Chapter1 1. 1
I n t r od u c t i on
Bro roa ad Pr Problem Ar Area
The cutting edge for business today is Electronic commerce and marketing. The meteoric growth of electronic commerce and and
mark market etin ing g
baff baffli ling. ng. severa several l began
at
the the
Duri During ng
this this
direct direction ions. s. to
operate
inno innova vate ted d
turn turn
uniq unique ue
of
deca decade de, ,
As
the the
mark market et
increa increasin sing g
in
the
last last
spac space e
number number
Internet
prop propos osit itio ions ns
cent centur ury y
to
has has
of
market
crea create te
is
trul truly y
grow grown n
in
organi organizat zation ion space, ce,
valu value e
they hey
in
the the
process. process. At the organization organization level workflow workflow has became more effi effici cien ent t
and and
prod produc ucti tive ve. .
More More
comm common only ly
e-co e-comm mmer erce ce
is
associated associated with buying and selling of information, information, products and and
serv servic ices es
uphi uphill ll
task task
via via of
comp comput uter er
deve develo lopi ping ng
netw networ orks ks. . the the
most most
All All
comp compan anie ies s
effe effect ctiv ive e
face face
meth method od
of
getting their product to their target market. It is a fact that integration of electronic commerce and marketing will brin bring g
with with
mark market etin ing g clos close e
to
it
a
rena renais issa sanc nce e
func functi tion on the the to
against
real
organi organizati zation on
it
custo custome mer, r,
comp compan any, y,
invo involv lvem emen ent t
as
expl explor ore e
and and
customers. stat state e
based based
in
pres presen ent t
to
new new
of
of
bring bring
prod produc uct t This
adve advert rtis isin ing, g, an the the
oppo opport rtun unit ity y cust custom omer er
idea ideas s
and and
research
info inform rmat atio ion n
Islama Islamabad bad with with
sale sales s
and and
to
get get
insi inside de
the the
pret pretes est t
them them
examines
the the
tech techno nolo logy gy the emphas emphasis is
in
the the
on
the
evaluation of current state of infrastructure required and its use in e-commerce e-commerce with in context context of the current policy developments by the government of Pakistan.
1.2 1. 2
Rati Ra tion onal al of th the e St Stud udy y
1
Resear Researcher cher will
be
intere intereste sted d
to
gather gather the relevant relevant
and
factual information regarding e-commerce and marketing which
will
give
imple plementation
a
of
Moreover
the
employi employing ng
these these
complete
the
extent
insight
E-co -commerce to
which
technol technologi ogies es
and
of
th e
marketi eting.
organizations
a re
and the unexplo unexplored red areas areas
will also be brought into consideration. The paper will stre stress ss
the the
impo import rtan ance ce
impleme implementa ntatio tion n
of
and benefi benefits ts
E-co E-comm mmer erce ce
and and
mark market etin ing g
for organiz organizati ations ons as
well
as society as a whole. In fact organizations worldwide are are
esta establ blis ishi hing ng
a
basi basic c
elec electr tron onic ic
pres presen ence ce
on
a
global global open open networ network, k, learnin learning g from from the experie experience nce and gradual gradually ly becomi becoming ng more sophis sophistic ticate ated d in their their use of the the
tech techno nolo logi gies es. .
perti pertine nent nt to myste mystery ry of
On
part part
unde underst rstan and d
elec electr troni onic c
of
that that
orga organi niza zati tion ons s
best best
comm commerc erce e
way way
that that
it
is
of gaini gaining ng the
will will
be
vita vital l
in
tomorrows markets is to try it today.
1. 3
In
Pro rob blem St Statement
toda today’ y’s s
succ succes ess s
and and
abil abilit ity y
to
commer commerce ce the the
and
curr curren ent t
glob global aliz ized ed
worl world d
gain gainin ing g
comp compet etit itiv ive e
mana manage ge
a the the
market marketing ing. . stat state e
of
an
impo import rtan ant t The
orga organi niza zati tion on edge edge
rest rests s
aspe aspect cts s
of
elec electr tron onic ic
theref therefore ore
envisi envisioned oned
project project
E-co E-comm mmer erce ce
and and
Theo Th eore reti tica cal l Fra Frame mewo work rk
2
with with
mark market etin ing g
implementation in organization based in Islamabad.
1.4 1. 4
long long-t -ter erm m
and and
its its
its its
Defining E-Commerce
Elec Electr troni onic c
comm commer erce ce
is
mode modern rn
busi busine ness ss
metho methodo dolo logy gy
that that
addresses the needs of the organizations, merchants, and consu consume mers rs
to
cut
cost cost
whil while e
impr improv ovin ing g
the the
qual qualit ity y
of
goods and services and increasing the speed of service delivery. The term also applies to the use of computer network networks s to search search and retriev retrieve e inform informati ation on in suppor support t of
huma human n
and and
corp corpora orate te
deci decisi sion on-m -maki aking ng. .
(Kal (K alak akot ota a
&
Whinston, 1996)
E-co E-comm mmerc erce e
is
cons consis ist t
of
buyi buying ng, ,
selli selling ng, ,
marke marketi ting ng
and
servicing of product and services over computer networks. The inform informati ation on elec electr tron onic ic
techno technology logy industry industry
busi busine ness ss
appl applic icat atio ion n
might might
see this this
aime aimed d
at
as
an
comm commer erci cial al
transactions. (www.bambooweb.com )
E-commerce refers to transactions such as buying; selling, inform informatio ation n
flow and
fund fund
transf transfer er
over over
the Internet. Internet. E-
commerce commerce broadly encompasses encompasses all business business activities activities taking place over the intent. It consists of electronic retailing (e-t (e-tai ailin ling) g), ,
elec electr tron onic ic
data data
inte interc rcha hange nge
and and
elec electr troni onic c
fund transfer. (Asoke, 2004)
The use of Electronic transmission transmission mediums to engage in the exch exchan ange ge, , serv servic ices es
incl includ udin ing g requ requir irin ing g
digi digita tall lly, y,
from from
buyi buying ng
and and
sell sellin ing g
tran transp spor orta tati tion on
loca locati tion on
to
of
eith either er
loca locati tion on. .
prod produc ucts ts
and and
physi physica call lly y
or
(Gre (G reen enst stei ein n
&
Femiman, 2000)
What is E-Marketing Mar Marke keti ting ng concep conception tion, ,
is
a
proc pr oces ess s
distrib distributi ution, on,
of
plan pl anni ning ng
promot promotion ion
3
and
and an d
exec ex ecut utin ing g
pricin pricing g
of
the th e
ideas, ideas,
go o d s
an d
s e rv i c e s
indivi individual dual
and
trad tr adit itio iona nal l
to
c r ea t e
organi organizat zationa ional l
mark ma rket etin ing g
in
e xc h a n ge s
needs. needs.
two tw o
tha t
sa t is f y
E-mark E-marketi eting ng
ways wa ys. .
Firs Fi rst, t,
it
affects affects incr in crea ease se
efficiency in traditional marketing functions. Second, the tech te chno nolo logy gy
of
E-ma Emark rket etin ing g
stra st rate tegie gies. s.
The Th e
tran tr ansfo sform rmat atio ion n
mod model els s
that th at
add ad d
cust cu stom omer er
tran tr ansf sfor orms ms
valu va lue e
resu re sult lts s and an d
many ma ny in
or
mark ma rket etin ing g
new ne w
busi bu sines ness s
incr in crea ease se
comp co mpan any y
profitability. (Judy Strauss & Raymond Frost 2001)
E-marketing
is
the
application
of
a
broad
range
of
information technologies for: Tran Transf sfer erri ring ng
cust custom omer er
mark market etin ing g
valu value e
thro throug ugh h
stra strate tegi gies es
more more
to
effe effect ctiv ive e
crea create te
more more
segm segmen enta tati tion on, ,
targeting, differentiation and positioning strategies; More
efficiently
concep conception tion, ,
planning
and
executing
distrib distributi ution, on, promot promotion ion and pricin pricing g
of
the goods, goods,
services and ideas and Creati Creating ng
and
exchan exchanges ges
that that
organi organizat zation ional al
satisf satisfy y
custome customers rs
individ individual ual
object objective ives. s.
consume consumer r (Strauss,
Ansary & Frost, 2003)
Electronic Commerce Framework
From From clear
the the
busi busine ness ss
that
acti activi vity ty
e-commerce rce
alre alread ady y
applica ication
taki taking ng will
plac place, e, bui built
it on
is the
existing technology infrastructure. None of these would be possibl e
without
each
of
the
building
bloc k
in
t he
infrastructure:
Common business services, for facilitating the buying and selling process.
Mess Messag agin ing g
and and
info inform rmat atio ion n
dist distri ribu buti tion on
sending and receiving information.
