Traditional Marketing Although Cyber Marketing example essay topic

1.0 Introduction Nowadays, Internet enables business ubiquity, allowing a company to conduct business everywhere, all the time. Internet usage and cyber marketing are growing explosively. The worldwide Internet populations are growing more than 580.78 million by the end of May in 2002, up from just 1 million in 1994. It also reports that 68% of marketers plan to increase on line marketing budget in 2003 (Internet source 1).

Cyber (On line marketing) is conducted through interactive on-line computer systems, which link consumers with sellers electronically. (Kotler & Armstrong, 1999) Along with the boom, cyber marketing has overturned conventional business strategies and plans, invaded traditional cultures and spawned new ideas. That is because of on line marketing provides a number of benefits to both consumers and companies. For consumers, the Internet is convenience; it is easy to get the goods! information.

For companies, marketers can quickly adjustments to market conditions, reducing the cost and building strong ongoing customer relationships. Judgments made by people are different. As far as I am considered, I do not think cyber marketing can replace the traditional marketing. There are some drawbacks about cyber marketing and need continuously to be developed. The key to organizational health is the management should examine the continuous changing marketing environment, adopting flexible strategies and behaviors to fit with the evolving marketplace; it means cyber marketing should integrate with traditional marketing to more effectively deliver customer satisfaction. In this essay, we will explore that how traditional marketing has been changed and in some cases revolutionized by cyber environment.

At the same time, we will analyze that why the cyber marketing cannot replace the traditional marketing. 2.0 Cyber marketing has changed the traditional marketing in some aspects The importance aspects of the traditional marketing are exchange values, ideas and expectancies, whereas the nature of cyber marketing is to create and exchange information to increase the effectiveness of marketing ultimately. In the following, we will illustrate the main shift between the traditional marketing and cyber marketing in term of the table 1. Table 1. The shift of paradigms in marketing Aspects Conventional marketing Online marketing (cyber marketing) Shift to Market focus Geographical Cyber space Virtual structures Segmentation Demographic Behavior Databases Positioning Local Global General brands Advertising Push Pull Interactive Promotion Mass Customized Individualization Power on pricing Seller Buyer Negotiations Communication Content only Content and context Corporate reality Distribution Intermediaries Direct channel Individualization Media Singular Multimedia Digital ization Management Market share Share of customer New metrics (Source: Rohner K, 1998) The marketing mix consists of everything the management can do to influence a potential purchaser's choice and the cyber environment affects each of them in a distinct way.!

^0 Four Ps! +/- in Online marketing changes is that customized products; lower prices; shorten channels of distribution directly to a global marketplace; and nonlinear promotions. (Brad Alan Kleindl, 2002) 2.1 Product Conventionally, products are made which almost completely depend on the intelligence of the designer and the workers, from marketing to translate them into market performance. In other words, the customers just have few or no chances to join in the products! design, production and distribution processes. Customers often are regarded when they are required to pay for the goods.

But the cyber market is very different traditional market. The on line environment can supply a place to exchange ideas that should be included from any new product idea to after service. The product should be finished with one of customer!'s special character. For example, as the biggest online directly selling company, DELL allows its customers to buy Dell computers via Internet at web It is very different experience, because you can buy a Dell computer via Internet base on you interest and needs. For instance, a customer wants to buy an Inspiron TM notebook with 30 G harddisk, but another wants to buy the same model but with 40 G harddisk. Dell can produce both of them from customers! orders (Internet Source 2).

Cyber marketing is also offering an opportunity for marketers to develop new products and services, augment existing products and services at same time that is becoming increasingly customized, individuation. For example, Malaysia airline is also an example to take advantage of cyber environment as a way to improve service quality. From the website of Malaysia airline, customers can check the timetable, tickets info, travel info even design personal travel planning (Internet Source: 3). 2.2 Price A product!'s price is based on its cost. In other words, the changing of costs can make a strong impact on the product!'s price. If the product!'s cost can be reduced, the price will go down.

