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Branding Laws · Internet Marketing · eMarketing · Internet Advertising · Online Branding |
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Branding Laws · Internet Marketing · eMarketing · Internet Advertising · Online Branding |
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A THREE COUNTRY COMPARISON OF INTERNET MARKETING
Stewart Adam
Deakin University
A THREE COUNTRY COMPARISON OF INTERNET MARKETING
Stewart Adam
Deakin University
Rajendra Mulye
RMIT University
Kenneth R Deans
University of Otago
Dayananda Palihawadana
University of Leeds
Abstract
This paper provides information on business use of the Internet (Net) and World Wide Web
(Web) across three countries viz Australia, New Zealand and the United Kingdom (UK), and
explores reasons for observed differences in use. The study reports that UK firms are more
likely to use the Internet in relationship management than are Australasian firms. The
conclusion drawn is that while there is less sophisticated business use of the Internet by
Australasian companies relative to UK companies, this is but one reason for lower household
penetration of the Internet and lower online purchasing levels.
Introduction
It is not surprising that most Internet marketing studies are conducted solely from the United
States perspective given that North America accounts for 151 million people using the Net,
representing 40% of all Internet users—with over a third of these in the United States, and
over 40 million US citizens buying online (Webstatistics.com 2001). While there have been
studies conducted recently in Australia (Poon and Swatman, 1999) and the United Kingdom
(Ng, Pan et al., 1998) it is not possible to draw any conclusions from these studies as to how
and, more importantly, why business use of the Internet differs across these countries. In this
descriptive paper, we attempt to address first part of the puzzle – ‘how’ or in what important
ways do businesses in these countries differ in their use of the Internet and speculate on ‘why’
these differences exist in countries that operate in, arguably, similar market environment.
While it would be interesting to extend this comparison to countries such as Singapore, we
believe it is more important to understand the nature of differences in Internet use in countries
that are similar in many respects than countries that are dissimilar where the differences
would be obvious. Besides we were unable to do so because the list of domain names is not
publicly available in Singapore.
In this paper we compare the countries using comparable sample bases, questions, and time
frames. This comparison is needed because of systemic differences between countries in
terms of household ownership of computers, Internet usage and online purchasing, and it is
necessary to know if these differences reflect differences in strategic Internet use by the
companies in these countries, whether cause or effect. There are reasons put forward for the
lower Australasian usage, particularly lower online purchasing, such as "distance from major
markets, the early stages of eCommerce adoption, and much higher levels of consumer
concern about Internet security" (Ernst and Young, 2000, p.2). There is also a possible
technological reason for this difference in that only 1.5 percent of Australian households have
broadband access, compared with 11 percent of households in the United States and 57
percent of Korean households (Paul Budde Communication 2001).
There is a conundrum presented for marketing organisations that set out to use a global
medium to communicate primarily with local Internet users, who may well click for global
information search using two fingers, but who in the main still shop on two legs at the local
level. Thus, an important issue this paper addresses is to explore whether or not lower
Australasian consumer usage of the Internet is a result of less sophisticated business usage of
the Web relative to the United Kingdom, or for some other reason.
Online Marketing Strategy
In the eight years business and government have been using the Internet, they have struggled
to accommodate this new interactive medium in their integrated marketing communications
(Hofacker and Murphy, 1998; Dholakia and Rego, 1998), or broadly use the medium as a
direct response tool (Adam, 2001), and more particularly as a relationship management aide
(Adam, Mulye et al., 2001; Kenny and Marshall, 2000).
Newer online business models have generated a great deal of news media attention (Argy and
Bollen, 1999; Rappa, 2001), consulting firm input (Andersen Consulting 1998; KPMG, 1999;
Ernst and Young, 2000) government endorsement (Henry, Cooke et al., 1997; NOIE, 2000),
academic attention on marketing communication (Novak, Hoffman and Yung, 2000; Hoffman
and Novak, 1996; Hofacker and Murphy, 1998), business processes such as exchanges (Klein
and Quelch, 1997), alliance co-ordination (Steinfeld, Kraut et al., 1995) as well as trust and
commitment (Ang and Lee, 2000) in online relationship management (Adam, Mulye and
Deans, 2001).
