Electronic Marketing and Purchasing

In the past thirty years, we have moved from the traditional exchange models of “explaining” and “managing” to the phenomena of the electronic revolution in buyerseller networks, the development of network formations, and the impact of electronic communications such as electronic data interchange (EDI) and the internet on electronic commerce. These network approach models emphasize “understanding” and “developing” relationships in business networks (Johnston and Lewin 1996). Van den Poel and Leunis (1999) studied the capabilities of the World Wide Web (WWW) as a new type of non-store retailing in which the Internet is a direct link between the consumer and the retailer or producer, bypassing the traditional store. Although retailers typically have lower costs of operating a commercial activity on the Internet compared with a brick-and-mortar store, non-store buying is perceived to be more risky than retail store buying (Van den Poel and Leunis 1999; Spence et al., 1970; Festervand et al., 1986). One main reason for this is that customers are often unable to physically inspect products before the purchase. Their research confirms earlier findings that money-back guarantee is the most important risk reliever, followed by offering a well-known brand and a price reduction for Internet shoppers. However, firms are seeing the value in customer account relationship management even for small customers. Oliver (1997) points out that everybody is not "technothrilled. " Some customers do not mind paying a premium to keep the personto-person contact when shopping (salespeople, clerks, and cashiers). Thus, when emarketers obtain customers they must be proactive to keep the customer from “clicking-off” their site. Oliver also suggests that electronic shopping might be context-dependent. The electronic experience is preferred at different times for different products. Oliver’s context-dependent model for purchasing goods and services conceptualizes three levels of commerce ("marketplace" where personal interaction, ritual and sense of community predominate; “marketspace” which includes things that can be digitized and/or have strong brands that can be easily described and understood by vendor and purchaser; and “customerspace” where customers create their own goods or level of service. All three levels fall under the electronic market umbrella. In turn, a growth in the functions of “butlers,” “intelligent agents,” and “gatekeepers” will prevail (Oliver 1997). The “butler bundles the inputs of the person being served and delivers them completed – not the ingredients of a meal, but the meal itself. “Intelligent agents” are electronic versions of butlers. The intelligent agent is a search-and-find tool for the Internet or other electronic shopping service. The challenge in marketing, as it always has been, is to give the customer what he, she or it wants whether it is the product or service, or the ability to create the product or service. The purpose of this paper is to contrast the old models of dyadic and network marketing to the electronic marketing and purchasing paradigms that are emerging. Buyer-seller relationships will be transformed. Networks will be electronically wired to rapidly communicate end consumption through out the entire value chain. A great deal of the existing marketing infrastructure will be disintermediated and left obsolete. It is also possible that industrial marketing and purchasing, as we know it will vanish. The terms customer relationship management and enterprise resource planning may completely replace the terms of marketing and purchasing. Introduction In the past thirty years, we have moved from the traditional exchange models of “explaining” and “managing” to the phenomena of the electronic revolution in buyerseller networks, the development of network formations, and the impact of electronic communications such as electronic data interchange (EDI) and the Internet on electronic commerce. These network approach models emphasize “understanding” and “developing” relationships in business networks (Johnston and Lewin 1996). Networks or alliances have become increasingly important due to competitive forces, technological innovations, and the need for resources (Johnston, Lewin, and Spekman 1998; Hamel, Doz, and Prahalad 1989; Ohmae 1989). The impetus to understand buyer-seller relationships increased in the 1960s as was embodied in the Robinson, Farris and Wind (RFW 1967) model, the Webster and Wind (1972) model, and the Sheth (1973) model. Johnston and Lewin (1994) compared these three original models of industrial buyer behavior and extended them into an integrated model which includes nine explanatory constructs representing various stages of the organizational buying process (environmental, organizational, purchase, group, participant, seller, informational, and conflict/negotiation characteristics), along with four additional variables (decision rules, role stress, buyerseller relationships, and communication networks). Johnston and Lewin (1994) proposed that organizational buying behavior is related to the levels of risk associated with a given purchase situation. They acknowledged that many variables contribute to the level of risk, among which include environmental uncertainty, buyer competencies, type of product being purchased, complexity, novelty, and importance. Notwithstanding the fact that existing buyer-seller relationships tend to influence the perceived level of purchase risk, Johnston and Lewin's (1994) review revealed that as the risk associated with an organizational purchase increases, the following tendencies can be seen: • The buying center becomes larger and members are more educated and experienced in their area of expertise • Sellers offering proven products and solutions are welcomed, even though information search will be actively used in seeking a variety of information sources • Within the buying center, conflict will increase and a "bargaining" (tit-for-tat) negotiation strategy might be employed, whereas, the collaborative or problemsolving negotiation strategy approach might be used more within the buyer-seller dyad • Established communication networks between buyer-seller dyad members facilitates information exchange and fosters cooperation. The three original models viewed organizational buying behavior as a process. Important influences were categorized as environmental (referred to as "situational" in the Sheth model), organizational, and buyers' characteristics. To understand these influences and their potential impact on the buyer-seller dyad in purchase situations, a breakdown follows: Environmental influences Physical, political, economic, suppliers, competitors, technological, legal, and global aspects Organizational influences Size, structure, orientation, technology, rewards, tasks, and goal aspects Buyers' Characteristics Education, motivation, perceptions, personality, attitude toward risk, and experience aspects The RFW and Sheth models have two other constructs in common namely, purchase (or product) characteristics and seller characteristics. Purchase (product) characteristics are delineated as buy task, product type, perceived risk, prior experience, product complexity, and time pressure. Seller characteristics encompass price, ability to meet specifications, product quality, delivery time, and after-sale service. Another construct, "Group Characteristics," is included in the Webster and Wind model. Dimensions in this category include size, structure, authority, membership, experiences, expectations, leadership, objectives, and backgrounds. The Sheth model also includes informational and conflict/negotiation characteristics. Informational (search) characteristics (which include sources and types of information) are salespeople, conferences and tradeshows, word-of-mouth, trade news, direct mail, and advertising. The conflict/negotiation characteristics are those employed in joint decision making (adopted from March and Simon 1958) such as problem-solving and persuasion, bargaining, and politicking. Johnston and Lewin (1994) extended the models at both the intra-firm and inter-firm level. Herein. we will concentrate on the inter-firm level from which the "buyer-seller relationships" and "communication networks" emerge. Frequent variables used to examine buyer-seller relationships in the Johnston and Lewin (1994) study are power/dependence, behavior/performance monitoring, cooperation/trust, adapatability, commitment, and communication. The buying center and selling center concepts surround those purchasing activities that occur on the buying side and selling side of the dyad, respectively. Interdependent Relationships Tikkanen (1996) and Brandenbury and Nalebuff (1996) concentrate on understanding focal nets, value nets, and holistic network perspectives. Their points of departure from the previous managerial approaches lie in the conceptualization that business networks have become important due to relationships, positions, structures, and the integration of business processes in the overall value system. They suggest looking at business relationships, interactions (e.g., the electronic revolution), and interdependence from a less dichotomous view of buyer-seller relationships, and more from a comprehensive, subjective systems approach. Networks such as the Internet can be viewed at both an organizational level and at an individual level. The organizational level encompasses the commercial and legal constraints of buying and selling products and services on certain terms. Whereas, at the individual level, personal contacts and individual relationships are established, which are beneficial to the involved actors. Interdependence implies that the actions of any participating actors can produce changes in the actions and behaviors of the other actors (Buchanan 1992; Gundlach and Cadotte 1994; Kumar, Scheer and Steenkamp 1995). A network of inter-organ