Introduction
According to Toffler, Betsy, and Jane. (2000) in their dictionary entitled Dictionary of Marketing Terms, the term marketing is defined as the process by which a product or service originates. They further state that a marketing channel is how a product is priced, promoted, and distributed to consumers. Beckwith (1997) also says that marketing involves the process of market research and product development, design, and testing.
Beckwith (1997) also says that marketing is concentrated primarily on the consumers and that after a marketer has identified and determined the customer’s needs, the marketer develops several strategies for enlightening the customer on the products’ most important features. The marketer also tries to persuade the consumer to buy the said product. After the consumers have bought the product, it is the marketer that ensures that satisfaction enhancement goes alongside the purchase. In today’s world businesses are trying to find avenues and means of making more sales in an economy that has become global due to the advancement of technological trends. This leads to the critical review of this paper entitled ‘The Impact of Internet Marketing on Profitability’.
Critical review
Abstract and Introduction
The writers of this research journal have stated in their abstract and introduction that marketing has been dynamically affected by the introduction of the internet. They give their abstract and precisely state their research questions leaving no doubt of their intended research and desired results. The words that these writers should have included in their abstract and introduction are the words of Riggs (1998) who clearly states that “Marketing includes planning, organizing, staffing, directing and controlling decision making process”. This is in regards to the promotion, pricing, servicing, and product lines. They should have also given the information that most of the areas of marketing have overall authority in terms of the channel theory while others exhibit authority in product-line development. This would have helped instigate a better understanding of the research question and a clearer view of the research solutions and conclusions
Literature review
The way the journal expresses the literature review is to some extent unsatisfactory. It is indeed true that the channel theory has concentrated on vertical dependencies between firms in the marketing channel. However, these writers leave a lot to be desired regarding the horizontal effects of the marketing channels as per the channel theory. I feel that the writers could have provided more information on the actors of the exchange process and how these actors affect the research proposal. This would have ensured the dependability of the financial and accounting statistics that this research proposal uses as its backbone. Also, how for instance do you account for the functional distribution between firms about internet marketing?
Comparison and contrast with Internet retail
When comparing and contrasting the internet marketing channel with the catalog marketing channel, the writers of this journal tend to have a bias for the internet marketing channel. What they forget, that the catalog marketing channel has been extensively developed in political, economic, financial, and social areas due to its long pre-existence and use. Internet is still new and its knowledge unknown to many consumers and thus if the writers would have carried extensive research, a strong belief resides within me that the accounting figures would have been leaning towards the famous and widely known catalog system. Also, as we shall see later, the accounting margins on ROA and ROS are not convincing. However, we should give credit where it is due. As much as the catalog system may share some characteristics with internet marketing, the latter has in various ways like efficiency surpassed the former making it indeed superior.
Channel Intermediaries
Even though the journal speaks of three channels through which marketing occurs, there is strong proof that these channels are not wholly and properly incorporated in the determinant of the profitability tests. Equations are not provided by the researchers on the constant and non-constant factors considered and how these factors influenced their decisions on the choice of variable constants for the research. Internet marketing was also at a disadvantage because distribution channels are physical whereas the internet is wholly virtual. Based on the financial ratios examined in this study, under what category are the internet users that order goods or services, pay for them but never receive them placed. Is the financial basket of an individual considered using the quantity the individual is willing to buy through the internet marketing channels? When one sees an advertisement on the internet but purchases through the catalog system, where is credit due? Is it to the catalog system or the internet channel? How can profitability be measured in such a situation? To me, such are the shortfalls encountered regarding the channels of intermediaries used by this. We must also place into account the fact that the internet channels are dynamic unlike the catalog systems thus making the internet channels difficult to predict and use in the calculation of profitability margins.
Research Question
According to the research question, the researcher acknowledges that indeed there exists a profitability difference between the internet marketing channel and the catalog marketing channel. What he intends to find out is the level or rather the statistical significance of this difference. This is dangerous because he has in no way stated the difference and has moved on to the research with a tint of formed opinion on the expected result. However, the research distinctively answers the research question despite this.
Research Hypothesis
The hypothesis is well defined and categorically clear on the expectations that are later justified at the end of the research. The null hypothesis is a correct reflection of its counterpart, not the null hypothesis as required in the event of a t-test.
Research Methodology
The researchers did not choose the best methodology. According to Riggs and Thomas (1998), the method used by the researchers was the Quota sampling method. Beckwith (1997) states that quota sampling is a nonprobability equivalent of stratified sampling and that like stratified sampling, stratums, and their proportions are identified as represented in the population after which judgment sampling is used to select a required number of subjects from each stratum. This method has its disadvantages in the sense that the sample population does not have an equal and known chance of being part of the sample due to its selective nature. Also, it does not specify the ratio of the proportion of the sample to the research population thus making the sample unreliable. Another major disadvantage of this method is that it does not consider the various marketing factors affecting the samples to be. Such marketing factors include the profitability of the company, technological advancement, and the nature of services or goods offered by the company using the marketing channels. Thus, it is clear that this form of sampling will lead to erroneous results. The best sampling method would have been random sampling that would have issued an equal opportunity to all the companies in the research area regardless of the state, nature, or size.
Data Analysis
The method used for data collection is wanting. This is because the data being analyzed is not in real-time and might not give the true light of the current marketing trends especially when it comes to the currently preferred marketing channel. Also, due to the dynamic nature of the current markets, data, therefore, is dynamic and thus making the profitability margins dynamic. This makes the data analysis process used to be wanting as other dynamic means would have been used to analyze the existing data.
It is also important to note that the margin of error that is expected in any such research is not noted while analyzing the existing data. It is assumed that the process of data collection and analysis and the protocols put in place for the said process are perfect. This is a costly assumption for it might determine the preference of a wrong marketing channel in a situation of the microscopic level of profit margin differences.
Results And Findings
Beckwith (1997) adds to what is in the journal when he states that the marketing department of a business firm is responsible for the physical distribution of the products. Marketing might be done on the internet successfully but can products be successfully distributed over the internet to achieve the profit margins, ROA, ROE, and ROS? These areas require accurate determination of the channels of distribution that are sufficient to ensure that the supervisory role of the marketing managers and product managers on the profit flow of goods and demand creation are harmonized. It is in this light that we discuss the results and findings as follows:
Despite the 0.05 level of significance in profitability and the poor market segmentation by the researchers, I can state that internet marketing remains superior over catalog marketing. This fact is further proven by Riggs and Thomas (1998) who state that internet marketing has an average of 2% Gross Domestic Product growth effect over catalog marketing. However, it is interesting to note that Giffen goods have not been discussed in this light. How does profitability react to such a Giffen situation when exposed to internet marketing? It can also be true that on the T-test, the mean differences in the profitability margins of the catalog channel are slightly higher than those of the internet channels. However, did the researchers consider the various risk factors affecting marketing channels?
Conclusion
Despite the errors in the research noted and the factors like the market segments that were ignored by the researchers. I can state that the research’s variables like ROA, ROE, and ROS are well predefined and correctly calculated to ascertain some level of confidence in the research findings. However, the internet as a marketing channel remains the way forward due to its dynamic nature among other vantage points it holds against catalog marketing channels. It will however depend on a company to review this research and make their conclusions on the type of marketing channels they desire
References
Beckwith, H (1997). Selling the Invisible: A Field Guide to Modern Marketing. Warner.
Riggs, T (1998) Encyclopedia of Major Marketing Campaigns. Gale.
Toffler, Betsy-Ann, & Imber J (2000) Dictionary of Marketing Terms. 3rd ed. Barron’s Educational.