INTERNET MARKETING IN FOOD INDUSTRY COMPANIES – THE SURVEY RESULTS

Wojciech Pizło
Department of Agricultural Policy and Marketing, Faculty of Agricultural Economics, Warsaw University of Life Sciences (SGGW), Poland

ABSTRACT

This article is the result of research and surveys conducted in the biggest Polish food companies. The subject of the research was the use of internet in marketing activities. 29 food companies were chosen (from the list of the biggest companies in Poland) accordingly to the following criteria; business model (relations B2B, business-to-business), activities in the food industry, and managing the web site in Polish. The research was conducted in 11 companies, of which 9 were case studies.

The first part of this article describes the basis of modern company functioning in changing environment, where information technology is expanding (the information technology era). The aim of this research is to describe the use of Internet marketing as a marketing tool. In this part of work, among other things, the following matters are presented in the form of a table: defined internet strategies (or their lack), the source of capital, the date of starting business in Poland and the date of introducing and maintaining the website in Polish. Further, the article describes the Internet marketing activities undertaken (product offer, prices, the distribution methods and communication activities). The last part of this article concentrates on the relations between traditional marketing and Internet marketing.

Key words: Internet marketing, food industry companies, Polish food companies.

INTRODUCTION

The XXI century is an era of information technology [4]. All commercially active companies (industries, consumers and non-profit organisations) need information that translates into useful knowledge. Modern companies are working in turbulent and changing environment. The event of information technology, the Internet, changes the company’s strategies, including its marketing strategy, and also creates new tools, and value. Through the use of modern marketing tools the companies gain a competitive advantage. The businesses that use the internet also adapt their internal management structures. In their current market strategies the companies mostly use the combination of traditional marketing and Internet marketing. Also to a greater degree, they use a kind of “relate” marketing through dialogue with consumers. This creates individual and personal offers through easy accessible and relatively cheap communication channels. The use of information technology increases internet sales and in the case of individual companies. That increase depends on the use of new technologies, which are accessed through planning, strategies, appropriate marketing and audit [11]. The sale of particular goods is increased through the internet. To increase online sales companies are using information technologies that allow the company to be more competitive. [1,9,10]. One of the major incentives for the company’s actions in the internet environment is the level of satisfaction and customer loyalty. [12] The development of new strategies is often connected with the change in social relations [7] and individual customers, achieving a stronger position than ever before. This also creates new social groups. The conducted empirical research, diagnosed the essential elements of marketing strategies realised on the internet, in the framework of interactive marketing and also defined the scope of activities conducted through social marketing such as creating new internet societies. It should also be pointed out that the internet is still an unregulated business space, that is taking the shape of a hybrid institution, which could be located between the precisely regulated real market and the chaos (lacking regulations) that exists since the development of www technology. Traditional marketing is a kind of institution that operates through the constant combination of marketing tools such as product, price, distribution and promotion, while internet marketing is still not established as such, although it is continuously changing because of the use of specific tools, and changes of the activities of the companies on the net, and also increasing competition.

AIM, SCOPE AND METHODS OF RESEARCH

The main aim of this article is to define the use of Internet marketing as a marketing tool by the biggest Polish food companies in B2C (business-to-customer) relations. The empirical research was conducted in chosen companies among the biggest 500 companies from the list “of biggest companies of Rzeczpospolita” (Rzeczpospolita being the most respected and well informed, daily newspaper). From that group 134 companies were chosen, that in their business activities are using the internet as a part of their marketing B2C strategies. From those, the companies, that were classified in PKD (Polish Classifications of Businesses) as food companies, were chosen. To those companies (40 in total) a letter explaining the scope of this research and encouraging an active participation was sent. From the first chosen 40 food companies, finally those that had their internet pages in the Polish language, were qualified. As the basis for this research 29 companies, that complied with the above mentioned criteria, were accepted. In 11 of those companies intermediate, simple, non standardised interviews were conducted with personnel responsible for internet marketing (vice chairperson or the manager of the marketing department, or the employee, directly responsible for this type of activity). Finally 9 such interviews were qualified.

