This research project compares traditional marketing and internet marketing to show the difference characteristics between them. Also this project is done to find out what marketing tools are effective for some chosen companies in the food industry. The main difference between internet marketing and traditional marketing is also studied in this project.
Different textbooks, websites, articles and interviews are taken for the information required in this study. Both the quantitative and qualitative approaches are used in this research. Quantitative data are gathered form the website of the UK National Statistics. The author conducted interviews with three companies operation in the food industry in UK to collect information needed for the analysis in this study.
After analyzing different aspects of theory, comparison and interview answers conclusion was drawn. Both the internet marketing and traditional marketing has their own advantages. Therefore, the most effective way of marketing is using the advantages of both internet marketing and traditional marketing according to the goals of the company.
Profit maximisation is the main objective of most business organisations for which they use marketing as their marketing strategy. Thus they use different strategies to sell their products and services. They always want to satisfy their target customers by creating, promoting and selling their product and services. One of the strategies they use is marketing, which can make a business grow and thereby become more powerful. To find out what sort of marketing to use in different area to achieve high share of market and high sales rate is very essential (Karp, 1974).
According to Dayal et al. 1996, marketing can be defined as the activity of satisfying the needs and wants of buyers through the exchange process in a manner which enables the firm to achieve its objectives. On the other hand, Saxena (2006), marketing means understanding and responding to customers needs.
Marketing is an organisational function and a set of process for creating, communicating, and delivering value to customers and for managing customer relationships in way that benefit the organisation and its stakeholders (Parsons, et al. 2009).
Marketing is considered to be a process of exploring, creating, and delivering value to satisfy the needs and wants of a target market at a profit (Kotler, 2003).
The Term “Marketing Mix (Product, Price, Place, and Promotion)” was introduced for the first time by Professor Neil Borden in approximately 1953. Markets were offered opportunities to exploit each aspect of the “4 P’s” of the marketing mix and satisfy their customers’ needs and wants, as soon as the concept was introduced by him (Karp, 1974).
Technology has changed marketing, after staying same for several years marketing has now affected by internet and out lives has become easy. It brings new opportunities for marketing as a new communication channel and has been replacing the traditional medium of communication and selling goods and services.
In traditional marketing, channels of communications such as magazines, catalogues, face to face communication etc are used. And nowadays in the internet marketing, internet is used as a communication channel as a part of direct marketing. New opportunities have been provided by this new communication channel which has affected marketing process. All the channels of communications have their own importance but internet is a channel that has developed and is continuously developing which has got a lot of attention from everyone. Right decision when choosing right marketing strategy for a marketer is very essential. For that the marketer should know the differences between internet and traditional marketing and their advantages and disadvantages also. Some obvious questions might arise in our mind that: which marketing approach is beneficial comparing traditional and internet marketing? In the real life companies, which tool is the most used ones? Is traditional marketing left back with the use of internet marketing? Is the traditional marketing and internet marketing independent to each other?
Author find these issues interesting and companies entering the market will find this report helpful in prioritise their marketing tools and also have clear picture of all the elements of marketing mix and the comparison of internet and traditional marketing.
The main objective of this research is to identify different characteristics of traditional marketing and internet marketing. Comparing Internet marketing and traditional marketing used by different organisations in food industry. Also, what marketing tools are effective for the chosen companies in the food industries are to be discussed?
The managers of the companies who need to make a decision about selecting the marketing tools and strategies will find this research helpful. They also will find the studies done on marketing theories and comparison between them, point of view of managers that were interviewed and the analysis made based in these things.
The marketing managers of chosen companies are working in UK and their answers are related to UK food and takeaway market. This research might not be suitable for business to business companies as it is only focused on business to consumers.
2. Literature Review
Different theories on the marketing mix and also traditional and internet marketing is presented in depth.
2.1 Traditional marketing
According to Kotler 2003, Marketing is considered to be a collective process where individuals or groups can exchange goods or services based on their needs and wants. Neil Borden for the first time approx in 1953 presented the content of marketing process as marketing mix, representing the mixture of useful elements for marketing. Kotler considers the marketing mix as a mixture of different instruments or tools for pursuing a marketing plan (Walter, 1992).
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Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchange that satisfy individual and organisational objectives. In traditional marketing, channels of communications such as magazines, catalogues, face to face communication etc are used. The aim is to create products and services which sell themselves by being what customers need and want (Kotler, 2003).
