Critical Review: E-marketing opportunities and issues in international markets - Iloka Benneth Chiemelie

1.0 INTRODUCTION

     The internet, web and information technology has proven to be transformational. While these technologies have influenced all corporations, marketing functions has perhaps been most influenced. E-marketing is a significant part of marketing arsenals in corporations across the globe. As international acceptance of the internet and web increases, the scope of international e-marketing now transitions from possibility to reality.

     The transformational impact of internet and web has been closely followed by international scholars. Several studies related to international e-marketing context have already emerged at the individual consumer (Callow and Lerman, 2003; Dou et al., 2003; Kucuk, 2002; Sing et al., 2004; Waller et al, 2005) and firm levels (Javalgi et al., 2004; Singh and Kundu, 2002). This activities includes database marketing, direct marketing (E-mails), online advertising, paid to click (PTCs), webhosting and online purchases.

     E-marketing involves utilizing existing and emerging communication and data networks to impact personalized and undisrupted communication between firms and their customers and to provide value above conventional networks (Watson et al., 2002). A common similarity exists between e-marketing and agricultural marketing era, with direct recurring relationship between consumer and producer at a lower cost (Sheth et al., 2000; Sheth and Sharma 2004).

      Opportunities in e-marketing are large as papers in this research based essay will attest, and that invokes the main emphasis of this paper which is to critique the opportunities and issues in international marketing based on country development with reference to the work done by Jagdish and Arum (2004) in international e-marketing: opportunities and issues. Based on the above reference, this research paper begins by summarizing the e-marketing article, and then followed by the critique/analyses. The critique is referred as the body of this research paper, thus it analysis all suggestions and proposals of the article, based on the two main points of international e-marketing opportunities and issues. These two points are further divided in the critique section to outline their pros and cons. the final section is the conclusion and recommendation part, which summarizes all issues critiqued in this research paper and recommending guidelines for further reading and research. 

2.0 SUMMARY OF SELECTED ARTICLE

     The article highlighted reduced cost and enhanced communication reach between customers and companies as the main advantages of e-marketing. The main emphasis in the article is to identify e-marketing opportunities and issues in the international markets based technological advancement in countries.

     The article began by introducing the advantages of e-marketing. Cost of e-marketing platform is typically lower than other marketing platforms such as distributors and face-to-face salespeople (Watson et al., 2002). Another advantage is that e-marketing enables firms to reach customers that might not be accessible due to limitations of distribution channels. These provide three areas of advantage for customers as explained below.

     First, organizations can provide unlimited information to customers without human intervention. This is an advantage because the amount of information that can be provided is greater compared with traditional marketing tools. Additionally, and perhaps more importantly, the information can be provided in a format that is easy to process and understand. For instance, “do it yourself” websites allows customer to carry out the transactions they want according to their need in different languages and easy to use steps.

     Secondly, e-marketing can provide interaction by allowing customers to customize products to meet their specific requirements(Watson et al., 2002). For instances, customers can check in and pick seats online when booking for a flight ticket. Finally, e-marketing platforms can undertake transactions that would basically require personal contacts as in the case of successful firms like Dell and Amazon.com. This reduces the risk of carrying bulk cash and other inconveniences related to the same transaction in conventional marketing platforms.  

     The article proceeds further by examining the effect of country on e-marketing. To better examine the effect of country on e-marketing, the authors classified countries based on two dimensions – country’s infrastructure development, and country’s marketing institutional development.

     Infrastructure development was referred to as roads, telecommunication, open and free justice system as well as legislative bodies. The reasons for including this dimension in their analysis was, firstly because, telecommunication density, broadband access and mobile phones addresses the issues of availability and access to e-marketing tools (Watson et al., 2002). Second, the issue of transactional cost is addressed by a country’s legislative and legal infrastructures. Transaction governance cost and adaptation requirements are increased by weak legal and legislative infrastructure(Sharma and Dominguez, 1992; Johnson and Arunthanes, 1995; Lyer, 1997).

     Marketing institutional development is associated with the availability of competitive, convenient, and effective marketing institutions that utilizes effective and efficient distribution and communication channels(Lyer, 1997). Effectiveness of distribution channels does not correlate with economic development because domestic rules and regulations can decrease channel effectiveness. On the other hand, marketing institutional development is associated with competitive marketing offerings, i.e. countries with highly advanced and developed marketing institutions provide effective, efficient, and competitive marketing institutions to marketers in the country (Lyer, 1997).  

