A New Channel

Move over rock & roll, fast food, and syndicated television.

The Internet is now considered American’s greatest 20th century gift to the world. What began in the late sixties as an alternative communication channel for the military has quickly developed into a complex business and economic system.

“Believe the hype. The Internet and the World Wide Web have become the most important new communication media since television, and ones that are fundamentally reshaping contemporary understanding of sales and marketing.” Jim Sterne, author

During the late nineties, the Internet explosion saw a myriad of new companies rapidly developing products and services that capitalized on the Web’s potential. However, the push of first to market too frequently resulted in poor planning and business models that neglected to include realistic goals or profit margins. Unfortunately, as the final quarter of 2000 ended so did many of the dot-com firms.

Companies are realizing that web-based techniques and strategies must be approached as they would with any traditional marketing activity. Fundamental questions must still be answered:

• Who are our customers?
• What is the competition doing?
• What are the channel dynamics?
• Which marketing mix strategies are most effective?
• Are our business models realistic?
• How and when we will make a return on investment?

The learning curve of this still embryonic world is being scaled. From hard-earned lessons new business, pricing, distribution and advertising models are emerging.

A Snapshot of The Internet and the World Wide Web

The Internet is a complex system of computer networks. Anyone with a computer interface (PC, laptop, PDA, etc.) and the ability to access the network (wireless modem, telephone line, cable,) can easily hook into the system.

The World Wide Web is a software application that runs on the Internet. It provides the platform that incorporates text, video, graphic and audio functions. Consider the “Web” as the user-friendly interface that brings the Internet to life.

The Changing Profile of Internet Users

At the start of the Internet’s history, the typical user was a high-income, young man. It’s not surprising that the people who developed the system would be its most dominant customers.

However, the overall demographic profile (U.S.) is shifting to reflect the average population. Many analysts, including those from the Yankee Group, report that the Internet is now reaching the mass consumer market. Cheaper computer prices, cultural acceptance and the ubiquitous influence of the Internet are influencing the online surge of new users.

A significant finding from the Yankee Group’s Interactive Consumer Survey (IAC) 2000 indicates the Internet is losing its mystique. For many the Internet has become an integral part of the daily lives of household users. According to the Yankee Group study, 87% of respondents logged online at least once a day.

 

As users gain a greater comfort level interacting with the Web and begin to establish trust among the Web sites they visit, it is logical to assume that online buying will continue to escalate.

In a study released May 2001, the Boston Consulting Group projected $65 billion in North American online sales for 2001. This represents a 45 percent increase from 2000 purchases.

Another strong signal that the Internet is becoming more entrenched in daily life is the increase in time spent online. Based on a study from Media Metrics, the average user in the United States spends approximately 40 minutes a day on the Internet compared to 30 minutes online in 2000.

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When it comes to B2B, Jupiter Media Metrixorecasts that most business-to-business companies will eventually move online even though purchasing agents plan to conduct only 20 percent of their transactions via the Internet by 2002. Jupiter predicates that 85% of online transactions will occur between buyers and sellers who have established relationships.

Forrester projects that online worldwide commerce, including both business-to-consumer and business-to-business, will reach $6.8 trillion in 2004. North America will capture $3.5 trillion.

Business and marketing on the Internet continues to explode. With easier access to computers, greater acceptance from the general public and faster connectivity the Internet is becoming the channel of choice for gathering information, and for some early adopters, the commerce medium of choice as well.