Trends in Internet-based business-to-business marketing

Arun Sharma*

Department of Marketing, University of Miami, P.O. Box 248147, Coral Gables, FL 33124, USA

Received 26 July 2000; received in revised form 15 December 2000; accepted 13 March 2001

Abstract

The Internet is changing the transactional paradigms under which businesses-to-business marketers operate. Business-to-business

marketers that take advantage of the operational efficiencies and effectiveness that emerge from utilizing the Internet in transactions are

outperforming firms that utilize traditional transactional processes. As an example, Dell computers, by utilizing business-to-business

processes that take advantage of the Internet, has gained the largest market share in the PC business when compared to traditional

manufacturers such as Compaq. This paper first examines the genesis of the Internet movement in business-to-business markets. The

long-term impact of the increase of business-to-business utilization of the Internet on the marketing theory and marketing process is

then discussed. Finally, managerial implications and directions for future research are highlighted. D 2001 Elsevier Science Inc. All

rights reserved.

Keywords: Internet; Business-to-business; B2B; Marketing trends; Practise

1. Introduction

The growth in the adoption of the Internet in marketing

has been revolutionary in the last decade. Although the first

wave of growth of the Web was in the business-to-consumer

domain, the business-to-business domain is regarded as

larger, with e-commerce transactions expected to be in the

range of US$800 billion by the year 2003 — five times as

much as business-to-consumer transactions. In the first

stage, the Internet was utilized to enhance the efficiency

of processes through a dramatic reduction in exchange costs.

This enhancement of the efficiency of exchanges could be in

the domain of information (e.g., sales materials, manuals),

customer support (e.g., frequently asked questions), and

transactions. In the second stage, firms sought to enhance

the effectiveness of their transactions. Business-to-business

marketers used the Internet to increase their supplier and

customer involvement in order to enhance customer sat-

isfaction and loyalty. Business marketers such as GE’s Jet

Engine Division that have increased their utilization of the

Internet in their marketing processes have seen increases in

both efficiency and effectiveness of those processes.

The primary impetus for the move toward the Internet is

the value that can be generated. Since the Internet can be

used to reduce the ‘‘exchange friction’’ that exists both

within and between organizations, business marketers can

better deliver value to their customers. This paper suggests

that the Web is fundamentally changing, and will continue

to change, business-to-business marketing thought and

practice. The paper builds on research that the author has

conducted with his colleagues [1,2]. The implication of the

nonadoption of Internet technologies will be dramatic. If

business marketers do not capture the value that emerging

technologies such as the Internet provides, value will

migrate from their firms. Value migration is an issue that

has affected most industries at most times. For example,

value migrated from small-lot manufacturing of automobiles

toward mass-produced Ford automobiles in the early part of

the century. Similarly, General Motors captured value and

enhanced their market share in the automobile market by

providing variety to customers.

This manuscript begins by examining the Internet and

how business-to-business marketers will evolve in terms of

their presence on the Internet. How the Internet will impact

the thought and practice of business-to-business marketing

will be discussed. This paper suggests that the Internet’s

impact will be in the areas of mass vs. customer-centric

markets, fixed vs. variable costs, geography vs. pervasive-

0019-8501/02/$ – see front matter D 2001 Elsevier Science Inc. All rights reserved.

PII: S0019 -8501 (01 )00185 -7

* Tel.: +1-305-284-1770; fax: +1-305-284-5326.

E-mail address: asharma@miami.edu (A. Sharma).

Industrial Marketing Management 31 (2002) 77–84

ness, time and cooperation vs. competition. Managerial

implications, specifically in the area of value migration,

will be discussed. Directions for future research are also

proposed throughout the manuscript.

2. The nature of the Internet

The Internet is an agent for change that can disrupt

markets. In its essence, the Internet is an intelligent ubiquit-

ous information platform. The information platform is

flexible, and firms utilize the Internet to provide informa-

tion, to accommodate connectivity, community, and trans-

actions, and to share cost reductions [2].

2.1. Information

The most significant/greatest impact of the Internet has

been on informational access. The Internet affords access to

vast amounts of information that can be programmed to

cater to the stated or unstated needs of Internet users [3].

Therefore, the Internet can instantaneously provide specific

and detailed information to a business firm’s employees,

suppliers, and customers.

2.2. Connectivity

The Internet furnishes a platform of instant and constant

connectivity with a firm’s employees, suppliers, and cus-

tomers. The Internet is never closed; the business is always

open in this virtual world, which provides a 24/7 platform

for customers. The Internet reduces dependence on time

norms while encouraging nontemporal relationships across

time zones.

