Internet Marketing Essay Sample

1. Introduction
During the past decennary. the popularity of the Internet has been turning explosively. This tendency is manifested in several ways. First. harmonizing to Cyberatlas. com ( 2002 ) . the Internet in the United States is turning at a rate of 2 million new Internet users each month ; 143 million Americans ( 54 per centum of the population ) used the Internet in September 2001. a 26 per centum addition over August 2000. Second. the figure of companies that create web presence to pass on with clients every bit good as other houses has been dramatically increasing. Third. the Internet has been accepted by wide Consumer sections for assorted intents. such as information hunt and online buying. Besides. as reported in Cyberatlas. com ( 2002 ) . 36 per centum of Americans use the Internet to seek for merchandises and service information. a 10 per centum addition over 2000. Among Internet users. 39 per centum are doing on-line purchases and 35 per centum are seeking for wellness information.

Along with the increasing popularity of the Internet. selling research workers have given qualitative and empirical attending to this phenomenon. Some academic diaries have released particular issues related to the Internet selling ( e. g. . Marketing Science. Journal of the Academy of Marketing Science. and Journal of Retailing ) . Old ages of research have yielded many of import findings. Among those surveies. the Internet has been viewed as a selling channel. a new advertisement medium. and a communicating platform.

2. Merchandises on the Internet
Research on the subject of Internet merchandises efforts to reply the undermentioned inquiries: • What sort of merchandises may be suited for online merchandising? • What sort of selling schemes can be used to ease online selling? Any merchandise is perceived by a purchaser to be a combination of public-service corporations ( e. g. . qualities. values. and/or capablenesss ) that is expected to supply client satisfaction assessed in footings of expected benefits minus costs incurred ( Murphy and Enis 1986 ) . By garnering information prior to buy. consumers can foretell whether the purchased merchandise may fulfill their demands and/or outlooks ( Alba et al. 1997 ) . The value of this information to consumers depends on its nature and its dependability ( Alba et al. 1997 ) . The nature of the information will probably be altered if one positions such information based on hunt. experience. and acceptance goods categorization ( Darby and Karni 1973 ) . From an economic point of view. goods are frequently classified into hunt. experience. and acceptance goods in footings of the consumers’ ability to measure quality and value earlier and after purchase ( Darby and Karni 1973 ) .

The quality and value of hunt goods can be 2 easy assessed by consumers prior to purchase ; the quality of experience goods is hard and/or dearly-won to measure prior to buy and usage ; the quality of acceptance goods can non be verified even after repeated purchase and use. Based on this trichotomous categorization. some selling research workers have drawn some probationary decisions sing the types of merchandises that may be successfully sold on the Internet. For illustration. Klein ( 1998 ) states that for hunt goods. the Internet has the possible to supply information in a more accessible. less dearly-won. and more customizable format. therefore increasing the value of the Internet. cut downing the costs of hunt straight ( e. g. . clip. travel ) and heightening the expected benefits by easing consumers’ information-processing. Similarly. Peterson. Balasubramanian and Bronnenberg ( 1997 ) anticipate that consumers who wish to straight see a good prior to buy may see the Internet as an uneffective replacing of traditional instore shopping where the good can be inspected.

Since hunt goods by and large tend to be more suited for online merchandising compared to see goods. in order for an experience good to be sold on-line successfully. information sing the good’s quality and value to the client should be made available anterior to buy. Research workers have addressed this issue from different positions. Taking the package and the wine merchandise class as an illustration of experience goods. Klein ( 1998 ) discusses how the Internet could transform experience into hunt properties. For case. the consumer can download a test or presentation version of the package and therefore acquire penetrations into the merchandise maps. Several vino sites offer visitants a wide range of information. runing from wine gustatory sensation information. wine maker histories. consumer reappraisals. to easy searchable merchandise databases. Alba et Al. ( 1997 ) besides illustrate that the same merchandise can be a hunt. experience. or acceptance good and how an experience good can be converted into a hunt good.

“If the cardinal properties of ice pick relate to see spirit. Ben & A ; Jerry’s Cherry Garcia might be a hunt good at a Ben & A ; Jerry’s shop. which allows a consumer to savor the ice pick prior to buy. It would be an experience good at first if a individual were purchasing at a supermarket that sells ice pick merely in cartons and does non let savoring prior to buy. Consequently. the Ben & A ; Jerry’s shop ab initio would hold an informational advantage over the supermarket. However. when the consumer learns that cherry Garcia on the carton label faithfully predicts experient spirit. the supermarket no longer would be at a disadvantage. ”

In other words. an experience good tends to be transformed into a hunt good as consumers become more familiar with the merchandise. provided the cardinal properties of the good remain consistent. Furthermore. it has been besides suggested that for some experience goods that are dominated by perceptual properties. the Internet can be every bit effectual as or even more effectual than traditional dealing channels to present utile information to consumers ( Alba et al. 1997. Klein 1998. and Pete rson. Balasubramanian and Bronnenberg 1997 ) . For illustration. consumers who purchase flowers based on the images presented in shops can make so on the Internet through 2D/3D images ; many Web sites have allow consumers to preview a picture or listen to a music Cadmium before they make a purchase. which can non be done traditionally. Alba et Al. ( 1997 ) term such a phenomenon as “predictability of satisfaction” which means that the suitableness of a certain merchandise class for on-line merchandising depends on the grade to which consumers can foretell how satisfied they would be if they make the purchase. 3

Mahajan. Srinivasan and Wind ( 2002 ) behavior a survey on 48 point. com retail merchants in 2000. They merely place 1-800contacts. com as the sole victor based on those points. com retailers’ pe rformance on the stock markets. Consistent with authors’ hypothesis. the victor is offering search goods online ( i. e. . contact lens ) . Based on old treatments. the undermentioned propositions are presented: P 2. 1: Search goods are by and large more suited for online merchandising than experience goods.

