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CHAPTER ONE

Introduction to E-Marketing

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Learning Outcomes:
After completing this chapter, students will be able to:
– Describe the evolution and scope of E-marketing
– Differentiate E-marketing, E-commerce, and E- business
– Understand the features of electronic commerce
– Compare electronic commerce with traditional commerce
– Familiar with the benefits of electronic commerce
– Know the limitations of electronic commerce
– Identify the challenges and opportunities of E- marketing.
– Identify the forms of E-marketing
– Identify the driving forces of E-marketing
– Identify the impacts of E-marketing

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Introduction
• There are different options of technologies to accomplish businesses’

commercial activities. Modern businesses use one or combination of different

technologies so that they will result in achieving their organizational goal.

• One of the most profound changes currently transpiring in the world of

business is the introduction of electronic business/commerce.

• The impact of electronic business (ecommerce, or EC) on procurement,

shopping, business collaboration, and customer services as well as on

delivery of various services is so dramatic that almost every organization is

affected.
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Con’t
• The nature of competition is also drastically changing,

due to new online companies, new business models,

and the diversity of EC-related products and services.

• EB provides unparalleled opportunities for companies

to expand worldwide at a small cost, to increase

market share, and to reduce costs.


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The difference b/n the 3 concepts

• E-Commerce
• E-Business
• Internet

• E-Marketing

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E-Business

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The Short History of E-Business

• In 1990, the first World Wide Web software was developed by


Tim Berners-Lee.

• In the early ‘90s commercial dial-up services were introduced.

• In 1992, the real e-business economy began


• By 1993, over 100 countries had an online presence

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Con’t

• Within the year, commercial users outnumbered academic


users for the first time.

• By the mid-nineties, e-commerce became attractive to


business.

• In 1997, virtually every major company, organization,


government and news service had a presence on the Web.

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Con’t
• The number of organizations using e-business is nearly
doubling each year
• Compared to the growth of e-commerce, e-business is being
implemented at a far faster rate
• The total world wide value of goods and services purchased by
business through e-commerce solutions will reach 5.8 trillion
by 2006, with e-marketplaces capturing the largest share of the
market

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E-Business
What is e-business?
• Involves the continuous optimization of an organization’s value proposition and value-chain
positions through the adoption of digital technology and the use of the Internet as the primary
communications medium.
• [EB = EC + BI + CRM + SCM + ERP]
• Where,
• EI = e-commerce
• BI = business intelligence
• CRM = customer relationship management
• SCM = supply chain management
• ERP = enterprise resource planning
• E-Business means utilising electronic medium in every day business activities.
• You turn your company from a business into an e Business when you integrate
your sales, marketing, accounting, manufacturing, and operations with your web
site activities.

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Con’t
• EC - uses digital technologies to enable buying/selling
• BI - collecting primary/secondary information
• CRM - strategy to satisfy customers and build long-
lasting relationships; high interaction with customers
• SCM – delivery of products efficiently and effectively;
high interaction with distributors
• ERP – optimize business processes and lowering costs
– Order entry and purchasing
– Invoicing and inventory control

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Con’t

o E-Business merges internet technology with business


processes to create new business value, new relationships
& build trust for an enterprise.

o E-Business refers to the paperless exchange of business


information using network based technology.

o Online purchase is very convenient for customers and can


provide competitive advantage for vendors.

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Importance of e-business

Cut costs and transaction times.


Promote, market and sell around the world and
around the clock through a website.
Improve customer support, communication and
relationship management.
Compete globally with your website against
businesses of all sizes without setting up offices in
other countries.

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Definition Of E-commerce

What is e-commerce?
• Electronic commerce, or e-commerce, refers to economic activity that occurs
online.
• E-commerce includes all types of business activity, such as retail shopping,
banking, investing and rentals. Even small businesses that provide personal
services.

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Con’t

Electronic commerce refers to the buying and selling


of products or services over electronic systems such as
the Internet and other computer networks.

It also includes the entire online process of developing,


marketing, selling, delivering, servicing and paying for
products and services. 

