Electronic commerce as the concept of marketing - Essay Example

E Commerce Electronic commerce (eCommerce) or e Business is eluded as the acquiring and selling of products or services using the World Wide Web. This concept of marketing over the Internet is experiencing hyperbolic growth rates and highly asymmetric global distribution. Innovations in the era of technologies that includes safe and secure transfer of data and funds electronically and many more has tremendously increased its significance and demand. Today if one wants to buy even a small item like toothpaste or wants to send bouquet of flowers to someone who is million of miles away, is very easy and possible through eCommerce only or more precisely through supply chain management. As a result Internet makes the whole world reachable in few clicks in very short time and the world becomes very small. Information technology plays an important role in the development and growth of industries of any economy.. Incorporation of information technologies has changed the business process of all the industries whether they are small-scale or large scale. It has entirely changed the aspects of market competitiveness in terms of products and processes. The amalgamation of information technology into business sector recompenses for size and distance and enables companies to expand and to work in a global market. Using new innovative tools and techniques of information distribution, they can no longer be isolated from international market. Such technologies includes electronic/video conferencing, mailing, tele-conferencing, electronic commerce, electronic networking etc. Internet is pool that can be used to access any kind of information without compensating on quality, legal and regulatory requirements, fiscal regulations and opportunities. It becomes very simple and easy to attain, collect any kind of information on technologies and markets with the use of various networking components. The acquired information can be used as a source of analysis to increase the productivity, profit and market share of the enterprise. The information is accessible with in a few seconds. Evolution in the world of computing and in the era of communications takes the form of global information networking. The net result of this innovation is that it decreases the cost, the time for collection the required valuable information no matter how far that information is. Along with this, the ability to collect, analyze and the frequency of transmission of data has enhanced extremely. Local knowledge can be assimilated, distributed among economic agents and then can be merged with global knowledge to give the valuable piece of information. The net effect of all these activities and use of communications technology has drastically decreased the transaction costs; expedite the triumph of scope with the familiar rapid and continuous customization. Such transmissions undermine authoritative controls since the hoarding of information is no longer possible. For all the Internet's promise as the consummate commercial marketing vehicle many companies are skeptical of their ability to accurately judge the return on their cyberspace investment. The development of internet-based technologies opens endless opportunities for Marketers. Drawing coop concentration to the ethical facet of the use of web-based technologies in the area of business might comprise of differentiating force for proactive firms. So, eCommerce is everywhere whether it is e Mail and messaging or shopping cart or order processing system or domestic or international payment systems. But in this rapidly changing environment of e business, business executives need to react immediately and sufficiently by converting their traditional business strategies to e-commerce processes. In doing so, they must assess opportunities and threats by examining closely the economic, demographic, political, cultural and technological factors that affect businesses trading online. Economic Factors With the emergence of whole world as global market, the significance of e commerce has been considered as the major component and governing factor for the economic growth of particular country. Rather one must say it removes the barriers of demarcations of state and country and affects the economic infrastructure of all the countries. Buyer and seller are the important component of this game. E commerce affects the purchasing behavior of buyer at one side and on other side its impact can be seen on production and rates of inflation. This new strategy of doing business provides immense flexibility to buyer as now the buyer has wide range of choices available for the required product on the internet that also at very reasonable price. Now he needs not to waste his time for surfing product from one market to another market. Every bits of information, every aspect of product is there on his screen. He can get even expensive jewelry to normal consumer able items. That way he can save his money and time also. This reduction in costs results in higher productivity. This also Forces Company's to demand and maintain reasonable competitive prices for their product and services. For example one wants to travel form India to America. When one goes for searching air fares on the net,he can easily get the price list of all the airways of all the classes. He can easily compare the prices and booked the flight with lowest prices considering all the factors. High competition is the essence of whole phenomenon that defines the price setting behaviour of all the suppliers of services or products. But this is one side of coin Use of new technology in production or marketing lead to lower price rates of product or services. As a result the sales volume of their product is also increased. All this issues lead to low rates of inflation and higher productivity. But again this higher competition and reduced cost also affect non efirms. An even larger increase in economy wide productivity levels may result from productivity gains by firms not engaged in e-commerce as they respond to this new source of competition. These changes in price-setting behavior may contribute to lower inflation in the short run and the faster adjustment of prices in response to changing economic conditions Economic factors such as income, availability and price structure, bandwidth and supporting infrastructure greatly affects e commerce. Credit card systems and other resources required for online transaction processing are not as developed in many parts of the world.For example. One research shows that the merchant can't verify the address of credit card holder. Lack of proper infrastructure is also crucial factor for the success or failure of ebusiness. For instance there is no proper central package tracking system in Europe.Similarly in Sweden and in some parts of Australia, Home delivery may not be available. Bandwidth is also another major factor that decides the success or failure of e Commerce.Lower bandwidth means low rate of data transmission and hence longer time for completing a transaction that means internet is not fully utilized all these factors demotivate the users to use e business. As a result users lost their interest and hesitant of using web for fulfiling their purcahsing requirements. Demographic Factors Demeography of country is key factors in affecting the growth of e Commerce. Size of market, Consumer needs and easily availability and access to technology are the core components of demographic constraints Detail studies shows that densely populated nations such as Singapore and Germany enjoy strong IT infrastructure as compared to countries like China and Brazil which have insufficient infracsture for information and delivery also. The next important thing is the awareness about technology and availability of labour force with IT skill. This is also crucial factor as it determines how frequently and how much the people use e business. Income, education age and gender also influence this further. If the income is high user can frequently use internet or web sites as their purchasing tool. Similarly education also makes them confident, aware to use information technology as a tool