Marketing on the internet legitimately assumed a very important place among various managerial practices and strategic solutions that companies' executives resort to in order to boost sales and improve performance. The last decade can also be considered the age of the internet and computer technologies.
Only a few years ago many people did not know what the internet was exactly and few people actually used it on a regular basis for their work. Today it is hard to find a person living in our civilized society who has never used the internet. Almost everyone knows what it is and what it is used for, even though few people have a clear understanding of how it actually works. Nevertheless, the internet now is the mass media that has even more reach than television and the radio.
Long before the internet became such an important part of our lives companies realized that advertising in the mass media was the key component of marketing.
Even though marketing is a much broader area of business activity the purpose of it eventually boils down to selling more products to more customers at the highest price possible. Advertising in the media brings about information about products and thus the viewers or the readers who represent potential customers become aware of their existence. The marketing mix consists of several components and basically represents the overall offer that a company makes to a customer. It includes the four Ps that are product, price, promotion and place. Product and price are essentially the key components that define the offer made to the customer. The product is characterized by such elements as quality, features, reliability, design etc. Price is another component that determines that the perceived value for the customer.
Nonetheless, the price is usually set based on the overall features of a product. If a company has a great quality product then it can set a high price given the product is better than that of a competitor. Thus the first and most important thing is to have a product and then the second step is to determine the price. However, what also contributes to the perceived value for the customer is place and promotion. Place determines the convenience or the distribution channels that our imaginary company utilizes.
If a product is available at every supermarket or convenience store then it is more likely to sell and thus is going to be perceived as more valuable by the customer. Promotion is another important element of the marketing mix and cannot be ignored. Even if a company has a great product that sells at a reasonable price and can be picked up at any convenience store, it is important to promote and advertise the product so that people know that such a product is available on the market. The company must draw the attention of the customer to the product that it is marketing otherwise it might be not very far from defeat. At present there are millions of products out there on the market and people literally get lost when they enter a department store. Promotion helps people concentrate and focus only on the products that are being advertised ignoring the rest of the products.
The role of the internet in the marketing mix is obvious. Certainly, the internet can do very little to create a product and set the price. However, it can very much influence the other two components. Promotion and place are directly impacted by the internet. The internet offers a new distribution channel for a company because from this point on it is possible to sell the product on line and then deliver it straightly to the customer in a certain geographical area. Promotion is another thing that can be improved by simply starting to use the internet as a new means of selling and marketing products. As it was already mentioned, the internet is a great means of advertising in terms of its reach. Thus the internet can increase the perceived value of the product that is being marketed. At present it is common for any company regardless of the nature of business that it is engages in to add the internet into the marketing mix. Many producers as well as consulting companies view the internet as an important component of marketing.
However, there are various ways of utilizing this incredible resource. A few years ago it was believed that the advertising banners that pop up on the computer screen every time an internet user opens a new window provide a great contribution to the perceived value of a product. Subsequently, companies wasted millions and millions of dollars on such advertising. Later they realized that all that cash was literally burnt because computer users get so irritated by banners and windows that appear on the screen that they shut them down immediately not even reading the content. Almost all computer users report that advertising on the internet needs to be regulated and controlled because the unrestricted access to information and resources on the part of advertisers makes work unbearably irritating and slows down performance. At present companies do not waste any more money on useless banners.
I believe that companies should not use the internet as the primary means of marketing. I should not be used as a foundation. Rather, what the internet can do is greatly contribute to the overall image of the company. In my opinion a company that incorporates the internet into its marketing mix should provide some valuable service to the customer via its webpage. For example an imaginary producer of computer parts can provide in-depth information about its products and provide on-line support to all its customers by email. Also the webpage should give insightful information about the company itself and some news that may be interesting to the customer. In other words the website should attract computer users and not distract them. That is how the component of promotion should be addressed. The internet component of marketing should contribute to the overall image of the company.
However, companies cannot use the internet the same way they use television. On television the viewers are forced to watch irritating commercial because they cannot turn them off, all they can do is switch the channel. And that is what actually happens a lot of times. Similar approaches do not work on the internet because computer users can by-pass irritating advertising and close windows and banners. Therefore, companies must be a lot more creative and imaginative while advertising on the internet. Another thing that is done by almost every company today is selling products on line. Many customers perceive it as a great service because it is possible to purchase virtually anything without even leaving the house. This strategy is effectively utilized by most producers because it creates an additional distribution channels and thus increases the perceived value of the product. Customers perceive our imaginary product as more valuable because it is easier to buy.
Looking at the situation from a financial perspective, it is a common fact that most dotcoms fail because they burn too much cash and eventually run out of money to meet their current financial obligations. Analyzing income statements of internet startups we can see that too much money is wasted on ineffective advertising. Thus the expenditures incurred by dotcoms outweigh the revenues that they can potentially generate. A few years ago the stock prices of most internet companies went through the roof because people liked the idea of conducting a business activity on the internet. However, no one really knew how to value internet companies. That is why today most investors are frustrated and the stock prices of dotcoms plummeted to the ground. I believe that the main problem with dotcoms is that their financial models were not sustainable from the very beginning. Most internet companies required huge capital inflows hoping that someday they would help generate revenues. In addition, companies that do generate revenues waste too much money on advertising and marketing which is not a good thing to do given the fact that cash is badly needed to sustain existence of the business.
To illustrate, I would look at how Dell Computer successfully incorporated the internet into its marketing mix. The company sells custom-built computer systems on the internet. Its products are not available at any retail outlet thus the internet is the primary distribution channel for this company. The webpage of Dell Computer serves two purposes. First of all it is an online store that is used for ordering computer systems. Also it provides information on all products that this company manufactures and sells through its on-line store. The other purpose that it serves is building the company's brand and image. A great thing internet can do for a company is create a relationship with the customer. If this resource is managed the right way customers truly bond with the company. The success of Dell Computer lies in efficient management of the internet as a resource and means of communication, quality products and great technical support which is available almost anywhere. That is why people go and by Dell instead of buying some other brand.
The internet is a great resource that a company can use to its advantage. There are many companies that use it successfully. However, if it is not used appropriately it can generate losses for the company and even have a detrimental impact on the company's image. Thus it should be carefully incorporated into the marketing mix. For one thing it creates an efficient distribution channel and for another it is a very effective means of advertising and building the brand.
Holly Odom is a freelance writer currently employed by essaymart.com - on line Custom Writing/Research company. Having graduated from Georgia Tech in 2000, he started a career in writing and journalism. Past employers include essaymania.com (from June 2001 to Sept 2002), urgentpapers.com (july 2003 to Jan 2004)
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