GRADUATE SCHOOL OF BUSINESS MBA SPEAKER OF THE MONTH:
Professor Roderick J. Brodie
University of Auckland
Assessing the Role of e-Marketing in Contemporary Marketing Practice
Using a sample of 149 firms from the UK and New Zealand, we extend previous research on the nature of contemporary marketing practices by Brodie et al (1997) to examine the practice of e-Marketing in relation to other aspects of marketing. Analysis reveals four combinations of marketing practice. While one third of firms emphasize either a Traditional Transactional or Traditional Relational approach to their markets, another third practice e-Marketing in combination with Transaction and Database Marketing, and a final third integrate all of Transaction, Database, Interaction, Network and e-Marketing. The findings show that for most firms, the level of e-Marketing practice reflects the extent to which information technology plays either a reinforcing, enhancing or transforming role in the organisation.
By adapting the Coviello, Brodie and Munro (1997) classification scheme to incorporate the concept of IT-enabled interactivity, five distinct marketing approaches are derived from the literature: Transaction, Database, Interaction, Network and now, e-Marketing. Theoretically, each approach has unique characteristics, and can be identified in practice.
As originally found by Brodie et al (1997), the current study shows that while different types of firms may emphasize different approaches to the market, they also practice all aspects of marketing to a certain extent. For example, nearly all firms practice medium to high levels of Transaction, Database, Interaction,. and Network Marketing, and well over half of all firms in this study practice medium levels of e-Marketing. At the same time, it is apparent that few firms currently practice eM at a high level. Indeed, in the case of the UK sample, over half report a low level of practice. This suggests that while Rust and Varki (1996), Webster (1996), Hoffman and Novak (1997) and Venkataraman (2000) argue that IT-enable interactivity and the Internet fundamentally change how all firms relate to their markets, such developments, as maifested in eM, have not been embraced by the cross-section of organisations that were investigated in this study. This supports the findings of Hart, Doherty and Ellis-Chadwick (2002) and the observations of Tapp (2001) and Hughes (2002). Indeed, 35% of firms currently emphasize a “Traditional Transactional” or ‘Traditional Relational’ approach to the market.
On the other hand, the results also show that two clusters account for 65% of firms: ‘Transactional Plus’ (33%) and ‘Pluralistic’ (32%). Indeed, all types of organisations fall into these two clusters. This suggests that while the application of e-Marketing may not drive marketing practices, this aspect of marketing is used in conjunction with others, across firm types. Thus, it may be seen as boundary spanning, and currently, it is mainly used to facilitate or support the more traditional transactional and relational approaches to the market (see Figure 2). A similar argument can be made for Database Marketing. This reflects Day’s observation (1994. p.49) that information technology is used to “enable the organisation to do things it could not do before,” e.g. in terms of how the firm relates to its markets.
The results also suggest that information technology’s ability to enable marketing practices is related to the role that IT plays in the firm as a whole. That is, the results seem t o support McKenna’s (1991) argument that technology comes first and the ability to market follows.
On one level, the findings of this study suggest that marketing practices are becoming increasingly complex and intertwined. These results support Day’s comment (1998, p. 48): “. . .there is no ‘one size fits all’ organisational template for situations.” Managers should therefore recognise that all five aspects of marketing discussed in this study may be relevant to their organisation. By balancing the use of these different approaches in an appropriate way, a firm should also be able to create synergy in all areas of customer management. In terms of gaining competitive advantage, however, managers should note that while 65% of organisations appear to use e-Marketing and Database Marketing in conjunction with more traditional aspects of marketing (as seen in the ‘Transactional Plus’ and ‘Pluralistic’ clusters), the most prevalent approaches are clearly Interaction Marketing, followed by Transaction and Network Marketing. Thus, as these approaches will likely dominate competitor activity, managers might be able to create a competitive advantage by developing a greater understanding of the potential role and application of both e-Marketing and Database Marketing in their organisation.
This does not necessarily imply that all firms should jump on the ‘technology bandwagon’. Decisions about the implementation of any aspect of marketing should be based on a strategic evaluation of the role it will play in the firm’s overall approach to the market (see Porter 2001). Decisions as to the implementation of e-Marketing in particular, will require a clear understanding of the strategic role of technology in the firm and the firm’s capabilities to implement and support “e” operations. In some firms, eM may involve a simple application of web technology, while other firms may operate within a complex and integrated Internet strategy. Equally, the decision to introduce eM should reflect the customer’s preference/capabilities to participate in electronically-interactive relationships. A thorough strategic evaluation may well lead the firm to conclude that a ‘Traditional Transactional’ or ‘Traditional Relation’ approach to their market is currently most appropriate. However, both e-Marketing and Database Marketing are likely to be aspects of marketing that can be used to complement, support and/or extend more traditional transactional and relational perspectives.
Indeed, these technology- enabled approaches are considered key ‘strategic inflection points’ for marketing practice (Brookes 2001). That is, developments in information technology are manifested in the increased emphasis on service aspects of all product offers and customer value management, as well as changing resource environments leading to transformation in organisations and systemic market relationships. Such developments will continue to inflect change on organisations, on the role that technology takes in those organisations, and how the firm relates to its markets.
The results of this study are quantitative in nature, and could benefit from a richer understanding offered by qualitative methodologies. In particular, case studies would allow for greater insight as to the implementation of e-Marketing relative to the other aspects of marketing, including how and why eM is applied, e.g. as a communications tool, an alternative channel, etc. Equally so, depth interviews could provide important insight as to the non-adoption of eM in terms of perceived or actual
barriers to its implementation.
Of particular note is that this study has had a primary focus on understanding how various aspects of marketing are practiced relative to each other, and a secondary focus on the role or impact of IT on these practices. It would therefore be useful to more fully investigate how and why the role of IT in organisations is perceived as either reinforcing, enhancing or transforming the status quo in terms of marketing, and how this relates to the nature and level of eM practices. As noted by Marcolin and Gaulin (200 1, p.128): “. . . technology enables, but it cannot transform business practices unless there is a corresponding effort from the user of the technology.”
Another interesting area for research would be to compare dot-corn start-ups/survivors with industry incumbents. This would allow for examination of firms who are likely to employ IT differently in the organisation. For example, dot-corns driven by eM may work to build brand and marketing infrastructure (through TM, DM, IM and/or NM), while incumbents may seek to enhance or transform their legacy marketing systems through the introduction of eM to their business.
Finally, the current study focuses on two culturally similar nations for examination. It was assumed that given the various similarities, comparable marketing practices would be identified. However, there are interesting differences in marketing practice, and this leads to two last implications. First, further study of the UK firms would provide insights as to why the practice of eM is low relative to New Zealand tirms. Indeed, an important research area involves identifying the inhibitors and facilitators of eM adoption and penetration, as well as understanding the extent to which national patterns reflect situation-based circumstances and country-specific customer and competitor imperatives. Second, and related to the preceding point, it would be useful to expand the study to more diverse cultures, e.g. Latin America, Africa, Asia. This would be useful in assessing the evolution of marketing practices, based on an understanding of whether nor not disparate patterns appear on a nation-by-nation basis, or if a new form of global marketing practice is emerging, regardless of country context.