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Con’t

A more complete definition is:


“E-commerce is the use of electronic communications and
digital information processing technology in business
transactions to create, transform, and redefine
relationships for value creation between or among
organizations, and between organizations and individuals”

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Advantages of e-commerce
• Faster buying/selling procedure, as well as easy to find
products.
• Buying/selling 24/7.
• More reach to customers, there is no theoretical, geographic
limitations.
• Low operational costs and better quality of services.
• No need of physical company set-ups.
• Easy to start and manage a business.
• Customers can easily select products from different providers
without moving around physically.

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Disadvantages of Ecommerce

Any one, good or bad, can easily start a business. And there
are many bad sites which eat up customers’ money.
There is no guarantee of product quality.
Mechanical failures can cause unpredictable effects on the
total processes.
As there is minimum chance of direct customer to company
interactions, customer loyalty is always on a check.
There are many hackers who look for opportunities, and thus
an ecommerce site, service, payment gateways, all are always
prone to attack.
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Features of E-commerce
• We have 8 features of e-commerce
1. Ubiquity
2. Global Reach
3. Universal Standards
4. Richness
5. Interactivity
6. Information Density
7. Personalization/Customization
8. Social Technology

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1. Ubiquity

• E-commerce is characterized by its ubiquity:


– it is available just about everywhere, at all times.
– It liberates the market from being restricted to a
physical space and makes it possible to shop from
your desktop, at home, at work, or even from your
car, using mobile commerce.
– Market place extended beyond traditional
boundaries and removed from a temporal and
geographic location.

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Con’t
• From a consumer point of view, ubiquity
reduces transaction costs, the costs of
participating in a market.
• To transact, it is no longer necessary that you
spend time and money travelling to a market.
• At a broader level, the ubiquity of e-commerce
lowers the cognitive energy required to transact
in a market space. Cognitive energy refers to the
mental effort required to complete a task.
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2. Global Reach
• E-commerce technology permits commercial
transactions to cross cultural and national boundaries far
more conveniently and cost-effectively than is true in
traditional commerce.

• As a result, the potential market size for e-commerce


merchants is roughly equal to the size
of the world’s online population.
• 3 billion internet users

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3. Universal Standards
• One strikingly unusual feature of e-commerce
technologies is that the technical standards of the
internet, and therefore the technical standards for
conducting e-commerce, are universal standards
they are shared by all nations around the world.
• most traditional commerce technologies differ
from one nation to the next. For instance,
television and radio standards differ around the
world, as does cell phone technology.

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Con’t
• And users of the internet, both businesses and
individuals, experience network externalities
benefits that arise because everyone uses the
same technology.
• With e-commerce technologies, it is possible for
the first time in history to easily find many of the
suppliers, prices, and delivery terms of a specific
product anywhere in the world, and to view
them in a coherent, comparative environment.
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4. Richness
• Information richness refers to the complexity and
content of a message.
• Traditional markets, national sales forces, and small
retail stores have great richness: they are able to
provide personal, face-to-face service using aural
and visual cues when making a sale.
• The richness of traditional markets makes them a
powerful selling or commercial environment.
• Prior to the development of the Web, there was a
trade-off between richness and reach: the larger the
audience reached the less rich the message.
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5. Interactivity
• Unlike any of the commercial technologies of the
twentieth century, with the possible exception of the
telephone, e-commerce technologies allow for
interactivity, meaning they enable two-way
communication between merchant and consumer.

• Television, for instance, cannot ask viewers any


questions or enter into conversations with them, and it
cannot request that customer information be entered
into a form. In contrast, all of these activities are
possible on an e-commerce Web site.
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6. Information Density
• The Internet and the Web vastly increase information
density.
• E-commerce technologies reduce information collection,
storage, processing, and communication costs.
• At the same time, these technologies increase greatly
the currency, accuracy, and timeliness of information
making information more useful and important than
ever.
• As a result, information becomes more plentiful, less
expensive, and of higher quality.

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Con’t
• Online merchants can discover much more
about consumers; this allows merchants to
segment the market into groups willing to pay
different prices and permits them to engage in
price discrimination selling the same goods, or
nearly the same goods, to different targeted
groups at different prices.

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7. Personalization/Customization
• E-commerce technologies permit personalization:
– merchants can target their marketing messages to specific
individuals by adjusting the message to a person’s name,
interests, and past purchases.
• The technology also permits customization changing
the delivered product or service based on a user’s
preferences or prior behaviour.
• Given the interactive nature of e-commerce
technology, much information about the consumer
can be gathered in the marketplace at the moment of
purchase.
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Con’t
• With the increase in information density, a
great deal of information about the
consumer’s past purchases and behaviour can
be stored and used by online merchants.

