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

1.0 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

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
2

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

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.

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.

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.

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.

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.

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, participantobservation, 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

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.

10

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/
11

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
12

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.

European
Commission
(2006)
Categorizations
of
SMEs,
http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/sme-definition/index_en.htm
13

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
14

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
15

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 (EMarketing). E-marketing or electronic marketing refers to the application of marketing
principles and techniques via electronic media and more specifically the Internet. EMarketing is the process of marketing a brand using the Internet (Kumar, 2010)6.

Kumar
(2010)
History
of
e-marketing,
retrieved
http://www.indiastudychannel.com/resources/113957-Histoey-e-marketing.aspx
16

from

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.

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-itbetter.html

17

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 EMarketing 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

18

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.

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-howis-it-better-than-traditional-marketing
19

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

20

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

21

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.
22

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
23

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

13

Internet Education Foundation (2004). GetNetWise. Guide to lnternet Terms: A Glossary.

Retrieved from http://www.getnetwise.org/glossary.php
24

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
14

Marketing Online (www.marketing-online.co.uk) is a source for links to web sites. It deals

with Internet marketing strategy, implementation and practice.
25

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 userinitiated 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

16

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

about new media.

26

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
27

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)
28

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.

29

 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.
30

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).

31

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
32

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
33

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.
34

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

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

35

from

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 emarketing. 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.

36

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
37

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.

38

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

39

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
40

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.

41

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.

42

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

Shop

Types of items sold

www.patrotour.cz

Holiday packages

www.pahorek.cz

Assortment of products

www.nakupnasplatky.cz

Assortment of products

www.photostar.cz

Photo and video cameras and equipments

www.tabletky.cz

Medicinal items

www.swshop.cz

Computers (hardware and software)

www.invia.cz

Holiday packages

www.zahradnishop.cz

Tools and equipments

www.alfasport.cz

Sports equipment

www.knihy.cz

Books

www.ikancelar.cz

Office equipment and stationary

www.hyperobchod.cz

Assortment of products

www.dvdmax.cz

Music and video CDs

www.cdcentrum.cz

Music and video CDs

www.dobreleky.cz

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
43

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

44

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 eshop. 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

45

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.

46

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
have built some kind of reputation in the market. However, the company also engages in other
communication activities such as advertising, direct mailing, search engines and price and
product visibility through their websites. Customers of the company usually want high quality
products and services for low prices as well as speedy deliveries.

47

The company tries to meet the expectation of the consumer although it is a challenge since it
is not easy to satisfy various customers they currently have. But, it is the expectation of the
company that any customer who buys at the website does not do it once but continues to visit
the website to buy more. They have developed a strategy of giving points for each purchase.
This means that, consumers who keep buying at the shop gain points that give them discounts
for future purchases. This is a form of reward for loyalty and motivation for repeated
purchases. In the future, the company seeks to give real time advice to current and potential
customers on the website.

According to the divisional manager of patro.cz, the main competitors within the Czech
Republic are alza.cz, mall.cz, kasa.cz, and obchodni-dum.cz. Patro.cz admits that, these
competitors have a slight urge over them because they communicate more with clients, have
user friendly look, descriptions of goods are helpful and make one want to buy. However, in
the opinion of the divisional manager of patro.cz, these competitors spend so much money on
marketing which is not all that wise. This money is mostly spent on PPC and radio
advertisement.

The main challenge that the company finds is the fact that the competitors could be seen
everywhere, keep goods on stock and hence ship immediately, mostly for free which is hard
to beat and in this respect marketing alone is not that important. However, the company
identifies certain unique benefits for the customers that could bind them to the company.
These benefits are highlighted in their marketing communication. These are:
Trustworthy
Cheap
One stop shop
Many delivery modes (PPL, FedEx, Czech Post among others).
48

 Many ways to pay, accepting credit cards as well (most e-shops do not)
The reasons why the company uses online marketing are listed below.

