Corporate Web Sites Flunking Business Basics

Dec. 21, 2004
Many ignore marketing, communication.

It's the hottest thing since television. And although the Web isn't quite as entertaining, it swept the nation much faster than TV. But before corporate America gets too hooked on the prospect of running business on the Web, it might pay to step back from the screen and take a reality check. In fact, all is not hunky-dory in cyberspace. Some companies are running headlong into disenchantment, while others are beginning to wonder if they will ever see the payoff. For the simple reason that no one wants to be labeled a Luddite, you won't find any corporate executives bad-mouthing the Internet as a business tool. But two studies released June 30 bear out the fact that the hype might be getting a few light years ahead of the reality. First comes the State University of New York at Buffalo School of Management, which reports that most of the 125 Web sites it studied (all belonging to major U.S. firms) would flunk a test of simple "Marketing 101" theory. "The creators of company Web pages do not seem aware of the different cues that impact consumers," says H.R. Rao, associate professor of management science and systems and a coauthor of the study. "They are too concerned with creating jazzy-looking sites and are not concerned enough with giving consumers the type of information they need to make a purchase decision. Consequently, many company Web sites are losing customers." He says many companies are missing out on millions of dollars in sales as consumers become more accustomed to Internet-based shopping. Among the 125 Web sites studied by the Buffalo School of Management were those of companies selling furniture, home furnishings, general merchandise, soap, cosmetics, automobiles, and alcohol. Rao found that the majority of sites failed to contain appropriate informational "cues" commonly used by advertising and marketing professionals to influence consumer choice. Taught in most undergraduate marketing courses, these cues include information on price or value, quality, performance, components or contents, availability, special offer, taste, package or shape, guarantee or warranties, safety, nutrition, independent research, company-sponsored research, and new ideas. Admittedly, 85% of the sites contained at least one of the marketing cues, but only about half used cues that have the greatest impact on consumer choice -- price or value (52%), performance (49%), and quality (46%). And only 54% of the sites studied contained two or more cues, while one-third had four or more. According to Rao, Web sites that contain fewer than half the cues, depending on type of product, are turning away highly motivated consumers who are actively searching for information needed to make a purchase decision. Unlike TV or other media, he says, Web-based advertising is most effective when used to provide straightforward, well-organized categories of information so that consumers can access additional information on features and product attributes. The bottom line, Rao contends, is that Web-based consumers will keep looking until they find the information or product they want. "If Internet shoppers do not find appropriate information about a product on one company's Web site, they will search on others until they do," he says. "That's the company that will get the sale." The University at Buffalo study's findings work hand in glove with those of a survey released the same day by Cambridge Technology Partners (CTP), a systems integration firm in Cambridge, Mass. CTP's benchmarking study of 170 chief information officers around the world revealed a schism between those running the electronic commerce in their firms and the rest of the business. "There seems to be a bit of a disconnect between the IT department and marketing and the rest of the business," observes Marney Peet, research director in charge of the firm's e-commerce investment survey. Three-fourths of firms responding said the IT department was driving the e-commerce strategy, as opposed to the marketing group. "We found that business process change trails technology change, and that there had been only moderate changes in marketing and sales processes" to accommodate the Web sites, Peet adds. Perhaps more telling, one-third of the CIOs responding said their Web sites were not successful. Explains Peet, "The No. 1 reason was the failure to connect the e-commerce strategy to the business strategy." It comes as no surprise, then, that 71% of those responding said their companies did not expect to make any profits from their electronic commerce activities this year. Sounds to me like there are a few holes in the business Web.

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