Internet Role on International Marketing in Amazon.com

Overview

The internet is considered to the drive of the new millennium. Advancement in internet technology has led information revolution. Communication throughout the world has been simplified by internet technology. Use of internet has great impact on business operation. The technology has made business-to-business and business to customer communication much easy. Marketing is one of business activities that have been significantly affected by internet usage. Internet marketing seems to be replacing conventional marketing. One of the companies that have been successful internet marketing has been Amazon.com. In this chapter, a literature review of internet marketing is conducted. Views of various scholars over the subject are addressed.

Academic research on international marketing has to date focused on several areas including the role of the internet on international marketing. In a sense, “Marketing practitioners and academics have devoted considerable effort to identifying the effect of the Internet on International Marketing” (Eid and Trueman, 2002). The speed of change came by modern technologies has had an important influence on the manner companies and customers relate to one another (Ozuem, Howell and Lancaster, 2008). In this respect, it is currently extensively accepted that the information technology explosion will encompass a deep effect on the conduct of international business as we shift towards the new millennium (Hamill, 1997). In this regard, “Developments in information technology have ceaselessly had profound marketing implications. None more so in recent years that the ever prospering forum of the internet, which poses both tremendous opportunities and challenges for international marketing” (Meleware and Smith, 2003). Moreover, The Internet makes available an essentially different environment for international marketing (Eid and Trueman, 2002). Consequently, “This enticing internet tool offers marketers the ability to enter that postmodern marketing golden age” (Simmons, 2008)

On the other hand, “Although the Internet can be a marketer’s dream come true, it can also be a nightmare for firms that are not aware of the challenges that the Internet creates” (Palumbo, Herbig, 1998). This international phenomena produces many new barriers and challenges since the Internet has extended the firm’s business to worldwide markets, where laws, legal, cultural, and community systems vary from those to which one is familiar (Palumbo, Herbig, 1998).

“In recent years the internet has exploded onto the world stage and has become an integral part of marketing mix” (Meleware and Smith, 2003). Marketing mix is one of most important concepts of the marketing theory (Rafiq and Ahmed, 1995). However, The International Internet Marketing was one of factor that changed some elements of the marketing mix (Eid and Trueman, 2002). Marketing on the Internet uses different processes and techniques from traditional marketing. The most important aspect to more significant marketing activities and efforts on the Internet will be an interactive strategy (Eid and Trueman, 2002).

“Amazon was the first company to move book retailing from the bricks and mortar industry online… rapid and continuous innovation in the electronic commerce has been Amazon’s Heritage” (Melllahi and Johnson, 2000). Amazon utilizes many opportunities that are readily available through using good technology (Sain, 2005). An evidence of this, Amazon has been particularly excellent in forming very high levels of customer bonding. For example, according to a research conducted by Millward Brown in their BrandZ study concluded that around of 54% US category buyers are really committed to Amazon brand compared with an industry standard of 10% (Melllahi and Johnson, 2000). Customer focused innovation has been the focus of Amazon’s strategy. This strategy has been determined by the technology expansion and development (Johnson G., Scholes K., Whittington R., 2008).

According to foster research, which concluded that, companies will assign around $ 270,000 in 2004 to their online marketing budget compared to & 240,000 in 1999. In addition, marketing online is more vital than the normal media channel. In addition, the internet paved a way for many organisations to get to target audiences more successfully, displacing undifferentiated mass marketing methods for more modified and customized practices (Meleware and Smith, 2003). In addition, the internet provides many benefits to product development process through its ability to facilitate exceptional levels of marketing (Meleware and Smith, 2003). Essentially, the internet permits “empowered online postmodern” customers to deal in a significant manner with companies forming a rapport which maintains a collaboration that permits these customers to say a word in the online creation of goods and service knowledge and experiences, which are customized to their specific requirements (Simmons, 2008)

The crossroads between new technology (mainly the Internet) and international marketing is a topic of growing interest and importance and therefore, many organisations are looking to enhance its market share and to penetrate other markets through establishing new international marketing strategies using internet. There is not enough knowledge and research on how such organisations like Amazon.com use its international internet marketing to support its strategy and achieve its objectives. We can find some articles related to internet and marketing mix or some strategies related to Amazon.com, but the reason behind selecting such topic is to find out the relation between internet, international marketing. We also want to find how such organisation uses internet to support its strategy through using different international marketing tools that are different from the traditional marketing tools.

