Impact of the Internet on Sales Management and Sales Processes
The Internet has changed the way of doing business by challenging manual and traditional business frameworks and providing alternative business formats. The key contribution of the Internet to business is connectivity in real time. This has a widespread impact on firms such as on global market expansion, marketing goals and strategy, and marketing management. Large firms were first to adopt the Internet in their sales management and processes to support internationalisation through the management of business units in different countries. Not long after, small firms also utilised the Internet for market access and expansion. Now, most if no...
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...t all business firms have been in contact with the Internet for different purposes such as website development, advertising, online transactions with customers, and even establishment and continuity of business partnerships. The widening impact of the Internet on sales management and processes involve a change in the perspective of firms to understand the use of the Internet as a tool in improving effectiveness in sales management and efficiency of sales processes. Nevertheless, there remain differences in the understanding of the Internet and its impact on sales management and processes.
This finds expression in the varying degrees of adoption, indicating limited optimisation, of the Internet and the failure of business firms to adopt fully Internet-based business framework. Furthermore, the Internet provides multifaceted benefits to business firms but there is variance in the achievement of these benefits, particularly in the area of sales management and processes, by business firms engaging in Internet tools and systems. Limited understanding of the potential benefits could be an explanation for the inability to target these benefits. Clarifying the impact of the Internet on sales management and processes is pressing, especially since many business firms are experiencing the impact of the recession in the United States. Investing on the Internet and optimisation of Internet use could comprise an important move to sustain sales until the upturn in global economic conditions.
2. Impact on E-Commerce
The Internet created e-commerce. E-commerce is a business framework utilising computers linked to the Internet to support purchasing, sales and other transactions such as payment and after sales service provision (Moran & Avergun, 1997). Without the Internet, e-commerce would not be possible. The difference between e-commerce and traditional model is the addition of electronic or online tools and systems that facilitate the flow of information in real time as alternatives to the telephone and facsimile. E-commerce integrates three key sales management systems, which are physical, financial and information systems as shown in Figure 1 below (Kalakota & Whinston, 1997). In doing so, sales management shifts to ensuring the effective alignment and interconnectedness of these three processes to support the production that meets the quality expectations of consumers, facilitation of electronic payment processes, and establishment of an ordering and transaction tracking system as well as an electronic customer service or after-sales service.
Figure 1: Linkages in an E-Commerce Framework
Source: (Kalakota & Whinston, 1997)
E-commerce then affects three areas of sales management and processes. First is value creation. Information systems provide consumers with the ability to communicate directly with the firm to secure a product or service through an online and ordering tracking system and experience the convenience of payment online. The firm can also reach out and provide information to consumers through its website and online advertisements. In e-commerce, Internet capability comprises a necessity for the firm to capture and address the value expectations of customers through direct interaction. (Kalakota & Whinston, 1997) Second is competitiveness in sales. There is a direct relationship between extent of Internet capability of a firm and its competitiveness in terms of market share and sales (Smith, 2001). Many of the successful companies with significant market base and sustained growth in sales are those that developed Internet capabilities and engaged in e-commerce. Third is sales monitoring. The Internet provides a means of monitoring website traffic, orders, fulfilment of orders, and complaints to provide the company with a way of monitoring growth in sales and areas for improvement. (Ryder, 2001)
3. Impact on Business-to-Business (B2B) Sales
The Internet provided an alternative virtual venue for business-to-business (B2B) sales. Prior to the widespread use of the Internet by business firms, B2B sales were done manually through personal meetings, telephone correspondent, or facsimile. The key to successful B2B sales is the establishment of strong business ties, often built on reliance and trust, with other firms such as manufacturers, wholesalers, distributors or industrial consumers. (Rich, 2002) A generic online B2B sales model, shown in Figure 2, below involves Internet linkage as the means through which a business transacts with other business firms. Specific examples of electronic B2B sales models are e-procurement or sales through websites and collaboration platforms that link the integrated products or services of firms.
Figure 2: Internet-Based Business-to-Business Model
There are two perspectives on the impact of the Internet on B2B sales. On one hand, Internet-supported B2B facilitates sales between business firms separated by geographic distance and time differences. In addition, massive flows of information can be shared in real time. This means that negotiations are closed in no time to move on to fulfilment. (Dai & Kauffman, 2002) On the other hand, the Internet has only moderately affected B2B because the Internet cannot replace the importance of personal dealings with business partners or industrial consumers to establish trust (Pitt. et al., 2007). While, personal interaction remains an important aspect of B2B sales, developments in Internet tools have been able to mimic personal interaction through audio-video communication and conferences. The wider adoption of Internet innovations in B2B would enhance the impact of the Internet on B2B sales.
