Online Marketing: Advantages and Disadvantages in Research

Executive Summary

Today we live in the digital era where the advancement of technologies and the World Wide Web has become a powerful force and influence. With this new media and line of communication, an increasing number of people are flocking to the internet as a source of information, shopping, and social networking. The purpose of this report is to provide “The Company” with the information and tools needed for a multi-channel market in online marketing and retail. To market in the digital era, many companies utilize technology as a marketing place to advertise. This also includes online sales. Every company should apply online information to produce a successful internet marketing strategy. It can fit the needs of both the product and the consumer. Scholars admit that people, “…are being swept away by advancements in technology, particularly through the potency of the Internet”, (Berry, Bolton, Bridges, Meyer, Parasuraman, & Seiders, 2010). With the internet generating power not only for consumers but for companies as well, researchers agree. Kiang, Raghu, and Shang iterate that literature has documented different advantages for companies to sell directly on the Internet. This report will encourage CFO and the marketing team to take advantage of the opportunities available in online marketing and retail.

The advantages include:

  • Generating Public Awareness
  • Increased Geographical Coverage
  • Increased Profits and Sales Margins

Although there are advantages there are also disadvantages as well. These advantages will be analyzed further throughout the body of the research. Research by Kurtz found that, “some highly routed e-business applications have proven less then successful, cost savings profits have occasionally been elusive, and many privacy and security issues still linger”, (2010). However, utilizing the recommendations provided throughout the research can combat negative forces. This includes issues that arise when entering online retail market. Strategies for this can be found through implementing consumer sales promotions. The company can also promote by, “interacting with…online forums, becoming a presence in their online chat groups and conferences, experimenting with direct email … and linking with their websites”, (Levinson, Levinson, & Levinson, 2007). This adds to substantial value within the consumer market. With the information and recommendations provided, the Company can create a competitive advantage in the online marketing and retail sales arena.

Introduction

The CFO and marketing team must strongly consider the utilizing the Internet as a forum for marketing and retail sales. With retail stores already in existence, and a brand name that is currently known by the consumer, the company can gain additional revenue in Internet marketing and sales. In the information provided throughout this research, the company will come to understand the opportunities available on the World Wide Web. Well into the new millennium, there are several components the company must consider when entering online marketing and sales. With a simple click, consumers are provided with a wealth of information on brands, merchandises, and services. The World Wide Web has produced a channel that allows consumers to shop from the convenience of their home, office, or even in the car. When engineering a marketing strategy to generate sales, the company must include online marketing into the marketing mix. Consequently, the purpose of this report is to inform you of the opportunities, provide you with recommendations and marketing strategies that will produce a successful online market.

Thesis: The World Wide Web is the “place” to be, as such, the marketing team may utilize this market to generate public awareness, increase geographical coverage, and increase profits and sales margins.

Gay, Charlesworth, and Esen declare that online marketing can now be accepted as just another marketing channel for customers in the ever-increasing multi-channel marketing world, (2007). With the increasing use of technology including tablets, laptops, and mobile devices, consumers can access the internet from almost any location, from airplanes to local coffee shops. The CFO and marketing team can take advantage of technology and the Internet, information is just a click away. As such, a potential buyer or a lost customer is just a click away.

Research Findings

The CFO and marketing team must be informed of the great advantages to online marketing including the ability to propagate ideas for the name brand, improve buyer loyalty, and increase profit margins. Despite the growing popularity of online shopping, entering the online retail sales arena continues to have its backlash. Customers are sometimes wary of online shopping due to security threats and internet hacking. Therefore, when purchasing items online there are “poor levels of online customer service and fulfillment”, (Gay, Charlesworth, & Esen, 2007). Consequently, this research will provide in-depth analysis of the three major points to consider when marketing and providing goods and services on the Internet.

This paper will address three major factors of Online Retail Marketing

  • Generating Public Awareness
  • Covering a Larger Geographic Area
  • Increase in Sales and Profit Margins

The advantages and disadvantages of each factor will be analyzed. Furthermore, recommendations will be provided to the company to provide useful information needed when immerging into the online sales platform. As a result, implementing these strategies and recommendations will produce a successful online business.

