Chapter One: Introduction

1.1 Background

The term E-business is today's popular form of business by using old business models with the interaction of technology and gaining the most out of customer value and profits which is the future way of doing business. In E-business as like bubbles are bursting there is constant threats about security, but e-business is increasing to a whole new level, and will most likely keep doing so in the near future.

In the latest years Internet has proved as a very important marketing tool. By the use of the Internet the companies have developed relationships with the customers by using different systems in promotion and sales. So the inception of Internet has had effect on the way the individuals and organizations communicate around the world (Doole and Lowe, 2004). Briefly, in the last years marketing has gone online taking advantage of the market opportunities.

The estimates regarding the amount of business conducted electronically vary widely, but it is clear electronic business and electronic commerce have gained tremendous momentum worldwide over the past decade. Much media attention was given to the dot-com boom, but has since waned following the dot-com bust and economic downturn of the early 2000s. Despite the dot-com bust, it is clear many successful electronic businesses will evolve and thrive for many years, e.g., eBay and Ocado.

Nonetheless, E-business sector has become an increasingly competitive and dynamic business environment within the past decade. Consumers perceive firms having a web site as more customer-oriented, responsive, informative, high-tech, sophisticated, and likely to stay in business longer (Griffith et al., 1998). These discerning and demanding consumers have led many innovative organizations to look for appropriate marketing strategy on the internet marketplace with the aim of building better business position; on the one hand value into service offerings, satisfying and maintaining loyal customer and on the other hand effectively making strategic decisions thereby increasing the overall business performance. The ability to retain and lock-in customers in the face of competition is a major concern for online businesses, especially those that invest heavily in advertising and customer acquisition stares. However, creation of loyal and a satisfied customer base is an important determinant of marketing success. Research shows that loyal customers buy more of company’s product, they are cheaper to serve, less sensitive to price and brings in more customers by word of mouth (Reichheld, 1996). Therefore, developing, managing and maintaining loyal marketing relationship of the internet market place for instance is harmonious to how well you are marketing. Thus knowing how well you are marketing as a firm and making innovative marketing strategy to perform better in future which is required and inevitable in such a marketplace as the internet.

Obviously, decision making is essential about organization strategy to determine the future direction (Johnson & Scholes, 1997). The prime function of management is perhaps to make the right strategic decisions. According to Johnson & Scholes, (1997) strategic or long-term decisions are concerned with an organization's overall objectives. Such corporate decisions include major capital investments, sources of finance, and product and market choices. Practically, the long-term directions are affected by strategic decisions of an organisation and are generally about attempting to complete some benefit for the company. Therefore, with the range of a company’s action are likely to be affected: Does (and should) the company focus on one area of action, or does it have many? The issue of range of action is fundamental to strategic performance (Johnson & Scholes, 1997).

In marketing strategy pricing is one of the most talked about but least understood of all the key marketing levers (DiCamillo 1996). Price is also the easiest of the marketing mix variables to manipulate and can be done so very quickly (Guiltinan and Paul 1985). The proliferation of e-commerce has already had a significant impact on how and where consumers shop. It also has the potential to make dramatic changes in the way goods are priced and how purchase decisions are made. In Internet shopping the cost (in both time and money) of comparison shopping is drastically decreased and price is a major element in purchase decision. A marketing manager strategically sets pricing to achieve the company’s objective.

1.2 Rationale

In e-business innovative marketing strategy change over the life cycle of a firm (Miller and Friesen, 1984) the strategy systems emerge over time, in response to changes in strategic goals, the business environment and the size of the firm. However the question of which marketing strategy is required for achieving to a goal or an objective. In this sense what marketing e-strategy required for? Implicitly, related to the current study by evaluating marketing e-strategy one firm going to make their future crucial decisions to improve their firm’s more in online business. Needless to say, marketing strategies depend upon basis for decision making and reflect the customer's needs as well as the firm's simultaneously. Companies and researches reflects the customer's satisfaction and needs by calculating price, feature, amount, cycle time, effectiveness, output etc., of the products, services, and procedure as long as ways to calculate those things have to be present (Tapinos et al, 2005). What is new and has attracted little attention to some extent is to evaluate marketing e-strategy using decision- making variables and to see the impact on strategic decisions. This clearly shows those not only find the appropriate marketing e-strategy but in order to better control, understand, and improve what firms do and must do.

In this research there are two different cases virtual company; one is basically auction store eBay and another grocery store Ocado. The main reason to select different category companies because both are doing e-business and through this research it’s going to be defining their marketing e-strategies and implementing in the market are approximately same. That’s why this study evaluates two different category virtual stores and compares their marketing e-strategies. Therefore this study goes beyond just required marketing strategy using the internet as a market place but is a bold attempt to evaluate e-strategy using decision making variables and to see the impact on strategic decisions.

1.3 Significant of the Research

The marketing discipline has been showing to different changes and powerful challenges into the business stadium with the induction and dispersion of the online phenomenon. Constantly since this new multimedia surroundings of exchange appeared, many research have been performed about how it will influence the nature and prospect of marketing activities. This research is an attempt to categorize and summarize the literature about online marketing and enlighten the study routes that will contribute to the development of the discipline.

In reality, most firms will need to plan marketing strategies for both traditional or place aspects of the business, and the fast developing electronic or space dimensions of the business (Rayport &; Sviokla, 1994). Both approaches need to be co-ordinated in a cost effective manner whilst providing the customer with an effective and integrated solution. Some research has reported that the early adopters of e-business show a trend towards cost reductions and administrative efficiencies from e-procurement and self service applications used by customers and employees.

By contrast, more mature users focus on strategic advantage and generate this through an evolutionary model of organisational change (Ash and Burn, 2005). Researchers have also recognised the importance of the extension of e-commerce use to small and medium sized businesses in order to realise improvements in efficiency and effectiveness (Hauge et. al, 2004)

Managers need to contemplate their strategic approach to the electronic business opportunity in terms of both internal and external considerations at a particular point in time. Based on recent research (Perrott, 2002), this paper proposes a tentative framework that will assist managers to determine their organisation’s strategic positioning in the electronic arena.

1.4 Aims & Objectives

Aim

To identify what might be appropriate marketing strategies for this new era e-business.

Objectives

  • To review literature on current developments in online marketing strategies.

  • Identify the e-strategies of the cases eBay and Ocado.

  • Review the strengths & weaknesses of e-strategies.

  • Identify immediate competition and implications for the cases eBay and Ocado.

  • How do customers react to the marketing e-strategies?

1.5 Purpose and Research Questions

The purpose of this thesis is to define required innovative marketing strategy of virtual stores using decision-making associated variables sternly to evaluate the impact on strategic marketing decisions.

There are many issues connected to this research problem, but we will only focus on certain aspects and a complete picture will therefore not be provided. The research questions we intend to answer are:

RQ1. What are the objectives for online marketing?

RQ2. How can the online product offer be described?

RQ3. How can the online pricing strategy be described?

RQ4. How is the Web site used as a communication, promotion medium, distribution and transaction medium?

RQ5. What influential innovative marketing e-strategy evaluation variables or indicators are associated with strategic marketing decisions in the online marketplace?

1.6 Scope and Limitations

This research will show the continuing progress in digitization and networking that is manifested in the rapid spread of the internet, information about product attributes, marketing strategy and especially in pricing process – which has long been considered a concomitant part of any article placed on the market – is now distributed independently from the product itself.

The growth in digitization has significantly increased a company’s freedom to both combine and diversify products, thereby enabling them to easily produce and offer a wide variety of product versions to their customers. Moreover, progress in networking has substantially increased the speed at which various product-related information can be distributed. At the same time, it has considerably expanded the range over which such information can be disseminated.

This research identifies the major scope and content of the studies about Internet marketing and displays the current state of the discipline. It also enlightens the main avenues or niche routes for future research by clarifying under investigated or unsettled areas. The framework of this review can serve as a skeleton explaining the accumulated state of knowledge about Internet marketing and can be a useful starting point for studies aiming to expand the views about this area further.

The current research has been limited and concentrated on required innovative marketing strategy up to company-level eBay and Ocado. The research is focused on evaluating virtual store marketing strategy for strategic decisions. Consequently, plethora of researchers have measured marketing strategy from diverse perspectives such as the financial perspective, process and supplier’s perspective, employee’s perspective innovation and development perspective.

  • The current study mainly focuses on the customer’s perspective.

  • The primary focus was on the online marketplace industry where the business model is emerging and fast spreading. Further the focal point will be on business to consumers (B2C). The companies studied involve UK firms providing service to UK users. The firms studied are eBay and Ocado.

  • The study was limited to customers or users within London, city in UK.

1.7 Signposting of the Study

Chapter One: Introduction

In order to improve a product or services to satisfy a need of a customer, once have to be able to improve or change it to meet their needs. In order to improve or change it, there is the need to know what the customer desire or want. In order to know and understand it, once have to be required innovative marketing strategy in online market. This first chapter will present the background and rationale behind innovative marketing e-strategy especially in pricing and the impact on strategic decisions in the online marketplace. Further this section will present the issue regarding marketing e-strategy which will lead to the purpose of this study.

Chapter Two: Literature Review

This chapter provides relevant existing theories and models of marketing e-strategy specially pricing in the online market place as well as a model modified by the author. The working model builds upon the presented theories and is used as a foundation for the following analysis.

Chapter Three: Research Methodology & Strategy

In this chapter, the research methodology & strategy is presented. The research approach that has been adopted in order to answer the research questions and to meet the purpose is described and motivated. The research methods used in this work are as well described and discussed.

Chapter Four: Empirical Analysis

In this chapter the results of both the qualitative and quantitative research are presented. The results will follow the outline of the working model. A brief companie's overview are also presented.

Chapter Five: Analysis

In this chapter the analysis and discussion of the empirical data will be presented. The analysis is assessed through the two major issues in the study along with the working model.

Chapter Six: Conclusion

This chapter includes the conclusions of the research as well as reflections for recommendations, a discussion of the limitations and suggestions for further studies.

Chapter Two: Literature Review

2.1 Online Marketing Objectives

Online marketing can be described as a system for selling products and services to target audiences who use the Internet and commercial online services by utilizing online tools and services in a strategic manner consistent with the company’s overall marketing program (Janal, 1997, p. 39). Before going online, the company needs to have a marketing plan that is consistent with the goals and objectives set by the company. It is necessary to decide what the company wants to accomplish by going online (Janal, 1997). Pitt, Berthon and Watson (1996) point out that the objectives for marketing through Web sites vary depending on the company, but that many organizations do not even have clear and quantified objectives for being present on the WWW. Companies must divert from the thinking that even a bad Web site is better than none at all, because without clear objectives it will be hard to make appropriate marketing strategy through the Web site’s effectiveness.

