Journal ofMarketing Management, 2003, 19, 857-881
Nicole E. Coviellota, Rode rick J. Brodie a, Rich ard W. Brookesa and Roger A. Palm erb
University ofAucklanda Cranfield University"
Asse ssing the Role of e-Ma rketi ng in Cont emp orary Mar ketin g Practice Using a sample of 149 firms from the UK and New Zealand, we extend previous research on the nature of contemporary marketing practices by Brodie et al. (1997) to examine the practice of eMarketing in relation to other aspects of marketing. Analysis reveals four combinations of marketing practice. J!Vhile one third of firms emphasize either a Traditional Transactional or Traditional Relational approach to their markets, another third practice e-Marketing in combination with Transaction and Database Marketing, and a final third integrate all of Transaction, Database, Interaction, Network and e-Marketing. The findings show that for most firms, the level of e-Marketing practice reflects the extent to which information technology plays either a reinforcing, enhancing or transforming role in the organisation.
Keywords: e-marketing, relationship marketing, internet, information technology, database marketing, contemporary marketing practices, cmp, interactive marketing
Intro ducti on As part of a study of transactional and relational marketing practices, Brodie et a1. (1997) investigated emerging developments in marketing that were identified by managers to be fundamental to their organisation. One such development was perceived to be the potential use of interactive inform ation
technologies in marketing practice. This reflected an emerging interest in the notion of technology-enabled 'one-to-one' marketing as popularized by Peppers and Rogers (1993; 1997), or the opportunities presented by technology-enabled mass-customization as promulgated in the acade mic t
Correspondence: Professor Nicole E. Coviello, Depar tment of Marketing, Unive rsity
of Auckland, Privat e Bag 92019, Auckland, New Zealand, Tel: 64 9 373 7599, Fax: 64 93737444, Email:
[email protected]
ISSN0267-257X/2003/7-8/000857 + 24 £8.00/0
©Westburn Publishers Ltd.
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N. E. Coviello, R J. Brodie, R W. Brookes and R A. Palmer
literature (McKenna 1991; Pine 1993; Kara and Kaynak 1997; Peppers, Rogers and Dorf 1999) and business media (Child et al. 1995; Martin 1997). As this literature emerged, so too did a range of differing views on the role of interactive technologies in marketing. Coviello, Milley and Marcolin (2001) synthesise these views and identify four relatively distinct schools of thought pertaining to how 'interactivity', enabled by various information technologies, might impact contemporary marketing practice. One school of thought is captured by Venkataraman (2000) who states: " ...the Internet changes everything" [italics added]. That is, IT-enabled interactivity has the potential to affect all businesses and all types of product, with interactive technologies fundamentally changing how all firms relate to their markets in terms of both their philosophy and their strategy. Hoffman and Novak (1997) were early proponents of this view, as were Rust and Varki (1996) and Webster (1996). Similar sentiments can also be found in the business press during the early stages of Internet development. A second school of thought suggests that the opportunities provided by different information technologies might simply offer tools to support or augment traditional approaches to the market (Carter 1996; Levin 1996; Deighton 1997). According to Peterson, Balasubramanian and Bronnenberg (1997), these tools are likely to have the greatest impact on marketing communications. For example, activities such as advertising or sales promotion can be tailored to past behaviour identified through a database (Burke 1997), while the Internet can be used to transmit audiovisual presentations or electronic catalogues (Avlonitis and Karayanni 2000). A third school of thought implies that interactive technologies offer what is primarily a new channel to the market (Elofson and Robinson 1998; Ghosh 1998); a channel that allows direct access to customers and the ability to bypass or complement existing channel members. For example, in his review of the practices of Federal Express, Quinn (1999, p.44) notes that the Internet is "nothing more than a fourth sales channel...integrated into other channel strategies." The third view appears to be related to a fourth and what is perhaps the most holistic school of thought to emerge. That is, the notion of a 'bricks and clicks' balance that suggests technology-enabled marketing offers different opportunities to different organisations in different contexts (HaeckeI1998; Nilsson 1999; Gulati and Garino 2000; Mandel and Hof 2001). In this perspective, the key is to allow for convergence of "...old and new, online and offline, traditional and revolutionary" (Wind and Mahajan 2002). Recently however, reports have commented on the difficulties experienced by firms in implementing technology-enabled initiatives such as one-ta-one marketing and CRM (fapp 2001; Fletcher 2002; Hughes 2002; Krauss 2002; Plakoyiannaki and Tzokas 2002). Similarly, Hart, Doherty and
Assessing the Role of E-Marketing
859
Ellis-Chadwick's (2000) study of UK retailer activities concludes that adoption of Internet technology in retail marketing is limited. These recent observations, in light of the bricks and clicks argument, lead us to question the extent to which marketing approaches enabled by interactive technologies are actually used relative to other aspects of marketing practice. The paper proceeds by introducing the conceptual framework underpinning the study. This is followed by the development of three research questions. We then present the method, results, and a discussion of various managerial and research implications.
