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  • Subject area(s): Marketing
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  • Published on: 14th September 2019
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The internet as we know it took off during the early 1990s, when the World Wide Web (WWW) protocol was invented, and has since then become incorporated as the backbone of advanced economies  such as North  America and major parts of Europe and Asia. Around  1.3 billion  people  were estimated  to  use  the  Internet  at  the  end  of  2007 (Internetworldstats,  2008). In relation to the world's population,  this gives 20 % as a total amount of the world's Internet users. While the less developed countries show a very low percentage, the developed countries have shown a 120 % annual growth in Internet use during the past seven years.

Ever since the creation of the Internet, the world of business has changed greatly with a redefinition in areas like marketing and customer relations. This medium opened up the doors for the conditions of conducting business through electronic methods. The growth of the internet  eventually lead to hundreds  of  thousands  of  companies  setting  up  shops  online,  gaining  millions  of consumers worldwide as their customers. In the early days, the average computer user might not have been able to use the Internet as we use it today. With the arrival of easy-to- useweb browsers, this medium went from being an advanced, text-oriented, and specialized application into a massive multimedia tool on a global scale. Some early speculators like Hein and Rich (1997) quoted in Goldsmith and Lafferty (2002) suggested that advertising on this medium would be more effective due to its interactive nature. At that time, the most used marketing channels were banner advertisements. Although the Internet users click through-rate of this marketing method went from 30 % in 1994 to 0.3 % in 2002, marketers still spent many billions of dollars each year on internet advertising with banners.

Kotler et al  (2005) point  out  Marketing  as a process in  understanding and satisfying customer needs. In the pre-industrial era, this process was achieved through Relationship Marketing, during which a close relationship was created between the customer and the company. The customers made their everyday purchases locally and a natural bond was created between the seller and the buyer. However, with the introduction of the industrial age, the focus on marketing went from individual- to mass marketing. The company's attention turned to reaching out to as many consumers as possible. This method was dominant during the past decades, but with the birth of the commercial Internet, companies have discovered the possibilities of recreating relationship marketing.  By keeping the information flow of their products and service available online, companies can create suited offerings to customers while satisfying their needs. This sort of marketing method is considered to be more acceptable, and at the same time more effective.

However, a web site purely presenting the business will not add any value for the potential consumer. According to Cronin (1994), traditional marketing e.g. sending out raw advertisements through e-mail accounts is  not the online  way of reaching out to the customers. Online marketing is just like its regular offline counterpart about sales promotion, public relations and direct marketing to customers, mainly through advertising. Online advertising has the crucial role of persuading and informing consumers of the available selection of products and services (Goldsmith and Lafferty, 2002). During the past decade, companies have learned this procedure to be difficult without information about the consumers. Through the use of various customer databases and the location of surfing habits, firms have been able to evolve their marketing strategy, becoming more customized and personalized for each user. As a result, they are adapting products and messages through the study and analysis of each user's  demographics,  preferences and purchases (Maclaran and Catterall, 2002). A great knowledge of the clients is of essential use for a firm's success.


At any given time there are millions of people online and each of them is a potential customer for a company providing online sales. Due to the rapid   development   of   the   technologies   surrounding   the   Internet, a company that is interested in selling products fromits web site will constantly has to search for an edge in the fierce competition. Since there are so many potential consumers, it is of the out most importance to be able to understand what the consumer wants and needs. The importance of analysing and identifying factors that influence the consumer when he or she decides to purchase on the Internet is vital. Since the Internet is a new medium for there have been new demands

set by the consumer. That is why it is crucial for the online retailers to know what influences the online consumer.

Analyzing   consumer   behavior   is   not   a   new   phenomenon.   The renowned marketing expert Philip kotler has published several works on the topic of consumer behavior theories. These theories have been used for  many years  not  only to understand  the  consumer,  but  also create  a marketing strategy that  will attract  the  consumer   efficiently. Hence, understanding and identifying the consumer is closely related to the directions a company will take with their marketing strategy. These theories  can  also  be  applied  to  identify the  online consumer   and  to create  certain  consumer  segments.  However, some   distinctions   must still   be made when considering traditional consumer behavior   and online consumer behavior.


As companies are trying to make their advertising more effective in terms of acceptance among consumers, we consider it important to find out if consumers have a greater acceptance towards marketing in familiar or liked sites such as blogs and communities compared to non-focused web sites. In addition, some companies are using more tailored ads to achieve their goals, and we will examine this issue in relation to use attitudes towards customized ads. Moreover, there has been no consensus in previous research concerning the difference between men and women in these cases. Blogs and communities are mostly created by private consumers, for specific causes. While some sites have a majority of male visitors, others are more popular among women.