Generate Public Awareness

The internet is a great platform to use when promoting a business or name brand. It, “allows the business to get connected to the public and build their brand”, (Bolotaeva & Cata, 2010). When checking an email or browsing through a search engine, ads and advertisements often pop-up on the top or right hand side of a web page. Like watching television, commercialization has become a fixture on the internet. In addition to advertisement, a company must have a website to provide information, products, and services. In any business or office building, information is provided about the brand, products, and the opportunity to make a purchase. Utilizing the Internet for retail sales, it is important to generate public awareness of the brand name easily accessible.

 Advantages Analysis: The internet is a fantastic place to generate public awareness for your name brand. To increase awareness of a brand a company has several options such as, utilize social networking sites, generate advertisements and commercials, and create a website.

Cost effectiveness is a substantial advantage when generating online awareness. Compare the cost to build a new store or office building to developing a company website. The savings are phenomenal. Bolotaeva and Cata explain that “[online] social marketing can be an inexpensive way to promote a company rather than putting together a huge marketing team or a prohibitive budget”, (2010). Business networking site, LinkedIn.com, charges companies $25 per 1,000 clicks made on advertisements. According to Bolotaeva and Cata, Facebook.com offers substantial savings as well. Facebook.com charges a minimum $5 daily budget plus $0.01 to $0.05 on a purchased advertising campaign, (2010).

Ads are direct portals to a company website and will stimulate interest. The brand can create a banner, short video commercial, or provide information that can generated through a search engine. Furthermore, these ads can be either produced on random sites or specific sites that can narrow the target audience. Advertisement on the internet can also be interactive. This can building a rewarding experience for the consumer as well provide them with additional information about products and services provided by an industry. As a result, “through the use of widgets, business have a lot of opportunities to market themselves, [the] company, and add value to the overall business eco system”, (Bolotaeva & Cata, 2010).

Disadvantages Analysis: There are disadvantages to online marketing when generating public awareness.

Potential customers do not like to be bombarded with commercials. “If businesses target the consumers too aggressively with advertisements and product promotion and selling, the consumer will not choose to stay in the network”, (Bolotaeva & Cata, 2010). Annoying and aggravating the potential customer will discourage them from paying attention to the ad, returning to the website, and give the brand a poor image. In reality, consumers do not like pop-ups. Due to this annoyance, most internet users utilize pop-up blockers to combat this. Furthermore, websites and search engines have banded pop-ups from their Internet site.

The internet user has the option to “click away”. Thus, by one click, a potential consumer can close the ad, mute the banner, or simply leave the page all together. This fact gives the consumer considerable leverage. So, companies must be aware and sensitive to the consumers’ needs when creating awareness of the brand.

The disadvantage of social websites must also be considered. Although they may provide a great advantage to generate knowledge and awareness of a product, it has the potential for a terrible downfall. On social websites individuals have the opportunity to communicate their like and dislike for a product, as well as make general complaints about the brand or service provided. With a lack of control of what others may say concerning the company, internet marketing and public awareness by means of social networking sites can be ill effective. As such, “the content in such networks maybe critical to the product and companies have little control in what users share in the social network”, (Bolotaeva & Cata, 2010).

Increase Geographical Coverage

Through the use of the Internet, companies have the ability to “increase an organization’s geographic coverage beyond its traditional heartland”, (Gay, Charlesworth, & Esen, 2007). Internet allows the ability to generate sales and revenue from a populace, who before had no access. This increased geographical coverage creates many advantages to the company that includes additional sales and profits. In this category both the good and the bad elements of branching out to geographical areas will be explored.

Analysis of Advantages: The internet provides accessibility to information, products, and services found online to anyone who with a phone line or Wi-Fi signal.

The Internet allows people around the globe, both far and wide, to gain access to company products and services. Those who are in rural places, small towns, little cities, and small populations can buy merchandise from online retailers and have it shipped to their home. As such, “internet marketing…concentrates on product market, emphasizing similarities regardless of the geographic area in which they are located”, (Emery & Tian, 2009). This geographical advantage allows a company to increase sales and revenue from a population that before was inaccessible. It allows, “geographical distances can be over won by the help of marketing through the internet and… could result in a new broader customer audience”, (Berter & Blomqvist, 2010).