Reach more potential customers

Reach already interested buyers

Present targeted messages to specific buyer

Present the most persuasive message to each target group

Get more from their target market

Use professional marketing strategies, but under your control

Build image

Save money on marketing

It was found that whiles NWT a.s. builds power plants among many other activities, Patro
online mall is just a part of NWT a.s. In order to get the best out of its online marketing
activities, the company engages in the following activities:

They constantly provide information about the firms products to online shoppers

They collect and record customer information through the companys website

They also have a two way communication with customers and suppliers. This ensures
that, they get firsthand information of the needs of customers so they can communicate
with suppliers.

They also give opportunity for customers to provide product feedback through the
companys website

The company also tracks customers orders through the website

They use online payments systems to receive payments

However, the company is yet to engage in activities that will relate visitors to their individual
preferences via website.
49

5.2 The Internet marketing strategy

The company recognizes that search engine is a major platform that shopper in the Czech
Republic use to search for and find products they require. Search engines such as Google
bring a lot of traffic to the companys websites. The focus of the online marketing campaign
of the company is related to positioning, branding, market awareness improvement, in some
cases educating the market on the products and services of the company. The company also
uses the online marketing strategy to send messages to end users.

In order of importance, the following list shows the most frequently used marketing channels
based on how effective they are in promoting the products of the company. According to
Marek Novek, the company uses them all and they are of the same importance. They are the
following:

Email marketing

Press release

Pay Per Click (PPC) advertising

Personal selling

Online advertising/Banners

Web PR

Patro club

The social networks

5.3 Email marketing

The company recognizes the importance of the email marketing in its strategy. Email
marketing generally takes two forms. Firstly, emails are sent to an internally created list and
also list of potential consumers that the company buys from third parties. Marek Novek
50

explained that, emails sent to an internally created list by the company provide information
that is relevant and helpful to prospective or actual client's needs. It is anticipated by the form
that, establishing this practice sending emails with a direct incentive to take action can be
integrated in a balanced sales approach.

Secondly, there are also emails that are sent to a list of potential consumers that the company
buys from third parties and this strategy utilizes a more aggressive approach from the very
beginning. However, the company recognizes that, for whichever method that is used that,
they must provide a trustworthy opt out option for those who are not interested in receiving
such unsolicited mails. Furthermore, the company does not hide the intension of such emails
so as to get law suit or incur the displeasure of clients. The goal of email marketing according
to the company is to:

Enhance the relationship between the company and its current or previous customers.

Promote customer loyalty and increase the probability of repeat purchases.

Acquire new customers or convincing current customers to purchase items often

immediately e.g. sales discounts, clearance sale etc.

According to the company, opt-in emails enable them to avid the legal issues associated with
email marketing. They use the opt-in e-mailing as a marketing tool and the intension is to
eventually result in a high level of satisfaction among consumers as well as the company.
Opt-in is based on the assumption that the consumer wants to receive such emails, unlike
unsolicited advertisements sent to the consumer. According to the managers interviewed, optin emailing is more personal and relevant to the consumer than untargeted advertisements.
Through this channel the company is able to send newsletter to customers. Such newsletters
inform customers about upcoming events or promotions or new products.

51

The company seeks the concern of customers at the point of purchase if they would like to
receive the newsletters or further information from the company. With the opt-in contact been
established, the information of the customer is stored in the companys database and then the
company can send promotional materials to client automatically. This is commonly known as
Drip Marketing. According to the divisional manager of patro.cz, this form of advertisement
can aid in the segmentation of their promotions to specific market segments.

5.4 Press release

Another strategy that is been considered by NWT a.s and e-shop patro.cz is the use of press
releases. The company recognizes that, these two methods aid in generating website traffic as
well as creating website visibility and attracting inbound links. Furthermore, the press release
of the company is converted into articles and oftentimes, the articles are also turned into press
releases. Articles are written in for publications and the usually contain strong opinions,
whiles press releases are usually newsworthy. The company recognizes that, the flexibility
allows the business operations to obtain more results for the time and resources invested.

Furthermore, with the increased demand for unique content of advances in the use of social
media, these two resources are highly adaptable and efficient in promoting the image of the
company.

