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Enrico Colla, Paul Lapoule, (2012),"E#commerce: exploring the critical success factors", International Journal of Retail
& Distribution Management, Vol. 40 Iss 11 pp. 842-864 http://dx.doi.org/10.1108/09590551211267601
G. Duffy, B.G. Dale, (2002),"E#commerce processes: a study of criticality", Industrial Management & Data Systems,
Vol. 102 Iss 8 pp. 432-441 http://dx.doi.org/10.1108/02635570210445862
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service, transactions) or to generate revenue from them (e.g. product Standard pricing
information, promotions, market research, transactions) Changing role for intermediaries
E-commerce should enable buyers and sellers to come together where Companies dominating markets
they previously could not. This is a critical area of growth for
international companies
Making business sense of Four business opportunities that are provided by the Internet: Replace intermediaries and value chain
the Internet (Gosh, 1998) (1) linking companies directly to customers, suppliers, and other members
interested parties Increased customers' loyalty
(2) allowing companies to skip other players in the value chain New competitors and customers
(3) using the Internet as a tool for developing new products and The emergence of category killers
services for customers
(4) allowing companies to dominate the electronic channel of an entire
industry or segment, control access to customers, and set business
rules
Getting real about virtual Navigation is now a separate business with three aspects: reach, Brands, as a source of rich information
commerce (Evans and affiliation, and richness (particularly those based on fact based
Wurster, 1999) Reach refers to the number of different categories and products a beliefs), will lose much of their value
consumer interface (e.g. store, catalog, and Web site) can cover. Reach The value chain will break down in most
also refers to the number of customers a business can interact with industries
Affiliation refers to whose interests are most important to the merchant: Navigators will be able to capture most of
the customer's, the retailer's or the supplier's? the value in an industry as the other
Richness is how much information can be exchanged between a producer elements of the supply chain (e.g.
and consumer. Richness has two aspects: customer information and physical retailers, distributors, and
product information manufacturers) become commoditized
change has resulted from technology that has information at one particular store. A
brought down the cost of collecting and complete search of all offerings would be
disseminating information about consumers extremely expensive, time-consuming and
and products. Evans and Wurster (1999) practically impossible. Instead consumers rely
describe navigation as the process through on product suppliers and retailers to aid them
which shoppers collect information about in the search. This allows the suppliers and
products. In the physical world, a shopper providers to use the consumers' cost-of-
who wants to buy something has to manually search as a competitive advantage. However,
sift through the millions of choices. This on the Internet, consumers can search much
usually requires a shopper to travel to a store more comprehensively and at virtually no
and inspect the products. Unless they want to cost. Suppliers and retailers must realize that
travel to various stores, they are limited to the product information can be delivered to
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E-commerce marketing strategies: a framework and case analysis Logistics Information Management
Eric Allen and Jerry Fjermestad Volume 14 . Number 1/2 . 2001 . 14±23
The Internet and Global reach Standard pricing Global branding Understanding the
international marketing Market makers global consumers
(Klein and Quelch, 1996)
Making business sense of Tool for developing Companies can skip Links companies
the Internet (Gosh, 1998) and delivering new other players in an directly to customers,
products and services industry value chain suppliers, and other
to customers Companies are able interested parties
to dominate the
electronic channel of
an entire industry or
Downloaded by Monash University At 08:53 06 December 2014 (PT)
segment, control
access to customers,
and set business rules
consumers by a third party. Indeed, pure reviewed addressed place. Klein and Quelch
navigators such as Yahoo! have already (1996) discuss the global reach of the Internet
become major players in this business (Evans in creating a larger marketplace and the
and Wurster,1999). strong growth of a network's utility based on
The Internet can also serve as a platform for Metcalf's law. Evans and Wurster (1999)
new product innovations. Companies can use discuss reach, the number of eyeballs that
the direct access to consumers to collect view a Web site. They claim that reach is the
information that will help them better develop most visible difference between e-commerce
products to meet the consumers' needs. For and the physical world.
