Internet Marketing in Saudi Arabia Term Paper

  • Length: 28 pages
  • Sources: 5
  • Subject: Education - Computers
  • Type: Term Paper
  • Paper: #19959664

Excerpt from Term Paper :

' Purchasing agents can place orders, gather information, and communicate with different organizations from any place at any time" (Martin & Hafer, p. 41). Following the introduction of the Internet, many purchasing departments and purchasing representatives were better able to engage in direct communications, order taking and fulfillment as well as the provision of technical support with their business counterparts abroad (Martin & Hafer, 2002). These authors add that, "The Internet permits immediate and virtually free (to the user) two-way communications with as many or as few others as needed. In addition to text information (e-mail), it now permits audio (voice-mail) and video (video-mail) communications as well" (Martin & Hafer, 2002, p. 42).

Based on the meteoric growth of Internet for marketing purposes in recent years, though, these authors also expect that the use of electronic purchasing to facilitate B2B commerce will continue to grow in exponential ways in the years to come as well. Based on data collected by Forrester Research Inc., Martin and Hafer note that, "B2B commerce accounted for 78% of the dollar value of cybertransactions in 1998 and resulted in exchanging an estimated $17 billion in goods and services. Forrester Research also prophesizes that B2B commerce revenues will reach $2.7 trillion by 2004, with more than 74% of those revenues coming from new e-marketplaces and B2B portals" (Martin & Hafer, 2002, p. 42). The benefits from Internet usage are apparent; however, the ultimate impact of these current trends remains unclear in some parts of the world where powerful cultural, religious and legal forces remain firmly in place. Even in highly regulated Internet environments, though, the light is beginning to shine in and as De Chatel and Hunt (2003) also point out, because of the Internet, "Niche retailing is becoming increasingly important. As people get tired of global retailing, brands like Saks have become ubiquitous; they just keep on expanding, most recently into Saudi Arabia" (pp. 171-172).

It is important also to note current trends in Internet usage in terms of whether to target Saudi consumers or businesses. In this regard, Honeycutt and his associates point out, though, "Customers today order both consumer products and standard business-to-business (B2B) goods over the web. This type of economic transaction is faster, less costly, and impacts the roles played by the sales manager and the sales force" (p. 8). As these authors add, though, these changes are of such recent origin that their eventual impact remains unclear. Nevertheless, companies of all sizes are embracing the Internet as a marketing tool and even small- to medium-sized enterprises are reaping the benefits of powerful customer relationship management (CRM) software applications that allow them to better target the specific market segments they want and monitor the effectiveness of various marketing initiatives over time. According to Honeycutt et al. (2003), "Technology is changing the way people live, work, and think. While technology is impacting manufacturing processes and medical services at a rapid pace, other technological forces - the Internet, communications, and customer relationship management - are modifying global sales force management" (p. 8). As Shabaz (1999) noted early on, making any accurate estimates of current Internet usage are extremely difficult at a given point in time, though, because these data change daily and even hourly. In this regard, Shabaz emphasizes that, "Due to the explosive growth of the Internet, information scientists can only give approximations of how many connections exist. Because of the network's expansion, it has essentially 'deterritorialized' the globe by making it one connected entity without defined borders" (p. 27). Indeed, the "information superhighway" represented by the Internet has created an entirely new marketing environment where small- to medium-sized enterprises can compete on equal footing with their major counterparts in many ways, and these issues are discussed further below.

Internet Marketing.

Although many observers suggest that the Internet remains in its relative infancy because it arrived virtually overnight (which in fact it did), more and more is being learned about its impact on how companies compete in an increasingly globalized marketplace. In this regard, Stone and Mccall (2004) suggest that not only has the Internet changed the way many people go about earning a living and interacting socially with others, "Without doubt, the Internet is also changing fundamentally the dynamics of competition. Investors can buy and sell shares on the Internet from New York, U.S., to Taipei, Taiwan, and Christmas shoppers can buy toys at eToys. It is also an increasing source of information for marketing decisions through the various search engines like AltaVista and Google" (p. 20). On of the major ways in which the dynamics have changed in how marketers are using customer information that can be gleaned from Internet use.

For example, in order to take advantage of the statistical data that can be discerned from customer use of the Internet, companies began collecting personal information on "surfers" that visited their Web sites as soon as the technology became available. Recent innovations in technology have made it far easier and less expensive to collect, store, retrieve, and analyze consumer data (Shabaz). According to this author, "Companies can use this information to target and maintain customers, or can organize this information into customer lists to be sold to third parties. These customer lists have become valuable resources for companies" (Shabaz, p. 27).

Such customer relationship management, or CRM, data provides Internet marketers with the ability to custom tailor their Web advertisements to target potential customers more efficiently than traditional advertisements (Shabaz). While the use of this information in this fashion has been the source of controversy concerning privacy issues and so forth, the fact remains that companies using such CRM applications will enjoy a significant competitive edge over those that do not and it is reasonable to suggest that their use will continue in the foreseeable future where such practices are allowed (Shabaz).

Cross-Cultural Constraints and Factors to Consider.

The Saudi people are much like their counterparts in other parts of the world where the Internet has been received with such great fanfare. They want access to it and they want it now. According to an analysis of the Internet's impact on the kingdom early on, Smith (1998) reports that, "Throughout the country and neighbouring states the prospect of the Internet coming officially to Saudi Arabia has created a buzz of excitement among potential advertisers. Industry sources say there are nearly half a million computers in the Kingdom, and this number is expected to increase rapidly once the cost of international connections comes down. Already some 30,000 Saudis have applied for Internet use" (p. 23).

The implications of the "applied for" observation may escape many Western observers, but the application process is just the beginning of the fundamental differences that exist in how, where and why the Internet is used in Saudi Arabia and elsewhere in the world. In spite of enormous wealth from oil production, Saudi Arabia remains a developing economy based on its current per capita GDP of $20,700 (2007 est.) (Saudi Arabia, 2008). There are signs that things are changing in Saudi Arabia in ways that will affect the Internet in profound ways in the years to come, but virtually all analysts emphasize that such change will take place slowly and perhaps not even surely. According to Idris, "As a member of the World Trade Organization since 2005, the long-protected Saudi economy is now facing international competition. Cultural and religious traditions have made the economy dependent on foreign labor, especially in vital, skilled technical and professional positions. Most Saudis want to be managers, not computer programmers or members of other professions" (Idris, p. 36).

The implications of increased Internet marketing in Saudi Arabia will include the impact on the kingdom's economy, certainly, but it will also impact in important ways on Saudi Arabia's culture as well. According to Callister and Burbules (2004), "The notion that the Internet is somehow awash in pornography, child molesters, and bomb-making directions is an alarmist characterization that has been foisted upon parents and the public, neither of whom typically has much direct understanding or experience with the Internet. Thus it tends to be regarded overall as strange and threatening" (p. 648).

In this regard, Idris reports, "The need to restrict imports of certain things like pork and pornography that are prohibited by both cultural mandates and Islamic teachings must be addressed. Joining the WTO means that the kingdom's culture will need to be immersed in the melting pot of Western culture, and the ability to implement regulatory decisions based on social, religious, or cultural issues will be restricted. In addition, small businesses that are currently providing a wealth of employment opportunities for the Saudis may suffer from competition from more experienced international companies" (p. 37). As Shapiro (1998) points out, "Saudi Arabia, for example, did not give its citizens online access until it had effectively tinkered with…

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