10.1.1.167.1837

E-commerce marketingstrategies anintegrated frameworkand case analysis

Eric Allen andJerry Fjermestad

Introduction

Numerous strategic frameworks have beenproposed to help organizations marketthemselves on the Internet (Kalakota andWhinston 1997 Rayport and Sviokla 1994)Many of these strategic frameworks representnew versions of familiar themes in themarketing process This paper will show thatby integrating the new strategic frameworkswith the traditional marketing model a morethorough framework can be developed Thenthe integrated framework will be applied inthe analysis of e-commerce strategy forNabisco an established consumer productscompany that has begun to formulate itse-commerce strategy

Framework integration

Zwass (1996) suggests that the establishedway to analyze and develop complex systems(such as e-commerce) is to organize them in ameaningful structure As a means ofcomparing the frameworks presented themajor concepts of each article will bediscussed as they apply to the traditionalmarketing mix model of product place priceand promotion In addition to the four Psmodel we will also discuss how eachframework addresses shifting consumerexpectations Table I summarizes four articlesthat provide strategic frameworks for thinkingabout online relationships betweenmanufacturers retailers and consumersTable II shows how the major concepts ofeach framework map to the traditionalmarketing model

ProductA product is anything that can be offered to amarket for attention acquisition use orconsumption that might satisfy a want or need(Kotler 1991) In an e-commerce marketingstrategy it is important to remember thatinformation is now its own viable productMany of the frameworks reviewed addressedthis area Rayport and Sviokla (1994) discusstransactions where the actual product hasbeen replaced by information about theproduct and Evans and Wurster (1999)discuss navigation as its own business This

The authors

Eric Allen is a Graduate Student in the School of

Management and Jerry Fjermestad is a Professor in the

School of Management Center for Multimedia Research

both at New Jersey Institute of Technology Newark

New Jersey USA

Keywords

Electronic commerce Marketing strategy Marketing mix

Consumer products Internet Grocery

Abstract

Demonstrates the usefulness of the traditional marketing

model in developing e-commerce marketing strategies

Discusses four e-commerce frameworks and integrates

them with the traditional marketing model (product price

promotion and distribution) to develop a complete

framework Discusses how the e-commerce strategies

could be applied to a real company using the integrated

model

Electronic access

The research register for this journal is available at

httpwwwmcbupcomresearch_registers

The current issue and full text archive of this journal is

available at

httpwwwemerald-librarycomft

This research was supported by the New JerseyCenter for Multimedia Research

14

Logistics Information Management

Volume 14 Number 12 2001 pp 14plusmn23

MCB University Press ISSN 0957-6053

change has resulted from technology that hasbrought down the cost of collecting anddisseminating information about consumersand products Evans and Wurster (1999)describe navigation as the process throughwhich shoppers collect information aboutproducts In the physical world a shopperwho wants to buy something has to manuallysift through the millions of choices Thisusually requires a shopper to travel to a storeand inspect the products Unless they want totravel to various stores they are limited to the

information at one particular store Acomplete search of all offerings would beextremely expensive time-consuming andpractically impossible Instead consumers relyon product suppliers and retailers to aid themin the search This allows the suppliers andproviders to use the consumersrsquo cost-of-search as a competitive advantage Howeveron the Internet consumers can search muchmore comprehensively and at virtually nocost Suppliers and retailers must realize thatproduct information can be delivered to

Table I The e-commerce frameworks

Article E-commerce business framework Major consequences

Managing in marketspace(Rayport and Sviokla1994)

Technology has allowed the information about a product or service to be

separated from the product or service itself This new market space has

three elements

(1) Content is what is being sold (ie what you take delivery of) This

can be information a service or a physical product

(2) Context is how the content is presented for sale Key to consumer

loyalty once the consumer is loyal to a particular context there is

a large potential for related transactions

(3) Infrastructure describes how the buyer and seller are brought

together

Traditionally all three elements would be managed by a single player to

develop a brand Now the three elements will be segmented and can be

managed separately to create brand value

Erosion of brand equity

Physical products replaced with information

based services

Near-zero marginal costs of additional

customers invalidates old concepts of

pricing

Companies must look to exploit the breadth

of the electronic channel plusmn develop

context loyalty first then exploit it with

various content

The Internet andinternational marketing(Klein and Quelch 1996)

E-commerce will develop along two paths information to transaction

(established companies) or transaction to information (start-ups)

