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					           E-Commerce Marketing
           Strategies: An Integrated
           Framework and Case Study



                                        Eric Allen
                                    Jerry Fjermestad
                    New Jersey Institute of Technology


Logistics Information Management, 14, 1/2, 2001, 14-23.
           Introduction
              Many of the models for E-commerce
               strategies that have been published have a
               lot in common with the traditional four P’s
               marketing model.
              Integrating the new strategic frameworks
               with the traditional marketing model provides
               for a more thorough framework.
              The framework is applied to Nabisco, Inc. to
               generate strategic planning ideas.
Logistics Information Management, 14, 1/2, 2001, 14-23.
           Framework Integration
              Zwass (1996) suggests that the established
               way to analyze and develop complex systems
               is to organize them in a meaningful structure.
              Handout 1 summarizes four articles that
               provide strategic frameworks for thinking
               about on-line relationships between
               manufacturers, retailers, and consumers.
              Handout 2 and Table 2 show how the major
               concepts of each framework map to the
               traditional marketing model.
Logistics Information Management, 14, 1/2, 2001, 14-23.
           Rayport & Sviokla, 1994
           Framework:
              PRODUCT Content is what is being sold . Can be information,
               a service or a physical product
              PLACE Context is how the content is presented for sale.
              PRICE Pricing based on cost
              Infrastructure describes how the buyer and seller are brought
               together

           Consequences:
              Erosion of brand equality
              Physical products replaced with the information services
              Near-zero marginal costs of additional customers invalidates old
               concepts of pricing
              Companies must look to exploit the breadth of the electronic
               channel - develop context loyalty first, then exploit it with
Logistics Information Management, 14, 1/2, 2001, 14-23.
           Klein & Quelch, 1996
           Framework:
            PLACE Global Reach; Market Makers

            PRICE Standard Pricing

            PROMOTION Global Branding



           Customer Centered:
            Technology will become more important than size of
             company
            Changing role fore intermediaries

            Companies dominating market

            Understanding the global market
Logistics Information Management, 14, 1/2, 2001, 14-23.
      Gosh, 1998
       Framework:
        PRODUCT Tool for developing and

         delivering new products and services to
         customers
        PLACE Companies can skip other players in

         an industry value chain

             Customer Centered:
              Links companies directly to customers,

                suppliers, and other
Logistics Information Management, 14, 1/2, 2001, 14-23.
           Evans & Wurster, 1999
           Framework:
            PRODUCT Navigation as a separate
             business
            PLACE Reach
               -describes the visibility of the customers interface and also of
               the business
              PROMOTIONS Richness
               -refers the amount of information exchanged between the
               producer and the consumer
           Customer Centered:
            Affiliation
               - describes the interest of most importance with respect to the
               merchant.
Logistics Information Management, 14, 1/2, 2001, 14-23.
                                     Table 2
                  The Electronic Commerce Marketing Framework


          Framework                    Product                   Place                      Price                Promotion            Customer Centered
     Managing in                  Content – what is       Infrastructure –          Pricing based on
     Marketspace – Rayport         being sold (what do      how was the sale           cost has no place.
     and Sviokla                   you take delivery        possible.
                                   of).                    Context – How is it
                                                            presented for sale.

     The Internet and                                      Global Reach              Standard Pricing        Global Branding        Understanding the
     International Marketing                               Market Makers                                                               global consumers
     – Klein and Quelch
     Making Business Sense        Tool for                Companies        can                                                       Links companies
     of the Internet - Gosh        developing and           skip other players                                                          directly to
                                   delivering new           in an industry value                                                        customers,
                                   products and             chain.                                                                      suppliers, and other
                                   services to             Companies are able                                                          interested parties.
                                   customers.               to dominate the
                                                            electronic channel
                                                            of an entire
                                                            industry or
                                                            segment, control
                                                            access to
                                                            customers, and set
                                                            business rules.

     Getting Real About           Navigation as a         Reach                                              Richness               Affiliation
     Virtual Commerce –            separate business.
     Evans and Wurster

Logistics Information Management, 14, 1/2, 2001, 14-23.
           The Traditional Marketing Model
           (the 4 P’s Kottler’ s model)
              A Product is anything that can be offered to a market
               for attention, acquisition, use, or consumption that
               might satisfy a want or need
              Place is Marketing channels- Supply Chains
              Price is the only element of the marketing mix to
               generate revenues.
              Promotion encompasses all the various ways an
               organization undertakes to communicate its products’
               merits and to persuade target customers to buy from
               them

Logistics Information Management, 14, 1/2, 2001, 14-23.
           Product
              Information is now its own viable
               product.
              Internet can also serve as a platform
               for new product innovations.




