Chapter 4 E-environment

Learning outcomes Identify the different elements of an organization macro-environment that impact on an organizations e-business and e-marketing strategy Assess the impact of legal, privacy and ethical constraints or opportunities on a company Assess the role of macro-economic factors such as governmental e-business policies, economics, taxation and legal constraints.

Management issues What are the constraints placed on developing and implementing an e-business strategy by the e-environment? How can trust and privacy be assured for the customer while seeking to achieve marketing objectives of customer acquisition and retention? Assessment of the business relevance of technological innovation.

Activity 4.1 Introduction to social, legal and ethical issues List all the social, legal and ethical issues that the manager of a sell-side e-commerce web site needs to consider to avoid damaging relationships with users of his or her site or which may leave the company facing prosecution. You can base your answer on issues which may concern you, your friends or family when you access a web site.

SLEPT Framework Social-influence consumer perception of Internet use for e-commerce Legal & Ethical-determine what can be promoted and sold online Economic-affect spending patterns Political-Determine the adoption and the future of Internet Technological-offer new opportunities

SLEPT Framework E-Commerce Manager has to monitor the changes of the Macro-environment (also called environment scan) Among the 5 factor type, Legal factor is one of the most important. P.195, Table 4.2 Lists the Key legal issues that have direct impact on e-commerce

Social Factors

Factors Governing E-commerce Adoption Cost of Access Value proposition Ease of use Security and trust Fear of the unknown Skills

Webographics Usage location Access device Connection speed ISP Experience level Usage type-work, social, entertainment, etc. Usage level-hours or minutes / month

Figure 4.2 Variation in broadband subscribers per 100 inhabitants, by technology, December 2007 Source: OECD (www.oecd.org/sti/ict/broadband)

Influences of Online Channel Finding products and services online is a popular web activity Online research occurs at every phase of purchase, even for offline purchases

Figure 4.3 Percentage by category who bought offline after researching online Source: BrandNewWorld: AOL UK / Anne Molen (Cranfield School of Management) /Henley Centre, 2004

Motivation for Using Online Services Community Survey Entertainment Download Product trial Search Information Interaction Make purchases Exploration Games News

Trust in Different Information Sources The role of social media and friends in influencing sales was highlighted by this research http://eiaa.net/ftp/casestudiesppt/EIAA_Online_Shoppers_Report.pdf

Trust in Different Information Sources Price comparison web sites (61%) Web sites of well-known brands (59%) Newspapers/magazines (58%) Customer web site reviews (58%) Expert web site reviews (57%) Retailer web sites (57%) Sales people in shops (50%) Content provided by ISPs (38%).

Figure 4.4 Development of experience in Internet usage

Figure 4.5 Variation in purchase rates of online products and services in Europe Source: European Interactive Advertising Association (www.eiaa.net), Mediascope Eupore 2008

Localization Why localize a website? Is it important? What to be considered for localization?

Localization Singh and Pereira (2005) provide an evaluation framework for the level of localization: Standardized web sites (not localized). A single site serves all customer segments (domestic and international) Many sites, especially small business sites fall into this category Semi-localized web sites. A single site serves all customers; however, there will be contact information about foreign subsidiaries available for international customers. Many sites fall into this category http://scotiabank.com/ Localized web sites. Country-specific web sites with language translation for international customers, wherever relevant. 3M (www.3m.com) has adapted the web sites for many countries to local language versions.

Localization (Continued) Highly localized web sites. Country-specific web sites with language translation; they also include other localization efforts in terms of time, date, postcode, currency formats, etc. Dell (www.dell.com) provides highly localized web sites Culturally customized web sites.Web sites reflecting complete ‘immersion’ in the culture of target customer segments; as such, targeting a particular country may mean providing multiple web sites for that country depending on the dominant cultures present.

Legislation

Privacy and Trust in E-Commerce What are ethical standards? Why is it so important for e-commerce? What’s privacy? Why privacy a big deal for e-commerce? Identity fraud in Canada- http://www.safecanada.ca/identitytheft_e.asp

Personal Data and E-Commerce Online businesses and e-marketer typical need these data Contact info Profile info—segmentation Access platform Behavioural info on a single site Behavioural Info on multiple sites Anything else?

Table 4.6 Types of information collected online and related technologies

Table 4.6 Types of information collected online and related technologies (Continued)

Ethical issues and data protection Ethical issues concerned with personal information ownership have been usefully summarized 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?

The eight principles for data protection Fairly and lawfully processed processed for limited purposes adequate, relevant and not excessive accurate not kept longer than necessary processed in accordance with the data subject's rights secure not transferred to countries without adequate protection

Table 4.2 Significant laws which control digital marketing

Table 4.2 Significant laws which control digital marketing (Continued)

Ethical issues and data protection In Canada, Personal Information Protection and Electronic Documents Act (PIPEDA) establishes principles for collection, use, and disclosure of personal information. http://laws.justice.gc.ca/en/showdoc/cs/P-8.6///en?page=1 Provinces have parallel legislation

Figure 4.7 Standard information collected about web site visitors from the DaveChaffey.com site Source: Feedjit

Figure 4.8 Information flows that need to be understood for compliance with data protection legislation

Other E-Commerce Legislation Market e-commerce business Domain name and brand/trademark protection Using competitor name in meta-tag and pay-per-click advertising Accessibility law

Other E-Commerce Legislation Forming Electronic Contracts Country of origin principle Distance selling law Making and accepting payment Others—ref. pp. 226-227

E-Commerce & Green Environment Do you think e-commerce have positive effect on environment? Read the Box 4.6 on page 228

Figure 4.10 HSBC virtual forest Source: www.hsbc.co.uk

Taxation What do you know about the e-commerce taxes?

Taxation Tax Jurisdiction In general, taxes are collected in the jurisdiction where consumption take place This applies to EU and Canada The US federal government doesn’t collect taxes for online purchases States may have different legislations

Economic & Competitive Factors The e-commerce potential would be determined by the economic health and competitive environment of the country.

How can governments improve the health of their e-economies ?

Political Factors

Political action enacted through government agencies to console the adoption of the internet can include: Promoting the benefits of adopting the internet for consumers and business to improve a country’s economic prosperity; Enacting legislation to protect privacy or control taxation, as described in previous sections;

Providing organization with guidelines and assistance for compliance with legislation Setting up international bodies to coordinate the internet such as ICANN (the internet corporation for Assigned names and numbers, www.icann.com) and other independent organizations controlling internet technology.

Internet governance: Internet governance describes the control put in place to manage the growth of the internet and its usage. Governance is traditionally undertaken by government, but the global nature of the internet makes it less practical for a government to control cyberspace.

E-Government E-government is distinct from internet governance.

E-Government (short for electronic government, also known as e-gov, digital government, online government, or connected government) is digital interactions between a government and citizens

The-Government delivery models can be briefly summed up as: G2C (Government to Citizens) G2B (Government to Businesses) G2E (Government to Employees) G2G (Government to Governments) C2G (Citizens to Governments)

Technological issues Rate of change Monitoring for new techniques Which new technologies should we adopt? Monitoring for new techniques Evaluation – are we early adopters? Re-skilling and training

Figure 4.12 Diffusion–adoption curve

Identifying Emerging Technologies Technology networking—monitoring, scouting, and sharing Crowd-sourcing—facilitate access to ideas from customers, partners, inventors, etc. e.g., innocentive.com Technology hunting—structured review of start-up companies for new tech capability Technology mining—search the published documentations. E.g., googlealert

Summary What are the SLEPT factors? How could they affect e-commerce? What’s a strategy to adopt in coping with the SLEPT factors?