Opportunities and restrictions of the internet in marketing communication strategies

Diploma Thesis, 2001

107 Pages, Grade: very good


Table of Content

1. Introduction
1.1. Reasons for the Topic
1.2. Aims and Structure

2. Usage of the Internet in Marketing
2.1. Market Research on the Internet
2.2. Product Policy on the Internet
2.3. Price Policy on the Internet
2.4. Distribution Policy on the Internet
2.5. Conclusion

3. Communication Marketing at the Internet
3.1. Differences to classical Media
3.1.1. Interactivity
3.1.2. Multimedia
3.1.3. Hypertext
3.1.4. Virtual Worlds
3.1.5. Model of Communication for CME's
3.2. Starting Points for Communication Marketing

4. Possibilities of Implication in the Communication Mix
4.1. Advertising
4.2. Fairs
4.3. Merchandising
4.4. Personal Sales
4.5. Product Placement
4.6. Public Relations
4.7. Sales Promotion
4.8. Sponsoring

5. Internet Marketing Strategy
5.1. The Branding Process
5.1.1. Creating Brand Awareness
5.1.2. Brand Experience
5.1.3. Brand Loyalty
5.2. Importance of Brand Loyalty on the Internet
5.3. Newly developed Marketing Strategies on the Internet
5.4. Negative Sanction

6. Marketing Strategy
6.1. Changes in Organisational Structure
6.2. Integrating Internet Activities into Strategic Marketing Planing
6.3. The Branding Process
6.3.1. Creating Brand Awareness
6.3.2. Brand Experience
6.3.3. Brand Loyalty

7. Further Developments

8. Conclusion

9. References
9.1. Resource Guide
9.2. References
9.3. List of used Examples

10. Appendices
I Internet
1. History of the Internet
2. Structure of the Internet
3. Internet Services
4. Size of the Internet
5. e-Commerce
6. Technical Opportunities at the Internet
7. Differences to Classical Media
8. Changes in Social Environment
II Marketing
1. Aims and Structure
2. Product Politic
3. Price Politic
4. Communication Politic
5. Distribution Politic
6. Market Research
III Top Advertisers
IV Advertising Revenues
V European Internet Access
VI Domain Response
VII e-Commerce
VIII e-Commerce

11. Figures
3.1 Process of Communication
3.2 Media Characteristics
3.3 Model of Communication in CME's
4.1. Formats Used for Internet Advertising
4.2. Average Production Costs for different Online Advertisements
4.3. Access Options for a Corporate WWW Site
4.4. Goals of Advertising for Dot.com and Multichannel Retailers
4.5. Models of Sponsoring in Computer Mediated Environments
5.1. Options for using the Internet to extend Product/Market Potential
5.2. Commitment-Implementation Matrix
5.3. Typical Ways that Organisations' use of the Internet evolves
5.4. Key Components in the Purchase Process (including loyalty)
5.5. Change in Organisational Structure
5.6. Unaided Awareness of and Preference for Online Book Retailers
5.7. Brand Unawareness: Respondents Not Naming a Website
6.1. Share of Advertising Budget spent online
6.2. Process of Purchase
6.3. Branding Process
I.1. Comparison between different networks
I.2. Time of first Household Access
I.3. Internet Domain Survey Host Count
I.4. Different Forms of Communication

12. Tables
2.1. Marketing, Sales, and Support Processes
3.1. Usage opportunities of Internet Services in Marketing Activities
3.2. Dimension of Interactivity
3.3. Comparison of Media
4.1. Models of Sponsorship on the Internet
5.1. Keys and Killers of Web Brand Loyalty
5.2. Website Features of Leading Book Retailers
6.1. Comparison of traditional and Web based Advertising
I.1. Income of UK Internet Users
I.2. Audience Profile of Internet Users

Opportunities and restrictions of the Internet in Marketing Communication Strategies

1. Introduction

"Sorry, you cannot count it. If you would take economical measurements you must leave it, but nevertheless you should do it."

Dirk Leitner, Partner of the Consultancy Roland Berger, regarding the question of the concept of amortisation of a customer for their Online-Presentation.

1.1. Reasons for the topic

The Internet is changing our existing world. Visions of fridges, which order milk via email by registering the quantity of stored goods, and success stories about Internet start-ups, or even the recession nowadays, are in the public press nearly every day. But how can the Internet be used in professional business?

The report leads into the world of the Internet as well as in the world of marketing. Internet marketing is a temporary, highly important task in marketing departments worldwide. Even companies, which never have established a marketing force, start to get involved through this new medium. It is used in many different ways and has created its own market so far, but is still a black box for many marketers.

1.2. Aim and structure of the dissertation

This project should enable companies to understand the Internet and the possibilities, it offers to strategic marketing communication planning. Therefore it should finally outline in which way the services can be included in an Internet strategy and how it can be integrated in the company marketing strategy.

A short summary about the usage of the Internet and its services in marketing introduce this piece of work. The next chapter outlines the differences to classical media and delivers starting points for marketing communication. The main part should enable companies to develop a specific Internet marketing strategy to evaluate the opportunities and restrictions in praxis. A differentiation, not only between dot.coms and old economy companies, but also between big multinationals and SME's (Small and Medium Enterprises), was necessary because of different objectives, interventions, and not least of all, marketing budgets.

This work concentrates on the point of view of the marketer. Therefore technical aspects are only explained, if they are needed to understand the services and contexts. Included is Appendix I, which gives an overview of the Internet and its services, and Appendix II, which deals with marketing.

Finally, an overview of newly developed services and further development of the Internet will conclude this report. This will give a complete overview of Internet opportunities nowadays. That being said, it has to be taken into account that this report will probably be useful for not more then one to one and a half-years. This depends mainly on further developments of the Internet, which cannot be seen as a static system, but as a highly changing system with extremely short innovation cycles. To establish higher value, the discovered sources will enable further research for up-to-date information if this publication is no longer considered applicable to the topic.

