ISSN 0263-4503

Marketing Intelligence & Planning

Volume 21 Number 2 2003

Issues in Internet marketing

Guest Editor: Kenneth R. Deans

Contents 74 Access this journal online
75 Abstracts & keywords
77 Guest editorial
79 Internet based marketing research:
a serious alternative to traditional
research methods?
Alan Wilson and Nial Laskey
105 Web site characteristics and
business performance: some
evidence from international
business-to-business organizations
Despina A. Karayanni and
George A. Baltas
115 E-relationships – emergence and the
small firm
Thomas O’Toole

85 A comparison of online and postal 123 E-trust: the influence of perceived

data collection methods in interactivity on e-retailing users
marketing research Bill Merrilees and Marie-Louise Fry
Heath McDonald and Stewart Adam

96 Luxury branding on the Internet: lost

opportunity or impossibility?
Francesca Dall’Olmo Riley and
Caroline Lacroix

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 Internet based marketing research:
Abstracts a serious alternative to traditional
research methods?
& Alan Wilson and Nial Laskey
keywords Keywords Internet, Market research,
Online computing, Questionnaires
This paper examines how online market
research is utilised within UK market
research agencies and what opportunities or
problems this new research tool is giving the
market research industry. The research
involved sending 120 postal questionnaires to
UK based market research agencies that
claimed to do Internet based research. The
main findings from the study show that the
dramatic growth predicted by industry
commentators is not evident among
practising market researchers. Internet
research is tending to be used for specialist
types of research study such as Web site
evaluation, business to business and
employee research, where the audience is
more likely to be online, or are part of an
easily accessible database list supplied by
clients. The research also found continuing
concern about sample frames, attrition of
panel members and response rates. Many in
the industry are still undecided on the likely
problems and opportunities associated with
Internet research. There needs to be far more
research and development if Internet based
research is to become a serious alternative to
traditional research methods.
Marketing Intelligence &
Planning
21/2 [2003]
Abstracts & keywords
# MCB UP Limited
[ISSN 0263-4503]
A comparison of online and postal data
collection methods in marketing
research
Heath McDonald and Stewart Adam
Keywords Internet, Marketing research,
Data collection, Online retrieval,
Postal services, Surveys
The widespread acceptance of the use of
online techniques in market research
necessitates appreciation of the relative
advantages and disadvantages of these
techniques over more traditional research
methods. This paper reports on a study
which directly compares online and postal
data collection methods using the same
survey instrument on two samples drawn
from the same population of football club
subscribers. The results confirm that the
online and postal respondents are
demographically different. Online data
collection is shown to be less expensive per
respondent and that data collection is faster,
however, an overall lower response level is
achieved relative to the postal data collection
method. Of greater importance, though, are
the findings that respondents seem to answer
questions differently online than they do via
postal methods. The conclusion here is that
online data collection should not be treated
as a direct substitute for postal data
collection in every instance.
Luxury branding on the Internet: lost
opportunity or impossibility?
Francesca Dall’Olmo Riley and Caroline Lacroix
Keywords Brand names, Brands, Internet,
Brand image, France, United Kingdom
The paper addresses the issue of the use of
the Internet for the management of luxury
brands. We investigate luxury managers’
attitudes towards the use of the Internet to
promote their brands and also assess
consumers’ opinions and behaviour
concerning luxury brands Web sites. Finally,
we present the results of a content analysis of
a number of luxury brands sites. Any
discrepancies between expectations and
reality are investigated. Results indicate that
reality falls short of the expectations of both
managers and customers and that the
interactive potential of the Internet is not
exploited. Furthermore, there is evidence
that the Internet works best as a
communication than as a customer
acquisition channel for luxury brands.
[ 75 ]
Abstracts & keywords Web site characteristics and business E-trust: the influence of perceived
Marketing Intelligence & performance: some evidence from interactivity on e-retailing users
Planning
21/2 [2003] 75-76 international business-to-business Bill Merrilees and Marie-Louise Fry
organizations
Keywords Electronic commerce, Interaction,
Despina A. Karayanni and George A. Baltas
Internet, Retailing, Consumer behaviour,
Keywords Web sites, World Wide Web
Business-to-business marketing,
E-retailing has received considerable
Marketing communications, Internet,
attention in recent years, especially with the
Business strategy, Interaction
help of consumer behaviour concepts and
This paper addresses the effectiveness of Web tools. This particular paper focuses on e-trust
site capabilities. It is intended to empirically and its antecedents. Special attention is given
determine the importance of site properties to the proposition that the more a site is
for Internet sales performance. More perceived to be interactive, then the greater
specifically, we consider the relationship of the trust that users attach to that site.
characteristics such as navigability, Previous research has demonstrated this
interactivity, multimedia design and relationship with respect to a particular site.
marketing communications content with The current paper re-examines this
sales attributed to the Internet. Advanced relationship with respect to another site.
econometric modeling of cross-section data More importantly, the paper tests whether
on business-to-business firms demonstrates the nexus between interactivity and e-trust
that interactive responsiveness of the site, applies to both pure ‘‘click’’ and ‘‘brick and
enabling customized interactive programs click’’ e-retailers.
and club membership, fast-downloading
multimedia, such as frames and animation,
corporate information stressing corporate
positioning and active information
submission on behalf of the target audience
may influence sales performance. Important
implications for optimization of business-to-
business Internet strategies are also
considered.

E-relationships – emergence and the

small firm
Thomas O’Toole
Keywords Electronic resources, Small firms,
Relational databases, Competitive advantage,
Information technology
The e-business model has become an integral
feature of business practice. Its existence has
created an extra electronic layer to business
relationships. This has facilitated close
partnerships to add unique and complex
electronic components to their relationships
that are not easily copied by other firms. The
emergence of e-relationships is detailed and
their value creating potential explored. The
e-relationship concept is then applied to the
small firm. The strategic and implementation
barriers that inhibit small firms from
capitalising on such relationships are
examined. E-relationships are found to offer
competitive advantage to few small firms.
Critical to an e-relationship’s success is the
relationship orientation of the partners.

[ 76 ]

About the Guest Editor
Originally a scientist,
Dr Kenneth R. Deans moved
to the dark side of the force in
the 1970s and is now a Senior
Lecturer in the Department of
Marketing within the
internationally ranked
School of Business at the
University of Otago, Dunedin,
New Zealand. He lectures
undergraduate, postgraduate,
MBA and executives in
principles of marketing,
marketing strategy, Internet
marketing and services
marketing. His research
interests are Internet
marketing, services and
marketing education. His
work, in collaboration with
overseas researchers has led
to more than 50 publications
in journals, books and
refereed conference
proceedings as well as
numerous seminars to
businesses and
organisations. Over the years
Ken has worked for and with a
number of SMEs as well as
blue-chip companies such as
Scottish & Newcastle and
Pilkington. Since moving to
Otago from Strathclyde he
has been heavily involved in
the department’s Marketing
Performance Centre,
researching service sector
competitiveness. In his spare
time he enjoys photography,
travel, mountain biking,
running, swimming and
tramping, as well as the
obligatory post-activity beer,
food and wine.
Visit him at: http://
marketing.otago.ac.nz/
marketing/staff/deansk.html
Marketing Intelligence &
Planning
21/2 [2003] 77-78
# MCB UP Limited
[ISSN 0263-4503]
Guest editorial
Issues in Internet marketing
The Internet, and its incorporation in what
many of us refer to as ‘‘traditional’’
marketing management, presents marketing
mangers and academics with as many
challenges as it does opportunities.
Personally, I believe we could have avoided
much of the hype and cut to the reality of
what was really happening and evolving
much sooner. In many ways the Internet
simply presents other ways of doing what we
have always done. However, many viewed
the Internet as a panacea for falling sales or
loss of market share. So the euphoric gold
rush to embrace the technology, the
countless millions of dollars, pounds, Francs
and Yen that were thrown at it and the
cataclysmic crash that ensued could all have
been avoided. It appeared that we had learnt
little from historical accounts of business
growth, shakeout and eventual ‘‘winners’’. In
our collective naı̈vety we believed there were
going to be clear winners in each market,
industry, sector or product class. Inevitably,
then, the bomb or, as I prefer to call it, the
‘‘World Wide Waste of money dot con’’ was
going to happen. It was simply a matter of
time and, unfortunately, money!
On a more optimistic note, my own
research has highlighted a gradual shift in
firms’ approach to Internet-based marketing.
Increasingly, they are adopting a more
strategic perspective with fewer firms
viewing it as a tactical ‘‘because we can’’ or
‘‘because they have’’ issue. Working with
Stewart Adam I have also come to rationalise
Web presence down to three broad
categories:
1 communication;
2 transaction/logistics; and
3 relationship enhancement.
Not all are appropriate for all firms, nor is
progression sequential. It is quite acceptable
for a firm to do nothing more than
communicate and for others to start by
communicating and then progress to a
relationship building focus, totally missing
out transactional and logistics issues.
Transactions and logistics may not be of
interest or appropriate for many firms. In the
light of research into customer relationship
management and, more recently, customer
satisfaction management, the Internet
facilitates that shift in focus from revenue
generation to integrated business support.
The challenge to marketers is to clearly
identify and articulate Internet objectives as
integral constituents of a successful strategy
and its implementation. Too often objectives
are non-specific and there are no identifiable
or quantifiable measures of success.
Establishing such metrics is an emerging
area of research and one that is being
investigated by two of my own doctoral
candidates.
So when Michael Thomas and I first talked
about this special edition, ‘‘Issues in Internet
marketing’’, I felt both thrilled and
challenged. From the comfortable
perspective of 20:20 hindsight I can
confidently say the experience was first class.
I would like to acknowledge the considerable
help and advice I was given by my friend and
colleague Philip Osborne. Also, all the
contributors were a delight to work with and
almost every submission I received was
worthy of inclusion at best or modification
for future consideration. That level of quality
made my job harder as I sought a spread of
articles that would provide both geographic
spread and topic variation. As I was on
sabbatical while some of the editing and
administration was undertaken I was able to
consider most of the accepted papers in the
light of my research and experiences in a
number of countries across Australasia,
China, Europe and the USA. It struck me that
the biggest challenges to the less
technologically advanced countries were;
getting the infrastructure right, educating
the business community and learning from
the successes and failures from ‘‘more
Internet advanced’’ economies while
avoiding the temptation to seek a blueprint.
The papers presented here are all from
established researchers and contributors to
our understanding of marketing theory, Web-
based and otherwise. I hope you enjoy
reading them and learn from their insightful
research and commentary. I think there is
something in each of the papers for all
marketing academics and practitioners.
Alan Wilson and Nial Laskey, both from
the University of Strathclyde, investigate the
appropriateness and usefulness of Internet
based marketing research. They report on
the reality of its use compared to the
dramatic growth predicted. They also offer
some commentary on common issues such as
‘‘sample frames, attrition of panel members
and response rates’’. A sample of 120 UK-
based market research agencies yielded a 53
[ 77 ]
Guest editorial percent response rate and some generalisable
Marketing Intelligence & findings and conclusions.
Planning Heath McDonald and Stewart Adam
21/2 [2003] 77-78 (Deakin University) have examined the
online research debate from a postal:online
data collection perspective. Many firms
seeking to collect valuable and timely
customer data are considering the Internet as
an alternative to traditional postal collection
methods, the ongoing e-mail:snail-mail
debate. The authors provide a succinct and
useful overview of previous research before
presenting their own work.
The third paper by Francesca Dall’Olmo
Riley and Caroline Lacroix from Kingston
University Business School considers the
appropriateness or otherwise of the Internet
as tool to assist in the management of luxury
goods. They have approached it from both a
managerial and customer perspective.
Additionally, they have included a technique
that I endorse and is gaining favour among
researchers, that of Web site content
analysis. Their findings endorse my
comments made earlier regarding Web
presence.
Despina Karayanni (University of Patras )
and George Baltas (Athens University of
Economics and Business) have written an
interesting B2B piece that considers the
[ 78 ]
contribution of Web site characteristics to
sales performance. There has been much
criticism of firms which simply transfer
paper materials to the Web in the mistaken
belief that the characteristics of the two
media are sufficiently similar to permit such
transfer, brochureware. This paper includes
sections on interactivity, navigability,
multimedia and communication content in
the light of their contribution to Internet
attributed sales.
Waterford Institute of Technology’s
Tomas O’Toole has written a paper that
belongs in my third category – relationship
enhancement. He considers the opportunity
offered by the Internet to small firms
seeking to establish closer and more
meaningful business relationships that
create value. Barriers to implementation are
also examined.
The final paper in this edition, by
Bill Merrilees and Marie-Louise Fry,
provides an exploration of trust in the online
environment. Its inclusion is timely as they
examine interactivity, a hot topic, and its
effect on trust in both pure ‘‘click’’ and ‘‘brick
and click’’ e-retailers.
Enjoy them all.
Kenneth R. Deans
Guest Editor
Internet based marketing research: a serious
alternative to traditional research methods?
Keywords
Internet, Market research,
Online computing, Questionnaires
Abstract
This paper examines how online
market research is utilised within
UK market research agencies and
what opportunities or problems
this new research tool is giving the
market research industry. The
research involved sending 120
postal questionnaires to UK based
market research agencies that
claimed to do Internet based
research. The main findings from
the study show that the dramatic
growth predicted by industry
commentators is not evident
among practising market
researchers. Internet research is
tending to be used for specialist
types of research study such as
Web site evaluation, business to
business and employee research,
where the audience is more likely
to be online, or are part of an
easily accessible database list
supplied by clients. The research
also found continuing concern
about sample frames, attrition of
panel members and response
rates. Many in the industry are still
undecided on the likely problems
and opportunities associated with
Internet research. There needs to
be far more research and
development if Internet based
research is to become a serious
alternative to traditional research
methods.
Marketing Intelligence &
Planning
21/2 [2003] 79-84
# MCB UP Limited
[ISSN 0263-4503]
[DOI 10.1108/02634500310465380]
Alan Wilson
Department of Marketing, Strathclyde University, Glasgow, UK
Nial Laskey
Department of Marketing, Strathclyde University, Glasgow, UK
Introduction
The Internet has grown exponentially over
the last decade from its humble beginnings as
a tool created by the US military in the Cold
War, to its present incarnation as a seemingly
omnipresent entity that, in the Western world
at least, has revolutionised a lot of business
and consumer behaviour (Harter, 1999). One
consequence of this so-called ‘‘Internet
revolution’’ is the impact that it may have in
providing an alternative research tool for
market research agencies. The Chairman of
Harris Black International was quoted as
saying, ‘‘all research is going to migrate to the
Internet’’ (McDaniel and Gates, 2001) and
ESOMAR also predicted that 30 per cent of
research world-wide will be conducted online
by the year 2010 (Savage, 2001). Although
these predictions exist, there is very little
research, particularly outside the USA, to
determine the current usage of Internet based
research and the experiences of those
involved in providing such methodology.
This paper will endeavour to redress the
paucity of non-US research in the area of
Internet market research by examining how
online market research is utilised within UK
market research agencies and what
opportunities or problems the market
research industry is experiencing with this
new research tool.
Perceived advantages and
disadvantages of Internet based
research
The literature suggests a number of positive
and negative attributes of the new research
medium. These are as follows:
1. Ease of use
If a researcher is using an Internet survey
much of the administration burden of
The Emerald Research Register for this journal is available at
http://www.emeraldinsight.com/researchregister
sending/receiving questionnaires and data
entry is significantly reduced. Once a
questionnaire is completed the data are
already in electronic form and can be
downloaded instantaneously into a database
for complex analysis (Iyer, 1996). In effect,
once the last questionnaire for a survey is
complete, researchers have all the data
stored in a database at their fingertips
instantaneously. Reminders to complete the
questionnaire can be permanently placed on
Web sites or can be sent out by e-mail at no
additional cost and with minimal effort.
2. Cost
The cost of sending e-mails or setting up a
Web questionnaire is much cheaper than
mail equivalents. Weible and Wallace (1998)
estimated that the variable cost of sending a
questionnaire (via e-mail) or survey
invitations (for a Web survey) to 150
additional e-mail addresses was the
equivalent of adding one extra contact to a
mailing sample. Watt (1997) states that
Internet interviewing becomes significantly
cheaper than postal surveys particularly
when there are over 500 respondents. Below
this number, the set up costs will tend to
make the traditional postal method more cost
effective.
3. Sampling difficulties
In the UK the number of people that have
Internet access has increased from
approximately 960,000 in June 1997, to 19.98
million in November 2000 that represents an
estimated 33.58 per cent of Britain’s
population (NUA Web site, 2001). Despite
these impressive growth rates the
penetration of the Internet has not, as yet,
developed to the extent that it represents the
population as a whole. Taylor (2000)
describes the Internet population as being
younger and possessing a higher standard of
The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/0263-4503.htm
[ 79 ]
Alan Wilson and Nial Laskey
Internet based marketing
research: a serious alternative
to traditional research
methods?
Marketing Intelligence &
Planning
21/2 [2003] 79-84
[ 80 ]
education than the public at large. This may
not be as big a problem as it seems, for
example in the USA, Internet research tends
to focus on doing research aimed at the
middle to upper income segment (Mehta and
Sivadas, 1995; Oppermann, 1995).
There is, however, a major difficulty
relating to the lack of a centralised database
of e-mail addresses (Litvin and Kar, 2001).
This is in stark contrast to mail surveys
where addresses are commonly found in a
wide variety of directories and databases.
Even where sample frames are available,
they frequently become outdated as Internet
users change their e-mail providers
(Dommeyer and Moriarty, 2000). In a study
undertaken by Oppermann (1995) it was
discovered that of the 500 e-mail addresses
that were selected from the members
directory of Association of American
Geographers (AAG), 25 per cent were out of
date. The advantage to researchers using e-
mail (whether to deliver a questionnaire or
as an invitation to a Web site survey) is that
the error messages are sent back to the
sender of the e-mail allowing the researcher
(as in the case of Oppermann, 1995) to select
another set of individuals from the list in
order to attempt to obtain the sample size
that the researcher originally envisaged.
Without a centralised e-mail database that
covers the whole online population,
researchers must use alternative methods to
get their samples. Mehta and Sivadas (1995)
selected their respondents by initiating a
programme that collected the e-mail
addresses from individuals that posted
discussion articles on the 20 most popular
discussion groups within an Internet
community known as Usenet, which is
basically a world-wide system of discussion
groups (Kumar et al., 1999; Jackson and
DeComormier, 1999). Although this method
was efficient at collecting a large database of
e-mail addresses it still may fail to develop a
sample that is representative of the
population as a whole, it may include the
segment that contribute to discussion groups.
4. Response rates
Another attribute of Internet surveys
surrounds the responses from the sample.
Most studies agree that when comparing e-
mail surveys with mail surveys, response
rates can be rapid, in some extremes
overnight (Mehta and Sivads, 1995; Tse et al.,
1994; Bachmann et al., 2000; Taylor, 2000).
As with normal postal surveys, responses
to Internet surveys tend to vary according to
the study. However, Table I indicates how
various studies have been constructed and
how the response rates have differed. It
Table I
Summary of research studies using e-mail
showing response rates
Methods used Response rate
Author in study (%)
Parker (1992) Mail 38
E-mail 68
Mehta and Sivadas Mail 57
(1995) E-mail 54
Tse et al. (1994) Mail 27
E-mail 6
Tse (1998) Mail 52
E-mail 7
Weible and Wallace Mail 36
(1998) E-mail 30
Web form 33
Note: Adapted from Sheehan and McMillan (1999)
generally appears from the summary in
Table I that, with the exception of Parker’s
(1992) study, response rates from e-mail
surveys tend to be lower than those of
traditional postal surveys.
A concern brought up by Bachmann et al.
(2000) is that, as the population becomes more
accustomed to e-mail they may become more
reluctant to respond to surveys. Essentially as
the ‘‘novelty’’ of the Internet wears off there is
the potential that online research may suffer
as Internet users become more apathetic
towards such studies. Burkeman (2001) has
indicated that the volume of
e-mails has increased substantially to the
point that the phrase ‘‘e-mail burnout’’ has
been created. He states that the volume of
e-mail that an individual can receive is so
great that many delete up to 60 per cent of
their messages based on the subject line alone.
Due to these poor return rates (even if they
tend to be much faster) there has been some
investigation into using Internet survey
response as an option in a mixed mode
methodology. The reason for this probably
came from studies such as Parker (1992)
where a small proportion (28 per cent) of
the e-mail respondents decided to print out
hard copies of the questionnaire and
send them back by more conventional
mailing systems.
5. Response quality
If the consensus of the literature reviewed to
date is that the responses from Internet
surveys (mainly e-mail questionnaires) are
lower than postal surveys then there also
tends to be agreement within the literature
that online surveys tend to have response
quality equal if not superior to the other
forms of survey. In the studies by Tse et al.
(1994; Tse, 1998) the quality of answers was
Alan Wilson and Nial Laskey
Internet based marketing
research: a serious alternative
to traditional research
methods?
Marketing Intelligence &
Planning
21/2 [2003] 79-84
comparable to those from the postal survey.
In fact, Bachmann et al. (2000) indicated that
participants of online surveys were much
more willing to respond to open-ended
questions. Mehta and Sivadas (1995) also
discovered that responses to open-ended
questions in their Internet survey were
significantly longer than those obtained
through similar postal surveys.
Taking account of these issues (ease of use;
cost; sampling difficulties; response rates and
response quality) there is a need to
understand how Internet based marketing
research is currently being used by the
market research industry and the extent to
which the research tool is creating
opportunities or problems.
Research design
The research involved sending 120 postal
questionnaires to all of the member agencies
of the UK’s Market Research Society (the
leading professional body for marketing
research in the UK) that claimed to provide
Internet surveys to clients. These claims
were made in the agencies’ entries within the
members’ directory.
A total of 64 usable responses (53 per cent
response rate) was obtained, of which 53 (83
per cent) undertook Internet based research
for clients and 11 (17 per cent) indicated that
although they planned to offer such research
had not as yet done so.
Findings
The majority of the respondents had only
started undertaking Internet surveys during
the last 24 months. However, just over half of
the respondents (55 per cent) considered
Internet based research to be very important
to their organisation. During the previous 12
months, 57 per cent of the respondents had
undertaken more than five online studies.
Reasons for offering Internet surveys
The majority of respondents that provided
Internet surveys agreed that the reasons for
moving into this area were principally:
1 to have a balanced portfolio of research
methodologies; and
2 to develop new research areas (see
Table II).
Responding to client demand was not viewed
as such a significant motivational force,
neither was the desire to become an online
survey specialist.
Types of market research
As Table III shows, the majority of research
being undertaken is quantitative in nature
and is delivered through e-mail,
pre-recruited panels or through electronic
mailing lists/discussion groups. Of the
respondents, 47 per cent combined Internet
research with other methodologies in a
mixed mode approach with techniques such
as telephone or postal surveys. Only 23 per
cent of the respondents had attempted
qualitative research on the Web by using
on-line discussion groups.
In terms of the purpose of the research,
Internet based market research is frequently
linked to Web-based activities such as Web
site evaluation (see Table IV) or to research
areas where respondents have easy access to
the Web such as is the case with employee
surveys and those in business to business
research.
Types of client
Internet based research tends to be
conducted for organisations that have a
significant Internet presence such as
financial services, Internet based businesses,
IT, the media and telecommunications.
This may reflect the fact that Web site
evaluations are one of the main types of
research (Table V).
Attitudes towards Internet surveys
Table VI sets out respondents’ agreement
with a variety of attitude statements. As
expected, the most important factor for
determining whether Internet survey
methodology is used is the extent to which
the audience is online. The majority of
respondents agreed that Internet research
required less administration and saw no
significant problems with security. However,
there were concerns about the problems
associated with sampling, drop out rates for
panels and response rates. Although 42 per
cent of respondents thought that Internet
surveys are used for important decision
making research, it is interesting to note that
more than one third of respondents felt that
they were not. This negative viewpoint is
supported by the 25-30 per cent of
respondents who stated that cost or speed
rather than quality determined when online
surveys are used. This suggests that there are
still doubts about Internet based research
and these doubts are also evident by the large
proportion of respondents who were
undecided and failed to agree or disagree
with many of the statements.
Future prospects
Only 7 per cent of respondents expected the
number of Internet based studies to increase
significantly over the next year. The
remainder expected no growth or only a
[ 81 ]
Alan Wilson and Nial Laskey
Internet based marketing
research: a serious alternative
to traditional research
methods?
Marketing Intelligence &
Planning
21/2 [2003] 79-84
Table II
Reasons for provision of Internet based research (base = 53)
Statements
To have a balanced portfolio of
research methodologies
To develop new research areas
Reacting to competitors moving
into this area
Clients were pushing us towards
this research
To become an online survey
specialist
[ 82 ]
moderate increase. So there does not seem to In relation to other commentators’
be any evidence of the dramatic growth that predictions, the majority of market research
many industry commentators were firms from the study did not agree (64 per
predicting. Some commentators had cent) that most of their quantitative research
suggested that potential clients would start would be done through Internet surveys in
carrying out their own online surveys, the future. Almost all of the respondents
bypassing agencies due to the cost agreed (91 per cent) with the statement that
advantages and the availability of their firm would only use their online
technology. However, only 10 per cent of the surveys as one part of a portfolio of research
agencies agreed that they would be doing less offerings and emphasised that they had no
Internet research in the future as a result of intention of becoming specialised in the use
clients doing their own online research (see of Internet surveys as a data collection tool.
Table VII). However, 65 per cent of agencies that
responded to this statement agreed they
would be looking to use their Internet
surveys for a wider range of market research
Strongly study (for example – employee surveys) in the
Strongly agree/ Neither agree/ disagree/ future.
agree disagree disagree
(%) (%) (%)
Conclusions
89 5 6 The main findings from the study show that
79 15 6 Internet surveys are generally offered by
marketing research agencies in order to
51 20 29 provide a balanced portfolio of research
services to their clients. The Internet can
39 27 34 enable researchers to access certain
markets and audiences such as teenagers
36 24 40 and business people that may prove
difficult through traditional research
methods. However, the dramatic growth in
Table III
Internet surveys predicted by industry
Research methods used (base = 53)
commentators is not evident among
Research methods used % practising market researchers. The use of
E-mail questionnaires 62 Internet research is predominately limited
Pre-recruited panel Web sites 51 to specialist types of research study such as
List based Web surveys 42 Web site evaluation, business to business
Online focus groups 23 and employee research, where the audience
is more likely to be online, or are part of an
easily accessible database list supplied by
Table IV clients. As a result the sectoral
Research applications (base = 53) concentration of activity relates to those
Type of research % sectors that make most use of the Internet
Web site evaluation 66 such as financial services, Internet
Customer satisfaction 51 businesses and IT.
Employee research 47 In terms of operational issues, there are
Business-to-business 43 continuing concerns about sample frames,
attrition of panel members and response
rates, although it is also noticeable that many
attitudinal responses in the study were
Table V
neutral suggesting that much of the industry
Main sectors undertaking Internet research
has still to reach a verdict on the problems
(base = 53)
and opportunities posed by Internet
Leading sectors % research. Generally, there is not an issue
Financial services 47 with the ability of Internet surveys to collect
Internet business (dotcoms/e-commerce) 43 data, the doubts relate more to the
Information technology 36 representativeness of any data collected. The
Media (TV/publishers) 34 nature of Internet sample frames and the
Telecommunications 32 characteristics of the people willing to take
Government 25 time to respond to Internet surveys or
participate in Internet panels is likely to
Alan Wilson and Nial Laskey Table VI
Internet based marketing Attitudes towards Internet surveys (base = 68)
research: a serious alternative
to traditional research Strongly
methods?
Strongly agree/ Neither agree/ disagree/
Marketing Intelligence &
Planning agree disagree disagree
21/2 [2003] 79-84 Statements (%) (%) (%)
The most important factor for Internet survey use is
the extent to which the audience is online 82 12 6
Internet surveys help to reduce administration 55 23 22
Security is a big issue with online surveys 25 31 44
Sampling problems are more prominent with Internet
panels 61 25 14
Drop out rates are a particularly large problem with
Internet surveys 55 22 23
You receive excellent response rates from Internet
surveys 21 38 41
Cost rather than quality determine when it is better
to use online surveys 25 26 49
Speed rather than quality determine when it is better
to use online surveys 30 26 44
Internet surveys are not used for highly important
decision making research 36 22 42

