Net-Marketing 101 Lesson 1 Reading

Introduction – Why Learn Marketing on the Web? The Internet –Channels of Distribution Case Studies of Successful Online Companies Why Learn Marketing on the Web? The emergence of globalise trade, increase in foreign investment and cross-border transactions have put many small businesses under pressure to find innovative ways to continue to market their products and services. This is especially difficult given that they often operate on tight marketing budgets. In the quest for cheap marketing alternatives, these small businesses continue to use conventional marketing tools such as newspaper, magazine, radio and television advertisements, unaware of the advantages that Internet Promotion offers. All too often, these entrepreneurs focus on the disadvantages of Internet Promotion and fail to adequately take advantage of the opportunities that it presents. Moreover, their preoccupation with conventional marketing strategies is driven by a misconception that these are cheaper than Internet Promotion. To most small business entrepreneurs, marketing or promoting their products or services via the Internet can be a daunting task. However, with adequate information small businesses can benefit significantly from Internet Promotion while minimising the disadvantages that it presents. In fact, it may prove to be the marketing strategy that generates the highest return on investment. The Advantages Cost Effective and Enduring Marketing Strategies The Internet has become the information superhighway for the buying public. Most persons prefer the hassle free transactions that Internet shopping can offer. As a result, the Internet has become the most powerful selling tool. Internet Promotion offers cost effective ways for small businesses to enhance their product or service distribution networks. For example, the use of portals can help create new marketing channels and logistics, or provide better or faster product access for customers. In comparison to other forms of marketing, Internet Promotion presents the advantage of reduced budget and storage costs, when compared with printing brochures, producing television or radio advertisements or managing a call centre. It presents a fast and cost effective option for penetrating new markets. Market Penetration With millions of person using the Internet to search for products and services, small businesses can penetrate other markets at a fraction of the cost of traditional marketing methods. Websites act as virtual storefronts, allowing businesses to stay open 24/7. Internet Promotion gives a business greater visibility, thereby creating more opportunities for increasing its customers at relatively low cost. Never before has it been easier for an upstart business to be able to reach out to literally millions of potential customers and to position themselves for success, without the need for costly infrastructure and overwhelming marketing costs. Thanks to the Internet, new businesses can become popular almost overnight. Low Cost, Instant Communication Email makes business communications instant, whether the customer or business affiliate is across the street or across the globe. It makes it easier for customers to maintain contact and readily facilitates repeat purchasing. An effective online strategy can therefore turn a small web business into a virtual cost saver and income-generating machine. The net result is that the small business can gain significant competitive advantage in a given market. Many online businesses have therefore resorted to the use of ezines, blogs, pop-up ads and other online marketing tools to let customers know about new products or services as well as provide information relevant to their respective industry. The benefits of this strategy are two fold. Marketers can effectively heighten brand awareness for relatively new products on the market whilst strengthening customer relationships, with shorter time frames. Content is Timeless Internet Promotion also provides the advantage of being enduring. Whereas participation at a trade fair or conference loses sales impact, once it is over, and an advertisement in a newspaper or business magazine may quickly lose its sales generating value within a day or two or as soon as the next issue is released; Internet Promotion is often timeless. Apart from the dates and sometimes prices, much of your website content remains valid years after. Real Time Statistics For Measuring Success of Promotion Campaign One of the most significant advantages of Internet Promotion is that its success is measurable. Marketers can use tools that provide real time statistics, on unique visitors, repeat visitors, click through rates (CTR) on advertisements, thereby allowing them to evaluate the effectiveness of a promotion campaign. This enables marketers to determine what works for their particular market and to make timely changes in their marketing strategies. Time Saving Another important advantage of Internet Promotion is that it saves time since it generally does away with counselling on product uses and benefits, service information and sales