E-Marketing, 3rd edition

Judy Strauss, Adel I. El-Ansary, and Raymond Frost

Chapter 1: The Big Picture

© Prentice Hall 2003

 Overview
The Emergence of E-Marketing: The Google Story
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
 The Google story shows:

 Markets always welcome an innovative new product

providing customer value.

 Customers trust good brands.

 Well-crafted marketing mix strategies can be

effective in helping newcomers enter crowded
markets.
 Key questions for
corporations:
 How to use information technology profitably ?

 How to understand what technology means for their

business strategies?

 How time-tested concepts by marketers can be

enhanced by the Internet, databases, wireless mobile
devices, and other technologies?

 What’s next after the rapid growth of the Internet

and the dot-com bubble has marketers wondering ?
 Overview
The Emergence of E-Marketing
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
 What is E-Marketing?
E-Marketing is the application of a broad range of
information technologies for:
 Transforming marketing strategies to create more
customer value (more effective segmentation, targeting,
differentiation, and positioning strategies),
 More efficiently planning and executing the conception,
distribution, promotion and pricing of goods, services,
and ideas,
 Creating exchanges that satisfy individual consumer and
organizational customers’ objectives.
 What is E-Marketing?
 Alternative definition:
E-marketing is the result of information technology
applied to traditional marketing.

 E-marketing affects traditional marketing in two ways:

 Increases efficiency in traditional marketing functions,
 The technology of e-marketing transforms many marketing
strategies.

 Results: new business models that add customer value

and/or increase company profitability.
 Overview
The Emergence of E-Marketing
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
 What Is E-Business?
 E-business “is the continuous optimization of a firm’s
business activities through digital technology”

 Digital technologies = information technology

are things like computers and the Internet, that allow
the storage and transmission of data in digital formats
(1’s and 0’s)
 The Big Picture
 Easy, inexpensive, and quick access to digital information
transforms:
- economies, - societies,
- governments, - businesses.

 Digital information enhances economies through:

 more efficient markets,
 more jobs,
 information access,
 communication globalization,
 lower barriers to foreign trade and investment, and more.
Uneven impact of the Internet across the globe:
 530 million users connected to the Internet worldwide = 8.5%
of the global population,

 Developed nations = 15% of the world’s population

= 88% of all Internet users,

 U.S. Internet users = 182 million

= 64% of the population,

 Indigenous peoples in remote locations gaining health, legal,

and other advice, or selling native products using the Internet.
 Undesirable changes created by a networked world

 Societies change as global communities based on

interests form,

 Worldwide information access slowly decreases

cultural and language differences,

 Easy computer networking = work and home

boundaries are blurring = more convenient work =
encourage more workaholism and less time with
family.
 Undesirable changes created by a networked world

 Class divisions will grow, preventing the upward

mobility of people on lower socioeconomic levels and
even entire developing countries,

 Digital divide: Internet adoption occurs when folks

have:
 Enough money to buy a computer,
 The literacy to read what is on Web pages,
 The education to be motivated to do it.
 The digital environment is enhancing processes
and activities across the entire organization:

 Cross-functional teams using computer networks to share and

apply knowledge for increased efficiency and profitability,

 Financial experts communicate shareholder information online, file

required government statements, and invent new ways to value
risk, etc.,

 Human resources personnel use the Net for electronic recruiting

and training; an increasing number are managing organizational
knowledge and workflow through corporate Web portals.
 The digital environment is enhancing processes
and activities across the entire organization:

 Production and operation managers can adjust

manufacturing based on the Internet’s ability to give
immediate sales feedback resulting in truly just-in-
time inventory and building products to order,

 Strategists are leveraging the Net to apply the firm’s

knowledge in building and maintaining a competitive
edge (easy access to data).
 What will the future be?

 Gartner Group predicts that a true e-business model will emerge, and by
2008 the “e” will be dropped, making electronic business just part of the
way things are done.

 Some say that “E-business has become just business. E-commerce has
become just commerce. The new economy has become just the
economy (Aronica and Fingar 2001).

 ” Others say that this is far from the truth—for them, e-business will
always have its own models, concepts, and practices.

