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Chapter 4 E-environment

Chapter 4 E-environment. Learning outcomes. Identify the different elements of an organisation macro-environment that impact on an organisation’ s digital business and digital marketing strategy Assess the impact of legal, privacy and ethical constraints or opportunities on a company

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Chapter 4 E-environment

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  1. Chapter 4 E-environment

  2. Learning outcomes Identify the different elements of an organisation macro-environment that impact on an organisation’s digital business and digital 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 economics, governmental digital business policies, taxation and legal constraints

  3. Management issues What are the constraints such as legal issues which should be taken into account when developing and implementing a digital business strategy? 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.

  4. Table 4.1 Factors in the macro-​and micro-​environment of an organisation

  5. SLEPT factors Macro-environment Social Legal Economic Political Technological

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

  7. Environmental scanning • The process of continuously monitoring the environment and events and responding accordingly.

  8. Social and legal factors • Social and cultural impacts of the internet are important since they govern demand for internet services.

  9. Table 4.2 Significant laws which control digital marketing

  10. Table 4.2 Significant laws which control digital marketing (Continued)

  11. E-commerce adoption • Cost of access (cost of ISP) • Value proposition (the need to be online) • Ease of use • Security • Fear of the unknown (fear of technology) • Social exclusion!

  12. Understanding user’s access requirements • It is important to understand “Webographics”; • Usage location (home vs. work) • Access device • Connection speed • ISP • Experience level • Usage type • Usage level

  13. Online buyer behavior • To develop effective online services we need to understand customers’ online behavior and motivation. • Activities online • Sources of information used to buy • The influence of these sources on the buying process

  14. Figure 4.2 Applications of using the Internet (Activities online)

  15. Figure 4.3 Variation in number of sources on information used to inform buying decision by sector Source: Google Shopper Sciences (2011).

  16. Figure 4.4 The influence of different information sources on purchase. ZMOT = Zero Moment of Truth (before visiting store), FMOT = First Moment of Truth (in‑store) [IMPACT OF DIFFERENT FORMS OF ONLINE PURCHASE]Source: Google Shopper Sciences (2011).

  17. Motivation for use of online services • Psychographic segmentation can help explaining motivation. • Psychodemographic profiles have been developed for web users.

  18. Motivation for use of online services • To understand different motivation the Web Motivation Inventory (WMI) can be very helpful. • 4 motives which cut across cultures: • Research (information acquisition) • Communication (socialization) • Surfing (entertainment) • And shopping • These can be broken into…

  19. WMI 4 categories can be broken into: • Community • Entertainment • Product trial • Information • Transaction • Game • Survey • Downloads • Interaction • Search • Exploration • News

  20. Purchase online • Increased number of consumers are purchasing online • However, there is a huge difference in online purchasing behavior depending on product’s price and complexity • Travel • Cinema ticket • Car • Clothes

  21. Figure 4.5 Development of experience in Internet usage

  22. Business demand for digital business services • B2B market is more complex than B2C • Analysis is important as part of the segmentation of different groups within a B2B target market, profile businesses according to: • Variation in organization characteristics • Individual role

  23. Variation in organization characteristics • Size of company (employees or turnover) • Industry sector and products • Organisation type (private, public, government, not-for-profit) • Division • Country and region

  24. Individual role • Role and responsibility from job title, function or number of staff managed • Role in buying decision (purchasing influence) • Department • Product interest • Demographics: age, sex and possibly social group.

  25. B2B profiles • We can profile business users of the Internet in a similar way to consumers by assessing: • Companies with access; B2B access levels are higher, buying unit reach • Influenced online; identify suppliers rather than completing a transaction • Purchase online; • We need to understand percentage of each!

  26. Adoption of digital business by businesses • Important to understand: • What digital business services are businesses adopting? • What the barriers?

  27. Figure 4.6 Enterprises adopting technologies for digital business, by size class, EU27, 2012Source: EuroStat (2013).

  28. Figure 4.7 Barriers to adoption of e‑commerce services of European countriesSource: European Commission (2010): http://ec.europa.eu/information_society/digitalagenda/documents/edcr.pdf. No longer available.

  29. Adoption of digital business by businesses • Digital business in the UK SMEs can be divided into 4 clusters: • Developers; which were actively developing services • Communicators; which use email to communicate internally and externally • Web presence • Transactors • Resources, planning, implementing an internet strategy?

