An exploratory study of the Internet as an industrial communication tool

Industrial Marketing Management 31 (2002) 145 – 154

An exploratory study of the Internet as an industrial communication tool Examining buyers’ perceptions Dawn R. Deeter-Schmelza,*, Karen Norman Kennedyb,1 a

Marketing Department, College of Business, Ohio University, 534 Copeland Hall, Athens, OH 45701, USA Department of Management and Marketing, School of Business, University of Alabama at Birmingham, Birmingham, AL 35294, USA

b

Received 15 May 2000; received in revised form 7 November 2000; accepted 25 February 2001

Abstract A thorough understanding of the impact of the Internet on industrial purchase decisions is of critical importance for industrial marketers seeking to incorporate the Internet in their overall communication strategy. Accordingly, this study examines (1) the degree to which purchasing professionals perceive the Internet as useful, (2) how purchasing professionals are using the Internet for communication activities, (3) how the Internet compares to other promotional tools in influencing buyers’ purchase decisions, and (4) whether differences among buyers can be identified relative to the perceived influence of suppliers’ websites. The results provide some practical implications for industrial marketers regarding the use of the Internet relative to other promotional tools. D 2001 Elsevier Science Inc. All rights reserved.

An examination of the business press reveals strong indicators that the Internet is radically changing the communication among those involved in industrial marketing. Indeed, such predictions as ‘‘[t]he Internet and the growth of e-commerce are at the heart of the marketing communications revolution’’ [1] (p. 18) are rarely questioned by business-to-business marketers [2]. Business leaders, investors, and marketers are currently focusing attention on the business-to-business Internet ventures, such as interactive websites, online supply networks, reverse auctions, and intranets [3– 5]. With this added attention, the possibility of marketers creating seamless direct communication between buyers and suppliers becomes a realistic possibility, even an expectation for business-to-business e-commerce [4], not conceived when our current research was completed on the influence of industrial communication tools. As many companies refocus their communication efforts and reevaluate their budgeting of promotional dollars, under-

standing the perceptions of purchasing decision makers is critical to effective allocations in today’s marketplace. Although radical changes are occurring in the industrial marketing communications environment, much of the research in this area was completed before the Internet became a viable marketing communications tool. Nearly 20 years ago, Parasuraman [6] completed a study published in this journal of organizational buyers’ perceptions of various industrial communication tools. Other researchers have collaborated and extended these findings to include variances based on the product considered [7], stage of the purchase process [8– 10], and characteristics of the purchase situation [11]. Interestingly, in reviewing the current research on business-to-business communication tools, we found no empirical study since the advent of e-commerce that has examined the influence of the Internet. Thus, it is the purpose of this research to investigate the relative importance of the Internet as an industrial communication tool. More specifically, we seek to answer the following questions:

* Corresponding author. Tel.: +1-740-597-1818; fax: +1-740-5939342. E-mail addresses: [email protected] (D.R. Deeter-Schmelz), [email protected] (K.N. Kennedy). 1 Tel.: + 1-205-934-8840; fax: + 1-205-934-0058.

1. What are the perceptions of purchasing professionals regarding the usefulness of the Internet as an information source? 2. How are purchasing professionals using the Internet for communication activities?

1. Introduction

0019-8501/02/$ – see front matter D 2001 Elsevier Science Inc. All rights reserved. PII: S 0 0 1 9 - 8 5 0 1 ( 0 1 ) 0 0 1 7 8 - X

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3. To what extent does the Internet influence organizational buyers’ purchase decisions, and how does it compare to other promotional tools and organizational factors? 4. Can differences among buyers be identified relevant to the perceived degree of influence of suppliers’ websites? In Section 2, we briefly review the literature on communication and industrial marketing especially as it relates to the influence of various promotional tools. In Section 3, we describe two studies investigating perceptions of organizational buyers and the communication elements influencing their decision-making. The first study focuses on buyers within a single industry and the second includes a broad range of purchasing agents from a cross section of industries. We discuss our findings contrasting them with previous research as appropriate. Finally, we conclude with Section 6.

