Chapter 15 F

E-Marketing, 3rd
edition
Judy Strauss, Adel I. El-Ansary, and Raymond
Frost
Chapter 15: E-Marketing in

Emerging Economies
Prentice Hall 2003

Overview
Overview of Global E-Marketing Issues
Emerging Economies
Importance of Information Technology
Country and Market Opportunity Analysis
Market Similarity
Credit Card Conundrum
E-Commerce Payment in the Czech
Republic
Technological Readiness Influences Marketing
Computers and telephones
Internet Connection Costs
Slow Connection Speeds And Web Site
Design
Electricity Problems
Wireless Internet Access
The Digital Divide
Overview of Global E-Marketing
Issues
One of the big changes online: users from other countries, speaking
languages other than English, will increasingly dominate the Internet.
Worldwide Internet use is projected to increase by 60% from 2002 to 2004:

In 2002, 1/3 of all Internet users in the world lived in North America,
By 2004, North American users = 1/4 of the worlds active Internet users,
By 2004, more Internet users will be living in Asia Pacific countries than
in North America,
Between 2002-2004, the number of Latin American Internet users will
increase by a substantial 84%,
By 2004, Europe is projected to be home to the largest number of
Internet users in the world.
2 important effects of the increasing number of non-US Internet users on the

Internet:
Diversification of Webs content & language,
Acceleration of the convergence of styles, tastes, and products to create
a more homogenous, global marketplace.
Year
2000 2001 2002 2003 2004
North America 97.6 114.4 130.8 147.7 160.6
Europe 70.1 107.8 152.7 206.5 254.9
Asia/Pacific Rim 48.7 63.8 85.4 118.8 173
Latin America 9.9 15.3 22.1 31 40.8

Africa and Middle
East 3.5 5.3 7.2 9 10.9
Worldwide Total 229.8 306.6 398.2 513 640.2
Active Adult Internet Users Aged 14+ Worldwide (in millions)

Source: Adapted from eMarketer, (2000)
Overview of Global E-Marketing
Issues
Internet use varies greatly from country to country.
Country size and population have little bearing on Internet

use:
Russia = only 7.5 million Internet users (5% of the population).
Singapore = 1.3 million Internet users (30% of all Singaporeans).
As Internet access and use accelerates around the world, so,

too, will e-marketing opportunities.
Where will the greatest challenges lie?

In countries with emerging economiescountries such as
Russia, India, Nepal, the Czech Republic, and China, which
present different & difficult decisions for e-marketers.
Overview
Emerging Economies
Market Similarity
Republic
Design
The Digital Divide
Emerging Economies
Countries vary in their level of economic development:
Developed countries = all of Western Europe, North America, Japan,

Australia and New Zealand.
Highly industrialized countries + use technology to increase their
production efficiency, result = a high gross domestic product (GDP)
per capita,
high GDP = citizens have enough discretionary income to buy items
that will make their lives easier, richer, and fuller,
Ideally suited for e-marketing activities.
Emerging economies = those with low levels of gross domestic product

(GDP) per capita that are experiencing rapid growth:
In North America, Mexico + Central and South American countries,
In Europe, former Baltic States + Eastern Europe,
Russia, Belarus, and the Ukraine,
Africa, Central Asia, South Asia and Southeast Asia,
China.
Overview
Emerging Economies
Importance of Information
Technology
Market Similarity
Republic
Design
Technology
To improve its level of economic development, a country can:
Increase efficiencies in the production, distribution, and sale of
goods and services.
For emerging economies, technology plays an especially

important role.
The application of information technology can open up new,
exciting, global markets.
The Internet allows businesses in emerging economies to

instantaneously tap a global marketplace.
Successful marketing on the Internet can leapfrog a company

from nowhere to somewhere overnight.
Technology
E-marketers from countries with emerging economies face a
double challenge:
All the marketing issues and decisions,
Unique challenges related to the conditions of operating
within a still developing nation.
Businesses operating in emerging economies must deal with:

Fewer computer users,
Limited credit card use,
Lack of secure online payment methods,

Unexpected power failures.
Technology
Internet marketing differences between developed and
developing countries for the greatest obstacles to e-commerce:
U.S. and European list: Emerging economies list:
Privacy concerns (31%), Slow connection speeds

Censorship (24%), (29%),
Navigation difficulties Costs of domestic phone
(17%), calls (29%),
Taxes (9%). Internet Service Provider
costs (19%),
Lack of content in ones own
language (10%),
Lack of local content (10%).
Overview
Emerging Economies
Market Similarity
Republic
Design
The Digital Divide
Country and Market Opportunity
Analysis
An e-marketing plan guides the marketer through the process
of identifying and analyzing potential markets.
Global e-marketers must balance 2 different analytical

approaches:
Market similarity = If they are operating from a country

with an emerging economy and want to target markets in
developed countries,
Market differences
= If they are based in an emerging economy and want to
market to their home target market,
= If they are from a developed economy and want to target
groups in an emerging economy.
Emerging economy Emerging economy
Understand market differences
Understand
Understand
market similarities
market differences
Developed economy
Market Approaches Between Emerging and Developed Economies

Overview
Emerging Economies
Market Similarity
Republic
Design
The Digital Divide
Market Similarity
Concept of market similarity = marketers choose foreign markets that
have characteristics similar to their home market for initial market entry.
A United States-based company would target Canada, the United
Kingdom, and Australia before France, Japan, or Germany.
Amazon.com has used this strategy as it expanded globally. It has

international Web sites in the UK, France, Germany, Austria, and Japan:
Some similarities based on language,
High literacy rates, high Internet usage rates, and clearly defined
market segments willing to shop for books (and other products) on-
line,
Credit cards are widely used for purchases,
Secure, trusted online payment mechanisms,
Efficient package delivery services.
Market similarity not only reduces (without eliminating) the risk of entry
into foreign markets but also helps explain why it targeted these
countries in the first place.
Market Similarity
E-businesses in countries with emerging markets make parallel
target market decisions.
www.munchahouse.com:
Offers a wide range of products that Nepalis living overseas can
send to individuals back home.
Customers pay on the sites by providing their credit card numbers
using a secure server.
These are all crucial marketing decisions.
If the Muncha House marketer had targeted a domestic home

market, his marketing situation would be completely different.
One of the biggest differences between developed countries

and emerging economies = the limited use and acceptance of
credit cards in underdeveloped countries.
Overview
Emerging Economies
Market Similarity
Republic
Design
The Digital Divide
Convenience & ease of transactions = 2 of the Internets
greatest benefits.
In developed countries: credit cards + secure online payment

systems make Web-based transactions easy.
But in countries with emerging economies, things arent so

easy.
In Bolivia:
= Fewer than 200,000 credit cards are in circulation within a
country with a population of 8.3 million people.
Limited credit card use can severely restrict a target markets

purchasing ability.
Ritas Pizza site in Vilnius, Lithuania:
Web site for ordering pizza, sandwiches, snacks, and beverages
online.
The final screen for ordering indicates that Ritas is strictly a cash
business:

Customers pay at the time of delivery (C.O.D.), or

When they pick up the food at Ritas.
Limited use/availability of credit cards limits what an e-marketer can do.
Marketers must also analyze relevant buyer behavior within a market:

In Lithuania, local consumers are very reluctant to purchase products
online.
37% said it was easier and more fun to buy goods and services in a
store than online.
21% said it was more secure to buy goods and services in a store.
BUT, the business understood one important thing: its target market:
24% of all current Lithuanian Internet users are under 20 years old,
11% are between the ages of 20-25.
Overview
Emerging Economies
Market Similarity
Republic
Design
The Digital Divide
E-Commerce Payment
in the Czech Republic
The Czech Republic face the same challenges of limited credit card
use and consumer skepticism of online purchasing.
The Czech Republic is a relatively small country in central Europe

