Chapter1 Introduction

1.1 Broad Problem Area

The cutting edge for business today is Electronic commerce
and marketing. The meteoric growth of electronic commerce
and marketing at the turn of the last century is truly
baffling. During this decade, market space has grown in
several directions. As increasing number of organization
began to operate in the Internet market space, they
innovated unique propositions to create value in the
process. At the organization level workflow has became more
efficient and productive. More commonly e-commerce is
associated with buying and selling of information, products
and services via computer networks. All companies face
uphill task of developing the most effective method of
getting their product to their target market. It is a fact
that integration of electronic commerce and marketing will
bring with it a renaissance of advertising, sales and
marketing function as it present an opportunity to get
close to the customer, to bring the customer inside the
company, to explore new product ideas and pretest them
against real customers. This research examines the
involvement and state of information technology in the
organization based in Islamabad with the emphasis on the
evaluation of current state of infrastructure required and
its use in e-commerce with in context of the current policy
developments by the government of Pakistan.

1.2 Rational of the Study

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Researcher will be interested to gather the relevant and
factual information regarding e-commerce and marketing
which will give a complete insight of the
implementation of the E-commerce and marketing.
Moreover the extent to which organizations are
employing these technologies and the unexplored areas
will also be brought into consideration. The paper will
stress the importance of E-commerce and marketing
implementation and benefits for organizations as well
as society as a whole. In fact organizations worldwide
are establishing a basic electronic presence on a
global open network, learning from the experience and
gradually becoming more sophisticated in their use of
the technologies. On part of organizations it is
pertinent to understand that best way of gaining the
mystery of electronic commerce that will be vital in
tomorrows markets is to try it today.

1.3 Problem Statement

In today’s globalized world an organization long-term
success and gaining a competitive edge rests with its
ability to manage the important aspects of electronic
commerce and marketing. The project therefore envisioned
the current state of E-commerce and marketing and its
implementation in organization based in Islamabad.

1.4 Theoretical Framework

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Defining E-Commerce
Electronic commerce is modern business methodology that
addresses the needs of the organizations, merchants, and
consumers to cut cost while improving the quality of
goods and services and increasing the speed of service
delivery. The term also applies to the use of computer
networks to search and retrieve information in support
of human and corporate decision-making. (Kalakota &
Whinston, 1996)

E-commerce is consist of buying, selling, marketing and

servicing of product and services over computer networks.
The information technology industry might see this as an
electronic business application aimed at commercial
transactions. (www.bambooweb.com)

E-commerce refers to transactions such as buying; selling,

information flow and fund transfer over the Internet. E-
commerce broadly encompasses all business activities taking
place over the intent. It consists of electronic retailing
(e-tailing), electronic data interchange and electronic
fund transfer. (Asoke, 2004)

The use of Electronic transmission mediums to engage in the

exchange, including buying and selling of products and
services requiring transportation either physically or
digitally, from location to location. (Greenstein &
Femiman, 2000)

What is E-Marketing
Marketing is a process of planning and executing the
conception, distribution, promotion and pricing of ideas,

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 goods and services to create exchanges that satisfy
individual and organizational needs. E-marketing affects
traditional marketing in two ways. First, it increase
efficiency in traditional marketing functions. Second, the
technology of E-marketing transforms many marketing
strategies. The transformation results in new business
models that add customer value and or increase company
profitability. (Judy Strauss & Raymond Frost 2001)

E-marketing is the application of a broad range of

information technologies for:
 Transferring marketing strategies to create more
customer value through more effective segmentation,
targeting, differentiation and positioning strategies;
 More efficiently planning and executing the
conception, distribution, promotion and pricing of goods,
services and ideas and
 Creating exchanges that satisfy individual consumer
and organizational customers objectives. (Strauss,
Ansary & Frost, 2003)

Electronic Commerce Framework

From the business activity already taking place, it is
clear that e-commerce application will built on the
existing technology infrastructure. None of these would be
possible without each of the building block in the
infrastructure:
 Common business services, for facilitating the buying and
selling process.
 Messaging and information distribution as a mean of
sending and receiving information.

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E-Commerce Applications
 Supply Chain Management
 Video on Demand
 Remote Banking
 Procurement and Purchasing
 Online Marketing and Advertising
 Home Shopping (Kalakota & Whinston, 1996)
Electronic Commerce
Electronic commerce has unleashed yet another revolution,
which is changing the way business buy and sell products
and services. It is associated with buying and selling of
information, products and services over computer
communication networks. E-commerce helps traditional
commerce through new ways of transferring and processing
information since it is information, which is at the heart
of any commercial activity. Information is electronically
transferred from computer to computer, in an automated way.
This has, in fact, transformed the way organizations
operate.

Electronic data interchange; EDI can be used to

electronically transmit documents such as purchase orders,
invoices, shipping notices, receiving advices and other
standard business correspondence between trading partners.
EDI can also be used to transmit financial information and
payments in electronic form. (Bajaj, Nag 2000)

EDI Application In Business

Although EDI was developed to improve transportation and
trade, it has spread everywhere. Four very different
scenarios in industries that uses EDI extensively:

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international or cross border trade, electronic fund
transfer (EFT), health care EDI for insurance claim
processing and manufacturing and retail procurement. As
these examples illustrates, companies have applied a number
of EDI based solution to improve business process for both
strategic and competitive advantages. In some cases EDI has
transformed operational aspects of a company’s business.
Increased quality and cost reductions can significantly
change industry standards of customer satisfaction and
productivity. In other words EDI has shaped a company’s
marketing and distribution efforts by helping to create new
distribution channels, develop new merchandise and market
research methods and introduce better customer service. In
sum, major improvement in product manufacturing and
customer service response time allows companies to be more
competitive. (Kalakota & Whinston, 1996)

Electronic Payment Systems

Electronic payment systems are becoming central to online
business process innovation as companies look for ways to
serve customer faster and at lower costs. Emerging
innovations in payment for goods and service in electric
commerce application promise to offer wide range of new
business opportunities. Electronic payment system and e-
commerce are intricately linked given that online consumers
must pay for products and services. If the claims an debits
of the various participants-individuals, companies banks
and nonbanks are not balanced because of payment delay or
even worse defaults then the entire business chain is
disrupted. Hence an important aspect of e-commerce is
prompt and secure payment, clearing and settlement of
credit or debit claims

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Portal
A point of entry to the Internet. Many portals such as
Yahoo!, Lycos and Excite were originally just search
engines. What makes them portals is that they provide many
services in addition to searching. In other words they are
destination for news, games, maps, shopping and so forth.
(Judy Strauss & Raymond Frost 2001)
E-tailing
The e-tailing model is one of the most visible e-commerce
business models. In this model merchants set up online
storefront and sell to businesses and or consumers. Digital
goods may be delivered directly over the Internet while
physical goods are shipped via logistic provider such
FedEx. E-tailers distributing digital products such as
media, software and music. Well known electronic storefront
include CDNOW (www.cdnow.com) and Dell Computer
(www.dell.com). (Judy Strauss & Raymond Frost 2001)

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Intranet
An intranet is a computer network similar to the Internet,
established within the organization to provide
information internally to employees. The information on
intranet web pages can be quickly and easily changed- an
advantage over paper publishing. (Judy Strauss & Raymond
Frost 2001)

Extranet
Extranet are two types of network that are joined for the
purpose of sharing information. If two companies link
their intranets, they would have an extranet. (Judy
Strauss & Raymond Frost 2001)

