Key Issues in The Digital

Environment
Session 4
 Sub-CPMK
• Mahasiswa mampu mengdentifikasikan issue pada lingkungan digital
dengan menggunakan SLEPT Framework. (C3, A3)

Materi
1. Introduction 10. Environmental and Green Issues
2. Social Factors Related to Internet Usage
3. Legal dan Ethical Factors 11. Taxation
4. Economic Factors 12. Freedom Restrictive Legislation
5. Political Factors 13. Economic and Competitive Factors
6. Technology Factors 14. The Implications of E-Commerce
7. Cultural Factors for International B2B Trading
8. Factors Affecting E-Commerce 15. Government and Digital
Buying Behavior Transformation
9. Privacy and Trust in E- 16. Technological Innovation and
Commerce Technology Assessment
1. Introduction
 Introduction
The starting point of any digital business and/or e-
commerce strategy should be to analyse the
environment, i.e. the marketplace, in which a business
operates. Generally, an organization has two
environments:
• Macro – environment – i.e. elements outside of the
organization that indirectly influence its operations
• Micro – environment – i.e. internal factors that directly
influence the organization such as suppliers,
competitors, intermediaries and customers
 Introduction (Cont’d)
In this chapter, we concentrate on the role of the
macro environmental forces, using the widely used
SLEPT framework. The SLEPT factors are:
• Social factors – these include the influence of
consumer perceptions in determining usage of
the internet for different activities
• Legal and ethical factors – these determining the
method by which products can be promoted and
sold online. Government, on behalf of society,
seek to safeguard individuals rights to privacy
 Introduction (Cont’d)
• Economic factors – variations in economic
performance in different countries and regions
affect spending patterns and international trade
• Political factors – national governments and
transnational organizations have an important
role in determining the future adoption and
control of the internet and the rules by which it is
governed
• Technological factors – changes in technology
offer new opportunities for the way products can
be marketed
 Introduction (Cont’d)

Table 4.1 Factors in the macro-​and micro-​environment of an organisation

 Introduction (Cont’d)

Figure 4.1 ‘Waves of change’ – different timescales for change in the environment
 Introduction (Cont’d)

Table 4.2 Significant laws which control digital marketing

 Introduction (Cont’d)

Table 4.2 Significant laws which control digital marketing (Continued)

2. Social Factors
 Social Factors
• Every country has people with different attitudes
and opinions to certain ideas, products/services
and communication. Some of the key elements
include:
1. Culture
2. Demographics such as age and gender
3. Social lifestyles
4. Domestic structures
5. Affluence / wealth
6. Religion
3. Legal and Ethical Factors
 Legal and Ethical Factors
Some of key legal factors to consider are:
• Data protection and privacy law
• Disability and discrimination law
• Brand an trademark protection
• Intellectual property right
• Contract law
• Online adveritising law
4. Economic Factors
 Economic Factors
These relate to the elements of an economy and
its condition. Examples include:
• Market growth and employment
• Inflation rate
• Interest rates
• Monetary / fiscal policies
• Foreign exchange rates
5. Political Factors
 Political Factors
An organization needs to considers the political
situation of a country and the world in relation
to that country. Areas to considers include:
• Government / leadership
• Policies
• Tax laws
• Internet governance
6. Technology Factors
 Technology Factors
• New technology is changing the way that
people (and businesses) do things, from
connecting with others to purchasing products
and services.
7. Cultural Factors
 Cultural Factors
• The social and cultural impacts of the internet
are important from an e-commerce
perspective since they govern demand for
digital services and propensity to purchase
online and use different types of e-commerce
services. For example, Blockbuster’s business
model no longer worked because of the
emergence and adoption of video streaming
services from companies such as Netflix.
 8. Factors Affecting E-
Commerce Buying Behavior
 Factors Affecting E-Commerce
Buying Behavior
It is useful for digital business manager to understand the
fears people have about placing orders online, so that
action can be taken to overcome some of these barriers.
Common fears include:
• Credit card information being stolen
• Fake online store
• Information will get sold
• Unsure what the product is really like
• Lost orders
• Need help from a salesperson
 8.1 Understanding User Access
Requirements
To fully understand online customer propensity to use an online
service we also need to consider the user’s access location, access
device, and webographics. Webographics is a term coned by
Grossnickle and Raskin (2001), which includes:
• Usage location (from home or work)
• Access device ( browser and computer platform form including
mobile devices)
• Connection speed – broadband versus dialup connections
• ISP
• Experience level
• Usage type
• Usage level
 8.2 Consumers Influenced by
using the Online Channel
• To help develop effective online services, we
need to understand customers online buyer
behavior and motivation.
• Online buyer behavior: an assessment of how
consumers and business people use the
internet in combination with other
communications channels when selecting and
buying products and services
 8.2 Consumers Influenced by using
the Online Channel (Cont’d)