P 2. 2: Well-known merchandises are more suited for online merchandising than other merchandises.
P 2. 3: Firms can implement marketing schemes such as leting merchandise test and supplying more assessable information to transform experience goods into hunt goods on the Internet therefore contradicting the disadvantage of selling experience goods online.

Although research on this subject is chiefly based on theoretical logical thinking. consequences from this research watercourse seem robust as the consensus ( as indicated in the propositions ) has been established and good accepted within this country.

3. Internet as a Marketing Channel
3. 1 Internet as a Transaction Channel
Merely as any invention. the success of the Internet as a selling channel depends on the advantage the system can offer compared to other alternate systems or engineerings – as by supplying new valuable characteristics that better fit the consumer needs or transcend the public-service corporation provided by other channel formats. Research workers have been comparing the Internet with other marketing channels from different positions. Alba et Al. ( 1997 ) separate different retail formats in footings of costs and benefits to consumers. including supplying options for consideration. testing options to organize a consideration set. supplying information for choosing from a consideration set. dealing costs. and other benefits such as amusement. societal interaction and personal security. Peterson. Balasubramanian and Bronnenberg ( 1997 ) indicate that the Internet portions several features with other selling channels and adds a figure of other characteristics and capablenesss that are alone to the Internet medium. These features include the undermentioned ( Peterson. Balasubramanian and Bronnenberg 1997 ; Varadarajan and Yadav 2002 ) :

• Storing larger sums of information at comparatively low costs and supplying information interactively and customizably. therefore decreasing information
dissymmetry between purchasers and Sellerss ;
• Providing powerful and cheap ways ( e. g. . hunt engine ) to seek. form. and administer such information ;
• Supplying perceptual experiences ( e. g. . 3D image and video prevue ) ;
• Serving as a dealing medium every bit good as a physical distribution medium for certain goods ( e. g. . package ) ;
• Establishing presence at comparatively low costs ;
No bing selling channel possesses all of these features. Alba et Al. ( 1997 ) propose that for a given merchandise class. competition among alternate retail formats ( e. g. . supermarket. section shop. catalog. and Internet ) is virtually based on the comparing made by purchasers among these formats. Consumers compare different channel formats in footings of benefits provided by each format. The Internet has a 4 possible to profit consumers in several ways. The Internet enables consumers to entree goods that are unavailable in their local markets. gather information about options at about no pecuniary cost ( consumers merely need to pay the Internet connexion fee ) . expeditiously generate a consideration set from assorted providers through certain seeking engine. and easy do a comparing among options. In add-on. Verity and Hof ( 1994 ) suggest that it could be 25 % less dearly-won to prosecute in direct online selling.

A apparently important benefit of the Internet compared with other selling channels is the figure of options that become available to consumers within a given merchandise class. Due to the lower searching costs on the Internet. consumers have an chance to see a 1000 options. which is non the instance from in-store shopping. However. Alba et Al. ( 1997 ) indicate that some consumers may experience excessively boring and nerve-racking when they try to turn up a merchandise from an highly big consideration set. unless the following 1 to be considered is thought to be consistently different from those antecedently considered and has a different combination of public-service corporations. Szymanski and Hise ( 2000 ) besides find that merchandise offerings ( figure of offerings and assortment of offerings ) do non impact consumers’ satisfaction with the online retailing.

Therefore. the mere addition of possible options considered may non be the major ground for the Internet’s acceptance as a selling channel. Whether consumers choose online or offline shopping depends on what types of shopping experiences they are willing to derive through shopping. Burke ( 2002 ) conducts an online study ( 2120 responses ) inquiring shoppers to measure 58 online and 78 instore characteristics of the shopping experience. A high per centum of his respondents studies that online shopping must hold following characteristics: online and offline merchandise monetary values. convenient client service entree ( e. g. . toll-free telephone ) . dependable transportation ( e. g. . to place or office ) . secure on-line recognition card payment. e-mail order verification. and order trailing. whereas offline shopping must offer knowing gross revenues associates. competitory monetary values. fast check-out procedure. and payment options.

One characteristic that the Internet does non hold is the societal interactivity ; that is. the interaction between a client and gross revenues associate. On the one manus. a sales representative can supply information about the specific merchandise attributes. a capableness that greatly cut down consumers’ information processing costs ( Alba et al. 1997 ) . On the other manus. as suggested by Tauber ( 1972 ) . because clients are societal animals. they shop for interpersonal communicating every bit good as for goods. Tauber ( 1972 ) indicates five societal motivations that drive consumers to buy. viz. . societal experiences outside the place. communicating with others holding a similar involvement. peer group attractive force. position and authorization. and pleasance of bargaining. For consumers who value the societal interaction. “the success of a shop. every bit good as client satisfaction with the shop. depends on the store’s location and the manager’s ability to use the retailing mix in a mode that is consistent with the alone socioeconomic and psychographic features of the client base” ( Ingene 1984 ) .