2. Organizational communication research It is widely accepted that industrial buyers utilize a mix of information sources during the purchase decision process, and that the information sources used can affect both process and outcomes (cf. Refs. [7,10 – 12]). Indeed, more than 25 years of research exist to support this claim. In an early study, for example, Dempsey [13] found that buyers in the electric utilities industry tended to use different sources to evaluate different vendor attributes, with vendor selection depending, in part, on the information sources used. In more recent research, information sources have been found to impact the length of time a firm takes in making major purchase decisions [14]. When the purchase process is perceived to be risky and uncertain, buyers often seek more purchasing-related information sources [15]. Given the impact of information sources on the purchase decision process, it is critical that business marketers understand which information sources are most influential and actively sought so that effective promotional strategies can be developed. Several studies have addressed this issue directly. As supported by conventional wisdom, some research suggests that salespeople are the most important source of information for industrial buyers in the average purchase situation [7,11,16], although other sources certainly have been identified. Personal sources, such as site visits, internal organization networks [8,17], and colleagues [18], have been found to be very influential. Indeed, Moriarty and Spekman [10] investigated 14 information sources and found that 6 of the top 7 were personal sources, such as internal coworkers, salespeople, product users, and colleagues in other companies. Other studies have identified technical literature, trade shows, and conferences as important information sources [6,7,16,19]. Surprisingly, Patti [20] discovered that buyers

in the capital equipment industry considered advertising to be as an important a source as salespeople for obtaining product and service information. Parasuraman [6] was an early researcher investigating the relative influence of communication tools on organizational buyers’ decision processes and offering guidance to marketing managers in planning the mix of elements. In reviewing the industrial information source literature, Moriarty and Spekman [10] developed a ‘‘taxonomy of information sources’’ along two dimensions: personal/ impersonal and commercial/noncommercial. As shown in Table 1, personal commercial sources include salespeople and trade shows, whereas impersonal commercial sources include such things as advertising and direct-mail brochures. Personal noncommercial sources vary widely, and can range from internal and external colleagues to personal experience. Impersonal commercial sources include news articles and information from trade associations [10]. A review of the Moriarty and Spekman taxonomy quickly reveals some of the major differences between the Internet and traditional elements of the marketing communication mix. As one important difference, the Internet could easily fit into all four cells as the examples on Table 1 illustrate. One of the first formal analyses of the Internet compared both traditional and online communication methods, demonstrating the flexible, global, and efficient nature of the Internet. In this study, Hoffman and Novak [21] describe how components of the Internet traverse the dimensions of their typology, specifically how the Internet can be both a personal and impersonal as well as a dynamic and static communication medium. In addition, various communication methods, both traditional and the Internet, were analyzed along the following dimensions: symmetry of information flow, media content, diversity of information sources, communication timing, and personal interactivity. Primarily, the Internet as a communication tool was shown to be much more versatile when considering these dimensions than the traditional tools used by marketers [21,22].

Table 1 Taxonomy of information sources used by industrial buyersa Personal Commercial

Impersonal

Salespeople Trade shows Interactional website E-mail

Advertising in trade publications Sales literature Direct-mail brochures Informational website Mass E-mail (spams) Noncommercial Personal experience News publications Top management Trade associations Users Rating services Outside consultants Internet newsletters Colleagues List serves Purchasing department Bulletin board E-mail Chat rooms a Adapted from Moriarty and Spekman [10] (p. 140). Internet examples added in boldface-italics.

D.R. Deeter-Schmelz, K.N. Kennedy / Industrial Marketing Management 31 (2002) 145–154

As the Internet has continued to evolve in the years since the Hoffman and Novak [21] initial study, the business press has examined many aspects of the Internet and its impact on business-to-business marketing, evidenced by the regular ‘‘special’’ reports in the major trade publications, such as Wall Street Journal, Business Week, and Fortune. In addition, academic researchers have begun to investigate more thoroughly the role of the Internet in marketing activities (cf. Refs. [23 –25]). Yet, data are sparse and much uncertainty remains for industrial marketers as the traditional tools of communication are considered in conjunction with the world of Internet communications when designing the promotional campaign and allocating promotional dollars. A thorough understanding of the impact of the Internet on industrial purchase decisions is of critical importance for organizations seeking to incorporate the Internet in their overall communication strategy. Developing effective web strategies requires knowledge of the usefulness of the Internet as an information source for industrial buyers, as well as knowledge of how buyers are using it for communication activities. An understanding of the relative impact of the Internet, as compared to other promotional tools, on purchasing decisions can assist industrial marketers in effectively allocating promotional dollars [6]. Identification of differences among buyers relative to the impact of the Internet could lead to more effectively targeted promotional strategies. The research described subsequently addresses each of these issues in detail.

