Marketing Opportunities on the Growing Internet

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M arketing on the
cutive summary for managers and executive readers can be found at the end of this article Internet
Pal ab Paul
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s market opportunities
Introduction
With increased globalization of the world economies, for most enterprises,
market opportunities seem to be endless these days. This in turn, of course,
causes heightened competition among the players in order to achieve better
performance. Consequently, departing from the traditional commercial
strategies and tactics, innovative managers are looking for unique ways to
compete more effectively on a local, regional and global basis. The
information superhighway is what many business leaders say will make
these visions a reality in everyday business.

The information superhighway is being shaped by advances in digital
telephone networks, interactive cable television, personal computers, online
services and, finally, the Internet. These technological advances will
inevitably change the face of business as we know it today. For most
organizations, the information superhighway offers an abundance of
opportunity. The Internet, in particular, provides corporate America with a
broad and vast communications network that is driving the formation of a
huge global electronic marketplace. The purpose of this article is to narrate
the impact of the Internet on the marketing aspects of businesses as of today,
its future, and how businesses can use its unlimited potential to their
advantage.
rk connection

Background
The Internet, also known as the “International electronic network,” began in
1968 by the Advanced Research Projects Agency of the Department of
Defense. Originally, known as the ARPAnet, the Internet was started as an
experimental network connecting different university computer centers
throughout the country. In the 1 980s, ARPAnet was broken into two distinct
networks called Milnet and NSFnet. Milnet was used primarily for
government purposes, while NSFnet, funded by the National Science
Foundation (NSF), was used to support education and research. The NSF
promoted NSFnet’s use within the realm of higher education institutions and
succeeded in establishing more than 3,000 institutional inter-networks by
1991.

Its beginning as a not-for-profit
facility intended to support the
educational community has
evolved into a global enterprise.
The NSF continues to fund and
promote the academic backbone
which is now managed by
Advanced Network Services, a
consortium comprised of IBM,
MCI and Merit. However, as a
government agency, its charter
makes it inappropriate for NSF to
condone use of the NSFnet for the

purposes of private business. This
has resulted in a number of
private concerns forming
commercial network backbones.
These network backbones
provide access to the NSFnet but
do not rely on it for connectivity.
Commercial network backbones
provided by

The author wishes to thank Bridgid
Roderick for her contribution to this
article.

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UUNET Technologies International, Performance Systems, and General
Atomics, are but a few of the providers in the USA through which
companies may access backbone services that permit and promote business
usage.

The combination of NSFnet and commercially available backbone services
forms what the Internet is today – the world’s largest collection of
decentralized computer networks. There are over 30,000 estimated computer
networks connecting more than 1.5 million computers to one another.
Transmission Control Protocol/Internet Protocol (TCP/IP) is used by all of
these networks as the standard communication protocol through which data
communication is accomplished. At least 20 million people (actually
estimated at 30 million) in 135 countries send and receive information
through the Internet (Direct Marketing Magazine, 1995).

This international nonprofit network mainly links educational, research and
Marketing on the Internet government facilities, but also increasingly ties in corporate research and
development sites. The Internet is the model for the information highway of
the future. It is relatively open, costs little, and provides information on
everything imaginable. The Internet is said to be the most “democratic part
of the cyberspace” and is a linkage between the user and every other
computer in the world, containing information on every existing subject. The
Internet represents the new wave of technological communication that has,
according to some analysts, become the next best communications medium,
second only to telecommunications.

The Net represents a $300 billion market. Over 30 million companies and
households around the world use the Internet as a communications link
through e-mail, interactive advertisement, bulletin boards, research and
online discussion groups. At its most basic level, the Internet serves as a
seemingly endless catalog of marketing messages and advertising in an
interactive fashion. Only two years ago, one would have to be a computer
veteran even to contemplate using the Internet for anything but e-mail, but
today even small businesses are jumping on the bandwagon and are
investing in their own personal gateway to marketing on the Internet.
Marketing analysts are calling the Internet a tool for “guerrilla marketing.”
Even large computer software companies, like IBM, Apple, AT&T,
Microsoft, and Lotus Development are investing millions of dollars to
develop new state-of-the-art tools and services aimed at helping companies
expand electronic business through the Internet.

