Abstract
Past commentaries on the potential impact of the Internet on consumer marketing have typically failed to acknowledge that consumer markets are heterogeneous and complex and that the Internet is but one possible distribution, transaction, and communication channel in a world dominated by conventional retailing channels. This failure has led to excessively broad predictions regarding the effect of the Internet on the structure and performance of product and service markets. The objective of this article is to provide a framework for understanding possible impacts of the Internet on marketing to consumers. This is done by analyzing channel intermediary functions that can be performed on the Internet, suggesting classification schemes that clarify the potential impact of the Internet across different products and services, positioning the Internet against conventional retailing channels, and identifying similarities and differences that exist between them. The article concludes with a series of questions designed to stimulate the development of theory and strategy in the context of Internet-based marketing.
Similar content being viewed by others
References
Ainscough, Thomas L. and Michael G. Luckett. 1996. “The Internet for the Rest of Us: Marketing on the World Wide Web.”Journal of Consumer Marketing 13 (September): 36–47.
Alba, Joseph, John Lynch, Barton Weitz, Chris Janiszewski, Richard Lutz, Alan Sawyer, and Stacy Wood. 1997. “Interactive Home Shopping: Consumer, Retailer, and Manufacturer Incentives to Participate in Electronic Marketplaces.”Journal of Marketing 6 (July): 38–53.
Alderson, Wroe. 1965.Dynamic Marketing Behavior: A Functionalist Theory of Marketing. Homewood, IL: Irwin.
Asimov, Isaac. 1977. “The Supermarket 2077 A.D.”Progressive Grocer 56 (June): 52–53.
Bakos, J. Yannis. 1991. “A Strategic Analysis of Electronic Marketplaces.”MIS Quarterly 15 (September): 295–310.
Balasubramanian, Sridhar. 1997. “Two Essays in Direct Marketing.” Ph.D. dissertation, Yale University, New Haven, CT.
Bank, David. 1996. “How Net Is Becoming More Like Television to Draw Advertisers.”Wall Street Journal, December 13, pp. A1, A8.
Beales, Howard, Michael B. Mazis, Steven C. Salop, and Richard Staelin. 1981. “Consumer Search and Public Policy.”Journal of Consumer Research 8 (June): 11–22.
Benjamin, Robert and Rolf Wigand. 1995. “Electronic Markets and Virtual Value Chains on the Information Superhighway.”Sloan Management Review 36 (Winter): 62–72.
Berkowitz, Eric N., John R. Walton, and Orville C. Walker Jr. 1979. “In-Home Shoppers: The Market for Innovative Distribution Systems.”Journal of Retailing 55 (Summer): 15–33.
Berthon, Pierre, Leyland F. Pitt, and Richard T. Watson. 1996a. “Marketing Communication and the World Wide Web.”Business Horizons 39 (September–October): 24–32.
—————, —————, and —————. 1996b. “The World Wide Web as an Advertising Medium: Toward an Understanding of Conversion Efficiency.”Journal of Advertising Research 36 (January–February): 43–54.
Bloom, Paul N., George R. Milne, and Robert Adler. 1994. “Avoiding Misuse of New Information Technologies: Legal and Societal Considerations.”Journal of Marketing 58 (January): 98–110.
Boyer, Marcel and Michel Moreaux. 1993. “Strategic Market Coverage in Spatial Competition.”International Journal of Industrial Organization 11 (Summer): 299–326.
Bredenberg, Al. 1995. “Seven Myths of Internet Marketing.”Target Marketing 18 (September): 49–50.
Burke, Raymond R. 1996. “Virtual Shopping: Breakthrough in Marketing Research.”Harvard Business Review 74 (March–April): 120–131.
—————. 1992. “Comparing Dynamic Consumer Choice in Real and Computer-Simulated Environments.”Journal of Consumer Research 19 (June): 71–82.
Choi, S. Chan. 1991. “Price Competition in a Channel Structure With a Common Retailer.”Marketing Science 10 (Fall): 271–296.
—————. 1996. “Price Competition in a Duopoly Common Retailer Channel.”Journal of Retailing 72 (Summer): 117–134.
Comer, Douglas E. 1995.The Internet Book. Englewood Cliffs, NJ: Prentice Hall.
Coughlan, Anne T. 1985. “Competition and Coordination in Marketing Channel Choice: Theory and Application.”Marketing Science 4 (Spring): 110–129.
Cravens, David W. 1997. “Looking Toward the Next 25 Years ofJAMS.”Journal of the Academy of Marketing Science 25 (Winter): 3.
Deloitte & Touche. 1990.A Special Report on the Impact of Technology on Direct Marketing in the 1990’s. New York: Direct Marketing Association.
