International Journal of Scientific Management and Development ISSN:2345-3974

Vol.3 (4), 289-296April (2015)

Research Paper
A model to evaluate the effect of the Internet marketing on hotels performance in fuzzy environment
Arezoo Sadat Ayatollah1, Alireza Naser Sadrabadi*2, Hossein Sayyadi Tooranloo3
1Graduate student IT Management at the University of Science and Arts.
2Ph.D. in Management and faculty member of the University of Yazd.
3 Ph.D. in Management and faculty member of Vali-E-Asr UniversityOf Rafsanjan
Available online at: www.IJSMD.Com
Received 7th October 2014, Revised 3th November 2014, Accepted 11th November 2014
Abstract
Rapid growth of Internet marketing in hotel industry has triggered several studies on hospitality, internet reservation, and effect of
Internet marketing in hotel performance. Websites designed for marketing are specifically effective in dealing with intangible nature
of hotel services and wining competitive advantages. In the case of tourism organizations, the content of websites provides more
opportunity for participation the customer. In addition, such websites can be used as a source of information regarding preferences of
the customers and to provide customized services. Knowing this, Internet marketing and assessment of its performance have been
subject of many studies. On the other hand, qualitative nature of the Internet marketing variables highlights necessity of using fuzzy
logic. Therefore, the present study is an attempt to assess the effect of Internet marketing on performance of hotels using a
mathematical model based on date envelope analysis (DEA) and Gray’s Entropy in fuzzy environment. As in the recommended model
used of gray entropy technique to determine the high and low coefficients of input and output variables and used of fuzzy DEA
technique to determine the efficiency of E-marketing. The using of output entropy and Composition gray with the DEA, provided the
new model for evaluating E-marketing in fuzzy environment.
Keywords: Internet marketing, performance of hotel, fuzzy date envelope analysis, entropy.
Introduction information regarding their priorities; this also helps the
Ever increasing development of information and organizations to provide customized services (Doolin et
communication technology (ICT) has been immensely effective al.,2002). Chang and Law (2003) showed that an interesting
on commercial procedures. As the most effective ground for design with useful information in the website increase sale and
electronic marketing with worldwide coverage, the Internet has credit of hotels. Scaglione et al. (2009) analyzed earning per
made international markets reachable by many companies. room before and after running website by hotels and found that
However, it is notable that many businesses lack enough a positive relationship between popularity of website and
knowledge concerning how to use different E-marketing performance of hotel(Merono-Cerdan et al., 2007). Cerdan
techniques and its effect on domesti c markets and export. andAcosta (2007) examined 228 Spanish companies and
Recent rapid development of the Internet has induced showed that there is positive relationship between content of
considerable changes in the operation of hotel industry. Internet website and performance of the companies. Furthermore,
makes travel information and online transaction available and knowledge of how to work with the Internet is a critical and
acts as a new marketing tool (Doolin et al.,2002). Information essential factor in expansion of Internet-based transactions and
based nature of tourism products can enjoy global accessibility its effect on performance of company. On the other hand, there
of the Internet and capability to use multimedia possibilities. are studies that argue for different results regarding the
Furthermore, The Internet is a key tool to promote and advertise relationship between acceptance of Internet marketing and
tourism services. Web hotels and Internet marketing procedures performance of businesses. Shung, Huang, Low, and Wang
are no longer an exclusive advantage of large chain hotels. (2008) argued that there is no significant difference between
Websites with beautiful and user friendly design act as effective performances of business under different level of acceptance of
and inexpensive software packs in the hand of independent and e-business. Sigala (2004) used DEA to analyze effect of ICT
small hotels for marketing and advertisement; which also positive effect and found that ICT fails to increase profitability
intensifies competitive in the market(Lituchy et al.,2000, of hotels in many cases. They maintained that integrity of ICT
Merono-Cerdan et al.,2007). Marketing website can bring in is more important than access to ICT services in realization of
distinguishing value for hotels. Some of web-based services are performance objectives. The present study is an attempt to
provision of online information, information sharing, and online propose a model based on fuzzy DEA and Gray’s Entropy. The
transaction. Fast and easy marketing have been subject of model is aimed survey the effect of Internet marketing tools. To
several studies on Internet reservation hospitality and its effect this end, a hotel located in Shiraz, Iran was selected as case
on hotel performance (Hashim et al.,2010, Scaglione, 2009). study.
Marketing website helps dealing with intangible nature of hotel
services and wining competitive advantages (Baloglu & pekcan, Theoretical framework
2006). Website contents enable tourism organizations to Internet-based Marketing
evaluate participation of the customers and to collect The Internet is a dynamic and live media and provides
opportunity for emergence of new philosophy of marketing.
*Correspondent Author Alireza Naser Sadrabadi (Alireza_naser@yazd.ac.ir) This philosophy represents a new definition of marketing
Manuscript No: IJSMD-KINA-2014-432 through which the customer is dealt with as an individual. In