5.5 Pay Per Click (PPC) advertising

The company believes that, an effective PPC advertisement uses the art of micro copywriting.
Micro copywriting involves the ability of the company to clearly, concisely and persuasively
state the message in few words as much as possible so as not to pay more. The PPC also
demands that there is commitment on the part of the company to experimentation and
refinement where necessary. The strategy in the use of PPC is to have the flexibility to
52

regulate the cost, the quickness with which results can be achieved and the ability of the
company to monitor them closely. The company spends time to conduct research on relevant
keywords that are necessary for its PPC initiatives. However, it was realized that there are too
many key words that are used in search engines. But, the company tries not to waste money
on such medium of advertising; hence they do not spend much on most frequented words.

5.6 Personal selling

NWT a.s clients range from companies, public authorities, education and health authorities - it
means a business segment, not individual customers like patro.cz. They mainly provide
reasonable IT services for the clients. They sell mainly hardware, software and do
installations and after-sale-servicing. Marketing targeted to these business segments is mainly
customized to meet the needs of the respective companies. They provide them with services;
sell product and maintenance of equipments.
The study found that more than 70% of marketing budget is invested to the B2B marketing
and 30 per cent of budget involved investments to the advertising26. Aims of the company are:
listen to customers and then suggest possible suitable solution, and mainly long-term relation
with customers. According to the company a key to maintaining a long-term relation with the
customer is helpful comfort and atmosphere full of information for customers. Therefore the
customers are provided always with "on-line" detailed information on companys products
online, warehouse stock, processing their orders, invoices supplies including delivery terms
and payment on "business-to-business" web portal.
Because, NWT a.s basically operates in the B2B market, they usually send personalized
emails to companies with proposals and offers about the products and services they offer.

26

Adapted from information from questionnaire and interview with managers

53

Because the B2B market is highly sensitive, emails sent to companies are usually customized
to meet the needs of the company so as not to receive negative feedback. NWT a.s looks at
the prices been provided by their competitors in the B2B market and tries to position itself in
a place of advantage in the market.

5.7 Online advertising/Banners

The company places banners on different websites. Such banners are not static but are very
dynamic with changing pictures to attract the attention of potential customers. It was realized
from the marketing manager that the company buys the banner package according the offer
they have and it varies every month. The use of the banners as an advertisement placement is
not regular. The intensity and frequency mainly depends on current offer form providers like
Novinky.cz and BillBoard.

54

Figure 5: Patro.cz banner on Novinky.cz

Source: www.novinky.cz

5.8 Web PR
Since March 2010, the websites of NWT a.s and Patro.cz have gone through transformations.
The first impression from these pages is quite positive. The items are visible and well
categorized making it user-friendly. The website has sections with specific categorization of
the various products and services on offer. The categorization ranges from electronics and
books to music and films. By clicking, subcategories are opened from the main sections. It is
also possible for frequent shoppers to register with the company on the website to facilitate
subsequent purchases. There is also provision for one time shoppers on the websites and they

55

can make purchases as guest, hence, they do not have to register. However, the website is not
translated into other important languages like English and Slovak.

5.9 Patro club

Patro club is a loyalty program for customers who buy goods from the e-shop Patro.cz. The
aim of this program is to express give back to regular customers who shop online and also to
motivate them to shop again. Regular shoppers are provided with virtual money that they can
use to buy more from the shop online. Each member of the club has a virtual pocket book
called "Patronka". In the "Patronka" the customers get virtual money and the amount of
money depends on the size of the order. Big orders exceeding a certain amount mean more
virtual money. Each product has different number of points (virtual money), and points are
shown with each item on the website. A customer could use his/her virtual money for
discount on the next purchase. Although the goods bought from the website are delivered by
post, it is possible for an order to be delivered to the homes of customers who are close to the
various branches of the company such as around Prague, Huln, and Zln.

5.10 The social network phenomenon

According to the marketing manager, social media marketing has become an effective tool for
branding and word of mouth marketing today. It offers the company an opportunity to
constantly update its customers about happenings in the company so they can make their
purchasing decisions. Small businesses like NWT a.s and patro.cz increasingly benefit from a
Social Media marketing strategy using approaches that distinguish them from the rest.

In choosing the appropriate social network to use, the company had to find out which of the
different social network platforms are popular among customers. Facebook is found to be

56

most popular among most people. It was found from the interaction with the managers of the
company that the certain critical questions are asked when deciding on using the social
network as a marketing tool. The questions include the following:
What are the most efficient Social Media platforms that will reach this market?
Whether there are existing online or offline assets that can be leveraged?
What are the tracking and research applications that are available to help monitoring
results from such social media platforms?