Future growth and opportunity
In December 1993, only $100
million worth of goods were sold
over the Internet. But by 1995, the
Internet market had grown to over
$300 billion in goods sold
(Boisseau, 1995). Business is
rapidly adopting the Internet as the
means through which it can
efficiently and economically
conduct marketing, research and
support. This process is being
facilitated by the proliferation of
software that is more user-

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friendly and makes information
easily accessible to the users.
With the number of users
growing monthly at an estimated
rate of 10 per cent and an
average of one million people,
the Internet is the fastest growing
global telecommunications
network in the world. Analysts
have projected that 100 million
will be using the Internet by the
year 2000 (Direct Marketing,
1995).

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Registered networks

Businesses
Nearly 75 percent of this astonishing growth is derived from the business
community. More importantly, of the networks registered within the Internet
worldwide, 63 percent are owned by businesses. The rate at which
businesses are connecting to the Internet is accelerating – 2,000 per month
and an increase of more than 260 percent between April 1994 and April
1995 (Kirkpatrick, 1995). The fact that the Net is relatively unregulated by
the government and businesses do not need a license from the Federal
Communications Commission (FCC) to go online helps the proliferation of
its usage. This helps reduce costs and cuts the red tape normally involved in
advertising.

Large and small companies are embracing the Internet as a fundamental
communication tool used to conduct daily business. Fortune 500 companies
such as Xerox, IBM, Merrill Lynch, Motorola, Intel, Digital Equipment,
Sun, and Hewlett Packard, are using the Internet as an important tool
through which they communicate internally with their business partners and
with their customers. Smaller businesses are also discovering the Internet to
be a cost-effective communications means through which they can conduct
research activities relating to their products, customers, and markets, as well
Growing business communication as conduct efficient product sales transactions. By the year 2000, a projected
60 percent of large companies and 30 percent of midsize companies around
the world will use the Internet or its equivalent for marketing and business
purposes (Crain’s Chicago Business, 1994).

User demographics
The demographics of the Internet population lend further support to the fact
that it is now an accepted and growing business communications means. Of
the 20 to 30 million Internet subscribers, approximately 50 percent are 25
years of age or younger. This is due to a large educational community using
the Internet. It is important to note that even with such a large number of
relatively young subscribers, a meaningful number of subscribers (30
percent) use the Internet as a tool for supporting business endeavors, as well
as for finding information on certain products and services the user may be
interested in. Even those who are 45 and over use the Internet, though on a
much smaller scale, with approximately five million users.

Furthermore, 31 percent of
households owned PCs (personal
computers) in 1995. That figure
continues to grow as more and
more people are investing in
home offices so that they can
work at home. Analysts have
predicted that of the 31 percent
of household PCs, 85 percent or
9.6 million households will use
online services by the year 2000
(Kirkpatrick, 1995). In addition,
catalog and home shopping sales,
now a $60 billion market, could
quintuple by 2000 due to sales
through the Internet (Computer
World, 1994).

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Growth problems
Despite its phenomenal growth,
not everything looks bright for
the Internet. The online industry
is growing less quickly than the
likes of the VCR and cable
industries when they were
introduced to the market.
Furthermore, the industry is
suffering from a high turnover. For
instance, 40 percent of online
customers discontinue service
from the Internet each year
(Kirkpatrick, 1995).

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Internet pros and cons

Businesses are also catching on relatively slowly to the Net. Only 1 percent
of worldwide advertising dollars were spent on the Internet in 1994
(Lipowitz, 1995). But forecasters are quick to point out that the Net is a
growing media form and, as technology advances, businesses and
households will use it for advertising and home shopping, respectively.

Major issues in using the Internet
There are several pros and cons associated with using the Internet for
marketing purposes. Some primary advantages to businesses using the Net
are described next.

