|Asia-Pacific I 1999
|Impact of Internet on Global Marketing
|Professor of Marketing
|University of California
The decades of the 1980s and 1990s have brought about remarkable geo-political, economic, and technological changes which has helped humanity to move in to the 21st century. At the beginning of the 1980s, the Chinese leader late Deng Xiaoping lifted the Bamboo-curtain by opening the Chinese economy to foreign investment.. The Mid- to late 1980s saw the fall of the Iron-curtain and the Berlin wall, in response to the peoples will. The 1990s eliminated the concept of national borders through the explosion of information technology. The information technology facilitating communication between people all over of the world has led to a weakening of boarders and a timeless global society and economy. As a result of the aforementioned events global communities and nations have become interdependent and cannot survive in isolation.Given the opening up of the frontiers for communication and business, it is left to the entrepreneurs involved in global marketing to reap the benefits of new technology and emerging markets. In order to do so they need to gain expert knowledge in the areas such as new technology and customer service at a global level.
Global Marketing in the 80s The geo-political changes and the explosion of information technology in the 1980s have revolutionized the way in which global business is conducted. Traditionally, firms were involved in International Trade, – buying and selling commodities. This activity was a surplus to any given country. The buyer was aware of what was needed and where to get it. The transaction took place either with payment of cash or bartering. The concept of International Trade evolved over a period of time but since the 1980s this kind of activity has generally been described as Global Marketing. Internet as a marketing tool The following marketing concept was used by companies in the 1980s when selling and buying products at a global level: the concept emphasizes on research into ways of identifying and targeting global customers. Once the customer group is identified, the marketer must develop and implement an effective communication strategy to convince the target group to buy the products/services offered by the company. The Internet serves as an effective vehicle to accomplish this goal. The Internet, is a fast growing medium and its information infrastructure connects 1000s of computers. The U.S. Department of Defense started the Internet as a research and development communications network in 1969 and from there it has developed into a loosely configured global web of corporate, educational and research networks.. Internet Growth and Development The growth of Internet since its beginning in 1969 has been sporadic and it is therefor difficult to predict where and when the next link will be added. Measured in terms of the hosting computers, it is growing at an annual rate of 70%. According to statistical data for 1996, the global growth in Internet domain is as follows: Sri Lanka — 5,717% China — 820% Indonesia — 308% Brazil — 284% Russian Federation — 250% Egypt and Japan — 173% each The U.S. — 151% Mexico — 110% Italy — 104%. A recent study showed that the U.S. is in the 3rd phase of Internet growth, Australia in the 2nd phase, and Asia is still in the 1st phase. Although it is difficult to precisely estimate the number of Internet users, several forecasts indicate variations ranging from 117 million worldwide users to 300 million by the year 2000. However, as of May 1998, a total of 119.5 million users were online globally. The breakdown of those online for various regions were as follows: (1) Canada and the U.S.– 70 million; (2) Europe — 23.5 million; (3) Asia/Pacific — 17.25 million; (4) South America — 7 million; (5) Africa — 1 million; and (6) Middle East — 0.75 million. Entrepreneurs involved in global marketing must use the Internet in conjunction with the World Wide Web (www) or Web in order to communicate with respective target customer groups. The Web sites provide advertising opportunities and they have , gained momentum as a commercial medium for the past two to three years. Those who favor the Internet as a global marketing tool must provide product information, price, and other information typically sought by potential customers. The Role of the Web Publisher With the acceptance of the Internet as a commercial medium , pressures are mounting on publishers of Web sites to get results. It is important to recognize when creating a Web site that the content must be updated on a regular basis which is very costly. The Web site can be used by global marketers to provide information to customers whenever large amounts of information is needed to make informed decisions, and serve as a medium for communication between the company and the potential customer. Some publishers like Yahoo, use their brand name, to attract large numbers of visitors. In addition to the number of visitors, which indicates the exposure of products offered, one should also focus on the revenue generated. It is important, therefore, that the Web publishers focus on skills as creators of content before licensing sites with high traffic. Accomplishing this objective may call for an increasing separation of roles between Web publishers and Web content developers. Banners representing brand names and/or graphics should only be available on sites that can generate sales leads. Internet users often surf the Internet looking for information, which is of particular interest to them, and not necessarily shop for products. In order to access information , the surfers use search engines and key words or phrases. The information search is accomplished by going through subject, guide, location, or content. As a result, the global marketers must provide links or banners