Marketing Challenges of E-Services

A fundamental tenet of contemporary marketing thought is that marketing activities should be directed toward creating, maintaining, and enhancing successful customer relationships. What is the role of e-services in creating and delivering value within customer-firm relationships? As illustrated by the table, marketing activity occurs through channels that enable distribution (that is, the physical exchange of goods and services), communication, and/or transactions (such as purchases). Different channels provide opportunities to reach different market segments. For example, Dell recently decided to sell computers through in-store kiosks to reach an estimated 25% of customers who make purchases solely through retail outlets. Although some customers can be reached through a single channel, many customers are touched by multiple channels. For example, General Motors reaches its customers through traditional channels, such as dealerships, as well as through online auto information management services.

When e-services are viewed as part of a product portfolio, they can be considered to act as both substitutes and complements to existing services.

Most organizations sell multiple products in multiple channels thereby operating at the intersection of traditional commerce and e-commerce. When e-services are viewed as part of a product portfolio, they can be considered to act as both substitutes and complements to existing services. Thus, a key marketing challenge for organizations is the “harmonization” of marketing activities across products—and across channels. For example, organizations may use different channels to acquire customers (for example, personal selling) than to maintain relationships (for example, Web-based support)—yet marketing activities should be consistent across all channels.

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Implementation Challenges

Although the fundamental principles of marketing apply to all products and services, implementation issues make e-services especially challenging.

• How do customers behave in electronically enhanced buying environments? Under what circumstances can organizations build brand equity? How can they leverage customer-initiated communications or customer-to-customer communications? How does an organization function within a value network rather than a supply chain?
• How can marketers design e-services that deliver quality and value to customers? What is the role of usability (Web site navigation and/or digital product use), customization (based on the acquisition and use of customer information) and the creation of trust (through the provision of privacy and security)?
• What are some of the ways organizations can extract value from customers? What are the roles of pricing strategies, such as usage-based pricing?
• How can organizations coordinate marketing activities across channels, including personal selling, mass media, direct marketing, Internet and retail outlets? How can organizations create synergies between customer-employee interactions and computer-mediated interactions? What are appropriate performance metrics for the effectiveness of marketing communications (especially interactive media)?

Marketers have only begun to address these challenges. With products and markets evolving at Internet speed, we can look forward to an exciting voyage of discovery.

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