Online Marketing In Sri Lanka example essay topic

I. Online Marketing in Sri Lanka 1. Introduction The development of online marketing in Sri Lanka is lagging behind when compared to developed countries. The adoption of online marketing is more than a technical issue. Country specific factors such as differences in culture and business environment are influencing the nature and type of appropriate IT solutions including online marketing. Therefore the marketing strategies must be suitable for the country to reach and communicate with the target audience. Online marketing and selling has enabled business organizations to provide better quality products and services, reduce costs and shorten deliver times.

Kotlar defines online marketing as "marketing conducted through interactive online computer systems, which link consumers with sellers electronically". (Kotlar et al, 1997) A company engaging in online marketing can use methods ranging from hosting an informative web site to taking orders over the internet to having a fully integrated Customer Relationship Management and Order Management system over the internet. The internet is considered as the engine of bringing phenomenal changes to business and society and failure to adapt to these changes would face extinction. Therefore both the Sri Lankan government and the private sector are conscious about the need to promote IT and online marketing to achieve competitive advantage. Online marketing is a sub system of e-commerce which is defined by Gartner Group, USA as "a dynamic set of technologies, integrated applications and multi-enterprises business processes that link enterprises and consumers together", which covers the use of messaging, networking and applications to enable communication of business information. E-Commerce could take place between businesses, business to consumers (e.g. Amer zon. com) or between customers facilitated by an intermediate service provider (e.g. e-bay).

Online marketing has its own advantages such as improving productivity and competitiveness as well as challenges and barriers. These, in relation to Sri Lanka, will be discussed in this paper. 2. Current Status recent survey by the Department of Census and Statistics has found that only 9.7% of Sri Lankans are computer literate although the overall literacy level is over 90%. The Colombo district has the highest computer literacy of 20%.

However the current trend of many youngsters opting for IT education and the government policy of e-enabling Sri Lanka are healthy signs that the computer literacy would take a steep upward trend in the years to come. 10% of urban households report having computers as against a low 3% in rural areas. Only 0.9% and 0.7% of households have access to email and internet respectively. The number of email and internet connections has grown at an encouraging rate since year 2000 as shown in figure 1. In addition many cyder caf " es and workplaces also provide, to those who patronage them, access to the internet. Figure 1: Growth in Internet and Email Subscribers Source: Data from web Lanka has a well established and deep rooted private sector which is seemed to be far ahead of the government sector in the use of technology and agility towards conducting business.

However, very recently, the public sector is also seen to be making a stride towards developing its IT infrastructure. E-Government was a key area of focus at the recent 2nd International Conference on e-Governance held in Colombo. The theme of this event was "From Policy to Reality" and it looked at how Sri Lanka can effectively move towards e-government especially with leanings from countries such as India and Singapore. Online marketing in Sri Lanka takes many forms. o Publishing information - Using ICT to expand access to company information Interactive marketing - Broadening customer participation through website so Transacting - Making goods and services available online Many companies use the World Wide Web ( ) to host a website to publish information and thus improve access to Company information. Having a website has become the "in thing" these days. Although the content is seen to be static over a period of time it is a good stepping stone to the world of online marketing.

This method was first used to promote Sri Lanka as a tourist destination. The tourist board website (web) provides a wealth of information for those interested in visiting Sri Lanka. The is now used by most organisations engaged in promoting tourism and many other business to business and retail organizations enabling its customers to view products, services and information and influencing their purchasing decisions. Some stores use mechanisms such as 3-D animation to enable customers to view products in 3 dimensional forms. e.g. Al ankara Jewelers (web) provides images in 3-D form. The next level is to use online marketing as an interactive marketing tool. E-Commerce sites have the option of collecting customer specific data and personalizing the site / targeting advertisements to suit the user.

For example the Keells Supermarkets (web) site collects user information at the time of registration and uses this information to personalize the site for visitors. The Skywards customer loyalty program web site (web) uses customer information for target marketing as well as providing customized services (such as meals and preferential seating) for airline passengers using the already stored customer information. Dialog GSM (web) uses chatting for customer support but the facility does not appear to be adequately manned to provide a prompt service. Use of email newsletters is another economical means of online marketing.

Many sites request visitors to voluntarily register to receive email newsletters with information of their choice. For example Comet Cable (web) uses e-newsletters to send latest updates of planned programs to those who register. However the number of companies using this method is still handful. Transacting or enabling the customers to buy and sell goods and services online is the next level in online marketing.

