UNIVERSITY OF ECONOMICS

PRAGUE

DIPLOMA THESIS

2011 VIKRAM MEHRA

University of Economics, Prague

International Business Central European Business Realities

Online Marketing in Small and Medium sized companies

Author: Vikram Mehra

Thesis instructor: Ing. Petr Krl, Ph.D.

Scholar year: 2010/2011

Declaration:

I hereby declare that I am the sole author of the thesis entitled Online Marketing in Small and Medium sized companies. I duly marked out all quotations. The used literature and sources are stated in the attached list of references.

In Prague on ............................. Signature:

Vikram Mehra

Acknowledgement

I hereby wish to express my appreciation and gratitude to the supervisor of my thesis, Ing. Petr Krl, Ph.D. I will like to express my profound gratitude to the Director of International Business program Mrs. Ludmila Sterbova for her patience and encouragement. Also, I will like to thank the Coordinator of the International Business program Ms. Ivana Krejci, for her support during my studies. I will also like to thank Mr. Marek Novek divisional manager of patro.cz for his cooperation during the information gathering process.

ABSTRACT

Online marketing plays a significant role in business and the World Wide Web has proven to

become a platform for success for many enterprises and industries. The advantages that comes

with the use of the internet platform for the marketing goods and services makes it imperative

for Small and Medium Enterprises (SMEs) to adopt, in order to stay competitive in the fast

changing global market. The main objective of this study is to explore the dynamics of the

Internet in connection with (SMEs). The case study approach is used in this study. Hence, this

thesis provides an analysis of the internet marketing strategy in the company NWT a.s and its

e-shop Patro.cz. The study found that, the internet as a marketing tool can enhance customer

relationship and enable SMEs in particular to maintain close contact with their customers and

provide them with a compelling shopping experience so as not to lose them to other

competitors.

Keywords: E-Marketing, SMEs, marketing communications, internet, online, marketing

Table of content

1.0 Introduction ....................................................................................................................... 1

1.1 Background of study ........................................................................................................... 1

1.2 Objectives of the study ........................................................................................................ 5

1.3 Organization of the study .................................................................................................... 6

2.0 Methodology ...................................................................................................................... 7

2.1. Design of the study ............................................................................................................. 7

2.2 Research Approach ............................................................................................................. 8

2.3 Strategy adopted in the study .............................................................................................. 8

2.4 Data gathering method ........................................................................................................ 9

3. Theoretical review ............................................................................................................. 11

3.1 Marketing and the emergence of the internet ................................................................... 11

3.2 SME (small and medium sized enterprises) ...................................................................... 13

3.3 The internet and SME growth ........................................................................................... 15

3.4 Online marketing / e-marketing ........................................................................................ 16

3.5 E-Business and E-Marketing Strategies ............................................................................ 18

3.6 The benefits of eMarketing over traditional marketing..................................................... 19

3.6.1 Reach .............................................................................................................................. 20

3.6.2 Scope .............................................................................................................................. 20

3.6.3 Interactivity .................................................................................................................... 20

3.6.4 Immediacy ...................................................................................................................... 21

3.6.5 Demographics and targeting ........................................................................................... 21

3.6.6 Adaptivity and closed loop marketing ........................................................................... 21

3.7 Online Marketing Tactics .................................................................................................. 22

3.8 Online advertising ............................................................................................................. 28

3.9 Summary and conclusion .................................................................................................. 36

4.0 Profile of NWT a.s. and Patro Group ............................................................................ 37

4.1 NWT a.s ............................................................................................................................ 37

4.2 The companys main business ........................................................................................... 38

4.3 Organizational structure of NWT a.s. ............................................................................... 39

4.3.1 Hardware division .......................................................................................................... 39

4.3.2 Service division .............................................................................................................. 40

4.3.3 Weak current division .................................................................................................... 40

4.3.4 Project division ............................................................................................................... 41

4.3.5 Internet division .............................................................................................................. 41

4.3.6 Solar division .................................................................................................................. 42

4.3.7 Patro division (Patro group) ........................................................................................... 42

5.0 Analysis of Online Marketing Strategies of the NWT a.s and PATRO.CZ ............... 45

5.1 NWT computers s.r.o to NWT a.s ..................................................................................... 45

5.2 The Internet marketing strategy ........................................................................................ 50

5.3 Email marketing ................................................................................................................ 50

5.4 Press release ...................................................................................................................... 52

5.5 Pay Per Click (PPC) advertising ....................................................................................... 52

5.6 Personal selling ................................................................................................................. 53

5.7 Online advertising/Banners ............................................................................................... 54

5.8 Web PR ............................................................................................................................. 55

5.9 Patro club ........................................................................................................................... 56

5.10 The social network phenomenon ..................................................................................... 56

5.11 SWOT analysis of NWT a.s and e-shop Patro.cz. .......................................................... 60

5.12 Application of Porters Five Forces model on NWT a.s. ................................................ 63

6.0 Conclusion and Recommendations ................................................................................ 67

6.1 Conclusions ....................................................................................................................... 67

6.2 Recommendations ............................................................................................................. 68

6.3 Suggestions for future research ......................................................................................... 70

Bibliography .......................................................................................................................... 71

Appendix ................................................................................................................................ 78

Figure 1: A webpage indicating pay per click ......................................................................... 32

Figure 2: In-text advertising .................................................................................................... 34

Figure 3: Old logo of NWT computers ................................................................................... 38

Figure 4: New logo of NWT a.s .............................................................................................. 38

Figure 5: Patro.cz banner on Novinky.cz ................................................................................ 55

Figure 6: Porters Five Forces model ...................................................................................... 64

Table 1: Categorization of enterprises..................................................................................... 14

Table 2: E-shops of patro.cz and types of items sold .............................................................. 43

Table 3: Number of visits to the e-shop Patro.cz in 2008 and 2009 ....................................... 46

1

1.0 INTRODUCTION

1.1 Background of study

Marketing is an important in the existence of every company irrespective of the industry it

finds itself. The concept of marketing has been around in one form or another. Since the day

when humans first started trading, marketing was there. However, the methods of marketing

have changed rapidly with a lot of improvements. Lately businesses have become a lot more

efficient at informing the public and getting their marketing messages to target markets.

In general, the concept of marketing is aimed at targeting an audience through a series of

activities. Marketing creates awareness for a certain need in consumers. The activities

involved in marketing are diverse, and from a marketing point of view they are classified as

separate tools which results in benefit to business entities. In spite of the different marketing

tools which are commonly used by companies, this study focuses on the usage of online

marketing in Small and Medium Enterprises (SMEs)

All over the world, Small and Medium Enterprises (SMEs) have been recognized as important

contributors in the economic growth and development of many countries. Small businesses

that are focused on growth are major contributors to economic development and avenues for

employment generation within local communities and national economies (Smallbone and

Wyer, 2000). SMEs contribute substantially to national economies (Poon and Swatman, 1999)

and are estimated to account for 80 per cent of global economic growth (Jutla, Bodorik, and

Dhaliqal, 2002).

SMEs today play a vital role in the businesses because of their presence in all industries.

Lately, new opportunities are been opened for most SMEs in both their domestic and

international markets and it behooves on them to strategize to take advantage of such

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opportunities. The significant role of SME in economic development makes it important to

highlight how marketing tools in general and online marketing tools specifically can

effectively affect or influence their operations to enable them to grow and become

competitive.

Online marketing plays a significant role in business and the World Wide Web has proven to

become a platform for success for many enterprises and industries. The online marketing

itself has transformed over the past decade, and its function and relevance has moved from its

basic use to a more advanced level. This study recognizes this change and diversified usage of

this tool and considers its influence in order to formally examine the overall significance of

the online marketing tool for SMEs and potential firms aiming at entering into business

ventures.

