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THE WIGAN & LEIGH COLLEGE (UK)

USE OF INTERNET AS A MARKETING TOOL AND THE CONSUMER BEHAVIOR TOWARDS

INTERNET MARKETING/E-COMMERCE IN SRI LANKA

BY

Mohamed Azri Mukthar

A Dissertation submitted to

Wigan & Leigh College (UK) in

Fulf il l ing the requirements for

The Postgraduate Diploma in

Marketing

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PGD/110/09/03

Copyrights 2010/11 by

Azri Mukthar

All rights reserved.

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ACKNOWLEDGEMENTACKNOWLEDGEMENTACKNOWLEDGEMENTACKNOWLEDGEMENT

Writing this book has taken a tremendous amount of cooperation from friends, colleagues

and many anonymous participants. The responses which I received for my questionnaire

and few other surveys from ninety percent of the people from all the areas I have short

listed provided a depth of information about the dissertation which is exceptional. I am

heartily thankful to my lecturer in Research Methodologies, Mr Niaz, who provided me

the knowledge in carrying this research out successfully and compiling this report. I am

indebted to the 124 respondents to the questionnaire and to the individuals who

participated in surveys and focus group discussion about their experiences in the topic of

my relevance.

Most of all, I am indebted to my family and friends who nudged me when I needed it, and

celebrated with me when I was done. These included my parents Mr. & Mrs. Mukthar for

understanding the task that I have taken, my little sister for sacrificing her time with my

computer, and my wife Bazeeha Kaleel for providing me the necessary motivation and

most of all the required time I needed to complete this dissertation..

I am so happy to arrive at this day when I feel like I have done the best I can— and await

your comments and suggestions.

Azri Mukthar

January 2011

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CONTENT

ABSTRACT

INTRODUCTION

LITERATURE REVIEW

RESEARCH METHODOLOGIES

DATA COLLECTION & ANALYSIS

CONCLUSION & RECOMMENDATIONS

REFERENCES

APPENDIX

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ABSTRACT

In this descriptive dissertation we will be looking at certain critical questions the

consumers comes up with when considering purchasing online or responding to the

online marketing models & methods. We will look into concerns the consumers have

when purchasing online and the criteria that they look into before they make a move.

Also, we will be derive as to which internet marketing method reaches out the right kind

of prospect at the right way the most and what are the pull factors that trigger a visitor

being a consumer.

The ways in which we have gathered the actual data were through observing certain

organizations. Then, we distributed questionnaire based on the project and collected the

replies from individuals and as well as from organizations for analysis. Also, as a backup

we have conducted a focus group with some individuals who has experience in online

purchasing and are literate in E-Commerce. This provided the luxury to fine tune my

research and data.

Based on the details provided, we had plenty of contrasting information which were

compared to one another. There were enough data to prove the increase in online sales in

Asian countries and specially Sri Lanka. Many customers are prone to do shopping online

while the majority are still getting used to the trend. But still, we have found there are

many opportunities that organization has ignored without making use of them. I have also

discussed some of the recommendations for organization who aspire going online or

having a website and is looking for a change towards success.

And, simply this is not just a dissertation where major work has been duplicated but since

the details and the literature that is relevant to my dissertation is extremely scarce I could

state that this is an effort that I made to fill some vacuum and to provide a better insight

to Sri Lankans who are interested in Internet Marketing & E-Commerce.

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INTRODUCTION

CONSUMER BEHAVIOR

The term consumer is probably a term often used in the discipline of marketing. And,

studying about consumer behaviors has been quite popular in the past few years as it is

observed that given the same inputs at different occasions, consumers could make

completely different purchase decisions. It is very important that a marketer understands

the buying behavior of his/her consumer in order to be successful in segmenting,

targeting, positioning and selling their products/services.

Philip Kotler explains that consumers go through five steps in buying process.

Let me explain the process for better understanding. The purchase of a microwave is an

important decision in the modern household. The need for a microwave is recognized,

when time pressures impact the smooth work flow in a household. The need may be

identified by the housewife and agreed by the rest of the family. Once the need is

recognized, an active information search is carried out by the entire family or otherwise.

Information regarding the types of microwave, brands of microwaves, payment terms

etc., will be aggressively sought. Based on the information obtained, an evaluation

process of the various options has to be carried out. The greater the choice the harder the

evaluation would be. Thereafter, a decision has to be made namely, to purchase or not to

purchase or to postpone the idea of purchasing. We should understand that the

postponement of purchase is also a decision. If the decision to purchase has been made,

then an evaluation after purchase is carried out and is referred to as a post purchase

evaluation. Often this evaluation is satisfactory if the product and brand purchased,

delivers its basic promise and satisfies the consumer.

The above example is a traditional way of thought process that everybody would go

through when thing of purchasing something. Same mechanism would be gone through

when an individual considers purchasing online, but with some difference in their

technical aspects. There are many external influences on this buying process ranging

from advertising and promotional messages, prices, payment terms, product features,

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brand messages, opinions of brand performance etc., Therefore, if it is an internet-based

organization in order to market a microwave effectively, the purchase process must be

clearly understood. The greater the understanding, the more accurate will be the stimulus,

provided to the consumers.

SRI LANKA EMBRACING IT

Ceylon or Sri Lanka which is the new name is an island in the Indian Ocean. Sri Lanka is

also known for its high literacy rate which boasts about its 91% high ratio compared to

India (point 1). But until late 90s, Internet was an alien to Sri Lankan. They found less

use of internet and the way around it either. Sri Lanka found internet versatile more later

than of many of the countries around the world. Internet became popular in Sri Lanka

only after 2000. Until then we were happier and less curious about internet.

Now things have changed. Living in Sri Lanka in 2010, you could witness internet and

the impact of information technology in each and every industry. According to the World

Bank statistics, 8.3% of the population has continuous access to Internet which is

1,776,200 Internet users as of June, 2010. Also, it has brought growth and improvements to

this little country.

This is a year-by-year statistic showing the penetration of internet in the island.

YEAR USERS POPULATION % PEN. GDP p.c.*

2000 121,500 19,630,230 0.50% N/A

2007 428,000 19,796,874 2.20% US$ 1,623

2008 771,700 21,128,773 3.70% US$ 1,972

2009 1,163,500 21,324,791 5.50% US$ 2,041

2010 1,776,200 21,513,990 8.30% US$ 1,807

But Even though the internet has penetrated quite high, the versatility of the internet or

the usage of internet was quite low until early 20th century. People in Sri Lanka use

internet for basic purpose like, mailing to friends and relatives. Searching for news and

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information in the web or for working purposes, business use internet to interlink their

branches and share information primarily.

But then came the internet marketing creeping from all under. Very soon people saw

advertisements in websites which link to other websites while they were browsing for

information. It started with just the normal banner adverts and then it moved on to videos,

high graphical content and various other things. Before most of the organizations has

website and it is simply carrying information about the organization, what do they do,

details about their board directors and their contact details. Now many organizations

operating in Sri Lanka has come out of that traditional mindset. They started seeing

internet as a tool to market their product. To sell things to the customers and to create

perception in consumers mind this is quite competing. Many organizations have online

purchasing options. And discount stores linked up to the internet. Now we could see

customers browse products on the internet and order them and get it delivered to their

door step. These are the trends today. The older days are gone.

