Consumer Behavior : A study of E-MARKET

A Research Project

Submitted in partial fulfillment of

requirement for the award of the degree

of

B.COM 5th SEMSTER

Submitted By
RAMANI RANJAN LENKA
Reg. No. : FCM/BCM/2017-20/0049

Under Guidance of
Dr. SARITA MISHRA

FACULTY OF COMMERCE AND MANAGEMENT STUDIES

Sri Sri University,
CUTTACK, ODISHA
November 2019

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CERTIFICATE FROM THE HEAD OF THE DEPARTMENT (HOD)

This is to Certify that this Project Report entitled "CONSUMER

BEHAVIOUR : A STUDY OF E_MARKET" is a bona-fide work, done and
submitted by MR.RAMANI RANJAN LENKA Bearing Reg NO.
FCM/BCM/2017-20/0049, student of B.Com.GEN to Faculty of Commerce
and Management Studies as a part of his 3rd year curriculum during 5th
semester for the partial fulfillment for the award of the degree of
“B.Com.GEN” of Sri Sri University.

I wish him all the success in his future endeavors.

PLACE: Cuttack

DATE: / / Programme Coordinator

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 CERTIFICATE FROM THE GUIDE

This is to Certify that this Project Report entitled “CONSUMER

BEHAVIOUR : A STUDY OF E-MARKET ” is a bona-fide work done by Mr.
RAMANI RANJAN LENKA, Bearing Reg. no. FCM/BCM/2017-20/0049,
Student of B.Com.General under my guidance and supervision and
submitted to Faculty of Commerce and Management Studies as a part of
his 3rd year curriculum during 5th semester for the partial fulfillment for the
award of the degree of “B.Com.General” of Sri Sri University.

I wish him all the success in his future endeavors.

PLACE: Cuttack

DATE: / / . Dr. Sarita Mishra

Signature of research guide

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 CANDIDATE DECLARATION

I do hereby declare that this project Report entitled “RAMANI

RANJAN LENKA” submitted in partial fulfillment for the award of the
degree of “B.Com.General” of Sri Sri University is my original work carried
out by me under the guidance and supervison of my faculty guide, Dr.
SARITA MISHRA.
The findings and the suggestions given are based on the data
collected by myself. So I confidently declare that this is not a dupication
work and it has not been previously submitted for the award of any other
degree, diploma, associateship , fellowship or other similar title to any
candidate of any University or Institution.

Place: Cuttack Mr. RAMANI RANJAN LENKA

Date: Reg. No.-FCM/BCM/2017-20/049

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ACKOWLEDGEMENT

I would like to express my greatest gratitude to the people who have

helped and supported me throughout my project.

I am grateful to my faculty Dr. SARITA MISHRA, for her continuous

support for the project, from initial advice and concepts in the early stages
of conceptual inception and through ongoing advice and encouragement to
this day.

A special thanks of mine goes to my colleague who helped me in

completing the project and he exchanged his interesting ideas, thoughts
and made this assignment easy and accurate.

THANK YOU.

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INTRODUCTION

The project report will help you to have a clear view of the consumer
behavior of E-MARKET . In the phrase we will focus on Market Survey
on services of E-MARKET offers. These are primarily targeted at the
corporate and general use of public, and thus can be a source of high
revenue generation for the web

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CONTENT

CHAPTER 1

INTRODUCTION

IMPORTANCE

HISTORY OF E-MAKETING

ADVANTAGE OF E-MARKETING

DISADVANTAGE OF E-MARKETING

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 Chapter 1

Introduction to E-Marketing

What is E-Marketing?

Online Marketing is the art and science of selling products and/or services over digital

networks, such as the Internet and cellular phone networks.

The art of online marketing involves finding the right online marketing mix of

strategies that appeals to your target market and will actually translate into sales.

The science of online marketing is the research and analysis that goes into both

choosing the online marketing strategies to use and measuring the success of those

online marketing strategies.

Online marketing uses internet to deliver promotional marketing messages to

consumers. It includes email marketing, search engine marketing, social media

marketing, many types of display advertising (including web banner advertising),

and mobile advertising. Like other advertising media, online advertising frequently

involves both a publisher, who integrates advertisements into its online content,

and an advertiser, who provides the advertisements to be displayed on the

publisher's content. Other potential participants include advertising agencies that

help generate and place the ad copy, an ad server who technologically delivers the

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ad and tracks statistics, and advertising affiliates who do independent promotional

work for the advertiser.

Importance of Online marketing

Growth of internet users must be credited for the growth of online marketing. With

the advent of internet technology number of internet user is increasing at the

greater extent across the world. India stands at fourth place with 81 million internet

users in 2010. (www.internetwoldstats.com)

Top 20 countries with highest number of internet users

Online marketing is becoming increasingly important to small businesses of all

types. In the past, marketing online was something that local bricks-and-mortar

businesses could justifiably ignore. It didn't make sense to waste time and money

on online marketing when all your business was local.

Now with increasing local search and people's new habit of searching on the

Internet first, it matters. Online marketing refers to a set of powerful tools and methodologies

used for promoting products and services through internet. Online marketing includes a

wider range of marketing elements than traditional business marketing due to the

extra channels and marketing mechanisms available on the internet.

Following are few specific contributed to the growth of online marketing -

Online marketing can deliver several benefits such as:

Growth in potential

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 Reduced expenses

Elegant communication

Better control

Improved customer service

Competitive advantage

Online marketing is also known as Internet marketing, Web marketing, digital

marketing and search engine marketing (SEM).

Offline and online work together

If you have a brick-and-mortar store, you know creating an image is key to

bringing in customers. That’s why online branding is vital.

Com Score reports the average American spends 32 hours online every month.

42% of Americans report watching TV while browsing the Internet. Having

consistent messaging across different mediums reinforces your values and brand.

Offline tactics will often result in larger online results.

E-commerce is not the future…it’s the present

Forbes Magazine reports retail is down and e-commerce is up. One clear example

of the power of e-commerce comes from Macy’s recent returns. Forbes reports the

154 year old retail chain saw online sales rise 40% in 2011 while same-stores sales

grew just 5.3%. Maybe you’re not a billion-dollar business like Macy’s, but the

numbers don’t lie. Online sales are overtaking retail sales.