Online marketing or E-Marketing comes as a result of the interaction between modern

communication technologies and the age-old marketing principles that humans have always

applied. E-Marketing creates a platform for firms to market their products or services with

Internet medium. This medium includes emailing, websites, online banners and recently

social network sites. The internet enables business owners to automate nearly all of their

business management functions. That means that, E-Marketing capabilities are taking care of

the day-to-day tasks small business owners and their employees would normally be engaged

in.

By extension, E-Marketing saves business owners an extra option for meeting the needs of

customers. Many small business owners want to follow-up with their contacts, but do not

know how. In spite of the many benefits of the internet in marketing, some companies that are

willing to engage in e-marketing activities do not want to spend extra effort on internet

platforms as they are skeptical about its efficiency. However, it must be emphasized that, the

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internet equips owners of SMEs to quickly and effectively stay in contact with their prospects

and current customers easily as compared to traditional forms of marketing.

Also, through the use of the internet, business owners are able to design follow-up tools in an

E-Marketing system. In this modern age of business, an e-marketing platform ensures

business contacts, improves company brand and image and ensures the competitiveness of

companies. This is because E-Marketing enhances companies selling abilities and encourages

more people to do business with them.

E-marketing is rapidly becoming the preferred choice of global businesses and considering

how widely it is being used today by business in different sectors or industries attest to its

reliability and efficiency. E-marketing provides SMEs with a platform where they can explore

business opportunities. This platform equips and enables SMEs to position themselves to take

advantage of greater opportunities and growth.

According to Chapman, Ettkin and Helms (2000), the use of the Information and

Communication Technologies (ICT) improves business competitiveness and the Internet

provides the opportunity for SMEs to compete on equal terms with larger organizations

(Chapman et al., 2000). In the last decade, the development of e-commerce has permeated

through all facets of business and the rate keeps increasing. The internet has been used as an

important lever to promote business growth (Bianchi and Bivona, 2002). It is important for

firms to aspire to grow if it wants to maintain competitive advantage in any industry.

Growth must be a priority of any firm otherwise its competitors will grow more and overtake

them. Therefore, it is imperative to invest time and resources in continuous growth to ensure a

firms survival in the competitive business environment. It is important for firms to struggle

for continuous growth keeping the aim of increasing or simply maintaining their sales and

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profits levels, to ensure their survival (Claver, Andreu and Quer, 2006). Lately, E-commerce

has become a yardstick for growth and competitiveness and it is imperative on any firms

which desire to stay in business and become competitive must adopt this medium.

There are a number of publications on successful stories by researchers that are aimed

encouraging SMEs to start e-commerce ventures in order to boost their market potentials

(Bianchi and Bivona, 2002). Also, there are considerable amount of effort expended, both in

time and money, by governments in different countries and other relevant stakeholders aimed

at encouraging small and medium sized enterprises to invest in the Internet or use the internet

as a platform for business operations (Beckinsale and Levy, 2004).

According to Delmer (1998) some firms can be assumed to grow in a traditional way, that is

to say, they can simultaneously increase their sales and employment of the original business

entity. However, some other firms may increase sales while actually reducing employment

(Delmar, 1998). The growths of firms vary considerably; firms may grow smoothly or in one

or a few large steps and growing organically or through acquisition (Davidsson and Delmar,

1997). Whichever form the growth of firms take, internet plays a key role in its continuous

survival.

For a company to implement and achieve its growth aims, it is required that they excel in all

vital areas (Kapur, Ferris, Juliano and Berman, 2005). Growth oriented SMEs must set the

right growth direction by forming a clear roadmap on the future of the business. This will

include evolving the product-market portfolio without being limited by history, as well as

building a competitive model to win customers whiles pursuing reinforcing initiatives to

sustain growth. SMEs must understand their capabilities, based on realistic assessments of

their strengths and limitations in terms of the resources available to them. Such an assessment

will help in developing appropriate operational model to support the growth strategy.

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According to Keogh and Evans (1998) strategy for competitive advantage is very important

especially for SMEs. This is especially true when they are operating in a niche market and

they may be subject to pressures from other competitors.

According to Levy and Powell (2002) most SMEs do not view the Internet as the key to their

business strategy. According to Drew (2003), research in some countries show that SMEs

have been slower in adopting the internet than their larger counterparts. However, the rate of

the Internet usage in SMEs is growing quite rapidly. Drew (2003) further states that, the

internet has focused on enabling firms to develop new business models. He further states that,

SMEs in traditional industries have been slower to adopt e-commerce than their larger

competitors and research into the use of the Internet by such firms is more recent (Drew,

2003). The internet can be used to build up unique competitive position, attract customers,

and increase sales. (Constantinides, 2004)

There is a substantial information gap in existing research relating to growth strategies of

SMEs particularly in connection with the use of the internet as a strategy for growth.

Furthermore, there have been many claims regarding the impact of the Internet on the growth

of SMEs. The fact remains that not many empirical studies have been done to show the role of

the Internet in SME growth and the extent of the use of the internet as a key growth strategies

for SMEs.

1.2 Objectives of the study

In view of the above discussion, the main objective of this study is to explore the dynamics of

the Internet in connection with Small and Medium Enterprises (SMEs). The study looks at

the use of the internet as a marketing platform and the role it plays in SMEs.

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The case study approach is used in this study. Hence, this thesis explains how online

marketing is used in NWT a.s and its subsidiary PATRO Group. Using these two

organizations, this thesis describes strategies for online marketing in Small and Medium

Enterprises (SMEs). It provides practical, viable and result oriented recommendations that

will contribute to the proper implementation and effectiveness of online marketing strategies

in SMEs. Also, the thesis describes how online marketing can contribute to the growth and

increase in market share in a competitive business environment.

1.3 Organization of the study

The thesis is divided into five six chapters. The first chapter provides a background to the

study and sets the objectives that guide the study. The methodology that was adopted in

executing the study is described in the second chapter. Chapter three then reviews relevant

literature on online marketing. The chapter also defines the concepts of online marketing and

other relevant concepts related to it. Chapter four then provides a profile of NWT a.s and

Patro group. The fifth chapter contains the practical part of the study. The chapter is made up

of the analysis of data collected and interpretation. Finally, chapter six concludes the study.

The chapter provides relevant recommendations, practical implications as well as suggestions

for future research.

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2.0 METHODOLOGY

2.1 Design of the study

There are different types of research design. And according to Yin (1994) the purpose of

research study can be distinguished in three categories: exploratory, descriptive, or

explanatory. Exploratory research helps the researcher to clarify and understand the problem

at hand (Zikmund, 2000). Exploratory design enables researchers to gather information

regarding the topic of interest.

According to Zikmund (2000) good researchers strive for descriptive precision. Descriptive

research helps to find out the answer of who, what, when, where, and how of a problem. It is

used to determine the difference, in need, features of subgroups and its characteristics.

According to Sauders, Lewis and Thornhill (2007), it is important to have a clear picture of

the situation on which you wish to gather information, prior to the collection of data (Sauders,

Lewis and Thornhill, 2007).

Explanatory Research is conducted to identify causal relationships among variables.

According to Yin (1994) an explanatory research approach could also be used when the study

aims to explain certain procedures from different perspectives or situations with given set of

events.

The objectives of this study make it more descriptive. However, this study can partially be

seen as explanatory since it explores and finds out, by answering research questions and

drawing conclusions. The study describes the subject matter and explains the information

gathered in order to find out the differences and similarities against the theoretical review.

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2.2 Research Approach

There are two main approaches to research. They are the quantitative and qualitative

approaches. In qualitative research, the researcher examines, provides an understanding and

considers the phenomena by means of an inside perspective. Qualitative methods are often

done in case studies because it makes it possible to receive thorough information and thereby

obtain a deeper understanding of the subject or topic (Yin, 1994).