The Web site can be characterized as something of a mix between personal selling and advertising and can move the customer through the six phases of the buying process: need recognition, information processing, develop specifications, search and evaluation, purchase and post-purchase evaluation. By attracting Internet surfers, establish contact with interested surfers, transform some of the interested surfers into interactive customers and keep these customers interactive, the Web site is acting as a mean to push the customer through the buying process. Converting surfers into customers can be considered a six-stage conversion process. The efficiency of the Web site in reaching the marketing communication objectives set for it, as well as in taking the surfer through the six stages of the conversion process, is shown in Table 2.1. (Pitt, Berthon & Watson, 1996)

Even though most companies wish their Web site to generate direct response orders and thereby set marketing communication objectives, there are many other objectives that can be achieved by marketing online (Mathiesen, 1995):

  • Generate direct response orders.

  • Increase brand awareness or corporate image.

  • Gather information about customer preferences to help guide future product development.

  • Improve customer service.

  • Test consumer response to discounts or other special offers.

  • Build a list of prospects for future promotions.

  • Find business partners, dealers, or franchisees for company’s products.

  • Recruit talent members, employees, subscribers, etc.

Table 2.1: A Model of the Conversion Process on the Web

Stages of

the

conversion

process

Marketing

communication

objectives for

each stage

Efficiency effect of the

Web site

Relevant measure

Marketing strategies and tactics

1

Make surfers aware

of the Web site

Awareness efficiency

Aware surfers

Include web site address in all broadcast advertising and publicity, on product packaging, other corporate communication material.

2

Increase the

number of hits by

aware surfers

Locate ability / attract ability

Efficiency

Number of hits aware surfers

Distinguish between passive and active surfers. Passive surfers are those who are not actively seeking the web site, but land on it nonetheless. Attract them through hot links, sponsored Web sites, sponsor web search engines such as Lycos and Yahoo. Active surfers are those actively seeking your Web site. Maximize their likelihood of finding you through multiple sites and names, faster service, speed, high bandwidth

3

Turn hits into visits

Contact efficiency

Number of active

visitors

Number of hits

Make the hit a worthwhile, interesting visit through quality of design. Visual appeal, graphics, sound, video, ease of use.

4

Convert active

visitors into

purchasers

Conversion efficiency

Number of

purchases

Number of active

visitors

Make it easy to establish a dialog. Attend to quality and speed of response. Respond to and explore ways of initiating dialog. Simplicity of ordering process. Alternative modes of ordering.

5

Cause purchasers

to repurchase

Retention efficiency

Number of

Purchases

Number of

repurchase

Ability to update and exploit database.

Purchase satisfaction and extent of feedback.

Update and refresh Web site as frequently as possible. Update customers on their order status.

6

Maximize the overall efficiency of the Web site as a marketing tool

Web site efficiency

Awareness + locatability + contact +

conversion +retention

efficiency/5* (but can be weighted)

Ability to maximize all five Web site efficiency effects.

*An overall average Web site efficiency index, which can be thought of as a summary of the entire process.

Source: Adapted from Pitt, Berthon & Watson, 1996, p. 8

According to Janal (1997), the Internet is the world’s most efficient marketing tool and helps companies disseminate sales and marketing messages, create one-to-one relationships, educate prospects and support existing customers on a worldwide scale. The Internet provides the possibility to deal with customers worldwide that have pre-selected a specific company. Firms can use the Internet to generate revenues by increasing sales to existing customers and by attracting new customers (Peterson, Balasubramanian & Bronnenberg, 1997). The Internet is an important marketing tool because the market prefers the decentralized, open-access environment presented by the WWW for E-commerce (Hoffman & Novak, 1996b).

The Internet possesses unique features making it appropriate for creating close customer relationships (Honeycutt, Flaherty & Benassi, 1998). Janal (1997) proposes that the flexible publishing platforms of the Internet and commercial online services gives the marketer the possibility to establish relationships with the consumers. The relationships are created through online sales, support and service. On the Internet, the customers and the company are interacting with each other and this gives a very intimate selling situation (Janal, 1997).

However, no physical intimidation exists between buyer and seller and no middle parties may interrupt the communication process (Samli, Wills & Herbig, 1997). Quelch and Klein (1996), as well as Sanden (1998) claim that the Internet is not constrained by either location or time. For the millions of individuals connected to the Internet, traditional limitations of time and distance no longer apply. The computer in Sweden or Hong Kong is just as close are the office next door. Messages can be sent to thousands of potential customers simultaneously with one keystroke (Cronin, 1994). Furthermore, the Web site is completely accessible, since it can be read 24 hours a day, 365 days per year (Samli, Wills & Herbig, 1997).

The Web site can be used to create customized sales presentations affecting several senses and appealing to logic and benefits. Consumers can pick the sales presentation and information they want (Janal, 1997). By using a variety of Internet resources, the company can create a customer-oriented environment while obtaining information about customers’ specific interests, responses to new product offerings and feedback on the company’s performance. Additionally, the Internet offers the possibility for online ordering and delivery. Customers logging on to the Internet can continue to receive enhanced support services through the network. (Cronin, 1994)

The Internet provides quick feedback on the effectiveness of marketing activities, enabling performance-based marketing (Burke, 1997). Marketers can test both new product concepts and advertising copy over the Internet for instant feedback. In addition, the Internet permits new types of measurement tools, such as online surveys, bulletin boards, e-mail marketing lists, customer identification systems, advertising measurement and Web visitor tracking. (Quelch & Klein, 1996)

The fact that the Internet is neither time- nor location-bound can have a major impact on costs. Customers do much of the work that would normally be handled by office-clerks or human tellers (Sheth & Sisodia, 1999). According to Sandén (1998), the Internet increases the company’s efficiency. By publishing information on the WWW, the sales process can be improved and thus, the productivity rises considerably. In addition, the time spent to process orders is lowered dramatically. Less errors and facilitated processing has led to substantial time-savings. The automation of various administrative tasks is another reason for the increased efficiency and the possibility to serve a vast amount of customers effectively (Sheth & Sisodia, 1999). Administration costs related to paper-based processes such as postage, printing, and handling, will be reduced. (ibm.com)

The WWW is the least expensive printing press and offers the seller an unlimited amount of space to describe and demonstrate the product range. Add to this the low rent compared to storefront, and it is clear that selling online means low cost of entry (Hoffman & Novak, 1996; Janal, 1997). Jäger and Winberg (1996) underline the cost-effectiveness of the WWW by claiming that the costs are independent of the number of people exposed to the message, as well as how much information that is to be presented. They compare the WWW to a printed catalogue, where the costs are very much depending on these factors. It is proposed that performing direct marketing through the Internet may be one-fourth less costly than through traditional channels. The great segmentation possibilities and the low cost for creating differentiated messages on the WWW are also mentioned. As a conclusion, Jäger and Winberg (1996) point out that the cost-effectiveness for presenting messages on the WWW is depending on whether the target group is on the Web. The success of the campaign in relation to the costs of executing it must also be considered in order to evaluate the cost-effectiveness. By marketing online, the company gains competitive advantages compared to companies who are not online. The Internet also reduces the issues of company size, since consumers only care that they find the product needed at the right price. (Janal, 1997; Sandén, 1998; Sheth & Sisodia, 1999)

2.2 The Online Product Offer

According to Brännback (1997), the focus in marketing automatically changes from physical to informational when uses the Internet. In the traditional marketplace, the idea of the product is physical or tangible and occasionally accompanied by intangible features or services. On the Web site, a picture or description of its features will replace the physical product, and thus, the product becomes informational rather than tangible.

Not all products are suitable for online marketing. Peterson, Balasubramanian & Bronnenberg (1997) categorize products and services along three dimensions that are relevant when discussing the product’s suitability for online marketing. The dimensions are: value proposition, degree of differentiation, and cost and frequency of purchase. Concerning the first dimension, goods can either be low-cost, frequently purchased goods, or high-cost, infrequently purchased goods. The product is more likely to fit internet-based marketing if it is infrequently purchased and expensive. Goods can be classified along the second dimension according to whether they are tangible and physical, or intangible and service related. Online marketing is particularly well suited for certain types of intangible or service related goods. The third dimension reflects to what extent the product is differentiable or not. The Internet is an effective segmentation tool when it comes to products or services that can be subject to differentiation. Peterson, Balasubramanian and Bronnenberg (1997) illustrate the product and service classification grid presented below. (Table 2.2)

Table 2.2: Product and Service Classification Grid

Dimension 1

Dimension 2

Dimension 3

Examples of Products

and Services

Low outlay, frequently

purchased goods

Value proposition

tangible or physical

Differentiation potential high

Wines, soft drinks, cigarettes

Differentiation potential low

Milk, eggs

Value proposition

intangible or informational

Differentiation potential high

Online newspapers and

magazines

Differentiation potential low

Stock market quotes

High outlay, infrequently

purchased goods

Value proposition

tangible or physical

Differentiation potential high

Stereo systems automobiles

Differentiation potential low

Precious metal ingot of known

weight and purity

Value proposition

intangible or informational

Differentiation potential high

Software packages

Differentiation potential low

Automobile financing

insurance

Source: Peterson, Balasubramanian & Bronnenberg, 1997, p. 337

According to Cunningham (1998), the product suitability for the target market is always an important issue, whether marketing by conventional means or via the Internet. However, when going online, there are certain aspects specific to the new business environment on the Internet. The factors that affect the product suitability in international marketplaces in general, as well as when conducting E-commerce are presented below. (Table 2.3)

Table 2.3: Factors Affecting Product Suitability in Internet Marketplaces

Factors

Questions to determine product suitability

Pricing

Is product competitive in local market place?

Competitiveness

How should product be priced and packaged for local market needs?

Language

Is localization required to enter the market?

What will be the cost and scope of translation needed for success?

Market size

Is the market place large enough to warrant the investment?

Internet infrastructure

Are there a suitable number of Internet users to make the transactions happen? (including good connections via ISPs)

Cultural infrastructure

Is E-commerce accepted as a means of doing business?

What is the current rate of E-commerce growth in this market?

Existing distribution systems

Are there current distribution systems in place that will help (or hinder) an E-commerce initiative?

Shipping/fulfilment

How will the product be shipped and delivered to the client?

Support

What local support is required?

Volatility

Is the market volatile? (Either financially or politically)

Source: Cunningham, 1998, p. 23

Wyckoff (1997) argue that media has directed its attention towards online merchants selling books, wine and computers, but that the real winners when it comes to e-commerce are intangibles like travel and ticketing services, software, entertainment and financial services. These types of products can not be physically examined and therefore conventional commerce has no advantage over the E-commerce.

