1999) According to David Baum, “Electronic commerce is a dynamic set of
E- Commerce helps us to reduce cost of the procurement and the payments. By putting the catalogue on the net
9.7 E-COMMERCE AND MARKETING MIX
The selection of an e-commerce marketing mix is likely to involve the application of established marketing management principles as the basis for defining how electronic technologies are to be integrated into a firm’s existing operations. In many organizations, e-commerce marketing mix proposals will be based around enhanching existing offline activities by utilizing the Internet to provide new sources of information, customer supplier interaction and/or alternative purchase transaction channels.
9.7.1. PRODUCT AND PRICING
It will be necessary to determine whether the Internet provides an opportunity for product enhancement. Such opportunities include improving customer service and broadening the product line. As far as pricing is concerned, thought must be given to whether offline and online prices will be different and the potential implications of any price variance for existing offline customers. When the move to e-commerce involves new distribution costs, consideration should be given to delivery charges. Tesco, for example, imposes a delivery charge for its home shopping service.
9.7.2 PROMOTION
The first issue to be addressed when considering promotional mix decisions given the important role of the Internet in making information available to customers-is
the design of a company’s webside. Some large companies will decide that this is an activity over which they wish to retain absolute control. In this situation the firm will hire a team of employees to manage the website creation process.
However, there are a variety of other approaches that may be adopted. The design process may be contracted out to a major consulting firm, such as IBM, or to one of the many specialist Internet agencies that have been formed in recent years.
Firms with limited financial resources may wish to use a web-authoring package.
One of the more expensive, but highly popular, authoring software packages is Drumbeat 2000 produced by Macromedia (www.macromedia.com). This product, besides containing a plethora of design options, also has features such as a shopping cart function; secure credit card transactions and an integrated database system. For those firms that do not feel able to run their own Internet operation, another option is to join an existing website, which acts as host for a number of organizations. These hosting services usually provide a choice of basic website templates to suit different types of business. The firm is provided with software by the hosting service, which permits it to customize a template and thus develop its own visual identity. An example of a hosting service is Mindspring.com (www.mindspring.com) The company provides software for a firm to build a product catalogue and storefront, which is then featured on the Mind spring site.
The degree to which a company already has a strong offline market presence will strongly influence the scale of an e-commerce promotional plan. Thus, for example, when
Tesco, the largest UK supermarket chain, began to offer an online grocery purchasing service; the promotional launch campaign was quite simple. As the company already had strong brand recognition in the market, the main aim of its
promotional activity was to register awareness for its website address. This was achieved by using traditional channels such as some television advertising, mail shots to Tesco loyalty card holders and in-store merchandising displays. For new entrants with no offline presence, building brand recognition can be expensive.
However, the Internet has also given rise to some novel approaches to promotion.
9.7.3. DISTRIBUTION
The commonest distribution model in the majority of offline consumer goods markets is to delegate both transaction and logistics processes (e.g. major brands such as Coca-Cola being marketed via supermarket chains). This can be contrasted with the online world where absolute delegation of all processes is a somewhat rarer event. The reason for this situation is that many firms, having decided that e-commerce offers an opportunity for revising distribution management practices, perceive cyberspace as offering a way to regain control over transactions by cutting out intermediaries and selling direct to their end-user customers. This process, in which traditional intermediaries may be squeezed out of channels, is, as we have already seen, usually referred to as disinter mediation.
Hence, for those firms engaged in assessing the e-commerce distribution aspects of their marketing mix, there is a need to recognize that the technology has the following implications.
* Distance ceases to be a cost influencer because online delivery of information is substantially the same no matter what the destination of the delivery.
* Business location becomes an irrelevance because the e-commerce corporation can be based anywhere in the world.
* The technology permits continuous trading, 24 hours a day, 365 days a year.
Once all the issues associated with the e-commerce marketing mix have been resolved, these variables will provide the basis for specifying the technological infrastructure that will be needed to support the planned e-commerce operation. In some cases the firm will decide to manage all of these matters in house but, in others, the firm may outsource a major proportion of its e-commerce operations to specialist subcontractors.