3. Description of research activity Our research consisted of two studies that represent different methods and perspectives. Both studies involve a national sampling of organizational buyers who report their reliance on various communication tools involved in business-to-business marketing. Our intent in analyzing two sets of data was to broaden the focus of professional buyers’ information search and to understand better the roles of various communication tools currently available to industrial marketers. 3.1. Study 1 Study 1 sought to investigate organizational buyers’ general expectations and use of information sources, including the Internet, within one industry. By investigating one industry, we examined Internet usage and perceptions without the expected variances mandated by different traditions and norms that are evident across industries. Data were collected using telephone interviews with meeting and trade show planners randomly selected from a national listing of 1392 professional meeting planners. By using telephone interviews, we were able to sequence our questions so that both aided and unaided recall could be evaluated and additional insights probed for as appropriate. Four hundred

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usable interviews were completed, for an effective response rate of 28.7%. Respondents were primarily female (72%), and classified themselves as either association planners (65.8%), corporate planners (30.5%), or miscellaneous type planners (3.8%). The majority of respondents planned between one and five meetings per year (76.1%). 3.2. Study 2 To explore the influence of the Internet on purchase decisions and identify the characteristics of organizational buyers more likely to be influenced by the Internet as a communication tool, a second study was undertaken. Study 2 focused on gathering data across industries as a means to increase the generalizability of findings. Respondents were a randomly selected list of 1000 purchasing agents who were members of a national purchasing organization. To encourage a favorable response, the initial mailing was followed by a reminder postcard exactly 1 week later. A 23.2% response rate was obtained, with 232 purchasing professionals completing and returning the questionnaire. Respondents were primarily male (66.7%) with at least some college (95.9%) and an average age of 43. Most respondents held the title of materials or purchasing manager (34.3%) or purchasing agent (26.1%) and worked for relatively large companies earning more than US$100 million annually (55.1%). Years of purchasing experience ranged from 1 to 40, with an average of 14 years. Similar results were found for years at current employer, with a range from 1 to 39 and average of just under 10 years. Of the 232 purchasing professionals responding, 77.5% reported at least some experience in using the Internet for corporate-related purchasing activities. Eighty-nine respondents provided industry background information; the majority of these respondents were involved in manufacturing (51.7%), services (14.6%), construction (9%), or wholesale trade (7.8%). Other industries represented by the sample include mining, transportation, finance/insurance, and public administration. To assess nonresponse bias, the data were divided into quartiles based on the timeliness with which questionnaires were returned to the authors. The first quartile was composed of responses received earliest and the fourth quartile comprised the latest responses. No significant differences in the study variables and the demographic profiles of respondents were indicated in the t tests [26]. Based on this evidence, we concluded that the data contained no major problems with respect to nonresponse bias.

4. Findings The findings are structured around our four research questions, across studies. Specifically, we address (1) the usefulness of the Internet as an information source, (2) the ways in which purchasing professionals are utilizing the Internet, (3) the relative influence of the Internet on

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buyers’ purchase decisions as compared to other promotional tools, and (4) whether differences among buyers can be identified.

Table 2 Internet usefulness (Study 1)

4.1. Internet usefulness

Rank

(A) Unaided recall of useful sources of information

1

To examine the usefulness of the Internet in organizational purchase decisions, respondents in Study 1 were asked, under conditions of unaided recall, to identify the information sources they found most useful when planning meetings. Each respondent was permitted to provide up to five responses. Subsequently, respondents were asked to rate the usefulness of information sources when aided by the interviewer. Each information source was rated on a fivepoint scale ranging from not useful at all (1) to extremely useful (5). The results can be seen in Table 2. Interestingly, the Internet was the second most named source under the unaided recall condition, followed closely by advertising in trade journals. The most frequently mentioned source was third-party location information, such as convention and visitors bureau resources. Under conditions of aided recall, the Internet was rated moderately useful, receiving a 3.2 average rating of usefulness on a five-point scale. Personal experience (x¯ = 4.47) and third-party location information (x¯ = 4.44) were rated as the most useful sources of information, a finding consistent with buyers’ behavior in other service purchases where judging the quality of the product is difficult prior to purchase, and the reliance on one’s own experience as well as trusted others is quite common [27]. Also rated very useful by respondents in this study were word of mouth from colleagues (x¯ = 4.10) and direct-mail brochures (x¯ = 3.87). Attendance at trade shows (x¯ = 3.36) ranked just above the Internet. Interestingly, personal sales calls (x¯ = 2.95), often identified as the top promotional source in previous research [7,11,16], ranked significantly below the Internet as well as articles in trade journals. Direct-mail promotional items (x¯ = 2.73) and newsletters from meeting facilities (x¯ = 2.66) were least useful to the buyers in this study. 4.2. Internet utilization To investigate how purchasing professionals are utilizing the Internet for corporate-related purchasing activities, respondents were asked, under conditions of unaided recall, how they were currently using the Internet in their job. Up to three responses per respondent were allowed. The results can be seen in part A of Table 3. Accessing information regarding related services was by far the most frequently mentioned use, followed by accessing product specifications. To a lesser extent, e-mail, e-mail lists/groups, and accessing names and addresses for contacts were also reported as ways in which the Internet is used by these respondents. Respondents in Study 2 were asked a similar question. Specifically, these respondents were asked to rate the frequency with which they use the Internet for the corpor-

