Marketing - the impact of the internet.

Gareth Craven 2003

Marketing

Assignment 1

Introduction

The Internet is an open interconnection of computer networks that enables the computers and the programs they run to communicate directly. There are many small-scale, controlled-access “enterprise internets”, but the term is usually applied to the global, publicly accessible network, called simply the Internet or Net. By early 2000, more than 100,000 networks and around 100 million users were connected via the Internet.

I am a member of a small group, employed by a marketing consultancy, which has been assigned to research how marketing has to respond to the challenges of the new millennium.

My tasks focus on where and how marketing will need to apply its attention during the 21st century.

Task 1

In this section I will describe how the increased use of the internet has impacted on marketing activities.

Marketing concentrates on the buyers, or consumers, determining their needs and wants, educating them with regard to the availability of products and to important product features, developing strategies to persuade them to buy, and, finally, enhancing their satisfaction with a purchase.

In order to develop a line effectively, market research is conducted to study consumer behaviour. Changing attitudes and modes of living directly affect the demand for products. For example, the trend towards informal dress has changed clothing styles dramatically. Market research involves the use of surveys, tests, and statistical studies to analyse consumer trends and to forecast the size and location of markets for specific products or services.

The internet can have a huge affect on market research due to the fact that the majority of the world’s population is ‘on-line’. This is very good for market researchers as there are all kinds of different people that have access to the internet such as different age groups, different races etc. So when targeting certain groups gaining access to these groups can be a lot faster compared to traditional means of research such as statistical studies or surveys would have probably been carried out face to face with a clip board and a list of questions.

But now with the internet marketing researchers can gain access to their chosen target area a lot easier, an example of this is; if you are a member of Hotamil.com (E-mail database) you are required to fill a registration form in including certain personal information about your self such as age, gender and location etc. Once this information has been subjected you become part of an immense data-base that only authorised parties can gain access. So marketing researchers can gain information through this example I have given, but this is just one and there are literally millions of other forms to gain information on ‘The Information Highway’.

The life cycles of products require careful study. Virtually all product ideas lose in time the attraction that initially drew people to buy them. Manufacturers may also accelerate the obsolescence of a product by introducing new, more desirable products or versions of the existing product. Consumers today expect product innovations and tend to react favourably to new features. This has an important bearing on the usable life deliberately designed into a product. Competition between manufacturers of similar products naturally accelerates the speed of changes made in those products.

So speed is of the essence for research and development of the product so that a company can stay ahead of or even keep up with the competition in its own industry. I believe that the internet has been a catalyst for this whole process. As I said in an example above, the trend for informal dress has grown immensely with an ever expanding materialistic world within the young community; no body wants to be ‘uncool’. So companies can use the internet to get at its target groups a lot easier than before, as most companies now have a web site, when you have bought there product there will be some kind of message asking you to visit their web page. Once and if you visit this page they will request for you to become part of their data base, so you fill in a few personal details and give them your E-mail address and in return they say they will send you information on all new products before the general public get to know about it, and all for free. It is basically so that in the future they may send you a small questionnaire or something.

The primary objective of advertising is to pre-sell the product—that is, to convince consumers to purchase an item before they actually see and inspect it, and by posting it on the net it is just another means of putting the product out on public display. Most companies consider this function so important that they allocate extensive budgets and engage specialist advertising agencies to develop their programme of advertising, as it has been said so many times before ‘first impressions last’.

By repeatedly exposing the consumer to a brand name or trademark, to the appearance or package of a ...

This is a preview of the whole essay

By repeatedly exposing the consumer to a brand name or trademark, to the appearance or package of a product, and to special features of an item, advertisers hope to incline consumers towards a particular product. Advertising is most frequently done on television, radio, and billboards or other large displays; in newspapers, magazines, and catalogues; and through direct mail to consumers.

This can now also be done at a much faster pace over the internet, as all it takes is a click of a button. It can also seriously reduce costs by sending information over the net rather than direct mail as there are the costs of printing, packaging and posting of catalogues. An example of a clothes company that does this is M and M sports, who offer extensive bargains on sports clothing and equipment, they have a web site that has their catalogue of goods on show and after viewing the items you can even order and pay over the internet with no troubles or waiting on the telephone for ten minutes waiting for someone to answer and take your order. It is just generally all round a lot more efficient if companies such as M and M operate on a national or even an international scale.

Task 2

As we move into the 21st century competition in the retail world is becoming ever more competitive, this is mainly due to consumers having more purchasing power this is mainly due to more disposable income. With this extra money people like to treat themselves on non necessities such as more expensive cars and holidays etc. So when purchasing more necessity items such as groceries the public wish to spend as least as possible.

A great example of a company that acts in a very 21st century manner is Tesco. When I say a 21st century manner I mean that companies are becoming ever more customer focused and put the needs and wants of the consumer at the centre of attention, ‘the customer is king’.

Tesco boast, ‘we lead the way in giving customers the products they want at the best possible value’. Straight away that tells me that Tesco tries to attract its customers and keep existing customers by their very competitive prices compared to most other companies already in the industry. This also emphasises my point I made in the above about extra disposable income, being that society in general wish to spend as least as they possibly can for the best possible value of necessities and this is exactly what Tesco are trying to project as their main sales promotion objective.

