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E-Marketing Strategy - Embracing New Technology
Electronic Commerce has revolutionised the procurement process. Companies
are embracing the new technology resources to achieve competitive
advantage. The following is a closer look at how an SME's competitive
advantage can be increased by analysing the Value Chain, devised by
Michael Porter. The Value Chain Analysis as a tool, allows one to
examine the production and support processes for their contribution
to competitive advantage.
'Competitive advantage cannot be understood by looking at an organisation
as a whole. It stems from the many discreet activities a firm performs
in designing, producing, marketing, delivering and supporting its
product' (Porter, 1983)
Fig 5.3 (Source: Porter 1985)
The Value Chain divides a company into it's components, while highlighting
the different primary and support activities that brings a product
or services from a raw material stage to delivery, and finally to
customer services and support. We can use the Value Chain as a tool
to examine how the Internet has positively affected a company's Primary
and Support activities.
Primary activities are those activities directly involved
with adding value to inputs and transforming them into support and
services desired by customers. These include Inbound logistics:
- Operations
- Outbound logistics
- Marketing and sales
- Service
Support activities are those activities necessary to support
or enable the effective functioning of the primary activities. They
include:
- Firm infrastructure
- HRM
- Technology development
- Procurement
The art of managing an e-enabled supply chain is the ability to communicate
and synchronize activities, which is the effective and efficient flow
of services and support and data between SMEs and organisations from
the beginning to end of a procurement / transmission / sales cycle.
The Chart below (Fig 5.4) shows how the Internet force has positively
affected the Supply Chain in reference to service industries (McGoey,
I, pg24)
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Primary
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Activities Internet
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Forces Secondary
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Activity Internet
Force
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Inbound
Logistics
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Increased speed for support and services.
Cheaper resources and quicker sourcing of goods for SMEs
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Human Resource Management
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More efficient technology application - less
HR required IT/Internet Training required for all personnel
Ease of access to information - for resource
prospecting purposes
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Outbound
Logistics
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Condensing distribution channels - direct
access to the customer via the Internet.
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Technology Development
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Applying technology into an SME strategy Implementing
Internet Strategy
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Operations
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Direct online marketing advances - EDI, mass
mailing, banners etc. cost effective deployment of good, use
of telephone reduced and human contact reduced.
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Procurement
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More cost efficiencies, cheaper operations,
less procurement e.g. Materials, paper online system in place
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International
Marketing and
Sales.
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Online branding corporate identity research
tool, sales, corporate information
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Company Infrastructure
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Flatter organization structure implied
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Services
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Increased services and efficiencies online,
real-time customer response mechanisms
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fig 5.4
Porter's 5 Competitive Forces
Porter's 5 competitive forces were developed as a guideline for companies
building a marketing strategy plan. Porter's competitive forces are
a combination of strengths that give a company a determining factor
on profit potential both from the industry perspective and the individual
company perspective. To compete today in the new economy, companies
must migrate their operations to electronic channels. The following
outlines the effects the Internet has on the Irish SME's in co-ordinance
with 5 competitive forces. New entrants, buyers, rivals, substitutes
and suppliers.
Fig 5.5 (Source: Porter 1985)
- New Entrants: New companies getting a market presence on
the Internet and adapting to the new technologies. The Internet
has enabled Irish SMEs to achieve competitive advantage with big
players.
- Buyers: The Internet has provided a global window to Irish
SMEs to source alternative products at a cheaper rate while lowering
distribution costs and enhancing competitive advantage.
- Rivals: The Internet has given Irish SMEs the opportunity
to gain competitive advantage over the big players due to their
ability to remain agile while providing the goods and services and
keeping their distribution costs to a minimum.
- Substitutes: Through the global window of the Internet,
SMEs can choose who they want to buy products from. The Internet
provides the opportunity to gain better prices and replace companies
who cannot supply and meet demands on time.
- Suppliers: The power of suppliers has been reduced online
due to competitive advantage. Suppliers now have to provide the
cheapest prices possible in order to gain competitive advantage
against their rivals (McGoey, I, pg25).
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