Web sites must be built to reduce costs for customers (eg customersrsquo

service transactions) or to generate revenue from them (eg product

information promotions market research transactions)

E-commerce should enable buyers and sellers to come together where

they previously could not This is a critical area of growth for

international companies

Technology (connection to the network) will

become more important than size for

companies marketing on the Internet

Standard pricing

Changing role for intermediaries

Companies dominating markets

Making business sense ofthe Internet (Gosh 1998)

Four business opportunities that are provided by the Internet

(1) linking companies directly to customers suppliers and other

interested parties

(2) allowing companies to skip other players in the value chain

(3) using the Internet as a tool for developing new products and

services for customers

(4) allowing companies to dominate the electronic channel of an entire

industry or segment control access to customers and set business

rules

Replace intermediaries and value chain

members

Increased customersrsquo loyalty

New competitors and customers

The emergence of category killers

Getting real about virtualcommerce (Evans andWurster 1999)

Navigation is now a separate business with three aspects reach

affiliation and richness

Reach refers to the number of different categories and products a

consumer interface (eg store catalog and Web site) can cover Reach

also refers to the number of customers a business can interact with

Affiliation refers to whose interests are most important to the merchant

the customerrsquos the retailerrsquos or the supplierrsquos

Richness is how much information can be exchanged between a producer

and consumer Richness has two aspects customer information and

product information

Brands as a source of rich information

(particularly those based on fact based

beliefs) will lose much of their value

The value chain will break down in most

industries

Navigators will be able to capture most of

the value in an industry as the other

elements of the supply chain (eg

physical retailers distributors and

manufacturers) become commoditized

15

E-commerce marketing strategies a framework and case analysis

Eric Allen and Jerry Fjermestad


Volume 14 Number 12 2001 14plusmn23

consumers by a third party Indeed purenavigators such as Yahoo have alreadybecome major players in this business (Evansand Wurster1999)

The Internet can also serve as a platform fornew product innovations Companies can usethe direct access to consumers to collectinformation that will help them better developproducts to meet the consumersrsquo needs Forinternational companies this can provideadaptations and customizations for localmarkets (Klein and Quelch 1996) or createniche products Companies can also leveragetheir reach to consumers to sell advertisingduring transactions (Gosh 1998)

PlaceFor most companies the place aspects of themarketing mix involve marketing channelsMarketing channels can be defined asinterdependent organizations involved in theprocess of making a product or serviceavailable for use or consumption (Kotler1991)

Due to the size of its marketplace theInternet will have the most profound effect onplace in the marketing mix E-commerce putsthe purchase decision anywhere a connectionto the Internet exists All of the frameworks

reviewed addressed place Klein and Quelch(1996) discuss the global reach of the Internetin creating a larger marketplace and thestrong growth of a networkrsquos utility based onMetcalfrsquos law Evans and Wurster (1999)discuss reach the number of eyeballs thatview a Web site They claim that reach is themost visible difference between e-commerceand the physical world

The Internet will allow organizations to skipover parts of the value chain Gosh (1998)discussed how the Internet could be used topirate the value chain Examples most ofteninvolve marketing the product on the Internetin order to bypass the retailer Computermanufacturers such as Dell and Gateway2000 do this UPS has a program to set upe-commerce sites for businesses that ship withthem (Gosh 1998) According to Evans andWurster (1999) the navigational Web siteswill allow small niche producers easier accessto the markets They will be able to skip overparts of the value chain that traditionalsuppliers have historically relied on forcompetitive advantage Traditional supplierscould respond to this by keeping their productout of navigational Web sites to block theirdevelopment However this strategy wouldbe technically difficult and would only be

Table II The electronic commerce marketing framework

Framework Product Place Price Promotion Customer centered

Managing inmarketspace (Rayportand Sviokla 1994)

Content plusmn what is

being sold (what do

you take delivery

of)

Infrastructure plusmn how

was the sale

possible

Context plusmn how is it

presented for sale

Pricing based on cost

has no place


Global reach

Market makers

Standard pricing Global branding Understanding the

global consumers


Tool for developing

and delivering new

products and services

to customers

Companies can skip

other players in an

industry value chain

Companies are able

to dominate the

electronic channel of

an entire industry or

segment control

access to customers

and set business rules

Links companies

directly to customers

suppliers and other

interested parties

Getting real aboutvirtual commerce (Evansand Wurster 1999)