Logistics Information Management, 14, 1/2, 2001, 14-23.
           Place
                 Of all the elements in the marketing mix, the Internet
                  will have the most profound effect on the marketing
                  channels.
                 The Internet will allow organizations to skip over
                  parts of the value chain- Supply Chain. The Internet
                  becomes e-value chain.
                 Must maintain relationships w/ manufacturers,
                  suppliers and buyers- the supply chain
                 It is critical to quickly develop a large customer base
                  in on-line commerce.
                 Organizations that are first to offer a large breadth of
                  products to consumers will have an advantage.


Logistics Information Management, 14, 1/2, 2001, 14-23.
           Price
              The Internet will lead to increased price
               competition and the standardization of
               prices.
              Organizations will have to employ new
               pricing models when selling over the
               Internet.


Logistics Information Management, 14, 1/2, 2001, 14-23.
           Promotion
              Incumbent retailers and manufacturers
               have certain advantages when
               promoting products and services on the
               Internet.
              Branding will continue to play an
               important role in Internet marketing.
              There are important limitations to
               promoting on the Internet.
Logistics Information Management, 14, 1/2, 2001, 14-23.
           Customer Centered
              Companies are changing how they
               market their products in order to better
               satisfy consumers’ needs: CRM-Supply
               Chains
              With the Internet it is possible to gain
               permission to discuss your products, as
               opposed to interruption marketing, such
               as television commercials.
Logistics Information Management, 14, 1/2, 2001, 14-23.
           The Shifting Importance of
           Marketing Mix Elements
              The Internet will change the tradeoffs
               between elements of the marketing mix.
              Evans and Wurster (1999) point out that the
               amount of products a retailer could carry in
               one place (their reach) is no longer inversely
               proportional to the amount of information
               they could present about the product in their
               promotions (richness).


Logistics Information Management, 14, 1/2, 2001, 14-23.
     Nabisco: A Case Study
     Background
        Nabisco, an $8 billion snack food company, has major competitive
         advantages in the traditional supermarket distribution channels.
        Nabisco’s current corporate strategy is to build total brand value. Total
         brand value calls for satisfying customers faster and more completely
         than the competition.
        Its Biscuit division currently spends 10% of sales in trade (retail)
         marketing for items such as special promotions and in-store displays.
        In addition, the Biscuit division maintains a fleet of trucks that provide
         direct store delivery which is an advantage that few competitors can
         afford.
        Direct store delivery and Nabisco’s dominant market share in the
         biscuit category ensure that Nabisco’s products receive the most shelf
         space in stores and cross shoppers’ paths more than competitor
         products.


Logistics Information Management, 14, 1/2, 2001, 14-23.
           State of E-Marketing at
           Nabisco (2000)
              To date Nabisco has established a significant presence during the land
               grab phase of the Internet referred to by Evans and Wurster (1999).
              For the U.S. market, the company currently has a number of web sites:
                  A corporate information site
                  A recipe site that provides consumers with recipes that feature
                   Nabisco products.
                  Each of its two domestic operating units have web sites that
                   contain games and promote the units brands.
                  On-line shopping for Nabisco brand merchandise (e.g. mugs, dolls,
                   and trains), along with specially packaged food products.
                  Various brand specific sites
              Nabisco has also started an e-business group to address the larger
               strategic issues presented by the Internet.

Logistics Information Management, 14, 1/2, 2001, 14-23.
           The Problem
              Current competitive advantages will diminish
               in a market dominated by on-line grocery
               shopping.
              Advantages critical for a bricks and mortar
               grocery manufacturer such as in-store
               displays, product presentation and shelf
               space do not directly transfer to an on-line
               environment.
              Strategies will have to be developed to create
               new competitive advantages.
Logistics Information Management, 14, 1/2, 2001, 14-23.
           Challenges
              For established companies, doing business on-line risks damage
               to brands and distribution relationships that currently represent
               key competitive advantages.
              The value chain for incumbent manufacturers and retailers is
               being deconstructed because the value to consumers derived
               from entire segments of that chain can be achieved more
               efficiently and effectively through the use of the Internet and
               Supply Chains
              Even if the overall percentage of sales on the Internet averages
               just 5% across all categories, that shift will still create
               tremendous pressure on physical retailers, particularly in the
               United States.


