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Fortune 500 manufacturer web sites Innovative marketing strategies or cyberbrochures?

Fortune 500 manufacturer web sites Innovative marketing strategies or cyberbrochures?

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Fortune 500 manufacturer web sitesInnovative marketing strategies or cyberbrochures?
Monica Perry, Charles D. Bodkin*
 Department of Marketing, The Belk College of Business Administration, University of North Carolina at Charlotte, 9201 University City Boulevard,Charlotte, NC 28223, USA
Received 31 May 2000; received in revised form 10 November 2000; accepted 15 March 2001
Forecasts for business-to-business electronic commerce over the next few years are in the trillions. Manufacturers represent a significant  portion of business-to-business activity and their web sites an integral component of business-to-business electronic commerce. Should theychoose to, manufacturers can use their web sites not only to conduct electronic commerce but also to engage in a wide range of marketingcommunications. Marketing communication activities include advertising, sales promotion, public relations, and direct marketing. The resultsof our content analysis of 188 Fortune 500 manufacturer web sites indicated that few manufacturers use a broad range of marketingcommunications activities. Analysis of differences in the use of marketing communications on web sites suggests that some aspects of website marketing communications differ based on manufacturer characteristics such as sales, R&D to sales ratio, and net income.
2001Elsevier Science Inc. All rights reserved.
Internet; Marketing; Electronic commerce; Business to business; B2B; Web sites; Manufacturer; Statistical analysis; Communications; Promotionalmix; Cyberspace; Studies; Performance evaluation
1. Introduction
Forecasts for business-to-business electronic commerceover the next few years are in the trillions. ForresteResearch [1] forecasts US$2.7 trillion in sales from business-to-business electronic commerce in 2004 (UnitedStates). International electronic commerce is also expectedto experience explosive growth in regions such as Asiaand Latin America [1,2].Manufacturers represent a significant portion of business-to-business activity and their web sites an integral compon-ent of business-to-business electronic commerce. Shouldthey choose, manufacturers can communicate directly with potential customers by utilizing a broad range of marketingcommunications via their web sites in addition to conductingelectronic commerce. Web sites differ from traditional and proprietary forms of electronic commerce, such as ElectronicData Interchange (EDI), and thus offer buyers and manu-facturers a unique opportunity. More importantly, over half of all Internet users are expected to be business users [3].As more business users access the Internet, the attractive-ness of using web sites as an integrated marketing com-munication medium increases. The growth and uniquecapabilities of web sites present the opportunity for manu-facturers to develop a relatively cost-effective channel tocommunicate directly with customers that use the Internet.In the physical marketplace (outside cyberspace), manu-facturers use a variety of marketing communications activ-ities to communicate with customers and stakeholders.While the potential is evident, it is not clear whether manufacturers leverage that potential by utilizing a broad,rather than narrow, range of marketing communications onweb sites. As a result of the time and effort involved in website development, it is likely that Fortune 500 firms would be most likely to have sufficient resources to engage in fullyfeatured web sites for marketing communications.While Fortune 500 manufacturers may have adequateresources, all of them do not engage in the same level andtypes of marketing communication activities on their websites. Our research results describe marketing communica-
0019-8501/02/$ – see front matter 
2001 Elsevier Science Inc. All rights reserved.PII: S0019-8501(01)00187-0* Corresponding author. Tel.: +1-704-687-4394; fax: +1-704-687-6463.
 E-mail addresses
: mlperry@email.uncc.edu (M. Perry),cbodkin@email.uncc.edu (C.D. Bodkin).
Tel.: +1-704-547-2741.Industrial Marketing Management 31 (2002) 133–144
tions trends and differences across Fortune 500 manufacturer web sites. The specific research questions we address are:1. Do Fortune 500 manufacturer web sites reflect thevariety of marketing communications activities usedin the physical marketplace?2. What are the dominant and rarely used marketingcommunications on Fortune 500 manufacturer websites?, and3. Are differences in web site marketing strategiesassociated with different manufacturer characteristicssuch as sales, R&D to sales ratio, and net income?We begin by first discussing the relevant literature thenthe research design, results, and lastly with the discussionand conclusion.
