INTRODUCTION AND DEFINITION

At the beginning of the century, social life was mostly local. It was followed by a period in
which commodities were produced on a mass scale. Consumer Marketing operated on mass
marketing principles and business primarily concerned itself with how to build the best sales
force. At the end of the century, there is an emerging global culture. The major driver of these
changes is technology. Technological change has moved steadily back focusing on the
individual. These changes shape the possibility and conduct of business. Marketing is
especially tied to communication and transportation revolution. As the tools and reach of
marketing increase, the job and responsibilities of marketers have evolved with them.

Kotler formalized this evolution with his book "Marketing Management." His key stages are
production, sales and brand management. Each of these is strongly motivated by
technological opportunities, which permit new methods and new opportunities. A fourth
stage, a focus on the individual customer, is also important. As the new technology of the
Online develops, it reinforces the new marketing emphasis - which in many ways is a return
to business at the turn of the century.

In today’s technology driven world, a new fast paced digital economy is emerging. In the
near future, it wouldn’t be surprising to see that there are companies that exist only inside
computer networks. Most business transactions will be made electronically, directly from the
producer to the consumer, bypassing the supply chain. In the digital marketing environment,
the consumer becomes an integral player in the development of the product. In fact, a
consumer might build the product himself from a wide array of parts provided by the
company. It is e-business that is changing the way products and services are conceived,
manufactured, promoted, priced, distributed and sold. The reason being that it is much
cheaper; it allows vast coverage and helps in serving the customer better.

1
Online Marketing Tactics
There are many different technologies to facilitate your online marketing strategy. Some of
the most common and effective tools are:

Search Engines and Directories: Search engines are one of the most popular means of
finding web sites, second only to following links on web pages.
Search engines help people find relevant information on the Online. Major search engines
maintain huge databases of web sites that users can search by typing in keywords or phrases.
Advertise your message. Web directories/search engines are information, gateways that have
high traffic and are good for displaying advertisement banners. They are used to find Online
information and for this reason, appeal to broad target groups.

E-zines (Online magazines): These publications are focused on specific topics and may be a
way to reach a target audience interested in that subject. Some companies have gathered the
e-mail addresses of potential customers and used these lists to send out product information
specific to client interests.
Seven good reasons to establish an E-Zine
1. Establishes Trust
2. Brings Visitors Back
3. Establishes You as an Expert
4. Keeps Current & Potential Customers Up to Date on New Products & Services
5. Builds Relationships
6. Allows You to Build an Opt-In Email Marketing List
7. Keeps Your Website Fresh in Visitors' Minds

E-mail: Ethical methods of gathering e-mail addresses are through on-line registration built
into your corporate Web sites, or requests for information forms that request submission to
your opt-in lists.

2
 OBJECTIVES OF THE STUDY

 To study attitude of customers towards e-commerce.

 To find out the preferences of the consumer regarding the attributes of online
marketing website.

 To identify the issues faced by the user while e-commerce.

 To determine the parameters for choosing the particular online shopping centre for
purchase of grocery items.

 To determine whether online grocery shopping will be beneficial and on what

factors.

SCOPE OF THE STUDY

 To determine which factor influences the consumer to go for e-business.

 To find out which feature of the website attracts the user to purchase the product
from the online marketing website.

 To find out the weather grocery online marketing is beneficial for the user.

 To analyze which factors influence the user to buy online grocery.

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 RESEARCH METHODOLOGY

The sources of data used in this project report are both primary and secondary data.

1. Primary data

Primary data consists of original information gathered from sample size of 200
respondents residing in Hyderabad, India.

2. Secondary data

Secondary data consists of information that already exists and that was collected in the past
for some other purposes.

SAMPLE DESIGN:

 Size of Sample: The sample size selected for the research is 200 in the area of
Hyderabad

 Parameters of Interests: The major parameter of interest is the subgroup of people

who are working professional and web savvy having an experience in online
shopping. The two other subsidiary parameters of interest are:
o The respondent should also have an experience grocery shopping.
o And the female respondent who have an online shopping experience.

SAMPLING TECHNIQUE

 Quota Sampling:

Quota sampling is a method for selecting survey participants. In quota sampling, a

population is first segmented into mutually exclusive sub-groups, just as in stratified
sampling. Then judgment is used to select the subjects or units from each segment
based on a specified proportion

Over here the sample are taken who working, having an experience in online
shopping and are web savvy. Also women respondent are taken as they are the user
who shop for grocery items than the male.

DATA COLLECTION TOOL USED:

 Questionnaire

The data collection tool used for the research is “Questionnaires “to get the primary
data for the empirical research on consumer preference on online grocery shopping.

The Questionnaire which is attached in the next page consists of a number of questions
printed in a definite order on a form which the respondents read.

4
 LIMITATIONS OF THE STUDY

 The first limitation caused during the market research was to find out the
respondent who shop online and are web savvy.

 The second limitation caused during the research was searching the women
respondents who shop grocery products along with the experience of online
shopping.

 Other limitation caused in the market research was that the research will only study
the consumer perception towards online grocery shopping and not the dealers,
wholesalers or retailers’perceptiontowards online shopping which acts as an agent
to the online retail industry to support its business operations.

5
 REVIEW OF LITURATURE

E-commerce in India

The Indian economy is slated to grow by upward of 6 % annually in the next few years which
is among the highest rates of any big emerging economy. And quite a lot of this growth
would be on the back of domestic consumption of goods and services.

E-business is emerging as a great level given that organized retail is still not ubiquitous
across the length and breadth of the country with large retail chains making up less than 10%
of the market.

E-business is helping people in smaller towns in India access quality products and services
similar to what people in the larger cities h of online shoppers would come from beyond the
top eight large cities by end of this year.

Increasing online penetration has helped to expand the potential customer pool. Online
penetration is only about 10% (or about 121 million users) as against about 81% in the US
and 36% in China. However this number continues to rise at a consistent pace because of
falling prices for broadband connections.

Indians are also increasingly taking to mobile devices for not only search but shopping as
well. The number of Smartphone users is rapidly increasing in India and with 4G services
about to take off it’s expected to get even about 900 million mobile subscribers and this
number is expected to touch 1.2 billion by 2018. Of these about 27 million are estimated to
be active mobile Online users. More importantly, 20% users indicated intent to buy products
through their mobile phones as against the current 4% and this number is expected to only
increase in the next two to three years.

Innovation is helping e-business companies break the inertia for online shopping by offering
benefits to customers not traditionally available in a brick and mortar store. Business models
include no question asked return policies ranging from 7 days to 30 days, free product
deliveries and the industry dyn last innovation has really help unlock the potential as people
can now order products and pay when they get physical delivery of the product.

At the beginning of the century, social life was mostly local. It was followed by a period in
which commodities were produced on a mass scale. Consumer Marketing operated on mass
marketing principles and business primarily concerned itself with how to build the best sales
force. At the end of the century, there is an emerging global culture. The major driver of these
changes is technology. Technological change has moved steadily back focusing on the
6
individual. These changes shape the possibility and conduct of business. Marketing is
especially tied to communication and transportation revolution. As the tools and reach of
marketing increase, the job and responsibilities of marketers have evolved with them.

Kotler formalized this evolution with his book "Marketing Management." His key stages are
production, sales and brand management. Each of these is strongly motivated by
technological opportunities, which permit new methods and new opportunities. A fourth
stage, a focus on the individual customer, is also important. As the new technology of the
Online develops, it reinforces the new marketing emphasis - which in many ways is a return
to business at the turn of the century.

In today’s technology driven world, a new fast paced digital economy is emerging. In the
near future, it wouldn’t be surprising to see that there are companies that exist only inside
computer networks. Most business transactions will be made electronically, directly from the
producer to the consumer, bypassing the supply chain. In the digital marketing environment,
the consumer becomes an integral player in the development of the product. In fact, a
consumer might build the product himself from a wide array of parts provided by the
company. It is e-business that is changing the way products and services are conceived,
manufactured, promoted, priced, distributed and sold. The reason being that it is much
cheaper; it allows vast coverage and helps in serving the customer better.

Growth of Online usage and E-business:

According to the research report of Goldman Sachs, India has emerged as the second largest
online market in Asia after China with 100 million users in 2005. It estimates that Indian
Online Users will increase by 160% compounded annual growth rate (CAGR) from 0.5
million users recorded at end of 1998. Also the figures of the number of Online Service
Providers (ISPs) is expected to increase by leaps and bounds and March 2006 sees at least 30
private international gateways. As per preliminary findings of the NASSCOM survey, the
total volume of E-business transactions in India was about Rs.161 crore in the year 1998-99.
Out of this volume, about Rs.12 crore were contributed by retail Online or Business-to-
Consumer transactions, and about Rs.119 crore were contributed by Business-to-Business
transactions. The survey also revealed that E-Business transactions in India are expected to
exceed Rs.300 crore during 1999-2000. Out of this, about Rs.50 crore could comprise of
retail transactions.

