Chapter 4 - E-Environment

Slide 4.
Chapter 4
E-environment
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 4.2
Learning outcomes
• Identify the different elements of an organisation

macro-environment that impact on an
organisation’s digital business and digital
marketing strategy
• Assess the impact of legal, privacy and ethical
constraints or opportunities on a company
• Assess the role of macro-economic factors such
as economics, governmental digital business
policies, taxation and legal constraints
Slide 4.3
Management issues
• What are the constraints such as legal issues

which should be taken into account when
developing and implementing a digital business
strategy?
• How can trust and privacy be assured for the
customer while seeking to achieve marketing
objectives of customer acquisition and retention?
• Assessment of the business relevance of
technological innovation.
Slide 4.4
Table 4.1 Factors in the macro-and micro-environment of an organisation
Slide 4.5
SLEPT factors
• Macro-environment
– Social
– Legal
– Economic
– Political
– Technological
Slide 4.6
Figure 4.1 ‘Waves of change’ – different timescales for change in the environment
Slide 4.7
Environmental scanning
• The process of continuously monitoring
the environment and events and
responding accordingly.
Slide 4.8
Social and legal factors

• Social and cultural impacts of the
internet are important since they govern
demand for internet services.
Slide 4.9
Table 4.2 Significant laws which control digital marketing
Slide 4.10
Table 4.2 Significant laws which control digital marketing (Continued)
Slide 4.11
E-commerce adoption
• Cost of access (cost of ISP)
• Value proposition (the need to be online)
• Ease of use
• Security
• Fear of the unknown (fear of technology)
• Social exclusion!
Slide 4.12
Understanding user’s access

requirements
• It is important to understand “Webographics”;
 Usage location (home vs. work)
 Access device
 Connection speed
 ISP
 Experience level
 Usage type
 Usage level
Slide 4.13
Online buyer behavior

• To develop effective online services we
need to understand customers’ online
behavior and motivation.
 Activitiesonline
 Sources of information used to buy
 The influence of these sources on the
buying process
Slide 4.14
Figure 4.2 Applications of using the Internet (Activities online)
Slide 4.15
Variation in number of sources on information used to inform buying

Figure 4.3
decision by sector
Source: Google Shopper Sciences (2011).
Slide 4.16
The influence of different information sources on purchase. ZMOT = Zero

Figure 4.4
Moment of Truth (before visiting store), FMOT = First Moment of Truth (in ‑store)
[IMPACT OF DIFFERENT FORMS OF ONLINE PURCHASE]
Source: Google Shopper Sciences (2011).
Slide 4.17
Motivation for use of online

services
• Psychographic segmentation can help
explaining motivation.
• Psychodemographic profiles have been
developed for web users.
Slide 4.18
Slide 4.19
Slide 4.20
Motivation for use of online

services
• To understand different motivation the
Web Motivation Inventory (WMI) can be
very helpful.
• 4 motives which cut across cultures:
 Research (information acquisition)
 Communication (socialization)
 Surfing (entertainment)
 And shopping
 These can be broken into…
Slide 4.21
WMI 4 categories can be broken

into:
1. Community 7. Survey
2. Entertainment 8. Downloads
3. Product trial 9. Interaction
4. Information 10.Search
5. Transaction 11.Exploration
6. Game 12.News
Slide 4.22
Purchase online
• Increased number of consumers are
purchasing online
• However, there is a huge difference in
online purchasing behavior depending
on product’s price and complexity
 Travel
 Cinema ticket
 Car
 Clothes
Slide 4.23
Figure 4.5 Development of experience in Internet usage
Slide 4.24
Business demand for digital

business services
• B2B market is more complex than B2C
• Analysis is important as part of the
segmentation of different groups within a
B2B target market, profile businesses
according to:
 Variation in organization characteristics
 Individual role
Slide 4.25
Variation in organization
characteristics
• Size of company (employees or turnover)
• Industry sector and products
• Organisation type (private, public, government,
not-for-profit)
• Division
• Country and region
Slide 4.26
Individual role
• Role and responsibility from job title, function or
number of staff managed
• Role in buying decision (purchasing influence)
• Department
• Product interest
• Demographics: age, sex and possibly social
group.
Slide 4.27
B2B profiles
• We can profile business users of the Internet
in a similar way to consumers by assessing:
 Companies with access; B2B access levels are
higher, buying unit reach
 Influenced online; identify suppliers rather than
completing a transaction
 Purchase online;
• We need to understand percentage of each!
Slide 4.28
Adoption of digital business

by businesses
• Important to understand:
 What digital business services are
businesses adopting?
 What the barriers?
Slide 4.29
Enterprises adopting technologies for digital business, by size class,