Specific benefits are put forward for business use of the Web. These may be grouped as
productivity based and revenue-growth based (Hanson, 2000) and include: global presence;
establishing and maintaining a competitive edge; shortening or eradicating components of
supply chains (disintermediation); cost savings; and a research advantage (Ng, Pan et al.,
1998). The views put forward by Rayport (1999) and Porter (2001) contrast with those of Ng,
Pan et al., particularly in the way the former authors suggest that Internet marketing
organisations have failed to seek strategic advantage, and in the way they have encouraged
their own judgement on spurious financial outcomes. The conflicting views put forward by e-
Commerce aficionados and the more circumspect management strategists concerning the
Internet's role in business further confirm the need for inter-country studies of the strategic use
of the Internet.
Method
The data for this paper has been pooled from two studies conducted by the authors: the
1999/2000 Australasian WebQUAL Audit (Adam and Deans, 2000), and a 1999/2000 study
in the United Kingdom (Palihawadana and Nair, 2000). In this section, we discuss the
methodology employed in each study.
Australia and New Zealand WebQUAL Audit
The WebQUAL Audit carried out in Australia and New Zealand is a multi-stage, longitudinal,
probabilistic study of business and government use of the Web. There were three phases to
the 1990/2000 study: 1) an online email and Web form survey
<144.132.42.242/webqual/webqual.htm> of a random sample of Australian and New Zealand
organisations with registered domain names, 2) content analysis of respondent Websites
<144.132.42.242/webqual/WebQualConceptualModel.htm>, and 3) personal interviews with
selected respondents. The first stage of the study involved an email invitation to a sampling
frame of 2,976 Websites drawn from the early 1999 population of 81,563 Australian and
17,888 New Zealand domain names (com/co; asn; edu; org; and gov). This followed a pretest
of the email and Web form software interface as well as the SQL database technologies
used. The then publicly available lists of domain names in both Australia and New Zealand
were used to systematically draw samples in each country, using a skip interval of 31. Before
sending the email invitation to participate, each Website was visited to obtain an email
address. Potential respondents were sent a country-adaptive email inviting them to participate
in the survey and supplied an access code at this time. The specially developed software used
was able to detect respondents who had entered the survey pages but who had not completed
the survey. These respondents were re-contacted to optimise the response rate, along with the
use of three reminders in the 21 days the survey Website was held open.
The study achieved a response rate of over 17%, with an overall useable response of 399
(13.4%). The analysis of results used in this paper mainly involves the online survey phase of
the study in Australia and New Zealand.
United Kingdom
The UK study was carried out in 1999/2000 with the key objectives of ascertaining the
characteristics of firms that have adopted the Internet in business-to-business marketing, and
to examine and evaluate the variety of uses, and the extent, to which Internet is used in
marketing by business-to-business organisations in Britain.
A survey was carried out among marketing organisations in Britain. A skip interval of 100
was used to systematically draw the sample of 560 firms from the population of 56,067
business organisations listed in the Yahoo! Directory for the United Kingdom. It is to be noted
that the number of businesses that operate online in the U.K. increased rapidly, with Ng et al
(1998) reporting an increase in the overall number of business sites from 20,000 in 1995 to
277,000 by 1997. In the sampling process, no distinction was made concerning the nature of
the organisations’ Web presence. That is, no account was taken of whether the organisation's
Website simply provided basic information, or additionally, was a full secure transaction site
with relationship enhancement capabilities. The only criterion employed was that the domain
names selected were primarily business organisations; with an emphasis on business-tobusiness.
Nevertheless, many of the organisations sampled, served both the consumer market
and the business market, with some undertaking marketing only using the Internet, while for
others, the Net was but one marketing channel used.
Questionnaires were emailed during the first week of December 1999, resulting in 143
(25.5%) responses by the beginning of January 2000. After discarding 7 responses due to
partial completion, 136 complete responses (24.3%) were used in the final analysis. The
questionnaire included several sections on company profiles, the Web environment, and areas
of Internet use such as marketing strategy, product strategy, promotion, pricing, distribution
and managing customer relations. In the main, the questionnaire was devoted to generating
information on the manner in which Internet is used by business firms. In addition to seeking
information on business use of the Internet, the study sought to establish the extent to which
the Internet contributes to company performance as well as the possible connection between
company characteristics such as size and industry sector and the variety and extent of Internet
use in business-to-business marketing.