Table VII
Future propects (base = 68)
Strongly
Strongly agree/ Neither agree/ disagree/
agree disagree disagree
Statements (%) (%) (%)
We will use Internet surveys to conduct most of our
quantitative research 14 22 64
Internet surveys will only be part of our portfolio, we will
not become a specialist 91 2 7
We will look to use Internet surveys for other types of
research studies 65 26 9
We will be doing less Internet studies because companies will
be doing online surveys for themselves 10 42 48

mean that respondents may not be
representative of typical computer users,
never mind the general public. This may
explain why the majority of market research
companies do not see Internet based research
as being their main approach to quantitative
research in the future, although they do
agree that Internet based research will
continue to make up part of their portfolio of
services.
As to future academic research, there is
certainly a need to track the changing
attitudes towards Internet surveys over
time as more and more people go online.
Changes in technology, such as interactive
digital broadcasting and Web-enabled
mobile telephones, combined with a more
widespread use of the Internet for shopping,
banking and education, are likely to alter
the usage and appropriateness of online
research. Research is also required to
determine whether attitudes towards
Internet surveys are the same world-wide.
Attitudes towards other methodologies
vary from country to country; do similar
variations occur with Internet surveys?
Finally, if Internet based research is to
grow, there also needs to be significantly
more research undertaken to address the
perceived weaknesses (i.e. sampling,
response rates and panel drop out rates) of
the methodology. Many practitioners are
still undecided about Internet methods and
need further academic research and
guidance if Web-based research is to
become a serious alternative to traditional
research methods.
[ 83 ]
Alan Wilson and Nial Laskey
Internet based marketing
research: a serious alternative
to traditional research
methods?
Marketing Intelligence &
Planning
21/2 [2003] 79-84
[ 84 ]
Managerial implications
For the majority of organisations, this
research has shown that Internet based
research should be seen as an additional
supporting methodology rather than as an
alternative to traditional research
approaches. In other words, the Internet is
best used alongside other methodologies to
pick up additional respondent groups such as
business people and teenagers who may be
more difficult to access through personal,
telephone or postal surveys. However, for
some organisations requiring specialist
areas of research such as employee surveys
and Web site evaluation, an Internet survey
may be the most cost effective and
appropriate way of carrying out the research.
Wherever Internet surveys are used, a word
of caution, clients and researchers should
pay particular attention to the extent which
the survey respondents are representative of
the specific population of interest. Although,
this issue may become less of a problem in
the future, sample frames and response rates
will continue to be critical in evaluating the
worth of Internet surveys in the short to
medium term.
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and Au, A. (1994), ‘‘A comparison of the
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Marketing Research, Vol. 10 No. 3, pp. 19-24.
A comparison of online and postal data collection
methods in marketing research
Keywords
Internet, Marketing research,
Data collection, Online retrieval,
Postal services, Surveys
Abstract
The widespread acceptance of the
use of online techniques in market
research necessitates
appreciation of the relative
advantages and disadvantages of
these techniques over more
traditional research methods. This
paper reports on a study which
directly compares online and
postal data collection methods
using the same survey instrument
on two samples drawn from the
same population of football club
subscribers. The results confirm
that the online and postal
respondents are demographically
different. Online data collection is
shown to be less expensive per
respondent and that data
collection is faster, however, an
overall lower response level is
achieved relative to the postal
data collection method. Of greater
importance, though, are the
findings that respondents seem to
answer questions differently
online than they do via postal
methods. The conclusion here is
that online data collection should
not be treated as a direct
substitute for postal data
collection in every instance.
Marketing Intelligence &
Planning
21/2 [2003] 85-95
# MCB UP Limited
[ISSN 0263-4503]
[DOI 10.1108/02634500310465399]
Heath McDonald
Deakin University, Melbourne, Australia
Stewart Adam
Deakin University, Melbourne, Australia
Introduction
Use of the Internet (Net) as a medium, and
the World Wide Web (Web) as an evolving
technology has made it less costly and
allowed marketers to get information – both
of low quality and high quality – more
quickly and easily than ever before. Couper
(2000, p. 466) notes, however, that the Net
offers ‘‘a wide array of approaches
representing varying levels of quality and
cost’’. This is but one of a number of
commentaries concerning the quality and
cost of Internet marketing research by a long
list of researchers such as Dommeyer and
Moriarty (2000), Weible and Wallace (1998)
and Comely (1996).
A number of problematic issues exist in the
undertaking of marketing research in
general, and in online marketing research in
particular, including declining response
levels and the resulting representativeness of
those responding. Past research into online
research has often produced conflicting
results on such crucial issues as response
levels and data quality. Some of these
conflicting results can be attributed to the
variety in research designs used, however,
the broader issues remain unresolved. This
paper continues the discussion on the quality
issues in online marketing research by
comparing the outcomes of a survey
involving both postal and online delivery of
the same questionnaire (in terms of items)
delivered to two sample frames from the
same population of football club members.
The focus of the paper is on the response
patterns and the demographic profiles of the
two groups of respondents using the two data
collection methods employed. The main
objective of the research presented here is to
clarify the exact nature of the advantages and
disadvantages online market research offers
The Emerald Research Register for this journal is available at
http://www.emeraldinsight.com/researchregister
in comparison to postal delivery. It is hoped
the results will help guide researchers who
are contemplating the use of one, or both, of
these data collection methods.
Online technologies in marketing
research
Most marketing scientists and practitioners
have used one or all of the possible research
approaches – observational research, survey
research and experimental research – at one
point in time. Moreover, they have in all
likelihood used one or more of the four
survey contact methods – mail, telephone,
personal interviews and electronic networks.
With the convergence of
telecommunications, media and TCP/IP
(Transmission Control Protocol/Internet
Protocol) technology, collectively called
TMT, we might extend this list to include
interactive television, cellphones, and even
touch-screen responses to 3D simulations in
store situations.
Recognising the ever expanding list of
options open to market researchers seeking
to collect data, it becomes increasingly
important to understand the unique
characteristics of each method. A detailed
understanding of these unique
characteristics ensures that the problems
inherent in using these research methods,
such as non-response bias, can be controlled
or overcome. To date, much of what we know
of these emerging methods of data collection
has mostly been learnt from small-scale
academic studies.
This study replicates and extends relevant
past work, using the same research
instrument delivered via online and postal
methods to two separate samples randomly
drawn from the same population of
subscription based customers. Online data
The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/0263-4503.htm
[ 85 ]
Heath McDonald and collection, the most widely used of the
Stewart Adam emerging data collection methods previously
A comparison of online and listed, is compared directly with postal data
postal data collection
methods in marketing collection.
research
Marketing Intelligence &
Planning
21/2 [2003] 85-95 Antecedent studies and issues
Traditional marketing research is suffering
from falling participation rates, rising costs,
respondent fears concerning misuse of
personal information and managerial issues
resulting from the time taken to conduct
postal surveys (Jarvis, 2002). In contrast, a
number of claimed advantages are put
forward for using online data collection
methods in survey research, in particular:
lower costs; faster turnaround; higher
response levels; lower respondent error;
broader stimuli potential through the
inclusion of colour, graphics and sound;
flexibility in the form of adaptive
questioning; and even greater enjoyment
(Forrest, 1999; Kehoe and Pitkow, 1996). Most
of these advantages relate to what has been
called the efficiency of online as a data
collection method (Weible and Wallace, 1998).
‘ ... a number of claimed advantages are put forward for using
online data collection methods in survey research, in particular:
lower costs; faster turnaround; higher response levels; lower
respondent error; broader stimuli potential through the inclusion
of colour, graphics and sound; flexibility in the form of adaptive
questioning; and even greater enjoyment ... ’
There is some concern though, that given
time, as novelty wears off, online data
collection will suffer from the same
disadvantages as the traditional methods.
For instance, we can already see that the
issue of the fear of misuse of respondent
information does not disappear, but rather is
exacerbated in the online environment (Cho
and LaRose, 1999), and that this has
contributed to falling confidence in online
marketing and research (Australian Privacy
Commissioner, 2001).
It is instructive to examine each of the
claimed benefits, albeit briefly in the context
of survey research. In doing so, we
acknowledge that there are other forms of
online research that present opportunities,
such as moderated e-mail groups (Eke and
Comley, 1999), however, this paper is
restricted to online surveys given the
increasing prevalance of this particular
methodology.
The costs of online surveys are frequently
claimed to be lower, provided it is not
necessary to continually develop specialised
software so that one can treat such
[ 86 ]
development costs as sunk costs (Weible and
Wallace, 1998; Zadeh et al., 2000). The need for
printing, stuffing, two-way postage, data
entry, handling and tracking is removed in
the case of online surveys, making them less
costly.
Turnaround times are frequently
reported to be much faster for online
surveys. Adam and Deans (2000) conducted
a probabilistic
e-mail and HTML form survey with 2,976
online businesses and gained 40 per cent of
their overall 500 responses within seven
days. In the case of the mixed mode e-mail
invitation and HTML form study we later
report on, 40 per cent of responses (334)
were received in the first 24 hours, and over
85 per cent of responses were received
within seven days. E-mail surveys, in
particular, offer higher response speed than
postal surveys (Comely, 1996; Cho and
LaRose, 1999; Dommeyer and Moriarty,
2000; Schaefer and Dillman, 1998), however,
the choice of a ‘‘technologically
sophisticated population’’ (Weible and
Wallace, 1998, p. 22) may bring about higher
response speed than might be achieved
when surveying the general population.
Higher response levels are often claimed
for online marketing research involving
either e-mail or HTML forms or a
combination of the two, over postal surveys
(Bachmann et al., 1996, 2000; Jackson and
DeCormier, 1999). Table I suggests that the
situation is not clear-cut, however, and it is
difficult to state with statistical certainty
that there has been a decline in response
levels for both postal and online surveys over
time. It has been previously suggested that
early novelty seeking behaviour in regards to
Internet based surveys may have artificially
increased online response levels initially
(Zadeh et al., 2000). The evidence would
suggest that any ‘‘novelty’’ effect is now
wearing off.
Another benefit of online surveys is a
claimed lower respondent error as
determined by such measures as the
completeness of response and quality of the
response to open text box questions
(Weible and Wallace, 1998). One issue in
this regard is that HTML form based
questionnaires may become too complex for
human use simply because the technology
permits more intricate rank and rate
matrices to be presented than hard copy
surveys allow (Zadeh et al., 2000). Analysis
of response quality, a vital issue, has been
limited to date and thus claims of the
superiority of online collection seem
premature.
Heath McDonald and Table I
Stewart Adam Response levels for surveys employing online and traditional data collection methods
A comparison of online and
postal data collection (percentages)
methods in marketing
research Traditional
Marketing Intelligence & Author(s) and year Online survey survey Population
Planning AFC (present study) 21w 46p AFC members
21/2 [2003] 85-95
Couper et al. (2001) 41w Random sample of 1,602 University of Michigan
students
Adam and Deans (2000) 17w Australian and NZ online business directors and
managers
Bachmann et al. (2000) 19e 46p Business school deans and chairs
Weible and Wallace (1998) 30e 36p MIS faculty, mainly North American
34h 31f
Schaefer and Dillman (1998) 54e 58p Washington State University faculty
Tse (1998) 7e 52p Chinese University of Hong Kong teaching and
admin staff
Noh (1998)b 31e Public e-mail directoryb
Zelwetro (1998)b 38e 36p nab
Besser (1997)c 20e 16p Former members of the Rural Sociological
Society
Couper et al. (1997)c 43e 71p Employees of US government statistics agencies
Smith (1997)c 8e Members of Web consultants association
13e
Williams et al. (1997)c 27e 75p Iowa State University students
Bachmann et al. (1996)c 53e 66p Business school deans in the USA
Comely (1996) 14e 15p Purchased list of UK Internet magazine
17o subscribers
Hertz et al. (1996)a 69e 96t Health care workers using CDC Wonder
Parks and Floyd (1996)a 33e USENET newsgroups
Mehta and Sivadas (1995)c 40e 64p Users of electronic bulletin board
Opperman (1995)c 49e 26p American Association of Geographers
33p
Mehta and Sivadas (1995)c 40e 64p Users of an electronic bulletin board
Kittleson (1995)c 28e 77p International Directory for Health Educators
Tse (1995)c 6e 27p Chinese University of Hong Kong teaching and
admin staff
Schult and Totten (1994)c 19e Marketing and MIS faculty at US universities
Parker (1992)c 68e 38p AT&T employees
Walsh et al. (1992)c 76e Subscribers to online user group
Kiesler and Sproull (1986)b 67e 75p Fortune 500 company department
Sproull (1986)c 73e 87t Fortune 500 company department
Notes: e = e-mail; h = HTML form; w = e-mail plus HTML form; o = postal plus HTML form;
p = post; t = telephone; f = fax
Sources: a Cho and LaRose (1999); b Dommeyer and Moriarty (2000); c Schaefer and Dillman (1998)

