BTEC Business - 3rd April 2006

The Benefits of e-Business and Marketing

A definition of marketing given by the Chartered Institute of Marketing is as follows:

In introducing this resource, it is important that you understand the implications of this definition.

• Firstly, marketing is a process - it occurs over time and evolves.
• Secondly, it is about identifying, anticipating and satisfying consumer needs. These needs are both real and imagined by the consumer. We need food to survive. We don't need chocolate-covered doughnuts, however, but a business might be interested in creating this 'need'. Identifying needs is about finding out what consumers want now; anticipating needs is about finding out what consumers might want in 2, 3, 5, 10, 20 years' time and satisfying those needs is making sure the consumer gets what they want.
• Thirdly, it is about satisfying those needs profitably. This means that having identified the consumer need, a product or service can be devised to meet that need. If the cost of developing that product means that the price to consumers would be extortionate, it is likely that it would not be profitable - consumers wouldn't be able or willing to pay the sort of price that might be necessary to bring the product or service to market.

More and more businesses are seeing the benefits that e-business can bring. Copyright: Carl Dwyer, from stock.xchng.

Definition

e-Business refers to any form of transaction (exchange) that uses an electronic medium to facilitate the transaction.

The way we pay for many of the goods and services we buy these days is a world away from that envisaged even 10 years ago! Copyright: Melodi 2, from stock.xchng.

e-Business, therefore, can include the following:

• Internet-based companies that operate wholly through the Internet to conduct their business. Examples are eBay and Amazon.
• Companies that combine traditional business formats with information on the business provided via the Internet: for example, Ikea.
• Companies that combine traditional business formats with the opportunity of buying online. Examples include Marks & Spencer, John Lewis, HMV, Tesco and Argos.
• Companies that collect information on customer profiles and markets and sell this information to interested parties for example Experian and Mintel.
• Any device used to facilitate exchange, such as 'Chip and Pin' technology, automatic ticketing, electronic ticketing, credit card transactions and so on.
• Business to business (B2B) activity.
• Using the opportunities that IT presents to improve the flexibility of working patterns

The Benefits of e-Business

There are a number of benefits to e-business but in thinking about these benefits it is essential that we make the link back to our definition of marketing in order for the benefits to be fully understood.

The benefits can be summarised as:

• The opportunity to reduce costs of production by reducing overheads - for example, not having a retail outlet in a busy high street location with high rents, reducing stock costs etc
• The opportunity to increase sales
• The opportunity to access new markets across the globe
• The chance to target market segments more effectively
• Provide more accurate information and improve customer service experience
• Improves the efficiency of the supply chain
• Improve employee motivation through more flexible working methods
• Allowing 24/7 access to the firm's products and services
• Provides convenience and comfort for customers

Let us explore some case studies of companies that use e-business strategies in different ways.

1. Saab

Saab provides opportunities for customers to see what models are available and to explore different specifications and prices before ever visiting a showroom. Copyright: Erik Johansson, from stock.xchng.

Follow this link to the Saab motor vehicle Web site (http://www.saab.com/main/GB/en/index.html). This link takes you to a series of pages that allow you to input information and specifications about a Saab car. Go through the steps to build your vehicle.

2. Amazon

Go to the Amazon.co.uk Web site. (http://www.amazon.co.uk) Search for a DVD or a CD of your choice - if you have an account on Amazon it will remember you through the use of a 'cookie' - this is a method of identifying users, which packages up information you enter initially, then sends this information to the Web server. Whenever you access these or similar pages in the future, the server will send information that is more personalised.

Shopping for a CD or a DVD can now be a more personalised and convenient experience - not to mention bringing a much wider range of artists and material to your home. Copyright: Lotus Head, stock.xchng.

Once you have put in some basic information, the future pages you are given will relate more specifically to the sort of music or movies etc. that you like.

3. A Concert Venue

Go to the home page for the Colston Hall. (http://www.colstonhall.org/) This is a concert venue in Bristol (you can probably get similar results by looking at a local concert venue near you).

e-business methods allow you to be able not only to access tickets without queuing, but also to choose your seat. Copyright: Kelly O'Conner, from stock.xchng.

The page allows you to be able to view what events are coming at the Colston Hall. You may be interested in buying a ticket, in which case the Box Office is the place to start. Not only can you buy your ticket but also specify where you would like to sit in the auditorium!

5. British Airways

Look at this page from the British Airways Web site. (http://www.britishairways.com/travel/etickt/public/en_gb?prim=plantrip) This page explains the benefits of e-ticketing to passengers.

The use of e-Business methods allows companies such as BA to reach customers and improve the convenience and quality of the service they receive. Copyright: Marek Wojtal, from stock.xchng.

In addition, once you have booked your flight (which you can do online of course) you can also manage your booking - select seats, check in online and so on.

6. HM Revenue and Customs

Her Majesty's Revenue and Customs operates an Electronic Data Interchange (EDI) service for businesses throughout the UK to help them manage the payroll implications of tax, National Insurance and pension payments to HM Revenue and Customs.

The software needed to be able to do this does require some initial investment but there is then a host of information that can be transferred between the business and HM Revenue and Customs. The service is especially useful for businesses employing large numbers of staff or who have high staff turnover ratios.

Completing PAYE tax returns can present a major administration task for businesses, especially large businesses with many employees. What can e-Business offer them? Copyright: Tijmen van Dobbenburgh, stock.xchng.

e-Business and Competition

Apart from offering the benefits that we have explored here, there are also other aspects to e-business that firms have to consider. The Internet makes information transfer far easier and as a result, people are able to share information about goods and services and the quality of a company - wherever they are.

Businesses such as Amazon provide opportunities for customers to review all the products they sell to help inform other customers. There are also more dedicated sites that provide information to help consumers make decisions. Look at the following example: Tripadvisor.com. (http://www.tripadvisor.com)

In the relevant box, type in the name of a hotel near where you live and find out what people have to say about this hotel.

Information exchange is having an impact on competition - no business can rest on its laurels! Copyright: Colin Nixon, stock.xchng.