CHAPTER 3

BOUNDARIES OF RESEARCH STUDY

TOPICS
3.1. Introduction
3.2 E-Commerce Models
3.2.1 Business-to-Business (B2B) Model
3.2.2 Business-to-Consumer (B2C) Model
3.2.3 Consumer-to-Consumer (C2C) Model
3.2.4 Consumer-to-Business (C2B) Model
3.3 E-Commerce in India
3.3.1 E-Commerce Growth
3.3.1.1 E-Commerce: Baseline for 86% of Marketing in India
3.3.1.2 eMarketing Effectiveness in FY11
3.3.1.3 Marketers Effectiveness by Periodic Comm. in 2011
3.3.1.4 eMarketing Channels in 2011
3.3.1.5 Consumer Acquisition: Largest Driver of eMarketing in 2011
3.3.1.6 Indian Marketers Investment in eMarketing
3.3.1.7 eMarketing Online Sales
3.3.1.8 Acquisition Rules to be Marketers Prime Goal for 2011
3.3.1.9 Investments Plans in eMarketing Platform
3.3.1.10 Digital Channel Preferences for 2011
3.4 Changing Media Consumption
3.5 Relative Internet Usages
3.6 Potential Digital Impact on Target Markets
3.7 Consumer Ratings of Online Experience
3.8 Ten Key Reasons for Returning to Website
3.9 Importance of Website Design Factors
3.10 Importance of Different Information Sources

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This chapter explains the study area in detail. The study area comprises
selected sub-geographical urban areas like Ahmedabad, Baroda, Surat and Rajkot of
the Gujarat State. This chapter will discuss about B2B, B2C & C2C online businesses
and their consumers to measure the efficient and effectiveness of eMarketing
facilities.

3.1 Introduction
E-Commerce is a huge domain on conducting business over internet and eretailing is part of it. While we discuss on digitally / Internet enabled commercial
transactions between organizations and individuals using latest web technologies as
per the policies of the organization it takes the form of e-business. Nowadays, 'e' is
gaining momentum and most of the things if not everything is getting digitally
enabled. Thus, it becomes very important to clearly understand different types of
commerce or business commonly called as E-Commerce.
The use of the internet and other digital media to support marketing has been
granted a bewildering range of labels by both academics and professionals. Internet
marketing can be simply defined as Achieving marketing objectives each and every
one the way through applying digital technologies. This succinct definition helps
remind us that it is the results delivered by technology that should determine
investment in Internet marketing, not the adoption of the technology! These digital
technologies include internet media such as websites and e-mail as well as other
digital media such as wireless or mobile and media for delivering digital television
such as cable and satellite.

3.2 E-Commerce Models

Creating an E-Commerce solution essentially involves creating and deploying
an E-Commerce website. The first step in the development of an E-Commerce
website is to identify the E-Commerce model. Depending on the parties involved in
the transaction, E-Commerce can be classified into 4 models.

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These are:
Business to Business (B2B) Model
Business to Consumer (B2C) Model
Consumer to Consumer (C2C) Model
Consumer to Business (C2B) Model

3.2.1 Business-to-Business (B2B) Model

The B2B model involves electronic transactions for ordering, purchasing, as
well as other administrative tasks between houses. It includes trading goods, such as
business subscriptions, professional services, manufacturing, and wholesale dealings.
Sometimes in the B2B model, business may exist between virtual companies, neither
of which may have any physical existence.
In such cases, business is conducted only each and every one the way through
the Internet.
Let us look at the same instance of www.amazon.com. As you know,
www.amazon.com is an online bookstore that sells books from various publishers
including Wrox, OReilly, Premier Press, and so on. In this case, the publishers have
the option of either developing their own website or displaying their books on the
Amazon website (www.amazon.com), or both. The publishers essentially choose to
display their books on www.amazon.com at it provides them a larger addressees.
Now, to do this, the publishers need to transact with Amazon, involving
business houses on both the ends, is the B2B model.
Consider a hypothetical instance. ABC Business sells automobile parts and
XYZ Business assembles these parts and then sells the automobile to consumers.
XYZ Business comes across the Website of ABC and discovers and locates it
suitable. XYZ therefore, requests for more information about ABC and finally,
decides to purchase automobile parts from ABC. To do this, XYZ places an order on
the Website of ABC. After ABC receives the order details, it validates the
information. As soon as the order is confirmed, the payment procedures are settled.

71

Finally, ABC sends an acknowledgement of payment to XYZ and delivers the goods
as per the shipment details decided between the two organizations.
The advantages of the B2B model are:

It can efficiently maintain the movement of the supply chain and the
manufacturing and procuring processes.

It can automate corporate processes to deliver the right goods & services
quickly and cost-efficient and effectively.
The B2B model is predicted to become the largest value sector of the industry

within a few years. This is said to be the fastest growing sector of E-Commerce.

Figure 3.1 B2B Business Model

3.2.2 Business-to-Consumer (B2C) Model

The B2C model involves transactions between business organizations and
consumers. It applies to any business organization that sells its goods or services to
consumers over the Internet. These websites display product information in an online
catalog and store it in a statistics and facts base. The B2C model also includes
services online banking, travel services, and health information.

