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E-Marketing

Dr. Karim Kobeissi

Chapter 4: Building Inclusive E-Markets

Keywords: Inclusive Markets


Inclusive

Marketsaremarketsthat

extend choices and opportunities to


the poor (and other excluded groups)
as producers, consumers and wage
earners.

Overview of Global E-Marketing


Issues
One of the big changes online: users from
Discuss
overall
trends
in
Interne
t
access,
usage,
and
purchasi
ng
around
the
world.

other

countries,

speaking

languages

other than English, will dominate the


Internet

By

2010

there

were

approximately 499 million English-speaking


and 407 million Chinese-speaking web users.

Exhibit 4.1 WORLDWIDE INTERNET


USAGE

Worldwide Internet Usage


Exhibit 4.1 shows that worldwide Internet usage
increased more than 45% between 2007 and 2009.
Asia has the most Internet users.
Africa saw the greatest growth in Internet use.
North America has the highest penetration as a percent of
the population.
Country size and population have little bearing on Internet
use:
Russia = only 7.5 million Internet users (5% of the
population).
Singapore = 1.3 million Internet users (30% of the
population).

Worldwide Internet Usage


An important effect of the increasing number of non-US
Internet users on the Internet is that the online
marketplace is changing which will require that global
e-marketers understand

country e-readiness.

Global e-marketers must differentiate between

developed
economies

countries
where

the

and

emerging

greatest

growth

opportunities and marketing challenges lie.

Developed Countries & Emerging


Economies
Countries that have high levels of economic
Define
emerging
economies
and explain
the vital
role of
information
technology
in
economic
developme
nt.

development (United States, Japan, etc.) are


classified as developed countries.
Highly industrialized countries + use technology
to increase their production efficiency, result = a
high gross domestic product (GDP) per capita.

Countries

that

are

still

struggling

with

standards of living for their citizens are


classified as emerging economies and are
experiencing rapid economical growth.
4-8

Developed Countries & Emerging


Economies (con)
Emerging economies are characterized by a rapidly
developing middle class, which creates demand for
products and services.
Four countries represent the power and opportunity in
emerging markets: Brazil, Russia, India and China
(BRIC).
Countries with emerging economies can be found on every
continent.

4-9

Importance of Information Technology


IT & Internet accelerates the process of economic
growth

through

diffusion

of

new

technologies

(e.g.

Internet banking, online reservation, online education...) which


increase efficiencies in the production (e.g., producing a
given set of goods or services in a more technically efficient
manner), distribution, and sale of goods and services.

The application of information technology opens up new,


exciting, global markets and opportunities especially for
businesses in emerging economies . For example, online
direct trade (instant access to a global marketplace) , online
direct investments (having foreign firms bring them to you).

Importance of IT in Economic Development

Importance of Information Technology (con)


The Internet can boost emerging economies (e.g., India)

where people will be armed with greater information for


agriculture, manufacturing, trade, business, selling their
products and services across the world, and not just
limiting themselves in the local market instantaneously
tap a global marketplace.

Successful marketing on the Internet


can leapfrog a company from nowhere
to somewhere overnight.

Country and Market Opportunity


Analysis

An e-marketing plan guides the marketer


through the process of identifying and
analyzing potential markets Global emarketers

must

balance

two

different

analytical approaches:
Market similarity
Market differences
Market differences and market similarities must be
measured and compared to determine strengths
and weaknesses.

Emerging economy

Emerging economy

Understand market differences

Understand
market similarities

Understand
market differences

Developed economy

Market Approaches Between Emerging and Developed Economies

Market Similarity
Concept of market similarity = marketers choose foreign markets
that have similar characteristics (language, Internet usage rates,
secure online payment mechanisms, use of credit cards rate, efficient
package delivery services, clearly defined market segments willing to
shop on-line,.) to their home market for initial market entry.
A United States-based company would target Canada, the United
Kingdom, and Australia before France, Japan, or Germany.
Amazon.com has used this strategy as it expanded globally. It
has international Web SITES in the UK, France, Germany,
Austria, and Japan.
Market similarity not only reduces (without eliminating) the risk of
entry into foreign markets but also helps explain why it targeted
these countries in the first place.

M a r k e t D i ff e r e n c e s
Market differences are ways in which two
markets exhibit dissimilar characteristics.
Internet marketing differences between
developed and developing countries form the
greatest obstacles to e-commerce.

M a r k e t D i ff e r e n c e s ( c o n )
U.S. and European list:
Privacy concerns (31%),
Censorship (24%),
Navigation difficulties
(17%),
Taxes (9%).

Emerging economies list:


Slow connection speeds
(29%),
Costs of domestic phone calls
(29%),
Internet Service Provider costs
(19%),
Lack of content in ones own
language (10%),
Lack of local content (10%).