As a final advantage, there is the opportunity

to use a broader range of stimuli in the case
of HTML forms (Web pages), and with those
whose e-mail clients are known to be set to
read HTML (Rae and Brennan, 1998).
However, little research appears to have been
published on this matter to date, although
experimentation is underway (Couper et al.,
2001). There is also the ability to use filtering
processes to increase the flexibility of online
surveys by employing adaptive questioning.
This approach appears to be used only in a
small number of commercial surveys, and
little has been reported thus far.
A comparative subscriber study
Many of the previous studies in this field
have examined the claimed advantages of
online surveys. However, there are a number
of issues that may affect the validity of such
studies (Couper, 2000). Such issues include
the use of small samples, low response levels,
non-probability sampling and other matters
such as the use of reminders and in some
cases the application of incentives, which do
not allow for ease of direct comparisons. The
need for a comparative study that avoided
these shortcomings was clear.
[ 87 ]
Heath McDonald and The study reported in this paper includes
Stewart Adam most of the areas of interest within the one
A comparison of online and
postal data collection investigation, and involves methodology that
methods in marketing enables a sound comparison of online and
research
postal data collection techniques.
Marketing Intelligence &
Planning
21/2 [2003] 85-95 Hypotheses
A number of hypotheses were developed from
the studies discussed earlier and outlined in
Table I, and are grouped under the areas of
interest in this section of the paper. These
hypotheses concern not only managerial
issues such as the speed and efficiency of the
contrasted data collection methods but also
concern research quality issues such as the
incidence of missing data and the levels of
variation amongst the responses received.
Response level and speed
H1a: Online data collection manifests a
higher response level than the postal
data collection method.
H1b: Online data collection manifests a
higher level of undelivered
questionnaires than the postal data
collection method.
H1c: Online data collection is less
expensive than is the case with the
postal data collection method.
H1d: Online data collection manifests a
higher response speed than the postal
data collection method.
Data quality
H2a: Online data collection manifests less
item-missing non-demographic data
than the postal data collection
method.
H2b: Online data collection manifests a
lower omission of personal
demographic data than the postal
data collection method.
H2c: Online data collection manifests a
lesser use of end and mid points in the
case of scale items than the postal
data collection method.
Comparability of resulting data and
respondents
H3a: Online data collection manifests
different mean responses to scale
items than the postal data collection
method.
H3b: Online data collection attracts
respondents with different
demographic profiles than the postal
data collection method.
[ 88 ]
Methodology
The study we report involved use of a 70-item,
seven page (postal version) questionnaire
entitled ‘‘Club name (withheld) member
satisfaction survey’’. As the title suggests, the
questionnaire dealt with the satisfaction of
members of a professional Australian Rules
Football (AFL) club, which we hereafter refer
to as AFC to maintain the club’s anonymity. In
the main, Likert scale items were used, with an
11-point (0-10) ‘‘poor’’ to ‘‘excellent’’ scale.
In the year of the study (2001), the AFC
claimed over 21,000 paid-up members. The
AFC also maintains an ‘‘opt-in’’ e-mail list for
those members who wish to interact with the
club via this medium. There were 3,900
members on this e-mail list at the time of the
study. The club sent an e-mail to the
members on this list inviting them to
complete an online questionnaire (HTML
form), and advising them of a username and
password to gain access to the questionnaire.
On completing the questionnaire, they were
presented with a ‘‘success’’ Web page. The
online responses were automatically parsed
to a flat file database. Additionally, 1,026
members were randomly selected, and sent a
questionnaire through the post to their home
address, together with a reply-paid return
envelope.
The attempt was made to have the online
questionnaire appear as close as possible to
the printed version, with minimal use of
colour (for instructions and the like), except
for the arguably preferred use of radio
buttons (Couper et al., 2001) presented in a
‘‘scrollable’’ HTML form (Dillman 2000) that
disclosed all questions to respondents.
The combined responses were then
assessed for their representativeness. Both
online and postal survey responses were
compared with the overall profile of the full
list of AFC members. No meaningful
differences were found between those who
returned the survey and the full membership
list, suggesting the sampling process was not
biased toward a particular demographic or
membership type.
Findings
The hypotheses set out in the preceding
section are directly tested and reported next.
Speed and efficiency
Response details for the two data collection
methods are shown in Table II. The postal
survey response level is similar to the
response achieved by Bachmann et al. (2000).
Moreover, the online response level is
similar to the levels achieved in the Adam
and Deans (2000) and Bachmann et al. (2000)
studies. The questionnaire was more easily
Heath McDonald and completed than the Adam and Deans (2000)
Stewart Adam online questionnaire; taking around eight
A comparison of online and minutes on average (from dump files and pre-
postal data collection
methods in marketing testing), compared with 20 minutes noted by
research Adam and Deans.
Marketing Intelligence & The response levels might have been
Planning
21/2 [2003] 85-95 expected to be higher, given that this is a
subscriber survey dealing with what is an
emotive matter for AFL fans. Dillman (1978)
observed that interest in a topic can lead to
higher response levels. A number of
respondents commented on how they
appreciated the opportunity to have ‘‘their
say’’ in the running of the club, which they
had expressed strong attachment to.
The postal data collection method resulted
in a response level more than twice that of
the online data collection method. Although
findings on this matter reported in
antecedent studies were mixed, there is a
clear rejection of H1a in this study. This
finding is in line with Dommeyer and
Moriarty’s (1999) argument that online data
collection methods do not result in higher
response levels.
‘ ... findings support past research, which has typically
found e-mail non-delivery rates of 35 per cent) . . . and as high as
67 per cent... ’
We employed Webalizer software
<mrunix.net/webalizer> on the host server
to analyse the server log files and are able to
report that for the response level of 826, the
questionnaire page was visited 1,298 times.
Due to the weakness of ‘‘hits’’ as a measure, it
is not possible to report whether or not the
additional 473 questionnaire hits represent
individuals who examined the questionnaire
and then left the site, or a few people
returning many times, or many people
returning a few times to the questionnaire
page. It is, however, known that they did not
submit the questionnaire. We acknowledge
that there are commercial survey programs
that do provide this information, however,
they were not employed here.
The level of non-delivered online
questionnaires was found to be unexpectedly
high, particularly given the fact that these
addresses had been collected in the ten
Table II
Response levels for online and postal data collection methods
Online Postal
Sent 3,900 1,026
Undelivered (invalid address) 700 (18%) 6 (< 0.5%)
Completed 826 471
Response level (%) 21 46
months prior to this study, and were
volunteered by participants. These findings
support past research, which has typically
found e-mail non-delivery rates of 35 per cent
(Comely 1996), and as high as 67 per cent in
one early study (Weible and Wallace, 1998).
The mailing list in the present study was,
however, more accurate in this regard and
we accept H1b, acknowledging the superior
reliability of mailing address lists, while also
acknowledging that it is not possible to
accurately measure the true undelivered rate
in the case of postal surveys.
A cost comparison is presented in Table III.
In this study, costs were minimised by using
an existing Linux server running Apache
Web server software configured to run a
PERL script that parsed HTML (hypertext
markup language) form responses to a pipe
(|) delimited flat text file. Thus, no fixed costs
relating to the host Web server nor Net
access costs were involved, as these were
treated as sunk costs.
The costs involved in setting up for online
data collection include the costs of HTML
coding the questionnaire, and setting up a
secure area using the Apache Web hosting
software. Postal distribution costs are much
higher given they include envelope stuffing
and two-way postage costs. By comparison,
the online costs relate solely to computer
administrator maintenance costs. Collation
costs are negligible in the case of online data
collection, and data entry costs are non-
existent.
In line with the findings of earlier studies
(Mehta and Sivadas, 1995; Weible and
Wallace, 1998), we conclude that the cost of
postal data collection is higher than where
online methods are used, supporting H1c. In
particular, there are substantially higher
costs incurred upon the return of postal
surveys, in terms of both collation and data
entry. Correctly designed online surveys
employing the Net avoid these costs, making
them a far cheaper option per usable
response returned. Since mainly semi-fixed
costs are involved in online data collection,
the unit costs shown would be much lower in
a survey involving a larger number of
respondents.
Antecedent studies indicate that online
data collection provides a higher response
speed than postal surveys. The findings in
this study support the earlier studies in that
75 per cent of the online questionnaires were
completed within four days following the
e-mail invitation to participate, and 40 per
cent were received within the first 24 hours.
Questionnaires delivered by post, whilst
starting more slowly, were mostly returned
in the second week of collection. Over
[ 89 ]
Heath McDonald and 40 per cent of postal responses were received Table IV
Stewart Adam on one day in the second week, as shown in Cumulative response for online and postal
A comparison of online and Table IV.
postal data collection data collection
methods in marketing The early response speed in online data
research collection is notable. However, when Online Postala
Marketing Intelligence & examining response speed it is usual to Days from cumulative cumulative
Planning present average response times when invitation response (%) response (%)
21/2 [2003] 85-95
examining postal surveys, and to include 1 39.1 0.0
weekends and other days when post is not 2 52.0 0.0
delivered. On this basis we find that H1d is 3 60.2 0.0
supported, since postal data collection took 4 75.5 2.3
an average 10.8 days compared to 3.9 days in 5 81.9 2.7
the case of online data collection (t = 58.9, 6 84.5 9.0
p = 0.00). 7 86.7 9.0
8 88.8 9.86
Data quality 9 89.9 10.2
Comparisons concerning the quality of data
10 90.9 52.6
obtained using online and postal data
11 92.0 76.4
collection methods are often reported at a
12 93.1 85.2
basic level. Typically, judgements on data
13 94.1 95.1
quality are restricted to analysis of item- 14 95.3 95.8
missing data, the number of responses to 15 96.2 97.5
open text boxes, and item-missing responses 16 96.7 97.5
for personal demographic questions. It is 17 97.0 98.4
assumed here that respondents are less 18 98.3 98.6
likely to provide personal data in online 19 99.6 98.6
surveys because of a perceived lack of Cutt-off date 100.0 100.0
security.
In the present study, item-missing data Note: a Weekends and non-postal delivery days not
have been analysed in a more complete included
manner, and analysis of response variance
was undertaken to increase the richness of difference. Item-missing data levels are high
the comparison. Scale items in this study in both cases, as respondents were not
included a ‘‘don’t know’’ or ‘‘refused’ option. required to comment on aspects of the AFC
Where respondents who completed the they may not have directly experienced (e.g.
HTML form questionnaire did not select a the club Web site and/or family days).
response of their own, the default response Prevention of question skipping in an online
was ‘‘don’t know’’. Those who completed the questionnaire changes this outcome (Couper
postal survey questionnaire could either et al., 2001).
answer ‘‘don’t know’’ or leave the question The analysis of responses to personal
unanswered. demographic questions is presented in
A comparison was made of the combined Table V.
item-missing and ‘‘don’t know’’ responses in Numerically, there was more item-missing
the postal survey and the number of ‘‘don’t data in the postal surveys in four out of the
know’’ responses in the case of the online five demographic questions. However, the
survey. On the basis of an analysis that level of item-missing data is significantly
excludes responses to demographic different in only two of the five cases, viz
questions, H2a is rejected. On average there occupation and life cycle stage. These results
was a 23 per cent item-missing data/don’t
know in the case of the online survey and 19 Table V
per cent in the case of the postal survey; Analysis of item-missing data: personal
which is not a statistically significant demographic items
Item-missing data (%)
Table III Demographic variable Online Postal
Unit cost comparison for online and postal data collection methods
Age 1.9 1.6
Online ($) Postal ($) Income 16.5 19.1
Set-up (e.g. Linus server administrator setup v. printing) 0.91 0.82 Occupation 3.4 6.4
Distribution (includes reply costs) 0.20 1.40 Life stage 1.2 6.2
Collation (e.g. extraction of data file) 0.05 0.76 Years as member 6.1 7.6
Data entry 0.0 1.86 Note: Figures shown in bold are significantly different
Total per usable response 1.16 4.84 (p < 0.05)

[ 90 ]
Heath McDonald and suggest that we should accept H2b, in that
Stewart Adam there is a higher incidence of item-missing
A comparison of online and data on personal demographic questions in
postal data collection
methods in marketing the case of the postal survey. This finding
research supports Basi (1999), who suggested that
Marketing Intelligence & those who complete online questionnaires
Planning complete more questions than those
21/2 [2003] 85-95
completing postal surveys.
In order to assess the differences in response
quality in more depth, analysis of variation in
the responses was undertaken. Because of the
ease with which questions can be answered
online, it was felt that there might be less
discrimination on scale items by online
participants. This would present itself as a
lower variation in responses, with individuals
not using extreme points of the scales.
An analysis of both the way individuals
answered the questionnaires and of the way
the sample as a whole answered specific
questions indicates that, in general, those
responding online are less likely to use the
full scale and are using end and mid-points
less than mail respondents. Analyses of
responses to two questions that illustrate this
general trend are presented in Figures 1 and
2, for illustrative purposes.
Figure 1
On-field performance scale item response pattern for online and postal data
collection methods
Figure 2
AFC communication performance scale item response pattern for online
and postal data collection methods
The scale item responses highlighted in
Figures 1 and 2 are significantly different
between the online and postal surveys. These
findings suggest that H2c should be accepted,
and highlight a possible weakness of online
data collection.
Comparability of data from online and
postal methods
The third group of hypotheses relates to
whether or not respondents involved in the
two data collection methods differ in the way
they responded to the questionnaire, and in
terms of their demographic profiles. H3a
proposes that the means on each of the
questions for the two groups would be the
same. Analysis of the responses shows that
for the non-demographic questions, the
groups are statistically different on 26 of the
65 questions (40 per cent of cases). Even when
the online survey was matched against a
more demographically equivalent group of
postal surveys (n = 182), the groups still
differed on 22 of the 65 questions (34 per cent).
We reject H3a in that the two groups of
respondents do not respond to the questions
in the same way using the two data collection
methods employed.
The two groups of respondents also differ
in their demographic profile. Income, age,
years as a member, occupation and lifestyle
category are significantly different between
the two groups of respondents (p < 0.01).
There are also marked differences within the
demographic measures. The online
respondents are clearly younger as Figure 3
illustrates. Only the under-19 age group is
statistically the same for both collection
methods. The online respondents are more
likely to be professionals, and report higher
incomes, as shown in Figure 4. In terms of
income, all categories were significantly
different at the p = 0.05 level. We therefore
reject H3b as the two data collection methods
clearly involve respondents with different
demographic profiles.
Managerial and academic
implications
As Couper (2000, p. 466) points out, ‘‘survey
quality is not an absolute but should be
evaluated relative to other features of the
design (such as accuracy, cost, timeliness,
etc)’’. While most marketing professionals –
managers and academics alike – can easily
see the efficiencies involved in online data
collections methods, the sources of error are
not always quite as obvious. Survey errors
arise involving such matters as sampling,
coverage, non-response, and measurement.
[ 91 ]
Heath McDonald and Figure 3
Stewart Adam Comparison of age groups for online and postal data collection methods
A comparison of online and
postal data collection
methods in marketing
research
Marketing Intelligence &
Planning
21/2 [2003] 85-95

