CH 04

Slide 4.
Chapter 4
E-environment
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 4.2
Learning outcomes
• Identify the different elements of an

organization macro-environment that impact
on an organizations e-business and
e-marketing strategy.
• Assess the impact of legal, privacy and ethical
constraints or opportunities on a company.
• Assess the role of macro-economic factors
such as governmental e-business policies,
economics, taxation and legal constraints.
Slide 4.3
Management issues
• What are the constraints placed on

developing and implementing an e-business
strategy by the e-environment?
• How can trust and privacy be assured for the
customer while seeking to achieve marketing
objectives of customer acquisition and
retention?
• Assessment of the business relevance of
technological innovation.
Slide 4.4
Activity 4.1 Introduction to social,

legal and ethical issues
• List all the social, legal and ethical issues that
the manager of a sell-side e-commerce web
site needs to consider to avoid damaging
relationships with users of his or her site or
which may leave the company facing
prosecution. You can base your answer on
issues which may concern you, your friends or
family when you access a web site.
Slide 4.5
Activity answer – this lecture
• Cookies – laws and consumer perception on placing

these are we limiting access to information from
certain sections of society (social exclusion)?
• Privacy of personal information entered on a web site
Sending unsolicited e-mail Replying promptly to e-
mail Copyright Site content and promotional
offers/adverts are in keeping with the different laws in
different countries Providing text, graphics and
personality in keeping with social mores of different
countries.
Slide 4.6
Introduction
• In this chapter we concentrate on the role of the
macro-environmental forces. Aspects of the micro-
environment or e-marketplace such as competitors,
suppliers and intermediaries are the focus of
Chapters 2 and 4 and Part 2 of this book.
• We will review the macro-environmental factor using
the widely used SLEPT framework. SLEPT stands for
Social, Legal, Economic, Political and
Technological factors. Often, these factors are
known as the PEST factors, but we use SLEPT since
it is useful to stress the importance of the law in
influencing Internet marketing practices.
Slide 4.7
The SLEPT factors are:

• Social factors – these include the influence of consumer perceptions in
determining usage of the Internet for different activities.
• Legal and ethical factors – determine the method by which products
can be promoted and sold online. Governments, on behalf of society,
seek to safeguard individuals’ rights to privacy.
• Economic factors – variations in the economic performance in different
countries and regions affect spending patterns and international trade.
• Political – national governments and transnational organizations have an
important role in determining the future adoption and control of the
Internet and the rules by which it is governed.
• Technological factors – changes in technology offer new opportunities
to the way products can be marketed.
• For each factor we look at new issues raised for managers
responsible for e-commerce trading.
• For those actively involved in the implementation of e-business, and
in particular sell-side e-commerce, factors associated with buyer
behavior are also important when implementing e-commerce. These
are covered separately in the section The online buying process
(Chapter 9, p. 492).
Slide 4.8
Figure 4.1 ‘Waves of change’ – different timescales for change in the environment
Slide 4.9
Figure 4.1 ‘Waves of change’ – different

timescales for change in the environment
• An indication of the challenge of assessing the macro-environment
factors is presented in Figure 4.1.
• This figure of the ‘waves of change’ shows how fluctuations in the
characteristics of different aspects of the environment vary at different
rates through time.
• The manager has to constantly scan the environment and assess
which changes are relevant to their sphere of influence. Changes in
social culture and particularly pop culture (what’s hot and what’s
not) tend to be very rapid.
• Introduction of new technologies and changes in their popularity
tend to be frequent too and need to be assessed.
• Governmental and legal changes tend to happen over longer
timescales although, since this is only a generalization, new laws can
be introduced relatively fast.
• The trick for managers is to identify those factors which are important
in the context of e-commerce which are critical to competitiveness and
service delivery and monitor these.
• It is the technological and legal factors which are most important to
managing e-commerce, so we focus on these.
Slide 4.10
Figure 4.2 Variation