Challenges of E-marketers Operating in Emerging Economies

E-marketers operating in emerging economies face many


challenges, such as solving payment & trust Issues.
In fact, one of the biggest differences between
developed countries and emerging economies is the
limited use and acceptance of credit cards in
underdeveloped countries (e.g., Bolivia, Nepal,
Ethiopia). This problem limits the ability for potential
customers to make a purchase via the Internet.
International e-marketers understand these differences
and must find alternative means for conducting
business over the Internet.

E-Commerce Payment & Trust Issues


E-marketers working in emerging economies

should also understand attitudes toward online


purchasing.
A 2007 study in Lithuania found that 51% of
Internet users had not made an online purchase
because they thought it was too risky.

Alternative payments were accepted

Bank transfers
Cash on delivery
Postal orders
eBanka debit cards specifically created for online
buying
Czech Republic, eBanka, an Internet bank, was
established in 1998 to handle secure online purchases.

Challenges of E-marketers Operating in Emerging Economies

Solving credit card payment issues is only one of


several problems. E-marketers must also deal
with:
a) Basic technology issues
b) High internet connection costs
c) Slow internet connection speeds
d) Unpredictable power supplies
e) Wireless internet access
f) The digital divide

a ) B a s i c Te c h n o l o g y
E-marketers must deal with frightening issues of basic
technology such as the limited access to and use of
computers and telephones:
Computers
In many of the developing nations there are markets to
be penetrated, but with low levels of internet access it
proves to be very difficult for companies to reach these
untapped markets. One aspect, which helps this
problem, is that entrepreneurs in these countries are
discovering that personal computers are too expensive
for most people to obtain.
Telephone
Telephone land lines are entering the decline stage of
their product life cycle
As wireless technology increases, landlines will become
less useful and ultimately obsolete

B a s i c Te c h n o l o g y ( c o n )
Challenges
Global

computer

ownership

and

access

is

unevenly distributed.
Ownership ranges from 84% in Kuwait to 2% in
Bangladesh.

Telephones (and connectivity) can be scarce


and expensive.
Many consumers in countries with emerging
economies access the Internet from telecenters
small shops that offer Internet connections.
Many customers have cell phones, but not

b) High Internet Connection Costs


Countries with emerging economies
often

have

higher

Internet-related

costs.
If an emerging economy customer has a
telephone,

chances

are

the

Internet

connection costs are extremely high.


Dial-up costs can vary considerably.
Many customers in emerging economies have
cell phones, but not land lines

c) Slow Internet Connection Speeds

Broadband connections are developing quickly and growth


is predicted to come from emerging markets.

South Korea has one of the highest broadband penetration rates


and one of the worlds fastest, cheapest networks.

E-marketers must analyze the relationship between Web site


design and customers connection speeds.

Many feel the dial-up era is quickly coming to an end

Online companies with a diverse customer base must keep their


Web sites simple

E-marketers

must

understand

how

connection

speeds

influence download rates


E-marketers and graphic designers must differentiate
between what can be done and what should be done.

d) Unpredictable Power Supplies

Emerging

economies

irregular

electricity can also be a challenge for


e-marketers.
Internet

based

business

cannot

complete transaction if customers have


no electricity.

e) Wireless Internet Access


Many

countries,

including

those

with

emerging

economies, have more mobile telephone subscribers


than fixed-line telephone subscribers (two-thirds of the
world are now connected via mobile phones). As a
result, e-marketers must consider how to:
Modify Web site content for small cell phone displays
Handle text entry using tiny keypads
Develop appropriate content for wireless Web users
Price services
Develop appropriate payment methods

f)The Digital Divide


Internet adoption is affected by money, literacy,
and education.

This creates a divide between

those who have access to the Internet and


those who dont.

It weakens the upward

mobility of those on the lower socioeconomic


level, who dont have access to the Internet and
the information that comes with it. This impacts
individuals on the lower socioeconomic levels
and those living in less developed countries.

The Digital Divide (con)


Digital divide: Is that between countries and

between

different

groups

of

people

within

countries, there is a wide division between those


who

have

real

communications

access
technology

to

information

and

are

and

using

it

effectively, and those who dont.


The digital divide raises challenging questions for

global

policy,

international

business,

entrepreneurship.
The World Wide Web is not really worldwide

and

Building Inclusive E-Markets


Explain
how emarketing
is being
used with
very low
income
consumer
s.

Explosive growth of mobile phones


has enabled e-marketers to reach
base of the pyramid consumer
segments.
Mobile banking is one of the most
successful e-marketing efforts in
LEAST developed countries (LDCs.)
In heavily agricultural countries,
mobile applications for farmers are
making them more productive (e.g.
Uganda, India & Indonesia)

Building Inclusive E-Markets


(con)
The Internet is aiding in closing the technology
and financial gap in several ways:
Financial assistance
Micro loans
Microfinance
Credit can be issued to low income consumers

Technological assistance
Mobile phones
Satellite Internet access

Banking assistance
Solve the rural related problem
Many people are unbankable
Mobile phones can be used to conduct banking