Internet purchases are almost blind, since the customers have no opportunity to test the product before buying it. When selling a product or service online, the customer and the seller rarely speak to each other prior to the placement of the order, and therefore the customer is putting a lot of trust in the seller. Truthfulness and service are expected to a higher degree when purchasing online. In addition, Internet customers are accustomed to obtaining information immediately and therefore expect the same high-speed service for the products they buy. (Jones, 1997)

Online selling can cut product support costs, since support techniques, such as frequently asked questions (FAQ’s), are able to answer most routine questions without human intervention. The FAQ’s have to be updated regularly to give customers fresh information. Other tools that can be used to aid marketers in providing product support are: e-mail and email boxes, and mailbots that answer common questions. To improve customer satisfaction, it is essential to have online service centres open 24 hours a day (Janal, 1997). Providing product support when selling online is important, if the company wish to maintain a good reputation and promote the company internationally. For businesses selling tangible products, handling product support online may be more difficult than for businesses offering intangible products. (Jones, 1997)

To be able to provide complete and relevant product information is crucial in order to satisfy the customer’s needs and make the product offer attractive. Even though various types of product support can be provided on the Internet, the lack of the human factor will always be an issue. Many companies selling online do so in order to replace expensive human labour with computerized assistants, but this is at the expense of product support. The Internet shop has no human agent to clarify or interpret product information, respond to specific questions or help in solving specific customer problems directly. (Burke, 1997)

The Internet enables companies to adapt their products to local needs and preferences more easily and inexpensively. In addition, niche products should be able to find the necessary critical mass of consumers’ worldwide (Quelch & Klein, 1996; Wyckoff, 1997). According to Kiely (1996), companies that market niche products will gain from the interactive selling situation provided by the WWW. This because technology makes it possible to communicate quality and brand information more easily.

2.3 Web Marketing Strategy

When any organization realizes the benefits of Internet marketing then it is needed for the company for developing well-planned and appropriate structured approach for internet marketing. In Internet marketing for managing online channels company will face a lot of risks when they use ad-hoc approach and do not use strategic approach. Some common problems that have seen in companies are:

  1. If the responsibilities for many different activities in online marketing are not clear.

  2. Company do not set any specific objective for online marketing;

  3. Company allocate the budget which is not sufficient for online services which is underestimating customer demand and then competitors companies get potential market share by providing better online services;

  4. When in online marketing different parts of the company experiment by using different suppliers or tools do not gaining economies of scale then company budget become wasted;

  5. Until online is showed as just another way of market, without reviewing opportunities for improving offer and differentiating online services, new internet value propositions are not developed for customers.

  6. If online marketing results are not measured or reviewed adequately, then for improving effectiveness actions cannot be taken by company.

  7. For poor integration e-communications company use an experimental rather than planned approach between online and offline marketing communications.

The integration of an internet marketing strategy into business and marketing strategies represents a significant challenge for many organisations, in part because they may have traditionally considered the internet in isolation and in part because of the profound implications of the internet for change at an industry level and within organisations. The challenges of Internet marketing strategy highlighted by E-consultancy (2005) research. The E-consultancy (2005) research involved companies e-commerce managers which companies’ have online business – suppose Bradford and Bingley, Barclays, and Lloyds TSB for financial services; MyTravel and Tui for travel; The Carphone Warehouse, O2, and Orange for mobile phones; and BCA for direct marking. To gain sufficient resource for Internet marketing what main challenges were which were asked to respondents and these highlighted the issues. E-consultancy (2005) surveyed and showed that around one third did not have a plan. Following figure is astonishing low because advanced E-commerce companies involved only.

Source: E-consultancy (2005)

Challenges included:

  • Achieving buy-in and budget reliable with spectators media utilization and value generated;

  • Contradiction of vendor ship and tensions between online marketing team and usual marketing team suppose IT and finance/senior management;

  • Harmonization with different channels in combination with groups administration marketing curriculum to another place in the business;

  • Overseeing and incorporating customer records about characteristics and performance collected online;

  • Gaining integrated information / analysis / achievement all over the business;

  • Organizing the professional online group and incorporating into the company by altering accountabilities to another place in the company;

  • In-sourcing vs. outsourcing internet marketing strategy, i.e. Explore, affiliate, email marketing, PR;

  • Human resources recruitment and retention

In following figure suggested a process for increasing and executing an internet marketing which is based of plan definition in a broad range of organization. This figure indicates the main performance and their reliance which are involved for creation of a distinctive online marketing.

2.4 The Online Pricing Strategy

Pricing on the Internet has attracted much research attention (e.g., Bakos 1997; Baye and Morgan 2001, 2004; Brynjolfsson and Smith 2000; Clemons, Hann and Hitt 2002; Degeratu, Rangaswamy and Wu 2000; Erevelles, Rolland and Srinivasan 2001; Ratchford, Pan and Shankar 2003; Shankar, Rangaswamy and Pusateri 2001; Smith, Bailey and Brynjolfsson 2000; Smith and Brynjolfsson 2001). In general, developing pricing strategies for online selling is no more complex than doing it in other environments. However, the impact of price transparency is of major concern to companies that are selling online. Once a price is shown on the Web site, it will be visible in all markets worldwide and it is therefore hard to justify price differences in different markets. (Cunningham, 1998)

According to Peterson, Balasubramanian & Bronnenberg (1997), Internet-related marketing can lead to intense price-competition if the products or services are too standardized and difficult to differentiate. On the Internet, buyers and sellers can gain access to almost complete information on prices. Internet users can easily track down the cheapest price or have software tools do this for them (Hagel & Armstrong, 1997). The fact that customers can search for the lowest price will generate downward pressure on prices, which is believed to lead to general price deflation (oecd.org). In a normal marketplace, companies acting under such conditions would most likely set prices according to marginal costs and make sure that no company can make positive profits because of price competition. However, when marketing online, all companies are depending on each other and interacting and such destructive pricing behaviour would thus negatively affect the company (Peterson, Balasubramanian & Bronnenberg, 1997). According to Sandén (1998), price transparency has a impact on the price structure, but it does not necessarily lead to lower or more levelled prices.

Quelch and Klein (1996) state that advances in Web browsers will facilitate rapid, frequent price changes and levels of price differentiation in a more refined way than alternative, traditional media. On the Internet, prices can be customized even at the level of the individual customer. This customization of information and price is instantaneous across borders. Customers online can easily and rapidly check and compare prices between different companies and quickly become aware of price discrimination. If a visitor is classified as a price-sensitive shopper, he or she may be offered a lower price compared to someone less price-sensitive. On the other hand, Quelch and Klein (1996) also suggest that due to smart agents and software programs can uncover different prices, the price discrimination will be combated. As a result, an increased standardization of prices will occur.

Companies can use the Internet to experiment with different price levels to test how price affects sales volume (Hagel & Armstrong, 1997). The Internet has made it possible for companies to collect detailed data about the buying habits and preferences of customers, and this even goes as far as checking their spending limits. As a result, the price of the product can be specifically tailored and the marketplace becomes more efficient. (Cortese & Stepanek, 1998)

Bill Gates has predicted that in the future, the web sites will have the capacity to recognize individual consumers, remember what they paid for products previously and charge the consumers a customized price based on that information. (Woolley, 1998)

Companies using a high-price strategy are probably the most affected when marketing online. To be able to keep the high prices, the companies must be ready to justify the price differential by effectively communicating the product advantages and benefits (Hagel & Armstrong, 1997). Since consumers that visit the company Web site can easily compare prices and features to other offers, some high-margin products could drop in price. A strong brand name may not be sufficient to charge a high price and some branded products may even become substitutes to each other. (Cortese & Stepanek, 1998)

2.5 Dynamic Pricing Strategies

Kannan and Kopalle (2001) provide taxonomy for e-commerce dynamic pricing strategies. They describe three high-level categories: posted price, auction pricing, and bundle pricing. Posted price includes both dynamic price updating and the use of e-coupons. Dynamic price updating simply involves the periodic update of a posted, fixed, and non-negotiable price. The Internet permits these updates to happen more frequently and at less cost than in traditional markets. E-coupons are electronic coupons that reduce posted prices and can vary over time and across customers. Auction pricing includes traditional auctions (e.g., eBay) as well as reverse auctions (e.g., Priceline) and exchange pricing (e.g., financial and commodity markets). Bundle pricing has two variations. The first is a volume discount, which could be earned by an individual consumer purchasing a large quantity or by a group of consumers bundling their demand and buying together. The second variation involves changes in price for an item dependent on what other items are purchased. All of these dynamic pricing schemes are important to the future of electronic markets, but this research is focused on dynamic posted price updating. As Pedersen (2000) notes, the Internet facilitates dynamic posted pricing by decreasing menu costs—the cost associated with changing prices. Virtual stores can change their price in one place for customers worldwide. Cortese (1998) makes the same assertion, noting that streamlined networks can reduce menu cost and time to nearly zero, even for companies with large product lines.

Varian (1980) develops a model for dynamic pricing designed to mimic price behaviour in markets where items are periodically put on sale. He proposes a market model for both informed and uninformed consumers. Informed shoppers compare prices and buy at the lowest available price. Uninformed shoppers merely pick one retailer and purchase blindly. The pricing model he suggests has sellers drawing prices at random from a price density function. The seller who sets the lowest price in the market gets the business of all informed customers and the uninformed customers who choose him. Other sellers are limited to selling to only those uninformed customers who choose them. Varian makes a series of mathematical propositions about this model and concludes that sellers may find it in their interest to randomize prices in the interest of price discriminating between informed and uninformed customers. The Varian model is not a dynamic pricing strategy, but is useful for modelling the behaviour of sellers who change their prices. Deck and Wilson (2003) simulate a market where there is a mix of informed and uninformed buyers. They, however, go a step beyond Varian (1980) by utilizing three types of buyers. One is uninformed, but there are two levels of informed—those who shop at two sellers and those who shop at all sellers. The level of comparison shopping is fixed throughout the study. They also utilize different pricing strategies from the randomized model proposed by Varian—they focus on undercutting, low-price matching, and trigger pricing. The undercut strategy simply involves setting a price for the next period that is lower than the lowest price observed in the prior period. Low-price matching involves querying currently available prices in the market and setting a price equal to the current minimum. A seller employs a trigger strategy by setting a current price along with a trigger value and associated potential new price. If the lowest price observed in the market is less than or equal to the trigger, a change to the new price is made.

Deck and Wilson (2003) carry out an experiment with computerized buyers and human subject sellers to investigate the strategies described above. A manual strategy where the subjects were free to set prices at their own discretion is also studied—a simulation where this was the only available strategy is used as the baseline treatment. Other treatments give subjects a choice between manual pricing and pricing utilizing one of the automated strategies. Throughout the experiment, sellers receive feedback in the form of competitors’ prices. Four findings are described:

1. When sellers are allowed to set prices manually, the resulting distribution of prices is very similar to the theoretical Nash equilibrium, but with lower profits

2. Subject sellers use automated pricing strategies more often than they use manual pricing.

3. The undercut algorithm leads to median prices equivalent to the baseline. The low-price matching algorithm increases median prices above baseline. Trigger pricing leads to median market prices below those of the baseline.