Total cost (TC) is the sum of fixed cost (FC) and variable cost (VC) (Eric N. Berkowitz, 1992). In traditional marketing, an organization must spend a lot of money for variable cost. Such as administration fee, manufacturing and logistics costs. But in the cyber marketing environment, variable cost should be decreased to quite low. It is because many traditional shops, sales people and managers are not necessary.

On the other hand, cyber marketing model can decrease wholesaler and retailer levels, it is means middlemen!'s profits should be saved, and then the customers should get the products with the lowest price directly from producer. In additional, using the web means the cost of advertising and communicating should be decreased. For example, Dangdang. com bookshop is one example of a dominant firm in Chinese electronic marketplace. It sells CDs, DVD, software and books for far less than the retail price in China, such as the books were offered approximately in 30%-40% of the general retail price.

On the other hand, the contribution margin of Dangdang. com more than 25% and turnover increase 40% per month. Because Dangdang. com can directly sell the books to the consumers, the lower price attracts a vast number of customers. In statistic, 750 thousand visitors visit the website of Dangdang per day (Internet source: web ). 2.3 Place In the past, the customers had to spend a lot of time in the markets to by their wanted goods. However, following the on line market is established, this problem has been solved. We can buy books, foods and CDs etc directly from on line shop.

At the same time, manufacturers are allowed to sell products directly to the customers and provide customer support on line without shops and service center. It is an important distribution channel that offers a chance for manufactures to directly face vast customers. In the traditional marketing, wholesalers and retailers both exist between manufacturers and customers. But the traditional intermediaries cannot be exited in the cyber marketing environment.

It is called disintermediation. Without the traditional intermediaries, manufacturers! benefits should be increased; the final prices of goods should be decreased and the transport costs and time should be saved. For example, Amazon leapfrogged into an effective first-mover advantage by offering more than a million titles on its Website. If a customer ordered a book that was not in the stock, Amazon immediately submitted an order for the book to a wholesaler, which then shipped it to Amazon!'s distribution warehouse to be shipped on to the customer. This!

^0 just-in-time! +/- model for filling customer orders allowed Amazon to keep its inventory expenses very low. The company also held down its operating costs by locating its headquarters in a lower-rent district in Seattle and, as the company!'s CEO Jeff Bez os liked to say, by! ^0 skimping on everything but people and computers! +/- (David D. Vanhoose, 2003). However, there is a big problem about how the customers select their needs among a large number of online manufacturers. So new on line intermediaries are emerging, it is called re-intermediaries, which refers to the new online intermediary replacing the role of traditional intermediaries in the online environment.

(Turban E., King D., Lee J., Warkentin M. & Chung H., 2002). Such as the on line auctions is a kind of re-intermediaries. The following figure shows the differentiation among intermediaries, disintermediation and re-intermediaries. Figure 1.

Disintermediation in the supply chain (Source: Turban E., King D., Lee J., Warkentin M. & Chung H., 2002) 2.4 Promotion / Advertising An advertising goal (or objects) is a specific communication task and achievement level to be accomplished with a specific audience in a specific period of time. (Philip Katler, 2003). As an important part of an organizational strategy, advertising must be regard cost and efficiency. Traditionally, such as TV, broadcasting, newspapers and magazine will spend a lot of money but only express a small number of advertising messages in a specific period of time. For example, the advertiser who decides to buy 30 seconds of advertising on network television can pay $154,000 for a popular prime-time show such as Law and Order, $650,000 for especially popular programs like Frasier and ER, or $1.3 million for an event like the Super Bowl (Gene Accas, 1998). It is not economic way to promotion because of the entire advertising fee will be transfer to customers.