Safe to say e-commerce is trending upward more and more each year. It’s not too

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late to jump onboard the e-commerce train.

Online marketing is cost-effective with measurable results

In the old days, buying a newspaper ad was one way to reach potential customers,

but now, newspaper circulation is decreasing dramatically. However a full or even

half-page ad in a local paper could still run you thousands of dollars and may not

reach your target audience.

Web analytics tools allow you to track meaningful metrics and offer you the

opportunity to make informed business decisions on data and not just assumptions.

Based on data, one can determine the actual ROI of the online campaigns. If these

are not meeting expectations then the data provides with the rationale to terminate

the campaign.

Online business never sleeps

The Internet has no “business” hours. It’s open 24/7/365. That gives you the ability

to promote, to engage and, most importantly, to sell around the clock. As

mentioned above, traditional media advertising (like newspaper and television)

may cast a wide net but is limited in scope. Online marketing is also a time and

money saver in other ways.

The proliferation of web-enabled smart phones has done nothing, but accelerates

this development. It’s no longer even required that you be at a desk to access the

internet. Whether customers are sitting in traffic, jogging in the park or eating at

the dinner table, they have access to company’s website and the online advertising.

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The Steady Rise of the Dot Comes in Business

Business wasn't the fastest to embrace change, when it came over a computer

screen and thorough an online modem. Back in the Clinton days of the 1990s, the

internet was used by the public mostly as a means of communicating in chartrooms

and most of that was hosted by America Online.

Business began to see a future in e-commerce selling goods and services online,

but that was before Amazon, and eBay was still an outback where (very) small

sellers sold goods that were hard to find elsewhere, and waited for checks and

money orders to arrive by snail mail. This clearly was not the most efficient way to

do business, and larger brick- and- mortar ventures didn't see much use in

establishing an online presence.

There wasn't any way to easily take credit card payments online - this was before

the heady rise of PayPal - so why bother? Who even heard of a checkout much less

cart for purchases on computer screen? There were free websites where one might

set up a store, but most of the business was done the old fashioned way, by the

customer calling in their credit card number, or by sending out a check or money

order. The rise of the dot comes, though, was just around the bend, and when they came;

business changed...forever.

History of E-Marketing

Considering the current volume of internet marketing business, it’s hard to believe

how young the internet marketplace is. While the timeline of internet marketing

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has been short, the cumulative events leading up to where we are now have

impacted the entire globe faster than any marketing revolution in history. In 1994,

spending for internet marketing totaled nearly nothing, but increased to over $300

million in 1995. Now, little more than a decade later, marketing spending and

internet marketing business has exploded to nearly $200 billion (according to

Forrester Research). Today, it’s hard to believe in having an organization which

doesn’t have some kind of online presence.

When the internet was first introduced in the early 90s, it wasn’t considered to be

an advertising medium at all. Instead, the internet was treated as a tool for

exchanging emails and digital information, but wasn’t yet considered valuable for

reaching customers. However, it wasn’t long before marketing pioneers began to

see the potential for internet marketing business as millions of web surfers logging

on each day to find valuable and relevant information. Within just a few years,

informative and educational marketing, as well as graphically enticing banner ads

began to be show up. It wasn’t long before results began to flood in which proved

the value of the internet marketplace to even the most skeptical advertisers.

Most importantly, companies which had been spending huge chunks of their

marketing budget on offline list building, begin to realize that they could

accomplish the same thing via email and for much less. It wasn’t long before

everyone from industry giants such as Microsoft Corp. to small businesses began

to build company sites and spend marketing dollars to attract qualified traffic.

Next, search engine companies like Yahoo! began to create significant profits from

advertising alone.

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Then came the great internet marketing business bust around the year of 2000,

which marked the beginning of the end for interruptive marketing such as flashing

banner ads. As interactive features were added to web pages, consumers were

given the option of turning off marketing messages at will and they did. Then

entered the age of education based invitational marketing, which crystallized with

the creation of web 2.0 technologies. Suddenly, billions of “voices” began to rise

all over the world, as the internet marketplace became as much a global

community as it was an advertising medium. This led to a relational based

marketing approach which has led to one of the most lucrative opportunities for

solo entrepreneurs and small start ups alike to make a small fortune working from

their spare bedroom. Who knows where the internet marketing revolution will lead

us, but one this is for sure: Those who understand the principles upon which the

thriving internet marketplace is built will most likely never want for opportunities

to create internet marketing business success and to earn solid income.

Advantages of E-Marketing

One of the most important advantages is the fast availability of the information.

The clients/users can easily get information, by navigating the internet, about the

products that they wish to purchase, and besides that, they can check the

information at anytime of the day.

1. It allows the companies to save money, an aspect that is really taken into

account by the companies since the online marketing campaigns don’t

require a large amount of investment.

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2. The previous mentioned aspect, gives less importance to the differences

between large and small companies in some way, thus increasing the

competition and giving that way advantages to the customers.

3. Presence on the Internet can help the expansion of the company from a

local market to national and international markets at the same time, offering

almost infinite expanding possibilities.

4. On the internet everything can be measured, thus it’s easier for the

companies to know almost instantly if their campaign is working or not,

what company or user is interested in their products, from what cities or

countries are they, etc.

Disadvantages of E-Marketing:

1. Slow internet connections can cause difficulties. If the companies build too

complex or too large websites, it will take too long for users to check them

or download them and they will get bored eventually.

2. The e-commerce doesn’t allow the user “to touch” the merchandise before

purchasing it. Because of this, some salesmen are starting to guarantee the

possibility of returning the product. In Germany, where a law that regulates

e-commerce and guarantees the customers the total refund of the money

exists since 2000, the electronic commerce is very popular.

3. Other factor is the payment: many users still don’t trust in the electronic

methods of paying and give up buying online because of this.

4. One of the major disadvantages may be the lack of trust of the users

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because of the constant virtual promotions that appear to be frauds. This is

an aspect that deteriorates the image and reputation of quality and honest

companies.

5. Other disadvantage is the cash on delivery system, since it doesn’t

guarantee the 100% purchase of the product. This is also the case of

thousands of users that dedicate themselves to daily mock big companies

by ordering on the internet using false identities.