Navigation as a

separate business

Reach Richness Affiliation

16





successful if other large producers actedsimilarly Furthermore it would be atremendous advantage for a single producerto defect from the group and offer its productand the only defense available to otherproducers would be follow to suit (this is anexample of the tragedy of the commoneconomics principle) A more successfulstrategy would be to enter into joint venturesor expand a supplierrsquos Web site to offercompetitorsrsquo products (Evans and Wurster1999)

It is critical to quickly develop a largecustomer base in e-commerce Rayport andSviokla (1994) describe the place ofe-commerce in terms of two aspects contextin which the transaction occurs (eg anelectronic on-screen auction replaces a face-to-face auction) and the infrastructure thatenables the transactions to occur (egcomputers and communication lines replacecar lots) Rayport and Sviokla (1994) claimthat customer loyalty must be first gained inthe context dimension The first moveradvantage is very important because Internetstandards could make the competitiveadvantages of a particular context difficult tosustain By their very nature standards willallow organizations to duplicate the designand features of competitorsrsquo Web sitesHowever the courts may provide someprotection for e-commerce store designs(Reuters 1999)

Organizations that are first to offer a largebreadth of products to consumers will have anadvantage The marketplace on the Internetcould consolidate quickly as many e-retailerswill attempt to become category killers placeswhere consumers can go for all their shoppingneeds The success of category killers can beseen in the bricks and mortar world (eg Wal-Mart) Category killers on the Internet wouldhave the following advantages physical spaceis less of a constraint expansion would beeasier on the Internet and stores cancustomize offerings to consumers Instead ofnavigating hundreds of sites to find what theyneed consumers will stay with the sites theyfind convenient Magnet stores or categorykillers can be expected to form around anumber of dimensions such as productservice customer segment and industry(Gosh 1998) For example the largestphysical Barnes amp Noble bookstore in theUSA still carries only 200000 titlesAmazoncom offers 45 million volumes and

is lsquolsquolocatedrsquorsquo on some 25 million computerscreens With the success of category killerssome are starting to move outside theircategories Amazoncom now sells CDs andtoys among other things (Evans and Wurster1999) Gosh (1998) further suggests thatmanufacturers need to figure out how toembed their products in these magnet storesThis may be a key for the long-term survivorsover the next few years

PricePrice is the only element of the marketing mixto generate revenues As Kotler (1991)suggests all other elements of a businessoperation represent costs Internet pricingdecisions will be just as important as theytraditionally have been however most of theframeworks did not discuss price

The Internet will lead to increased pricecompetition and the standardization of pricesKlein and Quelch (1996) point out twocounteracting effects of the Internet on priceFirst a supplier can use the technology todiscriminate pricing between consumers forexample in different countries However ifthey do not take precautions the consumersmay be able to quickly find out about theprice discrimination and object to it Kleinand Quelch (1996) suggest that takentogether these factors would lead to increasedstandardization of prices across borders Alsothe ability to compare prices across allsuppliers using the Internet and onlineshopping services will lead to increased pricecompetition Finally the price of providingInternet-based services often contains little orno marginal costs Economic theory predictsthat the price of a product or service willapproach its marginal cost as competitionintensifies

Organizations will have to employ newpricing models when selling over the InternetRayport and Sviokla (1994) point out that theability of technology to offer services at acheaper cost would make it difficult todetermine the appropriate price for aconsumer Voicemail for example is solelyan information-based service which providesthe consumers with a replacement for thetraditional answering machine Howeverconsumers are willing to pay even more forthe service than they would for an answeringmachine due to the convenience and addedfeatures (Rayport and Sviokla 1994)

17





PromotionPromotion encompasses all the various waysan organization undertakes to communicateits productsrsquo merits and to persuade targetcustomers to buy from them (Kotler 1991)Incumbent retailers and manufacturers havecertain advantages when promoting productsand services on the Internet Evans andWurster (1999) discuss these advantages inrelation to the richness of information theycan provide consumers The Internetprovides a low cost way for the manufacturerto build a direct link with the consumerIncumbents can use their traditional sourcesof consumer information (eg producttesting focus groups) in addition to theinformation that is easily collected frome-commerce sites (eg sales informationcustomer demographics) Using data miningthey can build customer profiles that allowthem to offer distinct promotions that aretailored to their customers This advantage isat its greatest when the consumer is interestedin detailed product information or theproduct is marketed as state-of-the-art Suchrich product information is most useful whenthe consumer is evangelistic enthusiastic andthe product has a strong connotative context(Evans and Wurster 1999)