2. Literature review and conceptual definitions
We incorporate the relevant literature that focuses onmarketing communications, business-to-business marketing,and the unique aspects of web sites. The literature onmarketing communications, or the promotional mix, is wideand varied. Our focus is on the marketing communicationsliterature that defines and describes promotional mix activ-ities and variations in use. Components of the marketingcommunications mix for web sites include: (1) advertising,(2) sales promotions, (3) public relations, and (4) direct marketing [4].
2.1. Advertising 
The first promotional tool, advertising, occupies the samefunction in cyberspace (web sites) as in the physical market- place. The goals of advertising are to create awareness,communicate benefits, promote trial, and urge customersinto action [5]. Our definition of the content of communi-cations in web site advertising parallels van Waterschoot and Van den Botte’s [6] discussion of the promotion mix — the web site can communicate information about products, prices, and/or distribution. We also add general companyinformation to our definition of advertising content toacknowledge the potential role of institutional advertising.Advertising messages can contain company- and/or  product-specific content. Product-specific content includes brand images and trademarks, as well as product benefits,quality, and/or features. A corporate web site can provide avariety of information such as details about product lines,specific products, product use, product benefits, prices, anddistribution options (availability of products from variousintermediaries). Company information includes compo-nents such as tag lines and corporate logos. For example,Con Agra’s web site prominently displays their tag line‘‘Across the food chain — around the world.’’ The needfor corporate and product brand building advertising in business-to-business is at least as great as it is in consumer markets (Warman).
2.2. Sales promotion
Advertising is but one part of the promotional mix; sales promotions can also be offered and/or delivered via the website. The major sales promotion tools relevant to manufac-turer web sites include refunds/rebates, premium and spe-cialty offers, sampling, online demonstrations, and contestsand sweepstakes.Sales promotions have been given an increasing portionof the total communications budgets [cf. 5]. Some manu-facturers, like Procter and Gamble, have attempted to endsales promotions by utilizing EDLP (everyday low pricing),they subsequently have reinstituted sales promotion practi-ces [5]. If web site promotional efforts mirror the physicalworld, we would expect to see relatively frequent use of sales promotion on Fortune 500 manufacturer web sites.
2.3. Public relations
The third promotional tool, public relations, includesnews (e.g., press releases), speeches, educational programs, public-service activities, and lobbying or cause-relatedinformation. Significant debate exists within the marketingcommunity about the impact of public relations activities oncustomer choice. Therefore we include public relations for completeness but it is not a focal point for our current study.
2.4. Direct marketing 
The final type of communication utilized on a corporateweb site is direct marketing. Direct marketing takes twoforms. First, a manufacturer can engage in electronic com-merce by providing customers with the ability to purchase products online through the web site (Internet).One might expect limited direct marketing activities onmanufacturers’ web sites because EDI use precedes web siteelectronic commerce (Internet). While EDI has been usedsuccessfully by some firms, only a small percentage of UScompanies utilize EDI [7]. EDI often requires proprietarysoftware and hardware and thus can be prohibitivelyexpensive for many manufacturers and more importantlycustomers [8]. As a result the penetration and adoption of EDI across the business customer base is low. Consequently,we would not expect EDI to supplant the need for Internet or web site-based electronic commerce.In addition to EDI, intranets and extranets may supplant the use of Internet web sites as direct marketing options.However, as with EDI, the adoption rate for intranets andextranets is relatively low. A recent study of extranet usagein the US and Canadian forest products industries foundonly a 10% penetration rate for extranets [9]. Intranets can be expensive in the short term while a manufacturer’s website has relatively low initial and ongoing costs for custom-
 M. Perry, C.D. Bodkin / Industrial Marketing Management 31 (2002) 133–144
ers [10]. As a result, we would expect manufacturers acrossthe Fortune 500 to actively engage in electronic commerce(online ordering) on their web sites.The ability to develop successful online ordering pro-cesses is undoubtedly related to the specific competencies of manufacturers. Manufacturers with effective offline order fulfillment processes should be better positioned to transfer that competency to online ordering. Thus manufacturers that effectively manage the offline order fulfillment processwould be more inclined to engage in online ordering.Inventory turnover can be considered one outcome thareflects the effectiveness of order fulfillment processes.Consequently, we would expect more frequent implementa-tion of online ordering for manufacturers with higher inventory turnover.The second form of direct marketing, customer service,includes any direct marketing activity that involves auxiliaryservices, such as product availability, purchases/account activity, billing and returns, product use, delivery, or prob-lems [11]. Customer service, whether online or offline, isoften the most important influence on customers’ evaluationof suppliers [12,13].