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fact, Internet-based marketing is constituted of two elements of
marketing and being virtual. The virtual nature enables direct
and mutual communication with the customer and possibility to
retrieve the record of communication for further examinations.
All virtual communication is established through electronic
medium, which in the case of virtual marketing is “the
Internet.” However, Internet-based marketing is the process of
establishing and keeping relationship with the customer through
online activities that also facilitate sharing idea, products, and
services that leads to satisfaction of the both sides (Mohammed,
2001). As a result of introduction of the Internet in the business
world and development of digital economic foundations to
support realization of modern marketing goals in e-transaction,
Internet-based marketing has drawn great deal of attention as a
key competitive factor in the international markets. Increase of
computation capacity, fast information processing, better search
engines, removal of unnecessary dealers and that many works
are now done electronically have positively influenced
transactions process time and performance. Value of e-business
and e-marketing is increasing. The customer in the modern
market is real customer plus virtual customer; the idea that
constitute backbone of Internet-based marketing.
One of the purposes of Internet-based marketing is to create
online income through perceiving needs of the customers. This
is not possible unless online customer gain more knowledge of
available products and services and feel committed to them
(Kwana Irene et al., 2005).
Internet-based marketing is a new philosophy and business
activity that encompasses marketing goods, services,
information, and attitudes via the Internet and other electronic
tools ( El-Gohary, 2011). The nature of tourism industry gives a
key role to the Internet technology in the marketing. There are
varieties of definition of e-marketing each with specific
viewpoint to e-marketing. Struss and Raymond defined e-
marketing as the same phenomenon as traditional marketing
that uses IT to realize its goals and also improves performance
of marketing ( Straus, Judy and Frost, Raymond, 2001). From
another viewpoint, e-marketing occurs when technical
infrastructures are available (databank, terminals, servers,
software, and so on) and the customer can use such
technologies. This is usually realized through the website
(Business Research and Studies Institute, 2004). Stan believed
that when the 4Ps of marketing are realized in electronic form,
we have e-marketing (Stan, 2003). Smith and Chaffey also
defined e-marketing as realization of marketing goals by
employing electronic communications technologies such as the
Internet, email, e-books, databanks and mobile phone (Smith &
Chaffy, 2001). Prasad et al. defined e-marketing as employing
the Internet in doing marketing activities pertinent to the
customer distribution and sale channels, marketing researches
and communication management (Prasad et al., 2001).
Assessment of performance of hotels using DEA
Following implementation of business strategies, the
management needs to measure organizational effectiveness by
measuring the performance. Performance might be differently
perceived by stakeholders and throughout life cycle of the
company (Cook & Seiford, 2009, Wu, 2006). Performance
measurement might be done to focus more on results of actual
International Journal of Scientific Management and Development
ISSN:2345-3974
performance (outputs) or performance production activities
(behavior). Outputs control is specifically done by focusing on
the outcomes of behavior or by using explicit goals and
performance. Behavioral performance assessment suits
situations in which performance outcomes are not easily
measurable and when there is a clear cause and effect
relationship between the activities and outputs (Botten &
McManus, 1999). In addition, financial performance suits
perceiving organizational effectiveness based on several
advantages that profitable firms bring to the society and their
stakeholders ( Randolph & Dess, 1984, Snow et al., 1980).
Sharma and Apchena (2005) found that hotels performance is
subject to internal factors such as staff training, investment in
equipment, and availability of financial resources and external
factors such as organizational environment, standard systems of
services and products. Furthermore, there is a positive and
considerable relationship between performance of hotels and
organizational assets (e.g. organizational structure, human