Electronic Commerce Consumer Applications

Businesses looking to get involved in the electronic market
place want fast answers to some very basic questions. What
types of services do consumers really want or are willing
to pay for? Do they want applications that bring about
social change, that entertain, that are educational, or
that educate as well as entertain? What amount consumers
are willing to pay for these services? How should the
product be priced so that firms are competitive as well as
profitable. Consumers desires are very hard to predict,
pinpoint or decipher in electronic markets whose shape,
structure and population are still in the early stages.
Needs envisioned include entertainment on demand, video on
demand, games on demand and news on demand; electronic
retailing via catalogs and kiosk and home shopping network;
interactive distance education, collaboration through

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desktop video conferring, medical consultation and many
more. Kalakota & Whinston, 1996)

Modes of Payment
Check and cash are physical and traditional modes of
payment, whereas electronic payment refers to paperless
monetary transactions. A payment through electronic modes
has benefited e-commerce businesses and supporting
financial institutions. Electronic payment, also termed e-
payment has reduced a lot of paper work, transaction costs
and labor cost and helped in market expansion. Electronic
payment is user friendly and it takes comparatively less
processing time than manual processing. However, along with
these advantages, major frauds and risk are involved in
these payments procedures because a user has to provide
personal information while paying electronically. Thus it’s
essential for any e-commerce and online banking business to
ensure the privacy of individual and their identification
details. The various modes of electronic payment are Credit
cards, Debit Cards, Smart Cards, E-credit and Cards E-
money. (Asoke, 2004)

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Banking Services
Website of various banks offers online banking services
including online banking, account access, balance
enquiries, money transfers, loan processing, and
investment and wealth management. Online banking can be
of two types, Internet banking and electronic banking.
Internet banking is conducted through a website.
Electronic banking refers to banking transactions taking
place on private network such as Automatic teller
machines (ATM) and check clearing.
(Asoke, 2004)

Challenges in Online Education

Online education is not without its challenges and
obstacles, as well as a myriad of unanswered questions:
How does online education differ from regular classroom
instruction in terms of quality of student learning?
What impact does online education have on other outcomes of
classroom education, such as development of social
behavior, attitude and values? What effects does the lack
of personal contact have on teaching and learning?
CD Rom and Electronic Books
Traditional books are expected to face some challenges from
CD-Rom based information delivery. The book market is
highly varied and ranges from adult and children consumer
books, educational, academic and professional and reference
books.

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Technological Components of Education On Demand
The primary technological component of education on demand
is electronic publishing. Electronic publishing can be
categorized into three major classifications:
Online full text publishing uses various online databases
for storage and distribution of information on demand to
consumers. Example of this type of publishing include
bibliographic databases seen in libraries seen in
libraries, on line public databases and news on demand.
Examples of organization in this line of publishing are
Dow Jones and CNN.
CD Rom publishing uses a variety of compact disk and CD-R
(recordable CDs) for storage and distribution of
specialized information such as book, games,
encyclopedias and other forms of education and
entertainment.
Video is another emerging area of electronic publishing.
This technology involves use of video cameras,
camcorders and computers to capture image in digital
form and distribute it to others or paying subscriber
over the network. (Kalakota & Whinston, 1996)

Electronic Commerce and The Retail Industry

Consumers are pushing the retailers to the wall, demanding
lower prices, better quality, and a large selection of in
season goods. Retailers are scrambling to fill the order.
The are slashing back office costs, reducing profit
margins, reducing cycle times, buying more wisely and
making huge investment in technology. They are revamping
distribution channels to make sure that warehouse costs are
down by reducing their average inventory levels and
coordinating the consumer demand and supply patterns. In

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the push to reduce prices, more and more retailers are
turning to overseas suppliers, in part because of cheap
labor costs. (Kalakota & Whinston, 1996)

Just in Time Manufacturing

Just in time (JIT) is viewed as an integrated management
system consisting of a number of different management
practices dependent on the characteristic of specific
plants. The JIT management system, an evolution of the
Japanese approach to manufacturing and initially introduced
for Toyota production system, is based on two principles:
elimination of waste and empowering workers. The first
principle refers to the elimination of all waste (time,
material, labor and equipment) in the production cycle. The
following management practices are typically associated
with JIT systems: focused factory, reduced setup times,
group technology, total productive maintenance,
multifunction employees, uniform workloads, JIT purchasing,
total quality control and quality circles. JIT purchasing
considered an integral part of JIT has received
considerable attention in electronic commerce. It allows
manufacturer to incorporate its supplier efforts towards
eliminating waste in the upstream portion of the
manufacturing cycle. JIT purchasing focuses on the
reduction of inventory throughout the logistical systems of
the manufacturing firms involved and provides a careful
audit of production process. Basically it optimizes
supplier and customer relations. In a production plant the
needed materials are to be supplied just in time, no
earlier or later than is demanded for processing. To

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achieve JIT many large cooperation have installed private
communication networks.

Marketing and Electronic Commerce

Electronic commerce is forcing companies to rethink the
existing ways of doing target marketing and relationship
marketing and even event marketing. Interactive marketing
is accomplished in electronic markets via interactive
multimedia catalogs that give the same look and feel as a
shopping channel. Users find moving images more appealing
than still images and listening more appealing than reading
text on a screen. Those are two powerful reasons why every
text based and still picture based interactive experiments
like videotext has failed in the past. Maximum public
acceptance will require that interactive catalog services
have a more entertaining visual appearance than traditional
text intensive catalogs have had. (Kalakota & Whinston,
1996)

Integrated Marketing and Logistic

The highly competitive environment of the 1990s means that
marketing must do more than sell. Marketing must define the
way a company does business. For instance, in any customer
oriented industry, supply chain management begins with
information obtained at the checkout counter, but getting
cost conscious customers to the checkout line depend great
deal on marketing promotion such as coupons for consumer
packaged goods in grocery and drugstores. Promotion has
traditionally been part of the marketing function, which
may not see the need to integrate it computer system with
logistic planning system to perform with supply chain
management. In the time of exploring choice cutthroat

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competition and unpredictable shifts in demand, integrated
marketing could be the key to survival. Sales, advertising
and marketing are fast emerging as hot subjects for
technology oriented business professionals. Spurred on by
the desire to use information technology more
competitively, companies have begun to scrutinize the
interface with their customers and are realizing that they
do not understand marketing at all in the electronic age.
Broadly speaking, technology is changing firms marketing
edge in several areas: in manufacturing and logistic
planning; in management analysis of new markets, in
identifying and targeting customer; in promotion of the
allied areas of direct marketing and telemarketing and
finally in post sales (keeping the customers happy through
online customer service). The challenge of marketing arises
from the fact that that with unprecedented choice,
companies face the end of customer brand loyalty. To combat
that threat, they often increase their sales and marketing
force, throwing costly resources at the market as a way to
retain customers. The real solution, of course, is not more
marketing but more intelligent marketing. That means
marketing must find ways to integrate the customer into the
company, to create and sustain a relationship between the
company and the customers, and use the information garnered
from the customers for downstream activities. (Kalakota &
Whinston, 1996)

Advertising and Marketing on the Internet

Instead of merely transforming commerce from nonelectric
world to an electric platform, electronic commerce demands
radical changes in the marketing process, product sales and
pricing strategies and advertising and promotion campaigns.