Other such objectives would be schemes like;

Reward loyal customers, a company such as Tesco can do this with promotional schemes e.g. every time you spend x amount of money on groceries in Tesco you receive a discount of a certain amount off of your petrol in a Tesco petrol station. It has also been known that when rewarding loyal customers to give rewards cards but this form of rewarding has slowly disappeared recently. By building up loyalty with a customer some companies have tried to build up a database with customers just to try and gain a little more customer loyalty.
Lock customers into loyalty programmes, this is just to get the customer to keep on coming back and make a repeat purchase. This is to block out a competitor, Tesco’s may go about doing this by offering incentives to stock up by offering ‘2 for the price of 1’ deals. This may however have negative impacts as the consumer may be stocked up and may not come back for a few weeks but ultimately Tesco are achieving their goal by stopping the consumer going to competitors.
Exhibit new facilities, Tesco’s are always trying to improve their stores so that they are customer friendly, an example of this was the child spaces for parents that have to bring young children to do the weekly shop and moving sweets away from the counters so the parents don’t have nagging children asking them for sweets while paying at the counter.
Diseasonalise seasonal sales, e.g. Ice cream, soft drinks etc. All these summer products are generally made cheaper in the winter. This is just another point to illustrate that Tesco make products cheaper to keep the customer making a repeat purchase throughout the year, not just seasonally.

Once supermarkets have locked customers into some form of loyalty they still keep the customers interest very much at the centre of attention and will try and please them in every form possible that is within their control. This may include just general appearance of the stores, whereas before the interior of the stores were very displeasing to the eye they have changed the colours and lay out of the store to something that is just simply more welcoming and comfortable to shop, this is to entice the customer to spend more time in the store i.e. spend more money. The big companies such as Tesco also spend a lot of time in training their staff so they are a lot more efficient carrying out tasks and generally more pleasing with customers, rudeness will not be tolerated.

Ultimately Tesco is searching for complete customer satisfaction and they will do this as best and as economically as they can. They wish to do this to establish themselves and be known as a Company that offers groceries at very competitive rates. By achieving this they gain a bigger market share and then are able to expand to further pastures.

Task 3

In this section I will do a macro and micro analysis on British Airways as I believe this company is extremely relevant for this question.

I think that this is a relevant example as many of the PESTEL factors can affect the Aviation industry, a tragic example is September 11 possibly the worst day in aviation history. On September 11th terrorists hijack two United Airlines and two American Airlines flights, crashing two of the aircraft into the World Trade Centre’s twin towers in New York, and a third into the Pentagon in Washington. The fourth aircraft crashes in woodland in Pennsylvania. No British Airways aircraft were directly involved, although 22 aircraft were diverted. More than 4,000 people were killed.

Now although no British Airways (BA) planes were involved in this tragedy it did have a huge knock on effect on the industry as a whole because people became extremely precarious about flying and the Commercial air transportation became very un-stable. The immediate affects were that all flights were cancelled for the next few days in case of a repeat of events. This is an external and uncontrollable factor that the company could not control; this can be assessed in a macro analysis which is listed below.

Situation Analysis

Political

British Airways had to revise its menu plans following the outbreak of foot and mouth disease in the UK. British Airways confirmed that due to a huge majority of its customers coming from different parts of the world, that there were many complaints from customers that were extremely worried about the British Beef still being on the menu, so they were left with no choice than to remove it from the menu.

A campaign designed to bring back traffic after the Gulf War is spearheaded by "The World's Biggest Offer" to give away free every seat on international services on 23 April. This was to get people/society back in the air due to people being scared of flying because of the of the Gulf war.

Economic

In February 1987 trading in British Airways shares begins on 11 February.

In 2000 British Airways announces its e-business strategy, comprising e-Commerce, e-Working, e-Procurement and e-Ventures. E-procurement is targeted to increase on-line purchasing in the UK from 25 per cent to 80 per cent by March 2002, saving more than £175 million on the airline’s £3.7 billion a year purchasing spend. E-Working will transform the way the company carries out its business internally. E-Ventures include three new on-line ventures, in which up to £100 million of investment is planned over the next two years. These are an on-line travel agency; a lifestyle portal; and a significant expansion of the on-line activities of Air Miles.

Sociological

February British Airways send an emergency relief flight to transport aid workers and more than 36 tons of vital supplies to victims of the Gurjurat earthquake disaster.

British Airways pledges to take part in DVT research, alongside the World Health organisation

A campaign designed to bring back traffic after the Gulf War is spearheaded by "The World's Biggest Offer" to give away free every seat on international services on 23 April.

The airline announces in September that Rolls-Royce has won the contract to supply the engines to power the new Boeing 777s. This means plenty more investment into British industry especially one such as Rolls-Royce who employs quite a vast amount of British workers.

Technological

British Airways begins modifying its Concords, with the hope of resuming services later in the year. £17 million will be spent on safety-related modifications and £14 million on upgrading the onboard product.