Internet transforms traditional advertising to more abundant extent which is a powerful method to provide information that cannot be communicated effectively through traditional channels such as a 30-seconds TV spot. It allows organizations to promote products or services using online advertisements such as banner ads, on-line catalogues, product information, and electronic feedback, without worrying about advertising fee and amount of information. According to e-Marketer, total Internet advertising revenues exceeded $3 billion in 1999 and the category is growing far faster (112%) than traditional mass media advertising vehicles like cable (13%), television (7%), and print (6.2%). By 2004, online advertising spending was forecasted to exceed $33 billion in the world. (Internet Source 5). If we compare the traditional advertising and Internet advertising model, we can find that the traditional advertising model is One-to-Many model and the Internet advertising model is Many-to-Many model.

The following figure 2, figure 3 and figure 4 will explain the advantage of Many-to-Many model. Traditional One-to-Many Marketing Communications Model for Mass Media Model of Marketing Communications for Interpersonal and Computer-Mediated Communications - New Model of Marketing Communications in a Hypermedia Computer-Mediated Environment (Source: web) Figure 2 shows a traditional one-to-many marketing model for mass media whereby the factory sends contents through mass media one-way to the consumer. Figure 3 shows a computer-mediated communication model that is more interactive than the traditional one-to-many mass media model. Figure 4 shows a totally different hypermedia computer-mediated model by the Internet encompassing features of all media.

Many-to-Many model can offer an interactive business environment. So, an organization can push up stronger customers! service and advertising stratagem. The following table shows the different advantages and limitations between dissimilar advertising media. Profiles of Major Media Types Medium Advantages Limitations Newspapers Flexibility; timeliness; good local market coverage; broad acceptance; high believability Short life; poor reproduction quality; small! ^0 pass along! +/- audience Television Combines sight, sound, and motion; appealing to the senses; high attention; high reach High absolute cost; high clutter; fleeting exposure; less audience selectivity Direct mail Audience selectivity; flexibility; no ad competition within the same medium; personalization Relatively high cost; ! ^0 junk mail! +/- image Radio Mass use; high geographic and demographic selectivity; low cost Audio presentation only; lower attention than television; non-standardized rate structures; fleeting exposure Magazines High geographic and demographic selectivity; credibility and prestige; high-quality reproduction; long life; good pass-along readership Long ad purchase lead time; some waste circulation; no guarantee of position Outdoor Flexibility; high repeat exposure; low cost; low competition Limited audience selectivity; creative limitations Yellow pages Excellent local coverage; high believability; wide reach; low cost High competition; long ad purchase lead time; creative limitations Newsletters Very high selectivity; full control; interactive opportunities; relative low costs Costs could run away Brochures Flexibility; full control; can dramatize messages Overproduction could lead to runaway costs telephone Many users; opportunity to give a personal touch Relative high cost unless volunteers are used Internet High selectivity, interactive possibilities; relatively low cost Relatively new media with a low number of users in some countries (Resource: Philip Katler, (2003), Marketing Management, 11th, Pearson Education, Inc., New Jersey.) Through compare all advantages and limitations of major media types, we can find distinct competitive predominance of Internet media that cannot be reached by traditional media.

So, almost all modern organizations such as Microsoft, Novell, Dell, SONY, HAIER and many others have placed on-line advertisements. 2.5 Cyber marketing research Marketing research has the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company (Philip Katler, 2003). One major reason for undertaking marketing research is to discover market opportunities. In today!'s dynamic and changing business environment, timely, comprehensive and exact information is an important factor to help an organization to over other competitors. On line research is that collecting primary data through Internet surveys and online focus groups (Kotler P. & Armstrong G., 2001). Traditionally, an organization should spend a lot of time, money, labor and other resources to investigate market.

But cyber marketing research is quick, economic and with low costing. For example, in Malaysia, an organization just spends RM 88.00 or RM 128.00 per month for Internet which can be used without limit. By the Internet, we can send thousands & thousands mails to customers and get feedback immediately just by pressing keyboard and mouse. The following table is comparison of Internet with the other traditional research methods.