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E-Commerce vs. Traditional Commerce
• The major difference is the way information is
exchanged and processed:
1. Traditional commerce:
– face-to-face, telephone lines, or mail systems
– manual processing of traditional business transactions
– individual involved in all stages of business
transactions
– Heavy dependency on information exchange from
person to person.
– Communication/ transaction are done in
synchronous.
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Con’t
• It is difficult to establish and maintain
standard practices in traditional commerce.
• Communications of business depends upon
individual skills.
• No uniform platform for information sharing
as it depends heavily on personal
communication.

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2. E-Commerce

– using Internet or other network communication technology

– automated processing of business transactions

– individual involved in all stages of transactions

– pulls together all activities of business transactions, marketing

and advertising as well as service and customer support

– Information sharing is made easy via electronic communication

channels making little dependency on person to person

information exchange.

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Con’t

– Communication or transaction can be done in

asynchronous way.

– E-Commerce provides a universal platform to

support commercial /business activities across

the globe.

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Benefits of the E-commerce market

• We have 3 benefits :
1. Business Organizations
2. Customers
3. Society

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Benefits to organizations

• Enables companies to procure material and services


from other companies, rapidly and at less cost.
• Expands the marketplace to national and
international markets.
• Helps organization to reduce the cost to create
process, distribute, retrieve and manage the paper
based information.
• Easy to create and maintain customer or client
database.

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Con’t

• Helps organization to provide better customer


services.
• It Improves the brand image of the company.
• Helps to simplify the business processes and
make them faster and efficient.

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Benefits to Customers

• Customers can receive relevant and detailed


information in seconds, rather than in days or weeks.
• Customer can do 24/7 transactions for the product
or enquiry about any product/services provided by a
company anytime, anywhere from any location.
• Enables consumers to get customized products at
competitive prices.
• Allows customers to interact with other customers in
electronic communities and exchange ideas as well
as compare experiences.

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Con’t
• Provides customers with less expensive
products and services by allowing them to
shop in many places and conduct quick
comparisons.

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Benefits to Society
• Enables individuals to work at home and to do less
travelling, resulting in less road trafficking.
• Allows some merchandise to be sold at lower prices,
thereby increasing people’s standard of living.
• Facilitates delivery of public services, such as
increasing the quality of social services, police work,
health care, and education.
• Enables people in third World countries and rural
areas to enjoy products and services which otherwise
are not available to them.
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Limitations of electronic commerce

• Although e-commerce has the above


mentioned advantages, it has also some
limitations.
• limitations of e-commerce can be categorized
in to two broad divisions. These are :
• Technical limitations and
• Non technical limitations.

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Technical limitations
• Lack of sufficient system’s security, reliability, standards, and
communication protocols.
• The software development tools are still evolving and
changing rapidly.
• Sometimes, it becomes difficult to integrate E-Commerce
software or website with the existing application or databases.

• Possible problems of interoperability, meaning that there could


be software/hardware compatibility issue as some e-
commerce software may be incompatible with some operating
system or any other component.

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Non technical limitations
• Initial cost: The cost of creating / building E-Commerce
application in-house may be very high.
– There could be delay in launching the E-Commerce application due to
mistakes, lack of experience.
• Lack of trust and user resistance: Customers/user may not trust
the site being unknown faceless seller, paperless transactions,
and electronic money. So switching from a physical to online/
virtual store may be difficult.
• Security / Privacy: Difficult to ensure security or privacy on
online transactions.
• E-Commerce applications are still evolving and changing rapidly.

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What is e-marketing?

What is e-marketing?

• E-Marketing (Electronic Marketing) is the moving of


marketing strategies and activities to a computerized,
networked environment such as the Internet.

• It is the strategic process of creating, distributing, promoting,


and pricing goods and services to a target market over the
Internet or through wireless digital tools e.g. mobile phones
and pocket PC’s.

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Con’t

• E-Marketing is a subset of E-business that utilizes electronic


medium to perform marketing activities and achieve desired
marketing objectives for an organisation.

