E-BUSINESS:

A guide to e-business strategy formulation

Edited by
Godwell Karedza
Elijah John

Printed by Chinhoyi University of Technology Printing Press

Private Bag 7724, Chinhoyi, Zimbabwe
Tel: +2636722203-5

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Copyright © Lambert Academic Publishing 2017

All rights reserved.

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 TABLE OF CONTENTS
CHAPTER ONE 1
Introduction 1
E-business defined 1
Perspectives of defining e-business 2
A brief history of e-commerce 2
Distinction and relationship between e-commerce and e-business 4
E-business compared to E-commerce 5
The E-Business Framework.......................................................................................................6
Supporting pillars of an E-business application:E-Commerce Applications: Issues and Prospects
6
Advantages and disadvantages of e-business 7
Tangible benefits of e-business 7
Intangible benefits of e-business7
Other Benefits of E-Business 8
Limitations of E-Business 8
CHAPTER TWO.....................................................................................................................10
Introduction 10
Why is using Internet important? 10
Strategic people in Internet development 10
Historical Developments of the Internet 12
Networks that form the Internet...............................................................................................12
Intranets 12
Extranets 13
Drivers of e- business adoption................................................................................................14
Summary of the main potential inhibitors to consumer adoption of e-commerce 15
SMEs and e-Business Adoption...............................................................................................16
Factors affecting electronic commerce adoption in small to medium enterprises..................16
Background of SMEs on the adoption of e-commerce 16
E-commerce and SMEs 17
Potential Benefits of E-commerce to SMEs 17
Preparation for e-commerce adoption by SMEs17
Globalisation and its impact on the adoption of e-commerce by SMEs18
The digital divide and its impact on e-commerce adoption by SMEs 18
Factors that affect e-commerce adoption by SMEs.................................................................18
Individual factors 18
Organizational Factors 19

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Technological factors 21
Environmental Factors 22
Strategies that can be implemented to foster e-commerce adoption by SMEs in a developing
country context.........................................................................................................................23
CHAPTER THREE..................................................................................................................26
DIGITAL PRODUCTS............................................................................................................26
Pricing strategies for digital products 26
TRADITIONAL MARKETING TECHNIQUES....................................................................28
DIGITAL MARKETING.........................................................................................................32
Digital marketing techniques 33
CHAPTER FOUR....................................................................................................................38
E-PAYMENT SYSTEMS........................................................................................................38
Electronic funds transfer (EFT) 38
Payment cards 38
Electronic cash /money 41
CHAPTER FIVE......................................................................................................................45
BUILDING A WEBSITE........................................................................................................45
The Concept of Designing a Website for E-commerce and its usability.................................45
Types of websites.....................................................................................................................45
Informational Website 45
Transactional Website 46
Interactive Website 46
How to build an attractive site.................................................................................................47
Components of a website 50
Corporate Web Site 52
Contents of a Corporate Web site 52
PORTAL..................................................................................................................................53
Types of Portals 53
SEARCH ENGINES................................................................................................................54
Working of search engines 55
Search Engine Optimisation 56
CHAPTER SIX........................................................................................................................58
Introduction..............................................................................................................................58
Definition of e-marketing 58
Advantages of introducing E-marketing in an organization 59
Strategic e-marketing planning 59
STRATEGIC E-MARKETING PLAN FORMULATION (SOSTAC Model).......................59

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 VIRAL MARKETING.............................................................................................................63
Types of viral marketing 63
When to use viral marketing 64
Negative aspects of viral marketing 65
How to manage the viral marketing process 66
CUSTOMER RELATIONSHIP MANAGEMENT (CRM)....................................................67
Introduction..............................................................................................................................67
Definition of Customer Relationship Management (CRM) 67
Customer Relationship Management (CRM) and the Internet................................................67
Customer acquisition 69
Customer retention 70
Customer extension 71
Benefits of e-CRM 71
The Difference between CRM and e-CRM 72
e-CRM techniques used to retain customers............................................................................72
e-CRM technologies.................................................................................................................72
Operational CRM 73
Analytical e-CRM 73
Collaborative e-CRM 73
The effectiveness of e-CRM techniques 76
Customer retention and Marketing tool 76
Challenges faced by firms in the adoption of e-CRM..............................................................79
CHAPTER EIGHT...................................................................................................................82
BUSINESS MODELS.............................................................................................................82
Types of E-business Models....................................................................................................82
Level of Commitment to E-Marketing.....................................................................................86
Types of E-Business Models under Different Levels of Commitment to IT adoption 87
M-COMMERCE BUSINESS MODELS.................................................................................90
The Network Operator Centric Model 91
The Service and content Aggregator Centric Model 92
The Service and Content Provider Centric Model 93
Factors Supporting M-Marketing 94
M-commerce and mobile marketing benefits 95
Key success factors of mobile commerce 95
Factors behind M-Pesa’s success 97
Criticism of the service 99
CHAPTER NINE...................................................................................................................100

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 INTERNET ADVERTISING................................................................................................100
Models of Internet Advertising 100
Benefits of Internet Advertising 101
Weaknesses of Internet Advertising 101
Emergence of Internet as a tool for competitive Advertising 102
CHAPTER TEN.....................................................................................................................103
SECURITY ISSUES ON THE INTERNET..........................................................................103
Three groups of cybercrime 103
Types of cybercrime...............................................................................................................103
PREVENTION OF CYBERCIME........................................................................................106
General information: 106
Preventive steps for organizations and government 107
Network Security 108
TYPICAL EXAMINATION QUESTIONS AND MODEL ANSWERS.............................108

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 CHAPTER ONE

Introduction

In the emerging global economy, e-commerce and e-business have increasingly become a
necessary component of business strategy and a strong catalyst for economic development. The
integration of information and communications technology (ICT) in business has revolutionized
relationships within organizations and those between and among organizations and individuals.
Specifically, the use of ICT in business has enhanced productivity, encouraged greater customer
participation, and enabled mass customization, besides reducing costs.

E-business defined

There are many different definitions of e-business all trying to bring about a better understanding
of what it is. It can be defined as the bringing into play of the internet to networks and give power
to business processes, electronic commerce (e-commerce), managerial communication,
partnership within a business and its potential customers, suppliers and all other stakeholders in
general.

“Consequently, e-business has implications for a range of issues affecting an

organization, including the adoption of technology, choice of business
models, economics, marketing, legal and security issues, management and
strategies for gaining a competitive advantage.” Combe (2006)

E-business and e-commerce are in many ways often used as one and the same yet there is a
distinction between the two in that e-commerce is perceived as a topic of e-business as noted by
Chaffey (2004). E-Business (electronic business) is, in its simplest form, the conduct of business
on the Internet. It has broader implications because it refers to not only buying and selling but
also servicing customers and collaborating with business partners.

According to IBM (www.ibm.com ) it is the transformation of key business processes through the
use of internet technologies. It is therefore, all electronically mediated information exchanges,
both within an organization and with external stakeholders to support a range of business
processes. These include marketing, manufacturing, R&D as well as inbound and outbound
logistics.

E Commerce refers to all electronically mediated information exchanges between an

organization and its stakeholders. Connecting critical business systems and constituencies directly
via the internet, extranets and intranets. Therefore it has to be viewed from both the supply and
demand perspectives (buy side e commerce and sell side e commerce).

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Perspectives of defining e-business

From a communication perspective

Electronic Business is the delivery of goods, services, information, or payments over

computer networks or by any other electronic means.

 From a business process perspective.

It is the application of technology toward the automation of business transactions and

workflow.

 From a services perspective.

Electronic Business is a tool that addresses the desire of firms, consumers, and management
to cut services costs while improving the quality of customer service and increasing the speed
of service delivery.

 From an online perspective.

Electronic Business provides the capability of buying and selling products and information
over the Internet and other online services.

 From a collaborative perspective.

E-business is the facilitator of for Inter-and Intra-organisational collaboration.

 From a community perspective.

It provides a gathering place for community members, to learn, transact, and collaborate.

A brief history of e-commerce

It is outside most people’s realization that e-commerce and its principal/discoverable technology
have been with us approximately for forty years. The expression e-commerce was initially
visualized to put in plain words the process of carrying out business transactions by electronic
means using technology from the Electronic Data Interchange (EDI) and Electronic Funds
Transfer (EFT). EDI is widely observed as the commencement of e-commerce. Huge and great
institutions have been investing and devoting in the development of EDI since sixties. It has not
achieved levelheaded reception until eighties. EDI is a set of standards built up in the 1960s to
swap business information and do transactions by electronic means effectively. Electronic Data
swapping permitted diverse companies to perform electronic transactions with one another.

The internet began and developed in 1969, when the Advanced Research Projects Agency (a
Department of Defense Organization in the USA) financed the research of computer set of

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connections or networking. The internet could have stopped like EDI without the coming out of
the World Wide Web in 1990s. The web became a well-liked majority medium (supposed as the
fourth standard medium in adding together print, radio and TV) in speed, which had by no means
been seen previously. The web users and contents were increasing at an increased pace. In
addition the ease of use of technical infrastructures, the reputation of the web is largely attributed
to the low cost access and straight forwardness of HTML authoring, which are the impediments
of EDI development. The internet and the web have prevailed over the technical difficulty of
EDI, but have failed to rectify the setback of time-consuming development of e-commerce
standards.

Another significant stage in the transformation and development of e-commerce was the
development of Mosaic Web Browser in 1992. The Web Brower was soon given the form of a
browser (NETSCAPE), which could be downloaded and was named Netscape.
The development of NAPSTER was one of the outstanding landmarks in electronic commerce. It
was an online function used to distribute music files free of charge. Numerous consumers used
the site and were dictating/ordering what they required from the industry. Napster permitted
public to download music from the Internet, whenever they wanted to, for free.

The development and reworked copy of DSL and Red hat Linux in that order again benefited the
course of online business deals. The year 2000 was the most important of coming together of
ADL and Time Warner, which ushered in another important step towards the development of e-
commerce. The worldwide attractiveness of the Internet has been the outcome in the constant
development and irresistible acceptance of e-commerce. E-commerce offers rich online
transaction know-how. Business-to-Business is the largest –commerce in the current time.
Consumer-to-Consumer and Peer-to-Peer are two imperative types of e-commerce.

Electronic Data Interchange

make possible
It makes possible the firms to
exchange business more rapidly,
more cheaply and precisely than
possible using paper supported
documents. The whole point of
EDI is to make possible your
company to communicate with
other applications that are always
on the distal (situated away from
the point of origin) end of some
long distance connection and
always “black boxes” from the
perspective of your own network
and business functions. EDI is the exchange of business papers in a standard, computer process,
across the world-accepted format between partners trading in buying and selling. It is a
customary/standard for the electronic business documents exchange, such as invoices and

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purchase orders. EDI comprises of unvarying/standardized electronic message arrangements for
common business documents such as purchase orders, request for quotation, bills, invoice and
similar documents. These electronic documents make it possible in one company to communicate
to computers in another company without bringing into being paper documents.

Benefits of EDI
 Processing costs are low
 Get better the overall quality of data
Be of assistance to reduce inventory
 Transmission of information from computer is computerized and data is entered only at
the source
 Computer dealings can be enhanced
 Business relations with trading partners can be enhanced

Working of EDI
1. Preparation of electronic documents
The first step in the progression of EDI is the collected works of information and data.
The way to gather the necessary information should not be different from the traditional
or customary system. On the other hand, instead of printing out the data on paper in
tradition, the method has to build an electronic file or database to store those data. In the
case of companies who by now using computer to give out their documents like
procurement orders, they may by now have some kind of databases, which store up that
information, and then they can begin with the next step described below.
2. Outward bound transaction
The next step is to interpret the electronic file in to a standard set-up according to the
requirement of the matching document. The ensuing data file should be full of a series of
prepared transactions connected to purchase order for example. If more than one
company is involved in the particular transaction, each file should be particular each of
them.
3. Communication
Then the computer should hook up and send out those files to the approved Value Added
Network (VAN) automatically. The VAN should then process each file and route the
suitable electronic mailbox according to the target in the file.
4. Inbound translation
The chosen company should be able to retrieve the file from their electronic mailboxes in
a steady period, and then turn around the process by interpreting the file from the
standard format into the specific format required by the company’s application software.
5. Processing the electronic documents
The inside application system of the selected company can process the acknowledged
documents now. All the effected documents matching to the received transactions should
use the same process or steps to transmit back to the transaction designer, the entire cycle
of the electronic data interchange can be finished.

Distinction and relationship between e-commerce and e-business

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Globally both the conditions can be substituted and having the same perception, that is, doing
business online. However, EB is the term, which is the resultant from e-commerce. There is slight
diversity between these two notions. Electronic commerce is a business to business (B2B)
enterprise meant at matching business operation documents on actual time or near actual time
basis between well-known trading associates such as suppliers, customers etc. E-commerce might
be measured as the use of the Internet as a company’s most important or exclusive doorway to its
customers. We have Amazon and e-Bay as good examples of successful online businesses.
The other side of the story is that e-business refers to companies for which Internet is one of more
than a few guide to customers and possibly not even the main one. Banks are typical examples, as
are companies, which have Internet establishments. But all such entities have other chief controls
to issue out their products. There are main dissimilarities between e-commerce and e-business as
follows:

There are three perspectives that can also be considered in trying to distinguish the two:

 There is some degree of overlap between e commerce and e business. This can
however be refuted by the fact that the overlap between buy side and supply side e
commerce is significant often with linkages in the form of intranets ( a private
network within a single company using internet standards to enable employees to
share information using e mail and web publishing).
 E Business and e commerce are synonymous as the two are broadly equivalent.

 E commerce is a subset of e business. This seems more realistic since e commerce

does not refer to many of the transactions within a business such as processing a
purchase order that are part of e business. E business therefore emphasizes full
integration and application of technologies to operations.

E-business compared to E-commerce

 While some use e-commerce and e-business interchangeably, they are distinct
concepts. In e-commerce, information and communications technology (ICT) is used
in inter-business or inter-organizational transactions (transactions between and
among firms/organizations) and in business-to-consumer transactions (transactions
between firms/organizations and individuals).
 In e-business, on the other hand, ICT is used to enhance one’s business. It includes
any process that a business organization (either a for-profit, governmental or non-
profit entity) conducts over a computer-mediated network. A more comprehensive
definition of e-business is:

 “The transformation of an organization’s processes to deliver additional customer

value through the application of technologies, philosophies and computing paradigm
of the new economy.”
 Three primary processes are enhanced in e-business:

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  1. Production processes, which include procurement, ordering and replenishment of
stocks; processing of payments; electronic links with suppliers; and production
control processes, among others;

 2. Customer-focused processes, which include promotional and marketing efforts,

selling over the Internet, processing of customers’ purchase orders and payments, and
customer support, among others; and

 3. Internal management processes, which include employee services, training,

internal information sharing, video-conferencing, and recruiting. Electronic
applications enhance information flow between production and sales forces to
improve sales force productivity. Workgroup communications and electronic
publishing of internal business information are likewise made more efficient.

The E-Business Framework

For e-business to work efficiently, there need for certain applications to be available and there
execution depends on the following:

 Right information
 Infrastructure, and

 Support services

Supporting pillars of an E-business application:

 People
 Public Policy

 Technical standards and protocols

 Business partners

 Support services

E-Commerce Applications: Issues and Prospects

Various applications of e-commerce are continually affecting trends and prospects for business
over the Internet, including e-banking, e-tailing and online publishing/online retailing.

A more developed and mature e-banking environment plays an important role in e-commerce by
encouraging a shift from traditional modes of payment (i.e., cash, checks or any form of paper-

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based legal tender) to electronic alternatives (such as e-payment systems), thereby closing the e-
commerce loop.

a) Benefits of e Commerce

• Expanded Geographical Reach

• Expanded Customer Base

• Increase Visibility through Search Engine Marketing

• Provide Customers valuable information about your business

• Available 24/7/365 - Never Close

• Build Customer Loyalty

• Reduction of Marketing and Advertising Costs

• Collection of Customer Data

b) Basic Benefits of e Business e-commerce

 Increase sales - this is the first thing that people consider when dealing with e-
commerce

 Decreasing costs

 Increase profits
 Understanding that profits is not the same as sales
 Expands the size of the market from regional to national or national to international
 Target market segmentation allows you to focus on a more selected group of customers
and therefore have a competitive advantages in satisfying them

Advantages and disadvantages of e-business

 They’re a few advantages and disadvantages when it comes to trading on-line these include (the
benefits listed hereunder refer to business to business markets)

Tangible benefits of e-business

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  Increased sales from new sales leads giving rise to increased revenue from new
customers and markets as well as from existing customers through repeat selling and
cross selling.
 Marketing cost reductions from reduced time in customer service, online sales, and
reduced printing and distribution costs of marketing communications.

 Supply chain cost reductions from reduced levels of inventory, increased competition
from suppliers and shorter cycle time in ordering.

 Administrative cost reductions from more efficient routine business processes such as
recruitment, invoice payment etc.

Intangible benefits of e-business

 Corporate image communication

 Enhance brand

 More rapid, more responsive marketing communications including PR.

 Faster product development lifecycle enabling faster response to market needs.

 Improved customer service

 Learning for the future

 Meeting customer expectations to have a website.

 Identify new partners, support existing partners better.

 Better management of marketing information and customer information.

 Feedback from customers on products

Other Benefits of E-Business

 Work from home, saves money of renting office/shop place.

 If trading on-line won’t have to employee as many staff and this will also save the
business money.

 Able to buy from it 24 hours a day.

 Larger market of potential customers on-line.
 Elderly people or people with disability who are not able to go to the shops can still be
customers of yours.

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E-commerce makes “mass customization” possible. E-commerce applications in this area
include easy-to-use ordering systems that allow customers to choose and order products
according to their personal and unique specifications. For instance, a car manufacturing company
with an e-commerce strategy allowing for online orders can have new cars built within a few days
(instead of the several weeks it currently takes to build a new vehicle) based on customer’s
specifications. This can work more effectively if a company’s manufacturing process is advanced
and integrated into the ordering system.

E-commerce allows, “network production.” This refers to the parceling out of the production
process to contractors who are geographically dispersed but who are connected to each other via
computer networks. The benefits of network production include: reduction in costs, more
strategic target marketing, and the facilitation of selling.

Limitations of E-Business
 Security and privacy
Technological  There is lack of universally concerns deter customers
Limitations accepted standards for from buying.
quality, security, and  Trust in E-Business and
reliability. in unknown sellers
 The telecommunication hinders buying.
bandwidth is insufficient.  National and
 International government
 Software development tools regulations sometimes
are still evolving. get in the way.
 There are difficulties  It’s difficult to measure
integrating the Internet and the benefits of
the E-Business software with effectiveness of online
some existing (especially advertising.
legacy) applications and  Some customers like to
databases. feel and touch
 Special web servers in products .Customers are
addition to the network resistant to the change
servers are needed (added from a real to an online
costs). store.
 Internet accessibility is still  People do not yet
expensive and /or sufficiently trust
inconvenient. paperless, faceless
transactions.

 There is an insufficient
number (critical mass) of
sellers and buyers needed
for profitable E-Business

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 operations.

CHAPTER TWO

Introduction

Internet has been one of the fastest growing technologies since its inception and availability to
the public in the mid-1990s. It continues to have great influence on the economic and social
fabric of cultures and has helped people acquire information and how they do business. As a
result majority of people and businesspersons are enjoying the many benefits of Internet.
Nevertheless, there remain sections of societies where some people are sidelined or denied access
from the digital revolution. This unfortunate episode is prevalent in developing countries because
of poverty.

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Why is using Internet important?

The coming in or development of the World Wide Web (WWW) significantly contributed to the
factor that radically transformed the Internet into a global communication experience. It made it
possible to access to particular parts of documents or information even to other applicable
documents held on their servers. The huge changes in the business background is a result of the
development of this Web and has experienced an influx of more industries seeking to incorporate
their traditional business models with those on internet. This led to a large number of
entrepreneurs joining this technology with the purpose of exploiting the opportunities presented
thereof. The demand for Internet has grown exceedingly each year since its creation in the mid
1990s. Internet has effectively uplifted the way business is done including the lives of the general
populace, individuals, education and governments you name it.
Communication has been made easy by internet as a medium for unifying people together,
anywhere, anytime at low cost and so effectively. Customers also now have access to information
as they become better informed about using the Internet for their benefits and wellbeing.
Businesspersons and entrepreneurs now have the knowhow on developing new products and
services, innovative ideas on extending their markets as well as maintaining their competitive
advantage in order to achieve their objectives and goals.
One major benefit of e-commerce and e-business is that the admission cost and the way out is
low compared to traditional industries since no large sales teams are employed to operate on
internet or huge capital investments in business structures. Basically Internet has no geographical
limitations.

Strategic people in Internet development

Bill Gates
Today the name Bill Gates is globally known by those well versed in the computer world. He is
well known for writing software for computers that gave birth to the company called Microsoft.
Among all the impressive brands of the world Microsoft is one of the most acclaimed brands. Bill
Gates himself is now one of the wealthiest men in the world. The secret behind this success is the
vision Bill and his friend Paul Allen had in that they fully capitalized on the massive potential
unfolded to them on how the computer would be of great importance in the new economy
development.

Tim Berners Lee

In any new endeavor or development there are people behind such initiatives or creativities. The
advent of Internet was brought about by innovative and creative people, technologists, engineers
etc. the likes of Tim Berners Lee who developed the idea of connecting all the information
amassed on computers to other computers globally. This gave birth to the World Wide Web
(WWW) in the 1900s. This meant the creation of a single, global information sharing that would
be freely available, at any given time and place, to whosoever with access to a computer, laptop
or smart phone etc. the development was of paramount importance leading to the marketable and

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globalization of the internet since it allowed free access to enormous amounts of valuable
information that would make it possible for e-business to thrive.

Marc Anderson
Marc Anderson came in the early 1900s, was a programmer at the National Center for
Supercomputing Applications (NCSA) in the United States of America. Anderson teamed up
with Jim Clark and later developed the Netscape Navigator browser, which was launched in
December 1994.

Michael Dell
A man of repute is Michael Dell who began his business in computers while undertaking his
undergraduate at Texas University. The name has grown to be the world’s leading direct-sale
personal company. What made Dell to excel was the company’s ability to take huge volume
orders, convert those orders into finished products made as per customers’ specifications for a
Just-in-time delivery. It is said that Dell has the capacity to serve orders worth more than $20
million daily. This shows the importance of Internet, e-business and e-commerce in the
development of the “new economy”.

Jerry Yang
Millions of people use Yahoo as Internet search engine but the majority of them don’t know who
developed it. Yahoo has grown to be one of the world’s search engines although it has not been a
smooth cruising. The man by this development is none other than Jerry Yang and his business
partner David Filo. They started this concept when they initiated compiling lists of their favorite
websites. Out of this ‘hotlist’ they developed a database useful for computer users to access to
promptly find a web page.

Jeff Bezos
An interesting observation, to entrepreneurs following Amazon’s present-day business will
discover that vision, commitment, spirit, passion and technology produce definite impact on any
aspiring entrepreneur. When Jeff Bezos decided to vacate his job he started a business from the
back of his garage. Bezos didn’t just love books but fully embraced and accepted them to become
part of him, and made sure he processed each detail methodically.

Historical Developments of the Internet

 The Internet was the result of some visionary thinking by people in the early 1960s that
saw great potential value in allowing computers to share information on research and
development in scientific and military fields.
 The Internet, then known as ARPANET, was brought online in 1969 under a contract let
by the renamed Advanced Research Projects Agency (ARPA), which initially connected

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 four major computers at universities in the southwestern US (UCLA, Stanford Research
Institute, UCSB, and the University of Utah).
 Since the government initially funded the Internet, it was originally limited to research,
education, and government uses.
 Commercial uses were prohibited unless they directly served the goals of research and
education.
 Independent commercial networks began to grow in the 1990s. It then became possible to
route traffic across the country from one commercial site to another
 Delphi was the first national commercial online service to offer Internet access to its
subscribers. It opened up an email connection in July 1992 and full Internet service in
November 1992.
 As the Internet has become ubiquitous, faster, and increasingly accessible to non-
technical communities, social networking and collaborative services have grown rapidly,
enabling people to communicate and share interests in many more ways. Sites like
Facebook, Twitter, Linked-In, YouTube, Flickr, Second Life, delicious, blogs, wikis, and
many more let people of all ages rapidly share their interests of the moment with others
everywhere.

Networks that form the Internet

-There are two types of networks that form the Internet. These are: intranets and extranet.

Intranets

 An internal network confined to an organization. It runs internally within the

organization.
 Make use of the LAN but, if the intranet connects branches of a single organization it
makes use of a Wide Area Network (WAN).
 Can be used to store information within the organization such as customer databases,
inventory levels, financial statements, and staff information etc.
 Assist in making everyone within the organization to be customer focused
 Use a browser such as Mozilla Firefox, Internet Explorer.

Advantages of intranets

 Intranets can significantly improve communications and collaboration within an

enterprise e.g. receiving and sending e-mails.
 Intranets result in higher production and higher return to investment because of better
access to quality information.
 Intranets are time saving because there is no need to maintain physical documents such as
procedure manual, requisition forms and Internet phone list.
 Now intranet facilitates their user of ‘view and get information and data via the web
browser

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  Intranets also save money of any organization on printing, publishing and overall
maintenance.
 Through intranet, common corporate culture every user can view the similar information.
 Intranets offer improved teamwork through which teamwork is enabled and all certified
users can get information.
 Reduced costs through higher productivity, saving on hard copy.
 Better customer service responsive and personalized support with staff accessing
customer on the web.

Extranets

Extranet is formed by extending the intranet beyond a company to customers, suppliers and
collaborators.
They operate the same way as intranets except that they link an organization to its strategic
partners, e.g. suppliers, customers.
 Link value chain members to the organization e.g. suppliers of raw materials,
manufacturer and distribution.
 Raw materials can be secured online; manufacturers can be informed of products to be
produced in terms of size, color etc. e.g. Levi Strauss and Wal-Mart Makes use of the
WAN (wide area network).

Advantages of extranets

 Order processing and distribution – extranets are used to place orders, receive invoices,
track shipments and process payments.
 VIosky et al. 2000 refer to the benefits of extranets:
 Information sharing in a secure environment e.g. with suppliers and other
stakeholders.
 Cost reduction e.g. costs in terms of paper work can be reduced by 70%.
 Order processing and distribution through electronic integration effect where a
retailer’s point of sale are connected to a supplier delivery system.
 Customer service improvement is one of the benefits of establishing extranets.
 Extranets helps improve company efficiency by automating functions that were done
manually in the past.
 They permit company information to be updated periodically for business customers,
partners, and suppliers.
 Share product catalogue exclusively with trade partners.