Doody, Alton F. and William R. Davidson. 1967. “Next Revolution in Retailing.”Harvard Business Review 45 (May–June): 4–16, 20, 188.
Economides, Nicholas. 1996. “The Economics of Networks.”International Journal of Industrial Organization 14 (Fall): 673–699.
Fleischman, John. 1993. “In Classical Athens, a Market Trading in the Currency of Ideas.”Smithsonian, July, pp. 38–42, 44, 46–47.
Forman, Andrew M. and Ven Sriram. 1991. “The Depersonalization of Retailing: Its Impact on the ‘Lonely’ Consumer.”Journal of Retailing 67 (Summer): 226–243.
Fox, Bruce. 1995. “Retailing on the Internet: Seeking Truth Beyond the Hype.”Chain Store Age Executive 71 (September): 33–72.
Gallini, Nancy T. and Nancy A. Lutz. 1992. “Dual Distribution and Royalty Fees in Franchising.”Journal of Law, Economics, and Organization 8 (October): 471–501.
Hagel, John III and Thomas R. Eisenmann. 1994. “Navigating the Multimedia Landscape.”The McKinsey Quarterly 30 (3): 39–55.
Hagel, John III and Jeffrey F. Rayport. 1997. “The Coming Battle for Customer Information.”Harvard Business Review 75 (January–February): 53–55, 58, 61, 64–65.
Hanson, Ward A. and Daniel S. Putler. 1996. “Hits and Misses: Herd Behavior and Online Product Popularity.”Marketing Letters 7 (October): 297–305.
Hauser, John R., Glen L. Urban, and Bruce D. Weinberg. 1993. “How Consumers Allocate Their Time When Searching for Information.”Journal of Marketing Research 30 (November): 452–466.
Hoffman, Donna L. and Thomas P. Novak. 1996. “Marketing in Hypermedia Computer-Mediated Environments: Conceptual Foundations.”Journal of Marketing 60 (July): 50–68.
Hotelling, Harold T. 1929. “Stability in Competition.”Economic Journal 95 (January): 41–57.
Hyde, Linda L., Carl E. Steidtmann, and Daniel J. Sweeney. 1990.Retailing 2000. Columbus, OH: Management Horizons.
Jarvenpaa, Sirkka L. and Peter A. Todd. 1997. “Is There a Future for Retailing on the Internet?” InElectronic Marketing and the Consumer. Ed. Robert A. Peterson. Thousand Oaks, CA: Sage, 139–154.
Judd, Kenneth L. 1985. “Credible Spatial Competition.”RAND Journal of Economics 16 (Summer): 153–166.
Lanham, Richard A. 1993.The Electronic Word: Democracy, Technology, and the Arts. Chicago: University of Chicago Press.
Leibrock, Larry R. 1997. “Privacy, Surveillance, and Cookies.” InElectronic Marketing and the Consumer. Ed. Robert A. Peterson. Thousand Oaks, CA: Sage, 155–162.
Levy, Steven. 1996. “Breathing Is Also Addictive.”Newsweek, December 30, pp. 52–53.
MacKie-Mason, Jeffrey K. and Hal R. Varian. 1995. “Some FAQs About Usage-Based Pricing.”Computer Networks and ISDN Systems 28 (December): 257–265.
Mahajan, Vijay and Jerry Wind. 1989. “Market Discontinuities and Strategic Planning: A Research Agenda.”Technological Forecasting and Social Change 36 (August): 185–199.
Malone, Thomas W., JoAnne Yates, and Robert I. Benjamin. 1989. “The Logic of Electronic Markets.”Harvard Business Review 67 (May–June): 166–172.
McGuire, Timothy W. and Richard Staelin. 1983. “An Industry Equilibrium Analysis of Downstream Vertical Integration.”Marketing Science 2 (Spring): 161–191.
McNair, Malcolm P. and Eleanor G. May. 1978. “The Next Revolution of the Retailing Wheel.”Harvard Business Review 56 (September–October): 81–91.
Miller, Thomas E. 1996. “Segmenting the Internet.”American Demographics 18 (July): 48–52.
Molenaar, Cor. 1996.Interactive Marketing. Aldershot, UK: Gower.
Moorthy, K. Sridhar. 1988. “Strategic Decentralization in Channels.”Marketing Science 7 (Fall): 335–355.
Peterson, Robert A. 1997. “Electronic Marketing: Visions, Definitions, and Implications.” InElectronic Marketing and the Consumer. Ed. Robert A. Peterson. Thousand Oaks, CA: Sage, 1–16.