During the last 2 years we have seen an encouraging growth in this area. All leading banks are web enabled and promote internet based transactions as it helps improve their productivity and cost of operations. HSBC (web), Sampath Bank (web) and Commercial Bank (web) are some banks that use the internet effectively. Sampath Bank recorded 10,000 customers under its "Sampath Vish wa" online (only) account scheme in September 2004, according to its Product Manager. It promotes this account by offering 0.25% extra interest as compared to the normal savings accounts.

Sampath Bank offers the value added service of making secure online payments to all utility and telephone service providers as well as other establishments, thus locking in its customer base. HSBC promotes its internet banking option by offering reduced charges (e.g. 25% reduction in international money transfer charges) and loyalty programs. An increasing number of urban working class is registering for online banking services due to the convenience offered; ability to transact from ones desktop and round the clock availability. The online presence of the Colombo Stock Market (web ), where bidding is conducted online, is an example of a highly sophisticated e-business system. The widespread growth of credit cards helps those wishing to engage in online transactions. Leading Hotels in the country provide customers with the facility of making reservations and payments online.

Jetting and Aitken Spence Hotels are some examples. In the retail supermarket sector Keells Supermarkets (web) is promoting online purchases. Sites such as web and web bring together many suppliers into a single site thus providing a one stop shop for Sri Lankan online shoppers. According to the Marketing Manager at Jay kay Marketing (who manages both Keells Supper and Pizza Hut sites) a significant % of their sales come from Sri Lankans (including students) living in Northern America, Australia and Western Europe who make use of the facility to send gifts, flowers, cakes and chocolates to their loves ones in Sri Lanka.

The % revenue generated by online purchases is still insignificant in Sri Lanka. The percentage of transactions relative to the number of hits too remains very low (except in the case of banks which have frequent online customers). Due to the inequitable distribution of Internet Readiness majority of online marketing activities tend to be for highly specialized n itch markets. This very fact that the market penetration is low leaves a huge potential for those wishing to enter the world of online marketing. It is no secret that the internet opens global markets to those engaged in online marketing. Thus a company going online does not limit its market size to consumers in Sri Lanka but to those online customers all over the world.

Popular store ODEL (web) gets its entire online revenue from customers outside Sri Lanka. The Business to Business (B 2 B) online marketing still remains at a primitive stage in most local companies. The apparel industry, however, is leading the way by using the web not only for marketing purposes but also for e-business applications such as order fulfillment and placement. 3. Viability The main objective of any business is profits and customer satisfaction. Online marketing should be cost effective to provide the customers with added benefits.

As development and maintenance of a website costs time and money for a company e-business should be implemented after careful study of its viability. The cost per contact for marketing online is much lower compared to traditional methods such as medial advertisements and direct mail. However companies may need to invest in hardware, software and consultancy for building and hosting a web site. To recover this capital investment companies should ensure that the benefit from reduced cost of traditional marketing, automating marketing and selling processes (and thus reduction in cost of workforce) and increased goodwill and sales outweigh the costs incurred. According to survey conducted for US Customers the top most reasons for making online purchases is the low prices offered online (figure 2). Also amongst the top five reasons is that it is easier to compare product prices online.

This makes it important for companies to make their websites easy to navigate and provide easy comparison of prices. However the bottom line remains that consumers are cost conscious and this demand for companies to be competitive in their pricing and we can expect similar expectations in Sri Lanka. Figure 2: Reasons why US Customers make Online Purchases Source: web should ensure they have the technical competence to ensure a reliable, consistent service to its customers on a continuous basis. This is especially important where the company is considering online transactions through its website. It is important to ensure that customer base is ready for online marketing. The customers should perceive that engaging in online marketing is useful and that it is easy to use, in order for company's online marketing efforts to be viable.

Figure 3 shows a model of technology acceptance. Figure 3: Technology Acceptance Model Source: Davis, 19994. Infrastructure Compared to developed countries such as USA, Japan and other European countries, who are pioneers in internet based marketing, Sri Lanka has to put in place many prerequisites to make internet based marketing reachable and attractive to its customers. According to statistics on the ICT Status in Sri Lanka infrastructure remains the lowest in terms of readiness. Appendix 1 provides more details on ICT readiness in Sri Lanka. The availability of computers remains at a low 3.8% in Sri Lankan households whilst access to e- mail and internet remain at 0.9% and 0.7% respectively.