2.3. Community

The Internet creates communities in the virtual world,

communities that share news and expertise in specific areas.

Business infomediaries such as Plasticsnet.com, Vertical-

net.com, and Ultraprise.com provide communities wherein

business members can participate.

2.4. Transactions

Another advantage of the Internet is that firms can

complete transactions in a 24/7 environment. This enhances

marketing effectiveness while reducing the time and errors

associated with traditional order taking. Traditional order

taking typically involves multiple inputs of data that

increase errors.

2.5. Shared cost reductions

The final advantage of the Internet is shared cost reduc-

tion. The customer through self-service and the firm through

automated information systems, reduce the cost of interac-

tions and transactions. This reduction in costs benefits both

buyer and seller.

3. Evolution of Internet presence for

business-to-business marketers

The impacts of the Internet on business-to-business

marketing strategies will be based predominantly on how

business firms utilize the Internet for marketing to their

customers. In this context, traditional communication prac-

tices of business marketing firms are discussed first. This is

followed by a presentation of the hierarchy of Web pres-

ence, followed by a discussion of the final communication

platform that is expected.

3.1. Traditional communication processes

Traditional communication processes are transactional

both within and across business firms. A typical commun-

ication pattern from a business-to-business marketing firm is

presented in Fig. 1. For example, in a traditional business

marketing firm, the marketing and sales departments typ-

ically interact with customers. The manufacturing depart-

ment is contacted when there is a customer order or when

the customer has an inquiry. There is little communication

between the customer and the manufacturing department, as

if they are blind to each other.

Once a customer order is placed, the manufacturing

department is informed. The manufacturer communicates

with suppliers and logistics firms independent from the

marketing and sales departments. The logistics firm may

contact the customer directly. Clearly, there is a lack of

sharing of data both within and across organizations.

4. Evolution of business-to-business marketers’

Internet presence

The evolution of business-to-business marketers’ Internet

presence is expected to evolve through five stages. The five

stages — information, knowledge, conversations, relation-

ship, and e-commerce — are described in this section and

are sketched in Fig. 2. An evolutionary stages model is used

because the complexity of processes increases as the Inter-

net is used for higher-order purposes. However, to com-

pensate for the complexity, the potential returns from

business marketers’ Internet presence increases as business

marketers attempt more complex processes. The boundaries

of the stages are fuzzy, but the progression of firms is

anticipated in the ‘‘higher value’’ direction.

4.1. Information

In this stage, firms provide information to their custom-

ers. Although customization is sometimes available, the

A. Sharma / Industrial Marketing Management 31 (2002) 77–8478

customer is the navigator for the information. The customer

visits the site and obtains information, and may conduct

some transactions. The business-to-business marketer is

aware of the names and addresses, and of some transactions

of these customers. However, the flow of information is

one-way, from the marketer to the customer.

4.2. Knowledge

In the second stage, the firm starts to collect more

information on their customers. Through both internal data-

bases and actual behavior on their Web sites, firms attempt

to collect information regarding such concerns as prefer-

ences, attribute importance, channel preference, purchase

cycle, and purchases. Typically, firms use customer rela-

tionship management (CRM) systems to triangulate data on

their customers.

4.3. Conversations

In the third stage, business-to-business marketers use

the Internet to begin two-way conversations. These may

occur before and after transactions. For example, business

marketers can involve the customers in designing a

product over the Internet. An email system may be used

to inform customers of new product introductions. Sim-

Fig. 2. Evolution of Internet presence.

Fig. 1. Typical communication patterns.

A. Sharma / Industrial Marketing Management 31 (2002) 77–84 79

ilarly, service information can also be provided over the

Web. The Internet is used in the same ways that written

letters and telephone conversations were used in the past.

4.4. Relationships

The evolutionary stage following conversations is rela-

tionships. In this stage, business marketers use the Web to

develop relationships with their customers through com-

munication and design of the interaction platform. For

example, some Internet providers may provide all financial

data required for a bank on a single site customized for the

bank (e.g., Reuters). In these cases, there is a formal or

informal tying of firms’ information systems. The system

that ties Wal-Mart and Procter & Gamble systems together

is also an example. Manifestations of this structure are an

increase in cross-selling and referrals within existing cus-

tomer groups.

