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Fortune 500 manufacturer web sites Innovative marketing strategies or cyberbrochures?
Monica Perry, Charles D. Bodkin*,1
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
Abstract 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 they choose to, manufacturers can use their web sites not only to conduct electronic commerce but also to engage in a wide range of marketing communications. Marketing communication activities include advertising, sales promotion, public relations, and direct marketing. The results of our content analysis of 188 Fortune 500 manufacturer web sites indicated that few manufacturers use a broad range of marketing communications activities. Analysis of differences in the use of marketing communications on web sites suggests that some aspects of web site marketing communications differ based on manufacturer characteristics such as sales, R&D to sales ratio, and net income. D 2001 Elsevier Science Inc. All rights reserved.
Keywords: Internet; Marketing; Electronic commerce; Business to business; B2B; Web sites; Manufacturer; Statistical analysis; Communications; Promotional mix; Cyberspace; Studies; Performance evaluation
1. Introduction Forecasts for business-to-business electronic commerce over the next few years are in the trillions. Forrester Research  forecasts US$2.7 trillion in sales from business-to-business electronic commerce in 2004 (United States). International electronic commerce is also expected to experience explosive growth in regions such as Asia and Latin America [1,2]. Manufacturers represent a significant portion of businessto-business activity and their web sites an integral component of business-to-business electronic commerce. Should they choose, manufacturers can communicate directly with potential customers by utilizing a broad range of marketing communications via their web sites in addition to conducting electronic commerce. Web sites differ from traditional and proprietary forms of electronic commerce, such as Electronic
* Corresponding author. Tel.: +1-704-687-4394; fax: +1-704-6876463. E-mail addresses: email@example.com (M. Perry), firstname.lastname@example.org (C.D. Bodkin). 1 Tel.: + 1-704-547-2741.
Data Interchange (EDI), and thus offer buyers and manufacturers a unique opportunity. More importantly, over half of all Internet users are expected to be business users . As more business users access the Internet, the attractiveness of using web sites as an integrated marketing communication medium increases. The growth and unique capabilities of web sites present the opportunity for manufacturers to develop a relatively cost-effective channel to communicate directly with customers that use the Internet. In the physical marketplace (outside cyberspace), manufacturers use a variety of marketing communications activities 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 on web sites. As a result of the time and effort involved in web site development, it is likely that Fortune 500 firms would be most likely to have sufficient resources to engage in fully featured web sites for marketing communications. While Fortune 500 manufacturers may have adequate resources, all of them do not engage in the same level and types of marketing communication activities on their web sites. Our research results describe marketing communica-
0019-8501/02/$ – see front matter D 2001 Elsevier Science Inc. All rights reserved. PII: S 0 0 1 9 - 8 5 0 1 ( 0 1 ) 0 0 1 8 7 - 0
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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 the variety of marketing communications activities used in the physical marketplace? 2. What are the dominant and rarely used marketing communications on Fortune 500 manufacturer web sites?, and 3. Are differences in web site marketing strategies associated with different manufacturer characteristics such as sales, R&D to sales ratio, and net income? We begin by first discussing the relevant literature then the research design, results, and lastly with the discussion and conclusion.
