Introduction to Electronic Commerce

Online business has many names; e-Commerce, e-business, online shopping and others involving the use of the internet or a modern telephone or smart phone to place transactions for desired products and services. As you read, think about the power a successful online firm has over his store-based counterpart. What is online business? What is the role of the Internet and other communications media in providing an organization's e-business presence? What are some similarities and some differences between e-business and brick and mortar commerce? How can they complement each other? Are the days of brick-and-mortar stores coming to an end?

Key themes addressed

Chapter Five: Promotion and purchase

Chapter Five describes new methods for measuring communication effectiveness in cyberspace. Specifically, we discuss the Internet as a new medium, in contrast to broadcasting and publishing. Currently, Web users perceive this medium to be similar to a magazine, perhaps because 85 percent of Web content is text. Other capabilities of the Web (e.g., sound) are not extensively used at this point. In Chapter Five, we present several metaphors for thinking about what the Web can be, including the electronic trade show and the virtual flea market. We link the buying phases to Web functions and capabilities (such as identifying and qualifying prospects).

Measurement is a key theme in the chapter, so we describe the role of the Web in the marketing communications mix and introduce several formulas for measuring the success of Internet communications. Measurement of advertising effectiveness is a long-standing issue in marketing research. In some ways, this issue of communications effectiveness is almost impossible to answer. First, it is very difficult to isolate the effects of communication, independent from other important effects (such as changes in demand, price changes, distribution changes, or fluctuations in the economic environment). Second, there are likely to be important lagged effects that are difficult to isolate. For instance, a consumer might look at a Web page and then not use that information for making a purchase until six months later. However, the Web does create an environment where many new measures of communication effectiveness are possible. In the past, marketing research attempted to collect data about consumer attention levels in a very artificial way (e.g., by using information display boards). Now, it is possible to study click patterns and learn a lot about how consumers are processing organization-sponsored information.

Of course, the Web can be more than just a vehicle of communication. It can also serve as a medium for selling products and services. Two key measures that we describe in Chapter Five are: a) the ratio of purchasers to active visitors; and b) the ratio of repurchasers to purchasers. In certain circumstances, it is possible to collect direct behavioral measures about the effects of traditional advertising. On the Web, such behavioral measures are much more natural and much easier to collect on a routine basis.