4.5. E-commerce

The e-commerce stage is the final stage in the evolution

of a firm’s Internet presence. In this stage, firms conduct

commerce through the Internet rather than through any other

means. The business marketer ties all the systems together

to reduce costs related to transactions. Reduction in costs

associated with repeated transactions increases the effi-

ciency and effectiveness of relationships. An ideal model

is presented in Fig. 3, showing how the communication

system presented in Fig. 1 will evolve. In this environment,

all departments within the organization, as well as custom-

ers and suppliers, access the same information platform.

This reduces costs, and reduces other inefficiencies such as

cycle time. Cisco manages their Web site on this principle

and estimates cost reduction in million of dollars. Similarly,

GE Power Systems has reduced costs, reduced cycle time,

and increased customer satisfaction through this type of

platform.

It is expected that most business-to-business marketing

firms will gravitate to this type of information platform. This

migration to the e-commerce model will increasingly lead to

a common information platform that encompasses all the

functions of a firm and external suppliers (see Fig. 3). Such

a network of firm, suppliers, and customers is labeled

‘‘extended enterprise’’ or ‘‘Interprise,’’ and a tremendous

growth in this area is expected. These ‘‘extended enterprise’’

networks lead to a reduction in ‘‘exchange friction,’’ and an

increase in both efficiency and effectiveness of firms.

Research questions:

(1) Will the evolution stages model presented in Fig. 2

maintain the current growth patterns? Will technol-

ogy better define the boundaries of the stages?

(2) What are the antecedents and consequences of the

movement of the communication systems from the

present (Fig. 1) to the future (Fig. 3)?

5. How the Internet changes business-to-business

marketing practices

As business-to-business firms begin implementing

e-commerce business platforms, it is expected that the

thought and practice will change. In this section, five domains

that will be affected by Internet marketing are discussed.

5.1. Mass vs. customer-centric markets

Recently, researchers have suggested that businesses are

undergoing a paradigmatic shift toward customer-centric

marketing [1]. Customer-centric marketing emphasizes

understanding and satisfying the needs, wants, and resour-

Fig. 3. Common Internet-based information platform.

A. Sharma / Industrial Marketing Management 31 (2002) 77–8480

ces of individual consumers and customers [1]. In the

practice of customer-centric marketing, marketers assess

each customer individually, and make and service the needs

of the individual customer through customized or stand-

ardized offerings. Their actions are guided by analysis that

seeks to maximize the ‘‘effective efficiency’’ of marketing

actions [4]. Efficiency entails cost–benefit analysis and

seeks to maximize the output-to-input ratio of the marketing

function for individual customers. Effectiveness entails the

enhancement of customer loyalty and ‘‘share of wallet.’’

Just as mass marketing came into vogue in the US after

World War II, segmentation in the 1950s, customer-centric

marketing will emerge in this millennium due to the Internet

[1]. With input from other technologies, the Internet allows

business-to-business marketers to fulfill the needs of indi-

vidual customers. For example, Dell Computers takes PC

orders from business customers that are instantaneously

accessed by manufacturing, and suppliers, and even by

FedEx, who delivers the computers. This fulfills the needs

of the business customer at costs that are dramatically lower

— effective efficiency.

Affordable technological advances are allowing business

marketers to provide unique solutions for individual cus-

tomers, i.e., to practice customer-centric marketing. There

are three major technology thrusts — affordable production

technology, affordable distribution technology, and afford-

able facilitation technology.

Affordable production technology allows firms to prac-

tice customer-centric marketing [1]. CAD–CAM technolo-

gies and databases are being used for better and more

customized products. Similarly, flexible manufacturing sys-

tems and just-in-time production allow marketers to mass-

customize products that are of better quality at lower prices.

Distribution has also been enhanced by affordable tech-

nologies [1]. The introduction of scanners, EDI combined

with forecasting technologies, support faster replenishment

cycles with fewer stock-outs. In addition, firms such as

FedEx and UPS allow marketers to rapidly deliver products

at affordable prices. Through coproduction and coinforma-

tional processes, firms such as PC Warehouse have dramat-

ically reduced their cost of distribution.

The Internet has become one of the major facilitation

technologies to allow marketers to provide customized

information and complete transactions at a fraction of the

cost of other media. The availability of market information

through the Internet is becoming more universal. The

Internet also allows customers to seek unique solutions to

their specific needs. This aspect, the empowerment of

customers to seek unique solutions to their individual needs,

will lead to customer-centric marketing. Shopping habits

change due to the Internet are already being observed, as

most business travelers are provided their itinerary on the

Web, including gate and delay information.