= 22% of the population are Internet users.
Online purchasing has increased dramatically there in recent years.
In 2000, most online purchases = airline tickets (28%), appliances

(17%), books (12%), consumer electronics (10%), videos (8%), music
(6%), and computer hardware (6%).
= A mirror shopping interests in developed countries.
The Czech Republic has many online retailing Web sites:www.

obchodnidum.cz (appliances, consumer electronics and mobile
phones) and www.vltava.cz (music, books, videos and software).
The country also has specialized Web sites: airline ticket agents ,
wine, etc.
Average Monthly Sales
Year (in millions of Kronus)
Q1-99 5.9
Q2-99 9.9
Q3-99 18.2
Q4-99 25.6
Q1-00 28.0
Q2-00 30.0
Total Online Sales in the Czech Republic

Source: Adapted from American Chamber of Commerce (2000)
E-Commerce Payment
In the Czech Republic: People fear online shopping.
75% said that it was more secure buying goods/services in a store,
65% said it was easier & more fun to buy goods and/or services in a
store,
61% said you dont know what you get when you shop online,
42% said they didnt trust online brands.
Online marketers adapt their Web sites to the target markets preferences:
www.musicabona.cz posts the following in its About Security section:
Your personal data is transmitted via the secure SSL encoded transfer
system.
If you decide to become one of our registered customers, you neednt
fill in your personal data and send it over the Internet at all upon
subsequent purchases.
If you do not think it is safe to send your personal data through the
Internet, you can send your order in writing, by fax or mail.
If you dont want to disclose to us the number of your payment card,
you can pay by cheque.
E-Commerce Payment
How do Czech consumers pay for their online purchases?
31% make bank transfers,
28% pay cash on delivery,
21% pay with a credit card,
9% make bank transfer through either a PC or mobile phone,
8% pay with postal orders.
Czech citizens are reluctant to use online payment methods + only

35% of all Czech adults have credit cards.
Innovative solution = eBanka:

The oldest purely Internet Bank in Central and Eastern Europe.
The bank issues credit cards + handles secure and efficient online
money transfer accounts for purchases at many Czech Web sites.
A customer opens an eBanka account, deposits money, uses it to
make online purchases.
This is the Czech version of digital cash.
Overview
Emerging Economies
Market Similarity
Republic
Technological Readiness Influences
Marketing
Design
Technological Readiness Influences
Marketing
In emerging economies, e-marketers must also deal with
daunting issues of basic technology:
Limited access to and use of computers and telephones,

High Internet connection costs,
Slow Internet connection speeds,

Unpredictable power supplies.
Overview
Emerging Economies
Market Similarity
Republic
Design
The Digital Divide
Customers must have access to a computer and an ISP to use the
Internet:
In developed countries, this is not a problem.

Individuals can use computers at home, at work, at school, or at
libraries and other community institutions.
In emerging economies, computer access is a big problem.
Computer access is unevenly distributed throughout the world:

Ukraine has less than 2 computers for every 100 individuals,
Colombia has 3 1/2 computers per 100 citizens,
The United Sates has about 58 computers for every 100 citizens.
E-marketers should never underestimate the profound influence of

limited computer access on Internet marketing.
It directly limits market size.
Estimated Total Number of Estimated Total Number of
Personal Computers in Country Personal Computers per 100
Country (in thousands) Inhabitants
Colombia 1,500 3.5
Ecuador 275 2.2
Guatemala 130 1.1
India 4,600 0.5
Mexico 5,000 5.1
Morocco 350 1.2
Nigeria 750 0.7
Pakistan 590 0.4
Philippines 1,480 1.9
South Africa 2,700 6.2
Thailand 1,471 2.4
Ukraine 890 1.8
United States 161,000 58.5
Computer ownership in Selected Countries Source: ITU, (2001a)

Individuals & businesses need to be connected to the Internet though phones.
In developed countries, telephones are a common and prevalent commodity:

Most families have more than one telephone at home,
Many have multiple telephone lines,
Some even have several telephone numbers,
Many may have both fixed and mobile phones.
In countries with emerging economies, telephones are scarce and expensive.