Figure 1

Adopted from – International e-marketing: opportunities and issues by, Jagdish and Arun (2005)

     From the figure (1) above, it was found that countries with high infrastructure development and high institutional development are expected to have high levels of e-marketing penetration. This is because, with easy access to e-marketing institutions, both customers and firms will adopt e-marketing due to its effectiveness and efficiency. This can be seen from US, and it currently has one of the highest penetrations of e-marketing strategies.

     Countries with high infrastructure development and low marketing institutional development are expected to have medium levels of e-marketing penetration because, although the infrastructures to support e-marketing are available, the media and distribution channels don’t provide necessary products needed by firm and customers to adopt e-marketing innovation. This is applicable in Japan and Germany.

     Countries with low infrastructure development and high marketing institutional development are expected to have low level of e-marketing penetration due to lack of infrastructure support. Examples include Mexico and Brazil. Finally, countries with low infrastructure development and low marketing institutional development are expected to have negligible levels of e-marketing penetration due to lack of support from key institutions. Examples include Vietnam and Indonesia.

     Based on country classification, the authors examined how the emergence of e-marketing will affect country-level marketing practices. It was believed that in countries with developed infrastructure and competitive marketing institutions, the focus will be to reduce marketing cost. This is because these countries already have access to information technology and customers have already invested recourses to enable them to have access to these infrastructures. Elimination of intermediaries is not expected as firms have access to effective and efficient distribution and communication channels and they will attempt to reduce cost by enhancing e-marketing strategies through these firms.

     In countries that demonstrate advanced infrastructure but low marketing development, the focus will be on cost as well, but the implementation will be different from that mentioned above. The only option would be to eliminate intermediaries to reduce cost. While in countries with low levels of infrastructure development but advanced marketing institutions, marketing institutions will be provided to customers as a way of reducing marketing cost.

     In the last category, where countries have both low infrastructure and marketing institutional development, e-marketing processes will be concerned more with accessibility. Marketing institutions are expected to merge as a measure to bypass distribution channels. Based on the following discussions, they (the authors) proposed that:

• In countries that have developed infrastructure and marketing institutions, the focus of marketing firm’s successful e-marketing strategies will be to reduce cost. The penetration of e-marketing strategies will be high but the profitability will be moderate
• In countries with advanced infrastructure but under developed marketing institutions, the focus of marketing firm’s successful e-marketing strategies will be to eliminate intermediaries. The penetration of e-marketing strategies will be moderate but the profitability will be high.
• In countries with developed marketing institutions, and underdeveloped infrastructure, the focus of marketing firm’s successful e-marketing strategies will be to reduce costs. Both the penetration of e-marketing strategies and the profitability will be low.
• In countries that are underdeveloped in both infrastructure and marketing institutions, the focus of marketing firm’s successful strategies will be on marketing institutional development. Both the penetration of e-marketing strategies and the profitability will be very low.

     The preceding section, suggested that e-marketing strategies in international markets will depend on existing infrastructure and marketing institutions. These expectations are illustrated in figure (2) below.

Figure 2

Adopted from – International e-marketing: opportunities and issues by, Jagdish and Arun (2005)

     Based on research by Sheth et al., (2002) and Sharma (2004) how e-marketing will change marketing theory and practice was proposed by Jagdish and Arun (authors) as:

• Increased e-marketing strategies adaptation will result in firms practicing reverse marketing rather than traditional marketing, practising customer-centric marketing rather than mass or segmented marketing; providing personalization rather than standardization or adoption; and reducing transactional cost.
• Increasing adoption of e-marketing strategies will lead to customers increasing search for firms that provide co-creation opportunities, universal availability, and flexible time schedule.

     The conclusion provided managerial implications and directions for future research. The first managerial implication is that no multinational standard stand will be valid because all the countries exhibit different stages at e-marketing infrastructure and institutions. Therefore, firms need to develop specific e-marketing tools that best suit the country where they operate. In countries with high infrastructure and institutions, most firms will have to follow e-marketing strategies or face failure. For instances, Black (2004) showed instance with two countries in New York. J&R’s Computers adopted e-marketing strategies and flourished whereas 47^th Street Photo did not follow e-marketing strategies and had to shot down their retail operations.

     In countries with developed infrastructure and undeveloped marketing institutions, e-marketing strategies will be adopted slowly by customers, but highly profitable. Thus, firms that don’t adopt e-marketing strategies will face a cost disadvantage. Whereas in countries with less advanced infrastructure and highly developed marketing institutions, firms will need to develop infrastructure to implement e-marketing strategies.

     In countries where both infrastructures and marketing institutions are low, firms will have to invest largely into e-marketing strategies implementation. Though these returns will be negligible in the short-term, they are bound to last in the longer-terms. In conclusion, firms need to be early adopters of face competition from entrenched marketers.

