The Impact of the Internet on Traditional
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AN EMPIRICAL STUDY: The Impact of the Internet on Traditional Marketing Principles, Strategies and Practices in the Financial and Retailing Sectors Annmarie Birkett 2004 AN EMPIRICAL STUDY: THE IMPACT OF THE INTERNET ON TRADITONAL MARKETING PRINCIPLES, STRATEGIES AND PRACTICES in the Financial and Retailing Sectors BY Annmarie Birkett A Masters of Business Studies Presented to the Galway-Mayo Institute of Technology Head o f School: Mr. Larry Elwood Research Supervisors: Mr. Kevin Heffeman and Ms. Andrea Moloney Internal Examiner: Mr. James McGivem External Examiner: Mr. Gerry Grinham ‘Submitted to the Higher Education and Training Awards Council, April 2004’. TABLE OF CONTENTS List of Tables (v) List of Figures (vi) List o f Appendices (Vi) Dedication (vii) Acknowledgements (viii) Abstract (ix) Chapter 1: Introduction to Thesis 1.1 Introduction 1 1.2 Primary Objectives 2 1.3 Secondary Objectives 2 1.4 Research Plan 2 1.5 Summary of Research Findings and Conclusions 4 1.6 Summary 4 Chapter 2: The Internet 2.1 Introduction 5 2.2 Introduction to the Internet 5 2.3 Evolution of the Internet 6 2.4 Internet Technology 9 2.5 Intranets 10 2.6 Extranets 11 2.7 Internet Tools 14 2.7.1 The World Wide Web 15 2.7.2 Electronic Mail (E-mail) 20 2.7.3 ListSERV 22 2.7.4 Telnet 23 2.7.5 Usenet 23 2.7.6 File Transfer Protocol (FTP) 24 2.7.7 Gopher, Archie and Wide Area Information Server (WAIS) 24 2.8 Internet Security 26 2.9 Internet Statistics in Ireland 27 2.10 Summary 33 2.11 Conclusions 34 Chapter 3: Marketing and the Internet 3.1 Introduction 36 3.2 The Evolution of the Marketing 36 3.3 Traditional Marketing and the Internet 38 3.4 The Marketing Mix 39 3.4.1 Traditional Marketing Mix 40 3.4.2 Internet Marketing Mix 45 3.5 Marketing Strategy 59 3.5.1 Traditional Marketing Strategy 59 3.5.2 Internet Marketing Strategy 60 3.6 The Marketing Plan 63 3.6.1 Traditional Marketing Plan 63 3.6.2 Internet Marketing Plan 65 3.7 Comparison of Traditional Marketing and Internet Marketing 66 3.8 Summary 69 3.9 Conclusions 71 Chapter 4: Research Methodology 4.1 Introduction 73 4.2 Stage 1 : Problem Definition/Research Question 73 4.3 Stage 2: Research Approach 74 4.3.1 Positivism (Quantitative) 75 4.3.2 Phenomenology (Qualitative) 76 4.4 Stage 3: Research Design 79 4.5 Stage 4: Fieldwork 80 ii 4.6 Summary 83 4.7 Conclusions 84 Chapter 5 Research Findings, Conclusions and Recommendations 5.1 Introduction 85 5.2 Bank Company Profile 86 5.2.1 Progression of Website Development 91 5.2.2 Perceived Factors Encouraging & Discouraging a Website Presence 92 5.2.2.1 Perceived Factors Encouraging a Website Presence 93 5.2.2.2 Perceived Factors Discouraging a Website Presence 94 5.2.3 Actual Advantages for the Banks of a Web Presence 96 5.2.4 Marketing Techniques 98 5.2.4.1 Traditional Marketing Techniques 98 5.2.4.2 Internet Marketing Techniques 100 5.2.5 Key Differences between Traditional and Internet Marketing 101 5.2.6 Banking Summary 102 5.3 Supermarket Company Profile 104 5.3.1 Progression of Website Development 108 5.3.2 Perceived Factors Encouraging & Discouraging a Website Presence 110 5.3.2.1 Perceived Factors Encouraging a Website Presence 111 5.3.2.2 Perceived Factors Discouraging a Website Presence 112 5.3.3 Actual Advantages for the Supermarkets of a Web Presence 114 5.3.4 Marketing Techniques 115 5.3.4.1 Traditional Marketing Techniques 115 5.3.4.2 Internet Marketing Techniques 117 5.3.5 Key Differences between Traditional and Internet Marketing 118 5.3.6 Supermarket Summary 119 5.4 Summary 121 5.5 Conclusions 122 5.6 Recommendations 123 5.7 Further Research Questions 125 Bibliography Appendices LIST OF TABLES Table Description Page 2.1 Characteristics of the Internet, Intranet and Extranet 13 2.2 Top-Level Domains in the United States 16 2.3 Top-Level Location/Country Domains 16 2.4 New (2000) General Top-Level Domains 17 3.1 Comparison of Traditional Marketing & Internet Marketing 68 4.1 Comparison of Positivist and Phenomenological Paradigm 77 4.2 Strengths and Weaknesses of Positivism and Phenomenology 78 5.1 Cost versus Perceived Benefit Analysis (Banks) 94 5.2 Factors Encouraging & Discouraging a Website Presence (Banks) 96 5.3 Actual Advantages & Disadvantages of a Website Presence (Banks) 98 5.4 Traditional and Internet Marketing Techniques (Banks) 101 5.5 Cost versus Perceived Benefit Analysis (Supermarkets) 112 5.6 Factors Encouraging and Discouraging a Website Presence (Supermarkets) 113 5.7 Actual Advantages and Disadvantages of a Website Presence (Supermarkets) 115 5.8 Traditional and Internet Marketing Techniques (Supermarkets) 118 V LIST OF FIGURES Figure Description Page 2.1 The Role of Different Networks in E-Commerce 13 2.2 HTML Screenshot 18 2.3 The Web System Architecture 19 2.4 Growth in Internet Usage 28 2.5 Usage Locations 29 2.6 Frequency of Using the Internet 