University of Halmstad
School of Business and Engineering Master International Marketing
Business
Business Business Business to to to to Consumer Consumer Consumer Consumer web-site web-site web-site web-site under under under under the the the the financial
financial financial financial crisis crisis crisis crisis
- A case study of four business to consumer web-site -
Master’s disser tation in Internationa l Marketing, 15 credits Final semina r 15 August 2009
Supervisor: Venilton Reinert Author:Yi Gao 870618-T081 Liangjun Ying 870801-T070
Acknowledgements Acknowledgements Acknowledgements Acknowledgements
This Master ’s disser tation was written during the spring of 2009 at the Internationa l Marketing Programme of Halmstad University.
We would like to express our apprecia tion to our super visor Mr. Venilton.Reinert who supported us enthusiast ica lly with comments, ideas and genera l encouragement throughout the research process. The super visor’s input has been credibly helpful.
Halmsta d, 2009
GAO YI & YING LIANG YUN
ABSTRACT...4
1. INTRODUCTION...5
1.1 Background... 5
1.2 Problem discussion...7
1.3 Purpose ...8
1.4 Outline of thesis ... 8
1.5 Delimitation...9
2. THEORETICAL FRAMEWORK... 10
2.1 The internet ...10
2.2 Electronic commerce...12
2.3 The E-commerce and the internet ...16
2.4 Marketing strategy... 17
2.5 Marketing mixed ... 19
2.5.1 Product ...21
2.5.2 Place ...22
2.5.3 Prices ... 23
2.5.4 Promot ion... 26
3. METHODOLOGY...32
3.1 Research met hod... 32
3.2 Type of research ... 33
3.3 Sampling of the research ...35
3.4 Instruments of data collect ion... 36
4. EMPIRICAL DATA...39
4.1 TaoBao.com...39
4.11. Brief introduct ion about TaoBao.com...39
4.12 Price and promot ion strategy... 40
4.2 DangDang.com ...41
4.21 Brief introduct ion about DangDang.com ...41
4.22 Price and promot ion strategy... 42
4.3 Ebay.com... 42
4.31 Brief introduct ion about Ebay.com... 43
4.32 Price and promot ion strategy... 44
4.4 Amazon.com ...45
4.41 Brief introduct ion about ama zon.com...45
4.42 Price and promot ion strategy... 47
5. ANALYSIS...49
5.1 First impressions ...49
5.2 Price ...49
5.3 Promot ion...51
5.4 Comprehensive Analysis ... 52
6. CONCLUSION AND DISCUSSION... 58
6.1 Conclusion...58
6.2 Discussion... 59
6.3 Limitation...60
6.4 further research...60
7. REFERENCES...61
7.1Book and articles:...61
7.2 Websites:... 66
Abst ract Abst ract Abst ract Abst ract
Global fina ncia l crisis, triggered by the U.S. sub-prime mortgage crisis, is now the hot issue all over the world. The crisis has already slowed down the world economy and brought great shocks to almost ever y industry. For B2C companies all over the world, the crisis is more of an opportunity tha n a threat and therefore these companies should use marketing techniques to further boost their revenue and profit.
In view of this situation, this thesis is dedicated to discuss the price and promot ion strategies used by B2C companies during the crisis. Through case studies of four B2C companies, that is, TaoBao.com, DangDang.com, EBay.com and Amazon.com, we conclude that discount, pricing leadership and penetration pricing are the universa l price strategies used, while they also use nearly similar promot ion strategies:
advertising, public relation and sales promot ion. Consider ing the current crisis, we also think that current price and promot ion strategies are insufficient in face of globa l fina ncia l crisis in that they are not flexible enough to adapt themselves to the changing consumer behaviors and economic surroundings. Consequently, to seek to address these problems, we here bring forward three suggest ions: strengthened segment-based pricing Strategy, innovative promot ion strategy and flexible marketing mix.
KEYKEY
KEYKEY WORDSWORDSWORDSWORDS: fina ncia l crisis, B2C Electronic commerce , online, 4p, price strategy, promot ion strategy.
1. 1. 1. 1. IIIIntroduction ntroduction ntroduction ntroduction
In this introduct ion chapter, the background of the problem will be introduced, followed by problem discussion and purpose fina lly will end with outline and delimitations.
1.1 1.1
1.1 1.1 B B B Background ackground ackground ackground
The fina ncia l crisis was triggered in the first quarter of 2006 when the house prices began to decline. The real outbreak of the fina ncia l crisis came in the USA when ma ny subpr ime lenders went bankruptcy in March 2007 (Woertz, 2008)
The crisis is rooted in real estate and subpr ime lend ing. In the last few years, the housing price was increasing. The increased housing prices coincided with a period of gover nment deregulation that not only allowed unqualified buyers to take out mortgages but also helped blend the lines between traditiona l invest ment banks and mortgage lender s. However, when home values became to fall down and home owners failed to keep up with their payments, banks were forced to write downs and write offs on these products. These write downs made severa l fina ncia l inst itutions almost insolvency. These fina ncia l inst itutions were forced to raise capital or go bankrupt (Tang, 2008).
The fallout within the fina ncia l industry in 2008 has caused "cred it crunch" in the U.S.A. A series of bank and insurance company failures triggered a fina ncia l crisis that effectively halted globa l credit markets. Fannie Mae (FNM) and Freddie Mac (FRE) were both taken over by the gover nment. Because of failing to find a buyer, Lehman Brothers declared bankruptcy on September 14th. Bank of America agreed to purchase Merrill Lynch (MER), and American Internationa l Group (AIG) was saved by an $85 million capital inject ion by the Federal Reserve federal gover nment. More and more public corporations had filed for bankruptcy in the USA. These failures caused a crisis of confidence (Tang, 2008). Since then, Ownit Mortgage Solutions ’
bankruptcy in late 2006 and the New Century Financia l failed. It was a sign that the subpr ime game was over. The USA gover nment sponsored enterprises, tightening credit around the world, so the fina ncia l crisis becomes the worldwide (Acharya, Philippon, Richa rdson, roubini, 2009).
The fina ncia l crisis was so severe that, no business sector stayed untouched. Because of higher unemployment and lower incomes, the consumers have to belt-tightening.
With the deteriorating economic situation and the rising unemployment rate, the rate of consumer credit in bad debts has a rapid increase (World Economic Outlook, January 2009). Customers begin to find a new channel to buy products in a cheaper way and get more convenient service . On the other hand, the globa l fina ncia l crisis has created a struct ural break in the globa l economy. Businesses thus need to reassess the strategies they have developed to operate in a highly integrated globa l economy.
Times of crisis are also times of opportunity. Business-to- customer elect ronic commerce is basica lly a concept of online marketing and distributing of products and services over the Internet. It mea ns the conduct ing of commerce by companies, gover nment agencies, and inst itutions with consumers over the Internet . The genera l idea is, B2C elect ronic commerce is a natural progression for ma ny retailers or marketer s who sell directly to the consumer s (www.isos.com). The e-commerce has the following advantages:
For customers: reduced prices, globa l marketplace, and 24-hour access
For businesses: increased potentia l market share, low-cost advertising, and low barriers to entries.