administration. Visitors can access "frequently asked questions" to help themselves, and can buy online, without the involvement of staff. This saves time and money. So, whether 10 or 10,000 visitors visit the site, the increased cost is marginal whilst the savings can be immense. But like any business approach, Internet Promotion is not without its risks and weaknesses. Disadvantages Difficulty in Attracting Customers Small business may not have the resources to pay for paid directory inclusion, pay per click inclusions and often have to rely solely on search engine optimisation or word of mouth to drive traffic to their sites. With millions of businesses selling the same product and services, competing with more established businesses can be frustrating and costly venture for small business. On the other hand, larger companies can offer promotions, pay for directory inclusions, implement pay per click campaigns as well as employ the “who is who” in internet marketing to develop campaigns that generate traffic and leads. Difficulty in Evaluating Legitimacy of Transaction Another notable disadvantage of doing promoting businesses online is that it may be difficult for the businesspersons and consumers to thoroughly evaluate the legitimacy of a transaction. Small businesses are particularly vulnerable to thieves using stolen credit cards and stolen information to do online transaction. With Internet credit card and identity fraud on the rise, small businesses are forced to finance costly security measures to reduce their vulnerability to fraudulent transactions. Salespersons and Customers are Isolated Another disadvantage of promotion via the Internet is that the customers and businesspersons are isolated. There is little personal contact between customer and salesperson prior to and after the sales is closed. Thus, the prospect for repeat sales may thus be diminished. Entrepreneurs are therefore compelled to adopt marketing strategies to drive online users back to their site. From all indications, it appears that the advantages of Internet promotion, far exceed the disadvantages. With adequate knowledge, entrepreneur can benefit significantly from Internet promotion, especially small business owners. More and more, the growth and outreach of the Internet’s, its ease and accessibility for customers is becoming inevitable. Small business would therefore be well advised to start their web advertising function in order to improve their competitiveness online. Carla Lendor has been involved in Internet Marketing from 2000. She is a co-publisher of eXplosion!, a newsletter which offers guidance to small online businesses. She is the co-founder of Caricom Single Market Economy, a blog with discusses the challenges faced by Caribbean businesses in the CSME. Visit Patant Consultants International or Caribbean Vacation Resorts for more information. The Internet –Channels of Distribution and Beyond Computer systems have become ubiquitous. A firm understanding of the technology, as well as the opportunity it creates, is almost essential for the successful running of a business. It is now as important as the ability to prepare a business plan or deal with the VAT office. As recently as the late 1980s, computers were used only for simple business work-- preparing letters, helping with accounts, invoicing, and sometimes creating promotional materials. While they still perform these functions, they also offer unprecedented challenges and opportunities, especially for small businesses. In terms of opportunities, the most exciting development for business is the arrival of e-commerce-- electronic trading on the Internet. It is now possible for small companies to trade successfully in markets that were previously available only to large multinationals. E-commerce offers the possibility of a company that runs an almost completely computerized business, trading at all hours of the day or night, 365 days a year, with minimal human intervention. The challenges come from the technology itself, which remains badly designed and unreliable on more occasions that it should. Users are often forced to find ways around these limitations, and can waste time with poorly designed products that could easily be improved. A good example of this is the year 2000 (Y2K) problem, or millennium bug. Finding a way to exploit the opportunities fully and avoid the pitfalls of technology requires a ready source of explanation and information. Sources of information are not as plentiful as they might be. Consultants are expensive, and many computer magazines seem obsessed with technology for its own sake, and unaware of the practical implications for business users. Computer dealers are often more interested in making a sale than explaining the technology that is most suitable for their customers’ needs. This can result in, for example, the purchase of a new piece of software that simply will not work on an older machine. Ebusiness provides detailed information on Ebusiness, Ebusiness Solutions, Ebusiness Software, Ebusiness Consulting and more. Ebusiness is affiliated with Make Money Online With Surveys. Article