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 For Business-to-Business transactions, Indian industries are expected to reach online
penetration of 2% by 2003 and 8% by 2008.

The Figure below gives us a fairer idea of the current world online usage.

WORLD ONLINE USAGE AND POPULATION STATISTICS

As On August 31, 2021.

Usage
Population Population Online Usage, % Population World
World Regions Growth
( 2018 Est.) % of World Latest Data ( Penetration ) Users %
2015-2021

Africa 896,721,874 17.0 % 23,867,500 428.7 % 2.7 % 2.5 %

Asia 3,622,994,160 56.4 % 327,066,716 186.1 % 9.0 % 34.2 %

Europe 731,018,523 11.4 % 273,262,955 165.1 % 37.4 % 28.5 %

Middle East 260,817,179 4.1 % 21,422,500 305.4 % 8.2 % 2.2 %

North America 328,387,059 5.1 % 223,779,183 107.0 % 68.1 % 23.4 %

Latin America/Caribbean 546,723,509 8.5 % 70,699,084 291.31 % 12.9 % 7.4 %

Oceania / Australia 33,443,448 0.5 % 17,655,737 161.7 % 52.8 % 1.8 %

WORLD TOTAL 6,420,102,722 100.0 % 957,753,672 165.3 % 17.9 % 100.0 %

Effectiveness of the Net in Reaching Out to the Masses

The reach of Online may not yet be as wide as that of other mass media, but given its unique
advantages, it is undoubtedly the communication medium of the future. Marketers around the
world have from time to time tried to reach their target audiences through various media.
Scientific and technological advances have and will continue to create newer media to
improve communication, and marketers will try to use the same to effectively address their
audiences. Online is one of the latest to join the list of such media inventions.

Online Fame with the Indian Audiences

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Let us first take a quick look at the audience that this medium is trying to reach. The top 8
metros of the country, the scope of the Online as a medium to reach out to a large number of
people is presently limited. However, some of these limitations can be addressed.

1. Online is available in regional languages also. Even today this medium is largely confined
to only those who are literate in English. Various initiatives of companies like ITC and HLL
like E-choupal and i-Shakti have given a considerable boost to vernacular usage of Online

2. Online is accessible though other media also and not only through telephone lines. In the
current scenario, the usage of Online might be dominated by telephone lines, but broadband
and cable net are coming in a huge way.

3. Government policies are aimed at broadening and strengthening the infrastructure required
for online accessibility.

There could be several other modes to increase the reach of the Online. However, with the
current limitations, the projections on online usage appear to be as follows:

Current Media usage habits of the Indian audiences

TV, print and cinema have penetrated the most. Online in the media terms is expected to
make an impact and show its true caliber, but is yet not taken as a serious medium.

Does that mean that online is not an effective tool for reaching out to people? Or is it likely to
work very well under certain conditions?

To understand this better, let us compare Online and other traditional media, first from the
customer’s point of view. Current media options serve two broad benefits to the customer:

1. Information

2. Entertainment

The reach or popularity of any media is related to

1. The extent of benefits perceived to be delivered

2. The cost of acquisition of the media itself

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In short, the reach is related to the net value perceived by the customer about that particular
medium.

On the basis of the above clarification, Online appears to have a comparatively higher cost of
acquisition. However, Online has brought with it a very high degree of control to the media
user. Not only are there a plethora of sites catering to every imaginable need, there is also a
high degree of flexibility in what the user is able to do. All of this makes Online a highly
interactive media but also an expensive one.

If the Online is treated and used exactly like any other medium, it is unlikely to yield major
benefits to the marketer. Its effectiveness is dependent not only on the target audience one is
talking to, but also largely on the ability of the marketer to make use of the real advantages of
the Net like interactivity, flexibility, ability to monitor and the like.

Next, one can also evaluate Online as a media from the marketers’ point of view by way of a
similar classification. If evaluation as per the above classification is done, the Online does not
appear to be a very advantageous option either in terms of reach or in terms of cost-
effectiveness. But Online has various other advantages over the traditional media which
cannot be neglected. These stem mainly from the ability of this medium to allow a far more
focused targeting as compared to other media.

To quickly summarize the advantages of the Online as seen from the point of view of the user
as well as the marketer:

To the user:

Online gives more control in choosing content. It offers customization of the content, the way
the user wants to view it. It offers a variety of options for information and entertainment. It
offers a wide range to choose from for the user.

It offers tremendous convenience to the user not only in delivery of information, but also in
allowing him to transact — often in a seamless manner.

The best example of giving control of content is the My Yahoo !! service offered by the
Online giant, Yahoo Inc. It gives the user the choice of content for various topics ranging
from news to stock options to entertainment to sports and just about everything.

10
To the marketer:

The Online offers several options to a marketer trying to target a particular community

It serves not only as a channel of information, but also of product distribution

It offers a highly interactive medium that sometimes (e.g. chats, forums, VoIP) is almost
equal to one-to-one interaction with the audience.

It offers a higher level of identification of the user to the marketer.

It allows the marketer to actually link his spends to action, and pay only on action

This action could be a click on the banner or even product purchased or just a banner
impression or per 1000 impressions. In this ability Online is, in fact, unlike any other media.

Given the payment options and high interactivity, the Online offers a medium for high level
of experimentation at a low cost.

E.g. one can change the whole look of the advertisement within hours and increase the
effectiveness of the communication on the Online. Imagine doing the same with a television
advertisement. Therefore, though the Online with its present limitations may not be able to
match other media in actually reaching out to large numbers of people, the benefits of this
highly customizable and interactive medium can be used effectively to target niche
audiences.

This can be elaborated a little more by answering the following questions:

1. Who are the people who can be reached through the Online?

2. Which are the products that can possibly benefit from marketing on the Online?

3. What are the options available to the marketer to reach out more effectively to their
audiences?

4. Are there ways for monitoring effectiveness of this medium in order to control it better?

Overview of the Indian Online Users.

11
According to the data available with NASSCOM, about 60 per cent of Indian Online users
are chiefly found in the age group of 19-34. Almost 80 per cent of Online users are males. It
is estimated that the Online user spends an average of 10 hours per week on the Net, and
usually earns over 6000 per month. Almost 53 per cent of Online users belong to SEC
A1/A2. More than 55 per cent of such Online users live in towns with a population of over 40
lakhs. Even today, Indian users are most likely to use the Net for sending and receiving
emails. However, information- and entertainment-seeking are also growing.

Which products are likely beneficiaries of the Online?

Given that the usage of the Online is highest amongst young, male audiences belonging to the
larger towns and who belong to higher SEC groups, for this medium to be cost-effective,
products having similar target groups would benefit the most from this medium.

The most likely examples that come to mind include telecom, financial products and services,
products related to entertainment like movies (promotions and tickets), plays, contests etc,
FMCG products where the core target audience is younger (deodorants, soft drinks),

Advertising options available on the Online.

The Online offers a variety of options for the marketer to advertise her/his products/brands.
These include

1. Banner ads and their variations

2. E-mailers and their variations

3. Sponsorships

4. Search Engines

5. Affiliate marketing

In India, banners still remain the most popular option. However, wider options are now
available to the marketer which, even at the cost of being intrusive, serves to enhance the
visibility and effectiveness of the banner
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The Variants of Banners include :

1. Banner Ad - a graphical web advertising unit, typically measuring 468 pixels wide and 60
pixels tall (i.e. 468x60).

2. Beyond the Banner - online advertising not involving standard GIF and JPEG banner ads.

3. Button Ad- a graphical advertising unit, smaller than a banner ad.

4. HTML banner - a banner ad using HTML elements, often including interactive forms,
instead of (or in addition to) standard graphical elements.

5. Iterstitial - an advertisement that loads between two content pages.

6. Pop-up Ad - an ad that displays in a new browser window.

7. Pop Under Ad - an ad that displays in a new browser window behind the current browser
window.

8. Rectangle Ad - any one of the large, rectangular banner sizes suggested by the IAB.

9. Rich Media- new media that offers an enhanced experience relative to older, mainstream
formats.

10. Skyscrapper Ad- an online ad significantly taller than the 120x240 vertical banner.

11. Text Ad - advertisement using text-based hyperlinks.

12. Surround Session - advertising sequence in which a visitor receives ads from one
advertiser throughout an entire site visit.

16. Vertical Banner - a banner ad measuring 120 pixels wide and 240 pixels tall.

Given the highly interactive nature of the Online, and the also fact that unlike other media it
offers a higher level of identification of the user, simple direct marketing tools such as email
can also be used more effectively. For example, a high-end car seller can today easily send an
offer to persons earning over Rs 25000 per month at a very reasonable cost and within a very
short period.