With the dist inguishing feature and advantage, the fina ncia l crisis is a good opportunity for B2C Electronic Commerce , which grows rapid ly.
Marketing strategy begins with the changing environment. It is important that companies find the right combination of marketing mix when developing their strategies. As it is known that the marketing combination of marketing is 4ps that
stands product, price, place and promot ion. (Wang, 2006) In order to cope with the fina ncia l crisis, ma ny B2C websites applied some new marketing mixed strategies, like price and promot ion strategies.
As mentioned above, when a fina ncia l crisis occurred, customers changed their purchasing behavior and businesses try to find a better way of selling, which required the B2C websites had to do somet hing difference to be able to satisfy the changing environment. Sequentially, more and more promot ion skills were applied in sales in the marketing mix during this fina ncia l crisis.
1.2 1.2
1.2 1.2 Problem Problem Problem Problem discussion discussion discussion discussion
With the widespread of internet, e-business becomes the cutting edge for today's business. E-Business has created ma ny opportunities in today's internet based on societ y. The two researchers wanted to find how the fina ncia l crisis influence d the E- business. They therefore decided to focus on some famous and representative business-to- customer websites for this research.
The fina ncia l crisis is like a storm, affecting basica lly the whole world and all business sectors. As a consequence, people are changing their purchasing preferences and businesses try to find new selling channels to cope with this situation. Because of the advantage of online marketing, the online shops are celebra ting a boom time . Thus the fina ncia l crisis benefits e-commerce .
There are so ma ny factors can influence the ma nager’s determination and ma ny types of marketing strategies to choose from. Just like different consumer s, different economic environments, different polic ies , different type s, and so on. What price and promot ion strategies they use to deal with the crisis and whether the price and promot ion strategies adapt them or not ?
Under the fina ncia l crisis, B2C websites should active quick ly to match the customers ’ new requirement and the certain environment. The marketing mixed model, especia lly the price and promot ion strategy is the tool through which B2C websites operate their strategies. Therefore, the focus of this research will la y on price and promot ion strategies of some B2C websites during the fina ncia l crisis.
1.3 1.3
1.3 1.3 P P P Purpose urpose urpose urpose
The purpose of this study is really simple and easily understa ndable. It is to find out what price and promot ion strategy the B2C websites use to cope with the fina ncia l crisis and make some suggest ions for other companies
To answer the quest ion, the study will be made through a case study involving four famous and representative B2C websites. The researchers believe that the way to answer the previous quest ion is to study their marketing strategy by using the marketing mixed as the tool, especia lly the price and promot ion strategy, and the information from their website, and so on.
This thesis will most ly analyse the price and promot ion strategies they use during the fina ncia l crisis.
1.4 1.4
1.4 1.4 Outline Outline Outline Outline of of of of thesis thesis thesis thesis
The thesis contains seven chapters in total. Chapter 1 outlines the basis of the whole thesis. Research problem, aim, objectives and research purpose are presented in this chapter. In chapter 2 the theoret ica l framework is presented in the internet, elect ronic commerce, the marketing strategy, and marketing mixed model. Chapter 3 is about the met hodology and research design and how the met hodology is applied when conduct ing the research. In chapter 4, the empirica l data will be shown. It contains the synopsis of the research companies, some information and data which are collected in their annual report. Chapter 5 is an analysis about the four websites which the research
chooses; it will link the literature framework and the empirica l data. Chapter 6 is the conclusion of the whole thesis, the viewpoint will be shown. And chapter 7 is the reference showed for the readers.
1.5 1.5
1.5 1.5 Delimitation Delimitation Delimitation Delimitation
This thesis only focus es on price and promot ion strategies, have a deep research on price and promot ion. Don’t pay more attention on place and product. The select ion of companies delimits this study to only B2C elect ronic commerce websites, no other types of elect ronic commerce websites. The study is also delimited to the present time without consider ing histor ica l or future actions taken by the companies .
2. 2. 2. 2. T T T Theoretical heoretical heoretical heoretical framework framework framework framework
A review of literature was undertaken in order to pursue the aim and purpose presented in chapter 1.The key findings from the literature on issues related to the elect ronic commerce and the online marketing mixed model and strategy are presented. In order to provide the reader a comprehensive and clear understa nding of the framework, some figures will also be used.
2.1 2.1
2.1 2.1 The The The The internet internet internet internet
The inter net is a nearly perfect market because information is insta ntaneous and buyers can compare the offerings of sellers worldwide. With the widespread of internet, e-business becomes the cutting edge for today's business. E-Business has created ma ny opportunities in today's internet based societ y.
Internet is becoming more and more important in the moder n life. As a highly important new technology, internet has become an inescapable tool for companies. It has attract ed the attention of people from different areas and fields, like entrepreneurs, executives, investors, business observers, and so on. The internet can help companies change their traditiona l competition way who use the internet technology to alter the foundation of competition away from quality, features, and service and toward price, making it harder for anyone in their industries to turn a profit. It is an opportunity and also a challenge for companies. It is decided what will the company use the internet, or if use it in an effective way (Porter, 2001).
The suitability of the Internet for e-business depends to a large extent on the character ist ics of the products and services being marketed (Peterson, Balasubrama nian, & Bronnenber g, 1997).
The time has taken a clearer point of the internet. Internet is an enabling technology; it is a powerful set of tools that can be used, it used in almost any industry and as part of almost any strategy. It is not only for “Internet industries, ” “e-business strategies,”
and a “new economy”. People should realize the internet by an overa ll point, not only expert understa nd it. (Porter, 2001)
The Internet promises to revolutionize the shopping and information-gather ing choices available to consumers (Gefen and Straub, 2002).
Thanks for the internet technology. It affords better opportunities for businesses to make a difference strategic tha n use the traditiona l technology. Price and cost give expression to the economic value for a company. It is reliably measured only by susta ined profitability. (Porter, 2001)
Internet is so much powerful because it is both a market and a med ium, which makes it unique (Ngai, 2003). Internet offer companies sophist icated tools for advertising, promot ing their philosophies, and communicating with their customers all over the world. It has low entry barriers, so with the help of internet, most industries will likely end up with a net increase. (Palumbo & Herbig, 1998)
The internet has become a popular tool for information excha nge and knowledge deliver y. The commercia l has altered their traditiona l trading met hod, and ma ny traditiona l buying and selling activities have moved to the internet. (Shih& Wu, 2003)
The internet developed very fast in the moder n world. As it developed, the internet has become a critica l channel for selling products and services to consumers around the world. Many people will buy goods and services not only in norma l channel, also people can buy goods and services through internet. Moreover people can quick ly search for information about products and services by using the internet. There is no doubt that it will become the world’s largest shopping channel, and it is an outsta nding position to grow considerably over the foreseeable future (McQuitty &
Peterson, 2000).
The internet shows a huge opportunity for all the things. For customer, it gives a much choice of products, services and prices from different suppliers and the mea ns to purchase items more lightly. Also the internet channel gives a new opportunity for organiza tions marketing, the internet can help them expand into new markets. And they can sell their product to the new markets. The internet is a more equal basic point for businesses. There is other point that, for those working within organiza tions it can develop new skills and to use the internet as an advantage tool improves the competitiveness of the company. (Chaffey, Chadwick, Johnston & Mayer, 2006)
Now the internet marketing has in conjunction with traditiona l marketing med ia. The two marketing med ia have used toget her to acquire and deliver services to customers.