2. Usage of the Internet in Marketing

This chapter should firstly explain in which areas of marketing the Internet can be used valuably. Secondly, it will examine which opportunities and restrictions this includes. Therefore, the Internet has to be seen as a market itself and as a communication medium. Because this report concentrates on communication marketing this area will be explained, separately, in the next chapter.

2.1. Market Research on the Internet

The goals of market research are the market analysis, market supervision, and market prognosis. These should build the basic for marketing decisions. Therefore the Internet can be used for primary as well as for secondary research. With primary research it must be taken into account that receiving persons represent only Internet users and they often do not fit the whole market structure. With secondary research the Internet delivers plenty of statistics and secondary data, which covers not only the Internet user, but the data of the 'real world.' The Net is surely a good source of information to prepare for market entry abroad. This is valid again to prepare for the globalisation of marketing, but the data about various areas of the world is not of high quality at all. Data about North America was available at a time when data about Europe and Asia was rarely found. Today, high quality data about North America, Western Europe and parts of Asia is available, but data about South America and Africa is extremely limited. Therefore the Internet is surely an additional source of secondary data, but due to increasing information overload, high quality data is hard to find. Moreover, the amount of free, useful information is decreasing because of the higher professionalism of providers, who charge for access to their databanks. Exceptions to that are the databanks of universities and organisations like World-Bank[1].

To collect primary data, the whole range of services is useful because all of them could offer a questionnaire to answer. It is doubtful, though, that the recipient will send back the required information without any form of personal motivation. Due to the impersonality of this medium, the personality structure of responding people will change compared with customer questionings on the street. People who would not participate in a street questioning would partly take part on the Internet due to the anonymity. The opposite is also true. Those who would not participate on the Internet would take part on the street. Beyond active questioning, it is much easier to gauge responses over the Net. For example, one can read branch specific newsgroups which provide a range of interesting information about image, product standings, and customer satisfaction. In this case the newsgroups alt.aol.sucks, alt.aol.rejects, and alt.aol.overbill at Usenet should be required reading (they probably are) for America OnLine.[2] But official postings of AOL would probably lessen the opinion of this company, because it is useless to act temporarily. Other examples are found at Amazon.com, where every customer gets book advice because the system learns about the preferences of every customer.

After all, the Internet, in connection with other marketing activities, is a cost efficient and interesting alternative for offline market research. Furthermore, due to increasing usage and changing user profiles, the 'Internet world' becomes more and more like the 'real world.'

2.2. Product Policy on the Internet

Product policies must be divided into six independent categories. Please refer to Appendix II for more detailed information. Because of the wide range of possibilities for customer service policies on the Internet, it will be explained separately below. Firstly, it should be decided if the Internet can be used sensibly in other areas of product policies. Therefore it is advantageous to differentiate between the products which are developed for usage with the Internet, and the others which stand totally separated from it. Internet based products make up only a small margin of the total profits, but on the Internet these products still have a significant share of market activity. The Digital firm, for example, tests their software and hardware by saving and searching huge quantities of data with their public search engine, Alta Vista. The daily increase in the quantity of data on the Internet is used to test and optimise the search algorithm, which is later used in libraries and other applications.[3] Through the existence of the Internet, a business deal between Yahoo and Alta Vista was realised.

For the further development of a product, the Internet is an attractive alternative because many experts in different parts of the world can share their work to create a superior product. This is seen in Linux. For worldwide operating companies, it is now possible to work on one project 24 hours a day. The data is sent from Europe to America to Asia and back again to Europe. This is crucial in a time of shorter product development cycles. Furthermore, being supported by market research activities on the Internet, customers can be more involved in product development and pre-tests. Therefore, the Internet should be used to establish closer relationships with customers, which in turn, would then be used in an Internet marketing strategy.

2.2.1. Customer Service Policy on the Internet

In today's world, additional services connected with a product are more important than ever. In times of standardised products, a customer service policy is an enormous competence factor. In many areas, like investment and technical goods, high quality customer service is often a decisive factor. Therefore, an active creation of customer services can lead to important advantages. The basis for customer service is the specific customer philosophy of the company. This directly influences any attempt at customer service, which is addressed in Appendix II.

The usage of the Internet within the realm of customer service seems primarily sensible for companies which practice active customer management. The basis for customer service over the Internet is the established customer/service mix. At this time, it is not considered an appropriate practice to build up service departments for Internet communities in cases where the firm was not explicitly founded to handle this customer segment. The established range of services can be expanded favourably and in a cost effective way. For example, it is important that customer service can still be contacted, even when phone lines are overloaded. Therefore, many companies do add an email address to their customer service hotline. Additionally, it has become commonplace for companies to create special pages on the World Wide Web where, for example, lists of FAQ's (Frequently Asked Questions) and formularies can be found. Also, customer services can be used to actively participate in branch or product oriented newsgroups or mailing lists, or to initiate and take care of them.

Active and effective customer service can be used along with a company's primary means of increasing customer satisfaction to create and improve the company image. Therefore, customer service management should be an active part of the communication, presenting the company philosophy in an organised and structured way. Moreover, the information gathered by customer service should be used in other parts of the marketing mix, e.g. product development.

2.3. Price Policy on the Internet

On the Internet, especially in areas of price policy, new figures have to be taken into account because of international standardised presentations. Companies often used international marketing strategies to expand product life and to optimise consumer rents. In these times of high Internet usage, the whole world has to be seen as one market. Therefore, product introductions on the Internet are valid for the whole world as well. Customers can buy products even if delivery poses a problem. A product price strategy, which differentiates among regions, is nearly impossible to establish on the Internet. These are the main influences on the Internet for product price policies.

