slide 4.1 dave chaffey, e-business and e-commerce management, 4 th edition, © marketing insights...

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Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009

Chapter 4

E-environment

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Learning outcomes

• Identify the different elements of an organization macro-environment that impact on an organizations e-business ande-marketing strategy

• Assess the impact of legal, privacy and ethical constraints or opportunities on a company

• Assess the role of macro-economic factors such as governmental e-business policies, economics, taxation and legal constraints.

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Management issues

• What are the constraints placed on developing and implementing an e-business strategy by the e-environment?

• How can trust and privacy be assured for the customer while seeking to achieve marketing objectives of customer acquisition and retention?

• Assessment of the business relevance of technological innovation.

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Activity 4.1 Introduction to social, legal and ethical issues

• List all the social, legal and ethical issues that the manager of a sell-side e-commerce web site needs to consider to avoid damaging relationships with users of his or her site or which may leave the company facing prosecution.

• You can base your answer on issues which may concern you, your friends or family when you access a web site.

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SLEPT Framework

• Social-influence consumer perception of Internet use for e-commerce

• Legal & Ethical-determine what can be promoted and sold online

• Economic-affect spending patterns

• Political-Determine the adoption and the future of Internet

• Technological-offer new opportunities

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Figure 4.1 ‘Waves of change’ – different timescales for change in the environment

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SLEPT Framework

• E-Commerce Manager has to monitor the changes of the Macro-environment (also called environment scan)

• Among the 5 factor type, Legal factor is one of the most important.

• P.195, Table 4.2 Lists the Key legal issues that have direct impact on e-commerce

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Factors Govern E-commerce Adoption

• Cost of Access

• Value proposition

• Ease of use

• Security and trust

• Fear of the unknown

• Skills

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Webographics

– Usage location– Access device– Connection speed– ISP– Experience level– Usage type-work, social, entertainment, etc.– Usage level-hours or minutes / month

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Figure 4.2 Variation in broadband subscribers per 100 inhabitants, by technology, December 2007Source: OECD (www.oecd.org/sti/ict/broadband)

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Influences of Online Channel

• Finding products and services online is a popular web activity

• Online research occurs at every phase of purchase, even for offline purchases

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Figure 4.3 Percentage by category who bought offline after researching onlineSource: BrandNewWorld: AOL UK / Anne Molen (Cranfield School of Management) /Henley Centre, 2004

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Motivation for Using Online Services

Community Survey

Entertainment Download

Product trial Search

Information Interaction

Make purchases Exploration

Games News

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E-commerce-Psychographic Segmentation

• Ref. Box 4.1 on pp. 202-203

Online Consumer Type 1999 2004

Realistic Enthusiasts 15% 14%

Confident brand shoppers 16% 18%

Carefree spenders 15% 19%

Cautious Shoppers 20% 14%

Bargain hunter 16% 21%

Unfulfilled 17% 14%

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Trust in Different Information Sources

• The role of social media and friends in influencing sales was highlighted by this research http://eiaa.net/ftp/casestudiesppt/EIAA_Online_Shoppers_Report.pdf – Search engines (76%)– Personal recommendations (72%)

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Trust in Different Information Sources

– Price comparison web sites (61%)– Web sites of well-known brands (59%)– Newspapers/magazines (58%)– Customer web site reviews (58%)– Expert web site reviews (57%)– Retailer web sites (57%)– Sales people in shops (50%)– Content provided by ISPs (38%).

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Figure 4.4 Development of experience in Internet usage

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Figure 4.5 Variation in purchase rates of online products and services in EuropeSource: European Interactive Advertising Association (www.eiaa.net), Mediascope Eupore 2008

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Business as Online Buyers

B2B Profiles• The % of companies with access by the right

personnel

• Influenced online—may not buy online but affected by online information

• Purchase online

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E-Business Adoption by SMEs

SMEs have a lower adoption rate in comparison to larger enterprises. They can be classified into 4 categories– Developers– Communicators– Web presence– Transactors

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Figure 4.6 Variation in use of e-commerce services between SMEs and larger enterprisesSource: European Commission (2007)

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E-Business Adoption by SMEs

Assessing the risk and reward for SME adoption• Revenue• Reputation• Strategic importance• Regulatory compliance

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Privacy and Trust in E-Commerce

• What are ethical standards? • Why is it so important for e-commerce?• What’s privacy?• Why privacy a big deal for e-commerce?• Identity fraud in Canada-

http://www.safecanada.ca/identitytheft_e.asp

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Personal Data and E-Commerce

Online businesses and e-marketer typical need these data

– Contact info– Profile info—segmentation– Access platform– Behavioural info on a single site– Behavioural Info on multiple sites

•Anything else?

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Table 4.6 Types of information collected online and related technologies

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Table 4.6 Types of information collected online and related technologies (Continued)

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Ethical issues and data protection

• Ethical issues concerned with personal information ownership have been usefully summarized by Mason (1986) into four areas:

1. Privacy – what information is held about the individual?

2. Accuracy – is it correct?3. Property – who owns it and how can

ownership be transferred?4. Accessibility – who is allowed to access this

information, and under which conditions?