This low level of connectivity to the makes the potential for online marketing limited within Sri Lanka. Limitations in communication also forces users to use normal channels such as telephone to seek information, thus negating the benefits of online marketing. Navigating the internet is frustrating and time consuming in most instances. The Web is much slower than in the US or Japan. It isn't a matter of not having a fast modem (or ISDN), or of the U.S. sites being saturated: it's the capacity of the local telecommunication lines and their saturation. Most dial-up connections do hardly attain their promised data transfer rate of 33.6 kips.

However the introduction of ADSL technology (at 512 kips and 2 m bps) by SLT (for both household and businesses) at affordable costs should be applauded and is a stepping stone towards e-enabling Sri Lanka. The saturation of the communication link between Sri Lanka and Japan is another reason for the slow access speeds of most sites, (as some local sites too are hosted in the US). The only solution for any self-respecting Web master is to have a mirror site locally. Then there is the matter of the cost to access the Internet. ISPs do not provide toll free numbers (except ADSL) in Sri Lanka and in most cases the high cost of telephone charges have to be borne in addition to the internet usage charges. Local call charges during the daytime are as high as Rs.

150 per hour. The cheapest ADSL connection for domestic users stands at Rs. 2250 per month. Payment mechanism is another issue. Most Sri Lankan businesses are unaware of the available and recommended payment mechanisms. The Sri Lankan government should make efforts to regulate the online payment system to protect consumers and build confidence in the system.

Reliability of websites (hardware, software and databases) is another issue in building confidence towards using the internet for informational and transactional purposes. This can be overcome by using a quality management processes (such as six sigma) for e-business operations as well to ensure that the customers do not encounter failures / issues when using the web applications. Non availability of finances, technical expertise and performance (both quality and service) of ISPs is a reason for the low usage of the internet, for business purposes, by small and medium sized companies. As 50-60% of these companies only have access to dial-up connections it is not viable for them to host the web servers in the company and this leads to the extra burden of getting as ISP to host the company sites including the databases. 5.

Social Issues Inadequate knowledge and skill to perform online transactions is an issue for Sri Lanka. As we saw earlier computer literacy stands at a low 9.7% and very few of them too would be confident to surf the net let alone performing transactions online, even if they had access to the internet. Searching for information and services in the cyder space is also a daunting task. The cyder space is an ocean as compared to the needs of the local people. Most people, with their limited capabilities and needs, are likely to get lost in the labyrinth of information / services. Lack of knowledge of English is major barrier to either directly accessing or searching for web sites.

As most websites (approx. 98%) are in English, this rules out another major chunk of the population who lack English knowledge. Culturally Sri Lankan consumers still prefer to buy products the traditional way by touching, feeling and inspecting the product. Marketing and shopping are considered part of the social lifestyle and purchasing the same item over the internet may not be acceptable.

Most people are also resistant to try the new lifestyle of shopping online. Concern of whether the item displayed on screen would actually be delivered is another concern, since the payment is done at time of ordering in most instances. The doubt if the supplier who sold goods through the internet would be accessible, when the need for after sales services is required, is another mental barrier that people face when making an online purchase decision. Actually the physical distance between the buyers and seller may make it difficult for both parties to handle returns / maintenance jobs, especially during the warranty periods. However it is interesting that most Sri Lankans living in westernized countries readily use the internet to perform transactions (even Sri Lankan websites). It is revealed that entirely all customers who purchase online from sites such as web and web are young Sri Lankans living abroad.

Sri Lanka is a small island with most people flocking to major cities on a daily basis. This eliminates the need to purchase items online unless people are constrained by the time factor. The growing trend in online banking is due to the inability of working people to visit banks during working hours. In-fighting within and between companies, guarding each ones territory (especially information) and resistance to change by companies is another barrier to effectively moving towards online marketing. Cultural resistance, lack of confidence in an organisation's ability to manage internal data and the complexity of the process are also cited as barriers to implementing online marketing. A survey in 2002 revealed that most companies were unsure how websites can be used for sales or procurement services of the company.

It is perceived that web based marketing results in a reduction in jobs requiring manual intervention, especially clerical work. This perceived impact on jobs, workplaces and social interaction results in resentment towards online marketing. 6. Ethical Issues Corruption and integrity of businesses is a barrier to online marketing.