Drivers of e- business adoption

A summary of the main potential drivers for consumer adoption of e-commerce

14
  Accessibility and convenience. The possibility to shop anytime, from anywhere is the
most obvious and most commonly cited advantage of e-commerce, and was found to be
the most important perceived consumer benefit of Internet shopping.
 Global choice. Since the boundaries of e-commerce are not defined by geography or
national borders, consumers will benefit from a wide selection of vendors and products -
including a wider availability of hard-to-find products.
 Online delivery. For digital products, the whole commercial cycle, including distribution,
can be conducted via a network, providing instant access to products immediately when a
need arises.
 Test and trial online. Digital products can be tested over the Internet prior to making
purchase decisions, reducing uncertainty.
 The real-time nature of the medium. The Internet can provide consumers with up-to-the
minute information on prices, availability, etc.
 Time savings. Consumers may benefit from the shopping process being faster in the
marketspace than in the marketplace as a result of the rapidity of the search process and
the transactions.
 Possibilities for comparison shopping. By allowing consumers to shop in many places
and conduct quick comparisons of offerings and prices, Internet marketplaces have the
ability to reduce search costs for price and product information.
 Access to extensive information. An important consumer benefit is the access to greater
amounts of dynamic information to support queries for consumer decision-making.
 Privacy and anonymity. The Internet has the potential to offer consumers benefits with
respect to a partial, or even a total privacy and anonymity/pseudonymity throughout the
purchasing process.
 Competitive prices. By embracing e-commerce consumers may benefit from price
reductions as a result of increased competition as more suppliers are able to compete in
an electronically open marketplace, as a result of reduced selling prices due to a reduction
in operational/transaction costs, and manufacturers internalizing activities traditionally
performed by intermediaries.
 Availability of personalized offerings. Consumers can benefit from IT-enabled
opportunities for personalized interactions and one-to-one relationships with companies,
which allow for products, services and Web content to be customized more easily.
 The asocial nature of the purchasing process. Since consumers differ in their social
disposition, many customers may find an impersonal purchasing situation desirable for a
social reasons or simply because they find the verbal contact with a seller time-
consuming. Moreover, the lack of physical sellers creates sales setting where there is
virtually no pressure to buy.

Summary of the main potential inhibitors to consumer adoption of e-commerce

15
 Quality evaluation. On the Internet, it is more or less impossible to make sure, beyond
doubt, that (tangible) products have the desired features (e.g. design, material, color, fit),
giving rise to a quality evaluation barrier to e-commerce. The need to feel and touch is
the dominating disadvantage for all home-shopping services.
 Security risks. It has been suggested that transaction security (such as the credit card
number being picked up by third-party hackers) is mostly a perceptual problem in e-
commerce. Nevertheless, the fact remains that it may be one of the more complex barriers
to be overcome, as studies show that adopters as well as non adopters of Internet
shopping have security worries
 Lack of trust in virtual sellers. The fear of fraud and risk of loss has commonly been
cited as a significant barrier to B2C e-commerce, with empirical research findings
supporting this assumption
 Delivery times. In tangible product categories, any home-shopping method involves a
delivery time which means that the Internet is at a disadvantage to physical stores as it
fails to meet the customers’ need for instant gratification. Consumers may thus be
reluctant to wait for the delivery of ordered goods for days/weeks if the same product can
be collected immediately in physical outlets.
 Lack of personal service. While e-commerce offers great opportunities for one-to-one
marketing, it significantly reduces, or even puts an end to the personal service (human-
to-human contact) characterizing traditional commerce. This may be seen as an
impediment to e-commerce for many consumers.
 Lack of enjoyment in shopping. Many consumers find the shopping experience -
looking, feeling, comparing - in retail stores relaxing and enjoyable. As the feeling of
amusement and relaxation is unlikely to be as marked in electronic settings, e-shopping
can hardly be seen as a substitute for the leisure experience associated with conventional
shopping.
 Hard to find what you are looking for. The difficulty to locate
stores/products/information on the Web is a major problem. This can be from limitations
of the user, search engines used, or poor site usability.
 Time-consuming nature. As noted, e-commerce may offer consumers savings in time. In
practice, however, using the Internet for commercial purposes may prove to be too time
consuming for many users. There are multiple reasons for this: (i) difficulties locating
Web sites/products/services; (ii) registration procedures required to access services; and
(iii) making price comparisons.
 Cost of entry. Cost of acquiring a computer, etc.
 Cost of use. Internet access fees.
 Limited Internet/ computer experience. Reluctance/difficulties operating computers
and/or browsing the Web.
 Poor connection speed. Due to low bandwidth connections, using the Internet may be
time consuming, and thus frustrating.

16
SMEs and e-Business Adoption

Factors affecting electronic commerce adoption in small to medium enterprises

Background of SMEs on the adoption of e-commerce

Small to medium enterprises (SMEs) are a significant attribute to the World’s economy because
of the various factors that contribute in facilitating regional development, creating employment
and innovation. Therefore SMEs have a great impact on their countries’ economies. It is in that
way that SMEs development is on the agenda of almost all nations across the globe.
Developments in ICT have been very rapid and have brought about many changes in the World in
both developed and developing nations. Both large and small firms have been working on ways
to enlarge their commercial activities beyond the physical boundaries of their organizations into
international markets. They are doing this using computer networks, satellite broadcasting, digital
televisions, telecommunications and many other ICT appliances.
Developing nations have lagged behind in e-commerce adoption as compared to their developed
nation’s counterparts. Several factors have been identified as having led to this variance and these
include: lack of financial resources, unfriendly regulatory policies and several other factors.
Benefits that come about as a result of adopting e-commerce are well documented although the
attainment of such benefits is usually hard to pin down to many firms the World over. Some of
these benefits include access to global markets, reduced operational costs, opportunities brought
about by having multiple trading partners and many others.
Electronic commerce adoption in SMEs is a vital area of investigation and quite a number of
studies have been made in the past pertaining to this phenomenon. The overall presentations
though, in the scholarly publications have not been asymmetrical for both developed and
developing nations. There exist fewer studies in developing nations as compared to developed
nations. SMEs in the developing nation has faced numerous challenges in its quest to adopt ICT
since the beginning of the new millennium, the major constraints then were the government
policies and issues to do with corporate structures. It can also be added that consumers were not
eager to adopt e-commerce fearing issues to do with trust and security.

The invention of the Internet has helped many businesses in the way they do business, especially
on competing in international markets. Despite overwhelming and widespread announcement of
the importance of e-commerce in conducting business, there has been lack of motivation for
SMEs in developing countries to expand their operations through taking advantage of computer
networks, telecommunications, satellite broadcasting, digital platforms, internet technology and
digital cell phones to expand their customer database in order to be profitable through online
customer acquisition.

Several theories and frameworks have been employed in developing countries to advance
research and practice of e-commerce adoption in SMEs. Some of these include the Theory of
Planned Behavior, Technology Acceptance Model, Technology Organisation-Environment
Model, Diffusion of Innovation Theory and the Perceived E-readiness Model for developing
countries.

17
E-commerce and SMEs

E-commerce is considered very important for the development of SMEs and it promises better
business for SMEs. SMEs will gain substantial benefits from the adoption of e-commerce which
include helping them in overcoming technological, organizational, managerial and environmental
deficiencies. Various government initiatives have been put in place by various governments
across the globe to promote e-commerce adoption and diffusion among SMEs. This therefore
means that the adoption of e-commerce by SMEs is seen as the path to a sustainable economic
growth in any nation.

Potential Benefits of E-commerce to SMEs

The benefits of e-commerce for SMEs have been of major interest to both governments and
researchers due to the significance of this sector to their national economies. Studies suggest that
the greater the perceived benefits the higher the possibility of e-commerce adoption. Perceived
benefits should be considered as one of the factors that influence technology adoption in firms.
B2C e-commerce eliminates intermediaries, and the benefits of removing these intermediaries are
that business transactions become cheaper and more efficient. There is a reduction in inventory
and property costs, and maintenance. E-business encourages equal opportunity for all B2C
companies, as there are fewer barriers to market place entry. Benefits of E-commerce include
reduced transaction costs and increased opportunity to participate in international trade with
access to new markets.
E-commerce can provide substantial benefits to SMEs via improved efficiencies and increased
revenues. Businesses can gain access to better quality information through B2C services thus
empowering them to make informed decisions. Most importantly, e-commerce can give a
competitive advantage. It can help a business to strengthen its market position and open up new
business opportunities with the potential to improve profits.

Preparation for e-commerce adoption by SMEs

There is an absolute need for the infrastructure necessary for the engagement of e-commerce by
SMEs. The required infrastructure includes personal computers, laptops smart phones and any
other similar appliances. There is also need for connectivity to the ICT networks as well as power
to run the networks. Connection to network as well as power has not been much of an issue in
developed nations as much as it is for developing nations. There is a power shortage in most of
the developing nations especially in developing nations. Much of global e-commerce is done via
organisational websites. E-commerce activities are being done at a lower scale using modern
technologies such as mobile commerce applications, cloud computing and social networking
services.
Based on the global networked readiness rankings, most developing countries including
Zimbabwe, Zambia, Angola and others have low-networked readiness status, which might not
adequately motivate their SMEs for e-commerce adoption.

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Globalisation and its impact on the adoption of e-commerce by SMEs

Globalisation is defined as the “increasing interconnectedness of the World through information

flows, capital flows and people flows facilitated by political and trade openness together with
information technology. In all the globalisation drivers from, technology is seen to be the most
vital one. However the impact of the drivers to globalisation has not been the same on all
accounts mainly due to the characteristics and nature of different firms as well as their
geographical locations. Globalisation provides gains as well as restrictions for SMEs. Some of
the opportunities suggested include access to new markets, the ability to tap resources, and the
ability to participate in global production networks.

The digital divide and its impact on e-commerce adoption by SMEs

The digital divide is the gap between the level of sophistication in IT and e-business adoption
and usage in rural compared with urban areas, and small and medium enterprises compared with
large companies.” Due to the rapid diffusion of the Internet and other communication networks,
most researchers have been anticipating SMEs to catch up with their larger companies’
counterparts due to the low cost and easy access of Internet technologies. However this has not
been the case on the ground both in developed and in developing countries, even though the
performance is rather better in developed nations due to their well equipped e-readiness
environment.
Positive trends have been made to e-commerce adoption mainly through mobile telephones but
other institutional barriers still hold which include trade restrictions by powerful nations over
poor nations.

Factors that affect e-commerce adoption by SMEs

There are different models from literature that are used to review the factors that affect e-
commerce adoption by SMEs. The factors in this case will be made using the Tornatzky and
Fleischer model (1990). This model looks at the factors in the individual dimension,
organisational context, technological context and environmental context.

Individual factors

The positions of individuals matter a lot when it comes to the study of factors affecting e-
commerce adoption in the SME context. This is because of the fact that individuals in SMEs are
supposed to be generalists in carrying out their functions. Most of the personnel in SMEs are
either in key managerial positions or are classified in a unit or function that performs a certain
task or a number of tasks. Most of the SMEs are run by the manager who is also usually the

19
owner of the business. The following subsections describe the various individual aspects affecting
e-commerce adoption.

Owner/ Manager Characteristics

Previous studies have recognised the influence of the owner or manager in SMEs e-commerce
adoption. The owner / manager characteristics relate to the executive decisions that must be made
by the manager or owner of the business and this include the, financial commitment to be made,
the purchase of new e-commerce infrastructure and the overall day to day running of the firm.
Since the manager or owner in SMEs has got all the executive power to make important decisions
in the organisation, it becomes a challenge when the manager is hesitant to acquire e-commerce
developments. Studies have also shown that there is a relationship between the owner or
manager’s perspective and attitudes towards ICT and e-commerce, and the consequent ICT and e-
commerce adoption and use.

The level of education

The SME manager or owner must have attained a basic level of education. A basic level of
education such as an ordinary level of education in Zimbabwe is a prerequisite as it allows for
easy communication on global business. Most SME owner/managers, especially in developing
countries, are unable to communicate in international languages that give access to global
markets.

Level of ICT and E-commerce knowledge

The level of ICT and e-commerce knowledge is the other individual aspect that is important in
the study of e-commerce adoption. The manager or owner must have at least background
knowledge of e-commerce if they are to adopt and use it in their organisations. This will in turn
work in favour of the organization as the decision makers will be willing to consider the
acquisition of ICT developments. SMEs in developed nations have greater knowledge of ICT as
compared to their developed nations’ counterparts due to the availability of resources and ease of
starting businesses. In most of the developing nations there are vast issues of illiteracy which
makes it difficult for owners –managers in particular to appreciate and fully comprehend e-
commerce opportunities that may be available to them on the market.
However in certain instances owners/managers just lack the zeal to acquire ICT into their
businesses. In most of the cases, mostly developing countries, the managers will put the minimum
of effort to make them knowledgeable to technological issues. It is argued that in most of the
cases some managers will just complain about the costs associated with e-commerce set up whilst
they actually have not tried other inexpensive ways to access global markets in the form of open
software, short message service facilities (SMS) facilities and some other new generations of ICT
such as social networking sites.

Social and Cultural Issues

It is indeed that social cultural factors affect e-commerce adoption in the context of developing
countries. The argument is that this aspect is often disregarded when e-commerce diffuses from
developed countries to developing countries.

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Organizational Factors

Organisational factors that affect e-commerce adoption in SMEs are those factors that come about
as a result of studying the nature and characteristics of the firm itself. A number of factors were
identified and are discussed below:

Security, trust and privacy concerns

Online consumers find the issues to do with trust, security and privacy as very critical in their
quest to adopt e-commerce. Confidence and trust are essential requirements for secure electronic
trading. Security can be described in two categories which are: protection of the transactional
details of the customers and privacy of the personal information of the respondents. These
security concerns have been the major factors that have caused the partial adoption of e-
commerce where only safer electric mails are done online and there has been hesitant adoption of
online payment facilities. The jargon also that is associated with online facilities has proved to be
rather too complex for SMEs in developing countries that end up presuming that there may be
data predators.
Issues relating to privacy in the B2C environment are very paramount. An individual’s privacy
refers to their ability of the individual to personally control information about them. Individual’s
privacy has become a major issue of concern especially with the spread of more online
interactions due to platforms such as Facebook, Twitter, M y space, Whatsapp and many
others. There are two main paradigms that exist with the aim of protecting the customers’
privacy. The first one relies on the customers’ trust that the network will duly conform to their
privacy policy and the other one insists on the anonymity of the customer. The absence of an e-
commerce regulatory framework is a drawback to SMEs should security be breached during e-
commerce transactions.

Cost implications and financial ability

The issue of finance is one challenge that hinders the adoption of e-commerce in SMEs. It is so
because finance looks in depth at the financial resources that a firm can make use of in acquiring
and setting up necessary ICT for e-commerce implementation. However in a study which was
conducted in United Kingdom by Simpson & Dorchety (2004), they discovered that cost was not
really a hindrance to the adoption of e-commerce amongst SMEs. Rather, most SMEs do not
really have the financial muscle to acquire the necessary ICT infrastructure that will help them to
venture into e-commerce activities.

Organisational size
The size of the organisation has got an effect on the adoption of e-commerce. Whilst large
businesses are known to have plenty of resources at their disposal, small companies find it very
hard to acquire necessary e-commerce technology due to high costs of set up.

Perceived ICT benefits

The level of perception of the benefits that are derived from the adoption of e-commerce is
another factor that can be said. Most developing nations are not aware of the benefits that they
can get from acquiring e-commerce technologies due to lack of education and sometimes just

21
mere ignorance. They often say that it is difficult to perceive the actual good about something
before they have actually used it.

Organisational Culture
Organisational culture is another key issue that affects the adoption of e-commerce, culture has an
influence on e-commerce adoption in a country depending on the affiliations of the industries. As
an African country, Zimbabwe’s society can be described to have a low degree of individualism
and as such non-formal ways of communication and social interactions are highly preferable in
business undertakings.
In the Chinese context, e-commerce scenarios are culturally driven by a word, the term ‘guanxi’
and is also relationship based. It is further noted that the relationship based e-commerce put more
emphasis on contextual and informal information, personal trust and blurred boundaries between
business and government.

Technological factors

Technological factors are those factors that are found from the nature and characteristics of the
ICT that the SME employs and intends to use for the adoption of e-commerce. Technological
factors are those that are obtained from the nature and characteristic of the ICT that the SME
employs or intends to use for e-commerce adoption. The technological factors are discussed
below:

Availability and slow speed of Internet

The availability of Internet in SMEs has greatly contributed to the delay in the adoption of e-
commerce. In many developing countries, the availability of Internet in SMEs has greatly
contributed to the delay in adopting e-commerce. The lack of electricity, especially in the rural
areas hampers the use of Internet by SMEs. Furthermore, the Internet operates at a slow speed
and this acts as a demotivator to the adoption of e-commerce by SMEs as well.

Complexity of technology
The complexity of ICT can be considered a key factor affecting e-commerce adoption in SMEs.
Some organizations have been sceptical to adopt e-commerce technology because of concerns
about data management issues between the old and new ICT applications. SMEs whose managers
have some technological expertise can understand the role of e-commerce in their firms and
proceed to transact if they so wish. The fear of technology may hinder some managers to consider
e-commerce developments in their organizations. Organizations need to develop a strategy for e-
business applications for incorporating technological issues.

Lack of Payment Facilities

The lack of payment facilities such as credit cards has prevented the completion of e-commerce
transactions in most developing nations.

Lack of Reliable Power Supply

22
Another situation affecting e-commerce adoption is the unreliable supply of power or electricity
to operate ICT equipment. E-commerce adoption is affected by the availability of relevant
infrastructure. In most developing countries there is unreliable and poor Internet connection due
to poor telephone communication and erratic power supply. In Zimbabwe previous studies found
that the lack of power or electricity prevented small businesses especially in rural areas from
adoption e-commerce.

Language Barrier
Language barrier deters many people in developing countries from participating in e-commerce.
They further note that ICT and e-commerce applications are developed in the western countries
with English as the main language of communication and so it is taken for granted that users in
other parts of the world must automatically understand the language, which may not be applicable
in other contexts.

Lack of Internet Address space

It has been learnt that the current generation of Internet infrastructure is running out of address
space due to the multitude of mobile phone use, growing adoption of the internet in developing
countries, widespread use of the radio frequency identification (RFID) tags, etc.,

Environmental Factors

The external environment of the SME organisation also impacts some challenges to e-commerce
adoption. It describes the realm of business engagement of the firm. This describes factors such
as government role; business partner affiliation and preferences; nature and characteristic of value
chain; logistics and telecommunications infrastructure; economic and political instability; human-
rights issues; business culture; macro-economic policies; natural disasters; floods; and
earthquakes. A brief review of each of these follows:

Government Support
The role of government in providing various forms of involvement has been cited as a medium
for the development of e-commerce in SMEs. Government support can come in the form of
facilitating policy for SME operations in the country, institutional support for providing financial
and technological assistance, improving e-commerce infrastructure, and enacting favourable e-
commerce laws. Developed countries’ ability to adopt and use e-commerce and e-business at
advanced levels has been greatly enhanced by their government’s proactive role in providing the
enabling infrastructure for e-commerce to thrive. This is often lacking in developing countries
because their governments are usually concerned with issues of poverty and hunger eradication.
Unfavourable government and regional policies stifle creativity among SMEs, threatening the
existence of this sector in the economy.

Business Partner Affiliation

23
Another factor that influences the adoption of e-commerce in SMEs is the business partner
affiliation, which may be suppliers or customers. The presence of a business partner is even more
appealing to SMEs in circumstances where there are no trusted alternative partners in an industry.
Business partner relationships are usually depicted from the suppliers or customer’s perspectives.
SMEs will usually want to develop and deepen a business relationship with the aim of
establishing a long-lasting business partnership. This idea works well if the business partner
recognizes the strategic value and competitive advantage that this can bring to both organizations.
Customer or supplier demand is a significant factor that will necessitate the adoption of e-
commerce. Conversely, this does limit participation of small businesses if their business partner
does not value strategic e-commerce innovations or are adversely affected due to other internal
and external challenges.

The Nature and Characteristic of Value Chain

In the Business-to-Business market place, social relationships between buyers and sellers can
open up room for e-commerce adoption or close opportunities for growth. Previous studies in
South Africa have shown that SMEs may not adopt e-commerce due to the peculiar nature and
characteristics of certain industries such as the horticultural and garment industries. The closed
nature of such industries does not necessitate the need to undertake business on the open Internet,
as all stakeholders are within a closed market system. Any decision to adopt e-commerce will
have to be considered alongside other stakeholder’s position in the market system.

Natural Disasters, Floods & Earth-quakes

The occurrence of natural disasters has a tendency of slowing down development in e-commerce
adoption. For example, floods, earthquakes and tsunami in 2009 and 2010, in countries such as
Brazil, Haiti and Japan, respectively were a great example of the serious challenges that may face
up to SMEs where whole ICT infrastructure, lives and properties can be completely swept away.

Business Culture
The existing business culture in the SME environment has been seen as e-commerce
development. This element of business culture has been found to be different from one country to
another even so in developed economies. For example, most SME managers or owners in
Southern Africa and Zimbabwe in particular, can be said to have low uncertainty avoidance and
low individualism, meaning that people can easily interact and share ideas with friends or
relatives without much deliberation on losing one’s own identity.

Macro-Economic Policies
The presence of macro-economic policies in developed countries has been a channel for e-
commerce growth. In their research on the role of institutions in the diffusion of e-commerce,
during the early stages of e-commerce penetration, public and external institutions play ‘key roles
in creating favourable conditions and in providing the movement necessary for the spreading of
e-commerce’ In less developed nations, other forms of regulatory policies may have to be
pursued in order to enable e-commerce adoption using various types of technologies to support
efforts made by their governments.

24
Strategies that can be implemented to foster e-commerce adoption by SMEs in a developing
country context

Enhanced supply of power or electricity

The lack of reliable power supply has been found to be the major factor that affects the adoption
of e-commerce especially in developing countries. This has caused many SMEs to pump out a lot
of money on fuel to run generators.
It can also be noted that the other strategy of curbing the problem of electricity supply is the
endeavor to expand electricity infrastructure in order to expand coverage.

Boost SMEs financial ability.

There is need to substantiate the importance of finance as a factor that guides the adoption and
growth of e-commerce technologies. National governments have the mandate to improve SMEs
working environment in most developing countries and they can improve the financial capacity of
SMEs by strengthening the SMEs links with banks in order to increase their chances of accessing
finance.
Financing can help improve SMEs growth. A successful implementation of this strategy was in
Nigeria were funding schemes were created schemes from the government of Nigeria in the year
2003 for small and medium scale industries, known as the Small and Medium Industries Equity
Investment Scheme, where banks were expected to set aside 10% of their profit before tax to
finance the sector.

Proactive government support for SMEs

Government policies, legislation and any form of support that the government may offer is
considered as vital for the growth and sustainability of SMEs in any nation. The government has
a key role to play in providing an enabling environment to advance the adoption of e-commerce
technology. If the government is able to provide the enabling environment for these SMEs, it
would encourage small businesses to invest in e-commerce technologies which will bring about
further development in the SME sector. Government support has a significant and strong positive
link to ICT adoption. The industries and government bodies are well come to have a role to play
in promoting and supporting small business networks and ICT utilization.

Improve the quality of Internet service

There is a need for Internet service providers to improve on the quality of service they provide to
their customers, especially in the areas of low bandwidth, as this will assist SMEs not only to
effectively utilise e-commerce but also begin to adopt sophisticated e-commerce applications.
There is a need for the government to put in place modern telecommunication infrastructures that
would help in increasing Internet bandwidth as well as extending internet service to rural areas. In
developing nations, Internet service providers should also extend services to major cities where
there is currently no Internet presence.

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Government must tackle Corruption

There is robust corruption especially in developing countries. Most developing countries are
characterized by multiple taxes and levies which are said to be caused mainly by the level of
corruption in the countries. This is because people always want tips before they carry out their
duties and so on. The governments in developing countries can work on tackling corruption
especially in the issues of high taxes being levied on SMEs by funding for the taxes and offering
rebates. Various stakeholders can be brought together using platforms such as conferences where
they can discuss the evils of corruption, poor governance and their effects and subsequently
coming up with solutions to the problems.

Positive support from banks

Most SMEs are failing to adequately develop in developing nations due to the fact that they are
lacking adequate support from banks. This has mainly been caused by the fact that banks fear that
SMEs may fail to refund their money due to lack of adequate collateral.
Financial regulatory authorities in different countries should start new policies that support the
SMEs sectors. They must put much emphasis such as providing SMEs with easy access to capital,
and infrastructural development.

Promotion of Skills and Knowledge in ICT and its applicability

Most of the SMEs in developing countries especially, fail to adopt e-commerce due to the
deficiencies and lack of knowledge on the subject of e-commerce.
It is therefore the duty of the government and other relevant policy makers to come up with
training centers that are there to educate SMEs on e-commerce or ICT in general. The trainings
should be specific for every sector in order to look at the particular needs and practical problems
that affect SMEs in adopting e-commerce. Also, there is need for the government to make ICT
related skills and technology form part of the curriculum in educational institutions.

Owner-Manager’s Lack of Awareness needs to be overcome

SMEs, the managers’ lack of awareness on issues to do with e-commerce or ICT can hinder the
successful adoption of e-commerce by SMEs. Again lack of awareness could hinder SMEs from
understanding the potential benefits that are associated with new technologies, which can enhance
their efficiency and increase productivity.

The owner-manager of SMEs should be an exemplary on the acquiring of e-commerce

technologies in order for employees to do the same. The owner-managers should develop positive
attitudes towards ICT and should foster such culture in their organizations.

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 CHAPTER THREE

DIGITAL PRODUCTS

A digital product is anything that can be digitized or presented in digital form e.g.

a. Information based services like research services.

b. Literature i.e. books, magazines, newspapers.

c. Auditory information like music or lectures.

d. Movies

e. Images i.e. photographs, art, advertisements etc.

f. Financial assets e.g. stocks and bonds

g. Communication e.g. phone, fax

h. Other information e.g. recipes, directions, maps etc.

i. Software e.g. Antivirus products.

Pricing strategies for digital products

Examine different forms of pricing digital products giving relevant examples

27
Pricing strategies for digital products include zero pricing, bundling, differential pricing,
subscription and site licensing

Zero pricing

It entails not charging for the product e.g. readers pay $1 for a hard copy of the Herald but can
access it for free on www.herald.co.zw. There is also free software which can be in the form of
freeware (copyrighted software given away for free by the author) OR shareware (delivered free
of charge though the owner might require a small fee and does not allow one to pass it on for
free) OR public domain (when a program is not copyrighted and can be used without restriction.

Why zero pricing?

 When the primary revenue stream is from advertising the company expects greater profits
when it achieves higher levels of customer traffic or activity. To attract traffic they offer
the product for free.
 To generate and encourage trial especially for products that have complicated quality
attributes that cannot be determined without using the product.

 Some digital products are offered for free in exchange for personal information which is
more valuable as it can be used to target consumers in other fields or can be sold to other
marketers.

 A way to gain market acceptance especially with software often written by hobbyists for
personal growth and satisfaction.

Bundling

This refers to offering a combination of products instead of selling products individually

e.g. Microsoft Office is a bundle of Word, Excel, PowerPoint, Outlook, Access and other
programs. Bundling can either be mixed bundling (which gives some room for choice) or
pure bundling (take it or leave it basis). Bundling is useful when:

 Consumer preferences are diverse.

 There is a synergy between the components e.g. individuals can copy and paste
documents between Microsoft Office programmes.

 Even if a large proportion of the population is indifferent about most of the

bundles, components it can be profitable if the total number of components is
high e.g. DSTV’s premium bouquet has several channels which most viewers
don’t watch but is still profitable.

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  When there is a high degree of variability in the component prices. By
presenting consumers with a bundle, the company can hide the price increases of
some components by decreasing the prices of others.

 When complementary bundles are provided, the company may be in a position

to impose a surcharge for making the bundle available.

Differential pricing

The basis of this strategy is to charge different customers different prices. In economic terms it is
price discrimination. It can be in the form of:

 Providing discounts on the basis of purchase history to reward loyal customers or to

entice first time buyers.
 Identity based or personalized pricing (charging each individual a different price) on the
basis of the offer given or income levels. It however can cause controversy and negative
publicity if customers find out they is charged much higher prices.

