The time and cost barriers associated with access to markets have fallen significantly over the past 40 years. Internet was one of the main factors that help in reducing the cost of access to market. It has made it significantly easier for companies to trade overseas, engage with other companies on what is called B2B trading and consumers on what is called B2C trading; Internet has changed the market dynamic.

1. The Warwick MBA
Submitted by: 0760233
Date Sent: 27/07/2009
Module Title: IB94J0 – International Marketing
How did you study this subject:
Full-time term-based
5-day Module
Evening
Distance Learning
Date/Year of Module: June 09
Submission Deadline: 27th of July 2009
Word Count: 2494
Number of Pages: 11
Case study: The impact of the Internet on International Marketing
“All the work contained within is my own unaided effort and conforms
with the University’s guidelines on plagiarism.”
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2. TABLE OF CONTENTS
1.0
INTRODUCTION.................................................................................................................... 3
2.0
BACKGROUND ...................................................................................................................... 3
3.0
STRATEGIC FOCUS ............................................................................................................. 5
4.0
ROUTE TO MIND .................................................................................................................. 7
5.0
ROUTE TO MARKET............................................................................................................ 8
6.0
CONCLUSION ...................................................................................................................... 10
7.0
REFERENCES....................................................................................................................... 11
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3. 1.0 INTRODUCTION
The Internet, form its origin in 1969, has developed into an unstructured network of computers linking home
and business users all over the world, allowing them to communicate and exchange information instantly and
relatively cheaply, which revolutionised the way we interact together as individuals and business. The
computer networks are linked by telephone lines, fibre optics cables, microwave relays and satellite. Home
users gain access the internet from their computer through a websites that provide powerful search engine like
Google and Yahoo to find the information, service and products they need.
The main internet use are for the World Wide Web for information, e-mail, and community of interest such as
social networking sites, The Internet also support extranets, which are private network that connect companies
with each other securely & privately and intranet which are network within the companies.
2.0 BACKGROUND
The time and cost barriers associated with access to markets have fallen significantly over the past 40 years.
Internet was one of the main factors that help in reducing the cost of access to market. It has made it
significantly easier for companies to trade overseas, engage with other companies on what is called B2B
trading and consumers on what is called B2C trading; Internet has changed the market dynamic. “The Internet
is being written, and it is about doing everything faster, better and cheaper” (Faramarz Damanpour; 2001).
Other factors have also helped in reducing the cost and removing the barriers of international markets, like the
international travelling cost which have fallen significantly too. In 1970, 75 million passengers travelled
internationally; according to figures compiled by International Air Transport Association, which figure
increased to nearly 540 million passengers in 2003, yet the travelling cost is out of the scope of this essay.
The Internet revolution have forced companies to revise its strategic position, even if it only have a domestic
focus, in order to protect its future from other International competitors who are in constant quest for new
markets with new revenues streams. The internet has opened up competition, so it is not any more restricted to
local rivals but also to companies from other countries, who start knocking the consumers’ doors directly
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4. through the Internet. The Internet World stats (2009) estimate that there are 1.6 billion Internet users
worldwide, representing 23.8 percent of the world’s population. If the internet was a country it would have
been the biggest country in the world, bigger than China’s population 1.3 billion. It would have been a country
were all stores (websites) are few second away from customers (couple of clicks away). The below graph
shows the Internet users distribution geographically.
The Internet has changed the way companies engage and interact with consumers, how they share information
with business partners & suppliers, and how they buy and sell. It has also changed the way they approach
competition and market dynamic. Hence companies started to invest heavily on electronic business projects, to
improve customer satisfaction, increase brand awareness, or open new sales channels. Many companies then
sbegun searching for new ways for exploiting the benefit of the Internet and measuring the return on
investment (ROI) of their E-business projects. For less strategic projects, such as those that increase the
efficiency of the supply chain, traditional ROI evaluations are still being used. The bottom line is that Ebusiness is seen increasingly as something that must be pursued at all costs. (Faramarz Damanpour, 2001)
The impact of the internet and the development of e-business technology on the creation and implementation
of international marketing strategies will be the focus of the essay; with three key areas to be explored one:
impact on organisational strategies, how companies’ strategies have dramatically changed after the Internet.
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5. Secondly the route to market which basically focuses on distribution, at this point we will explain how the
Internet developed a new fast and economical channel to market. And lastly but not least the route to mind
which lay out the ways of the internet use for PR and to increase brand awareness. The essay will not focus on
a specific industry or company, because I thought focusing on specific industry might restrict the overall
picture and view. Yet a reflection will be made on Amazon as an e-retailer, as and when relevant through out
the essay. Other factors like transportation price decrease, world trading policies will be out of the scope of the
essay.
3.0 STRATEGIC FOCUS
“The digital revolution is causing dramatic changes in industry structure. Convergence is a term that refers to
the coming together of previously separated industries and product categories. New technologies [Internet]
affect the business sector(s) in which a company competes.” (W. J. Keegan and M. C. Green 2008).