The marketing mix is probably the most famous phrase in marketing. The elements are the marketing ‘tactics’. Also known as the ‘Four Ps’, the marketing mix elements are price, place, product, and promotion.
According to Belohlavek 2008, Price is a Conditioning element to the purchase. In general, except for commodities, price only conditions but does not determine. The price, by conditioning, determines if the product chosen, as first choice, is the one desired.
The pricing of services is one of the major factors in competing with other business open to most organisations. By fixing prices below those of competitors, a company will hope to get a greater share of the market, all other aspects of competition being equal (Gubbins, 2003)
On the other hand, Kotler presents, it is an important part of the marketing strategy and it sends out a message about the product, company and image. Pricing is decided upon the interest and goal of the company that they want to achieve. Whether, they want bigger market share, maximum profit or possibly a specific position in the market. It is very important job to set the price as it affect demand as the demand and price are dependent to each other.
Product, or service, is the element which satisfies the client’s needs. The product or services generates two types of relationships with the prospect: a functional and a linking one. The functional relationship refers to the product’s use value and the link with the product is mainly defined by the complementarity between itself and the client (Belohlavek, 2008).
Product is the solution to customers wants or/and needs. There are different aspects of product that needs to be considered. Quality, design and function of the product are some examples of different aspects of the product. The size, colour and general design should be considered by the marketer for the product appearance. The demand should be also kept in mind so that what is required in the market should be known and for that research and market study is essential. Service is also included in the product or is a part of this P. The company can provide warranty as a good customer service which is attached with the product and thus is a part of this P.
Products and services have to reach their customers to be consumed. In traditional market, it was possible for producers and their customers to meet face- to – face to exchange goods and services. The product and services should reach the customer in the right manner at right place. The process of moving product and service through different intermediaries to reach the end user is considered under this part of P (Stone et al., 2007).
According to Kotler 2003, place in marketing can be about location in the means of store, factory and storage. Also the decision on distribution channels and transport are part of it. Place is the crucial thing to determine for the business. The company who need wide space can chose location outside city which is cost effective. The company who need crowds and is opening new store need to be located in city centre, which is a bit costly but attracts customer’s attention and possible customers would drop in when passing by. A number of factors affect the nature of the supply chain that evolves to suit the needs of the producer and to meet customer demand (Stone et al., 2007).
According to Kotler 2003, Promotion is that part of communication that consists of company message designed to stimulate awareness of, interest in, and purchase of its various products and services. Company use sales promotion, advertising, salesperson, and public relation to disseminate message designed to attract customer’s attention and interest.
“Sales promotion is any form of promoting sales where there is a call to action that results in a demonstrable benefit, whether tangible or not” (Mullin, et al. 2008)
Advertising includes any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. In contrast, public relations focus on building good relations with the company’s various publics by obtaining favourable unpaid publicity. Personal selling is any form of personal presentation by the organisation’s sales force for the purpose of making sales and building customer relationships. Organisation use sales promotion to provide short-term incentives to encourage the purchase or sale of a product or service. Direct marketing can be done face to face meeting, mailing, telephone, catalogue, etc. This is one way of building long term relationship with customers. Finally, companies seeking immediate response from targeted individual customers use non-personal direct-marketing tools to communicate with customers. Sales force is the face of company towards customers when providing or offering customers solution in either services or products. Their working process has become from just selling to more complicated task. The sales representatives are the one that bring the needs of customers and the company together and create the mutual satisfaction. (Kotler et al., 2010).
2.2 Internet Marketing
Internet marketing has become an important issue for many businesses around the world which have any form of commercial presence on the net. In the early days of direct marketing, efforts at reaching prospective customers could be best described as using a “shotgun approach”. By packing an envelope full of advertisements and coupons and mailing them out to a large amount of households, it was discovered that customers would actually respond by buoying some of the promoted products. Today, with the creation of large scale databases and internet that systematically collect information on households and individuals, direct marketing has become faster. Incentive-based marketing is a technique where the customer is rewarded or compensated for completed purchase transactions. Similar to the concept of “rebates” in the physical marketplace, online marketing “incentives” are driving the explosive growth in advertising and marketing revenues. The key difference, however, is that marketer can extract information from online consumers by providing them additional incentives? This information can then be used in conjunction with other direct marketing plans to design and deliver targeted messages (Lee, 2001).