14
Misunderstandings about the nature of marketing in
electronic markets are rampant. Many think that online
marketing is equivalent to publishing a World Wide Web page
with product information that shopper can browse through.
Marketers are learning that valuable information can be
collected from the customers on line with minimum efforts
and low cost that otherwise would take months. (Kalakota &
Whinston, 1996)

The New Age of Information Based Marketing

The interactive marketing brought on the electronic
commerce will change the role of small business, retailers,
manufacturers and media companies.
Retailers Versus Manufacturer
The roles of retailers and manufacturers are fast reversing
in electronic commerce. Nowadays retailers have an
advantage over manufacturers because they can measure the
customer response and get first crack at the broadest range
of information. Indeed, Point of Sale (POS) scanning system
have played a major role in shifting power from
manufacturer to retailers, as large innovators like Wal-
Mart have amply proven. The attraction of POS system is
that they record each sale in a central database using a
scanner, which reads the bar code on the product, so that
retailers no longer have a wait for periodic inventory
check to find out what they need to record. Through
centralized buying that ensures lower prices through volume
purchasing and efficient distribution chains.
Information based marketing can offer manufacturer and
retailers a means to do market research and customer
prospecting; to establish brand loyalty, market presence

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and distribute redeemable coupons and to create customized
product bundles.
Product or Service Bundling
Bundling is a classic marketing strategy in which two or
more complementary products and or services are offered as
a package at a discounted price. Example of bundling
include two for the price of one airline tickets, computer
hardware and software combinations, season tickets for
sport and meals specials in restaurants.
Target and Micromarketing
In electronic commerce, technology has put target and
micromarketing with in the reach of small business.
Computers have armed micromarketing with more knowledge
not only about their own business but also about the
customer, to develop and exploit niche markets. Customer
targeting is one way to get closer and to create and
sustain a two-way flow of communication between the
seller ad the buyer. Direct mail and telemarketing are
two fast growing ways to micro markets. Both methods are
able not only to find prospects but also to qualify
them. Because both direct mail and telemarketing can be
easily measured and quickly adjusted to appeal to the
needs and expectations of customers, they have proven to
be very effective sales tools. There are two main types
of micromarketing:
Direct relationship micromarketing is aimed at simulating
sales at retail establishments through direct contact
with consumers in their homes.
Direct order micromarketing is focused on selling products
directly to consumers in their homes or businesses.
Catalogs are in this segment of marketing.
Online Pull based advertising includes:

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  Billboards: an example of pull-based advertising is
the web pages set up by many different commercial
ventures.
 Catalogs or Yellow Pages Directories: these
directories are searchable or browsable databases of
advertising.
 Endorsement: specific posting are made to subject
Internet discussion forums. Often recommendations from
users are offered in other types of communications
such as product oriented or service oriented Internet
discussion forums. (Kalakota & Whinston, 1996)

Interactive Marketing Process on the Internet

Step 1. Segment and identify potential customers
Step 2. Create promotional, advertising and educational material
(WWW page with multimedia effects-audio and video) (Product
information and complementary products, order forms and
questionnaires)
Step 3. Put the material on customer computer screens
Push based marketing –direct marketing using news
group and emails
Step 4. Interacting with customers Dialogue with the
customers, interactive discussion among customers
about various features offering endorsements,
questions and answers
Step 5. Learning from customers
Incorporating feedback from customer in
advertising and marketing strategy
Identifying new market using experience in new
product development
Step 6. Online customer service

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(Kalakota & Whinston, 1996)

Improving Direct Marketing

Traditional direct marketing is done by mail order
(catalogs) and telephone (telemarketing). In 1998, $75
billion in sales were estimated in United States. In 1998,
direct marketing via computer reached about $2 billion in
the United States. This figure is small, but it grew more
than 1,000 percent in less than four years.

E-commerce Impact
Bloch suggest the following EC impacts:
Product Promotion
Electronic commerce enhances promotion of products and
services through direct, information rich, and interactive
contact with customers.

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New sales channels
Electronic commerce creates a new distribution channel for
existing products, thanks to its direct reach of
customers and the bi-directional nature of
communication.
Direct Saving
The cost of delivering information to customers over the
Internet results in substantial saving to senders
(when compared with non electronic delivery or
delivery via VAN systems). Major savings are also
realized in delivering digitalized product such as
music and softwares versus physical delivery.
Reduced cycle time
The delivery of digitalized products and services can be
reduced to seconds. Also the administrative work
related to physical delivery, especially across
international border can be reduced significantly,
cutting the cycle time by more than 90 percent. One
example is Trade net in Singapore, which reduces the
administrative time of port related transactions from
days to minutes.
Customer service
Customer service can be greatly enhanced by enabling
customer to find detailed information online (for
example, FedEx allows customer to trace the status of
their packages). Also intelligent agents can answer
standard e-mail questions in seconds.
Brand or corporate image

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On the web, new comers can establish corporate images very
quickly. What amazon.com did in three years took
traditional companies generations to achieve.
Corporate image means trust which is necessary for
direct sales. Traditional companies such as Intel,
Disney, Wal-Mart, Dell, and Cisco use their web
activities to affirm their corporate identity and
brand image.
Targeting Online Customers
After reviewing many potential segments, marketers must
select the best for targeting. To do this, they review the
market opportunity analysis, consider findings from SWOT
analysis, and generally look for the best fit between the
market environment and the firm’s expertise and resources.
Sometimes this is as easy as discovering a new segment that
visited the company’s web site and then experimenting with
offers that might appeal to this group. Other times it is a
lengthy and thorough process. To be attractive, an online
segment must be accessible through the Internet, be sizable
and growing and hold great potential for profit. Next e-
marketers select a targeting strategy. E-marketers may
select from among four different approaches for segment
coverage:
 Mass Marketing, also called undifferential targeting,
occurs when the firm offers one marketing mix for entire
market. Wrigley’s gum uses this strategy. On the internet,
many firm uses undifferentiated strategy. For example,
banners ads that appear on portal site home page (e.g.,
Yahoo!) tend to appeal to the entire market.
 Multisegment marketing occurs when a firm selects two
or more segments and designs marketing mix strategies

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specifically for each. Most firms use a Multisegment
strategy.
 Niche marketing occurs when a firm selects one segment
and develops one or more marketing mixes to meet the need
of that segment. Amazon adopted this strategy when it
targeted web users exclusively.
 Micromarketing also known as individualized targeting,
occurs when a firm tailors all or part of the marketing mix
to a very small number of people. Taken to its extreme,
this can be a target market of one person.
The Internet big promise, one that is currently being
realized by many firms, is individualized targeting.
Amazon.com builds a profile of each user who browses or
buy books at its site. It tracks the books that its
customers read and makes recommendation based on their
past purchases. Amazon also sends email notifications
about products that might interest particular persons.
This is the marketing concept at it’s finest: giving
individual consumers exactly what they want at the right
time and place. The Internet technology makes this mass
customization possible in ways that were unimaginable 10
years ago. (Strauss, Ansary & Frost, 2003)

Guidelines for Internet Advertising

1. Don’t send intrusive message. People should receive a
commercial message they either haven’t asked to
receive or don’t not want to receive.
2. Don’t sell consumer data without the express
permission of the user. Unlike some commercial
services where users generally understand that their

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 names will be sold to other businesses, Internet data
should remain the users private property.
3. Advertising should appear only in designated news
groups and list servers. The most objectionable
advertising is unrelated commercial posting to
newsgroup, which are usually cross-posted to hundreds
of groups.
4. Conduct promotions and direct selling only under full
disclosures. Markets should be free to offer
promotions on the network. But users should be given
an opportunity to review the rules, guidelines and
parameters.
5. Conduct research only with the consumers’ informed
consent. Marketers should be able to conduct consumer
research so long as respondents are made fully aware
of the consequences of answering the research
questionnaire.
6. Never use Internet communication software to conceal
activities. Marketers should never gather data from
users without asking for permission.
(New York Times, August 3, 1994, p. C16)

1.5 Hypothesis Development

Given the general underdeveloped environment in a
developing countries like Pakistan there may not be a
extensive application of E-commerce and Marketing practices
used by the organizations due to lack of proper
infrastructure and financial constraints. There may not be
a significant relationship between E-commerce and marketing
and their determinants like Online banking, online
education, online entertainment, internet service providers
performance and online advertising techniques.