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 web site. The major sales promotion tools relevant to manufacturer web sites include refunds/rebates, premium and specialty offers, sampling, online demonstrations, and contests and sweepstakes. Sales promotions have been given an increasing portion of the total communications budgets [cf. 5]. Some manufacturers, like Procter and Gamble, have attempted to end sales promotions by utilizing EDLP (everyday low pricing), they subsequently have reinstituted sales promotion practices . If web site promotional efforts mirror the physical world, 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, includes news (e.g., press releases), speeches, educational programs, public-service activities, and lobbying or cause-related information. Significant debate exists within the marketing community about the impact of public relations activities on customer choice. Therefore we include public relations for completeness but it is not a focal point for our current study. 2.4. Direct marketing
2. Literature review and conceptual definitions We incorporate the relevant literature that focuses on marketing communications, business-to-business marketing, and the unique aspects of web sites. The literature on marketing communications, or the promotional mix, is wide and varied. Our focus is on the marketing communications literature that defines and describes promotional mix activities and variations in use. Components of the marketing communications mix for web sites include: (1) advertising, (2) sales promotions, (3) public relations, and (4) direct marketing . 2.1. Advertising The first promotional tool, advertising, occupies the same function in cyberspace (web sites) as in the physical marketplace. The goals of advertising are to create awareness, communicate benefits, promote trial, and urge customers into action . Our definition of the content of communications in web site advertising parallels van Waterschoot and Van den Botte’s  discussion of the promotion mix — the web site can communicate information about products, prices, and/or distribution. We also add general company information to our definition of advertising content to acknowledge 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 a variety of information such as details about product lines, specific products, product use, product benefits, prices, and distribution options (availability of products from various intermediaries). Company information includes components 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 need for corporate and product brand building advertising in
The final type of communication utilized on a corporate web site is direct marketing. Direct marketing takes two forms. First, a manufacturer can engage in electronic commerce by providing customers with the ability to purchase products online through the web site (Internet). One might expect limited direct marketing activities on manufacturers’ web sites because EDI use precedes web site electronic commerce (Internet). While EDI has been used successfully by some firms, only a small percentage of US companies utilize EDI . EDI often requires proprietary software and hardware and thus can be prohibitively expensive for many manufacturers and more importantly customers . 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 and extranets is relatively low. A recent study of extranet usage in the US and Canadian forest products industries found only a 10% penetration rate for extranets . Intranets can be expensive in the short term while a manufacturer’s web site has relatively low initial and ongoing costs for custom-
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ers . As a result, we would expect manufacturers across the Fortune 500 to actively engage in electronic commerce (online ordering) on their web sites. The ability to develop successful online ordering processes 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 process would be more inclined to engage in online ordering. Inventory turnover can be considered one outcome that reflects the effectiveness of order fulfillment processes. Consequently, we would expect more frequent implementation of online ordering for manufacturers with higher inventory turnover. The second form of direct marketing, customer service, includes any direct marketing activity that involves auxiliary services, such as product availability, purchases/account activity, billing and returns, product use, delivery, or problems . Customer service, whether online or offline, is often the most important influence on customers’ evaluation of suppliers [12,13]. 2.5. Marketing communications in the marketplace versus cyberspace In summary, the full-range of promotional tools on web sites includes advertising, sales promotion, public relations, and direct marketing. The synergy among promotional tools in the physical marketplace is quite evident; however, it is unclear whether that synergy is capitalized upon with manufacturer web sites. If such synergies are desired, understanding the possible range of marketing communications via web sites becomes even more critical. One might expect the use of a variety of promotional tools 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 and relatively low cost of imitation for competitors may present formidable disincentives for manufacturers. Industries that lack strong patent protection and have low costs of imitation make the initial costs of innovation unrecoverable. As a result, firms are slow to adopt innovations . In addition to the possible disincentives for innovative web sites, it is also likely that large companies, like Fortune 500 manufacturers, succumb to inertia. Such inertia happens when companies are successful and do not actively seek innovations . Web sites that provide an extensive variety of marketing communications activities can be viewed as a form of innovation. Having made it on the Fortune 500 list, Fortune 500 manufacturers may think of themselves as ‘‘successful.’’ Accordingly, Fortune 500 manufacturers may perceive less need to use a variety of promotional activities 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 communications have not been substantiated in rigorous studies across multiple industries. One survey of 150 companies by Forrester suggested broad categories of benefits, such as cost savings, decreases on time to process orders, and the like. However, most benefits are communicated via anecdotal success stories of companies like Cisco and Dell . All manufacturers may not utilize the full range of marketing communications because the magnitude of the benefits are unclear while the human and financial investments in corporate web sites is relatively easy to quantify . Quaker estimates they spent US$65,000 for first year design and maintenance of their web site and that it takes twice as much time and effort to respond to an email relative to a 1-800 call . The costs of implementing a web site that encompasses a broad range of marketing communications are indisputable while the magnitude of the benefits to a manufacturer may be extremely unclear. As a result of inertia, competitive disincentives, and vague cost/benefit analysis, we would expect to see two trends for marketing communications on manufacturers’ web sites. First, there may be no significant relationship between measures of success, such as sales and net income and 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, thus minimizing their investments in web site innovations. 2.6. Unique aspects of web sites Before discussing the results of our analysis it is important to categorize the unique characteristics of web sites and consider how the use of these unique characteristics might relate to company characteristics. R&D represents a basic source of technological knowledge . R&D intensity, usually measured as a ratio of R&D to sales, represents a company characteristic that has been related to various types of innovativeness such as product innovations , computerization in manufacturing , and productivity (process) growth . Manufacturers that invest in relatively more R&D would be more inclined to develop and use technological innovations, such as the more sophisticated information technology functions of web sites (unique characteristics). Firms exhibiting substantial technological proclivity would be most likely to fully utilize the unique characteristics of web sites. A manufacturer’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 communications, a manufacturer must understand and be able to use those characteristics of web sites that cannot be as easily replicated in the offline marketing communications. In