Branding will continue to play an importantrole in Internet marketing As Klein andQuelch (1996) point out new users tend toexplore sites with familiar brands first Recentsurveys have shown that 46 per cent of newonline shoppers prefer to buy from merchantsthey had previously bought from off-lineEven 34 per cent of repeat online shopperspreferred the familiar off-line store sites(Kane 1999) Brands that equate theirproducts with an experience (eg feelingsassociations and memories) will likely bemore effective than brands based on factsabout a product Belief-based brandsassociate themselves with attributes such ashigh quality or reliability These attributes canbe easily proven by an impartial display of thefacts on a navigatorrsquos Web site Even if thefacts confirm the brand it may only berendering the brand redundant Brands thatare associated with a mixture of beliefs andexperiences should play up the experientialside of the brand (Evans and Wurster 1999)

There are important limitations topromoting on the Internet Privacy concernsmay make consumers unwilling to give upinformation Technologies such as privacy

programs allow consumers to prevent datafrom being collected In addition consumersmay realize the value of this information anddemand a premium for it (Evans andWurster 1999) However Web marketerscan use consumer information to createsubstantial value for the consumer Asconsumers recognize this value they will bemore likely to share their information Inaddition when detachment objectivity andcomprehensiveness characterize the purchasedecision the richness of product informationprovided does not provide as strong anadvantage Other problems for manufacturerspresenting rich product information includethe reach of their Web sites and the lack ofcredibility in a single product Web site versusan independent site that compares multipleproducts (Evans and Wurster 1999)

Customer centeredCompanies are changing how they markettheir products in order to better satisfyconsumersrsquo needs Traditional marketing hasbecome more expensive and less effective overtime The concept of brand managementwhich was developed just after the SecondWorld War was the last major advancementin marketing practices However brandmanagement has become part of the problemRival products differ so little that brands havebecome hard to promote Various attempts tore-organize companies or motivate salesforces have not solved the problem Nowcompanies can use the Internet to enter into adialogue with their customers They canreplace the salesperson while increasing thelevel of service In doing so they can use onemedium for the customer and exploit anddiscover customersrsquo individual interests(Sealy 1999)

With the Internet it is possible to gainpermission to discuss your products asopposed to interruption marketing such astelevision commercials Advertising researchsales promotions coupon distribution andcustomer support can all be done on theInternet Eventually companies can developrelationships with customers that will allowthem to continuously re-supply after initialpermission is obtained Retailers will weakenin power and trade-marketing expenses formanufacturers will start to go away in favor ofimproving products and promoting brands(Sealy 1999) The frameworks reviewed onlytouched on this important factor

18





The shifting importance of marketingmix elementsBesides changing the elements of thetraditional marketing mix in isolation some ofthe most profound effects of the Internet willcome in how the trade-off between elementsof the marketing mix operates Evans andWurster (1999) point out that traditionallythe amount of products a retailer could carryin one place (their reach) was inverselyproportional to the amount of informationthey could present about the product in theirpromotions (richness) The Internet haseliminated that tradeoff Internet retailers canoffer many more products than the largestbricks and mortar retailer and providedetailed product information at the same time(Evans and Wurster 1999) Warehousing anddistribution are no longer part of navigationand selection Therefore manufacturers areno longer limited in the size of their marketand the amount of information they canpresent to consumers through promotions

Nabisco a case analysis

BackgroundAlmost every company has to rethink itsstrategies due to the changes that the Internetbrings For some the implications areobvious but for others they are not As atraditional manufacturer of packagedconsumer goods Nabisco falls into the lattercategory Nabisco a multi-billion dollar snackfood company has major competitiveadvantages in the traditional supermarketdistribution channels Its Biscuit divisioncurrently spends 10 per cent of sales in trade(retail) marketing for items such as specialpromotions and in-store displays In additionthe Biscuit division maintains a fleet of trucksthat provide direct store delivery which is anadvantage that few competitors can affordDirect store delivery and Nabiscorsquos dominantmarket share in the biscuit category ensurethat Nabiscorsquos products receive the most shelfspace in stores and cross shoppersrsquo pathsmore than competitor products Howeverthese competitive advantages will diminish ina market dominated by online groceryshopping Advantages critical for a bricks andmortar grocery manufacturer such as in-storedisplays product presentation and shelf spacedo not directly transfer to an onlineenvironment Strategies will have to be