13
Then again there are sponsorships, which can be effectively used to increase brand salience
and even change image.

The other tool on the web with enormous potential, and which has possibly not been used to
its optimal level yet by marketers in India, is the search engine. Marketers can own either
popular keywords or make use of meta-tags (these are similar to the keywords which the
search engines uses to catalogue various websites/products) in order to go higher on the
search lists.

The above is used by the search engine giant Google.com and it has reaped profits so much
so that it is now being viewed as a threat by the computer giant Microsoft Inc.

7 P's of Marketing – On line

The four P's - Product, Price, Place and Promotion have long been associated with marketing,
but things have changed on the Online. So along with a change in the nature of the four P’s
there are three new P’s which are relevant to the Online marketer.

1. The Product on the Online usually changes form online, and the user experiences it
electronically, in the form of text, images and multimedia. Physical goods are usually
presented in the form of a detailed online catalogue that the customer can browse
through. Technology allows the user to virtually touch and feel the product on the
Online - rotate it, zoom in or zoom out and even visualize the product in different
configurations and combination. The example of the above can be seen at dell.com
where the company offers the user to virtually feel every aspect of their product
before they go into a buy decision. Content and software are two avatars of digitized
products that can be even distributed over the Online. On the Online, E-marketing
will be based more on the product qualities rather than on the price. Every company
will be able to bring down the cost of its products and hence competition will not be
on price. It will rather be on the uniqueness of the product. To be able to attract the
customers and retain them, the company will have to provide nouvelle and distinct
products that forces the net users to purchase and come back for more.

2. The Price has been drastically changed over the Online. It lets the buyer decides the
price. Also it gives the buyers information about multiple sellers selling the same

14
 product. It leads to best possible deal for the buyers in terms of price. A website
named Priceline.com is extremely popular as its compares the price of many airlines
and offers the least price to the buyer. The very famous bazee.com now known as
ebay.in follows the same principles. Pricing is dynamic over the Online.

3. The Place revolves around setting up of a marketing channel to reach the customer.
Online serves as a direct marketing channel that allows the producer to reach the
customer directly. The elimination of the intermediate channel allows the producer to
pass the reduced distribution cost to the customer in the form of discounts. Dell
Computers have used this strategy very effectively and hence they have been able to
reduce their prices of their laptops drastically and reaped huge profits.

4. Promotion is extremely necessary to entice the customer to its website, as there are
currently more than one billion web pages. Promoting a website includes both online
and offline strategies. Online strategies include search engine optimization, banner
ads, multiple points of entry, viral marketing, strategic partnership and affiliate
marketing. Presently, the cyberspace is already cluttered with thousands of sites
probably selling similar products. For the customers to know of the Company’s
existence and to garner information on the kind of products or services that the
company is offering, promotion has to be carried out. There can be traded links or
banner advertisements for the same. Also the traditional mediums like print, outdoor
advertising and television can be used to spread awareness. Email campaigns and
spamming the Chat rooms on almost every server has been exploited to the maximum
for the cause of promoting their website.

5. Presentation The presentation of the online business needs to have an easy to use navigation.
The look and the feel of the web site should be based on corporate logos and standards. About
80% of the people read only 20% of the web page. Therefore, the web page should not be
cluttered with a lot of information. Also, simple but powerful navigational aids on all web
pages like search engines make it easy for customer to find their way around. The principle of
K.I.S.S ( Keep it simple stupid ) is the most important factor that has to be considered while
presenting the online business

6. Processes Customer supports needs to be integrated into the online web site. A sales
service that will be able to answer the questions of their customers fast and in a
15
 reliable manner is necessary. To further enhance after sales service, customers must
be able to find out about their order status after the sale has been made. For e.g.
FedEx (www.fedex.com), the overnight Courier Company allows its customers to
keep track of the parcel and they are well informed about the present whereabouts of
their package. Similar variants have been used by the Govt of India for its Speed post
and Registered Ad services where you can keep a track of your post by entering the
code that has been issued to you.

7. Personalization Using the latest software from Broad-Vision and others, it is possible
to customize the entire web site for every single user, without any additional costs.
The mass customization allows the company to create web pages products and
services that suit the requirement of the user. A customized web page does not only
include the preferred layout of the customer but also a pre selection of goods the
customer may be interested in. For e.g. Yahoo! (www.yahoo.co.in) entered the Indian
cyberspace and started its personalized services. A registered user of Yahoo can now
personalize the front page with all the information he needs. He can read the news of
the world, add a tax calculator, see the weather forecasts of his city and listen to his
favorite songs and all this simultaneously.

Online Marketing Tactics

There are many different technologies to facilitate your online marketing strategy. Some of
the most common and effective tools are:

Search Engines and Directories: Search engines are one of the most popular means of
finding web sites, second only to following links on web pages.
Search engines help people find relevant information on the Online. Major search engines
maintain huge databases of web sites that users can search by typing in keywords or phrases.
Advertise your message. Web directories/search engines are information, gateways that have
high traffic and are good for displaying advertisement banners. They are used to find Online
information and for this reason, appeal to broad target groups.

E-zines (Online magazines): These publications are focused on specific topics and may be a
way to reach a target audience interested in that subject. Some companies have gathered the

16
e-mail addresses of potential customers and used these lists to send out product information
specific to client interests.
Seven good reasons to establish an E-Zine
1. Establishes Trust
2. Brings Visitors Back
3. Establishes You as an Expert
4. Keeps Current & Potential Customers Up to Date on New Products & Services
5. Builds Relationships
6. Allows You to Build an Opt-In Email Marketing List
7. Keeps Your Website Fresh in Visitors' Minds

E-mail: Ethical methods of gathering e-mail addresses are through on-line registration built
into your corporate Web sites, or requests for information forms that request submission to
your opt-in lists.

An alternative is to purchase lists of customer e-mail addresses indexed by special interests

from a private company such as 'Postmaster Direct'.
Online customers are becoming increasingly selective about their relationships, the brands
they trust, and what they consider relevant. While most marketers are aware of privacy issues
and the risks of Spam, there is still need for improvement. Email marketing campaign
management is still fairly unsophisticated even at the largest of organizations.
Marketers have to think about the drivers of customer response and purchase. Over time, as
more is learned about your customer buying behavior, you can will isolate campaign and
program characteristics that drive your customer or visitor response and action. Isolating the
behavior of high value customers, business customers, or the minority of customers who
prefer to buy online will be critical. For example, new online buyers get referrals when
shopping online, while experienced frequent buyers prefer search engines.

Affiliate Marketing: Affiliate Marketing enables you to increase online sales by promoting
your products and services through a network of Affiliate sites on a payment-by-results basis.
It also provides the opportunity to generate additional revenue by exploiting your site's own
content to promote the products and services of other online Merchants.

17
A Merchant recruits content sites to partner with them as Affiliates in exchange for
commissions. A common third party provider such as Commission Junction can be used.
The Merchant provides their advertising banners and links to their Affiliates and assigns a
commission for each click-through to their site, subscription to their service, or purchase of
their products that is generated from those links.
Affiliates place the tracking code for these ads and links on their Web sites. This allows
clickthrough's to be tracked online and commissions to be calculated. If a product or service
is purchased, the customer pays the Merchant directly and the Affiliate is paid a commission
for that transaction. The dating giant adultfriendfinder.com has used this strategy to the
maximum and has earned millions of dollars by proper implementation of this strategy.

Banner Advertising: Banner advertising can play an extremely important role within your
website strategy. One can use banner advertising as a means of promoting it’s own products
and services, raising awareness, or as a way of generating revenue by selling advertising
space on your own website.