4
as
a
mean mean
of
E-Commerce Applications
Supply Chain Management
Video on Demand
Remote Banking
Procurement and Purchasing
Online Marketing and Advertising
Home Shopping (Kalakota & Whinston, 1996)
Electronic Commerce
Electr Electronic onic commerc commerce e
has unleas unleashed hed yet anothe another r
revolu revolution tion, ,
which is changing the way business buy and sell products and services. It is associated with buying and selling of information,
products
comm commun unic icat atio ion n commer commerce ce
and
netw networ orks ks. .
throug through h
new
services
E-co E-comm mmer erce ce
ways ways
of
over
help helps s
transf transferri erring ng
computer trad tradit itio iona nal l
and
proces processin sing g
information since it is information, which is at the heart of
any commer commercia cial l
activi activity. ty. Inform Informati ation on
is
electr electroni onicall cally y
transferred transferred from computer to computer, computer, in an automated way. This This
has, has,
in
fact fact, ,
tran transf sfor orme med d
the the
way way
orga organi niza zati tion ons s
operate.
Elec El ectr tron onic ic
inte in terc rcha hang nge e;
data da ta
EDI
can
be
used
to
electronically transmit documents such as purchase orders, invo invoic ices, es,
ship shippi ping ng
noti notice ces, s,
recei receivi ving ng
advi advices ces
and and
other other
standard business correspondence between trading partners. EDI can also be used to transmit financial information and payments in electronic form. (Bajaj, Nag 2000)
EDI Application In Business
Althou Although gh trad trade, e,
EDI it
scenarios ios
was
has has in
develo developed ped spre spread ad
to
improv improve e
ever everyw ywhe here re. .
industries
that
5
transp transport ortatio ation n
Four Four
uses
very very
EDI
and
diff differ eren ent t
extensively: ly:
international transfer
or
(EFT),
processing
and
cross
border
health
care
trade, EDI
manufacturing
and
electronic
for
insurance
retail
fund claim
procurement.
As
these examples illustrates, companies have applied a number of EDI based solution to improve business process for both strategic and competitive advantages. In some cases EDI has transformed Increased change
operational
quality
industry
productivity.
In
and
aspects cost
standards other
of
a
company’s
reductions of
words
can
customer EDI
has
business.
significantly
satisfaction
shaped
a
and
company’s
marketing and distribution efforts by helping to create new distribution
channels,
develop
new merchandise
and market
research methods and introduce better customer service. In sum,
major
improvement
in
product
manufacturing
and
customer service response time allows companies to be more competitive. (Kalakota & Whinston, 1996)
Electronic Payment Systems
Electronic payment systems are becoming central to online business process innovation as companies look for ways to serve
customer
innovations
in
faster payment
commerce
application
business
opportunities.
and
at
lower
for goods
promise
to
costs.
and service offer
Electronic
wide
payment
Emerging
in
electric
range system
of and
new e-
commerce are intricately linked given that online consumers must pay for products and services. If the claims an debits of
the
various
participants-individuals,
companies
banks
and nonbanks are not balanced because of payment delay or even
worse
disrupted. prompt
and
defaults Hence
then
an
secure
the
important
payment,
entire aspect
clearing
credit or debit claims
6
business
chain
is
of
e-commerce
is
and
settlement
of
Portal
A
point
of
Yahoo!,
entry
Lycos
to
and
the
Internet.
Excite
were
Many
portals
originally
such
just
as
search
engines. What makes them portals is that they provide many services in addition to searching. In other words they are destination for news, games, maps, shopping and so forth. (Judy Strauss & Raymond Frost 2001) E-tailing
The e-tailing model is one of the most visible e-commerce business
models.
In
this
model
merchants
set
up
online
storefront and sell to businesses and or consumers. Digital goods
may
physical FedEx.
be
delivered
goods
are
E-tailers
directly
shipped
via
distributing
over
the
logistic
digital
Internet provider
products
while such
such
as
media, software and music. Well known electronic storefront include
CDNOW
(www.cdnow.com)
and
Dell
(www.dell.com). (Judy Strauss & Raymond Frost 2001)
7
Computer
Intranet
An intranet is a computer network similar to the Internet, established
within
the
organization
to
provide
information internally to employees. The information on intranet web pages can be quickly and easily changed- an advantage over paper publishing. (Judy Strauss & Raymond Frost 2001)
Extranet
Extranet are two types of network that are joined for the purpose their
of
sharing
intranets,
information.
they
would
If
two
have
an
companies extranet.
link (Judy
Strauss & Raymond Frost 2001)
Electronic Commerce Consumer Applications
Businesses looking to get involved in the electronic market place want fast answers to some very basic questions. What types of services do consumers really want or are willing to
pay
social that are
for?
Do
change,
educate willing
they that
as to
well pay
want
applications
entertain, as for
that
that
are
about
educational,
entertain? What these
bring
or
amount consumers
services?
How
should
the
product be priced so that firms are competitive as well as profitable. pinpoint
or
structure
Consumers decipher
and
desires in
population
are
electronic are
still
very
hard
markets in
the
to
predict,
whose early
shape, stages.
Needs envisioned include entertainment on demand, video on demand,
games
on
demand
and
news
on
demand;
electronic
retailing via catalogs and kiosk and home shopping network; interactive
distance
education,
8
collaboration
through
desktop
video
conferring,
medical
consultation
and
many
more. Kalakota & Whinston, 1996)
Modes of Payment
Check
and
cash
are
physical
payment,
whereas
monetary
transactions. A
has
electronic
benefited
and
traditional
payment
refers
modes
to
of
paperless
payment through electronic modes
e-commerce
businesses
and
supporting
financial institutions. Electronic payment, also termed epayment has reduced a lot of paper work, transaction costs and labor cost and helped in market expansion. Electronic payment
is
user
friendly
and it
takes
comparatively less
processing time than manual processing. However, along with these
advantages,
these
payments
major
frauds
procedures
and
because
risk a
user
are has
involved to
in
provide
personal information while paying electronically. Thus it’s essential for any e-commerce and online banking business to ensure the privacy of individual and their identification details. The various modes of electronic payment are Credit cards,
Debit
Cards,
Smart
Cards,
money. (Asoke, 2004)
9
E-credit
and
Cards
E-
Banking Services
Website
of
various
including enquiries,
banks
online money
offers
banking,
online
account
transfers,
loan
banking
services
access,
balance
processing,
and
investment and wealth management. Online banking can be of two types, Internet banking and electronic banking. Internet
banking
is
conducted
through
a
website.
Electronic banking refers to banking transactions taking place
on
private
network
such
as
Automatic
teller
machines (ATM) and check clearing. (Asoke, 2004)
Challenges in Online Education
Online
education
is
not
without
its
challenges
and
obstacles, as well as a myriad of unanswered questions: How
does
online
education
differ
from
regular
classroom
instruction in terms of quality of student learning? What impact does online education have on other outcomes of classroom
education,
such
as
development
of
social
behavior, attitude and values? What effects does the lack of personal contact have on teaching and learning? CD Rom and Electronic Books
Traditional books are expected to face some challenges from CD-Rom
based
information
delivery.
The
book
market
is
highly varied and ranges from adult and children consumer books, educational, academic and professional and reference books.
10
Technological Components of Education On Demand
The primary technological component of education on demand is
electronic publishing.
Electronic publishing
can be
categorized into three major classifications: Online full text publishing uses various online databases for storage and distribution of information on demand to consumers.
Example
bibliographic
of
this
databases
type
seen
of
in
publishing libraries
include seen
in
libraries, on line public databases and news on demand. Examples of organization in this line of publishing are Dow Jones and CNN. CD Rom publishing uses a variety of compact disk and CD-R (recordable
CDs)
specialized
for
storage
information
encyclopedias
and
and
such
other
distribution
as
forms
book,
of
of
games,
education
and
entertainment. Video
is
This
another
emerging
technology
camcorders form
and
and
area
involves
computers
distribute
it
of
electronic
use
to
of
capture
to others
publishing.
video image
or
cameras, in
paying
digital
subscriber
over the network. (Kalakota & Whinston, 1996)
Electronic Commerce and The Retail Industry
Consumers are pushing the retailers to the wall, demanding lower prices, better quality, and a large selection of in season goods. Retailers are scrambling to fill the order. The
are
margins, making
slashing reducing
huge
back
office
costs,
cycle
times,
buying
investment
in
technology.
reducing more
They
profit
wisely
are
and
revamping
distribution channels to make sure that warehouse costs are down
by
reducing
coordinating
the
their
consumer
average demand
11
inventory and
supply
levels patterns.
and In
the
push
turning
to
to
reduce
prices,
overseas
more
suppliers,
and
in
more
part
retailers
because
of
are
cheap
labor costs. (Kalakota & Whinston, 1996)
Just in Time Manufacturing
Just in time (JIT) is viewed as an integrated management system
consisting
practices plants.
of
dependent
The
JIT
a
number
on
the
management
of
different
characteristic system,
an
management
of
specific
evolution
of
the
Japanese approach to manufacturing and initially introduced for Toyota production system, is based on two principles: elimination principle
of
waste
refers
to
and the
empowering
workers.
elimination
of
all
The
waste
first (time,
material, labor and equipment) in the production cycle. The following with
management
JIT
group
systems:
practices
focused
technology,
are
factory,
total
typically reduced
productive
associated
setup
times,
maintenance,
multifunction employees, uniform workloads, JIT purchasing, total quality control and quality circles. JIT purchasing considered
an
integral
considerable
attention
manufacturer
to
eliminating
waste
manufacturing
part
in
electronic
incorporate in
its
the
cycle.
of
JIT
JIT
has
commerce.
supplier
received It
efforts
allows towards
upstream
portion
of
the
purchasing
focuses
on
the
reduction of inventory throughout the logistical systems of the
manufacturing
audit
of
firms
production
involved process.
and
provides
Basically
it
a
careful
optimizes
supplier and customer relations. In a production plant the needed earlier
materials or
later
are
to
than
be is
supplied demanded
12
just for
in
time,
no
processing.
