Internet Marketing

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Internet Marketing: An Overview

1. Introduction
During the past decade, the popularity of the Internet has been growing explosively. This trend is manifested in several ways. First, according to Cyberatlas.com (2002), the Internet in the United States is growing at a rate of 2 million new Internet users each month; 143 million Americans (54 percent of the population) used the Internet in September 2001, a 26 percent increase over August 2000. Second, the number of companies that create web presence to communicate with customers as well as other firms has been dramatically increasing. Third, the Internet has been accepted by broad Consumer segments for various purposes, such as information search and online purchasing. Also, as reported in Cyberatlas.com (2002), 36 percent of Americans use the Internet to search for products and service information, a 10 percent increase over 2000. Among Internet users, 39 percent are making online purchases and 35 percent are searching for health information.

Along with the increasing popularity of the Internet, marketing researchers have given qualitative and empirical attention to this phenomenon. Some academic journals have released special issues related to the Internet marketing (e.g., Marketing Science, Journal of the Academy of Marketing Science, and Journal of Retailing). Years of research have yielded many important findings. Among those studies, the Internet has been viewed as a marketing channel, a new advertising medium, and a communication platform.

2. Products on the Internet
Research on the topic of Internet products attempts to answer the following questions: • What kind of products may be suitable for online selling? • What kind of marketing strategies can be used to facilitate online selling? Any product is perceived by a buyer to be a combination of utilities (e.g., qualities, values, and/or capabilities) that is expected to provide customer satisfaction assessed in terms of expected benefits minus costs incurred (Murphy and Enis 1986). By gathering information prior to purchase, consumers can predict whether the purchased product may satisfy their needs and/or expectations (Alba et al. 1997). The value of this information to consumers depends on its nature and its reliability (Alba et al. 1997).The nature of the information will likely be altered if one views such information based on search, experience, and credence goods classification (Darby and Karni 1973). From an economic standpoint, goods are often classified into search, experience, and credence goods in terms of the consumers’ ability to assess quality and value before and after purchase (Darby and Karni 1973). The quality and value of search goods can be 2 easily assessed by consumers prior to purchase; the quality of experience goods is difficult and/or costly to assess prior to purchase and usage; the quality of credence goods cannot be verified even after repeated purchase and usage. Based on this trichotomous classification, some marketing researchers have drawn some tentative conclusions regarding the types of products that may be successfully sold on the Internet. For example, Klein (1998) states that for search goods, the Internet has the potential to provide information in a more accessible, less costly, and more customizable format, thus increasing the value of the Internet, reducing the costs of search directly (e.g., time, travel) and enhancing the expected benefits by facilitating consumers’ information-processing. Similarly, Peterson, Balasubramanian and Bronnenberg (1997) anticipate that consumers who wish to directly experience a good prior to purchase may view the Internet as an ineffective replacement of traditional instore shopping where the good can be inspected. Since search goods generally tend to be more suitable for online selling compared to experience goods, in order for an experience good to be sold...
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