Purchasing Advertising: There are currently two widely recognized methods of purchasing
banner advertising. The rates for these are usually quoted on a cost per thousand basis or
(CPM). The rates you pay can vary tremendously as there is currently no standard price
model - so be prepared to negotiate!
 Pay-Per-Impression: This method of purchasing banner advertising is based on a
charge for the number of times someone sees your banner. There are no guarantees as
to how many visitors will come to your site as a result of seeing your banner; you are
simply paying for the number of times your banner is displayed. Websites that offer
such programs include paypopup.com and adclicksor.com
 Pay-Per-Visitor: This method of purchasing banner advertising is based on a charge
for the number of times someone visits your site as a result of clicking on your
banner. This is a better method of purchasing banner advertising as you are only
paying for results, although expect to pay a premium.
 Pay-Per-Click : The revenue model of the Online giant google.com has its very own
service which offers certain share of the profit that it makes by the click-thru that a
website generates from its adsense codes. The revenue model is known as google
adsense and almost every successful website uses this model to make profits. The

18
 Google adsense ads can be seen on websites like Times of India, Moneycontrol.com,
ManagementParadise.com and a lot many other reputed websites.
 Branding. While CTR and cost per sale relate to direct marketing objectives, another
way of looking at banner ads is as "branding" tools. They create brand awareness, and
a brand image in the viewer's mind, whether or not the viewer clicks on the ad.
Branding is very difficult to measure, but can be very powerful.
The average click through ratio on banners is just under 1%, although with a well planned
and executed advertising campaign using effective banners you can increase this to as much
as 18%, but be prepared to work at it.
It is a good idea to have a number of different banner ideas so that you can carry out small
test marketing campaigns with each one until you find those that work best.
There are a number of key issues that must be considered when designing a successful
banner:
 It must have an attention-grabbing headline.
 It must be simple and get your point across.
 It must invoke action (i.e.: "Click here")
 It must download quickly.
 It must be placed effectively on a web site, Location, Location, Location
Any campaign is limited by the amount of advertising you can do depending on the size of
your budget. Therefore it is important that you target your market carefully so as to maximize
advertising spend on effective banner campaigns.

Rich Media Advertising: Looking for ways to make online advertising more compelling,
and hopefully thereby more acceptable, marketers have increasingly been turning to
streaming advertising.
In effect another kind of rich media advertising, streaming advertising comes in two basic
forms.
First, it can either be part of a streaming audio or video program on the web. With many
people now listening to web radio or watching web broadcasts, this makes perfect sense.
After all, everyone is accustomed to getting commercials on their TV or car radio.
The other channel for streaming advertising is essentially an infomercial. Consumers can
download a streaming clip for a product or service from a marketer's website.

19
Two new studies recently released suggest that the streaming advertising market is going to
boom now and in the years to come. The giant ad selling company mediaturf uses this
method for providing content to advertisers
Conferences: By their nature conferences are organized for special interests. Advertising in
conference literature, print and electronic, is an excellent way to contact target markets.

Collaborative Marketing: Team up with other business to:

 Cross-promote - e.g. setting up links from one corporate Web site to another or
offering special promotions in partnership with complementary goods or services.
 Advertise - share advertising.
 Participate in joint sponsorship of events, initiatives, informational Web
sites, mailing lists, bulletin board systems, directories, etc.

 Link exchange with trade/professionals associations to support credibility of firm,

provide further market information to customers, build their awareness and prepare
them for the action of purchasing.

Sales Promotion: Employing methods to stimulate sales through immediate or delayed

incentives to the customer. If the incentive is attractive, the price: value ratio is adjusted
favourably enough to affect a sale. This strategy should integrate with the overall marketing
mix to balance extra sales with long-term profit motives. Examples of sales promotion
strategies are:

 Sampling - offering product samples, electronically.

 Bonus offers - offering additional goods or services when making single purchases (e.g.
buy-one-get-one-free).
 Limited time offers - attracting visitors to return to a Web site.
 Games with prizes: Useful to keep people coming back to Web sites.
 Cross-product sampling: When a customer makes a purchase they have an opportunity
to try out another company’s product/service. Also, the customer may have the
opportunity to try out more than one company’s product/service while testing another.
Useful for complementary products/services.
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 Feature pricing: providing special pricing to those that order electronically.
 Cross-promotions with other companies’ products/services - Buy a company’s
product/service and get a coupon for another company’s product/service.

Publicity: The goal of publicity is to have others talk about the small business or its products.
It can be inexpensive or even free and it may have the potential to generate far more in sales
than even a well executed advertising plan.

Promotional Publications: Facilitate customer education, with the intention of building

corporate image and even brand awareness, the small business may sponsor and/or publish its
own electronic magazine on the Web, e-mail, etc. These are useful in fields

where the customer needs information to develop sufficient knowledge for movement
through the first three stages of the sales process of awareness, interest, and desire. Although
time consuming, they replace or complement the print versions of newsletters/corporate
magazines/flyers.

Subscriptions: Business marketers may use their Web sites to encourage visitors to subscribe
to receive regular email messages from the company. These messages are called digests or
newsletters, and are a clever way for marketers to push product news to willing customers.

Controlled-access Web pages: Clever business marketers may use their Web site to attract
new customers.
They might publish a Web page that allows customers to download a free trial version of a
software application that expires after a time if not paid for. Or, customers might receive an
e-mail message inviting them to visit a private Web page on the company’s intranet, and
giving them a password. The company, as a way of encouraging a sale, offers customers who
visit the page a prize or enticement of some sort.

Public Forums: These are often community-based or interest-based sites that allow visitors
to communicate with one another. An opportunity for small businesses to reach to their
intended target group via these forums is by posting messages or by sponsoring such a forum.
E-mail based forums appeal to a wider audience due to the greater use of this application over

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Web-based forums. Web based forums are advantageous for their superior display of
advertising images/messages

Resellers: Some sites will remarket other companies’ products as intermediaries. The
companies that host these sites may have invested significant resources in making them
attractive to the target audience a small business is interested in attracted. By piggybacking
on another company’s efforts, cost-efficiencies may be realized by engaging in a reselling
arrangement.

E-mail Links: Visitors to a site should have the opportunity to correspond with the host of
that site, especially if out of the telephone area or time zone. E-mail links may be strategically
placed throughout the site to elicit response from visitors for at various points. These are also
useful for feedback on site maintenance problems.

On-line Surveys: Information may be collected on the visitors to a Web site through
registration forms, on-line surveys, or through tracking of areas of site they visit. These
websites also offer referrals wherein if you refer someone to their site and the person
becomes a member then you are paid commission on that.

Virtual Malls: Web based sites that allow companies to post their products or services for
sale long with other companies. These may be product specific, may be arranged by
complementary products, or may have products that are not related except by their
companies’ desire to attract a similar target audience.

Measurement: The Online has the unique ability to provide marketers with detailed
information about the success of their Web marketing programs. Companies can track
visitors to their site and collect information about them from their “cookies,” then process
this information using Web site analysis software.
Cookies are a type of digital identification, which is read every time the user connects to a
public Web site. The Web site can collect some very basic information about the user (e-mail
address, time of day the site was accessed, which pages were visited) and use it to create
visitor profiles. Visitors can then be identified as “old” or “new” when they visit the site.
Cookies are an essential part of many companies’ business strategies. The information
collected from them is used to measure site visitors, develop user profiles, and target
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advertising — in much the same way that television allows advertisers to target their message
to a certain demographic.

Product and service customization

Companies that have powerful brand awareness on the web all have sites that help consumers
do something – whether it’s configuring a computer system (www.dell.com) on-line or
offering personalized services like suburban railway pass ticket in Hyderabad
(www.rediff.com). Consumer demand and expectations are forecast to drive made-to-order or
customized products with rapidly shrinking lead times. Products are configured, as customers
want them to be and provide a high level of reliability, excellent quality, and longer life
spans. For e.g. ‘Dell’ computer (www.dell.com) has become a leading company in selling
computers because of the customization facility it provided on its site. The consumers could
build the own computer by ordering the own configuration. For e.g. On Nike’s site
(www.nike.com), the customer can become a registered user and customize the shoe of his
choice. The customization highlights the value-for-money aspect and induces the consumer to
buy a product that meets his own requirement.

Understanding the Online Customers

Now to be able to use the seven P’s effectively in order to achieve the predefined goals of any
organization it is imperative to understand the customers. Customization will only be truly
effective if we understand our customers and their true needs.

Before adapting marketing practices to the Online, the marketer needs to understand
the characteristics of the online customers. The Net users can be classified into five
categories depending upon their intention of using the Online.
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The five categories of users are:
 Directed Information Seekers: They require specific, timely and relevant
information about the products and services being offered.
 Undirected Information Seekers: These users require something interesting and
useful. Something that can give them an edge, advantage, insight or even a pleasant
surprise.
 Bargain Hunters: They are of two kind. One who look for free items on the Online
and other who are seeking better deals, higher discounts etc.
 Entertainment Seekers: they see the Web as an entertainment medium of vast breath
and potential and want to explore the medium before the mass gets there.
 Directed Buyers: They want to buy something - now. They are sure what they
require and just log on to the Web to purchase the item.

The Evolving Value Propositions

The value propositions of goods and services offered in the physical world differ pointedly
from those in the digital world. The ultimate aim of the universal marketer is to provide a
complete end-to-end consumer experience---right from the promise to satisfy his need to its
delivery. But the physical world offers only “Point Solutions” which is basically a solution of
his needs in terms of functional benefits. A credit card, for instance, allows consumers to
satisfy the immediate necessity of setting a transaction. But today’s consumers are also
looking for process and relationship benefit---book referrals at no extra cost or e-mail
reminders. The physical world is not able to deliver these benefits because of gaps in time,

24
space and memory. The web, on the other hand provides all of these and more (“reverse
marketing, for example, where consumers seek out vendors rather than the other way
around”) by giving the company the ownership and control over all interactions with the
consumer.