on the Web page to facilitate access to relevant information with the click of a mouse. Any one who can entice potential customers to visit a companys Web page can to a certain extend control where the customer may go next and the information one may come across. Hyperlinks leading to information sources favoring a companys products can lead to a purchase decision. The risks associated with the hyperlink are that it may take the potential customer to a location from which one may not return. Increasing use of Internet as a global marketing tool has resulted in mergers and acquisitions between Internet service providers and the telephone companies with the purpose of cutting costs and expedites connection. During 1997, there were six mergers between Internet service providers and telephone companies in the U.S. These mergers may result in cheaper Internet access and convenience for the end users. At the end of 1996 the worldwide ownership of computers was 305 million, and increase by 49 million or about 18% compared to 1995. By the end of year 2000, the global computer ownership is projected to reach 600 million or almost double to that of 1996. The largest growth in computer ownership is expected to take place in India and China. At the end of 1996, among the top 25 nations ranked in the order of computer ownership, Japan ranked 2nd with 23.3 million computers. Other Asian countries were ranked as follows: (1) South Korea ranked 9th with 4.57 million computers; (2) China ranked 10th with 4.34 million computers; (3) Taiwan ranked 17th with 2.57 million computers; (4) India ranked 19th with 2.12 million computers; and (5) Indonesia ranked at the bottom, 25th with 1.36 million computers. From a global view point, the results of an analysis of 1,064 responses to a survey conducted between November 1997 and January 1998 shows that the demographic, socioeconomic, and geographic profile of the typical AltaVista user was as follows: (1) the user belonged to the age group 20 to 29; (2) college educated; (3) typically employed in a large Information Technology related firm; (4) single in a relatively small household; (5) had a high disposable income; and (6) had invested in a house, car, and financial markets. The majority accessed the Internet from home and spent a minimum of one hour online each day. The most popular destinations were search engines seeking information about online products and services. The number of women on line represented 22%. The results of the survey showed that 67 % of those online were from South East Asia, 6% from the Pacific region, and 27 % from other parts of Asia. The most popular products purchased were: (1) adult entertainment — 17%; (2) wine — 15%; (3) business services — 14%;(4) Decorations 13%; and (5) clothing 10%. The number of Internet users varies depending upon how one defines Internet use.Europes leading consultancies and developers estimate the global Internet use to be that of 100 million people. The number of users is projected to double by the year 2000. The total number of users in the U.S. range between 40 and 47 million. The emerging 20 nations in Asia, Eastern Europe, and Latin America (Argentina, Brazil, Chile, China, Columbia, Greece, India, Indonesia, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Russian Federation, Saudi Arabia, Thailand, Turkey, Venezuela, and Vietnam) offer great opportunities in the Internet frontier. Next to these countries, Sub-Sahara Africa appears to offer further marketing opportunities. During November 1997, the government of India announced their new Internet Privatisation policy. The Internet market in India is projected to grow from 40,000 in 1997 to 2 million by the end of year 2000. Companies like AT&T, CompuServe, and Microsoft have already expressed an interest in the Indian market as Internet Service Providers. According to China Telecom, the dominant Internet provider, jointly working with AT&T, the Internet is going to revolutionise Chinas connection to the outside world. Projected figures show that anywhere between 3 to 4 million Chinese will be connected to the Internet by the end of year 2000. There are currently 40 Internet Service Providers in Beijing, but less than 1% of Chinese households have a personal computer. Asia is the largest continent in the world with over 50% of the global population. It is therefore natural for global companies to focus on the Asian market. Of the several Asian countries, India and China account for over 2.1 billion people and the economies of these two countries are booming. The average gross domestic product growth rates in China and India between 1976 and 1975 were 4.6% and 7.8%, respectively. In order to finance economic developments programs, the two countries must attract direct foreign investment and increase the level of export. Export from China to the outside world increased by about 32% between 1993 and 1994. The imports, however, increased only by 11%, creating a trade surplus. In India, the exports exceeded imports by about 2% for the same time period. Traditional marketing methods are no longer cost effective. One must therefor look towards alternative methods. In addition, as the Asian economy continues to grow, the prices of resources like raw materials and labor used in producing and exporting products increase. It is imperative that the Asian countries in general, and India and China in particular look for efficient and economical methods of conducting global business. Internet technology can play a major role in reducing marketing costs and also become an effective tool as a p response to the increased competition in the global marketing environment. Given the current rate of growth in the area of information technology it is likely that the 21st century will be the age of electronic commerce, which is is known in popular terms as ecommerce.