in broadband subscribers per 100 inhabitants, by
technology, December 2007
Source: OECD (www.oecd.org/sti/ict/broadband)
Slide 4.11
Figure 4.2 Variation in broadband subscribers

per 100 inhabitants, by technology, December
2007
• Competition in the marketplace amongst
broadband providers has caused a great
increase in the broadband Internet access
options available for consumers and small
businesses.
• But it should be borne in mind that these vary
significantly by country as shown by Figure
4.2. They show the web services should be
tested for lower-speed Internet access.
Slide 4.12
Figure 4.3 Percentage by category who bought offline after researching

online.
Source: BrandNewWorld: AOL UK / Anne Molen (Cranfield School of Management) /Henley Centre, 2004
Slide 4.13
Figure 4.3 Percentage by category who bought

offline after researching online
• Online information and experience (and

modified opinions about a brand or product)
also translates into offline purchase. This is an
important but sometimes underestimated role
of e-commerce (Figure 4.3).
Slide 4.14
Trust in different information sources

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• The role of social media and friends in
influencing sales was highlighted by this
research from EIAA (2008) which rated key
sources for research indicating the level of
trust amongst European consumers for
different online and offline information
sources:
– Search engines (76%)
– Personal recommendations (72%)
Slide 4.15
Trust in different information sources

(Continued)
– Price comparison web sites (61%)
– Web sites of well-known brands (59%)
– Newspapers/magazines (58%)
– Customer web site reviews (58%)
– Expert web site reviews (57%)
– Retailer web sites (56%)
– Sales people in shops (50%)
– Content provided by ISPs (38%).
Slide 4.16
Figure 4.4 Development of experience in Internet usage
Slide 4.17
Figure 4.4 Development of experience in Internet usage.

• Figure 4.4 shows that initially Internet users may
restrict themselves to searching for information or
using e-mail.
• As their confidence grows their use of the Internet for
purchase is likely to increase with a move to higher-
value items and more-frequent purchases.
• This is often coupled with the use of broadband.
• For this reason, there is still good potential for e-retail
sales, even if the percentage of the population with
access to the Internet plateaus.
• You can see from Figure 4.4 that Internet users take
longer to become confident to purchase more
expensive and more complex products. Many of us
will initially have purchased a book or DVD online, but
today we buy more expensive electronic products or
financial services. Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 4.18
Figure 4.5 Variation in purchase rates of online products and services in Europe
Source: European Interactive Advertising Association (www.eiaa.net), Mediascope Eupore 2008
Slide 4.19
Figure 4.5 Variation in purchase rates of online

products and services in Europe
• Figure 4.5 shows that the result is a dramatic difference in online

consumer behavior for different products according to their
price and complexity.
• For some products such as travel and cinema and theatre
tickets, the majority buy online, while for many others such as
clothes and insurance fewer people purchase online.
• However, consistent with the trend in Figure 4.5, there is now
less difference between the products than there was two or
three years ago.
• The figure suggests that the way companies should use digital
technologies for marketing their products will vary markedly
according to product type.
• In some, such as cars and complex financial products such as
mortgages, the main role of online marketing will be to support
research, while for other standardized products like books and
CDs there will be a dual role for the web in supporting research
and enabling purchase.
Slide 4.20
Variation in use of e-commerce services

Figure 4.6
between SMEs and larger enterprises
Source: European Commission (2007)
Slide 4.21
Figure 4.6 Variation in use of e-commerce services between SMEs

and larger enterprises
• The European Commission (2007) reviewed SME

adoption of the Internet across Europe.
• The results are shown in Figure 4.6. The adoption for
different e-commerce services is indexed, where 1
equates to equal access and figures less than 1 show
lower levels of usage within SMEs.
• You can see that access and broadband usage levels are
slightly lower for SMEs, but with online buying and selling
significantly lower. Electronic integration of processes with
other partners is very low.
Slide 4.22
Ethical issues and data protection
• Ethical issues concerned with personal