• E-Marketing is a broader term that describes any marketing


activity performed via electronic medium.

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Advantages of e-marketing(opportunities)

• Reduction in costs through automation and use of


electronic media.
• Faster response to both marketers and the end user.
• Increased ability to measure and collect data.
• Opens the possibility to a market of one through
personalisation.
• Increased interactivity with customers.

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Disadvantages of e-marketing(Challenges)

• Dependability on technology.
• Security, privacy issues.
• Maintenance costs due to a constantly evolving
environment.
• Worldwide competition through globalisation.

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Comparison between E-Business, E-Commerce and E-Marketing
E-Business E-Commerce E-Marketing

E-Business is a very broad E-Commerce is best described


entity dealing with the entire in a transactional context. for E-Marketing is also a part of e-
complex system that comprises example an electronic Business that involves
a business that uses electronic transaction of funds, electronic medium to achieve
medium to perform or assist its information or entertainment marketing objectives.
overall or specialised business falls under the category handled
activities. by principles of e-Commerce.
e-Marketing is set on a strategic
level in addition to traditional
Technically e-Commerce is a marketing and business
part of e-Business. strategy.

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Forms of e-marketing

Internet Marketing

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What is Internet Marketing?
– Alternative definition: Internet marketing is the
result of information technology applied to traditional
marketing.
– Internet marketing affects traditional marketing in two
ways:
• Increases efficiency in traditional marketing
functions,
• The technology of Internet marketing
transforms many marketing strategies.
 Results: new business models that add customer value and/or
increase company profitability.

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Birth of the Internet(Net)
• The Internet grew out of an experiment in the 1960s
by the U.S. Department of Defence.
• They wanted to create a computer network that
would continue to function in the event of a disaster,
such as a nuclear war.
• If part of the network was damaged or destroyed, the
rest of the system still had to work. That network was
ARPANET, (Advanced Research Projects Agency
Network) which linked U.S. scientific and academic
researchers. It was the forerunner of today's Internet.
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What is Internet?

• A large computer network linking smaller


computer networks worldwide.
• It is the network of network which links
millions of computers, organizations,
individuals , researchers with in a mater
of second.

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Internet

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What do I Need to Connect to the
Internet ?

+ +
Computer, Telephone, + Internet
Mouse & Cable, DSL
Browser Service
Modem or or
Software Provider
network card Wireless…

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Why Use the Internet?
• To search for Information on
the World Wide Web

• To use e-mail

• The World Wide Web (www) and


e-mail are two different Internet services!

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World wide web(www)Website

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World wide web(www)
• Tim Berners-Lee, First web server and client, 1990
• Established a common language for sharing information
on computers
What is world wide web(Web)
• It is a network of electronic files stored on millions of
computers all around the world.
• is a collection of documents and services, distributed
across the internet and linked together by hypertext links.
• The web is therefore a subset of the Internet, not the
same thing.

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Con’t
• It can be viewed as a huge distributed system
consisting of millions of clients and servers for
accessing linked documents.

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Hyper text/hyperlink
• Hyperlinks are the programmatic commands
to jump to another page in your web browse.

• A hyperlink is a word, phrase or image that


can click on to jump to document or a new
section with in the current document.

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HTTP (Hypertext Transport Protocol)

• The set of rules for exchanging files (text,


graphic images, sound, video, and other
multimedia files) on the World Wide Web.
• Example
http://www.google.com

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Http

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HTML (Hypertext Mark up Language)

• Is the programming language that makes it


possible for us to view content from all over
the world via hyperlinks.
• The coding language used to create
documents for use on the World Wide Web.
• HTML documents are described by HTML tags

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Tags
• Tags are items surrounded by angle
brackets containing codes indicating how
text should be displayed
• E.g. <B>Hello</B> appears Hello<B> is the
start-tag and </B> is the end tag

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What is Web page or page
• A web page is the basic building block for the
entire www.
• Web page is filled with dozens of hyperlinks
each sending you to some related web page or
picture/file.
• A web page is not the same as a web site.