According to Hill and Wright (2001), studies in SMEs are rooted in the big firm mindset and

tending to focus mainly on survey methods. According to them, these methods do not provide

a rich understanding of the key issues affecting SME adoption of e-marketing platforms.

Several researchers also advocate for a qualitative approach for research on the activities of

SMEs. The reason is that qualitative research provides a comprehensive view and an

understanding of the whole phenomenon.

The purpose of this study is to investigate and describe online marketing strategies that are

used in SMEs. Based on research purpose and above discussion, the qualitative approach is

suitable for this thesis. Hence, the qualitative approach is used for this study.

2.3 Strategy adopted in the study

According to Yin (1994) there are five major research strategies in the social science:

experiments, surveys, archival analysis, histories, and case studies. According to Yin (1994)

case studies strategy is when how or why questions are being posed, when researcher has

little control over events, and when the focus is on current happening within some real life

perspective. Gummesson (2000) describes case research as a useful strategy for studying

marketing processes in companies. Therefore, this study will adopt the case study strategy.

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The analytical part will be focused on online marketing of NWT computers and the internet

shop Patro.cz (PATRO Group).

A case study is a comprehensive description and analysis of a single situation (Yin, 1994).

The main aim of case studies is to seek conformity between the results and theories. The use

of case studies provides in-depth, contextual analyses of similar situations in other

organizations, where the nature of the problem and the problem definition happen to be the

same as the one experienced in the current situation (Sekaran, 2000).

The purpose of this study is to investigate and describe the role of the Internet in the

marketing by SMEs. The selection of case study is further motivated by the fact that, the

researcher has no control over the topic under study and the information is presented as it

happens in real life. This study attempts to provide a comprehensive view of the phenomena

and it provides detailed information of on the use of internet marketing by NWT a.s and its

subsidiary PATRO group.

2.4 Data gathering method

According to Yin (1994) data collection for case studies can be relied on six important

sources: documentation, archival records, interviews, direct observation, participant-

observation, and physical artifacts. With each source that is selected, there are advantages and

disadvantages. One of the main advantages of case study data collection is the opportunity to

use many sources of evidence. This enables the researcher to obtain enough information from

multiple sources to address the objectives of the study.

In this study, secondary data was collected from internet sources. This source is of

significance because of the subject matter of the study and the nature of the companies chosen

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for the study. This study examines online marketing in SMEs; hence, the internet is relevant

to this case study. The companies chosen for the study largely conduct their business over the

internet. The data in this study includes examining the firms web site for obtaining and

assessing secondary information. This includes the firms history, products, brochures, and

other related information.

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3.0 THEORETICAL REVIEW

3.1 Marketing and the emergence of the internet

The marketing concept is implemented by organizations in many ways and it is generally

perceived to be a function for growth. According to the American Marketing Association

(AMA), marketing is an organizational function and a set of processes for creating,

communicating and delivering value to customers and for managing customer relationships in

ways that benefit the organization and its stakeholders (AMA, 2004)1

The above definition provides an idea of the concept of marketing but due to the diverse

usage of this concept there are other different analytical definitions. In my opinion, marketing

is a set of activities through which a common goal of a company is achieved. This common

goal is shared by organizations, irrespective of whether the organization is profit or non-profit

oriented. However, for most commercial business entities such as SMEs, their major goal is to

maximize profit and increase market share. This goal is achieved when they are able to create

awareness of their products and services to influence the decision making process of

consumers. Lately, the internet has become one of the avenues that companies use in their

marketing activities.

In last two decades, thanks to progress in information technology, there has been the

establishment of a new informational and communication medium - the Internet. According to

Kurtz and Boone, the internet is a global collection of computer networks linked together for

a purpose of exchanging data and information (Kurtz and Boone 2006). After the extension of

the Internet into households, companies started using this medium as a marketing tool.

American Association of Maketing (2004). Definition of marketing, retrieved from

http://magnostic.wordpress.com/2007/05/21/ama-proposes-new-definition-of-marketing/

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Nowadays, the Internet facilitates the execution of some of the elements of the marketing

communications mix as it has some specific features which other traditional marketing media

do not have. Through the internet, we are able to send and receive electronic mail, access

information from any part of the world, use search systems, discussion forums, advertise, chat

online, organize business meetings in real time and transfer large amounts of files2. All of

these are mediums that help in marketing communications. The internet has also impacted the

business strategy, marketing channel structures and inter-organizational relationships. Kurtz

and Boone divided web or internet function into four categories. These are:

a. Communication: email, instant messaging, chat rooms, and bulletin boards, online

communications.

b. Entertainment: games, radio and TV programming including music, streaming video

of live news reports, sports, and musical performances, electronic books.

c. E-Commerce: online auctions, business to business (B2B) - electronic storefronts and

cyber mails, web kiosk, online ticketing, match making.

d. Information: search engines, online publications, newsgroups, Internet forums,

electronic bulletin boards, web communities. (Kurtz and Boone 2006)

The Internet is mostly represented by the World Wide Web (WWW). The World Wide Web

can be considered as a network within which there are a number of modes, called web sites

(Fill, 2005). The websites are usually created by organizations and individuals who want to

use the Internet for business or personal activities.

Today the World Wide Web is a platform which unites the world, in a sense to share

information and knowledge in the fastest possible way 2. The recent trend of international

business and the era of globalization where companies expand across a wide geographical

http://www.wilsonweb.com/wmt5/viral-principles.htm

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area has created a case for the internet to be the main driving force for businesses. The trend

in business growth and expansion has become a factor for the adoption of the internet. The

internet provides faster results and in the most efficient and reliable manner.

In general the internet creates a platform for company recognition and awareness and

contributes in segmentation and targeting a specific group of audience. Both B2B (business to

business) and B2C (business to consumer) markets are heavily dependent on it for a very

simple reason and that is, the fact that - it is efficient, affordable and provides coverage to a

large audience.

3.2 SME (small and medium sized enterprises)

SME (small-to-medium enterprise) is a term for segmenting businesses and other

organizations that are somewhere between the "small office-home office" size and the larger

enterprise. On 6 May 2003 the European Commission adopted Recommendation

2003/361/EC regarding the SME definition which replaced Recommendation 96/280/EC

from 1 January 20053.

According to the European commission, enterprises qualify as micro, small and medium-sized

enterprises (SMEs) if they fulfill the criteria laid down in the recommendation which are

summarized in the table below. In addition to the staff headcount ceiling, an enterprise

qualifies as an SME if it meets either the turnover ceiling or the balance sheet ceiling, but not

necessarily both. The European commission has therefore defined SMEs as a legally

independent company with no more than 250 employees.

3 European Commission (2006) Categorizations of SMEs,

http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htm

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Table 1: Categorization of enterprises

Enterprise category Employee head count Turnover Balance sheet total

medium-sized < 250 50 million 43 million

Small < 50 10 million 10 million

Micro < 10 2 million 2 million

SOURCE: European Commission, 20064

SMEs are very common and form a greater part of businesses globally. Every emerging

market has lots of SME which flourish under the national growth strategies whereas in other

economies be it undeveloped or developed, SME play a role to provide the basic necessities

within a society.

Today, globalization is a major driver that has impact on nearly every business. The

internationalization of markets for sales and purchasing, at least indirectly influences every

business. In the result, even smaller and locally orientated businesses have to see themselves

in a global context, even if they do not intend to launch their own import or export activities.

Doubtless, a major strength for many SMEs is their close customer contact and their ability to

maintain close and continuous customer relationships.