Subscription

This is when a buyer promises to buy access to content over a specific period of time e.g. Internet
access over a year or pay TV over a year. On the Internet, subscription pricing can be:

 All content available to paid subscribers only e.g. www.emeraldinsight.com

 Some content is free while premium content is available to subscribers only e.g.
www.espn.com

 All content is free upon registration e.g. www.newyorktimes.com

 All content is free and no registration is required e.g. www.cnn.com

 Users are rewarded for browsing e.g. www.cbs.sportsline.com

Subscription reduces the seller’s demand uncertainty over time. A paid up subscription
means assured demand for the period. Many publishers offer price discounts for this
reduced uncertainty. It also reduces administrative costs of tracking transactions.
Subscriptions can increase consumer usage, leading to higher advertising and sponsorship
rates.

Site licensing

This pricing practice is often used with institutional buyers. Typically a large company or
university pays a flat fee so that everyone in the institution or some subset of individuals can use

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a software programme or gain access to an online database e.g. a journal site like Emerald Insight
is subscribed by universities. Licensing has the following benefits for the software seller:

 It places the burden of enforcing the license and checking for software piracy on the
consumer.
 It is a simple pricing model and is easy to enforce.

 It encourages new users to try a software package thus stimulating more usage.

 It reduces maintenance costs by standardizing the programme features.

TRADITIONAL MARKETING TECHNIQUES

The idea of marketing and practice evolved over the past 100 years from a philosophy of taking
things to market to a philosophy of marketing to customers and it is increasingly shifting today to
a philosophy of marketing with customers. Marketing can be defined as an organizational
function and a set of processes for creating, communication, and delivering value to customers
and for managing customer relationships in ways that benefit the organization and its
stakeholders. Others view marketing as a science and art of exploring, creating, and delivering
value to satisfy the needs of a target market at a profit. The purpose of marketing is identifying
the unfulfilled needs and desires of customers.

Marketing techniques are the tools used by marketing departments in their endeavor to lure
customers to be loyal to their business and their products. Marketing department sets out to
identify the most appropriate techniques to utilize in order to make profits. Some of these
marketing techniques include public relations, sales promotion advertising, branding, and
packaging and direct marketing. Traditional marketing techniques typically focus on identifying
the right audience segment, understanding their behavior, and providing the proper incentive to
get them to buy a product or service, and in addition, there is the location or channel
consideration.

Promotion

Promotion includes all activities that marketers undertake to inform and to encourage potential
customers to buy their products. The promotion in the marketing mix includes all the integrated
marketing communications in which include items like advertising and sales promotions.

Sales promotion

A sales promotion is a marketing event focusing in which a corporate entity attempts to influence
customers directly. Consumer sales promotion is a marketing technique that is used to entice
customers to purchase a product. The promotions typically last for a set period of time and are
used to achieve a specific purpose, such as increasing market share or unveiling a new product. In
other words sales promotions are often conceived as having tactical, rather than strategic,

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potential. This is accounted for by the sheer diversity of promotions, namely; cash discounts;
refunds and rebate, trade contests and incentives, point of purchase displays and materials,
couponing, premiums, price offs, bonus packs and competitions. A number of scholars propose
that promotions can provide strategic direction in guiding, targeting and positioning decisions,
and can help to develop and maintain competitive advantage. This can be sustained by building a
steady stream of promotions, which support each other, within a strategic plan. Competitive
advantage can be achieved through cost leadership or differentiation. Sales promotions can offer
many consumer benefits, the most obvious being monetary savings, although consumers also may
be motivated by the desire for quality, convenience, value expression, exploration and
entertainment. It is confirmed that the maturing of most consumer markets in the United States
has put great pressure on manufacturers in their search for growth which lead them to concentrate
on building sales and expanding share proportions in the stagnant markets with devices like niche
products, product extensions, mergers, and international ventures. In this case it is clear that
marketers have shifted emphasis to sales promotions at the expense of advertising. Therefore, one
potential consequence of consumer promotions is the acceleration of consumer category
purchases. Promotions bring volatile demand, whereas the producer seeks stable demand. By
sustaining a brand image and building customer loyalty, on the other hand, theme advertising can
stabilise demand. Promotions have been successful in many African countries e.g. Zimbabwe
since the general society likes to get products cheaper than the normal price, of which the society
is dominated by rational consumers who seek to maximize utility. In Zimbabwe, retailers use this
marketing technique to promote their businesses.

The term ‘Sales promotion’ denotes the several types of selling incentives and methods, which
target the customers to harvest the immediate sales effects. These incentives and methods may be
in the form of free samples, discount coupons, demo shows, sweepstake as alluded earlier on.

Discounts and coupons

Price discounts play significant roles in influencing consumer product trial behavior through
indirectly attracting new consumers. The drop in price is notably likely to catch the attention of
the customers. It is arguably noted that, customers are more prone to purchase a service with a
lowered price and leave out the one with a high price. A promotion signal can be defined as a
sign, marker or other indicator of a price promoted brand to attract the attention of the customer.
Past research has shown that these kinds of promotions can generate a considerable increase in
sales of the promoted brand. This increase in sales generally occurs because the customer
evaluates the promoted brand more, favorably which eventually alters their brand choice.

In terms of coupon promotions, those consumers who obtain coupons are entitled to get discounts
of the products they purchase at their original prices, although it is argued that coupon
promotions do not have a significant effect on volume of products purchase by consumer.

Marketing managers are aware of product trial related to behavioral experience of consumers
towards a product. Thus, sending free sample take place in promotional tools. Free samples refer
to retailers giving a free small sample of the product so that consumers have the chance to try and

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use the product. It has been confirmed that a free sample has a greater influence on consumer’s
buying behavior and is positively related to immediate sales of that particular product.

Promotion technique of “buy-one-get-one-free” is one of the types of bonus packs in which the
consumers are offered the additional product at the ordinary price but are in an enhanced package.
Consumer would be easily persuaded to buy products, as there is no extra cost need. Besides, this
promotion technique would be beneficial to retailers in speeding up the stock clearance compared
to price promotions. Relating with buying behavior, consumers usually have endless demand to
fulfill their needs and satisfaction to obtain something new or better as every individual has their
own behavior, attitude and thought while choosing products, services and making purchase
decision.

Gift Giving

Gift giving is built on the foundation of reciprocity theory, which speaks for that giving can lead
to a recipient’s perceived sense of obligation to return the favor. A corporate gift can be anything
from regular trip to an all-inclusive for instance Caribbean holiday for two. Gift promotion cannot
simply be described as a tool to increase sales volume. Even though increased sales are shown to
a reasonable objective for a gift promotion the tool has several other objectives including,
enhancing the brand by using attractive branded gifts, providing a reminder of the brand’s
existence for the customer and promoting loyalty and commitment from customers. Other
objectives with corporate gift giving can be to give the customer a feeling of reward for past
business, but also tactfully stimulate continuous business conductions.

Gift giving can be used to create or maintain relationships with key customers as well as create
goodwill, and promote companies. In order to show gratitude of business accomplished, a gift can
be given. There are three common categories that cover most of the variety of reasons for giving
gifts as a part of conducting business. Gifts are used to show gratitude for such things as past
relationships, placing a new order, referrals to other clients, etc. In some cases gifts are given
with the intention to create a good first impression, which could help to establish a business
relationship.

Advertising

Advertising is the non-personal communication of information usually paid for and usually
persuasive in nature about products, services or ideas by identified sponsors through the various
media. Advertising plays an interesting role in the context and the projects of consumption.
Advertising is one of the ways in which we get into goods. Advertising can be seen as the
salesmanship in an attempt to influence the thoughts and action of people. Advertising consists of
all the activities involved in presenting to an audience a non-personal, sponsor-identified, paid-for
message about a product or organization. Advertising helps to capture these old and new cultural
meanings and invest them in consumer goods where they become accessible to the consumer.
Advertising is greatly helpful in meeting the forces of competition prevalent in the market.
Continuous advertising is very essential in order to save the product from the clutches of the

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competitors. It enables the manufacturer to expand his market. It helps in exploring new markets
for the product and retaining the existing markets. It plays a sheet anchor role in widening the
marketing for the manufacturer’s products even by conveying the customers living at the far-
flung and remote areas. Over advertising can have an adverse result since the audience will
generalize the advertisement and do not pay attention to it.

Personal Selling

Personal selling is defined as the personal communication of information to persuade a

prospective customer to buy something, a product, service and the searching out of prospects and
follow up services. Personal selling is not a matter of persuading others to satisfy their needs and
wants but is a face to face presentation and promotion of products, services plus searching out of
prospects and follow up services∙ it must be noted that effective selling is not a matter of
persuading others to buy but helping others to satisfy their wants and needs.

Personal selling includes face-to-face sales calls/meetings; telephone sales calls, video
conferencing, trade shows/exhibitions, conferences/seminars, and word of mouth. The strength of
personal selling lies in the fact that it allows for communicative interchange, and a process more
subtle but at the same time more hazardous than classical methods such as advertising, which rely
on one-way communication. Personal Selling is an effective way to manage personal customer
relationships. The sales person acts on behalf of the organization. They tend to be well trained in
the approaches and techniques of personal selling. However it should be noted that, personal
selling requires effective listening skills in the personal selling encounter for it to bring
quantifiable results. It should be advisable that sales people are very expensive and should only
be used where there is a genuine return on investment. For example salesmen are often used to
sell cars or home improvements where the margin is high. Personal selling is another factor in the
promotion mix, but it is not utilized by every organization. This involves an interpersonal
relationship between the buyer and the seller. Examples of this include telemarketing, door-to-
door sales and sales meetings with incentives. It is the most effective tool at certain stages of the
buying process, particularly in building up buyers’ preferences, convictions and actions.

Branding

Branding is defined as a seller’s promise to deliver a specific set of features, benefits and services
consistent to buyers. Branding is a strategic tool in sustaining and growing the market share. It
should be noted that a respected name builds brand equity that is the value of a brand’s strength
in the market. Furthermore it is believed that brand equity is likely to be higher if many satisfied
customers insist on buying the brand and if retailers are eager to stock it and this almost
guarantees ongoing profits. Consumers respond to a product offering in terms of its brand image
which they say is the meaning consumers give to a product based on the perceived benefits that
the product provides. They are different branding strategies that include individual names,
blanket family names, separate family names and company trade with individual product names.

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DIGITAL MARKETING

Digital marketing refers to all business conducted electronically that encompasses developing
content for digital touch points such as mini-videos, game consoles, brand created content and
consumer created content. It also encompasses building campaign websites and updating brand
websites, driving traffic to digital touch points including planning and buying digital media and
fostering engagement and the interactions in the social networks (managing communities).
Online retail is now embedded in consumer’s behavior and will force changes to the traditional
retail operating mode; those retailers that do not move to the new model will not survive. The
world of digital media is changing at a phenomenal pace. It is constantly evolving technologies,
and the way people are using them, are transforming not just how we access our information, but
how people interact and communicate with each other on a global scale. It is also changing the
way people choose and buy products and services. People are embracing digital technology to
communicate in ways that would have been inconceivable just a few years ago. Therefore it
should be noted that technology is behind the adoption of digital marketing. New technology
emerges and is initially the preserve of technologists and early adopters. Technology gains a
firmer foothold in the market and starts to become more popular, putting it on the marketing
radar. Innovative marketers jump in to explore ways they can harness the power of this emerging
technology to connect with their target audience. The technology migrates to the mainstream and
is adopted into standard marketing practice.

Digital technologies are able to emulate every aspect of marketing communications and
traditional media channels and in so doing, to span the marketing mix. Internet global
connectivity opens up new avenues for business in a manner that traditional commerce conduits
cannot match and it has been suggested that a company based anywhere in the world can launch a
website to compete on a global basis, as long as its products are easily transportable and
downloadable. Many established brands are successfully taking advantages of online
opportunities to expand globally such as Apple. However they face stiff competition from virtual
merchants. Some global online players have cannibalized the supply chain by going straight from
manufacturer to end consumer such as Amazon.

In this paradigm shift, retailers and consumer brands are likely to face increasing pressure from a
variety of entirely new businesses, keen to get their share of the electronic market. If one thing
has become very clear, from the first 15 years of retailing, it is that there is always the
opportunity for the innovative and dynamic company that has read the market well and has an
effective business model to make a strong impact and in so doing, grow very big and become
more powerful, very quick as in the case of Google, Facebook and eBay. The experiences of
these organizations demonstrate that Internet can be a very fertile environment for global
expansion if organizations have good ideas supported by an appropriate set of core competences
and technical digital know-hows.

Digital marketing drives the creation of demand using the power of Internet and satisfies the
demand in new and innovative ways. The Internet is an interactive medium, it allows for the
exchange of currency, but more than that, it allows for the exchange of currency, it allows for the

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exchange of value. A business on the Internet can gain value in the form of time, attention and
advocacy from the consumer. For the user, value can be added in the form of entertainment,
enlightenment and utility. The Internet has changed the world in which we sell. It is not a new
marketing channel; instead, it creates a new paradigm for the way in which consumers connect
with brands and with each other.

Digital marketing techniques

Blackwell (2006) noted that the traditional marketing strategies such as advertising in TV, on
billboards and posters might not be effective as they used to be and hence digital marketing
techniques may be a way forward. Due to the more intensive media noise and the information
overload that exist in the society today, old methods and ways of communication have a hard
time to maintain. In particular as traditional media is getting more and more expensive. As
customers’ attitudes towards marketing and market communication have changed, it implies new
demands on the marketers. “It is more important to reach the people that count than to count the
people you reach”.

Viral marketing

Viral marketing describes any strategy that encourages individuals to pass on a marketing
message to others, creating the potential for exponential growth in the message's exposure and
influence. Media fragmentation, inflated media prices, falling returns, increased consumer
marketing and advertising literacy and the adoption of new advertising blocking technologies, are
some of the principal reasons forcing organizations to find new ways of reaching their audiences.
Through the progression and evolution of the Internet, electronic peer-to-peer recommendations
have become an important phenomenon, and marketers have tried to exploit their potential
through viral marketing campaigns. Some messages might give rewards of referral for instance
on Microsoft’s OneDrive platform, if a user refers another user they get extra 5GB free of
storage. At the same time, spam and e-mail-based viruses have cluttered electronic
communications, making viral marketing campaigns problematic and challenging to deploy. The
key driver in viral marketing is the effectiveness of unsolicited, electronic referrals to create
awareness, trigger interest, and generate sales or product adoption. Viral marketing has become
the defining marketing trend of the decade. Brands big and small launch viral videos and post
new product information via YouTube, Twitter, LinkedIn and other platforms so that the gospel
will be spread by word of mouth. Through virtual networks all this can be achieved considerably
faster, resulting in electronic word-of-mouth and or viral marketing. The target of viral marketers
is to maximize reach. Thus this is vital in achieving competitive advantage through a viral
message; however, there is no empirical evidence to support this.

SEO (search engine optimisation)

SEO is the science of customizing elements of your web site to achieve the best possible search
engine ranking. In general the earlier and more frequently a site appears in the search results list,
the more visitors it will receive from the search engine's users. SEO may target different kinds of

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search, including image search, local search, video search, academic search, news search and
industry-specific vertical search engines. SEO refers to the basics of optimizing your website to
improve organic (free) traffic from search engines by improving sites overall ranking on the
various engines. Working to improve the visibility and popularity of your website to increase the
likelihood that other reputable web sites will link to your site and providing fresh content to your
website to further improve its “popularity”. SEO improve web rankings that is a better chance of
clicks to generate traffic to get users into your customer funnel, brand awareness, high value at a
low cost that is strong long-term effects will save on the budget. SEO is like building a solid and
attractive building: If you take the time to build it correctly, you can cut back on other
expenditures.

SEM (Search Engine Marketing)

Search engine marketing is a form of Internet marketing that involves the promotion of websites
by increasing their visibility in search engine result page through optimization and advertising.
Search engine marketing may use search engine optimization which adjusts or rewrites website
content to achieve a higher ranking in search engine results pages, or use pay per click listings.

RSS

RSS is a content syndication format that allows users to access frequently published and updated
works and greatly supports the purpose of information management. It is used to automatically
and selectively pull in updated information by scanning many web pages simultaneously. The
major advantage of RSS is that one need not understand the technology of this application to use
it. RSS reader, special software, collects a large number of RSS feeds and displays them to a user,
relieving the user of searching for new content, and reducing information overload. Users can
subscribe to RSS feeds of new additions and stay current with updated web content. Users can
receive notification about new arrivals in the library, new articles published in e-journals, newly
added topics in news and events sections, and much more. RSS feed readers aggregate news
headlines, blog posts, articles, and other dynamic content from across the web, all in a single
convenient preview and reading environment.

Link building

Link building is the process of acquiring hyperlinks from other websites to your own. A
hyperlink (usually just called a link) is a way for users to navigate between pages on the Internet.
One of the least expensive online marketing techniques, but perhaps one of the most effective, is
getting links from other Web sites. Contact suppliers and manufacturers you work with to see if
they will link from their Web sites to yours. Link building is the most important (and challenging)
SEO skill. Actually, it is a culmination of several different skills: you need to master content
creation, sales, programming, psychology, and good old-fashioned marketing if you want other
people to consistently link to your site.

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A good link from a highly-visited website can lead to an increase in traffic, too. If it is a relevant
website, chances are that the traffic is also relevant and may lead to an increase in sales, as well.
Good link building can help build your brand and establish you as an authority in your niche.
There are some link building techniques, such as content creation, which can show people the
expertise of your company, and this can go a long way toward building your brand. For example,
if you create a piece of content based upon industry data and publish it, you have a chance of
becoming well known for it in your industry. When you do outreach and try to get links to the
content, you are showing your expertise and asking other people in your industry to help spread
the word and show others the same.

Blogging

Blogs are web sites that are created by individuals or companies so as to display historical
information and update the content. Peter Merholz first coined the word blog in 1999. Blogs are
webpages which can easily be updated published by one person or a group as brief articles
displayed in reserves in a chronological order which differ from a company’s primary website in
that the new content is added on a regular basis. Blogging enables personal editorship; frequent
updates free public access to the content via the internet and archived posts. In addition, blogs
tend to have a conservational tone and are less formal, providing commentary on current issues
and trends with the goal of sharing knowledge and sparking knowledge and sparking a
conversation.

Social media marketing

Social media marketing seeks to involve customers where they naturally spend their time and also
picks up on what customers are talking about and connects this back into the business where it
can be processed to create the next round of customer experiences and therefore the next round of
conversations. Social media marketing is in many ways a precursor to social business. Social
media marketing is most effective when the entire business is responsible for the experiences and
everyone within the organization is visibly responsible for the overall product or service. A solid
social media marketing program begins with business objectives, an understanding of the
audience, and a thought-through measurement program or success assessment methodology.
Whether it is a fad or here to stay, social media has made an indelible mark on the web landscape
and, concurrently, on marketing tactics. Social media marketing involves using peer
recommendations, sharing, building brand personality and addressing the market as a
heterogeneous group of individuals. It also uniquely encourages customers to create content and
business around a product themselves. If you don’t work at creating meaningful relationships
with your audience, you will be ignored.

Although social media marketing appears to be free that is a marketer does not need to pay to
sign up with social networks like Facebook or twitter, running a proper strategy on it can be time
consuming because a marketer will have to devote at least an hour each day to maintaining the
profiles and campaigns, time that could be spent on other marketing activities.

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Content marketing

Content marketing is a creating and distributing relevant and valuable content to attract, acquire
and engage a clearly defined and understood target audience with the aim of driving profitable
customer action. Content marketing develops, executes and delivers the digital content and
related assets that are needed to create, nurture and grow a company’s customer base. Content
marketing is quickly becoming the next digital battle ground as more organisations look to
content as a way to reach and engage a larger audience to demonstrate their expertise and then
create passionate advocates for their brands.
Content marketing helps establish deeper relationships with the customers which in turn results in
the increase in brand preference. Marketers by providing something of value to customers in
either entertainment or information, they can engage and induce them to invest their time in and
attention to the content. Although video has the ability to engage an audience faster than any
other form of content marketing, it doesn't make sense for every small to medium enterprise in
the retail sector in Zimbabwe. Small retailers can be affected by low quality content which can
affect their rankings and damage the brand while trying to promote e-commerce through digital
marketing that is content riddled with grammar and spelling errors which makes them look
unprofessional.

E-mail marketing

Another important component of an effective e-marketing strategy is e-mail marketing which is

all about sending information of product and services to potential customers using e-mail. This is
a proven effective method of using online marketing as an efficient tool for business generation.
It is also a very good business marketing technique for building good business relations with
potential customers, as well as prospective clients. While you always have the option to send
weekly newsletters and announcements through your personal e-mail address, most platforms
were not built with e-mail marketing campaigns in mind. These platforms can't make sure your e-
mail gets to the inbox over the spam folder and won't track the level of engagement. If you are
spending the time to create the e-mail content, why risk the success rate?

Online Newsletters

You can even think of online newsletters as a decent way to pass on product information for
promoting product and services. Businesses generally issue online newsletters to regular
customers for letting them know what new introductory offers are available and which new
products are likely to be launched. Unlike e-mail marketing, these online newsletters are issued at
regular time intervals.

Developing a call-to-action

A call-to-action (CTA) is an image or text that prompts visitors to take action, such as subscribe
to a newsletter, view a webinar or request a product demo. Call-to-action should direct people to
landing pages, where retailers can collect visitors' contact information in exchange for a valuable

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marketing offer. In this sense, an effective call-to-action results in more leads and conversions for
retailer’s website. This path, from a click on a call-to-option to a landing page, illustrates the
much desired process of lead generation. In order to increase visitor-to-lead conversion
opportunities, retailers need to create a lot of calls-to-action, distribute them across their web
presence and optimize them. A good call-to-option should be attention grabbing and help lead a
potential customer further into their marketing funnel.

Online Press Release

One of the fastest ways to spread word about retailer’s store, and products or services, is by
sending an online press release. Media outlets all thrive on press releases every day. The
abundance of online news distribution services is now making it easier than ever for retailers to
announce new product lines, special events and other shop news. Online press releases can be a
powerful search engine optimization tool that is, if retailers write them correctly. Retailers should
learn why it is important to maximize press release for optimum search engine visibility, and
promote their site's content with properly written and search engine friendly press releases.

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 CHAPTER FOUR

E-PAYMENT SYSTEMS

 E-payment is the electronic transfer of funds from one individual to the other. It is a term
used to any kind of payment processed without cash or paper cheques. It can be defined
as the method of effecting payment from one end to another through the medium of a
computer without manual interaction beyond inputting payment data. Traditionally, a
customer sees a product, examines it, and then pays for it by cash, check, or credit card.
In the e-commerce world, in most cases the customer does not actually see the concrete
product at the time of transaction, and the method of payment is performed electronically.
There are several methods and tools that can be used to enable EPS implementation these
include Electronic funds transfer (EFT), Payment cards, Electronic money (e-money/e-
cash): Electronic wallets (e-wallets), Credit cards.

Electronic funds transfer (EFT)

 Electronic funds transfer is one of the oldest electronic payment systems. EFT is the
groundwork of the cash-less and check-less culture where paper bills, checks, envelopes,
stamps are eliminated. EFT is used for transferring money from one bank account
directly to another without any paper money changing hands. The most popular
application of EFT is that instead of getting a paycheck and putting it into a bank
account, the money is deposited to an account electronically. EFT is considered to be a
safe, reliable, and convenient way to conduct business.

The advantages of EFT contain the following:

 Simplified accounting

 Improved efficiency

 Reduced administrative costs

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  Improved security

Disadvantages of EFT

 Lack of Eligibility:

 Not all potential buyers may have a bank account.

Payment cards

 Credit cards, debit cards, charge cards, smart cards are payment cards. They are the most
popular tool for electronic payment transactions.

Credit Cards

 There are two types of credit cards on the market today:

 Credit cards issued by credit card companies (e.g., MasterCard, Visa) and Major banks
(e.g. Is Bankasi, Ziraat Bankasi, Yapi Kredi, etc.)

 Credit cards are issued based on the customer's income level, credit history, and total
wealth. The customer uses these cards to buy goods and services or get cash from the
participating financial institutions. The customer is supposed to pay his or her debts
during the payment period; otherwise interest will accumulate.

 Limitations of credit cards are their unsuitability for very small or very large payments. It
is not cost-justified to use a credit card for small payments. Also, due to security issues,
these cards have a limit and cannot be used for excessively large transactions.

 Credit cards issued by department stores (e.g. Boyner), oil companies (e.g. Shell)

 Businesses extremely benefit from these company cards and they are cheaper to operate.
They are widely issued to and used by a broad range of customers. Businesses offer
incentives to attract customers to open an account and get one of these cards.

Advantages and Disadvantages of Credit

 Like most things, there are advantages and disadvantages to credit cards. Knowing some
of these can help you decide if you do or do not want to use credit cards.

 Purchase Power and Ease of Purchase - Credit cards can make it easier to buy goods. If
you don't like to carry large amounts of cash with you or if a company doesn't accept cash
purchases (for example most airlines, hotels, and car rental agencies), putting purchases
on a credit card can make buying things easier.

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  Protection of Purchases - Credit cards may also offer you additional protection if
something you have bought is lost, damaged, or stolen. Both your credit card statement
(and the credit card company) can vouch for the fact that you have made a purchase if the
original receipt is lost or stolen. In addition, some credit card companies offer insurance
on large purchases.

 Building a Credit Line - Having a good credit history is often important, not only when
applying for credit cards, but also when applying for things such as loans, rental
applications, or even some jobs. Having a credit card and using it wisely (making
payments on time and in full each month) will help you build a good credit history.

 Emergencies - Credit cards can also be useful in times of emergency. While you should
avoid spending outside your budget (or money you don't have!), sometimes emergencies
(such as your car breaking down or flood or fire) may lead to a large purchase (like the
need for a rental car or a motel room for several nights.)

 Credit Card Benefits - In addition to the benefits listed above, some credit cards offer
additional benefits, such as discounts from particular stores or companies, bonuses such
as free airline miles or travel discounts, and special insurances (like travel or life
insurance.) While most of these benefits are meant to encourage you to charge more
money on your credit card (remember, credit card companies start making their money
when you can't afford to pay off your charges!) the benefits are real and can be helpful as
long as you remember your spending limits.

Disadvantages of credit cards

 Blowing Your Budget -- The biggest disadvantage of credit cards is that they encourage
people to spend money that they don't have. Most credit cards do not require you to pay
off your balance each month, so even if you only have $100, you may be able to spend up
to $500 or $1,000 on your credit card. While this may seem like 'free money' at the time,
you will have to pay it off -- and the longer you wait, the more money you will owe since
credit card companies charge you interest each month on the money you have borrowed.

 Credit Card Fraud - Like cash, sometimes credit cards can be stolen. They may be
physically stolen (if you lose your wallet) or someone may steal your credit card number
(from a receipt, over the phone, or from a Web site) and use your card to rack up debts.
The good news is that, unlike cash, if you realize your credit card or number has been
stolen and you report it to your credit card company immediately, you will not be charged
for any purchases that someone else has made. Even if you don't realize your credit card
number has been stolen (sometimes you might not know until you receive your monthly
statement), most credit card companies don't charge you or only charge a small fee, like
$25 or $50, even if the thief has charged thousands of dollars to your card.

 High Interest Rates and Increased Debt -- Credit card companies charge you an enormous
amount of interest on each balance that you don't pay off at the end of each month. This
is how they make their money and this is how most people in the United States get into

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 debt (and even bankruptcy.) Consider this: If you have a $100 in savings, most banks will
give you at the most 2.0 to 2.5% interests on your money over the course of the year.
This means you earn $2.00 - $2.50 a year on your $100 savings. Most credit cards charge
you up to 10 times that amount of interest on balances. This means that if you have $100
balance that you don't pay off, you will be charged 20-25% interest on that $100. This
means that you owe almost $30 interest (plus the original $100) at the end of the year. A
good way to look at this is in comparison to what you would earn in interest from a bank
or owe in interest to a bank loan: Savings accounts may pay you around 2% interest; if
you have a loan from a bank you may pay them around 10% interest (5 times as much as
you earn off your savings); if you owe money to a credit card company, you may pay
them around 20% interest (10 times as much as you earn off your savings.)

