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Richard T. Watson, George M.

and Leyland F. Pitt

Companies worldwide may recognize the marketing
potential of the Internet, but using it to its full potential is
often ignored.

Communication is the very heart of marketing, and for years companies have
fashioned communication strategies based on print, radio, and TV media to broadcast their mes-

sage. But times are changing. In this Internet era, Renaissance Hotels and Resorts uses QuickTime

VR to establish the atmosphere of its facilities; Sony provides downloadable audio clips of its

latest CDs; and Quantas makes downloadable soft- ing strategy that applies Internet technologies. Inte-
ware available for itinerary management. These grated Internet Marketing (I2M) is a structured
firms are but a fraction of the companies recogniz- approach that combines marketing strategy with
ing the Internet as an all-purpose communication Internet technology. I2M promotes creation of a
medium for interacting with a wide variety of stake- strategy that synergistically exploits the range of
holders. They know they must manage their brands Internet technologies (such as text, audio, video,
and corporate image in cyberspace [5]. They also and hyperlinking) to achieve marketing goals.
know the Internet is not just the Web, but a range There are two key questions companies should
of technologies that in combination can be a potent
marketing strategy.1
As organizations stampede to the Internet, they There is always some delay between the completion of a research project and the
publication of the findings. This delay is exacerbated by any study based on an
find there is not a systematic way to examine oppor- analysis of Web sites because of the speed with which the content and design of
these sites changes. Some of the sites reported in this study will have changed by
tunities and relate them to available Internet tools. press time. However, the fundamental principles on which this article is based
What is absent, in particular, is a cohesive market- have a far more enduring life.

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As organizations stampede to the Internet,
they find there is not a systematic way to examine opportunities and
relate them to available Internet tools.

consider before establishing an Internet presence. turers of typewriters, filed for bankruptcy in 1995.
Firstly, how many existing or potential customers are Cheap personal computers destroyed the typewriter
likely to be Internet users? If a significant proportion market. In simple terms, demand risk means fewer
of a firm’s customers are Internet users, and the search customers want to buy a firm’s wares. The globaliza-
costs for the product or service are reasonably (even tion of the world market and increasing deregulation
moderately) high, then clearly an organization should expose firms to greater levels of competition and mag-
have a presence; otherwise, it is missing an opportu- nify the threat of demand risk. To counter demand
nity to inform and interact with its customers. The risk, organizations need to be flexible, adaptive, and
Web is a friendly and extremely convenient source of continually searching for new markets and stimulating
information for many customers. If a firm does not
have a Web site, there is the risk that potential cus- Figure 1. Internet presence grid with
tomers, who are Web savvy, will flow to competitors illustrative examples.
who have a Web presence.
Information content of products
Also, what is the information intensity of a compa-
ny’s products and services? An information-intense Low High
product requires considerable information to describe Large
it completely. For example, what is the best way to Office Industrial
describe a CD to a potential customer? Ideally, text supplies products
would be used for the album notes listing the tunes, Proportion
artists, and playing times. Graphics would be used to of customers
display the CD cover; sound would provide a sample with Web
of the music; and a video clip would show the artist access Food and Consumer
performing. Thus, a CD is information intensive; beverages electronics
multimedia is useful for descriptive qualities. Conse-
quently, Sony Music provides an image of a CD’s Small
cover, the liner notes, a list of tracks, and 30-second
samples of some tracks. It also provides photos and
details of the studio session.
Those two parameters can be combined to provide demand for their products and services.
a straightforward model (see Figure 1) for determining The growth strategy matrix [1] suggests a business
which companies should be using the Internet. Orga- can grow by considering products and markets, and it
nizations falling in the top-right quadrant are prime is worthwhile to speculate on how these strategies
candidates because many of their customers have might be achieved or assisted by the Web. In the cases
Internet access and their products have a high-infor- of best practice, the differentiating feature will be the
mation content. Firms in the other quadrants, partic- Web is used to attain strategies that would otherwise
ularly the low-small quadrant, have less need to invest not have been possible. Thus, the Web can be
in a Web site. employed as a market-penetration mechanism, where
neither the product nor the target market is changed.
Why Use the Internet? The Web merely provides a tool for increasing sales by
Along with other environmental challenges, organiza- taking market share from competitors, or by increasing
tions face three critical strategic challenges [3]: the size of the market through occasions for usage. The
demand risk, innovation risk, and inefficiency risk. U.K. supermarket group Tesco is using its Web site to
The Internet, and especially the Web, can be a device market chocolates, wines, and flowers. Most British
for reducing these risks. shoppers know Tesco, and many shop there. The group
Demand risk. Sharply changing demand or the has sold wine, chocolates, and flowers for many years.
collapse of markets poses a significant risk for many Tesco now makes it easy for many of its existing cus-
firms. Smith-Corona, one of the last U.S. manufac- tomers (mostly office workers and professionals) to