However. it should be noted that non all clients need and want societal interaction when they shop. Assorted consumers interact with retail scenes in really different manners. For illustration. Stone ( 1954 ) finds that tierce of his respondents are “economic” shoppers who envision shops in footings of monetary value. merchandise quality. and ware mixture. Shopping clip is another issue that may count to consumers’ choice among channels. Ingene ( 1984 ) divides shopping clip into voluntary and nonvoluntary clip spent in a retail shop. Voluntary clip ( e. g. . trade name and monetary value comparings. browse. and societal interactions ) is under the consumer’s control and consumers spend such clip chiefly to heighten their shopping experience. Therefore. consumers can make up one’s mind whether they should cut down and even avoid voluntary clip during a shopping trip.

5 Factors that may impact voluntary clip include “consumers’ intrinsic involvement in shopping. the in-store retailing mix. and consumer’s sense of clip shortage” ( Ingene 1984 ) . In contrast. consumers can non avoid and cut down nonvoluntary clip ( e. g. . assemblage and carrying merchandises. and/or waiting in line ) if they make the purchase. Using this impression to the Internet. it is clear that the annoying nonvoluntary clip can be eliminated when consumers purchase online. The Internet shopping can besides shorten voluntary clip because consumers do non necessitate to see the physical shop. Two issues should be noted here. First. consumers can non get the merchandise instantly after they make the purchase online. Second. merely limited societal interaction is available on the Internet. Based on the old treatments and propositions. the undermentioned propositions are presented:

P 3. 1: Merchandise types. merchandise information. consumer features. and consumers’ usage of shopping clip are linked to consumers’ choice among channels. P 3. 2: Consumers are more likely to buy hunt goods online than experience goods. The more the merchandise information is provided on the Internet. the more likely the consumers will buy online. The higher the consumer values the societal interaction. the less likely the consumers will buy online. The stronger the consumers’ sense of clip deficit. the more likely the consumers will buy online. The figure of options provided has small consequence on consumers’ choice among channels.

Empirical surveies on this subject are scarce and should be conducted to a greater grade in the hereafter. Following inquiries are presented for future research waies. • On the demand side. what factors may act upon consumers’ shopping and purchase on the Internet? Why do consumers take the Internet over other selling channels? Do personality such as risk-taking. merchandise classs. attitude toward the Internet. demographic features ( e. g. . income. instruction. gender. and age ) . experiences. and/or determination regulations matter? On the supply side. what is the influence of sites planing. pricing. stigmatization. transportation and handling. customizing. advertisement. and information providing? • What factors may act upon the consumer’s usage of a combination of several selling channels to do the concluding purchase. such as geting information in one channel and buying in another channel? How make consumers’ determination schemes affect the integrating of multiple channels? 3. 2 Internet as a Communication Channel

Conceptually. the Internet serves as an highly efficient medium for accessing. forming. and pass oning information ( Peterson. Balasubramanian and Bronnenberg 1997 ) . At present. the Internet encompasses assorted communicating engineerings runing from the written and spoken words to ocular images. Research workers have pointed out some communicating relationships that are possible on the Internet but non available in traditional mass media ( e. g. . magazines. newspapers. telecasting. wireless. di rect mail ) . First. the Internet is a many-to-many medium through which companies and consumers communicate between each other ( e. g. . information on the Websites. electronic mail. and/or on-line forum ) . whereas the traditional mass media has a one-to-many communications procedure in which a house transmits content through a medium to tonss of consumers ( Deighton and Barwise 2001 ; Hoffman and Novak 1996 ) . It should be noted that the Internet is besides a one -to-many medium. For illustration. a 6 company develops a Web site with stati degree Celsius information that is accessed by many visitants. Second. consumers and houses can interact with the Internet ( Deighton and Barwise 2001 ; Hoffman and Novak 1996 ; Stewart and Pavlou 2002 ) .

Under traditional media. consumers can non straight command an advertisement message or easy bespeak farther information. which can be done on the Internet. For illustration. a consumer is interested in certain on-line advertizement and a chink can take him/her to more elaborate information. Furthermore. such interactivity can straight ensue in the existent merchandise bringing for some information goods ( e. g. . package. maps. music. tickets. etc. ) ( Kalyanam and McIntyre 2002 ) . Note that a combination of different traditional media may besides derive such consequence. For illustration. if a consumer efforts to obtain farther information on a Television advertizement. he/she can make so through a telephone. However. this may be less effectual than the Internet “in which the call to action can be followed up instantly by the consumer” ( Chaffey et al. 2000 ) . Third. possibly the Internet’s most extremist differentiation from traditional media is that consumers can set productrelated content on the Internet ( Hoffman and Novak 1996 ) . For illustration. Amazon. com allows consumers to post book reappraisals on the web. which can function as word of oral cavity that is valuable to other clients.

The displacement of traditional one -to-many communications to online many-to-many communications has import deductions ( Hoffman and Novak 1997 ; Varadarajan and Yadav 2002 ) . One is electronic word of oral cavity. Since some online mediators ( e. g. . Epinion. com ) have provided platforms for consumers to post their reappraisals on merchandises every bit good as on-line retail merchants. as the Internet continues to turn. more and more clients will be given to read these reappraisals before they make a purchase. One customer’s negative experience with a certain retail merchant can be disseminated among a 1000 consumers. which is non the instance in traditional shopping environments. Therefore. the effects of word of oral cavity on consumers’ purchase connotations are arguably much stronger for online shopping than for traditional shopping. Chatterjee ( 2001 ) through empirical observation investigates the consequence of on-line reappraisals on consumers’ purchase purposes and finds that consumers who select retail merchants based on monetary value -related factors are more likely to alter their purchase purposes after reexamining negative WOM information than those who select retail merchants based on acquaintance. Since most on-line shoppers are driven by the Internet’s ability of offering the best monetary value. one of import deduction of Chatterjee’s survey is that on-line retail merchants who attempt to pull consumers by the lowest monetary value are most vulnerable to the negative WOM information and should react consequently and decently.