Debit cards

 The difference between credit cards and debit cards is that in order to pay with a debit
card you need to know your personal identification number (PIN) and need a hardware
device that is able to read the information that is stored in the magnetic strip on the back.

Debit cards task similar to checks in that the charges will be taken from the customer's checking
account. The benefit for the customer is the easiness of use and convenience. These cards also
keep the customer under his or her budget because they do not allow the customer to go beyond
his or her resources.

Advantages of debit cards

 Stored many types of information

 Not easily duplicated

 Not occupy much space

 Portable

 Low cost to issuers and users

 Included high security

Disadvantages of Debit cards

 They are identification cards owned by the issuer & restricted to one user i.e. cannot be
given away.

 They are not legal tender

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  Their usage requires an account relationship and authorization system

Electronic cash /money

 Electronic money is a monetary value as represented by a claim on the issuer which is: (i)
stored on an electronic device; (ii) issued on receipt of funds of an amount not less in
value than the monetary value issued; (iii) accepted as means of payment by undertakings
other than the issuer.”

 Prepaid dedicated accounts include scratch cards. Payments are often paid in cash,
independent of an existing bank or credit card account and therefore allow for
anonymous shopping.

 Similar to regular cash, e-cash enables transactions between customers without the need
for banks or other third parties.

 . When used, e-cash is transferred directly and immediately to the participating merchants
and vending machines. Electronic cash is a secure and convenient alternative to bills and
coins. This payment system complements credit, debit, and charge cards and adds
additional convenience and control to everyday customer cash transactions. E-cash
usually operates on a smart card, which includes an embedded microprocessor chip. The
microprocessor chip stores cash value and the security features that make electronic
transactions secure. Mondex, a subsidiary of MasterCard (Mondex Canada Association)
is a good example of e-cash.

 One of the first forms of alternative payment systems Not really “cash” – rather, form of
value storage and value exchange that have limited convertibility into other forms of
value, and require intermediaries to convert. Many of early examples have disappeared;
concepts survive as part of P2P payment systems. Buyers deposit cash in the account and
spend it at E-Commerce sites (acct # is passed using secure proprietary protocol) E-Com
merchants can feel sure of payment.

 Customers do not need a credit card and spending is limited to account balance Set up
account with e-cash issuing bank

 Account backed by outside money (credit card or cash)

 Public key encryption used to validate coins: third parties can “bite” the coin
electronically by asking the issuing bank to verify its encryption.

 Spend e-coin at merchant site that accepts e-cash

 Merchant then deposits e-coin in his account at his participating bank, or keeps it on hand
to make change, or spends the e-cash at a supplier merchant’s site.

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Advantages of electronic cash

 Time saving

 We can transfer funds, purchase stocks, and offer a variety of other services without
having to handle physical cash or checks as long as bank is providing such services
online. The significant effect is we do not have to queue in lines, thus saving our time.

 Privacy

It offers the possibility of maintaining the absolute privacy of the client provided there is
agreement between the bank of issue and the organization from which the goods and
services have been acquired
 Efficient 

 Ease of use and flexibility

 Just as the currency, it provides an easy method of digital cash transaction and are simple
to execute and therefore there is transparency to all users

Disadvantages of electronic cash

 The main problem with e-cash is unlike the credit cards with a worldwide diffusion it is
necessary that the commercial establishment accept it as a payment method.

 Security

E-cash and E-Cash transaction security are the major concern. Frauds on E-Cash are on
the catch recent years. Hackers with good skill able to hack into bank accounts and
illegally retrieve of banking records has led to a widespread invasion of privacy and has
promoted identity theft. There are many other tricks including through phishing website
of certain banks and emails.
 Traceability

Money flow and criminal/terrorist activities are harder to be traced by government. With
the continued growth of E-Cash, money flow in and out of countries at immediate speed
without being traced will weaken the government's ability to monitor and income in tax.
Money laundering and tax evasion could be uncontrollable in e-cash systems as criminals
use untraceable internet transaction to hide assets offshore.
 Lacks popularity

There is also a pressing issue regarding the technology involved in electronic cash such
power failures, internet connection failure, loss of records and undependable software.
These often cause a major setback in promoting the technology.

E-wallets

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  Established by financial institutions in partnership with member E-Commerce sites.
Allows customer to submit billing and shipping info with one click at member sites. Also
can store e-Cheques, e-Cash and credit card information. It seeks to emulate the
functionality of traditional wallet. Most important functions:

 Authenticate consumer through use of digital certificates or other encryption methods

 Store and transfer value

 Secure payment process from consumer to merchant

 Two major categories:

 Client-based digital wallets – Gator.com, MasterCard Wallet

 Server-based digital wallets – MSN Wallet 

Advantages of e-wallets

 Then, e-wallets can be used for micro-payments

 Eliminates reentering of personal information

 They also eliminate reentering personal information on the forms, resulting in higher
speed and efficiency for online shoppers.

Disadvantages of e-wallet

 Lack of Coverage

 May not be offered by other institutions, thereby making it difficult to make e-payments

When we talk in terms of current businesses, they span many countries or states. These business
houses need faster transactions everywhere. This is not possible without the bank having branch
near all of the companies’ offices.

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 CHAPTER FIVE

BUILDING A WEBSITE

The Concept of Designing a Website for E-commerce and its usability

Also consider the usability of the design of an electronic commerce website as very
important. The human mentality develops new information based on study and interfaces and
steadily he shapes a conceptual or mental model. The design of an e-commerce website adds
in activities, ideas, technology, and relationship/affiliations that the customer is obliged to
handle when using the website. A theoretical replica is the starting point for customer
expectations. When a new customer/client enters an e-commerce website, he instantly starts
to put together a theoretical/conceptual model that speaks about the website to what he
already knows. A client will make out a website as simple to navigate and thus customer
welcoming, if he can without difficulty create a conceptual/practical model of the website, if
a website requires a difficult conceptual mode, the client/customer sees the web site as
puzzling or complicated to use.
The test for the website designer is to come up with a drawing/design model and a structure
image that is steady with the customer’s model of the website. The reason of a website is to

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 support and improve the goals and objectives of a business or institution. It is not an end
itself.

Types of websites

There are three types namely:

 Informational website
 Transactional Website
 Interactive

Informational Website

Website contains information only e.g. website for a football club that offers clubs’ historical
information, biography of players, results of matches played to dates herald.
The same information is transmitted to everyone entering the site and its one way
 Site may have linked pages (hyperlink allowing for detailed information to be
obtained about any specific topic
 There is no personalized or interaction within this type of site and it is often likened to
a newspaper as far as content value is concerned.
 The site enables the organization to establish a presence online: some companies may
undertake e-marketing to provide basic information on their sites, (E.g. general company
information, name, history, location, shopping hours etc.), products for sale, today’s
specials, and methods of payment,
special discounts or offers.
 Websites also carry a comment page usually with an e-mail button that they can click to
send a message.
 Overall goal is to tell consumers why they should do business with you

Advantages
 Relatively easy to construct
 Bandwidth can be kept to a minimum leading to a reduction in costs.

Disadvantages
 One way communication – not interactive and does not provide feedback to online
consumers
 Needs continuous or frequent updating.

Transactional Website

 Contains all the features of an informational website plus the capacity to retrieve
information in response to a user’s request e.g. African Sun Hotels.

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 Interactivity and dialogue is provided although this activity is limited to a series of ask
and respond interaction
 Visitors to the site engage in e-commerce activities (i.e. buying and selling of products
online.

Advantages
 Allows for revenue generation
 Has FAQ to assist customers in their decision making.
 It is able to offer products and services in line with the customer’s requirements through
linkages to relevant pages.

Disadvantages
 Complex to design
 Uses higher bandwidth than informational site
 Requires greater security for conducting online transactions
 It requires a relevant organizational support structure to facilitate online transactions.

Interactive Website

e.g. Pure play companies and enterprise organizations

 It contains all the elements of an informational and transactional site.
 Site may create a page for a specific individual (customization and personalization). It
moves beyond the ask respond interaction into a dialogue and may even anticipate user choices
and suggest alternatives
 Success of interactive websites requires that the user reveals information about
themselves (regarding their wants and needs) and to have the ability to respond
appropriately
 It is the ideal site for creating personalized relationships

Advantages
 Allows for a good deal of personalization and interacting with the customer.
 It enables a detailed database to be compiled about the customers’:
a) Purchase record in terms of quantity and value
b) Likes and preferences
c) Purchasing frequency
 Allows for regular marketing and promotional activities via e-mail

Disadvantages
 Complex and expensive to design and maintain
 Exposes a lot of customers’ personal information to an unknown seller
 Requires a fully computerized support system to ensure the maximum of efficiency from
the site.

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How to build an attractive site

Building a good e-marketing environment helps attract customers and creates repeat business. It
isn’t as simple a process, but it does have tremendous potential in terms of revenues and
profitability. Good e-marketing website design makes this task a lot easier by providing a
customer-friendly site. A website should be much more than just an online brochure, and well-
designed web site integrates the following:
An Online E-commerce Marketing Presence
 The first step to building a profitable e-marketing environment is to establish a presence.
This means that a company needs to have a website, and it should have great e-marketing
website design.
 Its content should be interesting and readable.
 An e-marketing website design should be easy to navigate and use, and structured so that
customers can find whatever they’re looking for with very little effort.
 It doesn’t need to be complex or flashy, but it does need to load quickly on slow
connections and be maintained regularly.

Solid Product And Service Details

 Details and images are important in e-marketing website design. A long description with a
lot of detail can help describe a product on sale, but a picture can do so much more.
 Include high-quality images of all products being sold, so that customers can see them
before deciding to make a purchase. At the same time, the text descriptions should contain
all pertinent basic information that a customer might want to know, like what the product is
for and how it functions.
 Customers won’t be able to handle a product physically, which means they’ll want a lot
more detail than they’d ask for if they could actually touch it.
 

Customer Feedback
 Good e-marketing includes listening to your customer base. Be sure to have a section for
feedback.
 The Internet opens up avenues for speaking out while remaining anonymous, which makes a
lot of people more willing to share their opinions about products.
 Keep a section in the e-marketing website design dedicated to those reviews, so that other
customers can get a glimpse of how other people feel about a certain product. (strategy for
managing customers’ cognitive dissonance)
 Negative reviews are a risk, but as the Internet continues to evolve, a lot more people are
becoming suspicious of products that never receive even one bit of criticism.

Building an attractive website using the 7Cs framework

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1. Content

 Text, pictures and sound e.g. images, videos, documents

 Offering mix of products and services online

 It’s about promotion and communication message.

 Need constant updating of content

 To increase traffic you have to put fresh content

 You need to have relevant key words- (interesting words)

 Put pictures of the product you are selling

 Take the consumer for a virtual tour

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2. Community

 A group of people living in one locality, it refers to user interaction with each other.

 It should allow bloggers- interaction and comments e.g. TV Muvhango Sop SA.

 It helps to build customer loyalty and customer retention.

 Companies can also use community to generate ideas

 Build relationships with customers

 Put a comment on the product on site and trigger consumer comment.

3. Communication

 This is the dialogue between users and website

 Website should set out blog to allow interactivity

 Move from channel to the other.

 The content should show the interaction between consumers and the company and previous
communication from databases.

 Acknowledge the customer that it has made the right decision by purchasing the product via
the email.

 Give them electronic coupons as a promotional means.

 Use telephone, emails, website, live chats, live Help to communicate with them and this
makes the site attractive.

4. Commerce

 Transactional capacity of the website does the website gives the consumer transacts.

 Customer should see the right product he/he is purchasing- view the product, virtual
shopping

 Assure security/ assurance of security upon purchase.

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 It should give you ways of payment e.g. credit card, e- payment systems.

 It should give the customer options to navigate around the shop (virtual shop).

 Update the website constantly for new products

 How the product is to be shipped.

 It should have: order tracking, delivery options.

 Products should be categorized e.g. books, music.

5. Connection

 Linkages and amount of information from other sites.

 Affiliate content

 Popup

 Bandwidth – speed at which the internet connect.

 Search engines optimization.

6. Context

 It focuses on the site design, does it captures interest.

 The consumer should have a feel of the product before purchasing it.

 Site layout of the website – if you specialize on cars- the site should enable the customer to
view interior, exterior and sideways of the product.

 Performance reliability in terms of making decisions in sections e.g. on buying sections or

options.

 Context should be set in such a way that mobile commerce can easily navigate without
getting lost or confused.

 What experiences do you have on the whole context ( the feel of the whole organization/
products)

7. Customization

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  Tailor made products

Components of a website

E-commerce merchants must take every chance/opportunity to convey their

expertise/professionalism in their website, goods and services to their customers’ services as every
one of them will play a significant part in their achievement. The following are important
components of a website.

1. The first page of a website. The consumer gets to this page at what time they spell out the
address of a web site. It contains connections and these connections help the consumer to
navigate the various parts of a site. It gives you an idea about the name of the company and
other important information.
2. Web page
A web page is used to put on view some detailed information concerning each item or aspect
explained in the home page. The web pages can be accessed by using connections provided in
the home page.
3. Domain name
It is very much necessary to have a domain name for a web site. In order to create
trustworthiness, the best is to have your own domain name and specialized/professional web
hosting. Web sites launched on free servers are taken without due consideration and will suffer a
serious loss of business. Consumers may feel that the company doesn’t have its own domain
name and for this reason may not be a trustworthy company. They will basically relocate or take
their business elsewhere.

4. Professional LOGO
For your logo to be professionally looking it must be well designed as an integral part of a web
site. This enables you to create an appetizing and professionally appealing web site, and it will
also allow your customers to recognize brand. The logo should be shown in the top left corner of
every page of the web site.
5. Theme based content
Always make sure your web site focuses on a specific subject and give a variety of
information/data that relates to the topic. Innovative content is always desirable.
6. E-mail capture
A web site should be able to take into account e-mail address of all customers and potential
customers.
7. Privacy policy
It is advisable to create your own page on the web site called “privacy” and let your customers
know precisely how you will be using the information you will collect from them. The page
should contain warning to customers concerning security of information they offer.
8. Testimonials
Enhance or increase credibility by including customers’ testimonials which include customer’s
name, e-mail address and web address and any other essential details.

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9. Money back guarantee
Your website should provide the customers with a firm, no risk, and money back warranty will
boost credibility so that it entirely takes away your potential customers’ risk. This will give your
customers enough confidence and trust by building their confidence with your company and
products or services.
10. Feedback
Customers and potential customers together will always have questions concerning your
products or services. It is advisable to use a feedback form for this purpose so as to achieve
better results.
11. Copyrights
Don’t forget to show or display the copyright/patent information at the bottom of each page
12. Link
When we talk of a link as a connector we mean it makes it practical to get another web page on
the site or the internet or to go back to the home page. A link has a specific identity and
directions for use
13. Banner/poster
This can be a graphic put on view on a web page generally used for advertising/publicity. The
banner is generally connected to the advertiser’s web page.

Corporate Web Site

A company website or company site is and bring up to date website operated by a business or other
private venture like a charity organization. They are at variance from electronic commerce sites in
that they give information to the community about the organization rather than carrying out business
or offering other services. The expression is a term of art that directs the purpose of the site rather
than its design or detailed features, or the nature of the marketplace, sector, or the structure of the
organization/ business site operator.

Contents of a Corporate Web site

A good company website basically includes the following:

1. A home page.
2. A navigation bar or other resources for accessing different sections.
3. You SHOULD Include An “about us” part which should include the following
information/details
o A summing up of company function, background, mission statement, company vision
o A well-presented list of products and services.
o A section with the executive summary or information on founders, board members,
human resources and other key executives. Not forgetting to provide a summary of the
company’s overall labour force.
o Another important aspect is a “news” section to be reserved for press releases and
connections to latest news articles about your organization.
o If your company has several investors remember to include an “investor” section

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 describing principal owners and investors of the company.
o Include a list, of which your main clients are, suppliers, accomplishments, projects,
partners or any other such necessary information.
4. Pages of particular interest to a special application, bearing or groups. These may include:
o A special section where the business record/list open positions and inform those seeking
jobs to know how to apply.
o Also include Investor pages with the annual financial reports, business plan, marketing
plan financial plan, current stock price, financial statements, general idea of the
company structure and other regulatory frameworks.
o A page for employees, information on suppliers, customers, key partners, associates etc.
5. A page for contact information.
6. A document and statement of academic property ownership and strategies as they relate to the
site content.
7. A privacy policy.

PORTAL

A web portal is also known as connections/links page; this presents information from different basis
in a combined way. Portals are there to give a way for businesses to offer a consistent look and feel
with access and have power over procedures for multiple applications and databases, which in other
ways would have been different units’ altogether. A web portal is a web site that gives
gateway/entrance, or portal, to other internet resources. Portals are repeatedly the initial page when
you bring into being your web browser like Netscape, Navigator or Internet Explorer. The extent and
coverage of the portals are very broad and therefore the expression search engine is not enough to
explain the multi offerings made available by portals. E.g. Yahoo, MSN, ALO, Google etc.
The following features are found in sites listed as portals.
 Search engine/Directory
 E-mail Account
 News
 Sports and weather

Types of Portals

 Vertical Portal
Vertical Portals are web portals which center simply on one specific trade, domain or vertical.
Vertical portals merely offer tools, information, piece of writing, and research and figures on the
exact industry or vertical. Vertical information Portal (VIP) is an exceptional doorway point to a
specific market place and or industry position and function.

 Horizontal portal
Basically these are common interest portals covering a wide choice of subject/topic and feature
the likes of yahoo or Google. These are very large portals trading in a wide range of topics.

56
 Enterprise Resource portals or corporate portals
These provide customized access to a suitable range of information concerning a particular
company. Big firms may well set up their own portals in for the purpose of meeting their range
of requirements varying from preparation to control of different functions. At first called internet
portals – these are venture portals on hand for the advantage of the company human resources.
This set of technologies has been built up to support and give access to an entrepreneur/business
associates as well.

 B2B portals
A B2B is a portal that helps to set up relations and to carry out transactions between different
businesses. Large volume of business is being undertaken from end to end in these channels; a
business which supports a portal can make profit if they partake in the ownership of the website
or charge a contract fee for any business accomplished through the portal.

 Application Centric Portals

These portals work as one of binding together back end methods to support customers’
application determined business procedures. consumers could be screening the information as
read only or capable to generate, transform, delete, stop information based on rights and
permissions – but they are in actual fact using the portal to put together a number of applications
into one view – so that to a certain extent open a number of different applications to drive their
business processes they are capable to access them all from one point.

 Content Centric Portals

These portals are used for getting information from wide different sources and display that
content to clients in a way that is based upon client’s role and segmented information
requirements. These are intended to develop the access to and sharing of information stored
inside a business.

 Knowledge Portals
These portals add to the success of knowledge workers by offering straightforward access to
information that is essential or supportive to them in one or more particular roles. Knowledge
portals are not simple internet portals given that the former are expected to supply extra
usefulness such as partnership services, complicated information finding services and
information map.

SEARCH ENGINES

A search Engine is an internet based interactive search tool that makes possible for a client to look
for information on the internet. Web search Engines are essentially databases that have references to
a horde of resources. A search Engine is software that cleans the internet collecting information
about every website and every web page inside a web that it can. The database/folder of most
internet Search Engines have web documents. A web search engine gives an interface in the midst of
the client and database. A search Engine works together and it asks a client to type a search
sequence, which may be a word or few words, a phrase/expression, a date or some important item

57
connected with the information. This initiates the searching operation with these key words and
continues searching until it comes across a catalog of resources that equals the focal word or
expression. Various search engines include instructions and guidelines to search the database in a
more successful way.

Working of search engines

Search engines for the common web do not actually search the World Wide Web straight forwardly.
Each one searches a database of the full text of web pages chosen from the numerous of web pages
out there living on the servers. Suppose you click on the connections given in a search Engine’s
search findings, you recover from the server the existing description of the page. Search Engines
databases are chosen and created by computer robot programs namely spiders. They move slowly
the web in their pursuit for pages to include. They discover the pages for prospective inclusion by
going after the links/connections in the pages they already contain in their database. They cannot
consider or write a URL or use evaluation to make a decision to go and discover for something
besides and see what’s on the web regarding it.

If a web page is never connected to any other page, search engines spiders will find it hard to locate
it. The simple way to create new page – one that no other page has ever connected to – can gain
entry into a search engine for its URL to be mailed by users to search engine companies as an
application that the up-to-the-minute page be included. All search engine companies provide ways to
effectively do it. Suppose the spiders find pages, they go beyond on to another computer program for
“indexing”. This program recognizes the text connects other content in the page and stores it in the
search engine’s databases files/records so that the file can be searched by keyword and anything
more highly developed approaches are provided, and the page will be discovered if your search
engine equals its content. Some kinds of pages and connections are barred from most search engines
by guiding principles. Others are barred because search engine spiders cannot have the ability or
right to enter. Pages that are barred are called the “Invisible Web” – what you don’t observe in
search engine outcome. The invisible web is projected to be two to three or more times better than
the observable web.
When you enter the key word search engine examines its database and gives a listing of sites that
match the search criteria. The hundreds and thousands of search engines outcomes are called Hits.
Listed below are some popular search Engines.
Google, Alta vista, Yahoo, Ask.com, Gmail.com, Dogpile, Met crawler, MSN, lycos, Hotbot.

 To really compete in a saturated field like the Internet, companies also need to make sure
their e-marketing website is optimized for search engine crawlers. This means taking
aspects of e-marketing website design and content to make them more “friendly” to the
way search engines like Google look for websites.

Good optimization allows companies to show up more prominently in search results, increasing the
chances of a customer finding their website and doing business with them.
 

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  Enlist affiliates:

Website owners can be affiliates of an online merchant by advertising the merchant’s products for
a fee or commission. Amazon.com has about 260 000 such affiliates who earn between 5% and
15% commission for any sales on their sites. The exposure is free.

 Keep the site content current:

Visitors will continue to return for news. The goal of setting up a site is not mere online presence.
The result of a site not constantly updated is reduction in the number of hits and volume of online
business. Refer to www.theherald.co.zw, www.zimbabwesituation.co.zw

 Offer free information or products:

Customers tend to visit sites that have something to offer e.g. free mouse pads, free one online
reading of an article of your own choice i.e. if you are not subscribed to the site. You give a
customer an incentive to enter into a relationship with you.
If a visitor is registered greeting them by name next time they visit your site is a great enforcer
e.g. sites of banking institutions.
Customers should not reenter information given in previous visits when they order things.
For B2B sites offer a free service as a way to entice customers. It makes it difficult for the
recipient company not to patronize the business.

 Implement a cross selling strategy designed to assist the visitor make a final decision.

Suggest other items that could be of interest to the visitor. E.g. on the Amazon.com the customer
is presented with other books by the same author or on the same topic that other customers have
bought after buying the queried book.

 Introduce event marketing: Special events on a merchant’s web site attract new
customers and encourage repeat visitors.

Victoria Secret’s broadcast its fashion show live on the internet. RealPlayer software was used to
transport the streaming media. Over 250 000 copies of the software were downloaded per hour on
the day of the event. Idea was a great success but unfortunately the technology was not designed
for real time media. As a result the server crushed.

Search Engine Optimisation

Search engines like google.com and directories like www.yahoo.com are designed to help
consumers navigate the millions of pages on the web. Search engine optimisation is therefore,
trying to get the best out of these resources. Search engines use software programmes called

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spiders or crawlers to search the web and create a large database or index of what is available
online.

Search engines can either be:

 Paid listing search engines which only include listings from companies who have paid to
be included e.g. Go To.com.
 Reward based search engines which reward customers for using the engine by entering
them into a contest e.g. iwon.com.

 Community based directories which have links contributed by members e.g. zeal.com.

 Meta search engine which searches across multiple search engines e.g. met crawler or
vivismo.com.

 Global search engines. Which focus on a global market.

 Natural language querry which allows users to ask questions using full form English
instead of key words e.g. AskJeeves.com

People often use search engines to locate information on the internet. In searching for information
individuals are presented with hundreds of selections but will not read through all selections but
the top few entries. To get more traffic it is advisable to design a website so that it shows up in
the top five of any listing. Search engines rank web pages using:

 Key words in the title.

 Key words near the top.

 Frequency of keywords.

 Link popularity.

There is a penalty for search keyword spamming (i.e. if you try to include every popular keyword
with the hope that you will show up near the top in many searches, there is a penalty you may end
up at the end of the list.)

To attain and maintain a position at the top end of a listing the following strategies can be
followed.

Change the Meta tags on the page. All web pages are written using HTML which has a set of
commands known as tags that determine how the page looks. A Meta tag does not affect how the

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page looks but rather it is a secret instruction of visiting search engines on where to put the page
in the index.

1. Change the page title.

2. Link reciprocally .i.e. site A and site B agree that they will place a
link to the others site on their page. This way a wider audience is
exposed to both pages.

3. Purchase multiple domain names i.e. be available on .com, .net,

co.zw e.t.c.

4. Have multiple home pages.

5. Pay for position approach. This entails paying the search engine to
place you in the top five.

CHAPTER SIX

Introduction

This chapter will explain different definitions of e-marketing as put forward by various
researchers so as to come up with a comprehensive and all-encompassing definition of e-
marketing. Advantages and disadvantages of introducing e-marketing in an organization will be
explained, furthermore strategic e-marketing planning will also be discussed with an objective of
formulating an e-marketing plan that will help organizations to strategize and outwit their online
rivals. The aim here is equip companies with online strategic ideas on how to prepare effective
online marketing plans that will enable them to compete and make money electronically. Viral
marketing as an essential technique of spreading information online will also be discussed
including the tactics that may be employed in the dissemination of this information.

Definition of e-marketing

1. Loosely defined as the buying and selling of products over the internet (marketing is
more than merely the buying and selling of products. (Chaffey and Smith, 2008)
2. Process of marketing a brand using the internet. Does not bring out what is involved
in marketing the brand, the activities in the process are not articulated. However, the
use of the word brand is broad. It is not only limited to products and services. A
brand can also be an organization or a person.
3. Application of marketing techniques via electronic media and more specifically the
internet. Definition does not provide the marketing techniques.
4. Strauss et al (2004:2) define e-Marketing as “the application of a broad range of
information technologies for transformation of marketing strategies to create more
customer value through more effective segmentation, targeting, differentiation and

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 positioning strategies”. (This definition takes a broader stance to the definition of e-
marketing i.e. marketing techniques which include marketing research, segmentation,
positioning, and the 7ps are being conducted online.
5. Chaffey and Smith (2008): Electronic marketing involves applying technologies
which form online channels to market: Web, e-mail, databases, plus mobile/wireless
& digital TV, PCs, PDAs) to support marketing activities aimed at achieving
profitable acquisition and retention of customers… within a multi-channel buying
process and customer lifecycle.
E-marketing recognizes the strategic importance of digital technologies in:
 Developing a planned approach to reach and migrate customers to online
services through electronic and traditional communications.
 Retaining customers.
 Gaining customer knowledge (of their profiles, behavior, value and loyalty
drivers).
 Developing online products and services to satisfy identified customers’
needs and wants.
 Building customer relationships.