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particular, marketing managers can take advantage of the highly interactive nature of web sites by recognizing that web site users are much more active acquirers of information . Thus we can categorize corporate web sites based on the ability to (1) customize the information acquisition with interactive functions, such as pull-down menus, searches, and screen specialization; (2) provide feedback mechanisms; and (3) convey messages with multimedia capabilities. Each of these functions is discussed below. 2.6.1. Interactive functions Customizing the information acquisition process is particularly critical given the possibility of information overload. The potential to provide ever-increasing amounts of information via web sites sets up the distinct possibility of information overload for web site visitors. One of the main barriers to marketing on the Internet is a concern for information overload . Web sites can provide such functions as drop-down menus, screen specialization, site maps, and search functions in an attempt to minimize information overload. 2.6.2. Feedback mechanisms A second unique characteristic of web sites is the enhanced ability for two-way communications between site users and the manufacturer. A web site can provide potential customers with information, but also can provide potential customers the opportunity to exchange information with the manufacturer. Therefore, we include feedback mechanisms such as direct email links, signups, surveys, and questionnaires. 2.6.3. Multimedia capabilities A third characteristic of web sites is the ability to provide static and moving text and images. However, some companies may view their web site as merely an electronic version of marketing communications done in print media. The web site then becomes just another channel to communicate the same marketing information provided in print (cyberbrochures). In a study of Australian companies using web sites, Leong et al.  found that firms considered web sites more like print media than television. Respondents considered the web a particularly good medium for relaying detailed and large quantities of information rather than being good at conveying emotion. However, even in business-tobusiness advertising photographs and illustrations (images) increase readership of advertisements . Most businessto-business firms use photographs and illustrations in print advertisements . The frequent use and effectiveness of images in advertising is unmistakable. Accordingly, even if manufacturers used web sites as cyberbrochures we would expect most to use visuals. Rather than using visuals on web sites in a way similar to print ads, some manufacturers may take full advantage of the uniqueness of the web to communicate marketing
information in different way. Web sites have the ability to convey animated text, images, and sound, more akin to television than print. 2.7. Additional literature on web site use and marketing The literature on marketing communications and web sites is emerging, with some research investigating different types of marketing communications and other research describing web site activities and perceptions. For example, Ghose and Dou  found that the more interactive a web site the more likely the web site was included in the Lycos Top 5% Sites list (proxy for web site quality). Many companies may be convinced of the need for a web site, but unclear about how to utilize the web site in terms of marketing communications . Consumers perceive advertisers with web addresses as more customer-oriented, responsive, and sophisticated , and that same perception can be extended to business customers. In fact, given the
Table 1 Summary of manufacturers by SIC SIC major group classification 20 21 22 23 Frequency (n) 25 1 1 1
Division D: manufacturing Food and kindred products Tobacco products Textile mill products Apparel and other finished products made from fabrics and similar materials Lumber and wood products, except furniture Furniture and fixtures Paper and allied products Printing, publishing, and allied industries Chemicals and allied products Petroleum refining and related industries Rubber and miscellaneous plastics products Leather and leather products Stone, clay, glass, and concrete products Primary metal industries Fabricated metal products, except machinery and transportation equipment Industrial and commercial machinery and computer equipment Electronic and other electrical equipment and components, except computer equipment Transportation equipment Measuring, analyzing, and controlling instruments; photographic, medical and optical goods; watches and clocks Miscellaneous manufacturing industries Total
24 25 26 27 28 29 30 31 32 33 34
3 4 12 8 26 12 3 0 3 9 6
M. Perry, C.D. Bodkin / Industrial Marketing Management 31 (2002) 133–144 Table 2 Components listed by usage frequency on web sites Percentage (%) Top-third 1 2 3 4 5 6 Logos About us Legal News-related Product list buttons Careers Total 175 172 140 135 134 126 882 93.1 91.5 74.5 71.8 71.3 67.0 Table 2 (continued )
Percentage (%) 56 57 58 59 60 61 62 63 64 65 66 Apply for an account Explanation of buttons Online account information Surveys Links to nearest dealer Apply for password Coupons Number of visitors Quizzes Welcome button Unrelated advertising Total Total number of individual components 4 4 4 4 2 1 1 1 1 1 0 1112 3156 2.1 2.1 2.1 2.1 1.1 0.5 0.5 0.5 0.5 0.5 0.0
123 114 112 112 107 98 95 93 90 81 70 67 1162
65.4 60.6 59.6 59.6 56.9 52.1 50.5 49.5 47.9 43.1 37.2 35.6
62 61 60 57 56 52 49 48 45 44 44 42 40 35 33 31 29 24 24 22 21 21 19 17 15 15 14 14 13 13 13 13 12 11 8 7 5
33.0 32.4 31.9 30.3 29.8 27.7 26.1 25.5 23.9 23.4 23.4 22.3 21.3 18.6 17.6 16.5 15.4 12.8 12.8 11.7 11.2 11.2 10.1 9.0 8.0 8.0 7.4 7.4 6.9 6.9 6.9 6.9 6.4 5.9 4.3 3.7 2.7 (continued )
greater level of sophistication of many business customers (relative to consumers), their perceptions are likely to be even more pronounced. Consequently, manufacturers believe that some type of web site presence is necessary. While companies may have a web site presence, only those that believe it provides a competitive advantage would use their web site across a variety of marketing communication activities. Bush et al.  found that while 78% of the companies had integrated the Internet with their marketing strategy, only 41% believed Internet marketing provided their companies with a competitive advantage. Hence, we anticipate observing differences in the breadth of marketing communications utilized on Fortune 500 manufacturer web sites.