It is an innovation for the marketing strategy. E-market ing or electronic marketing which can be considered to have a broader scope since it refers to digital med ia such as web, e-mail and wireless med ia. Also it contains the ma nagement of digital customer data and elect ronic customer relationship ma nagement systems. (Chaffey, et al. 2006)
2.2 2.2
2.2 2.2 Electronic Electronic Electronic Electronic commerce commerce commerce commerce
Somet imes, ‘e-commerce ’ is often used in a similar context to ‘internet marketing’, but their scope is different. Most people often think the electronic commerce is simply refer to buying and selling on the internet; when people talk about elect ronic commerce, they immed iately think the shopping companies like eBay, Amazon. But in Chaffey, et al, they mentions “e-commerce refers to both fina ncia l and informationa l elect ronically med iated transact ions between an organiza tion and any third party it deals with” (Chaffey, et al 2006, P11).It mea ns that like inbound customer e-mail enquiries and outbound e-mail broadcasts to prospects, customers, service which the non-fina ncia l transact ions are also aspects of e-commerce. (Chaffey,
et al. 2006)
Kalakota and Whinston (1997) describe Electronic Commerce (E-Commerce, EC) as
"t he capability of buying and selling products on the Internet and other online services." Chaffey et al. (1999) define EC as "transact ions of goods or services for which payment occurs over the Internet or other wide area networks". Internet technology such as computer, information networks, elect ronic data excha nge (EDI) leads the business transact ions is called electronic commerce. E-commerce can occur within and between three basic participant groups – business, gover nment, and individ uals.
Figure 2.1 model
Electronic commerce is not a single thing. It is a complex of technologies, infrastruct ures, processes, and products. It has been connected with applica tions, producers and users, information excha nge, and economic activity into a globa l marketplace. (Mann, Eckert & Knight, 2000)
Internet-based tools, processes and activities supporting, supplementing, improving or replacing traditiona l commercia l practices, mix these factors toget her, can be defined E-Commerce. Promot ion, Acquisition, Sales, Communica tion, Customer Retention, Personnel Recruitment, and Market Research etc are also including in the e-commerce parts. They all have a link with each other, and in the e-market these factors mix toget her to support the e-business ’s norma l work. (E.Consta ntinides, 2006)
E-commerce is bringing with it accompanying changes in the nature and struct ure of markets and the elimination of a wide variet y of midd lemen heretofore facilitating economic transitions (Symonds , 1999).
The technologica l and processing capability to make on-line payments and to deliver goods and services to consumers both physica lly and over the internet, it’s the elect ronic commerce requires. Like the traditiona l commerce, elect ronic commerce also needs laws to create a good environment. In the internet environment, there is much difference for the norma l environment. So elect ronic commerce needs standards,
regulations, laws to build an environment of certainty, trust, security for the purchase sale of products online (Mann, Eckert & Knight, 2000).
“Electronic commerce highlights the syner gies between the services sectors. It’s fast pace, globa l reach, and information rich-environment requires that progress on upgrading all these infrastruct ures precede comprehensively.” (Mann, Eckert &
Knight, 2000, P45)
Electronic commerce is a relatively new trading idea. All kinds of things can put into the elect ronic marketing place . A certain kind of commercia l and economic activities can be classified as the e-business .(Wang, Caldwell& Salvend y, 2003) The internet is growth so fast that there also has been a quick growth in B2C business due to the convenience of the internet and the relatively lower initia l costs (Wang, Kuo& Hwang,
2005).
The Electronic commerce is new, and its trade environment is intangible , customers do not know enough about security technologies, publicized security lapses make them wary about E-Commerce security. So ma ny customers can’t trust this kind of new business channel, but as it developed, more and more people began to accept this way. In Han (2003) invest igated that the most considerable component is trust. When the customers have a better understa nding of the E-Commerce, they will accept e- Commerce and online transact ions.
Traditiona l channels and E-Commerce channels have ma ny differences. In traditiona l channels, from dema nd generation to after-sales service, all the funct ions are performed by the chosen configuration. (Ellen and Robert, 1999) The WWW (World Wide Web, Internet) its funct ion will show in three broad groups:
(1) Non-store information channel,
(2) Non-store reservation channel with a traditiona l ma il or courier service deliver y (3) Non-store purchasing and physica l deliver y channel (Dirk and Joseph, 1999).
Electronic commerce is becoming an important business area, showing strong growth.
Electronic commerce reduces costs, extends exist ing distribution channels, extend ing exist ing business models. It is a completely new business model, can provide a much greater important and wide tha n before. (Fensel, Brodie, 2003)
Electronic commerce ma y have large economic effects in the future. Internet commerce will change the face of business forever. The e-commerce has affected the globa l economy in ma ny different ways (Gawady, 2005).
There are four types of elect ronic commerce: business-to-business elect ronic commerce, business-to-customer electronic commerce, customer-to-business elect ronic commerce, customer-to-customer elect ronic commerce.
People always think that B2C Electronic commerce can described as business to customer or B2C refers to e-commerce activities that are focused on consumers rather tha n on businesses .
B2C EC is referred to improve the transact ion between business and customer with elect ronic techniques. Offering products/ser vices on the inter net is referred to B2C elect ronic commerce . There is anot her kind of B2C elect ronic commerce is that establishing websites with purpose of attract ing streams of people , and getting profits from the advertisement. But most of the time we call them C2B which is a little bit of difference from B2C elect ronic commerce. B2C elect ronic commerce ma inly focuses on security and identifica tion. The key of B2C EC is to attract a great number of customers to browse the website. (ZHU, TA, TANG, CHEN, 2003)
Hence, the enormous potentia l of B2C commerce (Wang et al, 1998) can only be realized if consumers feel comfortable transact ing over this new med ium with unfamilia r sellers (Gefen and Straub 2002).
2.3 2.3
2.3 2.3 T T T The he he he E-commerce E-commerce E-commerce E-commerce and and and and the the the the internet internet internet internet
The potentia l of the inter net as a commercia l med ium and market has been documented in a variet y of publica tions (Haffma n& Novak & Chatterjee, 1995).
Many companies were hoping to attract more customers’ attentions on its website. In order to do this, they are developing commercia l web sites and adding web interfaces for the m in being information systems . Somet imes, people go through some websites random ly without buying anything; or ma y be they do not buy successfully due to complicated payment procedures, unsuitable information, or incompatible interface.
(www.survey.ya m.com, 2002) So understa nding the consumers ’ behavior is very important. Therefore, in order to build a better B2C environment to facilitate the
commercia l transact ions, it is necessary to understa nd the behavior differences between the virtual store consumer s and physica l store customers.
The internet and elect ronic commerce change the environment in which policymakers operate. They change interact ing way. Under internet and elect ronic commerce environment, the policymakers change the way which interact with each other, with consumers, and with businesses, both within and across jurisdict iona l boundaries.
