charges

Site AppearanceAttractive, free of clutter, , simple address, secureFast loading, with useful information

Is Internet Marketing Effective?

From a consumer perspective No, it is notA potential niche market of over 1000 people are being overlooked

From a management perspective Yes, it is.Organisations are seeing improvements in sales, cost cutting and customer service

Managers are generally satisfied with the Internet