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Figure 3.2 B2C Business Model

Consider a hypothetical instance in which a transaction is conducted between
a business organization and a consumer. A business house, LMN Department Store,
displays and sells a range of goods & services on their Website, www.lmn.com. The
details information of each and every one their goods & services is contained in the
huge catalogs maintained by LMN Department Stores. Now, a consumer wants to buy
a gift for his wife. He therefore, logs on to the website of LMN Department Stores
and selects a gift from the catalog. He also gets the detailed information about the gift
such as, the price, availability, discounts, and so on from their catalog. Finally, while
he decides to buy the gift, he places an order for the gift on their Website. To place an
order, he needs to specify his personal and credit card information on www.lmn.com.
This information is then validated by LMN Department Store and stored in their
statistics and facts base. On verification of the information the order is processed.
Therefore, as you can see, the B2C model involves transactions between consumers
and one or more business organizations.
The instance of the www.amazon.com website also involves the B2C model in
which the consumer searches for a book on their website and places an order, if
required. This implies that a complete business solution might be an integration
solution of more than one business model. For instance, www.amazon.com includes
the B2B model in which the publishers transact with Amazon and the B2C model in
which an individual consumer transact with the business organization.

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The B2C model of E-Commerce is more prone to the security threats because
individual consumers make obtainable and provide their credit card and personal
information in the website of a business organization. In addition, the consumer might
doubt that his information is safe and sound and used efficient and effectively by the
business organization. This is the main reason why the B2C model is not very widely
accepted. Therefore, it becomes very essential for the business organizations to make
obtainable and provide robust security mechanisms that can guarantee a consumer for
securing his information.

3.2.3 Consumer-to-Consumer (C2C) Model

The C2C model involves transaction between consumers. Here, a consumer
sells directly to additional consumer. eBay and www.bazee.com are common instances
of online auction Websites that make obtainable and provide a consumer to advertise
and sell their goods & services online to additional consumer.
Nevertheless, it is essential that both the seller and the buyer must register
with the auction website. While the seller needs to pay a fixed fee to the online
auction house to sell their goods & services, the buyer can bid without paying any fee.
The website brings the buyer and seller together to conduct deals.

Figure 3.3 C2C Business Model

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Let us now look at the previous Figure 3.3 with respect to eBay. While a
consumer plans to sell his goods & services to other consumers on the Website of
eBay, he first needs to interact with an eBay website, which in this case acts as a
facilitator of the overall transaction. Then, the seller can host his product on
www.ebay.com, which in turn charges him for this. Any buyer can now browse the
website of eBay to search for the product he interested in. If the buyer comes across
such a product, he places an order for the same on the Website of eBay. eBay now
purchase the product from the seller and then, sells it to the buyer. In this way, though
the transaction is between two consumers, an organization acts as an interface
between the two organizations.

3.2.4 Consumer-to-Business (C2B) Model

The C2B model involves a transaction that is conducted between a consumer
and a business organization. It is similar to the B2C model, nevertheless, the
differentiation is that in this case the consumer is the seller and the business
organization is the buyer. In this kind of a transaction, the consumers decide the price
of a particular product rather than the supplier. This category includes individuals
who sell goods & services to organizations. For instance, www.monster.com is a
Website on which a consumer can post his bio-statistics and facts for the services he
can offer. Any business organization that is interested in deploying the services of the
consumer can contact him and then employ him, if suitable.

Figure 3.4 C2B Business Model

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Let us look at additional instance of the C2B model.

William Ward needs to buy an airline ticket for his journey from New York to
New Jersey. William needs to travel immediately. Therefore, he searches a Website
for a ticket. The Website offers bidding facility to populace who want to buy tickets
immediately. On the Website, consumer quotes the highest price and gets the ticket.
In addition to the models discussed so far, five new models are being worked
on that involves transactions between the government and other entities, such as
consumer, business organizations, and other governments. Each and every one these
transactions that involve government as one entity are called e-governance. The
various models in the e-governance state of affairs are:
Government-to-Government (G2G) model: This model involves transactions
between two governments. For instance, if the Indian government wants to by oil
from the Arabian government, the transaction involved are categorized in the G2G
model.
Government-to-Consumer (G2C) model: In this model, the government
transacts with an individual consumer. For instance, a government can enforce laws
pertaining to tax payments on individual consumers over the Internet by using the
G2C model.

3.3 E-Commerce in India

The cutting edge for business today is E-Commerce. Most populace thinks ECommerce means online shopping. But web shopping is only a small picture. The
term also refers to online stock, bond transactions, buying and downloading software
without ever going to a store. In addition, E-Commerce includes business to business
connections that make purchasing easier for big corporations.
E-Commerce is generally described as a method of buying and selling goods
& services electronically. The main vehicle of E-Commerce remains the Internet and
the World Wide Web, but use of e-mail, fax and telephone orders is also prevalent.
Electronic commerce is the application communication and information
sharing technology among trading partners to the pursuit of business objectives. E76