3. Research design 3.1. Sample The sampling frame consisted of the top 500 revenue producing companies as identified by Fortune magazine’s web site during the period of mid-May to mid-July 1999 . This web site was also utilized to generate the URL addresses for the sample companies. From this population companies classified as manufacturers as defined by the standard industrial classification index (i.e., Division D) were included in the study. The selection process resulted in 188 companies that were suitable for this study. Of the 20 possible SIC Division D manufacturing classifications five were found to represent 61% of all companies in the division. SIC classifications with the highest representation include industrial and commercial machinery and computer equipment (i.e., 31 companies); chemicals and allied products (26 companies); food and kindred products (25 companies); transportation equipment (17 companies); and electronic and other electrical equipment and components, except computer equipment (16 companies). Table 1 includes a summary of the number of companies included in the study by SIC major group classifications.
M. Perry, C.D. Bodkin / Industrial Marketing Management 31 (2002) 133–144 Table 3 (continued ) Percentage of total (%) Percentage Percentage Yes (n) of components (%) of total (%) Apply for password Total Place and price Nearest dealer search Prices Links to nearest dealer Total Sales promotion General promotions Free gifts Games and sweepstakes Coupons Total 20 Advertising Links to other sites Highlights (what’s new, cool) Gallery Unrelated advertising Total Visuals Visuals Visuals Visuals Visuals Visuals Visuals Visuals Total 1 548 0.2 100.0 17
22 7 2 31
71.0 22.6 6.5 100.0
13 11 8 1 33
39.4 33.3 24.2 3.0 100.0
135 70 40 31 21 14 13 12 4 1 341
39.6 20.5 11.7 9.1 6.2 4.1 3.8 3.5 1.2 0.3 100.0
60 17 15 0 92
65.2 18.5 16.3 0.0 100.0
— — — — — — —
product continuous males females other flashing words moving words
112 81 67 57 56 48 42 463 3156
24.2 17.5 14.5 12.3 12.1 10.4 9.1 100.0
112 98 62 45 317
35.3 Grand total 30.9 19.6 14.2 100.0
3.2. Instrument development Content analysis of web sites has been used in previous research to examine the degree of interactivity within web sites [23,29] and web site advertising . In the current study a coding sheet was developed to allow for a content analysis of corporate web site components. The coding sheet was developed through an analysis of 50 randomly selected Fortune 500 corporate web sites. Since one of the goals of the current study was to identify immediate perceptions of corporate web sites, only the first screen of the web sites were analyzed. After reviewing these sites the authors identified 66 different web site components that were subsequently organized into nine comprehensive categories. Once an exhaustive list of potential web site components had been identified, a second set of 50 corporate web sites was utilized to test instrument reliability. Intercoder reliability for classification of items was 93.8%. Table 2 provides an overview of the individual components utilized within the study. The nine comprehensive categories identified in this study include web specific, public relations, shareholder information, company specific, product
172 126 95 90 61 33 29 24 24 21 13 688
25.0 18.3 13.8 13.1 8.9 4.8 4.2 3.5 3.5 3.1 1.9 100.0
Product specific Logos 175 Product list buttons 134 Tag line 93 Brands (trademarked) 49 Catalogs/Online ordering 44 Customer service 44 Online account information 4 Apply for an account 4
31.9 24.5 17.0 8.9 8.0 8.0 0.7 0.7 (continued )
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specific, place and price, sales promotion, advertising, and visuals. Table 3 provides an overview of individual items classified into the nine comprehensive categories along with the frequency of use for the items.
category include about us (i.e., information that tells about the company), careers, and divisional buttons. These three components account for 57% of all components used in this category. 4.2.5. Product-specific components This category includes nine components of which three account for approximately 73% of the total for this category. These three often-used components include logos, product list buttons, and the use of a tag line.