information ownership have been usefully
summarized by Mason (1986) into four areas:
1. Privacy – what information is held about the
individual?
2. Accuracy – is it correct?
3. Property – who owns it and how can
ownership be transferred?
4. Accessibility – who is allowed to access this
information, and under which conditions?
Slide 4.23
Table 4.2 Significant laws which control digital marketing
Slide 4.24
Table 4.2 Significant laws which control digital marketing (Continued)
Slide 4.25
Table 4.6 Types of information collected online and related technologies
Slide 4.26
Table 4.6 Types of information collected online and related technologies (Continued)
Slide 4.27
Ethics – Fletcher’s view
• Fletcher (2001) provides an alternative

perspective, raising these issues of concern
for both the individual and the marketer:
1. Transparency – who is collecting what
information?
2. Security – how is information protected once
collected by a company?
3. Liability – who is responsible if data is
abused?
Slide 4.28
The eight principles for data

protection
• Fairly and lawfully processed
• processed for limited purposes
• adequate, relevant and not excessive
• accurate
• not kept longer than necessary
• processed in accordance with the data
subject's rights
• secure
• not transferred to countries without adequate
protection
www.dataprotection.gov.uk
Slide 4.29
Standard information collected about web site visitors from the

Figure 4.7
DaveChaffey.com site Source: Feedjit
Slide 4.30
Figure 4.7 Standard information collected about web site

visitors from the Dave Chaffey.com site
• Platform usage information. Through web analytics

systems it is possible to collect information on type of
computer, browser and screen resolution used by site
users (see Chapter 7).
• For example, Figure 4.7 shows detail collected by a
widget installed on Dave Chaffey. com. As well as the
platform used, the search term referred from Google is
shown. Many Internet users will not realize that their visits
are tracked in this way on virtually all sites, but the
important point to know is that it is not possible to identify
an individual unless they have agreed to give information
through a web form and their profile information is then
collected which is the situation when someone subscribes
to an e-newsletter or purchases a product online.
Slide 4.31
Figure 4.8 Information flows that need to be understood for compliance

with data protection legislation
Dave Chaffey, E-Business and E-Commerce Management, 4
th
Edition, © Marketing Insights Limited 2009
Slide 4.32
Figure 4.8 Information flows that need to be understood for

compliance with data protection legislation
• Figure 4.8 suggests some of the issues that should

be considered when a data subject is informed of how
the data will be used. Important issues are:
• Whether future communications will be sent to the
individual (explicit consent is required for this in online
channels, which is clarified by the related Privacy and
Electronic Communications Regulation Act which is
referred to below); Whether the data will be passed
on to third parties (again explicit consent is required);
• How long the data will be kept for.
Slide 4.33
Figure 4.9 Comparison of number of blog postings for three consumer brands
Source: Blogpulse (www.blogpulse.com), reprinted by permission of Nielsen Buzzmetrics
Slide 4.34
Figure 4.9 Comparison of number of blog postings for

three consumer brands
• Blog Pulse (www.blogpulse.com) gives trends
and listings of any phrase (see example
• in Figure 4.9) and individual postings can be
viewed
Slide 4.35
Figure 4.10 HSBC virtual forest

Source: www.hsbc.co.uk
Slide 4.36
Figure 4.10 HSBC virtual forest

• Another aspect of HSBC green policy is its
online banking service, where it encourages
paperless billing. For example, in the UK in
2007, over 400,000 customers switched from
paper statements to online delivery, creating a
virtual tree each time (Figure 4.10), and for
every 20 virtual trees, HSBC promised to plant
a real one.
Slide 4.37
Localization
• Singh and Pereira (2005) provide an evaluation framework

for the level of localization:
• Standardized web sites (not localized). A single site
serves all customer segments (domestic and international)
• Semi-localized web sites. A single site serves all
customers; however, there will be contact information about
foreign subsidiaries available for international customers.
Many sites fall into this category
• Localized web sites. Country-specific web sites with
language translation for international customers, wherever
relevant. 3M (www.3m.com) has adapted the web sites for
many countries to local language versions. It initially focused
on the major web sites
Slide 4.38
Localization (Continued)
• Highly localized web sites. Country-specific web sites with

language translation; they also include other localization
efforts in terms of time, date, postcode, currency formats,
etc. Dell (www.dell.com) provides highly localized web sites
• Culturally customized web sites.Web sites reflecting
complete ‘immersion’ in the culture of target customer
segments; as such, targeting a particular country may mean
providing multiple web sites for that country depending on
the dominant cultures present. Durex (www.durex.com) is a
good example of a culturally customized web site
Slide 4.39
Economic / political
• Ensuring companies competitiveness