Figure 4.6
EU27, 2012
Source: EuroStat (2013).
Slide 4.30
Figure 4.7 Barriers to adoption of e‑commerce services of European countries

Source: European Commission (2010): http://ec.europa.eu/information_society/digitalagenda/documents/edcr.pdf. No longer available.
Slide 4.31
Adoption of digital business

by businesses
• Digital business in the UK SMEs can be divided
into 4 clusters:
 Developers; which were actively developing services
 Communicators; which use email to communicate
internally and externally
 Web presence
 Transactors
• Resources, planning, implementing an internet

strategy?
Slide 4.32
Ethical issues and data protection
• Ethical issues concerned with personal

information ownership have been usefully
summarised 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 4.33
Table 4.4 Types of information collected online and related technologies
Slide 4.34
Table 4.4 Types of information collected online and related technologies (Continued)
Slide 4.35
Economic and competitive

forces
• A comprehensive framework for
assessing an ‘e‑economy’ has been
developed by Booz Allen Hamilton
(2002). The report authors define the
e‑economy as:
 thedynamic system of interactions between
a nation’s citizens, the businesses and
government that capitalise upon online
technology to achieve a social or economic
good.
Slide 4.36
Slide 4.37
E-business and e-economy

• Globalization can insulate a company to
some extent from fluctuations in regional
markets.
• Globalization:
 Free movement of capital, labor, and products
 The increase of international trading and
shared social and cultural values
 The move towards international trading in a
single global marketplace.
Slide 4.38
Globalization
• consequences for organisations that wish to
compete in the global marketplace;
a 24‑hour order-taking and customer service

response capability;
 regulatory and customs-handling experience to
ship internationally;
 in‑depth understanding of foreign marketing
environments to assess the advantages of its own
products and services.
Slide 4.39
Globalization VS. Localization

• Tailoring e‑commerce services for
individual countries or regions is referred
to as localization; might include:
 Different product needs;
 Language differences;
 Cultural differences.
Slide 4.40
Localization
• The language that content is provided in.
• Tone and style of copy.
• Site design – certain colours or images may be
unsuitable or less effective in some countries.
• Range of product offerings.
• Product pricing.
• Promotional offers used to encourage acquisition
of customer email address This may be affected
by local data protection, taxation and trading laws.
• Local contact points.
Slide 4.41
Localisation
• Singh and Pereira (2005) provide an evaluation

framework for the level of localisation:
– 1 Standardised websites (not localised). A single site
serves all customer segments (domestic and international).
– 2 Semi-localised websites. 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.
– 3 Localised websites. Country-specific websites with
language translation for international customers, wherever
relevant. 3M (www.3m.com) has adapted the websites for
many countries to local language versions. It initially
focused on the major websites.
Slide 4.42
Localisation (Continued)
• 4 Highly localised websites. Country-specific websites

with language translation; they also include other
localisation efforts in terms of time, date, postcode,
currency formats, etc. Dell (www.dell.com) and IKEA (
www.ikea.com) provides highly localised websites.
• 5 Culturally customised websites. Websites reflecting
complete ‘immersion’ in the culture of target customer
segments; as such, targeting a particular country may
mean providing multiple websites for that country
depending on the dominant cultures present. Durex
(www.durex.com) is a good example of a culturally
customised website.
Slide 4.43
Political factors
• Political environment is shaped by the
interplay of government agencies.,
public opinion, consumer pressure
group.
Slide 4.44
E-political environement
• Booz Allen Hamilton (2002) review
approaches used by governments to
encourage use of the Internet. They
identify five broad themes in policy:
○ Increasing the penetration of ‘access devices’.
Approaches include either home access through
Sweden’s PC Tax Reform, or in public places, as in
France’s programme todevelop 7,000 access points
by a specific year/target date. France also offers
a tax incentive scheme, where firms can make
tax- free gifts of PCs to staff for personal use.
Slide 4.45
○ Increasing skills and confidence of target

groups. These may target potentially
excluded groups, as with France’s €150
million campaign to train the unemployed.
○ Establishing ‘driving licences’ or
‘passport’ qualifications. France, Italy and
the UK have schemes which grant simple IT
qualifications, particularly aimed at low- skilled
groups.
○ Building trust, or allaying fears. The US
1998 Child Online Protection Act used
schemes to provide ‘kitemark’-type
verification, or certification of safe
services.
Slide 4.46
○ Direct marketing campaigns. According to

the report, only the UK, with its UK Online
campaign, is marketing directly to citizens on
a large scale.
Slide 4.47
Technological issues
• Rate of change
– Which new technologies should we adopt?
• Monitoring for new techniques
• Evaluation are we early adopters?
• Re-skilling and training
• Are our systems secure?
Slide 4.48
Figure 4.12 Diffusion–adoption curve of a Gartner hype cycle
Slide 4.49
Figure 4.13 Example of a Gartner hype cycle

