Emarketing 3nd

8/3/2019 Emarketing 3nd

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E-Marketing, 3rd editionJudy Strauss, Adel I. El-Ansary,and Raymond Frost

Chapter 15: E-Marketing inEmerging Economies

Prentice Hall 2003


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OverviewOverview of Global E-Marketing Issues

Emerging EconomiesImportance of Information Technology

Country and Market Opportunity AnalysisMarket SimilarityCredit Card ConundrumE-Commerce Payment in the Czech Republic

Technological Readiness Influences MarketingComputers and telephones

Internet Connection CostsSlow Connection Speeds And Web Site DesignElectricity Problems

Wireless Internet Access

The Digital Divide


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Overview of Global E-Marketing Issues One of the big changes online: users from other countries, speaking languages

other than English, will increasingly dominate the Internet.

Worldwide Internet use is projected to increase by 60% from 2002 to 2004:

In 2002, 1/3 of all Internet users in the world lived in North America, By 2004, North American users = 1/4 of the worlds active Internet users, By 2004, more Internet users will be living in Asia Pacific countries than in

North America, Between 2002-2004, the number of Latin American Internet users will

increase by a substantial 84%,

By 2004, Europe is projected to be home to the largest number of Internetusers in the world.

2 important effects of the increasing number of non-US Internet users on theInternet: Diversification of Webs content & language, Acceleration of the convergence of styles, tastes, and products to create a

more homogenous, global marketplace.


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Year

2000 2001 2002 2003 2004

North America 97.6 114.4 130.8 147.7 160.6

Europe 70.1 107.8 152.7 206.5 254.9

Asia/Pacific Rim 48.7 63.8 85.4 118.8 173

Latin America 9.9 15.3 22.1 31 40.8

Africa and Middle

East 3.5 5.3 7.2 9 10.9

Worldwide Total 229.8 306.6 398.2 513 640.2

Active Adult Internet Users Aged 14+ Worldwide (in millions)

Source:Adapted from eMarketer, (2000)


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Overview of Global E-Marketing Issues Internet use varies greatly from country to country.

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 all Singaporeans).

As Internet access and use accelerates around the world, so, too, wille-marketing opportunities.

Where will the greatest challenges lie? In countries with emerging economiescountries such as Russia,

India, Nepal, the Czech Republic, and China, which present different &difficult decisions for e-marketers.


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The Digital Divide


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Emerging EconomiesCountries vary in their level of economic development:

Developed countries = all of Western Europe, North America, Japan,Australia and New Zealand.

Highly industrialized countries + use technology to increase theirproduction efficiency, result = a high gross domestic product (GDP) percapita,

high GDP = citizens have enough discretionary income to buy items thatwill make their lives easier, richer, and fuller,

Ideally suited for e-marketing activities.

Emerging economies = those with low levels of gross domestic product(GDP) per capita that are experiencing rapid growth: In North America, Mexico + Central and South American countries, In Europe, former Baltic States + Eastern Europe, Russia, Belarus, and the Ukraine, Africa, Central Asia, South Asia and Southeast Asia, China.


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The Digital Divide


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Importance of Information

Technology To improve its level of economic development, a country can: Increase efficiencies in the production, distribution, and sale of goods

and services.

For emerging economies, technology plays an especially important role. The application of information technology can open up new, exciting,

global markets.

The Internet allows businesses in emerging economies to

instantaneously tap a global marketplace.

Successful marketing on the Internet can leapfrog a company fromnowhereto somewhereovernight.


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Technology E-marketers from countries with emerging economies face a double

challenge:

All the marketing issues and decisions,

Unique challenges related to the conditions of operating within astill developing nation.

Businesses operating in emerging economies must deal with:

Fewer computer users,

Limited credit card use,

Lack of secure online payment methods,

Unexpected power failures.


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Technology Internet marketing differences between developed and developing

countries for the greatest obstacles to e-commerce:

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 ownlanguage (10%),Lack of local content (10%).


