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Growth of online shopping in Malaysia

The Internet is a technology which was born in the final years of 20century. It rapidly broke boundaries and helped people around the world to do their works easier and faster. One of the most important and popular facilities which is provided by the Internet is Website.

Website is a World Wide Web address in order to access different kind of information in different place in any time.

Year

Users

Population

% Penetration

Usage Source

2000

3,700,000

24,645,600

15.0 %

ITU

2005

10,040,000

26,500,699

37.9 %

C.I.Almanac

2006

11,016,000

28,294,120

38.9 %

ITU

2007

13,528,200

28,294,120

47.8 %

MCMC

2008

15,868,000

25,274,133

62.8 %

MCMC

2009

16,902,600

25,715,819

65.7 %

ITU

2010

16,902,600

26,160,256

64.6 %

ITU

Table 1.1: the Internet penetration rate in Malaysia. Source: http://www.internetworldstats.com/asia/my.htm

Table 1.1 clears the penetration rate of the Internet in Malaysia. Rapid growth in this rate during the last decade can be good evidence to popularity of this technology in Malaysia. It is estimating that more than half of Malaysian population will be the Internet users.

By looking at table 1.2, which shows the penetration rate of online shopping in Asia Pacific area, the increasing of online shopping is clearly.

Country

Online shopping penetration rate 2007(%)

2010(%)

Online shopping population 2007 (M)

2010 (M)

Australia

67

72.1

10.4

12

China

70

74.8

147.1

480.4

Hong Kong

50

62.5

2.4

3.5

India

47

59.2

28.1

203.1

Japan

83

83.1

72.7

75.1

South Korea

83

88.9

29

33

Singapore

60

67.5

1.5

1.8

Malaysia

43

57.5

3.6

10.5

Table 1.2: Asia pacific Online Shopping Market Outlook. Source: http://malaysiacrunch.blogspot.com/2009/12/asia-pacifics-e-commerce-statistics-at.html

The growth rate for Malaysia online shopping was 43% in 2007, while it is increasing around 12% and reaches the 72.1 % in 2010.

By going to the details, the most popular online companies can be ranked as bellow for Malaysia:

Website

% Reach

Amazon sites

17.7

Apple.com worldwide sites

9.4

Alibaba.com corporation

9.0

Yahoo! Shopping

4.9

Hewlett Packard

4.6

Dell

4.4

American greeting property

4.0

Wareseeker.com

2.9

Zol.com.cn

1.9

Enet.com.cn

1.8

Table 1.3: Malaysian’s top online retail sites. Source: ComScore segment matrix, 2009.

Base on Malaysian crunch announcement, Malaysian people who are interested on online shopping, majority buy airline tickets or make travel reservation through the Internet, are around 55% of users.

Hotel reservation are the next online shopping items in Malaysia with 41% users, and buying computer hardware is in the third ranked with 22%.

 

As a matter of fact, online shopping is a phenomenon that came from the internet growth. Term of online shopping can refer to buy product or service by using the internet and pay online. Using online shopping can cause to create competitive war among companies in order to offer their product online and giving more information about their product or services, providing more secure online paying system, and offering after sales services through the Internet. As an example, Dell Corporation offers all their product and services online and through their website.

The usage of the Internet and Internet application is increasing and it has been one of the popular technologies all over the world. As a matter of fact, these days most of people prefer to stay at home or their office and buy their goods and services rather than going out and search for them and by this way they can save their time and money as well as they will have more options on the Internet. Moreover, because the Internet plays one of the most important roles as a tool for promoting goods and services, online marketing has become a critical and vital means in today’s business and it is employed as the heart of companies. However, companies that employ online marketing in their business have to change their traditional ways. Ghosh (1998) elaborates some new ways of doing business and he mentions that online marketing provides a mechanism for firms to sell their products and services to their customers. Furthermore, Gosh (1998) states this mechanism as ‘disintermediation', ‘pirating the value chain' or in simple language ‘cutting out the middleman'. According to Hunt (1997) satisfaction refers to estimation delivered that experience of product or service at least can satisfy customers. So in order to satisfy customers in online shopping it is necessary to know key success factors in online business and laws of attraction them and change them into the loyal customers. The importance of website in today competitive world is clear, now it is important to find the factors that can affect people and attract them. Many previous studies work on websites quality from different aspects such as content, aesthetic and information. Base on Heldal (2004) study, information and transaction capabilities are two of most important needs of customer when they use a website. Another study which have done by Delone and Malean discuss about the factors that lead to success of an website, they believed that information quality, service quality and system quality will affect online users satisfaction. Factors such as convenience, product characteristics, website design and paying system security were mentioned by Szymenski and Hise (2000) as keys of successful website.

