Internet marketing is the use of the INTERNET to promote, distribute, and price goods and SERVICES for target audiences. While uses of the Internet are constantly changing, several successful Internet marketing models are evolving to facilitate E-COMMERCE and E-BUSINESS.
First, the Internet as a means of promotion is clearly established. Early Internet marketers had dreams of putting up a site on the WORLD WIDE WEB and drawing customers from around the world. In many ways, it was like the production mentality of the American Industrial Revolution: build it and they will come. The implosion of the DOT-COMS industry in 2000 brought marketers and investors back to reality, but the use of the Internet to promote goods and services is still expanding daily. Early Internet marketers often created what were known as “billboards” a Web page listing the phone number and address of the company and its logo. These were quickly replaced by informational sites that allowed consumers to access a wide array of information about the company, thus saving time and personnel for marketers. Since the goals of promotion are typically to inform, persuade, and/or remind consumers about a company, Internet marketers quickly learned to use the new medium in such a way that consumers could gather helpful information for their purchase decisions.
Some Internet marketers found they could do more than just promote their PRODUCTs; they could also take and confirm orders, and even deliver products electronically. The airline, hotel, and auto-rental industries quickly developed the capability to make reservations over the Internet. In the process, distribution systems changed. Travel agents and other service-industry intermediaries are disappearing as Internet direct sales are expanding. Automobile manufacturers have also been tempted to use the Internet for DIRECT MARKETING, but to date, having established distribution relationships with car dealerships, most have opted to direct Internet customers to retail outlets.
One of the Internet’s most amazing uses is on-line auctions. eBay and other Web auction systems are dramatically changing a wide variety of markets. The market prices for antiques and collectibles have plummeted with expanded market access through the Internet. In addition, Internet auction sites are important sources of market price information, reducing the ARBITRAGE possibilities used by many retail antique dealers. While some auction systems like Priceline.com have not been fully accepted by consumers, businesses are expanding their use of Internet auctions both to sell excess inventory and to purchase standardized products.
Another use of the Internet is the expansion of specialty merchants on-line. Several years ago, one merchant created a Web business solely for marketing hot sauces. Amazon. com started as a new-book retailer, holding minimal inventory but using relationships with major publishers to quickly fulfill Internet orders. Comparison-shopping websites expanded, allowing consumers to search multiple Web merchants for the best price for the product or service they desired.
Pricing strategy using the Internet is just beginning to evolve. Airlines are now ADVERTISING discount rates for Internet users both on their own sites and through group sites. Orbitz.com, created by airline companies, competes with other discount-pricing sites. Hotel and auto-rental companies have been slow to recognize the Internet as a distinct market segment and a way to discount services.
Some products and services like software and information can be delivered over the Internet. Relatively few firms are making a PROFIT using the Internet for delivery, but products such as Norton antivirus software, information distributors such as the Wall Street Journal, and agencies such as the INTERNAL REVENUE SERVICE are using the Internet to reach consumers. Access to secondary data, whether from government or private sources, is one of the major products available through the Internet. This information access is allowing entrepreneurs throughout the world to compete in major markets like the United States. For example, data processing and accounting services for U.S. firms are now being subcontracted to Indian businesses.
One of the visions of Internet marketing was a global marketplace in which a small entrepreneur with the right strategy could compete with the multinational giants. To some degree this is possible, but like BRANDS in a store, name recognition, preference, and loyalty is an evolving trend on the Internet. Major Internet marketers are buying up failing competitors’ domain names (their identifying Web address), increasing their market dominance. International trade restrictions are to some degree limiting global COMPETITION. Because Internet markets are changing so rapidly, global trade agreements regarding Internet marketing lag behind market advances.
Establishing and maintaining loyal Internet customers is a challenge for many marketers. With a click consumers can move from one competitor to the next. Contests, newsletters, and frequent-user programs are all being tested to increase Internet customer loyalty. Many different models are being used in Internet marketing, as evidenced in the wide variety of hotel Web sites. Some are “designer” sites—i.e., “come look and see how fabulous your stay will be with us” sites. Another group of sites will be more direct—“Let us take your order.” A third group of sites will display everything there is to do and see in or know about the cities or areas where the hotels are located.
One successful Internet marketing strategy is target email. By using opt-in e-mail distribution lists, lists of e-mail recipients who have agreed to receive marketing messages, marketers are quickly and efficiently communicating with target audiences. For example, one car dealership purchased an e-mail list for consumers in its geographic area and sent a message to 20,000 addresses, offering a price reduction to anyone who responded and offering a contest for a free car. Recipients enthusiastically entered the contest, forwarded the e-mail solicitation to friends, and generated more than enough new customers to justify the cost.
Like most marketing methods, Internet marketing is not without controversy and concern. The two major issues are PRIVACY and spam (junk e-mails and ads). Most ethical marketers reframe from spam, and most Internet marketers have established and posted clearly stated privacy policies. Other Internet marketing issues include “cyber hustlers,” “cyber squatters,” and “typo squatters.” Cyber hustlers are marketers who legally purchase rights to domain names that are not renewed. Like TRADEMARKs, domain names have value and are obtained on a first come, first served basis. In the United States domain names are registered through domain registry companies, licensed by the government to allocate specific Web addresses. If a company does not renew its domain name, it gives up its rights to the name, which then goes back into the available domain-name pool. Cyber squatters purchase potentially popular domain names and sell them to late-entry marketers. For example, an entrepreneur who learned about the new South Carolina lottery registered a number of logical domain names for the new program. Typo squatters register domain names that misspell or approximate a popular domain name, hoping to sell them to businesses at a profit. For example, one typo squatter registered amaza.com.
According to Net Solutions, the first domain registry company in the United States, in November 1999 the U.S. Court of Appeals (Ninth Circuit) ruled that the company had “no responsibility or duty to police the rights of trademark owners concerning domain names.” Questions about domain-name disputes are referred to www.domainmagistrate. com., which lists the new Uniform Domain Name Resolution Policy (UDRP). The site also suggests that viewers go the U.S. Patent and Trademark Office site (www.uspto.gov) to see if the domain name in which they are interested is similar to a trademark registered with the office.
The WORLD INTELLECTUAL PROPERTY ORGANIZATION (WIPO), one of a number of organizations handling domain-name disputes, reports increasing disagreement between cyber hustlers and previous owners of domain names. WIPO has no specific measure to address the problem, and instead the disputes have been referred to the UDRP.
Three of the many newer Internet marketing strategies are customization of websites, use of pop-up promotions, and viral marketing. Web sites can be customized based on viewers’ past visits or current movement within a site. For example, Amazon.com welcomes returning visitors. Popup promotions appear on computer screens after viewers visit particular sites. Pop-ups are considered annoying and force viewers to have to close the ad on their screen. Viral marketing is e-mail messages sent to groups asking recipients to forward the message to others. With relatively low entry costs, the Internet will continue to evolve and become an important part of almost any organization’s MARKETING STRATEGY.