Nevertheless, in the light of todays business environment, SMEs have to ask themselves

some questions, thus, if they want to go on with their local strategy or if they want to conduct

their business outside their traditional region of operation. Both way they have to make a

decision and they need to choose what kind and where and how they want to do the

European Commission (2006) Categorizations of SMEs,

http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htm

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marketing. Marketing plays an important role among SMEs and it is essential for their

survival in a highly competitive environment. SMEs constantly try to be innovative and a step

ahead of its competitors.

3.3 The internet and SME growth

The Internet creates an opportunity for businesses in general and SMEs in particular as it

reduces transaction costs of business and provides a level playing field for businesses. Some

of the benefits that accrue to businesses include the expansion of the scope of marketing,

wider and richer communication, reaching new markets, reducing the cost of operations and

partnering with suppliers and other collaborators (Drew, 2003).

The emergence of the internet provides a unique opportunity to examine the evolution and

growth of a business sector because it has taken place over a relatively short time period

(Javalgi, Cutler, and Todd, 2004). The internet as a channel for commerce is applicable to

different kinds of industries around the world. As a new marketing tool, it is transforming

businesses and creating new opportunities as well as challenges for international marketers.

Several companies in different nations are fast connecting to the global marketplace through

the internet.

Electronic commerce is affecting the way business are planning growth strategies and is the

leading driver of enterprise growth. In whichever way that the internet is used, it is important

that the internet is seen as the new engine for growth, and not as a frustrating tool for SMEs

(Fruhling and Digman, 2000)5.

Fruhling, A.l., and Digman, La.(2000). The impact of electronic commerce on business-level

strategies. Journal of Electronic Commerce Research, 1(1), also available at http://www.csulb.edu/web/journals/jecr/issues/20001/paper2.htm

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According to Drew (2003) several SMEs have made innovative uses of the Internet to invent

new business models or to enhance existing practices to enable them grow (Drew, 2003).

Many firms are constantly trying innovation with electronic commerce with the hopes to

ensure the efficiency and growth of their companies. Fruhling and Digman (2000) indicated

that electronic commerce enables business to quickly and efficiently implement growth

strategies. It is said that one of main reasons this strategy is so attractive is the incredible

growth rate of the Internet users.

3.4 Online marketing / e-marketing

A number of terms have been used to describe marketing activities that take place on the

Internet or other electronic tools as smart phones. In the following text there are some most

frequently used terminologies. The first one is electronic commerce, or E-Commerce (also

referred to as E-business). According to Kurtz and Boone (2006) it was defined as "a targeting

customers by collection and analyzing business information, conducting customer transaction

and maintaining online relationships with customers by means of computer networks."

(Kurtzs and Boone 2006) E-Commerce makes a background for launching a new business,

extending the reach of existing companies, and also retaining customer relationships. The

particular interest to marketers that is a part of E-Commerce is called electronic marketing (E-

Marketing). E-marketing or electronic marketing refers to the application of marketing

principles and techniques via electronic media and more specifically the Internet. E-

Marketing is the process of marketing a brand using the Internet (Kumar, 2010)6.

6 Kumar (2010) History of e-marketing, retrieved from

http://www.indiastudychannel.com/resources/113957-Histoey-e-marketing.aspx

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By such a definition, E-Marketing encompasses all activities a business conducts via the

World Wide Web with the aim of attracting new business, retaining current business and

developing its brand identity (Zarabotka, 2010)7. It is important to implement E-marketing

correctly because the return on investment (ROI) from such a platform can exceed that of

traditional marketing strategies. Whether it is a bricks and mortar business or a concern

operating purely online, the Internet is a viable force that cannot be ignored (Zarabotka,

2010). The use of the internet as a marketing tool enables business to reach millions of people

from year to year.

E-marketing is one of the processes for communicating and delivering value to customers and

for managing customer relationships in ways that benefit the organization and its

stakeholders. E-marketing has its own approaches and tools that contribute to the achievement

of marketing goals and objectives.

Generally marketing is about creating exchanges that simultaneously satisfy the firm and

customers. Mohammed, Fisher, Jaworksi, and Paddison (2003) suggested following definition

of the Internet marketing: Internet marketing is a strategic process of building and maintaining

customer relationships through on-line activities to facilitate the exchange of ideas, products,

and services that satisfy the goals of both parties. The process comprise: creating, distributing,

promoting, and pricing goods and services over the Internet through digital tools (Kurtz and

Boone 2006). It must be emphasized that, usually, the terms eMarketing, Internet marketing

and online marketing, are frequently interchanged, and can often be considered synonymous.

7 Zarabotka (2010). What is E-Marketing and how is it better than traditional marketing?

Retrieved from http://parizarabotka.blogspot.com/2010/07/what-is-emarketing-and-how-is-it-better.html

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It includes both direct response marketing and indirect marketing elements and uses a range

of technologies to help connect businesses to their customers (Kumar, 2010).

3.5 E-Business and E-Marketing Strategies

E-Business strategy is the deployment of enterprise resources to capitalize on technologies for

reaching specified objectives that ultimately improve performance and create sustainable

competitive advantage. According to Mohan (2005) when traditional business or corporate

strategies include information technology elements, such as internet and databases, they

become e-business strategies:

E-Business Strategy = Corporate Strategy + information Technology

Similar to the above, Mohan (2005) further indicates that when traditional marketing

strategies incorporate digital technologies to implement the strategies, they become E-

Marketing strategies:

E-Marketing Strategy = Marketing Strategy + information Technology

Strategic E-Marketing is the design of marketing strategy that capitalizes on the organizations

electronic or information technology capabilities to achieve specified objectives.

E-business adapts relevant and current technologies to the philosophy of marketing and its

management. It focuses attention on the areas of e-commerce, business intelligence; customer

relationship management, supply chain management, and enterprise resource planning

provide a framework for effective adaptation. Although the electronic environment

experiences rapid changes, the reliance on proven marketing models, in these areas, ensures

continuity of the marketing process both online and off-line. The above concept of e-business

19

leads to the realization that traditional marketing tools and approaches have to be transformed

into electronic media.

The two main issues for conducting business online are privacy and security. Various surveys

have indicated that online shoppers are concerned with their privacy, in particular about the

confidentiality of the personal data they provide to online retailers. For internet relationships

to succeed, trust is required for: Internet, website, information on website, and fulfillment of

website promises. According to Urban, Sultan, and Qualls (2000) the keys to building website

trust are:

i. Maximizing cues that build trust in a company's website

ii. Using virtual-advisor technology to gain customer confidence and belief.

iii. Providing unbiased and complete information.

iv. Including competitive products.

v. Keeping the stated promises.

3.6 The benefits of eMarketing over traditional marketing

According to Quirk E-Marketing (2006)8, the benefits that accrue to firms through the

adoption of online marketing strategies can be categorized into reach, scope, interactivity,

immediacy, demographics and targeting, adaptivity and closed loop marketing. These

categories are explained below.

8 Quirk E-Marketing (2006) What is eMarketing and how is it better than traditional marketing? Retrived from http://www.quirk.biz/resources/88/What-is-eMarketing-and-how-is-it-better-than-traditional-marketing

20

3.6.1 Reach

The nature of the internet means businesses now have a truly global reach. While traditional

media costs limit this kind of reach to huge multinationals, E-Marketing opens up new

avenues for smaller businesses, on a much smaller budget, to access potential consumers from

all over the world (Quirk E-Marketing, 2006).

3.6.2 Scope

According to Spiller and Martin (2004), internet marketing allows the firms to reach

consumers in a wide range of ways and enables them to offer a wide range of products and

services. E-Marketing includes, among other things, customer service, information

management, public relations and sales (Wilson, 2005)9. With increasing range of new

technologies becoming available all the time, this scope can only grow (Quirk E-Marketing,

2006).