India E-Commerce Readiness

In the latest couple of years, there has been a quantum growth in the

number of internet users and the awareness towards the World Wide Web

has increased in India. The various opportunities that it presents have been

recognized and companies have started making plans to include internet, e-

commerce and e-business in their scheme of things. The awareness and

interest in the web related activities have been fueled by some factors, those

are -

1) Easy Access to the Internet.

2) Reduction in the cost of procuring a internet connection.

3) Reduction in the cost of Personal Computers.

4) Reduction in the cost of web site hosting.

5) Availability of tools that support the web site hosting effort.

Thus there has been a rapid jump in the number of internet users in India as

well as the number of portals offering e-commerce facilities has also gone

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up. The portals have also launched massive advertising campaigns for their

portals invariably spreading awareness towards the concept and the

facilities offered by e-commerce.

CHAPTER : 2

Online Marketing

Today, virtually every aspect of our culture has an Internet counterpart; people
work online, bank online, check mail online, even make friends online, So it
only makes sense that, online shopping has become an increasingly integral part
of our society, exceeding $200 billion in sales are expanding by leaps and
bounds at a rate of 20% to 80 25% growth each year, indicating a momentous
shift in consumer spending habits. Those who don't change with the time will
become obsolete. Shoppers are turning to the internet rather that phone
directories for convenience, product reviews, and up-to-the-date information. A
business owner simply cannot rely on an advertisement in a phone book. In fact,
customers are fifteen times more likely to look on the Internet that they are to
flip through a phone book to call a company. Research consistently shows that,
consumers place less credibility in t business that does not have a web site as
opposed to one that does. The more personal the service (haircut, tattoo,
financial, counseling, legal etc.), the more research customers want to do to
ensure they are comfortable with the service provider. The more potentially
expensive the service (legal, medical, automotive, travel, construction, real
estate, etc.), the more comparisons customers want to make sure they get the
best value for their dollar. In order for a business to stay successful it is
imperative that, selling habits are adjusted to match the change in consumer
buying habits. More simply expressed business must sell the way their
customers shop or they will buy elsewhere. Even some of the more elaborate
websites that allow customers to make purchases online can cost less annually

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that a typical monthly phonebook ad; therefore, making perfect sense for
businesses to evolve with the times. Every business is different, but each is
going to require the power if the Internet to stay competitive. In the long run,
the net operating costs of a website become insignificant compared to the return
on the investment that the advertisement delivers. No other form of marketing
compounds value and spreads like an effective Website.

Phases in E-Commerce :

The concept of e-commerce has evolved over the period and we can define the
phase of its growth, what initially started off as a sapling has now grown by
leaps and bounds no one can really predict the way it will move all are wild
guesses, but one thing for sure the future is e-commerce.

We have divided the development of e-commerce into three phases, they are as
under :

1) The Website Phase (1994-1997):

We could practically call this as the beginning of e-commerce. Companies

started getting the feeling that, they should have a presence on the internet by
way of a Website. Though they felt the need regarding the online presence they
were really not sure about the kind of outcome or the results that it would
generate.

2) The Transaction/E-commerce Phase (1997-2000)

The next step in e-commerce was when people started transacting online.
Buying and selling over the web marked this transaction phase. Deals took
place between such buyers and sellers who had not been the web would never

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have found each other, while in other cases. This buying and selling could have
been done by the regular purchase procedure, but as the web was involved was
labeled as an e-commerce transaction. The emphasis in this phase was more on
the order flow at any cost and gross revenue generation. The business models
used in this phase were not customer-centric and the companies which have still
stuck to these types of give-it-away models are now in the red due to their
myopic point of view.

3) The E-Business Phase (2000-2010)

We have seen that, in the previous phase the emphasis was more on the
generation of gross revenue, but in this phase the emphasis was on increasing
the margins of gross revenue. Increasing the profitability through better
business models ones which enabled the company to service the business
transaction better is the objective of this phase. As this phase encompassed
more than the e-commerce transactions it was called ebusiness. E-business
includes both the front and the back office applications A radical shift in the
way business was carried out over the web was designed by each of the
companies. The business models were innovative and the main objective was to
provide value to the customer and increase the profit of the company.

Functions of E-commerce

Whenever we visit any e-commerce site, we will understand that, the function
of any ecommerce site can be divided into four basic functions.

Communication Function:

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The basic purpose of the communication function is to enable the interaction to
take place. Information regarding the product or the services should be passed
on the customer.

Process Function :

The basic purpose of the process function is to manage the process involved in
the transaction, the automations the networking of the two computers involved
in the transaction.

Service Function :

Improvement in the service provided to the customer is what really binds the
customer to the company. To manage the service provided to the customer is the
purpose of the service function.

Transaction Function:

To enable the transaction of buying and selling to go through is one the main
purpose of the transaction function

Forms of online marketing

Display advertising Display advertising conveys its advertising message

visually using text, logos, animations, videos, photographs, or other graphics.
Display advertisers frequently target users with particular traits to increase the
ads' effect.

Online advertisers (typically through their ad servers) often use cookies, which
are unique identifiers of specific computers, to decide which ads to serve to a
particular consumer. Cookies can track whether a user left a page without
buying anything, so the advertiser can later retarget the user with ads from the
site the user visited.
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Web banner advertising

Web banners or banner ads typically are graphical ads displayed within a web
page. Many banner ads are delivered by a central ad server. Banner ads can use
rich media to incorporate video, audio, animations, buttons, forms, or other
interactive elements using Java applets, HTML5, Adobe Flash, and other
programs.

Frame ad (traditional banner)

Frame ads were the first form of web banners. The colloquial usage of "banner
ads" often refers to traditional frame ads. Website publishers incorporate frame
ads by setting aside a particular space on the web page. The Interactive
Advertising Bureau's Ad Unit Guidelines proposes standardized pixel
dimensions for ad units.

Pop-ups/pop-under

A pop-up ad is displayed in a new web browser window that opens above a

website visitor's initial browser window. A pop-under ad opens a new browser
window under a website visitor's initial browser window.

Floating ad

A floating ad, or overlay ad, is a type of rich media advertisement that appears
superimposed over the requested website's content. Floating ads may disappear
or become less obtrusive after a preset time period.