Global opportunities
The Net access delivers a company with an opportunity to implement highly
cost-effective vehicles not only for their own marketing and customer
support needs, but also for positioning themselves globally. It is especially
beneficial to smaller companies who want to expand their businesses
globally, but do not have the capital and resources to do so. In addition, the
Internet helps ease the red tape surrounding the prospect of doing business
overseas, thus avoiding regulations and restrictions that companies must
follow who are physically present in other countries and who advertise in
international journals. More and more businesses are discovering that they
have the ability to reach and communicate with current and potential
customers abroad through the Internet with the same cost and ease as in the
USA.

Business on a global spectrum The Net is also growing in popularity in other countries. Singapore, for
example, promotes itself as the “Intelligent Island,” with a plan called
IT2000 supported by its National Computer Board. The objective of this
plan is to become Asia’s center for information technology with the Internet
as its heart. The Net is therefore promoted heavily within Singapore as an
essential resource for every business. PIPEX in the UK and Internet
Initiative in Japan, are two examples of commercial Internet providers that
are prospering tremendously in countries other than in the USA (Business
Europe, 1995; Ohmae, 1995).

Accessibility
Companies who use the Internet, not only for advertising, but for e-mail and
customer ordering, increase their hours of business on a global spectrum.
Instead of a typical eight-hour day, businesses have increased their
opportunities by providing 24-hour access for branch offices, business
contacts, and shoppers – access that is important in conducting business
across different time zones or internationally. Expanding access indeed
increases the number and coverage of potential customers.

Utility
Providing appropriate form, place
and time utility (i.e. giving
customers the opportunity to
decide what they want, where
and when) may result in a
competitive advantage for the
marketers. Especially, the Net
furnishes product and service
information to current and
potential customers when they

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want it (instead of bombarding
and annoying them with mass
marketing, direct marketing or
telemarketing), and hence
increasing the chances of
trial/purchase/repurchase.

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Advertisement effectiveness
Traditionally, advertising has been one of the major forms of communication
Major form of communication
between a firm and its clients. Wells et al. (1995) reported eight basic types
of advertising (brand, retail, political, directory, direct-response, business-to-
business, institutional, and public service) designed to reach a diverse
audience with varied objectives. In order to serve the desired role and
function most effectively, advertisements may use many different types of
media and vehicle for different target groups. For example, the media used
for typical brand advertising may not be appropriate for business-to-business
advertisements (see Table I).

With the advent of technology,
the Internet posits itself as one
of the very few media
alternatives that can be used for
almost all advertising purposes
across all possible market
segments.
Businesses/government/individual
s can create and transmit
advertisements on the Internet
that can be accessed by anybody
with a computer equipped with
appropriate software. Such a
convenience and marketing
efficiency, both for the advertiser
and the target audience, is
making the Net popular for
marketing practices all over the
world.

In addition, the Net has the
capability to compile statistics
regarding how many people
viewed each advertisement on an
hourly, daily, and monthly basis
(reach), and for how long each
viewer actually looked at an
advertisement (exposure time).
This helps companies track down
the effectiveness of their
advertisements in terms of the
number of direct purchases – a
much more effective mechanism
than the existing ones for
magazine advertisements or
television commercials. Most of
the Internet providers collect this
information for companies who
pay an extra fee. Furthermore,
advertising on the Net is, on an
average, costs merely a third of
what it costs in the magazines
and business journals, and a
fraction of the price associated
with television ads. This opens up
avenues, particularly for smaller

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firms, to reach their potential
clients more cost-effectively
(with a lower cost per million).

F
u
n
c
t
i
o
n
s

o
f

a
d
v
e
r
t
i
s
i
n
g
Direct action
(primary or
Indirect action
(primary or
selective,
commercial or
selective,
commercial or
Types of advertising noncommercial)
noncommercial)

Brand (national Newspaper, magazine,
television, Newspaper, magazine,
television,
consumer) radio radio
Retail Newspaper, Yellow Pages, direct
Newspaper, television, radio
mail, television,
radio
Political Television, radio
Television, radio
Directory Yellow Pages
Direct response Direct mail, catalog
Business to business Direct mail,
catalog, individual Business
publication,
directory
professional
journal, magazine
Institutional Newspaper, magazine,
television,
(Corporate) radio
Public service Newspaper, magazine,
television, Newspaper, magazine,
television,
radio radio