Phillips, Fred, Andrew Donoho, William W. Keep, Walter Mayberry, John M. McCann, Karen Shapiro, and David Smith. 1997. “Electronically Connecting Retailers and Customers: Interim Summary of an Expert Roundtable.” InElectronic Marketing and the Consumer. Ed. Robert A. Peterson. Thousand Oaks, CA: Sage, 101–122.
Quelch, John A. and Lisa R. Klein. 1996. “The Internet and International Marketing.”Sloan Management Review 37 (Spring): 60–75.
Rayport, Jeffrey F. and John J. Sviokla. 1994. “Managing in the Marketspace.”Harvard Business Review 72 (November–December): 141–150.
————— and —————. 1994. “Exploiting the Virtual Value Chain.”Harvard Business Review 73 (November–December): 75–85.
Rosenberg, Larry J. and Elizabeth C. Hirschman. 1980. “Retailing Without Stores.”Harvard Business Review 58 (July–August): 103–112.
Rust, Roland T. and Sajeev Varki. 1996. “Rising From the Ashes of Advertising.”Journal of Business Research 37 (November): 173–181.
Schlee, Edward E. 1996. “The Value of Information About Product Quality.”RAND Journal of Economics 27 (Winter): 803–815.
Schneiderman, Ron. 1980. “Non-Store Shopping Growing as Consumer Habits Change.”Merchandising 5 (September): 60–61.
Sheth, Jagdish N. and Rajendra S. Sisodia. 1997. “Consumer Behavior in the Future.” InElectronic Marketing and the Consumer. Ed. Robert A. Peterson. Thousand Oaks, CA: Sage, 17–38.
Shi, Christiana Smith and Andrew M. Salesky. 1994. “Building a Strategy for Electronic Home Shopping.”The McKinsey Quarterly 4: 77–95.
Spar, Debra and Jeffrey J. Bussgang. 1996. “The Net.”Harvard Business Review 74 (May–June): 125–133.
Stern, Louis W., Adel I. El-Ansary, and Anne T. Coughlan. 1996.Marketing Channels. 5th ed. Upper Saddle River, NJ: Prentice Hall.
Stigler, George. 1961. “The Economics of Information.”Journal of Political Economy 69 (January–February): 213–225.
Taylor, David. 1995. “Digital Dreaming, Part 1: The Internet Marketing Primer.”Marketing Computers 15 (March): 24–25.
Thisse, Jacques-Francois and Xavier Vives. 1988. “The Strategic Choice of Spatial Price Policy.”American Economic Review 78 (March): 122–137.
Thorelli, Hans and Jack L. Engledow. 1980. “Information Seekers and Information Systems: A Policy Perspective.”Journal of Marketing 44 (Spring): 9–27.
Tirole, Jean. 1989.The Theory of Industrial Organization. Cambridge, MA: MIT Press.
Urban, Glen L., John R. Hauser, William J. Qualls, Bruce D. Weinberg, Johnathan D. Bohlmann, and Roberta A. Chicos. 1997. “Information Acceleration: Validation and Lessons From the Field.”Journal of Marketing Research 34 (February): 143–153.
—————, Bruce D. Weinberg, and John R. Hauser. 1996. “Premarket Forecasting of Really New Products.”Journal of Marketing 60 (January): 47–60.
Wolinsky, Asher. 1983. “Retail Trade Concentration Due to Consumers’ Imperfect Information.”Bell Journal of Economics 14 (Spring): 275–282.
Zettelmeyer, Florian. 1996. “The Strategic Use of Consumer Search Cost.” Working Paper, William E. Simon Graduate School of Business Administration, University of Rochester, NY.
—————. 1997. “Expanding to the Internet: Pricing and Communications When Firms Compete on Multiple Channels.” Working Paper, University of Rochester, NY.
Author information
Authors and Affiliations
Additional information
Robert A. Peterson holds the John T. Stuart III Centennial Chair in Business Administration and is the Charles E. Hurwitz fellow at the University of Texas at Austin. A former editor of theJournal of the Academy of Marketing Science andJournal of Marketing Research, he currently chairs the board of governors of the Academy of Marketing Science.
His research interests include the competitive and cooperative interface between electronic and traditional retail channels, customer equity modeling, and the application of options theory in marketing.
His research interests are psychological models of economic behavior, consumer choice and choice protocols, and advertising. His work has been published in theJournal of Marketing Research, Marketing Science, Journal of Retailing and Consumer Service, andR&D Management.
Rights and permissions
About this article
Cite this article
Peterson, R.A., Balasubramanian, S. & Bronnenberg, B.J. Exploring the implications of the internet for consumer marketing. J. of the Acad. Mark. Sci. 25, 329–346 (1997). https://doi.org/10.1177/0092070397254005
Issue Date:
DOI: https://doi.org/10.1177/0092070397254005