4. Greater commitment to low-price matching shifts prices closer to the joint profit-maximizing outcome.

It is important to note that while Deck and Wilson (2003) make several conclusions in terms of the strategies studied, the data collected were not purely a result of the strategy employed. The data were also a result of decisions made by the human subjects—decisions of whether to adopt strategies and how to parameterize them. For each strategy treatment human decision makers had the option of employing the designated strategy or utilizing the baseline, non-algorithmic pricing method (i.e., manual pricing). The strategies were not universally adopted by subjects. In fact, the average adoption rate was as low as 62.5% (for low price matching) and as high as 81% (for trigger). Consequently, the competition for each strategy studied was variable (i.e., the low price match subjects competed with manual pricing more often than the trigger subjects did). Stricter control on seller behaviour would allow for stronger conclusions about the relative performance of the pricing strategies. Deck and Wilson (2002) also study varying implementations of a low-price match (LPM) strategy. Similar to the study above, they simulate a marketplace with computerized buyers and human subject sellers. Their study is a 2x2 factorial experiment where one factor is LPM vs. no LPM and the other factor is the level of customer search. For the no LPM condition, all four sellers submit a schedule of prices on which they prescribe prices depending on how many sellers a buyer had visited prior to inquiring about their price. The LPM treatment gives sellers the option of utilizing the no LPM price setting method or employing an LPM strategy. LPM consists of setting a price to be used if the seller is visited first. If they are not first, their price is set equal to the lowest of the prices that buyer has already observed. The customer search factor is used to manipulate the level of informed vs. uninformed consumers. For the low condition, 61% of buyers visit a single seller, while visiting two, three, or four sellers are equally likely at 13% each. For the high condition, the probabilities for visiting one, two, three, or four sellers are equal at 25%.

Deck and Wilson (2002) report the following three findings:

1. High search leads to lower prices than low search for one-seller buyers. Low price matching leads to higher prices for four-seller buyers (regardless of high vs. low search)

2. Price matching leads to less discriminatory pricing for high search. With or without matching, different buyer types receive considerably different prices in the low treatment

3. Price matching increases seller profits in the high treatment, but has no effect in the low case.

Because sellers are given visibility to past activities of their potential buyers, the LPM strategy can be used to price discriminate between informed and uniformed buyers. Because the human subjects were given the option of choosing LPM, the results of the Deck and Wilson (2002) study have the same shortcomings as the 2003 study described above. Deck and Wilson (2002) do not report adoption rates as in the 2003 work. Additionally, the strategies used in the 2002 study make significant assumptions about the capability of sellers to have visibility into the history of prospective buyers.

Both the LPM and no LPM treatments assume that the seller knows which competitors have already been visited by the buyer before making a pricing decision. While the Internet enables a wealth of information sharing, the extent to which current or future technology can support that assumption is debatable. Dasgupta and Smith (2003) also examine a seller strategy that attempts to price discriminate between buyers. They simulate a repeat buying market where 25% of the buyers shop at only one seller while the other 75% shop at all sellers. Buyers are repeat buyers of some consumable commodity and can be uniquely identified by the seller. The sellers set prices using an algorithm that seeks to determine which kind of buyer is requesting a price based on the historical behaviour of that buyer. Buyers determined to be comparison shoppers are offered a price determined by a model optimizer (MO) algorithm. The MO uses a set of weighted historical price and profit data points to estimate (via nonlinear regression) the price that would maximize profits. A higher price can be charged to those buyers who are assumed to not be comparison shoppers. That optimum price is determined by attempting to learn the distribution of buyer valuations.

The sellers are all trying to gain the largest market share, but do not have information about competitors’ prices or the extent to which buyers are informed. Dasgupta and Smith find that seller profits can be improved by 15-20% by utilizing this tiered pricing strategy. DiMicco et al. (2003) introduce a Java-based simulation tool called Learning Curve. It is designed to allow sellers to investigate agent-based marketplaces and evaluate the relative effectiveness of dynamic pricing strategies. Their study is different from those above in that it focuses on perishable good markets where supplies and their time horizon of availability are finite. They focus on two seller strategies—Goal-Directed (GD) and Derivative Follower (DF)—both of which require no assumptions about or knowledge of the buyer population. The GD strategy strives to sell all inventories by the last day of the market, but not before. The DF strategy experiments with incremental price changes by examining changes in profits after a change occurs. If an increase (decrease) in price results in greater profits, the price is increased (decreased) again. If profits decline, the next change is a decrease (increase) in price. DiMicco et al. (2003) studied the performance of these two strategies under both monopolistic and competitive conditions. As an overall conclusion, they state that both strategies performed quite well, despite their lack of knowledge of the buyer population. The GD strategy is generally successful in reaching its stated goal, but at the expense of drastically over and undershooting the buyer valuation curve early and late in the market. The DF strategy is successful in consistently selling at the highest price possible on a given day, but its performance is sensitive to the timing of peaks in demand. They also note that the complexion of the buyer population with respect to comparison shopping can impact price patterns—i.e., when the market is extremely price sensitive (100% comparison shoppers), adaptive strategies can easily breakdown into price wars. Kephart et al. (2000) examine a broad range of topics, all of which are related to agents that dynamically price goods or services. They first investigate an online bookselling market, where five sellers compete for business. They employ various combinations of pricing strategies and examine the resultant price patterns. The strategies examined are game-theoretic (GT), my-optimal (MY), and derivative-follower (DF). The GT strategy involves the determination of a price density function that can be computed when given the number of sellers, the valuation distribution of the buyers, and the comparison shopping complexion of the market (i.e., what portion of the market shops at 1, 2, … ,n sellers). The MY strategy requires the same market knowledge as GT, with the additional need to know current prices of all other sellers. The MY strategy uses that knowledge to calculate the value that will maximize profits, up until the moment that another seller changes its price. The DF strategy, as discussed above, requires no knowledge of competitors or buyers in the market.

Kutschinski et al. (2003) study an interesting and broad range of pricing strategies with a robust simulation model. Their results and conclusions, however, seem rather limited in their ability to guide the decisions of managers who make pricing decisions. In one study they examine the impact of varying levels of comparison shopping behaviour, but they do not compare performance of multiple strategies. In simulations involving multiple strategies, the focus of their conclusions is more on qualitative aspects of price dynamics than on relative quantitative performance of pricing strategies. The research seeks to make pricing strategy comparisons across varying comparison shopping levels that will aid decision making for pricing managers.

Zacharia et al. (2000) studies an agent-based service marketplace where both price and seller reputation are factored into a buyer’s utility. Buyers evaluate sellers not only by price but by reputation. Also, their needs have varying levels of importance. They incorporate a utility function that leads to a willingness to spend more for (relatively) important problems but allows the tradeoffs of quality for price in the case of (relatively) unimportant needs. Zacharia et al. (2000) run simulations to examine the effectiveness of varying shopping strategies with respect to varying market conditions. In this case, the market condition studied is the relative levels of supply vs. demand. Markets with less demand than supply are characterized as unemployed, while markets where demand exceeds supply are called over-employed.

The initial set of market simulations focus on three seller strategies: Derivative Follower (DF), Reputation Follower (RF), and random. The DF strategy here is the same as discussed in multiple studies above. The RF strategy is built upon the DF algorithm. To implement RF, a shadow price is maintained on which the DF algorithm is applied. The price advertised by an RF seller, however, is that shadow price multiplied by the seller’s reputation. Zacharia et al. (2000) create this strategy in hopes of enabling sellers to react to changing reputations faster than a DF strategy would allow. In the simulation, reputations were updated after each transaction between seller and buyer.

Zacharia et al. (2000) pit these strategies against one another via simulated marketplaces. In an underemployed market, the sellers who utilized RF agents fare best. However, in an over-employed market, the DF sellers are most profitable. In both cases, the strategies that make use of some sort of intelligence outpace random pricing. Zacharia et al. (2000) also examine market equilibrium with respect to varying seller strategy. They find that when seller reputation is allowed to vary in homogenous markets, DF markets reach equilibrium, while RF markets do not. As a result, they develop a new, theoretically Socially Optimal Strategy called Profit-Maximizing Reputation Follower with memory (PMRF). The PMRF market leads to equilibrium consistent with the theoretic optimal. The Zacharia et al. (2000) work suggests that varying market conditions and varying seller strategies both impact the nature of markets. Further study in those areas is needed to better understand the dynamics at work. The research examines the relative performance of various pricing strategies.

2.6 Online Up-to-Date

It is must for the e-business to keep update with the latest forms of online promotion and advertising, as well as in environmental changes, competitors, trends, technologies upgrades… if they want to seem a cutting-edge business and do not seem old and not fashionable any more. Fiore (2000) names the tools by which the company must base its up-to-date strategy. They might come from the following points:

  • Industry analysts: Professional prognosticators read the entrails of each sector of the Net Industry and publish reports of the net and where each of its sectors is heading. These researches may have a cost of thousand of dollars, as well as small analysis which can be given out for free.

  • Web sites: Good way to gather information from its own PC’s, especially about competitors. This information will not be as deep and analyzed as with industry analysts, but, however, this information is free to all.

  • Online focus groups: Talking with the actual consumers. The feedback is more reliable and focused in what the business and consumers want. There are specialized sites which provide online focus groups. They work together with the company in order to get the best output possible.

  • Surveys: not as personal as an online focus group, market surveys of consumer opinions can expand company’s reach to thousand of consumers on the Net. Survey companies may bring the e-business knowledge about what consumers think about its design, advertising campaigns, special products offers and customer service opinion.

To achieve the mainly purpose of marketing online is needed a product to satisfy the customers needs, this product has to be offering with a prize in a particular place, and the firm must develop a promotion program to make awareness of the product, this four elements constitute the marketing mix, they four have to be always coordinated in the marketing strategic, all of them must have the same importance and quality, all the elements have some tools

Chapter Three: Research Methodology & Strategy

3.1 Research Methodology

Research methodology is the theory of methods (Sarantakos, 1998); it is the way in which one makes sense of the object of enquiry. According to Robson (2002), the theoretical, political and philosophical backgrounds to social research and their implications for research practice, and for the use of particular research methods. According to Morvaridi (2005), the most prevalent methodologies in social sciences and humanities research methodology are quantitative and qualitative research.

3.1.1 Quantitative Research

A quantitative method spread out of a sharp academic convention that places considerable faith in numbers that signify opinions or concepts. It relies mainly on a hypothesis which is derived from theory deductively; the objective is to test the theory by way of observation and data collection, the findings of which, following analysis would either confirm or reject the theory (Morvaridi, 2005)

3.1.2 Qualitative research

In contrast the qualitative methodology to express reality and attempts to describe people in natural situations by concentrating on words and observations. Although quantitative and qualitative methodological approaches are different, it is wrong to oppose them as two competing methodologies (Morvaridi, 2005).

3.2 Research strategy

According to Saunders et al. (2003) research strategy is a general plan of how the researcher will go about answering the research questions. He distinguishes between eight research strategies, namely: Experiments, Surveys, Case studies, Grounded theory, Ethnography, Action research, Cross-sectional studies and exploratory studies. But, the main three strategies used by most researchers are: experiments, surveys and case studies (Robson, 2002).

3.2.1 Experiment strategy

Experiment strategy is calculating the outcomes of operating one variable on another variable, and usually it is related to the natural sciences (Robson, 2002).

3.2.2 Survey strategy

Survey strategy is the collection of data on a number of units with a view to collecting systematically a body of quantifiable data in respect of a number of variables which are then examined to discern patterns of association (Bryman, 1989). According to Saunders et al (2003), it is a popular and common strategy in management and business research.