Many fully internet based organizations and semi internet based organizations are seen to

be mushrooming. They have set a great perception towards consumers’ minds and they

are following it up well too. We could come across many individuals who have

experiencing purchasing products online even at times there are people who purchase

products over international websites as well like eBay and etc. So what do you think have

changed their perception towards internet purchase and the behavior so drastically? We

will be taking a deeper look and see what triggered them in the first place to make a move

on a product that they have encountered in the internet.

POSITIVE CHANGE IN SRI LANKAN SECTORS

The development of IT in the public sector has been hindered by the lack of funds.

However, due to generous grants from the donor countries and with the help of the World

Bank, IMF, etc, the public sector has initiated many IT projects and implemented them to

a satisfactory level during the past ten years. The eradication of the millennium bug from

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the computer systems in the public sector is a good example for the capability of this

sector. There were no major incidents reported from the public sector due to Y2K bug.

Private sector of Sri Lanka has reaped the maximum benefits from the information

technology revolution. Almost all private sector banks of Sri Lanka are now fully

computerized and offer their customers various on -line services. All popular IT brands

are well represented in Sri Lanka at present and 100% of the business houses as well as a

majority of the medium sized companies use information technology for their day to day

business and record keeping functions. The Colombo Stock Exchange (CSE) is known to

be using the latest technology available in the field and also fully computerized and

bidding could be done online.

And, according to Sunday Times, the government is planning to enact laws on

information technology crimes to deter the misuse of IT related products and services, the

Ministry of Economic Reform, Science and Technology has announced. It also intends to

enhance the existing laws on intellectual property. The ministry said it also plans to enact

laws to facilitate all forms of electronic commercial transactions (e-commerce) this year

and introduce voluntary guidelines to fulfill the requirements imposed by the European

community data protection directive. This has already begun and commencing right

throughout.

Sri Lankan families have a deep thrust for knowledge acquisition and the children are

sent to tuition colleges and IT education centres at very early ages. With the market being

more competent and the computer literacy is known to be very vital, business of IT

training is blooming. All popular IT training houses of India (such as NIIT) have

established branches in Sri Lanka. In addition, all universities offer bachelors degrees in

Information Technology while the University of Colombo has a postgraduate degree

program for IT. There were no higher research degrees offered by any of the universities

before. But, some private college as Informatics Institute of Technology has an extended

range of courses that are in the field of computer programming, software engineering and

web development.

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Currently, you not only see individuals purchasing products and services online, but

managing their work from home, studying from home and engaged in social networking.

Now, many institutes have diplomas for internet marketing, website designing and search

engine optimizing which was not even used a few years ago.

According to the topjobs.com more than 85% of the IT related jobs are related to search

engine optimizations and website designing. Now young individuals are prone to pursue

something that is web-based than of the traditional jobs which they feel less exciting.

Also, there are many moods that contribute the factors that trigger a Sri Lankan to go

online and purchase. And, as Sri Lankans are in an early phase in forecasting the

negatives or the disadvantages in purchasing online should also be addressed.

Internet marketing is not only about selling a product online, but also to satisfy a

customer on whatever he/she is searching for in a professional manner at the same time

by promoting our brand name and not forcing it.

I have listed out some benefits that could be found in E-Commerce which cannot be

experienced through offline shopping.

• E-commerce has the ability to take your business worldwide using rich IT

capabilities of the Internet and working with global currencies, secured payment

methods, etc bypassing the cultural and geographical barriers, etc pertinent to

conventional commerce.

• You can close more business deals rapidly enhancing business output and saving

time and money for both the buyers and sellers since ecommerce allows you to

interact dynamically and to make decisions online.

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• You could assist customers by answering their questions in real time and solving

their problems then and there thus improving the customer confidence and loyalty

towards your organization.

• You can conduct e-meetings with co-workers and business partners regardless of

location, saving travel costs.

• You can streamline and connect processes like product discovery, negotiation,

ordering, transaction fulfillment, delivery, inventory and accounting irrespective

of the physical location of the resource.

• It is easy to create value around the business transactions by offering enhanced

order features such as order status verification, back orders information,

immediate re-orders, etc

• Doors of your shop are wide open to your customers from all over the world,

24hours X 7 days a week since there are no time boundaries for work on the

Internet.

• Integrated e-commerce solutions allow you to dispatch your merchandise with

speed and accuracy to your customers and to carry out backend tasks such as

inventory management and accounting with ease.

• You can monitor customer preferences and behavioral patterns with much

accuracy and develop your marketing and sales strategies to suit your

requirements. This will result in less inventory management costs and obsolete

stocks.

• You can support your customers by listing useful links on your web site (sort of

trade referencing) so that your customers may develop a brand loyalty with you.

• You can incorporate search features in your web site that allows multiple searches

so that your customers will benefit by always coming to your site.

All the above would be extensively briefed in the below topics.

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LITERATURE REVIEW Several terms have been coined to use to describe advertising on the internet. Among,

them, some terms have been used more than others in academic literature as well as in

trade publication. They include interactive advertising, internet advertising, online

advertising, and web advertising. This diversity of the term that denotes advertising on

the internet seems to reflect the dynamically evolving nature of the internet as a

promising marketing communication medium. So, even the definition of internet

marketing follows a similar path (I will use the term internet marketing hereafter to

denote advertising on the internet in general).

Internet marketing has been defined in diverse ways by advertising researches as follows

“ any form of commercial content available on the internet that is designed by business to

inform consumers about a product or service “ (Schlosser et al., 1999,p, 36) or al paid for

space on the website or in an email (Strauss & frost, 2001,p,221). Or that which occurs

when a company pays or makes some sort of financial or trade arrangement to post its

logo or product information with the intent of generating sales or brand recognitions on

someone else internet space ) Kay Medoof, 2001, p,17)

In this dissertation, internet marketing is brand defined as internet content paid for by an

identifiable advertiser with persuasive intent to achieve marketing communication goals.

This proposed definition of internet marketing is consisted with the majority of options

from a recent panel of discussion of the redefinition of advertising in general by a group

of advertising experts in the United States (Richards Curran, 2002)

Also, shopping online is the future. Most of the individuals’ intent to purchase online for

many reasons and some are as follows.

• Convenient.

• No traffic problem.

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• No fuel expenses.

• Open 356 Days and 24/7.

• Cheaper cost.

• Less time consuming.

• Home delivered.

• Could compare many products and read reviews in no time.

But still people argue on the fact that I mentioned before. The difference between what

they visually witness over the internet and what they actually get once delivered are two

different products which is a critical fact to consider.

THE FACTORS INFLUENCING CONSUMER BUYING BEHAVIOR

There are four main factors, which are widely acknowledged as effecting consumer

buying behaviour. They are:

(a) Cultural Factors.

(b) Social Factors.

(c) Personal Factors.

(d) Psychological Factors.

According to Prasanna Perera who is a leading marketer in Sri Lanka, the culture of a

country has a profound impact on the purchase behaviour of its consumers.

E.g. in clothing, the fashion and styles adopted are in keeping with cultural norms or even

the way they purchase. Cultural norms have an impact on the buying behaviour and the

purchases made. The most powerful social group is the family. The parents may have a

preference towards a certain manufacturer, brand and purchasing modes. The

grandparents my have another preference. How do you reconcile these preferences and

arrive at a purchase decision? This is not too simple, since two families are involved and

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to achieve a consensus is quite a challenge! Amongst personal factors, age and life cycle

is very prominent.

