International Marketing- Essay Solved

 

International Marketing

(2440 Words)

Introduction

                 

    The Internet is like a 20-foot tidal wave coming across the Pacific for thousand of miles and gaining momentum, and it’s going to lift you and drop you. We’re just a step away from the point when every computer is connected to every other computer, at least in the U.S., Japan, and Europe. It affects everybody- the computer industry, telecommunications, the media, chipmakers, and the software world. Some are more aware of this than others (July 8, 1996). With the advent of ever-improving technologies, faster communication, and transportation, the world today is rapidly shrinking. Trends and environmental forces acting on today’s markets and economic arenas are basically forcing many companies to go “e-global” if they are not yet doing so (2002).

The Internet has extended the informational and interactive capabilities of the world. This technology is highly publicized, debated and regulated media ( 2000). This technology helps the people in different parts of the globe to communicate, making the world a small one. The Internet serves as a link or a bridge for different countries in sharing different ideas, information and data. It also offers a new and cheap way of communicating and effortless gathering of information.

The Internet also has the ability to change the nature and operation of markets, to such epochal events as the advent of the railroad and the introduction and growth of the telephone system (1993). The use of the Internet as a new medium of marketing has emerged as a major force in reshaping the nature of the market system in general. During the 2000 holiday season, 45% of US consumers bought products online (2001), and spent approximately $10.8 billion for items purchased online ( 2001). The Pew Internet and American Life Projects study shows that more than 50% of the U.S. population uses the Internet (2001).

This shows the growth and great demand of the Internet as a medium of marketing and shows that Internet-based business is now at the peak of its life. That’s why most of the companies or organizations and even individual are focusing on this kind of market system.

The fast growth and improvement of the Internet will definitely change the way how people live, learn and conduct businesses.

The Market System

            One of the most important advances needed for the creation of a market system took place sometime between 12000 and 10000 B.C. with the advent of specialization and the start of the Neolithic Age (2003). Most of the tribe members have focused in a certain task such as hunting, gathering of fruits and fruit crops, cooking, tool making, shelter making and clothes making. The first towns and cities were built as the methods of agriculture improved. Because of dependable food supplies, people learned to build and live in permanent houses. New forms of society such as the religious center, courts and market places developed as settlements increased in size.

The earliest signs of the market system at work can be seen with the advent of bartering within tribes as far back as 6000 B. C. in Mesopotamia ( 2003). This is product to product exchange or trade, for example, 10 chickens in exchange of a cow. The disadvantage of the barter system is that both parties had to want what the other party in order for the trade to take place, and more often than not this mutual understanding of both parties did not happen.

The disadvantages of the barter system led to the money system. Silver rings or bars were thought to have been used as money in ancient Iraq before 2000 B.C (2003). The usual forms of money were commodity money like seashells, tobacco leaves, large round rocks and beads.

The money system became the foundation of market system. All of the next developments in the market are all connected to this event.

The Internet Technology

            The market is a social arrangement that allows buyers and sellers to discover information and carry out a voluntary exchange of goods or services. In everyday usage, the word market refers to the location where goods are traded ( 2000).

            During the 1970’s, the only people talking about the Internet were the small number of individuals who were involved in engineering it, building it and nurturing its growth. During 1980’s, the Internet expanded its reach and diversified its information resources and services, but still its existence went largely unnoticed by the general public and it managed to retain its quiet, remote and unassuming presence. The only national press coverage that the Internet have received during its two decades of existence was when there was a sudden and sizable failure in one of its component systems or a debilitating network attack, like the Internet worm of 1988, and the only individuals who took an interest in the Internet were computer enthusiasts, that was very small during that time (2005).

The first twenty or so years of the Internet was hidden to the public. Before an individual can connect to the Internet system, he/she had to work at a major research facility, like AT&T Bell Laboratories, be one of the students or faculty of Internet-connected academic institutions, like the Massachusetts Institute of Technology (MIT)  or Stanford, or work for one of the United States government agencies (2005).

It was hidden to any private use and definitely commerce free. The Internet was only available for research purposes and government work of different government agency especially the military purposes.

The Electronic Commerce (E-commerce)

E-commerce is the modern business methodology that addresses the needs of organizations, merchants and consumers to cut costs while improving the quality of goods and services increasing the speed of service delivery by using Internet (2007).

            Commerce or the trading of goods has been a major impetus for human survival since the beginning of recorded history and beyond. The mass adoption of the Internet has created a paradigm shift in the way businesses are conducted today.  The emergence of e-commerce or the buying and selling of goods through   human-interaction over the Internet has seen immense growth over the past decade (2007).

E-commerce has become part of the daily lives of most of the people in the world. It is now one of the reasons why people do use the Internet. Through e-commerce, anyone can buy anything from any part of the globe for a reasonable price. This also gives any individual or business of any size to sell and even promote or advertise their products or services to the world.

The Disadvantage of E-commerce

Although e-commerce offers the public a vast variety of stores and shops for different products and services and offers the businesses with a vast and immeasurable target consumer, it also has its weak points.

The research shows that the top ten disadvantages of e-commerce are: lack of business model, lack of trust and key public infrastructure, slow navigation on the Internet, the high risk of buying unsatisfactory products, and most of all the lack of security ( 2000).

The lack of trust is one of the main reasons why customers are unwilling to accept e-commerce due to privacy and security reason, especially if it deals with the money terms like credit card information. According to an Economist article in 2000, there are about 95% of Americans were reluctant to give their important yet private personal information via the Internet. The main reason of the customers is the danger of hackers accessing their files and at the same time corrupting their accounts (2003).

