Chapter_04.ppt

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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 and
e-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 2007
Source: 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 online
Source: 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 Europe
Source: 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
enterprises
Source: 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
protection
www.dataprotection.gov.uk

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Ethical issues and data protection
• In Canada, Personal Information Protection
and Electronic Documents Act (PIPEDA)
establishes principles for collection, use, and
disclosure of personal information.
http://laws.justice.gc.ca/en/showdoc/cs/P-8.6///en?page=1
• Provinces have parallel legislation

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Figure 4.7 Standard information collected about web site visitors from the
DaveChaffey.com site
Source: 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 business
o Domain name and brand/trademark
protection
o Using competitor name in meta-tag and
pay-per-click advertising
o Accessibility law
Other E-Commerce Legislation

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Figure 4.9 Comparison of number of blog postings for three consumer brands
Source: 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 forest
Source: 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-economy
Source: 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 cycle
Source: 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 Class
Read 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?

Chapter_04.ppt

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