Expanding ad

An expanding ad is a rich media frame ad that changes dimensions upon a

predefined condition, such as a preset amount of time a visitor spends on a
webpage, the user's click on the ad, or the user's mouse movement over the ad.

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Expanding ads allow advertisers to fit more information into a restricted ad
space.

Trick banners

A trick banner is a banner ad where the ad copy imitates some screen element
users commonly encounter, such as an operating system message or popular
application message, to induce ad clicks. Trick banners typically do not mention
the advertiser in the initial ad, and thus they are a form of bait-and-switch. Trick
banners commonly attract a higher-than-average click-through rate, but tricked
users may resent the advertiser for deceiving them.

Interstitial ads

An interstitial ad displays before a user can access requested content,

sometimes while the user is waiting for the content to load. Interstitial ads are a
form of interruption marketing.

Text ads

A text ad displays text-based hyperlinks. Text-based ads may display separately

from a web page's primary content, or they can be embedded by hyperlink
individual words or phrases to advertiser's websites. Text ads may also be
delivered through email marketing or text message marketing. Text-based ads
86 often render faster than graphical ads and can be harder for ad-blocking
software to block.

Search Engine Marketing (SEM)

Search Engine Marketing, or SEM, is designed to increase a website's visibility

in search engine results pages (SERPs). Search engines provide sponsored
results and organic (non-sponsored) results based on a web searcher's query.

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Search engines often employ visual cues to differentiate sponsored results from
organic results. Search engine marketing includes all of an advertiser's actions
to make a website's listing more prominent for topical keywords.

Search Engine Optimization (SEO)

Search Engine Optimization, or SEO, attempts to improve a website's organic

search rankings in SERPs by increasing the website content's relevance to
search terms. Search engines regularly update their algorithms to penalize poor
quality sites that try to game their rankings, making optimization a moving
target for advertisers. Many vendors offer SEO services.

Sponsored search

Sponsored search (also called sponsored links, search ads, or paid search)
allows advertisers to be included in the sponsored results of a search for
selected keywords. Search ads are often sold via real-time auctions, where
advertisers bid on keywords. In addition to setting a maximum price per
keyword, bids may include time, language, geographical, and other constraints.
Search engines originally sold listings in order of highest bids. Modern search
engines rank sponsored listings based on a combination of bid price, expected
click-through rate, keyword relevancy and site quality.

Social media marketing

Social media marketing is commercial promotion conducted through social

media websites. Many companies promote their products by posting frequent
updates and providing special offers through their social media profiles.

Mobile Advertising

Mobile advertising is ad copy delivered through wireless mobile devices such

as smart phones, feature phones, or tablet computers. Mobile advertising may

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take the form of static or rich media display ads, SMS (Short Message Service)
or MMS (Multimedia Messaging Service) ads, mobile search ads, advertising
within mobile websites, or ads within mobile applications or games (such as
interstitial ads, “advergaming,” or application sponsorship). Industry groups
such as the Mobile Marketing Association have attempted to standardize mobile
ad unit specifications, similar to the IAB's efforts for general online advertising.
Mobile advertising is growing rapidly for several reasons. There are more
mobile devices in the field, connectivity speeds have improved (which, among
other things, allows for richer media ads to be served quickly), screen
resolutions have advanced, mobile publishers are becoming more sophisticated
about incorporating ads, and consumers are using mobile devices more
extensively. The Interactive Advertising Bureau predicts continued growth in
mobile advertising with the adoption of location-based targeting and other
technological features not available or relevant on personal computers. In July
2014 Facebook reported advertising revenue for the June 2014 quarter of $2.68
billion, an increase of 67 per cent over the second quarter of 2013. Of that,
mobile advertising revenue accounted for around 62 per cent, an increase of 41
per cent on the previous year.

Email Advertising

Email advertising is ad copy comprising an entire email or a portion of an

email message. Email marketing may be unsolicited, in which case the sender
may give the recipient an option to opt-out of future emails, or it may be sent
with the recipient's prior consent (opt-in).

Chat advertising

As opposed to static messaging, chat advertising refers to real time messages

dropped to users on certain sites. This is done by the usage of live chat software
or tracking applications installed within certain websites with the operating

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personnel behind the site often dropping adverts on the traffic surfing around
the sites. In reality this is a subset of the email advertising but different because
of its time window.

Online classified advertising

Online classified advertising is advertising posted online in a categorical listing

of specific products or services. Examples include online job boards, online real
estate listings, automotive listings, online yellow pages, and online auction-
based listings. Craigslist and eBay are two prominent providers of online
classified listings.

Adware

Adware is software that, once installed, automatically displays advertisements

on a user's computer. The ads may appear in the software itself, integrated into
web pages visited by the user, or in pop-ups/pop-under. Adware installed
without the user's permission is a type of malware.

Affiliate Marketing

Affiliate marketing (sometimes called lead generation) occurs when advertisers

organize third parties to generate potential customers for them. Third-party
affiliates receive payment based on sales generated through their promotion.

E-Commerce scenario in India

With the second wave of e-commerce in India surging, Indian internet-driven

companies seem to have learnt from their experiences and have evolved in their
approach to online business models. Not many old companies of the 1999 era
remain in 2010, but those who exist have set high standards and benchmarks for
the new crop of start ups. It is from the learning and experiences of those old
companies that, the industry today appears mature in overcoming serious

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infrastructural challenges in India. Although many differ on whether the current
trends in online businesses indicate a significant turning point in the industry,
nevertheless the panel on E-commerce in India approved to be an insightful
analysis on the challenges and opportunities in the sector.

E-commerce challenges for India

As compared to the west, E-commerce is relatively a new concept, but is

catching up fast and Indian companies are learning new ways to approach and
please their clients. E-commerce is a boom for the Indian Industry as it has
opened up new markets and opportunities which earlier had not existed. Along
with the opportunities e-commerce has also thrown some challenges which have
to be addressed to before we could say, that e-commerce is now completely
established in India.

Connectivity:

Videsh Sanchar Nigam limited enjoys a virtual monopoly in submarine cables

and all other Internet Service Providers have to go through them to provide fiber
optic link. In order to improve on the service provided by the ISP, there needs to
be better international connectivity. E-commerce thrives on better connectivity
and therefore we need more players who are offering international connectivity
through submarine cables.