3.2.3 Case study

Case study can be described as a strategy for doing research within its real life by involving an empirical investigation of a particular contemporary phenomenon context and using multiple sources of evidence (Robson, 2002).

3.3 Triangulation strategy

Triangulation strategy is a valuable and widely used strategy (Robson, 2002) it can be defined from different angles. While Denzin (1978) defines it as the combination of methodologies in the study of the same phenomenon, according to Saunders et al. (2003) it as the use of different data collection methods within one study.

There are four basic types of triangulation identified by Denzin (1978):-

- The use of a variety of data sources in a study is Data triangulation.

- The use of different researchers is Investigator triangulation.

- Using multiple theories or perspectives is Theory triangulation.

- Using multiple methodologies to study a single problem is Methodological triangulation.

3.4 Methodology Used

When it comes to determining the method one should use in the research project it is important to use the purpose and the research questions as a starting point. The purpose of the report should determine what kind of approach to use (Patton, 1987). Slife and Williams, (1995) supported this, suggesting that the most appropriate research approach is the one that best fits the question or the problem at hand.

Research Approach

The qualitative approach and the quantitative approach are the two key approaches when determining the nature of a research project. From the above, it is obvious that the purpose of this thesis aims to answer both the questions what and how. The focus is more on studying a certain phenomenon, in this case how marketing e-strategy can influence strategic decisions. Quantitative research is often based on measurable numbers (Creswell, 2002). In this kind of research one may draw law-like conclusions and generalisations from the obtained data. All phenomena is however not measurable. A qualitative research nonetheless focuses on more in-depth issues and is aimed to study an occurrence rather than draw population-wide solutions (Saunders et al., 2003). A quantitative and a qualitative approach can be combined in one study, in this way they will complement each other (Creswell, 2002, p. 105).

This study was carried out using mixed methodology. This has been derived from the mixed model studies that are the product of the pragmatist paradigm, by combining qualitative and quantitative approaches within different phase of the research (Tashakkori & Teddlie, 1998). This methodology was chosen for the current study due to the researcher’s interest in the questions of what and how. Patton (1987) suggests that the choice of research approach should be appropriate to the subject being investigated. The subject of this study is not only identifying the decision-making oriented performance driver, measure performance of selected virtual firms by way of survey (quantitative) but also how it influence strategic decisions by way of interview (qualitative). In support of mixed methodology, Brewer & Hunter (1989) stated that a multi-method approach allows investigators to attack a research problem with an arsenal of methods that have non-overlapping weaknesses in addition to their complementary strengths. They suggest that a multi-method approach is superior to mono-method research in that it provides grounds for data triangulation.

According to Creswell (2002), there are three types of mixed method approach: the triangulation mixed method design, explanatory mixed method and explorative mixed method design. (I)The triangulation mixed method design is the design that aims to concurrently gather both quantitative and qualitative information, combine the data and use the result to most excellent understands the research problem. (II) Explanatory mixed design involves initial gathering quantitative information and then gathering qualitative information to help describe or elaborate on the quantitative findings. (III) Exploratory mixed method design is consist of first collecting qualitative information to discover a phenomenon, and then gathering quantitative information to describe relationship found in quantitative information (Creswell, 2002). In this study, the author applied explanatory mixed method design. By starting with a survey amongst customers and then proceed with an interview on the firms to answer the research questions and consequently fulfil the purpose of the thesis.

There are two central visions of research approaches; the deductive and the inductive approach. The deductive approach intends to test theories whilst the inductive approach aims to build theory (Saunders et al., 2003). These are connected to the qualitative and quantitative approaches mentioned above. A quantitative approach is most often deductive and a qualitative most often inductive in its essence (Creswell, 1994). A combination of the two approaches will be used. In the case of this thesis the author has used some already existing theories and from that modified to develop a working model from which the author uses to analyse and draw conclusions. The time is limited when conducting this thesis and the author is not looking for evolutionary behaviour over time. The time horizon of the research project should be considered. A longitudinal study is research that takes place during a certain time period whilst a cross-sectional study deals with a snap-shot of time (Saunders et al., 2003). This study reflects the present situation and hence is a snap-shot of time.

3.5 Research methods used in this work

3.5.1 Survey

The goal with a survey is more general as well as the sought answers are of a wider nature than with case studies (Creswell, 2002). Surveys may both include structured interviews and formal questionnaires. In this case, both formal questionnaires have been administered and an in-depth interview survey has been conducted.

a. Questionnaire administration

The first method used in this research is a survey that aims to obtain customers’ perspectives regarding the marketing of virtual stores. The questionnaire was designed to incorporate innovative marketing strategies that allow customers to rate the better marketing of their virtual stores. It captures customers’ evaluation of a virtual store’s effectiveness of websites, satisfaction with current virtual store products, and quality of online customer services, promotions, users’ demographics and other related issues. The population captures the working populates ranging between the ages of 18 and 65 in London. This number forms 66% of the total population in London (LSC region, London 2009). For this research, the author categorized the respondents into three groups by asking them to select one of the following 3 options:

(1) I have selected and purchased at least one product/service over the Internet (online customers group).

(2) I have searched for product/service information over the Internet but have not purchased a product/service (information searchers group).

(3) I have never used the Internet or used the Internet for purposes other than product/service information search (e.g. e-mail) or purchase (Others group).

It is believed that only limited categories of people, the computer users, are more likely to have the information that is sought. Therefore, judgment sampling allows who was employed and are in the best position to provide the information required (Sekaran, 2000). In total, 176 surveys were fully completed. This forms 88% of the eventual sample size (100) and 12% of non-respondents (these included partial responses). The percent of the non-respondents compared to the respondents is infinitesimal and is unlikely to affect the outcome.

The questionnaire is a nomenclature of three sections relating to both the firm and customers/users. The questionnaire contained 16 closed-end questions regarding satisfaction through marketing and decision making. The statements are evaluated on a 5- point Likert Scale. Numerical values are given to each of the response. The values are: (Performance – 0 = do not know, 1 = very poor, 2 = poor, 3 = good, 4 = very good, 5 = Excellent). (Satisfaction - 0 = do not know, 1 = very dissatisfied, 2 = somewhat dissatisfied, 3 = satisfied, 4 = somewhat satisfied, 5 = very satisfied). (Decision - 0 = do not know, 1 = strongly disagree, 2 = disagree, 3 = undecided, 4 = agree, 5 = strongly agree). The questions were based on relevant marketing strategy evaluation variables or indicators. The choice of the variables and indicators will be discussed in the frame of reference section.

According to Creswell, (1994) some intriguing reasons for using a questionnaire are that of Patterns, frequency, ease and success of use. However, respondents’ attitudes and opinions are highly subjective. In this study, the questionnaire was aims to obtain customers’ perspectives regarding evaluation innovative marketing strategy of virtual stores. These perceptions are subjective and may either weigh some components/elements more highly than others or there must be a perceptible difference in the delivery of these components between the virtual stores. For that matter, the questionnaire depicts one side of the coin and was not enough to show the true picture. Thus an in-depth interview with the respective firms is an additional technique to explore the differences between users' experiences and outcomes. The conduct of interview is discussed in the subsequent section.

b. Conduct of Interview

The interview is obviously and exclusively an interaction between the interviewer and interviewee subject in which both participants create and construct narrative versions of the social world (Silverman, 1997). In depth Telephone interview were conducted with managers of two selected virtual stores namely EBay and Ocado at their place of work, and lasted from approximately 35 to one hour. In all two staff members were interviewed. For tangible reasons the author will not disclose their names. However, all of the staffs were jointly responsible for the online marketing activity of the firm and play vital roles in making both short-term and long-term decisions. Notwithstanding, one of the interviewees were staff of EBay and one from Ocado. The interviews were semi-structured and involved the use of interview guide which help to retain the focus of the study (Yin, 1994). During the interviews the respondents raised relevant issues that were not foreseen. These were subsequently followed up by the interviewer. The interview questions to the firm were based upon relevant literature, and included but not limited to the following:

1. What is the core value proposition of your business?

2. What marketing strategy associated with launching e-business?

3. How is marketing e-strategy linked to strategic decision making?

4. What challenges or problem have you faced in relation to your online marketing strategy system?

Additional questions concerning customer demographics, website design, navigation, promotion and customer management services were also addressed. Prior to the interview, the researcher examines each firm’s website.

c. Sample Selection

1) Sampling the respondents (scientific Estimation)

(I) This research adopted census sampling. Customers and users of the internet marketplace were chosen by random sampling in London, a city in United Kingdom.

(II) The sample size was calculated using Yamane’s method (1967). This was to ensure sufficiently large validity.

(III) The population was 7,700,000 this captures the working populates ranging between the ages of 18 and 65 in London. This number forms 66% of the total population in London. This research was intended to establish a confident interval of 90% or an alpha value of 0.1 and whose t-value is estimated at 1.67. The research has to accept the error at 10% due to the variation error from sampling elements instead of all the population elements. Thus the eventual sample size is: 100 (see appendix A for derivation).

2) Sampling the case firms

In sampling the firms for the study, the author faced a crucial decision regarding the choice of industry as well as the region. One of the reasons for the choice of firms was the researchers aim to delimit the study. Therefore, to begin with, the chosen industry was that of globalise, matured or maturing with escalating demand and supply conditions. These characteristics are important because the more volatility in these factors, the larger the risk that the empirical results will be massaged by this and will not give a clear prediction of the future. The aim has also been to investigate an industry where these measurements had not been previously or extensively conducted. Further, the author was in need of publicly available information and thus preferred an industry and region easily accessible to public information without any legal constraints. With regards to the above criteria, the research concluded choice fell on the online marketplace.

The major determinants for this choice of firms within the industry were that of internationalisation, similar business line, and availability of informative and interpretable reports as well as interim reports. Europe and the US are the major locations of the world’s online marketing or e-commerce (Global Insight). Companies or firms with their base in one of the Euro countries or the US were therefore a natural choice. In order to make the investigation more interesting from a United Kingdom point of view, it was decided to include firms providing services to the UK customers and users.

The study surveyed a sample of 2 retail online Marketing firms. The motivations behind selecting the firms are three folds: I) the selected firms were available on the Internet. Not only did their availability provided necessary and relevant information for the analysis but also made collating of data relatively easy, II) the firms exhibited advance technology activities and have generated well-known product innovations in recent years, III) due to backdrop of time the current study resorted to only 2 firms in the little bit different industry with different line of services. These firms have not less than 250000 customers and/or users. Two reasons for selecting firms with more than 250000 customers were to ascertain a tangible frequency of transaction and accessibility of information from users. The firms include EBay and Ocado.