3.6.3 Interactivity

Whiles traditional marketing practices basically deals with getting the companies message out

to the market, E-Marketing facilitates conversations between companies and consumers. With

this dual communication channel, companies can feed off of the responses of their consumers,

making them more dynamic and adaptive (Quirk E-Marketing, 2006)10.

http://www.wilsonweb.com/wmt5/viral-principlesh.tm

10 Quirk E-Marketing (2006) Retrieved from http://www.quirk.biz/resources/88/What-is-

eMarketing-and-how-is-it-better-than-traditional-marketing

21

3.6.4 Immediacy

Marketing through the internet provides an immediate impact. It is easy to use eMarketing to

conduct businesses regardless of normal office hours observed by companies (Wilson, 2005).

Effectively, Internet marketing makes business hours 24 hours per day, 7 days per week for

every week of the year (Quirk E-Marketing, 2006). By closing the gap between providing

information and eliciting a consumer reaction, the consumers buying cycle is speeded up and

advertising spend can go much further in creating immediate leads. (Quirk E-Marketing,

2006)

3.6.5 Demographics and targeting

According to Quirk e-marketing (2006) the demographics of the Internet are a marketers

dream. Internet users, considered as a group, have greater buying power and could perhaps be

considered as a population group skewed towards the middle-classes (Quirk E-Marketing,

2006). The nature of the Internet is such that its users will tend to organize themselves into far

more focused groupings. Also, Spiller and Martin (2004) indicate that, the internet makes it

quite easy for marketers to find access to the niche markets they wish to target. Marketing

messages are most effective when they are presented directly to the audience most likely to be

interested. The Internet creates a conducive environment for niche marketing to targeted

groups (Quirk E-Marketing, 2006).

3.6.6 Adaptivity and closed loop marketing

A closed Loop Marketing requires the constant measurement and analysis of the results of

marketing initiatives. Through continuous tracking of responses and the evaluations of the

effectiveness of marketing campaigns, the marketer can be far more dynamic in adapting to

consumers wants and needs (Moriarty, Mitchell and Wells, 2008). E-Marketing platforms

22

make it possible for responses of customers to be analyzed in real-time and feedback

provided. Combined with the immediacy of the Internet as a medium, this means that theres

minimal advertising spend wasted on less than effective campaigns (Sceats, 2004). Maximum

marketing efficiency from E-Marketing creates new opportunities to seize strategic

competitive advantages (Quirk E-Marketing, 2006).

3.7 Online Marketing Tactics

There are various internet marketing strategies that are being used in marketplace today.

a. Domain Name

From an online marketing perspective, the website domain name is one of the most important

parts of the website. The internet domain name, or URL, is the unique web address that

companies can purchase through a domain name registration company such as Network

Solutions.11

b. Solicited Marketing

The idea behind this type of marketing is that a marketer asks for and receives permission

from the customer to send him/her information about the company's products and services.

The most common way for a marketer to ask for permission is via forms with "opt-in" and

"opt-out" checkboxes. If a customer decides to opt-in a marketer will send appropriate

advertising material via email and/or mail. In contrast, if a customer decides to opt-out, then

no advertising will be sent by the marketer. By giving permission, a customer essentially

displays trust towards the marketer. To make permission marketing successful, a marketer

11

Network Solutions (www.networksolutions.com), an online organization which engages in domain name registration.

23

must not abuse this trust by sending unwanted advertisements to the customer, or sell their

contact information to other companies.

In 2002 the European Union introduced the Directive on Privacy and Electronic

Communications. Article 13 of the Directive prohibits the use of email addresses of

individuals for marketing purposes. The Directive establishes the opt-in regime, where

unsolicited emails may be sent only with prior agreement of the recipient. By this, it ensures

that only individuals who give their consent to receive emails from companies are contacted.

The directive is to ensure the privacy of consumers and prevent the abuse and exploitation by

companies who take advantage of the internet to send emails to individuals without their

consent.

c. Viral Marketing

Viral marketing describes any strategy that encourages individuals to pass on a marketing

message to others, creating the potential for exponential growth in the message's exposure and

influence (Wilson, 2005)12. Like viruses, such strategies take advantage of rapid

multiplication to extend the message to thousands or even to millions of people. In

comparison to the traditional marketing, viral marketing equals that of a "word of-mouth".

In the world of the Internet, "the word" is spread mostly via email, meaning that the

marketing messages can reach others in a much faster and more efficient way in comparison

to "old fashioned" face-to-face communication. Thus, messages can be spread to many more

recipients in a shorter time, with virtually no cost to the marketer.

12

http://www.wilsonweb.com/wmt5/viral-principles.htm

24

d. Email Marketing

Email marketing was the first form of Internet marketing, and consists of emailing marketing

messages to potential customers. Modelled after direct mail, email marketing is a form of

"push" marketing whereby marketers can rent an email list and send a solo offer (in text or

html) to their target audience. Email addresses are either grabbed from the Internet, purchased

or rented from the email address vendors, or, more ideally, obtained directly from the

customers (as in permission marketing). Emails mainly represented online direct marketing.

They are sent to the peoples mailboxes and have a big advantage - it is extremely cheaper

than traditional direct mail. Emails are sent in different frequency and they are important for

building awareness. For a company, it is necessary to use appropriate email lists. That is a

fast, efficient and effective way to communicate with market. Email-base marketing makes it

possible for organizations to send large amounts of messages concerning public relations-base

announcements, newsletters and sales promotions, to distribute on-line catalogues and to start

and manage permission-base contact list (Fill 2005). At the beginning of its use, email

marketing had higher response rates than direct mail or banner ads. In addition, emailing was

(and still is) one of the most economical ways to deliver marketing messages. There are three

major types of emailing practices: Opt-in email, Opt-out email, and Spam.

i. Opt-In Email

Opt-in email is the most acceptable type of emailing. Using only opt-in emails for sending

marketing messages is a form of permission marketing. One of the most comprehensive

definitions of opt-in email comes from GetNetWise13, a project created by Internet industry

corporations and public interest organizations to help ensure that Internet users have safe and

Internet Education Foundation (2004). GetNetWise. Guide to lnternet Terms: A Glossary. Retrieved from http://www.getnetwise.org/glossary.php

25

rewarding online experiences: A policy for giving permission under which the user explicitly

permits the Website operator to either collect the information, use it in a specified manner

and/or share it with others when such use or disclosure to third parties is unrelated to the

purpose for which the information was collected14. The opt-in email option is where internet

users have voluntarily signed up to receive commercial email about topics of interest. It is an

approach to email marketing in which customers must explicitly request to be included in an

email campaign or newsletter.

ii. Opt-Out Email

In case of opt-out email, the customer is automatically added to the mailing list. This form of

emailing is widely used, but it is not recommended. Similar to opt-in email, there are various

definitions of opt-out email. Two of the most complete definitions come from GetNetWise

and L-Soft respectively: A policy under which the user's permission is implied unless the user

explicitly requests that his/her information not be collected, used and/or shared when such use

or disclosure to third parties is unrelated to the purpose for which the information was

collected. It is an approach to e-mail marketing in which customers are included in email

campaigns or newsletters until they specifically request not to be subscribed any longer. This

method is not recommended and may in some cases be illegal.

iii. Spam

In contrast of using opt-in emails, where the recipients have voluntarily agreed to receive

commercial email about a topic of interest, some companies are inappropriately using internet

mailing lists to broadcast the same message to a large number of recipients who did not ask

for it. This form of unsolicited commercial emailing is called spamming, or spam. More

Marketing Online (www.marketing-online.co.uk) is a source for links to web sites. It deals with Internet marketing strategy, implementation and practice.