Figure 4.2 Applications of using the Internet

Source: EuroStat (2012).
 8.3 Motivation For Use of Online
Services
• Marketers can also develop psychographic
segmentations that divide users / potential
users into groups based on their knowledge,
attitudes, uses and responses to the brand,
product or service. Basically, demographics
help explain ‘who’ your buyer is and
psychographics help you. Psycographic
segmentation is a breakdown of customes
according to different characteristics.
 8.3 Motivation For Use of Online
Services (Cont’d)
Elements of psychographics segmentation include:
• Occasion
• Benefits sough
• Usage rate
• User status
• Loyalty status
There are a number of different ways you can gather data to
help form psychographic profiles for your typical customers:
• Interviews
• Surveys
• Customer data
 8.3 Motivation For Use of Online
Services (Cont’d)

Figure 4.3 Development of experience in Internet usage

 8.4 Business Demand for Digital
Business Services
• The B2B market is more complex than B2C in
that variation in demand will occur according
to different types of organization and people
within the buying unit in the organization.
• This analysis is also important as part of the
segmentation of different groups within a B2B
target market. We need profile business
demand according to:
 8.4 Business Demand for Digital
Business Services (Cont’d)
1. Variation in organization characteristics
• Size of company (employees or turnover)
• Industry sector and products
• Organization type
• Division
• Country and region
2. Individual roles
• Role and responsibility
• Role buying decision
• Department
• Product interest
• Demographics
• B2B profile
 8.4 Business Demand for Digital
Business Services (Cont’d)
• We can profile business users of the internet
in a similar way to consumers by assessing:
1. The percentage of companies with access
2. Influenced online
9. Privacy and Trust in E-
Commerce
 Privacy and Trust in E-Commerce

• Ethical standards is practice or behavior that is

morally acceptable to society
• Ethical are personal or business practices or
behavior generally considered acceptable by
society
 9.1 Privacy Legislation
• Privacy refers to a moral right of individuals to
avoid intrusion into their personal affairs by third
parties. Privacy or personal data such as our
identified, like and dislike is a major concern to
consumers, particularly with the dramatic
increase in identity theft.
• Privacy: a moral right of individuals to avoid
intrusion into their personal affairs
• Identity theft: the misappropriate of identity of
another person without their knowledge or
consent
 9.1 Privacy Legislation (Cont’d)

The most common forms of cybercrime that

relate to digital business and e-commerce are:
• Phishing: using fake email messages to get
personal information from internet users
• Identity theft: misusing personal information
• Hacking : shutting down or misusing website
or computer networks
 9.2 Why Personal Data is
Valuable for Digital Business?
What are the main information types used by the
internet marketer that are governed by ethics and
legislations? The information needs are:
• Contact information
• Profile information
• Platform usage information
• Behavioral information (on a single site)
• Behavioral information (across multiple sites)
 9.2 Why Personal Data is Valuable
for Digital Business? (Cont’d)

Table 4.3 Types of information collected online and related technologies

Table 4.3 summaries how these different types of customer information are
collected and used.
 9.3 Viral Email Marketing
• Viral marketing: in an online context, ‘Forward
to a friend’ email used to transmit a
promotional message from one person to
another, online word of mouth
 9.4 Other E-commerce
Legislation
1. Marketing your ecommerce business
2. Forming an electronic contract (contract law and
distance selling law)
3. Making and accepting payment
4. Authenticating contracts concluded over the
internet
5. Email risks
6. Protecting intellectual property (IP)
7. Advertising on the internet
8. Data protection
 10. Environmental and Green
Issues Related to Internet Usage
 Environmental and Green Issues
Related to Internet Usage
Research by the Internet Media in Retail Group shows the
growing importance of e-commerce in the UK , where
online retail sales exceeded 130 Euro billion in 2016. In
2007 IMRG launched a Go Green , Go Online campaign in
which it identified six reasons why it believes e-commerce is
green:
• Fewer vehicle miles
• Lower inventory requirements
• Fewer printed materials
• Less packaging
• Less waste
• Dematerialization
11. Taxation
 Taxation
• Tax jurisdiction determines which country gets
tax income from a transaction.
12. Freedom Restrictive
Legislation
 Freedom Restrictive Legislation