Most of the households use internet nowadays via laptop, mobile, palmtop, PC, Etc. The 2010 internet access survey of households and individuals measure home access to the internet and individuals’ use of the internet across the UK shows that 30.1 million adults used the internet everyday or nearly every day. 73 percent of households had internet access and 31 million people bought or ordered goods or services online in the last 12 months. As we can see on the chart of adults using the internet almost every day in appendix B shows that the number of internet users has almost doubled from 2006 till date. (Internet Access, 2010)
According to Hoffman et al. 1995, Internet is a new marketing tool that can be used by companies in order to reach their customers. Internet marketing is defined as the application of the internet and related digital technologies to achieve marketing objectives and support the modern marketing concept. Internet marketing is often presented as a new theory of marketing however some argue that basic concepts form the traditional marketing are still valid. Internet offers new opportunities to adapt the basics of marketing mix. (Chaffey, 2000).
Price transparency on the internet as it is much quicker and easier to compare prices by visiting company’s websites or by using prices comparison sites has made the business more competitive than was on the traditional marketing. Also the main reason of being competitive is the ability to reduce costs of store spaces and staff costs. As already mentioned above this is the reason of internet marketing being cost effective tool of marketing (Hagel, 1997).
Online payment is new methods of payment that internet offers. Credit cards are seen as an efficient, convenient and flexible payment method for both customers and companies. However, customers are less confident about the service because of the security and privacy issues.
Internet marketing is the most cost-effective way to market the products to the UK and the world. The internet leads to faster discovery of customer needs, greater customisation of the products to the customer needs, faster product testing, and shorter product life cycles (Eid et al., 2002). Internet provides the opportunity of offering a core product that satisfies the customers’ fundamental needs. On internet, a picture or description will replace the physical product offered in the traditional marketplace or in stores. Services offered on internet by a company should reflect the following factors in order to satisfy customers: reliability, responsiveness, competence, ease of use, security, and product portfolio. (Yang et al., 2004)
New way of distributing product is done in internet marketing i.e. online selling. People can make decisions and purchase any product from anywhere in the world. Allen and Fjermestad 2009, argue that the internet has the greatest implications for place in the marketing mix because it has a large market place.
Companies can gain the advantage of the low cost of advertising internationally without the necessity of a supporting sales infrastructure in different countries as they can expand their business form local market to both national and international markets. Internet also helps take advantage of new markets (Chaffey, 2000).
Internet marketing as a promotional tool can give business a presence all over the world. Advertising, sales promotion, direct marketing, etc are the elements of communication mix which can be done with the use of new way of marketing that is internet marketing. For example, websites and email are the effective tools to review the new ways of communicating to the customers (Chaffey, 2000).
Companies can encourage their customers to visit their websites and increase sales by sending emails remainders and different offers frequently. Internet helps to inform customers of the benefits of the product and assist in different stages of buying process.
Companies can use internet to deliver their messages to their customers and attract them with the help of online advertising. Customers are always encouraged to buy when they see offers or the cheaper product compared to other competitor brand. Thus, sales promotion on the internet and emails is very used nowadays by the companies. This also helps company to keep long term relationship with its customers. Internet offers companies the opportunity to publish the news directly which is a part of public relations. Customers are sent emails to remind about the product and services that the company offers which also encourages the customers to send feedbacks and helps keep in touch. This is the part of direct marketing done by the companies as internet marketing tool (Chaffey, 2000).
2.3 Comparing Traditional and Internet Marketing Mix
Traditional marketing and internet marketing is compared on the basis of its marketing mix or 4 Ps. This gives clear idea of different issues that either internet or traditional marketing carry in their tools.
The cost of supply chain or the cost of distribution channel determines the price of the product. The bigger amount of cost is saved through internet marketing which can result lowering the product price. The cost of product may reach the paramount because of the management of distribution channel in the traditional marketing (Kotler, 2003).
Tough competition in the internet marketing exist as the competitors can scan our potential pricing strategy and also our potential customers can reach to the competitors on one click. There is always security problem in the internet marketing, where customers may not feel safe paying online through their cards rather paying in the physical store where they can have more control over the payment process (Kotler, 2003).
Product that the company offer in websites in internet marketing is just a virtual image where customers can’t touch or feel. Whereas, in traditional marketing the product is tangible and customers can experience the quality by feeling it. Customer can sometimes change purchase decision because of lack of physically reaching and feeling the product (Lee, 2002).
