Chap 4

Slide 4.
Chapter 4
E-environment
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 4.2
Business Environment
• Macro-environment
• Micro - environment
Slide 4.3
SLEPT Factors
– Social
– Legal
– Economic
– Political
– Technological
Slide 4.4
SLEPT Factors
– Social
these include the influence of consumer perceptions in
determining usage of the Internet for different activities.
– Legal and ethical factors
determine the method by which products can be
promoted and sold online. Governments, on behalf of
society, seek to safeguard individuals’ rights to privacy.
Slide 4.5
SLEPT Factors
– Economic
Variations in the economic performance in different
countries and regions affect spending patterns and
international trade.
– Political
National governments and transnational organizations
have an important role in determining the future
adoption and control of the Internet and the rules by
which it is governed.
Slide 4.6
SLEPT Factors
– Technological
changes in technology offer new opportunities to the
way products can be marketed.
Slide 4.7
Figure 4.1 ‘Waves of change’ – different timescales for change in the environment
Slide 4.8
Environmental Scanning
• The process of continuously monitoring the
environment and events and respond accordingly
• Often occurs as an adhoc process
• Reporting mechanism should be there
• Is required to evaluate information and respond
accordingly
Slide 4.9
Social and Legal factors
• Factors governing e-commerce service adoption
1. Cost of access
2. Value proposition
3. Ease of use
4. Security
5. Fear of the unknown
Slide 4.10
Understanding users’ access requirements
• Webographics includes
Usage of location
Access device(browser and computer platform)
Connection speed – broadband versus dial-up
ISP
Experience level
Usage type
Usage level
Slide 4.11
Figure 4.2 Variation

in broadband subscribers per 100 inhabitants, by
technology, December 2007
Source: OECD (www.oecd.org/sti/ict/broadband)
Slide 4.12
Figure 4.2 Variation in broadband subscribers

per 100 inhabitants, by technology, December
2007
• Competition in the marketplace amongst broadband
providers has caused a great increase in the broadband
Internet access options available for consumers and small
businesses.
• But it should be borne in mind that these vary significantly
by country as shown by Figure 4.2. They show the web
services should be tested for lower-speed Internet
access.
Slide 4.13
Global variation in number of PCs per hundred population and percentage

Figure 4.2
Internet access in 2004
Source: ITU (www.itu.int/ITU-D/ict/statistics/)
Slide 4.14
Consumers influenced by using online

channels
• To help develop effective online services, we
need to understand customers’ online behaviour
and motivation
Popular activity is finding information about goods
Slide 4.15
Figure 4.4 Percentage by category who bought offline after researching online
Source: BrandNewWorld: AOL UK / Anne Molen (Cranfield School of Management) / Henley Centre, 2004
Slide 4.16
Motivation for use of online services
• Psychographic segmentations help explain

motivation
1. Casual user (20%)
2. Task-based user (24%)
3. Researcher (16%)
4. Emerging user (19%)
5. Established user (17%)
6. Next Gen user (5%)
Online Purchasing
Slide 4.17
Figure 4.5 Development of experience in Internet usage
Slide 4.18
Trust in different information sources

• The role of social media and friends in influencing sales
was highlighted by this research from EIAA (2008) which
rated key sources for research indicating the level of trust
amongst European consumers for different online and
offline information sources:
Slide 4.19
Trust in different information sources

(Continued)
– Search engines (66%)
– Personal recommendations (64%)
– Price comparison web sites (61%)
– Web sites of well-known brands (59%)
– Newspapers/magazines (58%)
– Customer web site reviews (58%)
– Expert web site reviews (57%)
– Retailer web sites (56%)
– Sales people in shops (50%)
– Content provided by ISPs (38%).
Slide 4.20
Figure 4.6 Percentage of businesses that order online

Source: DTI (2004), Fig 7.3a
Slide 4.21
Privacy and trust in e-commerce
• Ethical standards are personal or business

practices or behavior which are generally considered
acceptable by society.
• Privacy refers to a moral right of individuals to avoid

intrusion into their personal affairs by third parties.
• Identity theft is the misappropriation of the identity

of another person without their knowledge or
consent.
Slide 4.22
Why personal data are valuable for e-

businesses
Main information types used by the internet

marketer which are governed by ethics and
legislation
•Contact information
•Profile Information
•Platform usage information
•Behavioral information (on a single site)
•Behavioral information (across multiple sites)
Slide 4.23
Ethical issues and data protection

• Ethical issues concerned with personal information
ownership have been usefully summarized by Mason
(1986) into four areas:
1. Privacy – what information is held about the
individual?
2. Accuracy – is it correct?
3. Property – who owns it and how can ownership be
transferred?
4. Accessibility – who is allowed to access this
information, and under which conditions?
Slide 4.24
Ethics – Fletcher’s view

• Fletcher (2001) provides an alternative perspective,
raising these issues of concern for both the individual
and the marketer:
1. Transparency – who is collecting what information?
2. Security – how is information protected once

collected by a company?
3. Liability – who is responsible if data is abused?
Slide 4.25
The eight principles for data protection