98 June 2000/Vol. 43, No. 6 COMMUNICATIONS OF THE ACM

view the products in a full-color e-catalog, fill out a sim- The Web is also a mechanism for facilitating prod-
ple order form with credit-card details, write a greeting uct development, as companies who know their exist-
card, and facilitate delivery. By following these tactics, ing customers well can create exciting, new, or
Tesco is not only taking business away from other alternative offerings for them. The Sporting Life is a
supermarkets and specialty merchants, it is also increas- U.K. newspaper specializing in providing up-to-the-
ing its margins on existing products through a pre- minute information to the gaming fraternity. It offers
mium pricing strategy and markups on delivery. reports on everything from horse and greyhound rac-
Alternatively, the Web can be used to develop mar- ing to betting odds on sports ranging from American
ket, by facilitating the introduction and distribution of football to snooker, and from golf to soccer. Previously,
existing products into new markets. A presence on the the paper has been restricted to a print edition, but the
Web means being international by definition, so for Web has given it significant opportunities to increase
many firms with limited resources it offers hitherto
undreamed of opportunities to tap into global mar- Table 1. Companies and technologies cited.
kets. Icelandic fishing companies can sell smoked
salmon to the world. A South African wine producer Company URL
is able to reach and communicate with wine enthusi- ABC
asts wherever they may be, in a more cost effective way. American Airlines
To a large extent, this is feasible because the Web American Booksellers
enables international marketers to overcome the previ-
American Express
ously debilitating effects of time and distance, negoti- Direct
ation of local representation, and the considerable Apple Computers
costs of promotional material production costs. Benetton
A finer-grained approach to market development is Cathay Pacific
to create a one-to-one customized interaction between Claris
the vendor and buyer. CNN offers customers the CNN
opportunity to construct a personalized news service FBI
by specifying topics of potential interest. Thus, the Honda
customer adapts the Web site to his or her needs. Even Internet Air Fares
more advanced is an approach where the Web site is Library of Congress
adaptive. Using demographic data and the history of Oracle
previous interactions, the Web site creates a tailored PBS
experience for the visitor. An adaptive music site, for Pointcast
example, will try to discover what type of music the QuickTime VR
Real Audio
visitor likes so it can recommend CDs. Web sites will
Renaissance Hotels
increasingly and electronically watch profiles to create & Resorts
virtual communities, or at least groups of like-minded Sony
people who have similar interests and taste. Tesco
Any firm establishing a Web presence, no matter The Sporting Life
how small or localized, enters global marketing in an UPS
instant. The firm’s message can be watched and heard VDONet
by anyone with Web access. Small firms can market to
the entire Internet world with a few pages on the Web. its timeliness in a time sensitive business. Its market
The economies of scale and scope enjoyed by large remains unchanged bettors and sports enthusiasts in
organizations are considerably diminished. Small pro- the U.K. However, the Internet enables it to do things
ducers do not have to negotiate the business practices that were previously not possible, such as hourly
of foreign climes in order to expose their products to updates on betting changes in major horse races;
new markets. They can safely venture forth electroni- downloadable forms for further spreadsheet and statis-
cally from their home base. Fortunately, the infrastruc- tical analysis by serious gamblers. Most importantly,
ture—international credit cards (for example, Visa) The Sporting Life is not giving away this service free, as
and international delivery systems for global marketing have so many other publishers. It allows prospective
(for example, UPS)—already exist. With the addition subscribers to sample for a limited time before charg-
of Internet advertising, global market development ing for the online service.
becomes a reality for many firms, irrespective of their Finally, the Web can be used to diversify business by
size, location, and time. taking new products to new markets. American