NWT a.s and patro.cz capitalizes on the availability of such third party platforms and uses
subtle ways to measure the impact of a Social Media strategy relative to the investment
(although the cost is minimal or even zero). They use the comments that people place on the
walls of the company, level of interactivity achieved, increase in name recognition and direct
website visits to measure the effectiveness of such platforms. For the branding activities the
company also takes the advantage of the power of social media.

Contemporary development of digital media has brought a wide range of opportunities how to
address the young generation through the Internet. In the last few years, social networks such
as Facebook which has developed from a college photo-sharing portal to a burgeoning global
network which is used by many businesses besides other marketing activities as a cost
effective advertising platform. However, before a company takes advantage of the
opportunities which the social network could offer, it is necessary to emphasize once again
that the social networks are usually used by young adults. Hence, the marketing strategy has
to be also adapted to these their needs and interest. The use of the social network platforms
confirms the assertion by Drew (2003) that the internet expands the scope of marketing. Also,
the social network provides an avenue for meeting reaching new customers and exploring new

57

markets. Because the cost is almost not existent, it cost of advertising is reduced (Drew,
2003).
The main objective of using the social network platform is to engage the consumers in
conversation in order to prevent the fan page of becoming dormant or even being forgotten.
Therefore, it is also worth to discuss news and current events which interest the target group
and are relevant to the company at the same time. In case the fans are rather passive, NWT a.s
also Patro.cz might let them know that it would like them to share their feedback on the
products and services. The company as part of its plans intends to use the social networking
websites as a viral marketing tool. If the consumers communicate with the company via the
social network, the comments are accessible to their friends as well. Hence, new potential
customers might be attracted.
Although social networks seem to be a very cost-effective promotional tool at the first sight,
their business potential has not been fully developed and exploited yet by the NWT a.s and
patro.cz. Currently the company has only 84 funs on their Facebook page while the main
competitors such as alza.cz has 6,605, obchodni-dm.cz has 488, kasa.cz has 2,615 fans as at
9 January 2011. Clearly, the managers interviewed admitted that they have not fully exploited
the social network phenomenon. However, it is anticipated that, an aggressive fun expansion
will be carried out to get more people to follow the pages of the company. From the
companies point of view, future utilization of Facebook will be provided mainly by
interactive applications which will connect the customers directly with relevant services
accessible on the companys official web sites.

Also according to the division manager interviewed using the social network for marketing
purposes concerns not only creating of fun pages, but it is also necessary to promote them
and take time to run them properly in order to achieve the peak efficiency. Search engines
58

cooperate with Facebook for the purpose of updating the search results. Thus, it might be
very beneficial to increase the frequency of keywords which appear on the fun pages.

It is the hope that intensity in promoting the pages will attract more people. A way to do this
is to offer a new customer or user a registration into the application and this could raise the
number of fans more quickly. Although NWT a.s also Patro.cz does not give more
information that cannot be available on the NWT a.s and Patro.cz website, social network
websites provides the platform for getting feedback. Customers of the company who have had
experiences with buying goods through the NWT a.s and Patro.cz could write some
commentaries on the walls of the company.

Also, NWT a.s and Patro.cz can do free advertising of products on their wall and people can
discuss them. Again, it is as really personal. It is a kind of friendly advertisement, because
potential consumers go to the website only if they need or seek for specific goods. The
company also could show the users the latest offers during the time when they are not
seeking.

NWT a.s and Patro.cz could use Facebook in order to attract new audiences as well as to gain
valuable information about its present customers. The fun pages enable the company to
communicate with its customers. The post on the walls of the company by customers provides
an ad-hoc opinion of the perception of consumers about the company. The company admits
that based on some responses they have received through some social network websites their
marketers have been able to find the real needs of some customers, follow their buying habits,
learn from their feedback, and become aware of possible complaints or innovative
suggestions, although the use of this has been minimal. The knowledge gained from this

59

feedback following advertising is able to provide the company with understanding of the
differences and requirements of diverse segments or target groups. Consequently, the
company is able to address its potential customers more properly and eventually make the
necessary changes to meet the demands of each segment. In addition, the information gained
from the customers will enable the company to divide the market into segments according to
gender, age, or region, and thus help the marketing aspect of the company to plan more
effective marketing strategy around those groups.

