This research investigates the evolution of Internet marketing strategies in a longitudinal, exploratory study. The key research questions are “How does Internet strategy evolve over time, and what factors seem to drive this evolution?” To investigate these questions, we conducted in-depth interviews of senior managers at three manufacturing companies (Reebok International, Saturn, AB Dick) competing in different industries. By comparing past and current practices, we find that applications of Internet marketing strategy involve more than just e-commerce. Our research indicates that firms are using the Internet for creating value chain efficiencies, reducing costs, and enhancing customer and channel relationships.
The Internet represents a significant change in
the competitive landscape. Scholarly research
has devoted considerable attention to this new
marketing medium. Extant research has fo-
cused on such issues as the Internet as a com-
munication medium (e.g., Hoffman & Novak,
1996), electronic business markets enabled by
the Internet (e.g., Grewal, Comer, & Mehta,
2001), and the proposed effects of firms’ use of
the Internet on trust development (e.g., Sawh-
ney & Zabin, 2002; Sultan et al., 2002; Urban,
Sultan, & Qualls, 2000). Other research has
examined industry structure, product charac-
teristics, and the relative advantages of online
buying contexts and efficiencies (e.g., Balasu-
bramanian, Krishnan, & Sawhney, 2000; Lynch
& Ariely, 2000). In addition, conceptual work
has addressed competitive strategy issues re-
lated to the Internet (e.g., Varadarajan & Yadav,
2002).
In practice, decisions regarding channel
structure and strategy, particularly with respect
to new technologies such as the Internet, can be
critical to firms’ success or failure. Surprisingly,
given the significant body of research in this
area, there is little empirical work that provides
insights as to how firms’ Internet strategies may
evolve over time. Moreover, there is a lack of
research that examines the drivers of this evo-
lution. Insight into these areas will help guide
theory building and managerial understanding
of marketing strategy across multiple channels.
The purpose of this exploratory study is to
understand how organizations have sought to
incorporate the Internet in their marketing
strategy over time. In this study, we compare the
findings from an initial study conducted during
the height of the dot-com boom in 2000 (Rohm
& Milne, 2003), based on interviews with key
managers and executives regarding Internet
strategy, with a study conducted in 2002. Our
key research question is “How does Internet
strategy evolve over time, and what factors drive
this evolution?” By examining issues of Internet
strategy over time, we can begin to understand
how specific Internet initiatives can help
achieve firms’ overall strategic objectives. In addition, we aim to identify future Internet initia-
tives and hurdles to the implementation of suc-
cessful Internet strategies.
This longitudinal, exploratory investigation is
based on three case studies involving in-depth
interviews of managers. This extends recent re-
search by providing a longitudinal examination
of firms’ Internet strategies and how those strat-
egies have shifted over time. The contributions
of this study are threefold: (a) We provide a
longitudinal examination of firm-level Internet
strategy across industries, (b) we propose a con-
ceptual framework that identifies shifts in Inter-
net strategy over time, and (c) we identify the
factors that drive this evolution and the hurdles
firms face in implementing Internet initiatives.
We begin by summarizing the main results
from the initial study conducted in 2000 and
related themes from the literature, followed by
a review of our research methodology, which
employs in-depth interviews with managers. We
then describe the findings and propose a con-
ceptual framework. Next, we discuss the impli-
cations of this study. Finally, we present conclu-
sions, limitations, and directions for future
research.
The major contribution of this study is that it
offers a longitudinal view of the evolution of
Internet marketing strategy at three firms com-
peting in diverse industries. This study exam-
ined how Internet strategy has evolved across
two periods of Internet usage: (a) an initial
phase characterized by high expectations of the
benefits to be derived from firms’ adoption of
the Internet; and (b) a latter phase in which
these expectations have given way to reality, and
where companies began to realize that Internet
strategy must be developed and executed with
close regard for existing channel structure and
channel members.
Overall, this study provides a greater under-
standing of how firms’ Internet strategy initiatives have evolved and what the drivers of this
evolution might be as well as the ways in which
these initiatives are being employed to achieve
specific strategic corporate objectives. Internet
strategies are dynamic, and managers need to
recognize that there is no one single template
for successful Internet strategy.
This study illustrates the need for research to
investigate radical innovations such as the Inter-
net over time. Related to the work by Venkatra-
man (2000), our findings support the conten-
tion that companies’ Internet strategy and
usage follow a series of stages whereby firms
shift current strategy as needed through learn-
ing and experimentation. From a relationship-
marketing perspective, our findings also sup-
port the concept (see Sawhney & Zabin, 2002)
of the Internet as a medium with which to es-
tablish and enhance customer and channel re-
lationships rather than as a medium to elimi-
nate channel partners. In addition, there is a
need to identify performance metrics that allow
us to explicitly test the impact of particular
Internet initiatives on specific corporate objec-
tives. Recent emphasis on marketing Return on
Investment (ROI), found both in academe and
industry, supports the need for such metrics.
In interpreting these findings, it is important
to be aware that the data for this research are
based upon practices, experiences, and percep-
tions of managers at three firms and industries.
The relevance of these findings may be limited
to those firms competing in industries and mar-
ket settings that share characteristics similar to
the sample. Future research should include a
wider range of companies to enhance the rele-
vance of these findings to other firms and in-
dustries. Further, the qualitative insights from
this study can serve as a stepping stone for
future model building and testing. This could
be accomplished by building causal models
based on the proposed framework and generat-
ing survey-based quantitative data.