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
Friday, August 6, 2010
Contributions.and. Implications. of. this.Study
The most important contribution of this study is the representation of a process-based
categorization of B2B models and their assessment. This approach can also be used as a
benchmark for the evaluation and comparison of other new and upcoming B2B business
models and processes based on these models
The authors assume that similar studies or parts of these are used by consulting companies
in approaches to carry out analyses of models and process chains or SWOT analyses. The
process-based approach in this cross-sectional study is presented with some selected B2B
buy- and sell-side models. A longitudinal study could provide more meaningful and deeper
insights.
Future research in this domain could examine:
� Details.of.the.processes:.Lists introduced in this paper for the B2B fields of buyand
sell-side. A major goal should be to increase the depth for the classification and
refinement of existing models: A survey methodology could be used to determine the
frequency of these processes used by different B2B models in the marketspace.
� Expansion.of.the.process:.Lists to other models such as B2B-marketplaces, e-collaboration,
or to the extended supply chain. This could widen the universe for classification
of B2B models and lead to standardization in the categorization.
� Establishment.of.process.B2B.model.arrays:.(Showing models and processes in a
table format) for simplified analysis of similarities and differences between models.
Such matrices can also be used for fitting software products to different business models
or in the support of �Make or Buy� decisions in different stages of organizational
readiness.
categorization of B2B models and their assessment. This approach can also be used as a
benchmark for the evaluation and comparison of other new and upcoming B2B business
models and processes based on these models
The authors assume that similar studies or parts of these are used by consulting companies
in approaches to carry out analyses of models and process chains or SWOT analyses. The
process-based approach in this cross-sectional study is presented with some selected B2B
buy- and sell-side models. A longitudinal study could provide more meaningful and deeper
insights.
Future research in this domain could examine:
� Details.of.the.processes:.Lists introduced in this paper for the B2B fields of buyand
sell-side. A major goal should be to increase the depth for the classification and
refinement of existing models: A survey methodology could be used to determine the
frequency of these processes used by different B2B models in the marketspace.
� Expansion.of.the.process:.Lists to other models such as B2B-marketplaces, e-collaboration,
or to the extended supply chain. This could widen the universe for classification
of B2B models and lead to standardization in the categorization.
� Establishment.of.process.B2B.model.arrays:.(Showing models and processes in a
table format) for simplified analysis of similarities and differences between models.
Such matrices can also be used for fitting software products to different business models
or in the support of �Make or Buy� decisions in different stages of organizational
readiness.
Key. Issues.and.Trends. in. E-Business
Over the last decade, economic and technological advances have created a period of intense
globalization. A single world market is emerging in which the opportunities for global business
are enhanced by technical advances. These rapidly evolving new technologies enable
companies to reach their customers and trading partners around the world in just seconds,
regardless of geographic and/or time distances, political boundaries, and other barriers. The
growth of the Internet has intensified the speed of globalization and the need for companies
to implement effective global marketing and e-commerce strategies. With non-U.S. B2B ecommerce
spending projected to reach $2.8 trillion by 2004 (87% of total e-commerce), global
e-commerce is a major growth opportunity for U.S. companies (Saucini, LLC, 2002).
� E-commerce, and particularly B2B, is still in a rapid growth phase
� The domestic B2B e-commerce opportunity is dwarfed by the international opportunity
(European e-commerce revenues will surpass those of North America by 2005)
� Trends in e-commerce adoption are rapidly shifting the buyer base away from the
current North American, English language dominance
� Research indicates that B2B buyers are three to four times more likely to buy from
an e-commerce site presented in their native language
globalization. A single world market is emerging in which the opportunities for global business
are enhanced by technical advances. These rapidly evolving new technologies enable
companies to reach their customers and trading partners around the world in just seconds,
regardless of geographic and/or time distances, political boundaries, and other barriers. The
growth of the Internet has intensified the speed of globalization and the need for companies
to implement effective global marketing and e-commerce strategies. With non-U.S. B2B ecommerce
spending projected to reach $2.8 trillion by 2004 (87% of total e-commerce), global
e-commerce is a major growth opportunity for U.S. companies (Saucini, LLC, 2002).
� E-commerce, and particularly B2B, is still in a rapid growth phase
� The domestic B2B e-commerce opportunity is dwarfed by the international opportunity
(European e-commerce revenues will surpass those of North America by 2005)
� Trends in e-commerce adoption are rapidly shifting the buyer base away from the
current North American, English language dominance
� Research indicates that B2B buyers are three to four times more likely to buy from
an e-commerce site presented in their native language
Analyzing. the. Effectiveness. of.B2B
After the fallout of the dot-com companies and some unfulfilled expectations of the �B2B
hype,� the analysis of the effectiveness of B2B is important as it builds a base for understanding
the problems and actual trends in the area. Kaplan and Garciano (2001) state that B2B�s
key role is that of reducing transaction costs faced by buyers and sellers. They identify the
following five ways in which B2B e-commerce can potentially decrease transaction costs
and effectively operate in the post dot.com crash era:
1. By.changing.or.improving.processes:.Ariba reduces the costs of purchasing used
automobiles by not having to physically ship the product to an auction site.