Table 3: Comparative attributes of Internet, personal, telephone and mail surveys Attributes Internet surveys Personal interviews Telephone interviews Mail surveys Costs Very low Very high Medium Low Speed of turnaround Fast Instant Instant Slow Response rate High Very high Medium Low Population segments accessible Few All possible to be accessed Less than mail but more than internet Many Feasible geographic reach of survey Very high Very low Medium High Accessibility of medium to respondents Low Varies Medium Very high Time taken for questionnaire distribution Fast Long Medium Long (Resource: Forrest E., (1999)! ^0 Internet Marketing Research! +/-: resources and techniques, McGraw-Hill Book Company Australia Pty Limited, Australia) 2.6 Overcome the trade barriers We can find that the trade barriers of areas are reduced in the cyber marketing environment. It is because the Internet allow any company comes into any market where is located any place of this world. So, it is very far competitive advantage especially for small, medium company and even person who can operate their business at home. For example, in Sichuan province of China, some of flower growers already established communication with transport companies and flower shops by Internet who are staying in different cities. As a circular chain, they do businesses on the line and endow traditional business a new meanings (Internet Source: 6).

3.0 Cyber marketing cannot replace traditional marketing Although cyber marketing bring out a lot of benefits, some physiological weakness is also existing that cannot be disappeared. There is some weaknesses often are cited: transaction handling conflict, cultural differentiation, Limited consumer exposure and buying and security concerns etc. The following detail should analysis these thinks: 3.1 Order fulfillment and logistics cannot leave traditional marketing It is very easy to be understood. Because make an order by Internet that just a part of process of value. The materiel and goods must be produced, and then the goods must be sorted, packaged and shipped. Order fulfillment and delivery must depend on traditional transport channels that as a kind of logistic support.

For example, nobody can order a book on line but get it from wire. The cyber marketing cannot finish the marketing processes by itself; the cyber marketing cannot leave traditional marketing. 3.2 Culture and buying behavior conflict People who are living in different countries have different culture trait and almost all customers have special buying behavior, both of that can produce some barriers on the way to cyber market. Those ingrained habits and tradition are very difficult to be changed.

Such as some customers would like the feeling of touching rather than view the roc!'s egg on line. For example, almost Chinese people believe that some goods must be felt by their hands, eyes, nose or mouth before they purchase them, especially for foods, flows and jewelry. Obviously, the traditional marketing offers advantages that are not so easily replaced by on line marketing. 3.3 Security Almost all of the Internet users believe security is one of the great barriers to cyber marketing. 3.3.

1 Virus and Hacker A virus attack can be very damaging to any computer and especially to a company network and information. There are 500 kinds of viruses at 1991, but now there are more than 60 thousand kinds of viruses in this world. A report shows the entire world lost 129 hundred million dollars in 2001 because of the virus (Internet Source 7). On the other hand, hacker is also imperiling the safety of cyber market.

Hackers will break into their firewall and steal valuable information, such as quotation, financial data etc. It is estimated that Fortune 1000 companies lost more than $45 billion from thefts of proprietary information in 1999. (Brad Alan Kleindl, 2002). 3.3. 2 Payment security Some customers very worry about their payment security. Normally, on line shopping payment request customers fill in their credit card!'s number and passwords. It is not safe because there is no way to promise that your credit card is protected from unwanted use.

In the physical world, payments are often face-to-face model. That is believed that nobody can copy you natural character. 3.4 Limited Usage Cyber market is not for all of the people and organizations in this world. 3.4. 1 Lack of Digital Infrastructure Supports Worldwide, 88 percent of Internet users live in industrialized countries that represent 2 percent of the world population. (Brad Alan Kleindl, 2002). Some countries are too poor to have an Internet infrastructure.

The infrastructure includes telephone networks, bandwidth equipment, and computer equipment with software and cable networks. These costs are heavy burden for small to medium-size organizations and some developing countries. In addition, technicians are also important factor that cannot be ignored. These costs and technology are heavy burden for small or medium-size organizations and some developing countries. On the other hand, even some companies and countries already equipped these equipments and technicians, but there are still need of some extra cost for renewing equipments, upgrade software and train technicians. 3.4. 2 Limited Product Usage The Internet is useful for products and services where the shopper seeks greater ordering convenience (e. g., books and music), or lower cost (e. g., stock trading or news reading).