The Evolving Risk Profiles

The on-line customer is not a fickle customer, but he is a risky proposition nevertheless. This
is because all his online experience will influence consumer perceptions about the brand. If a
consumer buys a product from a retailer and is involved in an unhappy purchase experience
at the store, he will punish the store. But if the same experience were to occur to him at the
company’s web site, the consequences would be disastrous for the company if he were to
share his experience though different user communities using a combination of chat rooms
and electronic mails.

The Evolving Supply Chain

The transformation being brought about the Web revolution is not limited to just the
consumer. The last few years have seen a flurry of suggested business models for doing
business in the Online era. Will the Online era signal the death of the retailer? Or will a new
intermediary come into existence? Technological innovations have made possible two
interesting developments---the Choice board system 2 and the Vertical Portal. Because
Choice boards are essentially design tools and conduits of information, companies that
produce the products need not control them. Dell uses a Choice board system to sell its
computers but there are others like Point.com that uses a Choice board to help customers
research and buy wireless phones and accessories. The market information that a Choice
board collects about customer preferences is absolutely enormous and if the manufacturing
company does not control it, the site offering the Choice board can emerge as a powerful
intermediary. Vertical portals armed with sophisticated search engines, which specialize in a

25
particular industry or product category, and provide customized information and promote
online community development are the next emergent intermediaries. The sophistication and
range of information collected on customer preferences will drive emergent business models.
The Web will thus facilitate the transformation of the companies form transaction supporters
to customer relationship managers.

Critical Success factors in E-Marketing

Having observed the evolving paradigms of business in the Online era, there are five critical
success factors that the E-Marketer has to keep in mind.
 Attracting the Right Customer is the first crucial step. Rising digital penetration
would mean that the number of customer visiting particular sites would inevitably go
up. While the number of eyeballs or page views has so far been conveniently used as
a satisfactory measure by most web sites, it would be foolish to cater to the whole
spectrum of digital visitors. Content has to be very target specific. The digital
company has to select its target segment by finding out which section of customers
are the most profitable in terms of revenue transactions and who are the customers
who generate the maximum number of referrals. Here again it is important to note that
the majority of online customers are not seeking the lowest price. Rather they are
seeking convenience above everything else. The power of customer referrals has
never been so enormous, since word of the mouse spreads faster than word of the
mouth. E-Bay attracts more than half of its customers through referrals. Not only do
referred customers cost less to acquire than those brought in by advertising or other
marketing tools, they also cost less to support since they use their friends who referred
them for advice rather than using the companies’ own technical desk.

 Delivering Content Value to engage the user’s interest is the critical importance in
retaining customer participation. This is because content serves as a powerful
26
 differentiator. Content would include Product enhancements (Software patches for
glitches), personalized interactions (through customized navigation paths as seen on
the web sites of GM and Toyota) and Problem Resolution (updates of delivery
schedules and e-mail responses). Integral to the concept of delivering proper content
value is innovation. The retail financial services industry, for example, is changing
rapidly with multiple players jockeying for position. Product innovation serves as a
key tool to attract new customers.

Priceline.com, for example, has revolutionized the travel and related services business by
letting in a form of “buyer driven business”----Customers specify their desired prices and
competing companies then bid for customer requirements. Delivering proper content to
make existing customers in the traditional “brick” business switch to Web-enabled
transactions makes a lot of sense because in every conceivable case, the cost of Web-
Based transactions is an order of magnitude less than the traditional ways and is
decreasing at a faster rate. The cost of an Online based banking transaction is less than
one-tenth the cost of a human teller transaction. It is keeping this aspect in mind that
Indian Banks have started toying with the idea of setting up Online kiosks to let their low-
value customers settle their banking transactions at the kiosk nearest to their place.

 Ensuring E-Loyalty is vital to the success of any online venture. This is because
acquiring customers on the Online is enormously expensive and unless those
customers stick round and make lots of repeat purchases over the years, profits will
remain elusive. Contrary to the general view that Web customers are notoriously
fickle, they in fact follow the old rules of customer loyalty. Web customers stick to
sites that they trust and with time consolidate their purchases with one primary
supplier to the extent that purchasing from the supplier’s site becomes part of their
daily routine. The issue of trust is integral to the issues of privacy and security.
Companies like Amazon.com, which command amazing levels of consumer trust,
have used a variety of encryption tools ad simple ethical decisions like not accepting

27
 money for publishers for independent book reviews to maintain the trust of its
customers.
 E-Learning to facilitate personalized interactions with customers has been the
biggest contribution of the Web to the marketing strategists. Customers in traditional
bricks-and-mortar stores leave no record of their behavior unless they buy something
—and even then the date might be sketchy. In the digital marketplace, however
technology has made the entire shopping experience a
 Providing Digital value to the evolving consumer through his life cycle has
become possible because of customized interactions and emerging business models.
These models have often disturbed the traditional status quo and created new rules of
business. The sectors where new business models will emerge or have emerged are
the music industry, the financial services industry, the travel industry, the relating

Changing patterns of Marketing

Traditional Marketing V/s Online Marketing

Marketing over the years more so recently has started being used interchangeably with
advertising. Now since the explosion of the Online; advertising paradigms have been
constantly changing.

The first Web advertisement was placed on the Hot Wired web site in October 1994. AT&T,
MCI, Sprint, Volvo, Club Med, ZIMA were the first to try it out and the Online advertising
has come a long way since then. Here, I would attempt to compare Online Advertising with
Traditional Advertising:
Let’s have a look:
Traditional Advertising:
 Traditional advertising is static.
 Space is not a restricting factor
 The proportion of advertising to editorial is high sometimes 50:50.
 Does not evoke immediate action.
 Response to the action is not immediate.
 Advertisements are passively received.
 Advertising does not always target a much focused audience.

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  Advertisements are ubiquitous.

Whereas Online Advertising :

 It is dynamic with multimedia- supporting text and graphics video sound all together.
 Space is a problem, as regards size of the banners etc.
 A web page would be 91% editorial and 9% advertising.
 Invokes immediate action as you at-least need to click on the ad.
 First response is immediate as when the user clicks, the person is directed to other
web page with more details.
 The user has high attention level and concentration while using the net, and hence
they notice the ad. (please refer the chapter)
 This can be much focused.
 Advertisements catch users when they are on the lookout for some thing. For example
the search is for travel on a search engine there are ads of travel agents on the net.
Thus we see that advertising is changing and so are the rules for advertising on the Online. So
while designing or formulating any advertising strategy for a brand on the Online a manager
has to take in to account factors like: -

1. The Online has made a huge impact on advertising. Companies should be careful as
regards joining the IT bandwagon. They should not advertise on the net just to project
themselves as a techno savvy company or maybe because their competitor is doing
the same thing. It should be a well-planned campaign full of specific information and
attention catching.

2. The 'net' charges are on the higher side (though there has been a steep decrease in the
rates in the last few months). Hence people would be wary of the fact that ads
consume a lot of online web time and hence they avoid clicking on average ads.
Therefore, advertises should be designed in such a fashion that they attract attention
and induce people to click on the net.

3. One more thing would be to generate 'search' specific advertising. This would mean
that if I give a search for books on the search engine, the ads displayed would be
related to the books.
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 4. Generally, people perceive the ads to be time consuming and full of unwanted
information. Care should be taken to design the ads in such a way that the information
they provide or the hyperlinks they provide to a site gives adequate and specific
information.
5. The ads and the subsequent information on the web site should be constantly updated
and highlighted in the ads and thus induce repeated clicks on the ad.

6. Last but not the least; the ads should be designed so as to attract attention of
maximum number of people and inducing them to click, failing to do so the advertiser
ends up defeating his own purpose.

The Channel Strategies for delivering Digital Value to customers

The Online era has shown that companies have risked damaging relationships in their
physical chain to compete in the electronic channel. The ubiquity of the Online the fact that
cross-linkages are possible to any degree, has meant that companies have usurped the role of
other value providers in the value chain to gain competitive advantage. When companies
pirate the value chain of the industry they are essentially eliminating layers of costs that are
build into the current distribution system. However pirating the value chain does not mean
that the number of intermediaries in the whole process would necessarily decrease. The
emerging economic structure of Electronic Business would mean that profits would lie in the
intermediate transactions rather than in the final sale of the good. Companies would aim at
cutting down their traditional margins (give up the cost plus pricing structure) and aim at high
inventory turnover. In retailing profitability is primarily.