3.5.2 Direct observation

To gain first hand data, the researcher logged on the sampled firms’ websites to observe the case in the natural setting. According to Yin (1994), observational evidence in providing additional information about the topic being studied is often useful. Observation itself is a process by which a participant observer gradually makes organised sense and become a part of the action. The researcher employs this as an additional data collection tool in order to capture a variety of interaction and to openly explore the online market place by witnessing their activities. By far, this technique is necessary in addition to the aforementioned methods due to the reasons that 1) the events, institutional facilities, or processes discussed with the firms and users in the interviews and questionnaires could also be captured in the natural setting, thereby providing a richer understanding and 2) to reveal conditions, problems, or patterns the survey might be uninformed of or not capable to explain sufficiently. However, this direct observation according to Yin (1994) is vulnerable to viewer unfairness. The very perform of observation also can influence the behaviour being studied. In order to avoid the biasness, this technique was used as a supportive method to the survey method to balance the effect.

3.5.3 Literature research

An essential part of performing scientific work is finding relevant and scientific proof in literature. Usually, literature research is an ever-going activity throughout the research, but the most extensive efforts in this area is perhaps made early in a research project. Routio, (2004) argues that the purpose with the literature research is mainly to clarify the problem and to see what others attempts have been like. An important note is that a literature review should be considered to be a mean to an end, and not (as most students think) an end itself. In contrast, experienced investigators to develop sharper and more insightful questions about a topic usually review previous research (Yin, 1994).

Much of this research is, indeed, based on the literature research approach; especially chapter two literature review of the thesis. This is natural, since this section was a basis for the development of the working model. As a matter of the literature review in which previous research is reviewed creates a solid theoretical foundation as a starting point. The studied literature includes books, research papers and journal articles as well as articles in other printed media and on the Internet. In addition, the retrieved information from literature has always been used according to its scientific value.

3.5.4 Regression analysis

In order to make a reliable evaluation of the variables a statistical technique is appropriate. The author found regression analysis to be the most appropriate tool because this technique takes into account the relation between the independent variables strategic with the dependent variable decisions the three dimensions (website, products and services and promotion) (Befring, 1997).

Separate regression analyses were performed for one dependent variables, strategic decision. The three main variables identified were entered as independent variables and utilized for running the regression analyses (Shaohan and Minjoon, 2003). The two regression equations are shown in appendix A. The overall model fit for each regression equation was assessed through F statistics. The two regression models were statistically significant at p< 0:001, respectively (In Chapter Four, Table 4.5).

3.6 Research Process

In a connecting piece, to execution of the purpose of the study, the current study has determined to follow a research strategy, illustrated in figure 3.1 below. Following the discussion in chapter one, it was obvious that, the problem statement and purpose of the thesis stipulates a thorough review and analysis of existing research in the area of internet marketing strategy. The motive was to identify appropriate models and variables for the current research. Consequently, from figure 3.1, models that are considered most appropriate have been chosen to apply to the selected sample that is the case companies and customer/users. The models were reviewed and the variables were factor analysed using Varimax rotation factor analysis in order to attain the right variables and indicators.

With a modified model, decision making variable and indicators were identified. The literature review as a profound basis, the empirical results will subsequently be analysed. This is to determine whether we can reach any conclusions concerning marketing strategy and decision-making within the online marketplace.

3.7 Data Gathering

The data that has been collected to conduct this study is based on both secondary information and primary data. The literature review is an analysis of research articles and books regarding marketing, online business and internet marketing strategy and implementation. The data used in the empirical study are collected from a survey amongst customer, users, firms and interim reports from company websites. This data was gathered using the information gathering model depicted in figure 3.2 below.

From figure 2.2, the current study formulated precisely question with the emphasis on the research purpose and research questions the author is trying to answer. This was channelled to customers, users and the firms in question. The aim was to collect the data and facts relating to that question for empirical results and analysis. The author analysed the data to determine the factual answer to the question(s) and the way of presenting the data that clearly communicates the answer to the question. In the process of data gathering and search for previous studies, articles and useful information, the following key word have been used: online marketing, pricing strategy, decision-making, marketing e-strategy evaluation indicators and variables.

3.8 Reliability and Validity

Conversely, Olesen (1992) suggest that research results should be evaluated with respect to five aspects. If the research result satisfies all five criteria, then it is possible to view the results as valid with quite good accuracy: (1) internal logic: the results are based on known and accepted theories and there is a connection between the startling point, hypotheses and/or questions and the result. (2) Truth: the theoretical and practical result can be used to explain real phenomena. (3) Acceptance: other researchers accept the theories used in the project and professionals use tools based on the theory. (4) Applicability: the use of the tools allows the probability for success to increase with repeated use. It will not necessarily lead to success every time, but will over a period of time give better result than if not used. (5) Novelty value: new solutions are presented, or that new ways of looking at a problem are introduced.

These five criteria can be used as a platform when discussing the validity and reliability of the research result. Considering the first criterion (internal logic), a major part of the research result is deeply rooted on and a direct outcome of established theories and models found in literature. The research questions have been formulated based on a problem description that has its origin both in theory and in practise. The choices of theories that have been studied as well as the new framework that have been developed are influenced by the problem and research questions.

When it comes to the second criterion (truth) although difficult, this criterion has mainly been validated through theoretical and logical reasoning regarding the survey result. Though, it is relatively not easy to prove that the result precisely corresponds to the truth or reality.

Throughout the interviews the author tried not to affect the participants with their own preferences or beliefs. Thus it is believed that the responses reflects the practical and real situation hence this the author believes will increase the validity of the data.

The third criterion (acceptance) is perhaps the criterion that is equally difficult to prove at this juncture. However, most of the models or theories used in this research are well accepted models and theories and are used both practically and academically. The fourth criterion (applicability) has been tested to a minor degree by selected firms.

The final criterion (novelty value) is rather difficult to achieve considering the enormous amount of research that has been done in the field of performance measurement during the last two decades. However, some of the approaches that can be found in the developed method are new or in any case rare. First, from an overall point of view the research has contributed to more knowledge in a field that is clearly not explored to a larger extent, namely the impact of marketing strategy on making strategic decisions.

Chapter FOUR: Empirical Analysis

4.1 Companies Brief overview

4.1.1 EBay

EBay is an online mainly auction company that offers internet marketplaces for the transaction of goods and services. EBay also provides platforms, online payments services (Pay pal) and online communications offerings both individuals and businesses. The company headquarter is situated in San Jose, California and eBay employs around 15,500 people.

EBay registered incomes of $7,672.3 million in the financial year ended December 2007, an improve of 28.5% over 2006. The eBay company functioning turnover was $613.2 million in the financial year 2007, a decline of 56.9% over 2006. EBay net turnover was $348.3 million in the financial year 2007, a decline of 69.1% over 2006.

EBay UK Facts and Figures

In UK base eBay launched in October 1999 and become the UK’s largest online marketplace. And eBay.co.uk has active users over 14 million. UK base eBay has achieved the 10 million live listings landmark which means that eBay.co.uk has more than 10 million items for sale on its site at any one time. In eBay.co.uk 40.62% of active internet users visit at least once a month and has over 13000 categories. In February 2008 eBay UK’s unique audience become 13.2 million. EBay.co.uk was visited in November and December 2007 by an average of 15 million Britons and visitors stay on site average 1 hour 46 minutes and view 225 pages per month. In UK base eBay 178,000 estimated users run a business or use their primary or secondary income source. In quarter 2005 UK base eBay achieved $100 million revenue and growing in UK at very strong rates and reaching an important milestone through their process. (pages.ebay.co.uk)

4.1.2 Ocado

Ocado was formed by three ex-Goldman Sachs directors (Jonathan Faiman, Jason Gissing and Tim Steiner) in early 2000 and was originally named Last Mile Solutions. Financed by a ₤46 million investments and 40% ownership stake by Waitrose, Ocado has taken a deliberate and carefully planned approach to developing its business, under co-Managing Directors Nigel Robertson and Roger Whiteside and Logistics Director Robert Gorrie. This approach is in stark contrast with the shoot for the stars approach taken by many of the failed Internet grocers such as Webvan and Home Grocer. Ocado, renamed from Last Mile Solutions in late 2001, spent the better part of 2 years developing and planning all aspects of its business with a core group of 15 – 20 employees. This planning phase was followed by a phased rollout of service, starting north of London and working down toward central London between March and July of 2002. This approach is based on recognition that the idea of mass-market home delivery requires new techniques on the part of both companies and customers. Equally important to the long-term success is the understanding that customers need to be nurtured and guided to learn a new (and hopefully easier) way of shopping for groceries.

4.2 Profile of respondents and factor Analysis

4.2.1 Profile of respondents

The survey questionnaires were distributed to 200 respondents; 176 usable questionnaires were collected, resulting in 88 percent response rate. The respondents’ demographic characteristics are showing in Table 4.1.

Table 4.1: Profile of Respondents

Classification

No.

Percent

Gender (n = 176)

Male

128

72.7

Female

48

27.3

Education (n = 86)

High School or lower

8

4.5

College

64

35.4

Graduate

104

59.1

Age (n= 176)

18-24

84

47.7

25-34

88

50

35-49

4

2.3

50-65

0

0

Over 65

0

0

On average, how often do you shop online? (n = 176)

Everyday

8

4.5

Usually

76

43.2

Once a week

32

18.2

Never

52

29.5

Occasionally

8

4.5

4.2.2: Factor analysis

Since the marketing strategy evaluation focuses highly on decision making variable, principal component factor analysis with a Varimax rotation was employed to examine those dimensions. The initial factor analysis extracted several factors based on Hersey’s variables. The author further eliminated those items which did not stack strongly on any factor (below 0.5) or had cross-loadings. A total of 8 additional items were deleted after three iterations. Three factors were generated and accounted for 100 percent of the total explained variance (see appendix). According to Cohen et al., (1992), for satisfying the requirements of convergent and discriminate validity all items of a scale powerfully stacked on one factor and feebly on all other factors.

As shown in Table 4.2, the three derived factors were:

(1) Website.

(2) Product and Services.

(3) Promotion.

As measured by Cronbach’s alpha, reliability analysis results for the three extracted factors were, 0.82, 0.73, and 0.77, respectively. The results demonstrated that all the scales had relatively high reliability and were suitable for further analysis. The first factor, website, accounted for (45.139 percent) of the total explained variance, the largest proportion and was considered important. This factor was defined by three main scale items (web interface, transaction and content) with sub-items and was primarily related to the concept of providing quality, reliable, prompt, and timely services to customers or users. The second factor, product and service, explained (32.642 percent of the variance was constructed by four scale items that are product and service portfolio and differentials, pre-&-after-sales service, pricing strategy and delivery). The third factor, Promotion accounted for 22.219 percent of the variance and comprises two scale items which are primarily associated with well-organized online search engines and offline traditional channel concise contents. (See appendix B)

4.2.3 The importance of each element

The importance of each element to the virtual store is measured in the survey. The mean for each element is measured by a scale from 1 indicating very unimportant to 7 indicating very important. Results show that the all the element are important. This confirms that all the determinants of decision making with respect to the e-shop are interrelated and none can be completely excluded although more focus can be put on some elements than other ones.