The Internet is also useful where buyers and information about feature, style and value differences (e. g., automobiles or computers). The Internet is less useful for products that must be touched or examined in advance (e. g., jewelries or luxurious property). Some products that are smaller, standardized, packaged, and lower priced with longer shelf life are much more suited to distribution through intermediaries and for direct selling through Internet. While some perishable goods, complex goods (e. g., industrial machines, computer installations), bulky books, and high priced goods, require direct selling rather than using intermediaries. (Kilter, 1999) 3.6 Education and income conflict Most of the Internet users are good education, middle or high income.

For example, a research shows 81.6% on line customers with higher education degree in China (Internet Source 8). The report from the Conference Board / NFO Worldwide shows in American, 88% on line customers! family income over USD 35.000 in 2000 (The Conference Board / NFO Research, 2000). Therefore, the cyber customers are only a fraction of the total population. 3.7 Information Overload Although Internet is an advantageous tool for shopping and business, there are million of websites and zillion information that make information jam on the Internet.

At the same time, customer may fall into mess because they do not know what they want and where they can get it. In this chaotic and cluttered environment, companies and website providers should also find them difficult to attract customers! attention. So, the overload information and disordered environment make some latent customers stop their steps to cyber marketing. 3.8 Limited customer exposure and buying Although the number of consumers on the Internet is growing impressively, numerous market research studies earlier shows this year by the National Association of Manufacturers found that more than two-thirds of American manufacturers did not use the Internet for business-to-business commerce. If that is true for the United States, it is true in spades for the rest of the world. On-line consumer has yet to shop online in large numbers.

For example, only half of Dell Computer!'s customers are! ^0 online-enabled! +/-, as Joe Marengo, one of the company!'s senior executives, puts it: able to use Dell!'s web pages to configure their orders. And only 15% of customers place the order electronically. The remaining 35% design the order online and then submit it in some way that requires Dell to take a second step to feed it into the system, such as e-mailing or faxing it (Internet source 9). 3.9 Privacy Privacy is the protection of individual rights to nondisclosure (Gary P. Schneider, 200.

). Consumer privacy in online environments is a major problem. When customers on line shopping, normally, they need to fill their detail such as phone number and address in electronic form. These are useful business information.

So, some websites providers will sell customers! personal detail to third parties for other purposes without their knowledge or permission. All in all, the traditional marketing offers advantages that are not so easily replaced by cyber marketing. Cyber marketing involves high technologies and it need continuously be developed. 4.0 Conclusion There are some unique characteristics about cyber environment, if we compare with traditional marketing. We have shown that the cyber environment has sparked a revolution in the way that we do business. Nowadays, there are all kinds of E-business companies be built around the world every day.

Cyber marketing is the trend in the long term. In fact, it is emerging as the next battleground for market shares and market dominance. Few businesses can escape the needs to integrate use of the Internet into their operations. If they don! t seize the initiative and act quickly, even if this will threaten their existing profitable business, they may still go under.

Actually, the travel industry, commodity retailing and personal finance sectors are already operated on this way. As the trend continues, marketing use the Internet for commercial transactions will be increased rapidly. Nevertheless, although the cyber marketing is the trend, there are some inevitable disadvantages. In particular, there are security, limit usage, skewed consumer demographics, and chaos, clutter considerations that cannot be disregard. In the short term, the cyber marketing cannot leave traditional marketing. Today, organizations should use Internet technology to restructure and developing the traditional marketing, and then create higher customers satisfactions.

Customer satisfaction should bring us higher befits. In a word, the relation of cyber marketing and traditional marketing is to exist with each other, cyber marketing can help the traditional marketing succeed to win customers; traditional marketing can support cyber marketing to fulfill transaction best.

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