Source of information Third-party location information (e.g., convention and visitors bureau resources) The Internet, websites Advertising in trade journals/magazines Colleagues experience/word of mouth Personal experience/travel to meeting sites Direct-mail brochures Personal sales calls Trade associations Direct-mail promotional items Attendance at trade shows Articles in trade journals/magazines Others

2 3 4 5 6 7 8 9 10 11 12

Number of responses

Percentage of respondentsa

192

50.1

81 78

21.1 20.4

64

16.7

55

14.4

52 13 12 12 11 10

13.6 3.4 3.1 3.1 2.9 2.9

54

11.2

(B) Ratings of the usefulness of information sources — aided recall Source of information Personal experience/travel to meeting sites Third-party location information (e.g., convention and visitors bureau resources) Colleagues experience/word of mouth Direct-mail brochures Attendance at trade shows The Internet Articles in trade journals/magazines Personal sales calls Advertising in trade journals/magazines Direct-mail promotional items Newsletters from meeting facilities

Mean rating of usefulnessb 4.47 4.44c

4.10c 3.87c 3.36 3.21 3.20c 2.95c 2.80 2.73 2.66

a

Up to five responses allowed per respondent. Sources rated on a five-point scale ranging from not useful at all (1) to extremely useful (5). c Mean score was significantly greater than the mean score listed immediately below it, based on a t test for related samples ( P < .01). b

ate purchasing-related activities shown in Part B of Table 3. Each activity was scored on a five-point scale ranging from never (1) to always (5). As shown, the most frequently used activity reported by these respondents is e-mail (x¯ = 3.96), followed by five information-related activities: gathering product information (x¯ = 3.28), searching for new suppliers (x¯ = 3.24), gathering information regarding current suppliers (x¯ = 2.94), providing information to suppliers (x¯ = 2.61), and gathering competitive information (x¯ = 2.56), although the last two seem to occur with only moderate frequency. Online ordering and order status checks also are utilized with moderate frequency, judging by their mean scores of 2.45 and 2.47, respect-

D.R. Deeter-Schmelz, K.N. Kennedy / Industrial Marketing Management 31 (2002) 145–154 Table 3 Internet utilization (A) Use of the Internet (Study 1 — unaided recall) Purpose of Internet use Access information regarding related services Access product specifications E-mail E-mail lists/groups Names and addresses for contacts Other

Number of responses

Percentage of respondentsa

265

87.2

163 38 12 11 52

53.6 12.5 3.9 3.6 17.1

(B) Use of the Internet (Study 2 — aided recall) Purpose of Internet use E-mail Gathering product/component information Searching for new suppliers Gathering information regarding current suppliers Providing information to suppliers (specs, order policies, etc.) Gathering competitive information for your company Online ordering Online order status checks Accessing supplier documents (blueprints, layouts, specs, etc.) Gathering external customer information for your company Online customer support Electronic data interchange Discussion groups with other customers Just-in-time inventory planning Online payments Conducting reverse auctions

Mean scoreb c

S.D. 1.11

3.96 3.28 3.24c 2.94c

1.03 0.97 1.09

2.61

1.13

2.56

1.26

2.47 2.45 2.37

1.20 1.17 1.25

2.32

1.23

2.29 2.21c 1.55 1.51 1.41c 1.18

1.09 1.26 1.02 1.05 0.80 0.59

a

Up to three responses allowed per respondent. Sources rated on a five-point scale ranging from never (1) to always (5). c Mean score was significantly greater than the mean score listed immediately below it, based on a t test for related samples ( P < .001). b

ively, with accessing supplier documents (x¯ = 2.37), gathering external customer information (x¯ = 2.32), online customer support (x¯ = 2.29), and electronic data interchange (x¯ = 2.21) occurring with somewhat less frequency. The least used options include more sophisticated activities, such as conducting reverse auctions (an online bidding process, x¯ = 1.18), online payments (x¯ = 1.41), just-in-time inventory planning (x¯ = 1.51), and discussion groups with other customers (x¯ = 1.55). 4.3. Influence of Internet To gain insight regarding the extent of the Internet’s influence on organizational buyers’ purchase decisions, and how that influence compares to other promotional tools and organizational factors, an earlier study by Parasuraman [6] was replicated. In the original study, conducted almost 20 years ago, Parasuraman sought to understand the relative

