chapter 2 - DSpace@UM

CHAPTER 2.0 LITERATURE REVIEW
Previous chapter has provided a knowledge regard the environment of global market and
environment of global magazine business. The last chapter also reveals the current
problem that Global Publishing Sdn Bhd faced and the limitations it encountered when
carried out the research. Chapter 1 explains the contribution of the study and the overall
picture of the research being conducted. Chapter 2 will cover the literature that has been
conducted by other researchers. Chapter 2 contains a literature review on magazines and
e- magazines; the Internet; Internet usage, attitude and age differences, some information
on world internet users, online marketing and the advantages of online marketing. There
are potential of E-magazines in the Asia market, and this literature review will guide us in
exploring the potential of magazines business online.
2.1 Magazines and E-magazines
While our research study focused on the magazines, the study found that magazines
received very little attention compared to other mass media, such as newspapers and
television, and magazines receive only single digit percentage representation in some of
the major scholarly publications of the communication field (Abrahamson, 1996). The
reason are mainly due to the magazines are always seen as branch of craft of journalism
(Schmidt, 1989).
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Johann Gutenberg started the printing press in the 1450’s, approximately five hundred
years ago, and the first book ever be printed was a Latin language Bible, printed in
Mainz, Germany. 3 Over the years, magazines have come to the market at the rate of more
than 500 per year. This is mainly due to the magazines titles are increasing specialized,
which the publishers know their target market well and gear content and to meet specific
customer needs (Wallys W. Conhaim, 1993), at the mean time, he also contended of the
thousand of the magazines in circulation in United States, only a few dozen have a “live”
online presence. In fact, the print publication learns long ago that simply offering their
publication in electronic form, it was introduced much earlier in the mid seventies (T.C.
Ling, Mashkuri Haji Yaacob, K.K. Phang,1996).
Drott (1995) contends the “new communication channels have, in fact, been emerging for
decades”, and the electronic publishing is just another new communication channel.
Hawkins et al. (1994) have defined electronic publishing as “the use of electronic media,
computers and telecommunications to deliver information to users in electronic form or
from electronic sources”. Its does mean the publisher transferring the information
between end user without the involvement of paper. Electronic Publication often covers
electronic bulletin boards, online newspaper, online magazines and book.
2.2 Internet Usage, Attitude and Age Differences
In the 1960s and 1970s researchers such as Howard, Nicosia, Sheth, Engel and Bettman
had developed similar theories of consumer behavior that form the core of consumer
3 Source: http://www.greatsite.com/timeline-english-bible-history/gutenberg.html
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decision making theory, most of them mainly look from demographic perspective,
Bellman et al. (1999) have used a Wharton Forum panel consisting of 10,180 persons to
characterize internet shoppers regarding their internet habits based on number of daily
mails, months online and other mainly behavioral aspects of internet use such as income,
education and age have a modest impact on the decision of whether to buy online. They
concluded that once people are online, whether they buy there, and how much they spend
has more to do with whether they like to buy online and whether the time they have for
buying is limited.
Two studies, Donthu and Garcia (1999) and Korgaonkar and Wolin (1999) found that
older internet users were more likely to buy online when compared to young internet
users, even though the younger users had more positive attitudes towards internet
shopping. Korgaonkar and Wolin (1999) also concluded that the age and gender has
impacted the likelihood of the online purchasing. In the relationship between age and
Internet shopping motivations, Dholoka and Uusitalo (2002) found that young consumers
reported more hedonic ands utilitarian benefits of online shopping. Joines at al. (2003)
has included the measures of searching for products online and purchasing products
online, showed contradict conclusion with the Korgaonkar and Wolin (1999), which he
concluded that the young users were more likely to shop online. However, the research
may not conclusive as the data is relatively small.
Purchasing via the internet is one of the most rapidly growing forms of trade (Limayem
et al., 2000; Levy and Weitz, 2004; Shim et al., 2001). Loshe et al. (2000), using panel
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data, found that the percentage of panelists making a purchase on the Internet increases as
a function of time spent online. They showed that the longer the amount of time spent
online, the greater the chance of making a purchase online. Bellman et al. (1999) said
number of months online as well as length of time spent online is an important predictor
of online buying behavior. Morganosky and Cude (2000) were the first to look
specifically at the reasons for consumers to shop online in the grocery area, and their
survey of 243 respondents from the USA showed that convenience and time saved were
the primary reasons for shopping online.