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The Digital Divide


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Country and Market Opportunity Analysis An e-marketing plan guides the marketer through the process of

identifying and analyzing potential markets.

Global e-marketers must balance 2 different analytical approaches:

Market similarity = If they are operating froma country with anemerging economy and want to target markets indevelopedcountries,

Market differences= If they are based in an emerging economy and want to market totheir home target market,

= If they are from a developed economy and want to target groups inan emerging economy.


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Understand market differences

Emerging economy Emerging economy

Developed economy

Understandmarket similarities

Understand

market differences

Market Approaches Between Emerging and Developed Economies


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Country and Market Opportunity Analysis

Market SimilarityCredit Card ConundrumE-Commerce Payment in the Czech Republic




The Digital Divide


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Market Similarity Concept of market similarity = marketers choose foreign markets that have

characteristics similar 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 internationalWeb sites in the UK, France, Germany, Austria, and Japan: Some similarities based on language, High literacy rates, high Internet usage rates, and clearly defined market

segments willing to shop for books (and other products) on-line, Credit cards are widely used for purchases, Secure, trusted online payment mechanisms, Efficient package delivery services.

Market similarity not only reduces (without eliminating) the risk of entry intoforeign markets but also helps explain why it targeted these countries in thefirst place.


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Market Similarity E-businesses in countries with emerging markets make parallel target

market decisions.

www.munchahouse.com: Offers a wide range of products that Nepalis living overseas can send to

individuals back home. Customers pay on the sites by providing their credit card numbers using a

secure server.

These are all crucial marketing decisions.

If the Muncha House marketer had targeted a domestic home market,his marketing situation would be completely different.

One of the biggest differences between developed countries andemerging economies = the limited use and acceptance of credit cardsin underdeveloped countries.
http://www.munchahouse.com/http://www.munchahouse.com/


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The Digital Divide


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Credit Card Conundrum Convenience & ease of transactions = 2 of the Internets greatest

benefits.

In developed countries: credit cards + secure online payment systems

make Web-based transactions easy.

But in countries with emerging economies, things arent so easy.

In Bolivia:

= Fewer than 200,000 credit cards are in circulation within a countrywith a population of 8.3 million people.

Limited credit card use can severely restrict a target marketspurchasing ability.


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Credit Card ConundrumRitas Pizza site in Vilnius, Lithuania:

Web site for ordering pizza, sandwiches, snacks, and beverages online. The final screen for ordering indicates that Ritas is strictly a cash business:

Customers pay at the time of delivery (C.O.D.), or When they pick up the food at Ritas.

Limited use/availability of credit cards limits what an e-marketer can do.

Marketers must also analyze relevant buyer behavior within a market: In Lithuania, local consumers are very reluctant to purchase products

online.

37% said it was easier and more fun to buy goods and services in a storethan online.

21% said it was more secureto buy goods and services in a store.

BUT, the business understood one important thing: its target market: 24% of all current Lithuanian Internet users are under 20 years old,

11% are between the ages of 20-25.
http://www.rita.lt/http://www.rita.lt/


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The Digital Divide


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E-Commerce Payment

in the Czech Republic The Czech Republic face the same challenges of limited credit card use and

consumer skepticism of online purchasing.

The Czech Republic is a relatively small country in central Europe

= 22% of the population are Internet users. Online purchasing has increased dramatically there in recent years.

In 2000, most online purchases = airline tickets (28%), appliances (17%),books (12%), consumer electronics (10%), videos (8%), music (6%), andcomputer hardware (6%).

= A mirror shopping interests in developed countries.

The Czech Republic has many online retailing Web sites:www.obchodnidum.cz(appliances, consumer electronics and mobile phones) and www.vltava.cz(music, books, videos and software).