2. By.changing.the.marketplace:.For both buyers and sellers it is less costly to search
for products over the Internet than having to conduct a physical search.
3. By.changing.decisions:.Indirect benefits may arise due to the reduced transaction
costs. As transaction costs decline, the buyer might decide to outsource a product as
opposed to producing it himself. Furthermore, �better information about future demand
through B2B e-commerce may allow a seller to improve its demand forecasts and
change its production decisions� (Kaplan & Garciano, 2001, p. 5).
4. By.changing.information.incompleteness.and.asymmetries:.The Internet changes
the asymmetric information buyers and sellers have about each other and their products,
leading to a transformation in the marketspace.
5. By.changing.the.ability.to.commit:.By standardizing processes and by providing an
electronic trail, the Internet has the potential to increase the ability to commit, thus
reducing imperfect commitment costs.
Finally, Kaplan and Garciano (2001) conclude that in order to succeed future B2B business
models must include �measurable benefits and charge customers as a function of those benefits.�
Similarly, if a company cannot secure a customer�s commitment when allowing or
facilitating price discovery, it is likely to fail since its customers will likely use its services
to define a market for the product/service and go elsewhere to complete the transaction.
hype,� the analysis of the effectiveness of B2B is important as it builds a base for understanding
the problems and actual trends in the area. Kaplan and Garciano (2001) state that B2B�s
key role is that of reducing transaction costs faced by buyers and sellers. They identify the
following five ways in which B2B e-commerce can potentially decrease transaction costs
and effectively operate in the post dot.com crash era:
1. By.changing.or.improving.processes:.Ariba reduces the costs of purchasing used
automobiles by not having to physically ship the product to an auction site.
2. By.changing.the.marketplace:.For both buyers and sellers it is less costly to search
for products over the Internet than having to conduct a physical search.
3. By.changing.decisions:.Indirect benefits may arise due to the reduced transaction
costs. As transaction costs decline, the buyer might decide to outsource a product as
opposed to producing it himself. Furthermore, �better information about future demand
through B2B e-commerce may allow a seller to improve its demand forecasts and
change its production decisions� (Kaplan & Garciano, 2001, p. 5).
4. By.changing.information.incompleteness.and.asymmetries:.The Internet changes
the asymmetric information buyers and sellers have about each other and their products,
leading to a transformation in the marketspace.
5. By.changing.the.ability.to.commit:.By standardizing processes and by providing an
electronic trail, the Internet has the potential to increase the ability to commit, thus
reducing imperfect commitment costs.
Finally, Kaplan and Garciano (2001) conclude that in order to succeed future B2B business
models must include �measurable benefits and charge customers as a function of those benefits.�
Similarly, if a company cannot secure a customer�s commitment when allowing or
facilitating price discovery, it is likely to fail since its customers will likely use its services
to define a market for the product/service and go elsewhere to complete the transaction.
E-Procurement. Supplier. (EPS). Portal. in.B2B
The implementation of stage one was based on the results of an analysis of supplier-related
processes and the successful development of a process and functional concept for the supplier
portal for CLAAS prepared in advance of the implementation. The implementation included
installation and configuration of hardware and software, development and implementation
of defined functionalities, and deployment and testing of the application.
The processes for order, delivery, proposal, and invoice have been implemented based on
the standard described from the VDA (German Association of the Automotive Industry)
The EPS system represents one of the purest forms of Web-EDI e-business models for B2B.
There is no EDI server needed. The data interchange between the Web-EDI-server and the
SAP-Systems are transferred via a WebSphere connector using XML (Steinert, 2002). IBM
Global Services consultants state that a return on investment for a Web-EDI project using
EPS can be achieved in approximately two years on average.
The goal of the project was the successful implementation of the supplier portal for
e-procurement and supplier collaboration for CLAAS, a leading manufacturer of
agricultural engines in Germany with customers around the world. This supplier
portal supports sourcing and procurement processes of the company by providing
a web-based interface to suppliers and enabling efficient data interchange over
the Internet. The implementation approach divided the implementation of the
system into three stages with each stage containing a subset of functionalities
of the total planned scope of the project.
processes and the successful development of a process and functional concept for the supplier
portal for CLAAS prepared in advance of the implementation. The implementation included
installation and configuration of hardware and software, development and implementation
of defined functionalities, and deployment and testing of the application.
The processes for order, delivery, proposal, and invoice have been implemented based on
the standard described from the VDA (German Association of the Automotive Industry)
The EPS system represents one of the purest forms of Web-EDI e-business models for B2B.
There is no EDI server needed. The data interchange between the Web-EDI-server and the
SAP-Systems are transferred via a WebSphere connector using XML (Steinert, 2002). IBM
Global Services consultants state that a return on investment for a Web-EDI project using
EPS can be achieved in approximately two years on average.
