Marketing Strategy And E-Commerce Introduction With the rapidly advancing technologies that are occurring in modern business, organisations are required to be ready, and able to adapt within their ever-changing environment. It is true across all diverse industries that in order to stay competitive, organisations must be able to utilise the various tools that technology has to offer. Technological factors have been of growing importance, particularly in recent years. A major factor involved in these technology issues is the use of the Internet as a major issue to modern organisations. The Internet has been rapidly growing since it’s inception and is now commonly used in all sectors of societies, in all corners of the globe. The Internet has quickly become one of the most valuable assets in modern technology, and as such, is developing as an integral part of modern commerce.
As with past technologies, the Internet will have future technological advances develop from its own growth. The task the organisations of in the new century? Realise future opportunities and threats, and base a strategy accordingly. Is it clich to say that ‘the Internet changes everything’: the challenge now is to say what, how and how quickly. (When Companies Connect, 1999, p.19) The Internet has lead to the birth and evolution of electronic commerce or E-commerce. E-commerce has now become a key component of many organisations in the daily running of their business.
Simply defined, electronic commerce is a system of online shopping and information retrieval accessed through networks of personal computers. (Reedy, J. Schullo, S. Zimmerman, K. 2000, pg. 29) E-commerce challenges traditional organisational practices, and opens ups a vast array of issues that the organisations must address.
By focusing on the varying levels of an organisation, it soon become apparent the effects that E-commerce can have. An understanding of the implication E-commerce has on such organisational divisions can help businesses gain understanding hence plan for it’s inevitable continuing evolution. In terms of marketing, the modern organisation must be critically aware of the development of E-commerce, and the implications that it entails. Marketers develop their own recipe of promotional tactics to fit the product lines or industries in which they compete. Now electronic communications tools are and will continue to be an important ingredient in the promotional mix (Reedy, J. Schullo, S.
Zimmerman, K. 2000, pg. 29) In assessing the implications of E-commerce in terms of marketing, it is important to understand its impact in respect to marketing strategy formulation. As the Internet, and in turn E-commerce has developed, and continues to evolve and grow, it is vital that any organisation, in any particular industry, must base it’s strategic planning around such a rapidly growing medium. The growth of the Internet is an environmental influence that must be embraced and understood so to successfully plan for future marketing implementation.
In order to successful realise the impact that E-commerce has in terms of marketing, it is important to break the area of interest into some key areas. As most of the issues that arise in terms of E-commerce represent organisations entering the environment, it seems natural to base discussion around this. Therefore, the bulk of the literature review relates existing organisations entering into the E-commerce market environment. In successfully identifying the relationship between E-commerce and strategy, the issues are categorised as follows: 1. Strategic analysis Understanding the environment 2. Identifying the strategic options/SWOT analysis Strategic Advantages/Disadvantages Advertising Electronic cost cutting/publishing/Process 3.
Corporate level, Business level, d Marketing level 4. Retailing in E-commerce Implementation Issues Financial Performance monitoring 5. Conclusion Based on current knowledge state To gain a clearer understanding of the implication of E-Commerce in the formulation of marketing strategy, it is imperative to gain a clear understanding of the environment and it’s relevant effects. This helps in understanding the rationale in a developing marketing strategy, particularly the influences of E-Commerce on its make-up. The next crucial element is to gain an understanding of E-commerce itself, as well as the current and possible future developments. In understanding E-commerce’s impact on strategic foundations, an organisation’s strategies can be more clearly focused.
Once the organisation and E-commerce’s respective environments are clear it is then possible to understand E-commerce’s implications in regards to fundamental marketing strategies. By focusing on tools such as the competitive strategy framework we can gain a better understanding of strategy formulation. By now it is easy to link E-commerce ideals directly into the strategic planning sequence, and hence understand its impact to the marketer. (Brown, 1997) By reviewing these traditional marketing theories and practices, it’s possible to see where, if at all E-commerce fit into current frameworks. This will provide relevant conclusions that can be made based on the strategic implications of E-commerce, and it’s attributes in the marketing process.
In doing so, this adds a vital dimension to the marketer in an ever-growing technology based society, of which must be clearly understood. Strategic analysis Understanding the Environment In order to gain an understanding of E-commerce’s impact to the modern organisation it is imperative that the environmental issues are analysed and understood. The understanding of the environment in which an organisation is involved is a fundamental element of its strategic plan. In order to be successful in any industry the organisation must have a sound understanding of influences that effect its product or service offer. When conducting an environmental analysis in regards to the Internet, it may seem that many of its attributes are present in traditional consumer markets. However, E-commerce provides organisations with a unique medium to analyse, requiring information relating specifically to it’s environment.
(Strauss, J. Frost, R., 1999). E-commerce ideals place particular emphasis on environmental factors, due to the high rate of change and development it constantly undergoes. An understanding of both environmental influence on the Internet and E-commerce, and that of a particular organisation is imperative basing any strategic formulation. Strauss, J. Frost, R. (1999) includes these macro and micro environmental factor as key issues, and they are extremely useful in constructing a basic for strategic planning.
Macro Environment Technology Obviously technology is a key environmental issues that must be addressed when analysing and understand E-commerce. Technology is ever-changing, and as such E-commerce is absolutely influenced by it’s evolution. Rapid changes in recent technological advances have bought about the Internet and in turn E-commerce, and such dramatic evolution is likely to continue. In terms of strategic formulation, technology is a huge issue that any organisation must be aware of when realising E-commerce’ s strategic implications. For example, an organisation thinking of developing a Web site must be strongly aware of technological issues that pertain to such initiations. The decision to develop a web-site internally or externally would be a key issue for any organisation.