Table I. A framework of

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commonly-used media for
different types of advertising to
serve various functions

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Internet drawbacks

Market research and analysis
Although marketing on the Net can benefit companies of all sizes, smaller
organizations may have the maximum gain. Small- to medium-sized
enterprises across Europe, the USA, and the Far East have rushed to connect
to the Net and should be able to communicate within the “global village” as
effectively as major transnational corporations. The Internet furnishes direct
customer contact, combined with the appropriate market and technical
reference material, which gives organizations greater ability to identify
earlier shifts in product and customer trends and to test new value
propositions in response. This enables managers to recognize product and
market opportunities sooner and to adopt more effective product, price,
distribution and further promotion strategies relative to the customers’
needs. Ultimately, this ensues increased company revenue through
elimination of uncompetitive product offerings and launching of new
products better suited for the marketplace.

As the above benefits suggest, there are several reasons why a company
should advertise and/or market its products/services on the Internet.
However, there are also several drawbacks to using the Net. Some of these
disadvantages are described next.
Protectingonlinesecurity
Security
The Net has very little security and any company using the Net risks
disclosure of proprietary information. The Internet was originally designed
for a free flow of communications – regulation and security were not
considered when it was conceived and developed. However, with its
increasing use for marketing and advertising, there is ample concern for
security in terms of copyrights and other proprietary information. Because
millions of users access the Internet everyday, it is a hot spot for computer
hackers, pranksters and viruses. Anyone can go into the Net and change,
manipulate or discard information, including advertisements.

Although there are some basic safeguards to prevent this sort of practice, at
best it can be described as inadequate. Even more threatening is that users
can access businesses’ internal computer systems (if they are connected to
the Net) and can find out classified information. Copyright protection is also
in jeopardy when the creation of intellectual property and the upload of
information, transmission, access and use of content occurs (Business
Europe, 1995).

Sheraton Hotels, for instance, learned the hard way when computer hackers
booked every room in the world for them. The hotel chain lost millions of
dollars in lost customers and in downtime to straighten the problem out. On
another occasion, the Sheraton found that many of its customers’
reservations had been canceled by the pranksters on the Net. Since then, the
hotel chain has taken significant measures in protecting its online security
(Seal, 1995).

Besides being successful in
accessing businesses’ internal
networks, computer hackers
have also been known to access
customers’ personal information
(e.g. addresses and credit card
numbers). As a consequence,

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shoppers are wary of making
financial transactions over the
Internet. Both sellers and buyers
are uncertain about the security of
this process. Although there are
no published cases that the
hackers have accessed and used

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shoppers’ credit card numbers, analysts say that it is fairly common when
sellers do not implement adequate security for their clients (Dedy, 1995).

How the Internet will be regulated for security purposes is unclear to date.
Securityand regulation
At the recent Internet World Conference in 1994, security and regulation
were the primary topics. Attendees discussed the rapid development of
commercial transactions and how it will mandate the development of
security features to protect and foster electronic commerce (Mathews, 1995).
The delegates also noted that they would like to see the government step in
and enact regulations that would protect the content of what goes onto the
Net, and also some kind of penalty for those who manipulate, alter or delete
information. Still, the level of government intervention is nebulous and data
privacy is a gray area. However, these problems are becoming more
prevalent and defined, and it is only a matter of time before the Internet
users must follow a set of rules or face penalties.

In the meantime, many software and high tech companies are investing by
leaps and bounds to figure out what can be done to make interactive
shopping on the Internet secure. Firewall is one such mechanism that is
either in use now or is being implemented by many businesses to attain that
goal. It is a device that allows consumers to shop, but prevents hackers from
creating havoc. These are combinations of “security algorithms and router
communications protocols” that are used to prevent outsiders from tapping
into corporate databases and e-mail (Sales and Marketing Management,
1995). They act as buffers between internal networks and larger external
networks. Almost all companies that advertise on the Internet have firewall
in place to protect their internal networks and databases (Pugh, 1995). The
Sheraton is one prime example that uses a firewall to keep pranksters from
accessing its reservations system.