Commerce can be defined as modern business methodology that addresses the needs
of the organization, merchants and consumers to cut costs while improving the quality
of goods and services and speed of service delivery. E-Commerce is associated with
the buying and selling of information, goods & services, via computer networks. A
key element of E-Commerce is information processing.
The effects of E-Commerce are already appearing in each and every one areas
of business, from consumer service to new product design. It facilitates new types of
information based business processes for reaching and interacting with consumersonline publicity and advertising and marketing, online order taking and online
consumer service etc. It can also reduce costs in managing orders and interacting with
a wide range of suppliers and trading and trading partners, areas that typically add
significant overheads advertisements to the cost of goods & services.
Gartner Group predicted in April 2013 that the B2B E-Commerce in the Asian
and Pacific region will reach US$ 340 billion this year, which will be 47 per cent of
the worldwide total. In the year 2012, this Figure was US$ 220 billion or 34 per cent
of the worldwide total. A recent report of remarketer released in May, 2012 says that
the number of Internet users in the Asian and Pacific region will amplify and raise
dramatically from 48.7 million in the year 2011 to 173 million in the year 2012. It will
then comprise more than 27 per cent of the global Internet user community compared
with 21 per cent in the year 2011. The same report estimates the number of Internet
users in India will be about 5.8 per cent of the total number in the Asia-Pacific region
(eMarketer, 2012).
It is against this backdrop of the world at large and Asia-Pacific in particular
that we have to examine the developments in India. The Government of India has
long recognized the need for development of IT industry and information
infrastructure as these are twin engines for growth of the economy. Deeper
penetration of IT applications in the economy, and in the society as a whole can help
boost the economy. E-Commerce applications can make it easier for the country to
better integrate with the global markets, the e-marketplace. This has led the
government, over the last few years to formulate liberal policies for the development
and growth of the IT industry.

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The IT sector as a whole has grown upon at a compounded annual growth rate
of about 30 per cent every year for the last few years. The total production during the
current year, i.e. 2011-2012 was Rs 809 billion, out of which software exports
account for Rs 3,655 billion.
NASSCOM (National Association of Software and Service Companies) had
recently released findings of its study and survey to evaluate the E-Commerce state of
affairs in India. As per preliminary findings of the study and survey, the total volume
of E-Commerce transactions in India was about Rs 450 Crores in the year 2000-2010.
Out of this volume, about Rs 50 Crores were contributed by retail Internet or
business-to-consumer transactions, and about Rs 400 Crores was contributed by
business-to-business transactions.
With the regulatory framework (IT Act and Digital Signature) in place and
improvement in telecom infrastructure, amplify and raise in PC penetration could lead
to sizeable E-Commerce transactions in India in the next two years. In keeping with
global norms, it is expected that business-to-business transactions would continue to
constitute a major chunk of e-business transactions in India. Thus, E-Commerce is not
just a western version.
The most talked about and well-endorsed feature of E-Commerce is its global
flavor. Evidently, E-Commerce has also started to show its true potential in India.
While on one hand, Indias E-Commerce solutions are becoming a sought after
commodity around the world, even E-Commerce based businesses are leaving their
distinct marks of technology competitiveness, viable business model and
entrepreneurship. E-business can indeed emerge as a major prospect for India. This
acquires twin connotations of E-Commerce and e-business transactions from local
businesses and a huge prospect for software exports to other countries by quickly
joining the e-business bandwagon. Indias twin assets (the software industry and
rapidly restructuring industry sector) sector has been taken into consideration.

As of September 2012, there was a PC base of 7.5 million PCs.

More than 80 per cent of standalone PCs sold during last two years were
driven by the need to access the Internet.

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Ninety one per cent of Indias corporate websites are located overseas.

Internet access continues to be most widespread amongst the 18-24 year age
group. Nevertheless, each and every one age groups have seen vast amplify
and raises in access over the last 18 months. A significant development is that
almost 11 per cent of populace over the age of 40 now accesses the Internet.

Males continue to outnumber females in accessing the Internet at 77 per cent

compared to 23 per cent. This has nevertheless amplified and rose from the
ratio of 82:18 in June 2011.

The Internet and E-Commerce industry employs approximately 82,000

populations. These include web developers, web designers, system analysts,
ISP infrastructure make obtainable and providers, marketing staff, e-software
professionals, etc. It is projected that by March 2013, the Internet and ECommerce industry would employ over 300,000 populations.

India has about 1.6 million households connected to the Internet.

Internet users on an average are estimated to be accessing the Internet for 6

hours a week.

The profile of Internet users in India is dominated by:

The professional/corporate segment, which accounts for around 43 per cent of

Internet usage.

Inching close behind is the student community represented by school and

college goers. This segment contributes close to 38 per cent of Internet surfers.

Over half (59.2 per cent) use the Internet as an information resource, 11.3 per
cent use it as an educational tool and just fewer than 8.2 per cent use it for
entertainment.

While asked what are the most frequently used services online, 73.4 per cent
answered e-mail, 77 per cent answered search engines and 23 per cent said
they use it for downloading/ uploading software.

