From an analysis such as that in Figure 4.20 it should be possible to state whether the
company strategy should be directed as a complementary or as a replacement scenario. As
mentioned in relation to the question of the contribution of the Internet to its business,
the company should repeat the analysis for different product segments and different mar-
kets. It will then be possible to state the company’s overall commitment to the Internet. If
the future strategic importance of the Internet is high, with replacement likely, then a sig-
nificant investment needs to be made in the Internet, and a company’s mission needs to
be directed towards replacement. If the future strategic importance of the Internet is low
then this still needs to be recognised, and appropriate investment made.
Poon and Joseph (2000) have suggested that frameworks assessing the suitability of
the Internet for sales, based solely on product characteristics are likely to be misleading.
They surveyed Australian firms to assess the importance of product characteristics in
determining online sales. They found that there was not a significant difference between
physical goods and standardised digital goods such as software.
They conclude:
Although it is logical to believe that firms who are selling search goods of low tangibility
have a natural advantage in Internet commerce, it is important to understand that all prod-
ucts have some degree of tangibility and a mixture of search and experience components.
The only difference is the relative ratio of such characteristics. For example, a pair of jeans
is an experience good with high tangibility, but the size and fit can be easily described
using standard descriptions. Similarly, a piece of software is a search good with low tangi-
bility, but the functionality of a software package cannot be fully appreciated without
‘test-driving’ a beta release.
Changes to marketplace structure
Strategies to take advantage of changes in marketplace structure should also be developed.
These options are created through disintermediation and reintermediation (Chapter 2)
within a marketplace. The strategic options for the sell-side downstream channels which
have been discussed in Chapter 2 are:
disintermediation (sell direct);
create new online intermediary (countermediation);
partner with new online or existing intermediaries;
do nothing!
Prioritising strategic partnerships as part of the move from a value chain to a value
network should also occur as part of this decision. For all options tactics will be needed
to manage the channel conflicts that may occur as a result of restructuring.
Technological integration
To achieve strategic Internet marketing goals, B2B organisations will have to plan for
integration with customers’ and suppliers’ systems. Chaffey (2006) describes how a sup-
plier may have to support technical integration with a range of customer e-procurement
needs, for example:
1 Links with single customers. Organisations will decide whether a single customer is large
enough to enforce such linkage. For example, supermarkets often insist that their sup-
pliers trade with them electronically. However, the supplier may be faced with the cost
of setting up different types of links with different supermarket customers.
2 Links with intermediaries. Organisations have to assess which are the dominant interme-
diaries such as B2B marketplaces or exchanges and then evaluate whether the trade
resulting from the intermediary is sufficient to set up links with this intermediary.
STRATEGY FORMULATION