COMMUNICATIONS OF THE ACM June 2000/Vol. 43, No. 6 99

from the core business, but it is feasible that many
Figure 2. Integrated Internet marketing. firms will set up entirely new businesses in entirely
new markets.
Innovation risk. In most mature industries, there is
over-supply of products and services, and customers
Employees have a choice, which makes them more sophisticated
consumers. If firms are to continue to serve these cus-
tomers, they must give them something new and dif-
and services ferent; they must innovate. Innovation inevitably leads
to imitation, and imitation leads to more over-supply
[4]. This cycle is inexorable, so a firm might be
tempted to get off. However, choosing not to adapt
Public News
Stakeholder attitudes
stories and not to innovate will lead to stagnation and demise.
Corporate image
Failure to be as innovative as competitors—innovation
risk—is a second strategic challenge. In an era of accel-
erating technological development, the firm that fails
Word of
Signs to improve its products and services continually is
likely to lose market share to competitors and maybe
even disappear. To remain alert to potential innova-
tions, firms need an open flow of concepts and ideas.
Customers are one viable source of innovative ideas,
and firms need to find efficient and effective means of
Express Direct uses a Web site to go beyond its tradi- continual communication with customers.
tional travel services business by providing online facil- Internet tools are used to create open communica-
ities to purchase mutual funds, annuities, and limited tion links with a wide range of customers. Email can
stocks. The diversification here is not particularly far facilitate frequent communication with the most

Table 2. Internet technologies.

Technology Description Examples
Asynchronous text Email is generally used for one-to-one and one-to-few Cathay Paciific uses a one-to-many bulletin
communications. A bulletin board (in the form of a board to advice prospective customer of special
newsgroup or listserv) can handle one-to-many and airfares. Claris uses bulletin boards in the many-
many-to-many communication. to-many mode to support the exchange of ideas
among customers and support staff.
Synchronous text Chat enables several people to participate in real-time The American Booksellers Association uses chat
text-based discussion. A chat session is conducteed on to interview authors.
a channel, and those connected to the channel receive
all messages broadcast.

File transfer File transfer protocol (FTP) permits the exchange of Oracle uses FTP to distribute a 90-day trial
files across the Internet. version of Power Objects, a software product.
Telnet Telnet enables an authorized user to connect to and The Library of Congress Information System
run program on another computer. (LOCIS) is accessible using Telnet.
Audio Video files, like audio, are either downloaded and then ABC uses Progressive Network's RealAudio to
played, or played as they are downloaded (streaming deliver a news bulletin.
Video video).

Newswire An electronic newswire broadcasts stock prices, PBS uses VDOnet Corp. technology to broadcast
sports scores, news, weather, and other items. samples of its program.
Search Engine A search engine supports findiing information on the Internet Air Fares allows visitors the ability to
Web. Simple engines find Web pages. More advanced search for the cheapest airfares on a particular
engines locate information based on defined attributes route they wish to travel.
(for example, cheapest model Y of brand X camera).

Virtual Reality The visitor can look around a location through a full Honda uses QuickTime VR to enable prospective
360 degrees, as well as zooming in and out. customers to view its latest models, both
inside and out.