Based on the above background and literature review, I have used different literature reviews related to my topic in order to have excellent opportunities to get familiar with this topic from different angles. In addition, I will definitely use other literature review to enhance my research. I will start my dissertation with the impact of internet on the international marketing and then to narrow down to understand the impact of internet on marketing mix. Then, I will study the tools and benefits, opportunities, challenges of international internet marketing. Finally, I will deeply understand amazon.com strategy in different perspectives, completely study, and analyze Amazon.com internet marketing tools and techniques used to support its strategy. This research overlooks real life examples from Amazon.com.

Internet Marketing Environment

Internet marketing environment is significantly different from the conventional marketing environment. Haque et al. (2006, p. 381) explain that internet marketer have to gain customers from highly competitive online marketplace. Internet marketer also have to evaluate online target market with is more challenging as compared to conventional marketing. Kaur explains that tangible and relatively permanent form of communication is used in conventional marketing, a case that is different in internet marketing (Kaur, 2005, par 5). Unlike traditional marketing, internet marketing makes use of electronic means. Computers in internet communication are able to recognize, store and reproduce market communication. According to Haque et al. (2006, p. 391) internet marketing implies market can be conducted in a paperless environment. Ige (2004, p. 419) explains that electronic marketing is one of the ways of application of business-to-consumer e-commerce. He explains that two categories of business-to-consumer e-commerce, online purchasing and online shopping necessitate new forms of marketing.

Being able to interact with customers is a very important factor in internet marketing. Internet marketing environment requires marketers create interfaces that allow interaction with consumers. From consumers’ perspective, interactivity is implementation of features that help the consumer to make shopping decision (Haubl & Trifts, 2000, p. 57). The consumer must be able to get necessary information through interaction before making decision to purchase a particular product. Internet marketing tools enables an individual consumer to tailor web content according to their needs and preferences. In essence, this ability gives consumers similar power as content provider. According to Ronald Goldsmith (2002), online buyers view the internet as an easy and flexible way for shopping. Unlike it would have been expected, Goldsmith says that online shoppers have fewer security worries.

Design of online shopping website is challenging as many considerations have to taken. Reichheld and Schefter (2000, p. 106) explain that in order to satisfy difference consumers, competence, tastes, requirements and preferences a online shopping website must constitute a wide range of feature. Consequently, online shopping web sites as slower in loading and may be complicated to use. Reichheld and Schefter (2000, p. 109) say that many internet users are highly concerned over speed of access. Thus, they warn that organization intending to use online shopping must create sites that are easy to access. They also advise that the sites should be highly interactive and incorporate graphics to be attractive. They explain that information such as discount on some products or special offers influence buying decisions. Through online shopping, buyers are able to compare prices, discounts, offers and other factors from different organizations before making buying decision (Khanh & Kandampully, 2002, p.102). Interactivity has high influence on success of internet marketing. As discussed above, there is a distinction between person and machine interactivity. Machine interactivity is concerned with how well a machine is able to interact with online shoppers (Haubl and Trifts, 2000). Pratibha (2003, p. 63) asserts that technology usage, including internet shopping is influenced by environmental factors.

Individuals are influenced by various factors to use some technologies. Martin et al (2005, p. 391) posit that individuals use some technologies out of psychological reasons other than technical. This, as consequence, influences effectiveness of internet marketing. Martin et al. (2005, p. 387) give advice on need for better understanding of internet marketing in order to be successful online shopping. Some conditions are necessary for online shopping. According to MORI (2001, p. 73), internet access is the most important factor that influences level of internet shopping. Apart from access to the internet, other factors influence e shopping. Teo (2002, p. 158) identify poor design of interfaces, ineffective search engines, cluttered page layouts, dead links, wearisome navigation structures outdated information and complexity as some of other factor that frustrate consumers over online shopping.