26

formally Spam is unsolicited "junk" e-mail sent to large numbers of people to promote

products or services. Also refers to inappropriate promotional or commercial postings to

discussion groups or bulletin boards.

e. Search Engine Marketing (SEM)

SEM is regarded as a form of "pull" marketing whereby marketers sponsor a keyword on a

search engine that is representative of their product or service. Their text listing then appears

in a more favorable location when someone types in that particular keyword.

Why to use SEM:

i. The most popular way people find websites - Various surveys have shown that more

than 80% of internet users rely on search engines as their preferred method for

locating websites15.

ii. High usage of search engines According to Kienan (2000), the majority of internet

users (57%) search the web every day. Only the act of emailing occurs more often

than using search engines. Statistics have shown that 81% of internet users check their

email every day16.

iii. Billions of pages and millions of searches - There are four hundred million user-

initiated internet searches each day, which equals 400 million questions, curiosities,

and investigations. The exponential growth of the web resulted in billions of web

15

http://www.viz.co.nz/search-engine-marketing-a.htm

E-consultancy (www.e-consultancy.co.uk) A good compilation of reports and white papers

about new media.

27

pages, and, as a consequence, this has increased internet user reliance on search

engines as a way of locating information online.

iv. Qualified traffic ready to buy - Traffic a search engine delivers to a website is highly

qualified because users are actively searching for the information. This is the major

difference when compared to traffic delivered by banner advertising.

v. More effective than banners - There are five to six times more online purchases made

from traffic delivered by search engines, as compared to purchases generated by

banner advertising. Plus, the cost for online marketing campaigns using search engines

is significantly lower than that for banner advertising (Kienan, 2000),

vi. Marketing managers "know" they work - Because of the feasibility of SEM, 66% of

web marketers rate search engine marketing as the top method for driving traffic to

their websites. SEM was followed by email marketing (54%) (Sceats, 2004).

vii. Competitors inaction creates e-marketer's opportunity - A survey by CyberAtlas

Research revealed that nearly 46% of marketers surveyed allocate less than 0.5% of

their annual marketing budgets to search engine optimization (SEO) services17.

According to Svedic (2004), only 10% spend more than 25% of their marketing

budgets on increasing their visibility on the Web. However, there are some drawbacks

of SEM, such as: SEM is highly competitive (many marketers often compete for the

same keyword) (Svedic, 2004). Marketers have only a few simple line of text to

attract prospects. Marketers have little control over timing and volume. Demographic

targeting is virtually nonexistent - anyone can click on a company's listing, and a

company must pay for it.

17

http://forums.webhostingdiscussion.net/index.php/topic,434.0.html

28

f. Partnering

Partnering, as a marketing strategy for internet business, works well when synergies are

created especially when it occurs between offline and online companies. Similar to the

permission marketing, partnering heavily depends on the trust, but this time, the trust must

exist between the partners that are involved in this type of co-marketing. One of the most

widespread examples of partnering on the internet is when companies provide links to each

other's websites and advertise each other's products or services. With the offsite internet

marketing, the basic approach includes generating website traffic, attracting inbound links,

engaging in target market interactivity, image branding and creating Internet visibility. With

the objective of producing leads that become conversions. Therefore to a large extend it works

with different kinds of companies whether they are online or offline.

3.8 Online advertising

In fact advertising and all promotional activities on the Internet must to be planned and

managed in the same way as traditional media. Organizations suitable goals are part of this

process and Fill (2005) provides a useful set of objectives in this context:

i. Delivering content: click through to a companys website provides more detailed

information (e. g. health advice).

ii. Enabling transaction: a direct response that leads to a sale.

iii. Shaping attitudes: development of brand awareness (e. g. start-up situations).

iv. Soliciting response: aiding in interaction with new visitors.

v. Improving retention: reminding visitors and seekers of the organization (developing

reputation and loyalty)

29

The online advertising is classified into two main forms. The first form is when all off-line

media are used to drive traffic to the website. This happens when customers attention is

drawn to the website through other forms of advertisement, for example traditional forms of

marketing like newspapers, posters among others. The second form is used only in the online

environment. If a website is to be successful, it is necessary to use both forms.

Advertisements need to be placed on other websites, where the target audience is commonly

or are most likely visit. Before placement is done on a website it is necessary to conduct a

careful analysis of the potential market. Such analysis should give information about potential

audience and about their likelihood to click on the banners or visit the advertisers website

(Fill 2005).

i. Banner ads

Banners are considered to be a dominant form of paid-for communication on websites.

According to Fill (2005), more than 55 per cent of all web ads are banner ads, and they are

responsible for 96 per cent of all the Internet advert awareness (Fill 2005). The aim of the

banner ads is to attract attention and stimulate peoples interest. Viewers after seeing adverts

online can simply click on the banner that links them to the advertising companys site.

Banner ads are graphical presentations placed on web pages with the purpose of attracting

visitors to click on the ad and visit the advertised website. There are many standard banner

ads, each with a different shape and/or size. According to Wilson (2005) they include:

Banners and Buttons - rectangular or square shaped ads that usually appear at the top

or the bottom area of the webpage.

Rectangles and Pop-ups - large rectangular ad that usually appears on the middle area

of the webpage, or in a new window as pop-ups.

30

Skyscrapers -tall vertical ads that usually appear on the right-hand or left-hand area of

the webpage.

Floating -a new, multimedia ad that floats above the webpage, and must be closed

before you can see the rest of the webpage. Different ad sizes vary in popularity. The

standard, full banner type is still the most common banner size used on the Internet.

The problem with banner ads is low click rates. Another disadvantage is the cost involved in

positioning the advertising. The price usually depends on host websites, especially on their

popularity and amount of visitors. The more popular it is, the better, but is more expensive.

ii. Pop-ups

Besides using banners for advertising, another method of advertising is the use of automatic

pop-ups or pop-under adverts. Lately, one is bound to experience pop-ups when browsing on

the Internet. Sometimes pop-ups are often used by smaller websites that are looking for an

effective way to advertise their business. It is one of the fastest ways that viewers can get to a

firms websites. The first and very common drawback is that, the website owner faces the risk

of dissatisfaction as a result of the due to how irritated it is. They are largely unsolicited and

visitors may close them and refuse to visit them altogether. Another disadvantage is that, most

browsers offer an option for an automatic blocking of pop-ups. This means that this form of

advertising could be ineffective.

iii. Superstitials and interstitials

According to Fill, (2005) Superstitials and interstitials is also known as traditional online

advertising. They are adverts that appear during the time when pages are being downloaded.

(Fill 2005) Superstitials are advertisement that is appearing as a short movie. They are

projected to appear when videos or web pages to load. But most people consider these types

of adverts an intrusive and unwanted than supportive.

31

iv. Micro sites

Micro site is when a separate site is created aimed at introducing a new product or promoting

specific products. They often run as a joint promotion with other advertising. It could help to

emphasize on the company or brand image and place the product to potential customers.

Micro sites are much less expensive to set up than the traditional site and are particularly

adept at building awareness as click through to micro sites is higher than through just banners.

(Fill 2005)

v. Pay per click

This is most cost-effective form of online advertising. "Pay per click (PPC) is an Internet

advertising model used on websites, in which advertisers pay their host only when their advert

is clicked. With search engines, advertisers typically bid on keyword phrases to their target

market. Content sites commonly charge a fixed price per click rather than use a bidding

system" (Fill 2005).