Table 4 ANOVA results by category (mean number of components per category) A. Net sales Fortune 500 Fortune 500 manufacturers manufacturers Level of higher sales lower sales F value significance 0.48 3.87 0.21 3.10 2.09 0.16 1.85 2.48 3.84 0.50 3.45 0.12 2.73 1.54 0.19 1.52 2.45 3.00 0.05 3.11 2.40 3.09 10.87 0.17 4.01 0.02 13.01 .82 .08 .12 .08 .00 .68 .05 .88 .00
4. Results The results will be discussed in three parts. First, overall web site characteristics are presented followed by analysis of web site components, and lastly differences between web sites of manufacturers classified by Fortune 500 rank. 4.1. Overall web site characteristics The two independent coders examined a total of 3156 individual components. Findings indicate that the top 50% of the Fortune 500 manufacturing companies account for approximately 63% (1988 of the 3156 items) of the total components identified in the study. In addition, approximately 9% (6 of the 66 categories) of the categories studied accounted for 28% of all components used (882 of the total 3156 components). 4.2. Comprehensive component categories Results are summarized below and a detailed analysis within each of the nine comprehensive component categories is presented in Table 3. 4.2.1. Web-specific components Fourteen components are included in this category and account for approximately 20% of total components identified. Within the category four components account for 75% of all components utilized in this category. These four components include legal, email/contact us, search, and site maps. 4.2.2. Public relations components This category accounts for 11% of the total number of web site components. While 10 components are included in this category, 3 of the components account for approximately 72% of the total. These often-used components include news-related, press releases, and educational. 4.2.3. Shareholder information components Only four components were used to develop this category. These items include shareholder information — other, financials, stock quotes, and annual reports. Shareholder information — other and financials account for approximately 66% of the total components found in this category. 4.2.4. Company-specific components This category includes 11 different components and accounts for 22% of all components identified in the study. The top three components identified by usage in this
Category Advertising Company specific Place and price Product specific Public relations Sales promotion Shareholder information Visuals Web specific B. Net Income
Category Advertising Company specific Place and price Product specific Public relations Sales promotion Shareholder information Visuals Web specific C. R&D expense to sales
Fortune 500 manufacturers higher net incomes 0.50 3.98 0.14 3.11 1.98 0.12 1.88 2.51 3.77
Fortune 500 manufacturers lower net Level of incomes F value significance 0.48 3.34 0.19 2.72 1.65 0.23 1.49 2.41 3.07 0.05 7.14 0.73 3.47 3.87 2.28 5.76 0.20 8.61 .82 .01 .39 .06 .05 .13 .02 .65 .00
Category Advertising Company specific Place and price Product specific Public relations Sales promotion Shareholder information Visuals Web specific
Fortune 500 manufacturers higher R&D expense to sales ratio 0.43 4.12 0.24 3.43 1.93 0.20 1.72 2.72 3.93
Fortune 500 manufacturers R&D expense Level of to sales ratio F value significance 0.57 3.53 0.12 2.70 1.93 0.15 1.73 2.32 3.18 1.64 4.65 2.71 10.91 0.00 0.36 0.01 2.91 8.71 .20 .03 .10 .00 1.00 .55 .94 .09 .00
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4.2.6. Visuals While many companies incorporated visuals into their web sites, the percentage of visual components identified accounted for 15% of the total number of components in the study. Seven visual components were analyzed in the study and include product, continuous, males, females, other, flashing words, and moving words. The component with the greatest usage was product visuals, which accounted for approximately 25% of the components classified in this category. In addition to the component categories discussed, three other categories each accounted for 3% or less of the total number of components observed in this study. These three categories include place and price, sales promotion, and advertising. 