developed to replace these competitiveadvantages with new ones

For established companies doing businessonline risks damage to brands anddistribution relationships that currentlyrepresent key competitive advantages Newstrategies will often require a companyrsquos newbusinesses to compete against old ones(Evans and Wurster 1999) For examplemany conventional retailers have hesitated toembrace electronic commerce because theyfear that when consumers shop online theywill make fewer impulse purchases andbecome more price-sensitive (Maruca 1999)Resistance to change in these areas will begreat The larger the organization the greatertrouble it may have The Internet will reducethe competitive advantage of scale in anumber of ways and global companies willhave to coordinate the Internet strategies ofall their subsidiaries to preserve their brandsand prevent confusion across markets (Kleinand Quelch 1996)

Established companies must face up to thechallenge and determine the opportunities theInternet creates and how their traditionalbusiness models are threatened (Gosh 1998)The value chain for incumbent manufacturersand retailers is being deconstructed becausethe value to consumers derived from entiresegments of that chain can be achieved moreefficiently and effectively through the use ofthe Internet (Evans and Wurster 1999) Evenif the overall percentage of sales on theInternet averages just 5 per cent across allcategories that shift will still createtremendous pressure on physical retailersparticularly in the USA (Maruca 1999)

To date Nabisco has established asignificant presence during the land grabphase of the Internet referred to by Evans andWurster (1999) For the US market thecompany currently has a number of Websites a corporate information site a recipe site that provides consumers with

recipes that feature Nabisco products each of its two domestic operating units

has Web sites that contain games andpromote the units brands

online shopping for Nabisco brandmerchandise (eg mugs dolls andtrains) along with specially packagedfood products

various brand specific sites

19





Nabisco has also started an e-business groupto address the larger strategic issues presentedby the Internet

Growth of the online grocery businessThe online grocery shopping industry ispositioned for tremendous growth in thecoming years Although current sales areestimated at $18 billion annually (Dykema1999) they are expected to reach $35 billionby 2002 (Munarriz 1999) and $37 billion 4per cent of domestic sales by 2004 (Dykema1999) Some projections call for 20 per centof all grocery orders to be placed online by theyear 2007 (Munarriz 1999)

The incentive for grocers to go online is toestablish relationships with customers thatwill allow them to automatically replenishhomes regularly This will result in aconsistent cash flow (Dykema 1999)Therefore being the first to offer qualityservice through an expansive distributionsystem is critical to the industry It will takesome time for the industry to reach itspotential because distribution centers willneed to be established across the country On-line grocers will also have to develop ways tohelp consumers break their old habits ofweekly shopping trips to local stores(Dykema 1999)

Despite the obstacles and what could beseen as slow growth projections for theimmediate future (from $18 billion to $35billion by 2002) it is clear that online grocerswill be a significant retail force in the industrywithin the next five years Beyond five yearsgrowth at a much greater rate cannot be ruledout The growth of online grocery shoppingwill clearly have an impact on packagedconsumer product suppliers by changing thebusiness models they have operated under fordecades

Implications of the integrated frameworkNabiscorsquos current corporate strategy is tobuild total brand value Total brand valuecalls for satisfying customers faster and morecompletely than the competition As onlinegrocers become a significant force in themarket this general strategy may still beuseful but the specifics of an Internet strategywill have to be developed Using an Internetstrategy framework that has been integratedaround the traditional 4Ps marketing modelsome of the implications for NabiscorsquosInternet strategy are discussed

ProductCollected Internet information would provideNabisco with the ability to spot entirely newmarkets Nabisco may have to compete withniche shops over the Internet and should starta business unit designed to compete in nichemarkets A niche business unit would be ableto respond to the marketing information thatindicates a new product is desired by a smallersegment of the market A niche business unitwould also help Nabisco respond better tointernational consumer needs Finally nicheproducts would give the companyrsquos productdevelopment labs a chance to use promisingdevelopments that could not achieve thecritical market mass required by todayrsquos coststructure