resource management and policy) and credit assets of the
company (reputation of services and products among the
customers). Other studies have argued that there is a correlation
between brand name and performance of company (Aaker,
1996, Phillips et al., 2002). Kim et al. (2003) surveyed the
effect of aspects of brand name of hotels in their performance
and showed that brand name image is considerably effective on
financial performance of hotels. Kim et al. (2003) argued that
brand name image is a long-run measure and, thus, marketing
staff need to develop an accurate knowledge of specifications of
brand name. A strong brand name leads to considerable increase
in income and vice versa.
Performance measurement has to do with the relationship
between inputs and outputs. Performance assessment of the
units of organization is not straightforward specially when the
inputs (resources and expenditures) and the outputs (services
and the products) are multi aspects(Cook, Seiford,2009, Wu,
2006). DEA is a nonparametric method to experimentally
measure performance pertinent to multiple decision-making
units (MDUs). DEA can receive different inputs and used as a
secondary tools for decision-making. The method, in particular,
does not need mathematical computation for production
functions and determines and analyzes inefficiency of each
DMU. DEA is widely used in variety of production and service
industries including hotels(Chen, 2007, Chung & Law, 2003).
For instance, Barwer (2005) used DEA for analyzing technical
and allocative efficiencies of hotels. Sigla, Jonse, Wook, and
Ieri (2005) have recently developed DEA application through a
step-by-step approach and measured performance of hotel
rooms. Boti et al. (2009) found that plural form networks are on
average more efficient than strictly franchised and wholly
owned chains.
At any rate, many studies use DEA techniques to survey
relationship between online marketing and performance of
hotel.
Gray relationship analysis can be directly used for assessing
the main data so that there is no need for additional interactions.
The method is widely used for analyzing performance and
multi-criteria decision-making problems (Chou & Tsai, 2009,
Tung & Lee, 2009, Wang, 2009, Wu, 2006). Gray Entropy
method is a goal weighting technique that does not need
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accurate statistical assumptions. The present study used Wen,
Chang, and You’s (1998) Gray Entropy to relative weight of
DEA inputs.
Literature review
A study titled “Using e-marketing, internal conditions and
organizational performance in small software businesses in
Austria” discussed few viewpoints regarding utilization of e-
marketing in Business to Customer (B2C) field and its relation
with internal success factors and the criteria pertinent to
performance of small and medium size enterprises (MES and
MEs) in Austria. Discovery analysis was performed on
information from 141 software enterprises in Austria. E-
marketing was generally used among the SMEs under study,
while some of MEs tended to use traditional e-marketing tools.
The study showed that firms that find their strength in branding,
pricing, variety of products, entering international market, and
possessing new technologies are more open toward e-
marketing. The study found a positive relationship between
utilization of e-marketing and the factors in organizational
performance among MEs in particular. The hypothesis of the
study was based on the assumption that there is a relationship
between utilization of e-marketing and possessing stronger
competitive situation. The hypothesis was supported
(Bernroider, 2008).
In another study titled “integrating the Internet and
marketing operation” it was emphasized that acceptance and
utilization of the Internet for advanced marketing operations
creates challenging opportunities for firms of whatever sizes.
However, this may depreciate investments already made on
current marketing channels; that is, there is a radical innovation
to be concerned about. Through innovation literature review,
the study tried to find if there is any and to what extent
difference between firms of different sizes that utilize advanced
Internet-based marketing operation and those that do not. The
conceptual model of the study was based on a set of
internal/external factors such as size of the firm, tendency to
takeover other firms, entrepreneurship motivations,
management’s support, and market demand. The data was
collected from 379 Sweden Producing Firms and the results
showed that the set of the factors that lead the firm to utilization
of advanced Internet-based operations are mainly a function of