The AFC study reported in this paper
illustrates that the responses and
demographic profile of the two groups of
subscribers are statistically different
between the data collection methods
employed. This difference could be a
coverage error (those without an e-mail
address or Web access), and/or a sampling
Figure 4
Comparison of income groups for online and postal data collection
methods
[ 92 ]
error that arose because not all members of
the postal sampling frame were measured
due to undelivered mail.
Even in this study, where respondents
were drawn from the same membership
base, there are clear differences between
the two groups. Non-response remains an
issue, even where an emotive topic such as
football fans’ perceptions of their
experiences with the club are involved. As
antecedent studies show, the issue is not
going away with the advent of a new
interactive medium, and may become a
greater issue as more people become aware
that they are paying for their Internet
service and therefore for the privilege of
being over-surveyed. When and if TMT
convergence extends to the point where
almost all televisions are interactive
devices, then both these issues may be
overcome in consumer research. Until that
far off day, the issues remain.
In this context, it must be remembered
that Net access costs are not uniform across
all countries, and that the penetration of the
technology can in part be explained by
differences in broadband availability and
access costs (Park and Jun, 2002). Such
differences would only exacerbate the
inequities found in this research project.
There is a need for further research into
measurement error where online data
collection methods are employed, and
particularly where HTML forms are used.
The clear message for managers and
Heath McDonald and practitioners from this research is that
Stewart Adam online surveys should not be expected to
A comparison of online and
postal data collection produce equivalent results to the more
methods in marketing established methods of data collection.
research
Marketing Intelligence &
Planning
21/2 [2003] 85-95 Conclusion
In this paper, we have acknowledged that an
exciting new interactive, and multi-faceted
medium and related technology has spurred
innovation in marketing science and
practice, and that this innovation includes
the field of marketing research. While there
are many aspects of online marketing
research that require scientific investigation,
we have restricted our commentary to the
comparative use of the online and postal
survey data methods. The study we report is
a probabilistic survey of known subscribers,
where the same questionnaire was employed.
In some ways, the methodology employed
might be considered an ideal approach
relative to an end-user study that employs
non-probability sampling of large numbers of
volunteer Net users (e.g. Kehoe and Pitkow,
1996).
We conclude that online data collection
does offer some advantages over postal
collection from an efficiency viewpoint.
Although not uniform, there is also evidence
to suggest a lower incidence of item-missing
data in online surveys on more sensitive
personal demographics questions.
‘ ... While . . . differences in thinking may be a function of the
demographic differences, it remains clear that online data
collection cannot be used as a direct substitute to the postal data
collection method... ’
There are, however, a number of
unfavourable differences between online
and postal methods which should be taken
into consideration by researchers
employing online methods. The online
survey in this study is characterised by a
large number of non-delivered
questionnaires, and a response level less
than half that of the postal data collection
method, thus heightening concerns over
representativeness. Moreover, clear
differences are evident between the two
data collection methods in terms of both
demographic data and the responses given.
The two groups of respondents appear to
think differently about the topics presented
to them in this study. While those
differences in thinking may be a function of
the demographic differences, it remains
clear that online data collection cannot be
used as a direct substitute to the postal data
collection method with this population.
The findings in this study are all the more
interesting given the nature of the population
sampled. The database used to compile the
online sample was current, and populated by
involved subscribers. It might be said that
use of the particular list in this study is an
optimal situation, from a marketing research
viewpoint.
Nevertheless, even in this subscriber
survey situation, the significant differences
between the two data collection methods
suggests that further research on the
application of self-administered online
questionnaires is warranted. The study we
report shows that researchers need to
ensure that the practical benefits of using
the technology are not outweighed by any
survey errors. Better use of the interactive
medium used in this study can be made in
the longer term, by reducing the likelihood
of the errors mentioned in the paper, and
reducing non-response in particular.
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Stewart Adam
A comparison of online and
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research
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21/2 [2003] 85-95
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[ 95 ]
Luxury branding on the Internet: lost opportunity or
impossibility?
Keywords
Brand names, Brands, Internet,
Brand image, France,
United Kingdom
Abstract
The paper addresses the issue of
the use of the Internet for the
management of luxury brands. We
investigate luxury managers’
attitudes towards the use of the
Internet to promote their brands
and also assess consumers’
opinions and behaviour concerning
luxury brands Web sites. Finally,
we present the results of a
content analysis of a number of
luxury brands sites. Any
discrepancies between
expectations and reality are
investigated. Results indicate that
reality falls short of the
expectations of both managers
and customers and that the
interactive potential of the
Internet is not exploited.
Furthermore, there is evidence
that the Internet works best as a
communication than as a
customer acquisition channel for
luxury brands.
Marketing Intelligence &
Planning
21/2 [2003] 96-104
# MCB UP Limited
[ISSN 0263-4503]
[DOI 10.1108/02634500310465407]
[ 96 ]
Francesca Dall’Olmo Riley
Kingston University Business School, Kingston upon Thames, UK
Caroline Lacroix
Pileje SAS, Paris, France
Introduction
The Internet has become an essential part of
the branding and communication strategies
of organisations, ranging from fast moving
(e.g. Nestle and Procter & Gamble), to luxury
goods (e.g. Chanel and Dior). Peterson et al.
(1997) comment that the Internet may provide
an efficient medium for accessing, organising
and communicating information, while
Chaffey (2000) focuses on the Internet’s
interactivity potential and on the
opportunity to build relationships with
individual consumers. Yet, the content of
existing Web sites varies widely, from truly
interactive to on-line brochures. Likewise,
the level of customer service and
personalisation provided by different on-line
companies is found to vary widely (Hewson
and Coles, 2001).
In parallel with the increasing number of
brands with a dedicated Web site, there has
been an escalating interest in the literature
on the use of the Internet for brand
management (e.g. de Chernatony (2001) and
in the recent Journal of Brand Management
(Special Issue) 2001). However, much of the
literature on successful brand building on
the Internet is either prescriptive in nature
(e.g. Chaffey, 2000; Clauser, 2001), or does not
go beyond the hype of anecdotal evidence
(e.g. Chiagouris and Wansley, 2000). No
single empirical paper contrasts planning
with implementation issues. This paper
attempts to fill such a gap, first, by exploring
the motivations that have led manufacturers
to create Web sites for their brands. We then
contrast the managers’ aims with consumers’
perceptions and their use of brand Web sites.
Finally we report on a content analysis of a
number of such sites.
The focus of our research is the luxury
sector, for a number of reasons. First, a study
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by Nyeck and Roux (1997) on whether the
Internet had the potential to become a
suitable communication tool for luxury
brands sets a precedent and offers a means of
comparison with the early days of the
technology. Second, following Peterson
et al.’s (1997) products typology, the Internet
may be an effective transaction and
communication tool for luxury goods,
because of their high cost, relatively low
frequency of purchase, high value and high
differentiation characteristics. On the other
hand, since many luxury goods (e.g. clothes)
are experience (rather than search) goods,
the Internet may function better as a
communication than as a transaction
channel.
Background
Internet branding
A number of recent papers have confronted
the issue of brand management on the
Internet. Most authors (e.g. Chen, 2001; de
Chernatony, 2001; Clauser, 2001) agree that
the fundamental rules of branding and the
essence of ‘‘the brand’’ itself are the same off-
and on-line. However, the new technology
may require adjustments at the executional
level, for example in the way information is
presented (de Chernatony, 2001). Moreover,
the degree of control exerted over the brand
may need relaxing so that, for instance,
unmoderated chat forums and communities
are built within the brand’s Web site
(de Chernatony, 2001). This would enable
companies to engage in a more immediate
and unfiltered dialogue with their publics
(Ind and Riondino, 2001). The sites’
interactivity features are crucial to Internet
marketing success, according to Chaffey
(2000). Ind and Riondino (2001) also highlight
that while a brand’s presence on the Web
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Francesca Dall’Olmo Riley and
Caroline Lacroix
Luxury branding on the
Internet: lost opportunity or
impossibility?
Marketing Intelligence &
Planning
21/2 [2003] 96-104
should be conceived in a way that is
sympathetic to the technology and the
environment, the Web site should be
consistent with the whole brand presentation
and should reflect the overall brand identity.
However, and in spite of the emphasis on
the interactive, real-time features of the Net
for branding success, studies by Hewson and
Coles (2001) and Molesworth and Jenkins
(2002) reveal that many organisations fail
miserably in the implementation of such
features, resulting in customers’ needs and
expectations not being met.
Managing luxury brands
Nueno and Quelch (1998) define luxury
brands as:
. . . those whose ratio of functional utility to
price is low while the ratio of intangible and
situational utility to price is high.
Phau and Prendergast (2000) point out that
while ‘‘luxury’’ is a subjective concept:
. . . luxury brands compete on the ability to
evoke exclusivity, a well-known brand
identity, [. . .] brand awareness and perceived
quality.
Another concept related to luxury brands is
the ‘‘rarity principle’’: the prestige of the
brand gets eroded, if too many people own it
(Dubois and Paternault, 1995). This creates a
paradox for luxury brand management (Roux
and Floch, 1996): the company needs to
maximise its profits but can never sell or
standardise too much. Luxury brands
organisations have to maintain a fragile
equilibrium between high exposure and
awareness but a controlled level of sales. To
maintain their dream value and avoid the
risk of commoditisation, ‘‘luxury brands
must be desired by all, consumed only by the
happy few’’ (Kapferer, 1996).
Because of their high prices, luxury brands
must not only deliver the best but also
‘‘extensively customise them (their products)
in order to prove how customer-focused they
are’’ (Kapferer, 1996). This will be an issue
explored in this research, as the Internet
allows a great deal of personal customisation.
The Internet and the luxury sector
According to Kapferer (2000), e-commerce
presents both an opportunity and a threat for
luxury brands. The Web will give an
opportunity to buy to those potential
customers who do not have nearby access to
one of the few distribution outlets of a luxury
brand or who feel intimidated from entering
‘‘such temples of luxury’’. At the same time,
for brands whose image is based on
excellence and on highly selective
distribution and information channels, there
is a real threat of ‘‘commoditisation’’, arising
from being referenced by other portals and
being pirated by those who buy merchandise
on the grey market. On the other hand, this
‘‘commoditisation’’ effect may not be as
strong in all markets. For example, Phau and
Prendergast (2000) note that the popularity of
a brand does increase its dream value among
Asian customers.
An exploratory study by Nyeck and Roux
(1997), at the time when the Internet started
to take off in Europe, offered the framework
for the current study. They carried out
in-depth interviews with six luxury brand
managers concerning their opinions on the
Internet. Some thought that there was no
compatibility between the Internet and
‘‘luxury’’ or luxury brands consumers.
Others were positive about the Web and
believed it would bring an innovative twist to
the brand image, especially as they thought
that the luxury sector had to be ‘‘avant-
garde’’. They pointed out that the site had to
be luxurious and have ‘‘perfect aesthetics’’.
With regards to selling through the Web,
some said it clashed with the very selective
distribution channels the brands used and
feared the possible increase of fake products
sales. Others saw an opportunity to reach far
foreign markets in a sector where
globalisation is vital. Sales through the
Internet were judged as useful for repeat
buyers where the overall luxury experience
can be slightly less important.
As for the consumers, they liked to enter
into the shops to purchase luxury goods, but
felt they lost the environmental quality when
visiting the luxury brands’ Web sites.
Managers also mentioned this point.
Consumers also felt it was sometimes hard to
use the medium and that they could not
master it, although they expected luxury
brands to be online. Some thought it was not
for consumption, except for a repeat
purchase or for well-known accessories or
products that do not require to be tried on
first, such as champagne.
Methodology
Because the use of the Internet has become
much more widespread since 1997, it is likely
that more luxury consumers are now Web
users, at least for the younger layers of the
target markets. At the same time, most
luxury brands nowadays have Web sites.
Hence, it seemed appropriate to further
Nyeck and Roux’s (1997) research at the
current, more advanced stage of development
of the Internet, both as a management tool
and as a consumer activity. The study is
divided into three parts. The first part
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Francesca Dall’Olmo Riley and
Caroline Lacroix
Luxury branding on the
Internet: lost opportunity or
impossibility?
Marketing Intelligence &
Planning
21/2 [2003] 96-104
[ 98 ]
investigates luxury managers’ attitudes
towards the use of the Internet to promote
their brands. The second part assesses
consumers’ opinions and behaviour
concerning luxury brands’ Web sites.
Finally, we present the results of a content
analysis of a number of luxury brands sites.
Any discrepancies between expectations and
the reality are also investigated.
Managers’ attitudes
In-depth interviews were used to elicit the
attitudes and opinions of five luxury brands
professionals. Because most of the
headquarters of the luxury houses contacted
are in France, the face-to-face interviews
were carried out in Paris, in French. The
interviews were tape-recorded, transcribed
and content analysed in French. All efforts
were made to ensure that the translation into
English, for the purpose of this paper, was as
accurate as possible.
All organisations interviewed had an
operational Web site. Company A, company
D and company E specialise in clothes but
also have a range of perfumes. These three
companies belong to the LVMH group and
employ, respectively, 250, 150 and 600 people,
world-wide. The respondents were
respectively a brand manager, a marketing
and sales manager, and a multimedia
specialist. Company C is a small company
that started in 1991 and employs two people
in the showroom and workshop in Paris. The
respondent was the founder and owner.
Company B is a fashion company, created in
1976 and employing 40 people. The managing
director was interviewed.
The interviews aimed to obtain managers’
insights in the following areas: for how long
have they had a Web site; what was the Web
site aiming to achieve; are they attempting to
sell online; and what impact was it deemed to
have had.
Consumers’ perceptions
A self-completion questionnaire (in English)
was employed to collect data on the attitudes
of luxury brands’ consumers towards the use
of the Internet both in general and for luxury
brands. The only pre-requisites were that the
respondents had bought a luxury brand over
the previous 18 months and that they had
Internet access. The questionnaire was
administered in two ways: face-to-face and
through the Internet. Twenty-nine responses
were collected by means of store intercept in
four London department stores. The same
questionnaire was sent by e-mail to a
convenience sample of 112 acquaintances and
addresses authorised by them. This yielded
52 valid questionnaires (a response rate of 46
per cent). Checks revealed no significant
differences between the responses of the two
cohorts, hence the entire sample of 81
respondents will be analysed all together.
Sixty per cent of respondents were female,
and 75 per cent were between 18 and 44
years old.
Web content analysis
A total of 54 luxury brands’ sites were
content analysed, following the framework
provided by Carroll (2001). The brands were
chosen because they were referred to in most
academic articles on luxury (e.g. Kapferer,
1996); they were often mentioned by
respondents in the piloting of the survey; and
the managers of some of these brands were
interviewed. The sites were in six categories:
‘‘accessories’’ (three sites), ‘‘automotive’’
(three sites), ‘‘couture’’ (26 sites), ‘‘perfume
and cosmetics’’ (nine sites), ‘‘food and drinks’’
(seven sites) and ‘‘jewellery’’ (four sites). The
brands that operate in more than one sector
(e.g. couture and cosmetics) were classified
according to the emphasis given in the home
page of the site. Brands with different
addresses for different products had an entry
for each one.
The Web sites were analysed for their
general, visuals, promotion, communication,
interactivity and sales features.
Results
The managers’ perspective
Here we discuss how the interviewees viewed
the use of the Internet for brand
management.
The Internet
The motivations given by the managers for
building a Web site varied. Some had put a
Web site in place because it was a fashionable
thing to do (e.g. companies A and D). For
others (e.g. company E), the Web project had
been championed by someone within the
organisation who had realized the new
medium’s potential.
The issue of selling on the Internet was
then explored. Several problems were
highlighted in the responses. The first
problem was how to show the garments in a
truthful and complimentary way on the
Internet. The director of company B
remarked that:
They [the clients] should not be lost or
disappointed by what they are going to see.
Not being able to touch and feel the garments
was another problem, for instance:
Personally I don’t think I would buy on the
Net, you need to see and touch the garments.
Francesca Dall’Olmo Riley and
Caroline Lacroix
Luxury branding on the
Internet: lost opportunity or
impossibility?
Marketing Intelligence &
Planning
21/2 [2003] 96-104
And . . . there is the sales assistant’s advice
(Marketing manager, company D).
The impossibility of touching the product
was part of a more general issue, the
holistic experience that is put forward by
the literature. For the brand director of
company A, an ‘‘atmosphere’’ can be
communicated through the Internet ‘‘but
this requires a very high level of
professionalism in this sector. This
cannot be put together by an IT person’’.
However, all the other respondents felt that
the holistic experience could not be
transmitted through the Web. For
example:
You remove the ‘‘pleasure purchase’’, that is
to go in the shop, being received there, being
recognized . . . All this aspect disappears
(Director, company B).
When probed to elaborate what products
could be sold online, clothes were generally
excluded from consideration. In company C
attempts at selling on the Web had been
made, but the results had not been
satisfactory:
Well I sold six or seven pieces when there
were about seven or eight thousand visitors
on the site . . ..
The director of company B felt that the Web
site was catering more for the needs of the
buyers of the diffusion lines, than for the
couture customers. For him, the Internet
suppressed the spontaneity in the purchase,
just because you have to make a conscious
decision to get on the site.
Impact of the Web site
The respondent for company C said that the
site does not have much impact on his brand
image:
It remains very limited.
. . . the brand promotion has not really taken
off on the Net, maybe later if the phenomenon
increases, but here it is essentially the
catwalks, the press and the open show-room
that bear the brand identity.
In contrast with this view, the managers in
companies D and E believed that their sites
had a positive influence on the brand image:
It is a beautiful site. I rather think that it
reinforces the brand image.
When asked if the Web site has had an impact
on company E, the multimedia specialist
said:
Yeah, I believe so, especially for our target
anyway. For our target, it allows us to
modernize the image. As we attract a new
audience, we are going to modernize the
image, which is going to be relayed in the new
communication campaign, just being worked
on. The new campaign reflects this will of
modernizing the brand. It is truly a part of the
communication tool.
The final area of interest is the impact of the
Internet Web site in the communication
strategy of the luxury companies.
For the respondent in company D:
It is true that the consumers can
communicate with us much more easily since
we have the site. Still, I believe that the site
and the communication are very difficult to
manage, once again it is a group project.
In contrast, for the multimedia specialist in
company E, the Internet site:
is totally integrated, hence the presence of the
site here, internally of the communication
department, it is because it is not a window
site, it’s an integral part of the company’s
communication tool.
Company E’s multimedia specialist added
that there is a strong attempt at relationship
building through the Web site, where a
community is created, the users can
subscribe and receive a newsletter.
Additionally, the Web site offers a magazine
that changes every 15 days and ‘‘. . . (the
customers) can also take part in the forums’’.
In contrast, the other brand managers said
that the relationships are established and
maintained through human contact. It is the
sales assistant and shop managers who learn
to know the customers and have sometimes
an independent customer database, for
example:
Relationships are made in the boutiques and
in the multi-brand shops, the franchises. This
is where the relationship happens
(marketing/sales manager, company D).
The consumers’ perspective
Use of the Internet
Over two-thirds of the 81 respondents
claimed to access the Internet on a daily
basis, with a further 30 per cent doing so ‘‘at
least once a week’’. The main access point
was from home (75 per cent), although there
was an overlap with ‘‘at work’’ access (51 per
cent). The most important reason for surfing
the Net was ‘‘to look for information’’ (40 per
cent), followed by ‘‘for leisure’’ (19 per cent)
and ‘‘to shop’’ (18 per cent). Other reasons
included ‘‘to chat’’ and ‘‘e-mail’’. The
respondents’ perceptions regarding the
advantages and the disadvantages of the
Internet were also investigated. The three
dominant reasons selected by the
respondents were: ‘‘it saves time’’ (20 per
cent); ‘‘it contains all the information
needed’’ (19 per cent) and ‘‘it is interactive’’
(18 per cent). Among the disadvantages, ‘‘not
secure’’ and ‘‘too slow’’ came on top (17 per
cent each), followed by ‘‘can’t always find
what I am looking for’’ (15 per cent) and
[ 99 ]
Francesca Dall’Olmo Riley and
Caroline Lacroix
Luxury branding on the
Internet: lost opportunity or
impossibility?
Marketing Intelligence &
Planning
21/2 [2003] 96-104
‘‘expensive’’ (10 per cent). The Internet’s
superficiality, coldness and impersonality
followed. Other respondents mentioned
‘‘spam and banners’’ among their dislikes. Of
respondents 50 per cent did not feel
comfortable with leaving their credit card
details on the Internet, and a further 14 per
cent admitted to leave their details, despite
feeling anxious about security. Men were
more concerned about security than women.
Use of luxury brands Web sites
One-third of the respondents had never
visited any luxury brand Web site. Among
the respondents who had visited a luxury
brand Web site in the previous 18 months, the
reasons most cited were ‘‘looking for
information on the brand’’ (22 per cent),
‘‘looking for information on the product’’ (21
per cent) and ‘‘seeking personalised advice’’
(12 per cent). Only 5 per cent had accessed a
luxury brand Web site for the purpose of
making a purchase. The reasons for not
buying on-line are reported in Table I.
In 40 per cent of the cases, the respondents
could not find what they were looking for.
This is probably due to the fact that many
sites do not have any sales capabilities and
the ones that do usually have limited ranges.
Consistently, with some of the comments
made by the managers, the second reason for
not buying online was that people like the
shopping experience (35 per cent) and also
like to touch and try (11 per cent). The
security issues came up again, for 22 per cent
of the respondents. Among the ‘‘other
reasons’’, respondents indicated that when
visiting a site they were ‘‘just looking’’ and
not shopping online.
Respondents were then asked to indicate
what they liked about the luxury Web site
they visited most. Sites that were easy to
access and navigate were the most liked (33
per cent). The design of the site and the
visuals are also important factors and were
appealing to 30 per cent of the respondents,
indicating that the brands managed to
communicate their ‘‘beauty’’ or ‘‘magic’’
(Kapferer, 1996) through the Internet.
Personalisation and interactivity followed, at
22 per cent and 17 per cent respectively.
When asked to indicate what they would
expect from a luxury Web site, the aesthetics
and presentation features again came up at
the top, followed by the opportunity to
communicate with the organisation via
e-mail and, once again, the ease of access and
navigation (see Table II).
The high scores in Table II indicate that
the users have high expectations from luxury
Web sites, especially the aesthetics
(mentioned by 60 per cent), communication
via e-mail (47 per cent) and information on
the product (44 per cent). Consistently with
other results of this survey, only a quarter of
respondents ticked the possibility to
purchase the goods. When asked what type of
luxury items they would consider buying
online, respondents answered as follows
(Table III).
Here we can see that the first two
categories are food and wine and cosmetics.
It should be noted that these items are
usually the ones carrying the least
involvement in the purchase. This is also
true to an extent for the accessories category.
Finally, respondents were asked whether
or not they felt that the luxury brand they
purchased most often, online or offline, was
involving them in a relationship. The
Table II
Features expected in a luxury Web site
Feature %
Aesthetics 60
Communication via e-mail 47
information on products 44
Easy to navigate 40
Information on brands (PR events) 36
Personalised advice (club, newsletters) 33
Secure connection 32
Community (boards, chat) 31
Clear postage and package charges 28
Real time communication 27
World-wide availability 27
Purchase possibility 26

Table I Table III

Reasons for not buying online Luxury items the respondents might buy online
Reason % Category %
Could not find what I wanted 40 Food/wine 37
I like the shopping experience 35 Cosmetics 33
Concerns over security 22 Accessories 24
It looked too complicated 15 Clothes 20
I need help and advice 13 Jewellery 19
Conditions of purchase were unclear 11 Decoration 17
Like to touch and try 11 Cars 10
Other reasons 55 Other items 11