Digit scrambling
Encryption is the scrambling of digits and the “secret” coding of numbers so
that only the intended receiver will be able to translate the real credit card
number, and in some cases, the real addresses and phone numbers of
customers ordering through the Net. Mosaic, a translating program used by
Netscape Corporation for its software, is the first such encryption program
available to the sellers. However, Mosaic still has glitches and is not 100
percent secure by any means (Computer World, 1994). Currently, Netscape is
partnering with Mastercard, Bank of America and MCI to build encryption
and validation into its popular Web browser, the most used browser on the
Internet. If Netscape is successful in this endeavor, most transactions
through the Net will be nearly 100 percent secure.

There are several other
companies who are developing
ways in which customers can
exchange payment for goods
over the Net. One such
company, Softlock Services,
has developed a proprietary
system for credit card
purchases. Shoppers obtain a
“personal payment password”
provided by the company for
all transactions. All purchases

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made with these passwords are
directly sent to Softlock and
then billed to the customers’
respective credit cards. Softlock
makes transactions 100 percent
secure by using passwords
instead of credit card numbers
(Direct Marketing Magazine,
1995). The only problem with
this service is that customers
can only make transactions
with sellers that use Softlock
for their billing.

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First Virtual is another company that offers a similar service. It collects the
money for the products purchased through the Net. The buyer’s account is
charged and the seller’s account is credited. For security purposes, each
transaction takes place in a “closed loop” system so buyers’ credit card
information is protected from being displayed on the Internet itself. To use
this service, both buyers and sellers need a mailbox through First Virtual.

Companies are also warned to protect themselves and their products/services
Infringement protection
against infringement by others. A carefully worded copyright notice should
appear on every screen and any logos and slogans should have Federal
Trademark registration. Companies should also view e-mail, messages and
documents as a postcard rather than a sealed envelope.

High cost for the users
Usage of the Net requires a hefty investment for common people. To access
the Internet, a computer is needed with a minimum of 4Mb of RAM, a
minimum 486SX-25 processor, and a 256 colored VGA monitor. Users also
need a high-speed modem, an Internet connection, and a browser like
Netscape or Mosaic, so that they can surf the Web.

Accessibility
Most modems, to date, are slow and deter users from using the Web
efficiently. Also, multimedia features such as audio and video displays that
make the Web so exciting, consume a tremendous amount of memory that
most PCs do not have. Therefore it is sometimes, if not always, impossible
for many users to download information to see it in its full color, graphics
and sound.

Control
Internet advertising Advertisement over the Net reduces managers’ control considerably. Users
of the Internet are difficult to target. Although 50 percent of the users are 25
years or younger, there is still another 50 percent of users from ages 25 and
up. It is possible to reach all age groups, yet targeting certain age groups
may be difficult. First of all, it cannot be measured applying the
conventional methods used for television or magazine advertisements. For
example, television has the Nielsen ratings and magazines focus on specific
interests of different segments. To date, the Net is so broad and unknown, a
company cannot possibly determine easily who or where to advertise on the
Net. Furthermore, there are so many resources on the Internet, it is probable
that users will not see a company’s advertisement at all unless they are
prompted to search for certain products/services offered by that company.
This may require a company to promote a product using the conventional
tools that are more proactive (television, print, radio, direct mail etc.) even
while using the Internet.

Implementation
Getting started
Unlike advertisement through
magazines and television,
companies do not need a license
from the Federal Trade
Communications Commission to
go online. Therefore, the first
step is simply to find an Internet
provider – a company that will

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furnish a link to the Net. The
second step is to find someone
who will establish and maintain
companies’ presence on the Net.
There should be carefully
drawn agreements with both
entities establishing

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rights and obligations. Costing and implementation of marketing on the
Internet is relatively easy and very reasonable.