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

The following SWOT analysis shows strengths, weaknesses, opportunities and threats of
NWT a.s and e-shop Patro.cz. The SWOT analysis makes it possible to provide relevant
recommendations which can help to eliminating the negative impacts on the company and
reinforce strengths and opportunities that the company can capitalize on to make the
necessary impact in the already competitive environment. The factors that are internal are
mainly strengths and weaknesses. The external factors are classified as opportunities or
threats. The external environmental analysis provides the opportunities for profit and growth.
Its marketing communication covers a diverse range of subjects. Each of them is promoted
through specific promotional tools.

a. Strengths
Diversification of product lines
Long tradition in providing services.
Friendly approach to customers.
Focused on key accounts.
60

 No orientation only on one business.

Common e-shop at www.patro.cz
Diversity of the companys business activities
Emphasis on professionally trained personnel
Broad assortment of products and services
Taking everything into account, extensive geographic coverage, professionally trained
personnel, and assortment of exclusive products could be emphasized as the most important
strengths of the company. Among other advantages, the growing popularity of the company
should be stressed in its communication because it contributes to enhancing the brand image
of the company.

b. Weaknesses
Lower public awareness of the corporate image of a specialist in the electronics field
Fluctuating demand volumes within a year
Poor marketing.
Irregular marketing campaigns.
Difficulties connected with monitoring and measuring of promotional campaigns in
terms of their effectiveness
When considering the rapidly growing popularity of online shopping, the absence of a standalone NWT a.s and e-shop Patro.cz should be emphasized as the most obvious disadvantage
facing the company. The situation is even worsened due to the unclear link between the NWT
a.s and e-shop Patro.cz web pages. Another weakness is the fact that in comparison with

61

bigger domestic competitors, most online shoppers perceive the retail chains operated by
Patro.cz as a specialist on only electronic appliances market.

c. Opportunities
Growing market
Acceptance of the internet as a marketing tool
The interest in buying on the internet by young people
Social network
The strategic implication of the opportunities is that, NWT a.s and e-shop Patro.cz could use
its website to attract customers in the lower age bracket by the network. When the company
gains the loyalty of young people, they stand a chance of reaping profits over a long period of
time. The company could also attract people and communicate with consumers through the
popular social networks. NWT a.s and e-shop Patro.cz could use the internet as a leverage to
extend into other international markets
d. Threats
Price wars among competitors
Strong competition among the internet e-shops as well as traditional retail shops
Stronger consumer awareness of the competitiveness in the market
Lack of customers loyalty
Increased competition
Slow reactions or skepticism towards the latest trends in marketing communications

62

To sum up, the most considerable opportunity of company seems to be the decision of NWT
a.s and e-shop Patro.cz management to differentiate between the two companies. Such an
initiative will provide a clear distinction in the minds of potential customers with regards to
the line of business of the company. It will therefore serves as a leverage to formulate better
communication with the market. Also, the Internet offers even more opportunities for online
advertising and social marketing. Although the company has not done so much with the use of
social networks in particular, the managers interviewed that, they have put in place the
necessary strategies to take advantage of this medium. Promotions through the internet offer
the company an opportunity to contact a large number of audience as well as receiving
valuable information about consumers. Furthermore, NWT a.s and e-shop Patro.cz could take
advantage of its partnership with leading producers such Dell, Fujitsu-Siemens, HP, IBM,
Microsoft to increase its credibility in the Czech market.

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

NWT a.s has competitors both within and outside the Czech Republic and this poses as a
threat to the companys profits and market share. The competitiveness of NWT a.s in the
Czech market is analyzed with Porters Five Forces of Competitive Position. Porters Five
Forces is indicated in figure 6.

