THE IMPACT OF INTERNET MARKETING STRATEGY ON THE NIGERIAN ECONOMY

THE IMPACT OF INTERNET MARKETING STRATEGY ON THE NIGERIAN ECONOMY

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CHAPTER ONE

INTRODUCTION

1.1       Background of the Study

Research in dividing information into packets and switching them from computer to computer began in the 1960s. The U.S department of Defense Advanced Research Projects Agency (ARPA) funded a research that created a packet switching network known as the ARPANET. ARPA also funded a research project that produced two satellite networks. In the 1970s, ARPA was faced with a dilemma: Each of its networks had advantages for some situations, but each network was incompatible with the others. ARPA focused research on ways that networks could be interconnected, and the internet was envisioned and created to be an interconnection of networks that uses transmission control protocol/internet protocol (TCP/IP). In the early 1980s, a group of academic computer scientists formed the computer science network, which used TCP/IP protocols.

As large commercial companies began to use TCP/IP to build private internets, ARPA investigated transmission of multimedia-audio, video, and graphics across the internet. Other groups investigated hypertext and created tools such as Gopher that allow users to browse menus, which are lists of possible options. In 1989 many of these technologies were combined to create the World Wide Web (www). Initially designed to aid communication among physicists who worked in widely separated locations, the web became immensely popular and eventually replaced other tools. Also during late 1980s, the U.S. government began to lift restrictions on who could use the internet, and commercialization of the internet began. In the early 1990s, with users no longer restricted to the scientific or military communities, the internet quickly expanded to include universities, and companies of all sizes. Libraries, public and private schools, local and state governments, individuals and families had access to the internet.


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The simplicity and user-friendliness of the World Wide Web protocols led to an exponential growth in web utilization for technical and educational publishing on the internet. This paved the way for the development of browsers (software allowing the user of the World Wide Web to navigate through the World Wide Web and to display the information downloads) like Viola, Mosaic, Opera, Mozilla and Netscape, and its multimedia characteristics. The World Wide Web became extremely popular for commercial and personal publishing.

Now the www is by far the most rapidly expanding parts of the internet. The number of computer hosts (end-user terminals) was approximately 6.64 million worldwide as of July 1995 with more than 35 percent of these hosts outside the U.S.A. The figure has been doubling every year since 1981. In August 1995, there were around 80,000 web servers, providing information and services to the www.users. The internet is a global web of computer net-works that has made instantaneous and decentralization of global communication possible. Users can browse the internet and have a link with fully integrated text, graphics, images and sound. Also users can send e-mail messages, exchange views, shops for product, and access news, recipe art, and information on business growth and development. The internet itself is free, though owning a website costs some amount to design both for individuals and for corporate organization.

The internet is a voluntary interconnected collection of computer networks that links people and organizations throughout the world. Internet users can communicate freely and directly regardless of time or distance, there is a common language (English); and no single government regulatory control. The World Wide Web (WWW) is a network of documents accessible via the internet, offering its facilities plus the additional features of multimedia: sound and fun colour graphics. Anyone can have a presence on the internet in the form of specially written files (web “pages”) that appear in a web “site” (i.e. a cyberspace location indexed by a page number) which net users can visit, browse, explore in detail and sometimes interact with “online”. Websites are placed on a computer (web server) connected


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to the internet. Files may comprise simple textual messages or any combinations of graphics video and sound. “Web page designer” help firms write web pages, generate graphics, and provide general advice on how to use the web as a marketing tool. The number of host computers linked to the internet is estimated to have risen from 1.3 million in 1993 to 16.1 million in 1997, (Network wizards, 1997) with a prediction that 120 million machines will be connected by the 2000 (Bourn , 1995). At present, half of all internet linked computers and located in the U.S.A, although the rate of expansion of the net is much higher in other counties, thus ensuring the continuing globalization of the system.

According to Kantor and Neubarth (1996), the internet in 1996 comprised around 90, 000 networks involving up to 68 million users, increasing to 250 million by 2000 (Davenport, 1996). The internet has doubled in size annually since 1988; an event unprecedented in telecommunication history, outstripping the growth rate of personal computers, fax machines and mobile telephones. Indeed, expansion is currently so fast that it is arguably pointless even attempting to make estimates (Denison, 1995). Kantor and Neubarth (1996), noted dramatic rise in the use of the net by US small businesses for international marketing and communication, with 200-300 new firms joining the net daily! In Britain during the first half of 1997 about 150 enterprises a week established websites on electronic yellow pages. On this premise lies the rationale for this study.