To
achieve JIT many large cooperation have installed private communication networks.
Marketing and Electronic Commerce
Electronic existing
commerce
ways
of
is
doing
marketing and even is
accomplished
forcing target
event
in
companies
to
marketing
marketing.
electronic
and
rethink
relationship
Interactive
markets
via
the
marketing
interactive
multimedia catalogs that give the same look and feel as a shopping channel. Users find moving images more appealing than still images and listening more appealing than reading text on a screen. Those are two powerful reasons why every text based and still picture based interactive experiments like
videotext
acceptance will
has
failed
require
in
that
the
past.
interactive
Maximum
public
catalog services
have a more entertaining visual appearance than traditional text
intensive
catalogs
have
had.
(Kalakota
&
Whinston,
1996)
Integrated Marketing and Logistic
The highly competitive environment of the 1990s means that marketing must do more than sell. Marketing must define the way a company does business. For instance, in any customer oriented
industry,
supply
chain
management
begins
with
information obtained at the checkout counter, but getting cost conscious customers to the checkout line depend great deal
on
packaged
marketing promotion such goods
traditionally
in
been
as
coupons for
grocery
and
drugstores.
part
the
marketing
of
consumer
Promotion
function,
has
which
may not see the need to integrate it computer system with logistic
planning
management.
In
the
system
to
perform
time
of
exploring
13
with
supply
choice
chain
cutthroat
competition and unpredictable shifts in demand, integrated marketing could be the key to survival. Sales, advertising and
marketing
are
fast
technology oriented the
desire
business
to
competitively,
emerging
use
as
hot
professionals.
information
companies
subjects
have
begun
Spurred
for
on
technology to
by
more
scrutinize
the
interface with their customers and are realizing that they do not understand marketing at all in the electronic age. Broadly edge
speaking,
in
several
planning; identifying allied
technology
in
in
management
and
areas
areas:
direct
changing
firms
manufacturing
analysis
targeting
of
is
of
customer;
marketing
in and
marketing
and
new
logistic
markets,
promotion
in
of
the
telemarketing
and
finally in post sales (keeping the customers happy through online customer service). The challenge of marketing arises from
the
fact
that
that
with
unprecedented
choice,
companies face the end of customer brand loyalty. To combat that threat, they often increase their sales and marketing force, throwing costly resources at the market as a way to retain customers. The real solution, of course, is not more marketing
but
more
intelligent
marketing.
That
means
marketing must find ways to integrate the customer into the company, to create and sustain a relationship between the company and the customers, and use the information garnered from the customers for downstream activities. (Kalakota & Whinston, 1996)
Advertising and Marketing on the Internet Instead
of
merely
transforming
commerce
from
nonelectric
world to an electric platform, electronic commerce demands radical changes in the marketing process, product sales and pricing strategies and advertising and promotion campaigns.
14
Misunderstandings electronic
about
markets
are
the
nature
rampant.
of
Many
marketing
think
that
in
online
marketing is equivalent to publishing a World Wide Web page with
product information that shopper
Marketers
are
learning
that
can browse through.
valuable
information
can
be
collected from the customers on line with minimum efforts and low cost that otherwise would take months. (Kalakota &
Whinston, 1996)
The New Age of Information Based Marketing
The
interactive
marketing
brought
on
the
electronic
commerce will change the role of small business, retailers, manufacturers and media companies. Retailers Versus Manufacturer
The roles of retailers and manufacturers are fast reversing in
electronic
commerce.
Nowadays
retailers
have
an
advantage over manufacturers because they can measure the customer response and get first crack at the broadest range of information. Indeed, Point of Sale (POS) scanning system have
played
manufacturer Mart
have
a to
amply
major
role
retailers, proven.
in
as
The
shifting
large
power
innovators
attraction
of
POS
like
from Wal-
system
is
that they record each sale in a central database using a scanner, which reads the bar code on the product, so that retailers
no
check
find
to
longer out
have
a
wait
what
they
for
need
periodic to
record.
inventory Through
centralized buying that ensures lower prices through volume purchasing and efficient distribution chains. Information retailers
a
prospecting;
based means to
marketing to
do
establish
can
offer
market brand
15
manufacturer
research
loyalty,
and
and
customer
market
presence
and distribute redeemable coupons and to create customized product bundles. Product or Service Bundling
Bundling is a classic marketing strategy in which two or more complementary products and or services are offered as a
package
at
a
discounted
price.
Example
of
bundling
include two for the price of one airline tickets, computer hardware
and
software
combinations,
season
tickets
for
target
and
sport and meals specials in restaurants. Target and Micromarketing
In
electronic
commerce,
micromarketing
with
technology
in
the
has
reach
put
of
small
business.
Computers have armed micromarketing with more knowledge not
only
about
their
own
business
but
also
about
the
customer, to develop and exploit niche markets. Customer targeting is sustain
a
one
way
two-way
to get
flow
of
closer
and
to
communication
create and between
the
seller ad the buyer. Direct mail and telemarketing are two fast growing ways to micro markets. Both methods are able
not
only
to
find
prospects
but
also
to
qualify
them.
Because both direct mail and telemarketing can be
easily
measured
and
quickly
adjusted
to
appeal
to the
needs and expectations of customers, they have proven to be very effective sales tools. There are two main types of micromarketing: Direct relationship sales
at
retail
micromarketing
is
aimed
establishments
through
at
simulating
direct
contact
with consumers in their homes. Direct order micromarketing is focused on selling products directly
to
consumers
in
their
homes
Catalogs are in this segment of marketing. Online Pull based advertising includes:
16
or
businesses.
Billboards: the
web
an
pages
example
of
pull-based
set
by
many
up
advertising
different
is
commercial
ventures.
Catalogs
or
Yellow
Pages
Directories:
these
directories are searchable or browsable databases of advertising.
Endorsement:
specific
posting
are
made
to
subject
Internet discussion forums. Often recommendations from users
are
offered
in
other
types
of
communications
such as product oriented or service oriented Internet discussion forums. (Kalakota & Whinston, 1996)
Interactive Marketing Process on the Internet Step 1. Step 2.
Create
Segment and identify potential customers promotional,
advertising
and
educational
material
(WWW page with multimedia effects-audio and video) (Product information
and
complementary
products,
order
forms
and
questionnaires) Step 3.
Put the material on customer computer screens Push based marketing –direct marketing using news group and emails
Step 4.
Interacting
with
customers
Dialogue
with
the
customers, interactive discussion among customers about
various
features
offering
endorsements,
questions and answers Step 5.
Learning from customers Incorporating
feedback
from
customer
in
advertising and marketing strategy Identifying
new
market
product development Step 6.
Online customer service
17
using
experience
in
new
(Kalakota & Whinston, 1996)
Improving Direct Marketing
Traditional (catalogs)
direct and
marketing
telephone
is
done
by
(telemarketing).
mail
In
order
1998,
$75
billion in sales were estimated in United States. In 1998, direct marketing via computer reached about $2 billion in the United States. This figure is small, but it grew more than 1,000 percent in less than four years.
E-commerce Impact
Bloch suggest the following EC impacts: Product Promotion
Electronic
commerce
enhances
promotion
of
products
and
services through direct, information rich, and interactive contact with customers.
18
New sales channels
Electronic commerce creates a new distribution channel for existing
products,
customers
and
thanks the
to
its
direct
bi-directional
reach
of
nature
of
communication. Direct Saving
The cost
of
delivering information
Internet (when
results
compared
delivery
via
realized
in
in
customers over
substantial
with
VAN
to
non
electronic
systems).
delivering
saving
Major
to
senders
delivery
savings
digitalized
the
are
product
or also
such
as
music and softwares versus physical delivery. Reduced cycle time
The delivery
of
reduced
to
related
to
digitalized
international
seconds. physical border
products
Also
the
and services
administrative
delivery, can
be
can be
especially
reduced
work across
significantly,
cutting the cycle time by more than 90 percent. One example is Trade net in Singapore, which reduces the administrative time of port related transactions from days to minutes. Customer service
Customer
service
customer
to
can
be
find
greatly
detailed
enhanced
information
by
enabling
online
(for
example, FedEx allows customer to trace the status of their
packages).
Also
intelligent
agents
standard e-mail questions in seconds. Brand or corporate image
19
can
answer
On the web, new comers can establish corporate images very quickly.
What
traditional Corporate direct
amazon.com companies
image
sales.
