Marketing on the internet

Updated January, 2006					File C5-34

Mary Holz-Clause, Co-Director, Ag Marketing Resource Center, Iowa State University, 515-294-0648, mclause@iastate.edu

If you are not on the Web, you are probably not serious about marketing. Harsh words? Yes - but the Web is how and where the world today conducts business. You need to have a Web presence, and depending on your product line, you may also need to be selling on the Web.

Listed below are some guidelines and thoughts for Internet marketing.

Phases of Internet Development

Value-added agricultural businesses are increasingly using the internet to market food products. There are three phases that small- to medium-sized companies often go through in their Internet development.

Brochure-ware sites: Companies use the Internet primarily to advertise products. The firms gather customer prospect information and provide customer feedback and information requests.
Pre-commerce sites: Firms use the Internet to create immediate orders off the Internet. However, on-line transactions are not part of these sites.
Simple commerce sites: In this advanced stage of e-commerce, businesses accept orders and payments over the Internet. However, the sites are often primitive compared to bigger company sites with little in security features.

Types of On-Line Marketing

On-line retail marketing is divided into three categories based on the type of goods purchased.

Convenience items: Low cost items such as books, music, apparel and flowers. Product selection and ease of shipping will keep customers ordering.
Replenishment goods: Items included are high frequency purchases like groceries, personal care, prescription refills and specialty foods. With the exception of specialty foods and refills, consumers will be slow to adopt this purchasing mode due to distribution issues.
Research purchases: These are information driven purchases, such as travel arrangements, computers and automobiles. Airline tickets are the most often purchased item over the Internet.

Consumers usually start by ordering convenience items and then, after about a year, move to the next category of items. Most value-added food businesses fall in the second category. So, consumers purchasing these products over the Internet usually will already be using the Internet to purchase convenience items.

When to Consider a Web Site

When is Web site development something to consider using in your marketing strategies? Ask yourself some questions similar to those you must ask to develop your overall marketing strategy.

What percentage of my customers and potential customers use computers, the Internet and Internet selling/buying mechanisms (E-commerce)?
Do I/we wish to use the Web as an avenue of sales, information or both in reaching customers?
Where are my customers located? What geographic areas do I want to add to my customer circles?
What is the competition doing? Will a Web site alter perceptions about your company compared to perceptions about other companies doing similar things?

If you wish to conduct sales activity through your Web site, there are other things to consider as well. You will have to have in operation a means by which to receive payment (credit card, purchase order, etc.), since no cash or checks can change hands. People use E-commerce to speed up the process of making purchases. Are you able to deliver? Is staff available to process orders in a timely way? Are you up to speed on requirements for shipping in response to Web-based purchases?

If your customer base is local, a Web site may be of less value to you. Your time may be spent more productively in dealing with these customers through printed messages, local advertising and one-on-one associations. If you are trying to increase sales to a broader area regionally or nationally - and you have sales and shipping details worked out - a Web site may be of more value to you. If you are looking at International sales, it is a strategy that is necessary.

In some cases, your product sales increases will depend on a learning curve among potential buyers. For example, perhaps your food product is one that is becoming known for health value or for its value in an eating trend of another type. A Web site may be a way to increase knowledge (again consider the geographic factors) among the public. Web browsing has become a favored, fun activity for many, especially the young (who are the longer-term customers). You can put information about benefits, ways of using a product, trend growth, etc., on your Web site that will in a broad way emphasize why buying your product is a good thing to do. Throughout much of agricultural production, increasing public awareness and knowledge is considered critical to future business.

Where a Web site is linked is as important as using lively graphics on it. If you decide to proceed with developing a site, consider how a customer will come across the site if the exact site address is not known. These “hyperlinks” are critical for expanding image and sales, but don’t mean as much to existing customers. You will have already let them know exactly where to go to find you on the Web.

Advantages and Disadvantages

As highlighted in various studies, advantages and disadvantages of Internet use by companies are:

Advantages

Allows small companies to compete with other companies both locally and nationally.
Creates the possibility and opportunity for more diverse types of individuals to start a business.
Offers a convenient way of doing business transactions, with no restrictions on hours of operation.
Offers an inexpensive way for small firms to compete with larger companies by their products available worldwide.
Provides higher revenues for small companies using the Internet.

Disadvantages

Need to manage upgrades.
Need to assure Web site security.
Avoid being a victim of fraudulent activities on-line.
Cost required to maintain a site.
Difficulty finding qualified consultants.
Difficulty fiinding and retaining qualified employees.
No market for old computers.

Marketing Considerations

Producers considering marketing over the Internet should consider some of the following:

Businesses successful on the Internet are often those that are unique, commonly used and affordable.
When marketing livestock on the Internet you must be slaughtering and processing from a federally inspected plant, unless you only sell to clients in your state.
Unique businesses succeed on-line only if people can find them.
Promote your Web site by submitting it to several search engines repetitively and linking with other high traffic related Web sites.
Link (with permission) to many applicable Web sites, but be cautious about having too many links that quickly redirect consumers away from your site.
Don’t link to your competitors, but check out your competitors’ Web sites.
Promote your Web site off-line by sending out cards and putting your Web address on every promotion piece.
Find a reliable service.

Going On-Line

If you are ready to go on-line you will need:

A computer with a modem. The modem needs to be fast enough to handle the Internet or e-mail and to perform desktop publishing.
Consider a second phone line to avoid busy signals while you are on-line promoting or researching your Web site. The cost for this second line will vary according to your local system.
Consider a toll free number - a risk-free way for potential customers to inquire.
A user-friendly e-mail program (such as Microsoft Outlook) to manage client contact.

Designing your Web Site

Hiring a professional Web site designer is often a good idea. Before doing this, check references and on-line work samples. Do-it-yourself design programs can be limiting and may create Web sites that look like many others. If you choose to hire a designer, here is what he/she will need to create an effective Web site.

Photographs representing your products and/or services.
Any printed material such as business cards, brochures and catalogs are helpful for formatting and content.
A storyboard that gives an idea of how many pages are needed and what each page should be about, as well as what you like and dislike.

Source: Yankee Group, Forrest Research Inc.