Logistics Information Management, 14, 1/2, 2001, 14-23.
           Growth of the On-line Grocery
           Business
              The on-line grocery shopping industry is positioned
               for tremendous growth in the coming years.
                     current sales are estimated at $1.8 billion annually
                    they are expected to reach $3.5 billion by 2002
                    and $37 billion, 4% of domestic sales, by 2004
                    Some projections call for 20% of all grocery orders to be
                     placed on-line by the year 2007.
              The incentive for grocers to go on-line is to establish
               relationships with customers that will allow them to
               automatically replenish homes- a new form of SCM.


Logistics Information Management, 14, 1/2, 2001, 14-23.
     Implications of the
     Integrated Framework




Logistics Information Management, 14, 1/2, 2001, 14-23.
           Product

              Nabisco must use the information collected from the
               Internet to develop new products for new markets.
              Nabisco may have to compete with niche shops over
               the Internet and should start a business unit
               designed to compete in niche markets.
              Niche products would give the company's product
               development labs a chance to use promising
               developments that could not achieve the critical
               market mass required by today’s cost structure.

Logistics Information Management, 14, 1/2, 2001, 14-23.
        Place
               Nabisco needs to quickly develop an on-line customer base and
                ensure that its products are offered on sites that have all the
                products consumers want.
               Promote on-line retailing standards to allow consumers to
                switch on-line grocers easily, counteracting “sticky” web-sites
                developed by e-grocers.
               Encourage standards that would allow consumers to select
                products from manufacturers' sites even if the purchase and
                distribution occurred through the on-line grocer.
               Must maintain relationships w/ manufacturers, suppliers and
                buyers- the supply chain
               It is critical to quickly develop a large customer base in on-line
                commerce.
               Organizations that are first to offer a large breadth of products
                to consumers will have an advantage.
               If done correctly, would allow Nabisco to sell directly to its
                customers –disintermediation reducing the Supply Chain.
Logistics Information Management, 14, 1/2, 2001, 14-23.
           Place
              Provide an on-line service that allows consumers to
               navigate their selection of on-line grocery providers.
              Provide information about on-line grocers that
               consumers would be interested in such as the price
               of the service, service quality measures and the
               geographic area the service is offered in.
              Sponsoring manufacturers could embed themselves
               in the on-line grocer’s site by offering promotions
               through on-line grocers who are complying with
               industry standards.


Logistics Information Management, 14, 1/2, 2001, 14-23.
           Place - Strategies to Avoid
              Nabisco like other companies will have to be careful not to
               damage their brands and their relationship with existing
               distributors and retailers.
              Most likely strategies would be to keep Nabisco products off on-
               line grocer sites or not support the on-line grocers.
              Nabisco would also find it difficult to compete by selling its
               product on-line because it would not have the reach consumers
               would want.
              Nabisco could form alliances with other consumer products
               companies (e.g. Heinz, Campbell’s, P&G), thus forming B2B
               Supply Chains.



Logistics Information Management, 14, 1/2, 2001, 14-23.
           Price
              Nabisco should be prepared to respond to increased price
               pressures on the Internet. Increased price pressures would play
               to the benefit of the traditional large producers like Nabisco.
              Nabisco should consider new pricing models for its products,
               such as product subscriptions (e.g. cookie of the month).




Logistics Information Management, 14, 1/2, 2001, 14-23.
                                  Promotion
        Nabisco should continue to aggressively promote its brands on
         the Internet, particularly brands based on experience.


                  Customer Centered
        An on-line service that allows consumers to navigate their
         selection of on-line grocery providers would give manufacturers
         the opportunity to collect additional consumer information-
         CRM.




Logistics Information Management, 14, 1/2, 2001, 14-23.
           Conclusion
              Although many of the e-commerce strategy frameworks offer a unique
               contribution to strategic planning, integrating these models into the
               traditional product, price, place and promotion framework can provide
               a more complete analysis of strategy.
              Based on an analysis that uses the traditional four P’s model, along
               with integrating other on-line strategy frameworks, Nabisco should
               pursue the following on-line marketing strategies:
                  Use the Internet to develop new products and services.
                  Help the consumer choose an on-line grocer by encouraging
                   standards and disseminating information.
                  Prepare itself to operate in an increasingly price competitive
                   marketplace.
                  Emphasize those brands that relate to experiences over facts.
                  Develop customer centered marketing practices.
Logistics Information Management, 14, 1/2, 2001, 14-23.
           Conclusion

E-commerce Frameworks
                                             +
                                                          Traditional 4 P’s Model
                                                                                    =
              Integrating previously developed e-commerce
               frameworks with the traditional 4 P’s model
               provides a more comprehensive strategic
               approach to exploiting opportunity offered by
               e-commerce
Logistics Information Management, 14, 1/2, 2001, 14-23.

				
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