Advantages of introducing E-marketing in an organization

 Global reach
 Low cost- adverts, rent, payments
 24/7 selling products
 Allows innovation and exchange of technology and allows research e.g Johnson and
Johnson.
 Selling of specialized products.
 Allows answering of frequently asked questions.
 Sharing of sensitive information – event marketing.
 Gathering of market intelligence through blogs
 Locks customers in and competitors out
 Increases cost of competitors
 Enables e-CRM
 Creating of partnerships e.g. Amazon.com.

Strategic e-marketing planning

The essence of developing an e-marketing strategy is to ensure that the companies IT

capabilities are matched to the market environment in which it operates.

E-Strategic Planning attempts to answer 3 questions:

 What is the business doing now in terms of IT? What is happening in the technological
environment?
 What should the business be doing in relation to developments in technology?

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 It tries to create a strategic fit between the firm’s technological resources and market
condition.

Strategic E – Marketing Planning involves the establishment of the goal of an SBU and the means
by which it is to be achieved electronically

STRATEGIC E-MARKETING PLAN FORMULATION (SOSTAC Model)

Situational Analysis

 Highlight activities in the internal and external environment that can be taken advantage
of through the introduction of electronically products and services. Determine what stage
the company is currently at in terms of adoption of E- Marketing and identify opportunities
 Make use of a SWOT analysis. Internal Analysis (Strengths and Weaknesses) assess
companies resources/assets and companies capabilities
 Skills – strong customer service department
 Employees are eager to learn
 Product/Service Analysis – excellent website and database system
 Vision and Mission – vision to be the best or leading company worldwide. (Provides
opportunity to enter international markets)
 Financial resources
 Process technology – is it latest technology or old
 Reputation of organization – do offer unique products electronically
 Relationships with suppliers/distributions – backward or forward integrated.

External analysis
 Process of monitoring and analyzing the external marketing environment of a company
with the aim of understanding current and potential taking place in the environment so as
to foster strategic thinking in the organization. Conduct the following
 Industry analysis – what are the forces driving competition? Are the rules of the game
changing in the industry? Is technology the basis of competition in the industry?
 Use Porter’s 5 forces

The aim of industry analysis is to reduce the intensity of the forces by introducing electronic-
strategies e.g.
Bargaining Power of Suppliers
Suppliers have more bargaining power because they are few offering highly differentiated
products such that cost of switching suppliers is high. (Integrate backwards and install an
extravet)

Competitor analysis
 How are competitors capitalizing on the use of the internet software being used, how are
they customizing their products (online or off-line), inventory control system,

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 Are they selling online
 Are competitors using the internet as a low cost strategy way to differentiate the
organization?
 Competitor analysis assists an organization in coming up with a positioning statement.

Customer Analysis
 Do they have access to the internet?
 Are they risk averse when it comes to the use of the internet? Also use the PESTEL
factors to make an external analysis e.g. legal – what laws are there in introducing digital
products services.

Identification of Opportunities
 List the opportunities that have been identified from the situational analysis that you
think they can allow you to implement e-marketing strategies e.g. Demand for the
product is growing in international markets.
 Ability to integrate backwards and install an extranet
 Customers favouring to shop online.

Objectives

 Formulated based on the results from the situational analysis. Objectives set must not be
business objectives in general but must be related to internet marketing. E.g. to achieve
online promotion contribution of 5% of the target market visiting the website or
seeing the banner.
 Online objectives should be set with the business type in mind.
 Firms tend to concentrate on financial objectives and ignore other strategic objectives.
 Use of the Balance Score Card (Kaplan and Norton, 1993) helps management to develop
a balanced range of objectives and it also provides measures for the objectives set.
 Objectives can be set from a :
i. Customer perspective
ii. Internal Business Process Perspective
iii. Innovation and Learning Perspective
iv. Financial Perspective

Example of BSC with e-marketing strategy objectives and measures

Perspective & Explanation Objective Possible Measure
Customer Perspective: set -Position firm as high tech -Customer attitudes services

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objectives in relation to how -Create high
you can improve customer satisfaction with
value offering and customer online purchasing
satisfaction
customer - No of complaints received
value of through e-mail or telephone
- No. of abandoned shopping
- Sales online versus offline
for some products

- Increase the amount or -Analyze the database for

frequency of online sales from change in frequency of
current customers purchases over time

Internal Business Process -Improve quality of online -Amount of time to answer

Perspective -objectives in technical help customer e-mail
relation to electronic business -No of problems covered by
processes to be excelled at to website FAQ
satisfy all stakeholders. -Customer follow up survey
- Achieve optimized inventory -Inventory turnover
levels -Supplier speed to deliver
product
- average number of items in
warehouse

-high product quality for -Product test statistics

online service

Innovation and Learning -To provide online service -No of new services products
Perspective – efforts to innovation markets in a year
continuously improve on - No of new service features
existing products and to offered by competitive
introduce new products offering

- penetration of new markets -percentage of the firm’s sales

in each market

Financial Perspective -Increase market share for -Market share percentage

online products firm’s sales as percentage of
-Achieve at least 5% net profit industry sales
in first year of new product -Net profit as a percentage of

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 sales

Table 6.1

Strategies

 Strategies define how e-marketing objectives will be achieved. The company needs to
decide on segmentation, targeting, positioning, differentiation, growth strategies, etc.
 Marketing strategies developed must capitalize on an organization’s electronic or
information technology capabilities.
 A firm’s strategy consists of how:
 To satisfy customers
 To respond to changing industry and market conditions.
 To best capitalize on new opportunities.
 To manage each functional piece of business.
 Through these strategies a company should develop a customer magnet website.

Segmentation strategies

These are an organization’s e.g. Objective – Create high customer satisfaction with value of
online purchases.
- Capitalize on business strengths when selecting strategies.

Tactics

 Details on how to achieve the strategies

 They are short term e-marketing activities e.g.
 Online sales promotion through the use of electronic coupons
 Installation of CRM software
 Introduce send direct E – mail to customers
 Introduce e-commerce

Action plan

Action plans should involve how activities are to be undertaken to create value for the target
market, time to be taken on different activities and their cost
 Make use of a Chart

Activity By Whom How When How Much

Table 6.2

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Control

Evaluate if objectives are being achieved. Put in place a tracking system.

Use metrics or possible measures on the balance score card.
 Also have a contingency plan (convective measures) in place just in case plans are not in
order.

VIRAL MARKETING

Viral marketing proposes that messages can be rapidly disseminated from consumer to consumer,
like the spread of a virus, leading to large scale market acceptance. It is based on the idea of word
of mouth advertising. With the advent of the internet and e mail, marketers have to view markets
as networks of consumers rather than an amorphous mass and use this knowledge to enhance the
spread of their message.

Types of viral marketing

There are three types of viral marketing:

 Incidental contagion
 Contagion due to transaction consummation

 Consumers as professional recruiters

Incidental contagion

In this case the consumer is not made aware of his or her role in the message
dissemination process. Consumers’ sign on to a service while using the service
unwittingly increase the awareness of the product. Consumers do not perform any special
promotional tasks and do receive any reward.

Contagion due to transaction consummation

In this case a firm makes an attractive product available for free provided that all
interested parties register for the service. In other words, a service is available to a
particular individual only if others sign up giving the user an incentive persuade others to
sign up as well e.g. PayPal which allows users to make small payments to one another
online, paid $10 to its early users to sign up and a few more dollars for each new member
they referred. As a result PayPal reached 3 million users in the first 9 months. Once it
reached a critical mass PayPal reduced its payments to $5.

Consumers as Professional Recruiters

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 In this case consumers are encouraged to contact others and inform them about the
product. This can be done in two ways. No incentive might be provided to the consumer.
The “tell a friend” icon might appear right next to a product display or news story.
Alternatively, the marketer sets up an explicit incentive structure to reward consumers
who bring in the most traffic.

When to use viral marketing

From a strategic perspective viral marketing is called for when you care about the
quantity rather than the quality of traffic frequenting you site i.e. building up a crowd.
Viral campaigns also work well for markets that are homogeneous rather than
heterogeneous. Viral marketing works best for products or services that have one or more
of the following characteristic:

 Uniqueness.

It works very well for products that are market creators or are nothing like
what is available on the market and represent a new way of thinking e.g.
Hotmail at its launch was in an era of paid for e mail. It being a free e mail
service represented a new way of thinking about customer acquisition.

 Exciting product concept

Viral marketing works when individuals are excited about a product and its value
proposition. As such, viral marketing is great for products that are entertaining, colourful
and exhilarating to use.

 Simple product concept

The product has to be as simple as possible for a consumer to explain to his or her
friends. A concept as simple as “free e mail”, as in the case of Hotmail, was naturally
easy to disseminate.

 Low cost trial

In trying a product, the total cost of adopting a product should be low. The total cost can
be broken down into several components i.e. switching costs, transaction costs and the
cost of the product. Switching costs refer to the cost of moving from an old product under
use to a new product. The price of a product entails the products value. Viral marketing
works best for products that are free or inexpensive e.g. digital products, free
communication technologies etc.

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 Transaction costs involve actual payment to make the move and hassles involved e.g.
filling up forms. For a successful viral market campaign the actual sign up or registration
process must be seamless.

Negative aspects of viral marketing

1. Brand control is reduced by viral marketing. One has no control over the
audiences contacted in the process and how the message may be modified
leading to variability in how your brand is perceived.
2. Uncharted growth. Viral marketing can lead to unanticipated growth paths
which may lead to abrupt changes in strategic direction like being led to
unplanned for markets.

3. Lack of measurement. Results of viral marketing are difficult to track and

measure. In many cases it may not be possible to tell if people who adopted your
service did so because of your viral marketing technique.

4. Spam Threats. Poorly done viral marketing can lead to large scale
spam(unsolicited e mail) especially in the case of paid for viral marketing where
people who want to earn money go about sending as many messages as possible
which might not be as well received.

How to manage the viral marketing process

Though viral marketing offers an organic customer led growth path, continuous
managerial oversight is required. This can be done:

 Carefully picking the initial recipients of the message. Viral pioneers must
be popular (have access to a large social network), influential and
representative of the target market. It is also important to identify and pick
people who play a bridging role in bringing together two social networks. It
is not advisable to pick such individuals out of convenience e.g. friends of
employees rather than by any strategic consideration.
 Carefully picking the message. The message should be designed such that it
communicates the value proposition clearly and simply, so that it is easy for
consumers to pass the message on.

 Putting control mechanisms in place. This will measure the impact of the
viral marketing campaign. A simple way of doing this is to ask new

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 customers how they heard about your service. One must constantly monitor
how consumers are spreading the message.

NB. As with any other form of promotion, viral marketing works for products
that offer general value to customers. If a product is bad viral marketing can sink
it fast.

CHAPTER SEVEN

CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

Introduction

This chapter will look at a variety of contributions made by various researchers on the concept of
electronic customer relationship management (e-CRM). Studies have shown that organizations
who fail to create relationships with customers will never be successful. A customer is a king in
this marketing paradigm shift and therefore firms have to take note of this if they want to realize
their dreams. Online customers are looking for a total solution and therefore due to the fact that

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there are a lot of online suppliers looking for profitable customers, organizations need to create
solid mutual relationships so that they can lure profitable customers to their businesses.

Definition of Customer Relationship Management (CRM)

Customer relationship management is a strategy used in creating and building sustainable and
long lasting relation with your valued customers. The application of the technology to realize or
achieve customer relationship with customers should be highly esteemed as an important business
phase for any sustainable business. The importance of which is drawn from the past failures of
many dot-coms following huge expenditure on customer acquisition. The internet development as
means of transacting has generated a variety of business models for creating viable advantage. A
point to note is that, company managers are now more and more conscious of the essence or
importance of customers’ loyalty and the building of long-term relationships with them. It is
important to note that it is expensive to acquire customers and that start-up companies usually
struggle and fail to get profits for at least two to three years due the absents of a comprehensive
customer database.

Customer Relationship Management (CRM) and the Internet

Customer retention is increasingly being seen as an important marketing and managerial issue,
especially in the context of saturated market or lower growth of the number of new customers. It
has also been recognised as a key objective of customer relationship management, primarily
because of its potential in delivering superior relationship economics, that is to say it costs less to
retain than to acquire new customers. Accordingly, CRM is a mixture of business processes and
technology that seeks to understand a company’s customers from the perspective of who they are,
what they do, and what they are like. In this sense, the focus of the company is to understand its
customers. The definition however does not highlight the intentions of the organization after
getting the knowledge of their customers. It is worth to note that CRM is also defined as a
customer centric business strategy with the objective of taking full advantage of profitability,
revenue and customer satisfaction. This definition highlights the intentions of the organisation,
which are: profit maximizing, increasing revenue and customer satisfaction.

In other words CRM is customer situated at the centre and focus is on increasing sales and
customer satisfaction. Electronic Customer relationship management is also a broadly recognized,
extensively put into online operation strategy for managing and nurturing a company’s
interactions with online clients and sales prospects. It also involves using technology to organize,
automate, and synchronize business processes-principally sales activities, but also those for
marketing, customer service, and technical support. It is of noteworthy an outline that the overall
goals of e-CRM are to find, attract and win new online clients, nurture and retain those that the
company already has, entice former clients back into fold, and reduce the costs of marketing and
client service.

All organizations therefore strive to make the best use of e-CRM towards building long-term an
online relationship with a network of influence markets in order to understand, if possible,
anticipate their need and wants to better satisfy and retain them. It is evident that CRM

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implementation enables better customer service, allows better management of customer
expectations, and improves customer loyalty effective management of customer relationships
directly boosts company profitability.

The Internet can help organisations to recognize and know their customer needs and wants, and
satisfy customer needs through the development/improvement of customer-centric marketing
programs and also create value for customers by managing information and providing
personalized products and services. One way to do it is through the online channel where
companies can build relationships, segment and retain customers and maintain customer loyalty.

Integration of CRM and Internet technologies will be of assistance to companies to build

competitive advantages, enables companies to put together relationships with customers, and
improves customer satisfaction. The main reason or factor behind the concept is that without the
assistance of Internet tools, CRM cannot be successful. Therefore uniting CRM and the internet is
an effective marketing means and this is e-CRM.

Most researchers do agree in that e-CRM is a mixture of software, hardware, application and
management commitment. E-CRM can be categorised into operational, analytical and
collaborative. Operational e-CRM is given weight to customer touch up points, which can have
contacts with customers through telephones or letters or e-mails. Therefore, customer touch up
points is something web based e-mails, telephone, straight sales and fax.

The world is now a global village hence technology and internet should provide better solution in
electronic customer relationship management (e-CRM) as a management tool that can be widely
used in today’s ever-changing business world. It is referred to as marketing activities, tools and
techniques delivered through the Internet, using technologies such as email, the worldwide Web,
chat rooms, forums, social media, etc., with the goal of locating, building, and improving long-
term customer relationships. E-CRM generally refers not only to the technology used in
managing customer relationships, but also to the business management processes employed with
customer strategies.

In other words, e-CRM is seen not only as the use of the internet but as “the use of internet
technologies to facilitate the management of customer relationships.” The Internet offers
unprecedented transparency for customers and marketers, way beyond the capabilities of any
traditional media. Information available shows that after establishing a relationship with an
organisation, Internet customers are found to slowly but surely double their spending over a
period of about two years. Necessary credit must be accorded to e-CRM for the great
achievements so far realised since effective e-CRM strategies enables a company to access new
worldwide customers and suppliers and capture valuable stakeholder data, which is essential to a
company’s growth and market competitiveness. Hence, e-CRM has received increasing attention
from different organizations around the world.

Evidence has shown that it costs as much as twenty times to acquire a new customer as to retain
one. As a result it clear that customer relationship management has drawn the necessary attention
as a prerequisite of all managers involved in e-business to otherwise seriously consider adopting
customer-driven and customer-oriented business models if they are to achieve competitive
advantage.

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It was also discovered that competitive advantage is for companies who base their marketing
focus not only on repeat/loyal customers as the most profitable because that could lead to loss of
business and cause them to miss opportunities in targeting other potential customers with the
potential to make them profitable. Some small businesses (SMEs) may wonder whether they
really need the added complexity of a small business e-CRM solution. The answer will depend to
a large extend on the size of the business and its growth objectives. It has also been noted that
those companies can boost their profits by almost 100% by retaining just 5 percent of their
customers. What is very important in any relationship, be it personal or customer relationship, is
the quality of the relation.
There was a time when Customer Relationships Management (CRM) solutions were difficult to
access especially by small entrepreneurs or start ups. Nevertheless, it is no longer the case; now
even the smallest entrepreneur can now afford if he so wishes to implement these CRM solutions
and they are affordable.
It must be noted that Customer Relationship Management is central to e-business. Analyzing
customer behavior enables businesses to personalize their offerings and to anticipate their
customers’ wants and needs. Doing this successfully means organizations can maintain good
customer relationships. This is a key to retaining customers, which is something every
organization is working hard to do. Gaining a new customer is six times more costly than
retaining an existing one. It is further stated that the cost of customer defections is also well
documented. A company with a 90% customer retention rate, which most businesses would
consider exemplary in fact losses almost half of its customer base every five years. All
organizations regardless of size should practice customer relationship management effectively for
them to be successful in achieving their desired objectives through identifying and sustaining
profitable and long-term relationships with their customers; providing their valued customers
with relevant information on products and services, at the right time, just in time, and in the right
set-up.
Basically there are three component parts to a Customer Relationship Management (CRM) model
as follows:

Customer acquisition

It is where a company implements technology and techniques to market activities intended to

form relationships with new customers through internet as well as trying to reduce acquisition
costs and targeting profitable customers in the online environment. It is doing the right thing and
doing it right throughout the process, maintain quality standards and as well choosing the right
procedures for the company’s different valued customers’. This could be done through
advertising and promotion, incentivized customers, discounts etc.

Customer retention

When starting a business, it is important to make sure all customers are served effectively. As the
company grows techniques should be put in place that will help to retain the repeat or existing

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customers. It gives managers the opportunity to identify relevant offerings based upon the
individual needs, using information on customers in giving them, personalized service and access
to promotional materials in a special way.
A key principle to Electronic Customer Relationship Marketing is retention of customers through
different means and practices to ensure repeat purchasing and trading from pre-existing
customers by satisfying requirements above those of competing companies through a mutually
beneficial relationship. How good the seller buyer relationship is depends on how well it is
managed by the seller through different means and practises. Evidence has shown that 5 percent
increase in customer retention would increase the value of each customer by between 25 to 100
percent. The potential implied in that finding led directly towards electronic customer relationship
management.

Researches undertaken by several researchers suggest that there is high degree of relationship
between customer retention and profitability. Established customers, who have a tendency to buy
more from the company, are predictable and usually cost less to serve than new customers.
Therefore many companies in competing markets aim at redirecting or allocating large amounts
of resources and attention towards customer retention especially in markets with increasing
competition. It must be noted as well that it may cost five or six times more to catch the attention
of new customers than it would to retain current customers as direct; or offensive marketing have
need of much more wide resources to effect defection from competitors.

Research shows that 5 percent improvement in customer retention can cause an increase in a
company’s profitability of between 25 and 85 percent (in terms of NPV) depending on the
industry. Yet some disputed that the calculation resulted from faulty cross-sectional analysis of
data.

However increased profitability linked with customer retention efforts happens because of several
factors that occur once a relationship has been established with a customer and these include;

 The cost of acquisition only occurs at the beginning of a relationship.

 Account maintenance costs decline as a percentage of total costs (or a percentage of
revenue).
 Long term customers tend to be less inclined to switch, and also tend to be fewer
prices sensitive.
 Long term customers may initiate free word of mouth promotions and referrals.
 Long term customers tend to be satisfied with the relationship and become loyal.
 Regular customers tend to be less expensive to service because they are familiar with
the process, require less education.
 Increased customer retention and loyalty makes the employees’ jobs easier and more
satisfying. In turn happy employees' feedback into better customer satisfaction in a
virtuous circle.

It is clear that from the studies above it can cost anywhere from four to ten times as much to
acquire new customer as it does to maintain repeat buyers, therefore Electronic Customer
Relationship Marketing is viable, as it focuses its emphasis on customer retention than customer
attraction.

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Customer extension

Customers must all the time be reminded of the new or existing products by increasing the depth
or range of goods they can buy; that is encouraging them to become more acquainted with the
company by sending additional information on the company products. By so doing the company
will be developing.

Benefits of e-CRM

Any organization small large, startup or established, can use internet for relationship marketing to
make customer relationship targeted and personalized. The result of implementing these
relationships marketing can be improved as follows;
 Targeting more cost-effectively. Traditional targeting, for direct mail for instance, is often
based on mailing lists compiled according to criteria that mean that not everyone contacted is
in the target market. For example, a company intending to acquire new affluent customers
possibly will use postcodes to target areas with appropriate demographics, but within the
postal district the population may be heterogeneous. However, the internet has the benefit that
the list of contacts is self-selecting or pre-qualified. A company will only aim to build
relationships with those who have visited a web site and expressed an interest in its products
by registering their name and address.
 Achieve mass customization of the marketing messages (and possibly the product). This
tailoring process is described in a subsequent section. Technology makes it possible to send
tailored e-mails at much lower costs than is possible with direct mail and also to provide
tailored web pages to smaller groups of customers (micro-segments)
 Increase depth, breadth and nature of relationship. The nature of the internet medium
enables more information to be supplied to customers as required. The nature of the
relationship can be changed in that contact with a customer can be made more frequently.
The frequency of contact with customer can be determined by customers – whenever they
have the need to visit their personalized pages – or they can be contacted by e-mail by the
company according to their communication preferences.
 A learning relationship can be achieved using different tools throughout the customer
lifecycle.
For example, tools summarize products purchased on-site and the searching behavior that
occurred before these products were bought; online feedback forms about the site or products
are completed when a customer requests free information; questions asked through forms or
e-mails to the online customer service facilities; online questionnaires asking about product
category interests and opinions on competitors; product development evaluation –
commenting on prototypes of new products.
 Lower cost. Contacting customers by e-mail or through their viewing web pages costs less
than using physical mail, but perhaps more importantly, information only needs to be sent to
those customers who have expressed a preference for it, resulting in fewer e-mail-outs. Once
personalization technology has been purchased, much of the targeting and communications
can be implemented automatically.

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The Difference between CRM and e-CRM

CRM and e-CRM have been used interchangeably in many studies; however they do not mean
the same. CRM provides an integration of people, processes, and technologies in every area of
business that touches or affects customers.The focus of CRM is to integrate people, processes and
technology to maximize the relations of an organization with all types of customers.

The difference between e-CRM and CRM technique is the integrating technologies of new
electronic channels such as the Web, wireless technology and voice technologies, and merges
them with e-business applications into the company’s overall CRM strategy, where in CRM
customer contact is mainly done through traditional ways such as: stores, retail, telephones and
faxes. Thus, e-CRM can be considered much wider in scope and more comprehensive than
traditional CRM.

It is further postulated that e-CRM emerges from the technologies of the Internet and the Web in
order to make easy the implementation of CRM. The integration of various communication
channels such as the Internet, email, telephone, call centre, and fax is essential across all
departments in the company, and this specifically is what e-CRM promises to deliver.

Accordingly, CRM system focuses on products and work functions and the web-facilitated
applications are intended around one department or business unit in other words it can be used for
internal use. On the other hand, e-CRM mainly focuses on customer’s needs, in other words it can
be used for external use. It also allows for individualized and personalized views based on
purchases and preferences, where it allows clients to customize their views unlike CRM, where
personalization is not possible since the individual customization requires programming changes.

Relationship Marketing

Relationship marketing refers to effective marketing activities used by organisations to establish,

develop, and maintain flourishing relationships with customers. The use of relationship marketing
effectively can help in broadening the customer base, and increasing market share and
profitability. Dwyer, Schurr and Oh (1997) highlight that attention to customers fosters relational
bonds that will lead to repeat purchases and subsequently benefit both business and consumer
marketing. A positive bond between customer and company makes possible customer satisfaction
and loyalty.
Satisfied and loyal customers tend to spend more money and purchase repeatedly, are less price
sensitive, have higher intention to refer others, and are more economical to maintain. Hence, loyal
customers are very important to the continued existence and success of many service industries,
in particular in the hospitality, insurance, and financial sectors. A slight change in the percentage
of loyal customers is said to bring about a huge change in profits and also the overall value of the
company. Marketers are hence eager to understand the key to building strong, long-lasting online
customer relationships.

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e-CRM techniques used to retain customers

e-CRM technologies
It is important to have solid understanding of how e-CRM technologies assist organisations.
Accordingly, it is necessary to provide the relevant background to the CRM technology types.
There are three main types of e-CRM technologies that firms can adopt. These types are
Operational, Analytical, and Collaborative.

Operational CRM

Operational e-CRM allows the establishment to perform its work in a successful and well-
organized way through the integration among a range of communication channels. It aims to
support front-office processes. It focuses on automating business processes, including channels
and front-back office integration (Sheth, 2000). It is a tool for getting better customer service and
makes easy communication between the customer and the customer service officer which should
increase the customer loyalty and lead to a better service.

This allows the enterprise to work together effectively with its customers through a variety of
channels, some of which are phone, fax, e-mail, chatting, and mobile devices. It also matches
customer interactions consistently across all channels and improves the organisational
performance.

Analytical e-CRM

Analytical e-CRM builds on the operational CRM and intends at building data warehouses,
getting better relationships, and examining data by managing information relating to customer
segments and behaviour using numerical methods. Analytical CRM is important as it offers
products based on the customers’ first choices. This is mostly done by classifying customers into
various categories or groups according to their profession, social traits and business deal records,
which allow firms to cross-sell the products in a better and effective way.

Information is often stored in information storehouses, which is best explain as a large storeroom
of corporate data. Analytical CRM deals with the planned, efficient, and successful use of data in
order to provide a value addition to the customer, and bestow management with possibilities to
make decisions. Dividing customers into different categories will allow organisations to cross-sell
the products in a successful way, and to tailor the offering according to the needs and preferences
of each and every customer.

Collaborative e-CRM

Combined e-CRM is a communication hub or an administration network that aims at building

online societies, developing business-to-business customer exchanges, and personalizing services.
These include communications channels such as the World Wide Web, email, and voice
applications.

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It also takes account of any function that provides a point of communication between the
customer and the channel. Collaborative e-CRM for example in a banking sector gives the
combination between distant banking and phone banking and private banking by either opening
an account outside the country, purchasing and selling stock of foreign entity through the bank),
which will give the client a full connection with the banking services all the time. Collaborative
e-CRM focuses on customer integration using a coordinated mix of interaction channels. The
integration between traditional banking, phone banking, and Internet banking will give the client
a reliable connection with the banking services all the time.

The e-CRM expands the CRM technique by integrating technologies of new electronic channels,
and combines them with e-business applications into the enterprise's overall CRM strategy (Pan
and Lee, 2003). Therefore, after determining the readiness of organisations to implement e-CRM,
an organisation should determine the level of readiness, in order to be able to implement CRM
either at the operational level, analytical level, collaborative level or an e-CRM.

Latest e-CRM techniques used to offer new products and services to customers: A case
study of Banks in developing countries

Electronic funds transfer (EFT)

Bielki (2002) asserts that the term EFT refers to Automated Clearing House (ACH), and explains
that it is a payment processed by electronic means using a standard data format. These will be
electronic payments of funds and government securities among financial institutions and
businesses. Nevertheless, some described it differently that it is an electronic movement of
financial data, designed to eliminate the paper instruments normally associated with such funds
movement. It is further elaborated that it is a method used for transferring funds by a bank
branch to any other branch, not considering distance. EFTs process pre-authorised debits or
credits from one bank account to another within 48 hours.

