Electronic Marketing: Integrating Electronic Resources into the Marketing Process, 2e 1/27/2014 2004...

04/10/23 2004

Joel Reedy and Shauna Schullo

Electronic Marketing: Integrating Electronic Resources into the Marketing Process, 2e

Electronic Marketing

Chapter 16Special Opportunities for

E-Business Situations

04/10/23 2004



The Brave, New World of the Web

• For competitive pressures, business management is looking inward to evaluate its own strengths and weaknesses, defining the corporate competencies and shoring up or outsourcing its deficiencies

– Internet-based B2B trade will reach nearly $2.4 trillion in 2004

– B2B commerce will experience astounding growth over the next 5 years rising to $6.3 trillion in 2005

– Businesses must adopt bold new models for buying and selling as online B2B commerce swells from 3% to 42% of total B2B domestic trade within 5 years

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• Additional findings continued…

– Business users accounted for 54% of all Internet users in 1999. Cyberatlas estimates more than 500 million active users accessed the Internet

– More than 75 million businesses world wide are listed on the Dunn & Bradstreet world wide database. Of those, 54.4 million are active companies. In 2000, 80% had Web sites, 43% had online catalogs, 32% use B2B e-commerce, and 52% want new Web sales channels

– Volumetrics – the use of the Internet in the business world has had a 17% increase compared to home user statistics

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– Web usage – according to a Thomas Register and Visa USA online survey of two thousand American and Canadian businesses, 40% used the Web at least once a month

– Small Business – according to a survey of 501 small businesses with less than 100 employees, 66% said they have integrated the Internet as a tool to help them run their business

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The Logic of Web Usage by Business-to-Business Organizations

• The way commercial enterprises conduct business has changed drastically through the nineties, and few managers, marketing included, could have foretold how technology would entangle itself in the Web of business

• Businesses are finding methods to adjust their business practices in the Information Economy

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• Marketers recognize the greatest benefit of the Web to the business sector is its efficiency:

– Products can be rushed to the market

– Production costs can be reduced by computer-aided design and computer-aided manufacturing

– The marketing process can be made more efficient with electronic resources

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• Efficiency continued…

– Targeting prospects can be enhanced with Web sites, listservs, or Usenet discussion groups, which are directed specifically to electronic commerce support, entrepreneurial, or venture capital funds

– Advertising messages can seek out viewers chosen by these viewers’ site selections and search engine choices; electronic publicity releases covering business topics find their way to news wires

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The Opportunities for Electronic Marketing Resources in Business-

to-Business Transactions

• The first order of e-business for many companies was toward automated procurement because much of the material handling involved numbers easily recognized by computer interfaces

• Open Buying on the Internet (OBI) became the standard way for exchanging and trading information

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• Values delivered by e-business as described by PricewaterhouseCoopers

– Achieve market leadership

– Reach new markets

– Create new products and services

– Build customer loyalty

– Optimize business processes

– Enhance human capital

– Harness technology

– Manage risk and compliance

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• Information is the key commodity in business-to-business transactions

• E-business strategies are selling products and services

– E-business is conducive for presentation through the catalog medium

– The Web serves the catalog medium well

– Listings, color photographs, diagrams, prices, and details subject to quickly change are popular product specifications

– Web site selling keeps product information updated

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• Management and advisory services are other forms of worthwhile information gaining awareness and sales momentum on the Web

– Consultative selling, situations where the outside representative becomes a trusted member of the client’s management team and the salesperson’s input is highly valued, is a most profitable activity

– IBM has created a “virtual seminar for e-business”

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• The electronic marketing resources for e-business

– Commercial auctions to sell surpluses carried with “live price boards” for common knowledge, either buyer or seller

– Virtual consulting using videoconferencing or virtual reality Web sites

– Speech recognition for routing telephone sales inquiries and security authentication

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• Marketing resources continued…

– Automated kiosks for guard-less entry of lodging facilities after hours, retail order-taking by push key, or printed or graphical information dispensing such as maps or brochures

– Automated procurement and reordering

– Robot shopping for availability of item and best price

– Delivery tracking

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– Customer and prospect profiling for company preferences and buying patterns

• Inventory control and balancing

• Custom communications networks

• Suppliers extranets for partnering and collaboration

• EDI for fast and efficient passing of large amounts of data

• Company marketing presence via Web advertising and customer communications and Web-enabled product and service ordering

• Customer service e-mail and call routing systems for customer communications

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– Virtual seminars and CD-ROM training of personnel

– Partnering with specialized companies to strengthen all technology and service areas of an e-commerce organization

– On many Web sites the user will find search engines that are time-savers in locating information contained within the site

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Internal Considerations for Business Operations

• Business should always be searching for the best methods for doing business

• Competitive forces are pushing many companies to assess the Internet as a competitive tool

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Disadvantages of Online Business-to-Business Commerce

• While the strength of e-business is streamlined efficiency, companies employing e-business lose contact with their distribution channels and sales personnel

• The biggest disadvantage is the threat of alienating distributors and therefore loss of physical distribution points

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• Different companies are trying different strategies to address the distributor or salesperson displeasure

– Compaq had introduced its own Web commerce site, selling computers at rock-bottom prices directly to small businesses and individuals

– IBM has tried using their Internet sites mainly to direct prospects to online ordering sites operated by long-established dealers

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• Strategies continued…

– Radius, Inc., began online sales of its software for handling digital photos

– Many other industries have long been partnering with distributors or third-party resellers, and e-business marketing strategies should be set with the prospect of gaining or losing key personnel or distribution outlets at any time

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• Some companies abhor the prospect of limiting its sales over the Internet

– 3M lists hundreds of its products on its Web site, but generally does not provide a way to order these products directly from the company

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E-Business Sales Forecasts by Industry

• The e-commerce specialist, Forrester Research, expects business-to-business e-commerce revenues to jump from $109 billion in 1999 to $1.3 trillion by 2003

• In making marketing decisions and plans, the marketer should probably adopt a conservative strategy, projecting the industry’s sales volume and her company’s market share and volume no further than two years hence

• Study the industry projections to see which are reasonable for the environmental conditions of today and hopefully of tomorrow

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