4. Impact on Business-to-Consumer (B2C) Sales
The Internet created a virtual market that has now reached 1.4 billion of the global population and enabled business firms to establish sales links with the virtual market. The virtual market developed as Internet use popularised to create the opportunity for firms to sell online. In addition, Internet functions and tools such as websites and search engines provided a cost effective means of reaching out to the global market for the offering of products and services even for small and medium firms. (Rich, 2002) The generic model of an online B2C model is shown in Figure 3 below. This describes the role of the Internet in linking business and consumers through the Internet through electronic tools. Examples of electronic B2C sales are via e-shops such as amazon.com or e-malls such as au.shopping.yahoo.com.
Figure 3: Internet-Based Business-to-Consumer Model
Apart from creating a virtual market and enabling firms to sell their products and services online, the Internet also made the virtual market a new venue for competition and new determinants of competitiveness in sales. Competition in the top supermarkets in the U.K., which are Tesco, ASDA, Sainsbury and Morrisons is not only for the market of its traditional retail centres but also for the virtual market. The relative strength of sales of its virtual shops contributes to its overall relative competitiveness. New determinants of competitiveness have emerged in the Internet-based B2C including the navigability of the website, the extent of transactional features available, the range, uniqueness and rarity of product and services offered, the provision of customer service, and information security (Liao & Cheung, 2001). The ability to achieve these determinants ensures greater sales and better competitive position.
5. Impact on Consumer-to-Consumer (C2C) Sales
The Internet created the online auction or bidding market that changed the role of business in sales. Instead of business firms offering products and services to consumers, business firms engage in sales by providing a venue for consumers to sell or resell to consumers (Krishnan et al., 2002). This constitutes a different sales format. A generic model of C2C is shown in Figure 4 below. This describes the Internet linkages between the parties involved and the new role of business firms as hosts or venue providers in this sales format. Consumers directly interact through a website facilitated by firms. Specific C2C models are auction or bidding sites such as ebay.com and auctionyard.com.
Figure 4: Internet-Based Consumer-to-Consumer Model
Business firms hosting auction or bidding site manage sales by providing hosting services through the maintenance of the website, regulating transactions, and promoting the website to gain more consumer-sellers. The popularity and quality of the website and the integrated services generate sales in terms of commission for successful transactions. (Chu & Liao, 2007) A successful auction company such as e-Bay can generate revenue of $2.04 billion for the fourth quarter of 2008 (eBay Inc., 2009). Now, many firms are establishing auction sites to compete with e-Bay. Furthermore, the sales process occurs through the attraction of consumer-sellers to place their products for sale in the site by providing reliable and trusted informational and transactional services for buyers and bidders alike. The auction market is growing due to the participation of consumers in the sales process by selling or reselling items they no longer use or want and seeking consumers selling the items they want (Chu & Liao, 2007). The facilitation of C2C interaction as part of sales management and a sales process is very reliant on the Internet.
The Internet enabled retailing through electronic means to end consumers. E-tailing refers to the totality of sales of various goods and services through the Internet or electronic channels to consumers. This encompasses all electronic sales transactions with consumers. This intersects with B2C but e-tailing in terms of sales of consumers but the e-tailing does not involve the provision of information or brand promotion included in B2C. (Dennis et al., 2004) An e-tailing model is shown in Figure 5 below. E-tailing involves all the sales transactions between firms and consumers. The business firms that could engage in e-tailing are broad because of the Internet. Manufacturers can now engage in direct sales to consumers through websites and other electronic means to eliminate distribution channels. Dell, Inc. is a computer assembler/manufacturer involved in e-tailing. Majority of its sales is through direct sales via e-tailing. Wholesalers and retailers can also engage in direct sales through electronic means such as websites. Examples of electronic wholesalers are dollardays.com offering 25,000 wholesale products and representing thousands of small manufacturers and online-wholesaler.com for various kinds and brands of electronic goods. Retailers have been engaged in electronic sales much earlier. However, the participants of e-tailing have also broadened because of the Internet. Individuals can look for low priced marketable products from traditional or online shops and sell these through websites or auction sites with at a mark-up price. Amazon.com and bestbuy.com owing to the scale of operation are considered as both wholesalers and retailers.
Figure 5: E-Tailing Model
By creating e-tailing, the Internet has changed the strategies in sales management and processes of selling products and services. The consideration of firms in securing targeted level of sales are factors such as accessibility, convenience, access to price and other information, product range, novelty and marketability of products. The electronic business format has also created challenges such as in the management of handling or shipping cost and Internet capability. (Grewal et al., 2004) Firms engaged in e-tailing to succeed in achieving sales targets should address these challenges. E-tailing remains an evolving business format continuously developing as used in electronic sales strategies and processes.
7. Internet and Website Development
Apart from introducing or developing e-business models, the Internet also gave way to the development of electronic venues for sales. The most widely used tool for selling goods in the World Wide Web are websites. (Packer, 2008) Since the development of the virtual community connected through the Internet, similar to physical or non-virtual communities, the Internet also created websites as venues for selling products similar to physical stores and shops. A website is a collection of web pages containing text, still images, moving images, audio or sound, and other digital functions embedded in the web pages that provide information on products and services and enable transactions. A website has a unique URL address used to link, locate and open the website. (Packer, 2008) These are effective modes of selling because of their accessibility and functionality to firms and consumers to support sales targets. Most if not all of the leading companies in the world, regardless of industry, advertise and sell their products through company websites.