Purchase behaviour and the resultant purchase decisions, are greatly influenced by the

age and the life cycle of the consumer.

E.g., young and single persons would make independent decisions in terms of clothing,

entertainment, food etc., Young married couples without children, would invest in

housing, consumer durables and engage in leisure pursuits such as dancing, socializing

with friends etc., Therefore, at different stages in their life cycle, purchase decisions and

actual purchases vary amongst consumers. Moving onto psychological factors, the power

of motivation is simply remarkable. Motivation is defined as a power, which impels

action, in this case purchase behaviour.

VIRTUAL GOODS Virtual goods are goods that we purchase online virtually. Mostly it could be something

which is non physical. Like software that we purchase online, or games, or game credits

like gold coins in Facebook.

According to Nielson Survey in 2009, Virtual Goods Grow 8% in Popularity Since ’09.

Also, 13% of online consumers have bought virtual goods online in the past 12 months,

representing a roughly 8% increase from 12% who had done so in 2009. Furthermore,

21% of virtual goods buyers will buy more virtual goods in the next 12 months. In this

study, virtual goods are defined as non-physical objects that are purchased and exchange

on the internet in games, virtual worlds and social networks. Virtual goods can be simple

items such as virtual points, tokens, or more complex items such as avatars.

Growth in virtual goods are especially strong among the male 18-to-24-year-old

demographic (increase from 15% to 31% of online consumers in this demographic since

2009). Growth was also notable among males aged 25-34 (increase from 12% to 21%)

and 12-17 (increase from 15% to 23%). In contrast, growth among most female

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demographics was flat or negative, with only the 18-24 age group showing positive

growth (from 8% to 14%).

This chart was extracted from www.marketingcharts.com which represents the Virtual Goods purchased by consumers for 2010 by Asians

According to Mehdi Khosrow-Pour understanding people behavior in the online market

place can help online business to primarily focus on their target customers, predict

customers’ purchasing behavior and make more profit through online channels. Bellman

et al (1999) describes some factors that predict customer buying behavior; look for

products information for month’s online, read number of emails daily, work online at

work every week, read news online at home every week, total household working hours,

click on banners, and agree that internet improves productivity.

In the stores at the streets, sales people are hired to distinguish shoppers and to stimulate

their maximum consuming desire based on their in-store behavior. When shoppers show

special interest in some specific product, sales people will help them find what they are

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looking for. In other case, for shoppers who are merely window shopping, sales person

can recommend some product to persuade their shopping motive. However, in the virtual

shopping environment, there is no sales person to perform this role. Therefore, to

understand consumer behavior in virtual stores is very important for online business. This

research aims to provide theatrical analysis to explain consumers shopping behavior in

virtual stores. We first review literatures on aspects of consumers’ online purchasing

behavior and then propose a model for customer online behavior.

According to Man Luo who wrote Consumer Behavior, tourism, and the internet, studies

shows that internet provides opportunities to reduce dependency on traditional

intermediaries for remote peripheral and insular destinations Additiona buhalis (1998)

suggested that the Internet provides a mechanism to develop and promote specialized

products for mini market segments.

Some studies have examined the profile of internet users among tourist in the pleasure

segment.

According to Nielson research, the number of consumers that access internet and the time

they spend online is growing in an rapidly and many organization wants to get a piece of

profit by marketing their product to them.

Also, marketing online is an expensive but an effective tool that many organizations use

freely at the moment. Below is a chart that would explain the budget spent for marketing

online alone and it is presented based on the industrial sector.

This chart was extracted from Nielson research organization which was from a survey

conducted in Asia at January 2008.

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This chart depicts that online marketing is a serious business at present and many

organizations are spending a huge fortune as they have reaped the benefit of doing so.

Currently, among the hottest topics in the internet, Search Engine Optimization (SEO) is

at the highest. Before a decade nobody in Sri Lanka or in the world would have heard of

this term, but now there are institutes carrying out SEO training programs and

organizations searching for SEO specialists to be recruited.

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• Below are few mostly used methods in which SEO Specialists or Web Marketers

increase their internet traffic and gain more productivity in their websites. Some

of these were extracted from Corley’s SEO Bible (2009)

• Affiliate Marketing: A form of marketing or advertising used on the internet.

Companies that sell products or services online link to relevant sites. The

advertising on the other or 'affiliate' sites is paid for according to results.

• Banner Adverts: Adverts on web pages used to build brand awareness or drive

traffic to the advertisers own website.

• Blogs / Blogging: Contraction of Web log. An internet publishing device

allowing an individual or company to express their thoughts and opinions.

Businesses can use blogs as a marketing communication channel.

• Click through Rate (CTR): The percentage of those clicking on a link out of the

total number who see the link. For example, imagine 10 people do a web search.

In response, they see links to a variety of web pages. Three of the 10 people all

choose one particular link. That link then has a 30 percent click through rate. Also

called CTR.

• Conversion Rate: The relationship between visitors to a website and actions that

are considered to be a “conversion,” such as a sale or requesting to receive more

information. Often expressed as a percentage. If a website has 100 visitors and 3

of them convert (make bookings / reservations), then the site has a 3 percent

(3.00%) conversion rate.

• Cost Per Click: System where an advertiser pays an agreed amount for each click

someone makes on a link leading to their web site. Also known as CPC.

• Keyword Research: Doing research on a single keyword to find it's relatives and

related keywords. This is often done to find the highest producing keywords.

• Landing Page: The specific web page that a visitor ultimately reaches after

clicking a search engine listing. Marketers attempt to improve conversion rates by

testing various landing page creative, which encompasses the entire user

experience including navigation, layout and copy.

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• Navigation: Describes the movement of a user through a website or other

application interface. This term also indicates the system of available links and

buttons that the user can use to navigate through the website.

• Quality Score: This is the basis for measuring the quality and relevance of your

ads and determining your minimum CPC bid for Google and the search network.

This score is determined by your keyword's clickthrough rate (CTR) on Google,

and the relevance of your ad text, keyword, and landing page.

• Link Popularity: A raw count of how "popular" a page is based on the number of

backlinks it has. It does not factor in link context or link quality, which are also

important elements in how search engines make use of links to impact rankings.

• Organic Listings / Natural Listings: Organic Listings: Listings that search

engines do not sell (unlike paid listings). Instead, sites appear solely because a

search engine has deemed it editorially important for them to be included,

regardless of payment.

• Paid Listings / Sponsored Listings: Listings that search engines sell to

advertisers, usually through paid placement or paid inclusion programs. In

contrast, organic listings are not sold.

• Search Engine Marketing (SEM): The act of marketing a web site via search

engines, whether this be improving rank in organic listings, purchasing paid

listings or a combination of these and other search engine-related activities.

• Search Engine Optimization (SEO): The act of altering a web site so that it does

well in the organic, crawler-based listings of search engines. In the past, has also

been used as a term for any type of search engine marketing activity, though now

the term search engine marketing itself has taken over for this. Also called SEO.

• Search Engine Rank: How well a particular web page or web site is listed in a

search engine results. For example, a web page about hotels may be listed in

response to a query for “hotels." However, "rank" indicates where exactly it was

listed -- be it on the first page of results, the second page or perhaps the 200th

page.

• Viral Marketing: Spreading a brand message using word of mouth (or

electronically - 'word of mouse') from a few points of dissemination. Typical

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techniques include using email messages, jokes, web addresses, film clips and

games that get forwarded on electronically by recipients.