  30. Ethical issues and data protection Ethical issues concerned with personal information ownership have been usefully summarised by Mason (1986) into four areas: Privacy– what information is held about the individual? Accuracy – is it correct? Property – who owns it and how can ownership be transferred? Accessibility – who is allowed to access this information, and under which conditions?

  31. Table 4.4 Types of information collected online and related technologies

  32. Table 4.4 Types of information collected online and related technologies (Continued)

  33. Economic and competitive forces • A comprehensive framework for assessing an ‘e‑economy’ has been developed by Booz Allen Hamilton (2002). The report authors define the e‑economy as: • the dynamic system of interactions between a nation’s citizens, the businesses and government that capitalise upon online technology to achieve a social or economic good.

  34. E-business and e-economy • Globalization can insulate a company to some extent from fluctuations in regional markets. • Globalization: • Free movement of capital, labor, and products • The increase of international trading and shared social and cultural values • The move towards international trading in a single global marketplace.

  35. Globalization • consequences for organisationsthat wish to compete in the global marketplace; • a 24‑hour order-​taking and customer service response capability; • regulatory and customs-​handling experience to ship internationally; • in‑depth understanding of foreign marketing environments to assess the advantages of its own products and services.

  36. Globalization VS. Localization • Tailoring e‑commerce services for individual countries or regions is referred to as localization; might include: • Different product needs; • Language differences; • Cultural differences.

  37. Localization • The language that content is provided in. • Tone and style of copy. • Site design – certain colours or images may be unsuitable or less effective in some countries. • Range of product offerings. • Product pricing. • Promotional offers used to encourage acquisition of customer email address This may be affected by local data protection, taxation and trading laws. • Local contact points.

  38. Localisation Singh and Pereira (2005) provide an evaluation framework for the level of localisation: 1 Standardised websites (not localised). A single site serves all customer segments (domestic and international). 2 Semi-localised websites. 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. 3 Localised websites. Country-specific websites with language translation for international customers, wherever relevant. 3M (www.3m.com) has adapted the websites for many countries to local language versions. It initially focused on the major websites.

  39. Localisation (Continued) 4 Highly localised websites. Country-specific websites with language translation; they also include other localisation efforts in terms of time, date, postcode, currency formats, etc. Dell (www.dell.com) and IKEA (www.ikea.com) provides highly localised websites. 5 Culturally customised websites. Websites reflecting complete ‘immersion’ in the culture of target customer segments; as such, targeting a particular country may mean providing multiple websites for that country depending on the dominant cultures present. Durex (www.durex.com) is a good example of a culturally customised website.

  40. Political factors • Political environment is shaped by the interplay of government agencies., public opinion, consumer pressure group.

  41. E-political environement • Booz Allen Hamilton (2002) review approaches used by governments to encourage use of the Internet. They identify five broad themes in policy: • Increasing the penetration of ‘access devices’. Approaches include either home access through Sweden’s PC Tax Reform, or in public places, as in France’s programme todevelop 7,000 access points by a specific year/target date. France also offers a tax incentive scheme, where firms can make tax- free gifts of PCs to staff for personal use.

  42. Increasing skills and confidence of target groups. These may target potentially excluded groups, as with France’s €150 million campaign to train the unemployed. • Establishing ‘driving licences’ or ‘passport’ qualifications. France, Italy and the UK have schemes which grant simple IT qualifications, particularly aimed at low- skilled groups. • Building trust, or allaying fears. The US 1998 Child Online Protection Act used schemes to provide ‘kitemark’-type verification, or certification of safe services.

  43. Direct marketing campaigns. According to the report, only the UK, with its UK Online campaign, is marketing directly to citizens on a large scale.

  44. Technological issues Rate of change Which new technologies should we adopt? Monitoring for new techniques Evaluation are we early adopters? Re-skilling and training Are our systems secure?

  45. Figure 4.12 Diffusion–adoption curve of a Gartner hype cycle

  46. Figure 4.13 Example of a Gartner hype cycle Source: Gartner (2010).

  47. Gartner hype cycle • Technology trigger – The first phase of a hype cycle is the ‘technology trigger’ or breakthrough, product launch or other event that generates significant press and interest.

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