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Of the total Internet users, around 20 per cent own credit cards and around 14
per cent own mobile phones.
According to the NASSCOM study and survey, considering the interest the

Government is taking in the growth of the market, E-Commerce in India will witness
a significant jump over the next three years.
Based on these preliminary finding, experts have concluded that penetration of
Internet and E-Commerce transactions in India will amplify and raise by leaps and
bounds. It is being stated that in the case of business-to-business transactions, the
Indian industry will reach online penetration of 5 per cent by 2013.
Table 3.1 B2C & B2B Transactions
Total E-Commerce
B2B
B2C
Year
Transactions
(Rs Crores) (Rs Crores)
(Rs Crores)
2009-2010
131
12
119
2010-2011
450
50
400
2011-2012
1200
100
1100
Revenue streams would increasingly be aligned with the emerging global
model, it is being anticipated. This would mean that the majority of the revenues
would come from transactions; while a smaller amount would be realized from
publicity and advertising revenues would come from transactions, while a smaller
amount would be realized from publicity and advertising revenues. It is expected that
by 2013, more than 75 per cent of revenues of Internet business-to-consumer business
would come from transactions. The advertisement revenues would amount to about 8
per cent of total add spend by the companies. Analysts also believe that one of every
four non-resident Indians (NRIs) would make some form of purchase from Indiabased websites by 2013.
IT companies: Some of the preliminary findings on E-Commerce/E-Business
software exports potential are as follows:
In the year 2000-2010, Internet and E-Commerce related software and services
export from India brought in US$ 500 million out of an estimated US$ 4 billion
software and services exports.

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Supply Chain Management optimization is one of the strongest drivers of the

global E-Commerce solutions market, as it spurs business-to-business transactions.
More than 68 per cent of Indian software houses have informed of strong expertise in
supply chain and distribution management solutions.
Almost 32 per cent of IT business respondents have identified web based
consumer business as a major prospect area, with expected paybacks beginning in
three to four years. Some of the emerging hot areas of E-Commerce services are:
legacy

application

integration;

Internet

application

integration;

Consumer

Relationship Management (CRM), Consumer Service Management (CSM),

Enterprise Resource Planning (ERP) and Electronic Statistics and facts Interchange
(EDI) migration to web based models; new IT frameworks and integration with
business strategy (strategic IT consulting); E-Commerce training services, business
website development and maintenance. The user side, E-Commerce means business.
Some of the draw an attentions of the domestic E-Commerce state of affairs
based on the findings of NASSCOMs study and survey include the following:
Among user organizations, more than 90 per cent expressed keen awareness
about the increasing adoption of E-Commerce and its potential benefits. More than 55
per cent of corporate respondents said that E-Commerce transitions were integral of
their corporate plans. Of these nearly 85 per cent were industries which did not have
direct or frequent contact with end consumption.
About 23 per cent of top 500 companies in India already have started some
form of E-Commerce. These have been facilitated each and every one the way
through the up gradation of existing IT systems or fresh installations configured or ECommerce transactions.
SMEs Segment in India
In India, there are about 3.4 million small and medium enterprises which
accounts for 42 per cent of Manufacturing sector turnover and 35 per cent countrys
exports. These SMEs employ over 17 million persons.
The SMEs segment in India is fast getting tacked by the larger companies,
who are always on the lookout for new market avenues. Computer Associates which
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has a healthy clientele among large corporate has huge plans to enter the security
market comprising the Rs 10-Crore SME sector in India, offering end-to-end security
solutions to smaller players. There is a huge unexplored market in India and the
existing security offerings are scarce and fragmented. Since the SME market is the
largest spender on IT, it is the right time for an entry and also because SMEs in India
are under a great deal of pressure forms the bigger consumers to craft a safe and
sound e-biz infrastructure.
SMEs are increasingly seeing the benefits arising from E-Commerce as
expanded geographical coverage giving them a larger potential market into which
they can sell their goods & services. Some of the key industries that have high
potential for early adoption of E-Commerce are financial (stock exchanges and
banks), automobiles, retail, travel, IT and manufacturing.
For the SME sector, some of the concerns with E-Commerce revolve around
fear or eroding their existing consumer base and technical issues arising out of lack of
computer expertise and the cost of necessary hardware and software. These are some
of the preview draw an attentions of a study and survey conducted by NASSCOM to
determine the status of Internet and electronic commerce proliferation in India.

3.3.1 E-Commerce Growth

During the year 2010-2011, two major Industry Associations produced
separate reports on E-Commerce in India. Both the reports came out around the same
time, namely June-July 2001. One was prepared by the National Committee on ECommerce set up the Confederation of Indian Industry (CII), while the other was
commissioned by the NASSCOM and prepared by the Boston Consulting Group.
Both the reports are optimistic about the growth of E-Commerce in India. The
Confederation of Indian Industry (CII) report estimates the volume of E-Commerce to
grow up to Rs 500 billion in the year 2011, out of which B2B will be Rs 420 billion
and B2C will be Rs 80 billion (CII, 2011). The NASSCOM-BCG Report, on the other
hand, estimates for the same year that the total volume of E-Commerce will be Rs
1,950 billion, out of which Rs 1,920 billion will be on account of B2B and Rs 3
billion will be on account of B2C (NASSCON and BCG, 2001). E-Commerce volume
for the year is estimated to be Rs 150-200 billion (NASSCON and BCG, 2011).