Before the Internet the market where restricted to local companies and big multinational corporate. For
companies to embark outside their local boundaries they used to do a thorough research and prudent
investment appraisal, due to the massive cost associated of setting up a global operation and distribution
abroad. Now the game dynamic have changed as trading internationally became easier and cheaper, which
open a wide gateway for Small to Medium Enterprise (SMEs) and even Small Office Home Office (SOHOs)
to do business wherever opportunities arise. The internet has expanded the market boundaries, were the whole
world became one big connected market.
If we look at ‘The Strategic Marketing Process’ below and consider a book retailer before the internet and
Amazon.com (Hypothetical example), we can easily notice that the change on the market dynamic and the
impact on companies’ strategies, if they to compete on a new world with new competencies:
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6. TWOS Analysis
Traditional Book store
Amazon.com
(before internet) - Hypothetical
Strategic Objective
To have a store in main cities on Want to be Earth’s most customer-centric
the national level.
company, so customers can find anything they
might want to buy online.
Strategic Focus
Connect with publisher and have Offer its customers the lowest possible prices
good selection of books
Customer target
National book lovers
World wide readers
Competitors targets
Local book stores in the area
All book stores
Differential advantage
Book selection and may be Price, wider selection of books and accessibility
knowledgeable/friendly staff
(You can shop from any where at any time)
Marketing mix
Not in the scope, yet it happen Built strong Brand, have competitive prices, and
randomly
promotions, and available at all times
Investment
High capital nvestment for store Relatively lower capital investment
& storage, with low coverage
Evaluation & Control
Customer behaviour hard to All data are stored and easily recorded and
keep a record of
monitored
“Ammazon.com is perhaps the most successful example of the global audience-transaction business model.
Online book shoppers can chose from more than 2.5 million titles carry discounted prices.” (W. J. Keegan and
M. C. Green 2008) there are too many book titles for any one ‘brik-and-mortar’ store to carry. Sales exploded
after Amazon.com’s website became operational in mid 1995. Within a year, orders were coming in from 66
countries. Clearly the comparison shows the contrast on the both company strategies and the impact on each
stage.
Companies approach have had two impact on in the companies favour which is being exposed to new
business models and technology that perhaps improve and enhance their internal capabilities, yet from the
other side it increased the competitive pressure. For companies to be successful they have give macro and
micro environment scanning good attention while developing their strategies.
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7. 4.0 ROUTE TO MIND
It is all about “Integrated Marketing Communications & Brand Reputation” (Colin Egan, Lecture Slides)
Companies invest lots of money in order to reach their customers, to raise and improve their brand awareness
and consumer’s perception.
Brand awareness and consumer’s perception are two of
the fundamental stages of building any strong brand, in
order to persuade customers to purchase your product or
service. In the past mass marketing and traditional
advertising used to have a bigger impact on consumer
perception about certain brands. Marketers’ job was
comparatively easier in the past.
People use to spend more time everyday watching a fewer number of TV channels; the chances of reaching
consumers were higher than today. “Traditional marketing methods simply do not reach their target audience
with the same effectiveness as they did just a decade ago” (Smith, T., Coyle, J., Lightfoot, E. & Scott, A.;
2007). The internet and the use of New Media have changed the dynamic that form the consumers’ perception
as the world became more connected. People share their opinions and experiences publicly, which creates a
powerful impact on consumer perception about the brands and products they use.
Companies have to consider smarter ways for targeting their customers. Indeed the Internet made it easier for
companies to communicate and reach their customers, but on the same time it became more challenging to
stand out from the crowd. Consumers are exposed to more advertisements to what they used too a decade ago
particularly before the Internet. Now there are new way for Internet advertising, like sponsored links and
social networking…etc.
The key point here is that Internet have a great impact on the route to consumers mind, it is also have gave
away some power to the consumer to choose what they want to see and watch, consumer see adverts only on
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8. the websites they visit, and many instance they need to register to receive promotional materials, so it is not all
push marketing as it used to be.
It is faster to reach consumers anywhere in the world but it became much more challenging to build strong
brand equity for two main reasons; one consumers are exposed to way more advertisement as they used to do
before the Internet, two because consumers can now share there opinions easily and publicly which have a
great impact on consumer perception and brand repudiation.
5.0 ROUTE TO MARKET
“The Channel Management Process & Brand Delivery” (Colin Egan, Lecture Slides) in nearly a blink of a
cursor, you can reach Amazon online store, Amazon get on an average of 70 million visitors a month
(compete.com). While bookstore and other retail chains mainly depend on opening new stores to increase
revenues, Amazon totally avoided this enormous cost using the Internet. As in contrast retailers must
constantly invest on new stores to increase revenues, Amazon can boost sales by simply getting more people
to come into its single online store. Chief Financial Officer Joy Covey, said “I don't think we could have
grown a physical store base four times in one year.” [like Amazon]
“Amazon offers an easily searchable trove of 3.1 million titles -15 times more than any bookstore on the planet
and without the costly overhead of multimillion-dollar buildings and scads of store clerks. That paves the way
for each of its 1,600 employees to generate, on average, $375,000 in annual revenues-more than triple that of
No. 1 bricks-and-mortar bookseller Barnes & Noble Inc.’s 27,000 employees” (Hof, Neuborne and Green 1).
