Internet Market Segmentation Essay, Research Paper

Internet Uses

More in US are Online:

? Approximately 38 % of all U.S. homes now have access to the Internet.

? Approximately 100 million people (39 % of U.S. population) have been online at home.

? A total of 60 million (23%) access the Internet at least once a month and are classified as active users.

? Twenty-one of the top 35 local Internet markets have more than half of their population online. On top is San Francisco, with 66% of households having access to the Internet from a personal computer at home followed by Seattle, San Diego, Portland and Washington D.C.

(Source : Nielsen / Netratings)

Internet Growth And E-Learning

The Internet has changed all the rules for business. Past few years have shown the sizable numbers of companies across all industries began realizing the huge potential of Internet solutions for increased sales, stronger customer relationships, more focused marketing programs, streamlined internal systems, and better supply chain integration. As these early adopters publicize their success, a much larger group of ‘fast followers’ will rush to e-business adoption.

We’re only at the beginning of a total transformation in the way companies of all sizes and in every industry do business. e-business systems deliver value today and that e-business applications will become much more sophisticated and valuable during this decade. A new breed of e-business managers is taking on the role of specifying these new systems, which is a function that has traditionally been handled by IT personnel.

Explosive growth of the Internet provides delivery vehicle for education IDC estimates that, by 2003, the number of Internet users worldwide will grow to about 502 million, up from 87 million in 1997, representing a CAGR of 34%. With an estimated 103 million users in 2000 ? or 40% of the projected 2000 total ? the U.S. has the largest share and highest penetration of the Internet. The U.S. is also the leading nation in ecommerce. By 2003, one-fourth of all U.S. business-to-business purchasing will be done online, as predicted by The Boston Consulting Group. The increasing integration of the Web and American culture is also evidenced by tremendous annual user growth. In 1997, only 15% of the U.S. population used the Internet ? then mostly a domain of educational institutions and businesses. Research shows that a stunning 63% of Americans will be surfing the Web in 2003, more than doubling the usage in 1999. Through its increasing reach and simplicity of use, the Internet has opened the door to a global market where language and geographic barriers for many training products have been erased.

American companies moving quickly to adopt e-business systems throughout their operations are spending more than seven times of their post spending on this front. The landmark study of early e-business adoption trends, technologies, applications, and vendors across a dozen major industries estimates that companies in the United States spent $153 billion on e-business systems during 1999 and projects that this total will rise to $348 billion by 2003. From retail Web sites to Internet-enabled systems for supply chain management, procurement, human resources, knowledge management, and many other areas of their operations, companies are in a frenzy to achieve the massive increases in productivity offered by Internet technologies.

o ELearning growth is directly associated with e-business adoption of market. Although the minimum infrastructure required for e-learning is already available today, but still much more advancement is promised on technological front. As the internet expands and technology advances, so will e-learning acceptance.

o e-Commerce (or eBusiness), Learning-Technology Standards, More and Better elearning Content are the key driver of e-learning accelerating growth.

o Interactions among elearning, electronic commerce (ecommerce), and knowledge management will be the key to moving the fledgling elearning industry into adulthood in the next five years.

o Next-Generation eLearning: Wireless and Voice over Internet Protocol

The Future of the internet

By 2005, total peak global international demand for bandwidth will be about 7 Tbit/s, with an average annual growth rate of over 90%. The demand for bandwidth will be driven by growth of Internet use. By 2005 the forecast is that 83% of international demand will come from Internet traffic. Also, Ovum predicts that the value of business to consumer e-commerce transactions will be $358 billion, and business to business e-commerce transactions will be $2.1 trillion. Average annual growth rates will be about 60% per annum over the period.

(Source :”Global Telecoms & IP Markets”, by Dr. Richard Kee, Ovum, 12/1999)

The internet?s growth has been driven by PC penetration. Almost half the American homes have at least one computer. The number of PC?s connected to the internet has increased 51 percent over the past year and has more than doubled over the past two years.

Despite this growth, some industry analysts predict the PC will have only five to ten more years (topping out at 70 percent household penetration) before it will be replaced.

On the horizon are information appliances that can access the internet, send and receive e-mail as well as other features commonly associated with PC?s. These devices will enable consumers to access the internet via cellular phone, personal data assistants (PDA), digital TV and gadgets that have not been marketed or even invented yet.

It has been predicted that non-PC internet devices will surpass PC?s within five years. These new portable devices could have a huge impact on traditional media usage as internet access becomes more mainstream with the potential for out-of-home consumption.

Another factor in the growth of the internet is the rollout of broadband. Broadband is a high-speed system used for transmitting data. At this moment cable operators (cable modems), phone companies (digital subscriber lines) and satellite services are all racing to provide broadband connections to homes across the country.