Their aims are to get ma ximizing the benefits of the globa l, information-rich network, so policymakers need to align policies to take advantage of the new environment. Yet people acknowledge that, there is difference between nations and individ uals. Policies must be interoperable yet reflect that heterogeneity. (Mann, Eckert & Knight, 2000)
“The internet and elect ronic commerce change the traditiona l marketplace in two ways: process and product innovations and new markets in time, information, and geography.” (Mann, Eckert & Knight , 2000 P21) Supporting by technologies, it was very important for economic growth and infla tion. (Mann, Eckert & Knight, 2000)
In the article “the marketing mix revisited: towards the 21st century marketing ”, it mentions that : “The commercia lisa tion of Internet brought about a new breed of virtual business engaged in a variet y of commercia l online activities usua lly referred to as E-Commerce. ” The elect ronic commerce provides people a new environment and gives people new competition. The communication is new for either customer or businesses. The market is transparent; it is equal for the competater. (Weltz 1995;
Seybold and Marshak 1998; Porter 2001)
2.4 2.4
2.4 2.4 M M M Marketing arketing arketing arketing strategy strategy strategy strategy
A strategy is a pla n for achieving aim through the deployment of scarce resources in the face of intelligent competition. If the environment changes, people try to make the suitable marketing strategy in order to fit the changing environment, especia lly the
part of the environment consist ing of potentia l customers and competitors . (Webster , 1995)
A marketing strategy can be mixed toget her of some marketing programs, each consist ing of information of the products and services from the internet. Moreover, companies can establish an interact ive communication by the internet communicating tools; as a result, customers can join in the marketing process. When making marketing strategy, companies must start from the customers ’ wants and needs, or else they will not attract the customers or lose the customers. Consequently, companies should take customers into the account of marketing strategy decision as the key factor. It is known that the marketing combination of marketing is 4ps that stands product, price, place and promot ion. (Wang, 2006)
In a genera l word, the ma in point in the development of marketing strategy is an evaluation of the organiza tion’s strengths and weakness, and if those strengths or weakness satisfied by the customer in the marketplace. (Webster , 1995)
When people make marketing strategy, they should try to make effective marketing strategy. Depends upon honest evaluation of strengths and weaknesses and useful information about customer needs, wants and the extent to which they are being served by current suppliers, is called an effective marketing strategy. An effective marketing strategy consists of sub strategies for product, price, promot ion, and place.
(Webster , 1995)
Firms improve sales and marketing shares in a variet y of ways. The firm’s ability to identify and influence the flows of customers into and out of its franchise and into and out of the market mea ns the successful marketing strategy. The marketing strategies are designed to obtain additiona l customers, encourage brand switching, and increase purchase frequency, and so on. (Fornell & Wernerfelt, 1987)
2.5 2.5
2.5 2.5 M M M Marketing arketing arketing arketing mixed mixed mixed mixed
In 1953 Neil Borden brought the term ‘marketing mix’. He gives us a total impression of this definition . ‘Marketing mix’ referred to the mixture of elements useful in pursuing a certain market response. The significa tion not only suggested the availability of a large range of possible composing, not only mea ns the single element, but also the a good deal of ways in which these elements could be combined, this is the key, because in fact, it always only use one element of the marketing mix model. In a fact, different ama lgamations produce different results, with some preferable to others.
So choose how to mix each element is an art. The expression reminds one of ma ny other types of combination with similar character ist ics. (Baker, 2000)
The Evolvement of Marketing Mix Theory
Other than the 4P models, there are ma ny different types of marketing mix models as listed in the above table. These models attempt to extend exist ing marketing mix theor ies so as to better accommoda te specific aspects of marketing. For insta nce, 6Ps
Theory Forwarded by Content
4Ps Jerome McCarthy, 1960 Product, Price, Place, Promot ion 6Ps Philip Kotler , 1985 4Ps, Politics, Public Rela tions
7Ps Bitner & Booms , 1981 4Ps, Participant, Process Management, Physica l Evidence
4Cs Robert Lauterborn, 1990 Consumer, Cost, Convenience, Communica tion 4Rs Done Schuhz, 2000 Releva nce, Reaction, Rela tionship, Reward
model proposed by Philip Kotler includes public opinion and politica l power (Kotler , 2005) and 7Ps model proposed by Booms and Bitner in 1981 includes three additiona l elements to accommoda te trends towards a service or knowledge based economy (Bitner&Booms , 1981). 4Cs model proposed by Robert Lauterborn in 1990s is also a well-accepted marketing mix model, in which consumer, cost, convenience and communication are considered the most important elements in marketing (Lauterborn, 1990). To emphasize the significa nce of relations marketing, Done Schuhz proposed 4R marketing mix, which is consist ing of releva nce, reaction, relationship, and reward.
In the development of the theor y of ‘marketing mix’, ma ny people put forward ma ny ideas . But only McCarthy’s approach has survived and has become the ‘domina nt design’. The marketing mix widely referred to as the 4ps of product, price, place and promot ion was origina lly proposed by Jerome McCarthy (1960) and is still used as an essentia l part of formulating and implementing marketing strategy by ma ny practitione rs. ( Pickton &Broder ick，2005).
The marketing mix model is probably the most famous marketing term. Its elements are the basic, tactica l components of a marketing strategy. It is know as four P, price, place, product and promot ion.
Figure Figure
FigureFigure 2.32.32.32.3 thethethethe marketingmarketingmarketingmarketing mixmixmixmix modelmodelmodelmodel
Among all these models, 4P model contains the most basic concepts in marketing and allows us to consider from the view of company itself. And for B2C companies, price is currently the ma in advantage over traditiona l face-to-face sales. Therefore, in this thesis, two researchers choose 4P models as our theoret ica l framework.
2.5.1 2.5.1
2.5.1 2.5.1 Product Product Product Product
A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need (Kotler, 1991). The character ist ics of product element refer to a product, service or brand, and somet hing else. Depend on the product itself, product policy is made. The ma in factors which influence the policy are: brands and trademarks, country of origin, packaging, and warranty, service policies represent key decision areas, product life cycle, and the new product development. (Terpstra& Sarathy, 1994) Make the satisfaction of the possible excha nge party’s needs is the aim of product, for insta nce product variety, product quality, design, features, brand name, packaging, sizes, services, warranties and return(Baker,2000).Consumer needs are the starting point for product development.
Internet-rela ted product decision can be divided into decisions affecting the core product and the extended product. (Chaffey, Ellis-Chad wick, Johnston & Mayer, 2000) The connotation of online marketing product and traditiona l ones has some differences .
The level of online marketing has been expanded greatly. The internet marketing products add two levels: the level of customer expectations and potentia l products levels . In order to satisfy the customer ’s persona lized dema nd. (Ding, 2005) In e- market it is important to remember that information is fited its own viable product.
For online marketing, the extended product can be highlighted on-line. Extended product contributes greatly to quality.