Hoffman and Novak ( 1996 ) besides suggest that the Internet can be a combination of assorted traditional media. For illustration. telecasting media provide comparatively short-run exposure with low information content that is dynamic. whereas the print media provide comparatively long-run exposure with high information content that is inactive. Ad on the Internet carries the characteristics of the both media. It can be a short-run exposure if visitants merely spend a short clip on the advertisement ; it besides can be a longterm exposure since visitants can read elaborate information within each Web site ; the content of Internet advertisement can be visualized and verbalized as some commercial sites have already provided information in picture and/or sound formats. A new communicating method between purchasers and Sellerss occurs since the coming of the Internet. viz. . e-mailing. Such method can non merely function as an advertisement medium. but besides dramatically cut down companies’ communicating costs. An increasing figure of consumers are willing to contact houses through electronic mails before and/or after purchase. There can be no uncertainty that the email selling provides companies with new chances which allow for houses to spread out their concern by pulling new clients every bit good as repeated purchase. 7

Some research workers through empirical observation compare the Internet with other media. For illustration. Ducoffe ( 1996 ) and Brackett and Carr ( 2001 ) compare five media ( telecasting. magazine/newspaper. wireless. catalog/direct media. and Internet ) in footings of how valuable they soon are as beginnings of information and how valuable they will be in the hereafter ( 5 to 10 old ages ) . Subjects in both surveies rank telecasting and magazine/newspaper foremost and 2nd. severally. bespeaking that telecasting and magazine/newspaper are still the major beginnings of information at present clip. While topics in the Ducoffe survey ranked the web fifth. pupils in Brackett and Carr’s ( 2001 ) survey ranked it tied with wireless at 3rd. Most notably. in students’ future anticipations. the web replaces telecasting as the number-one ranked medium. bespeaking the influence of the Internet as a beginning of information is expected to increase. In general. the Internet can supply more merchandise information compared with other selling channels. but consumers still can non straight see the merchandise online. The inquiry raised here is how the content and format of information provided online can impact consumers’ willingness to buy without sing the merchandise. In add-on. the effects of on-line word of oral cavity on consumers’ purchase connotations need farther empirical scrutinies.

4. The Adoption of the Internet
Research on this subject attempts to reply following inquiries. • What factors may act upon firms’ and consumers’ acceptance of the Internet? • How does the add-on of the Internet influence firms’ public presentation how do consumers act online?

4. 1 Consumer side
Research on the Internet selling has identified a set of factors that may impact consumers’ credence of the Internet as a dealing channel and/or communicating medium. including demographic variables. psychographic features. attitudinal traits and situational factors.

It has been found in both U. S. and Asia that male consumers with high income and instruction degree are more likely to buy online. whereas age differences do non count ( Li. Kuo and Russell 1999 ; Sin and Tse 2002 ) . Understanding which demographic section is utilizing the Internet is of import in that on-line houses can plan effectual and proper selling schemes for their mark markets. However. as the rapid diffusion of the Internet every bit good as the societal and economic alterations. female. less educated and low income population may all hold entree to and be bit by bit familiar with the Internet. As a consequence. the demographic factors will play a less of import function in finding consumers’ Internet credence.

Research has shown that psychographic variables. such as freshness seeking. merchandise engagement. demand for societal interaction and sensed behavioural control have an consequence on consumers’ determination on whether or non to buy online ( Kokkinaki 1999 ; Shim et. Al 2001 ; Sin and Tse 2002 ) . Specifically. taking both demographic and psychographic features into history. Parasuraman and Colby ( 2001 ) place five different types of new engineering adoptive parents: the optimistic and advanced adventurers. the advanced yet cautious innovators. the unsure sceptics. the insecure paranoiacs. and the immune dawdlers.

Consumers’ attitudinal features besides influence their acceptance of the Internet. Among factors under probe. perceived convenience is the focal concept of researchers’ involvements ( Li. Kuo and Russell 1999 ; Szymanski and Hise 2000 ) . For illustration. Szymanski and Hise ( 2000 ) find that “convenience” is the most of import forecaster of e-satisfaction and step it in footings of clip and shoping easiness. It has long been argued that on-line security and privateness is of consumers’ major concern when they decide whether or non to prosecute in electronic minutess ( e. g. . Hoffman. Novak and Peralta 1999 ; Stewart and Pavlou 2002 ; Zeithaml et Al. 2002 ) . For illustration. Bruskin/Goldberg Research reports that 75 % of Internet shoppers consider credit-card security a primary concern ( see Chain Store Age. 1999 ) .

Specifically. Hoffman. Novak and Peralta ( 1999 ) province that consumers’ on-line information privateness is the primary barrier to the online shopping. When buying online. consumers fear that they have less environmental control and secondary usage of information control. Environmental control is defined as the consumers’ ability to command other parties’ actions ( e. g. . creditcard information may be stolen by others ) . while secondary usage of information control is defined as the consumers’ ability to command the airing of their personal information ( e. g. . on-line houses may sell consumers’ personal information to others without their permission ) ( Hoffman. Novak and Peralta 1999 ) . However. in a study of 220 on-line shoppers. Jarvenpaa and Todd ( 1997 ) find that the Internet security is non the chief barrier to consumers’ Internet acceptance. Rather. consumers are more concerned about other factors. such as the easiness of pilotage. trouble in happening a specific point. monetary value. and client service.