63

Figure 6: Porters Five Forces model

Source: http://www.12manage.com/methods_porter_five_forces.html
a. Buyer power is high when buyers have many choices from whom to buy, and low
when their choices are few. In the Czech Republic, there are so many online shopping
options available to the consumer. The products sold on all these websites are mostly
with the same brand and specifications. NWT a.s and patro.cz do not have control over
buyers and cannot reduce the power of buyers. The company can therefore engage in
vigorous marketing campaigns to increase its awareness in the market. Other activities
such as customer loyalty building, customer relations, sales promotion such as
discounts could be incorporated in the marketing strategy of the company.
b. Supplier power is high when buyers have few choices from whom to buy, and low
when their choices are many. The goods that are supplied are of from very reputable
brand and are identical among the various suppliers or companies. Because buyer
64

power is high, supplier power is low. This is because consumers have choices to select
when they want a product from an online mall. NWT a.s and patro.cz have limited
power in influencing the companys market position.

c. In the case of NWT a.s and patro.cz, the threat of substitute products and services is
high because there are many other alternative services available to the buyers. The
threat of substitute products or services is high when there are many alternatives to a
product or service and low when there are few alternatives to choose. The threat of
substitute products or services depends on relative price of substitutes, buyer
switching cost, buyer propensity to substitute and the perceived level of product
differentiation. The buyer propensity to substitute products offered by NWT a.s and
patro.cz is higher especially when there are cheaper prices been offered by other
companies. The perceive level of differentiation of products offered by NWT a.s and
patro.cz is minimal. The only variable that differs among the various substitute
products is price. Therefore NWT a.s and patro.cz could vary the price it charges for
its products and services to attract customers.

d. The threat of new entrants is high when it is easy for new competitors to enter a
market, and low when there are significant entry barriers to entering a market. The
threat of new entrants in this case is high. Lots of online shopping malls and
computers service providers are developing in Czech Republic. Some companies
which are mainly into brick and mortar business are gradually adding e-shops to
their sales outlets. The entry barriers are almost non-existent since the internet is free
for all and the cost is minimal as compare to the brick and mortar sales outlets.

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e. The rivalry among existing competitors is high when competition is fierce in a market.
Since there are many similar online malls, the rivalry among existing competitors has
intensified. As already indicated, NWT a.s and patro.cz recognize alza.cz, mall.cz,
kasa.cz and obchodni-dum.cz as its main competitors in the Czech market. However,
there are other competitors although their size and market share varies.

The Five Forces analysis reveals that, in order for NWT a.s and Patro.cz to remain
competitive, it must provide innovative and quality services to attract new customers and
retain existing ones. The quality of services and features that a service provider provides will
determine whether people continue to visit the website and patronize their products and
services or not. With the fierce competition that NWT a.s and patro.cz currently faces, it will
be useful to develop strategies such as giving discounts or points to customers who refer their
friends to the company.

This chapter presented the findings and discussions of the results that were received from the
responses from a questionnaire that was sent to the division manager of patro.cz as well as
interviews conducted with managers responsible for online marketing of the NWT a.s and
patro.cz. The chapter provides the various platforms the company uses to promote its
products. It also highlights the performance of these media. The strategies that the company
intends to adopt in the future to ensure its growth and competiveness are also presented in this
chapter. Also, the chapter contains a SWOT analysis and Porters Five Forces of competitive
position of the company as a whole.

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6.0 CONCLUSION AND RECOMMENDATIONS

6.1 Conclusions
In conclusion, it must be emphasized that the internet as a marketing platform is important in
the competitiveness of SMEs in todays business. Due to the fact that the internet has
permeated through all kinds of business irrespective of the industry, it is important for SMEs
to fully leverage on this platform to extend their operations so as to grow and become
competitive. The internet is relevant because of the minimal cost involved in brand promotion
and marketing of product and services offered by a company.
From this study, it is realized that online marketing differs from traditional marketing tools;
online marketing tools enjoys many advantages such as relatively low cost, instantaneous
communication, user friendly functions, wider coverage and well structural customer
information and feedback, among others. These factors make it suitable for the marketing
strategies of SMEs, especially those that operate solely online.
The SWOT analysis in this study provides details of the strengths, weaknesses, opportunities
and threats faced by NWT a.s and patro.cz. The analysis hence provides an understanding of
what the internal environment of the company is, and also the external factors that the firm
can either capitalize on, or must be conscious of in order to provide customers with a
compelling experience and be competitive and increase its market share. Also, the study also
uses Porters Five Forces of competitive position to analysis the trends in online shopping
companies in Czech republic to indicate the position of NWT a.s and patro.cz and how the
company can strategize to increase its market share in the Czech market.