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1.6 Objectives of the Study
It is necessary to collect and analyze information
regarding the status of e-commerce and e-marketing for
feedback and improvement process. Regular monitoring and
feedback of such information can be valuable in
benchmarking and in keeping up pace with the global
competition. This research is an effort to study the
following area in the organizations:

1. To investigate the extent to which the company, both

new and old, are integrating their e-commerce and
marketing into their business strategies and
operations.
2. To identify the direct and indirect use of information
technology infrastructure from the perspective of E-
commerce and marketing.
3. To study the government policies for fostering the IT
infrastructure and Internet based e-commerce and
marketing.
4. To understand the driving forces behind the adoption
of E-commerce and marketing.

1.Technology Aspect, which consist of Telecommunication,

networking and other infrastructure issues. The software
domain the includes databases, programming languages,
web page design, customer interface and transaction
management, security and privacy management and large
scale data mining.

2. Business Management Aspect, which deals with the

Business strategies for value creation, growth and customer

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development and retention and government policies for
nurturing the internet based E-Commerce.

1.7 Definition of Terms

Some important terms used in the thesis and their
definition are given below:
Electronic Business Includes all electronic activities
conducted by the organization such as business
intelligence, customer relationship management, supply
chain management, e-commerce.

Edutainment
Edutainment is defined as software, electronic books and
interactive games that have an educational component.

Event marketing
It refers to setting up a virtual booth where interested
people come and visit.

Electronic Fund Transfer

Electronic fund transfer is defined as any transfer funds
initiated through an electronic terminal, telephonic
instrument or computer or magnetic tape so as to order,
instruct or authorize a financial institution to debit or
credit an account.

Internet
The global network of interconnected networks. This
includes millions of corporate, government,
organizational and private networks as well as emails,
newsgroups, and the Web.

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Internet Service Provider
Company that has a network of servers (mail, news, web and
the like), routers and modem attached to a permanent high-
speed Internet backbone connection. Subscriber can then
dial into the local network to gain Internet access.

Kiosk
Kiosk offer buyers the opportunity to purchase from a
freestanding facility or structure located in a retail
complex or other public area.

Local Area Networks

A local area network is a group of computers and associated
devices that share a common communications line or wireless
link and typically share the resources of a single
processor or server within a small geographic area.

Relationship marketing
Building and sustaining a long-term relationship with
existing and potential customers.

Supply Chain Management

The behind the scenes coordination of the distribution
channel to deliver products effectively and efficiently
to customers.

Target marketing
It refers to isolating and focusing on a segment of
population and then targeting it to fulfill their needs.
Wide Area Networks

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A wide area network is a geographically dispersed
telecommunications network. A wide area network may be
privately owned or rented, but the term usually
connotes the inclusion of public (shared user) networks.

Web
The portion of the Internet that supports a graphical user
interface for hypertext navigation with a browse such
as Netscape or Internet explorer.

26
Chapter2 Literature Review
Desktop based research and information gathering was
ongoing for the duration of the project approximately for
seven-month period (September 2004 to March 2005).
Information was taken from wide variety of sources.
Relevant newspaper articles were collected. Information
rich sources included Dawn, The News, Computer World, and
Internet Development Magazines such as Spider. Information
was also collected from worldwide search of governments,
NGOs, industries and company websites. Published books,
articles, case studies, research reports and profiles of E-
commerce and Marketing of leading cooperation were of great
help in understanding the issues pertinent to this research.

Pakistan Lags Behind in E-Commerce Preparation

Although e-commerce is poised to become the only forum of

future trade within this decade, Pakistan is way behind
most of the countries of the region in Internet connections
essential for conducting this mode of business. According
to the statistics available on the Internet only 4.5
persons per 10,000 people in Pakistan use this facility
compared with 45 in India, 14.5 in Iran, 10.5 in Sri Lanka
and 6.5 in Nepal which considered to be the least developed
country of the region. It was found that Singapore tops in
the use of Internet facility in Asia-Pacific where 2435
persons per 10,000 people avail this facility, 2167
Taiwanese, 2123 South Koreans, 1609 Japanese, 1428 Hong
Kong residents and 657 Malaysians per 10,000 people have
access to Internet. The highest percentage of people using
Internet was in US where 4501 persons per 10,000 have
access to Internet followed by Canada where 4333 people use

27
this facility. In Europe, Britons are on top with 2656
people per 10,000 using Internet followed by Germany where
the usage is limited to 1924 persons per 10,000. A study of
the Internet use in Pakistan revealed that the usage is
mostly at the individual level in main cities where
families use this mode to maintain regular contacts with
their relatives living outside Pakistan particularly in the
West. It was found that there was a limited use of Internet
in the country for e-commerce as this facility is availed
mostly by the big corporations and the already-established
exporters who with their limited knowledge of computer use
this facility mostly to maintain quick contacts with their
regular customers abroad. Exploration of new markets is
rarely done, as most of them do not know how to make
optimum use of the available software. It was found that
although a few business houses in the corporate sector have
invested in the infrastructure required to run an
independent information technology system but the high cost
involved in acquiring various hardware and software needed
to compete the world in e-commerce forced them to rethink
their strategy. Hewllet Packard Vice President for Asia-
Pacific, Michael Hoffman said SMEs required the same
programmes and software needed by large companies to gain
full access to the international market. Hoffman said each
SME required a web-site builder, which hosts personalized,
advertising free websites in a variety of layouts and
styles that supports customized logos. User could also be
able to set-up real time, online chat capabilities. A
programme is needed for document storage and sharing which
allows users to organize documents in an unlimited storage
directory, and support web-based file sharing with
authorized colleagues and clients, he said. These SMEs, he

28
added, also required a programmed contact list which
enables the user to enter detailed notes, and uses the same
database as the portal's calendar and the e-mail, so that
there is no need to re-enter data. It was found that eight
world-class computer industries formed an alliance to
provide all the above-related facilities to the SMEs
through a programme called eSmart at affordable rates
($400-450 for the total package) in Asia-Pacific. These
companies include Intel, Oracle, Cisco, Nokia. It is
pertinent to note that there were only 100 websites a
decade ago, which have now grown to over 10 million.
Pakistan's share in these websites is negligible. Most of
the websites operating in Pakistan are not updated. Most of
the commercial banks, both national and foreign, private
and state-owned have their own websites but no one updates
them regularly. The nation loses its creditability when
most of its websites are outdated and provide stale
information. The ministry of IT should take note of this
and make it mandatory on all the state-owned enterprises to
update their websites on daily basis, even on hourly basis
where the demand necessitates (like forex rates). Country
Manager Acer Computers, Ijaz Anwar said there is an urgent
need to create awareness amongst the business community
about the importance of e-commerce. He said state
television should hammer this point regularly during its
normal transmission to prepare people to accept the
challenge which e-commerce offers. He said his company is
organizing seminars in this regard in Islamabad and
Karachi. He said acquiring computers is not enough. He
deplored that most of the business concerns use computers
as typewriter and data bank. The computers in these
offices, he added, are not even linked through a common

29
server. Internet, he continued, is considered a luxury
instead of necessity. Ijaz said our entrepreneurs would
have to change this attitude if they are serious in
accepting the challenges of globalization. An Internet
service provider Pervez Hanif said the per-hour cost
charged by the ISPs in Pakistan is not very high as alleged
by many entrepreneurs. He said the cost looks higher when
the users indulge in surfing unwanted sites. He said
targeted surfing would not only bring huge benefits to the
users but also cut the Internet charges substantially.
(Ahmad, 2000)