Surveies on self-service engineerings besides identify some factors that may bring on consumers’ positive or negative reactions to the Internet shopping service. Meuter et Al. ( 2000 ) find that their topics are most satisfied with engineerings that can salvage clip ( 30 % ) . work faithfully ( 21 % ) . be easy to utilize ( 16 % ) . run into a salient demand ( 11 % ) . and offer greater control and entree ( 8 % ) . whereas topics are non satisfied when engineerings fail ( 43 % ) . procedures fail ( 17 % ) . or services are ill designed ( 17 % ) . Based on the old treatment. it is clear that a figure of factors influence consumers’ likeliness to shop on-line and different consumers may value these factors ( excepting demographic characteristics ) otherwise. Understanding these dealingss is of import for companies who are be aftering to sell merchandises on-line since it can assist them section and place their mark markets.

Given that consumers’ Internet acceptance rate continues to turn. on-line consumer behaviour is another issue that attracts researchers’ attending. Some research workers attempt to place factors that may impact consumers’ on-line behaviours. while others try to develop a theoretical theoretical account that explains and organizes consumers’ on-line behaviours. Research has found that consumers’ cognition about the Internet may impact their on-line behaviours. For illustration. Hammond. McWilliam and Narholz-Diaz ( 1998 ) find that as novitiates continue surfing the Internet and derive more experiences. their involvements tend to be shifted from initial fun-seeking to information-seeking. Some specific on-line consumer behaviours are besides of researchers’ involvements. including consumers’ perceptual experience of on-line service quality ( Zeithaml. Parasuraman. and Malhotra 2002 ) . consumer perceptual experiences of the Web ( Geissler and Zinkhan 1998 ) . on-line client trueness ( Abbott et. al 2000 ; Srinivasan. Anderson and Ponnavolu 2002 ) . client exchanging behaviour in online services ( Keaveney and Parthasarathy 2001 ) . and the impact of shopbots on consumer behaviour ( Smith and Brynjolfsson 2001. Smith 2002 ) .

The construct of “flow” and a procedure theoretical account of its ancestors and effects ( Hoffman and Novak 1996 ) is the first effort to explicate consumers’ navigating9 behaviour on the Internet. Hoffman and Novak ( 1996 ) specify the flow experience in a computer-medicated environment ( e. g. . Web ) as the province that is “ ( 1 ) characterized by a seamless sequence of responses facilitated by machine interactivity. ( 2 ) per se gratifying. ( 3 ) accompanied by a loss of self-consciousness. and ( 4 ) self-reinforcing. ” When sing flow. consumers are so involved as to lose the sense of ego and control of clip.

The Y indicate three types of ancestors of flow. viz. . control features which include an equal degree of accomplishments and challenges and a sensed congruity between them every bit good as the presence of focussed attending. content features such as interactivity and color. and process features such as motive ( extrinsic or intrinsic ) . engagement ( situational or digesting ) . benefits ( useful or hedonistic ) . and types of hunt ( directed or nondirected ) . They further province that consumers sing the flow can accomplish increased acquisition. greater sensed behavioural control. increased exploratory and participatory behaviour. and positive subjective experience. In a subsequent research paper. Novak. Hoffman and Yung ( 2000 ) through empirical observation test their theoretical account of flow utilizing a structural mold attack. By adding rousing and gaiety. they eventually develop a theoretical account that has 12 concepts and three Web use variables. Luna. Peracchio and de Juan ( 2002 ) besides investigate the flow construct in a cross-cultural environment. One primary deduction of their theoretical accounts is that sellers should make flow for consumers.

However. by oppugning whether flow is a general plenty construct to explicate assorted facets of consumer online behaviour. Dholakia and Bagozzi ( 2001 ) suggest the construct of “mind-sets” and a theoretical account of mind-set formation and influence in digital environments. A mentality is defined as a “specific cognitive orientation. ” Each mentality ( deliberative. instrumental. or exploratory ) is associated with its ain undertakings and aims and specific environment cues may do consumers to exchange between different mentalities ( Dholakia and Bagozzi 2001 ) . For illustration. a consumer who starts surfing the Internet with a deliberative mentality ( e. g. . seeking wellness information ) may stop up with an explorative hedonistic mentality ( e. g. . playing an on-line game ) as a chink on a pop-up window leads him or her to make so. Their theoretical account suggests that the formation of a mind-set depends on consumers’ ends. cognition and experience. and emotions ; consumers’ mentalities besides affect their navigating behaviours ( e. g. . where to see and how long to remain ) ; the effects of mentalities and pilotage are rating of overall on-line experience. changed emotion and some specific rating ( e. g. . a peculiar web site ) which. in bend may ensue in modified ends and a changed mentality. 4. 2 Firm Side

Two sorts of companies are expected to be more successful on the Internet. One involves retail merchants that have strong national repute for supplying high-quality. alone ware. but that have merely regional incursion ( Alba et al. 1997 ) . Such retail merchants can capitalise on the market-expanding characteristic of the Internet by pulling new clients without doing important investings in shop locations. The Internet besides is ideal for niche retail merchants that attempt to make a widely distributed client base ( Quelch and Klein 1996 ) . Similarly. Peterson. Balasubramanian and Bronnenberg ( 1997 ) indicate that the Internet seems to be particularly suited for aiming niche markets in which purchasers and Sellerss are little and geographically dispersed. and the merchandises or services are specialized or alone ( e. g. . rare collectables ) . For illustration. Hothothot. com is a forte shop that offers more than 100 trade names of hot sauce and salsa via the Internet. and ships ware to more than 43 states. The Internet gives such steadfast international exposure without important investings in advertisement. P 4. 1: Among assorted sorts of companies on the Internet. the large companies with strong repute and the little. specialized companies are more likely to win than other houses. 10

