Bulletin UASVM Horticulture, 66(2)/2009

Print ISSN 1843-5254; Electronic ISSN 1843-5394

Electronic Commerce and Electronic Marketing in Agricultural Markets

Elena COFAS

Faculty of Engineering and Economic Management in Agriculture and Rural

Development, University of Agricultural Sciences and Veterinary Medicine Bucharest,
59 Marasti Boulevard, Bucharest, Romania; cofasela@yahoo.com

Abstract. Commerce is generally acknowledged as the interchange of merchandise on large

scale between nations or individuals. Electronic commerce enables more customer input to influence
agricultural marketing decisions. As competition intensifies across agricultural sectors, it becomes
more important for employees to be well informed of coporate and marketing objectives. Intranets
have a key role to play in effective internal marketing. The Internet does have a significant non-selling
function for agricultural sector and not-for-profit organizations, especially in terms of information
exchange, communication and online customers services. This study aimed at understanding the use of
the Internet and the marketing strategies adopted for electronic commerce implementation.

Keywords: e-commerce, market, agricultural, Internet, strategy, e-marketing

INTRODUCTION

Electronic commerce can be considered a major pathway for future strategies related
to marketing and efficiency improvement in the agro-food chain. Nevertheless, the adoption
of e-commerce by small and medium firms in this sector in Romania is still not frequent, in
particular if it is compared with the expectations of the benefits of such instrument. After the
disillusion on the performances of the so called "new economy", it is even more relevant to
try to understand what the realistic opportunities brought about by e-commerce are and how
they can be exploited. In this sense, a higher understanding of the factors affecting the spread
of e-commerce in business organizations is required in order to devise strategies able to allow
the exploitation of existing opportunities.
Currently, through an effective use fully the possibilities offered by the World Wide
Web, farms and agricultural companies can benefit of continues increase of the network
traffic, but also a range of solutions extensible to adapt to their current position scale adoption
of electronic business. Internet sites will replace more and more shops than classical
marketing of food products, in conditions in which every day new and new virtual addresses
through which it can sell any product. New forms of commerce offer different payment
method and fields or different products.

MATERIALS AND METHODS

Rayport and Jaworski (2001) define electronic commerce (e-commerce) as

’technology mediated exchanges between parties (individuals or organizations) as well as the
electronical based intra- or inter-organisational activities that facilitate such exchanges’. The
emphasis in most e-commerce definitions has been on digital transactions facilitated at every

130
stage (eg inventory, ordering and payment processing, etc) by technologies such as electronic
data interchange (EDI). Standardization of electronic data formats enables computers to speak
to each other, speeds information exchanges and reduces transaction costs.
Turban et al (2002) suggest that the term ’e-commerce’ is a rather narrow constricted
definition with its emphasis on the transactional process and that it does not encompass the
full range of applications and potential benefits of the Internet. To exploit such opportunities,
requires the redesign of the corporate environment and the total integration of information and
communications technologies across the business functions.
Electronic marketing (e-marketing) is described as ’the use of Internet and related
digital informations and communications technologies to achieve marketing objectives.
Mohammed et al (2001) defined Internet marketing as ’the process of building and
maintaining costumer relationships through online activities to facilitate the exchange of
ideas, products services that satisfy the goals of both parties’. Strauss et al (2003) suggest that
e-marketing covers a wide range of IT related applications with three main aims:
- transforming marketing strategies to create more customer value through more effective
segmentation, targeting differentiation and positioning strategies;
- more efficiently planning and executing the conception, distribution, promotion and pricing
of goods, services and ideas;
-creating exchanges that satisfy individual consumer and organizational customer’s
objectives.
Today, electronic commerce has evolved and turned into a mobile electronic
commerce (m-commerce). It can be defined as ’the buying and selling of goods and services
through wireless handheld devices such as mobile phones and personal digital assistants’. M-
Commerce enables users to access the Internet without needing to find a place to plug in
providing anytime, anymore communications technologies of all time - mobile phones and the
Internet - will make possible all kinds of new services and create a new market’. The
emerging technology underpinning m-commerce based on Wireless Application Protocol and
third generation (3G) bandwidth technology has led many to believe that m-commerce with
its flexibility does have greater potential than the Internet connected a PC. So-called smart
phones provides faster, personal and secure handheld communication content and payment
abilities for a progressively mobile workforce. With the fat pipe or broadband slowly
becoming more accessible in terms of connectivity and cost, the thirst for instant information
by some is becoming a reality for individuals and a marketing challenge for organizations.
Wireless Internet Access or Wi-fi enables users of handheld devices and laptops to access the
Internet on the move without the need for any physical links or attachments via ‘hotspots’
without the need for any traditional dial up connection.
Any modern business model has to address technological issues such as the efficiency of the
distribution channels, database applications, and a fully integrated and secure search engine
receptive site. When formulating objectives, strategies and tactics it is imperative that the
technology is applied with the customer in mind, such as:
Ease of site navigation
Fast access to product information
Ease of ordering and payment processing
Effective distribution networks including order tracking for transparency
Added value through speed, flexibility, interactivity and convenience.
When considering e-marketing, and broader e-busines strategy, the planning tools applied
by marketers for decades still have an important role to play in formulating an organisation’s
future business path. Adoption of electronic business in the farm has evolved as follows: E-

131
mail → Agricultural websites → E-commerce agricultural sector → E-marketing agricultural
sector→ E-business agricultural strategy → Transformed agricultural (agri-food)
organisations.