One of the notable researches that have examined customer acceptance of using an ecommerce website is done by Pavlou (2003) which is entitled as “Consumer acceptance of Electronic Commerce Integrating trust and risk with the Technology Acceptance Model”. The researcher in this study tries to combine the constructs of the Technology Acceptance Model with ecommerce issues of technology together to achieve a solid theoretical basis to examine influential and effective driving factors. Pavlou (2003) employed factors such as ease of use, and usefulness with two critical online businesses constructs which were risk and trust. Elsewhere, Levine (1998) found that three major factors of online marketing including flexibility, speed, and responsiveness result in higher level of customer satisfaction.

Although many researchers have examined effective and critical factors that affect customer satisfaction level in online marketing, it is necessary to conduct these researches and examine these factors in Malaysian online markets separately because it is clear that each country has different conditions, people, cultures, and also different beliefs and these differences can influence their satisfaction level. Hence, it is necessary to study each country regarding to its specific situation separately.

Statement of the problem:

By looking through previous researches that have done in customer satisfaction field, it was observed that there is a lack of doing these kind of research as specifically in Malaysia. In order to cope with this problem and increase the customer satisfaction in online marketing in Malaysia, it is necessary to find factors that can influence customer’s behaviors and satisfaction in Malaysia. According to Hunt (1997) satisfaction refers to estimation delivered that experience of product or service at least can satisfy customers. Therefore, in order to satisfy customers in their online shopping, it is necessary to know key success factors in online marketing and laws of attraction them and change them into the loyal customers. The importance of website in today’s competitive economy is clear, now it is important to find the factors that can affect people and attract them. Many previous studies have worked on websites quality from different aspects such as content, aesthetic and information. Based on Heldal’s (2004) study, information and transaction capabilities are two of the most important needs of customers when they use a website. Another study which has been done by Delone and Malean discusses about the factors that lead to success of a website, they believed that information quality, service quality, and system quality will affect online users’ satisfaction. Factors such as convenience, product characteristics, website design and paying system security were mentioned by Szymenski and Hise (2000) as keys of successful website. In spite of the fact that researches have done a lot of works in order to find effective factors on customer satisfaction in online marketing, however, it is necessary to do these kinds of researches in Malaysia because each country and their people have different cultures and beliefs, these beliefs may affect their way of using technology. Hence, it is necessary to clarify customer satisfaction in online marketing in each country separately. Moreover, only a very small portion of all researches that have been done all over the world have been allocated to Malaysian Internet. It is clear that researchers around the world work on satisfaction factors. However, still there is a gap between satisfaction level and its related factors in Malaysia. Additionally to the previous researches, some other factors were examined during robust of e-business. Factors such as convenience, merchandising (product offering and product information), site design and financial security were tested in a study by Szymanski Hise, (2000). They found that factors included website design; financial security and convenience have great significant effects on customer satisfaction level. Product offering did not have any effects on this level, but information has effect on customer satisfaction but it is not very significant. The past research of Smith and Rupp (2003), Kotler et al., (2002), Anderson and Srinivasan (2003) and others showed that there are some other factors like online branding, customization and commitment that also influence customer satisfaction. Previous studies offer general aspects of customer satisfaction level and they did not go through specific sector. This gap is more obvious in Malaysian Studies. Hence, this research’s aim is finding and examining the factors that can influence customer’s satisfaction of online marketing services of Malaysia.

Research objective:

Base on previous discussion, the aim of this paper is finding the factors can affect the customer satisfaction in online marketing in Malaysia and their relationship with customer satisfaction. It is clear this paper will be useful for companies’ website holder, who must design companies’ website base on customers’ needs and priority. The objective of this paper will be finding the effect of factors such as website design, trust, customization, and information quality in level of customer satisfaction in Malaysia.

Research Question:

So the research questions of this study will be defined as bellow:

Is there any positive relation between design of website and their online users’ satisfaction?

Is there any positive relationship between website customization and their customer satisfaction?

Is there any positive relationship between information quality of online marketing and customer satisfaction?

Is there any positive relationship between Trust and customer satisfaction in online websites?

Is customization a critical factor that affects customer satisfaction in online marketing systems in Malaysia?

Is website design a critical factor that affects customer satisfaction in online marketing?

Is information quality a critical factor that affects customer satisfaction in online marketing?