Penetration:

Though the number of internet users are high in India but comparatively
lagging behind the western countries. PC penetration is low and is mostly
concentrated in the urban areas. Awareness of e-commerce is not there and there
are certain apprehensions towards it, these problems needed to be addressed to
immediately.

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Legal Framework:

Though the Information Bill is in force, there is very low awareness towards its
implication Cyber crime is on the rise and unless and until the IT Bill is taken
up seriously, people are going to stay away from e-commerce.

Taxation:

Another major challenge is the way the deal will be taxed. Clarity as to the
taxation method needs to be made.

Electronic Payment:

Though there are many banks and online payment modules, the issue of safety
and security needs to look into. The methods of electronic payment need to be
refined and stabilized as they are the backbone of e-commerce People need to
divulge private information on the internet which may attract the attention of
criminals so care needs to be taken to ensure that safety and security are utmost
when the payment are being made.

Logistics:

The deal has been made online, but the goods need to be finally delivered and
considering the vast expanse of the market great thought and arrangements need
to be made. In a country, where there are problems of transportation on has to
make elaborate arrangements before going in for ecommerce as one of the
prime requirements of e-commerce is prompt delivery. So, for a country like
India Logistics and Shipment pose a major problem for ecommerce activities.

Acceptability:

The mindset of Indian people poses one of the greatest challenges. In India,
shopping is considered a festival where the family gets together and goes for
shopping. So to get them to shop online for their needs is a major challenge.

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The use of credit cards one of the prerequisites for online payments is very low
in India this poses another problem. Though Information Technology Bill has
been implemented, it needs to be strictly adhered to and awareness towards it
needs to built up. The mindset of Indians is that, if they use their credit card for
online purchase cybercriminals will hack into their information and misuse it.
These are some of the psychological challenges that e-commerce faces in India.
Online Marketing is growing in India; it has only touched a few sections. The
reason for the numbers not being as large as the businesses wish it to be is the
lack of certain key elements in the existing business models. These customer
propositions are: Convenience and Value.

OPPORTINITIES AND CHALLENGES IN DIGITAL MARKETING IN

INDIA

The explosion of digital connectivity, the significant improvements in

communication and information technologies and the enforced global competition
are revolutionizing the way business is performed and the way organizations
compete. Anew, complex and rapidly changing economic order has emerged based
on disruptive innovation, discontinuities, abrupt and seditious change. In this new
landscape, knowledge constitutes the most important factor, while learning, which
emerges through cooperation, together with the increased reliability and trust, is
the most important process (Lundvall and Johnson, 1994): The competitive survival
and ongoing sustenance of an organization primarily depend on its ability to
redefine and adopt continuously goals, purposes and its way of doing things
(Malhotra, 2001). While digital marketing is a part of mainstream marketing
activity in the more developed markets, in India it is still in the teething stage.
Lack of awareness of the potential of internet and mobile, low awareness of how
digit~ marketing works and a general unwillingness to "try new things", accounts
for the low level of digital marketing activity in India. However, in the last two
years, online marketing has seen a steep growth and seem to be gathering critical
mass. Given the criticality of the Digital platforms as an emerging medium and the

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opportunities it offers for marketing, the Internet and Mobile Association convenes
this conference with the aim of providing a common platform to advertisers,
agencies, online publishers, mobile marketing companies and other stakeholders to
collectively drive home the importance of Digital marketing. As multi-national
companies and Indian corporations continue to grow their Indian offices (expected
growth in MNC hiring in tech sector to double in 2007) and global work-practices
begin to be seen in India, the always-on connected professional is increasingly
visible. Flexi hours and home-office culture has set-in in the tech cities making
laptop usage and home Wi-Fi a necessity. The small business enterprises are
contributing significantly to the mobile workforce by becoming the fastest growing
segment in laptop consumption. The Indian Government is considering halving
excise duty on hardware (proposal status as of January 2007) which will likely bring
in taxation level on par with China. Should this become a reality, PC and laptop
costs will come down further increasing consumption even more. telephony
arrived. However, in India, mobile penetration (for basic voice) has already
exceeded PC penetration several fold. PC sales are growing at around 25% year to
year. Notably laptop sales have been doubling. The annual PC sales in 2005-06
were below the 5 million mark. Forecasts for 2006-07 estimate that over 5;6
million PCs would be sold in India. It is important to note that the prices of PCs
have been consistently falling. Dell Inc. has just announced setting up of a
manufacturing facility near Chennai, a major metro in southern India, for making
low cost PCs. India's Internet –service provider market has some major players who
are not telecom operators. Like other countries, India has separate licensing
system for ISPs, and a number of ISP-only firms are offering Internet access and
bandwidth. Like elsewhere, ISPs in India started off with dial-up offerings, started
moving to wired broadband connections and now increasingly to wireless routes to
the home and enterprise. The value proposition of the Indian software industry can
be summed up as "faster, better, and cheaper." The Indian companies have taken
responsibility on an end-to-end basis for new software development and for re-
engineering. The advent of the internet, digital connectivity, the explosion and use of
ecommerce and e-business modeless in the private sectors are pressurizing the
public sector to re-think hierarchal, bureaucratic organizational model. Customers,
citizens and businesses are faced everyday with new innovative e-business and e-

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commerce models implemented by the private sector and made possible by ICT
tools and applications are requiring the same from governmental organization.
Osborne and Gaebler 1992 referred to citizens as customers for convergence, since
convergence 1eed to empower rather than served. Governments world wide are
faced with the challenge of transformation and the need to modernized
administrative practices and management systems (Tapscott, 1996). recently, the
public sector has began to recognize the potential opportunities offered by ITC and e-
business model to fit with citizens demand, to offer better services to citizen and to increase
efficiency by streamlining internal processes. Tapscott and caston 1993 argued that ICT
causes a "paradigm shift" introducing "the age of network intelligence" , reinventing
businesses, convergence and individuals. Paradigm shifts prevail in the public sector too. The
traditional bureaucratic paradigm, characterized by internal productive efficiency, functional
rationality, departmentalization, hierarchical control and rule based management is being
replaced by competitive, knowledge based economy requirements, such as flexibility,
network organization, vertical or horizontal integration, innovative entrepreneurship,
organization learning, speed up in service delivery and a customer driven strategy. These new
paradigm thrust the shift towards e-government paradigm, which emphasizes coordinated
network building, collaboration and customer services.