The challenge will lie in managing these multiple channels of experience

It is likely that most companies will find that they will have to integrate several distribution
channels to provide the customer with a seamless purchase process. The key challenge is thus
to ensure that the personalized nature of the experience is not much different across channels.
Can an Online bookseller allow its customers to experience the same ambience on the net as
it does in the bookstore or vice-versa? If it cannot then companies will face friction among
the alternative distribution channels and the already established physical channel might
complain about its profitability being affected by digital purchases. This may be typified by
30
friction between vehicle dealers and the company over orders trough an auto company’s Web
site. Complementary to the problem of managing multiple channels of distribution is the
development of infrastructure needed to support such a distribution network. The billing
system and pricing strategies have to be properly frames and executed

INDUSTRY AND COMPANY PROFILE

31
 Amazon’s competitive advantage over the e-business industry is due to several key

factors: The three variations of types of customers made up of consumers, sellers, and

developers, low-cost operations, and customer loyalty. The wide economic moat that Amazon

possesses is supported by the combination of these key components and Amazon’s relative

small asset business model yielding in high returns on capital. In our valuation we will show

various ratios and projections to properly value AMZN.

Low-cost operations are the primary advantage that keeps it on top of its competitors.

Throughout the early years of Amazon, its revenue was mainly composed of selling products

such as books, DVDs, CDs, movies at very low prices in order to compete in its industry, e-

business. This created losses through the starting cycle of the company as it struggled to find

its distribution network. Later on as its distribution network became solid, the costs of

maintaining this type of network became lower than actually maintaining a physical

warehouse which in turn generated profits.

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 Amazon differentiates from its competitors by providing quality, convenient, and

user-friendly services through low prices. Also, customer reviews, product recommendations,

and wish lists are other unique features of Amazon that call the attention of online shopping

customers. The ability for sellers to sell their products at Amazon.com or to use Amazon to

fulfill their orders and the ability for developers to use technology infrastructure through

Amazon Web Services drives in more customers and revenue for Amazon. By these, Amazon

gains more ground to be familiarized with online purchases than its leading competitors.

Throughout the years, the industry barriers have increased for other competitors to join the

industry. However, it faces competitors in different areas in retail, e-business services, digital

media devices and digital content, and web services. In the digital content and digital media

devices industries, Amazon has developed its Kindle e-reader but Apple has sliced into

Amazon’s market share through the iPad only leaving Amazon to lower its prices for the

Kindle or to develop a better digitalized format for books. Even though their margins will be

minimized by increased competition, it should still increase revenue due to volume growth

not just for the Kindle itself but for the e-books that they will be selling at a low cost.
33
COMPANY PROFILE
Amazon.com was founded and launched by Jeff Bezos in 1994 as an online bookstore

headquartered in Seattle, Washington. The company quickly diversified by adding a

multitude of different product categories including movies, music, games, digital downloads,

software, electronics and computers, home and garden, toys, grocery, apparel, shoes, health

and beauty, and much more. Now a Fortune 500 company, Amazon was one of the first

companies to sell goods over the internet. Due to Amazon's broad range of products, they are

now a leading global internet company and one of the most trafficked internet retail

destinations worldwide. Amazon provides to the international market through various retail

web sites including amazon.com, amazon.co.uk, amazon.de, amazon.fr, amazon.co.jp,

amazon.ca, and amazon.cn. Amazon strives

To be the world's most customer driven company by providing customers more of what they

want- low prices, vast selection, and convenience. In 2007, Amazon released the famous e-

reader “Kindle”, which allowed for users to download reading material by internet. The e-

34
reader has a feel of reading from an actual book, by using magnetized ink instead of a LCD

display.

Macroeconomic and Industry analysis:

Amazon is a competitor within various industries such as music, video, book, and

entertainment retail; business services; advertising and marketing; commercial printing; copy

centers and online printing services; retail and most specifically online retailing. Within the

highly competitive retailing industry, Amazon's top competitors include EBay, Barnes &

Noble, and Wal-Mart. Each of these competitors competes with Amazon in a particular way.

For instance, Wal-Mart is known as a "one-stop shop" as is Amazon.com. Both companies

aim at offering their customers' the lowest prices available. Wal-Mart also features a website

containing a widespread selection of products beyond what is offered in stores. Nevertheless,

Amazon.com attracts twice as many visitors to its U.S. website annually; approximately 65

million customers per month.

Another competitor, EBay, is similar to Amazon in that consumers can go to the site

to find anything they have ever wanted and have it shipped right to their front door. The

difference is, with Amazon third-party sellers do not have to maintain separate payment

accounts; that is all payments are handled by Amazon. This is more convenient for customers

not having to go through the seller for returns or money back.

35
 Barnes and Noble is the number one bookseller in the U.S. operating about 1,355

bookstores in all 50 states. They also have an e-bookstore, barnesandnoble.com, which

features more than 1 million titles but only accounts for 10% of their overall revenue.

However, Barnes and Noble do not offer the widespread selection of products that Amazon

does. They compete with Amazon in a number of industries including music, video, book and

entertainment retail; media; publishing; and internet retail.

It is safe to say that as the economy advances through financially hard times, the

survivors in the retailing industry will see a major boost in sales going forward. Consumers

are feeling more confident in their spending patterns but are still in the market for the lowest

prices. Amazon provides customers the assurance that they are getting the best deal in the

convenience of their own home. They work hard to maintain a complete customer satisfaction

which results in return visitors.

Company Analysis and Major Product Prospects:

Amazon realized early on that to succeed as a big company they would need to

differentiate themselves among competing firms. That is when they expanded their product

categories and essentially their customer base to reach a broader market. And as technology

advances, Amazon has found a way to take advantage of new developments. Amazon

launched an e-book reading device in November of 2018 called the Amazon Kindle. As of

today, the Kindle has access to the largest selection of books including over 630,000 titles.

Amazon claims that the Kindle can carry up to 3,500 books wherever you go. Now at $169-

$189, the Kindle sales have tripled within the last month. The company announced in July

2010 that the e-book reader has outnumbered sales of hardcover books for the first time.

36
 The Kindle has some heavy competition with Barnes and noble’s Nook e-reader

entering the market as well as Apple’s iPad which has sold more than 3 million since it’s

April release. Amazon must rely on customer reviews, word of mouth, and different

marketing tactics to continue selling the Kindle on the retail site. This is actually a

disadvantage for them when compared to the Nook and the iPad because potential customers

can go into an Apple store or a Barnes and Noble and see these devices and touch them and

experiment with them before committing to a purchase. But the Kindle does not have the

luxury of being displayed on a physical store front.

Financial Analysis

When analyzing securities, financial statements identify areas of opportunity as well

as recognizing weakness within different areas of a company. Modern technology with the

ability to research public company financials, allows us to identify the financial health of the

company and help forecast the future. Important formulas for identifying a company’s

stability are current ratio, P/E Ratio, and yearly percentage of increase for Margins. Revenue

will also be analyzed and projections will be made for the next five years.

During the 2000’s, Amazon has shown both a steady increase in revenue and profits.

Comparing 2009 over the year 2000, Amazon has shown an increase in revenue of 787%

with last year totaling to 24.5 billion. Their average yearly increase in revenue is 24.87%

during this time period over its prior years. Gross margins in dollars have also steadily

increased an average of 22.98% from prior years during this period with a high of 36.52% in

2007, 27.35% in 2008 and 29.53% last year for 2009.

Amazon is the largest online retailer in the world with 52% of its sales in media

including books, movies, music, and video games. Even with the size that comes with 20%

plus revenue growth year after year, this company will continue to post strong revenue

37
increases by expanding their market share and various categories of product lines. What we

would like to see is a higher operating income with this continued growth. As noted in the

graph below, we see the operating income reached a personal high in 2004 of 6.4% and has

not been over 5% since 2005. With these low operating margins we still consider Amazon as

financially viable with inventory being turned over at a tremendous rate. This high rate of

turnover with exceptional customer service will allow Amazon to continue to be in great

shape financially.

In regards to dividends, Amazon has yet to distribute these earnings to shareholders which

allows for them to re-invest within the company allowing for increased growth for years to

come. We see this lack in dividends as a positive, while Amazon expects high returns for

projects being planned; it would be counterproductive to release these earnings. Also, this

shows the company is more likely able to re-invest the money versus if you received the

money in form of a payment and re-invested it yourself. Two well established companies that

do not pay dividends include Google and Apple, which do the same by re-investing within

the company for future projects that yield a higher return. A value to shareholders not

receiving dividends from a company is not having the liability of paying current year taxes,

and taxes not being paid until the actual shares are sold.