The country also has specialized Web sites: airline ticket agents , wine, etc.
http://www.obchodnidum.cz/http://www.vltava.cz/http://www.obchodnidum.cz/http://www.vltava.cz/http://www.fractal.cz/http://www.arvin.cz/http://www.arvin.cz/http://www.fractal.cz/http://www.vltava.cz/http://www.obchodnidum.cz/


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Year

Average Monthly Sales

(in millions of Kronus)

Q1-99 5.9

Q2-99 9.9

Q3-99 18.2

Q4-99 25.6

Q1-00 28.0

Q2-00 30.0

Total Online Sales in the Czech Republic

Source:Adapted from American Chamber of Commerce

(2000)


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E-Commerce Payment

in the Czech Republic In the Czech Republic: People fear online shopping.

75% said that it was more securebuying goods/services in a store, 65% said it was easier& more funto buy goods and/or services in a store, 61% said you dont know what you get when you shop online, 42% said they didnt trust online brands.

Online marketers adapt their Web sites to the target markets preferences: www.musicabona.cz posts the following in itsAbout Securitysection:

Your personal data is transmitted via the secure SSL encoded transfersystem.

If you decide to become one of our registered customers, you neednt fill inyour personal data and send it over the Internet at all upon subsequentpurchases.

If you do not think it is safe to send your personal data through theInternet, you can send your order in writing, by fax or mail.

If you dont want to disclose to us the number of your payment card, youcan pay by cheque.
http://www.musicabona.cz/http://www.musicabona.cz/info1/secuity.htmlhttp://www.musicabona.cz/info1/secuity.htmlhttp://www.musicabona.cz/info1/secuity.htmlhttp://www.musicabona.cz/info1/secuity.htmlhttp://www.musicabona.cz/info1/secuity.htmlhttp://www.musicabona.cz/


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E-Commerce Payment

in the Czech Republic How doCzech consumers pay for their online purchases?

31% make bank transfers, 28% pay cash on delivery, 21% pay with a credit card,

9% make bank transfer through either a PC or mobile phone, 8% pay with postal orders.

Czech citizens are reluctant to use online payment methods + only 35% of allCzech adults have credit cards.

Innovative solution = eBanka: The oldest purely Internet Bank in Central and Eastern Europe. The bank issues credit cards + handles secure and efficient online money

transfer accounts for purchases at many Czech Web sites. A customer opens an eBanka account, deposits money, uses it to make

online purchases.

This is the Czech version of digital cash.
http://www.ebanka.com/http://www.ebanka.com/


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OverviewOverview of Global E-Marketing IssuesEmerging EconomiesImportance of Information Technology






The Digital Divide


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Technological Readiness Influences

Marketing In emerging economies, e-marketers must also deal with daunting

issues of basic technology:

Limited access to and use of computers and telephones, High Internet connection costs,

Slow Internet connection speeds,

Unpredictable power supplies.


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The Digital Divide


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Computers and telephones Customers must have access to a computer and an ISP to use the Internet:

In developed countries, this is not a problem. Individuals can use computers at home, at work, at school, or at libraries

and other community institutions.

In emerging economies, computer access is a big problem.

Computer access is unevenly distributed throughout the world: Ukraine has less than 2 computers for every 100 individuals,

Colombia has 3 1/2 computers per 100 citizens, The United Sates has about 58 computers for every 100 citizens.

E-marketers should never underestimate the profound influence of limitedcomputer access on Internet marketing.

It directly limits market size.


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Country

Estimated Total Number of

Personal Computers in Country

(in thousands)

Estimated Total Number of

Personal Computers per 100

Inhabitants

Colombia 1,500 3.5

Ecuador 275 2.2

Guatemala 130 1.1

India 4,600 0.5

Mexico 5,000 5.1

Morocco 350 1.2

Nigeria 750 0.7

Pakistan 590 0.4

Philippines 1,480 1.9

South Africa 2,700 6.2

Thailand 1,471 2.4

Ukraine 890 1.8

United States 161,000 58.5

Computer ownership in Selected Countries Source: ITU, (2001a)


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Computers and telephones Individuals & businesses need to be connected to the Internet though phones.

In developed countries, telephones are a common and prevalent commodity: Most families have more than one telephone at home,

Many have multiple telephone lines, Some even have several telephone numbers, Many may have both fixed and mobile phones.

