MARK 404 Advanced Internet Marketing

1. MARK 404 Advanced Internet Marketing Tim Beal Session 2 – 15 July 2002

2. Today • Administration • Overview of the Internet

3. Administration • Allocation of sessions • Topics • Any other business?

4. Overview of the Internet and Web • Hanson chapter 1 • With comments and disagreements • Updated and additional material

5. Hanson’s Topics • The original WWW • Commercial beginnings • A .com world • Marketing and technology • Our approach in the book

6. Radio revolution • Hanson compares WWW with radio revolution • First consider two main aspects of Internet • Email • WWW • Differences between two • Necessity to utilize both appropriately

7. Email • Proactive • Needs recipient’s address • Spam ineffective because doesn’t have the right recipients • Text based • Cheap

8. Web • Reactive • Needs to attract visitors • Far greater functionality • Multimedia, interactivity, personalisation, transfer of money • More expensive • Now to Hanson and radio

9. The Original WWW • It’s 1922 • Radio suddenly transitions from a technology used primarily by the military and the shipping industry to a consumer and business phenomenon • At the end of 1921, there are 5 radio stations • A year later, there are 575 • Starting radio stations is the height of entrepreneurship • Listening to radio is a runaway consumer fad • “Combing the ether” is the hit of the day

10. The Original WWW • Radio’s impact on 1920s society • It changes the way people think about distance and time • Simultaneity no longer requires proximity • Global events are experienced as they happen • Performances in different cities can be heard in the neighbor’s living room • Fast-breaking world stories and even the local weather are available at the flip of a switch and the turn of the dial

11. The Original WWW • Radio changed business, especially marketing • It accelerated the economy’s transition to a mass market • It facilitated the creation of national brands • Firms could launch national marketing campaigns simultaneously • New product store introductions could be synchronized with ad campaigns to build consumer interest • Product positioning became more flexible • Businesses learned to use this new, powerful method of reaching customers

12. The Original WWW • As an industry, radio struggled with generating a self-sustaining revenue base • In 1926, radio stations were failing at a rate of 15% per month • Consumers still rushed to buy radios • Ultimately, national networks of stations emerged • A combination of national and local advertising made radio profitable • Internet marketing shows many of these same uncertainties

13. Books to Internet • Succeeding communication revolutions • Printing • Books, newspapers • Radio • TV • Internet • Discussion: what are similarities and differences?

14. Hanson on changes • The Internet changes the way companies connect to their customers • It expands the opportunities for branding, innovation, pricing, and selling • It leads to new ways of thinking about time and distance • It opens up new distribution channels and markets

15. Virtuous Web Cycle • Is a business system with positive feedback • Each element in the business system feeds off another element in the system and feeds into yet another element in the system • If the cycle is strong enough, it can actually be a self-fulfilling expectation

16. It starts with user fascination Consumer and Business Internet Access Popular Fascination • Providers see the developing opportunity and rush to create new brands & services, which creates more hype Web Sites and Web Content • The buzz feeds back into consumers’ interest and desire to experiment with the new technology Virtuous Cycle for Net Growth Let’s look at how it works

17. A Dot Com World • The virtuous Web cycle leads to rapid growth of • Consumer access • Internet usage • Content online

18. Dot.com to dot.bomb • Hanson’s optimism too glib • Much of the effect of Internet has happened offline • I.e. bricks and mortar companies using Internet • Dot bomb may have peaked • But

19. But • Internet Shutdowns and Bankruptcies Pass 800 Mark in February • And • Internet users still not buying online

20. Nevertheless • There ahs been rapid growth in users, hosts, activity… • Let’s look at some data

21. Figure 1: Trend of Internet Worldwide (1996-2002)

22. Fig 2 Internet Users by region, 2002 Fig 1 Internet Users by region

23. Fig 3: Asia and the digital divide

24. Fig 3: Global distribution of Internet users, 2002

25. Fig 4 Change in regional share of global Internet, 1997-2002

26. Fig 5: Numbers online - top Internet countries 2002

27. Fig 6: Top Internet countries, 2001, by percentage of population online

28. Fig 7: Growth in numbers online 1997-2002 in major Asian markets

29. Internet in Asia • Japan, though the most developed Asian economy has lagged in utilisation of the Internet and although broadband is growing fast it seems likely this will continue