This change in availability of affordable technology has

been extremely rapid during the past two decades, and

indications are that this rate of change will continue. The

prices of most information technologies will continue to

decline, and the capabilities will continue to expand. Many

technologies that operate specifically in the Internet domain,

such as information devices, have already been developed

and will begin to have a significant impact on society [5].

Some industries will be more prone to use customer-

centric marketing. First, industries that have diversity in

demand (e.g., services) and where cost of adaptation is not

high (e.g., personal computers) will be at the forefront of

customer-centric marketing [1]. In other words, industries

that have high cost of customer adaptation in production

(e.g., basic metals) and the majority of customer require-

ments are not variable (e.g., rolled steel) deter the rapid

expansion of customer-centric marketing. Second, industries

in which firms have legacy systems in business marketing

processes, systems, and infrastructure will be more reluctant

to abandon existing assets [1]. To organize for customer-

centric marketing, firms will need to organize themselves as

market specialists, and eventually as customer specialists,

rather than as product specialists. By doing so, companies

begin to look more like ‘‘one-stop shops’’ for a range of

loosely related products and services, some of which the

company produces and most of which they acquire from

other producers. This requires development of core com-

petencies surrounding particular customers and customer

groups [1].

With an increase in customer-centric marketing, custom-

ers will have an increasing role in the fulfillment process,

leading to ‘‘co-creation marketing’’ [1]. Co-creation mar-

keting involves both the marketers and the customer who

interact in aspects of the design, production, and consump-

tion of the product or service on the Internet. This process

has been seen in services (e.g., business consulting) but will

increasingly be also seen for physical products.

Research questions:

(3) What will be rate of increase in customer-centric

marketing? What industry and business market

characteristics will influence the development?

(4) What technology will enable the movement from

mass markets to customer-centric markets?

(5) Will customer focus emerge as a core competency in

business markets?

(6) Under what conditions will co-creation enjoy

increased acceptance in business markets?

5.2. Fixed vs. variable costs

Traditional economics and, therefore, traditional business

marketing practices were based on the existence of variable

costs in all marketing transactions [1]. The genesis was the

industrial age, when the total cost of doing business

included sizable fixed and variable components. This gave

rise to the economics of scale and scope; firms sought to

spread their fixed costs over a larger volume. Average costs

A. Sharma / Industrial Marketing Management 31 (2002) 77–84 81

declined slowly with volume, and prevailing market prices

tended to closely track production costs. The Internet

marketing era will be the era of customer knowledge.

In the knowledge age, fixed costs dominate. Knowledge

products such as software, computer chips, and new drugs

tend to very high upfront costs (R&D), may have very high

fixed costs (plant and equipment), but always have very low

marginal costs of production. Having a fixed-cost-dominated

marketing structure is equivalent to developing a marketing

infrastructure in which everything that can be automated is

automated. The costs of that infrastructure are largely invari-

ant with respect to volume. The Internet-based marketing era

will be the era of extensive investment in technology that

will aid in the reduction of transactional costs [1]. As

examples, databases and voice response technologies have

high fixed costs, but have reduced transactional costs. The

costs of these infrastructures are largely invariant with

respect to volume. The implication is that new technologies

will dramatically reduce the costs of acquiring a new

customer or of servicing an existing customer.

Since most costs in the Internet era will be fixed costs,

revenue maximization will be equivalent to profit max-

imization. The other factor that is different in the Internet

environment is increasing returns to scale when compared to

decreasing return to scale in traditional industries. Know-

ledge-based industries follow an experience curve in which

the slope is steep, and the lower asymptote is close to zero.

For example, software cannot be priced based on marginal

cost to produce an extra unit (cost of extra copy of software

is negligible). Volume and speed are the primary drivers of

the experience curve. Business marketers attempt to force

the experience curve down rapidly by generating a large

volume of demand in a short time. For example, Peachtree

Accounting has made far greater profit selling its small

business accounting software for US$149 rather than its

earlier price of US$4800 [1]. In addition to low variable

costs for a firm’s customers, elements of the infrastructure

can thus be profitably shared with other companies engaged

in similar businesses or others targeting the same customers

with complementary offerings. By sharing the costs, com-

panies can develop infrastructures of virtually unlimited

capacity and extremely low unit costs. Adding additional

complementary products and services that would be of

interest to the same customer group can then leverage the

marketing system.

Research questions:

(7) Will low variable costs increase customer acquisition

activities, as the cost of serving a new customer will

be very low?

(8) Will the nature of the Internet with universal

information access in conjunction with low switching

costs make business relationships difficult to main-

tain?