[ 100 ]
Francesca Dall’Olmo Riley and
Caroline Lacroix
Luxury branding on the
Internet: lost opportunity or
impossibility?
Marketing Intelligence &
Planning
21/2 [2003] 96-104
respondents answered as follows: 43 per cent
do not feel they have a relationship with the
brand, 47 per cent are loyal to several brands
they like and only 9 per cent answered ‘‘this
brand makes me feel special’’. Only 1 per cent
chose ‘‘I feel loyal to one brand’’.
Luxury brands’ Web sites content
analysis
A total of 54 Web sites in six categories
(accessories, automotive, couture, food and
drink, jewellery and perfumes) were content
analysed in August 2001 for their general,
visuals, promotion, interactivity and sales
features. These are discussed below.
General features
A number of aspects were considered,
including: ‘‘Is the Web site operational?’’;
‘‘Requirement for a special shareware?’’;
‘‘About us’’ section; ‘‘History’’; ‘‘Product list’’;
‘‘Media relations’’; ‘‘What’s new section’’;
‘‘Site map’’; ‘‘Segmentation’’ (that is the
existence of different sections according to
the type of consumer); ‘‘Help’’ and ‘‘Press
releases’’.
Only 70 per cent of the sites were
operational, that is, the site was present on
the Internet and had a content. For example,
Hermes (www.hermes.com) only had one
page with name, logo and flashing visuals,
saying it was going to become operational
soon.
Then the items related to the brand itself
were evaluated. ‘‘About us’’ was present in 46
per cent of the sites, ‘‘History’’ of the
company and ‘‘What’s new’’ were found in
half of the sites studied. Some sections
relating to the navigation were also explored.
The ‘‘Site map’’ and ‘‘Product list’’ buttons
were found in 61 per cent of the sites. The
help section was found in only 19 per cent of
the luxury Web sites visited. The more
interactive ‘‘search the site’’ option was
found in almost a quarter of the 54 Web sites.
Some more marketing oriented features such
as ‘‘Data collection’’, and ‘‘Segmentation’’
were also present in the sites. ‘‘Data
collection’’, or any device to gather
knowledge on the user (signups,
subscriptions, surveys, etc. . . .) were found in
half of the sites studied. ‘‘Segmentation’’ was
found when the site was segmented in several
sites, each designed for a different audience,
like male/female, or country segmentation.
For example, the Givenchy Web site
(www.Givenchy.fr) is segmented for fashion
and perfumes, male and female, and then a
separate site was set up for the oblique
perfume, with a much younger image. The
segmentation of the site was found in half of
the sites studied. This shows that the
marketing opportunities offered by the
Internet are not exploited to their full
potential by half of the brands studied. These
findings are summed up in Table IV.
Web site visuals
This section is dedicated to the imagery of
the Web site, since aesthetics play a major
part in luxury, according to the definition of
Roux and Floch (1996) and also in the views of
the managers we interviewed.
Overall, all the sites made good use of
visuals. A total of 72 per cent of them possess
some continuous pictures. Some sites had
more sophisticated illustrations such in
www.chanel.fr or www.dior.com, using the
Flash1 technology and even used the video
possibilities of the Internet (13 per cent), like
in www.armani.com. It should be noted that
this kind of features increases the perception
of interactivity of the medium but can be
confusing for the user. For example, in the
Chanel site where the buttons are not
precisely distinguished, the navigation is
made more difficult. Another drawback of
the presence of many pictures and
animations on the site is the downloading
time: about 50 per cent of sites took more
than one minute to download. Music is often
used as well (32 per cent).
Promotion
This section is about the promotions used on
the Web site. These are used in a general
context to trigger the purchase, but in the
Internet environment, they are especially
used to render the Web site ‘‘stickier’’. In all
the sites visited in this study, general
promotions were often limited to a simple
communication message. In 20 per cent of the
cases, free downloads were offered, such as
branded wallpapers, screensavers and
Table IV
Luxury brands’ Web site general features
General features %
Web site operational 70
Product list buttons 61
Site map 61
History 50
What’s new 50
Data collection 50
Segmentation 50
Special s/ware required? 48
Abous us 46
Search 24
Help 19
Press releases 15
Media relations 6
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Caroline Lacroix
Luxury branding on the
Internet: lost opportunity or
impossibility?
Marketing Intelligence &
Planning
21/2 [2003] 96-104
[ 102 ]
imagery from current advertising campaigns
(Dior, Jean Paul Gaultier). If other brands
were advertised on the sites, they were brand
extensions and never other companies. This
is consistent with Carroll’s study (2001).
There were no sites with coupons (they are
usually faxed, e-mailed or readily printable
from the site and allow a discount in the
shops). This is not really surprising, as a
monetary promotion would clash with the
premium nature of the brands studied here.
Interactivity and communication features
The interactivity is the feature that
differentiates the Internet from the other
media. Consistently with Carroll (2001), we
consider here both navigation features and
the features that allow a two-way
communication between the consumer and
the brand.
About a third of the sites visited offered
links to the organisation’s sites in other
countries, or to the group’s corporate site (for
example www.clarins-paris.com is linked to
www.clarins-group.com), or to sites from the
brand’s other activities (for example the
cosmetics site of Givenchy is linked to the
couture site). Pop-ups were found in a further
30 per cent of sites. They were used to draw
attention to a message (for example, the pop-
up at chanel.fr for the launch of the new
jewellery collection), but often increased the
downloading time and could appear
intrusive. The drop down menus allow an
easy navigation. They are not always present
(only 26 per cent of the cases) but the new
technologies like Flash1 allowed better-
looking navigation tools.
Of sites 11 per cent had restricted areas
that could only be accessed with a username
and password. They entail a subscription to
the site, for example to a brand’s club like at
www.shiseido.com. Such clubs allow the
creation of an ‘‘elite’’ group, a concept dear to
the luxury brands.
Finally, the most common two-way
communication feature between the
consumer and the brand was the ‘‘e-mail us’’,
where the users could send an e-mail or
HTML message to the company (60 per cent
of sites). Sometimes the topic of the
message could be selected, facilitating the
dispatching of the message when it arrived.
This was linked to the other features like
‘‘Webmaster’’ and ‘‘staff e-mails’’, allowing
the users to address their messages to a
specific person. Those were rather rare,
however, as they were found in only 9 per
cent and 4 per cent of the sites, respectively.
Only one-quarter of sites offered a contact
address and phone number for the ‘‘head
office’’ of the company. The other
possibilities offered for communication were
the ‘‘sign-ups’’ (50 per cent of cases), asking
for the users’ e-mail address and allowing
them to:
. receive a newsletter (e.g. Guerlain);
. become a member of a club (e.g. Midiron
at Dior.com);
. obtain personalised advice (e.g. Chanel
cosmetics); and
. participate in the site’s community (e.g.
Kozen.com).
Finally, over one-fifth of sites contained some
kind of survey.
These features are of importance as they
are linked to the customer relationship
management.
Web site’s selling features
While only 15 per cent of the sites visited had
a selling facility, two-thirds of sites provided
an online brochure showing the products,
sometimes in the form of an online catwalk
(e.g. www. Jeanpaulgaultier.com), or like a
proper catalogue with extensive description
of the products, for example at
www.montblanc.com.
Prices, packaging and postage costs were
not always easy to find and were given only
at a later stage of the order. The refund policy
was clear for only 9 per cent of the sites, but
when they were present, they were very
detailed and easy to understand
(www.jeanpaulgaultier.com). Finally, only 6
per cent of the sites allowed world-wide
dispatching. Most of them were solely for the
USA (e.g. www.tiffany.com). This is probably
due to delivery problems but, as the sites are
available from anywhere across the world, it
may generate some frustration. All the sites
offering selling facilities had a secure
transaction declaration, reassuring the
consumers about the encryption of their
details.
As the online selling is not very popular, 67
per cent of the sites had a store locator,
giving the user the address of the nearest
boutique.
Conclusions
In spite of a more widespread use and
acceptance of the Internet over the last few
years, managers’ opinions regarding its
suitability for luxury branding have not
changed much since the times of Nyeck and
Roux’s (1997) research. The majority of
managers we interviewed viewed the
Internet as an unavoidable development
posing both a threat and an opportunity.
Provided that the brand’s holistic experience
could be maintained by means of the design
Francesca Dall’Olmo Riley and
Caroline Lacroix
Luxury branding on the
Internet: lost opportunity or
impossibility?
Marketing Intelligence &
Planning
21/2 [2003] 96-104
and aesthetics of the Web site, managers
agreed that the Internet could serve as a
communication tool for their brands. At the
same time, they thought that the Internet’s
impact on the brand image would be less
important than the impact of traditional
means of communication and, more
importantly, it could not substitute the
‘‘pleasure experience’’ of entering one of their
shops. Moreover, managers did not believe
that the Internet could provide a viable
selling tool for their products, particularly
for clothes. The Internet was perceived as
removing not only the spontaneity of
shopping, but also the pleasure of touching
and feeling beautiful material and of entering
their ‘‘temples of luxury’’. Furthermore,
nothing could substitute the level of service
and the human contact provided in the
stores.
To a considerable extent, consumers’
perceptions matched the managers’
opinions. One-third of our respondents
never visited a luxury brand Web site and
only a handful had actually ever bought a
luxury item through the Web. Most would
not even consider doing so, even for less
involving search goods such as wine. At the
same time, consumers’ expectations of
luxury brands’ Web sites were high,
especially in terms of their visual effects,
aesthetics and interactive features. They
perceived the luxury brands’ Web sites as a
means of getting information and advice
about the luxury brands they liked. Over
half, however, did not think the Internet
meant they had a relationship with their
favourite brands.
In contrast, the more technologically
minded managers (e.g. the multimedia
specialist in company E) perceived the
Internet as a powerful means of establishing
relationships with customers by means of the
interactive possibilities available through
the medium. However, the content analysis
of luxury Web sites revealed that while most
sites scored high on visuals, few offered truly
interactive customisation and segmentation
features.
The results from the different parts of
our research are consistent in pointing
out that luxury brands’ organisations
have not yet exploited to the full the
interactive potential of the Internet and that
consumers themselves are still reluctant and
suspicious of the medium, at least as a
shopping tool. Most consumers still perceive
shopping for luxury items as a pleasure in
itself and as a gratifying experience. Our
results are also broadly consistent with
Peterson et al.’s (1997) analysis of the
potential impact of the Internet as a channel
intermediary for different kinds of products.
Based on Peterson et al.’s (1997) framework, it
would seem that, for luxury brands, the
Internet is very likely to fulfil a
communication and information role, but
less likely to be used as a customer
acquisition channel.
For luxury brand managers, the problem
remains of how to give incentives to people to
visit their Web sites. More efforts seem to be
needed not only in communicating to
existing and potential customers the
exclusive benefits of accessing the sites,
but also in providing real benefits for
doing so (e.g. customer clubs; customised
advice, etc.).
References
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Internet on brands’’, Journal of Brand
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Chiagouris, L. and Wansley B. (2000), ‘‘Branding
on the Internet’’, Marketing Management,
Vol. 9 No. 2, pp. 34-8.
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pp. 270-87.
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brands on the Internet’’, Journal of Brand
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Francesca Dall’Olmo Riley and
Caroline Lacroix
Luxury branding on the
Internet: lost opportunity or
impossibility?
Marketing Intelligence &
Planning
21/2 [2003] 96-104
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Proceedings of Academy of Marketing Annual
Conference, Nottingham.
Nueno, J.L. and Quelch, J. (1998), ‘‘The mass
marketing of luxury’’, Business Horizons,
Vol. 41 No. 6, pp. 61-9.
Nyeck, S. and Roux, E. (1997), ‘‘WWW as a
communication tool for luxury brands:
compared perceptions of consumers and
managers’’, in van Raiij, B. et al. (Ed.),
Proceedings of the Second International
Research Seminar on Marketing
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Peterson, R.A., Balasubramanian, S. and
Bronnenberg, B.J. (1997), ‘‘Exploring
the implications of the Internet for
consumer marketing’’, Journal of the
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pp. 329-46.
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luxury brands: the relevance of the ‘rarity
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la contradication interne de toute maison de
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Web site characteristics and business
performance: some evidence from international
business-to-business organizations
Keywords
Web sites,
Business-to-business marketing,
Marketing communications,
Internet, Business strategy,
Interaction
Abstract
This paper addresses the
effectiveness of Web site
capabilities. It is intended to
empirically determine the
importance of site properties for
Internet sales performance. More
specifically, we consider the
relationship of characteristics
such as navigability, interactivity,
multimedia design and marketing
communications content with
sales attributed to the Internet.
Advanced econometric modeling
of cross-section data on business-
to-business firms demonstrates
that interactive responsiveness of
the site, enabling customized
interactive programs and club
membership, fast-downloading
multimedia, such as frames and
animation, corporate information
stressing corporate positioning
and active information submission
on behalf of the target audience
may influence sales performance.
Important implications for
optimization of business-to-
business Internet strategies are
also considered.
Marketing Intelligence &
Planning
21/2 [2003] 105-114
# MCB UP Limited
[ISSN 0263-4503]
[DOI 10.1108/02634500310465416]
Despina A. Karayanni
Department of Business Administration, University of Patras, Athens, Greece
George A. Baltas
Department of Marketing, Athens University of Economics and Business,
Athens, Greece
Introduction
In recent years, new technologies have
created new and innovative means of
interacting with customers. In particular,
business-to-business organizations see the
Internet as a complement to their existing
networks, which diffuses at exponential
rates. For example, according to Forrester
Research (2000), inter-organizational
oe-commerce in North America will exceed
$2.7 trillion by 2004.
In view of the substantial and rapidly
growing Internet audience, several firms
have quickly adopted the Internet as a means
to conduct marketing communications
economically and efficiently. Nonetheless,
while most companies have felt compelled to
establish an Internet presence, they have
failed to create a Web site with substantive
features and capabilities (Breitenbach and
Doren, 1998). For example, many Internet
marketers take the printed corporate
brochure and put it onto the screen but that
technique simply does not work in this
interactive multimedia environment
(Monaco, 1997). Firms need to improve the
appeal of their Web sites because of the
increased online competition in industrial
markets. Therefore, a critical question to
consider is what methods are effective in
reaching the online business-to-business
market. As will be seen later, inspection of
the relevant literature suggests that very
little is currently known about these issues.
Given the lack of empirical research on site
effectiveness, this study attempts to assess
the effectiveness of various Web site
elements on sales performance. More
specifically, we examine the relationship of
Web site design features and information
content with sales attributed to the Internet
presence of the firm.
The Emerald Research Register for this journal is available at
http://www.emeraldinsight.com/researchregister
The organization of the paper is as follows.
The next section lays the groundwork by
briefly reviewing the relevant literature. In
the third section we provide a conceptual
framework of site effectiveness and develop
research hypotheses. The fourth section is
concerned with empirical analysis and
research findings. A concluding section
summarizes the paper.
Background
The literature suggests that the Internet has
provided more than just a new medium
through which organizations can
communicate with the public. The WWW
allows bi-directional marketing and offers
wider and deeper material and richer
advertisement content (Ellsworth and
Ellsworth, 1995). Nevertheless, little progress
has been made toward the development of
frameworks regarding the use of Internet for
marketing purposes, besides some case
studies (Hoffman and Novak, 1996; Palmer
and Griffith, 1998; Morgan, 1996). Yet, most of
these studies fail to recognize the unique
properties of the Web, which may be highly
synopsized into the attribute of interactivity
(Morgan, 1996), whereas very little is actually
known about how to use this new technology.
Some researchers contend that the role of
this new technology in Internet marketing
activities may be determined by the
interaction among the firm’s market offering,
its marketing activities and technical
characteristics (Palmer and Griffith, 1998).
Thus, optimal site design involves both
marketing and technical concerns and is
driven by the core market offering of an
organization. Therefore both marketing and
technical issues should be addressed by the
Internet marketers.
The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/0263-4503.htm
[ 105 ]
Despina A. Karayanni and
George A. Baltas
Web site characteristics and
business performance: some
evidence from international
business-to-business
organizations
Marketing Intelligence &
Planning
21/2 [2003] 105-114
[ 106 ]
Web sales performance
The most common measurement of site
effectiveness is the number of visits to the
site. This, however, will not completely
reveal the site effectiveness, as the visitors
may be just casual browsers who should not
be considered as potential customers or may
just have stumbled upon the site (Ghose and
Dou, 1998). Hoffman and Novak (1996) argue
that, in addition to examining purely
exposure measures such as click-through
rates, the degree to which the visitor
interacts should be also measured. They
propose such measures as duration of
browsing time, the depth, or number of
assessed pages, and the number of repeated
visits. Fortunately, there is a way to generate
such information through common gateway
interface (CGI) programming (Ong, 1995).
However, the real impact of promotional
content on the Web may not be accurately
known because of difficulties associated with
such measurement (Murphy, 1996; Dreze and
Zufryden, 1997). Although the number of
pages accessed and time spent on a Web site
should be expected to relate to visitors’
purchase behavior, it would be desirable to
use an objective function expressed directly,
in terms of sales, or profitability. This could
be accomplished by tracking individual
purchases in addition to the aforementioned
data (Dreze and Zufryden, 1997). Thus, while
sites may be judged on a number of criteria,
for the purposes of our study we use the
Web-based sales in order to measure
performance.
Conceptual framework
In this section, we shall consider site
properties and develop specific hypotheses
regarding the effect of such site attributes on
site performance. As noted above, firms
should move beyond the brochure look and
develop rich and well-organized sites (Palmer
and Griffith, 1998). It remains to be seen,
however, how site capabilities might
determine performance and which of them
are particularly effective.
Interactivity of the Web site interface
Interactivity of the site relates to the
optimization of hypermedia attributes by
providing custom-made solutions, allowing
users to customize preferences, and enabling
the organization to provide solutions to users
who have provided personal information
(Muylle et al., 1999). It is now technically
feasible to offer interactive functions to
customers who might otherwise require the
assistance of staff.
The Internet may change the way firms
interact with their customers and thus the
way they initiate, develop and terminate
relationships with them (Blattberg and
Deighton, 1991). Some authors view the Net
as a means of tying the customers to the
company through the development of
detailed customer databases and the use of
relationship marketing techniques (Shani
and Chalasani, 1992; Kara and Kaynak, 1997).
In particular, Berthon et al. (1996) have
suggested that the level of interactivity in a
Web site might be critical in getting surfers
involved in the marketing communication
process. It would thus seem desirable to
explore whether interactivity plays any
significant role in affecting the overall
quality of business-to-business
organizations’ Web sites.
Specifically, interactivity may be
discriminated into two facets, i.e. memory
storage and organizational response to
individual needs and preferences. The role of
the Internet in this process lies in identifying
the address of a customer, initiating the
dialogue, maintaining the dialogue and
storing data on customer behavior, which
can be used to customize marketing
strategies. First, the customer databases that
may be built via the Internet constitute the
memory of the customer relationship – a
record of every message and response
between the firm and each address (Blattberg
and Deighton, 1991). By adding artificial
intelligence the system can design new
messages, and even product offerings, at the
individual level, to reflect everything learned
from past interactions. However, the impact
of Web-database management upon
industrial sales has not yet been empirically
tested. We hypothesize that:
H1: Memory storage of industrial buyers’
characteristics and buying behavior,
as expressed by keeping customer
databases and ability of customers to
have access to them, will be related to
higher industrial sales performed
through the Internet.
The second facet of interactivity, i.e.
organizational response through customized
offerings, may be equally supported by the
two-way interaction between Web site and
the visitor. The Internet enables
demassification, a term meaning the degree
to which a specific message can be conveyed
to each individual belonging to a large
audience (Rogers, 1991). Demassification
usually implies that a certain degree of
control over a communication system has
shifted from the message producer to the
message consumer. Thus, visitors may
control the manner in which they utilize the
Despina A. Karayanni and
George A. Baltas
Web site characteristics and
business performance: some
evidence from international
business-to-business
organizations
Marketing Intelligence &
Planning
21/2 [2003] 105-114
site. For example, customers may be guided
through a catalogue of products and services
that is most suited to their profiles. Such an
interactive Internet system is cheaper and
far more effective than traditional mailshots,
since it is customized. As a matter of fact, it is
expected that the Web may be the ultimate
medium for market segmentation at the
individual level, targeting unique visitors
with individually designed promotion,
content, products and services (Dreze and
Zufryden, 1997).
Establishment of customer user groups is
another way of increasing organizational
responsiveness at a unit of one. These
newsgroups are many-to-many
communication tools, which personify
virtual forums where users can exchange
ideas. Customers can share their experience
with others and also ask questions which
may be answered by others. According to
Berthon et al. (1996), user groups may build a
community atmosphere in the site, which in
turn may make the site a satisfying and
adaptive marketplace. Such forums would
stimulate a feeling of belongingness for
users, which, in turn, would solidify their
affiliation with company (Breitenbach and
Doren, 1998). Thus, Web sites should
facilitate customers to join affiliated to the
company online customer clubs, in order to
exchange information and share stories. In
conclusion, it would be interesting to
examine the direct relationship between Web
site interactive response element and sales
performance. Stated formally,
H2. Organizational response achieved
through the Web site’s interactivity, as
expressed by interactive elements, i.e.
the Web site’s interactive program
resulting in customized company
offerings, and online club membership
and forums, will be related to higher
industrial sales performed through the
Internet.
Navigability
Navigation refers to the hypertext
connection of the multimedia content and
determines ease of information retrieval and
site well-organization (Bornman and Solms,
1993). Evans and King (1999) suggest that
organized, easy-to-navigate pages should be a
primary consideration of good Web site
design. More precisely, navigability and
accessibility are related to information
search costs. Hoque and Lohse (1999) argue
that subtle changes in the user interface
design influence information search costs,
thus they should be considered by Web
designers in order to create more effective
Web sites. The use of search engines, site
maps and indices provides the ability to link
pages throughout the Web site and to
hyperlink to related information, which
enhances the ability of Web site users to
navigate the page and identify information
quickly. Stated formally:
H3. Navigability of the Web site,
determined by such facilities as a site
index which would be always in
display, a search engine, a site map and
personal contact possibilities, will be
related to higher industrial sales
achieved through the Internet.
Multimedia design
The Internet offers capabilities similar to
those of newspapers (i.e. text and graphics),
radio (i.e. audio) and TV (i.e. video), all in one
concise package (Breitenbach and Doren,
1998). Thus, the Internet has hybrid
characteristics that combine those of the
print, broadcast, outdoor and direct response
media. Moreover, Dreze and Zufryden (1997)
have found that use of frames contributes to
the explanation of number of pages accessed,
which coincides with prior beliefs that
frames should promote the viewing of more
pages by more effectively providing links to
them. Advancements in graphics technology
allow more creativity on the Web, with
developments such as animated ads and
banners on screen. New inventions in Web
technology today such as the so-called Quick
Time movies and xlivescreen may allow
multimedia techniques to make much more
sophisticated and integrated presentations in
the form of video, sound, music, graphics and
text. This enhanced capability not only
makes visitors’ experiences more fun and
stimulating (Spalter, 1996) but also gives
visitors the flexibility to activate only a
needed part of the presentation (Ghose and
Dou, 1998). An example is the presence of
banners, which are clickable links to a
specific advertisement in a company’s
homepage and are usually based on creative
graphics animation.
Ghose and Dou (1998) state that site
attractiveness would increase with
interactive functions – the term used to
describe Web multimedia applications. Based
on media richness theory, they contend that
the multimedia interactive format should
provide more capabilities than text, sales
brochures and catalogues.
However, Hoque and Lohse (1999) argued
that different ways of presenting information
alter information search costs. Indeed, the
new media are not frictionless. Some
information search tasks take longer online,
while others are shorter, depending on how
the Web is designed. Unfortunately, there is
[ 107 ]
Despina A. Karayanni and
George A. Baltas
Web site characteristics and
business performance: some
evidence from international
business-to-business
organizations
Marketing Intelligence &
Planning
21/2 [2003] 105-114
[ 108 ]
no objective technique for measuring and the customer interaction, i.e. on
information search in the context of site company, and customer related information
design. Both speed and effectiveness are exchange, respectively.
impaired when information is provided
Company-related information
using video or audio, as compared to other
Drawing on the pertinent literature we elicit
subtle interfaces such as animation, text or
that there is a risk associated with using the
graphics. Information search in audio or
WWW as a marketing channel (Gelormine,
video takes more effort than searching in text
1995). Defining and illustrating the
or graphics. The additional effort is
company’s identity reinforces buyers’ trust
attributed to more waiting time to load an
in the company, acting as the counterbalance
audio, or video clip. Notwithstanding, system
of risk. Indeed, buyers are more likely to buy
response time is widely acknowledged as one
products from a company they know and
of the major sources of frustration,
with which they can identify (Breitenbach
annoyance, impatience and stress during
and Doren, 1998). Companies have the
human-computer interaction (Kuhman et al.,
opportunity to present the history and the
1987; Ducoffe, 1996). Indeed, it has been
fundamental culture of their organization
suggested that there should be significant
online. Information concerning corporate
correlation between Web site download speed
financial health, employees’ profile and
and Web user satisfaction (Muylle et al.,
affiliation ties with other vigorous
1999). Jayawardhena and Foley (2000)
organizations, may act as a control
identify a couple of additional disadvantages
mechanism which may guarantee stability in
in program downloading (e.g. an audio-video
future business transactions. Public
application), which may be synopsized as
relations may also contribute to building the
risk of importing unwanted components, like
corporate image. For example, users may be
viruses, as well as unwillingness to sacrifice
more inclined to purchase products and
hard disk space. Moreover, the value of
services from socially responsible
audio-visuals depends on the target market,
companies. Thus, companies could make
the product offering, and the target’s
users aware of any charitable activities,
equipment, as video and audio hardware,
community efforts, and environmental
may not be resident in a user’s PC (Evans and
projects, in which the company is involved.
King, 1999). In this sense, graphics may be
Companies could also provide some support
more effective than audio and video, since
products and services for free. Support
photos, diagrams and illustrations are sought
products are those products or services that
by more users (Dreze and Zufryden, 1997).
enhance or complement another offering of
In conclusion, designers of commercial
the company. In particular, links to unbiased
sites face a myriad of decisions about how
news and reviews of company offerings are
best to organize and present product
useful, especially for purchases with high
information, often without knowing how
buyer involvement. For example, Federal
their design may influence information
Express allows users to track packages to
search costs and subsequent buyer behavior.
ensure their arrival. The more
However, the direct relationship between site
complimentary products a firm can offer, the
design characteristics and sales have not yet
more industrial buyers will value their
been empirically tested. We hypothesize that:
original purchase as well as the site
H4. The use of multimedia, i.e. use of
(Breitenbach and Doren, 1998). Finally, a site
frames, animation, banners and audio-
may provide added value services such as
video elements that are built in an
instant calculation of required monthly
organizational Web site will be related
payment for a product, online contests,
to higher industrial sales achieved
electronic postcard delivery, and information
through the Internet.
of general interest (e.g. the weather or stock
exchange rates). We thus postulate that:
Marketing communication content
H5. Company-related information provided
Communication is a key aspect of successful
on the Web site which aims at building
marketing through the Internet as it may
the corporate image, will be related to
enable a firm to achieve a competitive
higher industrial sales achieved
advantage in the marketplace (Berthon et al.,
through the Internet.
1996).
Business-to-business Internet marketing Customer-related information exchange
communications should heavily stress the Another way of reducing risk and
company identity and interpersonal uncertainty is by transferring control of
customer communication (Karayanni, 2001). information flows towards the user of
Thus, we focus on communication activities information, i.e. the industrial customer.
that may influence both the company image New technology makes customer
Despina A. Karayanni and
George A. Baltas
Web site characteristics and
business performance: some
evidence from international
business-to-business
organizations
Marketing Intelligence &
Planning
21/2 [2003] 105-114
participation and feedback easier (Lovelock,
1991). Primarily, the WWW has been
regarded as a means by which the buyer can
pull information (Young, 1996). Customer
support and communications can be
achieved via e-mail and associated file
transfer activities (FTP) and WWW pages.
For example, answering frequently asked
questions (FAQ) from customers and
prospects cuts down the amount of staff time
spent on answering inquiries. This type of
support offers some advantages over the
telephone or fax. Not only may companies
find it a cheap, quick and logistically efficient
way to provide customer support, but also
firms are often able to use the WWW to
coordinate users to help each other (Morgan,
1996). The e-mail and the WWW are also
effective for the dissemination of time-
sensitive information, such as product
catalogues, product fact sheets, press
releases, speeches, research findings,
company newsletters, etc.
Moreover, the Internet allows companies to
carry out some marketing research functions
such as customer surveys, product and
service perception surveys, advertising
effectiveness surveys and some experimental
niche activities such as limited testing of new
products and services. A few sites enable an
online feedback form. On this form, visitors
can comment on anything related to the
company, either product related, or company
related. Berthon et al. (1996) discussed the
merits of such functions. This function
provides a way of establishing a dialogue
between site visitors and the firm. Visitors
can express their opinions on a company’s
new product. Companies can invite and
encourage customers and potential
customers to join in a dialogue using e-mail,
and can start or participate in newsgroups
about their products, industry and
applications (Morgan, 1996). In this manner,
customers are likely to feel that the firm
values their opinions and their perceptions
might therefore be positively enhanced.
Thus, Breitenbach and Doren (1998) urge
companies to design sites that allow users to
offer comments, suggestions and complaints
via e-mail.
In conclusion, greater involvement of
customers in information processing through
submitting opinions and complaints to the
firm would result in greater buyer control,
leading to increased sales. Thus, we
hypothesize that:
H6. Customer-related information
exchange available through the Web
site will be related to higher industrial
sales achieved through the Internet.
Methodology
Sampling and empirical analysis
As noted above, the principal aim of the
present study is to assess the effectiveness of
business-to-business Web sites and, in
particular, the impact of the Web site’s
characteristics on industrial Internet sales.
Toward that end, the research study
involved a two-stage data collection
procedure, i.e. an e-mail survey for assessing
Web sales effectiveness and on-line
observation for examining Web site technical
characteristics and communication content.
First, we conducted the e-mail survey,
following the guidelines suggested by
Avlonitis and Karayanni (2000). Specifically,
a random sample of 700 US and European
business-to-business companies was drawn
from the Yahoo! directory of the WWW
(http://www.yahoo.com/Business and
Economy/Companies/Industrial_Supplies)
which was used as the sampling frame. First,
a prenotification e-mail was sent, which was
answered appropriately by 320 companies,
accounting for a 45.7 percent of the initial
random sample. Within the next two months,
two waves of e-mailed questionnaires
followed, accompanied by a cover letter that
was personally addressed (i.e. not a multiple-
recipient letter) to the senior marketing
director of each one of the 320 companies.
The short research instrument comprised
only two sets of questions:
1 demographic characteristics (i.e. size,
type of industry and years of Web
presence); and
2 percentage of total sales attributed to the
Web presence.
In total, 112 companies responded, producing
a total response rate of 35 percent, which
compares favorably with response rates of
similar e-mail surveys (Avlonitis and
Karayanni, 2000). In order to examine the
possible presence of non-response bias, the
sample was divided into groups of early (first
wave) and late (second wave) respondents.
The late respondents imitated the non-
respondents, whereas the early respondents
simulated the respondents in the sample
(Armstrong and Overton, 1977). Then, t-test
analysis was performed on the variable
‘‘percentage of sales attributed to the Web’’,
using the demographic characteristics as
independent variables, in order to examine
any differences in these measures between
early and late respondents. No meaningful
differences were identified, which gave us
the base to ascertain that the sample was
homogeneous. As a result, response bias
seemed to present no problem in the study.
[ 109 ]
Despina A. Karayanni and
George A. Baltas
Web site characteristics and
business performance: some
evidence from international
business-to-business
organizations
Marketing Intelligence &
Planning
21/2 [2003] 105-114
[ 110 ]
As a next step, data on Web site
characteristics and communication content
were collected by empirical observation of
the Web sites of the 112 respondent firms,
conducted between July 15 and August 30 of
2000. The computer devices used were
Pentiums II 366 MHz, with 64 MB of RAM and
4 MB graphics cards, running Windows 2000.
Access on the Internet was through a cable
modem running conservatively at 300 to 500
Kbps. Web browsing was undertaken using
the latest popular browser versions, Netscape
Communicator 4.6 and Internet Explorer 5.
Sites that were unusually slow or did not load
were double-checked at another day.
Given the lack of previous studies on the
importance of both site characteristics and
marketing communication content in
Internet marketing, the examined variables
were considered in a rather exploratory
fashion. To avoid subjectivity, all attributes
relate to objective Web site features, whose
presence can be assessed with minimal, if
any, ambiguity. The distribution of the
examined diverse site aspects over the
sample units, indicating presence or absence,
is presented in Table I.
The site characteristics fall in three
categories of respective variables. The first
group of site attributes is concerned with the
interactive capabilities of the Web site. The
second group of site characteristics deals
with ease of navigation, whereas, the third
category of site attributes concerns
multimedia design of the site, such as
audiovisional capabilities and fast
downloading multimedia. The marketing
communication content falls in two more
categories of respective variables. Thus, the
fourth category pertains to corporate
information provision, whilst the fifth
category concerns information exchange
between the firm and the customer.
Table I demonstrates that presence
frequencies vary considerably over different
characteristics, suggesting heterogeneous
integration of the examined capabilities into
the sites. Therefore, such attributes may, at
least in principle, provide differentiating
dimensions to the Internet presence of the
firm. It remains to be seen, however, if site
capabilities affect the sales performance of
the firm.
Factor analysis
In order to obtain a structural model of
implementable dimensions, application of
data reduction methods is necessary. The
five categories of 26 variables are factor-
analyzed and factor scores are extracted by
the principal components method. Following
standard practice, we select factors with
eigenvalues greater than unity for further
analysis. Factor analysis results are
presented in Table II. For expositional
clarity, insignificant variable coefficients
(< 0.50) are not reported.
Specifically, the performed factor analysis
produced:
1 two dimensions for interactivity, which
may be labeled as ‘‘memory storage’’
(databases building) (FR1) and
‘‘organizational responsiveness’’ (i.e.
customized offerings and online club
membership) (FR2);
2 one unidimensional construct for
navigability (FR3);
3 two dimensions for the multimedia
design, which may be labeled as
‘‘audiovisional multimedia’’ (FR4) and
‘‘fast downloading multimedia’’ (i.e.
frames, animation and banners) (FR5);
4 two dimensions for company-related
information items, which may be labeled
as ‘‘corporate information provided to the
shareholders’’ (FR6) and ‘‘image-building
corporate information’’ (FR7); and
5 two dimensions for the customer-related
information, i.e. ‘‘customer information
provision’’ (FR8) and ‘‘customer
information collection’’ (FR9).
Econometric analysis and findings
The preceding factor analysis has reduced
the dimensionality of the data to a level at
which statistical modeling of structural
relationships can be conducted. We may now
proceed to test hypotheses H1-H6,
considering the impact of Web site
capabilities on company sales arising from
the Internet.
To that end, we regressed the dependent
variable ‘‘percentage of sales attributed to the
Web’’ against the nine variables that were
produced by the aforementioned factor
analysis. The dependent variable contained
zero values due to companies lacking online
sales capabilities or interorganizational
transactions, implying the occurrence of
zeros with non-zero probability, which
cannot be accomodated by standard
regression models, based on standard
distributions. In such cases, the Tobit or
censored regression model seems to be more
appropriate in bundling composite
distributions, containing a discrete part for
zero and a continuous part for non-zero
observations, as is well established in
modern econometrics (Maddala, 1983), which
led us to use it for our regression analysis.
Table III presents the maximum likelihood
estimates of the Tobit model of Web site
performance.
Inspection of Table III reveals the
exogenous variables that have a significant
impact on Internet sales, thus placing
Despina A. Karayanni and Table I
George A. Baltas Distribution of site characteristics and marketing communication content
Web site characteristics and
business performance: some Variable Percent Percent
evidence from international
business-to-business Characteristics name present absent
organizations
Interactivity
Marketing Intelligence & Customised user information I1 10.7 89.3
Planning
21/2 [2003] 105-114 Customer databases I2 48.2 51.8
Access to company’s databases I3 20.5 79.5
Customer’s login I4 15.2 84.8
Real-time interactive elements (e.g. club membership) I5 9.8 90.2
Navigability
Site map N1 24.1 75.9
Search engine facility N2 31.3 68.8
Site index N3 72.3 27.7
Personal contact possibility N4 48.2 51.8
Multimedia design
Audio D1 8.0 92.0
Video D2 8.0 92.0
Frame technology D3 63.4 36.6
Animation technology D4 20.5 79.5
Banners D5 22.3 77.7
Company information
Company history C1 86.6 13.4
Public relations material C2 44.6 55.4
Financial status of the firm C3 23.2 76.8
Company news and plans C4 70.5 29.5
Added value services of the firm C5 54.5 45.5
Employee profiles and CVs C6 16.1 83.9
Customer information exchanges
Collection of customer views and critiques E1 33.9 66.1
Structured online surveys E2 8.9 91.1
Adaptive information query E3 83.9 16.1
Exposition of customer cases E4 18.8 81.3
Announcements of promotion activities E5 16.1 83.9
Automatic FAQ/customer support E6 47.3 52.7

support in a subset of the hypotheses of the insignificant, suggesting that audiovisual

study.
More specifically, H1 was not supported,
since interactivity resulting in memory
storage of customer data was found to be
unrelated to Web sales performance. On the
contrary, organizational response was
highly related to Web sales, thus placing
evidence on H2. It appears that the mere
collection of customer data may not lead to
enhanced sales performance. Rather, it is the
implementation of gathered customer data
into customised organizational offerings that
may increase the effectiveness of the Web
sites.
H3 was not supported, since the navigation
aids of the site (FR3) appear insignificant,
perhaps because such features are crucial
only for inexperienced visitors, which might
be important in the consumer business
(Farquhar and Balfour, 1998).
H4, was marginally supported. Specifically,
audiovisional multimedia (FR4) was
capabilities might not be an important factor
in interorganizational Internet marketing.
This finding, however, is rather intuitive
since the industrial buying process is less, if
anything at all, sensitive to such excitement
generating features. This is also reflected in
the modest presence of audiovisual
capabilities, which are found in only 8
percent of the sites (see Table I). However,
fast downloading multimedia (FR5) were
marginally related to Web sales, thus
supporting H4.
Regarding H5, this was highly supported
by our findings, since both FR6 and FR7,
reflecting company information provided to
shareholders and image-building corporate
information, respectively, are positive and
significant.
Finally, H6 was partially supported by the
results. Specifically, variable FR8,
concerning provision of information to the
customers, such as promotion
[ 111 ]
Despina A. Karayanni and Table II
George A. Baltas Factor analysis summary
Web site characteristics and
business performance: some Factor
evidence from international
business-to-business Factor Variable loadings Eigenvalue
organizations
FR1 Interactivity: memory storage
Marketing Intelligence & I2: Customer databases 0.642 2.088
Planning
21/2 [2003] 105-114 I3: Access to company’s databases 0.737
I4: Customer’s login 0.857
FR2 Interactivity: organisational response
I1: Customised user’s information 0.692 1.049
I5: Real-time interactive elements (e.g. club membership) 0.851
FR3 Navigability
N1: Site map 0.776 1.633
N2: Search engine facility 0.743
N3: Site index 0.465
N4: Personal contact possibility 0.512
FR4 Audiovisual multimedia
D1: Audio 0.969 1.903
D2: Video 0.961
FR5 Fast downloading multimedia
D3: Frame technology 0.508 1.210
D4: Animation technology 0.684
D5: Banners 0.698
FR6 Corporate information provided to shareholders
C3: Financial status of the firm 0.641 1.795
C4: Company news and plans 0.686
C5: Added value services of the firm 0.679
C6: Employee profiles and CVs 0.621
FR7 Image-building corporate information
C1: Company history 0.773 1.213
C2: Public relations material 0.719
FR8 Customer information provision
E3: Adaptive information query 0.516 1.463
E5: Announcements of promotion activities 0.627
E6: Automatic FAQ/customer support 0.814
FR9 Customer information collection
E1: Collection of customer views and critiques 0.788 1.303
E2: Structured online surveys 0.789

