E-Marketing/6E Chapter 4 Building Inclusive E-Markets

Chapter 4 Objectives After reading Chapter 4, you will be able to: Discuss overall trends in Internet access, usage, and purchasing around the world. Define emerging economies and explain the vital role of information technology in economic development. Outline how e-marketers apply market similarity and analyze online purchase and payment behaviors in planning market entry opportunities. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Chapter 4 Objectives, cont. Describe how e-marketing strategy is influenced by computer and telephone access, credit card availability, attitudes toward Internet use, website design, and electricity problems. Review the special challenges of e-marketing on the wireless Internet in the context of emerging economies. Discuss the controversy related to the Digital Divide. Explain how e-marketing is being used with very low income consumers. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Idol Goes Global American Idol is broadcast in over 100 countries, often 48 hours after the show has been aired in the U.S. Its popularity has spawned 39 national versions in countries such as Ethiopia, the Philippines, Russia, and Kazakhstan. Georgians can follow the season’s music contestants by searching the YouTube key word: Geostari. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Idol Goes Global, Cont. Indian viewers vote for singers and apply to be a participant on Indian Idol through SMS. Over 5 billion votes were cast worldwide for Idol contestants in 2010. The sharing of popular culture has been enhanced by the convergence of TV, internet, mobile phones, and SMS. Freemantle Media, which markets Idol abroad, generates over $1B/year. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Overview Of Global E-marketing Issues Discuss overall trends in Internet access, usage, and purchasing around the world. Users from other countries, speaking languages other than English, will dominate the Web. By May 2011 there were approximately 565 million English-speaking and 510 million Chinese-speaking Web users. The online marketplace is changing and will require that global e-marketers must understand that a country’s e-readiness profile significantly influences marketing strategy and tactics. E-marketers must differentiate between industrialized nations and emerging economies. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

WORLDWIDE INTERNET USAGE And Population Statistics ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Global Markets Globalization has changed the way marketers conduct business. Market places that either have been difficult to access because of their physical distance from company headquarters or because of a consumer buying profile that did not match the firm’s core customer is increasingly being targeted. Exhibit 4.1 shows that worldwide Internet usage increased more than 45% between 2007 and 2009. Asia has the most Internet users: : 922M The Middle East saw the greatest growth in Internet use: 104.8%. North America has the highest penetration as a percent of the population: 78.4%. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Emerging Economies Define emerging economies and explain the vital role of information technology in economic developme nt. Countries that have high levels of economic development (USA, Canada, Japan, etc.) are classified as developed countries. Highly industrialized and use technology to increase their production efficiency High gross domestic product (GDP) per capita Enough income to purchase items. Countries that are still struggling with standards of living for their citizens are called emerging economies and are poised for rapid technological growth. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Emerging Economies, Cont. Emerging economies are characterized by a rapidly developing middle class, which creates demand for products and services. Four countries represent the power and opportunity in emerging markets: Brazil, Russia, India and China (BRIC). The next group of emerging market economies includes Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa (CIVETS). ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Importance of Information Technology Technology can increase a nation’s overall production capacity and efficiency. The internet and its supporting technologies can jump-start national economies. Bangalore, India is the center of India’s explosive growth in software and IT. The internet allows businesses in emerging countries to tap a global marketplace E-marketers in emerging economies must meet marketing issues and unique challenges related to the conditions of operating within a still developing nation. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Importance of Information Technology, Cont. Unique challenges in emerging economies (still developing nation) Slow connection speeds High costs of domestic phone calls ISP costs Privacy concerns Censorship Navigation difficulties Taxes Lack of content in one’s own language Lack of local content Limited credit card use Lack of secure online payment methods Unexpected power failures ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Country and Market Opportunity Analysis Outline how e-marketers apply market similarity & analyze online purchase & payment behaviors in planning market entry opportunities. Marketers in emerging economies must find market similarities in order to be successful in selling products. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Country and Market Opportunity Analysis, Cont. E-marketing plan guides the marketer through the process of identifying and analyzing potential markets. Market differences and market similarities must be measured and compared to determine strengths and weaknesses. Global e-marketers bust balance two different analytical approaches. Market similarity Market differences ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Market similarity Market similarity refers to ways in which two markets exhibit similar characteristics Marketers often choose foreign markets that have characteristics similar to their home market for initial entry. A U.S. company might first target Canada, UK, and Australia before targeting France, Japan or Germany, for example. CAGE (culture, administration, geography, economic) framework helps e-marketers evaluate similarities and differences between markets. If a firm is based in an emerging economy and wants to market to its home target, the marketer must identify market differences within the population. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Market similarity, Cont. Marketers will choose foreign markets that have similar characteristics to their home market for initial market entry. All similar markets between developed countries have High literacy rates High Internet usage rates Clearly defined market segments willing to shop various products online High Credit card usage rate Secure, trusted online payment mechanisms Efficient package delivery services ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Diaspora Communities When people leave their home country they may become part of a diaspora community and want to maintain relationships with their homeland. E-businesses in countries with emerging markets use market similarity to target their own diaspora communities living abroad Tortas Peru offers homemade, traditional Peruvian cakes online. Shop.muncha.com offers products to Nepalis living overseas can send to individuals in Nepal. Market similarity can be seen in “market convergence” phenomena that is “markets that were once very different become more similar over time”. Market convergence can be speed up by the Web ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