(9) How can business firms increase the switching costs

for their customers?

5.3. Geographical vs. pervasive

Since marketing developed in a physical world, the

geographical locations of resources have been critical to

success. When markets evolved from local to regional or

national markets, buyers and sellers were typically not in the

same geographic location. This geographical separation led

to the creation of intermediaries that advanced the interests

of the marketers in terms of information, communication,

transactions, physical movement of goods, and customer

service. Distribution, manufacturing, and sales force have

traditionally been location-based. The Internet is reducing

some of the locational advantages that firms enjoy. Firms

can use the Internet to inform customers, communicate with

customers, conduct transactions, and provide customer

service without having locational presence. In contrast to

geographical or locational sales forces, companies using the

Internet can more readily engage in direct order taking and

technical support.

The other issue of relevance to marketers is the creation

of a new kind of intermediary — infomediary. The infome-

diary began as an Internet-based intermediary that aggre-

gated and provided information in areas of interest to their

customers. This typically included information from sellers

packaged in a manner relevant to customers.

Research questions:

(10) Howwill customer acquisition and retention activities

be maintained in nonlocational environments?

(11) How critical will the face-to-face communication be

in the Internet era?

5.4. Time

Time has been central to marketing planning for two

reasons. First, business firms have traditionally set the

times of transaction or exchange. Increasingly, businesses

want more flexibility in their ability to interact with firms

[1]. The Internet has increased the growth of nontime-

based interactions. In surveys, most marketing firms

already provide or plan to provide 24-h access to

information, communications, transactions, and basic cus-

tomer service.

The second and more critical aspect of marketing has

been time-based in slowly depreciating physical assets,

nominal experience curve and network externality effects

[1]. Customers became accustomed to a slow pace of

change, and market behavior evolved correspondingly, with

high levels of inertia and strong resistance to innovations

[6]. The physical life of products and factories dictated the

marketing approach. The ‘‘new economy’’ or ‘‘knowledge

firms’’ are changing the fundamental assumptions. Know-

ledge-based industries use technology that rapidly depreci-

ates (e.g., PCs are obsolete in 2 years) and has very rapid

replacement cycles, and are more frequently attacked by

A. Sharma / Industrial Marketing Management 31 (2002) 77–8482

discontinuous innovation (rather than evolving or continu-

ous innovation).

Research questions:

(12) What are the antecedents and consequences of a

movement from an 8-to-5 weekdays business

toward a 24/7 business?

(13) How will knowledge-based markets differ from

product- and service-based environments?

5.5. Competition vs. coopetition

In the last three decades, the business-to-business strategy

has been preoccupied with competition. With increasing

assets that can be used with low variable costs, high fixed

costs in establishing the technology, and customer needs for a

bundle of products, firms are moving toward coopetition, the

simultaneous cooperation and competition between organ-

izations [1]. Coopetition enables resource sharing rather than

resource duplication or resources deployment to counter

competitors. For example, most Internet firms use the same

news service (e.g., Reuters, AP), hosting service (e.g., Exo-

dus), and advertising agencies (e.g., Double click). In addi-

tion, some portals (Yahoo) firms use search engines from

firms (Google) that seek the same customer. Finally, airlines

(Orbitz.com) and automobile manufacturers (Covisint.com)

cooperated to form Internet portals to increase their own

efficiencies. With a shift toward simultaneous cooperation

and competition, the focus moves from market share to

market growth; from traditional competitive strategies to

nontraditional cooperative strategies including outsourcing

customers; and from vertical integration to virtual integration.

Research questions:

(14) Will business marketing paradigms evolve from

competition-based toward alliance-based rules?

(15) Will evaluation standards change from market-based

(e.g., market share) to alliance-based (alliance

share)?

6. Implications of the acceptance of the Internet:

value migration

The major impact of the lack of usage of the Internet by

business firms will be in the domain of value migration.

Recently, the dramatic implications of ‘‘value migration’’

for established industries have been highlighted [7]. Value

migration identifies how firms such as Nicor have captured

growth in revenue, profits, and market value from previ-

ously dominant firms such as US Steel. The shift in markets

is not due to products, but is due to the innovative business

design of these new businesses that allows them to capture

value. These firms use superior customer selection, differ-

entiated offerings, go to market strategies, and configure

resources to capture value in the market space [7].

In the current business market environment of the

enhanced usage of the Internet and fragmented markets,

the disparate utilization of the Internet will lead to value

migration becoming more prevalent in a large number of

established industries. The impact of the Internet will be

dramatic due to the following reasons mentioned below.