announcements and adaptive information

Table III
queries, was insignificant. In light of the
Maximum likelihood estimates of the censored (tobit) regression model
present empirical evidence, such site
Factor Variable Parameter features fail to affect Internet sales
FR1 Interactivity: memory storage 0.273 (0.160) performance in a significant and systematic
FR2 Interactivity: organisational response 4.961 (3.021) fashion. Inversely, FR9 concerning collection
FR3 Navigability –2.799 (1.529) of customer information, such as customer
FR4 Audiovisual multimedia –0.313 (0.192) views and on-line surveys, appears to be
FR5 Fast downloading multimedia 3.530 (1.944) associated with highly effective sites.
FR6 Corporate information provided to shareholders 4.347 (2.418)
FR7 Image-building corporate information 3.216 (2.050)
FR8 Customer information provision 0.292 (0.167) Conclusions and implications
FR9 Customer information collection 4.778 (2.978)
Intercept 2.721 (1.802) The literature on site design and capabilities
LogL (max) –1.938 (0.190) is expanding but still lacking in empirical
LogL (restricted) –2.973 (0.194) work. This study attempted to shed some
light on these issues, by empirically testing a
Note: t-values in parentheses
number of hypotheses regarding the
[ 112 ]
Despina A. Karayanni and
George A. Baltas
Web site characteristics and
business performance: some
evidence from international
business-to-business
organizations
Marketing Intelligence &
Planning
21/2 [2003] 105-114
relationship of specific site characteristics
and marketing communication elements
with sales attributed to the Internet.
Among various site characteristics we
selected interactivity, navigability and
multimedia elements to be used as
independent variables. As marketing
communication elements we selected
company-related information and customer-
related information exchanges. The
explanatory power of the aforementioned
variables on Internet sales were examined
through censored regression analysis based on
maximum likelihood estimation. The research
findings provided support for a subset of the
study’s hypotheses, resulting in a number of
fruitful conclusions and implications for both
academics and practitioners.
First, as far as the Web site’s interactivity
is concerned, we found that memory storage
was unrelated, whereas its counterpart, i.e.
organizational responsiveness, was related to
site effectiveness. It appears that mere
database memory storage of industrial
customer characteristics and purchasing
behavior does not affect sales. Rather, it is
the exploitation of information stored in
databases, through customized end-user
programs and club memberships, that may
enhance the Web site’s performance. A
profound explanation may be that interactive
programs, enabling customized end-user Web
site applications, reduce information search
costs, thus influencing industrial buyer
behavior. At the same time, the
aforementioned positive relationship of
interactivity responsiveness with Internet
sales provides evidence that, apart from
business relationships, the Internet many-to-
many communication model may also
influence actual business performance (i.e.
sales). The above results seem to advocate for
an Internet many-to-many marketing model,
vis-à-vis the traditional one-to-many
marketing model, which introduces new
dynamics to industrial marketing.
In regard to multimedia design
characteristics, we found that sophisticated
multimedia, comprising audio and video
elements, failed to explain cross-sectional
variability of the dependent variable, which
is consistent with prior evidence supporting
that complex, high downloading-time sites
may restrain the site’s visits and buying
behavior. Inversely, fast downloading
multimedia (i.e. frames, animation and
banners) appear to be more effective,
resulting in increased site performance.
Navigability was found to be insignificant,
which implies that industrial buyers are
rather conscious and skilled information
seekers. Thus, although site organization
may be an important property, it does not
appear to be a determinant of site
performance, at least in inter-organizational
transactions.
As far as the marketing communications
are concerned, both company-related
information variables were found to have
high explanatory powers on Web sales.
Indeed, provision of favorable company-
related information promotes the corporate
identity and positioning in the market. The
empirical findings stress the critical
importance of promoting corporate identity
which elevates trust among interacting
organizations, acting as the counterbalance
to the high flux and anarchy prevailing on
the Internet. Increased trust, in turn,
favorably affects transaction costs of product
and financial exchanges and cooperation,
thus resulting in increased sales.
Finally, between the two dimensions of
customer-related information exchange, i.e.
information provision and collection, only
the later appears to be an important
determinant of site performance. The
positive relationship of customer
information collection with Internet sales
may be attributed to two reasons. First,
information gathering from customers may
facilitate implementation of marketing
orientation and identification of customer
satisfaction, which are highly related to
business performance. In addition, it may
result in increased customer involvement,
leaning information control towards the
customer, which reduces perceived risk of
making transactions over the Internet. As the
results of this study suggest, the reverse
direction of marketing communication flow,
that is, from the target audience (the
customer) to the firm should be considered
an important property of Internet marketing.
Limitations
A word of caution, however, might be in
order. The present findings are mainly
exploratory and it would be inappropriate to
generalize too far from a single study. In
particular, the direction of the structural
relationships cannot be applied crudely to all
situations. For example, it might well be the
case that some firms with great Internet
success are encouraged to invest more on
Internet marketing and exhibit sites that are
better designed and integrated. In such cases,
Internet success may determine, at least in
part, site capabilities, rather than vice-versa.
As is always the case in social sciences, the
definition of causal directions requires
experimental manipulation of the data-
generating processes, and might not be
feasible in the light of observational data.
[ 113 ]
Despina A. Karayanni and
George A. Baltas
Web site characteristics and
business performance: some
evidence from international
business-to-business
organizations
Marketing Intelligence &
Planning
21/2 [2003] 105-114
[ 114 ]
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E-relationships – emergence and the small firm
Keywords
Electronic resources, Small firms,
Relational databases,
Competitive advantage,
Information technology
Abstract
The e-business model has become
an integral feature of business
practice. Its existence has
created an extra electronic layer
to business relationships. This has
facilitated close partnerships to
add unique and complex
electronic components to their
relationships that are not easily
copied by other firms. The
emergence of e-relationships is
detailed and their value creating
potential explored. The e-
relationship concept is then
applied to the small firm. The
strategic and implementation
barriers that inhibit small firms
from capitalising on such
relationships are examined. E-
relationships are found to offer
competitive advantage to few
small firms. Critical to an e-
relationship’s success is the
relationship orientation of the
partners.
Marketing Intelligence &
Planning
21/2 [2003] 115-122
# MCB UP Limited
[ISSN 0263-4503]
[DOI 10.1108/02634500310465434]
Thomas O’Toole
Waterford Institute of Technology, Waterford City, Ireland
Introduction
E-business is changing market structures
and the economics of competition.
Technology and business strategy have
converged to the extent that e-business is an
essential component of strategy (Peppard,
2000). The dot.com phenomenon has become a
feature of most businesses. Consumers,
buyers, suppliers are all being connected as a
product of the e-business revolution. This
new business model makes it necessary to
focus on the electronic in relationships. The
article examines the emergence of the
e-relationship and the potential value it
offers to a business. The concept is then
applied to the small firm where strategic and
implementation barriers to its adoption are
outlined.
E-relationships incorporate a trading
relationship that uses both computer and
telecommunications technologies, and an
added value layer of electronic
embeddedness only available to close
relational partners. Cunningham and Tynan
(1993) capture the spirit of e-relationships in
their e-trading concept. This has been added
to by Geiger and Martin’s (1999), among
others, ideas on Internet relationship
marketing. E-relationships can be considered
a further layer of interaction that partners
can ‘‘wrap around’’ each other to create walls
of competitive superiority. To implement
e-relationships can require many
technologies and systems such as electronic
customer relationship management (e-CRM)
or virtual private networks. However,
e-relationships are not technology specific
but are partner-based. Managing value in an
e-relationship depends on the level of
co-involvement in the relationship. The
stronger and closer the relationship the more
unique its electronic element becomes.
The Emerald Research Register for this journal is available at
http://www.emeraldinsight.com/researchregister
Electronic relationships that offer benefits to
both the seller and buyer are offering a
potential source of competitive advantage to
partners that can exploit them to create
unique social and economic ties.
Information technology has had a huge
impact on business in general but also has
had major effects on the nature of how
partners interact (Donaldson and O’ Toole,
2002). Information rich exchanges can be
made at the touch of a button. Companies
have been able to mass customise their
products by selling them on the Internet.
Organisations can use virtual transactions to
maximise value; whole supply chains are
interconnected by technology. Each core
relationship variable has been, in some way,
affected by technology. Technology, through
the routinisation of many operational
processes, has minimised conflicts that arise
with individual transactions, for example,
product availability and delivery can be
checked on-line. Information technology is
changing the power balance in many
relationships. For example, the creation of
on-line communities has challenged firms to
respond to strong, more vocal, united
consumer groups (McWilliam, 2000). The
Internet has spawned new businesses that
have managed to grow through trust with
those with whom they trade, for example,
E*trade (www.etrade.com) in share dealing
and Amazon (www.amazon.com) in book
retailing.
The growth of e-relationships is being
forced by companies’ adoption of the Internet
and e-mail into their business process.
Traditional inter-organisational systems
(IOSs) are being transferred to the Internet.
In 2000, Ford and General Motors announced
the switching of their supply management
system from electronic data interchange
(EDI) to the Internet (Ford’s system is
Auto-Xchange (www.auto-xchange.com) and
The current issue and full text archive of this journal is available at
http://www.emeraldinsight.com/0263-4503.htm
[ 115 ]
Thomas O’Toole
E-relationships – emergence
and the small firm
Marketing Intelligence &
Planning
21/2 [2003] 115-122
[ 116 ]
GM’s TradeXchange www.gmtradexchange.
com)). The attraction of the Internet over
traditional IOS is its openness, flexibility and
low cost. The impact of the Internet is also
seen through the effect e-mail is having in
creating bonds across organisations and
between individuals who otherwise would
not communicate. The content of electronic
communication via e-mail varies
significantly across organisations. A closer
relationship is likely to have more volume
of communication as well as a richer
content.
Maximising value in e-relationships
Value added in a relationship, or by a
relationship, may give it a competitive edge
(Ramirez, 1999; Lorenzoni and Lipparini,
1999). A close relationship with a consumer,
supplier and even with a competitor can
represent a strategic asset (Madhavan et al.,
1998; Johnson, 1999). Value creation in a
relationship can be seen as a strategic option,
or in the case of a close relationship, as a
strategic imperative. E-relationship
components can add an extra layer of value
in a relationship that is difficult to imitate.
This electronic value appears to meet, in
close relationships, the criteria for
sustainable relationship advantage outlined
in Dyer and Singh (1998).
Much of the initial developments in
e-relationships have been to automate
existing transactional, production and
service functions. This automation adds
value in terms of cost reduction and possibly
higher reliability in service operations. A lot
of this value is probably relatively easy for
other firms in any given sector to copy and
thus is of a short-term nature. By taking a
relationship management perspective to the
study of e-relationships we can distinguish
other levels of value created. Value can be
added in information exchanged that allows
knowledge to be pooled for joint advantage,
in dense and rich communication patterns,
in integrated business processes, through
new products and services that are created or
developed electronically, and in bonding
with consumers that creates extra symbolic
value in brands. The potential to transform
organisations with technology is real (Brady
et al., 2000; Knol and Stroeken, 2001), but in
relationships is dependent on another, at
least one, partner. Using e-relationships as a
tool to better manage partner interaction
provides a myriad of possibilities.
E-relationships require a trusting culture
for exchanges of strategic value to take place.
Not all relationships may be worth this but
there is considerable potential where it is
judged possible. In the absence of absolute
co-operation maximising communication
and information value using technology is
limited. Not all a firm’s relationships will
offer similar potential. For example, a
manufacturer could share sales and
customer data with its retailer who could, in
turn, provide more accurate forecasting of
the demand for the manufacturer’s products.
On the manufacturer’s side, all order
processing, inquiry, and service problems
could be solved on-line within agreed time
frames. Plus the retailer could participate in
a product design group on-line due to its
knowledge of customers of the
manufacturer’s product. However, in other
relationships of either partner, the IT
integration may be present but not as
strategically used or pervasive (O’Toole and
Holden, 2001). Therefore, linking technology
strategy to overall relationship strategy is
vital. Holland and Lockett (1993) attempted to
match relationship structures to IOSs in a
supply chain management application. The
issue of control over the information system
dominated many hyopthesised structures.
However, the authors did develop a
competitive space for a co-operative
information system that is analogous to the
e-relationship concept of this paper. The core
strategic questions when considering an
e-relationship strategy are:
. How can e-relationships be used to
strengthen ties between partners?
. Which partners should we use
e-relationships with?
. How can e-relationships be used to
integrate partner firms’ systems?
. What effect has electronic integration on
traditional and on on-line marketing
techniques?
. Do e-relationships offer sustainable
competitive advantage?
. Can firms manage e-relationships or are
they optimised through trust?
Using relationships strategically, to add
value through integrated electronic
exchanges with consumers and other
businesses, appears to be the preserve of the
larger firm. Smaller firms adopt electronic
relationships when they have to, for example,
if forced by a larger partner, or at a time lag
when clear technology standards and off the
shelf packages become available that are
easily managed. The exceptions to these
trends tend to be the case of the very few. The
remainder of this paper considers the
strategic and implementation barriers in the
small firm, which impede its exploitation of
Thomas O’Toole
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and the small firm
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the e-relationship concept to create strategic
value.
E-relationships and the small firm
The definition of a small firm varies from
country to country. However, common
characteristics include less than 50
employees and independent ownership and
management. Most decision-making
functions in small firms rest with the owner-
manager. Small and medium sized firms are
estimated to comprise over 90 percent of all
firms and are, therefore, an important focus
for the direction of strategic and marketing
planning.
The physical and knowledge resources
available to plan and execute strategy in the
small firm are limited (Rothwell and
Dodgson, 1992; Nooteboom, 1994). The skills
needed to assess strategic opportunities at a
macro level are beyond the capacity and
competence of most small firms. Strategy in
small firms originates at the level of the firm
and with issues that reflect its immediate
environment. Relationships and network
perspectives on strategy present smaller
firms with real opportunities, as they are
dependent on the network to which they are
connected (Bryson et al., 1993; Perry, 1999).
Their relationships with customers,
suppliers, employees can define their
business. Therefore, they would seem well
placed to take advantage of electronic
relationships to add value to their business
and to further copper fasten their ties to their
network of partners.
Small firms have lagged their larger
counterparts in adopting and gaining value
from information technology (Yap et al.,
1992). However, the Internet and using it as a
marketing tool was seen as a mechanism for
small firms to use their advantage of
flexibility and adaptability to minimise their
barrier of scale and geographic reach. This
use of the Internet by small firms seems to be
the case of just a few firms rather than the
many. Characteristics of the smaller firms
that have used Internet marketing
successfully appear to parallel the rationale
of their larger counterparts – they saw a first
mover advantage and went for this
opportunity. The exploitation of first mover
advantage depends on many factors but
especially on management commitment and
technological sophistication. Many of the
successful smaller firms have been a long
time developing their product and thus
honing their Internet marketing skill.
Small firms have adopted the Internet but
have not universally managed to extract
competitive value from it. The fact that most
small businesses have not used the Internet
to transform their business is not surprising
considering the pace at which small firms
have adopted information technologies. They
have been found to be at the early stages in
the adoption of information systems in
general, see, for example, Bridge and Peel
(1999) and Poon and Swatman (1999).
Therefore, small firms are often placed in the
early stages of accepted models of IT
evolution, for example, at the initiation stage
of Nolan’s (1979) information systems growth
model, or at the very early stage of
Venkatraman’s (1994) transformation model
that is enjoying a low level of benefits and
potential to transform business processes
through information technology. This is
illustrated in a study by Chaffey (2000) that
found low levels of e-commerce integration
among small firms that are a lack of full
integration of back office to customer
processes.
Basic marketing tasks such as electronic
availability of brochures and ordering on-
line are not backed up with business
integration. Larger firms, on the other hand,
appear to have the financial and
technological resources to achieve
integration. For example, Dell computers
(www.dell.com) on-line ordering and
configuration of personal computer
requirements are fully linked to back office
and production processes. This allows Dell to
earn more from its value chain. Indeed, this
approach has been used by some firms to
capture further sources of revenue such as
Ryanair’s (www.ryanair.com) use of its
online booking and ticketing system to lower
brokerage fees and ticketing costs and
redefine its relationship to its customer
markets.
The small firms that have had the greatest
Internet marketing success are those who
owe their existence to the Internet such as
ebay (www.ebay.com), the auction portal.
The research in this paper suggests some
reasons as to the lack of strategic success by
small firms in exploiting the potential of
electronic relationship marketing. The
research for this paper was based on
consultancy and case research by the author
and is supported by a benchmark study on
e-commerce usage in small and medium sized
enterprises (Clancy, 2001). The case research
incidents reported involved small companies
– two precision engineering firms, two
professional services firms, and two
specialised food companies – and the
research and validation procedure followed
Yin (1993) and Patton (1990). The benchmark
e-commerce study audited the information
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[ 118 ]
technology and e-business practices of 100
small and medium sized enterprises
(regional random sample included
manufacturing, primary processing, and
service firms) and confirmed the usage
findings of the more in-depth case studies.
Electronic relationship strategy
Through the series of case studies, three key
issues emerged that determined the strategic
approach and potential of e-relationships to
the small business. They are manager/owner
commitment, technological sophistication
and relationship orientation. Manager/
owner commitment and technological
sophistication are recurring themes in
information technology adoption literature.
They also apply to electronic relationships.
These issues along with the extent of
relationship orientation in the business set
the boundaries for the strategic potential of
electronic relationships for the small
business. A relationship orientation is
needed to maximise value including joint
communication and information sharing in
an electronic relationship. Given that
general strategy development is more
limited in small firms, it is not surprising
that many have not realised the potential of
e-relationships.
In the small enterprise, the owner/
manager characteristically plays a dominant
role in the organisation, thereby shaping the
organisational culture with respect to the use
of IT (Thong and Yap, 1995). Often they are
the only ones in the organisation with the
authority, responsibility and access to the
information needed to evaluate opportunities
for strategic or competitive purposes.
Owner/managers, unless they come from an
IT background, may not see the benefits of
e-relationships. The lack of knowledge of
e-business models impedes the development
of electronic relationship forms in the small
business. The majority of firms in the sample
had adopted e-mail with customers but few
had integrated electronic relationships into
their demand or supply chain. Indeed, there
appears to be an industry effect, high
technology industries and service businesses
had more use of relationship technologies,
especially Web pages with functionality
including ordering.
However, the firms that used electronic
relationships to their fullest extent were
pioneers, found in all industry types, and saw
a potential into the future. These enterprises
were placing future bets and were not sector
specific but had owners/managers who were
totally committed to a new business platform.
In one case, a company had limited sales
through its electronic relationship presence
but believed that the industry future was to
go that way – they were ahead of the game. In
another case, a company had used technology
with an overseas partner to add value to its
product offering. Instead of just supplying a
basic raw material to a pre-specified low
technology design they were able to design
and make complete units through a close
e-working partnership.
The case studies in this research confirmed
existing studies (see, for example, Poon and
Swatman, 1997) that without a certain level of
firm technological sophistication it is
difficult to integrate information and
communication technologies back into the
business, and in the case of this research,
back into the relationship processes within
the firm. For example, there was little
back-end automatic order fulfillment. The
confinement of firms’ electronic business
application to e-mail and Web brochures
limits their ability to exploit the linkages
that technology can create. There are many
issues that compete for the attention of the
owner/manager and e-relationships may not
be a high priority. Outside the lack of
expertise, many small businesses won’t move
until the industry does. This follower status,
which is often reactive, does not contribute to
the build up of technology competencies in
the small firm.
In the successful e-relationship small
businesses tend to have long experience and
are first movers in their sector. The
technology sophistication needed to integrate
is much higher than the purchase of front-
end packages. The business case is not there
as most firms still find it is possible to
process orders manually and just don’t see
the financial case for integration even though
orders may be taken, manually completed,
and then transferred to a computerised
financial system by different people. Lack of
technology sophistication is a significant
barrier to developing integrated
e-relationships as there is little integration
between the Internet and internal
information technology in organisations and
between the companies studied, and for this
to happen it would appear that a considerable
organisation-wide change would be
necessary.
Small businesses often become focused in
order to maintain the specialised needs of a
few customers. They are therefore likely to
suffer from forced adoption of information
technologies; whether the adoption of such
technologies will be of long term strategic
benefit to the SME depends on the trading
relationship with their dominant partner.
Thomas O’Toole
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This was mainly the case in this research and
confirms existing work on the adoption and
response to e-business being driven by
factors external to the small firm (Poon,
2000). For example, Sillince et al. (1998), in a
study of 360 UK small and medium sized
enterprises, found that e-mail was used
primarily in response to external pressures
of the customer or supplier. The small firm
that develops e-relationships with its
suppliers or customers from its own strategic
intent could exert significant competitive
advantage. Therefore, an additional level of
e-relationship strategy is relationship
orientation. A firm’s belief and actions in a
relationship can influence how an
e-relationship develops. In a hierarchical
relationship structure, e-relationships will be
delineated by strict rules and procedures and
the smaller firm will continue to seek means
to balance its electronic dependence on its
powerful partner. A relationship based on a
more inclusive basis can exploit higher order
value from e-relationships, for example,
through the integration of business processes
across organisations or through the direct
involvement of customers in the design and
configuration of products/services. There
were few cases in the study that had realised
significant benefits. In the absence of
absolute co-operation (a strong relationship
orientation) maximising strategic value
using technology is limited.
Implementation-level barriers
There are many implementation issues that
small businesses must address when
implementing electronic relationships. These
implementation issues parallel general IT
implementation issues found in previous
studies (for example, Yap et al., 1992; Palvia et
al., 1994; Thong, 1999). Firms need to reassess
their business processes to exploit
e-relationships. However, the most pervasive
use of information technology is to automate
existing processes and to place this
automation on top of existing processes
without any evaluation. The strategy is based
on reducing costs of processes rather than
increasing the value of these processes to the
relationship. It is transaction orientated
rather than relationship orientated.
E-relationships must be linked to the
business processes such as production, sales,
service, and supply to be effective.
E-relationships require people and
processes to support them. Often, getting the
back office support right requires
considerable changes to current ways of
working. The information intensity of
e-relationships places huge importance on
managing volumes of data to best understand
the relationship. Having systems in place to
do this is critical, for example, well-managed
databases. Again the costs for a small
business to get the back office right can be
prohibitive, for example, the need for
network expertise, data mining capability,
etc. This factor makes many small firms wait
for standard solutions rather than bespoke
investment (for example, off the shelf e-CRM
packages). This can minimise flexibility and
responsiveness rather than create advantage
in the e-relationship. Only relationship-
centred firms are willing to take long-term
views of the cost of developing e-
relationships. When short-term benefits do
not appear to accrue, a ‘‘wait and see’’
attitude seems prevalent. This approach may
be linked to the lack of strategic planning in
general in the small firm and has many
parallels in the literature (Bridge and Peel,
1999).
There are numerous control issues when
other independent organisations/individuals
have access to your information. Given the
independence mentality of many small
business owners, control over information
flows was a major issue in implementing
e-relationships. Relationships based on high
trust may not perceive the risk of
information abuse to be that great. However,
many firms aim to monitor information
exchanged and to put in place safeguards to
manage access. Security and access to
perceived strategic data of a firm are a major
concern. Security of information exchanged
between partners and access to each other’s
systems remains a barrier to implementing
e-relationships. Considering the information
that can be exchanged on e-mail across
companies without any potential control
gives one the idea of the need for security. In
addition, consumers are concerned about the
type of information disclosed about them and
the security of electronic monetary
exchanges. There is also much doubt about
what electronic relationships can deliver, as
there are problems with quality of
connectivity. Telecommunication services
for high speed and content rich exchanges
are not universally available or
competitively priced. This can cause partner
friction and hinder e-relationship
development.
Electronic marketing and technology
expertise and competence is mainly not
found in the small firm. For example, Web
site management is ongoing, yet, often in the
small business the development and design
are completed by external software
providers. Therefore, there is no internal
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and the small firm
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[ 120 ]
expertise to continue to develop and actively
engage in the use and promotion of the site.
Small firms in the study were dependent on
external expertise or on the internal person
assigned to the task for most of their IT
expertise. There is little technology expertise
diffusion, thus limiting its application.
E-relationships as a communication channel
are one-to-one which can lead to a splintering
of overall marketing messages. This poses
huge risks for the marketing function in its
contribution to e-relationship management.
Fragmentation of message and associated
media makes it very difficult to communicate
standard advertising messages and retain
consistency in brand and product images.
Given that smaller firms have limited
resources devoted to marketing, adding
another communication medium does pose
challenges to its integration into the other
elements of brand and company
communication. Many of the companies
studied stressed the importance of
salespeople to complement e-relationships.
The development of e-relationships has
been used to reduce sales costs, especially
sales visits and number of salespeople – there
was considerable dissatisfaction with this
approach in the case companies. Firms
still put salespeople first as their most
effective communication medium. In fact,
e-relationships should free the salespeople to
work on the relationship, as the time spent
on the order fulfillment process should be
much reduced. Customers, in business-to-
business relationships, believed that any
reduction in salesforce contact and
communication would have a negative effect
on the relationship. The evolution of
electronic business relationships is focusing
more pressure on small businesses to develop
technology and electronic marketing skills
and to integrate these into their existing
marketing communication.
The overall picture from our sample is one
of limited integration of e-relationships into
the business system and processes of small
firms, with few exceptions. The patterns
emerging may be expected given similar
findings in small business IT literature in
general. Competitive opportunity available
to the small firm through e-relationships may
be limited, as an additional layer of expertise
is needed to fully exploit this medium. Far
from promising to make the small firm
competitive with its larger counterparts,
e-relationships may have widened the
performance gap. However, a similar barrier
faces all organisations – to exploit
e-relationships requires a close relationship
that may only be available to the few.
Conclusions and managerial
implications
The emergence of e-relationships has been
hastened by technological developments
aimed at linking firms to their partners in
their demand and supply chains. However,
partnerships that are close have most to gain
through implementing electronic
relationship strategy. E-relationship
advantage is sustained in the value created in
a co-operative relationship. A joint value
maximisation approach creates uniqueness
through information and communication
rich exchanges not easily copied, through
linked business processes, new products and
services, and adds an extra element to
customers’ relationship to the brand.
E-relationship advantage may only be
available to the few as a close relationship is
the basis for creating such sustained
difference. An e-relationship strategy
requires management commitment and
resources. These may not guarantee success
unless a relationship orientation is present
in the first place. A relationship orientation
is a co-operative, trusting partnership for
mutual value creation. For smaller firms,
there are many strategic and technology
barriers limiting their e-relationship
potential. However, some small firms have
developed unique customer relationships
using e-technologies even though these
relationships may not be linked to back office
processes and, therefore, not fully exploited
for the firm. Nonetheless, they represent
asset bases that can be developed further.
How can this latent potential be harnessed?
A long-term perspective is necessary to
justify the costs and benefits from fully
integrated e-relationships. Therefore,
management awareness and commitment to
this platform for competing is a prerequisite
to success. Training of owner/managers will
be a critical issue with the objective of
exploiting e-relationships as a strategic asset.
This training impetus may have to originate
from, in the case of the small firm, a
co-ordinated national policy response. It could
be implemented using industry associations,
consultants, government agencies,
universities or a network of such providers.
One idea would be to use a virtual e-business
laboratory as a demonstrator of potential.
This would enable firms to visualise the long-
term benefits of e-relationships to the costs
and performance of their supply chains and to
their relationships with their customers.
The apparent high usage of some
e-commerce tools (for example, e-mail and
Web pages) by the small firm clouds the
reality of a significant technological lag
Thomas O’Toole
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and the small firm
Marketing Intelligence &
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compared to its larger counterpart. This,
coupled with a lack of strategic resources in
most small firms, makes e-commerce and
e-relationships a policy issue. From a non-
interventionalist economic perspective, the
marketplace would determine the survival or
not of firms in a new technology age. A more
minimal policy case may be to ensure the
infrastructure for these technologies is made
more widely and cheaply available and no
more. However, as small firms represent the
bulk of enterprises and are often the source
of much economic innovation and growth,
use of our network of policy agents, agencies,
and institutions can be advocated. For
example, universities can act as providers of
discussion forums and training for
companies in exchange for data and
participation in new technology
development. Indeed, some such programmes
are already in place.
Competing, using an e-business model, is
still at a nascent state for the small firm.
Therefore, as a corollary, the opportunities
suggested in this paper for e-relationships
have yet to be fully exploited. The strategic
questions presented earlier can form the
commencement debate in any company as to
whether e-relationships are part of the
competitive competencies a firm wishes to
use. Nevertheless, the strategic and
implementation barriers to e-relationships
for the smaller firm are numerous and
outlined in detail in this article. However, the
key question facing all businesses is whether
or not a relationship approach represents a
credible strategy for competing. If it does it
can be complemented by an electronic
relationship platform that adds strength and
depth to the core partnership.
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E-trust: the influence of perceived interactivity on
e-retailing users
Keywords
Electronic commerce, Interaction,
Internet, Retailing,
Consumer behaviour,
World Wide Web
Abstract
E-retailing has received
considerable attention in recent
years, especially with the help of
consumer behaviour concepts and
tools. This particular paper
focuses on e-trust and its
antecedents. Special attention is
given to the proposition that the
more a site is perceived to be
interactive, then the greater the
trust that users attach to that
site. Previous research has
demonstrated this relationship
with respect to a particular site.
The current paper re-examines this
relationship with respect to
another site. More importantly,
the paper tests whether the nexus
between interactivity and e-trust
applies to both pure ‘‘click’’ and
‘‘brick and click’’ e-retailers.
Marketing Intelligence &
Planning
21/2 [2003] 123-128
# MCB UP Limited
[ISSN 0263-4503]
[DOI 10.1108/02634500310465461]
Bill Merrilees
Griffith University, Gold Coast, Queensland, Australia
Marie-Louise Fry
University of Newcastle, Newcastle, New South Wales, Australia
Introduction
The recent literature on the Internet has
begun to investigate how consumers behave
in this new medium. Particular emphasis has
been given to factors that impede their use of
the Internet, especially shopping online.
Other studies have examined how consumers
search for information online and form
brand attitudes towards online retailers. A
small number of studies have attempted to fit
the various pieces of the Internet experience
together, but much work remains to be done.
The current paper highlights two key
concepts that relate to Web usage, namely
interactivity and e-trust. It is suggested that
these may be among the most important
variables that explain consumer behaviour
on the Web. Surprisingly, there are only a
limited number of previous papers that have
empirically analysed these two variables. In
part, the paper contributes to the
measurement of these two variables. More
importantly, the paper proposes that the level
of perceived interactivity is a major
determinant of e-trust. That is to say, the
paper proposes that e-retailers wishing to
augment the amount of perceived e-trust that
users and consumers have of them should
ensure their site is interactive.
We begin by reviewing the literature,
presenting a research design, outline the
sampling frame, present the results, discuss
the managerial implications of the results
and conclude.
Literature review
Review of literature examining consumer
interactions with Internet purchasing
reveals an evolutionary approach. An initial
wave of e-commerce research has focused on
the adoption of the Internet from the
perspective of either the consumer (Eastlick
The Emerald Research Register for this journal is available at
http://www.emeraldinsight.com/researchregister
and Lotz, 1999) or the firm (O’Keefe et al.,
1998). Typically, these studies demonstrate
that perceived risk of using the Internet has
been a major deterrent to the take up of the
Internet. The problem areas include concerns
about credit card security, the risk of not
being able to return the product if unsatisfied
and the risk of having to evaluate a product
without handing or seeing it. We can re-
express these problems as one of trust.
Presumably, if trust can be assured, then a
greater proportion of consumers would be
willing to use the Internet for online
shopping.
Another wave of literature has addressed a
greater understanding of the consumer
behaviour aspects of the Internet. How do
consumers search the Web for information?
(Rowley, 1996, 2000). What criteria do they
use for selecting goods on the Internet (see
especially Morganosky and Cude, 2000). What
is their experience on the Web and do they
experience a ‘‘flow state’’ (i.e. a state of
immersion in which the challenge of the task
dominates the sense of presence of the
participant (Hoffman and Novak, 1996; Novak
et al., 2000). How do consumers form brand
attitudes about e-retailers? (Merrilees and
Fry, 2002) What is the level of interactivity?
(Wu 1999; Merrilees 2001) How is trust
developed on the Internet? (Urban et al.,
2000). The level of trust seems to be of
particular importance given the perceived
risks of using e-retail sites.
The above-mentioned body of research has
highlighted two key issues relevant to
consumers’ uptake of e-shopping. The first
issue refers to the ability of firms designing
Internet sites that are easy to use, easy to
navigate and allow the user to interact with
the site to make decisions about ‘‘what will be
presented and how it will be presented’’
(Andrisani et al., 2001). The second key issue
refers to the importance of firms developing
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[ 123 ]
Bill Merrilees and trust-based strategies to build positive
Marie-Louise Fry relationships with their customers while
E-trust: the influence of increasing market share and profits
perceived interactivity on
e-retailing users (Hoffman et al., 1988). We will elaborate on
Marketing Intelligence & each of these as they form the central focus of
Planning the paper.
21/2 [2003] 123-128 Interactivity refers to the interaction
between the site and a user of that site and
goes to the core of a computer-mediated
communication environment (Hoffman and
Novack, 1996). Despite its central place in the
Internet world, interactivity seems to be
under-researched. Often the term is poorly
defined or too narrowly defined. Regarding
the latter, Hoffman and Novak (1996) use a
simple three-item measure of interactivity,
which is narrowly expressed as the speed of
interaction. Elsewhere, Hoffman and Novak
(1996) implicitly refer to the ‘‘flow-state’’ as
another type of interaction, but again this is
a very narrow and extreme sub-set of
interactivity.
A number of other papers have suggested
that interactivity has the potential to be an
important influence in building online
relationships (Cuneo, 1995; Berthon and
Watson, 1996; Ha and James, 1998; Lindstrom
and Anderson 1999), though they were
conceptual rather than empirical. Most of the
few papers that have actually measured
interactivity have largely been exploratory
(Wu, 1999). This literature has been
summarised by Merrilees (2001) who notes
the following features of interactivity:
. The most common impression of
interactivity from the literature is that it
is primarily communication-based.
Infrequently, other activities, such as
downloading software or making a
purchase, are noted as forms of
interactivity that seem to have something
else other than communication as the
driving force. In such cases, the
communication or information aspects of
those activities can be highlighted.
. Interactivity is about two-way
communication. This spans
communication from the viewer to the
firm and from the firm to the viewer, as
well as simultaneous interaction between
the two parties.
. A special feature of Internet interactivity
is the ability to personalize the situation
for an individual.
. A number of writers have emphasized the
ability of the individual to control the
communication and learn as a noteworthy
feature of the interactive process.
. A broader, more holistic role of
interactivity has been noted as an
important contributor to building up the
total shopping experience on the Internet.
[ 124 ]
Merrilees (2001) has incorporated the above
features of interactivity into a multi-item
scale for interactivity. This scale was shown
to be valid and is therefore appropriate to use
in the current paper. Notwithstanding,
validity checks will be made to ensure that
the scale is valid for the samples in this
paper.
E-trust captures specific cues of Internet
sites important to consumers in visiting
retail Web sites and for organisations to
develop brand equity. Recent industry
reports and academic literature highlight the
emergence of providing consumers with
e-trust building components as a key driver
to e-retail, especially in the light of
transaction based financial information
continuing to be a major inhibiting factor for
online consumers’ success (Forrester, 2000b;
Nua, 2000; Urban et al., 2000). Forrester
(2000a) found that many consumers consider
the lack of security as the main inhibiting
factor to adopting on-line purchase
behaviour, and thus perceive e-purchasing to
be risky. Importantly, the perception of risk
is a pivotal aspect of consumer behaviour
because of the perceived pain and anxiety
associated with negative outcomes is real to
the individual (Salam et al., 1998). However,
Fry and Merrilees (2001) found that those
consumers with high levels of perceived
security risk were more likely to reduce their
level of risk perception via in-depth
experience with the Internet site.
Importantly, innovative e-retailers are
recognising the importance of developing
trust-based strategies to build positive
relationships with their customers while
increasing market share and profits
(Hoffman et al., 1998; Urban et al., 2000).
Urban et al. (2000) identify the drivers to
building Web site trust as:
1 building trust in the specific Web site,
ensuring customers of the security of
transactions, customer privacy of data
collected;
2 providing unbiased and complete
information concerning availability of
stock, competitive prices, delivery time
and reliability; and
3 ensuring fulfillment and satisfaction
guarantees of stock, service support, error
free billing and credits on return items.
A measure of e-trust has been taken from
Merrilees and Fry (2002) and includes items
relating to level of credit card security,
consumer privacy details, safety and security
of the e-site, trust of the e-site and credibility
of communications relating to the e-site.
Bill Merrilees and
Marie-Louise Fry Research design
E-trust: the influence of
perceived interactivity on The authors have developed a questionnaire
e-retailing users based on the literature, deriving issues
Marketing Intelligence & important to Internet users/shoppers
Planning relevant to their attitudes towards
21/2 [2003] 123-128 purchasing from e-malls. Australian
respondents were asked to familiarize
themselves with three pre-determined
Internet CD sites, namely CD Now, Sanity
and Amazon, and explore the sites’ features
before answering a set of likert scale based
questions.
In constructing the survey items specific to
this study, we reviewed prior studies to
extrapolate items examining Web usage
research. A survey was designed with 12
items intended to capture the underlying
multi-item constructs of e-interactivity and
e-trust. Each survey item was measured on a
seven-point scale of (1) disagree very strongly
to (7) agree very strongly.
The study consisted of 202 Australian
undergraduate and post-graduate marketing
students from a large regional area in New
South Wales. Given the nature of the study,
only those who had indicated that they had
used the Internet were selected to participate
in the study. The student sample met the
minimum conditions needed for this study in
that they were:
. familiar and experienced with the
Internet for information search; and
. of an age (mostly 18-25) that comprises a
major segment in the compact disc buyer
market (Forrester, 2000b).
Importantly, as the study focuses on
purchase intention rather than actual
purchase, it was not critical that respondents
had previously purchased via the Internet.
All respondents had access to the Internet,
either privately or through university
facilities. The sample consisted of an (almost)
equal number of males (91) and females (111)
with a median age of 23 years.
Results
A number of tests were undertaken to ensure
that the scales of e-trust and interactivity
were meaningful and valid. The tests were re-
applied to the CD Now site as a benchmark,
as well as the two additional sites, namely
Sanity and Amazon (Table I).
First, Cronbach Alphas were calculated. As
expected, the five-item e-trust measure for
CD Now had a reasonably high score of 0.75,
indicating reliability. Similarly, the e-trust
Cronbach Alpha for the other two sites,
Sanity and Amazon, were also above the 0.70
research standard, with scores of 0.79 and
0.77 respectively. The seven-item
interactivity measure for CD Now had a high
score of 0.83, indicating reliability. Similarly,
the interactivity Cronbach Alpha for the
other two sites, Sanity and Amazon, were
also well above the 0.70 research standard,
with scores of 0.85 and 0.82 respectively. We
conclude that the constructs of e-trust and
interactivity used in this study are reliable.
Second, separate confirmatory factor tests
were undertaken to verify validity of the two
constructs, namely e-trust and interactivity
(see Table I). For all three e-retail sites, the
e-trust construct and interactivity construct
were valid, as indicated by an insignificant
chi-square statistic. Further, the two
constructs confirmed high levels of fit
between the model and the data; for example
the adjusted goodness of fit were high, in
excess of 0.90. Moreover there were low levels
of misfit between the model and the data for
both constructs; for example, the ratio of
C-min to degrees of freedom were
appropriately well under the acceptable
standard of 3.0.
Third, both the e-trust construct and the
interactivity construct indicated face validity
in relation to the manner that the items
relate to the way the broad concept of e-trust
and interactivity are discussed in the
literature. The literature refers to the broad
essence of e-trust and the ideas of credibility,
integrity and honesty. Moreover, the
literature often discusses the specific issues
of privacy of information provided by the
user to the e-retailer as well as the endemic
problem of credit card security concerns.
Literature pertaining to online
interactivity refers to the notions of
communication, two-way communication,
responsiveness of the site to user queries,
control and personalisation.
Based on these three sets of evidence, we
conclude that the two constructs – e-trust and
interactivity – presented in this paper are
reliable and valid. In other words, we can
have confidence in the across-site
comparisons of e-trust. Additionally, we can
have confidence in using the e-trust variable
in further analyses later in this paper, when
we run a multiple regression analysis with
e-trust as a function of interactivity.
The statistical nexus between
interactivity and e-trust
A previous study undertaken by the authors
(Merrilees and Fry, 2002) examined the
relationship between e-trust and
interactivity. In their study, the authors
identified that while a combination of
interactivity and e-trust are critical in the
formation of favourable attitudes towards a
site, interactivity was clearly seen to be more
[ 125 ]
Bill Merrilees and Table I
Marie-Louise Fry Confirmatory factor tests for the constructs of e-trust and e-interactivity in three Australian
E-trust: the influence of
perceived interactivity on online CD sites
e-retailing users
Chi-square
Marketing Intelligence &
Planning Construct/site p-value GFI AGFI C-min/df Rmsea
21/2 [2003] 123-128 Trust (CD Now) 0.604 0.99 0.98 0.68 0.00
Trust (Sanity) 0.689 0.99 0.98 0.56 0.00
Trust (Amazon) 0.627 0.99 0.98 0.58 0.00
Interactive (CD Now) 0.445 0.98 0.96 1.00 0.002
Interactive (Sanity) 0.118 0.98 0.94 1.57 0.053
Interactive (Amazon) 0.159 0.98 0.95 1.41 0.045