According to Sunil Chopra, the Internet is revolutionizing the way companies conduct

business. We argue that the value of the Internet for a firm is strongly dependent on the

firm’s industry and on the strategy it pursues. A survey of firms with an online presence

displays wide disparities in performance. While Dell has successfully used the

Internet to boost revenues and earnings, Amazon lost $585 million on revenues of $1.6

billion in 1999. Firms that fully exploit the revenue enhancements and cost reduction

opportunities offered by the Internet and optimally integrate e-business with existing

channels are likely to be the big winners in the Internet age.

The above is a graph to show how internet could enhance your business.

Also, Onesmartcart.com says Google analyses the amount of time that a user spends on a

site after he/she has clicked a link from a search results page.

If there is a significant decline in the time spent on the site then it could indicate that the

document contains information that is out of date and has become stale.

For instance, if after clicking from a Google search results link to a timetable, an average

person spent 2 minutes on the site and now the average was under 30 seconds, it would

indicate that the timetable was out of date. Google collects this information using the

Google toolbar. So, more the information is frequently updated and it is relevant to your

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customer, then your customers would spend more time on your website providing you a

change to make a sale.

E.g. A product that you no longer sell should link through to the replacement product.

Pages Per Visitor. Another statistic all programs provide is “Page Per Visitor” (PPG).

This number tells you how many pages on your website the average visitor checks out

while visiting your site. So if your PPG is 1 that means that people are exiting you right

after seeing your homepage and a good indication that you need to fix your homepage.

Depending on the nature of your site the PPG will vary. The higher the PPG, the more

interest visitors are taking in your site and the more time they are spending on it.

Try to find the “exit” pages that visitors are using the most. This means which one of you

web pages most people exit your site from. Knowing and fixing these pages will help you

tremendously.

Google looks at the number of people and the growth in people that add a document to

their internet browser's bookmarks/favorites. The basis of this is that people would only

add a site to their bookmark/favorites, if the site would be useful in the long term and

wanted to visit the site in the future. Google looks at the number of people that then use

these bookmarks/favorites to rank a document higher. Conversely, a decline in the

number of bookmarks, their usage or deletion of bookmarks could indicate that a

document is out-dated and no longer relevant. Google gathers this information from the

users of the Google toolbar.

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RESEARCH METHODOLOGIES

This chapter would describe the research design, setting of study, subject of the study,

sources of data gathered and the procedure of the study and statistical treatments applied

in the conduct of study.

PRIMARY DATA

At the beginning, I planned to have structured formats of questions which will be used for

below purpose where the individual have to tick the appropriate checkbox based on the

likeliness. The scale will be set as 1 being the least likelihood of a particular action and10

being the most likelihood of performing the action. Also, there will be two formats totally

where we will be using to survey both the consumer group and the online marketing

organization’s data as well.

Initially I started off with crafting a sample questionnaire including all the pointers that

needs to be covered in order to analyze and match with my research objective. There

were set of questions that were based on buying habits, frequency, and the areas the

consumers have concerns the most when purchasing online. And, this was planned to be

distributed to150 individuals who match the segmented group mentioned below. I

selected a sample of five individuals who matched my sample criteria and presented my

questionnaire. Then I found there were plenty of fine tuning that needs to be done in

terms of broadening the questions I pose in the questionnaire. Also, found the need to

make the questionnaire more general to get more facts.

So, with the help of those individuals I crafted the final questionnaire and distributed it to

my colleagues, friends, relatives and some individuals who I have short listed through my

sampling selection. As I planned to collect the data from 4 groups of individuals as

mentioned in (Table 02) but finding them was quite hard due to limitations and lack of

knowledge. I distributed 150 questionnaires to the above mentioned groups offline and

online and received their thoughts which were very informative and insightful. I found it

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very successful in using a questionnaire to break the ice in my dissertation. But, it was

also time consuming to find the ideal candidate which matches my requirement and most

of all regular follow ups were required in making the individuals fill the questionnaire

and submit it to you.

Then, I moved from individuals to organizations that have online presence and provide e-

commerce services to their consumers. I planned to collect all the necessary data that

would provide me a clear picture on how consumers react to the marketing method of

these organizations also the data would provide strength to my initial questionnaire which

I provided to the individuals.

I found it more challenging that the initial task as Sri Lanka being a developing country

many organizations are not quite thorough with the advantages of internet marketing so

there were a few organizations that I have short listed in order to get the relevant

information I require. And, even though some of the organizations do maintain a website

for E-Commerce and marketing purpose, they do not have a mechanism or the skill to

collect the data in terms of number of customers visited, the average purchasing per

order, the time spent by an average visitor, or the links through they end up in the

website. None of these figures were stored in their organization. So I got the permission

from the organizations and installed softwares to monitor and gather the information I

require. Also, I went through the control panel of some of their websites and collected the

raw data that is captured automatically by the web itself.

Then, after collecting the data that I received from the organizations, I created a different

questionnaire which was for web based organizations that operates E-Commerce. This is

to understand the background of Sri Lankan consumers, profitability and the position Sri

Lanka stand in terms of online activities. Also, I extracted the maximum data possible

with regards to the latest statistics in online activities of Sri Lanka. This was filled by

website managers to strengthen my research. I distributed 20 questionnaires and collected

the filled information for analysis. There were another set of questions

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SECONDARY DATA

After sorting the data gathered from individuals and organizations which were my

primary data, I started working on collecting secondary data. I started with desk research

where in I searched for research statistics regarding internet marketing, e-commerce and

any statistics related to my dissertation. Our search of secondary sources was carried out

to refine the objectives and provide lines of enquiry for the next stages, specifically; this

desk research phase will gather information in national usage of internet over the last ten

years.

At this point, we also would generate a list of organizations and brands that the

consumers opt to look for and their strategies on E-Marketing. But the information that I

received was quite limited as there were no much of research in the area I am pursuing. It

gave me more pressure and at the same time excitement as I was contributing some piece

of information to a vacuum found in researched areas in Sri Lanka.

Then, through a reliable source, I managed to get some issues of research done by foreign

organizations in Sri Lanka to aid and develop the Information Technology & E-

Commerce aspect of the country. The information that I received was extensively helpful

and provided me some great knowledge about the trends and analysis of consumers

buying behavior online.

The secondary data was targeted on focusing some sub objectives such as below.

• How many households have internet access (Broadband / Dialup)

• Where the individuals use internet mostly used at.

• The websites Sri Lankan users visit the most.

• The age & gender category surfing the internet most.

• The average income of the individuals who are most prone to purchase online.

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• The type of goods mostly Sri Lankan are willing to purchase online.

TABLE 01, explaining the groups that I would be distributing the questioners.

Group Age Gender Geography Income Individuals

A 18 - 25 M / F Sri Lanka 20,000 - 50,000 30

B 25 - 40 M / F Sri Lanka 20,000 - 50,000 20

C 18 - 25 M / F Sri Lanka Above 50,000 30

D 25 - 40 M / F Sri Lanka Above 50,000 20

The above samples applies only for individual consumers only and not for organizations.

After strenuously gathering the surveys that my hands get grab, I went on researching for

trends and information through some established E-Commerce organization. I came up

with the below organizations that provided me very insightful information regarding the

consumer behavior and how internet marketing has improved in Sri Lanka.