30. Internet in Asia • The city states of Singapore and Hong Kong will continue to be the most advanced Internet places in Asia. However other Asian cities should not be overlooked. In particular country data on China tends to give a misleading impression and there are reports of very high Internet access in cities such as Beijing, Shanghai and Guangzhou Perhaps the same is happening in Bangalore, Hyderabad and Karachi

31. Internet in Asia • Beyond cities and city states South Korea and Taiwan will jostle for leadership in Asia

32. Internet in Asia • China, with its rapidly growing economy, and its large language area will soon be the major Internet market in Asia. Given the network effect, whereby the value of a network to its users grows exponentially with the size of the network, this has huge implications, especially for East Asian SMEs

33. Internet users • Rich countries? • Profile of US users • Reasons why other countries may not follow US pattern

34. Fig 6: Internet use and wealth, 2000

35. Fig 9 GVU Survey 1994-98 – Change in gender balance of Internet users

36. Fig 10 GVU Survey 1994 -1998 – age of Internet users

37. Fig 11: Age structure of Internet user compared with general population

38. Fig 12 GVU Survey 1995 -1998 – Occupation of Internet users

39. Some other key results of this 10th survey in 1998 were: • Race • The American respondents were overwhelmingly ‘white’ (88%), followed by Afro-Americans (2.3%) and Asians (2.1%). This can be compared with the ethnic breakdown in the 1990 United States census where 80% were white, 12% black (Afro-American) and 2.9% were ‘Asian or Pacific islander’. Blacks were clearly under-represented in the Internet community

40. GVU results: Location • 33% of the US respondents were urban, 52% suburban and 14% rural. In the 1990 census, 75% of the population were urban and 25% rural. It seems that internet users were disproportionately urban/suburban

41. GVU results: Education • 64% had college or some college, 17% had Masters, 3.4% had a PhD, and 3.5% a professional qualification. In 1990, only 13% of the general population had a Bachelor’s degree and a further 7% had a graduate or professional degree. Internet users were considerably better educated than average.

42. GVU results: Income • Median family income was in the band $50-74, 000. In 1998 the median household income in the United States was $39,744. Survey respondents had significantly higher incomes than average, even though 9.4% were students.

43. GVU results: Occupation • Trained professional: 28.5%; middle management 11%; student: 9.4%; self-employed: 9.9%, upper management: 6.8%. By comparison, although the categories are different, the 1990 census gave 12% managerial and 14% professional. This suggests, as we would expect, that the Internet users were working in more highly skilled occupations than average

44. User profile • Users in US, and other mature Internet markets, are now much closer to average • Less distinguishable from ordinary population • Lessons for follower countries? • Process of changing user profile may be quicker • Process of adoption may vary in three ways

45. Variations 1 and 2 • Leapfrogging of technologies and business models • Eg use of wireless overcome shortage of wireline in China • Adoption truncation • US pattern of tickle down class and education ladder not good guide

46. Variation 3 • Local variation • Internet use affected by • Local physical infrastructure • Eg broadband cheaper in high density urban places like S, HK and ROK • Political, social and cultural constraints • Sex has been big driver of internet in US, not likely in Asia • Business practices • Lack of credit cards in China

47. Types of websites • Static billboards • Dynamic billboards • updated (advantage over print) • Database-driven • interactive • links customers and products • Storefronts • e-commerce - purchase, pay (consume) online

48. Hanson’s approach • Look at Hanson • Comments on website design from SME perspective • More relevant to your major assignment

49. Innovative Applications • Stage I: Publishing sites • Stage II: Databases and Forms • Stage III: Personalization

50. Info Links Pictures/Information http://www.france98.com/french/index.html Stage I: Publishing Site Figure 1.7