4.3. Differences between manufacturers Following the descriptive statistics an analysis of variance was utilized to examine the impact of the categories on web site development across the Fortune 500 manufacturers. The 188 manufacturing companies were divided into two equal groups based on sales, net income, and R&D expenditures as a percentage of sales (median split). First companies were ranked according to gross sales. Sales for the 188 companies ranged from US$2.7 billion to US$158.5 billion with a median of US$6.59 billion. An analysis of variance indicated that of the nine comprehensive component categories three were found to be significantly different. Companies with higher gross sales were significantly more likely to utilize public relations ( P value = .00), shareholder information ( P value = .05), and web-specific ( P value = .00) components in their web sites
Table 5 ANOVA results by category (mean number of components per category) Two-digit SIC Code 20 Advertising Company specific Place and price Product specific Public relations Sales promotion Shareholder information Visuals Web specific 0.60 2.80 0.04 2.56 1.88 0.44 1.80 2.04 3.24 25 0.25 3.75 0.00 2.00 0.75 0.00 1.50 2.25 2.50 26 0.33 2.92 0.08 2.50 1.67 0.08 1.42 2.42 2.92 27 0.63 3.38 0.00 1.63 1.25 0.00 1.88 2.25 3.00 28 0.31 4.15 0.12 2.73 2.27 0.19 1.96 2.77 3.42 29 0.50 3.92 0.08 3.25 2.25 0.00 2.33 2.50 4.00 33 0.78 4.44 0.00 2.00 1.89 0.00 2.22 2.22 3.33
34 0.50 2.83 0.00 2.50 1.50 0.00 1.67 2.83 3.50
35 0.48 4.10 0.42 4.00 1.65 0.39 1.16 2.29 3.87
36 0.38 4.13 0.25 3.06 1.75 0.00 1.69 2.56 3.69
37 0.47 3.00 0.24 2.47 1.82 0.00 1.76 2.47 3.18
38 0.75 4.63 0.00 3.13 2.25 0.13 1.75 3.50 3.50
F value 0.72 2.31 2.04 3.91 1.26 1.86 1.41 0.80 0.67
Level of significance .72 .01 .03 .00 .25 .05 .17 .64 .76
SIC Code 20 Food and kindred products 25 Furniture and fixtures 26 Paper and allied products 27 Printing, publishing, and allied industries 28 Chemicals and allied products 29 Petroleum refining and related industries 33 Primary metal industries 34 Fabricated metal products, except machinery and transportation equipment 35 Industrial and commercial machinery and computer equipment36Electronic and other electrical equipment and components, except computer equipment 37 Transportation equipment 38 Measuring, analyzing, and controlling instruments; photographic, medical and optical goods; watches and clocks
M. Perry, C.D. Bodkin / Industrial Marketing Management 31 (2002) 133–144 Table 6 Chi-square analyses of online ordering Online ordering Yes Fortune 500 manufacturers Higher sales Lower sales Higher net incomes Lower net incomes Higher turnover Lower turnover Higher R&D expense to sales ratio Lower R&D expense to sales ratio SIC major group classification 20 Food and kindred products 25 Furniture and fixtures 26 Paper and allied products 27 Printing, publishing, and allied industries 28 Chemicals and allied products 29 Petroleum refining and related industries 33 Primary metal industries 34 Fabricated metal products, except machinery and transportation equipment 35 Industrial and commercial machinery and computer equipment 36 Electronic and other electrical equipment and components, except computer equipment 37 Transportation equipment 38 Measuring, analyzing, and controlling instruments; photographic, medical and optical goods; watches and clocks 28 19 30 17 24 23 30 11 No 66 75 64 77 70 71 75 32 F value (Pearson c2) 2.30 4.79 0.03 0.14
Level of significance .18 .04 .50 .84
5 0 1 1 5 2 0 2 16 4 1 2
20 4 11 7 21 10 9 4 15 12 16 6
company-specific and place and price components whereas manufacturers of products oriented towards final consumers (e.g., SIC Codes 20 and 35) were more likely to utilize product-specific and sales promotion components. The importance of electronic commerce in business-tobusiness markets is indisputable. For that reason, we used a chi-squared test of differences for the use of online ordering between groups of manufacturers based on sales, net income, inventory turnover, R&D expenses to sales ratio, and SIC classifications (Table 6). The results indicated that there was no significant difference in the frequency of online ordering between manufacturers with higher and lower inventory turnover, higher and lower sales, or between higher and lower R&D expense to sales ratio. However, we did find that manufacturers with higher net incomes were significantly more likely to engage in online ordering, and that there was a significant difference in the frequency of use of online ordering across industries (SIC classification).