This broader audience is also international.  The internet is available all over the world including industrialized countries like Canada, Europe, Australia, Asia, and Africa. Reaching others on this large scale may encourage the company to globalize and reach consumers across the world.

Analysis of Disadvantages: Despite these advantages, there are serious disadvantages that must be addressed when considering reaching the global market.

Emery and Tian admit that the English language has dominated the internet since its existence. Their research concluded, “that 68.39% of all existing websites are in English”. Japanese comes in second with a staggering 5.85% followed by German at 5.77% and Chinese at 3.87%. With language barriers in place, non-English speaking territories are limited when attempting to reach these geographical distances.

Cross cultural lines create disadvantages when marketing to people in different countries. A difference in culture, the marketing team must create a new marketing strategy to generate sales from this target group. “It is important for the marketers to keep in mind that one particular product may be categorized [a] shopping good in one culture but might be classified a specialty good in another”, (Emery & Tian, 2009). Emery and Tian use the bicycle as an example; the bicycle is considered a shopping good in China where cycling is the popular mean of transportation, where as in America the bicycle is treated as a specialty good. These cross cultural lines must be given direct attention and strongly considered if marketing to other cultures and countries.

Profits and Sales Margins

An increase in profits and sales margins is the primary reason to market to online consumers. In addition to saving cost from building a website versus building a new facility, online purchases provide an additional avenue for consumers to shop. It is a convenient and easy shopping experience. There are various advantages to online shopping that will generate purchases and increase sales.

Analysis of Advantages: The savings that an industry gains when opening the marketing mix to the World Wide Web, can in turn be passed along to the consumer.

A low price and cost effective strategy creates a competitive advantage. This is necessary when entering the world of online retail as, “online buyers can easily compare prices and products and switch suppliers with just a few mouse clicks”, (Min & Wolfinbarger, 2004). A company that is also known and trusted within the retail industry can enter the online market with ease.

The convenience and availability of online shopping is 24 hours a day 7 days a week. It is also available on weekends and holidays. These additional shopping days equal to additional days to generate sales and revenue. All the while, the company does not pay staff and sales representatives to work additional shifts nor accumulate bills to keep a store open. Thus, a company “can offer customers what they want whenever they want it”, (Min & Wolfinbarger, 2004).

A qualifying factor to profitability is sales promotions that pull a shopper to purchase online. This includes offering additional products and services not available in the store. There are also few incidents of unavailable items or products. Furthermore, the customer may personalize an item that could not be provided in store. However, most benefiting is consumer sales promotions that can be made available to online shoppers. Some of which, may not be made available to in-store customers. This includes:

  • Coupons
  • Premiums
  • Loyalty Programs
  • Discounts
  • Free Shipping
  • POP
  • Samples
  • Bonus Packs
  • Cross Promotion
  • Contest
  • Sweepstakes
  • Advertising Specialties

With the competitiveness of online shopping, “sales promotion [can] motivate and stimulate purchase [and] increase the strength in the decision”, (Berter & Blomqvist, 2010). Min and Wolfinbarger also iterate that “bricks and clicks” -companies that have physical and virtual stores- will always see “profit margins improve steadily over time”, (2004).

Analysis of Disadvantages: Despite the advantages and strong potential in increased profit margins, there are disadvantages to analyze and address.

Security, trust, and threat are concerns the consumer may face. Berter and Blomqvist explain that there is a “lack of security that customers often feel when shopping online”, (2010). This is due to stolen credit cards numbers and private information taken and used against consumer’s will. Potential of hackers and threats, consumers do not feel comfortable shopping online.

Item for purchase can only been experienced as a digital image. Thus, “customers cannot easily examine products before purchase”, nor “offer pre-purchase trial and experience”, (Min & Wolfinbarger, 2004). Gay, Charlesworth, and Esen call this a “sensory boundary” as the consumer cannot touch or taste the product, (2007). This is disadvantage may strongly influence a customer’s decision. Lastly, the consumer has no immediate gratification. The consumer must wait for the product to arrive.