Electronic Commerce Over Internet

The Internet is an international network of networks. It is
a worldwide information highway. It also signifies
information resources on innumerable servers on the Net.
The internet allows millions of computers to be linked
together offering a global network that connects
universities, individuals, government agencies and now more
and more corporate and private enterprises. Though
originally established as a private channel for research
activities and academics, the Internet is now being
exploited by businesses for wide range of commercial
services. (Bajaj, Nag 2000)

A recent report by the organization for Economic

Cooperation and Development predicts that Internet trading
will grow from today’s estimated $ 500 million to $ 5
billion by 2001. (Computer Today, June 1998)

30
Another report from Forrester Research projects that
Electronic commerce transaction will reach $ 7.2 Billion by
the 2000. (EC World, June 1998)

In fact, Killen & Associate and Forrester Research predicts

that 10% or $600 billion worth of all business transactions
done around the world in year 2000 will be made
electronically. One third of those transactions, worth $200
billion will be done through commerce on the Internet. (EC
World, June 1998)

Electronic commerce conducted over the three commercial

online services in the USA, i.e., America Online,
CompuServe and Prodigy during 1994 was estimated to be
US$325 million. The number of users subscribing to their
services in 1995 was estimated at 8 million people, and was
projected to grow at the rate of 35% a year. (Kuckro, Rod,
1995)

Revenue Via The Internet

In July 1996, Dell launched Internet based online sales and
services at www.dell.com. In fall 1999, Dell sold$15
million per day through the Internet and the Internet sales
have reached about 27 percent of the total revenue. In
future Dell experts see 50 percent of its sales over the
Internet.

Dell Products on the Internet

Dell sells all the items it produces on the Internet:
desktops, workstations, notebooks, network servers and
storage devices, softwares and add-ons (e.g. Zip drive,
printer, Microsoft plus! 98). Those items are also sold by

31
telephone, fax and mail, implying that the call center
service can complement the Internet home page. Services,
support and introduction to the company are also prepared
on the home page.

Dell Critical Success Factors

Dell success story is very impressive, so competitors must
have a desire to imitate Dell’s strategy. But why is it so
hard to copy? We can observe six reasons:
1. Advance Web Applications
Dell was the first web based computer seller and has the
best connections from the end consumers all the way back
through the supply chain.
2. Price Competitiveness owing to mass customization
Direct marketing to small consumer as well as corporate
buyers means manufacturing system should be adaptive to
small order in a make to order fashion. To keep the price
competitive without large delivery time, efficient
procurement of small number of parts from vendors, flexible
manufacturing systems and economical distribution to
customer are a must. Dell computer was born with the spirit
of telemarketing and the Internet is just another medium of
contacting distant customers interactively.
3. Database marketing and customer intimacy
Dells direct relationship with all of its customer makes
one to one database marketing possible. Dell can learn
about its customer makes one to one database marketing
possible. Dell can learn about its customer by watching
them how they use the web site. For this purpose, the
database, as well as the tools for data mining such as
statistical analysis, inductive learning, and network
modeling are used to classify customer segments. This is

32
essential for focusing on and deepening the personalized
relationship. This can be used for advertisement and
customer service as well.
4. High reliability and reputation
If the products do not have high reliability, customer will
hesitate to order the item without the trial. Dell was well
prepared in this regard. Dell product Optiplex and Dell
dimension desktop computers have garnered an unprecedented
174 award for performance, reliability and service. Dells
customers do not worry about the reliability of the dell
brand.
5. Delivery support
As inherent disadvantage of telemarketing in the relatively
longer lead-time needed for delivery. To overcome this
deficiency, dell provides the estimated delivery time as
well as online tracking information for each order. When
the product inventory and or parts are available, dell can
deliver a simple configuration in 2-3 days, average in 5
days and complex in 7-10 days. However if parts are not
readily available, the lead-time is estimated and the
customer is informed. (Turban, Lee, King, Chung, 2000)

Internet Commerce Examples

CompuServe hosts 200 odd merchants on its electronic mall.
Presently, the visits to the mall by customers have
increased by 78% and the orders by 50% each year.
CompuServe is now expanding its mall to the Internet. It
will make use of WWW along with its tools of graphics,
audio and video to make the mall attractive to its
customers. Similarly Prodigy the joint venture of IBM and
Sears too has a mall and it has also connected to the
Internet. Prodigy was the first to offer www access. It

33
also connects merchants with its members, offering space
for advertisements on screen. America Online on the other
hand took the direction of creating distinct sites for
corporations wishing to reach a target audience. For
example Express Net developed American Express allows it
cardholder to make travel reservations, check credit
balances, pay bills, purchase travelers cheque and foreign
currency electronically. (Bajaj, Nag 2000)

The Internet
Factors important to Repeat Visit on Shopping Sites
Guaranteed Security 93 %

Ease of finding Things on site 90%

Wide selection 85%

Availability of brand name products 83%

Good customers support features 81%

Price discounts 80%

Posted returns policy 74%

Ability to personalize 45%

Frequent shopper rewards 40%

Other shopper opinions 30%

(Judy Strauss & Raymond Frost 2001)

The Yahoo! Story

Yahoo! (www.yahoo.com) embodies one of the best example of
the marketing concept meeting the organizational goals
while serving customers needs. This is a company that even

34
before its inception focused on serving the customer. The
two chief yahoos are Jerry Yang and Dave Filo. They were
graduated students together at Stanford University before
leaving their studies to found Yahoo! Jerry is the more
vocal and outgoing of the two; Dave is the technical
genius. Yahoo! Got its start as “Jerry’s guide to the World
Wide Web.” This was literally a home page that Jerry and
Dave created on their university computer accounts to keep
track of the cool links that were out on the Web. They
began to share the address with others and the page rapidly
increased in popularity. In the tradition of the web gift
culture, they updated and maintained the list for free.
Stanford provided the servers, so there was no cost to the
viewing public. From the beginning, users would email them
suggested sites for inclusion and suggestion for improving
the sites. Jerry and Dave incorporated these suggestions in
order to improve their products. They even solicited
suggestion for sites to include. They also began to
introduce new product benefits such as “What’s New and
“What’s Cool”. User feedback was such an important reward
that Jerry said, “if there was no feedback… we would not
have0 done it.”
Choosing the name for the site was a bit problematic. The
name they linked was yacc, a name referring to software
tool on a Unix computer system. Following the yacc model,
they wanted the name to start with YA consulting a
dictionary, they went through a list of possibilities
before settling on Yahoo!. They added the exclamation
point just to be different.
Yahoo! received its first big break when Netscape put a
link to the site on the navigator browser. This helped to
generate traffic. But when Netscape later canceled the

35
link, the traffic stayed and Yahoo! continued to flourish.
Why? Yahoo! delivered something was rare- an index compiled
by humans. The other web search engines used software
robots to categories their sites and while this method
helped generate a larger list of sites than Yahoo! They
tended not be as relevant. People like the intuitive feel o
the Yahoo! index. And the index continues to grow. Each one
of the its army of classifiers is able to categorize about
100 sites daily! It now has half a million sites classified
into 25,000 categories, potentially making Yahoo!
Impossible for other search engines to catch.
Jerry and Dave were at first reluctant to sell advertising
for fear of being labeled sellout. Nonetheless, they needed
some source of revenue, so that they accepted their first
ad in August 1995. They now deal with 3,566 advertisers and
merchants, 35% of whom are outside the United States. Wall
street continues to put its faith and dollar behind Yahoo!
investor bid up the Yahoo!. Yahoo! is currently the most
popular site on the Internet, with over 145 million unique
users worldwide, including 14 million user in Japan. Yang
continues to believe that focusing on customer needs is the
key to the future success and the way to stay a step ahead
of the competition. To end this Yahoo! has introduced a
variety of free services: directories, news, references,
interactive and customized pages, commerce and shopping,
editorial and many others. ((Judy Strauss & Raymond Frost
2001)