Internet has helped companies like Amazon.com to develop another innovating method of retailing online.
Now Amazon are selling videos, music, gifts, and a host of other products, most of those products are sold by
small online sellers and Amazon are only taking a sales commission. Not only this model takes away the
burden of storage cost but also shipping costs. Customers can possible be buying a CD from Amazon website,
while Amazon have not interfered with the ordering process at all, and the whole end to end experience apart
from the webpage product display, which is actually a template. Similar to high street shops when they rent
out a space of their shop to a certain brand, yet the difference that Amazon’s space doesn’t cost anything.
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9. Bezos (Amazon Founder) was the first merchants to leverage the Internet power in that unique way by
spreading the Amazon brand. So Amazon give the opportunity to other websites the chance to sell books
related to their visitors' interests through a link to Amazon. Their inducement: a cut of up to 15% of sales.
Now, he has 140,000 sites in the so-called Associates Program.
As Amazon built a strong brand, and good customer’s perception, it started building an arsenal of global
suppliers for three main reasons; to compete on price, build a massive selection of products and on the same
time to hold a powerful position over suppliers.
On 2007 Amazon announced its intention to launch Amazon MP3, its own online music store. The store
launched in the US in public beta on September 2007, selling downloads exclusively in MP3 format without
digital rights management another example that creates a revenue stream that didn’t excite before the Internet.
Customer Value perspective have changed after the Internet, perhaps the below diagram can show the main
differences, it is clear how the Internet have been exploited to use the power of International business, so you
pass the value of getting your product cheaper from the source directly to your customer i.e. many of the CDs I
personally order from the UK comes shipped directly to me from suppliers in the USA, Mexico or China.
The below table will show Amazon as online retailer strengths.
Product: wide selection of products
Place: Easy to reach
Price: Very competitive
Promotion: Holding data about customers
Purchasing behaviour, put Amazon in
Good position to do customize
promotion
Amazon on the first year have
received order from 66 countries
Amazon have local sites in USA,
UK, Italy, Germany, Spain and
many others
Weak Supplier power
Competitive prices to consumers
Strong global brand
Accessibility any time from
anywhere
Deliver to your door step
Trust worthy
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As Amazon has saved huge amount of money
from overhead cost and capital investment, this
has put on the front line of the market
Economy of scale
Using the power of globalisation by
bring the cheapest product from
different suppliers all over the world
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10. 6.0 CONCLUSION
Websites are classified by purpose promotion sites provides marketing communications about a company’s
goods or services, content site provide news and entertainment and support company’s PR effort, and
transaction sites are online retailers like Amazon that allow customers to purchase goods and services.
Internet have forced companies to re-evaluate its capital investment, mass media marketing, and even question
if sensory appeal of shopping in stores is right and most cost effective approach or not, definitely companies’
strategies and organisation set up have changed after the internet revolution. Companies ‘Rout to mind’ has
changed as the factor that used to influence consumer perception have changed after the Internet, the whole
world became more connected, as a result new marketing techniques that exploit the internet start to emerge
like viral marketing, Internet advertising and digital marketing.
Indeed, Amazon is one of the successful business models that managed to exploit the power of Internet, in
terms of distribution (route to market), by pioneering and almost near perfecting the art of selling online; it is
forcing the other of retail to rush to e-commerce as it took a short cut on the Route to Market.
Lastly there are certain inventions that had a huge impact on our lives like transportation, radio and television.
Internet is one of the biggest recent inventions that had huge impact on our lives and still will.
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11. REFERENCES
-
Li-Ling Hsu Tzu-Chuan Chou & Tsuen-Ho Hsu (2008) “Factors that impact on the perceived benefits
of internet international marketing in Taiwanese SMEs”, Journal of Targeting, Measurement &
Analysis for Marketing, Vol. 16 Issue 4, p249-260
-
Faramarz Damanpour (2001) “E-business e-commerce evolution: Perspective and strategy”,
Managerial Finance Journal. Vol. 27, Issue7; p16-18
-
Isobel Doole & Robin Lowe (2006) “International Marketing Strategy” 5ht Edition
-
Warren J. Keegan & Mark C. Green (2008) “Global Marketing” 5th Edition
-
Ted Smith, James R. Coyle, Elizabeth Lightfoot and Amy Scott (2007) “Reconsidering Models of
Influence: The Relationship between Consumer Social Networking and Word-of- Mouth
Effectiveness”, Journal of Advertising Research, pp 387-397.
-
Compete.com (http://siteanalytics.compete.com/amazon.com/ )
-
Hof, R.D, Neuborne, E, Green, H (1998, December), "Amazon.Com: the wild world of e-commerce",
Business Week, Issue no.3608, pp.106-14.
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