Effect of internet on marketing strategies

The internet is viewed and efficient medium to organize and access information. Use of internet came as a revolution in communication as it simplified sharing of information. Levy (1996) asserts that that the internet has unpredictable effects on business activities. Marketing strategies is some of the business activities that have been influenced highly by the internet (Peterson, Sridhar and Bart, 1997, p. 339). The scholar admit that rapid advancement of technology in the last few decades have influenced marketing strategies but say that the impact of internet of marketing strategies cannot be easily measured. They say that rapid changes in the modern business environment make its challenging to measure the impact of internet marketing.

Marketing strategies in conventional concept follow some specific steps. According to Darby, Jones and Ah Madani (2003), effective marketing strategy must consist of eight steps that include “Market research to understand customer’s perception an wants; product development along the line of perceived customer wants; product delivery and customer feedback, market testing and others” ( Darby, Jones & Ah Madani, 2003). Internet marketing has brought major change to the concept of marketing. Use of internet for marketing challenges some of the basic conventional ideas of marketing. Although some changes on concept of marketing have led to positive effects, effects of some changes are not explicit. Some of the areas that have been challenged by internet marketing are product development and marketing itself. In conventional marketing strategy, information about customer needs and preferences was gathered before developing a product. The internet has made it much easy to get information over customers making it very important in product development. The richness of information about customers however implies that product developers have added task of satisfying ever-changing customers’ needs and preferences (Komenar, 1997). Komenar further warns that business to make use of information presented by the internet may not be able to compete favorable in the global market.

Fast growth of internet usage and fast development of internet technology provide great opportunities for internet marketing. Smith (2005) says that internet usage is in rapid growth and has influenced marketing. He explains that widespread usage of internet has compelled organizations to consider internet marketing in marketing strategy. He posits that exponential internet growth has turned market places “technological centric business world” (Smith, 2005). To be successful in the technological business world, businesses have to seek to understand opportunity presented by the internet and adopt them in marketing. The internet has influenced various aspects of marketing. According to Kokkinaki and Ambler (1999), give example of pricing policy as some of marketing activities that have been affected by the internet. Pricing policy has a very important place in the marketing mix as it influences the final price that an organization would charge a product. Prices also influence the response of customers to a product. The right pricing policy would ensure that an organization is able to attract customer, retain them but at the same time provide good profit margins. Apart from pricing policy, internet enables an organization to monitor various aspects of the consumers including consumer behavior. According Smith, internet provides immense opportunity for business to get immediate consumer response through internet marketing survey.

Effect of internet marketing on marketing mix

The internet has great influence on 4Ps of marketing-Price, product, promotion and place. Darby et al (2003, p. 107) assert that the internet influences marketing mix by the fact that customers have access to information on prices for various products. They explain that with internet consumers can compare prices of a product from various suppliers. As a result, there is increase in price competition as well as price standardization. Internet technology has as led to reduction in cost of marketing, thus, leading to reduction in prices. Darby et al (2003) explains that with internet marketing companies have to come up with better pricing models. The internet provides consumers with opportunity to access information over various products. Unlike in the past, consumers have access to a lot of information over product. Darby et al (2003) posit that companies have to make effort to develop unique and competitive products for them to remain relevant. They explain that companies have to be very innovative in product development since consumers are able to search for information on product and services at very low cost. Darby et al. also says that ability of consumes to access information through the internet provide business opportunity that product developers can utilize by producing appropriate products. The internet also influences promotion activities. Darby et al (2003) explain that through internet marketing companies can be able to display information on their products. Unlike in conventional marketing, internet marketing allows market to access wide market at low cost. Internet marketing gives opportunity to even small-scale businesses to advertise their products globally.

Conclusion

Internet marketing provides great opportunity for a company to be successful in international business environment. The technology provides an efficient and less costly means for communicating to consumers. Despite of great opportunity provided by the technology, not all marketers succeed in internet marketing. The literature review has provided an important foundation into understanding internet marketing. Amazon.com has been successful in internet marketing. The research will be able to compare principles presented in the review with how Amazon.com implements internet marketing.

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