The domain of marketing will, with rare exceptions, include at a minimum the following functions. These are the activities that need to take place to create exchanges that satisfy consumer and organizational goals. While there is no universal agreement on the exact designation of these activities, there is general agreement on the following as necessary (Churchill et al., 1995).

  1. buying – ensuring that enough units of product are available to meet consumer demand
  2. selling – using advertising, personal selling, and sales promotion to match goods and services to customer needs
  3. transporting – moving goods from point of production to a location convenient to customers
  4. storing – warehousing products until needed for sale
  5. standardization and grading – ensuring that products meet established quality- and quantity-control standards or size, weight, and other variables
  6. financing – providing credit for customers
  7. risk taking – assuming the uncertainties that result from developing and distributing goods and services customers may purchase in the future
  8. information gathering – collecting information about customers, competitors, and resellers to use in making marketing decisions.

These functions are carried out by designing a marketing strategy to specifically target a customer segment. The strategy would combine in various ways the traditional elements of the marketing mix: price, product, promotion, distribution, service and customer sensitivity. The ultimate objective of all marketing efforts is to persuade the consumer to accept a product or service as the solution to her needs and then allow the consumer to take possession of the product or service.

In the past, marketers have been, in most cases, constrained by the inadequacies of the traditional channels, particularly in the selling and information gathering functions. In figure 1, these are represented by the information flow and the market intelligence flow, both directly and through intermediaries. In this chapter, we show that the Internet has the potential to transform and enhance these flows, while having an impact on the material flow of certain categories of products like software and services like training. It is also our belief that the Internet does not change the ultimate objective of the marketer, but presents new opportunities to reach out more effectively to the consumer and to understand the consumer better.

One of the functions of the marketer is product promotion. Product promotion is defined as “the coordination of all seller-initiated efforts to set up channels of information and persuasion to facilitate the sale of a good or service, or the acceptance of an idea” (Cohen, 1988).   And promotion includes, at a minimum, (1) advertising, (2) personal selling, (3) publicity, and (4) sales promotion and (5) direct marketing. While serving as an additional media for promotion through advertising, the Internet allows marketers to use innovative channels such as virtual store-fronts and virtual communities. We start with an exploration of Internet advertising and follow it with a discussion on virtual store-fronts and virtual communities.

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