Electronic Marketing
Chapter 17
The Edge of Business-to-Business
Activities
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Short History of E-Business
• The Internet was created only 30 years ago
• Electronic mail was introduced in 1972
• In the mid-eighties, desktop operating systems (PCs)
surfaced and the modern day Internet began to take shape
• In 1990, the first World Wide Web software was developed
by Tim Berners-Lee
• In the early ‘90s commercial dial-up services were
introduced
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Short History of E-Business
• In 1992, the real e-business economy began
• By 1993, over 100 countries had an online presence
• Within the year, commercial users outnumbered academic
users for the first time
• By the mid-nineties, e-commerce became attractive to
business
• In 1997, virtually every major company, organization,
government and news service had a presence on the Web
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Short History of E-Business
• Vertical companies such as Amazon.com took the next step
and actually started performing business on the Web
• Some would call the first wave of e-business
“brochureware”
• In the next wave, supply chain issues started to be
addressed
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
How are B2B Firms Taking to the
Web?
• Common objectives, performance metrics, and work
cultures are changing
• A transition to e-business has a much better environment
for success
• E-business is driving nearly 30% of all business partners
and value chain interactions among large organizations
• Exponential growth is expected as the e-business model
extends to all areas of the marketplace
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
How are B2B Firms Taking to the
Web?
• E-business grew at a steady pace of less than 25% annually
among pioneers
• The number of organizations using e-business is nearly
doubling each year
• Compared to the growth of e-commerce, e-business is being
implemented at a far faster rate
• B2B will encompass about $5 trillion in economic activity in
2005
• Only half the companies surveyed by META Group
perceived e-business to have a significant impact on their
industries to date
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
What Might E-B2B Bring the
American Economy?
• Experts forecast that in the e-commerce sector e-businessto-business will dominate e-business-to-consumer revenues
by approximately 90% in the year 2003
• The total world wide value of goods and services purchased
by business through e-commerce solutions will reach 5.8
trillion by 2006, with e-marketplaces capturing the largest
share of the market
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
Conversion from Traditional
Business Practices to an EBusiness Proposition
• The notion that e-business is the same as e-commerce is
not holding true
• Both feature online communications and performance
• E-business is the business portion of e-commerce
• It is growing more complex to organize
• Its confusing terminologies and unfounded expectations are
hindering proper e-business and e-marketing
implementation
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
Conversion from Traditional
Business Practices to an EBusiness Proposition
• E-commerce
– Deals with using the Internet, digital communications, and IT
applications to enable the buying/selling process
• E-business
– Involves the continuous optimization of an organization’s value
proposition and value-chain positions through the adoption of
digital technology and the use of the Internet as the primary
communications medium
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
Conversion from Traditional
Business Practices to an EBusiness Proposition
There are two approaches to making the transition to ebusiness
• Take an evolutionary approach
– Use new technology to enhance your current business model
• Take a transformational approach
– Reconfigure your business and value propositions with the
technology to reconfigure and reinvent your business
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
Conversion from Traditional
Business Practices to an EBusiness Proposition
• Tetra Pak made several consequential decisions in
embracing a e-business model.
– Focus on an evolutionary introduction to e-business
– Focus on specific areas where e-business should be
introduced
– It is crucial for top management to be involved at every stage
– Customer satisfaction is the core goal being pursued by the
evolution of e-business. It can be divided into four parts:
• Accessibility
• Interaction
• Online transactions
• Collaboration with customers
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
E-Business Continues to
Grow in Size
• Estimates of e-business sales totals in the present and
future abound
• Many e-businesses established for four or five years are still
losing money
• Only in the fourth quarter of 2001 did Amazon.com finally
post a profitable quarter since opening in July 1995
• Estimates from e-commerce consulting firms are divergent
on visions of the future
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
E-Business Continues to
Grow in Size
• Some observations and predictions:
– B2B is growing at aggressive rates through 2004
– 42% of B2B e-commerce sites are profitable among those
online 2 or more years
– 92% market through traditional channels, 8% are Internet only
– 98% of all large companies will sell goods over the Internet in
2000
– 1/3 of U.S. companies made purchases online in 1998, 2/3 in
2000
– $16 billion was spent in B2B auctions
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
E-Business Continues to
Grow in Size
• Managers must try to harness and control online expansion
of e-commerce
• Growth can be a company’s best friend or worst nightmare
• B2B operations are a buzz among venture capitalists
• E-business opportunities are shaped by the needs of the
online market and the imagination of e-marketers
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
E-Business Continues to
Grow in Size
• Success in e-commerce requires sharing information in realtime
• Companies must integrate dissimilar information systems
across organizational boundaries
• Until technology exists to make this transition seamless,
standardization will play a role in the infrastructure of ecommerce
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
For What Size Company is an EBusiness Strategy Appropriate?