2.4. Distribution Policy on the Internet

The Internet, as an electronic medium, allows the delivery of data, in digital form, worldwide, in seconds. Because of that fact, the Internet is used by many software producer who deliver their products over the Net. Less substantial software, up to two Megabytes, can be downloaded comfortably by consumers. Basically, delivery of information in every form is possible and easy to carry out. For example, books, magazines, and newspapers can be delivered in this way. However, the following problems are yet not solved:

- Payment
- Copy rights
- Dependence of Computer
- Decreasing Number of Printings

Payment is still a problem because considerably small amounts cannot be handled cost effectively. As long as no systems of payment are established, the only ways to finance the offered information are to either advertise or obtain a sponsor. We will discuss those later on in the paper. The advantage of using the Internet over print media, in order to publicise information, is that this data can be distributed again and again without producing costs for printing and paper. This advantage, though, uncovers the enormous problem of every recipient being able to reproduce the information without any losses in quality or time. Admittedly, articles and books can be copied as well, but this incurs significant costs. For example, it costs nearly as much to copy a whole book as to buy it. Moreover, it takes plenty of time. In comparison, electronic texts can be copied within seconds. All providers of electronic publications are faced with this problem. It occurs everywhere, not only on the Internet. It is evident there, though, by way of the black market of software and copy safeties at DAT bands.

Another difficulty in using computer delivered books is the dependence on electronic equipment. It is possible to print these publications, but this is, firstly, a cost intensive method, and, secondly, not especially comfortable.

If these problems would be solved or be considered irrelevant for any area, it would result in an increased costs for printed products. This means that because of electronic competitors, the editions of printed texts would decrease. Therefore, economies of scale would not exist any more and printed exemplars would be increase in price. Henceforth, information providers would have to be aware of the influence delivery over the Internet has compared to classical delivery methods. In turn, they would be more aware of their own turnover in product.

Another aspect in usage was put into practice by Federal Express.[4] The company, which offers worldwide document and package delivering, enables their customers to follow the progress of their packages over the Internet. The transmitter, as well as the recipient, can always see the actual position of the packages, which enables them to plan ahead. A further service, introduced in 1997, offers the ability to deal online with the whole process of administration. Thereby the documents are printed out by laser printers at Federal Express.

As seen at FedEx, the Internet can enable companies to plan a more exact delivery, which should lead to higher efficiency in 'just in time' production. High complex structures between suppliers, producers and customers can easily be managed and supervised over the Internet. Therefore, the Web should also be used in marketing distribution activities.

2.5. Conclusion

Table 2.1. summarises finally the scope of WWW applications in the marketing, sales, and support to enable an overview about its usages. But it has to be taken into account, that this is only the first step into marketing on the Internet. The Internet will definitely change marketing much deeper than outlined in this Illustration, as we will see later on.

illustration not visible in this excerpt


3. Communication Marketing on the Internet

The Internet as a communication medium offers plenty of possibilities for the communication policy. The following table illustrates which parts of the communication mix can be supported by various Internet services.

illustration not visible in this excerpt

Table 3.1. - Usage Opportunities of Internet Services in Marketing Activities

Marketing communication over the Internet is extremely different from other communication intermediaries. From history related "plump-advertising", which is unpopular on the Net, to more sensible activities like sponsorships, public relations, and value added marketing, the final objective of marketing communication is to influence purchase decisions. Through endless advertisement campaigns found on TV and radio, and in magazines and newspapers, many consumers get a negative attitude toward it. To influence these potential customers, it is necessary to change their attitude about explicit company or product information. He must be directly involved in this process of advertising. Therefore, the potential consumer has to freely decide to obtain more information. This form of marketing knowledge is especially true on the Internet. All services, apart from email, are created to involve users actively in the process of receiving information. In comparison, television includes unsolicited advertisements within a movie or show. On the Internet, he follows a "link" instead. This "link" is often accompanied by an interactive game or an electronic magazine. The user feels a need to participate, and through participation shows that he is interested in this kind of information.

Further advantages of online marketing are flexibility and fewer fixed costs. Flexibility means the opportunity to evaluate campaign success and to create a relaunch in days or even hours. Moreover, all material produced for other media can be reused. Lower distribution costs and global availability have to be taken into account as well.

To evaluate opportunities in communication marketing, the differences between classical media and the Internet have to be explained under aspects of interactivity and multimedia availability. Afterward, hypertext and virtual communities are taken into account. That finally leads to the model of communication for computer mediated environments. This model enables companies to understand the usage of the Internet and furthermore, the ability to create an Internet marketing strategy.

3.1. Differences between classical media and the Internet

3.1.1 Interactivity

Interactivity is the basis for most online services offered on the Internet. In general, this means the user influences the provided content in this media. Rafaeli defines interactivity as "an expression of the extent that in a given series of communication exchanges, any third (or later) transmission (or message) is related to the degree to which previous exchanges referred to even earlier transmission."[6] The different dimensions of interactivity are shown in table 3.2. below.

Table 3.2. - Dimension of Interactivity[7]

illustration not visible in this excerpt Consciously Getting in Contact With and Selection of Information

Usually the users initiate the usage of a media. Exceptions to this are only billboards and radios in stores. Therefore it is necessary that the initiation comes from the user. He switches on the television, he buys the ticket for the cinema, etc. However, with classical media, the interaction stops at this moment.

With online media, the user is forced to interact because he has to search for the information he wants to receive. No information will appear automatically. This is true of every form of advertisement or company information. In classical media, such as television, magazines, etc., the user is automatically confronted with advertisements. Thereby the initiative always comes from advertisers (information provider). This is not the case with online media.

