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CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

For several years, a revolution in marketing communication has been developing, that is, traditionally altering the traditional views of advertising and communication media. This revolution is the internet, the massive global network of interconnected packet- switched computer network, which as a new marketing medium has the potential to radically change the way firms transact business with their customers. According to Hoffman and Novak (1996) the internet is firmly established as a new marketing communication tool. The internet has a tremendous impact on many processes in companies. Marketing is probably one of the areas most affected due to the possibilities offered in online marketing communication (OMC) Krishnamurthy, (2006). Perhaps the OMC approach has received almost instant recognition at the end of the 1990s, as a result of the existing trends to reduce the budget allocated to mass advertising campaigns and to concentrate with final consumers Kitchen (2000). Thus, online marketing communications (OMC) has grown to be an important part of a company promotional mix Adegoke (2004). Whereas OMC today consist of multiple activities Jensen and Jepsen, (2006).

In fact, online marketing communication means focusing on the use of internet for promotion where both pull (banner, search engine result pages and push (e-mailing, instant messaging) strategies can be applied Kitchenman (2010). One widely shared prediction about the future of marketing communication is that it will become more conversational. Interactivity increases the amount of information that can be presented to a customer (Deighton 1996; Watson et al, 1998).

With its unprecedented ability to provide dialogue and transactions in an interactive and interesting manner, the World Wide Web (the Web hereafter) has opened up a new door for retailers. As online retailers continuously face the challenge of enhancing consumer trust and building relationships with customers, an understanding of what influences or facilitates relationship building in an online retail environment is of imperative for them. Marketing today is heavily influenced by the shift away from transactions towards relationships, since relationship marketing offers a more holistic approach to understanding marketing dynamics and to developing and implementing marketing strategies. It further emphasizes the creation of greater value for customers and organizations through fostering co-operative and collaborative partnerships. The most valuable asset a company has is its relationship with customers, as it cost up to nine times more to acquire a new customer than to retain the current one Peppers and Rogers (1993), it is clear that it pays to value relationships. 

The present study attempts to investigate the particularities of implementation of OMC in an online environment. The study starts from the premise that the specific characteristics of the internet transform the application of OMC principle from an alternative, option to an absolution requirement.

STATEMENT OF PROBLEM

The total lack of accountability on the internet may explain why a certain proportion of the population is reluctant to engage in online transactions. Many consumers do not understand the performance characteristics of the internet and of various aspects of the digital world. This brings about lack of online trust and security The poor retail performance can be attributed to inefficiencies in building relationship marketing through online marketing communication and large numbers of customers are over the internet. The inability of retail firms to have highly interactive web pages, automatically personalized through the use of cookie files. Moderated group chats, e-communities and e-bulletins may also be valuable foe these retail organizations. The main value of the internet is as an interactive mass communication tool, and the main basis for measuring success is the number of regular users. To certain extent, these firms can replace traditional advertising and sales promotion by the website.

OBJECTIVES OF THE STUDY

The purpose of this study is to examine the extent of the application of online marketing communication (OMC) in retail organization, in the online environment. To this end, the study will examine the concept of relationship marketing and how building relationship marketing through OMC has increased customers confidence in online transactions, how it has contributed to the high performance of retail stores, and also how online marketing communication (OMC) as a means of building relationship marketing has contributed to the overall success of retail organization.

1.4     RESEARCH QUESTION

With regards to the statement of problem, this research study is intended to give answers to the following research questions:

Is OMC a reliable tool is building customer’s confidence and trust in online transactions?

Can OMC be used to increase the rate of sales/customers in retail stores?

Is OMC effective in creating and building relationship marketing?

1.5     RESEARCH HYPOTHESIS

It is a conjectural statement of relationships between two or more variables. It is a testable, tentative problem explanation of the relationship between two or more variables that create a state of affairs or phenomenon. The following hypotheses were formulated by the researcher.

Ho: Online marketing communication is not a reliable tool in building customers confidence and trust in online transaction.

H1: Online marketing communication is a reliable tool in building customer’s confidence and trust in online transaction.

Ho: Online marketing communication cannot be used in increasing sales/customers rate in retail firms.

H1: online marketing communication can be used in increasing sales/customers rate in retail firms.

Ho: online marketing communication is not effective in creating and building relationship marketing.

H1:  online marketing communication is effective in creating and building relationship marketing.

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