UNIVERSITY OF LJUBLJANA FACULTY OF ECONOMICS and INTERNATIONAL CENTER FOR PROMOTION OF ENTERPRISES LJUBLJANA MASTER`S DEGREE THESIS IMPACT OF ELECTRONIC MARKETING THE CASE STUDY OF M S T C LIMITED (A GOVERNMENT OF INDIA ENTERPRISE) Ljubljana, September 2009 Arumugam RAJAMANICKAM Author's STATEMENT I, Arumugam Rajamanickam, hereby certify to be the author of this Master's thesis, which was written under mentorship of Prof. Vesna Zabkar and in compliance with the Act of Authors' and related Rights- Para. 1, Article 21. I herewith agree this thesis to be published on the website pages of ICPE and the Faculty of Economics. Ljubljana, September, 2009. Arumugam RAJAMANICKAM 2 TABLE OF CONTENTS Contents Page INTRODUCTION......................................................................................................................6 1 CONCEPT OF MARKETING AND MARKETING STRATEGIES FOR INDUSTRIAL INPUTS............................................................................................................13 1.1 Marketing strategy...........................................................................................................14 1.2 The role of electronic commerce in marketing................................................................16 1.3 E-commerce Marketing Priorities....................................................................................17 2 IMPACT OF ELECTRONIC MARKETING IN BUSINESS-TO- BUSINESS TRANSACTIONS...................................................................................................................18 2.1 Benefits of electronic commerce/electronic marketing...................................................19 2.2Transparency.....................................................................................................................21 2.3 Reduction in transaction time..........................................................................................23 2.4 Human non-interference..................................................................................................24 2.5 Profitability impact of e-commerce.................................................................................24 2.6 The real impact of business-to-business data accuracy..................................................26 2.7 Limitations of electronic commerce................................................................................27 2.8 The future of business-to-business in e-commerce.........................................................28 3 CUSTOMER RELATIONSHIP MANAGEMENT..............................................................29 3.1 The need of customer relationship management for success of business........................30 3.2 Customer relationship management and business strategy..............................................30 3.3 Customer relationship management and electronic marketing........................................32 3.4 Customer care balance sheet............................................................................................35 4 IMPACT OF ELECTRONIC MARKETING-THE CASE STUDY OF MSTC LIMITED..................................................................................................................................38 4.1 Profile of MSTC LIMITED.............................................................................................38 4.2 Porter's industries competitive advantage analysis..........................................................43 4.3 Burton's five sources of collaborative advantage.............................................................48 4.4 Electronic auctions of MSTC LIMITED.........................................................................49 4.5 Electronic procurement in MSTC LIMITED..................................................................53 4.6 Customer relationship management in MSTC LIMITED...............................................56 4.7 Data analysis on impact of electronic marketing in MSTC LIMITED...........................58 4.8 Summary of findings of the research...............................................................................77 4.9 Suggestions and recommendations for MSTC LIMITED...............................................78 CONCLUSIONS.......................................................................................................................81 REFERENCES..........................................................................................................................85 APPENDICES..........................................................................................................................88 3 LIST OF TABLES Title Page Table 2.1 Benefits of electronic commerce/electronic marketing....................................19 Table 2.2 Electronic commerce impact on various distribution cost................................25 Table 2.3 Sale through electronic commerce to consumers in India.................................25 Table 3.1 Balanced scorecard-customers perspective.......................................................37 Table 4.1 Porter's five forces-threat of new entrants.........................................................45 Table 4.2 Porter's five forces-rivalry among existing competitors................................... 46 Table 4.3 Porter's five forces-threat of substitute..............................................................46 Table 4.4 Porter's five forces-threat of bargaining powers of suppliers............................47 Table 4.5 Porter's five forces-threat of bargaining powers of buyers................................47 Table 4.6 Comparision of profiles of the buyers sample...................................................60 Table 4.7 Comparision of the responses of buyers regarding benefits of e-auction..........61 Table 4.8 Comparative study of problems faced by the buyers in e-auction....................61 Table 4.9 Comparision of profiles of sellers sample.........................................................64 Table 4.10 Comparision of initiation of e-auction by sellers..............................................70 Table 4.11 Comparasive study of benefits of e-auction from sellers perpective.................71 Table 4.12 Comparasive study of difficulties faced by sellers in e-auction........................74 4 LIST OF FIGURES Title Page Figure 3.1 Marketingteacher model of customer relationship management and business strategy................................................................................................32 Figure 3.2 Customer relationship management cube..........................................................34 Figure 3.3 Customer relationship management cycle.........................................................35 Figure 4.1 Five forces that shape industry competitiveness...............................................43 Figure 4.2 Process flow diagram of electronic auction.......................................................51 5 INTRODUCTION Description of the research problem The problem to examine here is ''Is electronic marketing making an impact?.'' Impact here means the consequence or effect of an instructional activity, innovation or program. It is the measure of change in the outcome or the result of an activity. In this study we would analyze the impact of electronic marketing if at all it made and what type of impact it is making with a special reference to MSTC LIMITED, a government of India enterprise functioning under ministry of steel. The scope of this study will be restricted to business-to-business (B2B) transactions of electronic auctions, transaction in industrial input, customer relationship management (CRM), marketing and sales. Theoretical background Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders (AMA, 2007). Electronic marketing is essentially a part of marketing. So the place to begin defining electronic marketing is to consider where it fits within the subject of marketing. Therefore electronic marketing (E-marketing) by its very nature is one aspect of an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders. As such an aspect, electronic marketing has its own approaches and tools that contribute to the achievement of marketing goals and objectives. This also helps us to differentiate between electronic marketing and electronic commerce. Electronic commerce (E-commerce) is defined as the process of buying, selling or exchanging products, or services or information via computer network (Drucker, 2002). However, with the arrival of mobile technologies such as personal digital assets and third generation mobile phones, as well as interactive television, both terms tend to be stretched to include these new media technologies. While talking about e-commerce, we can not ignore the importance of m- commerce. Mobil commerce (M-commerce) is the use of mobile services to interact and transact the business (Sinha, 2007). Mobile commerce is frequently referred as subset of all e- commerce. Mobile subscribers can get access to internet immediately without any plug in. Mobile commerce is rapidly becoming an easy and affordable channel for reaching and attracting the customers. On the other hand, one can visualize subtle