Source: Gartner (2010).
Slide 4.50
Gartner hype cycle

• Technology trigger – The first phase of
a hype cycle is the ‘technology trigger’
or breakthrough, product launch or other
event that generates significant press
and interest.
Slide 4.51
Gartner hype cycle

• 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 4.52
Gartner hype cycle

• 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.
Slide 4.53
Gartner hype cycle

• 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.
Slide 4.54
Gartner hype cycle

• 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 4.55
Figure 4.13 Example of a Gartner hype cycle

Source: Gartner (2010).
Slide 4.56
Approaches to identify
emerging technology
• Technology networking
• Crowdsourcing
• Technology hunting
• Technology mining
Slide 4.57
Technology networking.
• Individuals monitor trends through their
personal network and technology
scouting and then share them through
an infrastructure and process that
supports information sharing.
• For example Novartis facilitates sharing
between inside and outside experts on
specific technologies through an
extranet and face‑to‑face events.
Slide 4.58
Crowdsourcing
• Crowdsourcing facilitates access to a marketplace of ideas
from customers, partners or inventors for organisations
looking to solve specific problems.
• E.g. Lego is well known for involving customers in discussion
of new product developments.
• InnoCentive: is an online marketplace which connects and
manages the relationship between ‘seekers’ and ‘solvers’.
 Seekers are the companies conducting research and 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 4.59
Slide 4.60
Technology hunting
• This is a structured review of new technology
through reviewing the capabilities of start‑up
companies.
• For example, British Telecom undertakes a
structured review of up to 1,000 start-ups to
assess relevance for improving their own
capabilities which may ultimately be reduced to
five companies with which BT will enter into a
formal arrangement each year.
Slide 4.61
Technology mining
• A traditional literature review of technologies
described in published documents.
• Deutsche Telekom AG use technology to
automate the process through software such as
Autonomy which searches for patterns indicating
potential technology solutions within patents,
articles, journals, technological reports and trend
studies.
• A simpler approach is setting up a keyword search
for technologies through a free service such as
Google Alerts (www.google.com/alerts).
Slide 4.62
Responses to changes in
technology
• Innovators
• Responders
• Laggards
Slide 4.63
Figure 4.15 Alternative responses to changes in technology

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Slide 4.

• Identify the different elements of an organisation

• What are the constraints such as legal issues

Table 4.1 Factors in the macro-​and micro-​environment of an organisation

Social and legal factors

Table 4.2 Significant laws which control digital marketing

Table 4.2 Significant laws which control digital marketing (Continued)

Understanding user’s access

Online buyer behavior

Figure 4.2 Applications of using the Internet (Activities online)

Variation in number of sources on information used to inform buying

Source: Google Shopper Sciences (2011).

The influence of different information sources on purchase. ZMOT = Zero

Motivation for use of online

Motivation for use of online

WMI 4 categories can be broken

Figure 4.5 Development of experience in Internet usage

Business demand for digital

• We need to understand percentage of each!

Adoption of digital business

Enterprises adopting technologies for digital business, by size class,

Figure 4.7 Barriers to adoption of e‑commerce services of European countries

Adoption of digital business

• Resources, planning, implementing an internet

Ethical issues and data protection

• Ethical issues concerned with personal

Table 4.4 Types of information collected online and related technologies

Economic and competitive

E-business and e-economy

a 24‑hour order-​taking and customer service

Globalization VS. Localization

• Singh and Pereira (2005) provide an evaluation

• 4 Highly localised websites. Country-specific websites

○ Increasing skills and confidence of target

○ Direct marketing campaigns. According to

• Are our systems secure?

Figure 4.12 Diffusion–adoption curve of a Gartner hype cycle

Figure 4.13 Example of a Gartner hype cycle

Gartner hype cycle

Gartner hype cycle

Gartner hype cycle

Gartner hype cycle

Gartner hype cycle

Figure 4.13 Example of a Gartner hype cycle

Figure 4.15 Alternative responses to changes in technology

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Table 4.1 Factors in the macro-and micro-environment of an organisation

a 24‑hour order-taking and customer service