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The Use of the Internet in Business-to- Business Marketing: Demographic Characteristics and Intercorrelations among Internet Marketing Variables from American and European Companies

By Despina A. Karayanni, Lecturer of Marketing, University of Patras, Department of Business Administration, Greece
Email: [email protected]
Despina Karayanni is Lecturer of Marketing in the University of Patras. Her research interests lie mainly in the fields of high technology marketing, pharmaceutical marketing, relationship marketing and the Internet marketing. See also the University of Patras' Web Site

By George J. Avlonitis, Professor of Marketing, Athens University of Economics and Business, Department of Marketing and Communications, Greece
Email: [email protected]
George Avlonitis is Professor of Marketing in the Athens University of Economics and Business, Head of the Department of Marketing and Communications. For more information see also the Athens University Web Site

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Abstract

In this paper we present some preliminary results from a major Internet survey which examined the use of the Internet in a firm's marketing strategies. Specifically we describe the profile of businessto- business respondents together with the descriptive statistics of Internet use intensity, strategic goals, product, promotion and sales strategies through the Internet. The intercorellations among the resulted factor scores of strategic goals and Internet marketing strategies with product complexity and Internet use depict some useful conclusions for Internet marketers and researchers. Some directions of future research are also discussed.

Introduction

Internet is a new technology breakthrough which has invaded almost every aspect of communication, with users expanding at exponential growth rates. For example, according to the Forrester Research (2003), inter-organizational e-commerce in North America will exceed $2.7 trillion, by 2004. Notwithstanding that there is a growing consensus about the benefits of the use of the Internet in their business activities, a few firms report quite disappointing e-business results (Strauss, J., El-Ansary, A. & Frost, 2003). Also, Thomson and Kaul (1995) suggest that success on the Internet can be measured by the number of site visits (hits), and they note, however, that very few companies report significant sales. In addition, Kurlwich (1995) states that most companies generate very little business from WEB advertising at present and that in reality, the main advantage of the WEB is the experience that they gain about the marketing strategies to be used when the network becomes a major commercial tool for everyone.

On the other hand, the Internet technology is endowed with the qualities of interactivity, demmasification and asynchronous that alter the rules of communication process (Rogers, 1991), therefore demanding the transformation of the communication strategies. As a consequence, new marketing paradigms have to be shaped in order to provide business models applicable in the field of this new marketing phenomenon (Glazer, 1991, Hoffman and Novak, 1996a, Thomson and Kaul, 1995).

The Study

The purpose of this paper is to present some descriptive statistics and intercorrelations among variables from a major international research on Internet business-to-business marketing strategy. The conceptual framework of this major study is presented on Scheme 1.

icommercecentral-conceptual-framework-study

Scheme 1: Conceptual framework Of The Study

According to this conceptual framework, the Internet Marketing Strategies which refer to the strategic goals of the use of Internet, as well as to product, promotion and sales strategies associated with the use of Internet, tend to be affected by the size of the company, its product/market strategy and its experience in using Internet. The impact of Internet Marketing Strategies and their antecedents on sales and export performance, the marketing effort and the channels of distribution is also considered. In this paper we examine the Internet Marketing Strategies and how they are influenced by two selected antecedents, namely the Use Intensity (a variable measuring Experience with Internet) and the Degree of Product Complexity (a Product/Market Strategy variable).

Specifically in this paper we address the following issues:

• We identify some basic demographic characteristics of respondent companies, including size, nationality, field of endeavour, product complexity and intensity of Internet use, in terms of percentage of marketing budget allocated to the Internet use.

• We identify the degree of the Internet inclusion, i.e. the use intensity of the Internet on their marketing strategies, in terms of strategic goals, product, promotion and sales strategies.

• We identify the interrelationships of Use intensity of the Internet and product complexity with the aforementioned strategic goals and Internet marketing strategies and

• We put forward some recommendations useful for the providers of Internet.