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The earlier expectations of value creation each and every one the way through
pure-play dot-coms, large online market sizes, businesses reducing their procurement
and inventory costs each and every one the way through B2B have been belied. The
euphoria of Internet revolution is over. But there is a deeper realization that the
opportunities and threats of the Internet are very real. Organizations that have
understood the power of the Internet and have implemented well thought out business
strategies have leveraged B2B and B2C E-Commerce to craft significant gains in their
business. LG Electronics India Ltd. is a case in point. It expects to realize margins up
to 1.5-2 per cent each and every one the way through B2B supply chain initiatives on
information sharing and procurement efficiencies. Amul, a milk cooperative, is
successfully using E-Commerce to deepen its brand trustworthiness, dependability
and loyalty. Likewise, corporate in the automotive sector are improving their
consumer relations each and every one the way through this medium.
Some of the new names that are rediscovering E-Commerce each and every
one the way through new portals at relatively low capital cost, without venture capital
funding

include:

KEY2CROREPATI,

MUSICABSOLUTE,

ATE2BIZ,

GRIHRACHNA, and SHAADI ONLINE. Business strategy on the Net is the key to
these new portals. The new entrepreneurs are very clear in what they offer. Since they
are not setting websites with a view to sell them later, unlike the first wave of dotcoms, they put in their best efforts to check offerings and their processes before
inviting consumers in (Business Today [India], September 2011).
It has been seen that while the websites and E-Commerce portals are setup by
technically oriented entrepreneurs, they have no know-how of the logistics involved
in delivering goods & services to distant areas. B2C E-Commerce is probably to
remain small because of these constraints. In fact, while the e-tailing market grow ups
in size, high delivery costs, logistical bottlenecks as well as regulatory requirements
will act as major barriers. Coupled with this are the cultural barriers where most
shoppers are uncomfortable buying items they are unable to see or touch. Consumer
protection is also not very efficient and effective. If goods are not delivered after
electronic placement of orders, the consumers may have to follow long process for
redressed of their grievances. These are some of the limiting factors for B2C ECommerce.

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Domain

names

can

now be registered

in

Indian

languages

too.

Vishwabharat.com offers domain names using the alphabet in Indian languages.

These will be valid like other domain names and are expected to help non-English
speaking populace take advantage of the benefits of Internet. Currently, one can
register in Hindi or Kannada scripts.
Most of Indias banks and financial institutions have set up websites. Online
stock trading has also taken off in India with the Securities and Exchange Board of
India (SEBI) making efforts to standardize message formats and address issues
pertaining to technology, connectivity, security, surveillance and monitoring.
Companies such as <indiabulls.com> and <5paisa.com> actively promote online
trading on their websites. A number of websites cater exclusively to the expatriate
Indians and offer valuable information on investment decisions, real estate, etc.
Online portals have been set up for B2B E-Commerce exchanges in the areas of
automobiles, steel industry, construction, insurance, shipping and pharmaceuticals. A
number of websites also deal in auctions. Most of the websites are in B2B segment,
while there are some in the B2C segment as well. Portals which cater to specific
information needs and make obtainable and provide services across areas as diverse as
cooking, women, online worship, specific sports (e.g. cricket), and matrimonial, jobs,
travel and tourism in India have also appeared in large numbers. Entertainment and
games too have moved online and a number of portals catering to these areas are
already in business.
A number of e-payment gateways have sprung up for B2B and B2C ECommerce financial transactions. There are four payment gateways operated by ICICI
Bank, Citibank, HDFC Bank, and Global Trust Bank. But each and every one these
are closed user groups. There are no real time settlement systems obtainable to let the
users of one gateway settle their accounts with users of additional group. No interbank settlement is feasible as of now. This delays E-Commerce transactions. The B2C
transactions can, nevertheless, be enabled by the credit cards which are grow uping in
number. The credit cards today number 5.1 million with total spending of Rs 81
billion.
The industry is alive to the need of being active players in the Internet world.
It has aggressively participated in the recent round of appointment of the Internet
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Corporation for Assigned Names and Numbers (ICANN) of new registrars in this
region. Two companies have been accredited as registrars in the .com domain. While
registration of websites for .com, .org and .net could earlier only be done each and
every one the way through Network Solutions Inc., a number of new websites such as
<123registry.com> and <planet4domains.com> are now offering this service in India.
It may be added here that the software industry which is the greatest strength
of India grew at a compound aggregated growth rate of nearly 50 per cent during the
last decade. The Indian software and services industry has attained a reasonably
robust growth of 30 per cent even during the last year which was a year of turbulence,
tragedy, terrorism and slowdown in world economy. The software exports rose to
US$ 7.8 billion in the year 2011-2012 from US$ 6.3 billion in 2010-2011. Majority of
the Fortune, 500 companies have outsourced their software requirements to India. The
software solutions from India have been moving up the value chain and are engaging
more and more electronic commerce and web based technologies. Internet and ECommerce related software and services export from India accounted for nearly US$
1200 million in the year 2011-2012. This Figure is expected to rise to US$ 3 billion
by 2012-2013 NASSCOM, 2011). Several of the software companies are specializing
in supply chain and distribution management solutions which are the key drivers of
the global E-Commerce solutions market. The NASSCOM-BCG Report estimates
that the e-solutions market, which worldwide is currently of the order of US$ 180
billion, will grow up to US$ 640 billion in 2015. India should be able to tap up to US$
4 to 13 billion in the year 2005. This segment includes SCM, CRM, knowledge
management (KM), Internet services and Application Services Make obtainable and
provider (ASP).
Indian marketers are moving at a fast speed to tap the new normal prospect.
Consumers are embracing online in large numbers and the companies are using digital
marketing techniques to engage with them. The focus of marketers is shifting from
sending the message out to start engaging with consumers. In this context, the role
of a marketer is changing from batch and blast processing to creating listening
posts and dialogue hubs in consumer communities. Leading marketers are now
precision-targeting their communications with the help of sophisticated analytics
based on consumption of messages and usage patterns. A shift from isolated pure play