People are not willing to share their personal information over the internet due to this perception. It gets reinforced when the media reports instances of misuse of (specially) credit card information. Hoax websites that break their promises on delivery and quality of items is another contributor towards breaking public trust in online marketing. It is also possible that customers would be less informed when making purchases through the web.

Another issue is the unethical (and annoying) use of information by corporate's. There are instances where companies use the information provided to target heaps of advertising emails, mail and telephone calls which become a nuisance to the consumers. Some website use this information (stored in cookies in customer computers and the company servers) to forcefully push advertising pop-ups and even change the user homepage, probably without realizing that they drive away visitors from their websites rather than attracting them. 7.

Security Issues The Sri Lankan legal system does not provide adequate assurance on the safety of conducting online transactions. Thus concerns on individuals' rights and privacy and information security greatly reduce the potential of online interactive marketing. Despite advances in communication and on-line chats, even government entities rarely use these methods due to legal implications. Most consumers are afraid to provide credit card information over the internet. Security is the biggest concern in providing their personal information online.

However it is interesting that ease of navigation and internet speeds (and not security) were the primary concerns for a group of IT professionals in a multinational company. They realise that a cashier / cleaner at a restaurant can obtain credit card information without going through the trouble of tapping into secure online data. Exposure to viruses is another reason why most household have reservations about which internet sites they visit. 8.

Future Trends The current trend of many youngsters opting for IT education and the government policy of e-enabling Sri Lanka (see web for complete policy) are healthy signs that the computer literacy and infrastructure issues would be solved in the years to come. The fact that 40% of these home computers are reported to have been acquired within the last 2 years and the steep growth in internet and email subscriber base since year 2000 are positive signs that more and more consumers are willing to e-enable themselves. Internet speeds too are expected to improve with the introduction of ADSL and improvements in telecommunication networks. All these provide an encouraging environment for businesses to start using online marketing. Every company would strive to have at least an informative website into the future. Online transactions would prosper in the banking sector mainly due to the convenience it offers to consumers and increased trust due to any security incidents not being reported.

Banks would also try to promote online banking, by means on added value and reduced charges for services, due to the reduced overheads associated with online transactions. Similarly utility companies (water board, electricity board), all telecommunication companies, insurance companies and cable TV companies would e-enable themselves so that customers convenience is improved whilst reducing transaction processing costs. Local Banks would start providing secure payment gateways and related services for their customers. Companies would start building portals to register and have links of local companies on the web, so that consumers can log in to a single portal. More sophisticated search facilities should be introduced to sites so that consumers can easily look for items and compare prices. Small scale consumer to consumer marketing too would take shape in the future.

Complete listings of items for sale by category (similar to classified section in a newspaper) would be provided by companies. web is such a site which tries to add value by having special news items on its front page. Dynamic, customized advertising should be introduced to Sri Lankan e-commerce sites. It is interesting to see the government having a plan to e-enable itself, with plans for a government intranet also on the cards. More and more Government Departments such as Pensions, Inland Revenue, EPF and ETF, Motor Vehicles would be e-enabled into the future so that the public can easily obtain relevant information and improve productivity of the country. 9. Conclusion Sri Lanka is still an infant in the field on online marketing, driven by mainly infrastructure and social barriers.

However with increased levels of computer literacy and infrastructure development and availability into the future there is vast potential for companies to harness the untapped area of online marketing.

Bibliography

1. Dunlap, Bill, The Shift of Emphasis in Online Marketing to Other Countries, web Hang, Cummings and Dawkins, Management Information Systems - for the Information Age, Irwin McGraw Hill, 19983.
Dunlap, Bill, Reasons for Success in International E-Commerce: Speaking the Customer's Language, web Punchihewa, D. J, The Measurement of e-Government Readiness in Sri Lanka: Survey Perspectives, 20045.
Venkate san, V.S., Towards an e-Government - Issues in Developing Countries 6. O'Brien, James. A., Management Information Systems, Sixth Edition, Tata McGraw Hill, 20047.
Dunlap, Bill, Internet Marketing in Europe - How Europeans see 'the Web as a marketing and business tool', 19968.
Financial Times (Sunday Times) December 5th 2004, Page 49.
Survey on E-Commerce implementation in Sri Lanka - Conducted for the Asia Foundation, Sri Lanka Business Development Centre - June 200210.