Automated Teller Machine

An ATM join a computer terminal, record-keeping format and cash vault in one unit, authorizing
customers to go into the bank’s book keeping system with a plastic card containing a Personal
Identification Number (PIN) or by striking a particular code number into the computer terminal
connected to the bank’s computerized records 24 hours a day seven days a week. It offers several
banking services. They were first introduced to function as cash dispensing machines and due to
advancements, they are able to provide services, such as making deposits, funds transfer and bill
payments. Saravanaraj (2012) term the ATM as “an Any Time Machine” because anytime a
customer can access their funds. There is enough information that supports the above writers that
it is a computerised telecommunications device that gives the customers of a bank with access to
financial transactions in a public space without the need for a cashier, human clerk or bank teller.

Internet Banking (I–Banking/ e- Banking)

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Basically Internet banking refers to any user with a personal computer and a browser can get
connected/linked to his bank’s website to carry out any of the essential banking functions. In
internet banking system, each individual bank has a centralized database/catalogue that is linked
with other banking systems by means of a web-based environment. All the services that the bank
has legally recognized on the internet are displayed in a menu. Through that any service can be
selected by the customer and further the demo or working manual is provided by the nature of
service. It would be a borderless entity permitting anytime, anywhere and anyhow banking.
Internet is the network which connects the various locations and gives connectivity to the central
office within the organization.

Point of Sale (POS)

Koch (2003) asserts that a POS is an instrument used as a direct debit instrument of the purchase
amount to the customer’s account. The funds are transferred at the time the withdrawal or sale is
made. They are found in banking halls and in supermarkets. Others have it that it is a machine
used to conduct retail transactions. It can offer many services, including credit card processing,
check reading and cash transactions, depending on the model. These devices can be found almost
anywhere, from grocery stores to gas stations. On the other side it is a technology used for quick
and secure transaction as acash register by electronic means. The system also allows consumers
to make payment for retail purchase with a check card which is a considered to be a new name for
debit card. The card looks like a credit card but has an important difference. The money for the
purchase is transferred immediately from account of debit card holder to the store’s account.

Prepaid payment instruments

Prepaid payment instruments include smart cards, magnetic strip cards, microchip cards, net
accounts, internet wallets, mobile accounts and mobile wallets, where value is laid up in advance
and used when required. The value stored is the value paid by cash, by the instrument holder.
Others have it different in that they existed as payment options on which purchases were charged
on, meaning it had to be prepaid before the transaction takes place or prepaid payment
instruments can be observed to be e-cash which composed of stored value cards, network money
and e-wallets. Stored value cards store prepaid funds by electronic means on a chip in the card.
Clients can download their cash from their accounts into the card, so they can be used like cash.

Magnetic ink character recognition (MICR)

Magnetic ink character recognition is a character recognition system that uses special ink and
character. It takes a cheque which contains this ink to be read and approved through a machine
which magnetises the ink and translates the magnetic information/data into characters. This is
used by banks to give a secure high speed technique of scanning and processing information.
McLennan (2000) differ with other researchers as he describes that this technology uses
magnetically chargeable ink or toner to print the numbers and special characters on the bottom of
cheques or other financial transaction documents. The numbers include the account number,
identification number and the routing and transit of the cheque for the bank. It can also be seen as

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a technology used to verify the authenticity or originality of paper documents, in particular
checks. This special ink, which is sensitive to magnetic fields, is used in the printing of definite
characters on the original documents.

Mass Mailing and Tele Calling

Customers can be contacted through e-mail and through telephones phones, mobile phones, and
they may be informed about the different services and schemes provided by different
organizations. As companies are determined hard to reduce expenses in marketing or whatever
mass mailing and tele-calling can be considered as viable. It is one of the cheapest methods of
advertisement and communication that can also reach a great number of people at a considerably
faster rate.

The effectiveness of e-CRM techniques

E-CRM has many benefits in the banking or financial sector in making the implementation of e-
business possible and relatively cost-effective. From the literature surveyed benefits of CRM
include improving customer loyalty, repeat purchase as well as long term profitability. Below are
some of the benefits of implementing electronic customer relationship management.

Customer retention and Marketing tool

Technological advancement allows banks to store, retrieve and repair customer profile data much
more efficiently, and provide them the potential/opportunity to improve the quality of customer
service by targeted selling and furnishing of products which do something in retaining the
customers and marketing the bank as well. In addition the technology acts as a strategy to retain
customers because the customer’s choice is made broad, since more IT based products and
services will be available.

Another important view is that, technology has had a profound effect on the financial service
sector, by radically changing the cost and potential for marketing financial products. To the bank
the innovative scheme addresses competition and presents the bank as technology driven in the
banking sector market. It also works in being a medium of promotion or as back-up of various
systems of the bank, an important marketing tool indeed.

Information availability

The importance of information availability is that information is centralized and updates are
available at the same time at all places, updated information becomes available to customers
wherever they will be and at any time and most valuable in its real time nature. A point to note is
that because of technology, additional communication and distribution channels are developing
and increasing, hence providing more information to be available to consumers. It is also
emphasized that this advancement makes it possible for banks to store, retrieve and reassemble
customer profile data much more efficiently and effectively, which in turn enables customers to
have their information available at whatever time they feel they need it.

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These positive impacts only increase to those customers who are technology literate. For those
who are not, it will be as good as there will be no technology for them to use.

Managing Customer Touch Points

Since the world has become a global village, customers are now moving between traditional and
online channels with accelerated and greater frequency when doing business with companies. The
e-CRM systems support multichannel touch points with the company and a major challenge is
providing a reliable experience for the customer. Offering various interaction paths scores
convenience points for customers but this benefit quickly evaporates if customers are forced to
repeat themselves because one part of the organisation is not synchronised with another.

It is also important to note that customers who are use current information must be catered for
when they change to an alternative channel. Actually it should not make any difference if a
customer communicates with the organisation through the sales force over the website or
indirectly through another channel.

This technology permits agents, partners’ management and different users/customers to maintain
a single view of all information concerning customers, to achieve fast on the spot knowledge of
the organisation and work together well with customers across many communication channels.
Being able to provide a single enterprise wide view of the customers has led to a number of
developments in customer service and also caused the company to better the bottom line at the
same time.

Personalisation and e-Loyalty

Personalisation is a strategy or plan that can be mostly differentiated and which cannot be
replicated by competitors in the market. A good personalised idea is a good way to help enhance
the increase of sales and improves customer relationship management. Personalisation can be
defined as serving the only one of its kind needs of individual customers. By getting better or
improving the customer conversation the organisation/entrepreneur can develop customer
relationship. Personalised services are not only limited in cheering new sales but its successful
implementation allows the organisation to improve its effectiveness and efficiency in serving the
customers established already.

Another essential success factor is identifying the requirements of customers and offering and
providing them a best solution before he makes a request shows excellence in the service of
customers. Presently customers do not visit their banks for other kind of additional services such
as finance or credit cards. Customers still see the bank as providing bank services. Customers of
the bank now have the opportunity to choose what they want and the success of the bank does
depend upon this.

Source of competitive advantage

When e-CRM is well designed and correctly implemented it enhances digital loyalty cycle which
becomes long-term competitive advantage. When a firm uses e-CRM technology and redesigns
its business procedures to get hold of clients and to retain them, it provides strength in the areas

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so that customers can make better informed purchase decisions. It includes pricing, quality of the
product, and marketing, sales promotion and customer service. It builds more digital loyalty
cycle. By using e-CRM customer centric companies are using customer information to manage
pricing and marketing decisions in real time in a better way (Kennedy, Kelleher & Quigley,
2005).

Relationship with customers is improved

Integrated e-CRM strategy allows organisations to manage customer and supplier relationships
more effectively and in an efficient way than ever before. More importantly it also helps
organisations to build long term customer relationships, also brand trustworthiness and repeat
sales and at the end will result in greater and sustained profitability. On the other hand the end
result of an e-CRM is a better base line. If e-CRM is well implemented it becomes a successful
business strategy that should help organisations to grow profitably and increase competitive
advantage.

Aihie and Eddine (2007) assert that an e-CRM is an idea which has its heredity line in the
technology. In the earlier days relationship marketing’s sole aim was to get information about the
preference of the customers and the information which was stored by them in their database, so as
to protect and deal with one to one relationships with customers. Once when the organisation
acquires the customers and is able to have them lastingly forever, this implies that the customer
becomes more loyal and making good use of the services of the organisation. Trust, cooperation
and satisfaction have to be seen as the face of assurance between both the parties for a long
lasting relationship with customers. Organisations need to be in constant touch with their
customers in order to build up long term relationships.
Organisations need to have much customer information available with them so that they are better
informed about what customers like and prefer and this enables a better effective and efficient
service provision. Organisations build up new products by observing customer preferences and
needs in mind, by doing so they get hold of new customers as well as retain them forever as their
repeat customers.

e-CRM gives more effective marketing

The e-CRM gives more effective marketing in the short to medium term, the information helps an
organization/entrepreneur produce more effective and focused marketing/sales promotions
designed to attract the considered necessary customer audience. The e-CRM makes way for more
targeted campaigns/promotions and tracking of the effectiveness of these promotions/campaigns.
Customer information can be analyzed from various perspectives to discover which basics of a
marketing campaign had the most excellent impact on sales and profitability. In addition;
customer segmentation can improve marketing efforts. Grouping customers according to their
need similarities allows a company to effectively market specific products to members of the
targeted groups.

Convenience and better accessibility

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Convenience and better accessibility will be of benefit to organisations by Installation of facilities
like ATMs which provide non-stop cash withdrawal, transfer of funds and inquiry facilities
enables accessibility to customers’ accounts 24hrs. It is worth to note that the customers’ most
important benefits accumulated from IT are enhanced accessibility to the bank services in view of
the fact that even during non-working hours, services will still be available. Al this has been
necessitated by the advent of internet or through technology, now customers do not need to queue
for their banking activities, but they can access/enquire the services at home be it during the
working hours or after 24/7.

The assertion by Thompson (1996) is that through technology, services to customers are provided
more flexibly, conveniently and reliably with lower unit costs. Technology enables anywhere
banking, which is wherever the customer is in the country they can access their accounts. On the
other hand it is viewed as remote banking by which remote terminals at the customer location are
linked to the particular branch through a modem, enabling the customers to make
inquiries/requests regarding their accounts on-line anytime and anywhere without having to move
from their offices. This is a tremendous psychological benefit of convenience well practiced all
the time. However, Leow (1999) contradicts when he explains that not all the technologies offer
convenience, for example telephone banking, does not offer the productivity generated from cash
dispensing by the ATMs which is productivity in the form of convenience that accrue in after
banking hours. This is so as with most technologies convenience is only offered during banking
hours.
Cost reduction

Electronic customer relationship management (E-CRM) brings in fast and state-of-the-art

information transfer making possible speedier and better decisions, linked with computerized
branches and controlling offices for the sole purpose of reducing costs in terms of waiting. To add
on to that that an extensive branch network, which has been very expensive to new potential
entrants/customers, all of a sudden becomes a less high-priced burden for organizations which
have a network in place. Once the costs are reduced this therefore gives room for new entrances.
According to our research we observed that the idea that emphasis has, has often been placed on
the direct cost-saving effects of using technology to provide transaction services. These likely
cost savings are without a doubt substantial and in the long term may guide to significant creation
of value. As a result the bank’s principal benefits are improved customer retention, customer
satisfaction, and lower costs due to the transfer of work to customers hence company objectives
will be achieved effectively.

Challenges faced by firms in the adoption of e-CRM

Be it so advantageous banks, are still facing some challenges in the adoption and implementation
of electronic customer relationship management. On the other hand it is important to note that
there are challenges crippling or hindering adoption of e-CRM information systems in the
banking sector especially in developing countries which include limited skills, security and
confidentiality concern, high costs of implementation, resistance to change by both staff and
management you name it.

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Security and privacy concerns

Wide consultations regarding the issue of security and privacy revealed that technology such as
the internet does not form part of the secure environment, as information is widely available on
the internet and can be easily accessed and used for criminal activities by information hackers.
The conventional risks of unauthorized access, identity theft or network attacks have been made
worse by contemporary threats including, spear phishing, carding and skimming, crime ware and
spyware, money laundering, mules, scams and spams. It can be further confirmed that security is
a major challenge when these companies as well as their valued customers are hesitant to pay for
goods online because of the prevalent risk of credit card fraud. Still others have discovered that
identity confirmation and security matters were identified to be some of the difficult
confrontations/challenges faced when adopting technologies. Usually regulations require that
financial institutions or banks confirm each customer’s identity, and may present a logistical issue
as faxing and copying documents is necessary. Security concerns involve hacking of accounts
and identity theft which are on the rise. Customers place their trust in the bank that their account
and personal information are safe. Despite the fact that technology is advancing and more and
more is on the offing in terms security software, yet most firms are faced with security challenges
and, in particular, there won’t be enough of security equipment to deal with the prevalent issue of
theft as in the case of the credit card identity. It requires advanced technology in terms of security
measures to assure customers of their financial security in order to make use of the service of
purchasing goods and services online.

On the other hand the advent of high technology, as good as it is, brought with it operational risks
in the form of security risks. The safety of banks, the integrity of the country’s payments,
settlement systems and the trust that customers impose in the safety of the system are all
intertwined to ultimately contribute to financial stability. Technology has evolved into mass
products which are essential whose quality can affect the customers’ loyalty to and satisfaction
with their bank. The risks also include viability and sustenance. In the case of internet banking,
hackers have realized the immense potential of internet banking to give them ill-gotten monetary
gains.

High costs of implementing e-CRM

There are a number of system requirements to consider before one decides to in purchase e-CRM
software, such as its compatibility with various operating systems, what kind of network
infrastructure is required, whether the responsible persons/employees require additional software
installed, and how much RAM and bandwidth are needed to run the software.

According to research on software guide it was discovered that one major challenge is exorbitant
costs as one of the problems with CRM. There is massive investment required to maintain a
customer database. The additional expense comes because of the money needed for computer
hardware, software, personnel just to name a few. The costs involved are enormous and most
often than not the resultant ROI from the implementation of e-CRM fail to cover the costs
involved. This leads to a negative feeling within the company about e-CRM and ultimately results
in e-CRM collapse.

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Fear of the unknown

Customers are people with different opinions when it comes to purchasing goods and are in most
cases not easy to convince to buy your products or services. Basically they are afraid of new
things or simply don’t want to move from their current suppliers. They say the devil you know is
better than the one you don't. They fear change mostly having fear of the unknown. The
customers are afraid to embrace new technologies, making it a challenge for banks to introduce
new technologies.

Poor timing and change management

It is also noteworthy to know that developing out of electronic customer relationship management
systems before changing the organisation to match with the system, contributes to the high failure
rate of customer relationship management. It is important for organisations to know that in
general the major impeding reasons behind the failure of e-CRM projects are lack of top
management support, neglected CRM strategy and underprivileged management of change,
unskilled labour force, poor customer centric orientation and lack of assessment process’.

Lack of expertise and resources

Basically it must be known and be affirmed that a challenge in adopting technology is lack of
internal expertise. Why? It was discovered that organisations delay the adoption of an innovation
until they have acquired or assured of sufficient internal know-how. No matter how competitive
an organisation may be it will not succeed unless it is aware that staff lacking in ICT skills is the
most significant internal challenge to adopting technology within these financial
institutions/banks. Another challenge is that of lack of time to investigate appropriate
technologies, financial resources and awareness of suitable technology are also major challenges
faced.

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 CHAPTER EIGHT

BUSINESS MODELS

A business model is a summary of how a company will generate revenue, its target customers,
core product offering, value added services and partnership arrangements electronically. A
business model is comprised of four parts: 1. a value proposition or ‘cluster’ of value
propositions, 2. a marketspace offering, 3. a unique and defendable resource system and 4. a
financial model.
 Value proposition or cluster of value propositions: choice of target segment, choice
of focal customer benefits and rationale why the firm can deliver the benefit package
significantly better than competitors. E.g. PC Flowers and gifts serves the ‘special
occasions’ segment with fresh flowers, complementary gifts and lower prices because of
their accumulated online experience and knowledge since 1989 and their unique, broad
product line of complementary gifts.
Proflowers.com serves the “price-sensitive and convenience-oriented customers” with
the “freshest cut flowers at a competitive price” because of their unique sourcing FedEx
shipping arrangements.

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  Marketspace offering: precise articulation of the products, services and information
that is provided by the firm.
 Resource system: supports specific set of capabilities and resources that will be engaged
in by the firm to uniquely deliver the offering.
 Financial model: various ways that the firm is proposing to generate revenue, enhance
value and grow.
 They can also be explained in terms of the type of website that the company intends to set
up so as to be able to serve its customers.
 Assist in decreasing a firm’s internal costs, improve the value proposition for customers
and partners and increase the enterprise’s revenue streams.

Types of E-business Models

Now the whole supply chain of various manufacturers has been completely changed
fundamentally by the development or advent of internet and its related technologies. Some
entrepreneurs or organizations specialize in different types of activities such as business to
business (B2B) by offering e-business services from corner to corner of the whole supply chain
or in parts of the supply chain; for instance stock control, distribution, e-payments, logistics, etc.
these types of e-business absorb those that sell products/services to consumers. Amazon is one of
the businesses to customer (B2C) sector that has attracted the highest number of customers and is
among the highest number of entrants and a successful e-business undertaking, as well as E-Bay.
Some of them incorporate a consumer to consumer aspect to their products and services by
unifying customers specifically. Some even have websites for marketing specific activities or for
the marketing of their new products and services. This has prompted traditional companies to be
more creative and innovative towards their own e-business and e-commerce websites to provide
additional sales channels for their consumers.
Classifying E-business Business Based on Nature of Participants. The two most common
participants in e-business are businesses and consumers. Based on this we can come up with
primary e-commerce types:

Business to Consumer (B2C)

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Figure 8.1

Business-to-Customer electronic commerce composed of the sale of products or services from a

business to the different people. Goods/products can be whatever thing from outfits to plants and
the goods can also be intangible products like online banking, stock trading, and airline
reservations. The business-to-consumer, or B2C, model of e-business sells products directly to
retail consumers online. Amazon.com is an example of a B2C model. The e-business has only an
online identity through which it offers a range of products to customers. Other B2C enterprises
include bestbookbuys.com and gartner.com. Most B2C models generate revenue from direct sales
and processing fees. B2C also is known as electronic retail or e-tail.

Business-to-consumer e-commerce, or commerce between companies and consumers, involves

customers gathering information; purchasing physical goods (i.e., tangibles such as books or
consumer products) or information goods (or goods of electronic material or digitized content,
such as software, or e-books); and, for information goods, receiving products over an electronic
network. It is the second largest and the earliest form of e-commerce. Its origins can be traced to
online retailing (or e-tailing). Thus, the more common B2C business models are the online
retailing companies such as Amazon.com, Drugstore.com, Beyond.com, Barnes and Noble and
ToysRus. Other B2C examples involving information goods are E-Trade and Travelocity. The
more common applications of this type of e-commerce are in the areas of purchasing products
and information, and personal finance management, which pertain to the management of personal
investments and finances with the use of online banking tools (e.g., Quicken).

B2C e-commerce reduces transactions costs (particularly search costs) by increasing consumer
access to information and allowing consumers to find the most competitive price for a product or
service. B2C e-commerce also reduces market entry barriers since the cost of putting up and
maintaining a Web site is much cheaper than installing a “brick-and-mortar” structure for a firm.
In the case of information goods, B2C e-commerce is even more attractive because it saves firms
from factoring in the additional cost of a physical distribution network. Moreover, for countries

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with a growing and robust Internet population, delivering information goods becomes
increasingly feasible.

Business-to-Customer model bring in many benefits to the business. Some of them are:-
 Low marketing costs
 Low order handing out cost
 Improved customer service
 Low customer maintaining cost
 Broad markets

Business to Business (B2B)

The business-to-business, or B2B, model involves companies using the Internet to conduct
transactions with one other. B2B e-commerce can also be defined as e-commerce between
companies. This is the type of e-commerce that deals with relationships between and among
businesses. B2B e-business accounts for more than 90 percent of all electronic commerce,
according to the U.S. Census Bureau. The main reason for this is the complexity of B2B
transactions. Unlike B2C transactions that involve sellers offering products and services and
buyers purchasing them, B2B transactions are multifaceted and often involve multiple
transactions at each step of the supply chain.

B2B businesses generate revenue from direct sales. The B2B market has two primary
components: e-frastructure and e-markets. E-frastructure is the architecture of B2B, primarily
consisting of the following:

 logistics - transportation, warehousing and distribution (e.g., Procter and Gamble);

 application service providers - deployment, hosting and management of packaged

software from a central facility (e.g., Oracle and Linkshare);

 outsourcing of functions in the process of e-commerce, such as Web-hosting, security and

customer care solutions (e.g., outsourcing providers such as eShare, NetSales, iXL
Enterprises and Universal Access);

 auction solutions software for the operation and maintenance of real-time auctions in the
Internet (e.g., Moai Technologies and OpenSite Technologies);

 content management software for the facilitation of Web site content management and
delivery (e.g., Interwoven and ProcureNet); and

 Web-based commerce enablers (e.g., Commerce One, a browser-based, XML-enabled

purchasing automation software).

E-markets are simply defined as Web sites where buyers and sellers interact with each other and
conduct transactions. The more common B2B examples and best practice models are IBM,

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Hewlett Packard (HP), Cisco and Dell. Cisco, for instance, receives over 90% of its product
orders over the Internet. Most B2B applications are in the areas of supplier management
(especially purchase order processing), inventory management (i.e., managing order-ship-bill
cycles), distribution management (especially in the transmission of shipping documents), channel
management (i.e., information dissemination on changes in operational conditions), and payment
management (e.g., electronic payment systems or EPS).

Customer to Business (C2B)

Consumer to business, or C2B, is a unique e-business model in which consumers create value and
demand for products. Reverse auctions are a common characteristic of C2B models, in which
consumers drive transactions and offer their own prices for products. The airline ticket website
Priceline.com is an example of a C2B e-business model. The website allows customers to bid for
tickets and offer their own prices. Shopping sites such as cheap.com, gilt.com and ruelala.com
also are C2B.

Consumer to Consumer (C2C)

Consumer-to-consumer e-commerce or C2C is simply commerce between private individuals or

consumers. Consumer-to-consumer, or C2C, e-business models enable consumers to behave as
buyers and sellers in third-party-facilitated online marketplaces. Craigslist is an example of a
third-party marketplace. The company brings together disparate buyers and sellers to conduct
business. Other examples of C2C websites include eBay and PayPal. A C2C model generates
revenues in several ways, including personal ad fees, membership or subscription fees, sales
commissions and transaction fees.

This type of e-commerce is characterized by the growth of electronic marketplaces and online
auctions, particularly in vertical industries where firms/businesses can bid for what they want
from among multiple suppliers. It perhaps has the greatest potential for developing new markets.

This type of e-commerce comes in three forms:

 Auctions facilitated at a portal, such as eBay, which allows online real-time bidding on
items being sold in the Web;

 Peer-to-peer systems, such as the Napster model (a protocol for sharing files between
users used by chat forums similar to IRC) and other file exchange and later money
exchange models; and

 Classified ads at portal sites such as Excite Classifieds and eWanted (an interactive,
online marketplace where buyers and sellers can negotiate and which features “Buyer
Leads & Want Ads”).

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There is little information on the relative size of global C2C e-commerce. However, C2C figures
of popular C2C sites such as eBay and Napster indicate that this market is quite large. These sites
produce millions of dollars in sales every day.

Business to Government (B2G)

Business-to-government e-commerce or B2G is generally defined as commerce between

companies and the public sector. It refers to the use of the Internet for public procurement,
licensing procedures, and other government-related operations. This kind of e-commerce has two
features: first, the public sector assumes a pilot/leading role in establishing e-commerce; and
second, it is assumed that the public sector has the greatest need for making its procurement
system more effective.

Web-based purchasing policies increase the transparency of the procurement process (and
reduces the risk of irregularities). To date, however, the size of the B2G e-commerce market as a
component of total e-commerce is insignificant, as government e-procurement systems remain
undeveloped.

Business to Employee (B2E)

Business to employee makes use of an in-house business network which consent to companies to
make available products and or services to their employees. It is the use of intranet technologies
to handle activities that take place inside a business. An intranet is an internal network that makes
use of internet technologies.
Business to employee is unlike other types because it is not an income form of business. Or else,
it increases earnings by reducing operating costs within a company. As an alternative of having to
look up all manually they can work together with each other and exchange data and other
information.
Many companies/entrepreneurs have established that B2E technologies have radically reduced the
managerial weigh down with the human resources department. Admittedly, upholding employee
into the B2E meaning. Examples of B2E include:
 Online insurance policy management
 Corporate announcement distribution
 Online supply requests
 Special employee offers
 Employee benefits reporting

Level of Commitment to E-Marketing

E-Business models can best be described according to an organization’s level of commitment to

E- Business. How committed are we to the use of IT in our business internal processes and
external processes).
The company has to decide on the type of site that fits the products or services that it is going to
sell on the Internet.

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  The taxonomy below summarizes an organization’s level of commitment to e-marketing.

Level of Commitment to E-Marketing

Figure 8.2

Types of E-Business Models under Different Levels of Commitment to IT adoption

1. ACTIVITY LEVEL
a) Online purchasing/E-procurement
 Firms use the web to place orders with suppliers e.g. Wal Mart, Levi- Strauss.
 Also includes Order processing, most Zim firms have adopted e-pocurement E.G
Zimazon.

b) E-shops

 This model is used by companies that are still in the first stages of their growth and
development for introducing and promoting the company, its goods and services.
 In general, any company that initiates a web site with the purpose of only having the
internet presence has actually created a primary form of e-shop.
 Model allows a firm to interact electronically with the consumer.
 Business exchange costs are extremely low for both the firm and the consumer, as it
eliminates the physical costs of retail stores or even, in some cases, warehousing costs.

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  Whether or not the transaction is carried out completely online, the firm’s Website is the
origin of the sale, and so the means by which customer preferences can be amassed.
 This connection allows the firm to create a strong electronic & symbolic connection
with the customer.
c) E- Mail – used to communicate with different stakeholders in order to save on
printing and mailing costs. Sales can also be generated through e-mails sent to
customers.
d) Content Publisher - firms create valuable content of services on their websites
in order to draw high traffic levels.
e) Online Advertising – firm buys net space on another company’s website for
online adverts or firm uses its own website for online adverts
f) Business Intelligence – gathering of data about competitors, markets and
consumers products and selling such information to third parties. Discuss Econet
selling subscriber list to companies etc.
g) Online sales promotion – use of the internet to send samples of digital products
(e.g. music or software) or electronic coupons
h) Community sites/ Virtual community. E.g. facebook, twitter.
 Virtual communities are groups of Internet users that form around a
topic of common interest, such as fishing or traveling.
 Suppliers or providers support the virtual community financially and
gain an income through commissions, referral fees, or provide the
service as an adjunct to some other, pre-existing Web-based business.
 These virtual communities are used to establish loyalty among customers
and facilitate obtaining feedback from them.
 In this model, added value can be established through creating personal
profiles from the customers. In this model, the sources of income are
membership fees and advertisement (Timmers, 1999).