Disney,
means
to
trust
Dell,
affirm
in
three
generations
Traditional
Wal-Mart,
activities
did
which
to
is
companies and
their
years
took
achieve.
necessary
for
such
as
use
their
web
identity
and
Cisco
corporate
Intel,
brand image. Targeting Online Customers
After
reviewing
many
potential
segments,
marketers
must
select the best for targeting. To do this, they review the market
opportunity
analysis,
consider
findings
from
SWOT
analysis, and generally look for the best fit between the market environment and the firm’s expertise and resources. Sometimes this is as easy as discovering a new segment that visited the company’s web site and then experimenting with offers that might appeal to this group. Other times it is a lengthy and thorough process. To be attractive, an online segment must be accessible through the Internet, be sizable and growing and hold great potential for profit. Next emarketers select
select
from
a
among
targeting four
strategy.
different
E-marketers
approaches
for
may
segment
coverage: Mass Marketing, also called undifferential targeting,
occurs when the firm offers one marketing mix for entire market. Wrigley’s gum uses this strategy. On the internet, many
firm
banners
ads
uses
undifferentiated
that
appear on
strategy.
portal site
For
example,
home page
(e.g.,
Yahoo!) tend to appeal to the entire market.
or
Multisegment marketing occurs when a firm selects two more
segments
and
designs
20
marketing
mix
strategies
specifically
for
each.
Most
firms
use
a
Multisegment
strategy. Niche marketing occurs when a firm selects one segment
and develops one or more marketing mixes to meet the need of
that
segment.
Amazon
adopted
this
strategy
when
it
targeted web users exclusively. Micromarketing also known as individualized targeting,
occurs when a firm tailors all or part of the marketing mix to a very small number of people. Taken to its extreme, this can be a target market of one person. The
Internet
realized
big
by
promise,
many
one
firms,
that
is
is
currently
individualized
being
targeting.
Amazon.com builds a profile of each user who browses or buy
books
at
its
site.
It
tracks
the
books
that
its
customers read and makes recommendation based on their past about This
purchases. products is
the
Amazon that
also
might
marketing
sends
interest
concept
at
email
notifications
particular persons. it’s
finest:
giving
individual consumers exactly what they want at the right time and place. The Internet technology makes this mass customization possible in ways that were unimaginable 10 years ago. (Strauss, Ansary & Frost, 2003)
Guidelines for Internet Advertising
1. Don’t send intrusive message. People should receive a commercial
message
they
either
haven’t
asked
to
receive or don’t not want to receive. 2. Don’t
sell
permission
consumer of
the
data
user.
without Unlike
the
some
express
commercial
services where users generally understand that
21
their
names will be sold to other businesses, Internet data should remain the users private property. 3. Advertising groups
should
and
list
advertising
appear
only
servers.
is
in
The
unrelated
designated
most
news
objectionable
commercial
posting
to
newsgroup, which are usually cross-posted to hundreds of groups. 4. Conduct promotions and direct selling only under full disclosures.
Markets
should
be
free
to
offer
promotions on the network. But users should be given an
opportunity
to
review
the
rules,
guidelines
and
parameters. 5. Conduct
research
only
with
the
consumers’
informed
consent. Marketers should be able to conduct consumer research so long as respondents are made fully aware of
the
consequences
of
answering
the
research
questionnaire. 6. Never use Internet communication software to conceal activities.
Marketers
should
never
gather
data
from
users without asking for permission. (New York Times, August 3, 1994, p. C16)
1.5
Hypothesis Development
Given
the
developing
general countries
underdeveloped like
Pakistan
environment there
may
not
in be
a a
extensive application of E-commerce and Marketing practices used
by
the
organizations
due
to
lack
of
proper
infrastructure and financial constraints. There may not be a significant relationship between E-commerce and marketing and
their
determinants
like
Online
banking,
online
education, online entertainment, internet service providers performance and online advertising techniques.
22
1.6
It
Objectives of the Study
is
necessary
regarding
the
feedback
and
feedback
of
to
collect
status
of
improvement such
benchmarking
and
competition.
This
and
e-commerce process.
keeping
research
can
up
is
and
for
monitoring
and
valuable
in
be
pace
an
information
e-marketing
Regular
information
in
analyze
with
effort
to
the
global
study
the
following area in the organizations:
1. To investigate the extent to which the company, both new
and
old,
marketing
are
into
integrating their
their
business
e-commerce strategies
and and
operations. 2. To identify the direct and indirect use of information technology infrastructure
from
the perspective
of
E-
commerce and marketing. 3. To study the government policies for fostering the IT infrastructure
and
Internet
based
e-commerce
and
marketing. 4. To understand the driving forces behind the adoption of E-commerce and marketing.
1.Technology
Aspect,
which
consist
of
Telecommunication,
networking and other infrastructure issues. The software domain web
the
page
includes design,
management,
databases,
customer
security
and
programming
interface
privacy
and
management
languages, transaction and
large
scale data mining.
2.
Business
Management
Aspect,
which
deals
with
the
Business strategies for value creation, growth and customer
23
development
and
retention
and
government
policies
for
nurturing the internet based E-Commerce.
1.7
Definition of Terms
Some
important
terms
used
in
the
thesis
and
their
definition are given below: Electronic
Business
conducted
by
intelligence,
Includes
the
all
electronic
organization
customer
such
relationship
activities
as
business
management,
supply
chain management, e-commerce.
Edutainment
Edutainment
is
defined
as
software,
electronic
books
and
interactive games that have an educational component.
Event marketing
It refers to setting up a virtual booth where interested people come and visit.
Electronic Fund Transfer
Electronic fund transfer is defined as any transfer funds initiated
through
instrument
or
an
electronic
computer
or
magnetic
terminal, tape
so
telephonic
as
to
order,
instruct or authorize a financial institution to debit or credit an account.
Internet
The
global includes
network
of
millions
interconnected of
networks.
corporate,
This
government,
organizational and private networks as well as emails, newsgroups, and the Web.
24
Internet Service Provider
Company that has a network of servers (mail, news, web and the like), routers and modem attached to a permanent highspeed
Internet
backbone
connection.
Subscriber
can
then
dial into the local network to gain Internet access.
Kiosk
Kiosk
offer
buyers
freestanding
the
facility
opportunity
or
structure
to
purchase
located
in
from
a
a
retail
complex or other public area.
Local Area Networks
A local area network is a group of computers and associated devices that share a common communications line or wireless link
and
typically
share
the
resources
of
a
single
processor or server within a small geographic area.
Relationship marketing
Building
and
sustaining
a
long-term
relationship
with
existing and potential customers.
Supply Chain Management
The
behind
the
scenes
coordination
of
the
distribution
channel to deliver products effectively and efficiently to customers.
Target marketing
It
refers
to
isolating
and
focusing
on
a
segment
population and then targeting it to fulfill their needs. Wide Area Networks
25
of
A
wide
area
network
is
a
geographically
dispersed
telecommunications network. A wide area network may be privately
owned
or
rented,
but
the
term
usually
connotes the inclusion of public (shared user) networks.
Web
The portion of the Internet that supports a graphical user interface for hypertext navigation with a browse such as Netscape or Internet explorer.
26
Chapter2
Desktop
Literature Review
based
research
and
information
gathering
was
ongoing for the duration of the project approximately for seven-month
period
(September
2004
to
March
2005).
Information was taken from wide variety of sources. Relevant
newspaper
articles
were
collected.
Information
rich sources included Dawn, The News, Computer World, and Internet Development Magazines such as Spider. Information was
also
NGOs,
collected
industries
from
and
worldwide
company
search
websites.
of
governments,
Published
books,
articles, case studies, research reports and profiles of Ecommerce and Marketing of leading cooperation were of great help in understanding the issues pertinent to this research.
Pakistan Lags Behind in E-Commerce Preparation
Although e-commerce is poised to become the only forum of future
trade
within
this
decade,
Pakistan
is
way
behind
most of the countries of the region in Internet connections essential for conducting this mode of business. According to
the
persons
statistics
available
on
per
people
Pakistan
10,000
in
the
Internet use
only
this
4.5
facility
compared with 45 in India, 14.5 in Iran, 10.5 in Sri Lanka and 6.5 in Nepal which considered to be the least developed country of the region. It was found that Singapore tops in the
use
persons
of per
Taiwanese, Kong
Internet
facility
10,000
2123
people
South
in
Asia-Pacific
avail
Koreans,
this
1609
residents and 657 Malaysians
where
facility,
Japanese,
1428
2435 2167 Hong
per 10,000 people have
access to Internet. The highest percentage of people using Internet
was
in
US
where
4501
persons
per
10,000
have
access to Internet followed by Canada where 4333 people use
27
this
facility.
In
Europe,
Britons
are
on
top
with
2656
people per 10,000 using Internet followed by Germany where the usage is limited to 1924 persons per 10,000. A study of the
Internet
mostly
at
families
use
the
in
Pakistan
individual
use this
mode
revealed
level
to
that
in
maintain
main
the
usage
cities
is
where
regular contacts
with
their relatives living outside Pakistan particularly in the West. It was found that there was a limited use of Internet in the country for e-commerce as this facility is availed mostly by the big corporations and the already-established exporters who with their limited knowledge of computer use this facility mostly to maintain quick contacts with their regular rarely
customers done,
as
abroad. most
of
Exploration them
do
of
not
new
know
markets
how
to
is
make
optimum use of the available software. It was found that although a few business houses in the corporate sector have invested
in
the
infrastructure
required
to
run
an
independent information technology system but the high cost involved in acquiring various hardware and software needed to compete the world in e-commerce forced them to rethink their
strategy.