3.0 ANALYSIS OF THE ARTICLE

     There is no doubt about the idea created in the above article, which states that the implementation of e-marketing strategies in international markets adds on increased level of complexity. And the main objective of the article is to identify e-marketing opportunities and issues in international markets based on country’s development. Thus, a critical argument will be presented on all the proposals by the authors.

3.1 P (1) AND P (3)

     As proposed (P1), in countries with developed infrastructure and marketing institutions, the focus of marketing organizations’ successful e-marketing strategies will be to reduce cost. This is also applicable in countries with less developed infrastructure but developed marketing institutions as stated by the third proposal (P3). Before we concur to this proposal, it is noteworthy to state that, Whiteley’s (2000)suggestion the interactive nature of the internet; aids in assisting all phases of sales and commerce – pre-sale, execution, payment and post-sale. By eliminating the intermediaries, companies that undertake e-marketing can be able to reduce the cost of production and cost of their goods and service. But, firms implementing e-marketing don’t neglect the idea of gaining competitive advantage and achieving benefits from more efficient operations (Graham et al, 1996). Paradoxically, this makes the proposal incomplete.

     Forrester research (2000) suggests that the European e-commerce will grow at a tripled rate of over $ Trillion by 2005, and in the UK as of 2001, over a third of adults in Great Britain who accessed the Internet also made purchases (Rowlatt et al., 2002). That makes other issues such as gaining competitive advantage, brand image, promotion and innovation a necessity for firms who are implementing e-marketing strategies in countries with developed infrastructures and marketing institutions such as U.S.A, and U.K. This is because more firms will have access to the internet, implement e-marketing strategies and consumers will have more choices to choose from, which means accessibility to consumers and providing product advantage is as important as reducing cost.

3.2 P (2)

     The second proposal (P2) suggests that in countries with developed infrastructure but underdeveloped marketing institutions, the focus of marketing organizations’ successful e-marketing strategies will be on disintermediation of legacy distribution channels. They is no doubt the distribution channels play major roles in making products and services available to consumers, as well as build consumer trust on brands, advertising and promotion of new products and services. Kotler (1991)defined distribution channel as an interdependent organisation involved in the process of making goods and services available for use or consumption.

     Undoubtedly, information and communication technology has reduced many distribution issues. The internet is borderless and the opportunity to sell over the net in a standardized way eliminates entry barriers (Wilson and Abel, 2002). Information and communication technologies have reduced the importance of intermediaries (distribution channels) by connecting customers directly to their manufacture. In countries with developed infrastructure and less developed marketing institutions, eliminating intermediaries is a necessity; this is because it would reduced the cost imposed by intermediaries while enhancing direct marketing. Quelch and Klein (1996) stated that for instances, a hospital in Saudi Arabia can put a request for proposal for equipment over the internet, secure bids, select a supplier without going through legacy distribution channels, and have the products delivered directly by DHL or Federal Express.

     The proposal is logically correct according to the theoretical evidences shown above. But suggesting that the proposal is complete can lead to questions such as, if they where no shopping malls to distribute goods and services as suggested in countries with low marketing institution, would all consumers order their products and services online? Therefore, based on this argument it is necessary to note that they are still some products and services that require distributors, and distribution channels such as Wal-Mart (U.S.A), Boulevard (Malaysia) are still important no matter the kind of country and level of infrastructure or marketing institutions. The website cannot, in most cases, replaces established distributors completely but, instead increase the efficiency of the existing network of intermediaries(Ranchhod and Gurau, 2002).

3.3 P (4)

     The fourth proposal (P4) stated that in countries with both underdeveloped infrastructure and marketing institutions, the main focus of marketing organizations’ successful e-marketing strategies will be on marketing institutional development. The above proposal is also logically incomplete. This is because marketing institutions no matter how well developed; still need advanced infrastructures (IT) to deploy their marketing strategies if they are to reach global audience.

     In the 1980s, many researchers argued that developed infrastructure (IT) can help a firm by raising the entry barriers, increasing the bargaining power with suppliers and customers, and enhancing product and service innovation (McFarlan, 1984; Porter and Milner, 1995). However, scholars have noted over the years that sustaining advantage through IT is sometimes difficult, because such applications are easily imitated by competitors (Cash et al., 1992; Mata et al., 1995; Sambamurthy and Zmud, 1997). Although there are methodological, theoretical, and measurement issues leading to theses inconsistent results, there is a growing realization that infrastructure (IT) cannot be a source of competitive advantage, instead it depends on how marketers deploy them globally that helps firms to gain competitive advantage(Bhatt and Grover, 2005). In other words, infrastructure alone can’t be the only focus for marketers to realize their goals internationally.

