Release Date: June 30, 1998 This content is archived.


BUFFALO, N.Y. -- They may be flashy and gimmicky, but most company Web sites would flunk a test of simple "Marketing 101" theory, a new study suggests.

H. R. Rao, associate professor of management science and systems in the University at Buffalo School of Management, says that the average company fails to follow basic marketing strategy when advertising products and services on its Web site.

As a result, many companies could lose out on millions of dollars in sales as record numbers of consumers grow accustomed to Internet shopping.

"The creators of company Web pages do not seem aware of the different cues that impact consumers," says Rao. "They are too concerned with creating jazzy-looking sites and are not concerned enough with giving consumers the type of information they need to make a purchase decision.

"Consequently," he says "many company Web sites are losing customers."

In analyzing the Web-site content of 125 "consumer-product" Fortune 1000 companies (those selling furniture or home furnishings, general merchandise, soap, cosmetics, automotive or alcohol), Rao found that the majority did not contain appropriate informational "cues" commonly used by advertising and marketing professionals to influence consumer choice.

Those cues include information that addresses price or value, quality, performance, components or contents, availability, special offer, taste, package or shape, guarantee or warrantees, safety, nutrition, independent research, company-sponsored research and new ideas.

Eighty-five percent of the Web sites Rao studied did contain at least one of the cues, but a surprising low percentage of sites contained cues that have the most impact on consumer choice -- price or value (52 percent), performance (49 percent) and quality (46 percent).

Moreover, only 54 percent of the sites contained at least two cues, while 52 percent contained at least three cues. Just 33 percent of the Web sites contained four or more of the cues.

According to Rao, Web sites that do not contain at least half of the cues, depending on the product, are turning away a highly motivated type of consumer -- one who is actively searching for the information needed to make a purchase decision.

He contends that unlike TV or other advertising mediums, Web advertising is most effective when it provides very straight-forward and well-organized categories of information that encourage consumers to seek out more information about product attributes.

And with Internet sales expected to reach $500 million by the year 2000, companies with Web sites that emphasize flash over substance are likely to lose a share of a burgeoning new marketplace.

"If Internet shoppers do not find appropriate information about a product on one company's Web site, they will search on others until they do," Rao says. "And that's the company that will get the sale."

The results of the study -- co-authored by Carl Pegels, professor of management science and systems in the UB School of Management, and A.F. Salam, assistant professor of management information systems at the University of Louisville -- were published in a recent issue of "Communications of the ACM."

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