P/E Ratio is the price per share divided by the earnings per share. This ratio is

valuable since it allows you to project whether a company expects an earnings growth in the

future. A higher P/E ratio is interpreted as having expected better earnings in the future,

where a lower P/E ratio is interpreted as having expected lower earnings in the future. This

information allows the investor to compare and evaluate a certain stock compared to others
38
within the industry. Below are listed P/E Ratios for comparing Amazon, Barnes and Nobles,

and EBay. Amazon has a much higher P/E compared to its competitors who signify

opportunity for growth and earning

P/E Ratio AMZN BKS EBAY Industry

P/E (ttm):

48.5 20.4 11.06 27.6

To measure the company’s market value against its cash flow, a price to cash flow ratio is

used. It is calculated by dividing the company’s market cap by the operating cash flow in the

most recent fiscal year or the most recent four fiscal quarters. One can equivalently divide the

stock price per share by the operating cash flow per share. When calculating this ratio one

can determine if the stock is of better value. The lower a stock’s price to cash flow ratio, then

usually the stock has more value because of the increased amount of cash flows. Also as the

price of Amazon’s securities go up, then the ratio will get bigger, and P/C ratio becomes less

39
valuable. Still an excellent stock for long term growth with expected growth of over 20% for

next 5 years.

DATA ANALYSIS AND INTERPRETATIONS

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Questionnaire on Online Grocery Store

Name:

Gender:-

□ Male
□ Female

Age:-

□ 18-24
□ 25-30
□ 30 and above

Occupation:-

□ Student
□ Service
□ Business

Income Level:-

□ 1 lakh –5 lakhs
□ 5 lakhs –10 lakhs
□ 10 lakhs and above

Q1. Which item you shop online?

41
 □Apparels
□Books
□Electronics
□Food
□Games
□Music
□Any other(Please specify)

Q2. How much money do you spent in online shopping? (Rupees)

□100 –500
□500 –1000
□1000 –5000
□5000 & above

42
 Q3. When do you feel the need to shop online?
□When I need home delivery
□When I want something unique and special
□When I need to compare prices
□When I don’t have the time to find
□Any other(Please specify)

Q4. What features in online shopping website attracts you?

□The design of a website
□Discounts offered
□Advertisement
□Variety
□Value for money
□Any other(Please specify)

Q5. While shopping what affects your satisfaction the most?

Feature Very important Somewhat important Not important

Design
User friendly
Adequate search option
Product assortments
Payment options
Cash on delivery
Net banking
Debit/ Credit Cards
Product Options
Offers & Discounts
Free Shipping
Security
Id & password
Order confirmation screen
Delivery
Tracking of items

43
 Q6. What are your issues regarding online shopping?
□No guarantee
□Possibility of forgery
□Product highly priced
□Too much clutter
□Security issue
□Physical examination
□Any other(Please specify)

Q7. Where do you shop for grocery items?

□Local Kirana
□Ration Shop
□Sabzi Mandi
□Supermarkets

Q8. Tick more than one parameter for the particular shopping place
regarding why you choose certain grocery shops for shopping?

Shopping Parameters
Places Price Quality Variety Proximity to home Discounts/Offers
Local Kirana
Ration Shop
Sabzi Mandi
Supermarkets

Q9. If given an option to buy grocery online will you buy online?
□Yes
□No
□May be

Q10. Do you think buying grocery online is beneficial?

□Yes
□No

Q11. If yes, why do you think is beneficial?

□Easy to order
□Variety at one shop
□Discounts & offers
□Saves time
□Avoid long queues
□Any other(Please specify)

44
45
Data Analysis
Personal Information:

Gender:

Gender
Male Female Total
90 110 200

Gender
Male Female

45%
55%

Illustration:

The above diagram depicts that out of the total 200 respondent 55% of the respondent were
female as the objective was to study the consumer behaviour with respect to online grocery,
as grocery is more shopped by female respondent.

46
Age brackets:

Age
18- 25-
24 30 30 & Above Total
75 50 75 200

Age brackets
18-24 25-30 30 & Above

38% 37%

25%

Illustration:

 The 38 % of the respondent were among 30 & above age bracket as

these respondents are well educated and web savvy.

 Another 37% of the respondent were ranging from 18-24 age bracket and the
remaining 25 % were respondent were ranging from 25-30 age bracket, as these
respondents are ready to adapt changes.

47
Occupation:

Occupation
Service Business Total
119 81 200

Occupation
Service Business

41%

59%

Illustration:

For the research to be successful most of the respondent are working officials who are
educated and web savvy

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Annual Income Level

Annual Income Level

1-5 Lakhs 5-10 Lakhs 10 & above
76 82 42

Annual Income Level

1-5 Lakhs 5-10 Lakhs 10 & above

21%
38%

41%

Illustration:

From the above pie chart we can determine that 41 % of the respondent have around 5-10
lakhs of annual income which indicates majority of the respondent have spending power to
purchase grocery items.

49
Q1. Which item you shop online?

People may select more than one checkbox, so percentages may add up to more than
100%.

Apparels Books Electronic Food Games Music Other

39 48 46 9 16 47 5

Items sold online

60

50

40

30

20

10

0
Apparels Books Electronic Food Games Music Other

Illustration:

 The above diagram depicts that book has the highest number transaction in online
shopping.
 Music is the second most item sold in the online shopping, along with electronics
appliances like hair dryer, mobile appliances, computer peripherals etc.
 The other items that are sold in the online shopping are the apparels which are more
preferred by the female respondent.
 Games are the items that are preffered with the respondent ranging the age bracket
between
 The other items which are sold online are such as flowers, gifts and movie tickets.

50
Q2. How much money do you spend in online shopping?

1000- 5000 &

100-500 500-1000 5000 above
12 28 53 7

Money Spent in Online Shopping

100-500 500-1000 1000-5000 5000 & above

7%
12%

28%
53%

Illustration:

 The money spend in online shopping is ranging from INR 1000-5000, which
indicates the users are willing to pay more price when there is premium quality
products such as electronics, branded apparels, original music etc.

51
Q3. When do you feel the need to shop online?

People may select more than one checkbox, so percentages may add up to more than
100%.

When I want When I When Ihavedon

something need to the time to find
When I need uniques & compare things in different
home delivery special prices markets other
71 39 43 42 1

Need to Shop factors

80
70
60
50
40
30
20
10
0
When I need home When I want When I need to When I don’totherhave
delivery something uniques compare prices the time to find
& special things in different
markets

 Illustration:
 From the above we can depict the factor which motivates the respondent to shop
online is when they need home delivery.
 The other factor which motivates to shop online when they compare prices of
different products at a same place.
 The above graph also determines that peop time to find things in the market for the product
 Also respondent shop online when they want some unique & special product which
they cannot find in the offline market.

52
Q4. What features in online shopping attracts you?

People may select more than one checkbox, so percentages may add up to more than
100%.

Design of Discounts Value of

website offered Advertisement Variety money
33 77 39 59 29

Online Shopping attraction factors

90
80
70
60
50
40
30
20
10
0
Design of website Discounts offered Advertisement Variety Value of money

Illustration:

 From the above diagram we can determine that people prefer online shopping when
discounts offered are offered to them.
 Also the variety of product offering to the customer also forms an important factor
which motivates the respondent to shop online.
 The other factor that motivates the user to shop online is when the product they
purchase is of value of money.
 Also the design of website along with the different advertisement promotion
motivates the user to shop online.

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Q5. While shopping what effects the satisfaction the most?

Very Somewhat Not

Important Important Important

Website User Friendly 78 19 3

Adequate Search Option 46 53 1

Product Assortment 44 54 2

Cash on delivery 69 26 5

Net banking payment 48 45 7

Credit/Debit Card payment 42 52 6

Offers & Discounts 77 22 1

Free Shipping 78 20 2

Id & Password Confirmation 47 46 7

Order Confirmation Screen 53 44 3

Tracking of items 53 38 9

54
Illustration:
 The above diagram depicts that website user friendliness forms an important factor
when it comes to online shopping, more the website user friendliness will determine
more number of visits on a website which will in turn results an increase in the sale
truncations for the particular shopping site.

 Adequate search option is the search bar which is used by the user to search for a
particular type of product in the website. The above graph depicts that user feels that
adequate search bar form neither important nor unimportant part of the online
shopping website.

 Product assortment in a online shopping website helps the user to easily track the
product they are willing to buy. Eg. In apparels category products can be assorted in
categories like male & female, jeans or tops, salwar, kameez etc. From the above
graph we can determine product assortment form neither important nor unimportant
part of the online shopping website.

 Cash on delivery forms an important aspect of the online shopping website in Indian
online shopping market, the above graph depicts that it does forms an most important
part on the online shopping.

 The other mode of payment gateway through net banking and credit/debit banking
also forms an important part of the online shopping website.

 The above graph depicts that along offers & discounts, free shipping also forms as
the most important factor for the online shopping website, which forms a motivating
factor for the user to shop.