Charles Schwab has already gone through the entire cycle allowing
e.Schwab.com to cannibalize the larger brick-and-mortar securities firm
in 1998.
 Environment, Strategy, and Performance
(ESP)
 Business environment: legal, technological, competitive, market-related,
and other environmental factors external to the firm =
Opportunities and Threats,

 SWOT analyses = Strengths and Weaknesses,

 E-business strategies + e-business models + e-marketing plans =

Help the firm accomplish its overall goals,

 Determine the success of the strategies and plans by measuring results.

= Performance metrics, specific measures designed to evaluate the
effectiveness and efficiency of the e-business and e-marketing
operations.
 Key environmental factors
affecting e-marketing

1. Legal,

2. Technological

3. Market-related factors
 Legal Factors
Current and pending legislation can greatly influence e-marketing strategies:

 Privacy: Difficult to legislate + Critical because consumers yield personal information

over the Internet
 Opt-out e-mail: when users must uncheck a Web page box to avoid being put on a
company’s e-mail list,

 Difficult for governments to balance freedom of expression against consumer needs,

 New technology brings new opportunities for fraud: enforcement is difficult in a

networked world.
 Technology
 Technological developments influence:
- The composition of Internet audiences,
- The quality of material that can be delivered to them.

 E-marketing is evolving through software advances:

Technologies can target consumers according to their
online behavior to give a firm a distinct competitive
advantage.
 Technology
 Technology lowers costs: Many firms have saved money on staff
and paperwork via electronic order processing, billing, and e-mail.

 Technology requires costly investments:

- Web page development costs millions of dollars,
- E-commerce operations require expensive hardware and
software,
- New technologies continue to emerge, which make current
investments obsolete,
- Putting technology to use entails a steep learning curve.
 What is the Internet?

The Internet is a global network of interconnected

networks:
- Millions of corporate, government, organizational,
and private networks,
- The Internet consists of computers with data, users
who send and receive the data files, and a
technology infrastructure to move, create, and view
or listen to the content.
 What is the Internet?
Three important types of networks form part of the Internet:
 Intranet = A network running internally in a
corporation + using Internet standards (HTML and
browsers) = a mini-Internet but only for internal
corporate consumption,
 Extranet = An intranet with value chain partners +
the access is normally only partial,
 Web = The portion of the Internet that supports a
graphical user interface for hypertext navigation with a
browser (Netscape / Internet Explorer). The Web is
what most people think about when they think of the
Internet.
It’s Bigger Than the Internet
Electronic marketing reaches far beyond the Web:
 Many e-marketing technologies exist
= Customer relationship management, supply chain
management, and electronic data interchange
arrangements predating the Web,

 Non-Web Internet services such as e-mail and

newsgroups
= Effective avenues for marketing.
It’s Bigger Than the Internet
 The Internet holds more than one Web:
 The Web that most users access from PCs,

 Subsets of the Web with content specially

formatted for the unique display
properties:
 Web TV,
 Personal digital assistants,
 Cell phones,
 Text-only browsers.
It’s Bigger Than the Internet
 Offline electronic data-collection devices
such as bar code scanners.

 Portion of the Web containing high-

bandwidth content for users who have
either cable modems or digital
subscriber loop (DSL) connections.
 Internet Properties and
Marketing Implications
 Marketers who grasp what Internet technologies can do will be better
poised to capitalize on information technology.

 Internet properties:
- Create opportunities beyond those possible with the telephone,

television, postal mail, or other communication media,

- More effective and efficient marketing strategy + tactical

implementation + change the way marketing is conducted.

 E.g. The idea of digitizing data (bits not atoms) has transformed media
and software delivery methods + created a new transaction channel.
Internet Properties and
Marketing Implications
Internet technologies have changed traditional
marketing in a number of critical ways:

 Power shift from sellers to buyers,

 Death of distance,
 Time compression,
 Knowledge management is key,
 Interdisciplinary focus,
 Intellectual capital rules.
 E-Business Markets
 Once marketers identify appropriate markets, information
technology facilitates relationships before and after the
transaction with:
 Prospects,
 Partners,
 Customers,
 Supply chain members.