Source: http://EzineArticles.com/?expert=Elizabeth_Morgan Case Studies Amazon: The early days In summer 1994, former investment banker Jeff Bezos left New York for Seattle, Washington to create an online bookstore. The web site was launched in July 1995 to sell books through the Internet. These were the early days of Internet and the web site was unattractive. However it worked quite well despite a lack of key information such as publication dates. And Tom Alberg from the Madrona Venture Group was impressed enough to invest $100,000 in Amazon in 1995. Amazon quickly became more than an online bookstore. It soon became a community in which customers could create book reviews online and research others before buying. It became not just a case of buying books but also of sharing opinions.Rapid growthIn 1996, its first full financial year in business, Amazon generated $15.7 million in sales. In May 1997, Amazon.com raised £54 million in an initial public offering as it launched itself on the stock market. In October 1997 Jeff Bezos himself hand-delivered Amazon’s 1-millionth order to a customer in Japan. One year after its stock market launch, Amazon added music CDs and videos to its web site. It then followed up with five more product categories – electronics, software, toys, video games and home improvements. This was growth at absolutely breakneck speed and many onlookers thought that the rapid growth policy would indeed “break their necks”. But early investors, such as Nick Hanauer, were convinced that Amazon would make a profit. However, profits didn’t come quite so quickly. Instead Amazon grew at express speed and profits were waived for the sake of growth to make it impossible for others to duplicate their achievement. It’s said that Hanauer’s initial $40,000 investment was at one time valued at $250 million. Hanauer apparently still keeps an old T-shirt from Amazon’s early days that reads: "Eat another hot dog, get big fast!"The end of 1999 saw annual sales reach $1.6 billion and on 10 December, Amazon’s stock closed at an all-time high of $106.69. And in the same month, Time Magazine named Bezos "Person of the Year," calling him the "King of Cybercommerce."But just one month later, the “King's” crown slipped badly.Amazon.toastAmazon fired 150 workers as part of a reorganization plan. Five days later, they reported a loss of $323 million for the fourth quarter, but promised lower losses in future. But the subsequent fourth quarter saw losses exceed that amount by more than $200 million.By the summer of 2000, Amazon's share price had dropped by almost 70% and analysts began to criticize the company for venturing into too many products and spreading itself too thinly. Speculation on Wall Street suggested that Amazon would file for bankruptcy or be bought out. Some even clearly warned investors to avoid buying Amazon stocks. Gloom and doom mongers gave the company various labels such as Amazon.toast or Amazon.bomb as the collapse of the world’s largest e-tailer was predicted. In early 2001, when Amazon reported a huge fiscal loss of $1.4 billion - the company's worst-ever annual performance - Jeff Bezos finally came up with an answer.Changing focusIn January 2001, the company’s chief executive promised a profit by the year-end. But expenses had to be cut and the business restructured. 1,300 workers (about 15 percent of its work force) were laid off. Two warehouses and a Seattle customer-service centre closed. Jeff Bezos gave orders to get rid of “crap” and cease selling unprofitable products. The company concentrated on streamlining its storage, packaging and delivery operation. It boosted its online offer by becoming an online shopping portal, offering and selling products from companies such as Toys ”R” Us and Target. It also competed with eBay through Amazon Auctions.By the end of 2001, Jeff Bezos had kept his word. Amazon reported its first profit with fourth-quarter earnings of $5 million. It was clear that one quarter of profits would not be enough but since then profits have steadily improved. This was only achieved by continuously pushing sales and increasing business efficiency and also expanding the products offered on the web site. 10 years onNearly 10 years on and Jeff Bezos’ name remains synonymous with the company. Hanauer, who describes his long-time friend as “the smartest man in the world” is pretty sure that Jeff Bezos will head Amazon for some time to come. "He remains as single-mindedly focused on Amazon now as he ever was” says Hanauer. Amazon has survived and is also making a profit - a fact that many analysts and observers doubted would ever happen. The company has grown into a multibillion-dollar business and is now not only the undisputed leader of Internet commerce but also reaping a profit. Its community of almost 40 million customers will help it retain its market lead.Location Amazon.com Headquarters Address: 1200 12th Ave., Ste. 1200 Seattle, WA 98144 Phone: (206) 266-1000 Fax: (206) 622-2405www.amazon.com Ebay: The story goes that founder Pierre Omidyar wanted to call it Echo Bay, but the name had already been registered by a