Chapter 3 The Internet macro-environment

Learning objectives Identify the different elements of the Internet macro-environment that impact on an organisation’s Internet marketing strategy and execution; assess the impact of legal, moral and ethical constraints and opportunities on an organisation and devise solutions to accommodate them; evaluate the significance of other macro-economic factors such as economics, taxation and legal constraints.

Questions for marketers Which factors affect the environment for online trading in a country? How do I make sure my online marketing is consistent with evolving online culture and ethics? How do I assess new technological innovations? Which laws am I subject to when trading online?

What is the macro-environment? Figure 2.1 The Internet marketing environment

Example - Oxfam

Ethical issues Ethical issues concerned with personal information ownership have been usefully summarised by Mason (1986) into four areas: Privacy – what information is held about the individual? Accuracy – is it correct? Property – who owns it and how can ownership be transferred? Accessibility – who is allowed to access this information, and under which conditions?

Ethics – Fletcher’s view Fletcher (2001) provides an alternative perspective, raising these issues of concern for both the individual and the marketer: Transparency – who is collecting what information? Security – how is information protected once collected by a company? Liability – who is responsible if data is abused?

Types of information needed Contact info Profile info Behavioural info Single site Multiple sites

Company best practice 1 (see p.88) 1 Inform the user, before asking for information: Who the company is What personal data is collected, processed and stored Purpose of collection 2 Ask for consent for collecting sensitive personal data and good practice to ask before collecting any type of data. 3 Provide a statement of privacy policy. ‘A privacy statement helps individuals to decide whether or not to visit a site and, when they do visit, whether or not to provide any personal information to the data controller.’ 4 Always let individuals know when 'Cookies' or other covert software are used to collect information about them.

Company best practice 2 (see p88) 5 Never collect or retain personal data unless it is strictly necessary for the organisation’s purposes. For example, a person’s name and full address should not be required to provide an online quotation. If extra information is required for marketing purposes this should be made clear and the provision of such information should be optional. 6 Amend incorrect data when informed and tell others. Enable correction on-site. 7 Only use data for marketing (by the company, or third parties) when a user has been informed this is the case and has agreed to this (this is opt-in). 8 Provide the option for customers to stop receiving information (this is opt-out). 9 Use technology to protect the customer information on your site.

A summary of actions 1. Reassure customers by providing clear and effective privacy statements and explaining the purpose of data collection 2. Follow privacy and consumer protection guidelines and laws in all local markets 3. Make security of customer data a priority 4. Use independent certification bodies 5. Emphasise the excellence of service quality in all marketing communications

Technology Think of new mobile technologies introduced in past 2-3 years. Examples: WAP 3G MMS (multimedia messaging) What issues do these raise for managers?

Managers’ choices ‘Wait and see’ Early adopter Intermediate What are the benefits of each for mobile phone companies introducing these technologies?

Diffusion of innovation curve Figure 3.5 Diffusion–adoption curve

Mobile/wireless proposition Element of proposition Evaluation Not fixed location The user is freed from the need to access via the desktop making access possible when commuting, for example. Location-based services Mobiles can be used to give geographically-based services, e.g. an offer in a particular shopping centre. Future mobiles will have global positioning services integrated. Instant access / convenience The latest GPRS and 3G services are always on, avoiding the need for lengthy connection. Privacy Mobiles are more private than desktop access, making them more suitable for social use or for certain activities such as an alert service for looking for a new job. Personalisation As with PC access personal information and services can be requested by the user, although these often need to be set up via PC access. Security In the future mobile may become a form of wallet, but thefts of mobile make this a source of concern.

WAP infrastructure Figure 3.8 Hardware and software infrastructure for a WAP system

Mobile technology standards Figure 3.9 Mobile access technology standards

Example 3G device

iDTV proposition Element of proposition Evaluation Instant access/ convenience Interactive services are available quite rapidly, but return path connections using phone lines for purchase are slower. Personalisation This is less practical for PC and mobile since there are usually several viewers. Security Credit card details can be held by the iDTV provider making it theoretically unnecessary to repeatedly enter personal details.

Interactive digital TV Figure 3.12 Components of an interactive digital TV system

Security requirements Authentication – are parties to the transaction who they claim to be? Privacy and confidentiality – is transaction data protected? The consumer may want to make an anonymous purchase. Are all non-essential traces of a transaction removed from the public network and all intermediary records eliminated? Integrity – checks that the message sent is complete i.e. that it isn’t corrupted. Non-repudiability – ensures sender cannot deny sending message. Availability – how can threats to the continuity and performance of the system be eliminated?

Encryption Figure 3.13 Public-key or asymmetric encryption

SET standard Figure 3.14 An example of the Secure Electronic Transaction (SET) standard

Open Buying on the Internet Figure 3.15 The Open Buying on the Internet model for business-to-business e-commerce

Leaders and laggards Figure 3.16 Leaders and contenders in e-commerce Source: Adapted from the Economist Intelligence Unit/Pyramid Research e-readiness ranking (www.eiu.com)