Banners Ad Targeting Increases Hotel Room Sales

Customers are currently saturated with advertising,
initiations and other offers. This makes them reluctant to
respond to the increasing flood of marketing messages. The

36
most effective way for marketers to increase responses to
their efforts is by offering their product and services
directly to the people with the highest potential interest.
This means that customer demographics are not necessarily
the most effective targeting criteria. Targeting customers
based on interests was extremely expensive and difficult
for marketers in the past. The Internet is now the best and
the cheapest way to do this efficiently and rapidly.
At Fiesta Americana we have some meaningful experiences
with Internet targeting. During late 1997 we launched a
banner camping at Travel velocity.com, a leading travel
portal on the Internet. We thought that this site was the
best for hotel since its users are people interested in
travel. However, being a bit more ambitious with our
targeting, we asked Double click, the company that sells
banners for travel velocity, to show our banners only to
people requesting information about the seven more popular
destinations in Mexico. We started with three different
banners. Studying the performance was very easy since
Double click has online tracking system that allows clients
to see the number of impressions and clicks for every
banner, destination, time, day and so forth. After doing
some tracking we realized that we could include more
filters to increase the click through rate, which was
averaging 1%. Using trial and error we narrowed the
audience to people who met following criteria: they had
already bought on air ticket, they were coming from the
seven eastern United States, they were using only the
latest version of Explorer or Netscape and they were
browsing only between 2.pm to 7.pm. e-mail targeting is
another successful form of direct marketing. We are
constructing a database formed from the users at our web

37
site, those who actually made a reservation, frequent
travelers and other potential and current customers both in
Mexico and the United States. This database has been used
to select people with interests in certain kinds of trips
and destinations. We send them e-mail with special offers,
and the response to this program has been 367% greater than
the response to our conventional mailing efforts with a
cost of less than 20% if the conventional costs. (Anna
Maria, 2001)

The Amazon Story

Jeff Bezos, founder and CEO of Amazon (www. Amazon.com) is
36 years old, is s Princeton graduate, and sits atop a
company valued at billions of dollars. Amazon opened its
Internet storefront in July 1995 an has never looked back.
the key to Amazon’s success has been using technology to
build relationships and brand loyalty both with its
customers and with its partners. Bezos realized early on
that purchasing on the web was less than an idyllic
experience for the average customer. While Net-heads may
relish the experience. The general population finds
purchasing online a bit scary, frustrating and
intimidating. Bezos is well aware that “the smallest amount
of friction can stop people” from coming to a site, let
alone buying from that site. To compensate for the
inconvenience of purchasing online, Bezos had to add value
to the shopping experience. He discovered that treating
customers as individuals, anticipating their need and
thereby building relationship could add value.
Interestingly, the relationship the Bezos built were the
ones that would be found in the smallest bookstore – a
personal greeting, recommendations based on past purchase,

38
recommendation based on the mood of the consumer,
notification of a new release by the customers favorite
author and conversation with others customers about the
book. Forty-four percent of Amazon’s customers are repeat
purchasers. Furthermore, according to Forrester Research,
consumer tend to be more loyal online than offline. In the
offline world consumers will often choose to shop at the
closest bookstore. Amazon continues to leverage its
customer base as it moves into new product offering. The
company now sells CDs, movies, electronic software toys,
health and beauty products and so on. In all these ventures
it applies the same tested formula- build relationship that
add value to the purchase experience and foster brand
loyalty. (Strauss & Frost 2001)

The Google Story

What performs million searches a day, speaks 74 languages,
reaches 32 countries, and is the 15th-most-visited U.S Web
site? The answer is google.com, the privately owned,
growing and profitable dot-com firm. By some estimates,
Google 2001 revenues hovered around $70 million, while it
doubled its number of employees and earned about $15
million in profit.
This success is particularly remarkable because Google
entered the market in 1998; well after other search engines
were firmly entrenched with loyal customers. How did Google
do it? First it got the technology right at low cost. Co-
founders Sergey Brin and Larry Page figured out how to pack
eight time as much server power in the same amount of space
as competitor by building their own system from commodity
hardware parts. Second, they invented an innovative new
search strategy: ranking search query page results based

39
not only on keywords but also on popularity-as measured, in
parts, by the number of sites that link to each web page.
This meant that users search results were packed with
relevant websites. Finally, the founder maintained the
customer focus used simple graphics allowed no advertising
on the home page, and not allowed only banners ads without
graphics so search result pages download faster and are
easier to read. Google generate revenue from two business-
to-business markets. It sells its search services to 130
websites such as yahoo.com and AOL.com; it also sells
keyword banners to web advertisers. In a firm where 15% of
employees hold a Ph.D., the innovation continues. The
profitability is likely to continue as well because Google
plays close attention to user value, keep costs low and
delivers eyeball to advertisers. (Strauss, Ansary & Frost,
2003)

40
Chapter3 Method
3.1 Type of the Study
The present piece of research has mainly been a
“Descriptive Study”, although the analysis was also
combined with the descriptive testing of a hypothesis. The
descriptive study was purposely undertaken in order to
ascertain and to be able to describe the characteristic of
variables in a situation. The goal of descriptive study is
to describe the relevant aspects of the phenomena of
interest to the researcher from an individual,
organizational and other perspectives.
In addition, the study has applied a major hypothesis for
determining the impact and application of E-commerce and
Marketing used by organizations based in Islamabad. In this
research, there is one major hypothesis in order to find
out the present situation and application of E-commerce and
marketing used by organizations. Hence the research is the
mix of two types of studies that is descriptive and
hypothesis testing.

3.2 Source of Data

Data can be collected in variety of ways in different
settings and sources. Research instrument used for this
study in order to generate primary data were mainly based
on interviews with various personnel involved and working
in the field of E-commerce and marketing.
The secondary data was gathered by extracting relevant
material from articles and magazines, Books on E-Commerce
and E-marketing and websites of organizations etc.

41
3.3 Statistical Tool
Statistical tools are pictorial presentation of the results
and analysis or the interviews administered. Here in this
specific piece of research, information and data was
gathered on the topic of study and discussed and described
by comparing the practical practices of the organizations
with those ordained in general theoretical framework. In
addition, the impact of E-commerce and marketing on
organization and its application has been described and
analyzed in terms of existing system and practices.

42
Chapter 4 Results and Discussion
Acceptance of E-Commerce and Marketing
Consumers have accepted the e-commerce and marketing
business. Several reasons might account for the slow
uptake, including:
Concern about security and many people don’t use credit
cards over the Internet due to concerns about theft and
fraud.
Challenges
The Challenges to E-Commerce can be broadly grouped under
technological, legal and regulatory heads.
Technological
Lack of reliable network infrastructure services
Lack of standards
High cost involved
Legal and Regulatory
Lack of consistent rules and procedure
 Custom and tax uncertainties
 The role of government and nation
 Other regulatory issues

Benefits of E-commerce and Marketing

Major benefits include increased revenue, enhanced customer
goodwill owing to the online support and service, and
reduced operating cost for distribution and purchasing.
Benefits will be relative to the initial business position
of each company and its possibility of changing business
structure towards telemarketing and make to order systems.
Basic Cost of Implementing EC include home page system
development and maintenance, server and network acquisition
and operation merchandising, order fulfillment cost can be

43
incurred when management commits to change the way of doing
business such as changing the major distribution channel
and manufacturing systems.

