One of the biggest advantages the Internet has to offer is that information technology can help businesses gain competitive edge by enabling them to gather and maximize information. Porter previously used the value-chain concept back in the mid-1980s in showing the advantages of incorporating IT per se into businesses (Porter, 1985). Basically the value chain was divided into its physical and informational components. The physical component included all the steps in capturing and manipulating the data. With the help of information technology, companies could effectively improve their information-processing powers. The Internet was hailed as a good fit for those industries with information-based business activity.
The Web also offers businesses new distribution channels that enable customers worldwide to be informed and buy their products. It has the potential to create a number of opportunities. For example, an Internet-enabled distribution strategy has been heralded as a way for small and medium-sized companies to compete with larger organizations. Taking a relationship marketing perspective, Gilbert and Powell-Perry (cited in Lewis and Chambers, 2000) believe that the hotel industry must continue to use the full potential of the Web as a strategic mechanism to facilitate the development of relationships with customers.
Overall, the Internet is both an opportunity and a challenge to marketers. The opportunity lies in reaching your customers directly through websites. The challenge is to get the customers' attention to dwell long enough in order to tell your story and track their response to it.
In this brave new world, informational goods and services are produced by and for ecosystem members. The most effective strategy is to position yourself near the center of the ecosystem and make your enterprise indispensable to its major transactions. As the ecosystem develops, its principal modes of transactions grow with it - often faster than the ecosystem itself. Where an enterprise is a node in a system, every new member increases nodal transactions that grow exponentially. Thus the tenth member of a group produces nine additional relationships, all of which may pass through the nodal enterprise. The quantum leap "beyond competition" is shown in Figure 8.2.
Figure 8.2: The emergence of business ecosystems
Note that competing and cooperating have jumped to a higher level of complexity. Whereas employees once cooperated within the firm to compete with those outside it, now whole ecosystems of companies cooperate within that ecosystem to compete with outside ecosystems.
Also significant is the convergence of telecommunications and digital content, i.e., entertainment, education, business, news, etc., all of which use computers to store a wealth of data. Although marketers have been using electronic tools for many years, the Internet and other new technologies create a flood of interesting and innovative ways to provide customer value. However such new opportunities give rise to a whole series of marketing dilemmas:
How can firms leverage new technologies to maximum benefit and still keep intimate relationships with their clients?
How much commitment should marketers make to electronic marketing programs while at the same time using traditional approaches?
Is your market online and do you need to serve it locally or globally?
In this chapter, we'll explore these tensions and offer reconciliations.
First let's reflect that e-marketing is not just traditional marketing using electronic methods. According to Strauss (2002) it affects traditional marketing in two ways:
It increases efficiency in established marketing functions, but
the technology of e-marketing also transforms many marketing strategies. These transformations result in new business models that can be used to add customer value and thereby increase company profitability.
Internet technologies have spawned a variety of innovative products for creating, delivering, and reading messages as well as services such as reverse auctions, business-to-business (B2B) market exchanges, and interactive games. Established pricing strategies are turned upside-down. Bartering, bidding, dynamic pricing, and individualized pricing are common features of online surfing. Shopping agents create transparent pricing for identical product offerings at various e-tailers. Then marketers use the Web for direct distribution of digital products (e.g., news stories and live radio) and for electronic retailing.
But tremendous value occurs behind the scenes: supply chain management and channel integration create efficiencies that can either lower customer prices or add to company profits. And the Net assists with overt two-way communication: one-to-one Web pages, email conversation, and email conferencing via newsgroups and mailing lists.
We might as well raise a flag from the start and mention that this chapter is a snapshot of e-marketing in early 2004. We all recognise that the Internet is a rapidly changing medium, that enterprising entrepreneurs constantly have cool new ideas, and thus some things in this chapter might be out of date before is is even printed - but there are some serious projections.
According to a November 2003 article on CBS MarketWatch.com internet advertising is projected to continue a strong growth pattern in 2004. After a rollercoaster ride in online advertising over the last four years, 2004 looks to be the start of stable and reliable growth over the next few years. A fresh calculation from Smith Barney pegs online advertising growth for 2004 as being between 20 and 25 percent. In 2005 this is expected to grow between 15 and 20 percent. Online advertising could potentially grow 20 percent compounded annually over the next 5 years, according to Piper Jaffray, which recently held its online advertising conference in New York. As well as the big players, a multitude of e-marketers of all sizes also use it for promotions, and sending electronic coupons and digital product samples directly to consumers.
E-MARKETING DILEMMAS
We hope to show that some organizations have been brilliant and intuitive in solving several key marketing dilemmas facing their businesses that the Internet has exposed. It is the quality of these reconciliations that have elevated organizations to their present powerful positions in global sales. Let's consider the following exemplar dilemmas:
Global versus local approaches.
Broad spectra of customers versus deep, personalized customer relationships.
Face-to-face versus internet selling.
Uniting inner and outer orientations.
Premier Pages: the bridge between gift and sale.
Dilemma 1: Global versus Local Approaches
This global/local dilemma manifests in many ways throughout this book, but here we'll consider the Internet version of it. One good reason that the Internet will not sweep all before it, simply by communicating data, is that every customer is different (or perhaps we should say will become different because of what the Internet will bring). As far as investors go, for example, some want high risk, others low risk; some want growth stocks, others dividends; some have specialized interests in technology, media, energy, engineering, etc., while some have ethical concerns about tobacco or armaments.