Online marketing product classifica tion Product
Configuration
Product Variety
Product
Table Table
TableTable 2.12.12.12.1 Online marketing product classifica tion
2.5.2 2.5.2
2.5.2 2.5.2 Place Place Place Place
The place element of the marketing mix refers to how the product is distributed to customers. Place determine and ma nner of how the products or services will be made available. The choice of distribution channels, the covera ge of exist ing outlets and location of outlets pla y an very important role (Baker , 2000) “Distribution strategy involves physica l distribution of goods; choose of distribution channels, and organiza tion of sell ing in bulk intermed iaries and retailers who distributes the firm’s products ” (Cammy & Sophia, 2000, P15). For online marketing it is very different from the physica l marketing. The ‘place ’ of online marketing is the channel that provides a product or service information by the internet, it is imma teria l and no fixed location. Funds transfer, transfer of the product and the communication between consumers has an interdependence link with the ‘place ’. ‘Place ’ is less clear. The internet has the greatest implica tions for place in the marketing mix since the internet has a globa l reach (Allen & Fjermestad, 2001). This direct interact ion with the space- time beyond the e-shopping is on the marketing channels of the revolution. The internet offers a new, additiona l marketing communications channel to inform customers of the benefits of a product and assist in him buying decision. Online transact ions have exist ing corporate struct ure of the channel will be a major challenge.
(Ding, 2005)
The online marketing channel and the traditiona l marketing channel has the big Actual Product Common
Product
Consumable , industria l goods, second-ha nd goods
Formlessness Product
Software Computer Software, Computer Games
Service Common service Telemed icine, lega l aid , booking, Information
Consulting Service
Stock market analysis , Database retrieva l, elect ronic news, elect ronic newspapers,
difference, for insta nce the servicers and the direct seller reduce, the organizationa l struct ure to reduce, the distributor and branch store quantity reduce, the channel to reduce ; hypothesized marketing department hypothesized organizations are in vogue, the retailing system struct ure is more open and so on.
Figure Figure
FigureFigure 2.42.42.42.4 OnlineOnlineOnlineOnline marketingmarketingmarketingmarketing channelschannelschannelschannels
2.5.3 2.5.3
2.5.3 2.5.3 Prices Prices Prices Prices
Price is the only element of the marketing mix to generate revenues, which also mea ns the fina le result will be reflected by this part (Allen & Fjerfestad, 2001). Price, the amount of money charged for a product or service, or the sum of the values that consumers excha nge for the benefits of having or using the product or service (Kotler, Armstrong Wong, Saunders, 2008). “Pricing is highly conspicuous element of the marketing mix and therefore has ma ny publics to satisfy” (Paliwoda& Thomas, 1998, pp252).Histor ica lly, price has been the major factor affecting buyer choice. Pricing mix is a tool for influencing consumer dema nd, likewise, consumer dema nd will influence the price, they interact ion with each other . The inta ngible nature and insufficient physica l evidence of services caused the price can indica te the quality of the services. (Cammy & Sophia, 2000) Baker et al. (2000) noted two approaches that have been commonly adopted for pricing on the internet.
There are four common approaches that can be used in pricing mix: (Cammy &
Sophia, 2000, P18).
1) dema nd-oriented approach 2) cost-oriented approach 3) profit-oriented approach 4) competition-or iented approach
Since online pricing depends on the range of products offered, the pricing element mix will often relate to the product element. One of the bigge st cha nges to the ma rket i ng mi x is onli ne purcha si ng. Consu mer s ca n purcha se direct ly (www.nextsbd.com). There are ma ny kinds of pricing ma y be possible on the internet ,
particularly for digital, loadable products. For online marketing, because of the low cost, price is a competition advantage; the Internet will lead to increased price competition and the standardization of prices. Price elast icity of dema nd is a core point which needs to focus. So pricing online has to take into account the concept of price elast icity of dema nd. And pricing online is relatively inelast ic (Chaffey et al.
2000). Many factors influence prices: marketing objectives, costs, products dema nd, competitive environment, and gover nment influences. And the price on line is lower tha n the one which offline .
There are ma ny forces driving pricing down in the internet channel. First, the internet gives the consumer an item which they can easily search nationwide or even worldwide for the lowest price . (www.pricesca n.com ). Second, all new internet products are immed iately visible to would-be competition. Third, since most online retailing takes place across state online, there are often no taxes to pay on purchases, so the price is lower tha n traditiona l retailing. Fourth, ma ny internet companies are fina nced through venture capital or stock issues. Fina lly, in this channel, costs are often lower, so the prices are lower, and can get higher profits. (Strauss & Frost, 1999)
There are ma inly having three online pricing strategies:
1) Penetration pricing
2) Price leadership 3) Pricing promot ions
Penetration Penetration
PenetrationPenetration prici ng:prici ng:prici ng:prici ng: ““““with the purpose of gaining market share, penetration pricing is the practice of changing a low price for a product or service” (Strauss & Frost, 1999).
In order to penetrate the market quick ly and deeply- to attract a large number of buyers quick ly, successful to enter the market and win a large market share, they set a low price in order initia l price. This high sales volume results in falling costs, allowing the company to cut its price even further. It is an enter strategy (Kotler, Armstrong Wong, Saunders , 2008) in a price-sensitive marketing this strategy is effective (Strauss &
Frost, 1999).
P P
PPricericericerice leadershipleadershipleadershipleadership: a price leadership is the lowest-priced product entry in a particular category. With shopping agents on the internet, a price leader strategy is an effective strategy. In order to implement this strategy, however, marketers must shave cost to a minimum; it is the basic of price leadership. This is can be done through online marketing cost efficiencies. (Strauss & Frost, 1999)
Prici ng Prici ng
Prici ngPrici ng promot ionspromot ionspromot ionspromot ions: companies will temporarily price their products below list price and somet imes even below cost to create buying excitement, with bring of this product, other products can also be paid more attention. Promot iona l pricing takes severa l forms. (Kotler, Armstrong Wong, Saunders , 2008) Price promot ions also have some shortcoming, they like the brand equiva lent of heroin: easy to get into but hard to get out of. If they always want to use this strategy to attract the customer, at last they ma y lose themselves . Once the brand and its customers are addicted to the short-term high of a price cut, it is not healthy. It is hard for them to build a real brand build ing. (Peter
& Cindy, 2005)
2.5.4 2.5.4
2.5.4 2.5.4 P P P Promotion romotion romotion romotion
Promot ion encompasses all kinds of ways an organization undertakes to communicate
its products ’ mer its, let the customer know more about their products and to persuade target customers to buy from them, in one word, promot ion mea ns use some strategy to let the consumer to buy their product or service (Kotler, 1991).Promot iona l strategy is the funct ion of informing, persuad ing, and influencing a consumer decision (Boone
&Kurtz 1996).E- promot ion inc l udes: Ba nner promot ion, Web publ ic rela tions (WPR), E- lea flets and ha vi ng a doma in na me. E- promot ion ha ve three character ist ics :
1) E- promot ion is throu gh the vir tua l net wor k ma rket
2) Net wor k promot ion throu gh the net wor k tech nolog y tra nsf ers prod uct s and ser vices , per for ma nce cha racter ist ics , funct ions and etc
3) The ob ject i ve of e-promot ion is globa l.
Ha ving a recog niza bl e doma in na me is fi rst sta ge towa rds e-promot ion.
Plac i ng ba nner ad ver tis emen ts on ot he r web pa ges is a com mon for m of e- promot ion. Di rec t ema il is a popula r and com mon for m of e-promot ions, and it is an usua l wa y for e-promot ion (www.nextsbd.com).