RESULTS AND DISCUSSION

The Internet is just another channel or communications tool or whether it has actually
transformed marketing concepts and practices forever. What are undeniable is the benefits
that the Internet has bought to marketers on agricultural markets:
Buyers and sellers can reach markets previously inaccessible for geographic, entry barriers or
other reasons creating new segments and new players in agricultural market sectors.
Electronic commerce and the Internet should increase competition within agricultural
sectors leading to a position of equilibrium where demand equals supply.
The Internet and related technologies also impact upon employment levels and
practices in agriculture; this can be evidenced in two ways: first, automated processes can
replace human labor or a combination of the two can lead to job losses.
The Internet provides a low cost, effective way of transacting with customers
compared to traditional selling costs.
A site can be open for business all day everyday providing customers convenience.
The Internet is a fast and flexible communications tool. Promotional communications
such as e-mail are significantly cheaper and often achieve higher response rates than
traditional methods.
Buyers’search costs are reduced whilst choice is increased with the availability of
agricultural supplier information; this may impact on traditional outlets and change consumer
behaviour.
E-procurement and online payment processing will streamline administrative and
buying procedures and cut transaction (e.g. in vegetable and animal sector).
Web only models can pass cost of sale savings onto customers and offer very competitive
pricing.
The Internet has led to disintermediation and occasionally reintermediation in supply
chains and distribution channels; this has often resulted in costs being driven out with the
elimination of intermediaries.
The Internet provides marketers with a rich source of marketing data for decision-
making purposes.

But there are also many problems associated with the Internet that marketers on
agricultural markets it must understand and respond to. These are outline below:
Customer resistance to change;
Public concerns over privacy issues, such as SPAM and chat-rooms;
Lingering security doubts over fraud and phishing (hackers) and network security and
stability (worms);
Lack of trust with unknown agricultural traders;
The Internet’s sensory boundaries limiting of senses like taste and touch which
influence buyer decisions;
Limited web access for low-income groups and those in rural areas;
Continued high costs of broadband connections deterring high speed take up;
Poor levels of online customer service and fulfilment;
Technology gap between users and agricultural providers;

132
 Complexities of cross-border trading;
Failure to provide an exciting and reliable online shopping experience.
Agricultural holdings that fails to consider the influences of the environment around it
will be in imminent danger. Some argue that marketplaces change so fast that it is not worth
the effort planning for the future and good feel and instinct play a more important role.
However, it is worth considering the environmental factors that have influenced and driven
the Internet‘s growth and ongoing development, as well as its sway upon the factors (fig. 1).
The factors are grouped in micro-environment factors and macro-environment factors.

Microenvironment factors
- Suppliers: The Internet had a major impact on existing supplier arrangements as partnership
relationships and more intimate vertical integration is desired to streamline supply chains and
improve efficiency. Technologies such as electronic data interchange (EDI) and extensible
mark-up language (XML) have enabled improved information exchanges. The Internet has
opened up the market for many agricultural holdings to access potential new suppliers across
national boundaries faster.
- Distributors: The Internet has impacted upon traditional distribution channels
(reintermediation) in existing agricultural markets. In addition, the Internet comes into its own
information based ‘products’ with negligible distribution cost involved once the ‘product’ has
been produced.
- Stakeholders: As part of any agricultural holding’s promotional planning, communicating
effectively with various stakeholders or ’publics’ is critical for successful ongoing
relationships. With careful use of e-mail and of the corporate web site, intranets and extranets,
stakeholders can be informed, influenced, persuaded and sold to in a faster and more flexible
way.
- Competitors: The reality of the Internet is that it has created more competition both within
and across national boundaries.