PlaceStrategies designed to halt or slow thedeconstruction of the value chain are unlikelyto work The company could work with bricksand mortar retailers to try to preserve thecurrent way of doing business Most likelystrategies would be to keep Nabisco productsoff online grocer sites or not support theonline grocers This strategy would only workif other consumer product manufacturersfollowed and also held out However none ofthem would take the risk of being left behindin the new channel Nabisco would also find itdifficult to compete by selling its productonline because it would not have the reachconsumers would want Consumers typicallydo not purchase grocery items in isolation andthey would be unlikely to pay the highshipping costs to deliver such a low pricedproduct for on demand consumption

Nabisco needs to quickly develop an onlinecustomer base and ensure that its productsare offered on sites that have all the productsconsumers want Nabisco could formalliances with other consumer productscompanies (eg Heinz Campbellrsquos PampG)However only one brand of each item wouldbe offered unless the industry as a wholedecided to open its own online grocery Amore useful alliance on the part ofmanufacturers would be to promote onlineretailing standards To counteract thelsquolsquostickyrsquorsquo technologies that online retailerswould be developing to retain customersconsumer products manufacturers shoulddevelop standards for technologies that wouldallow consumers to switch online grocerseasily The industry would also want to

20





encourage standards that would allowconsumers to select products frommanufacturersrsquo sites even if the purchase anddistribution occurred through the onlinegrocer In order to gain leverage in enforcingthese standards the manufacturers orNabisco in particular should provide anonline service that allows consumers tonavigate their selection of online groceryproviders The site would provideinformation about online grocers thatconsumers would be interested in such as theprice of the service service quality measuresand the geographic area the service is offeredin Sponsoring manufacturers could embedthemselves in the online grocerrsquos site byoffering promotions through online grocerswho are complying with industry standards

Nabisco will need to carefully managechanges in the industryrsquos value chainNabisco like other companies will have to becareful not to damage its brands and itsrelationship with existing distributors andretailers For a substantial part of thecompanyrsquos business it provides thedistribution itself through direct storedelivery A business model where consumersbuy groceries online directly from largeregional warehouses would negate the valueof direct store delivery It would also cut intothe volume of product carried by direct storedelivery which is crucial for offsetting fixedcosts (eg trucks) The company will have todetermine a divestment strategy for its directstore delivery assets as online groceryshopping grows in popularity In additionchange management plans will have to bedeveloped to help management andemployees adapt to changes in businesspractices that have been competitiveadvantages for decades Online grocers willdo the navigation and distribution functionsperformed by supermarkets Then onlinegrocers will split into delivery services andgrocery information sites These sites couldlink directly to manufacturer sites to provideconsumers with product information Therationalized distribution networks would beable to respond to consumer requests frommanufacturers within days even if theproduct was not already in the distributionchannel This would allow Nabisco inessence to sell directly to its customersManufacturers will no longer need bricks andmortar retailers to provide their products toconsumers

PriceNabisco should be prepared to respond toincreased price pressures on the InternetServices like pricelinecom and the potentialfor the consolidation of online groceryservices could bring the quick disseminationof competitive price information toconsumers increasing price pressuresIncreased price pressures would play to thebenefit of the traditional large producers likeNabisco In physical products there are stilltremendous benefits in economies of scaleand incumbent companies have much moreexperience producing and selling their goodsunder the constraints of intense pricepressures

Nabisco should consider new pricingmodels for its products For example it couldstart programs with online retailers that wouldallow consumers to subscribe to a cookie orsnack of the month This would allow it tobetter service existing consumers byintroducing new products Also thesubscription process would also allow foridentifying and establishing relationships withits best customers

PromotionNabisco should continue to aggressivelypromote its brands on the Internetparticularly brands based on experienceMost Nabisco brands are based onexperience For example many of the brandssuch as Oreo have a nostalgic appeal Inaddition it would be difficult for any onlinegrocery store to represent taste the mostcritical piece of information for consumersabout Nabiscorsquos products The bestapproximation of this would be publishingconsumersrsquo taste satisfaction surveys Themost effective way to use brands todistinguish Nabiscorsquos products in an onlineenvironment is to focus on presentinginformation about the experiences associatedwith its brands However some brands suchas SnackWellrsquos are belief driven In that casethe belief is that SnackWellrsquos products arehealthier than other snacks Consumers trulyfocused on health concerns could easily takeadvantage of information on an onlinegrocerrsquos site to determine which products arethe healthiest This would either destroy thecredibility of the SnackWellrsquos brand or makeattempts to establish the brand as healthyredundant

