The Advantages and the Disadvantages of the Internet
The Buyer-Seller Relationships
Impact of the Internet on the Sales Force
“When the rate of change outside your company exceeds the rate of change inside your company, disaster is imminent.”
Lou Pritchet Senior VP, Procter & Gamble
The environment companies are currently facing is often described by the famous white-water metaphor. Some decades ago, companies were ships sailing in calm water. No waves disturbed their journey. Especially the last decade this calm sea turned into a world of waves, the tips of the waves blinking white, a sign for a restless sea and a build up of higher waves. The Internet brought many companies into permanent white water, the ever changing business environment. They need to adapt in order to remain profitable and secure survival. The Internet is a type of global information infrastructure consisting of computer hardware and software that is characterized as both general and open (Peterson, Balasubramanian and Bronnenberg, 1997). In this definition “general” refers to the fact that the Internet has not been designed for one particular set of services. “Open” implies that all specifications necessary to use the Internet are publicly available. In other words, the Internet is a network of networks. The Internet is a rapid growing phenomenon. One of the most fascinating elements has been its amazing growth. The Bureau of Economic Analysis (2000) found that U.S. consumers and businesses spending on information technology was about 10 % of the U.S. gross national product (GDP) in the year 2000 compared to a merely 1.5 % in 1981. The present popularity of the Internet as a commercial medium is due to its ability to facilitate global sharing of information and resources, and its potential to provide an efficient channel for advertising, marketing, and even direct distribution of certain goods and information services. The Internet has been called the most important new marketing medium since television. The use of the Internet allows companies to identify their customers, differentiate them, interact with them, and then customize programs that will heighten customer satisfaction and loyalty (Groossman, 1998). The Internet has radically changed the way companies do business. For instance, it can be used as an effective business-to-business tool to increase collaboration. Therefore, the main problem statement this paper answers is : What is the effect of the Internet on Sales management?
First, the general advantages and disadvantages of the Internet will be discussed. Second, the effect of the Internet on the buyer-seller relationship are enlightened. Third, change in the sales representative’s job are elaborated on. After that a proposal is made to effectively integrate the Internet in the sales force activities. The paper ends with a short conclusion.
“The past was about have and have nots, the future will be about knows and know nots.”
Jim Dion, 1997
The Advantages and the Disadvantages of the Internet
The Internet has changed the way companies do business. The traditional one-to-many marketing communications model is replaced by the many-to-many marketing communications model that the Internet offers. One-to-one marketing was limited in the past. A salesperson could only visit a limited amount of people a day. With the popular growth of the telephone and fax machines the world changed and new forms of selling were developed (telemarketing). In the Internet area companies are seeing the transactional form of selling being more and more automated through advanced systems like buyer/seller business-to-business(B2B) portals. The development of those portals shows the many advantages of the Internet for the sales function as discussed below
First, the Internet offers certain classes of providers’ participation in a market in which distribution costs or cost-of-sales shrink to zero. The cost saving is the most important parameter that is caused by the Internet technology. Mass communication is real-time and at virtually no costs. For example, website sections like “frequently asked questions” or user forums save companies resources. The company XTServer (http://www.xtserver.net) maintains a user forum where users help each other with common problems. If no feasible solution is posted by other users/customers an employee answers the question. The costs of such a forum is less than $200 per year (http://www.forumromanum.com).
Second, consumers and manufacturers can contact each other directly, which may lead to the elimination of some of the marketing costs and constraints imposed by such interactions through traditional channels. The academic literature discusses the topic of disintermediation extensively(Arensman, 1999; Benjamin & Wigand, 1995; Frazier, 1999; Turban., Lee, King, Chung 2000; Zettelmeyer, 2000). Some authors (Geyskens, Gielens and Dekimpe, 2000; Gilbert & Bachelor, 2000; Hawkins, Mansell & Steinmueller, 1999; Kaplan & Sawhney, 2000; Pelton, Strutton & Lumpkin, 1997; Sarkar, Butler, Steinfield, 2000) even conclude that new intermediaries will replace the traditional ones: a re-intermediation process will take place. This dis- or reintermediation refers to the removal of organizations or business process layers responsible for certain intermediary steps in a value chain, for example, the elimination of distributors and /or retailers. By selling directly to consumers or reducing the number of intermediaries, companies can achieve higher profits while charging lower prices. This creates an advantage for both the seller and the buyer.
Third, the selling function is transferred from the retailer to the consumer, through online ordering and the use of fill-out-forms. This leads to another benefit namely the capture of consumer information, which can be used for a more customized marketing approach. Furthermore, this information will enable companies to better identify customers’ problems and provide better solutions, which will increase the relational aspect of the transaction. Finally, by using the Internet advertising, promotion and customer services become more effective. It is about one fourth less costly to perform direct marketing through the Internet than through traditional channels (Peter, Olson, Grunert, 1999).
A disadvantage of the Internet is the issue of consumer's privacy. Salespeople have lots of information about every customer and business. That information can be easily stored in a database and used for selling activities. However, the information can be used for many other purposes without the consumer knowing anything about it. The burden rests on the salespeople to use customer's information responsible because a buyer-seller relationship is based on trust. Misuse may lead to an increase in costs: it is six times more expensive acquiring a customer compared to retaining one (Peter, Olson, Grunert, 1999).