size of the firm(Bengisson maria et al., 2007).
The effect of the Internet on marketing activities of SMEs
was surveyed in 2000 by another study titled “e-marketing and
SMEs; operational lessons for future.” The study was an
attempt to find out whether there has been changes in e-
marketing operation of institute? Managers or expert of IT –
who directly worked on e-marketing activities of their company
- were interview in detail and thorough semi-organized method.
The results emphasized role of the Internet in modern business
world and that readiness for e-marking in many of companies is
at preliminary stages. Still, the results showed that e-marketing
followed an ascending trend since 2000. SMEs have unrealized
potential for e-marketing and using these potential demands
serious and comprehensive (Audrey et al., 2007) .
Hamdizade and Mojara (2008) made a comparative
assessment of luxurious hotels’ website based 7C model in
internet-based marketing. The hotels were based in Iran,
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Turkey, and Emirates. As the results indicated, the websites
were featured with preliminary features and not all the
potentials of the Internet and the website to establish effective
communication with the customer were actualized. The surveys
showed that less than 50% of the features of the websites had
been utilized.
Sorayaie et al. (2009) examined the effect of using Internet-
based marketing in improvement of business conditions of
selected firms in Iran. They argued that, this type of marketing
is a strategic factor and competitive advantages in gaining more
market share inside and outside the country for Iranian firms.
The results showed that the companies could enjoy saving
money and time by using the technologies and following the
principles introduced in the study.
Vazifedoust and Yari (2010) surveyed the effect of using
modern e-marketing methods in attracting tourists to Iran as the
case study. They concluded that electronic and Internet tools
have made considerable changes throughout the tourism
services including airlines, hospitality services, tour managers,
travel agencies, and tourism destinations. The results also
showed that introduction of e-business was an undeniable
necessity and its expansion was inevitable.
Medan and Lee (1982) studied marketing strategies for
hotels and found that any marketing analysis in hotel industry
must be based on utilization of marketing strategies and
individual/organizational/chain inference. Doubtlessly, income
of hotel from the sale of services and products depends on
marketing strategies.
Sin et al. (2005) analyzed attitudes toward market and
business performance in hotel industry. They found that there is
a positive attitude toward market and the attitudes are
significantly aligned with marketing and financial performance.
Balglo and Pekan (2006) studied website design and
marketing via the website among luxurious hotels in Turkey as
case study. Their results confirmed that hotels in Turkey have
not realized full potentials of the Internet regarding e-marketing
in hotel industry.
Gohari (2012) surveyed the effective factors in e-marketing
and implementation of the strategies as to e-marketing in
tourism companies and SMEs in Egypt as case study. The
results confirmed the role of environmental factors in popularity
of e-marketing.
Sinaghi et al. (2013) measured performance of hotel using
balance scorecard method. The results showed that website of
Spanish hotels were designed for the visitors and provide biased
information toward investment, which is valuable information.
In addition, a significant positive relationship was found
between size of hotel and information provided regarding
investment and social mediators. In addition, the study found a
significant relationship between customer, marketing, web 2.0,
and classification of social mediators. At any rate, no significant
relationship was found between investment opportunity and the
four types of investments.
Methodology
The preset study is an applied work regarding the goal and
an analytical-descriptive work regarding data gathering method.
Literature review was carried out using library sources (e.g.
books, magazines, scientific reports, and dissertation). First,
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Vol.3 (4), 289-296 April (2015)
inputs, outputs, and Internet-based marketing tools in hotel
industry were determined. Inputs and outputs pictured in figure
1 (Shuai and Wu, 2011) were used. Afterward, the effect of
Internet-based marketing on performance of hotels was assessed
using fuzzy DEA.