In the new economy, underpinned by revolutionary changes in science and

technology, information and knowledge has become a key factor in economic
competitiveness. Developing countries must pursue a non; active role in the
formulation of national policies and strategies to promote the information
economy, to reap huge benefits in terms of economic and social
growth/development. E Government is believed to play a fundamental role to this
end. It does not only facilitate market- led initiatives but it also plays a major role
in initiating the process of capability building and in coordinating the actions of a
large number of interested stakeholders (Mansell and Wehn, 1998). It offers the
potential of reshaping the public sector activities and processes, building
relationships between citizens and the government, enhancing transparency,
increasing government capacity and providing a "voice" for those outside the
government. In fact, the development of ICT and the growth of digitalization in
various sectors of the economy can be effectively harnessed for being used as

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useful marketing strategies for both the domestic and the foreign companies in
India.

CHAPTER 3

LITRATURE REVIEW

EVOLUTION OF COMMERCE

Commerce has evolved over the centuries. Prior to the evolution of money it was a
simple "batter process" where things could be exchanged, same milk for grains. The
evolution of money brought with it, the concept of a "market place". In a market place,
commerce is a function of four P's. These entire four components play a vital role in a
transaction to take place. Different combinations of 4 P's determine different forms of
commerce. Once the market place came into existence, a few pioneers realized that
people would be ready to pay extra if they could deliver products at customer's door
steps. A slight modification at price and place let to the convenience of getting products
at their homes. This concept delighted the customers and thus, the concept of "street
vendors" was born. When the postal system came into being the sellers decided to cash
in on the new opportunity and started using mailers giving description of their
products. It led to the concept of "mail order cataloguing". From here, the evolution of
the "tele shopping" network was inevitable with the development of media vehicles.
The latest generation of commerce is one that can be done over the internet. Internet
provides a virtual platform where sellers and buyers can come in contact for sale and
purchase of goods and services. They can be thousands of miles apart, may belong to
different parts of the world, might speak different languages, "E-commerce" emerged as
the boundary less trade medium in the era globalization. Since, internet has the ability to
reach the customers home; the distribution channel has started to assume, new meaning
to the B2C and C2C e-Marketer. The Physical delivery got converted to electronic
delivery; physical products were now electronic products, displayed on a website. With
options of paying online through debit and credit cards, even the transaction was purely

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electronic. Another important P for the e marketer, the Promotion, assumed importance,
especially because there is no face to face interaction between the buyer and seller. The
focus of online promotions is the' great deals', 'discounts', 'convenience' offered by the e-
Marketers.

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DIGITAL MARKETING:

Digital Marketing is the practice of promoting products and services using digital
distribution channels to reach consumers in a timely, relevant, personal and cost
effective manner. While online marketing is a part of mainstream marketing
activity in the more developed markets, in India it is still in the teething stage.
Lack of awareness of the potential of internet, spread of its use in India, low
awareness of how internet marketing works and a general unwillingness to "try new
things" accounts for the low level of online marketing activity in India. However, in
the last two years, online marketing has seen a steep growth and seem to be
gathering critical mass. Given the criticality of internet as an emerging medium
and the opportunities it offers for marketing, the Internet and Mobile Association
convenes this conference with the aim of providing a common platform to
advertisers, agencies, online publishers and other stakeholders to collectively drive
home the importance of online marketing. Whilst digital marketing does include
many of the techniques and practices contained within the category of Internet
Marketing, it extends beyond this by including other channels with which to reach
people that do not require the use of The Internet. As a result of this non-reliance
on the Internet, the field of digital marketing includes a whole host of elements
such as mobile phones, sms/mms, display / banner ads and digital outdoor.
Previously seen as a stand-alone service in its own right, it is frequently being seen
as a domain that can and does cover most, if not all, of the more traditional
marketing areas such as Direct Marketing by providing the same method of
communicating with an audience but in a digital fashion. There are 2 different
forms of digital marketing, each of which has their pros and cons.

PULL

Pull digital marketing technologies involve the user having to seek out and directly
grab (or pull) the content. Web site/blogs and streaming media (audio and video)
are good examples of this. In each of these examples, users have a specific link
(URL) to view the content.

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PROS:

No restrictions in terms of type of content or size as the user determine what they"
want.

=> No technology required to send the content, only to store/display it.

=> No regulations or opt-in process required.

CONS:

=> Considerable marketing effort required for users to find the message/content.

=> Limited tracking capabilities - only total downloads, page views, etc.

=> No personalization - content is received and viewed the same across all
audiences

PUSH

Push digital marketing technologies involve both the marketer (creator of the

message) as well as the recipients (the user). Email, SMS, RSS are examples of push

digital marketing. In each of these examples, the marketer has to send (push) the

messages to the users (subscribers) in order for the message to be received.

PROS:

=> Can be personalized -- messages received can be highly targeted and specific to

selected criteria - like a special offer for females, 21 years old or over and living

in California.

=> Detailed tracking and reporting - marketers can see not only how many people

saw their message but also specific information about each user such as their

name as well as demographic and psychographic data.

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=> High Return on Investment (RO!) possible - if executed the right way, push

messaging can help drive new revenue as well as brand reinforcement.

CONS:

=> Compliance issue - each push messaging technology has its own set of

regulations, from minor (RSS) to heavily controlled (emai~ and text messaging)

=> Requires mechanism to deliver content - the marketer has to use an application
to

send the message, from an email marketing system to RSS feeders.

=> Delivery can be blocked - if the marketer does not follow the regulations set
forth by each push message type, the content can be refused or rejected before
getting to the intended recipient.

'While digital marketing is effective when using one message type, it is much more
successful when a marketer combines multiple channels in the message campaigns.

For example, if a company is trying to promote a new product release, they could
send out an email message or text campaign individually. This, if properly
executed, could yield positive results. However, this same campaign could be
exponentially improved if multiple message types are implemented. An email
could be sent to a list of potential customers with a special offer for those that
also include their cell phone number. A couple of days later, a follow up campaign
would be sent via text message (SMS) with the special offer. Push and pull message
technologies can also be used in conjunction with each other. For example, an
email campaign can include a banner ad or link to a content download. This
enables a marketer to have the best of both worlds in terms of their marketing
messaging.