1. www.topjobs.lk

2. www.lankagifts.com

3. www.lanka.info

4. www.roomservice.lk

5. www.emarketingeye.com

6. www.echannelling.com

Now, these websites provided me more information that I possibly imagined as they were

following the best practices of E-commerce diligently. So, once I received their part of

information things got clear and ambiguity was eradicated from my case. Then I simply

carried out analyzing the data received from all sources and sorting them according to my

objectives.

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And, finally in order to add a rich topping to my research, I was lucky enough to stumble

upon a group of individuals who were experts in online purchasing and activities, so

without wasting time, I carried out a focus group regarding my objectives with a group of

8 members. This assisted me a lot in bring my dissertation to the right track and remove

off unnecessary information from the dissertation. There were many interesting and

shocking pointers that were dished out.

So this is where my research ended and I did the last part by my own.

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DATA COLLECTION & ANALYSIS In this chapter, I have analyzed the data that I have gathered through the primary and the

secondary research that I have conducted as explained previously and I have provided the

analysis below.

PRIMARY DATA

Below are some of the ways I chose to gather the primary date for my dissertation.

• Individual Questionnaire

• Corporate Questionnaire

• Focus Group

As mentioned, using multiple tools to gather the primary data could provide you

advantages in looking at a problem from many angels. Questionnaire would provide

straight forward information as to what the customers look for, the behavior, and the

concerns about internet marketing. Also, it provides the same for Corporate. While,

Focus Groups are more sort of a discussion we are having where every idea that is

mentioned are fine tuned and more redefined. And, observation provides you more details

of the activities that you actually see in the real market.

Firstly, I decided to structure a Questionnaire in order to collect primary data by

considering the below points.

• It is cost effective by far compared to the other tools.

• The Questionnaire could be filled by an individual at free time or at his/her

convenience.

• It safeguards his/her anonymity, so the individual would feel safe in what he/she

is trying to mention.

• The data collection and feeding would be easy.

• It could be filled by anyone without any hassle.

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INDIVIDUAL QUESTIONNAIRE REVIEWED

Initially, I prepared a basic questionnaire and tested it using five candidates. It provided

me many details in fine tuning the questions, generalizing some details and maneuvering

things as per my objectives.

Then, I structured the final Questionnaire and distributed to 150 individuals. Below is a

table presenting the end status for my 150 Questionnaires.

The Questionnaire was distributed to individuals who have fair knowledge in E-

Commerce and the Internet Marketing experience.

RESULTS The facts extracted from the questionnaire received from individuals are provided in

point form for clarity.

QUESTIONNAIRE

I have mentioned the findings that I received through the questionnaire that is gathered.

General:

• Average Age: 17 - 35

• Female: 35%

• Male: 65%

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Income:

• Under 10K 0%

• 10K - 30K 24%

• 30k - 40K 21%

• Over 50K 45%

• Misc. (unemployed, retired, wouldn't respond) 11%

Total respondents to surveys based on cities:

• Colombo: 87%

• Kandy: 8%

• All Other Cities: 5%

Internet Usage:

• 78% of respondents use their web browser more than once a day

• 56% use it more frequently than 4 times a day

• 36% use the web 1-4 times a day

• 8% use it less frequently than once a day

Frequency of Online Purchasing:

• Never 19%

• Less than once a month 63%

• Once a month 17%

• Once a week 1%

Amount Spend Online Between Jan’10 - Jan’11:

• Less than 500/- 13%

• 500/- to 1000/- 27%

• 1000/- to 5000/- 41%

• 5000/- or more 19%

Activities on the Internet:

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• It is report that 39% of individuals investigate on the information of a

product/service.

• 22% use Internet to communicate with people, work, and study.

• 21% use Internet to get connected to their favorite social network or chat with

friends

• Also, 15% of the individuals report that they use internet more than once for

entertainment purpose daily.

• 4% Chat daily.

Primary Usage (Individuals selects multiple categories): • Personal information 75%

• Work 65%

• Education 60%

• Entertainment 60%

• Shopping 50%

Bookmarks:

• 54% have between 11-50 bookmarks.

• 45% have over 100 items listed

• 1% never bookmark anything or don't know how to bookmark

Marital Status:

• 34% married.

• 45% single.

• 13% divorced or separated

• 8% other

Occupation:

• 39% works on computer related field.

• 22% works on marketing & sales field.

• 19% works on finance field.

• 7% miscellaneous

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• 13% educational field.

Used Web Browser:

• Microsoft 31%

• Mozilla Firefox 32

• Mobile browsers 18%

• Google Chrome 19%

Internet Entry Environments:

• 31% of users access the internet from home.

• 40% of users access the internet from work.

• 27% of users mentioned that they use internet from both home & work.

• 2% of users access the internet from the college/educational institute.

Reason to Buy Online: • 51% Convenience in Shopping.

• 22% Shopping for Latest Products.

• 27% Door Step Delivery.

• 12% Cheap in Price.

• 19% Time Restriction.

Internet Type Used:

• 59% Dial Up

• 29% Leased Line/ ADSL.

• 12% ISDN

CORPORATE QUESTIONNAIRE REVIEWED As mentioned before, I distributed 20 Questionnaires to website managers and

individuals who maintain corporate websites. This was structured differently compared to

what I provided to the individuals.

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WEB SITES MAINTENANCE

• More companies are inclined to run own web sites.

• The driving forces for establishing web sites are the “global exposure” and the

“direct interface with the customers”

• Primary purpose of the site is to promote sales and to create awareness to the

public.

• The web hosting companies developed most of the sites while in-house

development came second.

• The majority had entrusted the management of the website also to a web hosting

company.

• Location of the site is equally divided between in-house server and the web

hosting company.

• Most of the websites were professionally maintained and updated.

• Development cost and the annual running cost of the web sites were within the

reach of the organization.

• Majority of the respondents agree that the websites are important to improve

business exposure.

• Visitor profiles are not monitored by the organizations who own websites.

E-COMMERCE PENETRATION

• Web based selling is not well established in Sri Lanka.

• Sales volumes were at the low end for the few who used web-based selling.

• Everybody is positive about the sales to increase in the coming months.

• The portals do not provide enough sales information at present.

• Web based buying is limited to a few types of items.

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• No local establishments have B2B transactions.

• Buying frequency varied among the respondents and 37% declared that they buy

very rarely.

• Purchase volumes over the Internet are very low.

• Payment method is the bottleneck to purchase goods over the Internet.

• Using web portals for business propagation is not widespread among

organizations we surveyed.

• Back end applications such as Accounting Systems, Delivery Systems and Stock

Control Systems are not used within the organizations in order to effectively

engage in E-commerce.

• WAP systems though available, are not widely used or profitable within the Sri

Lankan marketplace.

KEY FINDINGS ON BANKING SECTOR APPLICATIONS

• Number of users of Internet Banking is very low.

• The main reason for non-usage is the security concern.

• Most of the respondents have been using the I-banking for less than one year.

• I-banking may sure catch up similar to the ATM cards since most of the banking

operations except cash could be carried out from home.

KEY FINDINGS ON NON USERS

• Undue worries about the cost is a barring factor for SMEs to establish Internet

facilities.

• Lack of staff with adequate knowledge to run an Internet based application is

another bottleneck.

• Infrastructural facilities such as insufficient telephone connections are another

disadvantage.

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• The management’s perceived lack of knowledge on the benefits of e-commerce is

preventing them from investing in Internet based applications.