At the beginning of the century, social life was mostly local. It was followed by a period in which commodities were produced on a mass scale. Consumer Marketing operated on mass marketing principles and business primarily concerned itself with how to build the best sales force. At the end of the century, there is an emerging global culture. The major driver of these changes is technology. Technological change has moved steadily back focusing on the individual. 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.

Kotler formalized this evolution with his book \"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. A fourth stage, a focus on the individual customer, is also important. 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 today's technology driven world, a new fast paced digital economy is emerging. In the near future, it wouldn't be surprising to see that there are companies that exist only inside computer networks. 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.


Traditional Marketing V/s digital Marketing

Marketing over the years more so recently has started being used interchangeably with advertising. Now since the explosion of the internet; advertising paradigms have been constantly changing.

The first Web advertisement was placed on the Hot Wired web site in October 1994. AT&T, MCI, Sprint, Volvo, Club Med, ZIMA were the first to try it out and the Internet advertising has come a long way since then. Here, I would attempt to compare Internet Advertising with Traditional Advertising:

Let's have a look:

Traditional Advertising:

 Traditional advertising is static.

 Space is not a restricting factor

 The proportion of advertising to editorial is high sometimes 50:50.

 Does not evoke immediate action.

 Response to the action is not immediate.

 Advertisements are passively received.

 Advertising does not always target a much focused audience.

 Advertisements are ubiquitous.

Whereas Internet Advertising :

 It is dynamic with multimedia- supporting text and graphics video sound all together.

 Space is a problem, as regards size of the banners etc.

 A web page would be 91% editorial and 9% advertising.

 Invokes immediate action as you at-least need to click on the ad.

 First response is immediate as when the user clicks, the person is directed to other web page with more details.

 The user has high attention level and concentration while using the net, and hence they notice the ad. (please refer the chapter)

 This can be much focused.

 Advertisements catch users when they are on the lookout for some thing. For example the search is for travel on a search engine there are ads of travel agents on the net.

Thus we see that advertising is changing and so are the rules for advertising on the internet. So while designing or formulating any advertising strategy for a brand on the internet a manager has to take in to account factors like: -

1. The Internet has made a huge impact on advertising. Companies should be careful as regards joining the IT bandwagon. They should not advertise on the net just to project themselves as a techno savvy company or maybe because their competitor is doing the same thing. It should be a well-planned campaign full of specific information and attention catching.

2. The \'net\' charges are on the higher side (though there has been a steep decrease in the rates in the last few months). Hence people would be wary of the fact that ads consume a lot of online web time and hence they avoid clicking on average ads. Therefore, advertises should be designed in such a fashion that they attract attention and induce people to click on the net.

3. One more thing would be to generate \'search\' specific advertising. This would mean that if I give a search for books on the search engine, the ads displayed would be related to the books.

4. Generally, people perceive the ads to be time consuming and full of unwanted information. Care should be taken to design the ads in such a way that the information they provide or the hyperlinks they provide to a site gives adequate and specific information.

5. The ads and the subsequent information on the web site should be constantly updated and highlighted in the ads and thus induce repeated clicks on the ad.

6. Last but not the least; the ads should be designed so as to attract attention of maximum number of people and inducing them to click, failing to do so the advertiser ends up defeating his own purpose.

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 1999-2000. 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.

Effectiveness of the Net in Reaching Out to the Masses

The reach of Internet may not yet be as wide as that of other mass media, but given its unique advantages, it is undoubtedly the communication medium of the future. Marketers around the world have from time to time tried to reach their target audiences through various media. Scientific and technological advances have and will continue to create newer media to improve communication, and marketers will try to use the same to effectively address their audiences. Internet is one of the latest to join the list of such media inventions.

Internet Fame with the Indian Audiences

Let us first take a quick look at the audience that this medium is trying to reach. The top 8 metros of the country, the scope of the Internet as a medium to reach out to a large number of people is presently limited. However, some of these limitations can be addressed.

1. Internet is available in regional languages also. Even today this medium is largely confined to only those who are literate in English. Various initiatives of companies like ITC and HLL like E-choupal and i-Shakti have given a considerable boost to vernacular usage of internet

2. Internet is accessible though other media also and not only through telephone lines. In the current scenario, the usage of internet might be dominated by telephone lines, but broadband and cable net are coming in a huge way.