Requirements and Recommendations

There are several recommendations that must be put into action if marking online. When utilizing all four recommendations provided, the company can maximize profits all the while focusing on the three main points: increase product awareness, expand geographical coverage, and increase profitability. The recommendations and the three points provided will generate a growing, progressing, successful industry.

  1. Webpage and advertisements that are well designed. A well designed web page provides consumers with easy access, interaction, and an easy shopping experience. A well designed web page is most important when implementing an online marketing strategy. Just as the case when walking into a store, the webpage must be clean, labeled, categorized, organized and appealing to the eye. Online banners must be direct and straight to the point and not cause an “annoyance” to the consumer. This will provide ease for the customer and will limit frustrations. Frustration will produce a lost customer.

 

  1. Price products wisely to create a competitive advantage. As indicated earlier in this analysis, products must be priced wisely. This will allow competitive advantage. With the accessibility of information on the internet, a potential customer has the ability to compare prices and quality amongst numerous retailers simultaneously.

 

  1. Sales promotions to encourage the consumer to buy. With competitors fighting for customers, it is imperative to offer sales promotions in various forms that may further encourage the consumer. Furthermore, when used accurately and efficiently, sales promotions may encourage the consumer to come back for more, redeem points earned, receive free shipping opportunities, and coupons. Maintaining sales promotions for the consumer is a must to create a buyer to buy and buy again.

 

  1. Strengthen consumer “trust” of the company as well as security issues and hackers. For a consumer to purchase a product from a company off line, they must “trust” the company. The consumer must trust that they will: receive the merchandise, the correct merchandise, and website security.  Furthermore, they must trust the quality of the merchandise they receive. To assure the consumer, it is good to offer free return shipping, product guarantees, and other services that will instill the consumer to have trust in the company and its products.

Conclusion

The company has great potential for success when entering online marketing and retail sales. With a world leading 2,196% gain from 2000 to 2009 more people have access to the internet and making online purchases, (Fawzy & Dworski, 2011). By increasing consumer purchasing options, the company is also increasing potential profit and revenue from additional sales. In particular, this is observed in companies such as business with both a physical store and a virtual store. This is otherwise known as “bricks and clicks”. Consequently, “Bricks and clicks  have clear advantages over pure plans” due to various factors including “brand strength”, “cross-promotional opportunities”, and “the ability to offer consumers multi-channel shopping results”, (Min & Wolfinbarger, 2004). Internet marketing and retail sales will provide the company with:

  • Increased public awareness of brand/product
  • Increase geographic coverage of brand awareness and sales market
  • Increase sales and retail revenue for brand/product

Simple advertisement ads and banners can generate awareness of the product or brand. It can be done on social websites as well. However, networking on social sites should be done with caution. The company website should also be well designed and an easy to use to gather information or purchase products.

Creating an online market will also increase geographical coverage. The company will have access to a larger network of consumers including those in rural areas and internationally. Most importantly, online marketing is economically efficient. This will allow the company to have additional savings that can be provided for the customer.

Online marketing, online sales, savings provided, and the ability to lower product cost, can create a competitive advantage. Online marketing will allow the consumer the option of multi-channel shopping. It will increase sales and profits. However, sales promotions are key to online marketing success and generating sales. Sales promotions will help influence the consumer to purchase the company product and brand.

By adhering to the recommendations and marketing strategies, the company can have business success in the online marketing and sales platform. Thus, the disadvantages to online marking and sales are minimal compared to the great opportunities made available. It increase profitability, generates public awareness, and increases geographical coverage that will move the company into wave of the future.