The goal of the project was the successful implementation of the supplier portal for
e-procurement and supplier collaboration for CLAAS, a leading manufacturer of
agricultural engines in Germany with customers around the world. This supplier
portal supports sourcing and procurement processes of the company by providing
a web-based interface to suppliers and enabling efficient data interchange over
the Internet. The implementation approach divided the implementation of the
system into three stages with each stage containing a subset of functionalities
of the total planned scope of the project.
Standards.and.Architectures
munication
standards to be used. With the increasing use of EDI, however, this procedure
has proven to be too difficult to practice. The Web-EDI standards are mainly driven by
different organizations that have relationships with different industries. For example, in
Europe the VDA standard of the German Association of the Automotive Industry is one of
the commonly accepted descriptions of Web-EDI and is based on the well-known EDIFACT
standards. Some Web-EDI software products based on these standards are implemented
several hundred times in Europe
Newer trends and solutions in Web-EDI (IBM, 2003b) ignore the need for EDI and the
EDIFACT standard and provide direct ways to connect the ERP-system of an enterprise
with a web-EDI portal using a Web-EDI server ().
The trend is that an explicit EDI server with translation to the intermediate format of EDIFACT
or ODETTE is considered unnecessary for small- and intermediate-size organizations since
an XML-interface performs the same service. illustrates an example describing
this model (EDI Comp., 2003b).
standards to be used. With the increasing use of EDI, however, this procedure
has proven to be too difficult to practice. The Web-EDI standards are mainly driven by
different organizations that have relationships with different industries. For example, in
Europe the VDA standard of the German Association of the Automotive Industry is one of
the commonly accepted descriptions of Web-EDI and is based on the well-known EDIFACT
standards. Some Web-EDI software products based on these standards are implemented
several hundred times in Europe
Newer trends and solutions in Web-EDI (IBM, 2003b) ignore the need for EDI and the
EDIFACT standard and provide direct ways to connect the ERP-system of an enterprise
with a web-EDI portal using a Web-EDI server ().
The trend is that an explicit EDI server with translation to the intermediate format of EDIFACT
or ODETTE is considered unnecessary for small- and intermediate-size organizations since
an XML-interface performs the same service. illustrates an example describing
this model (EDI Comp., 2003b).
Web-EDI
Web-EDI uses technologies and standards such as HTML, Java, CGI, or ASP for electronic
data interchange over the Internet (Thomas, 1999). The supplier of a Web-EDI system provides
its business partners with a Web site on which they can electronically transact business by
means of a conventional web browser that communicates with a Web-EDI server. The target
user group for Web-EDI is small and middle-sized business partners who cannot afford their
own traditional EDI system due to initial cost and/or ongoing maintenance costs.
Web-EDI systems are transaction-oriented; that is, the processes on the Web-EDI server
are steered by business transactions like orders or accounting. The user must complete the
authentication and authorization process on the website in order to mail an order or retrieve
and print an order. If the user has filled out the corresponding HTML form completely, he
can send the data back to the Web-EDI server. The transmission of data by the Web-EDI
server is carried to the in-house system of the supplier automatically. The integration of the
data into the supplier�s system can be carried out by direct correspondence with its import
interfaces or its EDI converter.
If a supplier already has a traditional EDI system in use, conventional EDI methods are
preferred in order to avoid the additional efforts resulting from conversion into Web-EDI
formats. These in-house systems can normally be used with different EDI partners due to
the ability of the most EDI products to route information. The Web-EDI server is simply
a new data source for the converter. After the data arrives at the converter, the handling of
orders is the same as conventional EDI orders, and the translation process is completely
transparent to the end user.
data interchange over the Internet (Thomas, 1999). The supplier of a Web-EDI system provides
its business partners with a Web site on which they can electronically transact business by
means of a conventional web browser that communicates with a Web-EDI server. The target
user group for Web-EDI is small and middle-sized business partners who cannot afford their
own traditional EDI system due to initial cost and/or ongoing maintenance costs.
Web-EDI systems are transaction-oriented; that is, the processes on the Web-EDI server
are steered by business transactions like orders or accounting. The user must complete the
authentication and authorization process on the website in order to mail an order or retrieve
and print an order. If the user has filled out the corresponding HTML form completely, he
can send the data back to the Web-EDI server. The transmission of data by the Web-EDI
server is carried to the in-house system of the supplier automatically. The integration of the
data into the supplier�s system can be carried out by direct correspondence with its import
interfaces or its EDI converter.
If a supplier already has a traditional EDI system in use, conventional EDI methods are
preferred in order to avoid the additional efforts resulting from conversion into Web-EDI
formats. These in-house systems can normally be used with different EDI partners due to
the ability of the most EDI products to route information. The Web-EDI server is simply
a new data source for the converter. After the data arrives at the converter, the handling of
orders is the same as conventional EDI orders, and the translation process is completely
transparent to the end user.
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