Advertising
Advertisers can buy advertisement space on the Net through a service
Buying space on the Net provider, a private company set up to be a gateway to the system for a set of
clients. Organizations can find individual consultants as easily as looking in
the Yellow Pages. Many of these small firms actually advertise their services
on the Internet. These specialized agencies will do everything from setting
up, maintaining and promoting their clients’ advertisements. Monthly costs,
depending on the complexity (color, graphics, sound and extent of content)
are as little as $20 per month and average about $20,000 per year (Crain’s
Chicago Business, 1994). Users need software such as Netscape, which
gives them the capability of seeing the advertisement in full color, graphics,
sound and video images. Netscape also helps users locate shopping networks
through a user-friendly, Windows-compatible environment. The following
are the primary shopping and advertising browsers available on the Net.

Web shops. Web shops can easily be found through browsing the World
Wide Web. It is the most well-known avenue for creating advertisements on
what the Web calls “pages.” Companies with “T1” services and UNIX
expertise should have no problem creating their own page in-house. Users
simply access the advertisement by prompting a search that is related to the
product. The Web shop currently serves 400 commercial enterprises, ranging
from mom and pop flower shops to multinational companies such as AT&T.
The cost is a flat fee of $25,000 per year (Computer World, 1994).

Internet malls. Virtual shopping centers (e.g. Shopping 2000, Mecklermedia,
Apple’s E-World, and AT&T’s E-Shop) advertise text, image or video to lure
possible browsers of the Net. The cost to advertise on these electronic
shopping malls is as little as $100/month to $25,000/year. This includes
creating, maintaining and promoting the Internet advertisements.

Creativeshopping Downtown Anywhere. Downtown Anywhere is a shopping network on the
Internet that is set up like a city. It actually simulates shopping through the
stores of the products that the user chooses from the menu. It is by far the
most creative shopping network on the Net, but is much more expensive
(over $75,000/year minimum). However, it is a lot of fun for users and also
grabs their attention better than the other shopping networks because of its
creativity (Mayfield, 1994).

Internet Shopping Network. The
Internet Shopping Network (ISN),
recently purchased by the Home
Shopping Network, sells 20,000
products for 1,000 vendors. It
receives 250,000 orders per day
on average. This is the fastest
growing shopping network on the
Internet. It expected to advertise
100,000 products and services by
the end of 1995. The network is
extremely accessible to users and
is the best known shopping
network on the Net today. Cost to
advertise on the ISN ranges

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from $25,000 to $75,000 per
year (Crain’s Chicago Business,
1994).

Sales and marketing research
Advertising is not the only
benefit to using the Internet. It
also serves as a huge database
for research and demographic
data. Each transaction that
takes place on the Net can be
tracked to the user. Therefore,
pertinent

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Identifying product
opportunities

information about the purchaser can be collected to develop target-marketing
strategies.

Of equal importance, the Internet’s discussion boards and electronic mail
provide marketing with a means to communicate directly with its customers.
This capability provides organizations with the ability to identify product
opportunities, changes in the competition, unaddressed customer needs,
shifts in price/performance/value propositions, and a host of other
indispensable information points that are difficult, if not impossible, to
obtain through more traditional and more costly means.

So far, the World Wide Web has proved to be the most popular medium for
market intelligence, while CompuServe is known for offering the largest
geographical spread – 2.4 million subscribers, 2,000 services, and 850
databases. These networks provide customer support, research, and product
development ideas through e-mail, discussion boards, and demonstration
facilities. Many researchers have found that the quality and accuracy of
these responses from the customers tends to be more accurate and honest
than that obtained from traditional focus groups, personal or telephone
interviews. Equally important to business needs is that the Internet provides
an effective two-way communication vehicle through which marketing may
test ideas and concepts while minimizing the investments needed to launch
either pilot programs or full-scale product introductions (Internet Business
Center, 1994).
Internet service provider
The Microsoft Network is another medium for marketing purposes.
Accessible through its Windows 95, it is more secure than existing services
and more oriented toward business users. Its focus is on communications,
sales and research. Since this software is part of the Windows 95, businesses
do not have to pay for monthly dues. It is also in an easy user-friendly
Windows format (Kirkpatrick, 1995).