Pacific,
Michael
Hewllet
Packard
Hoffman
said
Vice
President
for
Asia-
SMEs
required
the
same
programmes and software needed by large companies to gain full access to the international market. Hoffman said each SME required a web-site builder, which hosts personalized, advertising
free
websites
in
a
variety
of
layouts
and
styles that supports customized logos. User could also be able
to
set-up
real
time,
online
chat
capabilities.
A
programme is needed for document storage and sharing which allows users to organize documents in an unlimited storage directory,
and
support
web-based
file
sharing
with
authorized colleagues and clients, he said. These SMEs, he
28
added,
also
required
a
programmed
contact
list
which
enables the user to enter detailed notes, and uses the same database as the portal's calendar and the e-mail, so that there is no need to re-enter data. It was found that eight world-class
computer
provide
all
through
a
the
industries
above-related
programme
($400-450
for
companies
include
Intel,
pertinent
to
note
that
which
have
decade
ago,
the
called
total
formed
package)
at
in
Oracle,
now
alliance
facilities
eSmart
there
an
grown
the
SMEs
affordable
rates
Asia-Pacific.
These
Cisco,
were
to
to
only to
Nokia. 100
over
It
is
websites 10
a
million.
Pakistan's share in these websites is negligible. Most of the websites operating in Pakistan are not updated. Most of the
commercial
banks,
both
national
and
foreign,
private
and state-owned have their own websites but no one updates them
regularly.
most
of
its
The
nation
websites
loses
are
its
outdated
creditability and
provide
when stale
information. The ministry of IT should take note of this and make it mandatory on all the state-owned enterprises to update their websites on daily basis, even on hourly basis where the demand necessitates (like forex rates). Country Manager Acer Computers, Ijaz Anwar said there is an urgent need
to
about
create
the
television normal
awareness
importance should
of
hammer
transmission
amongst
business
e-commerce.
this
to
the
point
prepare
He
said
regularly
people
to
community state
during accept
its the
challenge which e-commerce offers. He said his company is organizing Karachi.
He
seminars said
in
this
acquiring
regard
computers
in is
Islamabad not
and
enough.
He
deplored that most of the business concerns use computers as
typewriter
offices,
he
and
added,
data are
bank.
not
even
29
The
computers
linked
through
in a
these common
server.
Internet,
instead
of
have
to
service
continued,
necessity.
change
accepting
he
the
this
Ijaz
provider
said
attitude
challenges
of
Pervez
is
considered
our if
they
said
luxury
entrepreneurs are
the
would
serious
globalization.
Hanif
a
An
in
Internet
per-hour
cost
charged by the ISPs in Pakistan is not very high as alleged by many entrepreneurs. He said the cost looks higher when the
users
indulge
in
surfing
unwanted
sites.
He
said
targeted surfing would not only bring huge benefits to the users
but
also
cut
the
Internet
charges
substantially.
(Ahmad, 2000)
Electronic Commerce Over Internet
The Internet is an international network of networks. It is a
worldwide
information The
resources
internet
together
information
allows
on
highway. innumerable
millions
offering
a
of
global
It
also
servers
computers network
signifies
on to
the be
that
Net.
linked
connects
universities, individuals, government agencies and now more and
more
originally activities exploited
corporate
and
established
as
and by
private a
academics,
businesses
private the
for
enterprises. channel
Internet
wide
range
for
Though research
is
now
being
of
commercial
services. (Bajaj, Nag 2000)
A
recent
report
by
the
organization
for
Economic
Cooperation and Development predicts that Internet trading will
grow
from
today’s
estimated
$
500
billion by 2001. (Computer Today, June 1998)
30
million
to
$
5
Another
report
from
Forrester
Research
projects
that
Electronic commerce transaction will reach $ 7.2 Billion by the 2000. (EC World, June 1998)
In fact, Killen & Associate and Forrester Research predicts that 10% or $600 billion worth of all business transactions done
around
the
world
in
year
2000
will
be
made
electronically. One third of those transactions, worth $200 billion will be done through commerce on the Internet. (EC World, June 1998)
Electronic online
commerce
services
CompuServe
and
conducted
in
the
Prodigy
US$325 million.
over
USA,
during
The number of
the
three
i.e.,
1994 users
commercial
America
was
Online,
estimated
subscribing
to
to
be
their
services in 1995 was estimated at 8 million people, and was projected to grow at the rate of 35% a year. (Kuckro, Rod, 1995)
Revenue Via The Internet
In July 1996, Dell launched Internet based online sales and services
at
www.dell.com.
In
fall
1999,
Dell
sold$15
million per day through the Internet and the Internet sales have
reached
about
27
percent
of
the
total
revenue.
In
future Dell experts see 50 percent of its sales over the Internet.
Dell Products on the Internet
Dell
sells
desktops, storage
all
the
items
workstations,
devices,
it
produces
notebooks,
softwares
and
on
the
network
add-ons
(e.g.
Internet:
servers Zip
and
drive,
printer, Microsoft plus! 98). Those items are also sold by
31
telephone, service
fax
can
and
mail,
complement
implying
the
that
Internet
the
home
call
page.
center
Services,
support and introduction to the company are also prepared on the home page.
Dell Critical Success Factors
Dell success story is very impressive, so competitors must have a desire to imitate Dell’s strategy. But why is it so hard to copy? We can observe six reasons: 1. Advance Web Applications
Dell was the first web based computer seller and has the best connections from the end consumers all the way back through the supply chain. 2. Price Competitiveness owing to mass customization
Direct
marketing
buyers
means
to
small
consumer
manufacturing
system
as
well
should
as
be
corporate
adaptive
to
small order in a make to order fashion. To keep the price competitive
without
large
delivery
time,
efficient
procurement of small number of parts from vendors, flexible manufacturing
systems
and
economical
distribution
to
customer are a must. Dell computer was born with the spirit of telemarketing and the Internet is just another medium of contacting distant customers interactively. 3. Database marketing and customer intimacy
Dells one
direct relationship with
to
about
one
its
database customer
marketing
makes
possible.
Dell
can
learn
them
they
use
the
how
database,
as
statistical modeling
well
as
analysis,
are used
to
all of
one
the
possible. to
about
web
tools
inductive
32
one
its
site.
classify
its customer
this
data
by
learn
marketing watching
purpose,
mining
learning,
customer
can
database
customer
For
for
Dell
makes
and
such
the as
network
segments. This
is
essential
for
relationship.
focusing This
on
can
and
be
deepening
used
for
the
personalized
advertisement
and
customer service as well. 4. High reliability and reputation
If the products do not have high reliability, customer will hesitate to order the item without the trial. Dell was well prepared
in
this
regard.
Dell
product
Optiplex
and
Dell
dimension desktop computers have garnered an unprecedented 174 award for performance, reliability and service. Dells customers do not worry about the reliability of the dell brand. 5. Delivery support
As inherent disadvantage of telemarketing in the relatively longer
lead-time
deficiency, well
as
needed
dell
for
provides
online tracking
delivery.
the
To
estimated
information
overcome
delivery
for each
this
time
order.
as
When
the product inventory and or parts are available, dell can deliver a simple configuration in 2-3 days, average in 5 days
and
readily
complex
in 7-10
available,
the
days.
However
lead-time
is
if
parts
estimated
are
not
and
the
customer is informed. (Turban, Lee, King, Chung, 2000)
Internet Commerce Examples
CompuServe hosts 200 odd merchants on its electronic mall. Presently,
the
visits
to
the
mall
by
customers
have
increased by 78% and the orders by 50% each year. CompuServe is now expanding its mall to the Internet. It will audio
make and
use
of
video
WWW to
along make
with the
its
mall
tools
of
graphics,
attractive
to
its
customers. Similarly Prodigy the joint venture of IBM and Sears
too
Internet.
has
a
Prodigy
mall was
and the
it
has
first
33
to
also
connected
offer
www
to
access.
the It
also
connects
merchants
with
its
members,
offering
space
for advertisements on screen. America Online on the other hand
took
the
corporations example
wishing
Express
cardholder
direction
to
to
of
creating
reach
Net
developed
make
travel
a
distinct
target
American
sites
for
audience.
For
Express
reservations,
allows
check
it
credit
balances, pay bills, purchase travelers cheque and foreign currency electronically. (Bajaj, Nag 2000)
The Internet Factors important to Repeat Visit on Shopping Sites
Guaranteed Security
93 %
Ease of finding Things on site
90%
Wide selection
85%
Availability of brand name products
83%
Good customers support features
81%
Price discounts
80%
Posted returns policy
74%
Ability to personalize
45%
Frequent shopper rewards
40%
Other shopper opinions
30%
(Judy Strauss & Raymond Frost 2001)
The Yahoo! Story
Yahoo! (www.yahoo.com ) embodies one of the best example of the
marketing
concept
meeting
the
organizational
goals
while serving customers needs. This is a company that even
34
before its inception focused on serving the customer. The two chief yahoos are Jerry Yang and Dave Filo. They were graduated students leaving vocal
their
and
together
studies
outgoing
to
of
at
Stanford
found
the
Yahoo!
two;
University before Jerry
Dave
is
is
the
the
more
technical
genius. Yahoo! Got its start as “Jerry’s guide to the World Wide Web.” This was literally a home page that Jerry and Dave created on their university computer accounts to keep track
of
the
cool
links
that
were
out
on
the Web.