A further reason for higher levels of interactivity is the compulsion to select received information more intensely. The Internet offers an incredible amount of information, and the user controls the process of selection. More initiative is required to obtain wanted news than in classical media. The following example should point this out more exactly. If someone is interested in football, he will obtain all information about the last day in the sports section of his newspaper. With online media, this would require the selection of information about only one game in all newspapers worldwide. Degree of Interaction depends upon User and Media

The degree of interaction levels is fixed by properties of media. This reaches from a simple yes/no decision at the cinema counter to the highest degrees of interaction with interpersonal communication, e.g. on the phone. Through usage of a special medium, a certain degree of interaction is enabled, which cannot be influenced by the user. This is also true for online media. The difference, though, is that on the Internet parallel various online media with different levels of interaction can be used. At the same moment that a website (low level) loads, the user can write an e-mail (high level). This is not possible in classical media even if different media are used at the same time. Human-Machine Interaction means Communication

When humans interact with media, it is defined as media supported interpersonal communication. Until now media was only an intermediary of messages and information. It supported communication between humans, but communication with classical media itself was not possible. Moreover it didn't make sense because of the lack of interactivity of classical media.

Online media enables communication with other humans as well as communication with the media itself. E-mail can be seen as the electronic pendant to mail, the ability to communicate with other users. But accessing databanks enables interaction with the media itself without other human beings. Due to the intelligence of computer systems, the theory that communication between human beings and machines is not possible cannot be maintained.[8] Measurement of Usage Behaviour

In market research enormous efforts are invested to figure out exact data about usage of classical media. Nevertheless, exact measurements about who is using which media at what time and why are not possible, or at least insecure. The usage of online media is supervised at all times on the Net and can be followed by marketers. Therefore it is not necessary to test small segments of users to find out usage behaviours. This decreases mistakes in measurements almost up to zero percent. Furthermore, if measurements of classical media are only valid for one moment, the usage of online media can be measured continuously because the 'click-troughs' of users can be followed.

Moreover, the interactivity has forced the user to look at the content, which is not guaranteed with classical media. Even if the user decides that he is not interested in this specific content, he has obtained an overview of it. Therefore, low-involvement theories in advertisement can be taken into consideration at this point. Abolition of Separation between Transmitter and Recipient

Within the model of the general process of communication, the possibility for feedback is included (see figure 3.1.), but in forms of mass-communication this possibility is only weakly developed. Feedback has to be given on other media because opportunities to respond directly are not available. Therefore various ways for feedback have been established for every media, but influences for recipients on the content are still weak. The roles of transmitter and recipient are clearly divided.

Figure 3.1. - Process of Communication[9]

illustration not visible in this excerpt

Communication within online media acts differently. Because of the interactivity, every transmitter is at the same time a recipient, and the other way round. This is especially important for marketing processes because marketers can immediately receive responses to their activities on the Net. Moreover, every employee of a company is going to be its representative automatically.

Therefore, the level of interaction depends mainly on its users. "Interactive communication represents a historical turning point away from the one-way transmission, 'because' source and receiver cannot be distinguished in an interactive communication system."[10] Individual as well as Mass-Communication

The last difference related to interactivity is the flexibility in spreading. Technically, every user of online media is reachable, but it is interesting how many users are actually reached with specific information demands. With classical media, different spreading led to problems of optimal media selection. Thereby the question, "is it more sensible to use mass media with high losses in attraction or niche media with bound spreading?" could not ultimately be solved.

Due to their interactivity, online media are usable for individual as well as mass-communication. An e-mail, for example, can either be sent personally to one person or as a newsletter to million of users at the same time without increasing costs. Published content in newsgroups or on websites can be directed to a mass-public or to a select, globally spread community.

Figure 3.2. shows the separation of classical and new media through the dynamics of their content and their usage for individual or mass-communication. Interestingly, classical media appear at extreme positions, but online media claim middle positions. These indicate again their availability for individual usage as well as mass-communication. Reardon/Rogers pointed out in 1988 that "new communication technologies are interactive in nature, and thus cannot be easily categorised as either interpersonal or mass media channels."[11]

Figure 3.2. - Media Characteristics[12]

illustration not visible in this excerpt

3.1.2. Multimedia

Many definitions exist for multimedia within online media. Therefore it should be defined here as "their ability to present content either statically in the form of texts, pictures and graphics or dynamically in the form of audio and video."[13] For the presentation of differences between classical and online media, the level of multimedia ability is important. In online media, this has the following benefit: content can be published and provided in various forms using one medium. The singular connection to specific media is not important any more. Content produced for different media in form of texts, audio, or video can be combined and used in online media.

illustration not visible in this excerpt

Levels of multimedia ability are temporarily marked differently with online media. An integration of all four forms (audio, graphics, texts and video) is nowadays only possible on the WWW, but it is expected that through increasing bandwidths, all online media will provide total multimedia ability. The following illustration shows the differences in criteria between interactive ability and multimedia ability.

Table 3.3. - Comparison of Media[14]

3.1.3. Hypertext

The idea of hypertext goes back to Vannevar Bush, a sience consultant of Franklin D. Roosevelt's. In 1945, he published his opinions about a machine he called "Memex". This machine would save texts on microfilm, and these would be available at all times. He also planned a path throughout the whole document structure that would allow new documents to be developed.[15] The next invention goes back to Ted Nelson. His "Xanadu" project, as well as "Memex," was never completed. It delivered important information, though, about the theoretical conception of hypertext-systems.[16]

Hypertext-systems are content networks in which the user can receive information in various rankings and connections. Bornmann/von Solms define hypertext as "the concept of non-sequential writing of information that allows the user to connect information together by means of different paths or links. The information in a hypertext-system is in form of nodes and links.[17] The main development on the WWW is that not only links on the same computer can be followed, but also that the whole network is linked together. Thereby the user cannot even detect if he searches on a different computer or not.[18] None of the classical media works with hypertext concepts. Therefore the comparison has to stop at this point. Network Navigation

The hypertext ability of online media leads to totally new dimensions of information selection in media. Hoffmann/Novac define network navigation "as the process of self-directed movement."[19] Moreover, "this non-linear search and retrieval process provides both essentially unlimited freedom of choice and greater control for the consumer, and may be contrasted with the restrictive navigation option available in traditional media such as television and print."[20] Due to the global spread of the Internet and direct transition from one server to the next, the usage of the WWW is commonly known as 'surfing'.[21]