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Web page

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Web Browsers
• A web browser is the software program you use
to access the World Wide Web, the graphical
portion of the Internet.
• Browsers are basically software programmes
that allows you to search for and view various
kinds of information on the web, such as
websites, videos, audio etc.
• Easy-to-use point-and-click interface helped
popularize the Web.
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Con’t

• A Web browser contains the basic software you


need in order to find, retrieve, view, and send
information over the Internet.
• It enables to connect your computer to the
Web server.
• The appearance of a particular Web site may
vary slightly depending on the browser you use.

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Web Browsers

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What is Uniform Resource Locators (URL)?

• Uniform Resource Locators or URLs are the


addresses used to locate the files or it is the
Internet address.  .
Example:
• http://www.mu.edu.et

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What are Domains?

• Domains divide World Wide Web sites into categories based


on the nature of their owner, and they form part of a site's
address, or uniform resource locator (URL).
• It locates an organization or other entity on the internet, for
example the domain name for google is
– www.google.com
– It is the comprised of three essential parts
• .com
• .google
• www: this is a sub- domain prefix for the world wide web

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Con’t
• The most Common top-level domains are:
• .com eg. About.com
• .org wikipedia.org
• .edu mu.edu
• .net sourceforge.net
• .mil navy.mil
• .info ethio.info
• Each country linked to the Web has a two-letter
top-level domain, for example .et is for Ethiopia .fr
is for France, .ie is Ireland
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Individual Assignment

1. The Driving Forces of Electronic Marketing


The three main driving force are:
1. Business pressures
2. Organizational responses
3. The role of Information Technology
(including electronic commerce)
2. Ten rules of E-Marketing
3. The impact of e-Marketing on:
- business organizations
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End of Chapter one

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Chapter II

The E-marketing Environment

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Learning objectives
• Identify the different elements of the
environment that impact on an organisation’s
e-marketing strategy;
• Assess competitor, customer and
intermediary
use of the Internet;
• Evaluate the relevance of changes in trading
patterns and business models enabled by
e- commerce.
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Introduction
• All organisations operate within an environment that influences
the way in which they conduct business.
• Organisations that monitor, understand and respond
appropriately to changes in the environment have the greatest
opportunities to compete effectively in the competitive
marketplace.
• Understanding an organisation’s environment is a key part of
situation analysis for the Internet marketing strategy
development process.
• There is also the need for a process to continually monitor the
environment which is often referred to as environmental
scanning.

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Different environment components

• The Internet introduces new facets to the


environment that must be considered by
marketers since strategy development is
strongly influenced by considering the
environment the business operates in.
• We have two environment components:
1. Micro –environment
2. Macro-environment

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The Internet marketing environment

Figure: The Internet marketing environment

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1. Micro –environment
• The micro-environment, sometimes known as ‘the
operating environment’ and is the immediate
marketplace of an organisation.
• For development of Internet marketing strategy, the
most significant influences are arguably those of the
micro-environment.
• This is shaped by the needs of customers and how
services are provided to them through the
competitors, intermediaries and upstream suppliers
within the marketplace.
• The Internet and electronic communications have
major implications for organisations and these must
inform their Internet marketing strategy. 79
Different elements of Micro –environment

• Customers
• Suppliers
• Intermediaries
• Competitors
• others
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Customers
• It is essential for Internet marketing and e-
marketing managers to understand the current
levels and trends in usage of the Internet for
different services and the factors that affect how
many people actively use these services.
• Situation analysis related to customers is very
important to setting realistic objectives estimates
for online customers and developing appropriate
propositions for customers online.

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Con’t
• Customer-related analysis can be divided into two.
• First, understanding the potential and actual
volume of visitors to a site (demand analysis)
and the extent to which they convert to
outcomes on the site such as leads and sales
(conversion modelling).
• Secondly, we need to understand the needs,
characteristics and buyer behaviour of online
customers.

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Competitors
• The monitoring of competitor use of Internet marketing for
acquisition and retention of customers is especially
important because of the dynamic nature of the Internet
medium.
• As Porter (2001) has pointed out, this dynamism enables
new services to be launched and elements of the marketing
mix such as price and promotion changed much more
frequently than was traditionally the case.
• Competitor Analysis is review of Internet marketing services
offered by existing and new competitors and adoption by
their customers.

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Suppliers
• The most significant aspect of monitoring
suppliers in the context of Internet marketing
is with respect to the effect suppliers have on
the value of quality of product or service
delivered to the end customer.
• Key issues include the effect of suppliers on
product price, availability and features.