• Some of the SMEs are already on the way to establishing Internet connections and

an increase in the Internet implementations within SME sector could be seen

within a few years.

RECOMMENDATIONS TO THE BUSINESS

• Develop e-commerce activities where feasible since it improves Supply Chain

Management (SCM) by targeting just-in-time approach.

• It also improves the Customer Relations Management (CRM) that is highly

beneficial for a commercial organization in the long run.

• Remove techno phobia from all elements within the organization.

• Train staff in new technologies since by default a well-trained staff brings in less

production defects and efficient services to the customers.

• Create awareness of the benefits of embracing Information Technology before

implementing them which will assist the organization to implement the process

smoothly without any resistance.

• Make staff use the new facilities and new technology as much as possible by

encouraging them with production related incentives.

• Carry out necessary business planning incorporating e-commerce activities so that

more benefits could be reaped from future investments.

• Commence online selling of goods. Especially commodities such as Ceylon Tea,

Antique items, etc, could be easily sold over the Net.

RECOMMENDATIONS TO THE GOVERNMENT

• Enact laws conducive to the establishment and proper management of e-

commerce activities in the country.

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• Invest in the improvement of the telecom infrastructure and other communication

facilities in the country to be in par with the growing technology.

• Allow deep penetration of personal computers to rural areas and townships by

removing all taxes on import of the IT equipment and reduce taxing on IT related

and software development companies.

• Carry out further studies on how to build up an e-commerce savvy business

environment.

• Provide incentives to ICT infrastructure projects by way of tax relief similar to

roads/ highways, air and seaports, etc

• Have a national policy on e-commerce and the development of web-based

applications.

• Make the technology and services available to grassroots levels encompassing the

whole country and propagate methods and technologies conducive to the

development of e-commerce within the SME sector too.

• Country level implementation of distance learning facilities embracing all

universities, provision of tools and funds for innovation and research in the ICT,

establishing a network of Internet centers at village level, etc are some positive

steps that the government could take to improve the e-commerce implementation

in the country.

FOCUS GROUP

After reviewing the two sets of questionnaires that was collected, I moved on in setting

up a questionnaire among 15 individuals who have experience in internet marketing,

purchasing online, and website managers. And. below are the points we discussed and

concluded.

• REASONS FOR PURCHASING ONLINE

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Most of the consumers prefer shopping online if they are short of time and would prefer

comparing certain products and brands to make a quick decision.

E.g. If a customer is checking out to purchase a wedding cake, he would simply browse

through few websites, compare the prices and the specification and make a call to

purchase the relevant one.

We could observe two things clearly from the above example.

1. People not only go online with the intention to purchase but also to compare

prices and make a decision.

2. People use internet to purchase when they are short of time or has no other

convenient choices.

Also, we came received an interesting fact as consumers also purchase online in order to

have it delivered to a different address, or to the same address at a different day. As the

delivery services would not come in a bundle when purchasing a product through any

traditional retail shop or any outlets. So, these facts lead us to research some activities on

the internet at a special day in Sri Lanka.

We started observing and collecting sales data and other related information which could

provide us some insight of the movements in the internet for the Valentines Day

(February 14). Then we received some shocking news where many E-Commerce

websites reported high sales than any other special occasion. There were huge traffic

inflow from all directions to the websites that sell flowers, cakes and other gift items.

And, surprisingly there were delivery booked for almost all regions in Sri Lanka for the

purchases to be delivered.

I have presented the description of two organizations that benefited the most from the

Valentines Day.

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1. Kapruka.com is a famous website that has a stable customer base in Sri Lanka and

specially Europe countries and America. Mostly their customers use their services

to deliver goods to relatives living in Sri Lanka. The Customer Service manager

in Kapruka.com reported that the Valentines Day 2010 was very profitable

compared to other days such as Mothers Day, Festivals and etc. It was recorded

that there were 432 inquiries over the phone about the products published on the

internet on 12th & 13th and out of them, 308 consumers purchased which is to be

delivered on the Valentines Day

2. Lankafoods.lk a leading organization in Sri Lanka that is managing well in E-

Commerce business in Sri Lanka and ibuy.lk which is a part of Dialog Telekom’s

initiative reported a spike in sales.

Though there research we came up with a fact and that is consumer purchases online to

deliver items to a different place which is not available in the normal shops. Or a surprise

gift to be sent to your loved ones.

• PROBLEMS IN CORPORATE WEBSITE

An overwhelming 97% told that the

primary purpose of their web site was

to promote the company to potential

customers. The bad news is that none

of the respondents use the company

web site for selling goods over the

Internet. That means Sri Lankan SMEs

have to go a long way before

effectively engaging in online selling of goods. However, there are hotels that perform

room reservations online with limited success.

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We asked the SMEs to rate the importance of the web sites to the operation of their

companies in terms of Promotion, Sales and Procurement. The outcome was as follows.

• CONCERNS IN ONLINE PURCHASING

Also, when discussing the concerns related to online purchases, I received majority being

the cause of not receiving the exact product that was originally ordered online. Many

consumers get disillusioned by the end product delivered to the consumer.

E.g. A consumer checks a Chocolate Fudge Cake which is 1 pound in size and on a

website and decides to purchase it and get it delivered to his friend’s home for a later

date. It has been noted that the size of the cake and the variety of the cake that was

purchased was not sent but for a different product. And, this scenario has been

encountered by many individuals providing a bad impression towards online purchasing.

And this shows Sri Lankans are not following the best practices of internet marketing and

it is crucial as we are in the initial phase.

And, Sri Lankans still feel that nothing could compare the feeling that they get by

browsing through shop stores physically with their friends and witnessing the tangible

evidence would be a greater experience and a way of shopping rather than the

convenience of purchasing online which some are ready to forgo.

Many individuals also agreed that many corporate and e-commerce websites operated in

Sri Lanka were either neglected or outdated. Consumers always come across dead contact

numbers, wrong addresses and dead website links when visited. There were also

instances when the product as a whole did not exist at the time consumers’ contacted the

organization. This seems to be quite alarming, and some organizations are not aware

about the damage that is been done to the companies reputation.

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SECONDARY DATA

In this topic, I would present some statistical analysis on the secondary data that I have

gathered. Mainly, I gathered the data through Desk Research where I used Internet and

some offline contacts of mine to collect some surveys that were conducted in same

grounds with the objectives possibly close to my objectives.

INTERNET RESEARCH STATISTICS

The below are some statistics of average Internet buyers. This will provide you with a

general idea of the kind of people who would visit websites with the intention of

purchasing online. All of the figures are based on professional surveys done in 2010.

As I mentioned in the early chapter about the desk research that I performed in order to

collect the secondary data to support my dissertation. Below are some interesting facts

that were collected.

Firstly, the sample included 716 respondents who were males. Of those respondents who

were willing to provide information about their age. 26% were between the ages of 35

and 44, while 17.5% and 13.9% were in the age categories of 25-34 and 55-64

respectively. These three age categories comprised the majority of the respondents. Of

those who answered the question regarding education, 18.8 of them had earned a high

school diploma, 17.3% of them had been to college but had no degree, 30.7% reportedly

that they had bachelors degree and 15.1% of them had masters degree. With regards to

the income questions, 528 respondents provide information on house hold income

With increasing consumer interest in online shopping, the amount of trade that is

conducted electronically has seen extraordinary growth. According to MasterCard's latest

Insights Report, Online Shopping in Asia Pacific - Patterns, Trends and Future Growth,

this growth is poised to further accelerate in the region and is expected to increase at an

annual rate of 23.3%, reaching US$168.7 billion by 2011.