With the exception of the free access offered by Windows 95, the cost of
marketing research and communication over the Net, which includes hook-
up, is anywhere between $175 and $300 per month, depending on the
company size. Businesses can hook up to services on the Internet through an
Internet service provider, such as America online and CompuServe, among
others. CommerceNet offers the first large-scale service for $15,000/year,
including access to browse pages, place orders, coordinate production,
schedule transportation, and provides many other business functions. Also
included in this package is the Netscape browser, WWW servers, and all
backbone and access equipment. This, however, does not include the cost of
advertisement creation and space (Crain’s Chicago Business, 1994).

Conclusion
We argue that utilizing the
Internet as a marketing tool is
something that businesses today
must consider. Whether a
company is large or small, if it is
not using or seriously
considering the Internet as a
marketing avenue in the near
future, it will be at a competitive
disadvantage over time.

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However, companies should not
limit themselves to just
marketing on the Internet. They
must also look at other traditional
media of advertising and
marketing research in order to
meet their business goals and
marketing objectives.
Furthermore, when using the
Internet, companies should use
caution but at

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Many benefits

the same time be assured that the Internet will reward the early adopters
rather than those who wait until the later part of the 1990s.

In closing, the Internet has many risks associated with its use, but it also has
many benefits that may outweigh the threats. Companies who do not use it
will be left out in the cold. An analyst from the Gartner Group summarizes
this issue with the following: “fire up your Internet engines and ease into
traffic – but drive slowly and don’t carry any valuables” (Computer World,
1994).

References
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p. 3C.
Business Europe (1995), “EU information technology: not yet on the Internet?”, Business
Europe, April 3.
Comp uter World (1994), “Corporations looking to do business on the Internet ...,”
Comp uter World, October 24, p. 79.
Crain’s Chicago Business (1994), “Technology and accessibility giving Internet global
impact,” Crain’s Chicago Business, November 14, p. T10.
Dedy, T. (1995), “Pioneering firms launch auto ads into cyberspace,” Los Angeles Business
Journal, April 10, p. 22.
Direct Marketing (1995), “How to market on the Internet,” Direct Marketing (Conference
Publication for the Marketing Advisory Board).
Direct Marketing Magazine (1995), “Successful marketing on the Internet,” Direct Marketing
Magazine, March, p. 39.
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Internet Group.
Kirkpatrick, D. (1995), “As the Internet sizzles online services battle for the stakes,” Fortune,
May 1, pp. 86-96.
Lipowitz, A. (1995), “FTC limits on phone calls hanging up telemarketers,” Crain’s New York
Business, May 1, p. 15.
Mathews, J. (1995), “Internet world ’94: growing and growing,” Searcher, March, p. 34.
Mayfield, D. (1994), “Forget lunch, let’s do the net,” The Virginia Pilot, April 18, p. 14.
Ohmae, K. (1995), “Letter from Japan,” Harvard Business Review, May, pp. 154-63.
Pugh, C. (1995), “A beginner’s guide to cyberspace,” The Houston Post, March 5, p. D1.
Sales and Marketing Management (1995), “Cerfin’ the net,” Sales and Marketing
Management, March, p. R18.
Seal, K. (1995), “Consumers browse through hotels on computer network,” Hotel and Motel
Management, February 6, pp. 3-3 0.
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Hall, Englewood Cliffs, NJ.

Pallab Paul is Assistant Professor of Marketing at the Daniels College of Business of
the University of Denver, Denver, Colorado, USA. Internet: ppaul@du.edu

O

Executive summary and implications for managers and
e. Those with a particular interest in the topic covered may then read the article in toto to take advantage of the more comprehensive description of the research u
executives
Interact, do not advertise: marketing on the Internet

Will the “information superhighway” deliver? And, if it does, will it provide
what most businesses now see as a promotional channel? Are traditional
marketing management skills appropriate to the exploitation of the new
medium?

These questions – and many others – should exercise the minds of marketing
executives examining their organization’s presence on the Internet. It is not
sufficient simply to put up a site (however pretty) and leave it at that.
Businesses must assess what they will get from a presence on the Internet.
This could be straightforward advertising; it could be distance selling,
customer service or market research. A combination of these could prove the
most effective mix.

