Marketing on the Internet - the food and beverarges industry

Table of Contents

1 Marketing on the Internet
1.1 The Introduction of Interactive Marketing on the Internet 3
1.2 Advantages of Marketing on the Internet 4

2 The Food and Beverages Industry
2.1 Characteristics of the Industry 5
2.2 Market structures 5
2.3 The products 5
2.4 Target markets 6
2.5 Relevance of Marketing on the Internet for the Food and Beverages Industry 6

3 Analysis of the Industry ’ s Web Marketing
3.1 Company and corporate information 7
3.2 Product information 7
3.3 Distribution and Price Communication 8
3.4 Entertainment 9
3.5 Evaluation of Sites 9

4 Action plan

5 conclusion

6 References

Marketing on the Internet: The Food & Beverages industry

The Internet as a new medium poses a special challenge for companies in reinforcing their public image, their advertising, distribution and marketing research, thus fulfilling various marketing objectives.

Companies are increasingly recognizing the importance of applying a full-systems perspective in using their communication tools. The aim is to set the overall communication budget and the right allocation of funds to each communication tool. Web marketing is becoming a more and more vital component of a firm’s marketing budget and therefore demands sensible and rational consideration and planning.

It is vital for organizations that are considering an Internet marketing strategy to effectively coordinate each component. The bottom line is that organizations are putting themselves in the global marketplace. It is thus important for organizations to be critical of what works well and what meets their needs with an Internet marketing strategy¹.

The focus of this paper will be the food and beverages industry regarding its German-speaking Internet presence. The objective is to assess companies’ Internet sites, including an evaluation of firms’ Internet marketing performance with respect to competition and the numerous marketing opportunities available to them.

1 Marketing on the Internet

1.1 The Introduction of Interactive Marketing on the Internet

The developments allowed by interactive marketing through the Internet focus mainly on how profitable market segments can be identified and how these segments can be reached. From the marketer’s point of view, interactivity brings together three main marketing functions or activities: direct marketing, sales promotion and conventional above-the-line advertising. Interactivity allows the opportunity to track individual customers one at a time and to build individual relationships with each. This strategy indicates the vast benefits that Internet interactivity supplies in terms of database formulation, management and utilization. However, the main challenge that does and will continue to plague advertisers in the future will be persuading the viewer to try the service.

The introduction of interactive marketing and specifically interactive advertising announces the beginning of an era when customers will choose the advertising they wish to see, when they want to see it. Consumers of today are far more informed than they used to be. Moreover, they are ever more demanding personalized attention from businesses that wish to serve them. The modern consumer wants to know what product he is buying, what its detailed characteristics are, how he can expect it to perform, what alternatives he is faced with and why he should pay the offered price for it. The nature of interactive marketing on the Internet provides an ideal medium for the satisfaction of the demanding modern day consumer. It is obviously of critical importance that marketers recognize these needs and develop systems for satisfying them.²

Online shopping has been recently introduced to interactive marketing. Virtual retail sales on the Web continue to grow. Some sites are purely promotional while at the other extreme, consumers are promised the lowest prizes as the product is drop-shipped directly from the manufacturer.

1.2 Advantages of Marketing on the Internet

The demographics of the average Internet surfer are attractive enough to warrant their inclusion as an important niche market.³ The Web can be transformed into a research tool, a brand builder and an advertising medium in one swoop, something not offered by other media.⁴ Furthermore, unlike other media in which the advertising agency is the only link between the client and the media owner, the Web allows the client to become the media owner. From the company’s point of view, by using this technology a company has the ability to market its products on the Internet without the intervention of any intermediaries. Yet another competitive advantage of this medium is that it provides advertisers with detailed demographics about who actually sees their advertisement, turning it into a marketing research as well as an advertising medium.⁵ Moreover, the Internet provides a distribution channel for hard-to-reach-customers by operating in territories not covered by a vendor’s sales force.

To summarize, the Internet is an unrivalled medium that allows consumers to compare products, receive product information and view product demonstrations.

2 The Food and Beverages Industry

2.1 Characteristics of the Industry

This industry is characterized by marketing to a vast and differentiated market. Market structures, products, target markets and finally the relevance of the Internet play a major role in defining this market. As compared to other industries, e.g. car industry, travel industry, the food and beverages industry lives off the satisfaction of the daily needs of their customers.

2.2 Market structures

The majority of firms in this industry is marketing internationally (Nestle, Kraft Jacobs Suchard, Coca Cola, etc.), but there are also companies whose marketing is confined to national markets. The industry markets to the ultimate consumer, that is it produces its products to a major extent itself and distributes them mainly decentrally through wholesalers and retailers. Marketing aims at satisfying daily and non-daily needs of customers. The products are easily obtainable either at supermarkets, gas stations, department stores or specialty stores. Because of their wide availability, the products are often bought spontaneously, and purchase decisions are seldom highly involved.