21





Customer centeredAn online service that allows consumers tonavigate their selection of online groceryproviders would give manufacturers theopportunity to collect additional consumerinformation This would transferinformational power from online grocers toconsumers and help in the deconstruction ofthe value chain which would allowmanufacturers such as Nabisco to becomecloser to consumers Eventually the supplychain will break down in new waysConsumers will no longer rely on grocerystores to help them narrow their choice ofproducts and navigate through theselections To operate successfully in thisenvironment Nabisco will have to developrelationships directly with consumers Theopportunity exists for companies to knowtheir customersrsquo preferences so well that theycan predict their needs accurately enough toship directly to them before they place anorder

Conclusion

Although many of the e-commerce strategyframeworks offer a unique contribution tostrategic planning integrating these modelsinto the traditional product price place andpromotion framework can provide a morecomplete analysis of strategy Theconclusions from this combined analysis aresummarized as follows

Product Information has become its own product

on the Internet The Internet will serve as a platform for

new product innovations

Place The Internet has created the largest

marketplace ever It puts the purchasedecision anywhere where a connectionexists

The Internet allows organizations to skipover parts of the value chain

It is critical to quickly develop alarge customer base in onlinecommerce because organizations thatare first to offer a large breadth ofproducts to consumers will have anadvantage

Price The Internet will lead to increased price

competition and the standardization ofprices

Organizations will employ new pricingmodels when selling over the Internet

Positioning Incumbent retailers and manufacturers

have certain advantages when promotingproducts and services on the Internet

Branding will continue to play animportant role in Internet marketing

There are some important limitations topromoting on the Internet includingprivacy concerns limits to the ability topromote certain brands and a potentiallack of credibility from single productWeb sites

In addition the Internet changes the trade-offs between elements of the marketing mixfor example the dependencies between placeand promotion are not as strong on theInternet Also companies are changing howthey market their products in order to bettersatisfy consumersrsquo needs With the Internet itis possible to gain permission to discuss yourproducts as opposed to interruptionmarketing such as television commercials

Based on an analysis that uses thetraditional four Ps model and integratingother online strategy frameworks Nabiscoshould pursue the following online marketingstrategies Use the Internet to develop new products

and services Help the consumer choose an online

grocer by encouraging standards anddisseminating information

Prepare itself to operate in an increasinglyprice competitive marketplace

Emphasize those brands that relate toexperiences over facts

Develop customer centered marketingpractices

References

Dykema EB (1999) ` Online replenishers deliverrsquorsquo TheForrester Report Vol 11 pp 114-18

Evans P and Wurster TS (1999) ` Getting real aboutvirtual commercersquorsquo Harvard Business ReviewNovember pp 84-94

Gosh S (1998) ` Making business sense of the InternetrsquorsquoHarvard Business Review March pp 126-35

22





Kalakota R and Whinston AB (1997) Electronic

Commerce A Managerrsquos Guide Addison-Wesley

Reading MAKane M (1999) ` Registers are ringing onlinersquorsquo http

dailynewsyahoocomhzd19991207tc

19991207043html ZDNetYahoo News

Technology Headlines December 7 1999Klein L and Quelch JA (1996) ` The Internet and

international marketingrsquorsquo Sloan Management

Review Vol 37 No 3 pp 60-75Kotler P (1991) Marketing Management Analysis

Planning Implementation amp Control Prentice-Hall

Englewood Cliffs NJMaruca RF (1999) ` Retailing confronting the

challenges that face bricks-and-mortar storesrsquorsquo

Harvard Business Review July pp 159-68

Munarriz RA (1999) ` The online grocer invasionrsquorsquohttpwwwfoolcomspecials1999sp991201grocerieshtm ref=yhoolnk Foolcom 1December

Rayport JF and Sviokla JJ (1994) ` Managing in themarketspacersquorsquo Harvard Business ReviewNovember pp 141-50

Reuters Judge Grants Injunction against (1999)barnesandnoblecom plusmn httpdailynewsyahoocomhnm19991203wrbn_injunction_2html YahooDecember 3

Sealy P (1999) ` How e-commerce will trump brandmanagementrsquorsquo Harvard Business Review Julypp 171-6

Zwass V (1996) ` Electronic commerce structures andissuesrsquorsquo International Journal of ElectronicCommerce Vol 1 No 1 pp 3-23