Macroenvironmental factors
The wider environmental factors as the analytical frameworks for environmental scanning
representing societal (cash rich, time poor; increased leisure time; increased technology
ownership), technological, economic and political dimensions. Other academics have
extended the model to incorporate regulatory frameworks, the natural environment and legal
aspects.
Competition
Convenien
Communicati
Corporate on
culture

Control Customers of Consistenc

agricultural y
markets

Creative
Coordination content
Customisatio
n

Fig. 1. Factors that influence the agricultural markets

133
 The marketing audit, SWOT Analysis, Porter’s five forces and so on continue to
provide useful analytical frameworks to snapshot the internal and external environments that
impact upon activities and performance. For example, the list of issues below - by no means
an exhaustive one - might need serious consideration for a business setting out its ‘e’ or multi-
channel strategy:
 the rate of net adoption by traditional customer segments
 the impact of new market entrants
 changes in the ‘supply chain’ perhaps where manufacturers can go ‘direct’ and cut
out intermediaries
 increased competition in both domestic and transnational agricultural markets
 the impacts of existing and future technological changes to remain competitive from
both an investment and training perspective
 market penetration, e.g. by superior online customer service
 product development, e.g. new trading exchanges to existing markets
 market development, e.g. reaching new markets by online selling
 diversification, e.g. customization of industry specific products.
A marketing plan for online markets in the agro-food sector combines four key
elements specific, including the takeover and management context in which the plan:
1. Positioning - building a brand online and using search in depth, corresponding
information in the agro-food sector.
2. Permission - initiating dialogue with potential new customers in the agricultural
sector and management relationships with those customers
3. Partnership - including affiliate marketing, co-promotions and business
partnerships in the agro-food sector
4. Performance - marketing strategies incorporate the use of web analysis.
Regarding the marketing strategy (Fig. 2) - strategic planning of agro-marketers - it
must be directed and conducted by the customers from the agriculture and include: strategy
and financial planning, strategy and human resource planning, strategy and production
planning, distribution for agricultural branch and the IT strategy and planning.

Strategic e-marketing in the agro-food sector

agricultural marketing research

review
Elements of planning setting objectives
strategic development (including programs and budgets arising
from the holding / agricultural company strategy)

coordination with agencies, suppliers, distributors

Elements functions of internal webdesign
implemented logistics
web hosting

monitoring the development of appropriate strategic / tactical

objectives previously established
Elements of control performance and benefits of using measurement tools and
web

Fig. 2. Cycle stages of strategic e-marketing in the agro-food sector

134
 CONCLUSIONS

The results show a low level of implementation of the instrument and a limited variety
of adoption strategies. Agro-food firms actually invest very little in e-commerce focusing
their efforts on the Internet as promotion tool, while web-based direct selling is confined to
market niches. The view that the Internet would reverse the disadvantages of small firms
appears by now non realistic, even if interesting opportunities for further development are still
present. Altogether, while the Internet and e-commerce can be perceived as a powerful way of
communication and information, the direct sell of products is still confined to market niches.
The illusion that the age of Internet would reverse the disadvantages of small firms presently
appears unrealistic, even if signs of a certain interest by small/medium companies in the lower
stage of the agro- food chain may still be caught.
To conclude, in agro-business the exploration of the new channel represented by e-
commerce is still underway and proceeds slowly. Yet, the technological delay offers
development prospects in the agro-food sector, where operators may learn from the mistakes
of those already working (and losing money) with e-commerce in other business areas,
considering that every stage of on line shopping should still be improved, from the website
design to delivery. Investments must be made in view of satisfying the expectations and the
needs of costumers, regardless to the business model adopted.
However, interesting opportunities for further development in the agro-food sector are
still to be explored, i.e. on the pathway of strengthening the connections throughout the
supply chain. Further technical advance, as well as the reduction of Internet divide among
consumers may act as relevant factors for future developments.

REFERENCES
1. Doyle, P (1998). Marketing Management and Strategy, 2rd edition, Prentice Hall Erope, Hemel
Hempstead, England, pp. 96-97.
2. Holland C. P. and Lockett A. G. (1997). Mixed mode operation of electronic markets and electronic
hierarchies. In: The formation of inter-organizational networks; Ebers M. (ed.); Oxford University Press: Oxford.
pp.238-261.
3. Kuhlmann, F. and Brodersen C. (2001). Information technology and farm management: developments
and perspectives, Computers and electronics in agriculture, pp.71-83.
4. Liao, Z. and Cheung M. T. (2001). Internet based e-shopping and consumer attitudes: an empirical
study, Information& Management, pp.299-306.
5. Lucas Jnr, H. C. (2002). Strategies for Electronic Commerce and the Internet, Massachusetts Institute
of Technology, USA, pp.51.
6. Mohammed, R et al. (2001). Internet Marketing, McGraw Hill, pp.4.
7. Raypot, J. F. and Jaworski B. J. (2002). Introduction to E-commerce, McGraw Hill, New York,
pp.141.
8. Strauss, J. et al. (2003). E-marketing, 3rd edition, Prentice Hall, Upper Saddle River, NU, pp.2
9. Turban et al. (2002). Electronic Commerce – A Managerial Perspective, Prentice Hall, pp.6
10. Wilson, R. (2002). Planning your Internet Marketing Strategy, John Wiley & Sons Ltd, New York,
USA, pp.228-238.

135