• The e-business entity for an existing organization is limited
only by the imagination of the marketing manager and
marketing assistance
• A thorough analysis of the systems of product inputs and
outputs will determine at what level e-business systems can
be integrated into the overall action
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
For What Size Company is an EBusiness Strategy Appropriate?
• 66% of small business owners are using the Internet as a
tool to help them run their business (OPEN Small Business
Network)
• The economic recession has affected 4 out of 5 small
businesses
– 40% surveyed are less profitable and 40% report flat profits
– 96% still plan to maintain or increase Internet expenditures in
2003
• After launching a Web site, 41% report an increase in sales
volume
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
For What Size Company is an EBusiness Strategy Appropriate?
Small Businesses continued…
• 55% say their Web sites have generated a profit or paid for
themselves
• 26% say they will create Web sites in 2003
• 54% will add a list of products or services to their Web site
in 2003
• 53% plan to change the design of their Web site
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
What is the Basic
Definition of E-Business?
• E-commerce is the broad term for doing business
transactions online
• It is necessary to rethink, restructure, and re-deploy
marketing resources, which is difficult for new or nonusers
of e-business strategies and tools
• As businesses incorporate Internet technology into their
core business processes, they start to achieve a new and
real plateau of business value
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
What is the Basic
Definition of E-Business?
• Companies employ a multi-purposeful Web that can resolve
existing operation problems such as:
– Introducing new methods of distribution online
– Integrating innovative MIS-types of customer purchasing and
fulfillment abilities
– The indispensable capacity for instant communication between
partnering clients and suppliers
– Proficiency for connecting back-end data systems
– Perform commerce transactions instantly and accurately
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
What is the Basic
Definition of E-Business?
• Rethinking the model of the company’s supply chain and
adopting a partnering approach is necessary to move to ebusiness
• Activities of the supply chain have been placed in 3
categories
– Upstream activities
– Internal operations
– Downstream activities
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
Application of E-Business
to Services
• E-business strategy can be equally beneficial to the
upstream and downstream activities of a service’s supply
chain management and implementation
• For example:
– Portals and Banks
– Hosting on virtual store fronts
– Cataloging wares in searchable databases (i.e.. Yahoo! Store
and iMall)
• Most portals and small business sites are offering ebusiness services as a loss-leader with the objective of
building their user base
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
Procurement and Payment
Without Paper
• Development is accelerating in allowing the supply chain to
operate successfully with electronic records, producing
great savings in data storage and in paperless transactions
using digital money
• The process of selection, ordering, shipping, and payment,
to name a few, are being migrated into Web-based systems
to:
– Create forms for inventory selection
– Order placement and balancing
– Issuing advance shipping notices
– And more
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
Procurement and Payment
Without Paper
• Operating cost savings are substantial
• At present the Web procurement market is responding to
two basic needs:
– Robust database links
– ASP outsourcing that can relieve new adopters of burdens of
implementing complex solutions
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
Procurement and Payment
Without Paper
• Key purchasers or Influencers of Web procurement
solutions report:
– 75% are currently buying, or plan to within 12 months, office
products and services through their Web-based procurement
system
– 52% indicated their organization currently buys, or plans to buy
within 12 months, corporate travel-related products
– 60% rated Web-based product searching features as somewhat
or extremely important in the selection of Web procurement
implementation
– 57% rated “industry tailored” procurement as a somewhat or
extremely important factor in their choice of procurement
solutions
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Advantages of Electronic
Transfer Infrastructure
• Speed of information exchange
• More control over information
• Greatly reduced handling
• Emerging digital currency and process standards for
transactions
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Disadvantages of Electronic
Transfer Infrastructure
• The cost of technology integration
• Lack of clear and immediate financial returns for purchasing
managers
• Existing wholesale and retail relationships
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Practice of Partnering
• Marketers in both startup and existing businesses wanting
to expand exposure on the Web should give serious thought
to seeking the advice of e-consultants that can produce
proof of strategic and structured counsel to firms in the
early stages of Web operations development
• Complementary business partners can bring fresh ideas and
other competencies to make the e-business operate more
smoothly
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Practice of Partnering
• Two major questions:
– How can you leverage the new medium to better market
yourself and take advantage of the new windows of
opportunity?