In the article the monographic method was used including; the interviews, observation and documents. The research interview was conducted within a wide scope of standard questionnaire. The interview was informal but ordered conversation. In the questionnaire there were open questions concerning 64 main problems and supplementary questions. The aim of the research was stated. Before the interview the head of the marketing department or the person from the board of directors responsible for marketing decisions was contacted by telephone.

The interview consisted of an introductory telephone conversation, the main interview and verification involving some additional telephone or e- mails, that would give more detailed information on specific issues. In the questionnaire the respondent was asked to give extensive information and also to give information contained in the company’s internal materials. Observation was also used to verify the answers concerning the general strategy and functional strategies of the company, its internet activities, and also the methods and ways of maintaining the contact with individual consumers (Table 1).

INTERNET MARKETING STRATEGY

The aim of an internet marketing strategy is the wide use of the internet in marketing activities, also to define the needs that could be realised through the internet, the target market (or markets) and defining the ways of influencing consumers and relations with the competition and cooperating companies. In this sense this strategy means defining the aims and the scope of online marketing in the company taking into account the possibilities characteristic for the Internet, its limitations and the means for realisation and evaluation of achievements.

The majority of researched companies did not define the aims that they want to achieve on the Internet. The usual Internet marketing activities were undertaken on the basis of a general marketing strategy (Skolow, ZT Kruszwica, Nestle, Danone, Drosed, KP and others). The companies did not want to give out information or really they did not have a distribution or pricing strategy, aimed at internet sales, only general concepts concerned with developing communication channels and strengthening customers relations (Nestle), creating more trust in the information presented on the net (Hoop) also building up loyalty of customers (KP- Brewer’s Association), or building up the connection with consumers on one side, and technology development on the other (Indykpol). Companies such as Danone are exceptional in the sense that their Internet aims involve not only the communicating with the customer, building up an image of “modern company”, but also PR activities.

The researched companies usually did not evaluate the effects of their internet marketing (Drosed). Only some of them admitted monitoring the number of visitors to the web site, the material watched, the downloaded information etc. (Nestle, ZT Kruszwica). In a very few of the researched companies the development of internet marketing was connected not with the general strategy, but functional strategies such as information strategy, in which framework the net activities were included. (Drosed).

In the researched companies the object of creating the Internet page was usually

At the same time, the researched companies did not undertake any deeper cooperation on the Internet with other companies. If there was any cooperation, it was only to refer to other company’s corporate or product on their web page (e.g. Nestle, Danone, Indykpol) or in establishing a distribution system (cooperation with fitness clubs: Hoop, with the yacht excursion company- Drosed). Usually all employees have the access to Internet, except production workers. In the companies that were already established (among others ZT Kruszwica, Indykpol, Drosed), in the first stage the e- mail was used, and then www pages. The first net pages presented only basic information about the company that could be used in sales. The first version of the page was created by IT workers, employed by the company (including Indykpol, Hoop). Management would employ a specialist IT company to improve and widen the new version of the web page, and would control the project (Indykpol, Hoop, Drosed) over a longer period (usually 3-5 years). The web page became diversified, it contained information for investors (corporate page) and for consumers (product page). Company Danone, managed their pages differently. The first page www.danone.pl was aimed only at individual consumers, introducing information about the product and its characteristics. From 2004 that page become also a corporate page and was addressed to the wider audience. The information on the corporate pages of Polish companies was presented not only in Polish, but also in other European languages (e.g. Hoop in Russian). International companies usually have “clones” of their web site pages, in the country’s language, taking into account the country’s specific legal requirements. They often refer, on their corporate pages, to links with other web sites that they have created (among others BAT, Nestle, Danone). Other than the internet the companies are developing intranet, that speeds up and makes internal information flow easier (Nestle, ZT Kruszwica) The development of intranet makes it possible to manage international projects and it is also used as a means of outside communication. Intranet gives employees the possibility of quick integration and also a feeling of being a part of an international team (in the case of international companies). It speeds up the response to customers queries and questions. As an example, Nestle company, firstly created corporate pages that informed and recruited, because it wanted to fulfil the expectations of consumers, interested in the company’s tradition, and on the other side wanted to introduce itself as a potential employee. At the same time Nestle kept the autonomy (among others) of the Winiary company in using the internet in their marketing activities. Danone acted in a similar way by placing on their corporate pages information not only about the company, important events from its past and products history, but also recruitment offers.