5. Discussion The overall results suggest that, in aggregate, manufacturers are only scratching the surface in terms of marketing communication web site activities. Most manufacturers used only 9% (6 out of 66) of the possible web site components. The use of a variety of marketing communications activities on web sites is only beginning to emerge.
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With respect to the use of different types of web site components, much of the web site activity involves corporate self-promotion and web site navigation. First, it is interesting to note that four of the most likely utilized components were logos, about us (i.e., company information), legal information, and news-related information. These results suggest that, with respect to corporate branding, web site advertising is not particularly consistent with advertising in the physical marketplace. While brands and trademarks for individual products and product lines are more common than institutional advertising in the physical marketplace, we fail to find a similar occurrence on manufacturers’ web sites. Manufacturer’s web sites, rather than focusing on specific products and brands, appear to focus much more on institutional advertising (logos and company information). Second, the next most frequently used set of components is web site navigation. Over 50% of manufacturers in the study incorporated search and site map functions. While more than half recognize the importance of helping users navigate the virtual space, a considerable percentage do not. The result is even more curious given the prevalence of web site addresses in firms’ offline marketing vehicles. Web site addresses are commonly listed on business cards, brochures, and TV and print ads. Apparently, many companies are more interested in generating awareness of the web site than ensuring that users can easily navigate the site once they arrive. Given the difficulty that users are likely to experience in a hyperlinked environment, one would expect that nearly all manufacturers would provide such a basic function. Such neglect of basic user needs seems to reflect a lack of concern or understanding of customers that would use the web site. As with web site navigation, over half of the manufacturers incorporated product list buttons, product visuals, news, and shareholder information. It is interesting to observe how the manufacturers are using web sites not just for communications with customers, but with many different target audiences. Many of the web sites provide direction to potential employees (career) as well as buyers (product list buttons). Rather than simply being a vehicle for communicating with customers, manufacturers’ web sites attempt to communicate with multiple audiences. The key in the future will be the degree to which a manufacturer’s web site effectively delivers desired information to multiple audiences. One method of delivering effective information quickly is to provide features that enable the user to freely explore the site. In other words, should a company impose predetermined navigational paths, such as product list buttons, or allow users to ‘‘free-fall’’ through a site? Free-falling allows users immediate access to information through the use of comprehensive search engines and intuitively organized site maps. While a web savvy user may prefer ‘‘free-fall,’’ a less experienced web user or ‘‘newbie’’ may need and prefer predetermined paths. Experienced users are likely to have the ability and vocabulary to use keyword searches effectively, while a newbie may need information organized for him or her to effec-
tively utilize a web site. The smart manufacturer must determine which type is the predominant audience for its web site and design accordingly. While we have tried to identify both the commonly used and infrequently used web site promotional activities, we also found differences between groups of manufacturers. Larger manufacturers (based on revenue and net income) engaged in significantly more web-specific and public relations activities than smaller manufacturers. If we consider larger manufacturers more successful than smaller manufacturers, then larger manufacturers would be more inclined to communicate that success to the investors, the community at large, and customers. Having greater financial resources at their disposal, larger manufacturers are likely to be more eager and able to develop web-specific features. As we expected, firms with a greater R&D to sales ratio (R&D intensity) utilized web-specific components more than firms with a lower ratio. We recognize that the ratio is a general proxy for technological proclivity and is not specific to Internet technology. Nonetheless, the R&D ratio seems to be indicative of some latent characteristics that drives technology-related marketing activities. Similarly, R&D intensity was positively related to the use of product- and company-specific information. Returns on R&D investments can be long-term and tenuous, thus such firms may have a greater desire to maintain a positive corporate image with potential customers and shareholders. In a similar manner, firms that invest a greater relative amount in R&D may be eager to communicate the outputs of R&D, one of which is product innovations. Thus, web sites provide the ability to quickly and easily communicate volumes of product- and company-specific information to ‘‘show off’’ products and reinforce the need for relatively high levels of R&D expenses. Surprisingly, the use of online ordering did not differ for manufacturers based on sales, inventory turnover, or R&D intensity. Although anticipated, we did not observe greater use of online ordering for manufacturers that were larger (sales), better at managing inventory (higher inventory turnover), or had relatively larger investment in R&D. The effectiveness of online ordering often requires substantial changes to order fulfillment procedures and processes and technological know-how. However, we did not have a measure of effectiveness, we simply measured whether or not a firm engaged in online ordering. While we would expect that the decision to engage in online ordering would be affected by a firm’s belief in its effectiveness, that may not be the case. A plausible explanation for our results is that the motivations for online ordering are made irrespective of the inherent competencies of the manufacturers. Interestingly, we did not find significant industry differences in the use of five of the nine web site components. The results suggest that there are some basic uses of web sites that are relevant regardless of the differences in industry-specific characteristics. The use of advertising represents such a basic marketing tool in the offline envir-
M. Perry, C.D. Bodkin / Industrial Marketing Management 31 (2002) 133–144
onment that we expect nearly every firm regardless of industry to engage in some type of advertising. In parallel, it seems that advertising, public relations and investor relations are perceived as basic marketing tools in the online environment regardless of industry. However, we did find significant industry differences in other categories, such as place and price information and sales promotion. While some marketing components may transcend industries, others may provide the chance for differentiation. A firm within a particular industry may be able to successfully differentiate itself through aggressive use of components that competitors use infrequently. Similarly, in identifying the potential capabilities of web sites as a marketing communication medium, it is critical to look outside one’s own industry to identify potential web site marketing uses. Industry myopia with respect to web site marketing communications may be detrimental.