Company can offer wide range of products via internet marketing but it is not possible or it costly to offer wide range of products in the physical store. There will be more problem of storing and staffs handling inventory in traditional marketing than in internet marketing (Kotler, 2003).
Customers can be attracted by decorating the store, like some stores does in the Christmas and New Year to create a specific atmosphere. This is only possible in traditional marketing but is not possible in the internet marketing as it is just a virtual image. Even though many of the websites try to create an atmosphere, but it is not as real experience as can be created in the physical store.
In the traditional marketing customers have to wait and plan for the opening hours of the store and reach the store but in the internet marketing they don’t’ have to bother about opening hours and the location. They can shop anytime and form anywhere from the world (Kotler, 2003).
Time is money, what people say nowadays. The internet marketing helps save time of the customers and the company by the speed of reaching message to the customers about the product and services and also the purchasing process is done speedy. In traditional marketing it is not possible. Reaching the targeted customers is made easy with the help of internet marketing and can continue the relationship with them (Kotler, 2003).
Face to face communication with customers creates bond between business and the customers. The company can get lots of advantages like they can get straight feedback and can measure result quickly. Communication is both sided in traditional marketing whereas it is not practical in internet marketing (Kotler, 2003)
A website helps company to present itself in many ways where the customer can study different aspects of the company and get to know it well where as this is not possible in the same way through traditional tools for promotion (Kotler, 2003). A good website is very important for succeeding in online marketing. According to Sunday Times, some important guidelines for a good website for a company are:
Keep sites simple and easy to use.
Think “user journey” rather than individual pages.
Provide clear information on contacts, delivery and refund policies
Let shoppers browse without having to register.
Comparison of internet and traditional marketing
On the basis of theories presented above, the main advantages of both internet marketing and traditional marketing is shown in the table as a bullet points. Marketer can adopt the positive aspects of either approach pointed out in this table.
Variety of products
Physical access to product
Reach targeted customers easily
Quick feedback face-to-face
Faster speed and communication
Less tough competition
Atmosphere of physical store
Figure 2.3 Comparison on Internet and traditional marketing
3. Research Methodology
There are different methods of data collection that we need in order to answer the research problem of this thesis. The two approaches are qualitative research and quantitative research which helps us explain the phenomenon.
Qualitative research is typically used to answer questions about the complex nature of phenomena, often with the purpose of describing and understanding the phenomena from the participants’ point of view. Qualitative research is concerned with qualitative phenomenon. Qualitative research focuses on understanding the research subject by investigating the results based on direct observations, in depth interviews and analysis of documents and materials (Leedy et al., 2005).
On the other hand, Quantitative research is based on the measurement of quality or amount. It is applicable to phenomena that can be expressed in terms of quantity (Kumar, 2008).
The aim of this research is to make a comparison between traditional marketing and internet marketing and find the effective tools in these two approaches used by a chosen group of companies in food industry. Therefore qualitative research method is mainly used in this research. This enables the author to explore all areas of the topic at hand and also give a thorough understanding and analysis.
3.1 Data Collection Approaches
There are mainly two approaches of data collection. Primary and secondary data collection is the two approaches of data collection and the author in this research will be using both the approaches for the data collection.
First hand information gathered directly from the source, through experiments, observations, and interviews through mails, telephones, emails or personal interviews which are close to the truth are called primary data (Leedy et al., 2005).
The primary data used in this study research was collected through interviews. The interviews were done with the managers of three companies in food industry they are: Popadoms, Zaffron Restaurant & Bar and Sultan Balti Palace. Interviews with the marketing managers of Popadoms, Zaffron Restaurant & Bar and Sultan Balti Palace were done through phone call.
Based on some specific qualities they have and all three could give us different point of views on the subject, these companies were chosen. The main qualities that these companies share are that they are successful, growing and use both internet and traditional marketing tools. Popadoms offer mainly takeaways with the finest and freshest Indian food locally (Popadoms, 2010); Zaffron Restaurant & Bar offers both service and foods for dining in customers with affordable price (Zaffron, 2010); again Sultan Balti Palace offers tourists with different new Indian foods with takeaway and dining in facilities (Sultanpalace, 2004).
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The author in this research has formulated a number of questions based on the data required to be able to come a conclusion regarding the research problem. To be certain of acquiring the necessary information as effectively as possible, the interview questions were structured according to the limited time for this research and keeping in mind difficult accessibility to the specific individuals that were interviewed and their busy schedules.