Adopting the Internet by retail merchants and makers offers benefits every bit good as incurs costs. On the positive side. retail merchants. by supplying on-line shopping can cut down operating costs ( e. g. . constructing one centralized warehouse alternatively of many single shops ) . transport fewer stock lists ( e. g. . transporting ware straight from makers to clients ) . spread out geographic incursion. and more efficaciously and expeditiously pass on with consumers ( e. g. . Benjamin and Wigand 1995. Burke 1997. Quelch and Klein 1996 ) . On the negative side. retail merchants may experience that set uping and keeping a web site every bit good as doing it known by consumers requires a important investing of clip. money and accomplishments ( e. g. . Burke 1997. Geyskens. Gielens. and Dekimpe 2002 ) . Some retail merchants are besides unwilling to post their monetary values on the Internet because they fear that making so may increase market efficiency for consumers and rivals therefore cut downing their borders ( e. g. . Burke 1997. Degeratu. Rangaswamy. and Wu 2000 ) .

For makers. the Internet provides an cheap and effectual manner for them to interact with their clients therefore easing the constitution of one-to-one selling. In add-on. the displacement of channel power from makers to retail merchants in recent old ages may actuate some makers to prosecute in direct selling such as the Internet merchandising in order to recover such power ( Burke 1997 ) . However. makers are besides loath to sell their merchandises online for several grounds. First. makers may confront revenge from their mediators. Second. most makers merely carry a narrow merchandise line and they have to collaborate with certain retail merchant ( Burke 1997 ) . Third. the channel cannibalization may happen ( consumers switching from bing channels to the Internet channel ) ( Alba et al. 1997. Geyskens. Gielens. and Dekimpe 2002 ) .

Some research workers through empirical observation investigate factors that may impact firms’ willingness to take part in electronic markets and their subsequent public presentation. For illustration. Grewal. Comer and Mehta ( 2001 ) find that efficiency motive and IT capacity are of import determiners of firms’ engagement in B2B electronic markets among jewellery bargainers. Geyskens. Gielens and Dekimpe ( 2002 ) look into how the Internet channel add-on affects a newspaper firm’s fiscal public presentation. They find that houses with less direct channel experience and more channel power outperform those with more direct channel experience and less channel power in the stock market. In order for the Internet to be successful as a new selling medium. it must be at the same time adopted by both houses and consumers ( Gupta and Chatterjee 1997 ) . In fact. the Internet acceptance by each group is mutualist. A consumer is more willing to utilize the Internet if there are a big figure of on-line companies. while a house is more likely to make its Web presence if there are a big figure of possible online consumers ( Gupta and Chatterjee 1997 ) .

This phenomenon is alleged “network effects” – the value of a merchandise or engineering ( e. g. . Internet entree. telephones. facsimile machines. and e-mail ) increases as the figure of users additions ( Shapiro and Varian 1999 ) . Based on this impression and the possible high costs for consumers exchanging from one site to another. some research workers suggest the first-mover advantage for houses wishing to prosecute in electronic market exchange ( Shapiro and Varian 1999 ; Varadarajan and Yadav 2002 ) . Though the first-mover advantage has been proven for some web sites ( e. g. . Yahoo. com and eBay. com ) . it may non be true for every sites peculiarly those retailing sites because of the easiness of exchanging ( Reibstein 2002 ) . Specifically. Geyskens. Gielens and Dekimpe ( 2002 ) find that early followings have a better public presentation on stock market than both innovators and late followings in a newspaper industry. 11

As more and more houses set up their Internet channels. many retail merchants find themselves in multiple channels. keeping their physical shops while besides making a web presence. As a consequence. some inquiries need to be answered ; for illustration. does this selling scheme increase a retailer’s sum gross revenues? If non. how these channels interact with each other and what function. if any. does cannibalization play in multiple channels? What selling scheme can retail merchants follow to incorporate its multiple channels? Should retail merchants implement different selling mix in different channels? Under what fortunes and to what degree should retail merchants ease consumers’ efforts to organize their behavior across channels?

5. The Effects of Internet on the Traditional Markets
The Internet is an of import focal point for sellers. as indicated by Hoffman and Novak ( 1996 ) . for several grounds. First. consumers and houses are carry oning a significant and quickly increasing sum of concern on the Internet. Second. the market prefers the decentralized. many-to-many Web for electronic commercialism to the centralized. closed-access environments provided by the online services. Third. the WWW represents the broader context within which other interactive multimedia CMEs ( Computer-mediated Environments ) exist. Fourth. the Web provides an efficient channel for advertisement. selling. and even distribution of certain goods and information services. It is already clear that the Internet is altering the regulations by which selling is conducted and evaluated. and new consumer market constructions will emerge as a effect of the Internet ( Peterson. Balasubramanian and Bronnenberg 1997 ) .