In making the choice, managers
need to consider how the
Internet might change over the
coming decade. A great deal is
written about the new media and
much of it is contradictory. To
assess what is needed, let us
consider the competences that
seem most appropriate to the
Internet as a communications
tool.

Direct marketing capability
Businesses which do not
appreciate the core skills and
tactics of direct marketing are at
a disadvantage. The best direct
marketers have been on the
Internet longer than any other
marketing group. They see it
(possibly wrongly) as another
direct response medium where
the tested tactics of copywriting,
incentives and attention-getting
will deliver business success.
Furthermore, the principles of
database marketing and
relationship making – both
emerging from the direct
marketing concept – apply to
marketing on the Internet.

Public relations skills
Boutié asserts, elsewhere in this
issue of JCM, that PR
professionals (along with
politicians) have the appropriate
skills to exploit the Internet.

O

News management, opinion-
former communications
campaign management and
writing skills all loom large in
this argument. The idea of
stakeholders and stakeholder
communication also applies to
this area of marketing
communications.

These competences, and the
evidence that mass marketing
techniques cannot work on the
Internet, suggest that the days of
traditional brand management
could be numbered. This is not
the same, please note, as saying
that the brand is no longer
relevant. It most certainly is, but
brand managers need to change
the basis of brand
communications to encompass
relationships and the dynamic
way in which opinions are
formed about a brand within the
marketplace.

As more “private” users come
onto the net, its role will change.
Users will be focused more on
interests and opinions rather
than the search for offers or
information. A home page
promoting a particular company
will need to be pretty special if it
is to deliver anything like the
returns posited in articles

O

such as this one. Communicators need to move toward asking “What do you
think?” rather than saying “here’s my product – buy it.” And Internet users
will want full disclosure rather than selected highlights. It will not be
sufficient simply to put up a brand; the rationale for a position and
background information normally rooted to the planner’s desk need to
emerge. Deception and secrecy are an anathema on the Net.

This takes us to the next important issue – an issue that Paul addresses in
some detail – security. I suspect that the Internet will never be wholly secure.
It is too unstructured and chaotic to respond well to active control. And
encryption techniques imply something to hide running against the “free
exchange of information” principle underlying the development of the
Internet. The idea of private information transmitted round the world on an
open system is not only daft but fundamentally unsustainable.

As more information goes online, the secrecy and privacy principles beloved
of big business and bureaucrats (when it suits them) must be undermined.
Only by excluding information from linked computers can any genuine
secrecy sustain. A new paradigm begins to emerge, driven by the interaction
of multiple individuals (and individual companies) rather than the decision
to “publish” made by organizations controlling the information. The power
transfers from managers to customers. The power lies with those best able to
search, assess and apply free information rather than those who can store
and control data. Or at least I hope so.

The danger is – and it is a very real one – that governments will try to
c
control the uncontrollable. How might they do this?
c
control who has access either via licensing or by restrictive legislation,
control the content through legislation – the attempted controls on
pornography recently overturned by Federal judges indicate the
w
willingness to act in this respect,
withdrawal of government from the Net into in-house systems to protect so-
c
called “secrets”,
nationalization or regulation of the Net itself.
Those who cherish the independence of the Internet must address these
problems. As the Economist recently observed, the Internet is not simply
another medium but a new platform on which media can grow. So long as
this platform is collectively owned and controlled, the prospect for the
Internet as a global communication revolution is bright. Any compromising
of its independence destroys its integrity and value.

Paul describes how the Net evolved and its rapid growth. He comments on
the small proportion of marketing expenditure dedicated to it and asserts
that businesses should get on the Net but act with caution. In this he is right,
but these same companies must also put something else into the Internet –
their commitment to unencumbered communications and free speech. If this
does not happen, and businesses allow the system to fall into the control of
regulators, it will act to reduce the trust that users have in other users’
fairness and openness.

(A précis of the article “Marketing on the Internet”. Supplied by Marketing
Consultants for MCB University Press)

Marketing Opportunities on the Growing Internet

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