1999, Indonesia = 2.9 phones/100 people, India = 2.7 phones/100 people,
The Philippines = 4.0 phones/100 people, Mexico = 11.2 ph./100 people,
In 2000, in Thailand, 91.5% of all Thais own a television, but only 27.7%
own a phone.
In emerging economies, telephone access has a very different pattern than in

developed countries.
Online firms cant market to someone who has no computer or no means of
connecting to the Internet.
Overview
Emerging Economies
Market Similarity
Republic
Design
The Digital Divide
Countries with emerging economies often have higher Internet-related
business costs:
Dial-up connection is the most common way of connecting to the
Internet.
Dial-up connections use telephone lines.
Dial-up connection costs vary quite considerably in emerging
economies.
The total price for Internet service is quite large in many countries.
Labor costs may be quite low, but technology and other business costs
can be quite high.
Why?
Government-owned telephone monopolies:
The lack of competition among ISPs:
When both of these constraints are loosened, Internet growth accelerates,

creating a rapidly expanding domestic market for e-marketers.
UAE
Egypt
ISP Charges
Kuwait
Oman Telephone Charges
Average
Saudi Arabia
Tunisia
Lebonan
Qatar
Jordan
Bahrain
Morocco
0 10 20 30 40 50 60 70 80
U.S. Dollars
Total Internet Connection Costs in Selected Arab Countries

Source: Adapted from Gray (2001)
Overview
Emerging Economies
Market Similarity
E-Commerce Payment in the Czech Republic
Design
The Digital Divide
Slow Connection Speeds
And Web Site Design
Connection speed and Web site design = a issue in emerging economies:
A telephone line limits the speed at which data can be sent and
received.
Current maximum speed for a modem connection is 56 kbps.
Emerging economies are seeking faster and better connections through
broadband and ISDN.
Download speeds has significant implications for Web site design,

especially the extent to which graphics are used.
The Web is a visual medium, and users expect to see pictures that move,
swirl, and morph into usual shapes + Web sites have sound.
These elements slows the download rate.
In countries with emerging economies, where connections speeds are slow

and a user may be paying by the minute, download speed is a major
consideration:
Need to understand how connection speeds influence download rates,
Just because graphic designers can do something cutting edge on Web
sites, doesnt mean they should.
Slow Connection Speeds
And Web Site Design
E-marketers must see the world from their target markets
perspective = understanding the target markets total
experience with a Web site.
In developed countries, users experience extremely slow

download times only occasionally.
In developing countries, slow downloads are an everyday

occurrence.
To avoid this problem, e-marketers need to :

Understand the target market,
Consider the countrys overall bandwidth,
Keep graphics simple,
Limit the number of pictures,
Optimize the site for speedy and smooth downloads.
Overview
Emerging Economies
Market Similarity
Republic
Design
The Digital Divide
Sporadic electricity = Another challenge for countries with emerging
economies,
Nepal:
One of the poorest countries in the world, with an annual per capita
income <$250,
Rich in many natural resources, including water,
Has built a series of hydro electric dams throughout the country,
15% of all households in Nepal have electricity,
Most people living in major cities have electricity (sometimes without
electricity during the summer months).
In the summer of 2001, the Nepal Electrical Authority (NEA) could not
generate enough electricity for the entire country:
Electricity loss affected every business, including Internet-dependent
businesses.
All locally-hosted Nepali Web sites went down when the electricity was
cut.
Overview
Emerging Economies
Market Similarity
Republic
Design
The Digital Divide
Mobile phones and the supporting technology have the potential to
dramatically change the face of e-marketing around the world.
Many countries have more mobile telephone subscribers than fixed-
line telephone subscribers.