Another reason is that the limitations of products that can be sold over the Net. For some business that offers some high-cost and unique items like jewelry and antiques, it will be hard to sell their product over the net because these are the type of product that are needed to be felt, touched and examined before the customer will buy them. Another example are the furniture companies that are offering information about their shop and products over the net but since most of their customers would still want to scrutinize the product before buying it.

Another reason is the expectation of the customer, most of the time, the picture or the presentation of the product or service is different from its actual form. Example is the perception of color. Due to the different monitor settings, inaccurate information about color makes it difficult for the customers to make a precise decision when purchasing online. Because customers are unable to trial or access the actual goods before purchasing and delivery, many of the customers will not take the risk of purchasing via the Internet ()

Another problem is the issue about taxing. This issue arose due to the increase of trade in e-commerce. The question in here is should the customer pay the sales tax, and if the business and the customer are in the different state or country, which state tax would be applied. The IRS (Internal Revenue System) , decided that web-based selling and purchasing activities must be levied with tax because if they were free from tax, then brick-and-mortar stores will lose business and customers will buy more over the web since shipping and handling fees are applied ().

The biggest problem in e-commerce is the security issue. There are sites that don’t have the capabilities to prove authentic transaction. If someone gets the number of your credit card, they can go to one of these sites and purchase items without proving who they are. All they need is your name and the credit card number ().

Application of E-commerce

E-commerce             has advanced from online billboards to a fully functional, personalized shopping experience over the past decade. While there were admittedly a few bumps along the road, the path from 1994 through the 2004 holiday shopping season is full of crucial milestones of Internet pioneers and technology innovators (2005).

The first two and the largest companies that offer the e-commerce were Amazon.com and eBay. Up until now, these two giant in e-commerce still continue to sell their products over the Net.

Amazon.com and Ebay

            Amazon.com is an American e-commerce based in Seattle was founded by Jeff Bezos in 1994 and today offers the world’s biggest selection of products over the Net. It began as an online bookstore and soon diversified its product lines adding VHS, DVD, music CD, computer software, video games, electronics and more.  It has now established its separate websites in Canada, the United Kingdom, Germany, Austria, France, China and Japan ().

eBay is an online auction and shopping website where people and businesses can buy and sell goods and services worldwide. There aren’t many sites on the Internet that can claim the success that eBay acquired. The company began in the home of Pierre Omidyar in 1995 as a personal site that offers a personal auction. It is now one of the leaders in Internet revenue. You can find almost anything in this site, and you can share a product and other viewer and customer can see it and might get interested.  Rare items can be sold at very high price, like Elvis Presly’s shoes or rare baseball trading card.

This e-commerce site offers wide selections of products and it offers a quick search where in you can find the product that you wanted in short time, but Amazon.com and eBay has its limitations. There are some products that are not available to a certain place or country and the company will wish the customer to give another location. Another is the shipping period or the time it will take to deliver the product; this will also affect the decision of the customer in buying a product. The price of the product is also a factor, because these two companies are based in America or in the UK, the currency issue will affect the overall price of the product plus the shipping cost and tax.

E-commerce the Future of Business

The main difference of e-commerce to the traditional market system is that it enables the trading of goods, money and information electronically from one computer to another. Business is done electronically and there is no need for physical currency or goods to conduct business (2007).

Traditional physical trading of goods and currency is becoming increasingly popular and more businesses are now engaging on the e-commerce business. Today the line between e-commerce and traditional commerce is becoming more blurred as more business start to continue to integrate the Internet e-commerce technologies into their business processes (2007).

In 1996, business that was done across in the Internet worldwide generated $2.9 billion in revenue on 50,000 sites. In 2002, it rose to $2 trillion (2002). In 1999, around 43% of all stock trades in the U.S. were conducted online (2000). Around 65% of all stock trades, including those by institutional investors, were transacted online in Korea by October, a dramatic increase from the five percent that was similarly traded at the beginning of 1999 (2001).

The new study of Center for Research in Electronic Commerse, e-commerce will become the industrial revolution of the 21st Century (2006). This study shows that e-commerce will be a powerful market environment in the world and will establish a new era of business to customer’s relationship. The Forrester Research predicted that American films alone would sell US$316 billion in goods and services via the Web by 2010. That figure would be more than double the 2004’s online spending to account for some 12% of all retail sales, up from about 7 percent today (2005).

E-commerce business opens a new medium in the global market. Global market exists when transactions between buyers and sellers of a product are not directly or indirectly segmented by geographical distance (2001).

Conclusion

            With the use of e-commerce, many businesses and individual in the world are able to compete in global markets regardless of language and cultural barriers, physical distance and national boundaries since products, services and transactions can be re-engineered to adjust to changing business environments ( 2000).

Some authors have argued that a new business paradigm has emerged in form of e-commerce (2002).  On the other hand,  (2002) said that the recent difficulties experienced by the e-commerce businesses indicate that there has actually been little change in the underlying beliefs and values. Such firms therefore operate within the same business environment as conventional businesses and hence are subject to the same rule (2002).

E-commerce will help the world to exchange goods and products across each timeline. This will help countries improve their respective economies as well as promote their country’s pride.

E-commerce offers an environment of healthy competition that will drive the companies to improve to meet their customer’s expectations.