Impact of Internet on Business

Establishing and maintaining good business relationship
with partners, suppliers, and customers is the core of any
business. The Internet has proved to be a boon for
businesses and their partners, because it provides easy,
cost effective and time saving communication and client
servicing methods. The Internet has given a dynamic
dimension to businesses with online transaction technology,
a system that helps in making the business more profitable.
Impact of E-Commerce on Business Activities
Electronic commerce has a deep impact on a large number of
business activities, which will be discussed in the thesis.
These includes:
 Marketing and sales promotion
 Improved commercial transaction, which includes
ordering, delivery and payment
 Product service and maintenance and development
 Improved Transport and logistic

Example of Specific Business Benefits of E-Commerce

 Reduced advertising costs
 Reduced delivery cost, notably for goods that can also
be delivered electronically
 Reduced designed and manufacturing cost
 Improved marketing and strategic planning

44
  Equal access to markets (i.e. from small medium
enterprise to large cooperation’s
 Access to markets
 Customers involvement in product and service
innovation

Types of Electronic Payment Systems Used by Different

Organizations
Electronic payment systems are proliferating in banking,
retail, health care, on-line markets and even government.
Organizations are motivated by the need to deliver products
and service more cost effectively and to provide a higher
quality of service to customers.
1. Banking and financial payments
 Large scale or wholesale payment (e.g. bank to
bank transfer)
 Small-scale retail payment (e.g. Automated Teller
Machines)
 Home banking (e.g. bill payments)
2. Retail Payments
 Credit cards (Visa or MasterCard)
 Private label cards (Debit Card)
 Charge cards (American Express)
3. Online electronic commerce payment
 Electronic cash
 Electronic checks
 Smart cards or debit cards

Bank Al-Falah

45
Bank Alfalah Limited was incorporated on June 21st, 1997 as
a public limited company under the Companies Ordinance
1984. Its banking operations commenced from November 1st,
1997. The bank is engaged in commercial banking and related
services as defined in the Banking companies ordinance,
1962. The Bank is currently operating through 45 branches
in 21 cities. Strengthened with the banking of the Abu
Dhabi Group and driven by the strategic goals set out by
its board of management, the bank has invested in
revolutionary technology to have an extensive range of
products and services. Bank perceives the requirements of
customers and matches them with quality products and
service solutions. During the past five years, bank
has emerged as one of the foremost financial institution in
the region endeavoring to meet the needs of tomorrow today.

Bank Al-Falah Electronic-Cards

Bank Alfalah Visa Card is customers partner everywhere and
is globally accepted and welcomed at locations
displaying the VISA logo. It is accepted at nearly 30
million merchants and 870,000 ATMs in more than 150
countries around the globe and over 10,000
establishments in Pakistan.

Alfalah VISA let’s you pay for shopping, travel,

entertainment, meals and much more. Card members are
facilitated through a number of promotions from time to
time like Matchless Discounts (discounts at nationwide
merchants’ outlets, making each shopping spree an exciting
one), Dine’a’ Discount (the best discounts at a wide range
of selective restaurants), Fortunes Rewards Program

46
(exchange of fortune points against an array of attractive
products and services), etc.

Bank Alfalah Hilal Card was offered in endeavor to give

customers versatile banking options to fulfill your
financial needs, Bank Alfalah Limited presents you the
Alfalah HilalCard, the first Visa Electron International
Debit Card which gives customers an unlimited access to
your current and savings account with a simple swipe, at
millions of retail shops and ATMs, worldwide. The Alfalah
HilalCard comes with a host of conveniences and benefits
combined with the wide reach of Visa Network enabling it to
be accepted at more than 840,000 ATMs and 13 million retail
outlets around the world, making it the most acceptable
Debit Card available in Pakistan.

Alfalah ATM Bank Alfalah through its commitment to provide

superior and improved services to its valued customers has
unveiled a nationwide network of ATMs. For customer’s
convenience, they have access to instantaneous cash
availability, 24 hours a day, 7 days a week. Alfalah ATM
network is geared up to exploit the latest technology, and
is equipped to meet the highest standards of security and
efficiency. Bank Alfalah is pleased to introduce 42 state
of the art ATMs, deployed at the most convenient and
accessible locations. Bank Alfalah is a founder member of
the 1-Link Switch, thus making a countrywide network of
ATMs available.

47
Paknet Local Level Internet Service Providers
Paknet Limited a fully owned Subsidiary of Pakistan
Telecommunication Company Limited (PTCL) was formed in
March 1999 and started commercial operation in January
2000. It is now the biggest Internet Service Provider of
the Country. Besides Internet Paknet also provides data
communication services like Clear Channel data links,
Frame Relay and Digital Circuits on Optical fiber cross
connect systems etc. Paknet made a fresh start with an
Internet customer base of 6000 as of January 2000 and
successfully achieved the target of its first year
business plan of 50,000 Internet customers. Currently
Paknet has a customer base of more than 1,30,000. Paknet
offers 24-hour technical support. They are able to offer
customer the same level of access as regional providers
to Internet news groups and e-mail often at lower costs.
And because local providers serve only a specific area,
they may offer better, faster connections for customers.
One main reason for growth of Paknet is the freedom of
expression. Some of the larger service providers tend to
restrict the activities of users on the Internet from
their networks. Another reason is that local ISP tends
to be more innovative and adapt more quickly to rapidly
changing Internet application. Paknet is actively
involved in E-marketing by giving customers information
through banners on website, emails and splash screen.

Allama Iqbal Open University On Demand Education

The Allama Iqbal Open University was established in June,
1974, with the main objectives of providing educational
opportunities to masses and to those who cannot leave their

48
homes and jobs. It has opened up educational opportunities
for the working people and has provided access to the
females on their doorsteps. It has also done pioneering
work in the field of Mass Education. It is now breaking new
grounds in the fields of professional, scientific, and
technical education. It is attempting to reach out to the
remotest areas of Pakistan. It is also attempting to
harness modern information Technology for spreading
education in Pakistan. The main objective of the University
is to provide educational facilities to people who cannot
leave their homes and jobs in such manner as it may
determine. It is a fact that education is in a state of
flux. Within the changing environment, with characteristic
are especially pertinent to electronic commerce
application. First, education is no longer considered
something that one acquires during youth to serve for an
entire lifetime. Modern education lacks age homogeneity, so
in a physical or virtual class we would find young adult,
middle-aged careerists and retired seniors. Second, because
knowledge like a product line can become obsolete every few
years, education must focus creating an environment that
facilitates continuous learning. To this end, continuous
business education is becoming a necessity as companies
educate their employees about competitors, events, news and
emerging products in a fast changing global market place.
Third education and entertainment are converging. Fourth,
the delivery of educational instruction has changed.
Instruction will be increasingly conducted electronically
and at times in small, informal meetings between faculty
and students. Student both residential and non-residential
will attend lectures broadcast to their homes, residence
halls or workplace and draw reference materials from

49
distant locations using computers. Local and wide area
networks will enable universities to integrate many aspects
of education that have long been segregated in separate
buildings. The teacher role will shift from lecturing to
advising or coaching students on tough, messy issues such
as choosing materials, topics and career paths. Finally,
electronic access to online databases and library catalogs
will eliminate the need for much book or reference space
but probably will increase the need for computer disk
space.
Computer Based Education and Training
For a number of years, educators and employers have been
talking about the enormous potential for computer-based
education and training, but change has been very gradual.
One reason is heavy capital expenditure for computers in
school and offices that have been installed without an
understanding of educational processes required to take
advantage of the new technology. Although technology based
education is impressive, knowing how to use it effectively
is still an art that few people understand clearly or
possess the necessary skills for. Explosive growth in
technology is fueling a new wave of teaching tools:
computer aided video, video instruction, multimedia, CD
ROMs, LANs, Internet connections and collaborative software
environment. Active learning and other learning approaches
are being developed to educate both workers and students.
Teachers are becoming more like coaches leaving students
free to discover knowledge on their own. In short, with
technology the role of teacher is more than of facilitator,
guide and resource broker.