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innovative customers. A bulletin board can be created holders. To a large extent, an organization’s Web site
to enable any customer to request product changes or defines the organization by establishing an enduring
new features. The advantage of a bulletin board is that image in the mind of stakeholders. We maintain that
another customer reading an idea may contribute to its organizations need a cohesive approach for using Inter-
development and elaboration. Also, a firm can moni- net technologies for communication.
tor relevant discussion groups to discern what cus-
tomers are saying about their products or services and Integrated Internet Marketing (I2M)
those of competitors. The interactive and multimedia capabilities of the
Inefficiency risk. Failing to match competitors’ Web, combined with other Internet facilities such as
unit costs—inefficiency risk—is a third strategic chal- email support for personal and mass communication,
lenge. A major potential use of the Internet is to lower present a range of tools for interacting with customers.
costs by distributing as much information as possible Furthermore, the Web can provide an interface to
electronically. For example, American Airlines uses its back-end applications (for example, databases and
Web site for providing frequent flyers their current air expert systems technology). Consequently, the Inter-
miles. Eventually, it might be unnecessary to send net offers an excellent basis for a variety of marketing
expensive paper mail to frequent
flyers or to answer telephone Figure 3. The I2M matrix
Asynchronous Synchronous File Telnet Audio Video News- Search Virtual
The cost of handling orders can text text transfer wire engine reality
also be reduced by using interactive
forms to capture customer data Atmospherics
and order details. Savings result
from customers directly entering News stories
all data. Also, because orders can be Signs
handled asynchronously, the firm Personal
can balance its work force because experiences
it no longer has to staff for peak Advertising
ordering periods. Word of mouth
Many Web sites make use of Public relations
FAQs to lower the cost of commu- Products and
nicating with customers. A firm services

can post the most frequently asked Popular culture

questions, and its answers to them,
as a way of expeditiously and efficiently handling com- tactics, which permits the development of a model for
mon information requests that might normally require Integrated Internet Marketing (I2M).
access to a service representative. UPS, for example, I2M (see Figure 2) is the coordination of Internet
answers more than 40 frequent customer questions facilities to market products and services, shape stake-
(What do I do if my shipment was damaged?) on its holders’ (customers in particular) attitudes, and estab-
FAQ page. Even the FBI’s 10 Most Wanted list is on lish or maintain a corporate image. The central idea of
the Web, and the FAQs detail its history and origins, I2M is that an organization should coordinate its use of
functions, and potential. the Internet to develop a coherent, synchronous mar-
The Web is the umbrella technology that can pro- keting strategy.
vide a single interface to each of the technologies The Web offers a unique way to shape corporate
described in Table 2. The hypertext feature of the Web image because it provides a means of communicating
enables links to be created within a document or to with so many stakeholder groups. For example, most
another document anywhere on the Web. This sup- organizations are interested in the ambiance or atmos-
ports rapid navigation of Web sites. The multimedia pherics their establishment creates for the customer,
capability means a Web page can display graphics, where the term “atmospherics” refers to a retail envi-
videos, play sound, and show animations, as well as ronment. The Web provides an opportunity for cus-
support for online forms and multiple windows. The tomers to experience an organization’s atmospherics
Web is the means by which a company can use a vari- without actually being there.
ety of Internet tools to interact with customers and In the same way, the Web provides new opportuni-
other influential stakeholders. It can shape and direct ties in terms of signs, word of mouth, personal experi-
the dialogue between an organization and its stake- ences, and public relations. Traditional marketing

