Saturday, January 24, 2009

Impact of Internet on International Marketing Practices

This paper will discuss the impact of Internet on the international marketing spectrum. One way to analyse this issue is through identifying the pros and cons of using internet as a marketing tool, and finally its implication for international marketers, professionals and academics.

Information technology has been the cataclysm for the development of international businesses. One area, which has been given increased attention, is the explosion of international marketing activity on the Internet. According to the international data statistics of 2003, they predict that there will be approximately one billion of active users in the world by 2005, which means more electronic commerce ( These figures demonstrate the attention of international marketing stakeholders.

The usage of Internet as a medium international marketing brings along many benefits to international marketers. Some major advantages are mentioned below:

Firstly, the net acts as a gateway to global opportunities. It allows companies, specially small and medium enterprises to position themselves globally at low cost. In addition, it alleviates the red tape regarding the prospect of doing business globally, consequently avoiding the regulations and restrictions in export countries, which normally companies should abide by if they physically enter the market ( Paul, 1996). Furthermore, low cost can also be associated with the elimination of intermediaries because Internet connects end-users to producers directly. Moreover, the global advertising costs which was considered as a barrier to entry, is now reduced as internet permits to attain the target audience cheaply ( Eid & Trueman, 2002).

Secondly, it provides accessibility. Companies which use internet for their international operations are able to increase their hours of business through email and customer ordering and interactive communication (Eid & Trueman, 2002). Although the different time zones which exist, they have increased their opportunities by providing 24 hours access for their branch offices and consequently this results in an increase in the number and potential international customers (Paul, 1996). In addition, the one to one interaction allows marketers to build strong and sustainable relationships with their customers, which as result enhance the brand loyalty (Arnott & Bridgewater, 2002).

Thirdly, the net contribute to an appropriate form, place and time utility which create a competitive advantage to the marketeer . Instead of exasperating the customers with the different types of marketing approaches, the choice is given to the customers to decide when, where and what they want. All the company’s products are provided on the net which increase the chances of trial, purchase and repurchase (Paul, 1996).

Fourthly, the net enhances advertising effectiveness. Through Internet advertising media, it is possible to achieve all advertising purposes across all possible market segments. All concerned parties can create, transmit and access advertisements on the net through a computer and appropriate software ( Paul, 1996). However, the effectiveness of the advertisement will depend on a well design and effective marketing of the site (Hamill, 1997). Moreover, Poon and Jevons(Eid & Trueman, 2002:57) argued that hard selling and push promotion strategies are not effective on the internet.

Lastly, the net improves market intelligence, market research and analysis. Studies show that the success to enter new market is systematically to gather, analyse accurate and timely information. The Internet provides up to date information on customer contact, potential market opportunities, technical reference materials which help managers to identify shifts in product and customer trends (Hamill, 1997). Ultimately, it enables managers to capture the right product and market opportunities, from which they can mold an appropriate marketing mix relative the customers’ needs (Paul, 1996).

As there are benefits of using Internet for international marketing purposes, so there are some disadvantages as well. The following shows two main constraints that affect international marketing.

One important issue concerning Internet marketing is security. As millions of people access the net everyday, Copyrights and proprietary information can be target of computer hackers and viruses. Moreover, there is also the risk that they can access the internal computer system and find out classified information (Paul, 1996). Another security issue is the financial transactions that occur over the network. By using unencrypted package, computer hackers can view the credit card number of the purchaser and cause terrible financial damages. Nevertheless, statistics show that the Internet crime rate is on the decreasing rate due to an increase in security features (Palumbo & Herbig, 1998).

One another major limit for the use of Internet as tools for international business is the structural constraints. In order to make proper use of Internet as tool for export, it is dependent on the absence of structural constraints. These constraints can take the form of computer literacy, culture, language; ownership of Pc’s which affect the efficacy of internet –based international business strategies. For instance, all the parties involved in this particular type of transaction should be computer literate and have access to equipments. Secondly, the Internet network should be easy and affordable to access. Thirdly, regulations that impede access to Internet should be removed. For example, in china, only those who register to the public security Bureau and employees of foreign companies can have accessed to internet ( Samjee, 1998).

The above discussion on the pros and cons of Internet on international marketing affect profoundly the major international marketing stakeholders in three aspects. Firstly, international marketers should consider Internet as cost-effective tool for export and if it use appropriately can be a competitive advantage for the company. Secondly, the internet-based businesses bring up some important issues to international marketing educators. The traditional teaching of fundamental international marketing like barriers to internalization, importance of intermediaries, country screening is no longer valid. The internet requires a different radical strategic approach to this new cyberspace environment (Hamill, 1997). Lastly, international marketing educators need to ensure that their students are familiar and understand the strategic implication of Internet in order to prepare them in this new cyber world characterized by international electronic commerce.

Hence, if a business is considering internationalizing, it should consider Internet as an option. Even than there are some risks associated with its use, the benefits may outweigh its disadvantages if it is use appropriately.

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