 When it comes to security aspect of the website Id & password forms an important
aspect of the online transaction. The other aspect order confirmation is the like the
shopping cart where the user gets the list of items he/she is going to purchase which
avoids unnecessary purchase of the product , also forms an important part of the
online shopping website.

 When it comes to tracking of items service in online shopping most of the

respondent think that it is an important service which allows the user to track their
items in transit.

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Q6. Issues regarding online shopping

People may select more than one checkbox, so percentages may add up to more than 100%.

Product
No Possibility highly Too much Security Physical
guarantee of forgery priced clutter issue examination
26 19 8 17 44 74

Issues of Online Shopping

80
70
60
50
40
30
20
10
0

Illustration:

 The above data determines that physical examination that is the tangibility of the
product is the important issue when it comes to online shopping.

 The other factor which demotivates the user to shop online is the security issue,
which consists of issues like phishing, hacking of accounts etc.

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Q7. Where do you shop for grocery items?

People may select more than one checkbox, so percentages may add up to more than
100%.

Local
Kirana Ration Shop Sabzi Mandi Supermarkets
34 12 20 85

Shopping Centres

90
80
70
60
50
40
30
20
10
0
Local Kirana Ration Shop Sabzi Mandi Supermarkets

Illustration:

 The above graph depicts that most of the respondents shop from supermarket for
grocery items. The reason for shopping from the particular shopping centre can be
depicted below.

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 Q8. Parameters for shopping grocery at a particular shop.

People may select more than one checkbox, so percentages may add up to more
than 100%.

Price Quality Variety Proximity Discounts/Offers

Local Kirana 47 34 22 85 25

Ration Shop 63 23 33 36 29

Sabzi Mandi 47 50 64 34 26

Supermarkets 65 77 80 58 73

Illustration:

 The above graph depicts that, when it comes to price factor people prefer to shop
from supermarket and ration shop as these shopping centres offers grocery items
at wholesale prices.

 User prefers to shop from supermarket when it comes to the quality of the product.

 When it comes to availability of variety of grocery items offered at a particular

centre, user prefer supermarket centre of shopping.

 From the above graph we can determine that user choose local kirana stores for
shopping grocery items as they are proximate to their home.

 User prefer supermarket to shop grocery items as they offer more discounts &
offers compared to the other shopping centres.

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Q9. If given an option to you buy grocery online will you buy?

Yes No Maybe
37 28 35

Option to buy grocery online

Yes No Maybe

35% 37%

28%

Illustration:

 The above graph depicts that around 37% of respondent are willing to buy grocery
online if the option is given.

 The remaining percentage of the respondent may or may not buy grocery online due
the factors like physical examination and security issues.

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Q10. Do you think buying grocery online is beneficial?

Yes No Total
116 84 200

Beneficial
Yes No

42%

58%

Illustration:

 The above diagram depicts that most of the respondent think that buying grocery is
beneficial which can be determined from the next question.

 The remaining respondent thinks that online grocery shopping will be not beneficial
due the factors like forgery products, highly priced products and no guarantee of the
product.

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Q11. If yes, why do you think is beneficial?

People may select more than one checkbox, so percentages may add up to more
than 100%.

Easy to Discount & Saves Avoid long

order Variety Offers time queues
46 39 35 71 58

Beneficial Factors
80
70
60
50
40
30
20
10
0
Easy to order Variety Discount & Saves time Avoid long
Offers queues

Illustration:

 The above graph depicts that user respondent think that online shopping
will be beneficial as it will save their time to shop for grocery items.

 The next relating aspect why consumer will shop grocery online as it will
allow the user to avoid long queues resulting in reduction in time spent in
shopping.

 The other factors why online grocery shopping will be beneficial as it will
allow the user to shopall the grocery at a particular place with discounts and
offers.

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 FINDINGS AND SUGGESTIONS

The following are a few things an Online marketer can do to maximize the potential of

his website: -

 Domain Fault Repair – This function directs the web visitor to the right site after
she/he potentially may have typed in the wrong Online address.
 Site Customization: - One of the web-based CRM most important advantages is the
volume of information available to the browsing customer. Unfortunately, the sheer
volume of information can be one of the weaknesses of web-based CRM design. Sites
that offer customization features allow user to filter the content they see. The future
of truly web-based CRM will be the completely “one-to-one” web sites. When
properly customizable on the first visit, the customer on a next entry can choose to
see only his/her own preferences. (Example: yahoo.com; my yahoo)
 Alternative Channels – Different ways to contact the company are offered, for
instance, Email, Fax toll-free numbers, Postal Address, Call back button and Voice
over IP.
 Local Search Engine – Allows the visitor to search on key words to quickly locate
specific answers on the website.
 Membership – The visitor can request a password. With this password he can
continue surfing on password protected web pages within the website.
 Mailing List – To receive more information, the visitor can add his/her email address
to a list to receive automated emails.
 Site tour – The visitor can follow a tour through the website.
 Site Map – This is a hierarchical diagram of the pages on the website, also called a
site overview, site index, or site map.
 Introduction for First-Time Users – Visitors, who enter the site for the first time,
can surf to an introduction page. This page contains information about “How to use
the site most efficiently”
 Chat – A main advantage of the Online is its self-generating advantage. By allowing
visitors to interact with each other and with the site, they create content for the site.

62
All this will help build a relationship with the customer and it will ultimately help the
marketer to achieve his objectives.
Online has opened up new avenues for reaching the consumer. It is true that there
is never a fixed way or strategy that a marketer can use to market its products and
services on the Online but it is still very much an arena where creative thinking can take
the company reach new heights. Thus we can say that marketing has not changed its
shape. It is the same, unpredictable, unusual and creative field that needs constant change
and open inputs that can work wonders for the company.

63
CONCLUSION
Benefits of online Marketing
online Marketing is a hot topic especially in these days of instant results. The reason why
i-marketing has become so popular is because they provide three major benefits to
potential buyers:
1. Convenience: Customers can order products 24 hours a day wherever they are.
They don’t have to sit in traffic, and a parking space, and walk through countless
shops to find and examine goods.
2. Information: Customers can find reams of comparative information about
companies, products, competitors, and prices without leaving their office or
home.
3. Fewer hassles: Customers don’t have to face salespeople or open themselves up to
persuasion and emotional factors; they also don’t have to wait in line.

Online Marketing also provides a number of benefits to marketers:

1. Quick adjustments to market conditions: Companies can quickly add products
to their offering and change prices and descriptions.
2. Lower costs: On-line marketers avoid the expense of maintaining a store and the
costs of rent, insurance, and utilities. They can produce digital catalogs for much less
than the cost of printing and mailing paper catalogs.
3. Relationship building: On-line marketers can dialogue with consumers and learn
from them.
4. Audience sizing: Marketers can learn how many people visited their on-line site
and how many stopped at particular places on the site. This information can help
improve offers and ads.

Clearly, marketers are adding on-line channels to find, reach, communicate, and sell. I-
marketing has at least five great advantages. First, both small and large firms can afford
it. Second, there is no real limit on advertising space, in contrast to print and broadcast
media. Third, information access and retrieval are fast, compared to overnight mail and

64
even fax. Fourth, the site can be visited by anyone from any place in the world. Fifth,
shopping can be done privately and swiftly.

The Online is a powerful tool for strengthening relationships. By offering customers

content and time value, E-Marketing has opened new vistas for marketers. The greatest

feature of the digital economy is that it enables the E-Marketer to eradicate man

traditional barriers before entering new markets. These barriers include economies of

scale and geographic positioning. The innate strength of an E-Market comes not from the

seamless flows of goods and services from the producer to the customer but in the

geometrically increasing returns from converging ideas and technological change the

strength of online communities has never been so great, and companies have used them

to develop new markets. Notice how Linux distributed free on the Net has been able to

build up a faithful customer base. Ultimately here also the marketer has to realize that

nothing sells as well as a good product. But the beauty of the Online is that it offers

constant opportunities for product enhancement based on continuous customer feedback.

Companies who have tuned their business processes to incorporate these customer

responses have been able to leverage the power of the Web to gain competitive

advantage.

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BIBLIOGRAPHY

Books
Marketing Management – Philip Kotler
Marketing.Com – Vijay Mukhi
E-Business Essentials- Matt Haig

Magazines
Business Today -March3, 2002 subscription

Articles
Economic Times- December 18, 2001
Indian Express-September 3, 2000

Personnel
Mr. Vikram Kumar, Director, MAQ Softwares (Project Guide)
Mr. Jeetu Chimnani, Chief Executive Officer, J-Info

Websites
www.rediff.com
www.hungama.com
www.fabmart.com
www.j-info.com
www.marketingterms.com
www.Onlineworldstats.com

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