They
began to share the address with others and the page rapidly increased in popularity. In the tradition of the web gift culture,
they
updated
and
maintained
the
list
for
free.
Stanford provided the servers, so there was no cost to the viewing public. From the beginning, users would email them suggested sites for inclusion and suggestion for improving the sites. Jerry and Dave incorporated these suggestions in order
to
improve
suggestion introduce
for new
their
sites
products.
They
even
solicited
include.
They
also
began
as
“What’s
New
to
product
benefits
such
to and
“What’s Cool”. User feedback was such an important reward that Jerry said, “if there was no feedback… we would not have0 done it.” Choosing the name for the site was a bit problematic. The name
they
linked
was
yacc,
a
name
referring
to
software
tool on a Unix computer system. Following the yacc model, they
wanted
dictionary, before
the
name
to
they
went
through
settling
on
start
Yahoo!.
a
They
with
YA
consulting
list
of
possibilities
added
the
a
exclamation
point just to be different. Yahoo!
received
its
first
big
break
when
Netscape
put
a
link to the site on the navigator browser. This helped to generate
traffic.
But
when
Netscape
35
later
canceled
the
link, the traffic stayed and Yahoo! continued to flourish. Why? Yahoo! delivered something was rare- an index compiled by
humans.
The
robots
to
helped
generate
other
categories a
web
search
their
sites
larger
list
of
engines and
used
while
sites
than
software
this
method
Yahoo!
They
tended not be as relevant. People like the intuitive feel o the Yahoo! index. And the index continues to grow. Each one of the its army of classifiers is able to categorize about 100 sites daily! It now has half a million sites classified into
25,000
categories,
potentially
making
Yahoo!
Impossible for other search engines to catch. Jerry and Dave were at first reluctant to sell advertising for fear of being labeled sellout. Nonetheless, they needed some source of revenue, so that they accepted their first ad in August 1995. They now deal with 3,566 advertisers and merchants, 35% of whom are outside the United States. Wall street continues to put its faith and dollar behind Yahoo! investor bid up the Yahoo!. Yahoo! is currently the most popular site on the Internet, with over 145 million unique users worldwide, including 14 million user in Japan. Yang continues to believe that focusing on customer needs is the key to the future success and the way to stay a step ahead of
the
variety
competition. of
interactive
To
end
free
services:
and
customized
this
Yahoo!
directories, pages,
has
introduced
news,
commerce
a
references,
and
shopping,
editorial and many others. ((Judy Strauss & Raymond Frost 2001)
Banners Ad Targeting Increases Hotel Room Sales
Customers
are
currently
saturated
with
advertising,
initiations and other offers. This makes them reluctant to respond to the increasing flood of marketing messages. The
36
most effective way for marketers to increase responses to their
efforts
is
by
offering
their
product
and
services
directly to the people with the highest potential interest. This means that customer demographics are not necessarily the most effective targeting criteria. Targeting customers based
on
interests
was
extremely
expensive
and
difficult
for marketers in the past. The Internet is now the best and the cheapest way to do this efficiently and rapidly. At
Fiesta
with
Americana
Internet
banner
we
have
targeting.
camping
at
some
During
Travel
meaningful
late
1997
velocity.com,
experiences
we
a
launched
leading
a
travel
portal on the Internet. We thought that this site was the best
for
travel.
hotel
since
However,
targeting, we
its
being
asked
users
are
bit
more
a
people
interested
ambitious
with
Double click, the company
that
in our
sells
banners for travel velocity, to show our banners only to people requesting information about the seven more popular destinations banners.
in
Mexico.
Studying
the
We
started
performance
with was
three very
different
easy
since
Double click has online tracking system that allows clients to
see
the
banner, some
number
destination,
tracking
filters
to
averaging audience already seven
we
1%. to
bought
version
the
on
air
United of
browsing
only
another
successful
that
click
trial
who
met
States,
form
of
every
forth. After
doing
error
include
rate, we
more
which
was
narrowed
the
criteria:
they
had
they
were
coming
from
the
they
were
using
only
the
or to
for
could
following
ticket,
2.pm
we
clicks
through
and
Explorer
between
and
day and so
realized
Using
people
impressions
time,
increase
eastern
latest
of
Netscape 7.pm.
direct
and
e-mail
they
were
targeting
marketing.
We
is are
constructing a database formed from the users at our web
37
site,
those
who
actually
made
a
reservation,
frequent
travelers and other potential and current customers both in Mexico and the United States. This database has been used to select people with interests in certain kinds of trips and destinations. We send them e-mail with special offers, and the response to this program has been 367% greater than the
response
cost
of
to
less
our
than
conventional
20%
if
the
mailing
efforts
conventional
with
a
costs. (Anna
Maria, 2001)
The Amazon Story
Jeff Bezos, founder and CEO of Amazon (www. Amazon.com) is 36
years
company
old,
is
s
valued at
Princeton
billions
graduate,
of
dollars.
and
sits
atop
a
Amazon opened its
Internet storefront in July 1995 an has never looked back. the key to Amazon’s success has been using technology to build
relationships
customers and with that
purchasing
experience relish
for
the
on the
and
brand
its partners. Bezos the
web
average
experience.
purchasing
online
loyalty
a
was
less
customer.
The
both
with
realized than
While
early
an
on
idyllic
Net-heads
general
population
scary,
frustrating
bit
its
may
finds and
intimidating. Bezos is well aware that “the smallest amount of
friction
alone
can
buying
stop people” from
from
that
site.
coming
To
to
a
compensate
site,
let
for
the
inconvenience of purchasing online, Bezos had to add value to
the
shopping
experience.
customers
as
thereby
building
Interestingly, ones
that
individuals,
the
would
be
He
discovered
anticipating
relationship relationship found
in
the
the
that
their
could
add
Bezos
built
smallest
treating need
and
value. were
bookstore
the –
a
personal greeting, recommendations based on past purchase,
38
recommendation notification author
and
based
of
a
on
new
the
mood
release
conversation
with
by
of
the
others
the
consumer,
customers
customers
favorite
about
the
book. Forty-four percent of Amazon’s customers are repeat purchasers.
Furthermore,
according
to
Forrester
Research,
consumer tend to be more loyal online than offline. In the offline world consumers will often choose to shop at the closest
bookstore.
Amazon
continues
to
leverage
its
customer base as it moves into new product offering. The company
now
sells
CDs,
movies,
electronic
software
toys,
health and beauty products and so on. In all these ventures it applies the same tested formula- build relationship that add
value
to
the
purchase
experience
and
foster
brand
loyalty. (Strauss & Frost 2001)
The Google Story
What performs million searches a day, speaks 74 languages, reaches 32 countries, and is the 15th-most-visited U.S Web site?
The
growing
answer
and
is
google.com,
profitable
dot-com
the
firm.
privately
By
some
owned,
estimates,
Google 2001 revenues hovered around $70 million, while it doubled
its
number
of
employees
and
earned
about
$15
million in profit. This
success
is
particularly
remarkable
because
Google
entered the market in 1998; well after other search engines were firmly entrenched with loyal customers. How did Google do it? First it got the technology right at low cost. Cofounders Sergey Brin and Larry Page figured out how to pack eight time as much server power in the same amount of space as competitor by building their own system from commodity hardware search
parts.
strategy:
Second, ranking
they
invented
search
39
query
an
innovative
page
results
new
based
not only on keywords but also on popularity-as measured, in parts, by the number of sites that link to each web page. This
meant
relevant
that
users
websites.
search
Finally,
results
the
were
founder
packed
with
maintained
the
customer focus used simple graphics allowed no advertising on the home page, and not allowed only banners ads without graphics
so
search
result
pages
download
faster
and
are
easier to read. Google generate revenue from two businessto-business websites
markets.
such
as
It
sells
yahoo.com
its search services
and
AOL.com;
it
to
also
130
sells
keyword banners to web advertisers. In a firm where 15% of employees
hold
a
Ph.D.,
the
innovation
continues.
The
profitability is likely to continue as well because Google plays
close
attention
to
user
value,
keep
costs
low
and
delivers eyeball to advertisers. (Strauss, Ansary & Frost, 2003)
40
Chapter3
Method
3.1 Type of the Study
The
present
piece
“Descriptive
of
Study”,
research
although
has
the
mainly
analysis
been was
a
also
combined with the descriptive testing of a hypothesis. The descriptive
study
was
purposely
undertaken
in
order
to
ascertain and to be able to describe the characteristic of variables in a situation. The goal of descriptive study is to
describe
interest
the
to
relevant
the
aspects
researcher
of
the
from
phenomena
an
of
individual,
organizational and other perspectives. In addition, the study has applied a major hypothesis for determining
the
impact
and
application
of
E-commerce
and
Marketing used by organizations based in Islamabad. In this research, there is one major hypothesis in order to find out the present situation and application of E-commerce and marketing used by organizations. Hence the research is the mix
of
two
types
of
studies
that
is
descriptive
and
hypothesis testing.