more effort to predict and monitor how both large and small competitors will use their web sites.
7. Future research The focus of our study has been to make an important first step in characterizing the use of manufacturers’ web sites for marketing communication. We believe Internet marketing communication strategy possesses considerable potential to advance the field of marketing research and practice. Further research along three dimensions would extend our research and benefit the emerging field of Internet marketing. First, we recommend developing a multifaceted measure of R&D and investigating the correspondence between R&D and marketing. Further examination of the impact of R&D on Internet marketing practice might reflect specific R&D investments relating to process innovations rather than product innovations. Measurements of process R&D investments could be further refined to reflect information technology-related R&D and other types of applied R&D. In addition, the wealth of existing research on the interface between R&D and marketing could be adapted to help assess the effects on Internet marketing activities. A second potentially fruitful area for further research involves collecting firm-specific data on extranet and EDI penetration to illustrate how the absence or existence of buyer – supplier relationships affects Internet marketing communications. Perhaps, manufacturers with greater investment in extranets and EDI perceive online ordering via the Internet as a threat to maintaining exit barriers for existing customers. Conversely, manufacturers with less investment in extranets and EDI may perceive online ordering as an opportunity to gain competitive advantage. While seemingly straightforward, environmental variables such as industry concentration and customer heterogeneity may moderate the relationship between existing investments in competing technologies and Internet marketing activities. Lastly, while our analysis provides a description of what manufacturers use on their web sites, we do not address the use or effectiveness of web site marketing communications. Observational data on users’ actual behavior is available with server log data. Clickstream analysis of server log data could be an initial gauge of the effectiveness of particular types of marketing communications. For example, while almost all manufacturers offer ‘‘About Us’’ information, we suspect that few users have any interest in such information. Through analysis of such clickstream analysis both practitioners and researchers could begin to tie specific marketing communications activities to web site effectiveness. The relatively young field of Internet marketing presents researchers with an exciting opportunity to offer understanding and substantial guidance for marketing practitioners. Future research will be well served if it can combine the existing marketing knowledge base with an in-depth appre-
6. Conclusion The implications of our study of Fortune 500 manufacturer web sites are twofold. First, few manufacturers use the full complement of marketing communication activities on their corporate web sites. A small percentage of the many possible marketing communication activities are currently being used. The importance of fully utilizing web site features becomes more important as more business people use the Internet. Being able to use a comprehensive and integrated marketing communications web site strategy to differentiate yourself from your competitors will become a necessity as more and more manufacturers use web sites to try and foster relationships with customers. The successful manufacturer will need to use all the strengths of the medium to beat the competition in attracting and maintaining customers. Second, the use of different components of web site marketing communications is fairly consistent across manufacturers regardless of sales, net income, and R&D intensity. Only a few web site components, such as web-specific functions and public relations information, differ between smaller and larger manufacturers. Within the range of manufacturers observed, it does not appear that innovative use of web sites is dependent on the size of the manufacturer. Two, somewhat competing conclusions can be drawn from our results. On the one hand, aggressive and forwardthinking manufacturers, regardless of size, may have a considerable opportunity to outmaneuver the competition by developing a comprehensive and well-integrated marketing communications strategy via their web site. On the other hand, predicting what competitors will offer on their web sites becomes more difficult. While competitors’ sales, R&D, and income data is relatively easy to acquire (e.g., CompuStat), such characteristics are not useful in predicting what competitors are likely to use on their web sites. As a result, a manufacturer may have to expend considerably
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