 There are three important markets that both sell and buy
to each other:
 Businesses,
 Consumers,

Governments.
 To Business To Consumer To Government
Initiated by Business-to-Business Business-to- Business-to-
Business (B2B) Consumer (B2C) Government (B2G)
FreeMarkets CDNow Western Australian
www.freemarkets.com Www.cdnow.com Government Supply
www.ssc.wa.gov.au/
Initiated by Consumer-to-Business Consumer-to- Consumer-to-
Consumer (C2B) Consumer Government
Better Business Bureau (C2C) (C2G)
site eBay GovWorks
www.bbb.org www.ebay.com www.govworks.com
Initiated by Government-to-Business Government-to- Government-to-
Government (G2B) Consumer Government
Small Business (G2C) (G2G)
Administration site California state site GovOne Solutions
www.sba.gov Www.state.ca.us http://www.govonesol
utions.com/
Exhibit 1 - 1 E-Business Markets
Source: Marian Wood (2001) with minor adaptation (p. 2)
 Business Market
- It is huge: more businesses are connected to the internet
than consumers.
- It is transparent to consumers: it involves proprietary
networks that allow information and database sharing.

E.g. FedEx, the package delivery firm:

- Its customers can schedule a package pick-up using the Web site,
- Track the package using a PC or handheld PalmPilot,
-
Pay the shipping bill online.
 Consumer Market
 E-marketers must understand consumers in potential
geographic segments:

 Iceland and Denmark = 2 of the most wired countries in

the world = 60% Internet penetration,

 Consumers in many countries pay by the minute for local

phone access = determine the kind of casual surfing
practiced by Internet users.
 Consumer Market
The consumer market is huge and quite active online:

 28% of consumers said they have shopped online or plan

to shop online in the next six months,

 15% purchased offline as a direct result of online

information,

 U.S. consumers are the biggest online shoppers, spending

US$53 billion in 2001, an increase of nearly 20% from
2000.
 Revenge of the Consumer
 The rebellion started with television channel surfing using the
remote control. Consumers did not seem to appreciate that
commercials pay for broadcast TV programs.

 At the start of the 21st century, consumers have control via the
mouse. When television, radio, print media, entertainment, and
shopping all converge seamlessly on a computer-like device,
consumers will truly have information on demand.

 Consumers are more demanding and more sophisticated, and

marketers will have to become better at delivering customer value.
 Consumer Needs
What do customers want in the information economy?

 Privacy: Customers want marketers to keep their data confidential +

don’t want to be bothered by sales calls at home during dinner,

 To safeguard children from objectionable sites,

 Want marketers to ask permission before sending commercial e-mail

messages,

 Want e-commerce to provide convenience, self-service, speed, good

customer service, personal attention, and value.
 Consumer Needs
Fortunately, e-marketing can meet all these needs:

 With mass customization individuals can contact firms over the

Internet and receive responses tailored to their needs,

 Business can also customize and personalize products and

communications to strengthen long-term relationships with
customers.

E.g. Amazon.com presents personalized Web pages to users

Exhibit 1 - 1 Amazon.com Uses Mass Customization to Personalize Web Pages
Source: www.amazon.com Amazon.com is a registered trademark or trademark of Amazon.com, Inc. in the United
States and/or other countries. © 2000 by Amazon.com. All rights reserved.
 Government Market
 The U. S. government is the world’s largest buyer, purchasing
over $200 billion in goods and services every year (see www.
isbdcorp.org/gmag).

 Add to this the purchasing power of U.S. states, counties, cities,

and other municipal agencies, and this makes for a huge
market.

 Small and large businesses usually have an equal chance of

selling to governments + government Web sites announce their
buying needs in advance of the bidding process.
 Government Market
 Businesses wishing to sell to governments face challenges
unique to this market:

 Follow rules regarding qualifications, paperwork, etc.,

 Must compete to be on the government list of
approved suppliers + compete for specific contracts
through a bidding process,
 Have to conform to very particular timely delivery of
quality products at reasonable prices.
 What’s Next?

 Regardless of the current disillusion with e-business, many

solid successes exist today and exciting new growth areas
will soon emerge.

 Seven trends that will help businesses move forward into

e-marketing :
 Integrating IT software,  Data security,
 Wireless is here to stay,
 Boom in Web services,
 Growth in portable
 Collaboration software,
computing.
 Dealing with too much data,