Results
The inter-country study involves a comparison of responses to16 key questions that have been
grouped in Table 1.
Table 1. Internet uses in Australia, New Zealand and the United Kingdom
Internet uses UK
n=133
(% Yes)
Australia
n=242
(% Yes)
New
Zealand
n=74
(% Yes)
Sig. (2-sided)
Strategic goals
Gaining competitive
edge
76.7 14.0 18.9 ?2 159.75, p= .000
Marketing intelligence 4.5 31.0 35.1 ?2 39.39, p= .000
Corporate image 78.9 81.4 83.8 ?2 .763, p= .683
Cost-effectiveness 61.7 28.1 25.7 ?2 46.57, p= .000
Marketing communication function
Provide product
information
84.2 81.4 83.8 ?2 .553, p= .758
Customer information
purpose
55.6 90.1 90.5 ?2 69.72, p= .000
Building brand identity 75.2 81.4 83.8 ?2 2.88, p= .237
Marketing logistics function
Direct sales 36.1 31.0 39.2 ?2 2.12, p= .346
Online ordering facility 30.8 31.0 39.2 ?2 1.928, p= .381
Realtime orderprocessing
16.5 12.0 10.8 ?2 1.983, p= ..371
Relationship management function
Maintain relationships 59.4 37.6 37.8 ?2 17.94, p= .000
After-sales service 0.8 16.5 14.9 ?2 21.79, p= .000
Online customer service 44.4 9.5 9.5 ?2 71.602, p= .000
Online communication
facilities with customers
(e-mail and /or form)
55.6 93.0 85.1 ?2 77.742, p= .000
Online customer
communities
31.6 3.3 5.4 ?2 68.518, p= .000
Promptly handling
customer queries
65.4 14.9 12.2 ?2 118.297, p= .000
The responses are grouped into four categories, namely strategic goals, marketing
communication function, marketing logistics function, and relationship management function
on the basis of the categories of use reported for small business by (Adam and Deans, 2001)
using a factor analysis of 11 business uses of the Internet.
Discussion and Implications
The primary goal of this paper was to compare the results of online studies carried out in the
three countries selected that each explore commercial use of the Internet. The studies have
similar timeframes and methodologies, and were conducted in similar cultural environments.
The comparisons made in this study are based on responses to a subset of questions common
to the three studies. These responses are grouped as indicated in Table 1. While there are
many similarities evident in how business uses the Internet, there are also considerable
differences across the countries in terms of these groupings.
The most pronounced difference appears in the strategic use of the Internet to gain
competitive advantage, to improve cost-effectiveness, as well as on many aspects of
relationship management where Australian and New Zealand companies under-perform their
UK counterparts. This might be thought to be the result of UK businesses using the Net
longer than Australasian firms. However, even when the affect of time is controlled for via a
three-way cross-tabulation, the results remain the same. Thus, time has no measurable affect.
In order to understand these results more clearly, we highlight a point made by Adam and
Deans (2000) to the effect that businesses follow some sort of an evolutionary process
whereby they migrate from marketing communication use to marketing transactions use and
then lastly to use the Net in relationship management. The findings of this study do lend
support to this observation in that Australian and New Zealand firms were using the Internet
to communicate with local firms, and maintain relationships at a local level in support of sales
made through traditional channels. Where the respondent firms were using the Net to
transact, they were seeking revenue growth from international buyers. We suggest that
because there is fragmented use of the Internet across these functions, business does not see
such use as leading to a strategic advantage. Porter (2001) provides a further reason when he
points out that the Internet is a possible source of fear for many companies and industries, in
that it lowers the cost of entry for both substitutes and competitors.
However, a conundrum is evident from the studies. At issue is whether the purchasing
behaviour of Australians and New Zealanders is a consequence of a failure by business to
strategically use the Net to its full potential, or rather, that business views low online
purchasing levels as a reason not to invest in the Internet beyond using it as they do the
telephone, or indeed mass media such as free-to-air television. This latter point was made by
Poon and Swatman (1999). The answer to this conundrum is not immediately obvious, and
suggests the need for further research. It is clear that further research is needed from the
consumer perspective, to unequivocally establish whether it is consumers who are reticent in
their use of this new interactive medium for transaction and fulfilment purposes, or if business
is indeed making a less than optimal use of the technological capabilities of the Internet in
marketing practice.
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