67

The internet also provides companies with an opportunity to deliver relevant information and
communicate with customers, as well as building and maintaining a long term relationship
with customers. Also, the internet as a marketing tool positively contributes to the
enhancement of customer relationship and enables SMEs to maintain close contact with their
customers so as not to lose them to other competitors. The internet is essential in customer
loyalty building as it offers companies the opportunity to obtain first hand information about
the concerns of customers.

6.2 Recommendations
The analysis in this study was based on the companys internal information and also their
official websites. The outcome from these analyses is that at present the company needs to
realize the importance of the internet in its promotion strategies. It was realized that, the
company has not fully exploited the benefits of the internet as a marketing tool. The outcome
from the analyses is that although traditional marketing is important for a company, modern
business operations require intensity in the use of the internet platform.
Based on the finding and discussions, it is recommended that NWT a.s improves its online
communication and marketing to customers. There should be persistent and aggressive
communication by the company through the internet as this has become the trend in business
operations. As an internet mall, there is a need to capitalize more on the internet to cultivate
and maintain customer satisfaction, commitment and trust. Depending on the characteristics
of the internet environment, NWT a.s could provide value-added services that traditional
marketing tools could hardly offer at the same cost.

68

The company could also make use of the advantage characteristic of internet to provide
utmost benefits to the customers; in the meantime, the internet environment could enable the
company to transform itself as a technically based company thereby gaining the attention of
potential customers.

Also, the long standing reputation in some towns in the Czech Republic could be used as a
marketing tool to promote the company. This will serve as an evidence of commitment and
trust to customers. Eventually, customer relationship will be improved and reinforced, and
will also grow the companys customer base.

The design of the webpage especially for the companys online shop (patro.cz) is not
appealing enough to get the attention of customers. At first glance, there is a lot of
information and many sections that make it difficult to get what is needed and sometimes
confusing especially for first time visitors of the website. The webpage could be simplified
and categorized to make the navigation easy. The design of the official website is not much
impressive as it lacks attractive elements that get the attention of customers to stay on the
website. As a way of increasing efficiency, the company could properly categorize the
contents of the webpage of the shopping mall to make surfing through it convenient. Such an
initiative will enable customers, especially first timers, to get a positive image of the company
and hence will increase the probably of visiting the website again.

The information on the website of patro.cz is in Czech only. However, that of NWT is
translated in English and Czech. There is a need for a translation of the website of the
shopping mall into English for online shoppers who do not speak Czech. This will add to the
shopping experience of these customers and reduce the frustrations they have to go through in

69

order to get the products they require. Furthermore, the website could be translated into
German, in order to attract other customers from near-by countries (Germany and Austria)
who are not from the Czech Republic. The reason for this recommendation is because of
Czech Republics close location with these German speaking countries. The company could
take the advantage of this proximity to extend their operations to cover all these near-by
countries. The potential advantage of having the website translated into more important
languages will not only be for the sake of attracting customers in near-by countries, but it will
make the content of the webpages accessible to customers all around the world. This will set
the stage of the growth, internationalization and expansion of the operations of the company.

6.3 Suggestions for future research

In future studies, it will valuable to evaluate other internet marketing tools in order to make a
comparative analysis with other companies in the same line of business both within and
outside the Czech Republic. It will also be important to study the perception of customers of
NWT a.s as well as patro.cz on the companys online operations. It will provide the
effectiveness of the companys online operations from the point of view of customers as they
are the target of all strategies. Such a study will complement the findings of this study and
provide comprehension results of the study.

70

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WEBSITES
http://www.viz.co.nz/search-engine-marketing-a.htm
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APPENDIX
INTERNET MARKETING IN SMES QUESTIONNAIRE
Please read each question carefully and answer as candidly as possible. Complete each
question thoroughly, with as much detail as you can use as much space as you want. Where
the word customer is used this refers to your equivalent be that a visitor, subscriber,
client, whoever it is you want visiting your website.
1. How many employees are in the company?
.......................................................................................................................................................
.......................................................................................................................................................
2. What Are The Key Products And Services You Offer?
.......................................................................................................................................................
.......................................................................................................................................................
3. Please List Any Areas Of Business Expertise and/or Specialism
.......................................................................................................................................................
.......................................................................................................................................................
4. Do You Consider Your Business To Be Business Or Consumer Oriented?
i.