Secondary data is information that has been gathered by someone other than the researcher and/or for some other purpose than the project at hand. Secondary data could be in form of books, journal articles, online data sources, etc. (Leedy, 2005). The secondary data that the author will collect is through internet and books that are trustable. The statistics can be referred to as quantitative data will be gathered from the website of the UK National Statistics.
Validity is “establishing correct operational measures for the concepts being studied” (Yin, 1994). In order to ensure the validity and reliability of this research, the methods and theories used to conduct this study were chosen from literatures written by authors known to be experts in this field and scientific articles form data bases recommended by Universities.
The empirical data was collected through interviews done with the managers of three companies operating in food industry in UK; therefore the author cannot conclude that the result can be applicable for the whole food industry in UK. With the choice of qualitative research and the mentioned limitations, the author of this research cannot give a general conclusion applicable for other industries in the UK.
4. Empirical Data
The author of this thesis will present the companies chosen as examples form food industry in UK. The companies were all chosen from the same industry to rule out the industry differences. The author contacted the companies to obtain information about the marketing conducted in respective companies. The marketing managers of these companies were just able to answer quickly by telephone due to lack of time. However, all these companies invited the authors to find more information on their websites; therefore some of the information presented in this part is from the companies’ websites. The questions asked with the managers in the interviews of all three companies are as follows:
1. What marketing tools does your company mainly use?
2. Which marketing tool does your company consider most effective? Why?
3. What are your point of view on Internet marketing and its importance for your company?
Popadoms is an Indian restaurant based in residential area Farnborough, Hampshire, UK. It opened 11 years ago and offers great Indian cuisine 7 nights a week. The restaurant is well established and has lots of regular customers. The restaurant also has a free local home delivery service and offers a great takeaway service (Popadoms, 2010).
The marketing manager was asked to give the marketing tools used as their marketing strategy in the company, which tool is considered most effective and how internet marketing was perceived in the restaurant.
The manager answered that the company uses mostly printed and online advertising. For example, the company use leafleting and posts for the promotion and advertisement. They use websites and send emails as online marketing tools. About the marketing tool perceived as the most effective, the answer was that the company uses a combination of traditional marketing channels because these allow the company to capture local customers and reminds them their local restaurant.
Internet marketing is an important marketing tool for Popadoms because it gives the company the possibility to spread information faster. Also from the statistics we know that internet users are increasing and ordering online. The manager doesn’t think that the success of the company only depends on internet marketing, and there is no such specific tool to success.
4.2 Zaffron Restaurant & Bar
Zaffron Restaurant & Bar is located in town centre of Farnborough, UK. It was established in 2001 and serves Indian food and drinks 7 days and nights a week. They have separate bar for their takeaway customers where they can have some drinks while waiting. They have more than 70 seating capacity and serves tourists as well as local customers. They are near Premier Inn, Aviator hotel and Farnborough airport which helps them to attract tourist customers (Zaffron, 2010).
The marketing manager was asked about the marketing tools they use for their marketing and the effectiveness of these marketing approaches in their business strategy.
The main marketing tools used by this company are according to the marketing manager Internet, homepage and traditional advertisement. As response to what the most effective tools would be, there was no general answer given. It was stated that in different types of marketing they use different marketing tools. It depends on what they want to achieve.
The point of view of the respondent about Internet marketing was positive. The manager considers Internet to be very important for their company. It helps them reach the right customer quickly and use different channels. It was stated that the company couldn’t succeed as well without Internet nowadays. It helps them to get their message out fast and reach a wider market. He believes Internet marketing helps their business and revenues grow.
4.3 Sultan Balti Palace
Sultan Balti Palace is now in its 10th year and is busiest Indian restaurant in Wokingham. It is in the heart of the Wokingham town and serves an average of 650 customers a week. An article in a local newspaper referred to the restaurant as having “Poppadoms in the Premier League”. It is two storey restaurants and is in listed Tudor building. Sultan Palace holds 25 seats on the ground floor and 55 seats upstairs in the main restaurant. The restaurant serves a range of tempting and delicious light meals and snacks at lunchtime. In the evening the restaurant is well known for its traditional Balti style cuisine. There is a private room that holds 30 covers that can be hired for parties and functions (Sultanpalace, 2
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