23





change has resulted from technology that hasbrought down the cost of collecting anddisseminating information about consumersand products Evans and Wurster (1999)describe navigation as the process throughwhich shoppers collect information aboutproducts In the physical world a shopperwho wants to buy something has to manuallysift through the millions of choices Thisusually requires a shopper to travel to a storeand inspect the products Unless they want totravel to various stores they are limited to the

information at one particular store Acomplete search of all offerings would beextremely expensive time-consuming andpractically impossible Instead consumers relyon product suppliers and retailers to aid themin the search This allows the suppliers andproviders to use the consumersrsquo cost-of-search as a competitive advantage Howeveron the Internet consumers can search muchmore comprehensively and at virtually nocost Suppliers and retailers must realize thatproduct information can be delivered to

Table I The e-commerce frameworks

Article E-commerce business framework Major consequences

Managing in marketspace(Rayport and Sviokla1994)

Technology has allowed the information about a product or service to be

separated from the product or service itself This new market space has

three elements

(1) Content is what is being sold (ie what you take delivery of) This

can be information a service or a physical product

(2) Context is how the content is presented for sale Key to consumer

loyalty once the consumer is loyal to a particular context there is

a large potential for related transactions

(3) Infrastructure describes how the buyer and seller are brought

together

Traditionally all three elements would be managed by a single player to

develop a brand Now the three elements will be segmented and can be

managed separately to create brand value

Erosion of brand equity

Physical products replaced with information

based services

Near-zero marginal costs of additional

customers invalidates old concepts of

pricing

Companies must look to exploit the breadth

of the electronic channel plusmn develop

context loyalty first then exploit it with

various content


E-commerce will develop along two paths information to transaction

(established companies) or transaction to information (start-ups)

Web sites must be built to reduce costs for customers (eg customersrsquo

service transactions) or to generate revenue from them (eg product

information promotions market research transactions)

E-commerce should enable buyers and sellers to come together where

they previously could not This is a critical area of growth for

international companies

Technology (connection to the network) will

become more important than size for

companies marketing on the Internet

Standard pricing

Changing role for intermediaries

Companies dominating markets


Four business opportunities that are provided by the Internet

(1) linking companies directly to customers suppliers and other

interested parties

(2) allowing companies to skip other players in the value chain

(3) using the Internet as a tool for developing new products and

services for customers

(4) allowing companies to dominate the electronic channel of an entire

industry or segment control access to customers and set business

rules

Replace intermediaries and value chain

members

Increased customersrsquo loyalty

New competitors and customers

The emergence of category killers

Getting real about virtualcommerce (Evans andWurster 1999)

Navigation is now a separate business with three aspects reach

affiliation and richness

Reach refers to the number of different categories and products a

consumer interface (eg store catalog and Web site) can cover Reach

also refers to the number of customers a business can interact with

Affiliation refers to whose interests are most important to the merchant

the customerrsquos the retailerrsquos or the supplierrsquos

Richness is how much information can be exchanged between a producer

and consumer Richness has two aspects customer information and

product information

Brands as a source of rich information

(particularly those based on fact based

beliefs) will lose much of their value

The value chain will break down in most

industries

Navigators will be able to capture most of

the value in an industry as the other

elements of the supply chain (eg

physical retailers distributors and

manufacturers) become commoditized

15















being sold (what do

you take delivery

of)


was the sale

possible


presented for sale


has no place


Global reach

Market makers


global consumers


Tool for developing

and delivering new


to customers

Companies can skip

other players in an


Companies are able

to dominate the



segment control

access to customers


Links companies


suppliers and other

interested parties


Navigation as a

separate business


16












17











18
















19













20










21






Conclusion























References




22






















23















being sold (what do

you take delivery

of)


was the sale

possible


presented for sale


has no place


Global reach

Market makers


global consumers


Tool for developing

and delivering new


to customers

Companies can skip

other players in an


Companies are able

to dominate the



segment control

access to customers


Links companies


suppliers and other

interested parties


Navigation as a

separate business


16












17











18
















19













20










21






Conclusion























References




22






















23












17











18
















19













20










21






Conclusion























References




22






















23











18
















19













20










21






Conclusion























References




22






















23
















19













20










21






Conclusion























References




22






















23













20










21






Conclusion























References




22






















23










21






Conclusion























References




22






















23






Conclusion























References




22






















23






















23





Documents

10.1.1.167.1837