Canadian company mining for gold in Nevada. So Pierre Omidyar chose eBay.The Mac daysPierre Omidyar is the founder of eBay. He was born in Paris in 1967, the only child in a French-Iranian family. At the age of six, the family emigrated to the United States and he grew up in and around Washington, D.C. Pierre was bitten by the computer bug at a very early age, sneaking out of the gym to teach himself on his science teachers cheap computer. He later graduated to an Apple II and got paid to computerize the school’s library catalogue. In the mid-1980s, Pierre Omidyar went to Tufts University near Boston. His main subject was computer science and Apple programming became his obsession. Apple had become a sort of cool trendy alternative to the major computer companies. Pierre did all his work on a Macintosh from his dorm room, rather than use the PCs in the computer laboratory. He created his first Mac programmer’s utility tool for other programmers. He got a summer job as an intern in Silicon Valley with Innovative Data Design, a company which wrote image programmes for Macs. This led to a full-time job and Pierre Omidyar took the following semester off to continue working. After completing a further semester at Tufts University, he moved to the University of California-Berkeley, where he finished his degree.A bit of business pays offIn 1991, Pierre Omidyar teamed up with a colleague to found the Ink Development Corporation producing software for pen-based computers. This was the technology which - it was thought - would replace the keyboard with a stylus. It did not! However, Ink Development had also developed some software tools for online commerce. They changed direction and re-launched as an electronic retailer – eShop.In 1994, things weren’t moving fast enough for Pierre Omidyar and so he left eShop. He kept a fair- sized stake in the company and when it was bought by Microsoft two years later, became a millionaire before the age of 30. A storyAs legend has it, in summer 1995 Pierre Omidyar was dining with his fiancée, Pam Wesley, when she mentioned that she was having problems finding PEZ collectors with whom to trade. PEZ, originally breath-freshener mints (later fruit-flavoured sweets) in dispensers with character heads, had become collectors’ items. This, so the story goes, gave Pierre the eBay idea. But actually it is not true. The fact is that Pierre Omidyar was following all other computer freaks in trying to find a use for the Internet. The dawningThough Pierre Omidyar had never been to an auction in his life, he believed that an auction could be an interesting marketing tool. Place an advert giving a minimum price and if several people show an interest - why not let them bid? At the time, Pierre Omidyar was employed by a company called General Magic and so had to do his programming in his spare time. Over a long weekend, he created an auction web site. It didn’t look very appealing, nor did he have a clue as to what the public might want to auction. He just created various categories: antiques, books, comics, computer items, electronics……. and called the site AuctionWeb. At the beginning the site was free and slowly began to attract visitors. Traffic on AuctionWeb steadily increased through the autumn of 1995 and by the end of that year AuctionWeb had hosted thousands of auctions with over ten thousand bids.Time to cash inIn 1996, Pierre Omidyar decided to start charging sellers a percentage of the final sale price. He had no idea whether it would be accepted or not, but soon the cash and cheques came rolling in. AuctionWeb was one of the few to make a profit right from the start. By June, revenues had doubled for the fourth consecutive month, reaching $10,000. Pierre Omidyar’s hobby had become a business. He left General Magic and hired his first part-time employee, Chris Agarpao.  It’s said that at this time, the staff sat around on folding chairs and DIY style desks were delivered in cardboard boxes to be screwed together by the employees. It is also said that there was only one single telephone and the staff were not allowed to answer it. Anyway, the number was kept secret because Pierre Omidyar wanted to keep costs to a minimum. The intention was that any customer with a query should send an e-mail. By August, AuctionWeb was so successful that it was joined by Jeff Skoll, a go-getting entrepreneur who had done some consulting work for AuctionWeb. Pierre Omidyar believed that Jeff Skoll was the man to develop and drive the business. Around this time, the laidback dot.com types were faced by men-in- suits with economic degrees, who had the task of making money while the more relaxed Omidyar tended the AuctionWeb web site and community. In 1998 eBay as it was now called, was launched on the stock exchange. Although the launch was very successful Odymar was not particularly satisfied. He had envisaged an auction in typical eBay style with the eBay community having a bite of the cherry, but Wall Street and the American stock exchange laws saw it differently.But in 1999, the casual approach almost brought ruin. Technology had been neglected and on 10 