Levy ( 1996 ) believes the Internet would finally go “the medium by which we keep in changeless contact with our households. ticker telecasting. dart off a note to a friend. look into the traffic. read the new paper. fix a study for work. do a phone call. purchase a book. ” The volume and inclination of the Internet minutess reflect a more and more of import function the Internet is playing. Harmonizing to Cyberatlas. com ( 2001c ) . consumers spent $ 59. 7 billion online in 2000. compared to $ 30. 1 billion in 1999. a 98 per centum addition. eMarketer undertakings B2C planetary e-commerce grosss will make $ 101 billion by year-end 2001. lifting to $ 167 billion in 2002 and $ 250 billion by 2003. Harmonizing to Gartner. Inc. the value of world-wide B2B Internet commercialism gross revenues minutess surpassed $ 433 billion in 2000. a 189 per centum addition over 1999 gross revenues minutess. Worldwide B2B Internet commercialism is projected to make $ 919 billion in 2001. followed by $ 1. 9 trillion in 2002. In 2003. the market will increase to $ 3. 6 trillion. and at the terminal of 2004. world-wide B2B Internet gross revenues minutess are forecast to make $ 6 trillion ( Cyberatlas. com 2001d ) .

5. 1 The Internet and Competition
The outgrowth of the Internet changes the nature and strength of competition. The Internet may alter the manner how existing retail shops compete ( Balasubramanian 1998 ) . In the state of affairs in which consumers’ cognition about merchandises is high. each retail merchant competes against its direct Internet channel instead than against the adjacent retail merchant ( Balasubramanian 1998 ) . The important point here is that consumers’ taking between channels is different from consumers’ taking between retail merchants. Sing the traditional position that the Internet has the possible to increase competition due to the easier monetary value hunt online. opposite consequences have been found in recent surveies. Lynch and Ariely ( 2000 ) find that for differentiated merchandises like vinos. take downing the cost of hunt for quality information reduced monetary value sensitiveness. which makes it easy for consumers to compare across shops and need non escalate monetary value competition.

Specifically. Lal and Sarvary ( 1999 ) find that the Internet is likely to diminish the degree 12 of monetary value competition when the Inte rnet users reach a high per centum of the whole population. when non-digital properties are relevant but non ruling. when consumers antecedently hold a more favourable attitudes toward their presently owned trade names. and when the purchase state of affairs can be characterized by “destination shopping” ( i. e. the cost of sing an extra shop is lower than that of set abouting the shopping trip ) . Similarly. Zettelmeyer ( 2000 ) argues that a rise in the range of the electronic channel relieves some of the competitory force per unit area by cut downing firms’ entire cost of supplying information to consumers.

Research on on-line monetary value scattering besides supports the position that the Internet does non needfully increase the competition. If the Internet markets are more competitory than conventional markets. monetary value scattering in the online markets would be expected to be narrower than in comparable offline markets. However. Brynjolfsson and Smith ( 2000 ) . Clemons. Hann and Hitt ( 2002 ) . and Pan. Ratchford and Shankar ( 2002 ) have all found that monetary value scattering in fact well exists in the Internet markets and is no lower than in traditional markets. A primary deduction of these surveies is that the Internet may non be as an efficient information beginning as we expected. Though findings in those surveies are same. writers interpret their findings otherwise. For illustration. Brynjolfsson and Smith ( 2000 ) attribute the being of on-line monetary value scattering to such factors as market immatureness and retail merchant heterogeneousness ( e. g. . trust and consciousness ) . whereas Pan. Ratchford and Shankar ( 2002 ) argue that retail merchant heterogeneousness merely explains a little part of monetary value scattering and the staying part is accounted for by the type of on-line retail merchants ( Internet-only vs. bricks-and-clicks retail merchants ) . Research refering to whether monetary values on the Internet are lower than those in conventional channels is assorted.

Arguments for both sides exist in the literature. Brynjolfsson and Smith ( 2000 ) comparison monetary values for books and Cadmiums across the Internet and traditional channels and happen that the monetary values on the Internet are 9-16 % lower than in conventional channels. depending on whether other costs related to revenue enhancements. transportation and handling have been accounted for. On the other manus. some research workers show that under certain fortunes. higher monetary values are expected to be charged on the Internet. Alba et Al. ( 1997 ) indicate that consumers’ monetary value sensitiveness on the Internet would be lower than in other traditional channels when the nonprice attributes ( e. g. . quality. service ) are of great importance. In other words. an on-line house can distinguish its merchandises from the competitors’ merchandises through nonprice property information supplying and service offerings therefore diminishing consumers’ monetary value sensitiveness and doing higher online monetary values possible. As discussed antecedently. Lal and Sarvary ( 1999 ) besides show that the Internet may supply chances for houses to bear down high monetary values ( e. g. . the range of Internet is sufficiently high ) .

Though there are statements for both higher and lower monetary values on the Internet compared to other channels. monetary value is still the dominant factor that attracts consumers to a specific online retail merchant ( Reibstein 2002 ) . Peterson. Balasubramanian and Bronnenberg ( 1997 ) make an premise that usage of the Interne T for selling intents will non increase overall consumer disbursement. They argue that there is no intuitive ground why the Internet will do consumers to pass more. Rather. usage of the Internet in marketing to consumers will more likely consequence in a redistribution of grosss among channels or among members within a channel. This implies two sorts of new competitions that result from the outgrowth of the Internet. One is the competition between the Internet and other channels. The other is the competition among Internet sellers.