3.1.4. Virtual Worlds

Due to the explained differences compared to traditional media, it is necessary to take a further point of view into account. The interaction with the medium itself and network navigation increases the awareness of media in another dimension. Online media are not only used to transmit messages to recipients, but they act as a space where things happen and users move. Hoffmann calls this "a room of reality. In this room, not applications but social interactions occur."[22] In this view, information or content is not merely transmitted from a sender to a receiver, but rather 'mediated environments' are created and then experienced."[23] Therefore they are called 'Computer Mediated Environments' (CME's). Online Presence

When online media are seen as a space where communication takes place, the perceptions of users change as well. If they have been transmitters or recipients or both, they are now more like actors in virtual space. This space in its condition can be seen as a copy of the real world, whereby all social groups and institutions can participate. Firms, universities, political parties, media in every form, religious organisations, private persons, etc., are all found here.

This presence, which is called online presence, builds the basis within the virtual world. Moreover, this presence must have an address that users can reach to contact the specific corporation. It is most common that the company name is used to form this platform on the Internet because of synergy-effects, but this is not necessary. Virtual Communities

Due to its interactivity, online media offer possibilities of communication with the media itself or with other users, as seen above. These communication facilities are the main reasons to use the Internet. Sending and receiving e-mails leads the reasons for usage with 89%, before obtaining information about hobbies or personal interest with 85%.[24]

Users of online media see themselves as a community, whereby "the users form within the virtual society, like in every culture, small sub-communities, which satisfy their specific needs and wants."[25] Obvious differences in comparison to the real world are that location or social environment of members do not form these groups, but specific interests and preferences of every member. Every user decides which group he wants to join because all interests are presented in the Net, as shown in Appendix I in 'Usenet/Newsgroups'. Again, the fact of anonymity of all users cannot be forgotten. Computer Mediated Environments

"We define a hypermedia CME as: dynamic distributed network, potentially global in scope, together with associated hardware and software for accessing the network, which allows consumers and firms to

1. provide and interactively access hypermedia content (i.e. 'machine interaction'), and
2. communicate trough the medium (i.e. 'person interaction')"[26]

Nowadays only the WWW can be seen as a CME but it is expected that all services will include the four forms of media, as described above.

3.1.5. Model of Communication for Computer Mediated Environments

Due to explained differences between classical and online media, the general model of communication is not valid any more for CME's. Therefore, Hoffmann/Novac invented a new model of marketing communication, which should conclude the explained facts and build the theoretical basis for the following marketing strategies.

Figure 3.3. - Model of Communication in CME's[27]

illustration not visible in this excerpt

This model represents the full range of possibilities, whereby the availability depends on the used online media. The partners of communication are divided into two groups, the consumers and the firms. Both groups can communicate with members of their own group, members of the other group, and with the media itself, whereby the initiative can appear on both sides, firms and consumers.

After direct communication, content can be published without any restrictions about topics. This results in "perhaps the most radical departure from traditional marketing environments - consumers can provide product-related content to the medium." [28] The model has no growth restrictions and can be used for individual and mass-communication. The model was developed by Hoffmann/Novac to underscore their research about navigation in hypermedia CME theoretically.

To close this chapter, it can be concluded that the conditions of communication in CME's are fundamentally different from those in classical media. This means that it is absolutely not enough to transfer given concepts for marketing communication policy, but that new concepts for marketing communication have to be developed for CME's.

The Internet must be seen in two dimensions, firstly as a market, and secondly as a platform to provide information and intensify customer relationships. As shown in Appendix I, almost everything can be bought over the Internet from pizza to a car. Many retailers had established themselves as participants in the fastest growing market worldwide. But in 2000, many retailers changed their strategy due to the enormous debts incurred through their Internet activities. They still inform over the Net but consumers have to visit the stores to finally buy these goods. Even successfully operating and well-known companies like Amazon.com have to reduce their losses to be able to compete against classical book and music stores. Therefore activities that provide information, raise consumer awareness, and intensify customer relationships are evaluated.

3.2. Starting points for Marketing Communication

Related to the specifics of online media are the starting points for their usage in marketing communication. These will be discussed during this chapter. It begins with the current situation of marketing communication to evaluate usage opportunities of online media at the objective and strategy level.

3.2.1. Situation of Marketing Communication

Due to computer designed and developed products, the exchangeability of products is increasing. Moreover, consumer expectations about quality and accessibility make it more difficult to distinguish between product benefits. Therefore, companies compete more than ever in the field of communication, and not only in products. In other words, "communication rises to be the central factor of competition."[29] Impeded Basic Conditions

Changes in the social, technological, ecological and economic environments led to impeded basic conditions for communication marketing. On the consumer side, constant, but not continuous, changes in demand made need difficult to anticipate. This changing environment for companies created new challenges for marketing communication and developed various problem-solving models.

Phrases about hybrid, ambivalent or multi-optional users try to describe the consumer of the new millennium. For communication marketing he is harder to reach than ever before. Information overload, dynamical development of media culture, and decreasing interest in classical company communication are the main obstacles in effectively reaching the target audience. Because of that "communication policy during the 1990's and in the future requires new ways of thinking and new attitudes on the management level, which will define communication as a strategic factor in competition and success." [30] Integrated Company Communication

Integrated company communication is now seen as an opportunity to react to these described impeded basic conditions. Thereby, "integrated company communications are understood as a process of planning and organisation, which unifies different sources of internal and external communication to build a consistent picture of the company for all stakeholders."[31] The extent to which online media can contribute in integrated company communication to enable effective marketing communication will be outlined during this chapter.