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Table 4.2 Significant laws which control digital marketing

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Table 4.2 Significant laws which control digital marketing (Continued)

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Ethics – Fletcher’s view

• Fletcher (2001) provides an alternative perspective, raising these issues of concern for both the individual and the marketer:

1. Transparency – who is collecting what information?

2. Security – how is information protected once collected by a company?

3. Liability – who is responsible if data is abused?

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The eight principles for data protection

• Fairly and lawfully processed• processed for limited purposes• adequate, relevant and not excessive• accurate• not kept longer than necessary• processed in accordance with the data

subject's rights• secure• not transferred to countries without adequate

protectionwww.dataprotection.gov.uk

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Ethical issues and data protection

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Figure 4.7 Standard information collected about web site visitors from the DaveChaffey.com siteSource: Feedjit

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Figure 4.8 Information flows that need to be understood for compliance with data protection legislation

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• Market e-commerce businesso Domain name and brand/trademark protectiono Using competitor name in meta-tag and pay-

per-click advertisingo Accessibility law

Other E-Commerce Legislation

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Figure 4.9 Comparison of number of blog postings for three consumer brandsSource: Blogpulse (www.blogpulse.com), reprinted by permission of Nielsen Buzzmetrics

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• Forming Electronic Contracts• Country of origin principle

• Distance selling law

• Making and accepting payment

• Others—ref. pp. 226-227

Other E-Commerce Legislation

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E-Commerce & Green Environment

• Do you think e-commerce have positive effect on environment?

• Read the Box 4.6 on page 228

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Figure 4.10 HSBC virtual forestSource: www.hsbc.co.uk

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Taxation

• What do you know about the e-commerce taxes?

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Taxation

Tax Jurisdiction

• In general, taxes are collected in the jurisdiction where consumption take place

• This applies to EU and Canada

• The US federal government doesn’t collect taxes for online purchases

• States may have different legislations

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Taxation

• Canadian merchants must collect Federal taxes (H/GST) for any order in the county, and Provincial taxes for orders made in any region that they have a physical location.

• If you are a merchants outside of Canada shipping to Canada, with no physical presence in Canada, you do not have collect any taxes

• http://www.ecomnet.ca/?p=87

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Freedom Restriction Legislation

• Read p. 232 Activity 4.4• Discuss the questions

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Economic & Competitive Factors

• The e-commerce potential would be determined by the economic health and competitive environment of the country.

• A 4-layer model was proposed to assess such e-economy environment by Booz Allen Hamilton (2002)

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Figure 4.11 A framework describing the e-economySource: Booz Allen Hamilton (2002). International E-Economy: Benchmarking The World’s Most Effective Policy for the E-Economy . Report published 19 November, London.www.e-envoy.gov.uk/oee/oee/nsf/sections/summit_benchmarking/$file/indexpage.htm

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Localization

• Singh and Pereira (2005) provide an evaluation framework for the level of localization:– Standardized web sites (not localized). A single site

serves all customer segments (domestic and international) Many sites, especially small business sites fall into this category

– Semi-localized web sites. A single site serves all customers; however, there will be contact information about foreign subsidiaries available for international customers. Many sites fall into this category http://scotiabank.com/

– Localized web sites. Country-specific web sites with language translation for international customers, wherever relevant. 3M (www.3m.com) has adapted the web sites for many countries to local language versions.

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Localization (Continued)

• Highly localized web sites. Country-specific web sites with language translation; they also include other localization efforts in terms of time, date, postcode, currency formats, etc. Dell (www.dell.com) provides highly localized web sites

• Culturally customized web sites.Web sites reflecting complete ‘immersion’ in the culture of target customer segments; as such, targeting a particular country may mean providing multiple web sites for that country depending on the dominant cultures present. Durex (www.durex.com) is a good example of a culturally customized web site

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Localization

• Why localize a website? Is it important?

• What to be considered for localization?

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B2B International E-Trading

• Large organizations are doing fairly well.

• How about SMEs?

• What’s your opinion on SME B2B international trading?

• Complete Activity 4.5 on p. 237

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Technological issues

• Rate of change– Which new technologies should we adopt?

• Monitoring for new techniques

• Evaluation – are we early adopters?

• Re-skilling and training

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Figure 4.12 Diffusion–adoption curve

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Figure 4.13 Example of a Gartner hype cycleSource: Gartner (2005) Gartner’s Hype Cycle Special Report for 2005

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Identifying Emerging Technologies

• Technology networking—monitoring, scouting, and sharing

• Crowd-sourcing—facilitate access to ideas from customers, partners, inventors, etc. e.g., innocentive.com

• Technology hunting—structured review of start-up companies for new tech capability

• Technology mining—search the published documentations. E.g., googlealert

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Figure 4.14 InnoCentive

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Figure 4.15 Alternative responses to changes in technology

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Summary

• What are the SLEPT factors?• How could they affect e-commerce?• What’s a strategy to adopt in coping with the

SLEPT factors?

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Lab Exercise

• Read the Box 4.3 on p.217. Compare to PIPEDA of Canada to see any similarity and differences

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Next ClassRead pp. 256-259 of the Econsultancy Interview and answer/discus these questions

– What type of business does Standard Life do?– What’s their online business target % in their

whole business?– Can you find a favorite Canadian company to

see what a typical % of their business are done online?

– What are the key challenges in implementing the online business?

– What’s the relationship between the online and other channels?

– What can we learn from this interview?

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