for doing businesses. It is found that eBusiness is widely used (as a supplier as well as a buyer) in young generation as compared to older ones. Young, dynamic and educated users have knowledge about how the secracy of information is maintained over the internet. Similarly research also shows that females are more concenerned about the privacy of information as compared to men. Todays time strapped shoppers have less time and want better values,fewer hassles and more options.A shopping trip requires a consumer to decide what he or sheor family needs, brave the traffic,hunt for parking, find and select items for purchase, take and carry them back home.so most working professionalpreferred online trading of goods and services. They can use the online payment system to pay their electricity bills and so on. In contrast there is segment of population (usually old) for whom time is not constrained.They prefer shopping at stores rather then online. As the consumer's level of comfort with online functions such as e-mail and research continues to increase, so too will their level of participation in e-commerce. A growing online consumer base, increases in new product categories, and efforts by online retailers to optimize online shopping experiences will spark significant growth in e-commerce in years to come. For example if one wants to buy a book through amazon.com, he/she should know how to operate computers, next important thing is how to use that site means how to add items to cart or how to cancel orders or even how to search for particular product. Evidences from the case studies further shows that distribution of wealth is major barrier to the usage of information technology. In developing Nations where income is unevenly distributed, a large percentage of population can't use computers because of their inability to afford such technologies. On the other hand in case of developed countries like United States of America or Japan where wealth is distributed evenly, there are more users, which are using e Commerce solutions very easily simply because of the reasons that they can afford those technological costs. Consumers are increasingly careful about their personal finances, social, demographic changes have altered the way users value their money and time. Shopping patterns are beginning to change with the increase of time strapped. Value and time management are the consumer driving interest in online trading. Cultural Factors Culture, as Varner and Beamer (1995) explain, can be thought of as a worldview that affects how people evaluate and react to the word around them. A culture provides its members with systems of values and morals that guide attitudes and behaviors toward the things individuals encounter. As a result, the effects of culture are manifold and complex. The complexities of culture can affect e-commerce adoption and use in a number of ways and thorough a variety of socially constructed (or culturally constructed) institutions. Uneducated and illiterate population is great barrier for the success for eCommerce. The Internet's asynchronous and relatively impersonal nature of communication makes it incompatible with cultures of some societies. For instance, Japan's custom requires personal correspondence to be handwritten to show respect and courtesy (James 1998), which is incompatible with Internet use. Likewise people in some cultures prefer to touch and feel the product before buying it. Cultural factors also influence the Web sites visited, purchase decision, payment mechanism and the type of the product likely to be successful on the Internet. Political and Legal Factors As the Internet's potential to provide unparalleled benefits to society continues to expand, however there has been an increasing recognition that the internet can also serve as powerful medium for those who want to commit unlawful and criminal acts. There is legal requirement to establish the authenticity of an electronic message or document. This includes integrity, confidentiality, and non-repudiation of origin and receipt of an electronic document in case of dispute. Internet commerce raises legal issues through the provision of the following services Online Marketing Online Retailing Financial services such as banking and trading in securities Online publishing Exchange of electronic messages and documents EDI, electronic filing, remote employee access, electronic transactions. With the rapid expansion of Internet, Global Electronic commerce is set to play a very significant role in twenty first century. The new opportunities that will throw open will be accessible to large corporations and small companies. Consumers will be able to chose from mind boggling array of products and services. However, the right commercial and legal environments are crucial to this form of trade conducted over invisible national barriers. Consumer and merchant interests have to be protected without infringing too much on their freedom of operations. The role of government is to provide a legal framework for electronic commerce so that while domestic and international trade are allowed to expand their horizons, basic rights such as privacy, intellectual property, prevention of fraud and consumer protection are all taken care of. The growth of e Commerce on internet depends to the large extent on the confidence of traders in forming legally enforceable contracts online. For this reason, virtually all electronic payment systems need to be able to keep automatic records. Technological Factors E Commerce on the internet faces several challenges. It needs to cross a number of surmountable barriers which are presently holding back its growth. The challenges to e commerce can be broadly grouped under technological issues are as follows. Lack of reliable network infrastructure services Strength of security Deployment of public key infrastructure Bandwidth costs Interoperability of technologies with existing applications Lack of standards Technical integration with existing applications Richness and depth of content Comparative buying capabilities Availability/interoperability of payment instruments The nation backbones are being strengthened as the information infrastructure of nations. Countries have begun to realize that the internet is shaping commerce, economics and societies. At the national level, countries are moving at great speed to address the problems of bandwidth and technology so that they don't lag behind in e Commerce. It was the US government which first set up the information infrastructure task force to define the commercial Internet or the national infrastructure task force to define the commercial Internet or the National information infrastructure to realize electronic commerce and other applications on the internet. NII is clearly the successor of the internet for commercial applications. They suggested ways to proliferate the internet strengthen the backbone and create conditions for large number of Internet Service Providers. E-commerce has emerged as a new way to transact in the marketplace. Initially introduced as a means for businesses to efficiently place orders over private EDI networks, the introduction of the Internet has recently spread the benefits of transacting electronically to consumers as well. While currently representing only a small share of total transactions, e-commerce has grown rapidly in recent years. The globalization of market place and the means of accessing the same through the national and global information superhighways have given new dimensions to the concept of information. Reference: Aggarwal, Raj (1999) 'Technology and Globalisation as Mutual Reinforcers in Business: Reorienting Strategic Thinking for the New Millennium', Management International Review 39(2): 83-104. Biederman, David (2000) 'Ecommerce Comes to Asia', Traffic World 26(9): 23. Dhillon, G. S., & Moores, T. T. Internet privacy: Interpreting key issues. Information Resources Management Journal, 14, 4 (2001), 33-37. Koenig, W., Wigand, R., and Beck, R. 2002. Globalization and e-commerce: environment and policy in Germany. Center for Research on Information Technology and Organizations, University of California, Irvine. Read More