3. Government policies are aimed at broadening and strengthening the infrastructure required for Internet accessibility.

There could be several other modes to increase the reach of the Internet. However, with the current limitations, the projections on Internet usage appear to be as follows:


TV, print and cinema have penetrated the most. Internet in the media terms is expected to make an impact and show its true caliber, but is yet not taken as a serious medium.

Does that mean that Internet is not an effective tool for reaching out to people? Or is it likely to work very well under certain conditions?

To understand this better, let us compare Internet and other traditional media, first from the customer's point of view. Current media options serve two broad benefits to the customer:

1. Information

2. Entertainment

The reach or popularity of any media is related to

1. The extent of benefits perceived to be delivered

2. The cost of acquisition of the media itself

In short, the reach is related to the net value perceived by the customer about that particular medium.

On the basis of the above clarification, Internet appears to have a comparatively higher cost of acquisition. However, Internet has brought with it a very high degree of control to the media user. Not only are there a plethora of sites catering to every imaginable need, there is also a high degree of flexibility in what the user is able to do. All of this makes Internet a highly interactive media but also an expensive one.

If the internet is treated and used exactly like any other medium, it is unlikely to yield major benefits to the marketer. Its effectiveness is dependent not only on the target audience one is talking to, but also largely on the ability of the marketer to make use of the real advantages of the Net like interactivity, flexibility, ability to monitor and the like.

Next, one can also evaluate Internet as a media from the marketers' point of view by way of a similar classification. If evaluation as per the above classification is done, the Internet does not appear to be a very advantageous option either in terms of reach or in terms of cost-effectiveness. But Internet has various other advantages over the traditional media which cannot be neglected. These stem mainly from the ability of this medium to allow a far more focused targeting as compared to other media.

To quickly summarize the advantages of the Internet as seen from the point of view of the user as well as the marketer:


Internet gives more control in choosing content. It offers customization of the content, the way the user wants to view it. It offers a variety of options for information and entertainment.  It offers a wide range to choose from for the user.

It offers tremendous convenience to the user not only in delivery of information, but also in allowing him to transact — often in a seamless manner.

The best example of giving control of content is the My Yahoo !!service offered by the Internet giant, Yahoo Inc. It gives the user the choice of content for various topics ranging from news to stock options to entertainment to sports and just about everything.

To the marketer:

The Internet offers several options to a marketer trying to target a particular community

It serves not only as a channel of information, but also of product distribution

It offers a highly interactive medium that sometimes (e.g. chats, forums, VoIP) is almost equal to one-to-one interaction with the audience.

It offers a higher level of identification of the user to the marketer.

It allows the marketer to actually link his spends to action, and pay only on action

This action could be a click on the banner or even product purchased or just a banner impression or per 1000 impressions. In this ability Internet is, in fact, unlike any other media.

Given the payment options and high interactivity, the Internet offers a medium for high level of experimentation at a low cost.

This can be elaborated a little more by answering the following questions:

1. Who are the people who can be reached through the Internet?

2. Which are the products that can possibly benefit from marketing on the Internet?

3. What are the options available to the marketer to reach out more effectively to their audiences?

4. Are there ways for monitoring effectiveness of this medium in order to control it better?


The Internet offers a variety of options for the marketer to advertise her/his products/brands. These include

1. Banner ads and their variations

2. E-mailers and their variations

3. Sponsorships

4. Search Engines

5. Affiliate marketing

In India, banners still remain the most popular option. However, wider options are now available to the marketer which, even at the cost of being intrusive, serves to enhance the visibility and effectiveness of the banner

The Variants of Banners include :

1.  Banner Ad - a graphical web advertising unit, typically measuring 468 pixels wide and 60 pixels tall (i.e. 468x60).

2.  Beyond the Banner - online advertising not involving standard GIF and JPEG banner ads.

3.  Button Ad- a graphical advertising unit, smaller than a banner ad.

4.  HTML banner - a banner ad using HTML elements, often including interactive forms, instead of (or in addition to) standard graphical elements.

5.  Iterstitial - an advertisement that loads between two content pages.

6.  Pop-up Ad - an ad that displays in a new browser window.

7.  Pop Under Ad - an ad that displays in a new browser window behind the current browser window.

8.  Rectangle Ad - any one of the large, rectangular banner sizes suggested by the IAB.

9.  Rich Media- new media that offers an enhanced experience relative to older, mainstream formats.

10. Skyscrapper Ad- an online ad significantly taller than the 120x240 vertical banner.

11. Text Ad - advertisement using text-based hyperlinks.

12. Surround Session - advertising sequence in which a visitor receives ads from one advertiser throughout an entire site visit.