Usage of E-Commerce in India - a Demand Side perspective

Since the introduction of E-Commerce, there have been debates on future of its
prospects in India. Would it be as successful as it is in US or is it a mirage that
attracts many but offers nothing worthwhile? True enough; the players in the

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online marketplace are still struggling to settle with a successful business model.
Most of them are settling for Advertising Model, hoping it would help them
breakeven. However, to grow beyond, the majority of the revenue needs to be
generated from customers. Customers on the other hand, have become choice-
spoilt. There is no dearth of offerings for them. They skip from one seller to other
in search of best deals in the standardized products market. In this section, we
would,

=> focus on the usage of E-Commerce in India, and

=> understand the triggers and barriers for the online marketplace

Usage of E-Commerce

According to one survey conducted among the Industry players, the E-Commerce
Industry in India was worth Rs 7080 cores at the end of 2006-07. Is it big enough?
How much is it expected to grow? The adoption and usage of E-Commerce in the
country is a function of the overall environment for Internet usage in a country. To
correctly understand the likely growth path for E-Commerce in India it is
imperative to understand the internet ecosystem in the country. Some of the key
variables that need to be understood are the proportion of computer literates,
internet penetration, frequency of access to the internet, purpose of internet
access etc. A correct mapping of these would help in understanding the overall
framework of E-Commerce in the country. The PC literate population is on a fast
growth curve having grown 100% in 2006 over 2004. Though in India overall
penetration is still low the important factor is that a critical mass of users is
shaping up which will fuel rapid growth over the next 3-4 years. A Claimed or Ever
Internet User is defined as one who has ever accessed Internet. A subset of
Claimed Internet users, Active Internet Users are defined as those who have
accessed Internet at least once in the last one month. They are the regular users
of Internet and are aware of the recent trends and applications emerging on the
Internet. The population of Active Internet Users was 21 million in March 2006. As
these Internet Users mature with respect to exposure and awareness of internet,
they tend to spend more time online; access internet more frequently and surf
non-communication based applications and advanced online applications like

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gaming, E-Commerce, etc. However, as it is evident from the charts below, E-
Commerce is still not the key driver of the Internet. Internet usage in the country
is still driven by email and information search. However, the interesting part is
that out of the 13.2 million internet users across 26 cities covered in I-Cube 2006,
(Syndicated Research of e technology group @IMRB International),14.2% use the
internet to buy travel tickets; 5.5% people do online shopping especially products
like Books, Flowers, Gifts etc. and 5% people deal in stocks and shares through the
internet. Though the percentage contribution of E-Commerce is almost same over
the years, however, the number of Internet users using E-Commerce is growing
rapidly. Thus, E-Commerce is surely being adopted by the Internet users as a way
to shop. They are buying a variety of products online and visiting various web sites
to buy products from. Given the rate of growth in E-Commerce users, size of the E-
Commerce industry is expected to reach Rs. 9210 cores at the end of 2007-08, a
big jump of 30% over the current industry size.

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Triggers and Barriers for the E-Commerce market in India

In addition to the industry size, it is imperative to understand the reasons behind the growth

and reasons hampering the growth E-Commerce industry in the country. This section

elaborates the triggers and barriers that impact the adoption of E-Commerce by the Internet

users we would start by enlisting the triggers which motivate the online shoppers to buy

products online.

As evident from -the table above, time saving is the major reason that drives Internet
users to shop online. It is followed by convenience of anyplace, anytime shopping online.
Online stores do not have space constraints, thus, a wide variety of products can be put
for display. Companies can display whole range of products being offered by them. This
further enables the buyers to choose from a variety of models after comparing the looks,
features, prices of the products on display. To attract customers to shop online, e-
Marketers are offering great deals and discounts to the customers. This is facilitated by
elimination of maintenance, real-estate cost of the seller, selling its products online. An
insight into some of the problems stated by customers while buying through Internet will
help us to have a closer look at the issues which need to be addressed by the online
community.

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Absence of touch-feel-try creates concerns over the quality of the product on offer.

Another roadblock in the way of E-Commerce is lack of interactivity so as to allow for

negotiations between the buyer and sellers. In addition to above, the security of online
payments is a major issue requiring immediate attention of the marketers.

Increasing rate of cyber crimes has made customer apprehensive of revealing their credit
card details and bank details online. Moreover, the duration of selecting, buying and
paying for an online product may not take more than 15 minutes; however, delivery of the
product to customer's doorstep may take about 1-3 weeks. Furthermore our past
observation has been that in India shopping is an experience itself. Consumers look
forward to it as an opportunity to get out of their homes and interact with other people.
The recent growth in the malls and the hypermarkets only corroborate this fact. Thus, E-
Commerce has to bank on the convenience and discount platform as there is no way that
they can compete with the offline platforms on the experience that they provide. There is
no doubt that Internet shopping has a number of benefits to offer. With changing
lifestyles, E-Commerce is surely the most appealing and convenient means of shopping.
However, the grave issues surrounding the market do not make it the "choice" of most of
the Internet users. Addressing the above specified issues, thus, has become critical to
expand beyond the current user base.

E-TAILING

As the name suggests, e- Tailing is the web version of Retailing. In other words these are
online shops where a customer can choose from a variety of items like Apparel,
Accessories, Mobiles/Cell Phones, Cameras, Computers, Books, Magazines, Music CDs and
DVDs, Electronic Goods, Shoes, Furniture, Health Equipments, Flowers, Jewelry, etc. The
two popular models that exist in the eTailing marketplace are Online Retailers and Online
Auctions. The Website of an Online Retailer is used as a storefront to sell physical goods
that are then delivered by a third party. The Online Auctions, on the other hand, serves as
a platform where a seller can offer to sell its products to interested buyers and provides
the enabling infrastructure for electronic transactions. In the past, auctions were limited
to only high valued items such as paintings, antiques and collectibles or for commodities in
the wholesale market

places. However, now it is possible to auction even low valued items like old books, music
cassettes, CDs, etc. Thus, both formats of e- Tailing differ in the procedure for conducting

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an electronic transaction. These differences can be highlighted in form of the following
process flow: Another difference between online stores and the online auction sites is that
the former earns transaction revenues while the latter charges a commission from the
buyer and seller once the deal is closed.