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Intermediaries
• Marketing intermediaries are firms that can help a company
to promote, sell and distribute its products or services.
• In the Internet context, online intermediaries can be
contrasted with destination sites which are typically merchant
sites owned by manufacturers or retailers which offer
information and products.
• Online intermediary sites provide information about
destination sites and provide a means of connecting Internet
users with product information.
• The best known online intermediaries are the most popular
sites such as Google and Yahoo! These are known as ‘portals’.

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2. Macro-environment
• Environmental scanning and analysis of the macro-environment
are necessary in order that a company can respond to
environmental changes and act on legal and ethical constraints
on its activities.
• Macro-economic factors will determine the overall characteristics
of the micro environment.
• For example, the social, legal, economic, political and
technological environment in any country will directly affect the
demand for e-commerce services by both consumers and
businesses.
• Governments may promote the use of e-commerce while social
conventions may limit its popularity.

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Con’t
• While it can be considered that the macro-economic
factors will influence all competitors in a marketplace,
this doesn’t mean that the macro-environment factors
are unimportant.
• Changes in the macro-environment such as changes in
social behaviour, new laws and the introduction of new
technologies can all present opportunities or threats.
• Organisations that monitor and respond best to their
macro-environment can use it as a source of
differentiation and competitive advantage.

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1. Political factors
• involve the role of governments in promoting e-commerce,
but also in trying to restrict it.
• The political and regulatory environment is shaped by the
interplay of government agencies, public opinion and
consumer pressure groups.
• Political action enacted through government agencies to
control the adoption of the Internet can include:
• enacting legislation to regulate the environment, for example to
protect privacy or control taxation;
• role of government organisations in promoting and regulating e-
commerce and government policy .

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Con’t
• Internet governance describes the control put
in place to manage the growth of the Internet
and its usage.
• Governance is traditionally undertaken by
government, but the global nature of the
Internet makes it less practical for a
government to control cyberspace.

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Legal and ethical Factors
• Considered by e-commerce managers include
taxation, domain name registration, copyright
and data protection.
• Ethical standards are personal or business
practices or behaviours which are generally
considered acceptable by society.
• A simple test is that acceptable ethics can be
described as moral or just and unethical
practices as immoral or unjust.
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Con’t
• Ethical issues include the need to safeguard
consumer privacy and security of details.
• Privacy issues include collection and
dissemination of customer information, cookies
and the use of direct e-mail.
• Marketers must act within current law, reassure
customers about their privacy and explain the
benefits of collection of personal information.

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Economic factors
• Include the regional differences in the use of the Internet for
trade. Different economic conditions in different markets are
considered in developing e-commerce budgets.
• The economic prosperity and competitive environment in
different countries will determine the e-commerce potential
of each.
• Managers developing e-commerce strategies will target the
countries that are most developed in the use of the
technology.
• Knowledge of different economic conditions is also part of
budgeting for revenue from different countries.

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Con’t
• According to Roussel (2000), economic,
regulatory and cultural issues are among the
factors affecting use of the Internet for
commercial transactions.
• The relative importance of these means e-
commerce will develop differently in every
country.

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Economic Factors includes
• Inflation
• Employment
• Disposable income
• Energy availability and cost
• Level of economic development

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Socio-cultural factors
Include variation in usage of the Internet
Includes :
• Demographics (population size and growth)
• The culture, beliefs and values of the
community
• Lifestyle changes
• Levels of education

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Technological factors
• Constant monitoring of adoption of the technology by customers
and competitors and appropriate responses.
• One of the great challenges for Internet marketers is to be able to
successfully assess which new technological innovations can be
applied to give competitive advantage.
– For example, personalisation technology is intended to enhance the
customer’s online experience and increase their loyalty.
• However, a technique such as personalisation may require a large
investment in proprietary software and hardware technology to be
able to implement it effectively.
– How does the manager decide whether to proceed and which solution to
adopt? In addition to technologies deployed on the web site, the suitability
of new approaches for attracting visitors to the site must be evaluated

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Con’t
• New discoveries and innovations
• Speed of technology transfer
• Internet (Information technology)

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Reading & individual assignment

• Reading assignment
– Porter’s five forces
• Individual assignment on:
– Types of virtual business

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End of Chapter Two

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