international companies this can provide The Internet will allow organizations to skip
adaptations and customizations for local over parts of the value chain. Gosh (1998)
markets (Klein and Quelch, 1996) or create discussed how the Internet could be used to
niche products. Companies can also leverage pirate the value chain. Examples most often
their reach to consumers to sell advertising involve marketing the product on the Internet
during transactions (Gosh, 1998). in order to bypass the retailer. Computer
manufacturers such as Dell and Gateway
Place 2000 do this. UPS has a program to set up
For most companies the place aspects of the e-commerce sites for businesses that ship with
marketing mix involve marketing channels. them (Gosh, 1998). According to Evans and
Marketing channels can be defined as Wurster (1999), the navigational Web sites
interdependent organizations involved in the will allow small niche producers easier access
process of making a product or service to the markets. They will be able to skip over
available for use or consumption (Kotler, parts of the value chain that traditional
1991). suppliers have historically relied on for
Due to the size of its marketplace, the competitive advantage. Traditional suppliers
Internet will have the most profound effect on could respond to this by keeping their product
place in the marketing mix. E-commerce puts out of navigational Web sites to block their
the purchase decision anywhere a connection development. However, this strategy would
to the Internet exists. All of the frameworks be technically difficult and would only be
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E-commerce marketing strategies: a framework and case analysis Logistics Information Management
Eric Allen and Jerry Fjermestad Volume 14 . Number 1/2 . 2001 . 14±23
enables the transactions to occur (e.g. The Internet will lead to increased price
computers and communication lines replace competition and the standardization of prices.
car lots). Rayport and Sviokla (1994) claim Klein and Quelch (1996) point out two
that customer loyalty must be first gained in counteracting effects of the Internet on price.
the context dimension. The first mover First, a supplier can use the technology to
advantage is very important because Internet
discriminate pricing between consumers, for
standards could make the competitive
example, in different countries. However, if
advantages of a particular context difficult to
they do not take precautions the consumers
sustain. By their very nature, standards will
may be able to quickly find out about the
allow organizations to duplicate the design
price discrimination and object to it. Klein
and features of competitors' Web sites.
and Quelch (1996) suggest that taken
However, the courts may provide some
together these factors would lead to increased
protection for e-commerce store designs
standardization of prices across borders. Also,
(Reuters, 1999).
the ability to compare prices across all
Organizations that are first to offer a large
suppliers using the Internet and online
breadth of products to consumers will have an
shopping services will lead to increased price
advantage. The marketplace on the Internet
could consolidate quickly as many e-retailers competition. Finally, the price of providing
will attempt to become category killers, places Internet-based services often contains little or
where consumers can go for all their shopping no marginal costs. Economic theory predicts
needs. The success of category killers can be that the price of a product or service will
seen in the bricks and mortar world (e.g. Wal- approach its marginal cost as competition
Mart). Category killers on the Internet would intensifies.
have the following advantages: physical space Organizations will have to employ new
is less of a constraint, expansion would be pricing models when selling over the Internet.
easier on the Internet, and stores can Rayport and Sviokla (1994) point out that the
customize offerings to consumers. Instead of ability of technology to offer services at a
navigating hundreds of sites to find what they cheaper cost would make it difficult to
need, consumers will stay with the sites they determine the appropriate price for a
find convenient. Magnet stores or category consumer. Voicemail, for example, is solely
killers can be expected to form around a an information-based service, which provides
number of dimensions such as product, the consumers with a replacement for the
service, customer segment, and industry traditional answering machine. However,
(Gosh, 1998). For example, the largest consumers are willing to pay even more for
physical Barnes & Noble bookstore in the the service than they would for an answering
USA still carries only 200,000 titles. machine due to the convenience and added
Amazon.com offers 4.5 million volumes and features (Rayport and Sviokla, 1994).
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E-commerce marketing strategies: a framework and case analysis Logistics Information Management
Eric Allen and Jerry Fjermestad Volume 14 . Number 1/2 . 2001 . 14±23
and selection. Therefore manufacturers are have to coordinate the Internet strategies of
no longer limited in the size of their market all their subsidiaries to preserve their brands
and the amount of information they can and prevent confusion across markets (Klein
present to consumers through promotions. and Quelch, 1996).
Established companies must face up to the
challenge and determine the opportunities the
Nabisco: a case analysis Internet creates and how their traditional
Background business models are threatened (Gosh, 1998).
Almost every company has to rethink its The value chain for incumbent manufacturers
strategies due to the changes that the Internet and retailers is being deconstructed because
brings. For some, the implications are the value to consumers derived from entire
obvious, but for others they are not. As a segments of that chain can be achieved more
traditional manufacturer of packaged efficiently and effectively through the use of
consumer goods, Nabisco falls into the latter the Internet (Evans and Wurster, 1999). Even
category. Nabisco, a multi-billion dollar snack if the overall percentage of sales on the
food company, has major competitive Internet averages just 5 per cent across all
advantages in the traditional supermarket categories, that shift will still create
distribution channels. Its Biscuit division tremendous pressure on physical retailers,
currently spends 10 per cent of sales in trade particularly in the USA (Maruca, 1999).