32

Figure 1: A webpage indicating pay per click

Source: Google Adwords (www.google.com)

According to study Sdruen pro internetovou reklamu (SIPR), from 200918, banners were the

most widely used form of internet advertising in the Czech republic but the predicted that, the

popularity of PPC will grow in the next few years. Hence, they predicted that the PPC will be

on the top as the preferred internet marketing tool. It is logical because the principle is simple

and effective. The advertiser pays a rate for every visitor who clicks the search engine site (or

their affiliates) to advertisers site. Each unique keyword or phrase has its own bid price. The

18

Marketingov noviny. Komunikace: ei a reklama 2009. Marketingov noviny. Retrieved from http://www.marketingovenoviny.cz/index.php3?Action=View&ARTICLE_ID=7094

33

next positive feature is the possibility to reach only customers looking for your services, and

getting the most form the budget. All campaigns can be tracked to the smallest detail allowing

advertisers to continually make the most from their money. There is an opportunity to set the

budgets so as to manage an advertising expenditure effectively and to the requirements of the

company. Sklik (seznam.cz) and Adwords (google.com) are widely used for PPC adverts in

the Czech Republic. More than 90 % of Czech users search predominantly on these websites.

(AdMarket)19

vi. In-text advertising

In-text advertising is online product placement base on the contextual relevance between an

advertisers brand and online content of the host website. With in-text advertising, the

advertisers brand is linked to a relevant keyword appearing in the online article or blog post

which is matched to the advertisers advert. Once a user places their mouse over the keyword

the advertisement will appear and they can be clicked and linked to advertisers page. This

model of advertising is based on cost per click (CPC), which means that each time a website

visitor clicks on an in-text adverts, the website owner gets paid by the advertiser.

19

AdMarket. Aktuln: Investice do reklamy letos porostou jen na internetu. AdMarket. http://www.admarket.cz/o-admarketu#english

34

Figure 2: In-text advertising

Source: www.koolaidantidote.wordpress.com

vii. Online sales promotion

Sales promotion activities are widely used on the internet. Sales promotion is normally used

to bring forward future sales, to provide a reason to buy now (Fill 2005). It is important to say

that the motivation on the Internet does not exist in the same way as for the traditional mode

of marketing. Many people use the Internet to find information or for the purposes of

comparing prices of goods and services (Fill 2005). Presently, there has been a decline in

usage of traditional on-pack promotion and it has contributed substantially to the growth in

the use of SMS, emails, and other online sales promotion, which influences people positively.

35

viii. Online personal selling

The Internet is an impersonal medium and does not allow direct personal communication.

Nevertheless the use of the Internet as a complementary tool, play a substantial role in the

promotional mix. It has an indirect impact on sales performances. Although, personal selling

is mostly seen as a face-to-face transaction, such as selling to a customer in their home or

office, it is also possible to sell using the personal selling method via the internet. This is

mostly done with what is known as online relationship marketing.

A companys website is a key component of the Internet marketing and E-Commerce

activities. A webpage is considered effective based on certain criteria. This includes the

suitability of initial location, the technical specification of the page (loading times) and the

simplicity of the design and content (user friendly). Visitors should be able to achieve their

goal quickly and efficiently as possible when they visit the website.

According to Balle (2010)20, relationship marketing can be done online using personal emails,

small online seminars, forums, blogs, and other tools. The essence in using online personal

selling is to maintain a strong connection with customers online, provide information about

new products, and educate on new trends with regards to the industry in which a firm operates

(Balle, 2010). It also enables the firm to build trust in sales contacts with written words and

also voice through the podcasts.

20 Balle (2010). Marketing Strategies for Personal Selling, Retrived from

http://www.ehow.com/way_5135734_marketing-strategies-personal-selling.html

36

3.9 Summary and conclusion

In conclusion, the role of the internet as a business tool has come to stay and it is important

for SMEs to leverage on the platform to conduct their business and reap the benefits that

accrue comes with it. The various modes and tactics indicted above can be used in e-

marketing. SMEs can adopt one e-marketing strategy or a combination of strategies.

However, the strategy to use largely depends on the kind of business and the industry it

operates it. Knowledge of the demands of the specific business area or industry will enable

SMEs to adopt a particular tactic and develop clear and concise strategies to implement it.

This will reduce unnecessary cost and the use of trial and error.

37

4.0 PROFILE OF NWT A.S. AND PATRO GROUP

4.1 NWT a.s

NWT a.s. is one of the biggest IT companies in the Czech Republic. The company was

founded in 1992. Nowadays, it has more than 150 employees and more than 118 000 clients21.

It is able to offer complex solution in the field of software, hardware, network management,

Internet access, and many other services such as server administration, outsourcing and

servicing and technical support among others. The philosophy of the company is to offer

complex services with high added value on professional level for competitive prices.

A major part of the companys customers portfolio consists mainly of the following groups:

Organizations of state administration and local authorities (schools, hospitals,

authorities)

Important regional middle-sized and big companies, dealers of computer and office

technology

Customers in B2C segment

A separate business policy is created for each customer group. The company ensures

effectiveness of performance and individual approach to each customer. A big accent is put on

the personal progress of all their employees. Employees regularly attend training sessions,

accreditations and certifications into latest technologies. For the company, human resources

represent one of its basic success factors.

The company has gone through a corporate change and the logo has currently been changed to

reflect the strategy and direction of the company. This is to reflect the long term goals of the

21

http://www.nwt.cz/lang_en/clanek/1/37/30.html

38

company as a provider of high-tech equipments and also to reduce the ambiguity that went

with the name NWT computers. The company is now known as NWT a.s, however, the

internet shop is still known as patro.cz.

Figure 3: Old logo of NWT computers

Source: www.nwt.cz

Figure 4: New logo of NWT a.s

Source: www.nwt.cz

4.2 The companys main business

The company mainly deals in the wholesale distribution of IT products. These include

computer technology branded PCs, component sets, peripheries and components of several

brands, but also spare parts, office equipment and telecommunication. The company is one of

the biggest business partners of Hewlett Packard. It is also "Microsoft OEM System Builder

Member", "Intel Product Integrator", "Cisco premier reseller" an authorized dealer of other

more than 20 brands.

39

It offers more than 50.000 hardware and more than 20.000 software items22. Deliveries are

carried out from two wholesale stores in Huln and Zln. New company information system

provides fast, transparent and good-quality information about terms of delivery, stock

information, payments and other company agenda. Such information is provided not only to

the employees but also to registered customers partners.

The company has a marketing department that consists of a marketing manager, and two

marketing assistants who are responsible for the marketing activities of the company. In spite

of the diversity in operations, the company is presented as one unit. Advertising is mainly

focused on brand building and brand awareness, more than on services or products.

4.3 Organizational structure of NWT a.s.

NWT a.s. consist of six divisions: hardware division, service division, weak current division,

project division, internet division, solar division and Patro division (Patro group)

4.3.1 Hardware division

NWT a.s supplies computers, components, notebooks, software, printers and other hardware

and software. With a turnover over 500 million CZK, they are eminent partner of all main

worlds brands (HP, Fujitsu-Siemens, IBM, Lenovo, Dell, Microsoft23) and that is why they

can offer the best business conditions if customers opt for different brands. Much of

customers needs are readily satisfied immediately this is because the company stocks goods

22

http://www.nwt.cz/lang_en/clanek/4/64.html 23

http://www.nwt.cz/lang_en/clanek/4/64.html

40

for more than 20 million CZK24. NWT a.s also has subsidiaries in Zln, Huln, Krom

which are involved in the provision of direct services to customers and also the design of IT

structure to businesses. It runs an on-line gateway for customers and provides them with an

overview about every item in stock inclusive of prices, description, pictures, condition of

warehouse at several subsidiaries and information about customer orders, invoices, supplies

and complaints.

4.3.2 Service division

The company offers maintenance of IT structure (computers, notebooks, servers and printers)

in platform Microsoft and Linux. This division provides solutions to the implementation of

hardware and software from small server to sophisticated solution of servers, clusters,

virtualization and storage system, archiving and backup. For their clients it provides hot-line

and checking centre 7 days a week and 24 hours a day.