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influence of various promotional tools and organizational factors on purchasing decisions, as perceived by purchasing decision makers. Similar to our study, Parasuraman sampled 1000 firms across industries, receiving responses from 267 purchasing professionals. Respondents ranked six factors in order of influence on their purchase decisions: internal specifications, supplier sales calls, colleagues’ recommendations, supplier exhibits at trade shows, directmail promotional materials, and advertisements in trade journals. Each of the factors was rated on a five-point scale, ranging from no extent (1) to very large extent (5). Factors were then rank-ordered based on mean influence scores, with t tests performed to discover if the mean influence score of each factor was significantly greater than that of the immediately following factor. His results clearly showed that the most dominant influences came from other departments within the firm through specifications laid down in purchasing requirements, followed by personal selling and peer recommendations (no significant difference between the two), trade shows, direct mail, and print advertisements [6]. We replicated the Parasuraman study [6] exactly, with the exception of adding a seventh factor: suppliers’ websites. The results, along with Parasuraman’s original results, are shown in Table 4. Interestingly, the results of the present study almost mirror the results attained by Parasuraman two decades ago. Specifications laid down by purchasing requirements by far had the most influence on purchasing decisions, followed by recommendations by colleagues, sales calls from suppliers, trade shows, suppliers’ websites, direct-mail promotional materials, and print advertisements in trade journals. As with the Parasuraman study, the only nonsignificant differences found between mean scores were with recommendations by colleagues and

Table 4 Determinants of purchasing decisions — replication of Parasuraman (1981) Factors influencing product purchase decisions (Study 2) Specifications laid down in purchase requisitions Recommendations made by colleagues in other organizations Sales calls made by suppliers’ salespeople Trade shows Suppliers’ websites Promotional materials mailed by suppliers Suppliers’ advertisements in trade journals

Mean influence scorea

Mean influence scorea (Parasuraman study)

3.86b

3.84

3.12

3.04

3.10b

3.10

2.94b 2.79b 2.41b

2.47 n.a. 2.20

2.29

2.10

a Mean influence scores refer to the average response on a five-point scale, where 1 = no extent and 5 = very large extent. b Mean influence score was significantly greater than the mean influence score listed immediately below it, based on a t test for related samples ( P < .05).

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suppliers’ sales calls. The influence of suppliers’ websites was much less than anticipated, given the predictions being made by the business press [1,2]. In terms of influence, suppliers’ websites ranked fifth out of the seven factors, behind trade shows. The mean score of 2.79 for this factor suggests that, on average, it is perceived as influencing purchasing decisions just below a ‘‘moderate extent’’ (which represents a scale value of 3 on the five-point scale used). It is worth noting that three of the four factors ranking more highly than suppliers’ websites also fall into the ‘‘moderate influence’’ range (i.e., recommendations made by colleagues in other departments, sales calls made by suppliers’ salespeople, and trade shows). Only specifications laid down in purchasing requisitions are seen as influencing purchasing decisions a ‘‘considerable extent’’ (4 on the five-point scale used). 4.4. Identifying differences among buyers The final goal of this investigation is to investigate potential differences among buyers relative to the extent to which they are influenced by suppliers’ websites during the purchase decision process. The identification of such differences can lead to the development of buyer profiles, which in turn can be useful to practitioners seeking to make more efficient use of their websites and target industrial buyers more effectively. Several steps were taken in Study 2 to fulfill this goal. First, a correlation matrix was generated to see if the level of influence was related to demographic variables: age, gender, educational background, years of purchasing experience, and annual corporate sales revenue. In addition, the relationships between the influence of suppliers’ websites and four usage-related variables were investigated. Individual adoption behavior reflects the length of time the buyer has been using the Internet for corporate purchasing-related activities. Respondents were asked to select one of six time-related categories, e.g., ‘‘I am not currently using the Internet for corporate purchasing activities,’’ ‘‘Less than 6 months,’’ ‘‘At least 6 months to 1 year,’’ etc. Perceived Internet skill was measured as the extent to which buyers feel they are skilled at using the Internet and are knowledgeable about good search techniques [28]. Perceived Internet convenience was measured as the extent to which purchasing professionals prefer the Internet to supplier representatives as a source of information because it makes the purchasing job easier. Finally, supplier support reflects the degree to which purchasing professionals perceive their suppliers are providing encouragement, guidance, and incentives for purchasing via the Internet. (See Appendix A for measures.) The correlation results can be seen in Table 5. None of the demographic variables were related to the perceived influence level of suppliers’ websites. Although gender had a marginal impact (r = .117, P =.078), suggesting a minor difference between men and women, the relationship was not strong enough to consider for further analysis.