Size of the eTailing Market for the year 2006-07 and 2007-08

After collating the responses from various players in the Industry, the size of eTailing
Market for the year 2006-07 was computed to be Rs. 850 crores. eTailing contributes
around 12% to the total E-Commerce Market size in the year 2006-07.The reasons that
limit the growth of this online segment comprise of lack of trust, especially for unknown
brands, lack of 'touch-feel-try' experience, higher chances for discrepancy in the product
delivered, low margins, etc. These factors have been elaborated upon in the next section.
However, with branded stores coming online, providing consistent service delivery, both
online and offline, this segment is expected to rise by 30% to Rs. 1105 crores at the end of
2007-08. These branded stores are likely to be visited by more buyers in the metros than
from non-metros.

GROWTH IN THE ETAILING MARKET IS DRIVEN BY:

INCREASE IN THE NUMBER OF BUYERS AND SELLERS: The success of a

marketplace depends on the presence of a large number of buyers and a large
number of sellers. Over the years there has been a sharp increase in the number of
buyers and sellers in this segment. In addition to online buyers, many offline stores
have begun to sell their products in the online marketplace. The greater the
number of sellers and buyers, the faster the market grows.

CHANGE IN THE CUSTOMER'S ATTITUDE: According to a leading eTailer,

"There has been a significant change in the attitude of an average Internet user.
He is ready to experiment to suit his convenience". Truly, an average user is buying
a variety of products online. These may vary from low-end items like books to
high-end items like laptops; less involving items like flowers to high, involvement
items like jewelry.

CONVENIENCE: As rightly pointed out by an eTailer, "a 15 minutes trip online can
save a two-hour trip to the mall.. we offer widest variety, the best deals and

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option for buying and paying online that won't take more than 5-6 clicks" Thus, an
online buyer saves time, effort and money when buying online as compared to
buying from physical stores.

BETTER BARGAINS: e- Tailing eliminates the need to maintain expensive and fancy
showrooms. Instead, what attract customer attention to online stores is the great
deals' 'best prices' and 'better bargains'. According to an industry player, "Online.

retailers can manage to offer attractive offers as they operate out of websites and
thus

save on inventory handling and maintenance costs".

BARRIERS TO GROWTH OF E-TAILING MARKET

CONSUMER BIAS: According to a leading industry player, "Consumers will display a

bias for brands that they know well and have had a good experience in the past".
Thus products of brands with a favorable bias will score over the products of less
popular brands. "A few would risk to buy expensive jewelry from an unknown
jeweler online", adds another industry expert.

LACK OF 'TOUCH-FEEL-TRY' EXPERIENCE: We have heard a lot of Internet Users

say "would the diamonds in the ring be as big as shown in this picture", "it seems
like my size but what if does not fit well", "what if this camera does not work".
Thus, lack of ability to try a product before buying acts as a barrier for some
Internet Users. In addition, often the product or the service delivered differs from
the standards displayed on the website. The customer is not sure of the quality of
the product unless it is delivered to him and post delivery of the product, it is
sometimes a lengthy process to get a faulty or the unsuitable product changed.
Thus, unless the deliverables are as per the customers' expectations, it is hard to
infuse more credibility in the e- Tailing market.

MOUNTING COMPETITIVE PRESSURES: The market for online buying is still at a

nascent stage. However, at this early stage too, the market is swarmed by the
players selling their or third party's products online. To attract customers, the
competing online players are adopting all means to provide products and services
at the lowest prices. This has resulted in making the consumers choice-spoilt, who

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in turn surf various websites to spot the 10w~st price for the product. Thus,
although the number of transactions is increasing, the value of the products sold is
continuously falling owning to high competition and leaner margins.

SEASONALITY: eTailing Market is faced by seasonal fluctuations. As told by an

Industry player, "August to February is the peak seasons for sale, while March to
July is the dry seasons for sale". During the peak season, occasions that drive the
sales are Diwali, Rakhi, Valentine's Day, New Year, Christmas, Mother's Day,
Friendship Day etc are. On these occasions younger generations prefers buying and
sending gifts. online.

CREDIBILITY IN PAYMENT SYSTEM: According to a leading eTailer, "online frauds

and breach is the biggest barrier to online sales".. As a result, prospective buyers
prefer staying away from revealing their credit card and bank details. UNTIMELY
DELIVERY OF PRODUCTS: it might take a few minutes to search, book and pay for
products and services online, but the delivery of the product may take
unreasonable time. Thus, the online retailing raises more issues than the benefits
it currently offers. The quality of products offered online and procedures for
service delivery are yet to be standardized. Till the same is done, the buyer is at a
higher risk of fra1,lds. In addition to above, efforts need to be taken to educate
the online buyers on the steps that need to be undertaken while making an online
purchase. Moreover, the feedback of an online buyer should be captured to
identify flaws in service delivery. This can be done through online communities and
blogs that serve as advertising and marketing tools and a source of feedback for
enterprises. Thus, unless the issues surrounding the eTailing market are addressed,
the benefits provided by the industry would fail to attract high value and volumes
of transactions.

ONLINE CLASSIFIEDS

B2C Online Classifieds is a customer driven market. It enables Internet Users to

place their offerings, including, CVs for jobs, profile for matrimony, ads to buy/
sell property and automobiles on websites. Though the Online Classifieds market
targets niche segments, for example, the working population can place their CVs
on job portals, those greater than 18 years are eligible to avail of services of a

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matrimonial website, etc., this segment still manages to attract the maximum
attention owing to the fact that it targets the young population, that contributes
maximum to the pie of Internet users. However, there is another potential
segment comprising 01 middle aged and senior citizens, who might be interested in
availing matrimony services (for their children) and buying/ selling property. Since
this segment is not comfortable in accessing the internet, they still rely on service
of middlemen like marriage

consultants and property dealers. Having realized this, players in the Online
Classifieds Market are opening physical counters. The physical counters assist the
not-so-Internet-savvy population by applying search as per the parameters
specified by the customer.

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 CHAPTER-4

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