– Funding for education and technology
– Promoting new technology for example,
broadband 12% in UK, 70% Taiwan, South
Korea
• Achieving government efficiencies
– E-government – all UK services online by 2005
– Singapore ‘Intelligent Island’
• Taxation regimes
– Legislation for offshore trading
Slide 4.40
Figure 4.11 A framework describing the e-economy

Source: Booz Allen Hamilton (2002). International E-Economy: Benchmarking The World’s Most Effective Policy for the E-Economy. Report published 19 November, London.
www.e-envoy.gov.uk/oee/oee/nsf/sections/summit_benchmarking/$file/indexpage.htm
Slide 4.41
Figure 4.11 A framework describing the e-economy

• The framework is based upon four layers of environment,
readiness, uptake and use, and impact, and three major
stakeholder groups: citizens, businesses and government, as
shown n Figure 4.11.
• A review of how different governments have tried to improve
the health of their e-economies is presented in the sections
later in this chapter on political factors and e-government.
• Knowledge of different economic conditions is also part of
budgeting for revenue from different countries. In China there
is regulation of foreign ownership of Internet portals and ISPs
which could hamper development. User access to certain
content is also restricted.
• The trend towards globalization can arguably insulate a
company to some extent from fluctuations in regional
markets, but is, of course, no protection from a global
recession.
• Managers can also study e-commerce in these leading
countries to help predict future e-commerce trends in their
own country. Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 4.42
Technological issues
• Rate of change
– Which new technologies should we adopt?
• Monitoring for new techniques
• Evaluation – are we early adopters?
• Re-skilling and training
• Are our systems secure?
Slide 4.43
Figure 4.12 Diffusion–adoption curve
Slide 4.44
Figure 4.12 Diffusion–adoption curve

• Figure 4.12 can be used in two main ways as
an analytical tool to help managers.
• First, it can be used to understand the stage
customers have reached in adoption of a
technology, or any product.
• For example, the Internet is now a well
established tool and in many developed
countries we are into the late majority phase
of adoption with larger numbers of users of
services.
• This suggests it is essential to use this
medium for marketing purposes.
Slide 4.45
Figure 4.13 Example of a Gartner hype cycle

Source: Gartner (2005) Gartner’s Hype Cycle Special Report for 2005
Slide 4.46
Figure 4.13 Example of a Gartner hype cycle

• An alternative graphic representation of diffusion of
innovation has been specifically developed by
technology analyst Gartner for assessing the
maturity, adoption and business application of
specific technologies (Figure 4.13). Gartner (2005)
recognizes the following stages within a hype cycle,
an example of which is given in Figure 4.13 for trends
current in 2005:
1. Technology Trigger – The first phase of a hype cycle is
the ‘technology trigger’ or breakthrough, product launch or
other event that generates significant press and interest.
2. Peak of Inflated Expectations – In the next phase, a
frenzy of publicity typically generates over-enthusiasm
and unrealistic expectations. There may be some
successful applications of a technology, but there are
typically more failures.
Slide 4.47
3. Trough of Disillusionment – Technologies enter the