important partly because of a greater direct
contribution and partly because of its
additional indirect contribution via e-trust.
While there are no strong theories of what
causes greater interactivity with an e-retail
site, we suggest the analogy with the
sensory/stimulus/motivation literature
(Korgaonkor and Wolin, 1999; Alpert, 1994).
Sites that are more enjoyable and
entertaining are more likely to engage the
user in two-way communication and
dialogue with the retailer.
To explore the notion of an interaction
between interactivity and e-trust among
three sites that incorporate a mixture of
brick and mortar and brick and click stores,
the next stage of the analysis was to run a
simple regression equation in which the
interactivity variable was postulated as a
determinant of the e-trust variable. The latter
variable was treated as the dependent
variable. Separate regressions were run for
each of the three e-retail sites, CD Now,
Sanity and Amazon. The regression results
are given in Table II.
There was a positive and significant
relationship between interactivity and
e-trust in all three e-retailer sites. In fact, the
standardised beta coefficients were very high
at 0.66, 0.70 and 0.68 respectively. The t-values
were very high, in excess of 12.0, indicating
that the results were very highly significant
(p = 0.000), formally significant at the 1
percent level.
The positive beta coefficient indicates that
the higher a rating in terms of how
Table II
Regression analysis, determinant of e-trust, three Australian online
CD e-retailers
Dependent variable: e-trust CD Now Sanity Amazon
Beta coefficient on interactivity
independent variable 0.70 0.66 0.68
t-value 13.73 12.34 13.09
Constant term 1.59 1.62 1.62
t-value 6.50 6.74 5.88
Adjusted R2 0.48 0.43 0.46
p-value 0.000 0.000 0.000
[ 126 ]
interactive the site is, the greater the user
perceives e-trust towards the site.
Discussion
The first set of results, concerning the
development of reliable and valid measures
of e-trust and e-interactivity, is important for
the development of marketing knowledge in
understanding what is important to the
e-retailing experience from the perspective of
the user. The two particular concepts studied
in this paper are not just any two Internet
concepts but are fundamental to users having
a positive and fruitful online shopping
experience. The lack of e-trust is likely to
deter any purchase over the Internet, while
the lack of interactivity is likely to deter a
positive brand attitude and repeat purchases.
These results are also of relevance to the
marketing practitioner. Assuming that
e-retailers are trying to build interesting and
effective sites, then the design of those sites
should factor in ways to build both e-trust
and interactivity. Practitioners can also use
the measures of e-trust and interactivity
alluded to here as ways of monitoring their
sites. For example, our measures of e-trust
indicate that, of the three sites examined in
this paper, Sanity has the lowest level of
e-trust, CD Now has the second highest, while
Amazon has the highest level of e-trust in our
particular sample. This pattern may vary
depending on the sample, but the point is that
the scale provides a practical measure that
firms can use to monitor how well they are
delivering on e-trust or e-interactivity,
among other variables.
The regression results are also of interest
in that they contribute to marketing
knowledge. This is done by building up a sub-
model within the overall user experience of
the Internet. Our particular sub-model
links two key Web variables, interactivity
and e-trust, in a causal way. We now know
that e-trust can be developed by increasing
the interactivity of the site. This relationship
is very robust in that it is present in all three
CD sites examined in this paper. The
Bill Merrilees and magnitude of the regression coefficient is
Marie-Louise Fry very high, of the order 0.65-0.70, indicating
E-trust: the influence of that interactivity is a powerful influence on
perceived interactivity on
e-retailing users e-trust. Note that the constant term is still
Marketing Intelligence & positive and significant, suggesting that
Planning there are other factors that also influence
21/2 [2003] 123-128 e-trust. These additional factors need to be
identified and incorporated into the
modeling of e-trust. However, in the interim
it is clear that all future studies of e-trust
need to incorporate interactivity as a starting
point.
A special aspect of our results is a
comparison of the nexus between
interactivity and e-trust across both ‘‘click’’
and ‘‘brick and click’’ sites. The original
study of the nexus reported in Merrilees and
Fry (2002) referred to one site only, namely
CD Now. At that point we might have been
left with the impression that the nexus
between interactivity and e-trust was
confined to pure ‘‘click’’ e-retailers. Indeed,
one might have prophesised that brick-based
e-retailers (that is, brick and click) had less
need for interactivity because they already
had trust built up from their brick
operations. In other words, it is only the click
e-retailers that have to work hard at
interactivity in order to build up e-trust.
Given these expectations, our results are
somewhat of a shock. We had expected that
the constant term would be larger for the
brick and click e-retailer (Sanity is a leading
‘‘brick’’ retailer of CDs in Australia) and that
the beta coefficient would be a lot smaller for
the same site. In fact, the constant terms and
the beta coefficients were very similar for
both the one brick and click e-retailer
(Sanity) and the two click e-retailers (CD
Now and Amazon). How can we interpret
these phenomena? The similarity of the
results across the two business models of e-
retailing seems to suggest that the trust built
up from brick retailing does not
automatically carry over to the e-retailing
operations of the same firm. In other words,
consumers may trust Sanity in a brick
context, but still need to be re-assured (via
interactivity) that its online activities are
trustworthy. This, of course, is a
generalisation that may not apply to all
segments of users. There may be some
segments where there is carryover from
brick experiences to trust in the click context
of the same firm. Further research is
required to examine the size of this segment
and to find out what is special about such a
group.
All of these lessons are equally important
for the practitioner as well as the marketing
academic. In practice, e-retailers need to
know how to build e-trust. An important
route, indicated in this paper, is e-
interactivity. Given that some practically
oriented academics have suggested that
e-retailers need to build trust as the centre of
their Internet strategy (see Urban et al., 2000),
then developing e-interactivity has been
shown to be an important step in pursing
such a strategy.
In Australia at least there has been a big
swing in favour of brick and click firm, with
pure click e-retailers (like d-store and e-store)
struggling. With an increasing role for brick
and click stores, they should keep in mind
that they can not simply rely on loyal
customers from their brick operations
switching, without questions to the click
context of the same firm. Rather, brick and
click firms should build on their brick
knowledge of customers and enhance this in
the click context. Brick and click firms still
need adequate e-interactivity, otherwise
their trusting customers from the offline
situation may not trust them in the online
context.
Trust is most likely a key factor in any
company’s reputation, whether e-commerce
or not (Merrilees and Fry, 2002). This seems
likely because trust is akin to being re-
assured that the specific company will look
after the interests of the user or consumer
and protect them in all respects. It is a form
of meta-guarantee, one that goes beyond just
a product guarantee. Given the virtual
nature of the on-line shopping experience,
trust is likely to be even more important in
the context of e-retailers. This is because
major consumer concerns over the adequacy
of credit card security or the way that
privacy matters are handled could be
detrimental to a company’s reputation. To
overcome the ‘‘e-trust’’ barrier firms are
developing e-trust strategies such as clearly
articulating explicit policies regarding credit
card security and the way privacy issues are
handled to consumers.
Conclusion
The current paper has contributed to the
measurement of e-trust and e-interactivity,
mainly by demonstrating that certain scales
are now quite robust against an increasing
number of studies of e-retail sites. Reliable
and valid measures of e-trust and e-
interactivity were found in relation to three
e-retail sites, namely CD Now, Sanity and
Amazon for a convenience sample of
Australian users.
Equally importantly, the paper has
demonstrated that there is a nexus between
interactivity and e-trust. Higher levels of
interactivity lead to a positive and large
increase in e-trust. If the perception of
[ 127 ]
Bill Merrilees and interactivity increases by three points (on a
Marie-Louise Fry seven-point scale), then the perception of e-
E-trust: the influence of trust increases by two points (also on a seven-
perceived interactivity on
e-retailing users point scale and using an average beta-
coefficient of 0.67, found in Table II). This is a
Marketing Intelligence &
Planning very significant, important and strategic
21/2 [2003] 123-128 relationship.
Of interest, the nexus between interactivity
and e-trust was found to be similar across both
brick and click (Sanity) and pure click (CD
Now and Amazon) e-retailers. Retailers that
have built up trust through their brick
operations cannot assume that these feelings
automatically carryover to the online context.
Brick and click e-retailers also have to work
hard at building up online interactivity. More
research with other sample, in other sites and
other countries is needed to back these
conclusions.
Placing trust at the centre of your Internet
strategy is the catch-cry heralded by Urban et
al. (2000) in their recent Sloan Management
Review paper. Such a view has much merit.
However, for this approach to be really
effective, firms need to place interactivity at
the centre of their e-trust strategy.
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