• Although governments enact legislation in

order to protect consumer privacy on the
internet, some individuals and organization
believe that legislation may also be too
restrictive.
13. Economic and Competitive
Factors
 Economic and Competitive
Factors
• Electronic economy is the dynamic system of
interactions between a nations citizens,
businesses and government that capitalize
upon online technology to achieve a social or
economic good
• Globalization is the increase of international
trading and shared social and cultural values
• Localization is tailoring of website information
for individual countries or regions
 Economic and Competitive
Factors (Cont’d)
• Standardized website (not localized)
A single site servers all customer segments (domestic and
international)
• Semi localized website
A single site servers all customers
• Localized websites
Country specific websites with language translation for
international customers wherever relevant
• Highly localized website
Country specific website with language translation
• Culturally customized websites
Websites reflecting complete ‘immersion’ in the culture of
target customer segments
 14. The Implications of E-
Commerce for International B2B
Trading
 The Implications of E-Commerce for
International B2B Trading
• Hamill and Gregory (1997) highlight the strategic
implications of e-commerce for international
business to business trading.
– They note that there will be increasing standardization
of prices across borders as businesses become more
aware of price differentials.
– Secondly, they predict that the importance of
traditional intermediaries such as agents and
distributors will be reduced by internet enabled direct
marketing and sales.
15. Government and Digital
Transformation
 Government and Digital
Transformation
Political action enacted through government agencies to
control the adoption of the internet include:
• Promotion the benefits of adopting the internet for
consumers and business to improve a country’s
economic prospery
• Enacting legislation to protect privacy or control
taxation, as described in previous sections
• Providing organization with guidelines and assistance
for compliance with legislation
• Setting up international bodies to coordinate the
internet
 Government and Digital
Transformation (Cont’d)
• Information Society : a society with widespread access
and transfer digital information within business and the
community
• FinTech : this means ‘Financial Technology’ and is a
growing sector that uses new technology and
innovation in the financial services market to create
disruptive business models and inclusive products. For
example, bKash allows people in Bangladesh (where
less than 15% of the population are connected to the
formal banking sector) to safely send and receive
money via mobile phones
 Internet Governance and E-
Government
• Internet governance is control of the
operation and use of the internet
• Electronic Government is the use of internet
technologies to provide government services
to citizens
16. Technological Innovation
and Technology Assessment
 Technological Innovation and
Technology Assessment

Figure 4.4 Diffusion–adoption curve of a Gartner hype cycle

 Technological Innovation and
Technology Assessment (Cont’d)
• Figure 4.4. can be used in two main ways as an
analytical tool.
• First, it can be used to understand the stage
customers have reached in adoption of a
technology.
• Second, managers can look at adoption of a
new technique buy other businesses from an
organizational perspective
 Technological Innovation and
Technology Assessment

Figure 4.5 Example of a Gartner hype cycle

Source: Gartner (2010).
 Approaches to Identifying
Emerging Technology
1. Technology networking
2. Crowdsourcing is utilizing a network of
customers or other partners to gain insights
for new products or new process inovations.
3. Technology hunting
4. Technology mining
5. Technology incubators
 Approaches to Identifying
Emerging Technology (Cont’d)

Figure 4.6 Alternative responses to changes in technology

 Approaches to Identifying
Emerging Technology (Cont’d)
• Figure 4.7 summaries the choice. The stepped
curve 1 shows the variations in technology
through time.
• Some may be small incremental changes such
as a new operating system, others such as the
introduction of personalization technology are
more significant in delivering value to
customer.
 Summary:
• Environmental scanning and analysis are necessary in
order that a company can respond to environmental
changes and act on legal and ethical constraints on its
activities
• Environmental constraints are related to the micro
environment variables and the macro environment
variables in this chapter using SLEPT
• Social factors that must be understood as part of the
move to the information society include buyer
behavior characteristics such as access to the internet
and perceptions about it as a communications tool
 Summary: (Cont’d)
• Ethical issues include the need to safeguard
consumer privacy and security of personal
information. Privacy issues include collection
and dissemination of customer information,
cookies, and use of direct email
• Rapid variation in technology requires
constant monitoring of adoption of the
technology by customers and competitors and
appropriate responses
TERIMA KASIH