85

conventional, customary & traditional platforms to an integrated multi-channel

approach is helping the marketers address the challenge of new consumers
expectations across several devices and channels. Indian marketers are leveraging the
power of various communication channels and technologies- be it Email, SMS or
Social Media in their portfolio.
This fast paced change has thrown newer opportunities for eMarketing.
Researcher wanted to capture a snapshot of this change. This report presents a
dynamic view of the current thinking and future prospects of this medium. This being
the first such report of its kind will make obtainable and provide us with a baseline
benchmark for our ongoing research/studies in the field of eMarketing.
Researcher is curious to see how this will trend over the coming months and
years and its our genuine desire to share this back with the marketing community in
India.
3.3.1.1 E-commerce: Baseline for 86% of Marketing in India
The rising importance of online for todays marketers can attributed to the
core facets of eMarketing platform. The eMarketing platform make obtainable and
provides scalability (important to reach a mass addressees) with the flexibility of
segmentation and precision targeting the addressees. Having a global reach at a lower
cost, an eMarketing program make obtainable and provides results that can be easily
tracked, measured and hence improved. The consumer addressees have moved online
and are expecting to be reached each and every one the way through appropriate
channels. In this context, the focus of marketers is shifting from sending their
message out to start engaging with consumers. The control is giving way to
collaborate. While compared to conventional, customary & traditional media like
print or TV, online and eMarketing offers a tremendous range of choice to innovate
and engage.

86

Somewhat
important, we
have an email
program
9%

Figure 3.5 Importance of E-marketing

Important, we
use it as part
of our digital
marketing
31%

Not important
5%
Very
important, its
the foundation
of all we do
32%
Rather
important, we
consider it
valuable
23%

So its not a surprise while for 86% of top marketers in India, eMarketing is a
vital platform for addressees engagement while, for 32% of that segment, eMarketing
lies at the core of the foundation of their business model.
3.3.1.2 eMarketing Effective
ffectiveness in FY11
With the growth
growth of internet in India in 2011, its not surprising that
eMarketing assumed a central role in marketing efficient and effectiveness
effective
and
efficacy. In the U.S. it is said that for each dollar of investment in eMarketing channel
(email) delivers US $ 46 of ROI.
ROI. We may be not there as yet in India but this is an
interesting area to be explored perhaps in our subsequent report. There is almost
unanimous acceptance that eMarketing is one of the most efficient and effective
communication and endorsement and promotion
promo
vehicles with close to 97% marketers
in India agreeing on the efficient and effectiveness
ness of this platform.

87

Figure 3.6 Effectiveness of eMarketing Platforms

Not at all
effective
7%
Very effective
16%
Somewhat
effective
42%

Effective
35%

3.3.1.3 Marketers Effective

ffectiveness by Periodic Communications
ommunications in 2011
Marketers rely on sustained periodic communications to deliver marketing
efficacy. It is interesting to note that 34% of marketers in India are using this platform
for their daily communications with their addressees. Our know-how
how shows that the
frequency of consumer communication should be at least once a quarter and never
more than once a day. An optimal frequency can lead to higher response rates and
conversions. As a note of caution, increasing the frequency without permission of
receiver can potentiall
ally run the risks of amplify and raisedd spam complaints,
unsubscribe and list fatigue. Short-term
Short term response boosts can at times be at the cost
of brand erosion and a long-term
long
loss of engagement. As we will discover and locate
later in this report (top 3 factors
factors impacting deliverability), the daily frequency is being
seen as one of the major contributors towards the core issue of message deliverability.
deliverability

88

Figure 3.7 Frequency of Sending Communication

34.4

24.2

22.8

11.2
7.4

daily

once a week once a month

bimonthly

occasionally

3.3.1.4 eMarketing Channels

C
in 2011
The two prime objectives of using eMarketing channels in 2011
201 are
endorsement
endorsement and promotional
promotional communications and Newsletters. With newer
developments in eMarketing technology, marketers today have a plethora of options
in which to use eMarketing as a method of consumer engagement and tracking the
same. Some of them are
are purely information based like transaction-based
transaction
communication

(order

confirmation,

delivery

confirmation)

and

periodic

communications (newsletters) while others are revenue generation methods (incident

(
endorsement and promotion,
promotion alerts, behavioral triggers, etc.)

89

Figure 3.8 Promotional Communications

48

Alerts

62

Event Promotion

24

Behavioral Triggers

58

Promotions

52

Newsletters

32

Transactional

3.3.1.5 Consumer Acquisition:

Acquisition Largest Driver of eMarketing in 2011
Indian companies are targeting to acquire newer consumerss and relationships.
In this context it is not surprising that consumer acquisition is the key driver for
eMarketing in 2011. eMarketing delivers the ability to precision target an addressees
and efficient and effectively
effective engages with them leading to amplify and raise in
conversion rates.

90

Figure 3.9 Consumer Aquisition

Loyal customers

Discount seeking customers

Need based

Not specific

18%
32%

33%
17%

In 2011, it seems Indian marketers were targeting consumer acquisition as

more and more marketers are tapping need based consumers (E-magazines,
Newsletters) and discount seeking consumers (Deal Websites) to amplify and raise
their consumer base. Consumer retention seems to be the second key driver for
eMarketing with close to 32% of marketers focusing at loyal consumers (consumers
who have bought). There seems to be a correlation between large numbers of loyal
consumers being targeted 32% and high usage of newsletters at 52%.
3.3.1.6 Indian Marketers Investment in eMarketing
36% of marketers in India have reported more than 10% of their investments
in marketing budgets on eMarketing channels in 2011. It is interesting to know that
eMarketing forms the baseline for 86% of marketers. The reason for marketers
confidence in online platform can be attributed to the efficient and effectiveness of
this platform, for which 93% of marketers have positive sentiments.