The company ensures accredited service for hardware of brands such as Fujitsu-Siemens,

IBM, Lenovo, HP and Acer through its engineers. They also have the highest level of

partnership with the biggest producer of software - Microsoft. This is the reason why they

invest financial resources to the education of engineers. Their employees gain certification

that helps them to prove their capability of providing the highest quality of services.

4.3.3 Weak current division

The services of this division of NWT a.s covers projection, supply, installation, service and

revision for weak current systems and technologies such as systems of unified time, local

24

http://www.nwt.cz/lang_en/clanek/4/5.html

41

evacuation wireless, structure cabling including active elements, telecommunication exchange

and systems, projection, conferential and videoconferencing technique, systems for control

intelligent buildings, radio and television antenna systems. The other weak current systems

include electric preventive signalization, electric fire signalization, camera systems, electronic

check of entrance attendance and access systems, metering and regulation.

4.3.4 Project division

Main responsibility of this division is ICT projects which exceed capacity of a single division

of NWT a.s. In many cases, the NWT a.s hires the services of other suppliers or providers

when they do not have adequate equipments available to execute a project. This happens

when the project is beyond the capacity of the entire company. Typical projects are system

integration, complex outsourcing and public orders of bigger range.

4.3.5 Internet division

NWT a.s provides wireless network for connection to Keynet network. It is one of the most

extensive internet service providers in central and south Moravia. It offers high-quality access

to Internet, connection subsidiaries such as VPN, VoIP and other services over IP. Recently,

the company built a topology of their backbone NET. The main connections were upgraded to

a total capacity of over 1 Gbps. The company buys technology which works in licensed zone

18 GHz and connects access points in Perov, Krom and Zln. To improve channel

capacity and stability, the company upgraded its backbone routers which dispose power

reserve for the growth of the capacity of other channels. Investment into new technologies

confirms the company leading position among providers of Internet connection and the

courtesy of the level of services which is above the regional average.

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4.3.6 Solar division

NWT a.s offers components and construction of turn-key photovoltaic power plants. They are

specialists at both large industrial installations and realization of small solar power plants on

the roofs of private houses.

4.3.7 Patro division (Patro group)

A group of internet department stores PATRO GROUP was established in 1998. A dominant

e-shop is www.patro.cz, to which other 13 shops were gradually added, more or less

specialized in the sales of different commodities. With the establishment of a new project

dealing with the sales of trips via travel agency PATROtour the company gained another

space for the development of www.patrotour.cz. Currently, there are 15 shops operating under

www.patro.cz. The shops and the main products it sells are indicated in the table 2 below.

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Table 2: E-shops of patro.cz and types of items sold

Shop Types of items sold

Holiday packages

Assortment of products

Assortment of products

Photo and video cameras and equipments

Medicinal items

Computers (hardware and software)

Holiday packages

Tools and equipments

Sports equipment

Books

Office equipment and stationary

Assortment of products

Music and video CDs

Music and video CDs

Medicinal items

Source: Authors compilation based on information from the website of patro.cz

After 10 years of operating on the Czech e-market, the group has gained about 200,000

customers, over 90,000 shopped at least once in 2007. The offer of 170,000 active products

draws attention from all customer groups from all regions. Electronics, electrical appliances

and hardware are still among the best selling products, but books are gaining more popularity

as well as sports equipments and tools. Also, sales of new furniture are becoming successful.

With external sales of limited product assortment of esk Zbrojovka Uhersk Brod, the

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group examines its abilities of communicating with foreign countries to explore alternative

logistics potentials for further growth into other territories.

Annually, the number and quality of added services for e-shop customers are enlarged.

Recently, the possibility of finding the expected dispatch terms with products in the e-shop

order, presence of pdf format invoice, introducing trendy way of payment in a form of micro-

payment system - PaySec, contributed to the comfort that customers enjoy.

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5.0 ANALYSIS OF ONLINE MARKETING STRATEGIES OF THE NWT

A.S AND PATRO.CZ

5.1 NWT computers s.r.o to NWT a.s

According to the Radovan Zajc, marketing manager the popularity of the company in the

entire Czech Republic is quite low compared to that of its competitors, except in some

specific towns. As already indicated in chapter four of this thesis, the company changed the

name from NWT Computers s.r.o. to NWT a.s. The name change according to the managers

interviewed will enable potential customers to get to know all the other divisions of the

company rather than thinking that the company only deals with computers.

The managers indicated that they are working on improving the marketing strategy of the e-

shop. The concept of buying a lot of different categories of products on one platform is a good

one, however, the marketing strategy of Patro.cz does not take the advantage of this idea It is

the aim of the company to rebrand the company to make the idea of one e-shop where a

customer can buy everything under one roof the pivot around which the marketing activities

will revolve. The patro.cz in particular has received very few visitors in the last two years. In

comparison with year 2008 the visitors rate fell about 11.3% in year 200925. The peak period

when people visit e-shop is November and December.

25

Own calculation base on company internal information

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Table 3: Number of visits to the e-shop Patro.cz in 2008 and 2009

Month 2008 2009 Change in number % change

January 443 234 454 400 11 166 2,5%

February 351 492 366 272 14 780 4,2%

March 386 045 358 881 - 27 164 - 7,0%

April 376 290 271 114 -105 176 - 28,0%

May 335 077 309 788 -25 289 - 7,5%

June 289 605 299 844 10 239 3,5%

July 328 607 280 580 - 48 027 - 14,2%

August 331 634 289 763 - 41 871 - 12,6%

September 363 083 308 789 - 54 294 - 15,0%

October 505 958 386 094 - 119 864 - 23,7%

November 591 567 469 869 - 121 698 - 20,6%

December 528 459 488 780 - 39 679 - 7,5%

Total 4 831 051 4 284 174 - 546 877 - 11,3%

Source: Own calculation base on company internal information

The main communication channel of NWT a.s and Patro.cz is the Internet. Besides

communication with customers via their website, they use PPC on Google AdWords, banners

and in-text advertising. In some cases Patro.cz adverts are accompanied by the advertising of

NWT a.s on the posters as well as on radios.

However, with regards to the Internet marketing communications and online advertising in

particular, in the past NWT a.s and e-shop Patro.cz has faced some problems. Firstly, the

Internet users are overloaded by huge amount of banners, pop-ups and other forms of online

advertising. Therefore, consumers have gradually learnt to ignore the advertising elements.

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Secondly, even when a banner is noticed, the distance between this moment and the real act of

purchase is too long to have any significant impact on response rates.

According to Marek Novek, the division director of the subsidiary patro.cz, the company is

positioned as an internet mall. It is a mall that is similar to the brick and mortar shopping

malls that could be found on the streets of some of the busy cities in the world. The internet

shop provides a variety of products ranging from fast moving consumer goods, hi-tech goods

and goods for in-home consumption. Each part of the activities, right from the soliciting of

clients, payments and customer loyalty is done by through the internet. According to the

divisional manager, the number of visitors to the website is about 10,000 per day. However,

just approximately 5,000 of them are unique visitors.

Marek Novek further indicated that the business of patro.cz is business to customer

oriented. However, the mother company NWT a.s operates in the business to business

segment. The main target group of the companys marketing strategy is online shoppers. He

further indicated that the top five goals of engaging in online marketing is to increase the

number of visitors, to increase conversion rate, to increase number of loyal customers that

will return to shop again, to measure effects of PPC campaigns and heat map analysis.

The main target group of the online shop is any online shopper. These customer mostly shop

for the convenience from their homes and also from workplaces or anywhere they could have

access to the internet. Because the company has been operating for the past 13 years, they