Benefits to Organizations

50
The benefits of organizations are as follows:
 Electronic commerce expands the market place to
national and international markets. With minimal
capital outlay, companies can easily and quickly
locate more customers, the best supplier and the most
suitable business partners worldwide.
 Electronic commerce decreases the cost of creating,
processing and distributing, storing and retrieving
paper-based information.
 Ability of creating highly specialized businesses
using World Wide Web.
 Electronic commerce allows reduced inventories and
overhead by facilitating pull type supply chain
management. In a pull type system the process starts
from customer orders and uses just in time
manufacturing.
 Electronic commerce lowers telecommunication cost and
the Internet is much cheaper.
 Other benefits include improved image, improved
customer service, new found business partners,
simplified processes, compressed cycle and delivery
time, increased productivity, eliminating paper,
expediting access to information, reduced
transportation costs and increased flexibility.

Benefits to Consumers
The benefits to EC to consumers are as follows:
 Electronic commerce enables customers to shop or do
other transaction 24 hours a day, all year round from
almost any location.

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  Electronic commerce provides customers with more
choices, they can select from many vendors and from more
products.
 Electronic commerce frequently provides customer with
less expensive products and services by allowing them to
shop in many places and conduct quick comparisons.
 Customers can receive relevant and detailed
information in seconds, rather than days or week.
 Electronic commerce makes it possible to participate
in virtual auctions.
 Electronic commerce allows customers to interact with
other customer in electronic communities and exchange ideas
as well as compare experience.
 Electronic commerce facilitates completion, which
results in substantial discounts.

Benefits to Society
The benefits of EC to society are as follows:
 Electronic commerce enables more individual to work at home
and to do less traveling for shopping, resulting in less
traffic on the roads and lower air pollution.
 Electronic commerce allows some merchandise to be sold at
lower prices, so less affluent people can buy more and
increase their standard of living.
 Electronic commerce enables people in third world countries
and rural areas to enjoy products and services that
otherwise are not available to them. This includes
opportunities to learn professions and earn college degrees.
 Electronic commerce facilitates delivery of public services
such as health care, education, distribution of government

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social services at a reduced cost and or improved quality.
Health care facilities can reach patients in rural area.

Action Taken by Government of Pakistan

 As a first step towards electronic commerce, the
state bank of Pakistan has allowed banks to open Internet
merchant accounts within Pakistan. This was a major
hindrance in start of E-commerce activities in the country.
 To help the software export industry, SBP has
instructed banks to accept the contracts as collateral for
software exporters to qualify them for export refinance
scheme. Software exporting companies have been allowed to
retain 25 percent of export earning in foreign exchange
account.
 Introducing national scholarship fund and loan
schemes for field of science and technology.
 Free leased line Internet access to the public
sector universities under an agreement with PTCL and
reduced rates for connectivity to educational institutions
to promote IT in country.
 Pakistan educational intranet will be established
to connect all the public and private educational
institutions. It would be established with centralized data
containing teaching and research material in order that
resources may be shared through video conferring.

Evaluation of Current Research

In this research information related to organizations using
E-commerce and marketing were presented in order to support
the purpose of the study. The reality of E-commerce and
marketing is that it is changing the way we do business.

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The present study has observed that organizations are now
banking on Speed, efficiency, market widening and great
communication to ensure their success. They are increasing
the speed of standard business operations, opening new
global markets, and driving competition up. The aggressive
measures taken by the government and by the organizations
can direct the resources into useful financial outcomes
otherwise the affect will be loss of resources, inabilities
of the companies and organizations to compete with
international market, loss of business, brain drain and
inabilities of organizations to expand globally.
Organizations are maintaining the standards using E-
commerce and marketing techniques to maintain their market
share and expand their business. Therefore the hypothesis
is rejected. While the organizations maintain the
infrastructure for the promotion of E-commerce and
marketing, careful analysis and long term plans must be
brought into consideration to further enhance customer
service and increasing the market share.

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Chapter 5 Conclusion and Recommendation

Conclusion
The world market of Internet subscribers has reached the
mark of 400 million and is increasing every day showing a
growth rate of 100%. The Asia/Pacific region although
comprising mostly of developing countries has reached up to
4 million subscribers. In Pakistan, the 'dot com' culture
is emerging at a very fast pace and there has been a
mushroom growth of Pakistani commercial web sites,
information portals and specialized search engines.
Electronic commerce in Pakistan is growing at a rapid pace,
which has prompted the government to take a number of e-
commerce development initiatives.

Broadly speaking electronic commerce and marketing is a new

way of conducting, managing and executing the business
transactions using computers and telecommunications
networks. They have improved the productivity and
competitiveness of participating business by providing
unprecedented access to an online global market place with
millions of customers and thousands of products and
services. Moreover, it has also provided participating
companies with new and more cost and time efficient means.
The changing needs and new technological changes come
together to revolutionize the way in which business is
conducted. Modern business is characterized by ever-
increasing supply capabilities, global competition and
increasing customer expectations. In response to this
organizations all over are changing their operations.

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Students and professional do have access to Internet at
their respective institutes and workplace respectively.
Although people spend fair period of time online but online
spending are very low. Local area network is available in
fair percentage of organization but the intranet and
extranet culture is not developed effectively in
organizations, particularly in government organization and
universities. Although 1/3 of the organizations are using
fiber optics as a communication channel however the network
are mostly used for emails. The development of IT
infrastructure has not very substantial outcome in terms of
e-commerce and marketing. The government policies do not
translate into the world of e-commerce. Government of
Pakistan has allocated 6.54 percent of the total Rs4.895
billion IT funds. E-commerce and marketing lie at the
bottom of policies and agenda for companies engaged in
business in Islamabad.

Recommendations

For Business and Government

Government of Pakistan and investor should encourage small
dot.com startup to manage business over Internet. Small
dot.com business within the country will help the local
customer to practice buying online. Government should
increase the percentage of allocation of fund on e-
commerce. Companies should use the intranet and extranet
for their daily business transaction. Government should
facilitate such practices by providing tax relief.
Advertisement is a major avenue for doing business over
Internet. It is one of the most neglected area of e-
commerce and marketing. Local and private business should

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exploit advertisement over Internet. Fair percentage of
people surf Internet and advertising can bring financial
returns.

For Future Study

a. Establish a business case for e-commerce into business
strategy

b. Chart and quantify the amount of money and time spent

on e-commerce activities including intranet, extranet
and e tailing.

c. Chart and quantify the amount of money spent on online

advertisement and compare financial returns.

d. Investigate the extent to which the government

organization are examining and supporting commerce
issues.

e. Ask yourself following questions in an attempt to

evaluate the substantial business and e-commerce-
internet strategy:

i. Quantify the amount of capital spend on IT

infrastructure on your organization.

ii. What are the e-commerce and e-marketing practices

impact on my business, customers and suppliers.

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