E- promot ion has fi ve funct ions :
1) Inf or ma tive funct ion, e-promot ion is able to send the prod uct s, ser vices , pr ices and ot he r inf or ma tion to the ta rget publ ic, in order to arous e people ’s atten t ion.
2) Persuasion funct ion, the purpos e of e-promot ion is throu gh all kinds of eff ect i ve mode , to li ft the publ ic ’s doubts about the prod uct or ser vice, persuade the goa ls, to stead fast the buying deter mi na tion.
3) Feed back funct ion, e-promot ion ca n quic k ly get the consu mer ’s needs and sugges t ions by ema il, and also ha ve a quic k fee d back to the le ader.
The fee d back inf or ma tion is va l ua ble
4) Crea tion dema nd. Good e-promot ion ca n not only ind uc e dema nd, but also crea t ing dema nd, the y ca n fi nd out the poten tia l cust omer s, and inc rease the sel li ng.
5) Stead y sel li ng. The sel li ng is vola tile, beca use of the vola tile
ma rket i ng. So ma ke a good com pa ny ima ge and prod uct ima ge ca n st abi lize the sel li ng.
Promot ion mix also called marketing communications mix. Consist ing of the specific blend of advertising, sales promot ion, public relations, persona l selling and direct marketing tools, these met hods can help the company communicate customer value and build customer relationships better.
AA
AAdvertisingdvertisingdvertisingdvertising: promot ion of ideas, goods or services by an identified sponsor, and the paid form is non-persona l presentation (Bennett, 1995). All paid-for space on a web site or in an e-mail is considered as advertising online. Advertising is used to create awareness, provide information, and create positive attitudes about products, let more people know it and take an interest in it. Inter net advertising can build brand equity and direct response from the customer (Strauss & Frost, 1999).
Advertising objective is based on the decision about the target market, positioning and marketing mix model and their aim. It can be divided into three parts: (Kotler, Armstrong Wong, Saunders , 2008)
1) Information advertising 2) Persuasive advertising 3) Reminder advertising
Advertising can be used either to build ing brands or to elicit a direct response in the form of a transact ion or some other behavior, and using advertising can quick ly receive an effect, so it also called the first useful promot ion tools (Strauss & Frost, 1999).
Different format elements make different impact as well as in its cost. A sma ll change in ad design can make a big difference in its effects. Like illustration, figure, table is the first thing to notices; it must be strong enough to draw people ’s attention. The headline must highlight and must effectively mot ivate the right people to read the copy. The
copy, the ma in block of text in the ad, must be simple but strong and convincing, in order to attract people in the first eyes (Kotler, Armstrong Wong, Saunders , 2008)
The advertising can be divided into two kinds:
1) The text-based and
2) Multimed ia-based advertising
Text-based advertising operates through e-mail and bullet in. Multimed ia advertising use banners, buttons, interst itials, and sponsorships , and so on (Strauss & Frost, 1999).
The advertising online have the features like: high select ivity, low cost, immed iacy, and interact ive capabilities (Kotler, Armstrong Wong, Saunders , 2008). On the internet, the advertising has strong communication with consumers. The consumers notice their products through a banner advertisement to the sponsor ing web site. And can obtain further information about the product and has the opportunity to complete the transact ion online, the purpose of advertising is to let people pay more attention on their product and service (Strauss & Frost, 1999).
In Cammy & Sophia (2000), they mentioned “the opinion of advertising is more complex. It involves pretests and posttests. Some organiza tions pretest their messa ge to evaluate consumer reaction before advertisements are placed. On the other hand, posttest messa ge tracking is used more widely which gauges the performa nce of advertisements during or after the la unch of an advertising campaign. The two common tools of evaluation are recall testing and recognition testing. ” (Cammy &
Sophia, 2000, P23)
PP
PPublicublicublicublic relationsrelationsrelationsrelations: “Build ing good relations with the company’s various publics by obtaining favorable publicity, build ing up a good ‘corporate ima ge’, and handing or heading off unfavorable rumors , stories and events” (Bennett, 1995). Public relation is one marketing communication tool which is to promote all kinds of stakeholders.
Public relations are used to create goodwill among a number of different publics.
Public relation is a complex thing, it include ma ny factors: company shareholders and employees, the med ia, suppliers, and the loca l community, as well as consumers, business buyers, and ma ny other stakeholder groups and so on (Strauss & Frost, 1999) Public relation can have a strong impact on public awareness at a much lower cost than advertising, but ma y be more slowly. Public relations results can somet imes be spectacular, and very effective (Kotler, Armstrong Wong, Saunders , 2008) On the internet, public relation is very important; it is significa nt to attract customers. The ma in public relations tools include news, speeches, specia l events, written materia ls, audiovisua l materia ls, and so on. The result of public relations is difficult to scale and estimate. This is because public relation is a long-ter m process and some of drumbeating is not controlled by the company but other med ia, it need more time to reflect the result. Moreover, people somet imes didn’t pay more attention to it. Public relations often have the effect on a company’s ima ge and reputation, and the effect is significa nt. (Cammy & Sophia, 2000)
PP
PPersonalersonalersonalersonal sellingsellingsellingselling: persona l selling by the firm’s sales force for the purpose of marketing sales and build ing customer relationships. Persona l selling is the interpersona l arm of the promot ion mix, it depends on huma n. Persona l selling can be more effective than advertising in more complex selling situations. For persona l selling, promote skills for sellers are very important. (Kotler, Armstrong Wong, Saunders , 2008)
S S
SSalesalesalesales promot ionpromot ionpromot ionpromot ion: Short-term incentives to encourage the purchase or sale of a product or service. It has some same idea with “price promot ion”, but there has some differences. Sales promot ion consists of short-term incentives; they encourage the customer to purchase or sell a product or service. And sales promot ion contains two ma in kinds of promot ion: consumer promot ion and trade promot ion. Consumer promot ion: sales promot ion designed to stimula te consumer purchasing, including samples, coupons, rebates, prices-off, premiums, patrona ge rewards, displa ys, and contests and sweepstakes. Trade promot ion: sales promot ion designed to gain reseller
support and to improve resell selling efforts, including discounts, allowa nces, free goods, cooperative advertising, push money, and conventions and trade shows. The point of emphasis between consumer promot ion and trade promot ion is totaling different, but also has some connect with each other. Promot ion is not a simple thing, there are ma ny skills to learn. (Kotler, Armstrong Wong, Saunders, 2008)
DD
DDirectirectirectirect marketingmarketingmarketingmarketing: Direct marketing as one element of the promot ion mix is an approach for communicating directly with customers. The ma in forms of direct marketing are direct-ma il marketing, catalogue marketing, telephone marketing, direct- response television marketing, kiosk marketing, new digital direct marketing technologies, online marketing and integrated direct marketing, and so on (Kotler, Armstrong Wong, Saunders , 2008)
T T T
Thehehehe strengthsstrengthsstrengthsstrengths andandandand weaknessesweaknessesweaknessesweaknesses ofofofof thethethethe fourfourfourfour promot ionalpromot ionalpromot ionalpromot ional elementselementselementselements
Promot iona l elements Strengths Weakness
Advertising Efficient mea ns for reaching large number of people
High absolute costs Difficult to receive good feedback
Sales promot ion Effective at changing behaviour in short run
Very flexible
Easily abused
Can lead to promot ion wars Easily duplica ted
Public relations Often most credible source in the customer ’s mind
Difficult to get med ia cooperation
Persona l selling Immed iate feedback Very persuasive Can select audience
Extremely expensive per exposure
Messages ma y differ between
Table 2.2 the strengths and weaknesses of the four promot iona l elements
Source:Berkowitz, Eric N., Kerin, Roger A., and Willia m Rudelius (1997), Marketing.