(retail) marketing for items such as special To date Nabisco has established a
promotions and in-store displays. In addition, significant presence during the land grab
the Biscuit division maintains a fleet of trucks phase of the Internet referred to by Evans and
that provide direct store delivery, which is an Wurster (1999). For the US market, the
advantage that few competitors can afford. company currently has a number of Web
Direct store delivery and Nabisco's dominant sites:
market share in the biscuit category ensure . a corporate information site;
that Nabisco's products receive the most shelf . a recipe site that provides consumers with
space in stores and cross shoppers' paths recipes that feature Nabisco products;
more than competitor products. However, . each of its two domestic operating units
these competitive advantages will diminish in has Web sites that contain games and
a market dominated by online grocery promote the units brands;
shopping. Advantages critical for a bricks and . online shopping for Nabisco brand
mortar grocery manufacturer such as in-store merchandise (e.g. mugs, dolls, and
displays, product presentation and shelf space trains), along with specially packaged
do not directly transfer to an online food products;
environment. Strategies will have to be . various brand specific sites.
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E-commerce marketing strategies: a framework and case analysis Logistics Information Management
Eric Allen and Jerry Fjermestad Volume 14 . Number 1/2 . 2001 . 14±23
consistent cash flow (Dykema, 1999). Strategies designed to halt or slow the
Therefore, being the first to offer quality deconstruction of the value chain are unlikely
service through an expansive distribution to work. The company could work with bricks
system is critical to the industry. It will take and mortar retailers to try to preserve the
some time for the industry to reach its current way of doing business. Most likely
potential because distribution centers will strategies would be to keep Nabisco products
need to be established across the country. On- off online grocer sites or not support the
line grocers will also have to develop ways to online grocers. This strategy would only work
help consumers break their old habits of if other consumer product manufacturers
weekly shopping trips to local stores followed and also held out. However, none of
(Dykema, 1999). them would take the risk of being left behind
Despite the obstacles and what could be in the new channel. Nabisco would also find it
seen as slow growth projections for the difficult to compete by selling its product
immediate future (from $1.8 billion to $3.5 online because it would not have the reach
billion by 2002), it is clear that online grocers consumers would want. Consumers typically
will be a significant retail force in the industry do not purchase grocery items in isolation and
within the next five years. Beyond five years, they would be unlikely to pay the high
growth at a much greater rate cannot be ruled shipping costs to deliver such a low priced
out. The growth of online grocery shopping product for on demand consumption.
will clearly have an impact on packaged Nabisco needs to quickly develop an online
consumer product suppliers by changing the customer base and ensure that its products
business models they have operated under for are offered on sites that have all the products
decades. consumers want. Nabisco could form
alliances with other consumer products
Implications of the integrated framework companies (e.g. Heinz, Campbell's, P&G).
Nabisco's current corporate strategy is to However, only one brand of each item would
build total brand value. Total brand value be offered unless the industry as a whole
calls for satisfying customers faster and more decided to open its own online grocery. A
completely than the competition. As online more useful alliance on the part of
grocers become a significant force in the manufacturers would be to promote online
market this general strategy may still be retailing standards. To counteract the
useful, but the specifics of an Internet strategy ``sticky'' technologies that online retailers
will have to be developed. Using an Internet would be developing to retain customers,
strategy framework that has been integrated consumer products manufacturers should
around the traditional 4Ps marketing model, develop standards for technologies that would
some of the implications for Nabisco's allow consumers to switch online grocers
Internet strategy are discussed. easily. The industry would also want to
20
E-commerce marketing strategies: a framework and case analysis Logistics Information Management
Eric Allen and Jerry Fjermestad Volume 14 . Number 1/2 . 2001 . 14±23
their customers' preferences so well that they In addition, the Internet changes the trade-
can predict their needs accurately enough to offs between elements of the marketing mix,
ship directly to them before they place an for example the dependencies between place
order. and promotion are not as strong on the
Internet. Also, companies are changing how
they market their products in order to better
Conclusion satisfy consumers' needs. With the Internet it
is possible to gain permission to discuss your
Although many of the e-commerce strategy products, as opposed to interruption
frameworks offer a unique contribution to marketing, such as television commercials.
strategic planning, integrating these models Based on an analysis that uses the
into the traditional product, price, place and traditional four Ps model and integrating
promotion framework can provide a more other online strategy frameworks, Nabisco
complete analysis of strategy. The should pursue the following online marketing
conclusions from this combined analysis are strategies:
summarized as follows: . Use the Internet to develop new products
and services.
Product . Help the consumer choose an online
. Information has become its own product grocer by encouraging standards and
on the Internet. disseminating information.
. The Internet will serve as a platform for . Prepare itself to operate in an increasingly
new product innovations. price competitive marketplace.
. Emphasize those brands that relate to
Place experiences over facts.
. The Internet has created the largest . Develop customer centered marketing
marketplace ever. It puts the purchase practices.
decision anywhere where a connection
exists.
. The Internet allows organizations to skip
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