2. Business Process Level

a) CRM – Digital processes are used to integrate customer information at every
touch point. Customers interact with the firm in person at retail stores via e-mail,
telephone or the internet. The results of interactions at all these touch points are
integrated to build a complete picture of customer characteristics, behaviour and
preferences.
b) Knowledge Management (KM) – combination of a firm’s database contents, the
technology used to create the system and the transformation of data into useful
information and knowledge. The model makes use of database marketing
(collection, analysis and dissemination of electronic information about
customers)
c) Affiliate programs – firm puts a link on another organization’s website and
earns a commission on all purchases from referred customers. e.g. Amazon.com
link on Dave Chaffey’s weblog.
d) Enterprise Resources Planning (ERP) – back office system for order entry,
purchasing, invoicing and inventory control. OK and TM and most Hotels

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 e) Mass Customization – database created enable customization of products and
communication on an individual basis. The company’s website allows customers
to design products and services they require from the company. e.g. Barbie.Com.
3. Enterprise Level
a) E- Commerce – conducting online transactions through selling goods and services
online.
b) E – Tailers (Online retailers), buy products, sell them online and distribute them
using traditional methods. Some e-tailors may sell digital products (software,
music videos, and media) and distribute them online (Amazon, Com.) payment is made
online.
c) Portal e.g. Yahoo – in addition to search engines, portals can offer additional services
such as destinations for news, games, maps and shopping e.g. American Online portal is
used for communication with member, help them find other websites, offer
entertaining commerce and conduct e-commerce. Also look at www.msn.com
d) On-line brokers – firms may decide to set website to act as intermediaries in
purchase negotiations without actually representing either buyers or sellers. (Just
like insurance brokers). Revenue stream in these models is commission or fee based
e.g. E* Trade.
e) Online agents – can either be manufacturers or buying agents representing sellers
or buyers respectively. On the virtual market, manufacturers’ agents create a
website to help an entire industry sell
a product e.g. Travelocity.com. is an online travel agent in the travel industry. Also
look at Rennies Travel’s website.
 Intermediaries use their web sites to form the relationship with their customers.
 The selling of goods (the transaction), however, is carried out by seller/suppliers
or complementors.
 This model owns the relationship, but has limited access to the data and no
ownership of the transaction.
f) Virtual Malls – hosts multiple online merchants. Promotes the websites and takes
a fee for services provided e.g. Kelko, Pricerunner, www.indigosquare.com
g) Online directories- look at www.zimyellowpages.com. The website makes revenue
through listing companies on its site. The listed company pays a fee to the host
for being listed.
4. Pure – Play
No specific e-business models exist because S.C.A in the industry depends on
redefining the rules of the
game in the industry and offering greater customer value. (This can be through the
combination of a number of different e-business models. E.g. www.amazon .com
N.B ALTHOUGH NEW E-BUSINESS MODELS ARE EMERGING, THE
SAME BASIC BUSINESS PRINCIPLES FOR SERVING CUSTOMERS
STILL APPLY;
 Get close to customers, listen to them
 Involve them
 Serve them

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  Add value
 Find the best ones
 Nurture them into lifelong customers and replicate them
 And test, measure and improve

M-COMMERCE BUSINESS MODELS

M-commerce can be defined as the conduct of business supported by wireless technologies. The
most significant advantage that m-commerce offer is the portability that facilitate customers
doing business transactions and using services regardless of their physical locations. The mobile
telecommunication networks, such as General Packet Radio Service (GPRS, Commonly referred
to as 2.5G), Enhanced Data Rates for Global Evolution (EDGE, Commonly referred to as 2.75G),
Code Division Multiple Access 2000-EVDO (CDMA2000-EVDO, Commonly referred to as one
type of 3G) and Wideband Code Division Multiple Access (WCDMA, Commonly referred to as
one type of 3G) (http://www.itu.int) have been developed rapidly. Countries that lack regular
telecommunication infrastructure are likely to adopt wireless and mobile communications to
serve both urban and rural areas.
Statistics indicate a rapid increase in mobile subscribers: from 2 billion in 2005 to approximately
5.3billion by 2015. A study by the Wireless Data and Computing Service of Strategy Analytics
predicted that transactions via mobile devices generate about $14 billion per year. This data
implies the growing importance of mobile technology and applications in addition to the existing
applications and services, including SMS and billing. It also suggests ample business
opportunities and potential revenues in m-commerce.
To capture this opportunity, it is important for the industry to deploy effective business models
and understand the drivers and inhibitors of m-commerce adoption. Hence, the need to examine
the existing m-commerce business models and identify factors that influence the adoption of m-
commerce. When the 2nd generation (2G) network was the primary network in use, the network
providers and service and applications providers were bundled together. Network providers and
equipment vendors were responsible to develop the services and applications. Consequently, the
number of third-party services and application providers was limited. The services offered by
network providers were delivered to customers based on subscription offerings. Let’s look at the
referred to as the strict operator-centric model.

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 Mobile
Network
B2C Relationship B2B Relationship
Operator

Third-Party
Subscriber/ Service/
User Payment Content
Provider

Figure 8.4
Basic M-Commerce Model (Source: Shoniregun, 2005)

The restrictions were mainly caused by:

 Limitation on types of methods to gain revenue – Generally, this is because 2G service
operators offered no more than voice services and SMS.
 Limitation on type of services provided - From the users’ point of view, the only services
available to them are for making telephone connection and sending SMS.
 Pricing problem - In some countries, government regulates the services to be provided by
one or very few MNO, causing high subscription fee due to the lack of competitiveness in
the market.
When 2.5G, 2.75G and 3G systems are available, new m-commerce business models emerge.
These m-commerce models improve the previous model by removing the dependence
between accessing services and applications and subscribing to network providers. Three
basic models that emerge with the newer generation network revolve around network
operator, service aggregator and service provider.

The Network Operator Centric Model

In this model, the user subscribe to a mobile network operator, which is responsible to provide
users with telecommunication services, and deliver services and applications offered by any of
third party players. In addition, the network operator is also responsible for charging and billing
tasks. The mobile network provider apportions the revenue among all involved players. In
summary, the mobile network operator is the main actor for service and content aggregator,
network transport provider, billing and payment provider. The revenue streams for this model are
illustrated in Figure 8.5.

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 Mobile Network
Operator

Network
Transport Service Location
Provider Charges Information
Broker
Transport
Charges
Service
Charges
Billing Payment WASP
Provider

Service/Content Service/Content
Charges Charges

Subscriber/ Service/Content
User Service/Content Provider
Aggregator

Figure 8.5

Network Operator Centric Model

(Source: Adapted from Panagiotakis, Koutsopoulou and Alonistioti, 2005)

The Service and content Aggregator Centric Model

In this model, the service and content aggregator is responsible for providing users with its own
services and applications. In addition, it also provides access to applications and services offered
by third party independent services and applications providers. It is assumed that the service and
content aggregator comes into directly agreement with a network provider for delivering content
and services through the network provider’s transport infrastructure. The users have to subscribe
to both the service and content aggregator and a mobile network provider. However, choosing
mobile network provider is made independently from choosing the service and content
aggregator. Based on the subscription, the service and content aggregator defines the prices,
collects the charging information and charges the user based on both transport part and services
and contents parts. Then, the apportioning of revenues among mobile network providers, service
and content providers and service and content aggregator is performed by service and content
aggregator based on the agreements established among the players. This means that in this model,
service and content aggregator undertakes the role of billing and payments providers. The
revenue streams for this model are illustrated in Figure 8.6

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 Service/Content
Aggregator
Transport Mobile
Service/Content Charges Network
Provider Operator

Service/Content
Charges Service
Charges
Billing Payment WASP
Provider

Service/Content
Charges
Service
Subscriber/ Charges
User Service/Content
Provider
Location
Information
Broker

Figure 8.6

Service and Content Aggregator Centric Model

(Source: Panagiotakis, Koutsopoulou and Alonistioti, 2005).

The Service and Content Provider Centric Model

In this model, instead of the service and content aggregator, the service and content providers
come directly into agreement with network provider for delivering their applications and services
through the latter’s telecommunication infrastructure. The service and content providers define
the pricing and payment policies and charge the users based on their usage of transport and
services and content. According to this model, the users come to subscription agreement with the
service and content provider, which incorporates the roles of service and content aggregator and
billing and payment provider. Furthermore, the service and content provider collects and
apportions the revenue among the involved players according to business agreements. The
possibility the network operator to charge the user separately for the transport part is not
precluded. The revenue streams for this model are illustrated in Figure 8.7.

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 Service/Content
Provider

Service/Content
Publisher

Service/Content
Charges

Billing Payment Transport

Provider Charges

Service Mobile Network

Subscriber/ Charges Operator
User
Location
Information
Broker

Figure 8.7

Service and Content Provider Centric Model

(Source: adapted from Panagiotakis, Koutsopoulou and Alonistioti, 2005).

Factors Supporting M-Marketing

In most markets, phones with the characteristics below are already becoming available:
• A communicative device
 The mobile phone will continue to be a device that is used to communicate with others.
 May be extended beyond voice to instant messaging and email,
 Sharing photos and videos with others
 Implication to marketing
• A connective device
 Connecting to other sources of data anytime, anywhere.
 E.g. mobile email.
 Can synchronize your email account with your mobile phone.
• A transactional device
 Can be used for payments and transactions.
 An electronic wallet that can be used as a payment device.
• An intelligent device
 Mobile devices that integrate a phone, a camera;
 a location finder (GPS)
 a connection to the internet

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  Make it possible for a user to request context-dependent information such as finding out
where a store selling a product they want to buy is located.
 Agents of change, tools that facilitate connecting things in the physical world to
information about them in the digital world.

M-commerce and mobile marketing benefits

 People are using their mobile devices, like smart phones, to browse the internet and shop
whilst 'out and about' - wherever there is network access.

 Access digital content -

 Instant, adaptable, easily monitored communication - you can send single or bulk
messages from any place, any time with immediate tracking and ability to record results.
E.g. Econetmail
 The ability to target a large active consumer group by specific demographic information
– e.g. age, location, gender
 cost efficiency, with low production and distribution costs, and additional revenue from
replies to promotions and competitions
 a direct link to consumers through 24 hour billing/sales/service/assistance
 Viral marketing potential, as consumers can forward messages.
 cross-media integration, which is easily tied in to other advertising mediums – e.g. TV or
radio

Four key factors distinguishing mobile marketing from other more traditional forms of
marketing:
• Permission-based: unlike the interruption model that characterizes television
advertising, direct mail and other forms of mass marketing, consumers need to give their
permission before being marketed to.
• Targeted: by agreeing to share information about themselves and their buying habits,
consumers allow businesses to improve the relevancy of the offers they send out.
• “Live”: because of the nature of mobile phones, responses can be processed to give real-
time visibility of reaction to specific offers.
• Two-way: using mobile devices, consumers can not only respond to offers but also
request specific types of information or interest (for example, offers related to a brand or a
category) as well as sharing information with their peers.

Key success factors of mobile commerce

1. Innovative Business Models.

Companies that want to take advantage of the opportunities presented by this new
technology will have to understand how this technology fits with existing business
models or provokes new ones.
• Retailers and manufacturers have to consider that they have the opportunity to become
providers of services as well as providers of products. Providing services requires

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 different resources, different internal organization and different thinking to providing
products.
• Mobile Network Operators need to consider how mobile commerce can be integrated
with existing tools for revenue generation such as SMS, Premium SMS and MMS as
well as the huge potential to drive data traffic (which in most markets is still priced
highly and discourages increased usage).
• Mobile Phone Manufacturers need to consider how to provide mobile devices that suit
the needs of the market but also drive the market in new directions, with open
architecture and tools allowing new applications to develop based on their devices and
platforms.
• Solution Providers need to understand how to collaborate with different players,
bearing in mind that in many mobile commerce applications they will only be one part
of a solution.

Consumer adoption of M-Marketing.

Mobile phones are already starting to become a basic device available to everyone:
anytime, anywhere. This means that the question is not so much “Will every consumer
adopt his mobile phone as a universal interface to connect to any digital service?” as
“When will consumers do this, under what circumstances, how much will they use it and
how quickly will this adoption take place?”.

For mass adoption of this technology to take place quickly, consumers must:

• be able to access services as easily as possible (“just a few clicks and no more”).
• be convinced that the services are useful and make a difference to their lives.
• be confident about the costs of these services (for free, part of the monthly fee they
already pay as a subscriber or a transparent one-off fee (such as SMS)).
• be confident about the source and reliability of the information delivered (for example
bank, brand-owner, retailer, government organization).
• be confident about respect of privacy and personal information.
• be confident that security measures protecting their devices (such as biometrics and pass
codes) are effective.

For consumers to adopt any of these new services on their mobile phones
confidently, they will need
 to be able to use these services whatever kind of mobile phone they buy, whatever kind
of subscription contract they have signed and whatever mobile network operator they
have chosen.

For service providers, this means that choices need to be made:
 To support interoperability and openness, rather than to develop and use private or
proprietary model.
 Business models need to be developed to make sure this is possible.

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 Once there is a global, interoperable platform available, service providers (bank, brand
owners, retailers and many other stakeholders) will be able to focus their resources on
creating and launching new services or on transferring existing services to mobile
devices, all based on a system that is trusted by consumers.

2. Technology availability
.
Without certain technologies, mobile commerce is impossible.
The full potential of the mobile phone as an ubiquitous object is only released when
local interaction technologies are embedded, such as the combination of camera and
image recognition software (to read bar codes or recognize specific images) and ways
of exchanging and communicating wireless information with products, point-of-sale
and other devices.
The integration of a secure element, such as a tamper proof chip card, inside the
mobile phone will provide security and trust for handling valuable data (such as
personal and payment information).

3. Support for high quality display of the information to the users, supporting state of
art internet technologies are required to provide a satisfying and consistent user
experience.
Mobile networks need to be able to deal with large amounts of traffic at high speed.

4. Interoperable Systems.

Interoperable systems are essential to mass adoption of mobile commerce.

• Can we imagine a world in which identification keys to access to mobile commerce
applications are not unique and may cause conflicts when end consumers scan a bar
code with their mobile phones?
• Can we imagine a world in which data carriers are different depending on the
applications and need to download multiple bar code readers for the users? Significant
additional costs are generated if applications providers are forced to adapt their bar
code readers to each operating system in the mobile market.
• Can we imagine a world in which the communication layer is specific to a mobile
device, a mobile operator or a local area? This means that whenever a consumer
changes a geographic zone certain services will no longer be available. The access to
the mobile service must be as simple as possible and the protocols used must be
transparent for the users.
• Can we imagine a world in which data processing is built in a proprietary “logic” with
no possibility of interoperability between the data pools used to store and exchange
data with the services?

Factors behind M-Pesa’s success

Large Market Share –

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 Market share of Safaricom in Kenya was in excess of 80% at the time of launch of the service.
This large base could ring in the network effect which is reflected in the high consumer adoption.

Trust –
Safaricom selected the agents with a lot of care to ensure agents with high integrity are there on
its network. Since the service involves money, it is important to gain user trust. Safaricom
communicated a lot with the users; if the server is slow, it would communicate that to the users so
that there is no anxiety amongst the users. The survey conducted by Financial Sector Deepening
Trust (FSD) confirms the faith reposed by users in the M-Pesa service.
Relationship with the Regulator and other Banks
Safaricom never had any confrontation with the regulators. It involved the central bank right
from the very beginning. It always tries to accommodate concerns of the regulator and the
banking industry. The Kenyan Government had voiced concerns over the possibility of criminals
using the service to launder money, and on May 4th 2009 had ordered the Central Bank to audit
Safaricom’s M-Pesa service. Safaricom welcomed the Government’s decision and passed the
audit due to complete transparent operations and proactive sharing of data with the regulator. The
Central Bank declared the service safe and in line with Government’s objectives of financial
inclusion.
Quick response to consumer needs-
Safaricom quickly changed its focus from repayment of microloans to helping people make
person-to-person (P2P) remittance payments to their friends and family after it found the
consumer preference for P2P transfers in a survey at the beginning of the service. Safaricom has
been able to keep a tab on the pulse of the consumers and has been nimble enough to adjust its
value proposition to the needs of the consumers.
Simple Communication –
At the start of the service, the communication was simple, “Send Money Home” targeting the
migrant workers. The communication’s focus on what the single largest service (rather than all
that M-Pesa) could do was a well-articulated value proposition.
Pricing-
Safaricom kept the pricing of the product very transparent and lower than other alternatives. Free
registration and no monthly fee helped the agents in persuading the potential user to subscribe to
the service. This helped in building up the customer base initially that was important for agent
and merchant recruitment.
Store Management -- Safaricom ensured consistent branding, training and constant supervision
of the stores to deliver the right user experience. It worked tirelessly for proper liquidity
management at the stores.

Limited KYC –

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 M-Pesa was not positioned as a bank alternative and hence the “Know Your Customer”
requirements were quite relaxed. The users were required to submit only the identity proof to get
the service started. This limited KYC helped many Kenyans especially in the rural areas where
the address proofs and other documents required by the banks are not available with most of the
Kenyans. People who were not able to fulfill the documentation requirements of the bank saw M-
Pesa a good alternative.
Dedicated Customer Care Line –
In Kenya, not everyone can read, so sometimes people make mistakes and send money to the
wrong person, so Safaricom established back office support to assist people get the money back
where possible. M-PESA has its own dedicated call centre with its own number. Safaricom
ensures that a very high quality of customer care is maintained. The strong back office support
has helped the company in not only building trust but also attracted the users who are afraid of
technology.

Criticism of the service

Despite being touted as a financial inclusion service, M-Pesa user households are twice more
likely to have a bank account than non-user households. It is young, male, urban migrants who
are driving the uptake of services – customer adoption. Hence, the adoption is not uniform across
social strata.
Both agents and customers complain of cash float problems, especially in the rural areas. Because
the majority of transactions in the village are withdrawals, agents must maintain their cash float.
They do this by making frequent trips to the bank. This can be problematic if the agent is not
close to an urban centre, where most banks in Kenya are located. This situation is frequent
despite great efforts by Safaricom on the store liquidity management.
The service availability is not uniform across the country. The service availability is dependent on
the network availability that is strong in the southwest corner of the country. There are only 2000
towers of Safaricom, which are not sufficient to cover the entire country.

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 CHAPTER NINE

INTERNET ADVERTISING

Internet Advertising

Internet advertising is a new advertising method. Internet advertising or online marketing is a

form of promotion/advertising that make use of the internet and World Wide Web (WWW) for
the communicative purpose of bringing marketing messages to draw customers. It is a method for
retailers to advertise their products/goods and services through the Internet. Usually Adverts
target people with detailed leisure pursuit or interests.

One key benefit of Internet advertising is the instant publishing of information and text that is not
limited by natural features or time. Another advantage is the efficiency of advertiser’s investment.
Online advertising permits for the customization (build according to individual specifications or
preference) of advertisements, including content and posted websites.

Models of Internet Advertising

a. Banner Ads.
It appears as rectangular graphics near the top of the page. Banner ads have been used for
many years and are the most popular from advertising on the web.
b. Floating Ads
These ads appear when we first go to a web page and they ‘float’ over the page for five to
thirty seconds. While they are on the screen, they create difficulty to our view of the page and
often block the mouse input as well.
c. Interstitials
These are forms of advertisement on the web that appears between web pages that the user
requests. These appear as pop-up windows displaying a message.
d. Unicast Ads
A unicast ad is basically a TV commercial that runs in the browser window. It has enriched
audio/video content. The ads can last anywhere from 10 to 30 seconds
e. Takeover ads

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 Viewers visiting the website will see a large ad when they first come, and then the continuity
is maintained by reiterating the same message throughout the site in the form of banners, side
bars or buttons.
f. Contextual Ads
This is type of online advertising commonly used for content based websites. With contextual
advertising, targeted Ads appear based on the page’s actual content.
g. Rich Media Ads
This is another form of banner advertising. Banners that are animated contain audio or video,
or just flash, blink or make weird sounds belong to this type.
h. Advertorials
Advertisements take the form of website copy. Similar to an infomercial in the way it
portraits goods or service and then proceeds to offer it to you.
i. E-zines
It resembles online magazines generally covering a topic of interest.
j. Newsletters
These are similar to E-zines, these give more industry related news and company updates.
k. Press release
It provides newsworthy information that can be picked up newspapers, magazines and
industry related news sites.

Benefits of Internet Advertising

 Provides rich content

 It is less expensive
 It can be quickly updated
 Offer Brand important information
 Data can be easily collected
 worldwide accessibility
 Superior elasticity/flexibility
 Improved Customer Relation
 Effective and persuasive Ad
 Can easily Facilitate Purchase Decision

Weaknesses of Internet Advertising

a. It is not a substitute/replica for customary/traditional Advertising

What businesses should know is that Internet is not an alternate for traditional
advertising models such as print/publishing advertising and TV advertising.
b. Welcome/unsolicited in nature
Forcing a message at a potential customer whilst it has not been asked for and when the
customer is in the midst of something else on the internet will fail as a most important
revenue source for most internet sites.
c. Misdirection

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 Sometimes companies tend to sending customers to web locations different from the one
for which they are searching. Monetizing (to legalize as money) of misdirection
frequently takes the form of charging businesses for key words and frightening to turn
away their customers to a competitor if they don’t succeed to pay sufficiently for key
expressions that the customer is probably to use in searches for the company’s products.
d. Surfacing of background ads send to mobile phones through SMS. This has caused in the
decreasing of attractiveness of Internet advertising.
e. Cluttered appearance.
Advertising that is incompetent and complicated to read, as well as providing too much
information at one time, time and again turns viewers off.
f. Not suitable for all products and services.
Internet advertising is predominantly suitable for goods/products, like music and books,
not foodstuffs, which can be successfully advertised through social networking sites such
as facebook, My space etc.
g. Less Dependable
Because of large numbers of SPAM and uncalled-for emails that are sent out, customers
can have complications in distinguishing between real advertising and false adverts and
as a result the trustworthiness of advertisements is brought into question.

Emergence of Internet as a tool for competitive Advertising

Researches carried out reveal that the minority believe the internet will change their move toward
to advertising. Most see it as little more than a complement to conventional marketing practices,
and some don’t foresee it reducing expenses on broadcast and publish media or change the
appearance, pricing, or delivery of advertisements. It is most likely a reaction to the early form of
Internet and the World Wide Web (www).
Online advertising will be responsible for a rising proportion of overall advertising costs. In
addition, advertising – and marketing in overall–will embrace procedures first industrialized or
installed on the Internet. As the technology improves, the effect of the internet
advertising/marketing will rise and be easily measured, and the space between the new specific,
few years, advertising agencies and consumer salespersons will be pressurized to change their
entire approach to marketing/promoting communications.
Marketers will tend to be more answerable for their outcomes, and they will be more attentive to
creating total customer relationship/bond. Providing clients’ value in return for data will become
dynamic in stimulating their first choice. Companies’ whole marketing will be more and more re-
designed to replicate communications with users/clients on the internet. For ad agencies, fees
based on results will become standard. The economics of Internet advertising are likely to make
current business models obsolete.
Standard advertising tactics such as placing, brand essence, and position marketing are critically
more essential when advertising on the Internet. The power and weakness of the standard ought
to be measured for advertising/publicizing on the internet. Internet advertising is not much
complicated than physical world advertising. Space for advertising on the Internet is very much
affordable.

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This is the opportunity time for entrepreneurs or companies to take advantage of the situation that
there are various opportunities to reach potential clients, and devise a diverse advertising strategy.
They ought to minimize hits to websites proposing to sell of any kind they can. Most importantly,
advertising on the internet ought to include a wide range of different fields intended to appeal to
different potential customers.

CHAPTER TEN

SECURITY ISSUES ON THE INTERNET

Three groups of cybercrime

Cybercrime is an illegal activity committed on the internet. Again Cyber Crime can also be an
evil having its origin in the growing dependence on computers in modern life The internet, today
is being misused for illegal activities like e-mail espionage, credit card fraud, spams, software
piracy and so on, which invade our privacy and offend our senses. Criminal activities in the
cyberspace are on the rise and these fall into three groups which are
i) Those against persons
ii) Against Business and Non-business organizations
Iii) Crime targeting the government

Types of cybercrime

Hacking

The act of gaining unauthorized access to a computer system or network and in some cases
making unauthorized use of this access. Hacking is also the act by which other forms of cyber-
crime (e.g., fraud, terrorism, etc.) are committed. Hacking in simple terms means illegal intrusion
into a computer system without the permission of the computer owner/user.

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Denial of service attack

This is an act by the criminal, who floods the band width of the victim’s network or fills his e-
mail box with spam mail depriving him of the services he is entitled to access or provide.
In some cases hackers do not want to gain access to the system, but implement malicious
procedures that cause a so called “Denial of service” (DoS) attack.

Virus Dissemination

Malicious software that attaches itself to other software.(virus, worms, Trojan Horse, Time bomb,
Logic Bomb, Rabbit and Bacterium are the malicious soft wares).Viruses can slow down
efficiency and lead to decrease in productivity. The cost of repairing compromised system can be
prohibitive.

Software piracy

Theft of software through the illegal copying of genuine programs or the counterfeiting and
distribution of products intended to pass for the original. Retail revenue losses worldwide are ever
increasing due to this crime, can be done in various ways such as end user copying, hard disk
loading, counterfeiting, illegal downloads from the internet etc.

Cyber Pornography

This would include pornographic websites; pornographic magazines produced using computer
and the Internet (to down load and transmit pornographic pictures, photos, writings etc.).
Pornography is the first consistently successful e-commerce product. It was a
deceptive marketing tactics and mouse trapping technologies. Pornography encourage customers
to access their websites. Anybody including children can log on to the internet and access website
with pornography contents with a click of a mouse.

IRC crime

Internet Relay Chat (IRC) servers have chat rooms in which people from anywhere the world can
come together and chat with each other Criminals use it for meeting conspirators. Hackers use it
for discussing their exploits / sharing the techniques.

Credit card fraud

You simply have to type credit card number into www page off the vendor for
online transaction. If electronic transactions are not secured, the credit card numbers can be stolen
by the hackers who can misuse this card by impersonating the credit card owner.

Net extortion

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Copying the company’s confidential data in order to extort said company for huge amount, e.g.
the Trojan mine saga.

Sale of illegal articles

This would include sale of narcotics, weapons and wildlife etc., by posting information on
websites, bulletin boards or simply by using e-mail communications.

Online gambling

There are millions of websites, all hosted on servers abroad, that offer online gambling. In fact, it
is believed that many of these websites are actually fronts for money laundering.

Forgery

Counterfeit currency notes, postage and revenue stamps, mark sheets etc., can be forged using
sophisticated computers, printers and scanners.

Cyber Defamation

This occurs when defamation takes place with the help of computers and or the Internet e.g.
someone published defamatory matter about someone on a websites or sends e-mail containing
defamatory information to all of that person’s friends.

Cyber Stalking

Cyber stalking involves following a person’s movements across the Internet by posting messages
on the bulletin boards frequented by the victim, entering the chat-rooms frequented by the victim.

Phishing

It is technique of pulling out confidential information from the bank/financial institutional

account holders by deceptive means

Spoofing/Masquerading

Getting one computer on a network to pretend to have the identity of another computer. Usually
one with special access privileges so as to obtain access to the other computers on the network. IP
Spoofing is the way most attacks are conducted. Many systems are restricted to a certain IP

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addresses by pretending to be a certain IP address, it is possible to get automatic access to a
certain resource.

Cyber defamation

The Criminal sends emails containing defamatory matters to all concerned of the victim or post
the defamatory matters on a website. (Disgruntled employee may do this against boss).

Salami attack

Those attacks are used for the commission of financial crimes. The key here is to make the
alteration so insignificant that in a single case it would go completely unnoticed e.g. A bank
employee inserts a program into bank’s servers, that deducts a small amount from the account of
every customer.
In such crime criminal makes insignificant changes in such a manner that such changes
would go unnoticed. Criminal makes such program that deducts small amount like 2.50 per
month from the account of all the customer of the Bank and deposit the same in his account. In
this case no account holder will approach the bank for such small amount but the criminal gains
huge amount.

