E-marketing 651
that the commitment should mirror the readi-
ness of consumers to use the new medium. If
the objective is to achieve a high on-line
revenue contribution of >70 per cent, then this
will require fundamental change for the com-
pany to transform to a ‘bricks and clicks’ or
‘clicks only’ company.
Decision 2. Restructuring
Closely related to decision 1 is whether the
company should restructure in order to achieve
the priorities set for e-marketing. Gulati and
Garino (2000) identify a range of approaches
from integration to separation. The choices
are:
1 In-house division (integration). Example: RS
Components Internet Trading Channel
(www.rswww.com).
2 Joint venture (mixed). The company creates an
on-line presence in association with another
player.
3 Strategic partnership (mixed). This may also be
achieved through purchase of existing
dot-coms; for example, in the UK Great
Universal Stores acquired e-tailer Jungle.com
for its strength in selling technology products
and strong brand, while John Lewis purchased
Buy.com’s UK operations.
4 Spin-off (separation). Example: Egg bank is a
spin-off from Prudential financial services
company.
Gulati and Garino (2000) give the advantages of
the integration approach as being able to
leverage existing brands, to be able to share
information and achieve economies of scale
(e.g. purchasing and distribution efficiencies).
They say the spin-off approach gives better
focus, more flexibility for innovation and the
possibility of funding through flotation. For
example, Egg have been able to create a brand
distinct from Prudential and has developed
new revenue models such as retail sales com-
mission. They say that separation is preferable
in situations where:
A different customer segment or product mix
will be offered on-line.
Differential pricing is required between on-line
and off-line.
If there is a major channel conflict.
If the Internet threatens the current business
model.
If additional funding or specialist staff need to
be attracted.Additionally, from a technology viewpoint it
may be quicker to develop a new infrastructure
rather than integrating with an existing one,
but again economies of scale are lost.Decision 3. Business and revenue models
Another aspect of e-marketing strategy for-
mulation is review of opportunities from new
business and revenue models, which are a
summary of how a company will generate
revenue by identifying its product offering,
value-added services, revenue sources and tar-
get customers.
Timmers (1999) identifies no less than 11
different types of business model that can be
facilitated by the web as follows:1 E-shop. Marketing of a company or shop via
web.
2 E-procurement. Electronic tendering and
procurement of goods and services.
3 E-malls. A collection of e-shops such as
Barclays Square (www.barclays-square.com).
4 E-auctions. These can be for B2C, e.g. Ebay
(www.ebay.com), or B2C, e.g. QXL
(www.qxl.com).
5 Virtual communities. These can be B2C
communities such as Xoom
(www.xoom.com) or B2B communities such
as Vertical Net (www.vertical.net). They are
important for their potential in e-marketing
and are described in the ‘Focus on virtual
communities’ section in Chapter 6.
6 Collaboration platforms. These enable
collaboration between businesses or
individuals, e.g. e-groups (www.egroups.com),