3.2.2 Objectives

The main objective of marketing communication is to create a consistent picture of the company. In this hierarchical system of aims, further objectives have to be integrated into the structure to support this main objective of a consistent picture. These reachable objectives through online media should be outlined, and concrete activities should be shown as 'opportunities of implication in the communication mix', later on.

Usage of online media can support economic or psychological objectives. This report about communication marketing should only outline psychological aims. Economic advantages from the usage of online media (for example, savings in print and material costs) should be seen as positive external effects and not as primary reasons for these activities. Increasing Intensity of Contact to Target Groups

Contacts between target groups and the company should be intensified and led in favourable directions. To enhance these contacts companies have to handle various groups more individually and give an address directly to individuals. The distance between the individual and the company in computer mediated environments is much smaller, as we have seen above. Through navigation on the website the user is directly close to the company. It can be seen as a visit to the company, which the word 'homepage' definitely points out.

In CME's there is a more direct and personal relationship between the company and interested persons. This is realised more through a CME than through any other communication intermediary. Further enhancement is made through involvement of different target groups within the homepage. An example is the website of the music-channel VH-1 [32], which enables their audience to present their own work in areas such as art and music.

Linear concepts of influence will be restructured through relationship networks. Strategies to reach this objective are summarised in relationship marketing later on. Customer Relations

The main aim of many communication concepts is to improve customer relations with the company, and through quality products to obtain customer loyalty. The importance varies from branch to branch, but often the improvements in customer relations is the main motivation for engagements in CME's.

To achieve this aim through online media, a relation with the online presence has to be realised. This means a positive influence can only be achieved if target groups visit the homepage regularly. To which level a relationship can be realised depends mainly on the content. Product or branch information or entertainment are main components. More than only product information can be presented as long as it matches the positioning and the interest of the target group. If the online presence is known as a source for specific information it can be used to establish a clearer image of the company.

For example, VH-1 provides 'all' information about music. Singles and CD charts, as well as tour data of stars are offered. Customer relations and off-air promotions have increasing importance in branches of commercial TV-channels. Customer loyalty is thereby difficult to achieve. The online presence of VH-1 is a source of information about music. Because of this, the channel automatically obtains a clearer image and a more intense relationship with its consumers. Improvement of Company Image

The extent to which a company can use online media to increase their image depends mainly on specific environmental conditions. When using an online medium to create a new image or to rebuild an image, former product or company images have to be taken into account. In technology driven branches, for example, new developments can be presented, and due to the advancement in technology a positive image can be created.

Basically it is easier to achieve a more positive image in investment industries than in consumer goods industries. Nevertheless, the engagement can show innovative ability and progress. "People generally view companies with a website as progressive and leaders in their industries"[33] even if nowadays almost no company can exist without a web presence. Furthermore, the presence has to fit the company presentation in offline media because "if a well-known, trusted brand has a poorly designed website, that site can damage perceptions of the brand."[34] This can reach so far that "the negative perception can diminish brand loyalty among existing customers."[35] Other Psychological Objectives

Following these above-mentioned objectives, the usage of online media can be useful to reach advertisement aims on an instrumental level. These psychological aims, oriented on knowledge, attitudes, and preferences, must be defined as aims of company communication in connection with online media. In CME's the whole online presence is established to reach objectives that normally were related to advertisement only. Therefore every instrument of communication used with the online presence retains its specific aim; but as the online presence is always seen as a whole, it is necessary to focus on leading objectives of integrated communication.

In which ways can online media support other marketing activities to reach these psychological objectives? It is not possible to create awareness for a brand or a product without other communication activities or media because of the technical framework of online presences. As mentioned above, the initiative to visit a homepage has to be developed by the user. Therefore the creation of an online presence does not necessarily and automatically increases the level of awareness. If a company has established a website and has attracted a regularly visiting audience, it can be used to present their product and to generate higher levels of awareness for them. The website is extremely useful for publishing product specifics and competition advantages. Information about products and the company itself can be presented worldwide in a never before known scope and scale. Therefore we can conclude that the spread of these online media can lead to maximisation of marketing activities. It is possible to use each of their specific advantages in different stages of customer relationships.

Opportunities to change attitudes were explained in 'Image,' but the extent to which preference structures can be developed, conserved, and changed through online presences can for the moment, be outlined only vaguely. For the computer industry, which holds the systems-related leading position, it is obvious that without an engagement in online media, product preferences cannot be established. Therefore it can be concluded that differences between industries are only temporary, and that in near future every company in every branch needs to establish consumer relationships supported by online presences.

3.2.3 Target Groups

After outlining the usage of online media in objective levels, should now follow an explanation about which target groups are reachable. Users of online media temporarily do not represent a complete cross-section of the population, but their numbers are still growing all over the world. Nevertheless, online media attracts a market of nearly 400 million people, and no company can afford non-participation. Please refer to Appendix I for figures about the size and demographic criteria of Internet users worldwide.

Moreover, if the development of online media continues at its current rate, it is expected in the near future that the demographic structure will depict the 'real world.' In long term planning it is expected that the diffusion of online media will be comparable to television, which is at about 98 percent.

Because of that, this report should not focus on temporarily favourable target groups, but on the forms of identifying target groups in CME's. Starting points are the various methods of market segmentation as well as the degree of differentiation. Revitalisation of Opinion Leader Concept

In marketing research, various methods of market segmentation, and therefore definition of target groups, have been established. "Most common is the segmentation about socio-demographic or psychographic criteria and purchase behaviour. Additionally, a few special methods and models exist, which were developed to connect different segmentation criteria."[36] One method, less taken into consideration in recent marketing literature, is the segmentation of sociologic criteria. So-called opinion leaders build the defined target group of communication. "Persons who gain a status as consultant, and who can influence in this position other members of the group in their purchase decisions, are seen as opinion leaders."[37] Disadvantages of this concept are the identification of these opinion leaders and the restricted ability to contact them with communication intermediaries.