Effectiveness for the new Club World seat which turns into a six foot fully flat bed. The award was given in recognition of how the product had revolutionised business travel. The seat also won the best consumer product award. This lead to many other leading airlines to copy this idea, as they thought that it was quite a revolutionary idea and would attract a lot more customers who wish to fly first class.

British Airways announces a £500 million three-year plan to revolutionise air travel. The programme kicks off with the re-launch of Club World and Executive Club frequent flyer programme. A completely new First Class service, renamed ‘First’, was launched in the winter off 2000, with every other cabin then following suit, another scheme to attract more custom.

Environmental

There is a no flying rule during certain hours, such as in London so that local residents are not severely disturbed by the noise of aircraft engines. This also leads to less air pollution as flights are not continuing all day. This can have an affect on business for BA as these are dead hours that they could be trading in so they lose out in Billions every year due to not being able to take off and land in British airports as much during the night. Also cabin lights must also be turned off during the night’s darkness when aircraft are operating so that they do not disturb local residents.

Legal

Lots of legal formalities imposed after the September 11th such as a step up in company security was mandatory.

There are also many other laws and legislations that Airlines must abide by such as provision and use of work equipment regulations, such as the pilots must have the necessary requirements to take charge of the planes. Also that the plains have met the necessary requirements so that they are able to fly. The staffs are trained in all of the essential scenarios in case of emergency etc.

All of what I have noted above is all external factors to the Airline that they have no control over and they stipulate the way in which the airline is run. Below are some internal factors which I have presented as a SWOT analysis which can also be known as a micro analysis. These are all factors that can be controlled internally by the company.

SWOT Analysis

Internal strengths

British Airways is the world's biggest international airline, carrying more passengers from one country to another than any of its competitors. It is one of the world’s longest established airlines too, and has always been regarded as an industry-leader.
Last year, more than 48 million people chose to fly on the 529, 807 flights that it operated. That’s the equivalent of 80 passengers checking in every minute around the clock, and a British Airways flight taking off or landing every 30 seconds.

Internal weaknesses

While British Airways is the world’s largest international airline, because its US competitors carry so many passengers on domestic flights, it is the fifth biggest in overall passenger carryings (in terms of revenue passenger kilometres).

After September 11th BA had to cut its scheduled flights by 10% and had to lose 7’000 members of its staff to make up for the losses it made over that period.

External opportunities

British Airways is one of the founding partners of the oneworld alliance, which took off in February 1999. Fellow members now include American Airlines, Aer Lingus, Cathay Pacific, Finnair, Iberia, LanChile and Qantas. They introduced their joint services and benefits in February, under the banner "oneworld revolves around you", with the aim of making travel to more place around the world easier and better value.

Besides oneworld, British Airways has one-on-one relationships with a number of airlines. It owns a 25 per cent stake in Qantas and 9 per cent in Iberia. It counts among its subsidiaries the second-force German airline Deutsche BA, and UK regional airlines CityFlyer Express and Brymon Airways, both of which operate in British Airways’ colours under franchise arrangements.

Other members of British Airways’ franchise family include BASE, British Mediterranean Airways, British Airways Regional, Brymon Airways (wholly owned subsidiary), City Flyer (wholly owned subsidiary), Comair, GB Airways, Loganair, Maersk Air, and Sun Air. These franchise airlines operate some 115 aircraft to around 112 destinations - 68 of them not served by British Airways itself - carrying 7.6 million passengers on 212,000 flights last year.

British Airways also "code-shares" with a number of other airlines - including America West, Crossair of Switzerland, Middle East-based Emirates, Malev, of Hungary, and Poland’s LOT.

These various "alliance" arrangements enable British Airways to offer passengers smoother travel to more places, with any one airline unable to fly every single route worldwide for financial and regulatory reasons. Through oneworld and its other alliances, British Airways can offer passengers seamless flights to some 600 destinations in more than 130 countries worldwide.

External Threats

Since the September 11th tragedy there has been further more threats for the same to happen again. So to insure this does not happen, security levels must be kept extremely high to cancel this out otherwise there could be another scenario similar to the one after the Gulf War when people became very scared to fly and airlines made huge losses.

Another external threat would be recession. If recession hits the UK or any of the countries that BA operate from this could have a knock on affect for the airway as individuals will be looking to save money and in that case will not be looking to taking holidays i.e. flying off to places.

Competition is a threat for British Airways as well as it always is but as it prides itself as the airline that takes great pride in delivering the highest levels of innovative customer service. In January 2000, it unveiled £600 million worth of new customer services and products, to be introduced during the subsequent two years. This is the biggest investment of its kind in airline history. I don’t think that competition is a major problem for BA as it is the pioneer of Aviation services.

Conclusion

Marketing is an essential key element to any successful business and therefore research and development are also key factors behind this. Once the company has established itself within the industry it then goes on to try and keep up and become original and innovative in order to keep up with competition. It must also project a very positive image in order to obtain good PR, ultimately leading to extensive profit margins if this is achieved.

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