The main motivations to start online marketing were;

Creating the internet pages of (KP-Brewers’ Association) or (BAT-British American Tobacco) was influenced by legislation that banned advertising of alcohol and tobacco in other media. In the case of KP other motives of entering the internet were mentioned such as the company’s involvement in the social environment (including activities presented on the page were “charity actions”, “responsible beer drinking”, and also “culture” and “sport”).

ACTIVITIES UNDERTAKEN ON THE INTERNET

The use of the Internet in many parts of life could be called the “internetisation” process of social space and following this business space. In a narrow view this process only involves marketing undertaken and aimed at individual consumers. This process of “internetisation” could be also described as the reason to undertake some activities by companies, also the scope and consequences of those activities. At the same time it is not possible to define the importance of the reasons, that started business activities on the net, and also the dynamics of changes that happen within the framework of internet marketing. However some stages of marketing development can be identified.

The “internetisation” of marketing can involve not only the market of that specific country (if in the geographical sense it is its target market), but also foreign markets. Formally we can say that the end of the “internetisation” process of marketing happens when most marketing activities are conducted on the net. How many of those activities as being realised through the internet is decided by the line of trade of the company. The development level of the internet marketing is higher when the company understands and employs the rules and tools of the net and can use those to its competitive advantage.

PRODUCT

In the researched companies the products were presented within the products ranges, except in the case of Nestle, as it was banned by international laws from marketing activities concerned with selling breast milk substitutes. All the researched companies publicised on the internet the whole range of their products (95% - 92%) and new information was added immediately by Danone, (Drosed is modifying its pages every 2- 3 months), Nestle introduced its new products with the delay of 2 weeks before distribution. In the case of Drosed the information offered was not useful for the individual customer as it was wholesale information. In the case of other companies new information has no big priority and is introduced “as often as a new product becomes available” (BAT).

The companies chose three ways to present their products:

information about the company’s and product’s history, the production process, quality control, environmental care, and social care for employees

Part of the researched food industry companies restricts their internet offer only to main brands and trade mark products (e.g. Danone omitted in its offer newly introduced product and an assortment of biscuits of two brands “Lu” and “Wedel”. The researched companies do not create brands aimed only at internet users and the major part of their offer is aimed at many market segments (Nestle, Brewers’ Association KP, BAT, and others).

The offered products were often presented with additional information that was not available on packaging. For example Nestle placed a short product description giving its ingredients, a picture (in the case of improved product) and also some interesting detail concerned with the technology or history of the product. Some companies encouraged taking part in competitions. Some companies, however, would give less information about their product on the web, than on the packaging (e.g. Hoop products). The food companies’ products offer, on the internet, makes the complex consumer service easier. The companies do not offer their products exclusively, but also, among others; nutritional information (Nestle), expert advice and consultation (including Nestle, Danone) and provide entertainment by the possibility of playing computer games (e.g. ZT Kruszwica, Nestle), also downloading advertising films, that were on TV and also downloading wallpapers, screen savers (e.g. Indykpol).

However, some of the companies restrict their pages to chosen products and do not offer more than some graphics and laconic description. Internet makes it possible to fulfil a wider range of consumer needs, that bring together the need to participate in important cultural events and consuming the product, for example having a cup of Nescafe produced by Nestle while watching movies at a film festival. It seems that companies are creating web pages that fulfil a wider range of information needs. For the time being, however, companies mainly concentrate on their products and do not cooperate with companies offering different goods. The food companies try to fulfil not only the consumer needs concerned with their business but also the wider interests of their target groups. On the web pages of Brewer’s Association the internet users can book a tour of the two chosen breweries and purchase merchandise connected with their favourite beer. Nestle on its web pages, in the part named “Career” and aimed at students, offers advice on job interviews and CV writing: there is also information about nutrition, including advice to parents about healthy food for children etc. Internet gives an opportunity to inform customers about the company’s product, its specific qualities and also to convey some emotions or events connected with it. Not only full rational information, but also emotional contents is important for the competitive advantage. That advantage can be built not only as in traditional marketing by giving the benefits of the product, but also by providing the wider context in which consumer needs can be fulfilled.