New York: McGraw-Hill Publishing Co.
“There are five common promot iona l strategy objectives, namely provid ing information, differentiating a product, increasing sales, accentuating a product ’s value and stabilizing sales. ” (Boone & Kurtz 1996) And they can be divided into three parts.
Provid ing information belongs to “to inform”; differentiating a product, increasing sales, accentuating a product ’s value belong to “to persuade ”; and stabilizing sales belongs to “to remind ” (Cammy & Sophia, 2000, P21).
Can give complex information sale people
3. 3. 3. 3. M M M Methodology ethodology ethodology ethodology
This chapter will be divided into four parts. Research met hod, type of research, sampling of the research, instruments of data collect ion.
3.1 3.1 3.1 3.1 Research Research Research Research method method method method
There are two different met hods to use when doing a scientific research, qualitative and quantitative . The following table shows us the fundamenta l differences between quantitative and qualitative strategies. (Bryma n& Bell, 2007, P28)
Table 3.1 difference between quantitative and qualitative
In this thesis , the two researchers choose the qualitative approach. The qualitative approach is used because it is appropriate for sources of data to solve a problem (Holme & Solvang, 1997). The qualitative met hod is very open and flexible . There are six ma in steps for the qualitative research: (Bryma n& Bell, 2007, P405-407).
- General research quest ions
- Select ion of releva nt sites and subjects - Collect ion of releva nt data
- Interpreta tion of data
- Conceptual and genera l framework - Sum up of the find ings/conclusions
“The qualitative approach based on words, points of view of participants, researcher
Quantitative Qualitative
Principal orientation to the role of Theory in relation to research
Deduct ive;
Testing of theor y
Induct ive; generation of theor y
Epistemologica l orientation Natural science model, in Particular positivism
Interpret ivism
Ontologica l orientation Objectivism Constructionism
close, theor y emer gent, process, unstruct ured, contextual understa nding, rich deep data, micro, mea ning, natural settings to analysis.” (Bryma n& Bell, 2007, P426) The qualitative met hod aims at increasing the understa nding of phenomena, give people a deeper understa nding, rather tha n the testing of a hypothesis (Holme &
Solvang 1997). Qualitative met hod is the standard procedure when following an explorator y approach, which allows a more flexible research process.
Qualitative research can be construed as a research strategy that usua lly emphasizes words; analysis of data; emphasizes the relationship between theor y and research.
(Bryma n& Bell, 2007)
Hence, the qualitative met hod was chosen in order to get a deep understa nding of the subject. For this research, the researchers have no clear vision about what the outcome of the study will be. But the qualitative met hod has the advantage at gaining more knowledge about the topic, the research quest ion can be reformula ted. So the researchers choose the qualitative met hod. Qualitative met hod is suitable for this thesis as it was the best way for the researchers to discover exact ly what the B2C websites do to cope with the fina ncia l crisis and with the help of qualitative met hod, the research can go deep.
3.2 3.2
3.2 3.2 T T T Type ype ype ype of of of of research research research research
According to Yin (1994), five different techniques can be used to collect and analyze data, which are case studies, exper iments, surveys, multiple histor ies and analysis of archival information.
In this thesis, we choose multiple case studies. Eisenhardt (1989) recommends case studies as a fruitful way to give a deeper insight in conflict ing literature, which is an important goal in this study. A case approach was considered as the most appropriate to catch the explorator y focus in this study (Yin, 1994).
The case study is a research strategy, which focuses on understa nding the dynamics present within single settings (Einsenhardt 1989). Yin (2003), mention the purpose for case study is to identify the criter ia of the data which collect as a part of the case study.
Multiple cases can be described as a study of how such systems differ, in practise, is conceived as a multiple-case study. The purpose of multiple case studies is to define practices in using a certain system, and to understa nd whether such practices are different. It mea ns to analysis multiple cases in order to get a precise result. (Yin, 2002) Multiple cases strengthen is the research is replicating, thus can increase confidence in the theory. (Yin, 2003)
Case study is defined as a research strategy, it usua lly has three approaches:
exploratory, causa l and descript ive. Yin (2003) suggests the following conditions as the way of dist inguishing them:
1) The type of research quest ion
2) The extent of control an invest igator has over actual behaviora l events 3) The degree of focus on contemporary as opposed to histor ica l events
An explorator y approach aims at defining the quest ion and hypotheses of a subseq uent study or at determining the feasibility of the desired research procedures (Yin, 2002).An explorator y process should be used when the task is to “gain additiona l insights”. There are six character ist ics about the explorator y: (Robson, 2002)
1) To find out what is happening, particular in little understa nd situations 2) To seek new insights
3) To ask quest ions
4) To assess phenomena in a new light
5) To generate ideas and hypotheses for future research 6) Almost exclusively of flexible design
Descriptive approach presents a complete descript ion of phenomenon within its context (Yin, 2002). Descript ive approach covers the scope and depth of the object being described.
Since the purpose of this study is to find out what price and promot ion strategies the B2C websites use to cope with the fina ncia l crisis, the explorator y approach and descript ive approach are both used.
3.3 3.3
3.3 3.3 Sampling Sampling Sampling Sampling of of of of the the the the research research research research
The choice of sampling is very important for case study. So when doing the research, the choice of the sample are some samples which could give a sufficient overview for the research. The researchers choose four business-to-customer websites in the whole thesis.
In this study, the population consists of all the business-to-customer websites, and the sample is instead the part of the population that the researchers choose to expla in in the thesis. The choice of the sampling is systematic .
In order to choose the idea l samples, the researchers should conform the following rules. Firstly, the company must be B2C websites. Secondly, the chosen companies had better to be the top level of their trades which can make sense of the crisis influence to the company. Thirdly, these companies, which are more famous and representative , can get more information and data from the website or the annual report.
The four cases are: TaoBao.com, DangDang.com, Ebay.com and Amazon.com . The first two are Chinese famous websites; the last two are the world famous listed websites.
TaoBao.com is one of the most famous websites in China. It is the largest Asia’s network of retail shopping district. Almost 60% of the Chinese young people have bought somet hing on TaoBao.com, so it has a big influence on people ’s daily life.
DangDang.com is also a Chinese famous B2C website. It is the world ’s largest Chinese integrated online shopping ma ll. It grows very fast, and pla ys an important role in Chinese online marketing.
Ebay.com is the largest online marketplace in the world; Amazon.com is also world famous. The two websites are the well-known worldwide B2C websites. They are all America n companies, which have been greatly affected by the fina ncia l crisis, so they are representative.