Surveys conducted by Graphics, Visualization and Usability group at George Tech,
(1994-1998) concluded that the web delivers convenience and time savings for the online
shopper. Alreck and Settle (2002) also concluded that the internet shopping was
perceived as saving more time than traditional modes of shopping.
Bathnagar et al (2000) concluded the increases in the product category risk (the product
was technologically complex, high price, satisfied the needs of the purchasers and was
sold based on its feel or touch) and financial risk (fears about the safety of customers’
financial information online) decreases the likelihood of online purchase behavior.
Vellido et al (2000) had concluded that the online purchase was determined by the
consumers risk perception of shopping on the internet.
Evans and Wurster (1999) said internets provide a rich source of information for many
products. Peterson et al. (1997) said more extensive and higher quality information
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available online leads to better buying decisions and higher levels of customer
satisfactions. Smith and Brynjolfsson (2001) felt that there is strong indicator online
consumers used brand as an indicator for merchant reliability and service quality.
Many marketing practitioners and researchers continue to be interested in perceived risk
because it is more powerful in explaining consumer behavior and also because the theory
has intuitive appeal and broad application (Mitchell, 1999). Bhatnagar et al. (2000)
argued that the likelihood of purchasing on the Internet decreases with increases in
product risk.
2.3 The Internet
Internet was used in the 1960s as a means for protecting US mainframe computer systems
in the Cold War. In the 1970s Internet used as a link for scientists and academics to share
data and research, the Internet get popular in the 1990s with the combination of the
personal computer and citizens’ band radio (Hof and Verity, 1994). Today, in this
modern age of Internet almost every business has web presence to run their company
activities; the emergence of the Internet has been becoming a powerful channel for
business marketing and communication (Palmer, 1999).
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2.4 World Internet Users
In 1990, fewer than 1 million users were connected to the Internet, by 1995; the figure
had risen to 50 million. By 2007, the Internet may have more than 1.47 billion users, or
about 25 percent of the world’s population. 4 According to a recent global survey
conducted by The Nielsen Company in February 2008, 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.
Figure 4: World Internet Users Figure 5: Internet Users in the World
December 2007 (%) December 2007
A survey has been carried by the Miniwatts Marketing Group in year 2007 on Asia
country and several countries such as Europe, North America, Latin America, Africa,
4 Source: Global Business Today, Charles.W.L.Hill Fifth edition.Pg14
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Middle East and Australia country. This survey showed that Asia is the biggest Internet
users with 38.7% or 510 millions of users of the 1319,872,109 world Internet users. It’ s
followed by the Europe country with 26.4% Internet users, and North America country
with the 18% Internet users.
Figure 6: Internet Users in the World Growth between 2000 and 2007
A survey has been carried out by the Miniwatts Marketing Group on the growth rates
between year 2000-2007 for the Internet users in the world, with the estimates of
1,319,872,109 total world Internet users, the world growth average of the Internet Users
between this periods are around 265.6%, there are four regions which above the world
growth average rates, with the Middle East country has the largest growth rates of
920.20%, followed by Africa country with 882.7%, Latin America/Caribbean country of
598.50% and Asia country of 346.60%.
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Figure 7: Top 20 Countries in Internet Usage
The table above showed the survey carried by the Miniwatts Marketing Group on the top
20 countries with the highest numbers of Internet users; United States has the highest
ranking with 211 million users, followed by China with 162 million users and etc.
However, the top 20 countries do not include the Singapore country.
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By looking into the top 20 countries with the highest Internet users, Global Publishing
Sdn Bhd has a good potential and chances of success to market their magazines to China
using the online marketing strategy.