Some research workers look into how the Internet may act upon firms’ competitory selling scheme. For illustration. Varadarajan and Yadav ( 2002 ) indicate that the Internet has the possible to heighten the effectivity and the efficiency of all selling mix elements ( e. g. . 4P ) except the existent distribution of nondigital merchandises. 13 However. Varadarajan and Yadav’s ( 2002 ) focal point is on the displacement of the traditional physical market place to the intercrossed 1 that encompass both physical and electronic market place. They do non see the competitory scheme of pure-Internet houses. Kalyananam and McIntyre ( 2002 ) present the e-marketing mix as compared to the conventional selling mix. Besides traditional 4Ps – merchandise. monetary value. publicity and topographic point. their e-marketing mix contains seven excess elements thought to be indispensable for e-marketing. including personalization. privateness. client service. community. site. security. and gross revenues publicity. They conclude that e-marketing mix has more overlapping elements and the integrating of those elements is more common as compared to the traditional 1.

The Internet besides diversifies the pricing mechanism. Such pricing schemes as forward auctions. rearward auctions. dynamic pricing. and “name your ain price” that seem impracticable traditionally can be efficaciously implemented on the Internet ( Kalyananam and McIntyre 2002 ) .

5. 2 The Internet and Mediators
Some research workers have examined the consequence of the Internet on traditional mediators. Peterson. Balasubramanian and Bronnenberg ( 1997 ) bespeak how the Internet might impact three types of channel mediators. viz. . distribution channels. dealing channels. and communicating channels. They argue that the potency that the Internet offers for efficiency betterments in channel maps will evidently vary across the three types of mediators. Specifically. the logistic maps of distribution mediators are likely least dependant on the being of the Internet except for information goods such as package that can be distributed via the Internet ; dealing channel mediators will likely be more affected by the being of the Internet because it will be possible for Sellerss to efficiently interact with single purchasers and possible purchasers ; communicating channel mediators will likely be the most affected by the being of the Internet. Benjamin and Wigand ( 1995 ) maintain that the Internet has the capacity to “eliminate retail merchants and jobbers wholly. ”

Although under certain conditions the Internet will likely do some grade of disintermediation because of the distribution. dealing. and communicating maps it can ease for some merchandises and services. on the other manus. the Internet may besides take to more channel mediators. such as evaluation services. automated telling services. and order consolidation services ( Peterson. Balasubramanian and Bronnenberg 1997 ) . Similarly. Sarkar. Bulter and Steinfield ( 1998 ) besides emphasize the importance of mediators in the Internet-based markets. They province that cybermediaries. such as gateways. directories. hunt services. on-line retail merchants. and on-line publishing houses. can function as an efficient mechanism for back uping the diversified commercial exchanges on the Internet.

5. 3 The Internet and Customer Relationship Management ( CRM )
The Internet and its associated communications engineering have dramatically enhanced the ability of houses to interact. thereby better functioning their consumers every bit good as other relational spouses. Peppers and Rogers ( 1999 ) province that “relationship selling has merely late become practical and cost-effective on a big graduated table because of database engineering and the Internet” ( p. 122 ) . The Internet has the ability to profile client relationships and develop customized offerings due to Internet-based applications. therefore doing certain client relationship direction scheme possible ( Sawhney and Zabin 2002 ) . On-line houses can non merely sell different merchandise bundles to different client sections. but besides provide merchandise offerings separately as some commercial sites have allowed clients to configure their ain merchandises ( e. g. . Dell Incorporation ) . Based on customers’ penchants and the Internet-based interactions between houses and 14 consumers. houses can so better their merchandise and service offerings and therefore intensify their relationships with the clients. Along with this procedure of personalization and customization. client trueness will besides increase ( Srinivason. Anderson and Ponnavolu 2002 ) .

Sawhney and Zabin ( 2002 ) indicate that the Internet can be served as the platform that enables relationship direction. In other words. the Internet provides houses with an efficient and effectual tool for CRM. Traditional relationship direction applications have two jobs – consecutive information flows and deficiency of application integrating that may take to detain and inconsistent information bringing. Such jobs can be good solved in the Internet-based environment in which all relationship pa rtners can be interconnected and information can be disseminated synchronously ( Sawhney and Zabin 2002 ) . The Internet. Intranet and Extranet. albeit covering with different relationship spouses. consist of a incorporate endeavor relationship direction substructure ( Sawhney and Zabin 2002 ) .

Some research inquiries within this subject are presented below for future research waies.
• To what degree can makers short-circuit the retail merchants and sell straight to consumers on the Internet? How does disintermediation work in footings of different merchandise classs and selling sections?

• Competition among Internet sellers is ineluctable. What selling schemes could be effectual. merchandise differentiating. monetary value know aparting. and/or selling sectioning? How can these schemes be implemented? • Constructing an effectual firm-customer relationship requires both parties to do relationship-specific investings ( Williamson 1975 ) . As these investings addition. the relationship will be strengthened and clients will confront increased costs if they attempt to exchange to another relationship. One research issue is to find how houses can do clients put more into the relationship in the context of the Internet. What incentives and offering bundles can be provided by houses to pull and retain clients to larn more about those houses every bit good as their merchandises and finally do perennial purchases? 6. Decisions

More than ten Old ages of Internet selling research have yielded a set of of import findings. Based on our reappraisal of these findings. it is clear that the Internet is playing a more and more of import function in the field of selling.

Understanding Internet selling will go on to be important for at least three grounds. From an academician’s position. it non merely helps derive new thoughts about the Internet. but besides enhances our apprehension as to whether bing selling theories can be applied to this new phenomenon. From a practitioner’s position. Internet selling research provides cognition about the online consumer’s beliefs and behaviours. therefore heightening the online firm’s chances to win. From a public policy maker’s position. there are a figure of subjects that need to be addressed. such as security. consumer protection. and revenue enhancement. Future probes can be targeted at each of these three positions.