     Customer focus involves identifying customer’s need, development solutions to their need, providing quality and timelessness in their orders as well as meeting their demand in new product and services (Pine II et al., 1993). To provide these seamless services to customers, IT infrastructures should be flexible enough to accommodate additional load, and at the same time, robust enough to take additional load and work with additional applications (Duncan, 1995; Byrd and Turner, 2000; Feeny and Ives, 1990). Based on the above theory, a better proposal should combine focus in both infrastructural and marketing institution advancement.

3.4 P (5)

     The fifth proposal (P5) states that in countries with developed infrastructure and marketing institutions, the penetration of e-marketing strategies will be high but accompanied with moderate profitability. This is acceptable because since firms already have access to efficient and effective distribution channels, these channels will attempt to reduce cost through enhanced e-marketing strategies but this cost reduction will not be large.

     In countries with developed infrastructure and marketing institutions, the use of e-marketing has seen rapid growth with relations to the increase in commercial websites and the reverse is the case in countries with developed infrastructure and less developed marketing institutions. This enhances information accessibility, order placement, product delivery and service performance (Ching and Ellis, 2004). It has also had impact on export and import barriers, and allowing small medium enterprises to enter the market by providing them with the necessary facilities to communicate globally as efficient and effective as any large organization (McCue, 1999; Hoffman and Novak, 1996; Herbig and Hale, 1997; Nguyen and Barrett, 2006).

     Since advancement in infrastructure and marketing institution provides customer and companies the necessary tools to compare prices before purchases, this engages sellers and their competitors in price wars. Thus by drastically reducing the price of their products and services in other to make sales and attract new customer, the profit don’t turn out to be high for companies that go global through the use of e-marketing institutions and infrastructures. This is visible in the internet, where web portals such as Google and Yahoo can provide access to millions of companies that offer same kind of product or services for comparison. Whereas when customers don’t have access to prices of other companies as the case is in countries with developed infrastructure but less developed marketing institutions, the penetration of marketing strategies tends to be low and the profitability high because buyers can maintain stable prices since customers can’t compare prices.

     Nevertheless, recent literatures reveal a lack of evidence with regards to e-marketing in relation to organisations marketing activities and business performances globally. While there have been increasing number of studies on e-marketing, there is a lack of actual research on issues such as constraints, successful e-marketing strategies, the role of internet with relation to organizations marketing activities and the viability of e-marketing (Ching and Ellis, 2004; McCue, 1999; Avlontis and Karayanni, 2000). In that case, conducting more empirical and primary researches will be a better way to improve on the theories highlighted above in other to develop a better thesis. This makes the fifth proposal plausible.  

3.5 P (6)

     Both the penetration of e-marketing strategies and the profitability will be low in countries with underdeveloped infrastructure but developed marketing institutions and in countries with both underdeveloped infrastructure and marketing institutions.

     Recently, they have been a growing importance of information technology and e-marketing in both business-to-business (B2B) and business-to-customer (B2C) exchanges. This role has been seen as a fundamental shift in service delivery (MacDonald and Smith, 2003; Leek et al., 2003; Parasuraman, 1996) and has attracted high attraction from academia (e.g. Osmonbekov et al., 2002; Wilson and Vlosky, 1998; Bauer et al., 2002; Archer and Yuan, 2000; Dabholkar and Bagozzi, 2002), media (e.g. Bitner, 2001; Johnson, 2001; Heun, 2001)and government (e.g. web-based tax payment such as MYEG.com.my and e-health provision). This is because the development in information and communication technology is cost efficient compared to the labour intensive manual operations. But, cost is not the only benefits of e-marketing and infrastructural development. Other benefits include enhanced efficiency, return on investment, customer reach and accessibility, time control and saving (Dabholkar, 1996; Gallagher, 2002). 

     Haven highlighted above that information technology and e-marketing enables efficient and effective circulation of information, it is arguable to agree with the proposal that countries with developed marketing institution, but less developed infrastructure and countries with both less developed marketing institutions and infrastructure, will find it difficult to deploy their marketing strategies due to low reach of customer thus, making their profit low as compared to countries who can successfully access customers globally. This is seen in developing countries such as Indonesia, where manufacturers still rely solely on intermediaries to make their products and services available to consumer, and limiting direct marketing, database and email marketing, direct selling and online customer services.

3.6 P (7)

     Increasing adoption of e-marketing strategies will lead to firms practicing reverse marketing rather than traditional marketing; practicing customer-centric marketing rather than mass or segment marketing; providing personalization rather than standardization or adaption; and, reducing transactional cost. It will also lead to customers seeking firms that provide co-creation opportunities, universal availability, and time flexibility.