6.1. Declining market prices

Economists believe that we may be entering an era of

disinflation. In this context, business marketers are expect-

ing and planning for an era of consistently declining prices

[1]. Therefore, business marketers will be under constant

pressure to maintain margins in the era of declining prices.

The Internet can reduce costs by reducing the informa-

tional and transactional frictions. When the Internet is not

utilized, margins cannot be maintained within a business

design, and there will be a ‘‘value migration’’ from the

given industry.

6.2. Rising competitive intensity

Most business marketers agree that the level of competi-

tion is rising. One of the reasons is the availability of capital,

especially in the US, for alternative business designs. Also,

due to global restructuring, competition is emerging from

new arenas. For example, the steel industry that was

dominantly based in the US, Japan, and Germany is under

successful attack from firms in South Korea, Russia, and

India. In this era of hypercompetition, firms that use all of

their resources will survive. If the Internet’s capabilities are

not utilized, business value can migrate to different nations.

6.3. Advanced technology enablers

Advanced technology is increasing the communication

flows between suppliers and buyers [1]. Therefore, value

migrates from firms at a more rapid pace. Technology such

as Internet, electronic commerce, and EDI are fundament-

ally changing business processes. If firms do not adapt their

processes to include the Internet, value will migrate due to

technology enablers.

6.4. Reverse marketing strategies

Traditional strategies are product-focused — the tra-

ditional business process flow is from R&D and sourcing

to manufacturing, sales, and service. Increasingly, market-

focused organizations are organizing into reverse marketing

— they begin with customer needs, and the customer

becomes the focus of their business marketing strategies

[1]. It is apparent that the latter strategies will provide more

value to customers of firms. The Internet is the medium that

will allow an easy adaptation of reverse marketing strategies

because of the ease of informational transformation. There-

fore, value will migrate from firms that focus on products

A. Sharma / Industrial Marketing Management 31 (2002) 77–84 83

and follow traditional marketing, when compared to firms

that use the Internet to practice reverse marketing.

6.5. Strategic positioning

In the past, companies partnered primarily for operational

efficiency (i.e., just-in-time procedures or zero-inventory

models). Today, due to intense competition, firms need to

concentrate on alliances based on effectiveness. Recently,

IBM and Dell formed an alliance to share technology. The

Internet is a platform for extensive communication (Fig. 3),

and firms that do not partner for effectiveness by utilizing

the Internet will see value migrate from their industry.

6.6. Disruptive innovation

In addition to business design leading to value migration,

another reason for value migration is the innovator’s

dilemma. New firms utilize disruptive technologies that

negatively affect incumbents [8]. Established companies

are effective at creating value for their existing customers

and do not take notice of disruptive technologies that may

affect the very nature of their industry in the future.

Established firms allocate their resources to focus on activ-

ities that address customers’ existing needs. This focus on

existing customer needs keeps firms from investing resour-

ces in disruptive technologies that are not seen as valuable

to their prominent customers.

An example of disruptive technologies leading to value

migration can be seen in the telecommunications industry.

Traditional firms such as Lucent, Nortel, and Siemens sold

telephone switches to traditional telephone companies.

Cisco Systems developed networking solutions for personal

computers. As the technology for voice and data have

merged, Cisco personal computer network switches have

become suitable for telecommunications markets. To com-

pete, Northern Telecom acquired Bay Networks and Lucent

acquired Ascend. It is expected that the majority of tele-

communication switching will be packet-based and net-

works such as Level 3 have emerged that are IP-based.

Therefore, disruptive technology from personal computers

has changed the telecommunications industry. The Internet

is a platform that allows firms to better monitor needs of

existing and emerging customers, as well as existing and

emerging competition; firms that extensively utilize the

Internet will be less vulnerable to disruptive innovations.

7. Conclusion

Based on the confluence of marketing needs and the

emergence of the Internet, this paper suggests that business

firms will need to utilize the Internet in their marketing

processes. By utilizing the Internet, firms will better serve

the needs of their customers. This movement will impact

business-to-business marketing in the areas of markets, cost

structures, location, time, and competition. If business firms

do not utilize the Internet, there is a high probability that

value will migrate from the firm.

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Arun Sharma is Professor and Chair of the Department of Marketing at

the University of Miami. He received his PhD from the University of

Illinois at Urbana Champaign and has published extensively in the areas of

sales management and business marketing.

A. Sharma / Industrial Marketing Management 31 (2002) 77–8484