Misappropriation

E-Payments from legitimate users may be directed to an unauthorized party. Although this may
be difficult when credit cards are used, other payment systems may be more susceptible, for
example one seller appearing legitimate might sell access to another seller’s content. The
payment would go to the wrong party with the buyer unaware of the diversion.

PREVENTION OF CYBERCIME

Children:

Children should not give out identifying information such as Name, Home address, School Name
or Telephone Number in a chat room. They should not give photographs to anyone on the Net
without first checking or informing parents or guardians. They should not respond to messages,
which are suggestive, obscene, belligerent or threatening, and not to arrange a face-to –face
meeting without telling parents or guardians. They should remember that people online might not
be who they seem.

Parents:

Parent should use content filtering software on PC to protect children from pornography,
gambling, hate speech, drugs and alcohol.

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There is also software to establish time controls for use of limpets (for example blocking usage
after a particulars time) and allowing parents to see which site item children have visited. Use this
software to keep track of the type of activities of children.

General information:

Do not delete harmful communications (emails, chats etc). They will provide vital information
about system and address of the person behind these.
 Try not to panic.
 If you feel any immediate physical dangers contact your local police.
 Avoid getting into huge arguments online during chat and discussions with other users.
 Remember that all other Internet users are strangers; you do not know who you are
chatting with. So be careful.
 Be extremely careful about how you share personal information about yourself online.
 Choose your chatting nickname carefully so as others.
 Do not share personal information in public space online; do not give it to strangers.
 Be extremely cautious about meeting online introduced person. If you choose to meet, do
so in a public place along with a friend.
 If a situation online becomes hostile, log off and if a situation places you in fear, contact
local police.
 Save all communications for evidence. Do not edit it in any way. Also, keep a record of
your contacts and inform Law Enforcement Officials.

Preventive steps for organizations and government

1. PHYSICAL SECURITY: Physical security is most sensitive component, as prevention from

cyber crime Computer network should be protected from the access of unauthorized persons.
2. ACCESS CONTROL: Access Control system is generally implemented using firewalls,
which provide a centralized point from which to permit or allow access. Firewalls allow only
authorized communications between the internal and external network.
3. PASSWORD: Proof of identity is an essential component to identify intruder. The use of
passwords is the most common security for network system including servers, routers and
firewalls. Mostly all the systems are programmed to ask for username and password for
access to computer system. This provides the verification of user. Password should be
charged with regular interval of time and it should be alpha numeric and should be difficult to
judge.

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4. FINDING THE HOLES IN NETWORK: System managers should track down the holes
before the intruders do. Many networking product manufactures are not particularly aware
with the information about security holes in their products. So organization should work hard
to discover security holes, bugs and weaknesses and report their findings as they are
confirmed.
5. USING NETWORK SCANNING PROGRAMS: There is a security administration’s tool
called UNIX, which is freely available on Internet. This utility scans and gathers information
about any host on a network, regardless of which operating system or services the hosts were
running. It checks the known vulnerabilities include bugs, security weakness, inadequate
password protection and so on. There is another product available called COPS (Computer
Oracle and Password System). It scans for poor passwords, dangerous file permissions, and
dates of key files compared to dates of CERT security advisories.
6. USING INTRUSION ALERT PROGRAMS: As it is important to identify and close existing
security holes, you also need to put some watchdogs into service. There are some intrusion
programs, which identify suspicious activity and report so that necessary action is taken.
They need to be operating constantly so that all unusual behavior on network is caught
immediately.
7.ENCRYPTION: - Encryption is able to transform data into a form that makes it almost
impossible to read it without the right key. This key is used to allow controlled access to the
information to selected people. The information can be passed on to anyone but only the
people with the right key are able to see the information. Encryption allows sending
confidential documents by E-mail or save confidential information on laptop computers
without having to fear that if someone steals it the data will become public. With the right
encryption/decryption software installed, it will hook up to mail program and encrypt/decrypt
messages automatically without user interaction.
8. DETECTION: Cybercrime is the latest and perhaps the most specialized and dynamic field in
cyber laws. Some of the Cyber Crimes like network Intrusion are difficult to detect and
investigation even though most of crimes against individual like cyber stalking, cyber defamation
and cyber pornography can be detected and investigated through following steps:

After receiving such type of mail

(1) Give command to computer to show full header of mail.
(2) In full header find out the IP number and time of delivery of number and this IP number
always different for every mail. From this IP number we can know who was the Internet
service provider for that system from which the mail had come.
(3) To know about Internet Service Provider from IP number take the service of search engine
like nic.com, macffvisualroute. Com, apnic.com, arin.com.
(4) After opening the website of any of above mentioned search engine, feed the IP number and
after some time name of ISP can be obtained.
(5) After getting the name of ISP we can get the information about the sender from the ISP by
giving them the IP number, date and time of sender.
(6) ISP will provide the address and phone number of the system, which was used to send the
mail with bad intention.

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Network Security

Computer networks are distributed networks of computers that are either strongly connected
meaning that they share a lot of resources from one central computer or loosely connected,
meaning that they share only those resources that can make the network work. When we talk
about computer network security, our focus object model has now changed. It is no longer one
computer but a network. So computer network security is a broader study of computer security. It
is still a branch of computer science, but a lot broader than that of computer security. It involves
creating an environment in which a computer network, including all its resources, which are
many; all the data in it both in storage and in transit; and all its users are secure. Because it is
wider than computer security, this is a more complex field of study than computer security
involving more detailed mathematical designs of cryptographic, communication, transport, and
exchange protocols and best practices.

Information Security

Information security is even a bigger field of study including computer and computer network
security. This study is found in a variety of disciplines, including computer science, business
management, information studies, and engineering. It involves the creation of a state in which
information and data are secure. In this model, information or data is either in motion through the
communication channels or in storage in databases on server. This, therefore, involves the study
of not only more detailed mathematical designs of cryptographic, communication, transport, and
exchange protocols and best practices, but also the state of both data and information in motion.

TYPICAL EXAMINATION QUESTIONS AND MODEL ANSWERS

Explain 5 strategies that can be incorporated in an e-marketing plan [20]

[1 mark for stating the right strategy, 1 mark explanation and examples]
1. Targeting

-Segmentation
 Pareto rule 80/20
 Key a/c managers
 Brand loyalty customers
 People not reached by media

2. Positioning , differentiation , e.g. Zimazon – you only pay after the product is delivered
at your door step.www.kelkoo.com O.V.P- Compare , buy, serve
3. Customer relationship Mgt focus
 The organization needs to know what strands to take in investment on customer
acquisition and retention strategies.

4. Market and Product Development Strategies

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 Penetration Market Development
Current -What digital channels can be -can we use online
adopted to move existing channels to sell into new
products into markets? E.g. markets. E.g. Kingdom
Products music companies or financial bank
New institutions.

Product Development
Current Diversification
New
Market -Can we develop new digital Can we target new digital
5. products that can be delivered by markets with completely
the internet e.g. info products. new digital products?
Consider Kingstons Consider computer
manufacturing companies
and the provision of
software

Organizational restructuring requirements

6. Channel structure modification –
Organization need to decide on which channel members have to be removed
(disintermediation) and which channel members to partner – (re-intermediation).

QUESTION TWO
State and explain five forms of pricing Digital Products giving relevant examples
[1mark for stating, 2 marks explanation, ½ mark example]

1) Zero pricing entails not charging for the product e.g. readers pay $1 for a hard copy of
the Herald but can access it for free on www.herald.co.zw. There is also free software
which can be in the form of freeware (copyrighted software given away for free by the
author) OR shareware (delivered free of charge though the owner might require a small
fee and does not allow one to pass it on for free) OR public domain (when a program is
not copyrighted and can be used without restriction.

Why zero pricing?

 When the primary revenue stream is from advertising the company expects greater profits
when it achieves higher levels of customer traffic or activity. To attract traffic they offer
the product for free.
 To generate and encourage trial especially for products that have complicated quality
attributes that cannot be determined without using the product.

 Some digital products are offered for free in exchange for personal information which is
more valuable as it can be used to target consumers in other fields or can be sold to other
marketers.

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  A way to gain market acceptance especially with software often written by hobbyists for
personal growth and satisfaction.

2) Bundling

This refers to offering a combination of products instead of selling products individually

e.g. Microsoft Office is a bundle of Word, Excel, PowerPoint, Outlook, Access and other
programs. Bundling can either be mixed bundling (which gives some room for choice) or
pure bundling (take it or leave it basis). Bundling is useful when:

 Consumer preferences are diverse.

 There is a synergy between the components e.g. individuals can copy and paste
documents between Microsoft Office programmes.

 Even if a large proportion of the population is indifferent about most of the

bundles, components it can be profitable if the total number of components is
high e.g. DSTV’s premium bouquet has several channels which most viewers
don’t watch but is still profitable.

 When there is a high degree of variability in the component prices. By

presenting consumers with a bundle, the company can hide the price increases of
some components by decreasing the prices of others.

 When complementary bundles are provided, the company may be in a position

to impose a surcharge for making the bundle available.

Differential pricing

The basis of this strategy is to charge different customers different prices. In economic terms it is
price discrimination. It can be in the form of:

 Providing discounts on the basis of purchase history to reward loyal customers or to

entice first time buyers.
 Identity based or personalised pricing (charging each individual a different price) on the
basis of the offer given or income levels. It however can cause controversy and negative
publicity if customers find out they are charged much higher prices.

Subscription

This is when a buyer promises to buy access to content over a specific period of time e.g. Internet
access over a year or pay TV over a year. On the Internet, subscription pricing can be:

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  All content available to paid subscribers only e.g. www.emeraldinsight.com
 Some content is free while premium content is available to subscribers only e.g.
www.espn.com

 All content is free upon registration e.g. www.newyorktimes.com

 All content is free and no registration is required e.g. www.cnn.com

 Users are rewarded for browsing e.g. www.cbs.sportsline.com

Subscription reduces the seller’s demand uncertainty over time. A paid up subscription
means assured demand for the period. Many publishers offer price discounts for this
reduced uncertainty. It also reduces administrative costs of tracking transactions.
Subscriptions can increase consumer usage, leading to higher advertising and sponsorship
rates.

Site licensing

This pricing practice is often used with institutional buyers. Typically a large company or
university pays a flat fee so that everyone in the institution or some subset of individuals can use
a software programme or gain access to an online database e.g. a journal site like Emerald Insight
is subscribed by universities. Licensing has the following benefits for the software seller:

 It places the burden of enforcing the license and checking for software piracy on the
consumer.
 It is a simple pricing model and is easy to enforce.

 It encourages new users to try a software package thus stimulating more usage.

 It reduces maintenance costs by standardizing the programme features.


QUESTION THREE

Explain the strategies that can be adopted by online booksellers to increase their sales
giving examples. [20] [2marks for stating and explaining, 1mark relevant example]

 Free online books

 Sales promotions-e.g. Electronic coupon
 Advertising the presence of online books, in store-retail
 Setting up a Wi-Fi on e-books
 Downloading of books online
 Online retail sites
 Total solution………..

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  E-mail marketing
 Marketing on social networks.

QUESTION FOUR

Giving relevant examples, describe the various e- business modes of payment that is
available to an international business trader [20] [1mark for each, 1mark explanation, half
mark for justification]

E-payment systems

 E-payment is the electronic transfer of funds from one individual to the other. According
to Chaffey (2004) it is a term used to any kind of payment processed without cash or
paper cheques. It can be defined as the method of effecting payment from one end to
another through the medium of a computer without manual interaction beyond inputting
payment data. Traditionally, a customer sees a product, examines it, and then pays for it
by cash, check, or credit card. In the e-commerce world, in most cases the customer does
not actually see the concrete product at the time of transaction, and the method of
payment is performed electronically. There are several methods and tools that can be
used to enable EPS implementation these include Electronic funds transfer (EFT),
Payment cards, Electronic money (e-money/e-cash): Electronic wallets (e-wallets), Credit
cards

ELECTRONIC FUNDS TRANSFER (EFT

 Electronic funds transfer is one of the oldest electronic payment systems. EFT is the
groundwork of the cash-less and check-less culture where paper bills, checks, envelopes,
stamps are eliminated. EFT is used for transferring money from one bank account
directly to another without any paper money changing hands. The most popular
application of EFT is that instead of getting a pay check and putting it into a bank
account, the money is deposited to an account electronically. EFT is considered to be a
safe, reliable, and convenient way to conduct business.

The advantages of EFT contain the following:

 Simplified accounting

 Improved efficiency

 Reduced administrative costs

 Improved security

DISADVANTAGES
 Lack of Eligibility:

 Not all potential buyers may have a bank account.

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  PAYMENT CARDS
 Credit cards, debit cards, charge cards, smart cards are payment cards. They are the most
popular tool for electronic payment transactions.

Credit Cards
 There are two types of credit cards on the market today:

 Credit cards issued by credit card companies (e.g., MasterCard, Visa) and Major banks
(e.g. Is Bankasi, Ziraat Bankasi, Yapi Kredi, etc.)

 Credit cards are issued based on the customer's income level, credit history, and total
wealth. The customer uses these cards to buy goods and services or get cash from the
participating financial institutions. The customer is supposed to pay his or her debts
during the payment period; otherwise interest will accumulate.

 Limitations of credit cards are their unsuitability for very small or very large payments. It
is not cost-justified to use a credit card for small payments. Also, due to security issues,
these cards have a limit and cannot be used for excessively large transactions.

 Credit cards issued by department stores (e.g. Boyner), oil companies (e.g. Shell)

 Businesses extremely benefit from these company cards and they are cheaper to operate.
They are widely issued to and used by a broad range of customers. Businesses offer
incentives to attract customers to open an account and get one of these cards.

Advantages and Disadvantages of Credit

 Like most things, there are advantages and disadvantages to credit cards. Knowing some
of these can help you decide if you do or do not want to use credit cards.

 Purchase Power and Ease of Purchase - Credit cards can make it easier to buy goods. If
you don't like to carry large amounts of cash with you or if a company doesn't accept cash
purchases (for example most airlines, hotels, and car rental agencies), putting purchases
on a credit card can make buying things easier.

 Protection of Purchases - Credit cards may also offer you additional protection if
something you have bought is lost, damaged, or stolen. Both your credit card statement
(and the credit card company) can vouch for the fact that you have made a purchase if the
original receipt is lost or stolen. In addition, some credit card companies offer insurance
on large purchases.

 Building a Credit Line - Having a good credit history is often important, not only when
applying for credit cards, but also when applying for things such as loans, rental
applications, or even some jobs. Having a credit card and using it wisely (making
payments on time and in full each month) will help you build a good credit history.

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 Emergencies - Credit cards can also be useful in times of emergency. While you should
avoid spending outside your budget (or money you don't have!), sometimes emergencies
(such as your car breaking down or flood or fire) may lead to a large purchase (like the
need for a rental car or a motel room for several nights.)

 Credit Card Benefits - In addition to the benefits listed above, some credit cards offer
additional benefits, such as discounts from particular stores or companies, bonuses such
as free airline miles or travel discounts, and special insurances (like travel or life
insurance.) While most of these benefits are meant to encourage you to charge more
money on your credit card (remember, credit card companies start making their money
when you can't afford to pay off your charges!) the benefits are real and can be helpful as
long as you remember your spending limits.

Disadvantages
 Blowing Your Budget -- The biggest disadvantage of credit cards is that they encourage
people to spend money that they don't have. Most credit cards do not require you to pay
off your balance each month, so even if you only have $100, you may be able to spend up
to $500 or $1,000 on your credit card. While this may seem like 'free money' at the time,
you will have to pay it off -- and the longer you wait, the more money you will owe since
credit card companies charge you interest each month on the money you have borrowed.

 Credit Card Fraud - Like cash, sometimes credit cards can be stolen. They may be
physically stolen (if you lose your wallet) or someone may steal your credit card number
(from a receipt, over the phone, or from a Web site) and use your card to rack up debts.
The good news is that, unlike cash, if you realize your credit card or number has been
stolen and you report it to your credit card company immediately, you will not be charged
for any purchases that someone else has made. Even if you don't realize your credit card
number has been stolen (sometimes you might not know until you receive your monthly
statement), most credit card companies don't charge you or only charge a small fee, like
$25 or $50, even if the thief has charged thousands of dollars to your card.

 High Interest Rates and Increased Debt -- Credit card companies charge you an enormous
amount of interest on each balance that you don't pay off at the end of each month. This
is how they make their money and this is how most people in the United States get into
debt (and even bankruptcy.) Consider this: If you have a $100 in savings, most banks will
give you at the most 2.0 to 2.5% interest on your money over the course of the year. This
means you earn $2.00 - $2.50 a year on your $100 savings. Most credit cards charge you
up to 10 times that amount of interest on balances. This means that if you have $100
balance that you don't pay off, you will be charged 20-25% interest on that $100. This
means that you owe almost $30 interest (plus the original $100) at the end of the year. A
good way to look at this is in comparison to what you would earn in interest from a bank
or owe in interest to a bank loan: Savings accounts may pay you around 2% interest; if
you have a loan from a bank you may pay them around 10% interest (5 times as much as
you earn off your savings); if you owe money to a credit card company, you may pay
them around 20% interest (10 times as much as you earn off your savings.)

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 Debit cards
 The difference between credit cards and debit cards is that in order to pay with a debit
card you need to know your personal identification number (PIN) and need a hardware
device that is able to read the information that is stored in the magnetic strip on the back.

 Debit cards task similar to checks in that the charges will be taken from the customer's
checking account. The benefit for the customer is the easiness of use and convenience.
These cards also keep the customer under his or her budget because they do not allow the
customer to go beyond his or her resources.

Advantages
 Stored many types of information

 Not easily duplicated

 Not occupy much space

 Portable

 Low cost to issuers and users

 Included high security

Disadvantages of Debit cards

 They are identification cards owned by the issuer & restricted to one user i.e. cannot be
given away.

 They are not legal tender

 Their usage requires an account relationship and authorization system

Electronic cash /money

 Electronic money is a monetary value as represented by a claim on the issuer which is: (i)
stored on an electronic device; (ii) issued on receipt of funds of an amount not less in
value than the monetary value issued; (iii) accepted as means of payment by undertakings
other than the issuer.”

 Prepaid dedicated accounts include scratch cards. Payments are often paid in cash,
independent of an existing bank or credit card account and therefore allow for
anonymous shopping.

 Similar to regular cash, e-cash enables transactions between customers without the need
for banks or other third parties.

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 . When used, e-cash is transferred directly and immediately to the participating merchants
and vending machines. Electronic cash is a secure and convenient alternative to bills and
coins. This payment system complements credit, debit, and charge cards and adds
additional convenience and control to everyday customer cash transactions. E-cash
usually operates on a smart card, which includes an embedded microprocessor chip. The
microprocessor chip stores cash value and the security features that make electronic
transactions secure. Mondex, a subsidiary of MasterCard (Mondex Canada Association)
is a good example of e-cash.

 One of the first forms of alternative payment systems not really “cash” – rather, form of
value storage and value exchange that have limited convertibility into other forms of
value, and require intermediaries to convert. Many of early examples have disappeared;
concepts survive as part of P2P payment systems. Buyers deposit cash in the account and
spend it at E-Commerce sites (acct # is passed using secure proprietary protocol) E-
Comm merchants can feel sure of payment.

 Customers do not need a credit card and spending is limited to account balance Set up
account with e-cash issuing bank

 Account backed by outside money (credit card or cash)

 Public key encryption used to validate coins: third parties can “bite” the coin
electronically by asking the issuing bank to verify its encryption.

 Spend e-coin at merchant site that accepts e-cash

 Merchant then deposits e-coin in his account at his participating bank, or keeps it on hand
to make change, or spends the e-cash at a supplier merchant’s site.

Advantages
 Time saving

 We can transfer funds, purchase stocks, and offer a variety of other services without
having to handle physical cash or checks as long as bank is providing such services
online. The significant effect is we do not have to queue in lines, thus saving our time.

 Privacy

It offers the possibility of maintaining the absolute privacy of the client provided there is
agreement between the bank of issue and the organization from which the goods and
services have been acquired
 Efficient 

 Ease of use and flexibility

 Just as the currency, it provides an easy method of digital cash transaction and are simple
to execute and therefore there is transparency to all users

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 Disadvantages of electronic cash
 The main problem with e-cash is unlike the credit cards with a worldwide diffusion it is
necessary that the commercial establishment accept it as a payment method.

 Security

E-cash and E-Cash transaction security are the major concern. Frauds on E-Cash are on
the catch recent years. Hackers with good skill able to hack into bank accounts and
illegally retrieve of banking records has led to a widespread invasion of privacy and has
promoted identity theft. There are many other tricks including through phishing website
of certain banks and emails.
 Traceability

Money flow and criminal/terrorist activities are harder to be traced by government. With
the continued growth of E-Cash, money flow in and out of countries at immediate speed
without being traced will weaken the government's ability to monitor and income in tax.
Money laundering and tax evasion could be uncontrollable in e-cash systems as criminals
use untraceable Internet transaction to hide assets offshore.
 Lacks popularity

There is also a pressing issue regarding the technology involved in electronic cash such
power failures, internet connection failure, loss of records and undependable software.
These often cause a major setback in promoting the technology
E-wallets
 Established by financial institutions in partnership with member E-Commerce sites.
Allows customer to submit billing and shipping info with one click at member sites. Also
can store e-Cheques, e-Cash and credit card information. It seeks to emulate the
functionality of traditional wallet. Most important functions:

 Authenticate consumer through use of digital certificates or other encryption methods

 Store and transfer value

 Secure payment process from consumer to merchant

 Two major categories:

 Client-based digital wallets – Gator.com, MasterCard Wallet

 Server-based digital wallets – MSN Wallet 

Advantages of e-wallets
 Then, e-wallets can be used for micro-payments

 Eliminates re-entering of personal information

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  They also eliminate re-entering personal information on the forms, resulting in higher
speed and efficiency for online shoppers.

DISADVANTAGES
 Lack of Coverage

 QUESTION FIVE

Using relevant examples, describe;

(a)B2B model [5]

(b)B2c model [5]
(c) C2C model [5]
(d) G2C [5]
[3 Marks for explaining the meaning of a business model, 2marks relevant examples]

QUESTION SIX

Using the 7Cs framework, examine the aspects that determine the quality of a good website
[20] [2marks for stating and explaining correct points given below, 1mark example]

8. Content

 Text, pictures and sound e.g. images, videos, documents

 Offering mix of products and services online

 It’s about promotion and communication message.

 Need constant updating of content

 To increase traffic you have to put fresh content

 You need to have relevant key words- (interesting words)

 Put pictures of the product you are selling

 Take the consumer for a virtual tour

9. Community

 A group of people living in one locality, it refers to user interaction with each other.

 It should allow bloggers- interaction and comments e.g. TV Muvhango Sop SA.

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 It helps to build customer loyalty and customer retention.

 Companies can also use community to generate ideas

 Build relationships with customers

 Put a comment on the product on site and trigger consumer comment.

10. Communication

 This is the dialogue between users and website

 Website should set out blog to allow interactivity

 Move from channel to the other.

 The content should show the interaction between consumers and the company and
previous communication from databases.

 Acknowledge the customer that it has made the right decision by purchasing the product
via the email.

 Give them electronic coupons as a promotional means.

 Use telephone, emails, website, live chats, live Help to communicate with them and this
makes the site attractive.

11. Commerce

 Transactional capacity of the website does the website gives the consumer transacts.

 Customer should see the right product he/he is purchasing- view the product, virtual
shopping

 Assure security/ assurance of security upon purchase.

 It should give you ways of payment e.g. credit card, e- payment systems.

 It should give the customer options to navigate around the shop (virtual shop).

 Update the website constantly for new products

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  How the product is to be shipped.

 It should have: order tracking, delivery options.

 Products should be categorized e.g. books, music.

12. Connection

 Linkages and amount of information from other sites.

 Affiliate content

 Popup

 Bandwidth – speed at which the Internet connect.

 Search engines optimization.

13. Context

 It focuses on the site design, does it captures interest.

 The consumer should have a feel of the product before purchasing it.

 Site layout of the website – if you specialize on cars- the site should enable the customer
to view interior, exterior and sideways of the product.

 Performance reliability in terms of making decisions in sections e.g. on buying sections

or options.

 Context should be set in such a way that mobile commerce can easily navigate without
getting lost or confused.

 What experiences do you have on the whole context ( the feel of the whole organization/
products)

14. Customization

 Tailor made products

Tutorial Program

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 Define e-business and e-marketing
 What are performance metrics and why are they important?
 How does technology both raise and lower costs for companies?
 What are some of the marketing implications of Internet Technologies?

 How does e-business strategy relate to strategy on the corporate level?

 Define e-marketing strategy and explain how it is used?
 How does an e-business model differ from a physical (analogous) model?
 What is Customer Relationship Management (CRM) and why do companies
create strategies in this area?

 What are the six steps in e-marketing plan?

 What is the purpose of an e-marketing objective-strategy matrix?

 How and why do e-marketers use database-marketing technologies?

 What is content filtering and why is it important to some Internet users?

 What are the three main vehicles for advertising on the Internet?
 What are some ways of companies are using the Internet for marketing public
relations, sales promotions, and direct marketing?
 What are the strengths and weaknesses of the Web as an advertising medium?

 What is Competitive Intelligence and what are some of Online CI data?

 How do marketers turn marketing data into marketing knowledge?
 How can e-marketers facilitate Internet Exchange?
 What are the five main categories of outcomes sought by Internet Users?
 What is CRM and what are main benefits of e-CRM?
 What are the seven building blocks of CRM?
 What is Supply Chain Management and what are the advantages of CRM-SCM
integration?
 Explain how data mining, real-time profiling, collaborative filtering, and
outgoing e-mail help firms customize offerings?

 Why do e-marketers need to measure attitude toward technology? What measures

are available?
 Why would an e-marketer want to create or nurture a Web site for building a
community?

 How might an online company react if a rival embarks on competitor positioning

in an unflattering way?

 What are the arguments for and against using existing brand names on the Web?

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  What is price transparency and why is it an important concept for e-marketers to
understand?
 List the main factors that put downward pressure on prices in the Internet
channel?
 How does the value of distribution channel functions change when they become
Internet based?

Typical exam questions

Define the following terms

a) Electronic Data Mining
b) Virtual touring
c) An electronic business model
d) E-payment system
e) E-customer focus
f) E-customer value
g) E-collaboration
h) Viral marketing
i) Spoofing
j) Firewall
k) Malicious
 Discuss the different online strategies that can be adopted by online book sellers to ensure
their survival.
 Discus the applicability of community sites in enhancing trade in Zimbabwe.
 How can an organ utilize social networking sites so as to build brand awareness and
brand attitudes?
 Examine the effect of electronic customer Relationship Management in providing
solutions to SMEs in developing countries.
 Identify and explain security threats that are posed to e-business and suggest ways of
eliminating them.
 Explain the benefits and drawbacks of e-procurement to both buyers and suppliers.
 Explain search engines optimization strategies that can be adopted by organization to
maintain their top positions online.
 Discuss various ways an e-business trader can use to improve its visibility in search
engines.
 Explain how an online company may react if a rival embarks on competitor positioning in
an unflattering way.
 Giving relevant examples, explain the different forms of pricing digital products.
 Outline the factors that should be considered when designing a website.
 Examine aspects that determine the quality of a website.
 Examine the benefits and challenges of mobile commerce in a developing country
context.
 Analyze major challenges to e-business adoption by SMEs in developing countries.

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  Examine different forms of marketing communications offered by the Internet.
 Analyse the main benefits and challenges of establishing intranets and extranets in
organizations like CUT.
 How can Customer Relationships be established online?

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