3.4 3.4
3.4 3.4 IIIInstruments nstruments nstruments nstruments of of of of data data data data collection collection collection collection
Yin (2003) indica ted there are six met hods to be used of data collect ion:
1) Documentation 2) Archival records 3) Interviews
4) Direct observations 5) Participant observation 6) Physical artifacts
“Documents include persona l documents, officia l documents from both the state and private sources, and the mass med ia.” (Bryma n& Bell, 2007, P576) Printed, visua l, digital, or indeed any other retrievable format can be considered as the kinks of documents. Authenticity; credibility; representativeness and mea ning are the quality of documents. (Bryma n& Bell, 2007)
Company document materia l provide information about the company, its histor y, its
goals, its concept ion and vision, its strategy, its organiza tion, its fina nce, etc. While books and articles will be used to find the aspiration of topic, problem area and releva nt literatures.
A case study requires multiple sources of evidence. So the case studies are ma inly built on qualitative interview, direct observation and diaries that mea n the prima ry and the secondary data. In this thesis, both the prima ry data and the secondary data are used.
Prima ry data mea ns the information that has been collected at the first hand . The ma in met hods of collect ing prima ry data include:
Questionnaires Interviews
Focus group interviews Observation
Case-studies Diaries
Critica l incidents Portfolios
When collecting some data on their homepa ge, it is also called prima ry data. In this thesis, data is collected in the following form:
Secondary data is often of good quality and it can be useful. However, when using
Price Promotion
Discount Advertisement
Penetration pricing Public relations
Price leadership Sales promotion
Pricing promotions Direct marketing
secondary data as a source in a research it is important to be critica l about the data and also to the select ion of the data to make sure that the data is reliable and trustworthy for the research in quest ion (Jacobsen, 2002). Secondary data such as annual report of a company, books, and articles are ma inly collected. This thesis chooses the four websites because they are famous. The secondary data will be collect. The secondary data, which is documented facts, like Annual report was found from the chosen company website. Additiona l information about the company will be collected through other ma gazines and newspaper. Books and articles were searched from internet and database of Halmstad University’s library.
Because of the two authors are Chinese. The authors know both Chinese and English, so the authors can find some information and useful data from the Chinese websites, for this, the authors can get more data that are abundant for this research thesis.
4. 4. 4. 4. Empirical Empirical Empirical Empirical data data data data
In this chapter the four studied B2C websites will be presented, toget her with the empirica l find ings from their homepa ge, annual reports and different articles. The data and information in this chapter is the basis of the analysis chapter.
4.1 4.1
4.1 4.1 TaoBao.com TaoBao.com TaoBao.com TaoBao.com 4.11.
4.11.
4.11. 4.11. Brief Brief Brief Brief introduction introduction introduction introduction about about about about TaoBao.com TaoBao.com TaoBao.com TaoBao.com
Taobao.com was established by the Alibaba Group in May 10, 2003. It is the Asia's largest network of retail shopping district, committed to creating a global network of retail shopping district of first choice. It has two major parts: B2C (business-to- customer) and C2C (customer-to-customer ). (www.taobao.com)
In the first quarter of 2008, Taobao has 62,000,000 registered members, cover ing the vast majority of the people who purchase on the net. In this period, Taobao's transact ion value exceeded 18.8 billion; in 2007 the transact ion value exceeded 43.3 billion. TaoBao have occupied the market share of Chinese net purchases market by more than 70%. (The report of TaoBao.com)
Currently, Taobao has become the first choice for the net izen to carve out on the Internet and make friendship with business. In October 2005, Taobao announced: in the next 5 years, they will create one million job opportunities in order to help more people find jobs in TaoBao. By the year of 2008, Taobao has provided more than 200,000 direct jobs for the society. (www.taobao.com)
While creating a more secure and efficient network -trading platform for the Taobao members, Taobao also dedicated to create and advocate the mutual aid, and lively atmosphere like the family at the same time. The people who transact in Taobao, can not only get transact ion more quick ly and efficiently, but also reach more friends.
4.12 4.12
4.12 4.12 Price Price Price Price and and and and promotion promotion promotion promotion strategy strategy strategy strategy
Discount is the widely used price strategy for Taobao.com; on the homepa ge you can find almost all the products have a discount. Some of them can have a discount for 90%.
No matter whether they are food, commod ity, digital products, fitting or some luxury goods, the selling cost is less than 10% on this website, so customers shopping on TaoBao.com can save at least 10%. Hence, customers can buy products at a very low price on TaoBao.com.
The TaoBao company has the promises that if you buy products in other place less expensive than buying in TaoBao.com, the company will return the money. Under the influence of fina ncial crisis, people nowada ys carefully plan all expend itures. So the
“price relations ploy ” attracts more customers.
TaoBao Company put much idea in build ing good public relation. The company cooperates with ma ny famous film or program play staff. Depend ing on the influences of these play staffs, more fans know TaoBao.com, and begin to buy products on the websites. The company is enthusiast ic in public welfare, and always does somet hing to help the children who can’t go to school; help the people who have lost their home and so on. In addition, it is also sponsors some sports tournaments, trying to expand the company brand.
TaoBao.com does the advertising well. By corporate Web site, the company deliver s a variet y of transact ion information to the customers and describes the products flexibility by using text and pict ures. People can easily search the websites on Baidu.com or google.com. Another promot ion tool the company use is ema il. In the modern life, ema il is used widely, the website sends new products information or
discount information, collects the customers ’ comments, and communicates with the customers by using ema il. It is good to save the customer services cost, to improve the service quality, to let customers more satisfied with the website.
4.2 4.2
4.2 4.2 DangDang.com DangDang.com DangDang.com DangDang.com 4.21 4.21
4.21 4.21 Brief Brief Brief Brief introduction introduction introduction introduction about about about about DangDang.com DangDang.com DangDang.com DangDang.com
Dangdang (www.dangdang.com) is the world's largest Chinese integrated online shopping ma ll, created by the well-known publishing inst itution --- Cowan Company, United States: Tiger Fund, United States: IDG Group, Luxembourg: Cambr idge Group, Asia n: Venture Capital (former ly Softbank China venture capital funds).
(www.dangdang.com )
In November 1999, Dangdang (www.dangdang.com) officia lly opened. Since its establishment, Dangdang has ma inta ined high-speed growth; the annual growth rate is more than 100%. The products on Dangdang online sales contain general mercha ndise, cosmet ics, digital, books, audio-visual and other dozens of categor ies, nearly one million kinds of goods, more than 400,000 kinds of books. (www.dangdang.com)
Dangdang currently has more than 45 million registered users (including ma inla nd China, Hong Kong, Macao, Taiwan and foreign), all over the country in 32 provinces, autonomous regions and municipa lities. Book sales in 2008 reached more than 1.2 billion yuan. In 2008, DangDang Company’s net is 6 billion Yuan has an increase of 200% of 2007. Every day, thousa nds of people buy things in Dangdang, 20 million people browse the information of Dangdang per month. (www.dangdang.com )
Dangdang insists to the "more choices, more low-cost" mission, in this way more and more customers begin to enjoy online shopping which brings the convenience and benefits. It also tries its best to make the Chinese Internet users to enjoy the fun which brought by online shopping --- the great kinds of styles, 7 × 24 to the freedom of