Cambodia, Chile, Ivory Coast, Morocco, Paraguay, Philippines, Senegal,
Uganda, and Venezuela are all countries with emerging economies.
Cambodia:
In 1993, first country in the world to have more mobile telephone
subscribers than fixed-line telephone subscribers.
Why?
Cost = Cell phones and the accompanying technology for mobile
networks were less expensive than fixed-line telephones.
History = As a result of more than two decades of warCambodia
has 4 to 6 million landmines in the ground = digging up the ground to
lay telephone cable is simply too risky.
This case reminds international e-marketers that understanding country

history is an important element in assessing foreign markets.
1993 1998 1999 2000 2001
Cambodia Finland Austria Bahrain Senegal
Hong Kong Belgium Singapore
SAR
Ivory Coast Botswana Slovenia
Israel Chile United
Kingdom
Italy Greece
Paraguay Iceland
Portugal Morocco
Uganda Philippines
Venezuela Rwanda
Selected countries that have more mobile telephones than fixed line telephone subscribers by year
Source: Adapted from Minges, (2001)
Mobile phone technology is an effective and relatively inexpensive path to
telecommunications, countries with emerging economies can leap frog
industrialized countries in terms of usage.
Challenges of wireless e-marketing:

How to modify existing Web site content for the smaller screens on
cell phone displays,
How to resolve potentially cumbersome text entry using tiny keypads
How to develop new content that consumers will want
How to price services,
How to develop easy, secure payment methods,
Understand that consumer behavior with the mobile Internet.
Text messaging: On PCs, E-mail length is not a problem with PCs. It is a

problem with mobile phones.
New content and new marketing strategies must be developed for

wireless Internet access.
Success story: How McDonalds identified & capitalized on an e-
marketing opportunity by merging the anytime, anywhere capability
of mobile phones with China's interest in soccer and its rapidly
growing consumer economy.
During the 2002 World Cup Finals, McDonalds developed a special
SMS promotion for the China market (worlds largest mobile
telephone market).
McDonalds sent an SMS alert to selected mobile phone subscribers
explaining how to download coupons for free ice cream, how to get a
special McSmilie icon for their mobile phones, and how to download a
McDonalds theme song as a special phone ringer.
Results:
Store sales increased
Every mobile phone with a McDonalds phone ringer promoted
Overview
Emerging Economies
Market Similarity
Republic
Design
The Digital Divide
The Digital Divide
E-marketers have to consider the social environment in which their e-
businesses operate.
Nations with emerging economies may be in different stages of

economic development, which affects their social climate.
Least developed countries (LDCs) = countries with the worlds

poorest economies:
Economically underdeveloped,
Share one other common characteristic: excruciating poverty,
To describe the economic situation= the percentage of a countrys
population earning less than $2 per day.
In these, the worlds poorest countries, life is literally a war waged for
survival.
The Digital Divide
In the least developed countries:
Meager incomes provide only the basic necessities.

Most meals are the same, consisting of rice, wheat, or corn.
Shelter is primitive.
People share a small room (earthen floor and no sanitary facilities).
Most of the population lives in rural areas, work is hard and time-
consuming.
Productivity is low, household plots are small and only the crudest of
farm implements are available.
Farm output per person is barely sufficient to feed a farmers own
family, with nothing left to sell to others.
School age children may receive some formal education, but illiteracy
remains chronic for you and old.
Infant mortality runs 10 times higher than in the United States.
Only one physician per 5,000 people.
Percentage of Population earning
Country below $2 a day
Bangladesh 77.8
Bolivia 38.6
Botswana 61.4
Central African Republic 84.0
China 53.7
Ecuador 52.3
El Salvador 51.9
Guatemala 64.3
Indonesia 86.2
Mali 90.6
Nepal 82.5
Nigeria 90.8
Zambia 64.2
International Poverty Lines for Selected Countries Source: Adapted from Table 4, World Bank, (2000)
The Digital Divide
A dual economy:
LDCs contain population segments with much higher income
levels.
This divides the country into haves and have nots.
Wealth is concentrated in a countrys largest city, usually the
capital.
2 completely different economies exist side-by-side, they are