July, the whole computer system crashed and stayed down for 22 hours. Without backup! Luckily the company weathered the storm, got the system back up and running and very quickly invested millions in state-of-the-art technology. A few years laterToday it’s clear that Pierre Omidyar’s perception has paid off. He quite simply believes that the human race is basically good. At the beginning, many prophesied that it could not work – complete strangers dealing with complete strangers. But it is now obvious that it does. He also believes that the Internet community should remain the central philosophy, fearing a steady commercial takeover. But some things have changed. Pierre Omidyar never wanted advertising on the web site. However, these days eBay is one of the favourite sites for banner advertising. Now known as eBay, the San Jose-based company has become the largest person-to-person online trading community. eBay used the web to create a totally new market in the form of an auction. It now has over 1,000 categories and bids are placed at the rate of over 600 per minute. It is said that over 250,000 items are added daily and that it has sold over 45 million items since its conception in 1995. The site has about 50 million registered users and employs a staff of over 2,500. One of the most expensive items to be sold (as yet) was a Gulfstream II jet for $4.9 million! Despite his wealth - he is now a multibillionaire - Pierre Omidyar remains a modest man. In 2004 he was still driving around in a beat-up VW convertible.Location Headquarters: eBay Inc.2145 Hamilton Avenue San Jose, California 95125www.ebay.com YouTube.com YouTube is a free video-sharing website on which users can distribute their video clips – short films in video format primarily found on the Internet. The site was founded in February 2005 by American-born Chad Hurley, Taiwan-born Steve Chen and Jawed Karim, born in East Germany of Bangladeshi decent. All three were former employees of PayPal, the Internet payment-transfer company. A preview of the YouTube website was presented to the public in May 2005 and officially launched six month later with the initial headquarters in San Mateo, California. The venture gainsYouTube was initially funded by a so-called angel investor, a wealthy individual who provides business start-up capital, usually with a share in ownership. In November 2005, Sequoia Capital, the venture capital company founded by Donald T. (Don) Valentine invested US$ 3.5 million in YouTube. Don had previously funded various other successful technology companies. Roelof Botha, a partner in Sequoia Capital and former PayPal financial director, joined the YouTube executive board. Following impressive growth within a few short months, Sequoia Capital invested a further US$ 8 million in YouTube Protests provide impetusYouTube’s rapid expansion quickly caught the attention of the traditional media. Despite official YouTube policy prohibiting uploading of copyrighted material and the company’s efforts to regularly remove uploaded content infringing copyright laws, a large amount of such content continues to be uploaded. In February 2006, NBC requested removal of its copyright content from the YouTube website. Although YouTube complied with NBC’s request, the incident hit the news and the increased publicity gave even more impetus to YouTube expansion.NBC then realised the truth of the old saying “If you can’t beat ‘em, join ‘em!” and in June 2006 announced a strategic partnership with YouTube. An official NBC channel would be set up on YouTube presenting promotional clips of the TV series ‘The Office’ and YouTube would also promote NBC’s videos on its website. CBS, which had previously also requested the removal of various video clips, followed suit in July 2006. Nevertheless, copyright lawsuits are likely to plague YouTube sooner or later.Fast lane to fameYouTube’s success has also catapulted a number of unknowns to Internet-celebrity status. One is Peter Oakley, known as geriatric1927, from Leicester in the UK. The widowed pensioner, born in 1927, gained instant popularity with a series of autobiographical videos entitled ‘Telling it All’, revealing various aspects of his life including his service in World War II. YouTube has also provided a launching pad for new bands and their music. OK Go, the rock band from Chicago and Washington DC, and Sick Puppies, the Indie rock band from Sydney, Australia both became famous almost overnight through YouTube.GoogledIn summer 2006, YouTube became one of the fastest growing websites in the world, rated as the fifth most popular website by Alexa, a company providing web-traffic statistics to other sites. Surveys conducted in July 2006 showed that 100 million clips were viewed daily on YouTube, 65,000 new clips were uploaded every 24 hours and the website was visited 20 million times each month.In October 2006, it was announced that Google would acquire YouTube for US$ 1.65 billion. The company would continue operating independently and keep its co-founders and all employees. The deal went through on 13 November 2006, marking Google’s biggest purchase to date. 1