Slide 4 1 Chapter 4 Eenvironment Chaffey Digital

Slide 4. 1 Chapter 4 E-environment Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 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 Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 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. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 4 Table 4. 1 Factors in the macro-and micro-environment of an organisation Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 5 SLEPT factors • Macro-environment – – – Social Legal Economic Political Technological Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 6 Figure 4. 1 ‘Waves of change’ – different timescales for change in the environment Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 7 Environmental scanning • The process of continuously monitoring the environment and events and responding accordingly. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 8 Social and legal factors • Social and cultural impacts of the internet are important since they govern demand for internet services. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 9 Table 4. 2 Significant laws which control digital marketing Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 10 Table 4. 2 Significant laws which control digital marketing (Continued) Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 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! Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 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 Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 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 Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 14 Figure 4. 2 Applications of using the Internet (Activities online) Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 15 Variation in number of sources on information used to inform buying decision by sector Figure 4. 3 Source: Google Shopper Sciences (2011). Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 16 The influence of different information sources on purchase. ZMOT = Zero Moment of Truth (before visiting store), FMOT = First Moment of Truth (in‑store) Figure 4. 4 [IMPACT OF DIFFERENT FORMS OF ONLINE PURCHASE] Source: Google Shopper Sciences (2011). Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 17 Motivation for use of online services • Psychographic segmentation can help explaining motivation. • Psychodemographic profiles have been developed for web users. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 18 Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 19 Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 20 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… Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 21 WMI 4 categories can be broken into: 1. 2. 3. 4. 5. 6. Community Entertainment Product trial Information Transaction Game 7. Survey 8. Downloads 9. Interaction 10. Search 11. Exploration 12. News Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 22 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 Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 23 Figure 4. 5 Development of experience in Internet usage Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 24 Business demand for digital business services • B 2 B market is more complex than B 2 C • Analysis is important as part of the segmentation of different groups within a B 2 B target market, profile businesses according to: Variation in organization characteristics Individual role Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 25 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 Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 26 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. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 27 B 2 B profiles • We can profile business users of the Internet in a similar way to consumers by assessing: Companies with access; B 2 B 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! Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 28 Adoption of digital business by businesses • Important to understand: What digital business services are businesses adopting? What the barriers? Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 29 Enterprises adopting technologies for digital business, by size class, EU 27, 2012 Figure 4. 6 Source: Euro. Stat (2013). Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 30 Figure 4. 7 Barriers to adoption of e‑commerce services of European countries Source: European Commission (2010): http: //ec. europa. eu/information_society/digitalagenda/documents/edcr. pdf. No longer available. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 31 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? Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 32 Ethical issues and data protection • Ethical issues concerned with personal information ownership have been usefully summarised 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? Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 33 Table 4. 4 Types of information collected online and related technologies Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 34 Table 4. 4 Types of information collected online and related technologies (Continued) Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 35 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. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 36 Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 37 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. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 38 Globalization • consequences for organisations that wish to compete in the global marketplace; 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. a Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 39 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. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 40 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. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 41 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. 3 M (www. 3 m. com) has adapted the websites for many countries to local language versions. It initially focused on the major websites. – Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 42 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. • Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 43 Political factors • Political environment is shaped by the interplay of government agencies. , public opinion, consumer pressure group. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 44 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. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 45 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. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 46 ○ Direct marketing campaigns. According to the report, only the UK, with its UK Online campaign, is marketing directly to citizens on a large scale. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 47 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? Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 48 Figure 4. 12 Diffusion–adoption curve of a Gartner hype cycle Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 49 Figure 4. 13 Example of a Gartner hype cycle Source: Gartner (2010). Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 50 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. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 51 Gartner hype cycle • Peak of inflated expectations – In the next phase, a frenzy of publicity typically generates over-enthusiasm and unrealistic expectations. There may be some successful applications of a technology, but there are typically more failures. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 52 Gartner hype cycle • Trough of disillusionment – Technologies enter the ‘trough of disillusionment’ because they fail to meet expectations and quickly become unfashionable. Consequently, the press usually abandons the topic and the technology. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 53 Gartner hype cycle • Slope of enlightenment – Although the press may have stopped covering the technology, some businesses continue through the ‘slope of enlightenment’ and experiment to understand the benefits and practical application of the technology. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 54 Gartner hype cycle • Plateau of productivity – A technology reaches the ‘plateau of productivity’ as the benefits of it become widely demonstrated and accepted. The technology becomes increasingly stable and evolves in second and third generations. The final height of the plateau varies according to whether the technology is broadly applicable or benefits only a niche market. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 55 Figure 4. 13 Example of a Gartner hype cycle Source: Gartner (2010). Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 56 Approaches to identify emerging technology • • Technology networking Crowdsourcing Technology hunting Technology mining Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 57 Technology networking. • Individuals monitor trends through their personal network and technology scouting and then share them through an infrastructure and process that supports information sharing. • For example Novartis facilitates sharing between inside and outside experts on specific technologies through an extranet and face‑to‑face events. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 58 Crowdsourcing • • • Crowdsourcing facilitates access to a marketplace of ideas from customers, partners or inventors for organisations looking to solve specific problems. E. g. Lego is well known for involving customers in discussion of new product developments. Inno. Centive: is an online marketplace which connects and manages the relationship between ‘seekers’ and ‘solvers’. Seekers are the companies conducting research and development that are looking for new solutions to their business challenges and opportunities. Solvers are the 170, 000 registered members of Inno. Centive who can win cash prizes ranging from $5, 000 to $1, 000 for solving problems in a variety of domains, including business and technology. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 59 Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 60 Technology hunting • This is a structured review of new technology through reviewing the capabilities of start‑up companies. • For example, British Telecom undertakes a structured review of up to 1, 000 start-ups to assess relevance for improving their own capabilities which may ultimately be reduced to five companies with which BT will enter into a formal arrangement each year. Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 61 Technology mining • A traditional literature review of technologies described in published documents. • Deutsche Telekom AG use technology to automate the process through software such as Autonomy which searches for patterns indicating potential technology solutions within patents, articles, journals, technological reports and trend studies. • A simpler approach is setting up a keyword search for technologies through a free service such as Google Alerts (www. google. com/alerts). Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 62 Responses to changes in technology • Innovators • Responders • Laggards Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015

Slide 4. 63 Figure 4. 15 Alternative responses to changes in technology Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6 th edition © Marketing Insights Limited 2015