E-Commerce Payment and Trust Issues Describe how e-marketing strategy is influenced by computer & telephone access, credit card availability, attitudes toward Internet use, slow connections, website design, & electricity problems. E-commerce in emerging markets is often hampered by: Limited credit card use and consumer skepticism. Customers did not think shopping online was “fun” Customers did not “trust” online brands Firms reassured customers concerning online security In Egypt, Senegal and Pakistan less than 2% of the population owns a credit card. Most credit card usage in Nepal is by young professionals, upper-income Nepalis and tourists. Credit card use is virtually non-existent in Ethiopia. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

E-Commerce Payment and Trust Issues, cont. 4-19 E-marketers working in emerging economies should also understand attitudes toward online purchasing. A 2007 study in Lithuania found that 51% of Internet users had not made an online purchase because they thought it was too risky. Alternative payments were accepted Bank transfers Cash on delivery Postal orders eBanka; is the oldest purely internet bank in Central and Eastern Europe; debit cards specifically created for online buying Czech Republic, eBanka, an Internet bank, was established in 1998 to handle secure online purchases. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Consumer concern about online use of credit cards ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Infrastructure Considerations A country’s physical infrastructure also influences online marketing strategy Unless the firm’s product is completely digital, online retailers of tangible products still need to solve logistics problems of physically moving the product from one location (a warehouse) to another (e.g. road conditions, traffic…) Countries with emerging economies are also prone to electricity blackouts We will discuss each of these issues in the next slides ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Technological Tipping Points E-marketers must understand the seismic changes occurring in consumer access to online content. A tipping point occurs when an emerging trend or phenomenon becomes so big that it becomes irreversible. Computer and mobile phone technology. Rapid development of broadband. We will discuss each of these issues in the next slides ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Legacy Technologies: Computers & Telephones Historically, Internet connection is with a desktop PC and dial-up ISP In emerging economies, global computer ownership and access is unevenly distributed according to a global survey Ownership was 2% in Bangladesh. Creates opportunities for local, small business entrepreneurs Telecenters, small shops that offer internet connections to the public, are popular means of accessing the Web in many countries. Peru has one of the highest usage rates of telecenters in the world. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Legacy Technologies: Computers & Telephones Landline-connected telephones are entering the decline stage of their product life cycle. As wireless technology increases, landlines will become less useful and ultimately obsolete. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Wireless internet Access: Mobile Phones In 2012, over half of the world’s population had at least one handset (4.3B users). Challenges of wireless e-marketing: Modification of content for small screens Text entry using tiny keypads Content development Pricing and secure payments E-marketers must also understand that mobile consumer behavior differs from desktop or laptop consumer behavior. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Wireless internet Access: Smartphones A recent study noted that smartphone adoption rates were the fastest ever of any technology innovation. Marketers must understand how smartphones are influencing consumer purchase behavior in various countries. 36% Egyptian consumers with a smartphone changed their minds about buying a product while they were in a store because of real-time, online research. 37% of smartphone users in Argentina make an in- store purchase after online research with their smartphones. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Wireless internet Access: Broadband Broadband illustrates another significant tipping point Broadband connections, or high-speed internet access, are developing quickly and growth is predicted to come from emerging markets. Global prices continue to decline as more individuals and firms subscribe to broadband. The rapid development of broadband networks in developed and developing countries is creating new opportunities for e-marketers. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

The Digital Divide Discuss the controversy related to the Digital Divide. The division between those who have access to information and those who don’t is termed “digital divide.” Differences with regard to technology access can create a digital divide between countries or populations, such as urban and rural consumers in China. The digital divide raises challenging questions for global policy makers, international business, and entrepreneurship: what are their responsibilities, if any, for narrowing the gap? The World Wide Web is not really worldwide. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Building Inclusive E-Markets Peter Drucker said that business consists of two activities: marketing and innovation. Explosive growth of mobile phones has enabled e- marketers to reach base of the pyramid consumer segments in interesting and creative ways. Base of the pyramid used to describe 4 billion people who live on less than $2 per day Mobile banking is one of the most successful e- marketing efforts in LEAST developed countries (LDCs.) In heavily agricultural countries, mobile applications for farmers are making them more productive (e.g. Uganda, India & Brazil) Explain how e-marketing is being used with very low income consumers. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

M-KRISHI® For Rural Indian Farmers ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Building Inclusive E-Markets, Cont. The Internet is aiding in closing the technology and financial gap in several ways: Financial assistance Micro loans Microfinance Credit can be issued to low income consumers Technological assistance Mobile phones Satellite Internet access Banking assistance Solve the rural related problem Many people are “unbanked” Mobile phones can be used to conduct banking ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

Social Networking 82% of the world’s 1.2 billion online consumers reported using at least one social networking site when online. Half of the world’s most engaged markets for social networking are in Latin America. Facebook is a market follower, not leader, in South Korea, Japan, China, Brazil and Vietnam. Forward thinking e-marketers are integrating Facebook into their overall marketing strategy. ©2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

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