Is trust a critical factor that affects customer satisfaction in online marketing?

In order to answer these questions, it is necessary to look at factors that will affect satisfaction level in Malaysian online marketing. Website design, customization, quality of information, and trust, are items which this research will try to examine them in satisfaction level.

Scope of the Study:

In order to achieve the best results samples of this paper must be selected from Malaysian residences who use online shopping regularly, and buy most their needs thorough online website. It means they search all websites in order to find their favorite products or services , this cause that they will be familiar with most website that try to attract people online, and change these customers to regular loyal one. Survey on Malaysian perspectives in online marketing needs to cooperate of local respondents. Universities students are the best samples for this kind of researches. These students have qualification to use the Internet; besides, they access to the Internet facilities more than others. Furthermore, time is the important fact that cause student to use online shopping. Doing transaction online instead of going to the physical stores, leads to increase students interest to use Internet as communication channel. University of Malaya (UM), Multi Media University (MMU), UCSI and University Technology Malaysia (UTM) were universities which took part in this research.

Significance of the Study:

In today’s competitive world, companies monitor people’s needs and trends to meet their customers’ needs and expectations and they know that in these days people prefer to stay at home and browse the Internet to find the products and services that they need instead of going out and search in shopping malls and outlets. Moreover, they can compare different products, find the best price, negotiate with many suppliers, and find others’ comments about it easily by the Internet. Hence, it is more profitable and convenience to find their products by this way and buy it from websites.

The results of this study can be leverage for companies which have business in Malaysia. By using the finding of this paper they can track success factors in online marketing and improve their websites base on today’s customer needs. It is clear that this study will be ranked as the some of the first researches in Malaysia in this topic. In today’s competitive and fast growing online marketing industry, companies try to offer their products and services online and expand their market share and also the whole market as well. Moreover, Internet penetration which is increasing so fast is providing an opportunity for companies to take in more online customers and the interesting thing is that by going online they can decrease their operation costs as well. Therefore, online marketing is a very important and vital service that they can offer to their customers.

As a matter of fact, customers’ satisfaction surveys are used by many e-commerce organizations to examine their customers’ satisfaction level and their expectations as well. And usually it is done through focus groups and feedback forms. Some of these organizations give this information to contractors to compile and analyze them and interpret the results. And others buy commercial softwares and applications to measure satisfaction level by employing a standard methodology across multiple websites on the Internet. By these ways, companies can measure their customer’s satisfaction level and spend a lot of their budget to increase it.

This finding of this study can be a guideline for online marketing companies that how they can attract online customers and how the level of customer satisfaction are increased. Besides, most of the customers have sufficient knowledge about computer and internet. They also check and read email regularly since they feel comfortable to interact with others via online. Thus, it provides a valuable hint to online marketers to send daily or monthly newsletter to customers so that they will be updated with latest information. Meanwhile, it is a guideline for the managerial implication of online decision making plays a vital role. Customer can make effective online decision and it increases their productivity of customers. Because, by using internet customers can take decision easily, quickly and change their decision frequently.

Malaysia is a developing country, they need to learn and employ developed countries’ knowledge and experience to eliminate their weaknesses and improve their strengths. On the other hand, domestic companies know the culture, taste, and needs of their people better than others and foreign ones need to recognize these factors and apply them to expand their market share. Hence, this research by recognizing the critical success factors of online marketing and compare them try to combine those key success factors to provide a comprehensive guideline for corporation which work in Malaysia to satisfy their Malaysian online marketing users.

1.8 Summary and Organization of the Remaining Chapters:

The main part of the dissertation is divided into five Chapters, which will be briefly introduced:

Chapter1: Introduction

The introduction section a projects a brief overview of the study is provided.

Chapter 2: Literature Review

In this section, selected academic literature related to customer satisfaction and the factors which affect the level of customer satisfaction in online marketing will be explored. Then framework and steps to developing the hypothesis are discussed.

Chapter 3: Methodology

Framework and steps to developing the hypothesis are discussed in this chapter. The methodology section critically examines a range of research approaches and techniques. Sample and the size of samples, also one of the most important for the study, finding the local sample that are the users of online shopping. The research technique that is selected for this study is multiple regression.

Chapter 4: Analysis and Results

In the analytical section, the research findings are explained briefly according to the data collection and analysis.

Chapter5: Discussion

In discussion section the further interpretation and explanation the findings is provided and comparisons is made between the findings with other literature in the area of the study. Then the findings are summarized; recommendations for future research and the practicing manager are made.


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