• Fairly and lawfully processed;
• Processed for limited purposes;
• Adequate, relevant and not excessive;
• Accurate;
• Not kept longer than necessary;
• Processed in accordance with the data subject's
rights;
• Secure;
• Not transferred to countries without adequate
protection.
www.dataprotection.gov.uk
Slide 4.26
Information flows that need to be understood for compliance with data

Figure 4.7
protection legislation
Slide 4.27
E-commerce legislation – Sparrow’s eight

areas
1. Marketing your e-commerce business
2. Forming an electronic contract
3. Making and accepting payment
4. Authenticating contracts concluded over the
Internet
5. E-mail risks
6. Protecting Intellectual Property
7. Advertising on the Internet
8. Data protection.
Slide 4.28
Environmental and green issues related to

internet usage
1. Less vehicle- miles
2. Lower inventory requirements
3. Fewer printed materials
4. Less packaging
5. Less waste
6. Dematerialization
Slide 4.29
Economic / Competitive factors

• E –economy
The dynamic system of interaction between a
nation’s citizens, the businesses and government
that capitalize upon online technology to achieve
a social or economic good.
Slide 4.30
Figure 4.11 A framework describing the e-economy

Source: Booz Allen Hamilton (2002). International E-Economy: Benchmarking The World’s Most Effective Policy for the E-Economy. Report published 19 November, London.
www.e-envoy.gov.uk/oee/oee/nsf/sections/summit_benchmarking/$file/indexpage.htm
Slide 4.31
A framework describing the e-economy

• The framework is based upon four layers of environment,
readiness, uptake and use, and impact, and three major
stakeholder groups: citizens, businesses and government, as
shown
• Different governments have tried to improve the health of their e-
economies.
• Knowledge of different economic conditions is also part of
budgeting for revenue from different countries. In China there is
regulation of foreign ownership of Internet portals and ISPs which
could hamper development. User access to certain content is also
restricted.
• The trend towards globalization can arguably insulate a company
to some extent from fluctuations in regional markets, but is, of
course, no protection from a global recession.
• Managers can also study e-commerce in these leading countries
to help predict future e-commerce trends in their own country.
Slide 4.32
E-commerce and globalization

• Globalisation
To compete in the global marketplace , a company must
have
1. A 24-hour order taking and customer service response
capability
2. Regulatory and customs handling experience to ship
internationally
3. In- depth understanding of foreign marketing
environments to assess the advantages of its own
products and services.
Slide 4.33
Localization
• Tailoring e-commerce services for individual countries or

regions is referred to as localization.
• The website may need to support customers from a range
of countries with:
• Different product needs
• Language differences
• Cultural differences
Slide 4.34
Localization
• Singh and Pereira (2005) provide an evaluation framework

for the level of localization:
• Standardized web sites (not localized). A single site serves
all customer segments (domestic and international)
• Semi-localized web sites. A single site serves all customers;
however, there will be contact information about foreign
subsidiaries available for international customers. Many sites
fall into this category
• Localized web sites. Country-specific web sites with
language translation for international customers, wherever
relevant. 3M (www.3m.com) has adapted the web sites for
many countries to local language versions. It initially focused
on the major web sites
Slide 4.35
Localization (Continued)
• Highly localized web sites. Country-specific web sites with

language translation; they also include other localization
efforts in terms of time, date, postcode, currency formats,
etc. Dell (www.dell.com) provides highly localized web sites
• Culturally customized web sites.Web sites reflecting
complete ‘immersion’ in the culture of target customer
segments; as such, targeting a particular country may mean
providing multiple web sites for that country depending on
the dominant cultures present. Durex (www.durex.com) is a
good example of a culturally customized web site
Slide 4.36
Political factors
• The political environment is shaped by the
interplay of
government agencies,
public opinion,
consumer pressure groups and
industry-backed organisations
that promote best practice amongst companies.
Slide 4.37
Internet governance
• Describes the control put in place to manage the
growth of the internet and its usage.
• The different layers of jurisdiction are:
1. Physical space comprising each individual country
where its law holds.
2. ISPs – the connection between the physical and
virtual worlds.
3. Domain name control and communities
4. Agencies such as TRUSTe (www.truste.org)
Slide 4.38
E-government
• The application of e-commerce technologies
to government and public services
Slide 4.39
Technological innovation and technology

assessment
• No one can predict the future and many companies

have misunderstood the market for products.
• Rate of change
– Which new technologies should we adopt?
• Monitoring for new techniques
• Evaluation – are we early adopters?
• Re-skilling and training
Slide 4.40
Figure 4.12 Diffusion–adoption curve
Slide 4.41
Figure 4.13 Example of a Gartner hype cycle

Source: Gartner (2005) Gartner’s Hype Cycle Special Report for 2005
Slide 4.42
Example of a Gartner hype cycle