The impact of the Internet on the development of websites for electronic selling is three fold. First, the Internet has provided an address or location of business firms selling in the virtual market (Packer, 2008). The URL address of business firms comprises their identification so that the company name or brand is made part of the URL address, such as www.microsoft.com. This transfers firm reputation and brand equity to the virtual market. Second, websites have become commodity in itself (Packer, 2008). Websites is purchasable in the Internet. There are websites selling pre-made or by order websites. This reflects the value of websites in selling products in the World Wide Web. Third, the growth in website design and development firms has created an industry and profession out of websites (Packer, 2008). In fact, many business firms engaging in electronic sales outsource website design and development to these professionals or firms. The cost of developing and maintaining websites and the accessibility, functionality and navigability of websites are considerations in managing sales and form part of the sales process.
8. Internet and Marketing Communications
The Internet has also affected sales management and sales processes by catalysing the development of information and communication technology (ICT) tools. ICT tools refer to all technology-based products made for storing, retrieving, manipulating, transmitting, and receiving digitised information. These tools affect sales management and processes by supporting marketing communications. (Kotelnikov, 2007)The purposes of marketing communications is to build awareness of the business, brands and products to the market, facilitate information sharing between the company and consumers to support value creation in sales, and establish linkages with customers to influence purchases and built loyalty. ICT tools support the achievement of these purposes by providing various ways through which to communicate with consumers. The function and reach of ICT tools varies, with some limited only to targeted people while others can communicate to large groups of people. As such, the adoption of ICT tools depends on the need or purpose of the business. ICT adoption could happen in stages, with each stage referring to certain types of ICT tools according to basic or advanced classification. Advanced information technology not only supports communication but also the organisation and analysis of data to support sales decisions and strategies.
Figure 6: Stages of ICT Adoption and Types of ICT Tools
Source: (Kotelnikov, 2007)
With the Internet, there was increased accessibility and utility of advanced ICT tools. Even small firms could use advanced ICT tools to communicate to the online market using advanced communications such as email, internet browsing, websites, and VoIP. In fact, ICT tools could be attributed as the means through which many small business firms entered the virtual market. Large firms are able to use advanced information technology to establish a database necessary for customer relationship management. In the Internet age, sales management decisions involve the selection of the appropriate ICT tools to support the sales processes that would secure firm objectives for small, medium and large firms alike.
9. Internet and Empowerment of the Customer
The Internet has also influenced sales management and processes by influencing the perspective of consumers towards the company, brands and products they see and read about online. The core principle of consumer empowerment is access to information to support informed decisions and enhance satisfaction. Given sufficient information, customers are able to compare their expectations with the firm offering as well as compare the offers of other firms, brands and products. The decision to purchase and the actual purchase then results to greater satisfaction on the part of consumers that could even influence repeat purchase or even customer loyalty, which positively affects sales outcomes. The Internet is the biggest repository of information on different companies, brands and products. Furthermore, informed consumers are also able to participate in marketing processes to their benefit and to the indirect benefit of business firms. Customers are able to express feedback for immediate resolution by the company through email correspondence or customer service via websites. This leads to better experiences with sales transactions. Communication or interaction in real time between consumers and firms is made possible by the Internet. (Pires et al., 2006)
However, the alignment of the information needs of consumers and information provided by the companies via the Internet is a sales management consideration. The value of information provided to consumers depends on how well this addresses the actual information needs of customers. Low information value leads to lesser degree of empowerment of customers and high information value ensures consumer empowerment. (Harrison et al., 2006)
The impact of the Internet on sales management and processes is both direct and indirect and varies in strength depending on the area affected. The Internet affects sales management and processes directly by challenging existing business formats and introducing new ones that fit the virtual market. These new business formats involve different management considerations of different objectives, expenditure items, risk assessment, and marketing mix decisions. The new business formats are e-commerce, B2B, B2C, C2C and e-tailing that influence sales management and processes in terms of strategic decisions and activities and implementation requirements. The Internet affects sales management and processes indirectly by supporting the development of websites that comprise the most used venue of selling products and services to the virtual market. The use of websites involves different considerations in managing sales that focuses on ensuring the effectiveness and efficiency of the website and integrated functions or services. Another indirect impact is also on marketing communications through ICT tools. Marketing communications supports the achievement of sales targets by facilitating the sharing of information between firms and consumers influence purchasing decision. The Internet support information sharing between firms and the virtual market through ICT tools. Still another indirect impact is on consumer empowerment, which is a response from consumers reflecting on the effectiveness of sales management and basis of management decisions on sales processes. The Internet facilitates consumer empowerment through information sharing in real time provided the information provided by firms match the information needs of consumers.
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