centuries apart in terms of economic and technological development.
Digital divide = between countries and between different groups

of people within countries, there is a wide division between those
who have real access to information and communications technology
and are using it effectively, and those who don't.
Industrialized countries, with only 15% of the world's population, are

home to 88% of all Internet users.
The Digital Divide
The digital divide raises challenging questions for global policy makers,
international businesses, and local entrepreneurs.
What responsibilities do these different groups have for narrowing the

gap between those that have and those that dont have access to
technology?
Global policy makers at the United Nations, the World Bank, and the G8
believe the answer is yes.
Some e-marketers are successfully helping to close the digital divide.
www.villageleap.com, the Robib village website (Cambodia):

Women market traditional Cambodian silk weavings to overseas
buyers,
Money is reinvested in the local pig farm,
Also allow villagers to send and receive medical information = reduce
the number of two hour road to the nearest hospital.

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E-Marketing, 3rd

Chapter 15: E-Marketing in

Prentice Hall 2003

Worldwide Internet use is projected to increase by 60% from 2002 to 2004:

2 important effects of the increasing number of non-US Internet users on the

2000 2001 2002 2003 2004

North America 97.6 114.4 130.8 147.7 160.6

Europe 70.1 107.8 152.7 206.5 254.9

Asia/Pacific Rim 48.7 63.8 85.4 118.8 173

Latin America 9.9 15.3 22.1 31 40.8

Worldwide Total 229.8 306.6 398.2 513 640.2

Active Adult Internet Users Aged 14+ Worldwide (in millions)

Country size and population have little bearing on Internet

As Internet access and use accelerates around the world, so,

Where will the greatest challenges lie?

Developed countries = all of Western Europe, North America, Japan,

Emerging economies = those with low levels of gross domestic product

For emerging economies, technology plays an especially

The Internet allows businesses in emerging economies to

Successful marketing on the Internet can leapfrog a company

Unique challenges related to the conditions of operating

within a still developing nation.

Businesses operating in emerging economies must deal with:

Limited credit card use,

Lack of secure online payment methods,

U.S. and European list: Emerging economies list:

Privacy concerns (31%), Slow connection speeds

Global e-marketers must balance 2 different analytical

Market similarity = If they are operating from a country

Market Approaches Between Emerging and Developed Economies

Amazon.com has used this strategy as it expanded globally. It has

If the Muncha House marketer had targeted a domestic home

One of the biggest differences between developed countries

In developed countries: credit cards + secure online payment

But in countries with emerging economies, things arent so

Limited credit card use can severely restrict a target markets

Marketers must also analyze relevant buyer behavior within a market:

The Czech Republic is a relatively small country in central Europe

In 2000, most online purchases = airline tickets (28%), appliances

The Czech Republic has many online retailing Web sites:www.

Total Online Sales in the Czech Republic

Czech citizens are reluctant to use online payment methods + only

Innovative solution = eBanka:

Limited access to and use of computers and telephones,

In developed countries, this is not a problem.

In emerging economies, computer access is a big problem.

Computer access is unevenly distributed throughout the world:

E-marketers should never underestimate the profound influence of

Computer ownership in Selected Countries Source: ITU, (2001a)

In developed countries, telephones are a common and prevalent commodity:

In countries with emerging economies, telephones are scarce and expensive.

In emerging economies, telephone access has a very different pattern than in

can be quite high.

When both of these constraints are loosened, Internet growth accelerates,

Total Internet Connection Costs in Selected Arab Countries

Download speeds has significant implications for Web site design,

In countries with emerging economies, where connections speeds are slow

In developed countries, users experience extremely slow

In developing countries, slow downloads are an everyday

To avoid this problem, e-marketers need to :

line telephone subscribers.

Uganda, and Venezuela are all countries with emerging economies.

This case reminds international e-marketers that understanding country