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The report, which analyses consumer behavior in relation to e-commerce across the

region (Australia, China, Hong Kong, India, Japan, South Korea, Singapore and

Thailand), reveals that the focal point of this growth is likely to shift from the consumers

in Japan to new consumer populations in China and India. Some of the key findings

include:

63% Survey Respondents Shop Online; South Koreans and Japanese Most Active

Shoppers (83% each)

In terms of total spend on shopping online the survey revealed that online shoppers in the

region spent an average of US$612.40 online over a period of three months, with

Singaporean ($770.70) and South Korean (US$707.50) consumers emerging as top

spenders. Online shoppers from Thailand and Hong Kong were the least active, making

an average per person purchase of 1.8 times and 2.1 times respectively.

44% of online shopper respondents indicated that they have been shopping online for

more than three years now, with 76% indicating that they will make a purchase in the

next six months. More specifically, a majority of respondents from South Korea (93%)

and China (87%) were likely to make an online purchase in the next six months.

Japan to Lose Pre-eminence as China Leads Region in Online Shopping Market Size by

2011; India Will Rise Strongly to Emerge Second.

The rising population of upper-middle-income urban elites is likely to boost the online

shopping markets in China and India significantly. Domestic consumption spending in

the two countries is poised to pick up strongly, underpinned by a rapid pace of

urbanization, robust economic expansion and rising spending By 2011, China’s online

shopping population is projected to increase to 480 million and contribute to 58.6% of the

total online shopping population in the region compared to 49.9% that it does currently.

Meanwhile, India’s online shopping population is poised to overtake Japan and Korea in

terms of share of the online shopping population in the region.

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Additionally, 2011 will see China offering by far the largest market in Asia Pacific in

terms of online shopping revenue turnover - US$1415.7 billion compared to the $297.8

Focus Centers of E-Commerce Set to Shift as Online Sales in Asia reach US$168.7

billion by 2010. India in the interim will rise strongly (from US$70.8 billion in 2007 to

US$734.3 billion projected in 2011), to emerge as the second largest online shopping

market in the region in terms of revenue turnover.

Majority of Region's Shoppers Plan Purchases and Conduct Research before Spending

Online

A majority (84%) of online shoppers in the region tend to plan their shopping in advance

and conduct research on their planned purchases, including browsing on the internet

(87%) and the merchant's website (61%) and through recommendations (47%). The level

of opportunistic spending online therefore does not seem to be a major factor for many

online shoppers, with tendency for impulsive spending in e-commerce varying widely

among markets in the region. Some 41% of respondents across the region had bought on

impulse while shopping online, with 34% indicating that they hardly ever bought on

impulse.

In markets such as Singapore, South Korea and Australia, which are somewhat more

mature financially, only about 10% of shoppers frequently made opportunistic purchases.

This proportion jumped drastically in markets like India (30%), China and Thailand.

For those who made opportunistic purchases online, they attributed this to the low prices/

substantial discounts they found (74%). Other factors included the availability of unique

items available only online (48%) and advertisements and promotions (33%).

Internet Penetration Rate, Income Level & Culture Key Factors Driving Online Shopping

Penetration in the Region

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Based on analysis conducted, a strong relationship (an 87.1% possibility) was found to

exist between the online shopping penetration rate and the above three factors.

Asia Pacific markets with higher internet penetration rates (Japan, Korea and Australia)

were reported to have higher online shopping penetration rates. While China has one of

the lowest internet penetration rates (15.9% of population), the online shopping

penetration rate this small group was unusually high at 70% - indicating that the online

population has a high tendency to make online purchases. Similarly, higher-income

markets tend to have relatively higher online shopping penetration rates.

Based on the survey where respondents were asked their reasons for not making

purchases online, the cultural affinity for online shopping across the region was analyzed

as part of the report. A key finding was that cultural factors in Hong Kong tend to be less

favorable towards online shopping activity compared to other developed countries such

as Australia, Japan and Korea.

Secure Payment Facility, Price and Convenient Payment Methods Top Factors Affecting

Propensity of Online Shopping

While consumers in Asia Pacific perceived online shopping to be convenient (71%) and

easy (66%), 87% of the region’s online shoppers regarded secure payment facilities and

price as the most important factors affecting their tendency to shop online. These were

followed by convenient payment methods (85%).

Credit Cards Top List of Preferred Form of Online Payment Methods in Asia Pacific

Credit cards were the dominant and most preferred mode of payment for online shopping

in most of Asia Pacific (53%), with the exception of China (25%) and Thailand (41%),

where debit cards were preferred. In most markets, consumers indicated that they would

shop more online and use more of their credit cards if their security concerns were

allayed. On average, 74% of online shoppers in the region felt that payment security and

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Percentage

Promotion34%

Record15%

Sales11%

Media40%

Promotion Record Sales Media

user confidence in online transactions could be improved. Power of urban elites.

(Reference 05)

ORGANIZATIONS IN SRI LANKA

Based on ICT Survey conducted in Sri Lanka at 2009, below are some of the data related

to organizations operating in the country.

Initially, the question, “What is the primary purpose of your site” was asked from the 34

Companies who told that they were maintaining company web sites. The responses

were summarized as follows.

Primary Purpose:

• Promote company to potential customers (Promotion): 34%

• Collect visitor information for database(Record): 15%

• Sell goods over the internet (Sales): 11%

• Convey messages to public and other corporate(Media): 40%

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NIELSON ONLINE SHOPPING REPORT FEB 2008

This is a comprehensive report that I received and it states, Consumers across the globe

are increasingly swapping crowded stores for one-click convenience, as online shopping

becomes a safer and popular option these days. According to a recent global survey

conducted by The Nielsen Company, over 85 percent of the world’s online population

has used the Internet to make a purchase, up 40 percent from two years ago, and more

than half of Internet users are regular online shoppers, making online purchases at least

once a month.

The Nielsen survey, the largest survey of its kind on the topic of Internet shopping habits,

was conducted from October to November 2008 and polled 26,312 Internet users in 48

markets from Europe,

Asia Pacific, North

America and the Middle

East.

When The Nielsen

Company conducted its

first survey into online

shopping habits two years

ago, only 10 percent of

the world’s online

population (627 million)

had made a purchase over

the Internet. Within two

years, this number has

surged by approximately 40 percent – to a staggering 875 million.

This table indicated that the Asian are rapidly adapting in purchasing products/services

online than other continents.

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46

The online shopping revolution has had a marked effect on shopping for air travel.

Internet shopper interest in buying airline tickets/reservations online rose three

percentage points in the past two years. Today, one in four online shoppers globally said

they had purchased airline tickets on the internet in the past three months.

More than 70 percent of Indians and more than 60 percent of Irish and UAE Internet

users said they bought airline tickets/reservations on the Internet in the last three months,

making travel the fourth most popular shopping category on the web.

“Travel is a category extremely suited to the Internet due to the latter’s ability to provide

efficient access to an extremely wide range of comparable information. Whilst certain

areas of the travel industry were initially slow to utilize the benefits of the Internet, it is

now one of the undoubted success stories of online, playing an integral part in the

arrangements and experience of today’s traveler,” said Jonathan Carson, President,

International, Nielsen Online.