Table 5 Correlations between influence of suppliers’ websites and individual/ organizational characteristics (Study 2) Influence of suppliers’ websites Variables Age Gender Educational background Years of purchasing experience Annual corporate sales revenue Individual adoption behavior Perceived Internet skill Perceived Internet convenience Supplier support

r

P .074 .117 .093 .052 .052 .354 .383 .320 .270

.294 .078 .169 .446 .460 .000 .000 .000 .000

Alternatively, each of the four usage-related variables was significantly and positively correlated with the influence of suppliers’ websites. The strongest relationship occurred with perceived skill with Internet (r = .38, P = .000), followed closely by individual adoption behavior (r = .35, P = .000), perceived Internet convenience (r =.32, P = .000), and supplier support (r = .27, P = .000). Accordingly, these four variables were included in the subsequent analysis. Second, the data were analyzed using MANOVA. To facilitate this analysis, respondents were divided into three subgroups based on their perception of the level of influence of suppliers’ websites. Respondents who scored 1 or 2 were categorized as low influence (n = 90). Respondents scoring a 4 or 5 were categorized as high influence (n = 58). Those respondents who scored 3 were categorized as medium influence and, for the purposes of the MANOVA analysis, removed from consideration (n = 84). The MANOVA analysis was conducted to assess if differences exist between the two groups of purchasing professionals based on their opinions concerning the four variables. Prior to the analysis of these four variables, assumptions of multivariate normality and equal variances were checked and satisfied. The MANOVA omnibus test was used to investigate the overall assumption of differences between the two groups on all dependent variables [29]. The MANOVA results displayed in part A of Table 6 reveal overall statistically significant differences between the two groups of buyers ( P = .000). To determine exactly which variables showed significant differences, univariate F tests were generated (see Table 6, Part B). The univariate F test considers each dependent variable separately, thereby allowing the researcher to pinpoint the source of the differences [29]. The results indicate that each of the four variables was significantly different between the two test groups of purchasing professionals (P < .000). Purchasing professionals more highly influenced by suppliers’ websites were found to score significantly higher on individual adoption behavior, perceived Internet skill, perceived Internet convenience, and supplier support. As shown by the adjusted R2 values, the most explanatory power was associated with perceived Internet skill (adjusted

D.R. Deeter-Schmelz, K.N. Kennedy / Industrial Marketing Management 31 (2002) 145–154 Table 6 MANOVA results (Study 2) (A) Omnibus test for differences among buyers’ perceived degree of influence of suppliers’ websites Test name

Value

Exact F

P

Pillai’s trace Wilks’ l Hotelling’s trace Roy’s largest root

.29 .72 .40 .40

13.33 13.33 13.33 13.33

.000 .000 .000 .000

(B) Main effects: differences among buyers’ perceived degree of influence of suppliers’ websites

Dependent variable Internet experience Perceived Internet skill Perceived Internet convenience Supplier support

Low High influence influence mean mean F

P

Adjusted R2

2.65 12.58 11.70

3.75 15.88 14.05

16.41 30.02 22.96

.000 .000 .000

.10 .17 .14

7.12

9.21

19.92

.000

.12

R 2=.17), followed by perceived Internet convenience (adjusted R2=.14), supplier support (adjusted R2=.12), and individual adoption behavior (adjusted R2=.10).

5. Discussion and implications With the growing emphasis on the Internet as an industrial communication tool, it is critical to understand the impact of the Internet on industrial purchase decisions. In this new and challenging arena of research and application, this study takes the first step in understanding the role of the Internet in industrial promotional strategies. The results of this study offer several key implications for industrial marketers. Our first research question addressed the usefulness of the Internet. When asked under unaided recall conditions to name the most useful information sources, buyers mentioned the Internet second behind third-party location information. When asked to rate the usefulness on a one-to-five scale, the buyers in Study 1 found the Internet to be moderately useful. Consistent with previous research (e.g., Refs. [10,18]), personal experience and third-party sources were rated extremely useful, with word-of-mouth communication rated moderately useful. Direct-mail brochures were also rated very useful, with attendance at trade shows and articles in trade journals rated as useful as the Internet. Less useful sources included personal sales calls, trade journal advertising, direct-mail promotional items, and newsletters. In reviewing the sources of information respondents considered most useful, buyers seem to prefer the sources that allow them greater control over access to information. Only one of the top five sources, facilities’ brochures, is under the direct control of the marketer for a meeting site, the most salient and significant purchase buyers in this industry make. Buyers rated personal experience and