In countries with emerging economies, telephones are scarce and expensive. 1999, Indonesia = 2.9 phones/100 people, India = 2.7 phones/100 people, The Philippines = 4.0 phones/100 people, Mexico = 11.2 ph./100 people, In 2000, in Thailand, 91.5% of all Thais own a television, but only 27.7%

own a phone.

In emerging economies, telephone access has a very different pattern than indeveloped countries.

Online firms cant market to someone who has no computer or no means ofconnecting to the Internet.


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The Digital Divide


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Internet Connection Costs Countries with emerging economies often have higher Internet-related

business costs: Dial-up connection is the most common way of connecting to the Internet. Dial-up connections use telephone lines.

Dial-up connection costs vary quite considerably in emerging economies.

The total price for Internet service is quite large in many countries. Labor costs may be quite low, but technology and other business costs can

be quite high.

Why? Government-owned telephone monopolies: The lack of competition among ISPs:

When both of these constraints are loosened, Internet growth accelerates,creating a rapidly expanding domestic market for e-marketers.


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0 10 20 30 40 50 60 70 80

Morocco

Bahrain

Jordan

Qatar

Lebonan

Tunisia

Saudi Arabia

Average

Oman

Kuwait

Egypt

UAE

U.S. Dollars

ISP Charges

Telephone Charges

Total Internet Connection Costs in Selected Arab Countries

Source:

Adapted from Gray (2001)


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The Digital Divide


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Slow Connection Speeds

And Web Site Design Connection speed and Web site design = a issue in emerging economies:

A telephone line limits the speed at which data can be sent and received. Current maximum speed for a modem connection is 56 kbps. Emerging economies are seeking faster and better connections through

broadband and ISDN.

Download speeds has significant implications for Web site design, especiallythe extent to which graphics are used.

The Web is a visual medium, and users expect to see pictures that move, swirl,and morph into usual shapes + Web sites have sound. These elements slows the download rate.

In countries with emerging economies, where connections speeds are slow anda user may be paying by the minute, download speed is a major consideration: Need to understand how connection speeds influence download rates, Just because graphic designers cando something cutting edge on Web

sites, doesnt mean they should.


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Slow Connection Speeds

And Web Site Design E-marketers must see the world from their target markets perspective

= understanding the target markets total experiencewith a Web site.

In developed countries, users experience extremely slow download

times only occasionally.

In developing countries, slow downloads are an everyday occurrence.

To avoid this problem, e-marketers need to :

Understand the target market, Consider the countrys overall bandwidth, Keep graphics simple, Limit the number of pictures, Optimize the site for speedy and smooth downloads.


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The Digital Divide


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Electricity Problems Sporadic electricity = Another challenge for countries with emerging

economies,

Nepal:

One of the poorest countries in the world, with an annual per capitaincome


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The Digital Divide


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Wireless Internet Access Mobile phones and the supporting technology have the potential to

dramatically change the face of e-marketing around the world. Many countries have more mobile telephone subscribers than fixed-line

telephone subscribers. Cambodia, Chile, Ivory Coast, Morocco, Paraguay, Philippines, Senegal,

Uganda, and Venezuela are all countries with emerging economies.

Cambodia: In 1993, first country in the world to have more mobile telephone subscribers

than fixed-line telephone subscribers. Why?

Cost = Cell phones and the accompanying technology for mobile networkswere less expensive than fixed-line telephones.

History = As a result of more than two decades of warCambodia has 4to 6 million landmines in the ground = digging up the ground to laytelephone cable is simply too risky.

This case reminds international e-marketers that understanding country historyis an important element in assessing foreign markets.


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1993 1998 1999 2000 2001

Cambodia Finland Austria Bahrain Senegal

Hong Kong

SAR

Belgium Singapore

Ivory Coast Botswana Slovenia

Israel Chile United

Kingdom

Italy Greece

Paraguay Iceland

Portugal Morocco

Uganda Philippines

Venezuela Rwanda

Selected countries that have more mobile telephones than fixed line telephone subscribers by year

Source:Adapted from Minges, (2001)


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Wireless Internet Access Mobile phone technology is an effective and relatively inexpensive path to

telecommunications, countries with emerging economies can leap frogindustrialized countries in terms of usage.