Internal web-site development would require a vast understanding of technology and require this environmental factor to be constantly reviewed and analysed. In any case, awareness of technology is vital in planning marketing and business strategies, and should be closely followed. World economies Another key environmental influence is an awareness and understanding of global activity such as world economies. As the Internet provide a basis for global communication, the awareness of world economies must be understood in regards to E-commerce. The linking of the Internet world-wide, in turn effects the way in which E-commerce behaves, and therefore makes an understanding of world economies imperative. Legal/Political As with the need to understand world economies, global integration of E-commerce highlights fundamental environment issues such as legal and political influences.
As independent countries operate different legal and politic systems, it is obvious that an understanding of such ideals is also important in addressing E-commerce. For example, a recent precedent-setting court case in New York recently, a judge ruled that New Yorkers were breaking the law by gambling on the Internet, even if the gambling companies were based in other countries. State Supreme Court Justice Charles Edward Ramos stated, The act of entering the bet and transmitting the information from New York via the Internet is adequate to constitute gambling activity within New York State. (Public Agenda Online, 2000) Such example highlights issues that organisation must be aware of when developing a marketing strategy formula. Failing to recognise possible repercussions of E-commerce use, in a political or legal manner could prove catastrophic for an organisation. It is imperative it is carefully looked at, particularly in regards to E-commerce.
Micro Environment Market environment The growth of E-commerce has transformed the way in which consumers purchase products as well as how organisations operate. The Internet provides the necessary tools; easy operation and exchange of information; and therefore effects all diverse industries and organisations. The Internet has become a useful tool for selling, buying and distributing goods and services globally in a rapidly growing supply chain. The potential market that the Internet provides has little or no restrictions by either geography or time, and therefore poses a huge impact on any organisation considering E-commerce in it’s strategic marketing formulation. Opportunities in E-commerce are enormous, as present growth and development have proved.
(Kay, E. 2000) The Internet provides a virtual marketplace, providing huge opportunities in the marketing strategies that an organisation my wish to develop. Forecasters have projected that the world wide E-commerce revenues will be over $350 Billion in the year 2000. (Jones, I. 1999) User trends The trends of Internet users and in fact the use of E-commerce in general is extremely valuable information that the organisation must be aware of. By knowing how the advances of the Internet are being used, a marketing strategy can be focused keeping these ideals in mind.
As E-commerce provides different uses to varying companies or industries, user trends and their relative importance differ. For example business to business electronic communication would represent different characteristic than communication relating directly to the end-consumer. Ideals such as customer tracking can be found as an integral advantage in the use of Internet based marketing. Information regarding users use of resources can be tracked reasonably easily on the Internet, and is a direct result of the information-based platform the Internet provides. For example Amazon.com provide e-mail announcements when a new product or service become available to its customers. (Reedy, J.
Schullo, S. Zimmerman, K. 2000). Such understanding and manipulation of user information is beneficial to both consumer and suppliers. (Fig 1.) is an example of user information that may be pertinent in designing a strategy based using research of Internet use. The Graphics, Visualisation, and Usability (GVU) Centre conducted the research of this information that was found in on an information-based Web site.
Such information may be particularly useful when implementing strategic formulation, however should not be treated as sacred. Because of the limited nature in which this research is presented, it is hard to gauge its validity as a neutral and independent source. Organisation must be aware of such information’s credibility, and clear of its context and meaning. Without doing so, an organisation risks initiating a strategy that is based on inaccurate information. In keeping in mind the limitations of various consumer analysis information, it should be understood that there is still a place for its use in strategic formulation and planning.
Having an awareness of the varying user trends aids in strategy formulation in a number of ways. By understanding how the users of information tools such as the Web act, for example, it is possible to forecast or predict future behaviour and base strategies accordingly. Therefore user trends are an integral environmental issues that FIG 1. INTERNET USER PROFILE must be identified, in order to achieve successful marketing success. Consumer analysis Possibly the major factor in understanding the effects of E-commerce towards marketing within an organisation is the awareness of who in fact has access to such resources. By having an understanding of users of the Internet and E-commerce resources, the marketing strategy can be further advanced, and tailored in a favourable direction to the organisation.
Various factors make-up the analysis of the consumer when addressing both E-commerce and the more tradition means of commerce. Ideals such as demographics and cultural influences must be identified when assessing the characteristic of any market. It is important that the users of Internet technology are identified, and the relevant consumer attributes understood. In terms of E-commerce, this aspect of the environment provides a basis for how an organisation would structure their marketing strategies based on the attributes that make up the general Internet consumer. It is important to get some idea of the degree to which the marketing approach will be accepted by potential customers (Higgins, 1999, p.47) It is also imperative that awareness of the consumer does not limit organisations to just the end-consumer.
Business-to-business relationships must also be taken into account when planning strategy based around the E-commerce framework. By being aware of how industries and organisations utilise tools such as the Internet, a marketing strategy can be further guided in the right direction. Identifying the Strategic Options/SWOT analysis Having provided a situation analysis and environmental analysis, an organisation must use the information, in order to implement its strategic plan. In implementing a strategic plan is it appropriate to identify the four key elements in an organisation’s environment. They are: the internal strengths and weaknesses; and the external opportunities and threats.
(Or SWOT analysis). By matching the organisation …