91

Figure 3.10 eMarketing Budget

60

50

40

30

20

10

0
Less than 11% to 30% 31% to 50% 51% to 75% Over 75% Dont know
10%
Sales Budget
3.3.1.7 eMarketing Online Sales
In terms of generating sales each and every one the way through eMarketing,
46% of marketers are generating more than 10% of their total sales each and every
one the way through online channels. An interesting thing to note is that close to 22%
of marketers are generating more than 30% of their total sales each and every one the
way through eMarketing efforts.
3.3.1.8 Acquisition Rules to be Marketers Prime Goal for 2011
As the Indian economy shifts gears, consumer acquisition and brand
awareness emerge as the top two goals for the India Marketers. The prime focus for
almost 60% of countrys marketers for 2011 is to acquire new consumers. The next
important goal for marketers is to build brand awareness among consumers. It seems
that organizations are using online platforms for establishing strong brand awareness.

92

Figure 3.11 Primary Marketing Goal

Other
4%
Brand
Awareness
23%
Customer
Acquisition
59%

Customer
retention
14%

From
rom our research and industry know-how, consumer retention is one area
where marketers could do a lot more in 2011. Marketers who focus on reducing the
switch rates while acquiring newer consumerss and relationships, will be able to
sustain growth rates inn the longer term. Consumer trustworthiness, dependability and
loyalty can lead directly to creating enormous Earned media which is proven to be a
very cost efficient and effective strategy to win market share without bloating up the
marketing budgets.
3.3.1.9 Investments Plans in eMarketing Platform
This research has shown that most marketers in India have planned a
budgetary amplify and rise towards the eMarketing in 2011. A good 35% of the
marketers indicated that they have plans to amplify and raise their eMarketing
investments in 2011 by 11% or more. Majority of marketers (72%) in India have
plans to amplify and raise their investments in eMarketing platforms in India this
year.

93

Figure 3.12 Increase in eMarketing Spend

36.7

28.6
23.3

9.5

1.9

Less than
5%

6% to 10%

11% to 20% 21% to 50%

Over 51%

3.3.1.10 Digital Channel Preferences for 2011

The simple fact that social
s
networks offer companies the prospect to connect
with millions of potential consumers,
s, and that too with precision, can count as the
main reason for its rising popularity among marketers. After social media, almost
neck to neck is Email marketing and search marketing. No surprise that 40% of
marketers feel that spending on email marketing will definitely amplify and rise this
year, while compared to 2010. Next in line is search marketing. About 40% of
marketers plan to amplify and raise their investment
nt in search platform, compared to
last year. An interesting finding from this report is that video marketing is not
catching up with only 16% of marketers indicating a plan to amplify and raise their
investment in this area.

94

Figure 3.13 Markeing Investment Plan

61.4

40.2

42.3

34

16.2
11.6

3.4 Changing Media Consumption

Although the importance of the Internet varies for different organizations,
what each and every one share is changing behavior in their stakeholder addressees
whether they be prospects, consumers, media, shareholders or other partners.
Media
Internet
TV
Radio
Press
Direct Mail
Directories
Outdoor

Consumption %
25.4
29.6
7.85
23.15
5
4.31
4.69

Table 3.2 Communication Media Usages

Each of these addressees is increasing its consumption of Internet media and
there is a corresponding change in buyer behavior. Figure 3.14 shows that in the
Gujarat, the Internet is the third most consumed media following TV & Press. During
the business day, the web is the most frequently consumed medium.

95

Figure 3.14 Changing Media Consumption

30

Media Consumption

25
20
15
10
5
0

Communication Media

3.5 Relative Internet Usages

We need to understand the applicability of internet services among the
consumerss selected geographical places of Gujarat State. Following Table 3.3 and
Chart 3.15 clarifies the usages of internet for the different purposes. Its ease to verify
the application areas of internet services on demand among this populace of Gujarat.
Main use of internet is for email conversation among them. For marketers, email
marketing could be a good strategic point of implementing their marketing efforts.
Second main use of an internet is an information search for various details. Over here,
marketers can go with the support of SEO (Search Engine Optimization)
Optimization Techniques
to list out their websites
websites URL with priorities into the various search engines and meta
search engines like google.com, yahoo.com, dogpile.com etc.