Internet-based marketing

Revenue from foods and

Employees drinking sale

Guest rooms DMU

DMU
Revenue from rooms
Total costs

Figure 1- Conceptual model

Data envelop analysis
From management viewpoint performance of hotel is
outcome performance of different parts of the hotel (Charnes,
Cooper, Rhodes,1978). DEA is a nonparametric approach that
does not need assumptions regarding production function and
functional forms. There are few well-known DEA forms. In the
last decade, ranking efficient units has become the interests of
many researchers and a variety of DEA models were developed
to use (Li et al., 2007).
Under supper functional model (Andersen, Petersen, 1993),
a DEA model, high performance units are assigned with points
above 1 and units with low performance are assigned with
points below 1. That is, with supper functional model, units
Max S k  r 1 u r y rk
p
with good performance are scored 1 or above 1 (Banker &
Chang, 2006, Nahra et al., 2009). Clearly, supper performance
model is recommended as a better method to manage and deal
performance management in practice. Therefore, Andersen and
Petersen’s supper performance DEA model (1993) was
employed. To estimate relative performance, 48 hotels were
taken into account.
CCR model
The model assumes n DMUs with m and n as input and
outputs respectively, then performance assessment model is
defined as (Charnes, Cooper, Rhodes,1978):

 u r y rk  i 1 vi xik  0
p m
s.t r 1
k  1,2,...., n ;


m
i 1 i
v xik  1; k  1,2,...., n ;
ur    0 , r  1,2,....., p;
vi    0 , r  1,2,....., m;

Where, Xik denotes ith input for kth DMU and Ytk denotes value The above model is the definite model and for fuzzy inputs and
of rth output for kth DMU, and Ur and Vi are input and output of outputs, fuzzy DEA model is as follows:
virtual coefficients respectively, and ε is a positive constant and
Sk is performance of kth DMU. Like multi criteria decision-
making models, DEA does not use weights.
 u ~
p
Max S  k r 1
y r rk

 y rk  i 1 vi ~
ur ~
p m
s.t r 1
xik  0 k  1,2,...., n ;

 vi ~
m
i 1
xik  1; k  1,2,...., n ;
ur    0 , r  1,2,....., p;
vi    0 , r  1,2,....., m;

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Vol.3 (4), 289-296 April (2015)
If, ~   ~  , ~ 

max

max L
 
max U
  be a set of alpha interval
~ max
from  , then following models can be used to obtain it:

~  
max L
 : Max S k  r 1 u r  ~y rk 
p L

 u ~y    v ~xik   0
p m
k  1,2,...., n ;
L U
s.t r 1 r rk i 1 i

 v ~x   1;
m
k  1,2,...., n ;
U
i 1 i ik

ur    0 , r  1,2,....., p;
vi    0 , r  1,2,....., m;

~ 
max U
 : Max S k  r 1 u r  ~y rk 
p U

 u ~y    v ~xik   0
p m
k  1,2,...., n ;
U L
s.t r 1 r rk i 1 i

 v ~x   1;
m
k  1,2,...., n ;
L
i 1 i ik

ur    0 , r  1,2,....., p;
vi    0 , r  1,2,....., m;

Having the minimum and maximum performance of each alpha By obtaining performance of each hotel in the alpha interval,
interval, performance of each unit in alpha interval is obtained the performance is fixed by centroid difuzzyfication method as
using geometric mean. follows:
 i    . 
i
Max L
i
Max L
, i  1,..., n,

1 U
 
  
n 1 n 1
~ x dx            i 1 x U  x L 
b
a A
     
L U L
 x  x  i x  x 
2 n
i 1
n
i 1
i 1

i 1 i i

1  2U
  
 
n 1 n 1
~  x dx             i 1 x 2Ui  x 2 L1  
b
a A
     
2L 2U 2L
x  x n x n i x  i 1 x  i 1
6 i 1 i 1 

 
n 1
 i x  i .x  1i  x  i .x  1i
1

6 i 0
U U L L

In particular, when the interval [0, 1] is equally divided by

different alpha intervals, centroid difuzzyfication is done
through:

1
     
n 1

a  A~ xdx  2  x  x  x  x  2 x  x 

b U L U L U L

 
  n0 n i i
i 1

1  2U
   
x    x 2 L  x 2Un  x 2 Ln   x 2Ui  x 2 Li    
n 1
x A~ x dx 
b
 a 
6n  i 1 

 
n 1

 x i .x  1i  x i .x  1i

1 U U L L

6n i  0

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Gray Entropy
Gray systems theory was introduced in Dang (1982) in the
1980. The theory argues that there are three types of systems
including white system (complete knowledge of information),
black systems (no knowledge of information) and gray systems
(knowledge of information to some extent)(Guo, 2005).
In spite of standard statistical methods, Gray systems theory
enables us to analyze data featured with uncertainty, multi-
inputs, discreteness, small sample size, and unknown
distribution. Thus, the theory is an efficient method to deal with
uncertainty with discrete data(Tseng, 2009). In addition, it is a
multidiscipline approach for models featured with limited and
incomplete information and random uncertainty.
According to Wand, Lin and Hu (2007), entropy weighting
method is a target weighting method that, for each criterion,
calculates relative importance of all criteria through comparing
values of entropy. However, in the case of weighting analysis,
the standard entropy method based on continuous entropy is not
suitable for practical problem with discrete data(Wen et al.,
1998).
To deal with this problem, gray entropy based on a discrete
type entropy was proposed by Wen et al. (2007) to do the
weighting analysis correctly. Chou and Tsai (2009) also
proposed a weighting method by combining Shannon Entropy
and gray relational analyses model(Chou & Tsai, 2009, Wen et
al., 1998).
Gray relational analysis is a part of gray systems theory
proposed for complicated relationship with several factors. In
the case of decision-making problem with several features, gray
relational method combines the whole spectrum that
performance features can take for any alternative with specific
value. Therefore, multi features alternatives, after gray
relational analyses, can easily compare different values(Kuo et
al., 2008).
Following Wen et al. (1998) and Wang et al. (2007),
procedure of weighting gray weighting includes several steps:
1. Suppose X is a set of factors of gray relation as:
xi  ( xi (1), xi (2), xi (3),... , xi (k )) X ,
Where, k  1,2,3,...n , i  0,1,2,...m
2. Sum of the values of each feature for all sequences is
obtained as:
Dk  i 1 xi (k ) .
m
3. Normalized coefficients is obtained as:
1
k
(e 1)n
0.5
Where, n denotes number of criteria.
4. Entropy for specific criteria is:
ek  k i 1We ( z i )
m
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ISSN:2345-3974
Where,
We ( zi )  zi e (1 zi )  (1  zi )e zi  1
xi ( k )
zi 
Dk
5. Total entropy is:
E  k 1 ek
n
6. Relative weight factors is obtained as:
1
k  (1  ek )
nE
7. Normalized weight of each features is:
k
k 
 i
n
i 1
Summary
A model based on DEA and Gray Entropy was proposed to
assess the effect of Internet-based marketing on performance of
hotels. To this end, hotels performance assessment model was
first solved by fuzzy DEA without taking into account Internet-
based criterion as an input. Afterward, performance of the
hotels was evaluated with fuzzy DEA by taking into account
Internet-based marketing. Having the performance under the
both scenarios, the results were compared pairwise using
parametric and non-parametric tests. With significant difference
between the performances, one may conclude effectiveness of
Internet-based marketing on performance of hotels. Eventually,
definite weight of the input/output criteria was measured by
Gray Entropy. The fuzzy nature of the model and that Gray
Entropy technique was used in the study removes intrinsic
ambiguities of human judgment and promises results with more
reliability.
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