Tesco, Waterstones, ScottishPower, Interflora and Freemans are among the many benefitting from the most revolutionary marketing channel we've ever known. And size really doesn't matter when it comes to using the Internet for business.

What connects these companies has nothing to do with huge resources or marketing budgets. Today's senior managers are willing to support an Internet strategy as a core part of their company's business plan and companies that will not commit to using it as a serious business tool risk being left behind.

So how do companies start making money from the Internet? The most important element of an Internet strategy is being clear about what your business wants to achieve from going on-line and how it will integrate the Internet with existing activities. If your Internet strategy doesn't tie in closely with the wider business plan, it is likely to fail.

Despite what many computer companies would like you to believe, there is no mystique about the Internet - companies need to think about it as they would any other marketing activity. Factors to consider include who are you trying to reach, the competition, distribution channel dynamics, and the marketing mix. But the Internet is a new medium of communication which presents new ways of approaching traditional marketing techniques. Therefore, once a broad idea of how the Internet is to be used has been agreed, many companies choose to enlist the services of a SPECIALIST INTERNET MARKETER.

That's the hard part out of the way - and also the area where many companies fail. Once the Internet strategy has been agreed, companies need to decide on the type of Internet web site that will fulfil their needs. Most develop one of three main types of Internet web site: promotional sites, content sites or transaction sites.

A PROMOTIONAL site is generally seen as an electronic extension to the corporate marketing collateral, such as company brochures or product catalogues. The aim of the site is not to sell, but to give customers the information they need about the company, its products and services to make an informed purchase decision. Visitors to the BMW web site (http://www.bmw.co.uk/) are able to find out every detail about the company's car range, and it even includes maps on how to reach the nearest showroom. Promotional sites are also used as a valuable information gathering tool, encouraging visitors to submit personal details that can help with future marketing activities.

CONTENT web sites generally aim to be the main source of information about a specific subject area. For example, a cycle manufacturer may seek to develop the most comprehensive information service available on mountain biking. Businesses that take this approach to web site development can often persuade other companies to advertise on the site. Another revenue stream for this type of web site is subscription charges, an approach adopted by many of the on-line news services, such as CNN Interactive.

The latest use of the Internet for business involves TRANSACTION-based sites. These allow customers to buy goods directly over the Internet using a standard PC and a credit card. The implications of this are far-reaching, as many companies are discovering. If the company web site can be used as a successful, low-cost retail outlet, the traditional, retail and sales operations can be reconstructed with potentially huge cost savings.

Sweden Post, the Swedish national post office, recently took the concept one step further. Operating in one of the most technically advanced countries, Sweden Post's revenues were being threatened by the use of Internet e-mail. Rather than fight what would inevitably be a losing battle. Sweden Post instead worked on developing Europe's largest Internet commerce service - an on-line shopping mail called Torget.

Customers browse through Torget's goods and services and pay for them directly over the Internet, using a new, secure, "smart-card" system called SmartGATE (from London-based Internet Smartware). Diversifying into on-line services has paid off very quickly and Sweden Post expects to sign up over two million Torget customers by the end of the year.

Setting up a transaction web site can be complex, as it requires careful development and integration of databases, transaction software and security technology. Smaller companies often rent space from dedicated transaction services providers, especially if they are only planning to sell one or two products.

Recent technological developments have enabled transaction web sites to become even more advanced. You may have heard of Sun Microsystems' Java Technology. Most experts agree that Java has radically changed the nature of business computing, yet what it does is simple. It provides a common language that all computers can understand, from a microchip to a supercomputer. Research suggests Java can cut computing costs by up to 80 per cent. Java can provide a direct link from a web page into the heart of the most complex database system.

As well as creating new revenue streams, the Internet also allows companies to develop closer relationships with their customers. The latest technique is called "web-casting" which basically involves broadcasting live information, sound and images over the Internet. Television, in other words, you might be thinking. But TV doesn't allow live and meaningful audience participation and feedback - priceless information for any business. Using web-casting, customers get to interact with suppliers at first hand.

For example, as part of Paul McCartney's recent "Flaming Pie" album launch, Sun arranged the world's largest web-cast which allowed fans to watch a live interview over a web site during which they could ask him questions of their own. By the end of the interview over 2.5 million questions had been submitted. For businesses, this offers a new way of getting close to customers and receiving instant feedback on the company, its products and services.

Once your web site is up and running, it is ESSENTIAL TO MARKET IT just like any other service. This is where a web orientated strategic marketing consultancy can really help. Many companies now add their web site address to all promotional materials. Another technique is to persuade partners and customers to provide "hot-links" from their own web site into yours. The latest techniques allow companies to view how successful their web site promotion has been by monitoring the number of people who have visited the site.