29 2.7 Number of Hours Spent Online 30 2.8 E-Commerce Activity 31 2.9 Online Sales 31 2.10 E-Commerce Intentions 32 3.1 Key Aspects of the 7Ps of the Internet Marketing Mix 58 LIST OF APPENDICES App. Description A Cover Letter Accompanying the Questionnaire B Questionnaire Designed for Traditional Outlets C Questionnaire Designed for Internet Outlets D Internet Advertising Terminology E Company Websites DEDICATION Bernard and Mary Birkett To two people who have been a true inspiration to me and imparted to me the virtue of hard work. For your encouragement and understanding - I am truly grateful. Thanks Mum, Thanks Dad. ACKNOWLEDGEMENTS I gratefully acknowledge the assistance and support of the following people in completing this thesis: Kevin Heffeman and Andrea Moloney, who, in their supervision of this thesis provided invaluable critical comment. Mr. Larry Elwood for affording to me the resources of his department. Daragh Henehan and the other members of the technical staff who were generous in their support. Thanks to all those who participated in the case studies for their valuable insights into the business of the banking and supermarket sectors. Furthermore, my thanks to the library staff in the Galway-Mayo Institute of Technology, University College, Galway, Limerick and Cork for their willingness to assist me in my research for information. My Mother and Father who inspired confidence and self-belief. My Brothers and family for their care and support. To Martin, for his encouragement, kindness and patience. Helen, Siobhan, Mary Teresa, Derval and Sylvia - thank you for your help. ABSTRACT The purpose of this research is to provide an insight into the impact of the Internet on traditional marketing principles, strategies and practices in the financial and retailing sectors. The growth of the Internet is explored from its modest beginnings through to the diverse opportunities that it offers today’s marketers. The evolution of marketing is also discussed in order to provide the reader with an understanding of its origins and the advancements it has made over the years. A comparison is made between traditional and Internet marketing plans, and traditional and Internet marketing strategies. The key differences between traditional and Internet marketing is then highlighted. The Internet provides numerous opportunities to the marketer and the consumer and it encourages dialogue between both, through various forms of interaction such as e-mail. The marketer has the power to build relationships and develop customer loyalty. The Internet is also one of the most cost-effective methods of marketing in today’s global marketplace. The Internet has affected many businesses. In an effort to demonstrate this, case studies are the chosen research method to identify the impact of the Internet on four different companies, two from the financial sector and two from the retailing sector. An in-depth analysis of all four companies is conducted, concentrating primarily on how the Internet has changed their business strategy, if at all. Chapter 1 Introduction to Thesis Chapter 1 - Introduction to Thesis 1.1 Introduction This study examines the impact of the Internet on traditional marketing principles, strategies and practices. The Internet is a prominent player in today’s marketing environment. It has become an increasingly popular and versatile tool for marketing. Frequently touted as a revolutionary force for businesses, the Internet is becoming a fundamental and often necessary vehicle for communications and transactions between marketers and consumers, and between businesses. The Internet is a medium that gives companies the opportunity to provide existing and potential customers with company, product and brand information (Dibb, Simkin, Pride and Ferrell, 2001). The Internet plays a pivotal role in developing marketing communications, building customer relationships, and using consumer data to build a community (Dwyer, 2001). It provides one of the most efficient and effective marketing tools a company can use to promote a brand, service, or product. According to Collin (2000) the Internet offers a variety of new ways to contact new and existing customers, setting up focus groups, supporting press enquiries, research campaigns, investigating new export markets, and getting advice or discussing topics with other professionals. Equally, companies will always use traditional forms of marketing as not all customers have access to the Internet and some people are not interested in it. In order for certain companies to thrive, they must implement both traditional and Internet marketing techniques as both of these methods target a wider audience. Chapter 1 - Introduction to Thesis 1.2 Primary Objectives The primary objectives of this thesis are as follows: • To undertake a comparative study of Traditional and Internet Marketing Principles, Strategies and Practices.