13. Vertical Banner - a banner ad measuring 120 pixels wide and 240 pixels tall.

 Given the highly interactive nature of the Internet, and the also fact that unlike other media it offers a higher level of identification of the user, simple direct marketing tools such as email can also be used more effectively. For example, a high-end car seller can today easily send an offer to persons earning over Rs 25000 per month at a very reasonable cost and within a very short period.

Then again there are sponsorships, which can be effectively used to increase brand salience and even change image.

The other tool on the web with enormous potential, and which has possibly not been used to its optimal level yet by marketers in India, is the search engine. Marketers can own either popular keywords or make use of meta-tags (these are similar to the keywords which the search engines uses to catalogue various websites/products) in order to go higher on the search lists.

The above is used by the search engine giant and it has reaped profits so much so that it is now being viewed as a threat by the computer giant Microsoft Inc.


The four P\'s - Product, Price, Place and Promotion have long been associated with marketing, but things have changed on the Internet. So along with a change in the nature of the four P's there are three new P's which are relevant to the internet marketer.

1. The Product on the Internet usually changes form online, and the user experiences it electronically, in the form of text, images and multimedia. Physical goods are usually presented in the form of a detailed online catalogue that the customer can browse through. Technology allows the user to virtually touch and feel the product on the Internet - rotate it, zoom in or zoom out and even visualize the product in different configurations and combination. The example of the above can be seen at where the company offers the user to virtually feel every aspect of their product before they go into a buy decision. Content and software are two avatars of digitized products that can be even distributed over the Internet. On the Internet, E-marketing will be based more on the product qualities rather than on the price. Every company will be able to bring down the cost of its products and hence competition will not be on price. It will rather be on the uniqueness of the product. To be able to attract the customers and retain them, the company will have to provide nouvelle and distinct products that forces the net users to purchase and come back for more.

2. The Price has been drastically changed over the Internet. It lets the buyer decides the price. Also it gives the buyers information about multiple sellers selling the same product. It leads to best possible deal for the buyers in terms of price. A website named is extremely popular as its compares the price of many airlines and offers the least price to the buyer. The very famous now known as follows the same principles. Pricing is dynamic over the Internet.

3. The Place revolves around setting up of a marketing channel to reach the customer. Internet serves as a direct marketing channel that allows the producer to reach the customer directly. The elimination of the intermediate channel allows the producer to pass the reduced distribution cost to the customer in the form of discounts. Dell Computers have used this strategy very effectively and hence they have been able to reduce their prices of their laptops drastically and reaped huge profits.

4. Promotion is extremely necessary to entice the customer to its website, as there are currently more than one billion web pages. Promoting a website includes both online and offline strategies. Online strategies include search engine optimization, banner ads, multiple points of entry, viral marketing, strategic partnership and affiliate marketing. Presently, the cyberspace is already cluttered with thousands of sites probably selling similar products. For the customers to know of the Company's existence and to garner information on the kind of products or services that the company is offering, promotion has to be carried out. There can be traded links or banner advertisements for the same. Also the traditional mediums like print, outdoor advertising and television can be used to spread awareness. Email campaigns and spamming the Chat rooms on almost every server has been exploited to the maximum for the cause of promoting their website.

5. Presentation The presentation of the online business needs to have an easy to use navigation. The look and the feel of the web site should be based on corporate logos and standards. About 80% of the people read only 20% of the web page. Therefore, the web page should not be cluttered with a lot of information. Also, simple but powerful navigational aids on all web pages like search engines make it easy for customer to find their way around. The principle of K.I.S.S ( Keep it simple stupid ) is the most important factor that has to be considered while presenting the online business

6. Processes Customer supports needs to be integrated into the online web site. A sales service that will be able to answer the questions of their customers fast and in a reliable manner is necessary. To further enhance after sales service, customers must be able to find out about their order status after the sale has been made. For e.g. FedEx (, the overnight Courier Company allows its customers to keep track of the parcel and they are well informed about the present whereabouts of their package. Similar variants have been used by the FGovt of India for its Speed post and Registered Ad services where you can keep a track of your post by entering the code that has been issued to you.

7. Personalization Using the latest software from Broad-Vision and others, it is possible to customize the entire web site for every single user, without any additional costs. The mass customization allows the company to create web pages products and services that suit the requirement of the user. A customized web page does not only include the preferred layout of the customer but also a pre selection of goods the customer may be interested in. For e.g. Yahoo! ( entered the Indian cyberspace and started its personalized services.

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