PRICE

The researched companies did not sell their products on the internet, and the price was usually not given (BAT, Drosed, Indykpol and other). Exceptionally, some companies gave “suggested price”, that was a guide price for retailers (Danone) or the price information was to show that the product was not only the best on the market but also the cheapest (Hoop). Usually the price information was aimed at the wholesalers, retailers but not consumers. The price information was also given to avoid the overpricing of product by some retailers. The price was often adjusted accordingly to the amount purchased by one buyer and the length of time of cooperation with the buyers etc (Drosed, Indykpol and others).

DISTRIBUTION

The companies did not create their own distribution channels for individual customers because of: legal restrictions (BAT), specific product (Nestle, Drosed, Hoop, ZTK and others), although it ought to be pointed out that some products such as dried meats, powdered milk can be sold through the internet. Only a few companies cooperated with virtual shops, for example Nestle with the “Totu” shop, that also cooperates with traditional shops. Nestle does not create the e- mail distribution lists in Poland. Although this company has about 40 thousand addresses of varied consumer groups, the company’s address list contains addresses of students, which are interested in internship and work for the company, addresses of the children taking part in competition promoting the product “Jojo”, or addresses of people taking part in Winiary products promotions.

COMMUNICATION

In the researched companies including Brewers’ Association, Nestle, and Danone kept in touch with individual consumer through an info line. In the case of Danone the info line relations consisted 90% of all relations of the B2C type. E- mail, although noted as an additional instrument of the “internetisation” process, was only sporadically used in promotional activities aimed at individual consumers. For example in Drosed the consumers could contact the company through the e- mails (15%) and traditional mail (85%). Often e- mail was used to give information about the new product and encouraged internet users to take part in promotions (Nestle). Nestle e- mail campaigns were organised when promotions took place (on average twice a year). Those campaigns were addressed to the people who agreed to have their addresses in the company’s data base, containing about 40 thousand addresses.

Sporadically advertising banners were used, which were bought as services from outside portals (among others Nestle, Hoop). Only a few companies simplified communication by placing links which, that could be used to send short e-mails (e.g. Hoop, Brewers’ Association).

Very few companies used only their www pages to contact consumers. Also only a few companies used e- mail and advertising banners. Such companies as Hoop or Nestle used additional ways of communication such as text messages to promote their product. The researched companies, also used newsletters, in which they informed customers about new products, promotions and important events of potential interest. This type of activities were carried out by, among others, Danone, Brewers’ Association and Nestle. In 2004 about 5000 people subscribed to the Danone newsletter. Consumers were informed about internet pages mainly through information on the product packaging, in promotional materials, posters and sporadically in TV advertisements.

In a part of the researched companies the internet page was used not only to promote but also to collect information about the company’s products, for example on the www pages of Danone there were questionnaires about its product promotions. This type of activities some companies (e.g. Drosed) only planned for the future. Collecting information was often connected with strengthening relations with the consumer and company organised competitions (Danone). In businesses where there were legal restrictions or bans on promotions and advertising only marketing activities described as informative (or social marketing and PR) were used. This type of marketing was used by international companies such as BAT, Danone, Nestle. When legal requirements deny access to some of web pages (unsuitable information), the companies restrict access by asking customers to declare their age (Brewers’ Association), or create pages where people can subscribe only individually (for example Pall Mall BAT product page). It seldom happens that companies internet addresses are promoted on social organisations pages that are being sponsored by them (Danone) or cooperate with them (Hoop).

The efficiency of promotional activities on the internet is usually not specified, only a few companies declared constant monitoring of the number of their web sites users, visited sites, downloaded material etc. Usually only information concerned with a specific information event and the number of visitors to the corporate or product pages was noted. In the case of promotional action called “Danone Kids Football Cup” about 200 thousand internet users visited Danone web page. Other types of internet activities consist of Public Relations (PR) that usually are concerned with providing information for journalists on certain pages and that facilitate direct contact of the company’s PR team with journalists (this was done in the majority of companies).