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third-party location information as significantly more useful than any other sources, possibly because these sources offer informational value without an added ‘‘sales pitch.’’ Although marketers do have control over the content of their own websites, the buyer decides when and how these web pages will be accessed. This experience is similar to the control professionals have in sharing information with colleagues and attendees have at a trade show. Certainly, the marketer for an industry exhibiting these characteristics must be sensitive to the apparent preference of buyers to have control over access to information. It is worth noting that respondents named an average of 1.7 sources of useful information under conditions of unaided recall, even though they were probed for up to five responses. As these buyers indicate, they are using only a few primary sources in their information search and decision making. This highlights the need for industrial marketers to understand the importance buyers place on the various communication elements, including the Internet, as they plan their promotions. With a narrow selection of information sources considered useful by buyers in an industry, marketers must understand their buyer’s preferences and target the media carefully. Our findings regarding the utilization of the Internet highlight its usefulness for gathering and sharing information. To some extent, these findings signify the importance of the Internet as a communication tool. Regarding sharing information, e-mail seems to play a critical role in online corporate-related purchasing activities. Respondents in Study 2 cited e-mail as the most frequently used online option, and respondents in Study 1 cited their use of e-mail under conditions of unaided recall. Given that purchasing professionals are already utilizing e-mail, suppliers might consider an ‘‘in-touch’’ strategy, using the Internet to manage customer relationships electronically. When used properly, such a strategy offers several advantages, including responding quickly to customer questions and building customer loyalty [30]. A review of the Internet utilization results across samples (Table 3) suggests that accessing information increases the usefulness of the Internet for organizational buyers. The purchasing professionals in our samples used the Internet to access product specifications along with current and new supplier information. To encourage website use and perhaps build customer loyalty [31], suppliers should make it easy for targeted buyers to access these types of information on their site. Website design and performance are crucial dimensions that must be considered [24]. If the user cannot interact with the site easily and effectively, the buyer may not return. In addition, because the probability that a buyer will come across an unknown site is low, site promotion is critical. Interested practitioners are encouraged to review Evans and King’s [24] article that examines the opportunities and obstacles inherent in businessto-business websites and includes a useful website assessment tool.

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The buyers in our study indicated that they use the Internet to gather competitive information with moderate frequency. This finding is not necessarily surprising, as the acquisition of information about competitors and the competitive environment is central to strategy development [32]. Moreover, competitive information is the type of archival information that is increasingly available on the Internet [33]. This issue represents both an opportunity and a threat to organizations. In terms of opportunity, the Internet is a useful and efficient means for gathering competitive information [34], although its strength is as a complementary resource rather than a replacement for traditional resources [35]. On the other hand, purchasing organizations are likely not the only companies perusing a given supplier’s website. Suppliers should consider the sensitivity of the information they are posting on their website. For sensitive information that needs to be available for buyers, passwordprotected sites offer a viable alternative. Our data show that online ordering and order status checks also were used with moderate frequency. Yet, the frequency with which this option is utilized will likely increase over time. Indeed, the results of a study by Carter et al. [36] argue that e-commerce is the number one issue facing purchasing and supply executives, and that the Internet will be the backbone of electronic purchasing by 2008. As reported by Wall Street Journal, Forrester Research predicts that business-to-business online sales will approach US$2.7 trillion in 2004, from an expected US$406.2 billion this year [3]. These predictions, when combined with a multitude of others (e.g., Refs. [1,2]), argue that suppliers should consider and be prepared for the impact of online purchasing in their industry. Our replication of the Parasuraman study [6] provided interesting, and somewhat surprising, results. Perhaps most amazing was the fact that in more than 20 years, and during the course of what has been called a marketing communications revolution [1], we found no significant differences between the two studies. The ordering of the promotional and organizational factors influencing purchase decisions was almost identical across the two studies. In both cases, specifications laid down by purchase requisitions was the most influential factor. Although the second most influential factor switched from suppliers’ salespeople in the Parasuraman study to recommendations made by colleagues in other organizations in our study, the difference between the two was not significant. The remaining factors stayed in the same order as those in the Parasuraman study, other than our finding that the Internet is significantly more influential than direct-mail promotional materials from suppliers. These findings contend that the Internet is not as influential as more traditional communication tools, at least at the present time. Consequently, suppliers should not abandon more traditional promotional methods. Personal selling is still the most effective promotional tool for influencing purchasing decisions, followed closely by trade shows.

Even in the age of the Internet, buyers appear to value personal interaction and find ‘‘direct experience’’ information sources most credible. Still, given the potential of the Internet to cut purchasing costs by as much as 20% [37], it is to suppliers’ advantage to increase Internet use among industrial buyers. Perhaps suppliers can use these more traditional promotional methods to attain this goal. Salespeople can provide buyers with hands-on training for using the supplier’s website. Trade shows can be used to highlight the new web options and educate both users and nonusers of the benefits. Even direct mail and advertisements in trade journals could be used to inform current customers and prospects about the availability and usability of the website. Such site promotion is critical for buyers to find, understand, and use suppliers’ websites effectively [24]. Finally, the results relevant to our final research question provide a profile of those buyers who are most influenced by suppliers’ websites versus those buyers that report little influence. A relationship between demographic variables and the influence of suppliers’ websites did not exist in our data. This includes individual demographic variables (i.e., age, gender, educational background, and years of purchasing experience) as well as size of organization (measured as annual corporate sales revenue). Interestingly, these findings are similar to research results obtained by Bellman et al. [38], who found that demographics were not predictive of online shopping habits in the consumer marketplace. Thus, at this point, we do not have a clear demographic picture of the business-tobusiness Internet user. Alternatively, the usage-related variables explored in this study did provide some indication of buyers’ profiles in terms of experience and perceived skill. Buyers who perceived more influence from suppliers’ websites had been using the Internet longer, perceived themselves as having greater skill in using the Internet, felt that the Internet was a convenient information source that made their job easier, and perceived greater supplier support in terms of encouragement, guidance, and incentives. These findings have several implications for practitioners. First, the influence of supplier websites increases as experience in using the Internet increases. As more buyers become comfortable with the Internet and gain experience with using it, they are more likely to turn to supplier websites for information. Of course, training and other supplier support mechanisms can perhaps increase the individual adoption rate of buyers and their perceived skill in using the Internet. In addition, such supplier support can increase the influential power of suppliers’ websites directly. As previously suggested, salespeople can be used to educate buyers on the usefulness of the website and train them to use it effectively. Likewise, salespeople and other promotional tools can be used to extol the communication benefits of using the Internet for corporate-related purchasing activities. Monetary incentives, e.g., purchase order