The Many Faces of Marketing In recent years, a number of classification schemes have emerged in the literature, each comparing what is generally referred to as 'interactive' marketing with more traditional approaches to the market (Day 1998; Hagel 1999; Iacobucci and Hibbard 1999). Most recently, Coviello, Milley and Marcolin (2001) draw on these schemes to refine a framework developed and validated by Coviello, Brodie and Munro (1997,2000). The original classification scheme developed by Coviello, Brodie and Munro (1997) outlines four aspects of marketing practice: Transaction, Database, Interaction, and Network Marketing. Transaction Marketing involves a firm attracting and satisfying potential buyers by managing the elements in the marketing mix, whereby the seller actively manages communication "to" buyers in the mass market in order to create discrete, arms-length transactions. Database Marketing involves using database technology to create a type of relationship, thus allowing firms to compete in a manner different from mass marketing. The intent is to retain identified customers, although marketing is still "to" the customer, rather than "with" the customer. Relationships per se are not close or interpersonal, and are facilitated and personalized through the use of database technology. In contrast, Interaction Marketing implies face-to-face interaction between individuals. As such, it is truly "with" the customer, as both parties in the dyad invest resources to develop a mutually beneficial and interpersonal relationship. Finally, Network Marketing occurs across organisations, where managers commit resources to develop their firm's position in a network of various firm-level relationships. Coviello, Milley and Marcolin (2001) extended this framework by reviewing the IT/marketing interface literature and pattern-matching the findings of their content analysis back to the dimensions of the original framework. They identify a fifth aspect of marketing: e-Marketing, and define it as "...using the Internet and other interactive technologies to create and mediate dialogue between the firm and identified customers" (Coviello,
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N. E. Coviello, R. J. Brodie, R. W. Brookes and R. A. Palmer
Milley and Marcolin 2001, p. 26).2 Thus, e-Marketing encompasses one-toone marketing and allows for mass customization. In comparison with other practices, the purpose of exchange in eMarketing involves establishing a dialogue that provides individual customers access to information (see Table 1). In tum, the use of interactive technologies allows these customers to provide information to the business. While this has some similarities with both Database Marketing and Interaction Marketing, the intent of managers in e-Marketing is to create a real-time dialogue that is enabled and mediated by information technology. Furthermore, their planning focus is on understanding and managing the ITenabled relationships that result between the firm and its customers. Rather than an emphasis on marketing "to" the customer by using databases to personalize communication (as found in Database Marketing), the firm establishes interactive, technology-enabled communication "with" and "among" many parties. Customers may act independently or join groups (e.g. in the form of online communities). In addition to being able to personalize communication efforts, customer information can be used to individually customize the product or service offer. The relationship however, is formal, relatively distant, and relies on technology to enable interactivity. This contrasts with Interaction Marketing's face-to-face and interpersonal contact that is based on social processes. Also, while the relationship created bye-Marketing is implied to be continuous/ over the longer term, the IT-enabled interactivity occurs in real-time. Given the reliance on information technology in e-Marketing, investment is not in internal or external market assets, but internal operational assets such as IT and various interactive technologies. These technologies can range from web sites to interactive voice response, wireless, interactive kiosks, etc. More importantly, information technology, systems and personnel are actively integrated with the marketing function and other areas in the organisation. Responsibility for e-Marketing permeates the organisation (as in Interaction Marketing) but it is facilitated by technology and marketing specialists, often with the support of senior management given the strategic implications that e-Marketing might pose for some firms. Coviello, Milley and Marcolin (2001) use the label 'e-Marketing' as it reflects contemporary business language and avoids the term 'interactive', thus minimizing confusion with the term 'interaction' (already used in the original framework to define another marketing approach, based on work of the IMP group). Also, rather than describe the (electronically) interactive nature of the relationship, the label eMarketing more clearly indicates an approach to marketing practice. e-Marketing also implies that it is a subset of e-Commerce activity, which is defined as "on-line trading, that is, buying and selling goods and services over electronic networks." (Ministry of Economic Development, 2000).