Because of above explained specifics of online media, which can be used for individual as well as for mass communication, the opinion leader concept should be given a closer look when taking CME's into consideration. In this case, the communication in discussion platforms are the most interesting. According to Aaron Benner at Vanderbuilt University, opinion leaders in newsgroups could be identified. He identified opinion leaders as persons who posted more messages to newsgroups than the average.[38] This, of course, is only a quantitative method of measurement, and does not prove that 'opinion leaders' can influence other members of the group. Nevertheless, it is expected because of the mentality of these newsgroups. "An interesting experience is the high level of idealism and helpfulness, which often come across. Within such communities respect and acceptance seem to be an efficient form of reward. Information is not paid for with money, but with increased status and reputation."[39] Persons who are recognised through helpful postings enjoy a specific status in a long-term view. Let us suppose, then, that their opinions are strongly agreed with. If a specific product is commented on in a positive or negative way, this could influence other members of the group significantly.

The number of users who actually participate in such newsgroups cannot be measured because only active members can be identified. It is expected, though, that the amount of passive members (so-called lurkers) outnumbers active ones by the factor ten. Moreover, it is generally known that these discussion platforms are the second most used service within the Internet after e-mail.

The problem with contacting opinion leaders is naturally seen as well in CME's. In contrast to the 'real world,' though, the e-mail address is made available in online media. Questionable, if direct contact by e-mail leads to success, but it becomes easy to assume that people who post regular messages to newsgroups generally spend an enormous amount of time in CME's. Therefore, indirect influence through well-designed and structured online presences should be most successful.

Finally, it has to be pointed out that the concept of opinion leaders can be revitalised in the framework of communication in online media. Temporarily lacking are theories concerning the influence of and the contacting of opinion leaders. Further research has to be done in these specific areas. Targeting Multiple Audience Groups

Increasing numbers of satisfied markets force providers to concentrate on qualitative growth. But increasing prices are only explainable through added and recognised product benefits. This leads to stronger segmentation criteria until individualised markets are realised. In marketing communication, products have to be promoted to specific target groups, but it is questionable how these segments can be reached through traditional media. Online media provides, through global spreading, the possibilities to target even small segments without exorbitant promotional costs. Having calculated costs, even the small segments can be supplied with specific products through homepages.

The target groups of company communication are plentiful and exist not only from customers and potential customers, but also from shareholders, employees, suppliers, press, governmental bodies, etc. This points out that all stakeholders of a company have to be taken into consideration when planning an online presence. Usually different target groups of communication are addressed by different channels, but online media offer the possibility to establish contact with all of these groups. A well-structured and designed homepage can thereby easily lead every user to the specific information he is interested in.

An interesting twist in the usage of online media is that specific information for different target groups is not only provided, but additional different benefit expectations have to be fulfilled. As long as different marketing communication is related to segmentation strategies, it is relatively easy to position a product exactly. This is because of significant similarities of the members of this group. To fulfil a mass market strategy, though, the product has to be positioned in a relatively general way to take all expectations into consideration. Therefore it is almost impossible to give a clear image of the promoted product. At the same time, parts of the target group may become emotionally attracted, while other parts, which respect the benefits, may be misled. The risk of unprofiled products is thereby obvious.

With online media it is theoretically possible to communicate with different parallel supply characteristics. A significant task therefore, is to lead customers to specific parts of the homepage to fulfil their specific benefit expectations. In extreme cases, this can lead to opposing statements about a product. Hence, this has to be planned carefully. To transform this theoretical concept into reality, it should be explained in the case of product 'politics'. The target group is obviously defined by election laws and can be described as all persons entitled to vote. Every person has just one vote. Therefore it is senseless, as a party, to be concentrated on only one subject when you want to reach the majority. The objective of leading parties should be to offer something for everybody, or in other words to please everybody. In fields of communication this leads to decisions about personal or content election campaigns and emotional or rational addresses.

If these parties create a mixture of these forms, it definitely leads to confusion and insecurity in different segments, because the conception of recipients cannot be forecasted. On online presences of politicians or parties this concept can be realised when the political program is presented differently for various segments. It is significant that only that these segments respond exactly to their presentation of the program without obtaining the presentation for other segments. During gubernatorial and presidential elections in the U.S., this concept was partly realised. Furthermore, the server of the Austrian 'Volkspartei'[40] is a leading example. Future challenges in this area will be to identify and cluster users according to the address of their access server or their click streams and to provide an individualised information supply.

3.2.4 Strategical Starting Points

Due to communication conditions in CME's, new opportunities to create relationships between market participants have been established. Of primary strategical importance are the creation and maintenance of communication relations to customers or potential customers. Changing customer relationships will lead through the whole Internet marketing strategy, but two important concepts should be explained here to outline facilities of online media. Increased Relationship Marketing

After the evolution from mass to target group, marketing expert Meffert expects developments to further individualism. This requires, in his opinion, more intensive customer orientation to 'one-customer-approach' as well as adaptation of marketing instruments.[41] "Individualised marketing assumes increased customer dialogue. Supported by the development of information-technology, linear communication and influential concepts will be replaced by a networked marketing relationship."[42] Bruhn/Bunge describe a "revival or concentration of marketing's basic element, which purports the advanced idea of exchanging relationships between market participants. In recent literature this is generally called 'Relationship Marketing'."[43] Carriers of this exchange or business relationships can exist in the internal and external environment of a company. Activities of relationship marketing can be found in every sub-area of marketing. For communication policies Bruhn/Bunge mainly point out thoughts about dialogue and interaction, whereby they strongly recommend "new" media (Telemarketing, Data-Base-Marketing, DRTV, etc.).[44]

Strategically, relationship marketing is one of the main usages of online media. Its facilities for interactivity enable companies, through starting dialogues and developing partnerships, to communicate with different target groups. The process includes these components: contact opening, information selection, and response. Contact opening is always started by members of the target group, but they will only take part if the company provides information and signals an interest in dialogues. "Companies initiate the dialogue by opening themselves to consumer access; they sustain it by involving consumes as partners..."[45]

Companies can open themselves to the dialogue in varying intensities within online media. The weakest form is communication of the company e-mail address; the most developed one is the integration of customers into the business processes of the company at the online presence. In areas such as product policy, this facility is often used, as mentioned above. Companies integrate customers into product development to produce products, which finally match customer expectations exactly. For communications marketing, it is also useful that a relationship between the product and customer is established even before market introduction. The time, which can be used to establishing brand relationship is therefore increasing.

