Electronic Commerce: The Strategic Perspective

Electronic commerce is a revolution in business practices. If organizations are going to take advantage of new

Internet technologies, then they must take a strategic perspective. That is, care must be taken to make a close link between corporate strategy and electronic commerce strategy.

In this course, we address some essential strategic issues, and describe the major themes. Among the central issues we discuss are defining electronic commerce, identifying the extent of a firm’s Internet usage, explaining how electronic commerce can address the three strategic challenges facing all firms, and understanding the parameters of disintermediation. Consequently, we start with these issues.

This course contains eight chapters. 

Chapter One: Introduction

Introduces the key themes.

Chapter Two: The Technology of electronic commerce

Deals with the technology that underlies electronic commerce. Specifically, we discuss the methods that computers use to communicate with each other. We compare and contrast:

- The Internet (which is global in nature and has the potential to communicate with multiple stakeholders

groups)

- The intranet (which focuses on internal communications within the organization–such as communication

with employees);

- The extranet (which concentrates on exchanges with a specific business partner).

At present, the majority of electronic commerce concerns business-to-business relationships and is strongly linked to this last category.

Also introduces the security issues associated with electronic commerce. Security is important both for organizations and for consumers.

Chapter Three: Web Strategy

Introduces elements of electronic strategy. In particular, we describe business practices that evolve because of the way that the Web changes the nature of communication between firms and customers. We describe attractors , which firms use to draw visitors to their Web site, including sponsorship, the customer service center, and the town hall. We discuss different attractor strategies that are appropriate, depending upon what material an organization wants to put on the Web. We describe the strategies behind various services that organizations can provide in cyberspace.

Chapter Four: Promotion

This is the first of a series of five chapters that discuss the four major functions of marketing: promotion, price,

distribution, and product (service). As the Web is a new communications medium.

Chapter Five: Promotion and Purchase

Describes new methods for measuring communication effectiveness in cyberspace. Specifically, we discuss the Internet as a new medium, in contrast to broadcasting and publishing. Currently, Web users perceive this

medium to be similar to a magazine, perhaps because 85 percent of Web content is text. Other capabilities of the Web (e.g., sound) are not extensively used at this point. In this, we present several metaphors for thinking

about what the Web can be, including the electronic trade show and the virtual flea market. We link the buying

phases to Web functions and capabilities (such as identifying and qualifying prospects). Measurement is a key theme in the chapter, so we describe the role of the Web in the marketing communications mix and introduce several formulas for measuring the success of Internet communications. Measurement of advertising effectiveness is a long-standing issue in marketing research. In some ways, this issue of communications effectiveness is almost impossible to answer

Chapter Six: Distribution

The advent of electronic commerce has the potential to transform logistics and distribution. Today, a small software firm in Austin, Texas, can deliver its product (via the Web) to a customer in Seoul, South Korea. The economic landscape is altered dramatically. 

Chapter Seven: Service

Services are more and more important in the U.S. economy. In this chapter, we describe how electronic

commerce comes to blur the distinction between products and services. Traditionally, services are a challenge to market because of four key properties: intangibility, simultaneity, heterogeneity, and perishability. 

Chapter Eight: Pricing

The price directly affects a firm’s revenue. Chapter Eight describes pricing methods and strategies that are effective

in cyberspace. We take a customer value perspective to illustrate various price-setting strategies (e.g., negotiation, reducing customer risk) and show how these strategies can be used to attain organizational objectives.

Chapter Nine: Postmodernism

The final chapter concentrates on societal changes that are encouraged by electronic commerce (and other related trends). Through the metaphors of modernism and postmodernism, we show how electronic commerce influences:

• Perceptions of reality;

• Notions of time and space;

• Values;

• Attitudes toward organizations.

Chapter Nine is future-oriented and discusses electronic commerce as a revolutionary force that has the potential to transform society and transform consumers’ perceptions of business practice.