4.3 Website Evaluation Results

Direct observation: The Website evaluation is divided into web interface, Transaction and Content. The listed in table 4.2 captures the Internet capabilities/offerings of the Virtual stores by direct observation. This inculcates the evaluation of the firm’s effectiveness, efficiency and quality in terms of current design, navigability, personalization means of payment, means of order, commercial content, information availability, the quality of online customer services and other related issues.

Table 4.2: Website Evaluation – web interface, Transaction and Content.

ITEM

EBay

Ocado

WEB INTERFACE

Design:

1

1

Aesthetic effects (Graphical & Animation)

1

1

Navigation:

Ease of finding information (Search engines, Help, FAQ, etc.)

1

1

Ease of navigation (links to pages, no scrolling)

1

1

Compatibility (browser, operating systems, monitor, other interface)

1

1

Personalization

1

1

TRANSACTION

Means of payment(online, secured, credit/debit card)

1

1

Means of order( shopping cart, online /e-mail)

1

1

CONTENT

Commercial content (product or service description, means of delivery, means of payment

1

1

Background content (information on company,

information on sector)

1

1

Legal statement (legal disclaimer, privacy

policy, security policy)

1

1

TOTAL

10

10

The result shows that that all the websites provided general information about their respective firm, information regarding product, services and links to other sites as well as advertisement (new products, special offers). Items related to products and services were evidently displayed on the respective firms’ websites. The result showed that all the websites provided at least some kind of basic products to their customers or users at large. However, there are some products that are peculiar to some of the firms. Consequently, each firm provided a function for a shopping cart to enable users to basket their selected or purchased items.

Although it is relatively easy to assess the website of these two firms, firms stood out astounding providing additional facilitating competence to their respective customers or users which enable them to navigate effortless on their respective site. EBay and Ocado provided all the navigable functions.

Survey results: However, the web site evaluation results (Table 4.2) denote the Internet capabilities/offerings of the Virtual stores in an objective manner. Subjective customers or users opinions were also surveyed. Their perceptions must either weigh some components/elements more highly than others or there must be a perceptible difference in the delivery of these components between the firms. This next paragraph describes the survey results.

39 percent use the e-shop website content (that is commercial, background, and legal statement). This is the most frequently used service. The second frequently used website items are the payment and order items which is categorized under transaction forming 31 percent. Though web interface formed 30 percent, the navigability activities facilitated the use of the other items and it form 40 percent of the web interface.

Interview: Mr. X of EBay also disclosed in an interview that the speed of the website is not solely dependent on the resolution of the graphic but also on the speed of the user’s internet. For instance a dial-up connection will slowly load a site than a high broadband.

4.4 Products and Services Evaluation Results

Survey results: The Product and service evaluation results (Table 4.3) denote the e- shop capabilities/offerings of product, pre & after –sales service, pricing and delivery in a subjective customers or users opinion. Their perceptions must either weigh some components/elements more highly than others or there must be a perceptible difference in the delivery of these components between the firms.

Table 4.3: Product and service evaluation- product, Pre & after-sales service, pricing and delivery.

ITEM

EBay

Ocado

Product:

Product Range (%)

36

38

Product competitive differential (%)

30

34

Pre & after-sales service:

% of customers or users which use the pre-sales service

98

90

% of customers or users which use the after-sales service

92

87

Pricing:

Price differentials with respect to online competitors

94

95

Discount and shipping cost with respect to online competitors

28

15

Price differentials with respect to offline competitors

96

91

Delivery:

Number of options offered with respect to offline competitors (%)

97

98

Delivery time with respect to distance per time

10 days

21 days

Interview: All the participant virtual stores in the interview by far disclosed that, for Internet sales some products or services are more suitable and for offline sales others remain are more suitable. Therefore most of the virtual stores are dealing products which are information storage, retrieval and modification digital products such as song, films, software, learning, office delivers, financial deals, photography, and communication. Typical evidence is EBay and Ocado. For facilitating transactions of tangible goods EBay use Affiliate marketing or Drop shipping techniques without maintaining real inventory. For a virtual marketer suitable products are music DVDs, CDs and books which can easily go through a standard letterbox. Ocado use the direct delivery service according to grocery product order. Ocado makes home delivery of groceries in the U.K. greater density of people, particularly in the expensive, heavily populated greater London region.

According to the interview, some virtual stores endeavour to offer their retail customers possible lowest prices through low everyday product pricing and offers free shipping. For delivery service, the virtual stores are striving to fulfil customer orders quickly and accurately, and to provide intuitive self-service features that assist customers when they have questions. The virtual stores are striving to fulfil customer orders quickly and accurately for delivery service, and to provide intuitive self-service features that assist customers when they have questions.

4.5 Promotion Results

Survey results: Obviously, the assessment of the effectiveness of the e-shop promotional channel by means of the ratio (the number of buyers and the budget) pre-supposes that the company’s objective is the increase site sales. Other minor issues, which a promotional campaign might provoke, e.g. increased brand awareness are considered.

Table 4.4: Effectiveness of promotional channel.

ITEM

EBay

Ocado

Effectiveness of the promotional channel

[Ni buyers /BDGi =(CTRi . 1:000 / CPMi). ERi .CRi]

3.56

4.60

Interview: The interview disclosed that some virtual store promotion strategy is to increase customer traffic to their respective websites, drive awareness of products and services they offer, develop incremental product, promote repeat purchases, strengthen and broaden the firm’s brand name, and service revenue opportunities.

4.6 Impact on decision making

Regression analysis: The second research issue is related to assessing the impacts of the generated required innovative marketing strategy for strategic decisions. The results of regression analysis strategic decision against the independent variables are presented in (Table 4.6). This regression equation explained 49.2 percent of the variance of the dependent variable (F = 25.721, p < 0:001). The three independent variables, such as website, product and services and promotion had statistically significant and positive relationships with the overall strategic decisions. The website responses dimension was the most significant independent variable with the largest beta coefficient, followed by the product and services and promotion.

Table 4.5: Regression analysis results between strategic decision and the performance variables.

Independent variables

Standardized coefficients Beta

t-evaluate

p-evaluate

Website

0.459

6.677

0.000

Product and services

0.408

5.834

0.000

Promotion

0.346

4.776

0.000

Notes: Dependent variable: Strategic decision (F = 25.721 p < 0:001, adj. R2 = 0:4925, * p, 0:001)

Chapter Five: Analysis

5.1 Marketing evaluation indicators

The first issue addressed in this study focused on identifying the influential marketing strategy evaluation indicators or variables associated with decision-making in the online marketplace and measure performance along that stream of variable or indicators. The results identified three major dimensions with important variables: website, product and services, and promotion. These dimensions and their respective variables share in their meaning many common aspects with decision making determinants derived within the context of online market industry by Prior research (for example Rangone et al, 2000). Conversely, all three dimensions also have their own unique characteristics inherent in the online marketing environment.

First, the website dimension captures, dependable, prompt, and timely information core competence of the product and/or services. Online users or consumers apparently want to receive the right quality and right quantity of items that they will order within the time frame displayed on the web page by the virtual store, and they expect to be billed accurately by them.

Second, product and service capture the product differentiation, pricing, and delivery of the item. Practically product and service qualities fulfilment still remains the most troublesome area for the online marketing firms and when poor reliability service provided by virtual stores then most online users feel frustrated (Jedd, 2000). Lacks of strong internal and external collaboration are the primary reasons. Strict combination of Web sites with customer service functions and effective communication among different functional departments includes internal cooperation and external cooperation means combination of supply chain partners (e.g. suppliers, packaging and shipping companies).

Third, promotion pre-supposes the ability that the company’s objective to increase site sales and increased brand awareness materializes.

5.1.1 Website Evaluation

The structure of a successful Web site should allow users to easily shop and search products; quickly locate a certain brand; and conveniently checkout (Ernst & Young, 2001). Both the direct observation and the survey result identifies important aspects and structure of the e-shops websites that are influential to decision making such as the web interface, transaction and content. These are select variables which can be incorporated in the firm’s strategic decisions.

Table 5.1: Total Net percentage Score and Rank.

Name of the Firms

Total Net Score (%)

Rank

EBay

100

1

Ocado

60

5

In all variables were observed to evaluate the firms website. Table 5.1 shows the total net score in relative terms from empirical results. According to the model used, EBay the highest total net score 100%. However, the different rank position Ocado under the website indicators suggest that two firms were at least performing successfully in one segment or the other. It is therefore worth mentioning that the virtual stores providing more sophisticated trading tools and have been implementing changes to improve navigation, and have made a quantum leap on educating the customers through their websites.

According Dellaert and Kahn (1999), successful online firms respond promptly to their respective users and it is well advised that online retailers improve their customer service response time via e-mail automation. From the survey, online users expect the online retailers to respond promptly to their inquiries, especially e-mail inquiries.

Another important facet of the website is related to information downloading time. There is a significant positive correlation between the information downloading speed and the Web user’s satisfaction revealed from previous studies (Page and Lepkowska-White, 2002; Van Riel et al., 2001). Dellaert and Kahn (1999) performed four computer-based research to show that waiting time could affect evaluations of Web sites negatively if there was uncertainty about the wait, as in the case of no countdown information available. Likewise from the survey most users said that switching between e-shops can be attributed to the speed of loading the firm’s sites. However, Doherty et al., (1999) suggest that the online marketing firms must evade using extensive high-resolution graphics and select an proficient host server. But the response from the firms for instance Mr. X of EBay said that the speed of the website is not solely dependent on the resolution of the graphic but also on the speed of the users’ internet. For instance a dial-up connection will slowly load a site than a high broadband.

Online customers prefer to have multiple ways to contact online retailers, such as e-mail addresses, telephone and fax numbers. Burke (1997) and Cox and Dale (2002) found that online consumers often need to contact a customer representative over the telephone and by other conventional communication means. Further, from the survey results online users time and again want to access a variety of informative sources to obtain up-to-date and useful information for making informed purchasing decisions. Both the direct observation and the survey depict that ease of navigation is enormously a unique characteristic of the online systems. Specifically, a website should be configured to allow users to reach a desired web page from anywhere in the Web site’s hierarchy easily (Kim and Eom, 2002). Otherwise, the results are often appalling as customers would have considerable difficulty in navigating pages and would be unlikely to complete transactions.

The survey results of the present study indicated that online customers are yearning for attention from online shops. This is evidenced in the efficiency measure in the empirical survey results. In effect, users need specific response to their e-mail and telephones than general answers. Moreover, the e-shops need to maintain message areas on their Web sites in order to listen to individual customer voices, thereby better understanding their changing preferences and predicting their future requirements. The results of the current study shows that Online firms need to offer more personalized services to their customers in order to build customer loyalty, since they can automatically track, through the Internet, customers purchasing behaviours and gather information from their integrated database.

5.1.2 Product and services

Although a Web site is basically an impersonal medium, in order to attract and retain users, a company needs to differentiate its products and services from those of its competitors based on its personalized services to customers (Zeithaml, 2002). In all 9 indicators were observed to evaluate the firms product and services. From the survey results of this study it was obvious that the product and services dimension was relatively imperative. Users regarded every indicator very crucial. One of the main objectives of a customer is to get what he or she pays for and at the right quality right time and at the right place. Therefore the mechanisms for handling product and services should be highly guaranteed (Zeithaml, 2002).