3.2 Source of Data
Data
can
settings
be
collected
and
sources.
in
variety
Research
of
ways
instrument
in used
different for
this
study in order to generate primary data were mainly based on interviews with various personnel involved and working in the field of E-commerce and marketing. The
secondary
data
was
gathered
by
extracting
relevant
material from articles and magazines, Books on E-Commerce and E-marketing and websites of organizations etc.
41
3.3 Statistical Tool
Statistical tools are pictorial presentation of the results and analysis or the interviews administered. Here in this specific
piece
of
research,
information
and
data
was
gathered on the topic of study and discussed and described by comparing the practical practices of the organizations with
those
addition,
ordained the
organization
in
impact
and
its
general of
theoretical
E-commerce
application
has
framework.
In
and
marketing
on
been
described
and
analyzed in terms of existing system and practices.
42
Chapter 4 Results and Discussion Acceptance of E-Commerce and Marketing
Consumers
have
accepted
business.
Several
the
reasons
e-commerce
might
account
and
marketing
for
the
slow
uptake, including: Concern cards
about
over
security
the
and
Internet
many
people
to
concerns
due
don’t
use
about
credit
theft
and
fraud. Challenges
The Challenges to E-Commerce can be broadly grouped under technological, legal and regulatory heads. Technological
Lack of reliable network infrastructure services Lack of standards High cost involved Legal and Regulatory
Lack of consistent rules and procedure
Custom and tax uncertainties
The role of government and nation
Other regulatory issues
Benefits of E-commerce and Marketing
Major benefits include increased revenue, enhanced customer goodwill reduced
owing
to
operating
the cost
online for
support
and
distribution
service,
and
and
purchasing.
Benefits will be relative to the initial business position of
each
company
and its
possibility
of
changing
business
structure towards telemarketing and make to order systems. Basic
Cost
of
Implementing
EC
include
home
page
system
development and maintenance, server and network acquisition and operation merchandising, order fulfillment cost can be
43
incurred when management commits to change the way of doing business
such
as
changing
the
major
distribution
channel
and manufacturing systems.
Impact of Internet on Business
Establishing
and
maintaining
good
business
relationship
with partners, suppliers, and customers is the core of any business. businesses cost
The and
effective
servicing
Internet their and
methods.
has
proved
partners,
to
because
time
saving
The
Internet
be it
a
provides
communication has
boon
given
and a
for easy,
client dynamic
dimension to businesses with online transaction technology, a system that helps in making the business more profitable. Impact of E-Commerce on Business Activities
Electronic commerce has a deep impact on a large number of business activities, which will be discussed in the thesis. These includes:
Marketing and sales promotion
Improved
commercial
transaction,
which
includes
ordering, delivery and payment
Product service and maintenance and development
Improved Transport and logistic
Example of Specific Business Benefits of E-Commerce
Reduced advertising costs
Reduced delivery cost, notably for goods that can also be delivered electronically
Reduced designed and manufacturing cost
Improved marketing and strategic planning
44
Equal
access
to
markets
(i.e.
from
small
medium
enterprise to large cooperation’s
Access to markets
Customers
involvement
in
product
and
service
innovation
Types
of
Electronic
Payment
Systems
Used
by
Different
Organizations
Electronic
payment
systems
are
proliferating
in
banking,
retail, health care, on-line markets and even government. Organizations are motivated by the need to deliver products and service more cost effectively and to provide a higher quality of service to customers. 1. Banking and financial payments
Large
scale
or
wholesale
payment
(e.g.
bank
to
bank transfer)
Small-scale retail payment (e.g. Automated Teller Machines)
Home banking (e.g. bill payments)
2. Retail Payments
Credit cards (Visa or MasterCard)
Private label cards (Debit Card)
Charge cards (American Express)
3. Online electronic commerce payment
Electronic cash
Electronic checks
Smart cards or debit cards
Bank Al-Falah
45
Bank Alfalah Limited was incorporated on June 21st, 1997 as a
public
1984.
limited
company
under
Its banking operations
the
Companies
commenced
Ordinance 1st,
from November
1997. The bank is engaged in commercial banking and related services
as defined in
the
Banking
companies
ordinance,
1962. The Bank is currently operating through 45 branches in
21
cities.
Strengthened
Dhabi Group and
driven by
its
management,
board
of
revolutionary
technology
with
the
banking
of
the strategic goals the
to
bank
have
has
an
set
the Abu out
invested
extensive
by in
range
of
products and services. Bank perceives the requirements of customers service
and matches them with quality solutions.
During
the
past
products
five
and
years,
bank
has emerged as one of the foremost financial institution in the region endeavoring to meet the needs of tomorrow today.
Bank Al-Falah Electronic-Cards Bank Alfalah Visa Card is customers partner everywhere and
is
globally
accepted
and
welcomed
at
locations
displaying the VISA logo. It is accepted at nearly 30 million
merchants
countries
and
around
870,000
the
ATMs
globe
in
more
and
than
150
over
10,000
shopping,
travel,
establishments in Pakistan. Alfalah
VISA
let’s
entertainment,
meals
facilitated time
like
through Matchless
you and
a
pay much
number
of
Discounts
for more.
Card
promotions (discounts
members from at
time
are to
nationwide
merchants’ outlets, making each shopping spree an exciting one), Dine’a’ Discount (the best discounts at a wide range of
selective
restaurants),
46
Fortunes
Rewards
Program
(exchange of fortune points against an array of attractive products and services), etc. Bank
Alfalah
customers
versatile
financial Alfalah Debit
Card was
Hilal
needs,
Card
banking
Bank
HilalCard, which
offered
options
Alfalah
the
first
gives
in endeavor to
Limited Visa
fulfill
presents
Electron
customers
an
to
give your
you
the
International
unlimited
access
to
your current and savings account with a simple swipe, at millions of retail shops and ATMs, worldwide. The Alfalah HilalCard comes
with
a
host
of
conveniences
and benefits
combined with the wide reach of Visa Network enabling it to be accepted at more than 840,000 ATMs and 13 million retail outlets
around
the
world,
making
it
the
most
acceptable
Debit Card available in Pakistan.
Alfalah ATM Bank Alfalah through its commitment to provide
superior and improved services to its valued customers has unveiled
a
convenience,
nationwide they
network
have
of
access
ATMs.
to
For
customer’s
instantaneous
cash
availability, 24 hours a day, 7 days a week. Alfalah ATM network is geared up to exploit the latest technology, and is equipped to meet the highest standards of security and efficiency. Bank Alfalah is pleased to introduce 42 state of
the
art
ATMs,
deployed
at
the
most
convenient
and
accessible locations. Bank Alfalah is a founder member of the
1-Link
Switch,
thus
making
ATMs available.
47
a
countrywide
network
of
Paknet Local Level Internet Service Providers
Paknet
Limited
a
fully
Telecommunication
owned
Company
Subsidiary
Limited
of
Pakistan
(PTCL) was formed in
March 1999 and started commercial operation in January 2000. It is now the biggest Internet Service Provider of the Country. Besides Internet Paknet also provides data communication
services
like
Clear
Channel
data
links,
Frame Relay and Digital Circuits on Optical fiber cross connect systems etc. Paknet made a fresh start with an Internet customer base of 6000 as of January 2000 and successfully business
plan
achieved of
the
50,000
target
Internet
of
its
first
customers.
year
Currently
Paknet has a customer base of more than 1,30,000. Paknet offers 24-hour technical support. They are able to offer customer the same level of access as regional providers to Internet news groups and e-mail often at lower costs. And because local providers serve only a specific area, they may offer better, faster connections for customers. One main reason for growth of Paknet is the freedom of expression. Some of the larger service providers tend to restrict
the
activities
of
users
on
the
Internet
from
their networks. Another reason is that local ISP tends to be more innovative and adapt more quickly to rapidly changing
Internet
application.
Paknet
is
actively
involved in E-marketing by giving customers information through banners on website, emails and splash screen.
Allama Iqbal Open University On Demand Education
The Allama Iqbal Open University was established in June, 1974,
with
the
main
objectives
of
providing
educational
opportunities to masses and to those who cannot leave their
48
homes and jobs. It has opened up educational opportunities for
the
working
females
on
people
their
and
has
doorsteps.
It
provided has
access
also
done
to
the
pioneering
work in the field of Mass Education. It is now breaking new grounds
in
the
fields
of
professional,
scientific,
and
technical education. It is attempting to reach out to the remotest
areas
of
harness
modern
Pakistan.
It
information
is
also
attempting
Technology
for
to
spreading
education in Pakistan. The main objective of the University is to provide educational facilities to people who cannot leave
their
determine.
homes
and
It is a
jobs
in
such
manner
fact that education
as
is in a
it
may
state
of
flux. Within the changing environment, with characteristic are
especially
application.
pertinent
First,
to
education
electronic
is
no
longer
commerce considered
something that one acquires during youth to serve for an entire lifetime. Modern education lacks age homogeneity, so in a physical or virtual class we would find young adult, middle-aged careerists and retired seniors. Second, because knowledge like a product line can become obsolete every few years,
education
facilitates business
must
focus
continuous
education
is
creating
learning.