MASTER CARD INSIGHT REPORT

Visa leads the charge in online credit card payment. Credit cards are by far the most

common method of payment for online purchases – 60 percent of global online

consumers used their credit card for a recent online purchase, while one in four online

consumers chose PayPal. Of those paying with a credit card, more than half (53%) used

Visa.

“Shopping on the Internet with the ease of a credit card is especially appealing to

consumers in emerging markets who simply cannot find or buy items they want in their

retail trade. The Internet has opened up a whole new world of shopping for these

consumers,” said Carson.

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While Latam and Asian online shoppers are also more likely to use credit cards than any

other form of payment, debit cards are most popular among UK (59%) and U.S. (40%)

online shoppers.

So the research findings end here by concluding that Sri Lanka as a country has a great deal of untapped opportunity to explore. And, many industries I Sri Lanka could prosper online. We are trending upwards for a great future.

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CONCLUSION & RECOMMENDATION

s many countries that has revolved due to the presence of Internet, Sri Lanka too should

adopt the change more effectively and efficiently. Many organizations seems to be going

online at present which is a positive note towards the right direction, but it is just a

beginning, there are many models that the Sri Lankan organization could adopt from successful

organization that has a strong online presence.

But, according to my finding and analysis in this subject as a whole I could strongly state, most

of the Sri Lankans are not yet ready to respond to a 100% virtual organization at present. Sri

Lankans are still in stages where they go online for reference or in search of information and

then call up the relevant store or visit them personally and purchase the required product. This is

witnessed even for organization that has been in business for several years. So, if an organization

is totally depending on E-commerce and has no offline presence like a shop in the streets, or any

posters in the road or at least a leaflet mentioning the offers; it is likely the company has to

struggle immensely.

Also, it is noted in many Sri Lankan organizations have websites and it is maintained by the

youngest individual in the organization due to lack of knowledge in managing the websites or

due to the misunderstanding of such practice by the higher management. A corporate website is

just critical as the newspaper advert about the organization or your perfect proposal that you

present to your clients. There articles, contact numbers, product portfolio and the address are the

most critical part of a website and it should be frequently updated and maintained with due

diligence and with the precise marketing mix to gain

reputation and revenue.

Even though many websites have set the default

payment method as through credit cards to their

customers who are willing to purchase online, it is

less likely they would feel safer to provide it. As,

marketers should understand that Sri Lanka has just

A

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started purchasing online and would be paranoid about giving out such confidential information,

but if organizations have many payment options to choose for customers, then it is more likely

that they would choose one among them and it would most likely to be the credit card option.

This might sound confusing, but it is just the way Sri Lankans grade an E-Commerce

organization.

E.g. Some of the payment methods that could be facilitated by organizations to have a better

result.

• Online credit card payment.

• Order through phone and get it delivered.

• A street address to collect the order which is purchased.

• Standing order or through direct debit.

• Coupon code or through any promotional point system.

So, in the current situation, if an organization is planning to have an online shop running, they

could consider some of the below points to expect more responses.

• Simply print some leaflets about your online shop with the promotions and the website

and attach it along with the weekend newspapers in order to give tangible evidence about

your online organization.

• Publish your special promotions campaign you are running in any magazine or in the

newspaper with the promotion code and the deadline.

• It is recommended to use outdoor billboards or some posters in the street. This has a

higher tendency to remind the advertisement that you have published in the newspaper to

the customers.

• Do not place a promotion offer in the internet or adverts in other websites promoting your

products and sit there expecting the Sri Lankans to make use of the offer.

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• It is highly recommended to have an online support system placed in the website where

customer queries could be answered immediately through an agent and the purchasing

decision is made right there.

• Try to have more than 2 payment methods for customers to choose if purchasing online,

and do not make the mistake of having only the credit card payment method alone.

• Have your website updated frequently and it should be among the frequently used media

to communicate to the public and corporate.

It is important to organizations to actually fine-tune their business model and the standard

operating procedures before they go online as it is a total different platform compared to the

traditional way of carrying out business.

Finally, there are great deals of opportunity to expand the business online as the E-Commerce

business is still surrounded with Blue Ocean and the possibilities are endless. Internet is just an

ocean and many business ideas could be generated by just formulating the existing technology.

Provided the business idea is unique and the usage of online marketing tools are chosen wisely

and business model is in par with the recommendations that is mentioned in this dissertation, an

organization could succeed in every aspect and foresee every challenge and be prepared for it.

And I would like end this by mentioning one of my favorite quote:

"Marketing is not a battle of products, it's a battle of perceptions." Sometimes the best product

does not win.

By Al Ries & Jack Trout

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REFERENCES BOOKS: Research Methods for Business Students, (Fifth Edition,2009) Mark N.K. Saunders, Adrian Thornhill & Philp Lewis The Internet and Travel and Tourism Education, (Volume 01, 2001) Bob Mckercher, Gary Williams & William Chernish Global E-Commerce, (First Edition, 2001) Ali Farhoomand & Peter Lovelock Secrets of Asia's Most Successful Internet Gurus, (First Edition, 2009) Pearlin Siow The 22 Immutable Laws of Marketing Al Ries & Jack Trout LINKS : Internet Marketing Tools used for Sri Lankans http://www.emarketingeye.com/internet-marketing.html Marketing chart pasted on literature review. http://www.marketingcharts.com/direct/online-ad-spend-by-industry-january-2008-3446/ Website that provides global statistics related to online users. www.emarketer.com Website that provides details related to searches that were conducted based on countries. www.alexa.com Nielson online shopping report Feb 2008. Sri Lanka Business Development Center survey conducted for SLBDC http://id.nielsen.com/news/documents/GlobalOnlineShoppingReportFeb08.pdf Literacy rate, adult total (% of people ages 15 and above) (world bank 2008) gathered some data on what Prasanna Perera wrote. http://print.dailymirror.lk MasterCard Insight Report http://www.asiatraveltips.com/news08/266-OnlineShopping.shtml

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APPENDICES INDIVIDUAL QUESTIONNAIRE

Please fill the below Questionnaire diligently and accurately. Do not hurry but take your own time to complete all the relevant fields. OCCUPATION : _________________ CITY : _______________ MARITAL STATUS : _____________ 1. SEX: MALE FEMALE 2. INCOME: Under 10K 10K – 30 K 30K – 40K Over 50K 3. INTERNET USAGE:

More than once a day.

Frequently than 4 times a day.

1-4 times a day.

Frequently than once a day.

4. Frequency of Online Purchasing:

Once a Week.

Once a Month..

Less than once a Month.

Never. 5. Total Spent Online

Less than 500/-

500/- to 1000/-

1000/- to 5000/-

5000/- or more.

6. Primary Usage of Internet

Personal information.

Work.

Education.

Entertainment.

Shopping. 7. What do you do in internet the most? _______________________________________

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8. No. of Bookmarks ________________________________________ 9. Used Web Browser:

Microsoft.

Mozilla Firefox.

Mobile browsers.

Google Chrome.

10. Internet Entry Environments:

Access the internet from home.

Access the internet from work

Access internet from both home & work.

Access the internet from the college/educational institute.

11. Reason to Buy Online: ________________________________________ 12. Internet Type Used: ________________________________________ Any Suggestions that you expect E-Commerce should be like or any concerns that you have when purchasing online. ______________________________________________________________________________ ______________________________________________________________________________ I am very grateful to you for allocating some of your precious time in filling my questionnaire. Thank You.