2.3 The products

Widths and depths of product mixes differ substantially in this industry. Breweries, for instance, offer only one product line that is usually quite narrow, Henkell⁶, for instance, markets only one product (sparkling wine). The giant in this industry is undoubtedly Nestle⁷ with a uniquely wide and deep product mix (children’s food, alternative food, instant meals, sweets, dairy, coffee and diet products, ice-cream, cat and dog food, etc.)

2.4 Target markets

All firms target ultimate consumers. Some focus additionally on commercial customers. A differentiation according to age structures is necessary: Teenage surfers up to the age of 18 are targeted with entertainment appropriate to that age group, chat fora and sweepstakes. Companies try to appeal to Generation Xers up to the age of 28 with lifestyle products like coolers and image appeals of Bacardi commercials⁸. The group of adults up to the age of 45 is attracted by comfort appeals like the German “beer culture”, jet-set sweepstakes (Henkell) or presentations of product information for the whole family.

2.5 Relevance of Marketing on the Internet for the Food and Beverages Industry

Since the Internet is assessed as an innovative marketing tool for reinforcing corporate and brand images and providing product information and its opportunity for interactivity and new ways of communicating with customers is realized, marketing on the Internet can be considered as highly relevant to the food and beverages industry. Because of its market structures, the food and beverages industry places a great emphasis on consumer-oriented advertising and sales promotion to recognize and build consumer wants on the one hand and differentiate products from their competition on the other.

Online shopping offers a new channel of distribution specifically to manufacturers of products in the food and beverages category, since they are predestined for spontaneous purchases. In addition to its various opportunities in the areas of product development, advertising, distribution, as well as marketing research, the Internet can enhance corporate images and build goodwill.

3 Analysis of the Industry ’ s Web Marketing

Companies’ homepages clearly underscore their corporate philosophies. They show what objectives they pursue and how they want to be perceived by consumers. Sites offer a wide variety of information in these categories:

3.1 Company and corporate information

The information presented is basically confined to descriptions of the company’s history, forging into corporate philosophy and environmental or social commitment issues . Data on companies’ performance is sparse. Balance sheets are not published; sometimes company reports and revenues are made available online. Opportunities for ordering company data are rarely provided as are press releases and archives. Nestle, however, stands out positively with respect to public relations and provision of company information. Contact opportunities by e-mail are provided by a couple of companies. Other forms of exchange, like telephone, fax and mail contacts, are provided only by Nestle and Kraft Jacobs Suchard⁹.

3.2 Product information

Providing product information and communicating benefits are placed on the forefront for the majority of firms. Descriptions of product’s features, availability and prices are provided by most of the firms. In order to provide access to product information, most companies utilize “explorative browsing”. This means that by clicking on icons and hyperlinks in the copy, users can forge ahead from general to detailed product information. The goal behind this kind of information search is to promote interactivity and to urge the user to surf the whole spectrum and read a lot of pages. Therefore, search machines are not provided. Access to product information is arranged according to product lines, meaning that products are arranged by brands (Milka, Kraft)¹⁰. Sometimes they are grouped by functional criteria and usage patterns ( e.g. baby foods, backing mixes) or specific product attributes (e.g. instant coffee, frozen foods).

The information presented is short because the user is not to be bored with a lot of copy. Moreover, too much information does not seem to be conducive to interactivity. Only a small percentage of firms provide detailed information, targeted either to commercial customers or, with products that require explanation, to ultimate consumers. Product presentations are well balanced between copy and illustrations. Illustrations essentially serve as decorations of copy and are aimed at attracting attention and generating emotional responses. The main objective of these sites is either creating brand awareness or enhancing brand equity and attitudes. The ultimate objective is, of course, to influence purchase intentions.

3.3 Distribution and Price Communication

The Internet’s opportunities for sales promotion and online selling are insufficiently employed. This problem could be ascribed to the products’ overavailability. Only a small percentage of companies display a list of retailers. Opportunities to speak with staff members are sometimes provided. Prices are seldom quoted. However, sometimes order forms are made available. Other opportunities for placing an order by e-mail, telephone or fax are lacking in most of the cases.

3.4 Entertainment

The main target audience of sites are consumers. The remaining sites target commercial customers. Therefore entertainment is an important feature of marketing on the Internet. Above and beyond information, entertainment is important for the consumer. Therefor entertainment appeals play a major role in influencing the consumer and are prevalent although their forms vary. There are chat foras, games, sweepstakes, sports, cultural issues, etc. Some advertisers provide links to other interesting sites.

3.5 Evaluation of Sites

As far as user-friendliness and simplicity of the sites are concerned, most companies can be assessed very positively. Moreover, all of the sites display unity of appeal. Information is presented in a matter-of-fact way and is usually restricted to essentials.