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discounts for online ordering, could improve participation. Practitioners are encouraged to consider these and other support mechanisms as feasible.

6. Directions for future research The results of this study enhance our understanding of the role of the Internet in industrial promotional strategies. However, a multitude of related issues are worthy of investigation as a means to assist industrial marketers in Internet strategy development and implementation. First, researchers might investigate how users differ from nonusers in the industrial environment. Although our study found no evidence of demographic differences among users, it is possible that industry, experience, education, and/or behavior characteristic differences may exist between users and nonusers. Knowledge of these differences could assist in targeting efforts. Second, as a means to assist practitioners in site development, researchers might examine buyers’ preferences for the various types of content available on the Internet. Online purchasing represents another fruitful area for future research. For example, previous research contends that the importance of any given information source may vary by the product, the stage in the purchase process, and the characteristics of the buying situation [7– 11]. Such findings might also hold true for the Internet. Wall Street

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Journal predicts that online purchasing will have the greatest impact on such products as office supplies and electronic components [3]. One can imagine that the Internet might be more useful during the prepurchase information search stage. Likewise, buyers might be more likely to engage in online purchasing under conditions of straight rebuy. Understanding how organizational buyers’ use of the Internet changes across categories is critical to suppliers developing and implementing online purchasing systems. Additional research is needed to answer these important questions. Practitioners implementing online purchasing systems would also benefit from an understanding of buyers’ expectations, fears, and predictions as the use of the Internet moves from a source of information to a transactional tool. It might be useful, for example, to compare buyers’ expectations of online purchasing with those of salespeople, and to understand how buyers and sellers are preparing for e-commerce. The effectiveness of reverse auctions, a relatively new phenomenon dealing with online bidding by buyers and sellers, might be investigated from both the buyers’ and sellers’ points of view. Researchers might examine, for instance, the impact of online bidding on long-term buyer – seller relationships. Ultimately, as the use of the Internet becomes more prevalent in industrial situations, researchers should reexamine the organizational buying model to determine the nature of any changes that might occur.

Appendix A. Measures Variable Individual adoption behavior Perceived Internet skilla (four items)

Measure

Indicate if you are using the Internet for corporate purchasing-related activities, and if so, how long? I am extremely skilled at using the Internet. I consider myself knowledgeable about good search techniques on the Internet. I know somewhat less about using the Internet than most users.b I know how to find what I am looking for on the Internet. Perceived Internet With the Internet, I will be able to reduce the time I spend with convenience suppliers’ salespeople. (four items) Compared to traditional communication sources, I can get my questions answered more effectively using the Internet. With suppliers who have online services, my job as a purchasing professional is easier. I prefer speaking directly with my suppliers’ personnel to get help and information.b Supplier support Most of my suppliers encourage me to use their Internet sites. (three items) My suppliers provide effective guidance in the use of their Internet sites. Many of my suppliers offer incentives for using their Internet purchasing options. a Adapted for the business-to-business context from a scale developed by Novack et al. [28]. b Reverse-scored item.

Factor loadings

Cronbach’s a

n.a. .90

n.a. .90

.96 .65 .81 .66

.69

.67 .65 .42 .64 .66 .74

.71

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Dawn R. Deeter-Schmelz (PhD, University of South Florida), Assistant Professor of Marketing at Ohio University, has published in the Journal of Marketing Education, Journal of Business Logistics, Journal of Personal Selling and Sales Management, Journal of Travel Research, among others. Karen Norman Kennedy (PhD, University of South Florida), Assistant Professor of Marketing at the University of Alabama at Birmingham, has published in Journal of Marketing Education, Psychological Reports, Journal of Social Behaviour and Personality, and various conference proceedings.