 

References

  1. Berry, L., Bolton, R., Bridges, C., Meyer, J., Parasuraman, A., & Seiders, K. (2010). Opportunities for innovation in the delivery of interactive retail service. Journal of Interactive Marketing, 24(2010), 155-167. Retrieved from               http://www.ruthnbolton.com/Publications/sdarticle.pdf
  1. Berter, E., & Blomqvist, C. (2010). Online consumer sales promotion in retail clothing companies: A study of four  american companies websites. (Master’s thesis, University of Halmstad).
  1. Bolotaeva, V., & Cata, C. (2010). Marketing opportunities with social networks. Journal of Internet Social Networking and Virtual Communities, 2010, Retrieved from http://www.ibimapublishing.com/journals/JISNVC/2009/109111.pdf
  1. Emery, L., & Tian, R. (2009). Opportunities vs challenges: a cross cultural approach to internet marketing. (Master’s thesis, Business School of Lander University)Retrieved from            http://is.muni.cz/el/1422/podzim2006/MVV793K/um/Opportunities_vs_Challenges_-  _A_Cross-Cultural_Approach_to_Internet_Marketing.pdf
  1. Fawzy, L., & Doworski, L. (2011). Emerging business online: Global markets and the power of b2b internet marketing. Upper Saddle River, NJ: FT Press. Retrieved from http://books.google.com/books?hl=en&lr=&id=HY9FsBwl9owC&oi=fnd&pg=marketing opportunities for business&ots=CKt3LlbkQ6&sig=PHJZC7tVTbcZFlb_90YOY4cvG3o
  1. Gay, R., Charlesworth, A., & Esen, R. (2007). Online marketing: A consumer led approach. New York, NY: Oxford University Press Inc. Retrieved from  http://books.google.com/books?hl=en&lr=&id=Vu5I9rA7fm0C&oi=fnd&pg=PR11&dq=advantages+to+online+marketing&ots=5M03pLIhYa&sig=k0Mscn8g_m2bqCfVq2hfE_4UJOI#v=onepage&q=advantages%20to%20online%20marketing&f=false
  1. Kiang, M., Raghu, T., & Shang, K. (2000). Marketing on the internet: Who can benefit from an online marketing approach. Decision Support Systems, 9(27), 383-393. Retrieved from http://faculty.fuqua.duke.edu/~khshang/Working Papers/Marketing_on_the_Internet.pdf
  1. Kurtz, D. (2010). Contemporary marketing: A consumer approach. (15th ed.). Mason, OH:South-Western Cengage Learning. Retrieved from http://books.google.com/books?hl=en&lr=&id=-e0Yt7AxEV0C&oi=fnd&pg=PR4&dq=online marketing opportunities for retail sales&ots=ct0fEFrYKP&sig=HwdKbZMC418JbKVy6MBUORF3BvU
  1. Levinson, J., Levinson, J., & Levinson, A. (2007). Guerilla marketing: easy and inexpensive strategies for making big profits from small business. New York, NY: Houghton Mifflin Company. Retrieved from http://books.google.com/books?hl=en&lr=&id=UqXLxndm2oUC&oi=fnd&pg=marketing opportunities for business&ots=hJJ_rle0yi&sig=qQ6J4NgdHUbuScRxRa3DWRHm9zc
  1. Min, S., & Wolfinberger, M. (2004). Market share, profit margin, and marketing efficiency of early movers, bricks and clicks, and specialist in e-commerce. Journal of Business Research, 58, 1030-1039. Retrieved from http://www.csulb.edu/~smin2/Min and Wolfinbarger.pdf
Advertisements

About Russia Robinson

I am an independent freelance writer and free thinker. I strive to use my writing talents to benefit the greater good of society, one word, one sentence, one page at a time. Originally from Richmond, California I attended San Francisco State University receiving a BA in English Creative Writing and American Literature in 2004. After this I attended post graduate studies in 2008 at Georgia’s Kennesaw State University in Technical Writing. With an academic background in English, I have spent more than 10 years’ helping young people succeed. This can be seen in my career background in education and mental health. I am a certifiable Language Arts teacher for the state of Georgia. I also worked in social services including juvenile mental health treatment services and counseling. As a result, I understand the diversity of problems people face in their everyday lives. With words put together like so, I promote equality and a healthy society for all people regardless of individual differences. Conducting research, writing articles, essays, and blogging, I push to educate others about various issues that affect people. I also do this creatively through short stories, poems, pictures, and a novel in progress. My hobbies and interest are reading and learning. I enjoy all things art and all things nature. From camping and astronomy to photography and cooking, I enjoy sighting seeing and socializing just as much as I enjoy curling in bed with a good book or binge watching TV.
This entry was posted in Business and tagged , , , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s