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Formal (yet perlJOAIIi-.d ria It' 30 years (46%). An average of 26% of firms reported no change or a decrease in sales growth over three years, 33% reported 1-10% growth and 41 % had greater than 10% growth. Beyond these characteristics, four size categories emerged (11 % with less than 20 employees, 26% with 21-100 employees, 21 % with 101-500 employees, and 42% with over 500 employees). A comparison across the two countries shows the firms to be similar in terms of type of customer served, nature of product offered, and ownership characteristics, although the UK sample included a greater proportion of large firms and older firms compared with New Zealand. These differences are to be expected given the UK's larger population and economic base. Differences also emerged across the two countries with regards to firm sales growth rate, use of technology and export level however all of these were controlled for in subsequent analysis. Turning to the role of information technology in the organisation, 46% of managers categorize their firm as simply using IT to reinforce the status quo. As noted by the manager of a consumer goods firm: "IT is seen as an addon...a tool to achieve and do business, but it has not been addressed on an integrated basis or in terms of producing effective hardware, software, systems and support personnel, including a basic website." Another 34% of the aggregate samples use IT to enhance their operations, with one manager commenting: "...the investment banking industry uses IT primarily to ensure our front office has fast access to the market and the latest information. In terms of marketing, the ongoing development of a client relationship management system will enhance the status quo." Finally, 20% consider their firms to have transformed the status quo with technology. As commented by a business-to-business goods manager: "Technology has enabled our business [small firm) to reach new international markets in an economic way. This lets us transform our marketing programme." These results are reinforced by comparing the role of IT with the reported use of technology in the firm (see Table 2). For example, firms reporting a low current use of information technology are characterized as 'reinforcing' firms. Those at a medium level are slightly more likely to see technology as 'enhancing' their activities. Those using technology at a high level generally see IT as 'transforming' their practices.
"'hat is the use ofe-Marketing relative to tlte otlter aspects ofmarketing? To examine the level of practice of each aspect of marketing, each of the firm's index ratings for the five constructs (fM, DM, eM, 1M, and NM) were categorized as low, medium, or high. These categorizations reflect the extent to which a specific aspect of marketing practice such as e-Marketing is
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Assessing the Role of E-Marketing
implemented by an organisation. The frequency of firms in each category, by marketing type and across the two countries, is reported in Table 3.
Table 2. Comparing Role and Use of Technology in the Firm Use of Technology
IT Role
Low n=21
Medium n=59
High n=16
Reinforces Enhances Transforms Total
71 %
42% 44% 14% 100
25% 19% 56% 100
19% 10% 100
Note: Measures of the role of IT were included only in the UK questionnaire.
Table 3. Comparison of Index Values by Marketing Type Index ~
Transaction
m
w
Database
m
w
e-Marketing
m
w
Interaction
m
w
Network
m
w
Low 2 13 4 24 38 45 6 8 4 17 Medium 75 72 65 68 54 52 27 46 54 53 High 23 15 31 8 8 3 67 46 42 30 Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Nott: Low • index less than 0.5 (i.e. an average of 3.8 on the 5-point scale).
The results of Table 3 highlight a number of interesting patterns at a general level. First, an analysis of the proportions shows that over 80% of organisations in both countries report medium to high levels of practice for each of Transaction, Database, Interaction, and Network Marketing. Second, if only the high index values are considered, over half of all firms practice high levels of Interaction Marketing, with one third emphasising Network Marketing. These patterns may reflect recent suggestions that a 'network economy' is emerging (Achrol and Kotler 1999). They also support Gummesson's (1999, p. 1) view of marketing as "relationships, networks, and interactions." In contrast, less than one-fifth of all organisations report high levels of Transaction Marketing or Database Marketing, and only 5% indicate high levels of e-Marketing. Even more notable is that over one-third of firms in each country report a low level of e-Marketing practice. These results are of particular interest given the attention paid to "e" issues in both the business press and academic environments, and they support recent observations in the literature. This could imply that firms have either experienced difficulties in the practical implementation of interactive technologies or that adoption is still at an early stage of the diffusion process.
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N. E. Coviello, R. J. Brodie, R. W. Brookes and R. A. Palmer
Given the focus of this study is to understand how all five aspects of marketing are practiced relative to each other, with a particular interest in the practice of eM, bivariate correlation analysis was undertaken to examine which aspects of marketing are practiced in combination (see Table 4).3 While there are some country-specific pattern differences, these are not major considering the relatively small sample sizes, especially for New Zealand. For example, there is a stronger positive relationship between: (1) TM and DM, and (2) eM and NM for New Zealand than for the UK. This might suggest that New Zealand firms are more likely to use OM to support their TM activities, and that New Zealand firms use eM to support (e.g.) supply chain or network relationships. In contrast, there is a stronger positive relationship between DM and 1M in the UK compared with New Zealand. This might suggest that UK firms are more inclined to use OM to support 1M rather than TM efforts. Overall however, the general pattern of results, including the direction and power of the correlations, is similar across the two countries. Thus, it is reasonable to examine the sample in aggregate.
Table 4. Comparison of Bivariate Correlations by Country New Zealand
UK
Total Sample
Transaction/ Database
.44·
.20·
.28··
Transaction/e-~arketing
-.06
.04
.03
Transaction/Interaction
-.34··
-.29··
Transaction/Network Database/ e-~arketing
.4S··
-.31 -.19 .45**
.30*" .29·· .36** .46** .74··
.31** .35**
Combinations
-.10
e-~arketing/Interaction
.14 .35· .46**
e-~arketing/Network
.66··
Interaction/Network
.75**
Database/Interaction Database/Network
H
-.14 .47··
.40** .52·· .75**
.. p