2.5. Marketing communications in the marketplaceversus cyberspace
In summary, the full-range of promotional tools on websites includes advertising, sales promotion, public relations,and direct marketing. The synergy among promotional toolsin the physical marketplace is quite evident; however, it isunclear whether that synergy is capitalized upon withmanufacturer web sites. If such synergies are desired,understanding the
range of marketing communica-tions via web sites becomes even more critical.One might expect the use of a variety of promotionaltools on web sites to compare similarly to the variety of various promotional tools used in the physical marketplace.However, the visibility of web sites to competitors andrelatively low cost of imitation for competitors may present formidable disincentives for manufacturers. Industries that lack strong patent protection and have low costs of imitationmake the initial costs of innovation unrecoverable. As aresult, firms are slow to adopt innovations [14].In addition to the possible disincentives for innovativeweb sites, it is also likely that large companies, like Fortune500 manufacturers, succumb to inertia. Such inertia happenswhen companies are successful and do not actively seek innovations [14]. Web sites that provide an extensive varietyof marketing communications activities can be viewed as aform of innovation. Having made it on the Fortune 500 list,Fortune 500 manufacturers may think of themselves as‘successful.’Accordingly, Fortune 500 manufacturersmay perceive less need to use a variety of promotionalactivities on the web sites (innovate).The indeterminate nature of cost/benefit analysis for innovative use of web sites may also contribute to a lack of innovation on web sites. The magnitude of and specific benefits from a broad use of web site marketing commu-nications have not been substantiated in rigorous studiesacross multiple industries. One survey of 150 companies by Forrester suggested broad categories of benefits, suchas cost savings, decreases on time to process orders, andthe like. However, most benefits are communicated viaanecdotal success stories of companies like Cisco andDell [15].All manufacturers may not utilize the full range of marketing communications because the magnitude of the benefits are unclear while the human and financial invest-ments in corporate web sites is relatively easy to quantify[16]. Quaker estimates they spent US$65,000 for first year design and maintenance of their web site and that it takestwice as much time and effort to respond to an email relativeto a 1-800 call [17]. The costs of implementing a web sitethat encompasses a broad range of marketing communica-tions are indisputable while the magnitude of the benefits toa manufacturer may be extremely unclear.As a result of inertia, competitive disincentives, andvague cost/benefit analysis, we would expect to see twotrends for marketing communications on manufacturers’web sites. First, there may be no significant relationship between measures of success, such as sales and net incomeand the use of specific promotional activities on web sites.Second, manufacturers may use a very limited subset of the possible range of promotional activities on web sites, thusminimizing their investments in web site innovations.
2.6. Unique aspects of web sites
Before discussing the results of our analysis it isimportant to categorize the unique characteristics of websites and consider how the use of these unique character-istics might relate to company characteristics. R&D repre-sents a basic source of technological knowledge [18]. R&Dintensity, usually measured as a ratio of R&D to sales,represents a company characteristic that has been related tovarious types of innovativeness such as product innova-tions [19], computerization in manufacturing [20], and productivity (process) growth [21]. Manufacturers that invest in relatively more R&D would be more inclined todevelop and use technological innovations, such as themore sophisticated information technology functions of web sites (unique characteristics). Firms exhibiting sub-stantial technological proclivity would be most likely tofully utilize the unique characteristics of web sites. Amanufacturer’s level of R&D expenditures can serve as a proxy for technological know-how so we would expect greater use of unique web site characteristics with firms that spend more in R&D.To fully leverage a web site for marketing communica-tions, a manufacturer must understand and be able to usethose characteristics of web sites that cannot be as easilyreplicated in the offline marketing communications. In
 M. Perry, C.D. Bodkin / Industrial Marketing Management 31 (2002) 133–144

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