‘trough of disillusionment’ because they fail to meet
expectations and quickly become unfashionable.
Consequently, the press usually abandons the topic and
the technology.
4. Slope of Enlightenment – Although the press may have
stopped covering the technology, some businesses
continue through the ‘slope of enlightenment’ and
experiment to understand the benefits and practical
application of the technology.
5. Plateau of Productivity – A technology reaches the
‘plateau of productivity’ as the benefits of it become widely
demonstrated and accepted. The technology becomes
increasingly stable and evolves in second and third
generations. The final height of the plateau varies
according to whether the technology is broadly applicable
or benefits only a niche market.
Slide 4.48
Figure 4.14 InnoCentive
Slide 4.49
Figure 4.14 InnoCentive
• InnoCentive (Figure 4.14) is one of the largest

commercial examples of crowd sourcing. It is
an online marketplace which connects and
manages the relationship between ‘seekers’
and ‘solvers’. Seekers are the companies
conducting research an development that are
looking for new solutions to their business
challenges and opportunities. Solvers are the
170,000 registered members of InnoCentive
who can win cash prizes ranging from $5,000
to $1,000,000 for solving problems in a variety
of domains including business and
technology. Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 4.50
Figure 4.15 Alternative responses to changes in technology
Slide 4.51
Figure 4.15 Alternative responses to changes in

technology
• Figure 4.15 summarizes the choices. The stepped curve I

shows the variations in technology through time. Some may be
small incremental changes such as a new operating system,
others such as the introduction of personalization technology are
more significant in delivering value to customers and so improving
business performance. Line A is a company that is using
innovative business techniques, that adopts technology early,
or is even in advance of what the technology can currently deliver.
Line C shows the conservative adopter whose use of technology
lags behind the available potential. Line B, the middle ground, is
probably the ideal situation where a company monitors new ideas
as early adopters trial them and then adopts those that will have a
positive impact on the business.
• Figure 4.15 Alternative responses to changes in technology
Changes

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Slide 4.

• Identify the different elements of an

• What are the constraints placed on

Activity 4.1 Introduction to social,

Activity answer – this lecture

• Cookies – laws and consumer perception on placing

The SLEPT factors are:

Figure 4.1 ‘Waves of change’ – different

Figure 4.2 Variation

Figure 4.2 Variation in broadband subscribers

Figure 4.3 Percentage by category who bought offline after researching

Figure 4.3 Percentage by category who bought

• Online information and experience (and

Trust in different information sources

Trust in different information sources

Figure 4.4 Development of experience in Internet usage

Figure 4.4 Development of experience in Internet usage.

Figure 4.5 Variation in purchase rates of online

• Figure 4.5 shows that the result is a dramatic difference in online

Variation in use of e-commerce services

Figure 4.6 Variation in use of e-commerce services between SMEs

• The European Commission (2007) reviewed SME

Ethical issues and data protection

• Ethical issues concerned with personal

Table 4.2 Significant laws which control digital marketing

Table 4.2 Significant laws which control digital marketing (Continued)

Table 4.6 Types of information collected online and related technologies

Ethics – Fletcher’s view

• Fletcher (2001) provides an alternative

The eight principles for data

Standard information collected about web site visitors from the

Figure 4.7 Standard information collected about web site

• Platform usage information. Through web analytics

Figure 4.8 Information flows that need to be understood for compliance

Figure 4.8 Information flows that need to be understood for

• Figure 4.8 suggests some of the issues that should

Figure 4.9 Comparison of number of blog postings for

Figure 4.10 HSBC virtual forest

Figure 4.10 HSBC virtual forest

• Singh and Pereira (2005) provide an evaluation framework

• Highly localized web sites. Country-specific web sites with

• Ensuring companies competitiveness

Figure 4.11 A framework describing the e-economy

Figure 4.11 A framework describing the e-economy

Figure 4.12 Diffusion–adoption curve

Figure 4.12 Diffusion–adoption curve

Figure 4.13 Example of a Gartner hype cycle

Figure 4.13 Example of a Gartner hype cycle

3. Trough of Disillusionment – Technologies enter the

Figure 4.14 InnoCentive

Figure 4.14 InnoCentive

• InnoCentive (Figure 4.14) is one of the largest

Figure 4.15 Alternative responses to changes in technology

Figure 4.15 Alternative responses to changes in

• Figure 4.15 summarizes the choices. The stepped curve I

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