Business to consumer oriented

ii.

Business to business oriented

iii.

Both business and consumer oriented

iv.

Others

5. Do You Have A Current Marketing Strategy?

i.

Yes

ii.

No

6. What Are Your Key Target Markets?

.......................................................................................................................................................
.......................................................................................................................................................

7. Do You Have An Online Marketing Strategy?

i.

Yes
78

ii.

No

8. If Yes, What Are Your Top Five Strategies For Online Marketing?
.......................................................................................................................................................
.......................................................................................................................................................

9. How Many Monthly VISITORS (not hits) Does Your Website Receive?
.......................................................................................................................................................
.......................................................................................................................................................

10. How Many Monthly UNIQUE VISITORS (not hits) does your Website Receive?
.......................................................................................................................................................
.......................................................................................................................................................

11. Do You Use Pay Per Click Advertising?

i.

Yes

ii.

No

12. If Yes, Please Include The List Of Keywords Used To Trigger Adverts
.......................................................................................................................................................
.......................................................................................................................................................
13. What is the aim of using online marketing platforms? (tick all that is applicable)

Reach more potential customers

Reach already interested buyers

Present targeted messages to specific buyer groups

Present the most persuasive message to each target group

Get more from your target market

Use professional marketing strategies, but under your control

Build Image

Save money on marketing

14. Rank the following online marketing mediums based on the effectiveness to your
company. List in order of importance (use 1 to 7)
79

 Search engine optimization

Pay per click
Online advertising
Viral marketing
Web PR
Email marketing
Social marketing (Facebook etc)
15. Specify which of the following items are used by NWT computers and its subsidiaries
on its webpages (tick what is applicable)

Providing information about the firms products

Collect customer information via the website

Have a two way communication with customers and suppliers

Profiles and cookies are used on the website

Receive product feedback via the companys website

Perform product quality survey via website

Relate visitors to their individual preferences via website

Customers orders are tracked through the website

Receive payments through the companys website

16. Who are your customers?

.......................................................................................................................................................
.......................................................................................................................................................
17. Where are your customers?
.......................................................................................................................................................
.......................................................................................................................................................
18. At present, how do your customers know about you?
.......................................................................................................................................................
.......................................................................................................................................................
19. What do you think your customers want?
.......................................................................................................................................................
.......................................................................................................................................................
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20. At present, how do you give them this?

.......................................................................................................................................................
.......................................................................................................................................................
21. Step back a bit for this one; what do you have that they need?
.......................................................................................................................................................
.......................................................................................................................................................
22. What do you want your customers to do when they visit your website?
.......................................................................................................................................................
.......................................................................................................................................................
23. Who are your closest competitors in Czech Republic? (List the top 5)
.......................................................................................................................................................
.......................................................................................................................................................
24. What are they doing well on their websites, in your opinion?
.......................................................................................................................................................
.......................................................................................................................................................
25. And what are they getting wrong?
.......................................................................................................................................................
.......................................................................................................................................................
26. What are they doing wrong on their websites?
.......................................................................................................................................................
.......................................................................................................................................................
27. What are they doing well in terms of online marketing initiative, in your opinion?
.......................................................................................................................................................
.......................................................................................................................................................
28. What are they doing that you think its a major challenge or threat to marketing or
doing your business online?
.......................................................................................................................................................
.......................................................................................................................................................
29. Apart from marketing online. What other traditional advertising mediums do you use?
.......................................................................................................................................................
.......................................................................................................................................................
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30. Please provide a listing of the unique features or benefits of your product or service
that you would like highlighted in the marketing communication (minimum 5)
...................................
...................................
..................................
..................................
...................................
31. How will you measure the success of this marketing initiative (i.e., benchmarks for a
successful effort)?
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
.......................................................................................................................................................
32. Any additional information or comments?

THANKS FOR YOUR TIME

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