2.5 Online Marketing
Online marketing also known as Internet marketing or E-marketing, is the marketing of
products or services over the Internet. With the advent and mass acceptance of the
telephone, radio, television, and then cable, electronic media have become the dominant
marketing force (Hoge, 1993). Smith and Chaffey (2005) give a short and basic definition
of E-marketing as “ Achieving marketing objectives through use of electronic
communication technology. They also stress that E-marketing is most effective when
used with other conventional communication channels. Chaffey (2005) also reckons that
any communication or messages to the customer must be personalized and each buyer
must treat distinctly 5 . E-marketing also referred to the process of building and
maintaining customer relationships through online activities to facilitate the exchange of
ideas, products and services that satisfy the goals of buyers and sellers (Imber and Betsy
Ann, 2000). E-marketing uses the Internet as a platform that allows firms to adapt to the
needs of customers, reduces transaction costs, and allows customers to move from time
and location based behaviors toward non-temporal and non-locational behaviors (Watson
et al., 2002). The Internet has brought many unique benefits to marketing including low
costs in distributing information and media to a global audience. The interactive nature of
online marketing, both in terms of instant response and in eliciting response, are unique
5 Source: (http://en.wikipedia.org/wiki/E-Marketing, 2006).
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qualities of the medium. Online marketing enables the business for business expansion
from a local market to a national or international one more faster compared to traditional
media, such as print, radio and TV, moreover Internet marketing can have a relatively
low cost of entry.
The Advantages
Cost Effective Marketing Strategies
The Internet has become the information superhighway for the buying public. Peoples
use the Internet for various activities, such as gather information knowledge, Internet
banking transaction, download music, plays games, online shopping, and etc. Most
companies use the website as a portal to create new marketing channels to market the
products or services, and the cost of an online marketing platforms is typically lower than
other marketing platforms with the elimination of face to face salespeople or middle
people or middlemen distributors (Watson et al, 2002), besides Internet also provide
better or faster product services access to the customer.
Market Penetration
With millions of people using the Internet to search for products and services, small
businesses can penetrate other markets using online marketing at a fraction of the cost of
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traditional marketing methods. It presents a fast and cost effective option for penetrating
new markets.
Websites act as virtual storefronts, allowing businesses to stay open 24/7. It’ s easier for
an upstart business to be able to reach the millions of potential customers, without the
need for costly infrastructure, and overwhelming marketing costs.
Figure 8: World Internet Penetration Rates (December 2007)
The survey carried out by the Miniwatts Marketing Group on the world Internet
penetration rate in year 2007 showed that the North America country is the world highest
Internet penetration rate country (71.1%), its followed by Australia (57.1%), Europe
(43.4%), Latin America (22.2%), Middle East (17.4%), Asia country (13.7%), and lastly
Africa (4.7%).
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Low Cost, Instant Communication
Johns and Spiegel (2003) said the Internet makes business communications between the
businessmen and the customers easier to maintain contact and facilitates repeat
purchasing. An effective online strategy can therefore turn a small web business into an
income-generating machine; its enable the small business gain significant competitive
advantage in a given market.
Many online businesses have therefore use the ezines, blogs, pop-up advertisements to let
customers know about new products or services as well as provide information relevant
to their respective industry. Marketers can effectively heighten brand awareness for
relatively new products on the market whilst strengthening customer relationships, with
shorter time frames.
Content is Timeless
Internet promotion also provides the advantage of being enduring. Internet promotion is
often timeless, the company’ s website content remains valid years after, However, if
compare to participation at a trade fair or conference, a company might loses its sales
impact once it is over, and an advertisement in a newspaper or business magazine may
quickly lose its sales generating value within a day or two or as soon as the next issue is
released.
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Success of Promotion Campaign is Measurable
Internet promotion success is measurable. Marketers can use tools that provide real time
statistics, on unique visitors, repeat visitors, click through rates (CTR) on advertisements,
thereby allowing them to evaluate the effectiveness of a promotion campaign. This
enables marketers to determine what works for their particular market and to make timely
changes in their marketing strategies.
Time Saving and Global Reach
Another important advantage of Internet promotion is that it saves time since it generally
does not need a middleman in another part of the world to reach out to the customers.
Visitors can access “ frequently asked questions” to help themselves, and can buy online,
without the involvement of staff. This saves time and money.
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