High-speed internet access promises to provide full-action video (instead of the less effective banner ads) telephone calls, music, interactive games and a myriad of other services. Currently less than 1 million households have broadband access, with penetration expected to exceed 20 percent by 2003.

e-Commerce / e-Business Growth

More and more people and companies are doing business over the Internet including the government. This is having major effects throughout the business cycle: customers are demanding choice, convenience, and responsiveness; costs are often dramatically lowered as the cost of entry into a market is reduced and new competition appears overnight; pricing strategies are changing as businesses look at advertising revenue rather than product markup as the revenue generator, and distribution and service channels are changing dramatically. To take advantage of electronic commerce, an organization must be ready to accept new business strategies and new ways to measure economic results.

v The B2B market will grow from $145 billion in 1999 to $7.29 trillion in 2004. By that year, B2B e-commerce will represent 7% of the forecasted $105 trillion total global sales transactions. E-market makers are projected to facilitate $2.71 trillion e-commerce sales transactions in 2004, representing 37% of the overall B2B market. The worldwide B2B market is poised for explosive growth as the market is projected to reach $403 billion in 2000 followed by $953 billion in 2001. In 2002, the market will increase to $2.18 trillion, and at the end of 2003 worldwide B2B revenue is forecast to reach $3.95 trillion.

(Source : Gartner Group, 3/00)

v Industry experts expect sales figures for electronic commerce to reach a total of $200-$300 billion by the year 2001. New technologies such as WAP and interactive TV will accelerate these changes, making multi-channel access to all products and services critical to an organization’s success.

v Electronic banking and electronic money are fundamental to the growth of e-commerce.

North America Region

Projections for 2004 : worldwide business-to-business electronic commerce is projected to surpass $7.29 trillion, with the North America region accounting for 39 percent of that market over $145 billion in 1999, with the North America share of 63 percent of the market.

(Source : Gartner Group, Inc.)

Brick and mortar B2B commerce is increasingly international by nature, and the e- enablement of business will perpetuate this trend. The largest e-commerce companies are all US-based, but that most generate a significant percentage of revenue internationally. Currently, North American companies account for about 63 percent of total worldwide B2B e-commerce. (Source : Knight)

Europe Region

Europe market represents strongest regional growth in the B2B market ,today. This sector accounted for 1999 revenues of $31.8 billion.

Projections for 2004 : European portion of the global B2B market will exceed $2.34 trillion.

Latin America Region

Only $1 billion in 1999, the Latin America market is projected to total $124 billion by 2004. Some large firms are already benefiting from their early B2B setups in Latin America. In the next two years, full deployment of B2B e-commerce by the remaining large firms is expected. In addition, medium- and small-size enterprises (SME) understand the value of B2B e-commerce, and they are starting to create B2B platforms as well.

Merrill Lynch is forecasting that mobile commerce revenues in the United States will reach $11.3 billion by 2005, when the global market for wireless software, content and commerce will exceed $25 billion. International Data Corp. data, meanwhile, suggests that Americans could spend as much as $21 billion on shopping via mobile devices by 2004.

Analysis of the Internet Market

The Internet Rearranges the Marketing Landscape : A Look Ahead

o Businesses of all sizes are realizing that much of their future success depends on implementing complete and scalable e-business systems.

o The Internet growth enables a large opportunity for Internet-related companies ? and hence for e-Learning growth also. Today, E-Commerce generates $132 Billion in revenues worldwide. There is no question that online revenues will continue to expand, but what really counts is profitability.

o As online revenues continue to expand, profitability is the basis for continued growth and success. Predictions are that ,the next five years of today’s online world will change as much as the last five. But many business models adopted by most of Dot.Com today are not able to promise positive return, in speculated time frame. Although Today market is in forgiving mood because of expectations of quick return on investment but they will not surely wait for longer time anymore beyond year 2001 and so next year is going to decide the fate of Most of them.

o A decade ago, top-tier firms had annual returns of 25 to 30 percent. But today, even second- and third-tier firms are returning in excess of 100 percent, with some exceptional firms returning a whopping 400 percent. Clearly, that’s not sustainable, especially since the IPO window has slammed shut and nearly every VC firm is saddled with questionable Internet companies that have almost no chance of survival. The year 2001 will be when returns on investment drop precipitously — from triple digit returns to double and single digits.

? In the past year alone, an estimated 350 new incubators sprang out of nowhere. Most incubators are built around failing markets like consumer-oriented dot coms and business-to-business exchanges. They are betting on a particular business model, rather than investing in talented, passionate entrepreneurs. That’s not a recipe for success.

? Government is looking at electronic commerce to streamline its purchasing process.

? Budget constraints in many organizations are requiring them to do “more with less”. IT technology, particularly the Internet, is creating opportunities to realize greater efficiency and economy in day-to-day processes and in improving their business practices.

Only 36% of e-customers are satisfied with their Internet purchasing experiences. Poor handling of e-contacts create 30-48% lower customer loyalty among the two-thirds of e-contactors who are not satisfied. E-customers across all industries expect acknowledgment of their e-contact within one hour. However, only 12% receive an acknowledgment within an hour and only 42% receive one with 24 hours. One-fourth of all companies are pushing outgoing e-mails to customers with suggestions and promotions. Only one-third of e-customers indicate a high interest in receiving such e-mails. ( Source : International Customer Service Association (ICSA) and e-Satisfy.com (formerly TARP), 3/00.)

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