1.2        Statement of the Problem

Since the 1990s the internet has grown tremendously in most countries around the globe and the information contained in it. The internet has also created opportunities for new business models that redefine how companies interact with customers. Through this medium, customers and other stakeholders can truly respond to a company’s media communication in real time, using the same channels for feedback that the company used for promotion.


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Advertisers can easily reach the international market since the internet has made the world a global village and information now travels at the speed of light. It is now possible to purchase specialty Italian cheeses direct from a Cyber shop in Italy or New York. Consumers interested in smoked fish can pay a virtual visit to companies in Alaska or Iceland from their home computers. E-market services is not for profit, it is funded by trade promotions organizations of Australia, Denmark, Holland, Iceland, Italy, New Zealand, Norway, Portugal, Spain and Sweden. There are several e-marketplaces operating in the market today, examples are ForestExpress.com, an e-market place for the forest products industry, and Transora, an e-marketplace for consumer goods owned by Coca Cola Company, Proctor and Gamble, and Grocery store Association of America. There is also Ariba.com, Alibaba.com and Quadrem.com (Lassen et al, 2003).

In Nairobi, a small trading company selling fruits and vegetables through open e-marketplace and gaining profits. Now the company had registered with many open e-marketplaces which sites did not charge the company a registration fee. The company’s overall turnover was not less than US$20,000 per annum. Before it registered with e-marketplaces, the income was less and much of the money was paid to the intermediaries but after registering with e-marketplaces, the company was gaining more profits and it was able to develop it business through internet and supplying the fruits and vegetables according to the customer’s choice (Berry, 2002).

In Nigeria, the e-marketing tools available are the websites designed by organizations for promoting their products and services and bulk e-mails to various customers creating awareness about products and services.

The knowledge, affordability and awareness of internet in Nigeria are still very low compare to developed countries of the world (Zenith, 2008).

The use of internet, which cut the costs of global market entry for small businesses and enables consumers to find them, has no base in Nigeria. The fear of insecurity


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on the internet by many companies has caused the companies to be unpopular with many prospective consumers of their products (Agbada, 2008).

Many Nigerians still do not know what it means to buy and sell on the internet, and the items purchased delivered to the buyers. Lots of companies in Nigeria advertise their products and services on radio, television, and billboards, which can only reach the consumers within the national boundaries and leaving out the international market that would have produced consumers for their products and services. These are some of the problems of this study.

1.3        Objectives of the Study

Through this study, the researcher aims at assessing the strong effects of using the internet as an alternative medium of marketing of goods and services.

The enhanced capital level of Nigeria banks has heightened competition among the institutions in terms of expanding branch network, new product offerings and application of technology. Nigerian banks now have the capacity to take on more complex, big-ticket transactions. They have also improved their international competitiveness. The leverage has attracted the attention of the international business community who now see the need to do business with Nigeria banks (Oceanic, 2007).

Oceanic bank business office expansion began in the 2000 from a total of 12 branches as at September 31st, 2000. These have grown to 320 Business offices spread across the country. Currently the bank is ranked amongst the top four banks in the industry in terms of branch network. In the year 2006/2007 alone, the bank added a total of 135 Business offices to its branch network. Subject to regulatory approval, the bank doubles its network of business offices in 2007/2008 financial year.

Zenith bank, as a child of information Age, laid the foundation of its structures and processes on cutting-edge of information and communication technology (ICT)


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infrastructure. This ensures that every operation/transaction is carried out via a medium that makes for speed, utmost flexibility, accuracy and convenience for the customer. Thus, in Zenith bank, all activities are anchored on the E-platform, ensuring service delivery through the electronic media to all customers irrespective of place, time and distance. This has aided the achievement and sustenance of deeper and broader relationship with all clients, the peculiarities of their individual or industry needs notwithstanding.

Thus, a recent industry-wide survey conducted by KPMG professional services on customer service quality among Nigeria banks, showed Zenith bank as the “Most Customer-focused Bank” in the country. This goes to affirm a tradition of superior service quality that has become a heritage of Zenith Bank. As a pathfinder in ICT-enabled banking in Nigeria, Zenith Bank has leveraged its in-depth understanding of the local business environment and global financial markets to develop unique e-solutions to meet specific customer needs. The unique deployment of ICT to customer service delivery has made the Zenith franchise synonymous with e-banking. The bank’s e-products range covers virtually all services and fall into three broad categori


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