From the survey (interview with the firms) results, for Internet sales some products or services are more suitable and for offline sales others remain are more suitable. But Ocado show that offline suitable product can also sell online, suppose grocery. As usual most of the virtual stores are dealing products which are information storage, retrieval and modification digital products such as song, films, software, learning, office delivers, financial deals, photography, and communication. Typical evidence is the selected firm used in the current study of EBay. Besides, Ocado is virtual store dealing with grocery products which can easily go through a standard letterbox.

The higher the percentage of users of the pre and after sales service the higher the effectiveness of the service to both the user and the firm (Rangone et al, 2000). From the survey, the percentages of users or customers which use a- pre & after-sales service were relatively high, denoting a high effectiveness and usefulness the service to users and customers. The comparative parameter was offline service providers. However, the high after sales service was not solely related to the product but also to the service in delivery or attaining the products.

Some eBay users are frustrated for the company's size and company offers no customer support by telephone, instead referring online help features to all ordinary members. Library of self-help resources apart from these features consist mainly of e-mail contact forms and Live Help, which lets users via instant messaging to chat with customer service representatives. In fact, most visitors will not find any company phone number listed at all to the eBay site. But eBay have a phone support department which is limited to members of the rank "Gold Power Seller" and above who sell at least $10,000 worth of goods per month on the eBay site. The telephone number for that service is kept closely guarded, though ordinary users persistent enough to discover it will usually be offered help as a one-time courtesy.

In the nutshell, failing to understand why and how users or customers buy will collapse the virtual store. Even a product with a reliable value scheme can fail if manufacturers and sellers do not understand customer pattern, expectations, and inspirations (Chaudhury et al., 2002). The virtual stores must offer to its customers an enjoyable and remuneration experience.

5.1.3 Promotion

The promotion dimension refers to the extent to which online marketing firms provide personalized services to their customers. As Luedi (1997) and Madu(2002) argued, the fierce competition in the Web marketplace places. Online marketing firms are in a position where simply posting product or service catalogues on the Web is not enough to ensure their survival but combining them with an interactive order processing facility, to process orders and capture payments.

5.2 Impact on decision making

The second issue in this research focused on understanding impacts of the identified variables on strategic decisions. Addressing these issues will help online marketing firms develop and implement effective decisions strategically within their virtual stores. From the regression analysis in the empirical results section, all the dimensions had significant and positive impacts on strategic decisions. These dimensions were found to be, in relative order of importance. This finding parallels the results of similar studies such as Minjoon, 2003. Thus, online retailers need to pay special attention to these dimensions.

Minjoon, (2003) argues that firm’s website is perhaps the backbone of the virtual store in all aspects. This can make or unmake the firm. Therefore overlooking a firm’s websites could significantly bring negative repercussion on the firm. Importantly, our study revealed that the Virtual Store’s Web sites play a vital role and can convert an ordinary user that is information searcher into extraordinary users/customers that is buyers. Thus, in strategic decisions, the virtual stores must highly consider their storefront. In the short run, they must fully utilize their storefront to serve the needs of the users. For example, the virtual stores could use the search engines on their Web sites to address users’ primary concerns, such as security risks, on-time delivery, and return policies. In the long run, the virtual stores can adapt their interfaces with the users’ by using the so-called personalization software. This software utilizes a self-learning engine to evaluate visitors’ real-time behaviours, such as what a visitor is looking at and where the visitor comes from, and allows online retailers to offer relevant suggestions to customers who are not frequent visitors (Koller, 2001).

Significantly, from both the survey and direct observation results, the product and service dimension point out that the virtual stores should provide users/customers with variety of products with both inbound and outbound services (pricing, delivery service and user or customer services. The failures of these often result from the lack of synchronizing online (e.g. marketing and sales functions) with offline (e.g. inventory and logistics management functions) business processes (Van Hoek, 2001). Therefore, it is obvious that issues concerning products and services are vital in making long-term (strategic) decisions. The virtual store should therefore, strategically implement information systems as part of their core competence that integrate all their online and offline operations to improve their products and services. It is also imperative that the virtual stores have a smooth physical distribution channel. If the virtual store lacks enough resources for building such a channel, it may outsource its logistics function to a third party specializing in logistics management to ensure timely and accurate service deliveries.

Pen ultimately, the promotion dimension suggests that the virtual stores should be able to sell themselves in order to make for instance sales increase and brand increase a variety of online and offline media. Besides the widely used promotion channel such pop-ups (advertising), live user/customer service, such as live text chat, co-browsing, and page pushing (Waltner, 2000). Therefore, instead of waiting for users/customers to respond to the pop-ups, the virtual store can have their customer representative monitoring the behaviours of online shoppers, and proactively offering them new products or service (Marriot, 2000). This is a potential element to be considered in a short term decisions.

Finally, from the discussion above, it is obvious that evaluation of marketing e-strategy indeed has significant impact on strategic decisions. Below show a synopsis of some vital strategic decisions undertaken by the EBay and Ocado firms as a evaluation of appropriate innovative marketing strategy.

Strategic Decisions:

EBay- To make significant investments to grow existing categories and to expand the number of categories in the eBay marketplace. In marketplace eBay should provide the complete understanding information of the products or services which has offered and provide help by sound advisors and selectors. Also focusing on development, marketing and customer support efforts around major categories. EBay can provide potential customers product or product-line which has offered at a competitive price, as like as offline business offer.

Ocado- As its founders admit, ensuring good service is easy for a small business, but hard for a growing one. With Waitrose stores based in southern England, any brand advantage disappears if Ocado's plans to open five warehouses nationwide ever materialise. Meanwhile, more than 90% of Ocado's existing warehouse, which guzzles £6m a year in running costs, is idle. Whether the worker-owned John Lewis will pump in more cash if Ocado misses its targets is questionable. Mr Gissing's claims that they won't let us fail — we are here to stay, sound all too familiar. In today's environment, the courage of Ocado's founders is remarkable. They may even be right about the economics of warehouses. But as the dotcom era proved, enthusiasm alone does not build sustainable businesses. Ocado risks becoming a relic of a bygone era; and its warehouse, another giant white elephant.

Chapter Six: Conclusion

6 Conclusion

The purpose of this research is to define required new innovative marketing e-strategies of virtual stores using decision-making associated variables and evaluate the impact of the variables on strategic decisions. It is apparent that marketing strategy systems of online virtual stores cannot stand in a vacuum, since these systems sources information from other activities as an input and produces output for other activities. As in any other industry, marketing strategy occupy an important position in this industry. It promotes and integrates different business activities of online marketing and installs the business decisions throughout the firm.

In this study, it was obvious that online users and customers can have unlimited access to the information they require and may enjoy a wider range of choices in selecting products and services with highly competitive prices. Therefore, it is by far not easy for the virtual stores to gain and sustain competitive advantages based solely on a cost leadership strategy in rival driven online marketing. Rather, marketing strategy with decision-oriented variables or indicators have increasingly become a key driving force in enhancing customers’ satisfaction and in turn in expanding their user/customer bases. The finding of this research confirmed that there is a strong and positive relationship between marketing strategic decisions.

Base on the findings of this study, it was obvious that strategic decisions initiatives begin with defining users/customers’ needs and preferences, and their related performance variable (decision-making) dimensions. If the virtual store understands what dimensions users/customers use to judge quality, they can take appropriate actions to monitor and enhance innovative strategy on those dimensions and remedy service failures. This study identified three main virtual store dimensions with sub-variables. Moreover, these variables were appropriate to paint a practical strategy picture and the impact on making decisions. Obviously, in order to make an appropriate strategic decision to maintain a high level of overall service quality and satisfy the users/customers at their utmost, the virtual store should pay attention to all three dimensions identified in this study.

Pen ultimately, the different rank positions of the two firms under the different performance drivers suggest that all firms were at least performing successfully in one segment. It is therefore worth mentioning that the virtual stores have been implementing some changes to improve navigation, and to provide more sophisticated trading tools, and have made a quantum leap on educating the user/customers through their websites.

In the nutshell, the findings disclosed that a virtual store will exist not only dependent on its product, good services of post-sales, business having well-organized shape, good network communication, a secured and market-oriented website but also having a competent decision oriented management team. And the e-commerce vendor must also maintain such worldly tasks such as its products availability, reliable shipping, and handling promptly and effectively about complaints. In the online environment particular customers have access to far more about the retailer information than they would find in a brick-and-mortar situation which is a unique property. That is customers can and occasionally do the investigation a brick-and-mortar shop online before visiting virtual store and that distinction does not show in every case.

6.1 Reflection for Recommendations

More specifically, the author reflected on some issues for recommendations. First, Web sites play a vital role and can convert an ordinary user that is information searcher into extraordinary users/customers that is buyers. Therefore, it is recommended that virtual stores implement information systems that integrate all their online and offline operations to improve their delivery performance. It is also of the essence that virtual stores have a smooth physical distribution channel. By far if the virtual lacks sufficient resources for building such a channel, it may outsource its logistics function to a third party specializing in logistics management to ensure timely and accurate service deliveries. The products and services dimension suggests that virtual store should do their best to provide personalized or individualized services to their users/customers, even though they use an impersonal medium, a Web site, as their primary marketing and distribution channel. It is well advised that the virtual store must have enough staff members to answer users/customers diverse questions via telephones and e-mails. In addition, while maintaining message functions on their web sites in order to listen to individual users/customers voices, the virtual store should have their customer representative monitoring the behaviours of online shoppers.

The virtual store management should focus on easy navigation for their online systems, well organized online catalogues, and concise contents. Invariably, a well-designed navigability can facilitate users’ acuity of online control and enjoyment. For instance the front store should clarify the meaning of interactive messages in order to facilitate the flow. In addition, virtual store managers may encourage users to share their views on products. For example, they may create online communities for their customers, which would allow customers to access experts and other customers with similar interests and experiences.

6.2 Limitation and Suggestion to further studies

Arguably, it is hard to make a study that provides detailed investigation in all elements causing a phenomenon. Instead some important elements are touched upon to reach a holistic view of what is going on. Digging deeper into these elements can be a suggestion for making further studies in this field of study. One major limitation is in sampling. Since the survey was given to a random sample of people residing in London a city in United Kingdom, the prudent reader may need to interpret the results of the study with caution, particularly with respect to the generalization of research findings to United Kingdom online users/customers as a whole.

Future research should make several extensions of the current study. First, to verify the marketing strategy decision measurement variable/indicator dimensions (decision-making variables) derived in this study and to enhance the generalizability of the research findings. Future research needs to use more diversified random samples and should employ a confirmatory factor analysis.

Subsequently, a future study needs to examine the causal relationships, rather than simple associations, between marketing performance variable/indicators dimensions, strategic decisions by employing a more rigorous research methodology, such as a structural equation modelling technique or causal models. Finally, the same research issues addressed in this study may need to be explored in the business-to-business e-commerce setting.