– How do you seamlessly integrate online initiatives with existing
business processes and technology infrastructure?
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Practice of Partnering
• Partner with a firm that embraces a strategic, structured and
pragmatic approach to uncovering and capitalizing on ebusiness opportunities
• No one firm will have all the expertise needed
• Identify and set priorities for the processes best suited for
an online world, and measure the results against strategic
objectives
• Look for demonstrated business process expertise
• Select a partner with proven project management
methodologies and technical skills
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Practice of Partnering
• Market e-initiatives carefully by spending time on the
planning and rollout phase of the project to ensure all
stakeholders are on board from day one
• Success requires looking for partners who understand
marketing from the business process viewpoint
• Consider ROI
• The electronic marketplace has created a whole new series
of incremental measurements; use them
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Advantages of E-Business
• Improved efficiency of communications
• Improved company performance
• Reduced cost of doing business
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Disadvantages of E-Business
• The uncertainty of secure transactions
• The fear of the unknown business model
• The uncertainty of the monetary outlay
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Principal Benefits of EBusiness: Expediting Paperless,
Cashless Commerce
• The speed and accuracy of electronic communications
coupled with the ability to settle financial transactions
online make e-business an attractive, labor saving business
system
• E-business’ greatest opportunities are to be found in the
control of back-office and supply chain systems
• E-business improves performance by connecting disparate
value chains that encourage new relationships
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Principal Benefits of EBusiness: Expediting Paperless,
Cashless Commerce
• E-business provides information instantaneously, helping
executives identify their best profit centers, modify existing
business processes and create new ones
• E-business permits organizations to create strategic
alliances and partnerships, and to outsource functions and
processes that can be carried out more efficiently by others
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Principal Benefits of EBusiness: Expediting Paperless,
Cashless Commerce
• So how do e-business systems work?
– Input forms are Web-enabled so that companies not using EDI
protocols can still complete the forms to initiate transactions
among buyers or suppliers
– They can include business forms for
• Tracking orders
• Creating and changing original orders
• Hosting Web-based catalogs
• For closed loop, secure paperless electronic funds transfer to
produce timely debit or credit transactions with related invoice
and adjustment information
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
The Principal Benefits of EBusiness: Expediting Paperless,
Cashless Commerce
• So how do e-business systems work?
– The second portion includes online payment systems that can
• Accept credit cards and arrangements
• Interface with Automated Teller Machines
• Process business operations such as payroll disbursements and
EDI services
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo
Shifting to Brand Management by
Building a Modular E-business
• With the strategy and tactics electronic business systems
now have available, the logical conclusion is a shift to
modular business
• A company could concentrate solely on managing its brand,
outsourcing all physical aspects of the business to others
• As these activities are moved to specialist third parties, the
core management activities will change
• The truth of e-business is that it changes businesses and
merges industries
• It destroys industries and appears unstoppable
Electronic Marketing: Integrating Electronic
Resources into the Marketing Process, 2e
3/22/2016
2004
Joel Reedy and Shauna Schullo