• An alternative graphic representation of diffusion of
innovation has been specifically developed by technology
analyst Gartner for assessing the maturity, adoption and
business application of specific technologies. Gartner
(2005) recognizes the following stages within a hype
cycle, an example of which is given for trends current in
2005:
1. Technology Trigger – The first phase of a hype cycle is
the ‘technology trigger’ or breakthrough, product launch or
other event that generates significant interest.
2. Peak of Inflated Expectations – In the next phase, a
frenzy of publicity typically generates over-enthusiasm
and unrealistic expectations. There may be some
successful applications of a technology, but there are
typically more failures.
Slide 4.43
3. Trough of Disillusionment – Technologies enter the

‘trough of disillusionment’ because they fail to meet
expectations and quickly become unfashionable.
Consequently, the press usually abandons the topic and
the technology.
4. Slope of Enlightenment – Although the press may have
stopped covering the technology, some businesses
continue through the ‘slope of enlightenment’ and
experiment to understand the benefits and practical
application of the technology.
5. Plateau of Productivity – A technology reaches the
‘plateau of productivity’ as the benefits of it become widely
demonstrated and accepted. The technology becomes
increasingly stable and evolves in second and third
generations. The final height of the plateau varies
according to whether the technology is broadly applicable
or benefits only a niche market.
Slide 4.44
Approaches to identifying emerging

technology
1. Technology networking – Individuals monitor

trends through their personal network and
technology scouting (Novartis)
2. Crowdsourcing – Utilizing a network of
customers or other partners to gain insights for
new product or process innovations
(InnoCentive)
3. Technology hunting – Structured review of new
technology through reviewing the capabilities of
start-up companies (British Telecom)
4. Technology mining – traditional literature
review of technologies described in published
documents (Deutsche Telekom AG)
Slide 4.45
Figure 4.14 InnoCentive
Slide 4.46
Figure 4.14 InnoCentive
• InnoCentive (Figure 4.14) is one of the largest

commercial examples of crowd sourcing. It is an
online marketplace which connects and manages the
relationship between ‘seekers’ and ‘solvers’. Seekers
are the companies conducting research an
development that are looking for new solutions to
their business challenges and opportunities. Solvers
are the 170,000 registered members of InnoCentive
who can win cash prizes ranging from $5,000 to
$1,000,000 for solving problems in a variety of
domains including business and technology.
Slide 4.47
Figure 4.15 Alternative responses to changes in technology
Slide 4.48
Alternative responses to changes in technology
• Figure 4.15 summarizes the choices. The stepped curve I

shows the variations in technology through time. Some may be
small incremental changes such as a new operating system,
others such as the introduction of personalization technology are
more significant in delivering value to customers and so improving
business performance. Line A is a company that is using
innovative business techniques, that adopts technology early,
or is even in advance of what the technology can currently deliver.
Line C shows the conservative adopter whose use of technology
lags behind the available potential. Line B, the middle ground, is
probably the ideal situation where a company monitors new ideas
as early adopters trial them and then adopts those that will have a
positive impact on the business.

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Slide 4.

Social and Legal factors

• Factors governing e-commerce service adoption

Understanding users’ access requirements

Figure 4.2 Variation

Figure 4.2 Variation in broadband subscribers

Global variation in number of PCs per hundred population and percentage

Consumers influenced by using online

Motivation for use of online services

• Psychographic segmentations help explain

Figure 4.5 Development of experience in Internet usage

Trust in different information sources

Trust in different information sources

Figure 4.6 Percentage of businesses that order online

Privacy and trust in e-commerce

• Ethical standards are personal or business

• Privacy refers to a moral right of individuals to avoid

• Identity theft is the misappropriation of the identity

Why personal data are valuable for e-

Main information types used by the internet

Ethical issues and data protection

Ethics – Fletcher’s view

1. Transparency – who is collecting what information?

2. Security – how is information protected once

3. Liability – who is responsible if data is abused?

The eight principles for data protection

Information flows that need to be understood for compliance with data

E-commerce legislation – Sparrow’s eight

Environmental and green issues related to

Economic / Competitive factors

Figure 4.11 A framework describing the e-economy

A framework describing the e-economy

E-commerce and globalization

• Tailoring e-commerce services for individual countries or

• Singh and Pereira (2005) provide an evaluation framework

• Highly localized web sites. Country-specific web sites with

Technological innovation and technology

• No one can predict the future and many companies

Figure 4.12 Diffusion–adoption curve

Figure 4.13 Example of a Gartner hype cycle

Example of a Gartner hype cycle

3. Trough of Disillusionment – Technologies enter the

Approaches to identifying emerging

1. Technology networking – Individuals monitor

Figure 4.14 InnoCentive

Figure 4.14 InnoCentive

• InnoCentive (Figure 4.14) is one of the largest

Figure 4.15 Alternative responses to changes in technology

Alternative responses to changes in technology

• Figure 4.15 summarizes the choices. The stepped curve I

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