Methodology

Traditional dating approaches typically involve a man initiating contact with a woman. The findings of this study suggest that African-American men may have unique psychological concerns with regard to online dating. This is illustrated by their preference to wait for automated information about prospective matches rather than initially searching online for prospective matches. An understanding of the gender differences among African-Americans can help understand if it is necessary to advocate a change in this behavioral pattern among African-American men.

Sample

A ten pages long questionnaire was developed and sent by e-mail to the top marketing executives of 400 business-to- business firms. The sample was randomly selected from the business-to-business directories of the Yahoo WEB portal. Initial and follow-up efforts generated 78 responses, producing a response rate of 19.50% which is acceptable as it compares favourably with response rates obtained in similar large-scale e-mail surveys from executives/managers (Gatignon and Robertson, 1989).

The following three Tables show certain characteristics of the sample companies. From these companies, about 70% were using Internet the last two years, 20% started four years ago, while the remaining 10% had an experience exceeding four years.

Nationality

icommercecentral-Nationality-Respondents

Table 1: Nationality of the Respondents.

Size

icommercecentral-Size-Respondent-Companies

Table 2: Size of the Respondent Companies.

Field of Endeavour

icommercecentral-Field-Endeavour-Respondent

Table 3: Field of Endeavour of the Respondent Companies.

Variables and their Measurement

The study reported in this work-in-progress necessitated the measurement of three blocks of variables:

Experience with the Internet

Use Intensity of the Internet: The respondents were asked to indicate the percentage of their total marketing budget that Internet accounted for (mean 11.57, st.d. 14.59).

Product/Market Strategy

Degree of product complexity: The respondents were asked to indicate whether their product was simple, relatively simple, or complex. The variable was treated as a dichotomous one (0=simple or relatively simple, 1=complex).

Internet Marketing Strategies

i. Strategic Goals

The respondents were asked to indicate on a 5-point Likert scale, the importance (5="extremely important" to 1="of little importance") of using Internet for each of the following strategic goals:

icommercecentral-Use-Internet

Table 4: Strategic Goals for the Use of the Internet.

A factor analysis reduced the above variables into four factors, which explained 62.7% of variance in the original variables. Specifically the factors are :

• Marketing Research: new product research, environmental scanning, finding new vendors and cost effectiveness.

• Gaining Competitive Advantage: gaining marketing edge over the competition, keeping up with the competition and establishing a lead position.

• Expansion of markets: finding new coalitions, finding new markets locally and finding new markets globally.

• Preservation of markets: preservation of existing customers and building brand identity

• Factor scores were computed for each of these factors to be used in the analysis.

ii. Product Strategy

The respondents were asked to indicate the extent to which they were using Internet for the following product planning activities, using a 5-point Likert scale (5="to a large extent", 1="to a limited extent"):

icommercecentral-Internet-Product-Strategy

Table 5: Internet Product Strategy.

iii. Promotion Strategy

The respondents were asked to indicate, using a 5-point Likert scale (5="to a large extent" 1="to a limited extent") the extent to which the message in their Internet ads placed emphasis on the following strategic issues:

icommercecentral-Internet-Promotion-Strategy

Table 6: Internet Promotion Strategy.

iv. Sales Strategy

The respondents were asked to state, using a 5-point Likert scale (5="to a large extent", 1="to a limited extent"), the extent to which their salesmen were making use of the Internet for the following purposes:

icommercecentral-Internet-Sales-Strategy

Table 7: Internet Sales Strategy.

Findings

Table 8, below, shows the correlations between the antecedents (Use Intensity of Internet, Product Complexity), and the Internet Marketing Strategies.

Use Intensity of the Internet and Marketing Strategies

It appears that the use of Internet is associated with the companies' strategic goal of gaining competitive advantage. Indeed, according to Porter (1991), the top management that invests in information technology is doing so because tends to perceive it as a strategic weapon for gaining competitive advantage.

icommercecentral-Relationships-Between-Use-Intensity

Table 8: Relationships Between Use Intensity, Product Complexity and Internet Marketing Strategies.