In the researched companies the internet as a new means of communication has a supportive role in the process of communication with consumers. The promotional activities realised in the researched food industry companies used mostly info lines to communicate with individuals, rather than banner advertisements, e- mail and www pages.

The promotional activities on the internet we can describe as:

Those three above mentioned elements of promotional activities on the internet are used to create the company’s image depending on the contents of the communication (including direct appeals), the structure of communication (conclusions, findings), form of communication (including the clarity of delivery) and source of communication (persons identified with a certain product).

INTER RELATIONS BETWEEN TRADITIONAL AND INTERNET MARKETING

The relations between traditional and internet marketing we can define as supportive. On the basis of this research we can conclude that in the researched companies traditional marketing supports the development of internet marketing, online marketing becomes a support for the traditional marketing. Internet marketing is used as an “additional element” (among others, Sokolow) for the activities undertaken within traditional marketing. To increase the scope of influence of online marketing the companies most often use traditional tools of promotion such as printing information on the product packaging, in the company’s materials, on the leaflets, or information in TV advertisements (Danone, Indykpol, Hoop, ZT Kruszwica), also on the company’s cars (of the company’s representatives and distribution vehicles- for example Indykpol). Online marketing also supports traditional marketing: that support is usually concerned with promotional activities or general communication. The activities undertaken through internet marketing were usually planned and had a specific purpose (including Nestle, Danone, Hoop, ZT Kruszwica) or “intuitional” (among others Drosed). In the case of planned communication activities, internet activities are integrated with other media to create a coherent promotional campaign (e.g. Nestle, Danone, ZT Kruszwica). Some companies, however, by using random tools of communication that are not connected with other media, make their campaign less complete (e.g. Drosed).

Among marketing activities that can be described as supporting traditional marketing we can point out some activities such as those undertaken by Hoop company where advertising banners were placed on the pages of cooperating companies, or in case of ZT Kruszwica (ZTK) e-mails are used to contact individual customers, whose addresses are in the company’s data base. In the case of Brewers’ Association the opinion was that traditional marketing was not fully supporting online marketing, as the knowledge of the company’s internet address was described as low, despite printing it on promotional materials, company’s documents and chosen magazines. In the researched companies we cannot precisely define the level of influence of these two types of marketing on each other (traditional marketing on internet marketing but also vice versa). We can only point out the stronger position of traditional marketing over internet marketing and underline that in the case of the researched food industry companies the following tools of marketing, in order of importance, are used in internet marketing: communication, product, distribution and price.

SUMMARY AND CONCLUSIONS

In the food industry companies researched the interdependence between Internet marketing and traditional marketing become stronger. The scope and methods of research is also wider. The companies, especially those with Polish capital, have now greater access than before to findings and research of renowned Science Institutes and can ask them to conduct research on their behalf. Marketing research, also involving traditional marketing is often ordered online. We can suppose that the use of internet marketing is in the greatest degree dependent on the development of information technology, which is firstly created to cater for the servicing of cooperating companies and secondly to build relations with the individual consumers. It is puzzling that in the researched companies there are no defined strategies dealing with online marketing as the whole complex of activities on the internet market, and they also lack precisely defined action strategies.

The new medium allows the employment of a diversity strategy (among other Brewers’ Association), product and market development, individual approach (among other Nestle) makes the product and company internationally known but also speeds up imitating. The information technology changes that have happened in the business environment are changing the traditional shape of large international corporations as well as local companies. The speed and the amount of consumer information makes the modern companies act faster but also more conscientiously. In the researched companies there were no special products prepared specifically for internet users and also products were not diversified for locality. The product offer of the researched companies was usually enhanced by some information, an appropriate picture or some recommendations (Fig. 1).

On the basis of this study we can confirm that despite the development of the internet the main means of communicating with consumers were in the order: info line, www pages, and e- mail. In the researched companies the scope of internet influence is widening, which means:

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Accepted for print: 7.11.2007

Responses to this article, comments are invited and should be submitted within three months of the publication of the article. If accepted for publication, they will be published in the chapter headed 'Discussions' and hyperlinked to the article.