      Johnston (1995) provides a critical review for the proposal above through his studies that attempted to distinguish between satisfiers and dissatisfies as determinants of service quality in the international market. His early reports where based on products (e.g. Hausknecht, 1988), service quality (e.g. Cadotte and Turgeon, 1988), comprises of small samples or where explanatory in nature (e.g. Smith et al., 1992; Mersha and Adlakha, 1992).

     Johnston (1995) found key satisfaction and dissatisfaction in a study of bank customers to be attentiveness, responsiveness, care, availability, reliability, integrity, friendliness, courtesy, communication, competence and functionality. All of these studies included services which involved encounter with service personnel, rather than “do it yourself” services as noticed in the e-marketing through the help of information technology. However, issues such as honesty, cleanliness/tidiness, security of transaction premise as source of dissatisfaction in customer services found by Johnston (1995) will have less or no meaning in e-marketing (virtual world).

     The internet provides a different environment for international marketing and requires a different approach. This results in development of new international marketing paradigm, to service customers globally in the electronic edge. E-marketing has unique characteristics that make them central to a perceived paradigm shift in the way in which goods and services are produced, distributed and consumed (Barnes-Vieyra and Claycomb, 2001; Brynjolfson and Smith, 2000; Eid et al., 2002; Ha-mill and Gregory, 1997; Hoffman and Novak, 1996b; Morgan and Hunt, 1999; Papows, 1998; Porter, 2001; Quelch and Klein, 1996; Rayport and Sviokla, 1995; Werbach, 2000; Wilson and Abel, 2002). This paradigm change has been noticed both in transaction, delivery and manufacturing of services.

     Taking Dell Company as an example, e-marketing and information technology (infrastructure) has shaped the way customers buy goods and services, manufactures produce the services and make them available for the consumer. At Dell.com customer can use a “do it yourself” approach to design and customized their computer to their own specific choice. Pay through credit card; follow the production online through a daily update on the stage the computer is in, continue following their products online through monitory the delivery, and send feedbacks once they receive their products. This is a total shift in all aspect of conventional business practices, thus, changing the way marketers position their goods, target customers, serve customers and attract new customers. Other example includes Amazon.com and EBay.

4.0 CRITICAL EVALUATION

     Based on the analysis above, it can clearly be pointed out that the differences in the proposal is either incomplete because of time factor or with relation to the fact that different countries adopt different marketing measure when it comes to international e-marketing.

     Time factor is a serious issue because constant advancement in either technology or marketing institutions makes past researches either irrelevant or incomplete since they are based on past level rather than present or future levels. Another issue is because of different countries no matter how advanced or less advanced, have some measure when it comes to adopting e-marketing. For instances porn sites are block in China, while they are acceptable in the U.S, marketing adverts that are sexually explicit are not allowed in most Muslim countries while they are not an issue in most European countries. Thus considering various countries as a unit will produce incomplete thesis compared to when each country is considered as a unit on its own.  

5.0 CONCLUSION

     This paper was meant to establish the issues and opportunities contributed by the use of information technology in international e-marketing based on total analysis of all the proposals from the summarized article above. A review of the proposals was conducted through index study and advanced research to drive theoretical evidences either to support to disagree with each proposal.

     An interesting finding regarding the level of validity and authenticity of the proposal was that the first four proposals were incomplete due to lack of either evidence to proof their argument or combination of all countries rather than direct or individual analysis. For example, the first proposal states that in countries with advanced infrastructure and advanced marketing institutions like the USA, the main focus of marketing strategies would be on cost reduction. Thus, posing a question as to how about profit? If they where to focus more on reducing the cost of their services and product, then what would be their fate in making profit? Businesses are mainly established for profit purposes and the major of companies should be on how to increase their sale, maximize profit rather than reducing cost. This makes the proposal incomplete because cost reduction is not the only or major focus for any organization as supported by evidence in the analysis.

     The analysis also found consistent evidence that use of information technology in administration, problem solving, customer relationship management, marketing analysis and implementation resulted in enhanced marketing performance as measured by marketing competitiveness, efficiency of services and effectiveness of activities. This research paper thus dispelled the argument that benefits of information and technology in e-marketing is unidentifiable.

     However, some of the proposals are theoretically acceptable because of the completeness in the idea they present. For example, the paradigm shift caused by information technology in international e-marketing is clear and illustrative enough to receive appraisal. Many researchers also provided evidence to support the idea as highlighted in the analysis above.  

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