To
becoming
a
an
environment
this
end,
necessity
as
that
continuous companies
educate their employees about competitors, events, news and emerging products in a fast changing global market place. Third the
education and entertainment are converging. delivery
Instruction and at
of
will
times
in
educational be
instruction
increasingly
small, informal
conducted meetings
has
Fourth, changed.
electronically between faculty
and students. Student both residential and non-residential will halls
attend or
lectures
workplace
broadcast
to
and
reference
draw
49
their
homes,
residence
materials
from
distant
locations
using
computers.
Local
and
wide
area
networks will enable universities to integrate many aspects of
education
that
buildings. The
have
teacher
long
been
role
will
segregated shift
from
in
separate
lecturing
to
advising or coaching students on tough, messy issues such as
choosing
materials,
topics
and
career
paths.
Finally,
electronic access to online databases and library catalogs will eliminate the need for much book or reference space but
probably
will
increase
the
need
for
computer
disk
space. Computer Based Education and Training
For a number of years, educators and employers have been talking
about
the
enormous
potential
for
computer-based
education and training, but change has been very gradual. One reason is school
and
heavy
offices
understanding
of
capital expenditure that
have
been
educational
for computers in
installed
processes
without
required
to
an
take
advantage of the new technology. Although technology based education is impressive, knowing how to use it effectively is
still
possess
an the
technology computer
art
that
few
necessary is
aided
skills
fueling video,
people
a
for.
new
video
understand
wave
Explosive of
instruction,
clearly
or
growth
in
teaching
tools:
multimedia,
CD
ROMs, LANs, Internet connections and collaborative software environment. Active learning and other learning approaches are being developed to educate both workers and students. Teachers free
to
are
becoming
discover
more
knowledge
like on
coaches
their
own.
leaving In
students
short,
with
technology the role of teacher is more than of facilitator, guide and resource broker.
Benefits to Organizations
50
The benefits of organizations are as follows:
Electronic national capital
commerce and
expands
the
international
outlay,
market
markets.
companies
can
place
to
With
minimal
and
quickly
easily
locate more customers, the best supplier and the most suitable business partners worldwide.
Electronic
commerce
processing
and
decreases
distributing,
the
cost
storing
of
and
creating, retrieving
paper-based information.
Ability
of
creating
highly
specialized
businesses
using World Wide Web.
Electronic overhead
commerce by
allows
facilitating
reduced pull
inventories
type
supply
and
chain
management. In a pull type system the process starts from
customer
orders
and
uses
just
in
time
manufacturing.
Electronic commerce lowers telecommunication cost and the Internet is much cheaper.
Other
benefits
customer simplified time,
include
service,
new
processes,
increased
expediting
improved found
access
business
compressed
productivity, to
image,
cycle
improved partners,
and
delivery
eliminating
information,
paper, reduced
transportation costs and increased flexibility.
Benefits to Consumers
The benefits to EC to consumers are as follows:
other
Electronic commerce enables customers to transaction
24
hours
a
almost any location.
51
day,
all
year
shop round
or
do
from
Electronic
commerce
provides
customers
with
more
choices, they can select from many vendors and from more products.
Electronic commerce frequently provides customer with
less
expensive
products
and services
by
allowing
them
to
shop in many places and conduct quick comparisons.
Customers
can
receive
relevant
and
detailed
information in seconds, rather than days or week.
Electronic commerce makes it possible to participate
in virtual auctions.
Electronic commerce allows customers to interact with
other customer in electronic communities and exchange ideas as well as compare experience.
Electronic
commerce
facilitates
completion,
which
results in substantial discounts.
Benefits to Society
The benefits of EC to society are as follows:
Electronic commerce enables more individual to work at home and to do less traveling for shopping, resulting in less traffic on the roads and lower air pollution.
Electronic commerce allows some merchandise to be sold at lower
prices,
so
less
affluent
people
can
buy
more
and
increase their standard of living.
Electronic commerce enables people in third world countries and
rural
otherwise
areas are
to
not
enjoy
products
available
to
and
them.
services This
that
includes
opportunities to learn professions and earn college degrees.
Electronic commerce facilitates delivery of public services such as health care, education, distribution of government
52
social services at a reduced cost and or improved quality. Health care facilities can reach patients in rural area.
Action Taken by Government of Pakistan
As a first step towards electronic commerce, the
state bank of Pakistan has allowed banks to open Internet merchant
accounts
within
Pakistan.
This
was
a
major
hindrance in start of E-commerce activities in the country. To
help
the
software
export
industry,
SBP
has
instructed banks to accept the contracts as collateral for software
exporters
to
qualify
them
for
export
refinance
scheme. Software exporting companies have been allowed to retain
25
percent
of
export
earning
in
foreign
exchange
account. Introducing
national
scholarship
fund
and
loan
schemes for field of science and technology. Free
sector
leased
universities
line under
Internet an
access
agreement
to
the
with
public
PTCL
and
reduced rates for connectivity to educational institutions to promote IT in country.
to
Pakistan educational intranet will be established connect
all
the
public
and
private
educational
institutions. It would be established with centralized data containing
teaching
and
research
material
in
order
that
resources may be shared through video conferring.
Evaluation of Current Research
In this research information related to organizations using E-commerce and marketing were presented in order to support the
purpose
of
the
study.
The
reality
of
E-commerce
and
marketing is that it is changing the way we do business.
53
The present study has observed that organizations are now banking
on
Speed,
efficiency,
market
widening
and
great
communication to ensure their success. They are increasing the
speed
of
standard
business
operations,
opening
new
global markets, and driving competition up. The aggressive measures taken by the government and by the organizations can
direct
the
resources
into
useful
financial
outcomes
otherwise the affect will be loss of resources, inabilities of
the
companies
and
international
market,
inabilities
of
Organizations
organizations
loss
of
business,
organizations
are
to
maintaining
to the
compete
brain
drain
expand standards
with and
globally. using
E-
commerce and marketing techniques to maintain their market share and expand their business. Therefore the hypothesis is
rejected.
infrastructure marketing, brought
While for
careful
into
the the
organizations promotion
analysis
consideration
and to
of
long
further
service and increasing the market share.
54
term
maintain
the
E-commerce
and
plans
enhance
must
be
customer
Chapter 5 Conclusion and Recommendation
Conclusion
The world
market of
Internet
subscribers
has reached
the
mark of 400 million and is increasing every day showing a growth
rate
of
100%.
The
Asia/Pacific
region
although
comprising mostly of developing countries has reached up to 4 million subscribers. In Pakistan, the 'dot com' culture is
emerging
mushroom
at
a
very
growth
information
of
fast
pace
Pakistani
portals
and
and
there
commercial
specialized
has
been
web
search
a
sites, engines.
Electronic commerce in Pakistan is growing at a rapid pace, which has prompted the government to take a number of ecommerce development initiatives.
Broadly speaking electronic commerce and marketing is a new way
of
conducting,
transactions networks.
managing
using
They
competitiveness
executing
computers
have of
and
and
improved
business
telecommunications
the
participating
the
productivity
business
by
and
providing
unprecedented access to an online global market place with millions
of
services.
customers
Moreover,
it
and
thousands
has
also
of
provided
products
and
participating
companies with new and more cost and time efficient means. The
changing
together
to
needs
and
revolutionize
new
technological
the
way
conducted.
Modern
business
is
increasing
supply
capabilities,
increasing
customer
in
which
changes
business
characterized
expectations.
global In
by
competition
response
to
organizations all over are changing their operations.
55
come is
everand this
Students their
and
professional
respective
do
have
institutes
access
and
to
workplace
Internet
at
respectively.
Although people spend fair period of time online but online spending are very low. Local area network is available in fair
percentage
extranet
of
culture
organization is
not
but
the
developed
intranet
and
effectively
in
organizations, particularly in government organization and universities. Although 1/3 of the organizations are using fiber optics as a communication channel however the network are
mostly
used
for
emails.
The
development
of
IT
infrastructure has not very substantial outcome in terms of e-commerce
and
translate Pakistan billion bottom
marketing.
into
the
The
world
of
has allocated 6.54 IT
of
funds.
government
e-commerce.
percent
E-commerce
policies
and
policies
and
agenda
of
not
Government
the total
marketing
for
do
Rs4.895
lie
companies
of
at
the
engaged
in
business in Islamabad.
Recommendations
For Business and Government
Government of Pakistan and investor should encourage small dot.com
startup
dot.com
business
customer
to
increase
the
commerce. for
to
manage
within
practice
their
daily
facilitate
such
of
is
a
major
Internet.
is
one
of
by
avenue the
of
and
for
most
doing
local should on
tax
should relief.
business
neglected
e-
extranet
Government
providing
Small
the
fund
intranet
transaction.
practices
help
Government
allocation the
Internet.
will
online.
use
business
over
country
buying
should
Advertisement It
the
percentage
Companies
business
area
over
of
e-
commerce and marketing. Local and private business should
56