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30 Part 1 Introduction

In markets such as car sales which have been transformed by the Internet, under-
standing how to improve reach, richness and affiliation is crucial. This is not because
a large proportion of people buy cars online, but rather the majority research online
their preferred make, model and supplier.

The Internet also provides significant opportunities for many businesses to build closer rela-
tionships with their existing customers and suppliers online to help achieve customer
retention. Encouraging use of online, e-business services by customers and suppliers can sig-
nificantly reduce costs while providing a new, convenient channel for purchase and
customer service. Through providing high-quality online services, organizations can build
lasting relationships with their stakeholders. While it is sometimes said that ‘online, your cus-
tomers are only a mouse click away from your competitors’, this is a simplification, and
Soft lock-in encouraging use of online services can help achieve ‘soft lock-in’. This means that a cus-
Customers or suppliers tomer or supplier continues to use a service since they find the service valuable and they
continue to use online
services because of the have also invested a lot of time in learning the service or integrating it with their systems
switching costs. and there are some costs in switching. Think of different online services you use for different
purposes. How often do you switch between them? Of course, the ideal is that the service
meets the needs of its users so well and delivers value such that they are satisfied and do not
consider switching.

Business adoption of digital technologies for e-commerce and e-business

As managers, we need to assess the impact of e-commerce and e-business on our market-
place and organizations. What are the drivers of changed consumer and business behaviour?
How should we respond? How much do we need to invest? What are our priorities and how
quickly do we need to act? Answering these questions is an essential part of formulating an
e-business and e-marketing strategy and is considered in more detail in Part 2. To answer
these questions marketing research will need to be conducted as described in Chapters 2 to 4
to determine the current levels of adoption of the Internet for different activities amongst
customers and competitors in our market sector and in other sectors.

Drivers of business Internet adoption

Business adoption of e-commerce and e-business is driven by benefits to different parts of
their organization. First and foremost, they are concerned how the benefits of e-business
will impact on profitability or generating value to an organization. The two main ways in
which this can be achieved are:
Potential for increased revenue arising from increased reach to a larger customer base and
encouraging loyalty and repeat purchases among existing customers.
Cost reduction achieved through delivering services electronically. Reductions include
staff costs, transport costs and costs of materials such as paper.
At a relatively early point in e-business adoption, a government report (DTI, 2000) identi-
fied two main categories of drivers which remain relevant today: