This book contains eight chapters. Chapter One introduces the key themes for the book. Chapter Two briefly describes the technology that makes electronic commerce possible, while Chapter Three introduces the topic of Web strategy. The major functions of marketing are described in the next five chapters: Promotion (Chapter Four); Promotion and Purchase (Chapter Five); Distribution (Chapter Six); Service (Chapter Seven); and Pricing (Chapter Eight). The final chapter takes a broader, societal perspective and discusses the influence of electronic commerce on society. More details about each chapter are provided in the following sections.
Chapter One: Introduction
Chapter One introduces the key themes covered in this book.
Chapter Two: The technology of electronic commerce
Chapter Two deals with the technology that underlies electronic commerce. Specifically, we discuss the methods that computers use to communicate with each other. We compare and contrast:
- the Internet (which is global in nature and has the potential to communicate with multiple stakeholder groups);
- the intranet (which focuses on internal communications within the organization–such as communication with employees);
- the extranet (which concentrates on exchanges with a specific business partner).
At present, the majority of electronic commerce concerns business-to-business relationships and is strongly linked to this last category (the extranet, where organizations can conduct exchanges with other channel members). Chapter Two also introduces the security issues associated with electronic commerce. Security is important both for organizations and for consumers.
As the Internet is used to facilitate exchanges, it has the potential to create new forms of money (e.g., electronic money). When the Spanish conquistadors discovered the gold mines of the New World and transported that gold (and silver) back to their home country, the amount of currency in Europe expanded dramatically. The result was an economic boom across all of Western Europe. Similar periods of economic prosperity followed the expansion of the money supply that resulted from the popularization of checks and, later, credit cards. As new forms of money are created in cyberspace, a similar phenomenon may transpire. That is, the expanding money supply (through the acceptance of digital money) is another reason that electronic commerce has the potential to transform the modern economy in a way that benefits both consumers and business owners.
Chapter Three: Web strategy
This chapter introduces elements of electronic strategy. In particular, we describe business practices that evolve because of the way that the Web changes the nature of communication between firms and customers. We describe attractors , which firms use to draw visitors to their Web site, including sponsorship, the customer service center, and the town hall. We discuss different attractor strategies that are appropriate, depending upon what material an organization wants to put on the Web. We describe the strategies behind various services that organizations can provide in cyberspace.
Chapter Four: Promotion
This is the first of a series of five chapters that discuss the four major functions of marketing: promotion, price, distribution, and product (service). As the Web is a new communications medium, we devote two chapters to promotion. In Chapter Four, we introduce a model for thinking about communication strategy in cyberspace: the Integrated Internet Marketing model.
Chapter Five: Promotion and purchase
Chapter Five describes new methods for measuring communication effectiveness in cyberspace. Specifically, we discuss the Internet as a new medium, in contrast to broadcasting and publishing. Currently, Web users perceive this medium to be similar to a magazine, perhaps because 85 percent of Web content is text. Other capabilities of the Web (e.g., sound) are not extensively used at this point. In Chapter Five, we present several metaphors for thinking about what the Web can be, including the electronic trade show and the virtual flea market. We link the buying phases to Web functions and capabilities (such as identifying and qualifying prospects).
Measurement is a key theme in the chapter, so we describe the role of the Web in the marketing communications mix and introduce several formulas for measuring the success of Internet communications. Measurement of advertising effectiveness is a long-standing issue in marketing research. In some ways, this issue of communications effectiveness is almost impossible to answer. First, it is very difficult to isolate the effects of communication, independent from other important effects (such as changes in demand, price changes, distribution changes, or fluctuations in the economic environment). Second, there are likely to be important lagged effects that are difficult to isolate. For instance, a consumer might look at a Web page and then not use that information for making a purchase until six months later. However, the Web does create an environment where many new measures of communication effectiveness are possible. In the past, marketing research attempted to collect data about consumer attention levels in a very artificial way (e.g., by using information display boards). Now, it is possible to study click patterns and learn a lot about how consumers are processing organization-sponsored information.
Of course, the Web can be more than just a vehicle of communication. It can also serve as a medium for selling products and services. Two key measures that we describe in Chapter Five are: a) the ratio of purchasers to active visitors; and b) the ratio of repurchasers to purchasers. In certain circumstances, it is possible to collect direct behavioral measures about the effects of traditional advertising. On the Web, such behavioral measures are much more natural and much easier to collect on a routine basis.
Chapter Six: Distribution
In the nineteenth century, a shopkeeper was likely to know all of his customers by name. He knew their needs. In the late 1800s, organizations with a truly national presence (e.g., Standard Oil) began to dominate the economic landscape in the United States. This marked the birth of the large, modern corporation. Distribution problems became large and complex. Organizations needed to be large to respond to these logistical challenges. The advent of electronic commerce has the potential to transform logistics and distribution. Today, a small software firm in Austin, Texas, can deliver its product (via the Web) to a customer in Seoul, South Korea. The economic landscape is altered dramatically. This chapter (along with the others) is future oriented as we outline strategic directions that are likely to be successful in the twenty-first century.
Chapter Seven: Service
Services are more and more important in the U.S. economy. In Chapter Seven, we describe how electronic commerce comes to blur the distinction between products and services. Traditionally, services are a challenge to market because of four key properties: intangibility, simultaneity, heterogeneity, and perishability. In this chapter, we show how electronic commerce can be used to overcome traditional problems in services marketing.
Chapter Eight: Pricing
Price directly affects a firm’s revenue. Chapter Eight describes pricing methods and strategies that are effective in cyberspace. We take a customer value perspective to illustrate various price-setting strategies (e.g., negotiation, reducing customer risk) and show how these strategies can be used to attain organizational objectives.
Chapter Nine: Postmodernism
The final chapter concentrates on societal changes that are encouraged by electronic commerce (and other related trends). Through the metaphors of modernism and postmodernism, we show how electronic commerce influences:
- perceptions of reality;
- notions of time and space;
- attitudes toward organizations.
Chapter Nine is future oriented and discusses electronic commerce as a revolutionary force that has the potential to transform society and transform consumers’ perceptions of business practice.