However, as with most Internet sites, there is a lack of intrusiveness. The persuasive elements of an Internet advertisement usually lie at least one click away from the user’s current location, requiring the user to be sufficiently interested in the product or intrigued by the advertisement banner to click to the advert.

In general, though, the sites suffer from a lack of interactivity and are little exiting and imaginative. Information is not presented in an innovative and creative way, and therefore sites do not have the potential to create interest in users and surfers and induce them to visit the site again. A long-term activation cannot be achieved.

4 Action plan

What can be observed?

- Technology is applied in such a way as to guarantee unity, factuality and ease of use. x Sites are lacking interactivity, excitement and originality.

- 90 percent of the average surfers are male, about 32 years old and typically employed or going to school. Due to this fragmentation of user audience, it is very difficult for any given site to draw enough attention to itself to attract an audience large enough to matter to the advertiser.

- The Internet as a transaction medium is not universally accepted.

What is the objective of marketing on the Internet?

- As part of Integrated Marketing Communication, it is demonstration of company performance and communication of product information together with interactive multi-media entertainment with the objective of influencing buyer behavior of target markets.

How can this objective be achieved?

- Through a carefully directed combination of information and entertainment this goal can be accomplished. Companies have to ensure user-friendliness, utilize technological advancements, differentiate themselves positively from thei competition, and consider current Web trends and design sites in such a way that the user or customer bookmarks the site and calls upon it again and again.

Bookmarking is of special importance to the advertiser. It plays a decisive role in image building and for conveying corporate identity concepts. First-time visitors to sites are likely to emphasize product information and have a desire to discover. If there is an element of surprise for the user and a long-term benefit is suggested, the visitor would bookmark the site or even provide a link on his own homepage. Repeated clicking onto the sites offers a lot more opportunities for persuasion. This is true both for the peripheral route of the elaboration-likelihood-model¹¹, affections, evaluations and beliefs formed through entertaining stimuli, as it is for the direct route, changes in evaluations and beliefs achieved through informational and rational appeals.

What makes a good site?

- Present information in a creative way

- Include interesting, humorous and exiting elements x Interactivity:

- Provide opportunities for contacting staff members (e.g. through e-mail addresses).

- Involve customers actively in product development, e.g. Langnese¹² asks for consumer preferences for old ice-cream brands that are not in their product line anymore for a possible relaunch.

- Promote communication through newsletters, guest books and discussion fora, that do not necessarily have to be related to products directly (but in the instance of beer advertising could deal with sports issues).

- Offer special services and promotions: chat fora, sweepstakes, discussion of current Web issues etc.

- Display current information and issues: daily weatherforecasts, Web statistics, tips (regarding conventional media such as TV, radio, movies, CD’s ,…and new media: hot sites, new sites, hitlists, discussions) and tricks (newsletters informing about alternative product usage).

- Employ stimuli used in conventional advertising: illustrations, sounds, sex, etc.

5 conclusion

Looking at Web marketing in general and the food and beverages industry in particular, a trend toward more entertainment and less focus on product information can be observed. Recalling the results of my research, I came to the conclusion that sites should try to differentiate themselves. Differentiation can only be achieved through features other than sole product information. Since the food and beverages category is characterized by parity of products, the objective should be to propose other benefits, e.g. life-style, belongingness, image, etc. Moreover, consumers demand innovation on the Web and expect manufacturers to convey their corporate philosophy through this new medium. Although companies do not yet take advantage of the Internet’s full potential for supporting consumer marketing objectives, marketers are increasingly recognizing the exiting and challenging marketing prospects this new medium provides.

6 References

1. Perlman, L. You Get What You Pay For: The Bandwidth Wars; Internet Solution Packages: Bundled Solutions: If You’ve Got to Flaunt it: Advertising: Internet. Finance Week; Vol. 69: Iss 11, pp. 32, 34, June 13, 1996.

2. Steyn, C. Introducing Interactive. Marketing Mix. Vol. 14, Iss 7, pp. 14, August, 1996.

3. Rath, B. Marketing on the Web: Net Return. Marketing Mix Vol. 14, Iss 3, pp. 88-89, April, 1996.

4. Joseph, E. The Wonderful Wired World of Marketing: Internet: Technology. Marketing Mix. Vol. 14, Iss 7, pp. 28-29, August, 1996.

5. Williams F. Interview: David Frankel MD. At the Internet Solution. Marketing Mix. Vol. 14, Iss 6, pp. 30-31, July, 1996.

6. http://www.henkell.de/ [1999, October 20]

7. http://www.nestle.com/index.html [1999, October 8]

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8. http://www.bacardi.de/# [1999, October 9]

9. http://www.kjs.de/ [1999, October 9]

10. http://www.kjs.de/kjs.html [1999 ,October 20]

11. Solomon, M. (1992). Consumer Behavior (4th ed.). New Jersey: Prentice Hall, pp. 256-259

12. http://www.langnese.de/ [1999, October 9]