According to McKenna, not 'time to market' but 'time to acceptance,' is one of the success factors. "The concept of time to acceptance includes the customer as an integrated, contributing partner. A product launch is not an isolated event but a milestone in a relationship with the customer - a relationship that begins with design and continues long after the product passes into the customer possession."[46] The online presence offers various facilities or continues the dialogue with the customer after purchase. In areas such as post-sales it is, for example, possible to place so-called FAQ-lists, which enable customer to solve their problems related to usages of products, without the call-centers. Additional space should be provided where customers can leave ideas and suggestions for further development.

Examples are easily locatable on the Internet. Bluewin[47], a subsidiary of Swisscom, established not only FAQ lists for every product on their website, but integrated a call-me button which is time saving for customer and company. If a customer pushes this button, a post-sale service employee gets a message which includes customer name, telephone number and the position in which the customer left the service on the website. Therefore questions asked by the system do not have to be asked again and costs for callings will be reduced.[48]


[1] World-Bank www.worldbank.org

[2] America OnLine www.aol.com

[3] Alta Vista www.altavista.de

[4] Federal Express www.fedex.com

[5] Stroud, D.; 1998 Internet Strategies p. 83

[6] Wieman/Pingree;1988 Advancing Communication Science p. 118

[7] Salvaggio/Bryant; 1995 Media use in the Information Age pp. 221 - 225

[8] Salvaggio/Bryant Media Use in the Information Age p. 231

[9] Kotler, et al. Principles of Marketing p. 423

[10] Rogers, E./Chaffee, S; 1983 Communication as an Academic Discipline p. 26

[11] Reardon, K. et al.; 1988 Interpersonal Versus Mass Communication p. 297

[12] Hoffmann et al. Marketing in Hypermedia CME’s: Conceptual Foundations

[13] Hoffmann et al. Marketing in Hypermedia CME’s: Conceptual Foundations

[14] Hoffmann/Novak; 1995 Marketing in Hypermedia CME’s: Conceptual Foundations

[15] Woolley, B.;1994 Die Wirklichkeit der virtuellen Welten pp. 171 - 172

[16] Nelson, T.; 1967 Getting it Out of Our System

[17] Bornman/von Solms;1993 Hypermedia, Multimedia and Hypertext p. 262

[18] Hoffmann./Novak; 1995 Marketing in Hypermedia CME’s: Conceptual Foundations

[19] Hoffmann/Novak; 1995 Marketing in Hypermedia CME’s: Conceptual Foundations

[20] Hoffmann/Novak; 1995 Marketing in Hypermedia CME’s: Conceptual Foundations

[21] Helmers, S. et al.;1994 Alles Datenautobahn – oder was?

[22] Hoffmann, U.; 1994 "It‘s life, Jim, but not as we know it."

[23] Hoffmann/Novak; 1995 Marketing in Hypermedia CME’s: Conceptual Foundations

[24] Kania, D.; 2000 Branding.com p. 69

[25] Kneer, V. Computernetze und Kommunikation

[26] Hoffmann/Novak; 1995 Marketing in Hypermedia CME’s: Conceptual Foundations

[27] Hoffmann/Novak; 1995 Marketing in Hypermedia CME’s: Conceptual Foundations

[28] Hoffmann/Novak; 1995 Marketing in Hypermedia CME’s: Conceptual Foundations

[29] Bruhn/Dahlhoff; 1993 Effizientes Kommunikationsmanagement p. 2

[30] Bruhn/Dahlhoff; 1993 Effizientes Kommunikationsmanagement p. 4

[31] Bruhn/Dahlhoff; 1993 Effizientes Kommunikationsmanagement p. 13

[32] VH-1 www.vh-1.de

[33] Kania, D.; 2000 Branding.com p. 126

[34] Kania, D.; 2000 Branding.com p. 126

[35] Kania, D.; 2000 Branding.com p. 126

[36] Becker, J.;1993 Marketing-Konzeption p. 230

[37] Nieschlag, R. et al.; 1991 Marketing pp. 474 - 477

[38] Benner, A.; 1994 Word-Of-Mouth Communications in USENET Newsgroup

[39] Falckenberg, C.; 1994 Internet – Spielzeug oder Werkzeug?

[40] Österreichische Volkspartei www.volkspartei.at

[41] Bruhn, M.; 1994 Effizienz und Flexibilität als Herausforderung des Marketing, p. 28

[42] Bruhn, M.; 1994 Effizienz und Flexibilität als Herausforderung des Marketing, p. 28

[43] Bruhn, M.; 1994 Effizienz und Flexibilität als Herausforderung des Marketing, p. 47

[44] Bruhn, M.; 1994 Effizienz und Flexibilität als Herausforderung des Marketing, pp. 65 - 66

[45] McKenna, R.; 1995 Real-Time Marketing p. 92

[46] McKenna, R.; 1995 Real-Time Marketing, in p. 92

[47] Bluewin www.bluewin.ch

[48] e-Business; 8/2001 p. 91

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Opportunities and restrictions of the internet in marketing communication strategies
University of Wolverhampton  (Wolverhampton Business School)
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Oliver Weimann (Author), 2001, Opportunities and restrictions of the internet in marketing communication strategies, Munich, GRIN Verlag, https://www.grin.com/document/4533


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