E-Business Strategies and Consumer Behavior Model

It is now conventional wisdom that both customers and manufacturers have strong incentives
to use Internet-based marketing channels (Alba et al., 1997; O�Cass & Fenech, 2003). It has
been argued that the Internet is changing the structure of marketing channels, especially in
industries such as retail banking, news media, and music, where an important part of the
output is in digital.form (Mols, Bukh, & Flohr Nielsen, 1999). However even many small
and medium-sized manufacturers have adopted and implemented Internet-based marketing
channels, though great differences can be observed in how these firms have actually gone
about this.
This chapter examines possible explanations of the adoption and implementation. Some of
the drivers of such radical innovations have been identified in previous research. Notably
willingness to cannibalize (Chandy & Tellis, 1998) and recent findings in the U.S. stress the
importance of the sense-and-respond capabilities of firms in e-business (Srinivasan, Lilien,
& Rangaswarny, 2002). As our study is based on a large European sample including several
small and medium-sized manufacturers, the intention is to allow more rigorous analyses using
structural equation modelling and trace how size may influence the models of adoption.
In continuation, the path to successful implementation is explored.
First, the chapter briefly reviews the literature on changes in marketing channels and on
organizational innovation. Then it proposes a basic research model for examining the adoption
of new channels, and the model and its 11 hypotheses are explained in detail. After
describing the methodology, we present the results of our survey of Nordic manufacturers,
stressing the role of willingness to cannibalize. Finally, the results and the theoretical and
managerial implications are discussed.

Internet-based marketing channels may radically interfere with the work and communication
connected with getting products and services from producer to consumer. However
the literature on marketing channels stresses that distribution systems are usually rigid and
stable because of persistent inertia. Firms wanting to convert from one type of marketing
channel to another often face resistance, conflict, and customer confusion (Anderson, Day,
& Rangan, 1997; Weiss & Anderson, 1992). Thus, Stern and Sturdivant (1987) contend that
of all marketing decisions facing firms, those that concern the design of distribution systems
are the most far reaching, resource demanding, and time consuming. The right investments in
distribution channels have traditionally provided long-term protection against competition,
and few researchers have been concerned with proposing strategic design principles focussing
on the dynamics of marketing channels or on feedback mechanisms that continually
monitor the design of distribution channels (for an exception, see Anderson et al., 1997).
The economic approach to analyzing marketing channels has been concerned with under