Considering the positive relationships between the Use Intensity of Internet and the company's Product Strategy (faster discovery of customer needs, better product customization, new product testing and faster product life cycles), as well as Sales Strategy (use of Internet by the salesforce for market segmentation and customer classification), we may argue that Internet has helped companies to put market orientation into practice. In other words, it is being used for identifying and targeting specific micro segments (niching), discovering customer needs into these segments and customizing their product/service mix to these specific needs.

Indeed, firms interested in marketing in a hypermedia computer-mediated environment adopt a market orientation (Hoffman and Novak, 1996a). Thus, the virtual world of Internet helps companies to follow demand-side strategies rather, than simply making and selling products. They seem to adopt a demand-side thinking (Rayport and Sviokla, 1996).

The lack of significant relationships between the Use Intensity of Internet and the variables pertaining to Promotion Strategy, is aligned with the practice of industrial marketing, which entails that advertising is necessary, still not sufficient for the accomplishment of actual sales. It plays a supporting role to the sales department's efforts to maintain and expand their customer portfolio. However, it seems that the companies which use extensively Internet, emphasize ad messages which have to do with the "Alternative Uses of the Product". This supports the argument put forward by Cronin (1993) that the content of Internet advertisment message should be mainly informational.

Degree of Product Complexity and Internet Marketing Strategies

According to Benjamin and Wigand (1995) "products that are easy to describe favor electronic markets" and "... producers of physical manufactured goods now sold through catalogs and those in which computer technology can simplify product complexity and reduce asset specificity can be connected through the information highway". The negative relationship of Product Complexity and the strategic goal of Market Expansion supports the views of Benjamin and Wigand indicating that industrial companies capitalize on Internet for direct selling of simple products, or for relatively simple buying situations, (straight rebuy).

The positive relationship between Product Complexity and the product strategy variable of better cooperation of R&D with external resources, may indicate that Internet is being used by business-tobusiness companies in their effort to develop new products with external cooperation. This is so, because product complexity and financial risk tend to impose the transfer and exchange of knowledge, assets and experience through collaboration patterns (Bucklin and Sengupta,1993, Gambardella, Garcia and Fontes,1995, Hausler, Hohn and Lutz,1994).

Also, product complexity implies a higher degree of market ambiguity-uncertainty (Moriarty and Kosnik,1989), in terms of product utility and operability. In other words, customers may not understand what needs the product could satisfy.Therefore, the advertising message in Internet should place emphasis on product applications and product uses and our results confirm this.

Conclusion

Management of the companies marketing industrial products and services acknowledge Internet as a competitive weapon and formulate certain strategies in order to capitalize on the benefits provided by this technology. Apparently Internet assist companies to put marketing orientation into practice. More specifically, companies utilize Internet in all their activities pertaining to the successful commercialization of their products. In addition, they involve their sales departments with Internet, mainly with the aim to facilitate the crucial task of market segmentation and targeting, as well as for discovering sales leads.

However, while the companies with simple or relative simple products are more inclined to set the strategic goal of market share increase through the use of Internet, companies marketing complex products are more likely to use Internet in order to facilitate their collaboration with other actors in developing new products.

Future Research

Closing this paper, we need to stress that since companies recognize Internet as a strategic weapon and deploy certain Internet Marketing Strategies, we need to focus on the performance of these strategies, in productivity and efficiency terms, in order to evaluate the contribution of the electronic superhighway in the effectiveness of business-to-business marketing strategies. Special performance measures have to be developed in order to substantiate how a firm's performance may be influenced by the Internet Marketing Strategies. Along similar lines, we need to develop specific measures in order to evaluate quality issues of a firm's Internet Marketing Strategy. For example, we may use productivity enhancement, increase of sales, or efficiency improvement as direct performance measures. However, indirect performance measures, such as improvement of corporate image, increase of brand equity and reinforcing of a firm's public relations may be more difficult to be used as quality evaluation measures of a firm's Internet Marketing Strategy. The above issues may be major objectives for future research in the scope of Internet marketing literature.

References

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