A New Marketing Paradigm for Electronic Commerce

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A New Marketing Paradigm for Electronic Commerce

Donna L. Hoffman hoffman@colette.ogsm.vanderbilt.edu Thomas P. Novak novak@moe.ogsm.vanderbilt.edu

February 19, 1996

Paper submitted for the Special Issue on Electronic Commerce for The Information Society.

Keywords:

computer-mediated environments, World Wide Web, marketing on the Internet, the marketing concept and corporate strategy A New Marketing Paradigm for Electronic Commerce

Running Title:

A New Marketing Paradigm for Electronic Commerce
Abstract The World Wide Web possesses unique characteristics which distinguish it in important ways from traditional commercial communications environments. Because the Web presents a fundamentally different environment for marketing activities than traditional media, conventional marketing activities are becoming transformed, as they are often difficult to implement in their present form. In this paper, we assert that these changes portend an evolution in the "marketing concept" and argue that in order for marketing efforts to be successful in this new medium, a new business paradigm is required in which the marketing function is reconstructed to facilitate electronic commerce in the emerging electronic society underlying the Web.

A New Marketing Paradigm for Electronic Commerce

The World Wide Web is the first and current networked global implementation of a hypermedia computer-mediated environment (CME). As such, it allows users of the

medium to provide and interactively access hypermedia content, and to communicate with each other. These unique forms of interactivity, "machine-interaction" and "personinteraction," respectively, have contributed to the rapid diffusion of the Web as a commercial medium in the last several years (Hoffman and Novak 1995). The traditional marketing communications model for mass media (e.g. Lasswell 1948; Katz and Lazarsfeld 1955) holds that mass communication is a one-to-many process whereby a firm transmits content through a medium to a large group of consumers. The key feature underlying all models of mass media effects is that there is no interaction present between consumers and firms. The new model underlying marketing communications in a hypermedia CME like the Web (Hoffman and Novak 1995) is a many-to-many mediated communications model in which consumers can interact with the medium, firms can provide content to the medium, and in the most radical departure from traditional marketing environments, consumers can provide commercially-oriented content to the medium. In this mediated model, the primary relationships are not between sender and receiver, but rather with the CME with which they interact. In this new model, information or content is not merely transmitted from a sender to a receiver, but instead, mediated environments are created by participants and then experienced.

The Transformation of Marketing Activities An important consideration in the structural analysis of the Web as a media and marketing environment is that it possesses unique characteristics which distinguish it in important ways from traditional commercial environments. First, as we argued above, 1

the Web is a virtual hypermedia environment incorporating interactivity with both people and computers. Thus, the Web is not a simulation of a real-world environment, but an alternative to real-world environments (see, for example, de Long 1995), where consumers may experience telepresence (Steuer 1992), the perception of being present in the mediated, rather than real-world, environment. Second, within the virtual environment, both experiential (e.g. "netsurfing") and goal-directed (e.g. "online shopping") behaviors compete for consumers' attention. Third, consumer capability in the virtual environment, as well as challenges posed by the environment, introduce a competency issue which does not exist so fundamentally in the physical world. experience" This competency...
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