COMMUNICATIONS OF THE ACM June 2000/Vol. 43, No. 6 101

theory and practice have discovered it is very difficult lishes messages critical of the company’s ads. This fits
to manage a corporate image so the identical image is with Benetton’s somewhat confrontational, in-your-
communicated to every stakeholder group. As illus- face advertising.
trated in Figure 2, the Web provides a powerful tool to The Benetton site is a source of considerable infor-
assist managers in communicating a unified image. mation. Benetton ads and press releases for campaigns
The I2M matrix (see Figure 3) can be used by firms since 1984 are retrievable. Journalists can sign up to
to search systematically for opportunities for using the receive electronic notification of future press releases or
Internet to support marketing strategies. The concept establish a personal press basket for storing releases and
is that each cell of the matrix is a focal point for brain- articles. Investors can download a copy of the financial
storming. An interactive Web-based version of the report and view a video of the annual financial meet-
matrix2 can be used to stimulate thinking by showcas- ing, with audio in English or Italian. A search engine
ing how organizations are using a particular cell. Thus, provides rapid access to available information.
clicking on the cell at the intersection of “atmospher-
ics” and “asynchronous text” would jump to a page Conclusion
containing links to organizations using asynchronous As transactions are conducted more and more elec-
text to establish atmosphere. Apple, an example for tronically, a firm’s Web site will be its defining image
this cell, has established a bulletin board, EvangeList, and the main point of interaction with many stake-
to keep the faith of Macintosh aficionados. Postings to holders. Consequently, firms must ensure they take
this bulletin board evoke an image of a feisty Brave- full advantage of the technology available to maximize
heart valiantly fighting the Sassenachs (also known as their impact.
Intel and Microsoft). A systematic approach, using the I2M matrix and
Because we often learn by modeling the behavior of modeling the behavior of others, provides a frame-
others [2], linking I2M cells to existing Web examples work for designing and implementing an effective
should assist managers to identify opportunities for Web site that takes full advantage of the Internet tools.
their organization. Furthermore, by providing a vari- Integrated use of this technology, however, is not
ety of examples for each cell, creative behavior should enough. An enterprise with a jumble of different page
be aroused because each example can be a different layouts and icons communicates disorganization. The
stimulus. In another sense, the interactive I2M matrix collective image of the Web site must communicate
is a precursor of a hybrid publication, combining tra- the overall integration and message of the organiza-
ditional print with Web pages to convey more effec- tion. Not only must use of Internet tools be inte-
tively the intent of the article. If advertising is grated, but a corporation’s entire Web presence must
succumbing to the problems of traditional media, be cohesive in order to communicate a consistent mes-
then maybe the same fate awaits print publications sage to stakeholders. c
because we cannot adequately represent some ideas in
a purely print medium. The concepts of integrated References
communication apply to all forms of communication, 1. Ansoff, H.I. Strategies for diversification. Harvard Bus. Rev. 35, 2. Cam-
bridge Press, Cambridge, MA. (1957), 113–124.
not just that between seller and buyer. 2. Bandura, A. Social Learning Theory. Prentice-Hall, Englewood Cliffs, NJ,
3. Child, J. Information technology, organizations, and the response to strate-
I2M Application gic challenges. Calif. Management Rev. 30, 1 (1987), 33–50.
Some organizations have intuitively grasped the cen- 4. Dickson, P. R. Toward a general theory of competitive rationality. J. Mar-
tral theme of the I2M model. Benetton, for instance, keting 56, 1 (1992), 69–83.
5. Quelch, J.A., and Klein, L.R. The Internet and international marketing.
uses several Internet technologies and, with a different Sloan Management Rev. 37, 3 (1996), 60–75
twist on integrated communication, uses its Web site
to communicate with a variety of stakeholders (cus-
tomers, investors, journalists, and store owners). The Richard T. Watson ( is a professor of
MIS in the Terry College of Business at the University of Georgia,
most obvious characteristic of the Benetton Web site is Athens.
its reinforcement of the Benetton image. The United George M. Zinkhan ( is the Coca-Cola
Colors of Benetton theme is echoed in the images and Professor of Marketing and department head in the Terry College of
fonts used for signage. Benetton goes a step further in Business at the University of Georgia, Athens.
Leyland F. Pitt (pittl@cbs,curtain, is a professor of
reinventing signs, its distinctive ads are sometimes marketing at the School of Marketing, Curtain University of
used to convey the purpose of a page. Technology, Australia.
In a variation on word-of-mouth, Benetton pub-
2 © 2000 ACM 0002-0782/00/0600 $5.00

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