Challenges of wireless e-marketing: How to modify existing Web site content for the smaller screens on cell

phone displays, How to resolve potentially cumbersome text entry using tiny keypads How to develop new content that consumers will want How to price services, How to develop easy, secure payment methods, Understand that consumer behavior with the mobile Internet.

Text messaging: On PCs, E-mail length is not a problem with PCs. It is aproblem with mobile phones.

New content and new marketing strategies must be developed for wirelessInternet access.


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Wireless Internet AccessSuccess story: How McDonalds identified & capitalized on an e-marketingopportunity by merging the anytime, anywhere capability of mobile phoneswith China's interest in soccer and its rapidly growing consumer economy.

During the 2002 World Cup Finals, McDonalds developed a special SMSpromotion for the China market (worlds largest mobile telephone market).

McDonalds sent an SMS alert to selected mobile phone subscribers explaininghow to download coupons for free ice cream, how to get a special McSmilieicon for their mobile phones, and how to download a McDonalds theme songas a special phone ringer.

Results:

Store sales increased

Every mobile phone with a McDonalds phone ringer promotedMcDonalds every time the subscriber received an incoming phone call.


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The Digital Divide


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The Digital Divide E-marketers have to consider the social environment in which their e-

businesses operate.

Nations with emerging economies may be in different stages of economicdevelopment, which affects their social climate.

Least developed countries(LDCs) = countries with the worlds pooresteconomies:

Economically underdeveloped, Share one other common characteristic: excruciating poverty, To describe the economic situation= the percentage of a countrys

population earning less than $2 per day.

In these, the worlds poorest countries, life is literally a war waged for survival.


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The Digital DivideIn the least developed countries:

Meager incomes provide only the basic necessities. Most meals are the same, consisting of rice, wheat, or corn.

Shelter is primitive. People share a small room (earthen floor and no sanitary facilities). Most of the population lives in rural areas, work is hard and time-consuming. Productivity is low, household plots are small and only the crudest of farm

implements are available. Farm output per person is barely sufficient to feed a farmers own family, with

nothing left to sell to others. School age children may receive some formal education, but illiteracy remains

chronic for you and old. Infant mortality runs 10 times higher than in the United States. Only one physician per 5,000 people.


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Country

Percentage of Population earning

below $2 a day

Bangladesh 77.8

Bolivia 38.6Botswana 61.4

Central African Republic 84.0

China 53.7

Ecuador 52.3

El Salvador 51.9

Guatemala 64.3

Indonesia 86.2

Mali 90.6

Nepal 82.5

Nigeria 90.8

Zambia 64.2

International Poverty Lines for Selected Countries Source:Adapted from Table 4, World Bank, (2000)


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The Digital Divide Adual economy:

LDCs contain population segments with much higher income levels. This divides the country into havesand have nots. Wealth is concentrated in a countrys largest city, usually the capital.

2 completely different economies exist side-by-side, they are centuries apart interms of economic and technological development.

Digital divide = between countries and between different groups of peoplewithin countries, there is a wide division between those who have real accessto information and communications technology and are using it effectively, andthose who don't.

Industrialized countries, with only 15% of the world's population, are hometo 88% of all Internet users.


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The Digital Divide The digital divide raises challenging questions for global policy makers,

international businesses, and local entrepreneurs.

What responsibilities do these different groups have for narrowing the gapbetween those that have and those that dont have access to technology?

Global policy makers at the United Nations, the World Bank, and the G8 believethe answer is yes.

Some e-marketers are successfully helping to close the digital divide.

www.villageleap.com, the Robib village website (Cambodia): Women market traditional Cambodian silk weavings to overseas buyers, Money is reinvested in the local pig farm, Also allow villagers to send and receive medical information = reduce the

number of two hour road to the nearest hospital.
http://www.villageleap.com/http://www.villageleap.com/

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