96

Table 3.3 Internet Application Usage Rates

Internet Application
Email
Information searching for self
Browsing for fun
Buying books, CDs, DVDs
Bank Accounts
Buying gifts
Downloading music/video
Clothes/personal goods
Buying services (e.g. insurance)
Household goods shopping
Sports news
Listening to radio/audio channels
Online games
TV programme
Regular grocery shopping
Voting in TV shows

Usage Rate
83
78
56
27
29
22
53
10
12
15
19
14
18
12
03
01

Figure 3.15 Relative Use of Internet

90
80

Percentage

70
60
50
40
30
20
10
0

97

3.6 Potential Digital Impact on Target Markets

Age: It can affect levels of access to technology, computer literacy, and
incidentally, the extent to which individuals use the internet as part of their shopping
routines. Age can also be linked to where populace live and again affect the potential
size of the online market; for instance if selling goods and services to Gujarat, the
majority of online users are under 35.
Household Size: It has the potential to affect the number of populace involved
in purchasing decisions and the direction of influence. For instance, research has
shown that in Gujarat children and teenagers can have a strong influence on
purchasing based on their levels of computing competency.
Household Type: It has the potential to affect product and service
requirements; major shifts towards single person households in the Gujarat have led to
a shift in purchasing patterns and times of purchasing. Online, such households can
craft logistical hard and difficulties while delivering bulky and perishable goods.
Income: It affects primarily purchasing power, but also lifestyles and
individual expectations of quality and levels of service will vary.
Gender: Generally, Internet populations still have a slight male bias which
potentially affects the likelihood of being online and level of computing skills.
Ethnicity: It affects access to technology and economic circumstances.
Employment status and work patterns: Employment places time constraints
on online shopping behavior, i.e. while individuals can access online shopping
channels.
Mobility: It affects channel access; less mobile targets may be encouraged to
shop online. This also applies to macro-populations, which are poorly served by
public and private transport.

98

3.7 Consumer Ratings of Online Experience

Table 3.4 shows a more recent compilation of consumers opinions of the
importance of these trustworthiness, dependability and loyalty drivers in the online
context. It can be seen that it is the after-sales support and service which are
considered to be most important the ease of use and navigation are relatively
unimportant.
Table 3.4 Consumers Loyalty Drivers
Loyalty Drivers
Price
Selection
Navigation
Product information
Ease of ordering
Privacy policies
Product content
Fulfillment
Support

%
20
23
24
25
25
46
48
59
65

Figure 3.16 Importance of Attributes of

Online Experience
Support
Fulfilment
Product content
Privacy policies
Ease of odering
Product
information
Navigation
Selection
Price
0

10

20

30

40

50

% who care about attribute

99

60

70

3.8 Ten Key Reasons for Returning to Website

It can be suggested that the tangible dimension is influenced by ease of use
and visual appeal based on the structural and graphic design of the website. A design
factors play a vital role which are attached to different facets of service quality is
indicated by the compilation in Table 3.5 which considers the reasons why consumer
return to a website.
Table 3.5 Website Weightages
Website Criteria
High-quality content
Ease of use
Quick to download
Updated frequently
Coupons and incentives
Favorite brands
Cutting-edge technology
Games
Purchasing capabilities
Customizable content

%
75
66
58
54
14
13
12
12
11
10

Figure 3.17 Reasons for Returning to Site

Cusomisable content
Purchasing capabilities
Games
Cutting-edge technology
Favourite brands
Coupons and incentives
Updated frequently
Quick to download
Ease of use
High-quality content

10

20
100

30

40

50

60

70

80

3.9 Importance of Website Design Factors

The structure craft by designers for websites will vary greatly according to
their addressees and the websites purpose, but we can make some general
observations about approaches to website design and structure and their influence on
consumers. There are some basic factors that determine the efficient and effectiveness
of an E-Commerce website. These factors are most important and make obtainable
and provided into the following Table 3.6.
Table 3.6 Weightage to Website Design Factors
Website Design Factors
Design look
Information design/structure
Information focus
Business motive
Usefulness of information
Accuracy of information
Name recognition and reputation
Publicity and advertising
Bias of information
Tone of the writing
Identity of website sponsor
Functionality of website
Consumer service
Past know-how with website
Information clarity
Performance on test
Readability
Affiliations

101

%
46.1
28.5
25.1
15.5
14.8
14.3
14.1
13.8
11.6
9
8.8
8.6
6.4
4.6
3.7
3.6
3.6
3.4

Figure 3.18 Importance of Website

Design Factors
Affiliations
Readability
Performance on test
Information clarity
Past experience with site
Customer service
Functionality of site
Identity of site sponser
Tone of the writing
Bias of information
Advertising
Name recognition and reputation
Accurac of information
Usefulness of information
Company motive
Information focus
Information design/strucuture
Design look

10

20

30

40

50

3.10 Importance of Different Information Sources

Search engines are vital for generating quality visitors to a website as
suggested by Table 3.7. But being registered in the search engines is not enough. The
importance of efficient and effective search engines shows that the higher the rank of
a business and goods & services in the search engine results pages the more visitors
will be received.

102

Table 3.7 Weightage to Information Sources

Sources of Information
Search engines
Personal recommendations
Websites of well known brands
Websites of well known retailers
Price contrast websites
Reviews/opinions on the internet written by experts
Consumer opinions/reviews
Product information in shops
Content make obtainable and provided by ISP
Television
Newspapers/magazines
Sales populace in shops

%
71
67
57
57
56
50
47
46
35
34
34
24

Figure 3.19 Importance of Different Information Sources

Salespeople in shops
Newspapers/magazines
Television
Content provided by ISP
Product information in shops
Customer opinions/reviews
Reviews/opinions on the internet written by
experts
Price comparison web sites
Websites of well known retailers
Websites of well known brands
Personal recommendations
Search engines

20

40

60

80

% who consider the above to be important sources of information

when researching/considering a product or service

103