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Principles of Online Presence

Image copyright: Melanie K., stock.xchng

This resource is designed specifically for Unit 6 of the Edexcel BTEC qualification, 'Business Online'.

Aim

This area of the Business Studies curriculum aims to investigate some of the reasons why businesses develop an online presence and the impact this has on customers.

An online presence means setting up a Web site for your business. The Web site may have a variety of functions, ranging from promoting the company to a wider audience, offering support/advice or selling products and services through e-commerce.

Initially, we will examine the impact of four Web sites. We will then explore the key opportunities and possible pitfalls for a business arising from an online presence. Finally, we look into the impact of a business' online presence on the customer.

At the time of writing (Spring 2006), the Web sites referred to in this resource were freely available and the details below correct. However, Biz/ed cannot guarantee the continued availability of third-party sites but will endeavour to keep this resource up to date with different examples should the need arise.

Focusing on the features and design, here are some of our thoughts on the Web sites:

• Honda Racing F1
  The Honda Racing F1 site promotes the activities of the Honda Racing Formula 1 team. In addition, there is a shop to buy merchandise. The site is visually appealing and regularly updated sections (news, latest pictures, etc.) mean that visitors are likely to return for the latest information. However, it could be argued that there is little contrast between the grey text of the navigation and the black background colour, which may make this text difficult to read. The Web site is also available in eight different languages so would have a wide appeal.
• SCONUL
  The SCONUL Web site promotes the activities and publications of the Society of College, National and University Libraries. One of the most prominent pieces of content on the homepage is information on what SCONUL is. A new visitor would find this information invaluable. There is a site map and site search, allowing a visitor to quickly find the information they require. Latest news is visible on the homepage and this highlights the fact that the site is regularly updated. There is also a 'change font size' feature so the user may increase the size of the text to make it easier to read. However, a user may be put off by the fact that the copyright link refers to 2003 rather than 2005 and the presence of both 'contact us' and feedback' links may be confusing.
• ACF Hospitality
  The Web site is for ACF Hospitality, a company that organises corporate events. The first content to appear is an animation (produced in Macromedia Flash). Although a visitor could follow the 'Skip Intro' link, it could be argued that this animation is a distraction from the site content (especially for regular visitors). In addition, most of the content of the Web site is delivered through Flash animations. Anyone visiting the site using a device that didn't support Flash may be unable to access the content. However, assuming you can access the content, the layout reflects the active nature of the company and the constantly changing testimonials and prominent contact details instil confidence in the organisation.
• Biz/ed
  Biz/ed supports students and educators of business studies, economics and related subjects. Visitors to the homepage can quickly determine what new content is available on the site, be it new and updated resources for educators, topical news items ('In the News') or the latest resources on current topics ('What's New'). New visitors can quickly gain familiarity with the site through reading the descriptions of the main site sections, using the site map or searching for relevant information. However, the homepage can appear busy or cluttered and may be off-putting to new users.

What makes a 'good' Web site?

In briefly examining these Web sites, we have highlighted some of the many issues that must be considered by businesses when developing an online presence, but what makes a 'good' Web site?

Biz/ed's view on what makes a 'good' Web site

Image: An online presence means firms can reach people wherever they are through developments in mobile Web technologies. Copyright: Michal A. Valasek, stock.xchng

• Content - content is the principal reason people visit Web sites, so it must be original and engaging. The Web site should be well structured so that it is easy for both new and experienced users to find information quickly.
• Regular updates - the Web site must be regularly updated. New content should be highlighted and easy for regular visitors to find.
• Load time - the graphics and code behind the Web site should be optimised to ensure that the pages are fast to load, even for people with slow internet connections.
• Interoperability - the Web site must display properly and function correctly on a wide range of devices. Many Web sites are poorly implemented and will only 'work' in a narrow range of devices (for example, just on Microsoft Internet Explorer). Web sites can be viewed on a variety of devices and should be usable on all of them. These devices include Web browsers (e.g. Internet Explorer, Firefox, Mozilla, Opera, etc.), mobile phones, Personal Digital Assistants (PDAs), assistive technologies (devices designed to help those with disabilities) and even Web enabled fridges.(http://www.lginternetfamily.co.uk/fridge.asp)
• Accessibility - everyone has the right to access content on the Web. Businesses have a social, moral and legal obligation to provide a Web site that can be used by anyone irrespective of their disabilities. A visually impaired person, for example, may want to increase the size of the text on a Web page to make it easier to read. This functionality is present in most Web browsers but Web site designers can disable this functionality through poor implementation of a Web site. This results in the surfer being unable to access the information on the Web site. We will examine this subject more fully in the 'Simple Business Web site' resource.
• Consistent user interface - the design and layout of the site should remain consistent throughout (this is often the most obvious difference between an amateur and professional Web site). You should also include familiar navigational tools, for example, a site map(http://www.bized.co.uk/homeinfo/sitemap.htm), help pages(http://www.bized.co.uk/help/helphome.htm), contact information(http://www.bized.co.uk/talkback/talkhome2.htm) and a site search(http://www.bized.co.uk/search/advsearch.htm).

On the Web, content is king; businesses must give people a reason to visit (and keep visiting) their Web site. So why do businesses develop Web sites and what are the potential pitfalls and problems?

Factors to consider when developing an online business presence

Why develop an online presence?

• Globally available, 24/7 marketing tool:
  • a shop that never closes
  • a brochure that never goes out of date (or shouldn't do)
  • a support line/helpdesk that's always available
  
  
• Niche markets and levelling the playing field - having an online presence means that businesses in specialised markets can gain excellent exposure. For example:
  • A Quarter of - an old fashioned sweet shop (http://www.aquarterof.co.uk/)
  • Somerset Organics - a shop selling produce direct from an organic farm (http://www.somersetorganics.co.uk)
    
    

  Task 4

  Consider how successful these two companies (above) would be if they tried to compete in a traditional way with supermarkets.

  Find two other examples of companies in niche markets that benefit from a Web presence and why.

  
  
• Reduced running costs and e-commerce - some business only operate online (for example: Chain Reaction Cycles)(http://www.chainreactioncycles.com). Costs are kept down through:
  • reduced staffing costs (no need for traditional sales people).
  • offices can be much smaller since customers will not be visiting and some staff will be able to work remotely. Traditional 'front of house' sales space can now be used for stock storage, allowing businesses to buy in bulk, take advantage of greater economies of scale and maximise profits. Businesses that operate solely online can be based in non-traditional locations, for example, a spare bedroom or offshore tax havens.
  • online shops can display a much wider range of products than the 'bricks and mortar' equivalents.
    
    

    Image: Firms such as Amazon.com have a competitive advantage over small local book shops such as this, which are unable to stock the same variety of books. Copyright: Maxim Lachmann, stock.xchng

  • orders received electronically can be linked to stock monitoring software, so replacement stock can be ordered automatically from suppliers.
  • many banks now offer e-commerce solutions. These can be linked directly to the bank account of the company, with the bank verifying credit card details and making the appropriate transactions, thereby making cash flow more efficient (for example: Barclays ePDQ)(http://www.barclaycardmerchantservices.co.uk/new_customers/type_of_business/over_the_internet.html).
  • product updates can be made available online. For example, updates to software can be downloaded by customers rather than put on CD/DVD and sent through snail mail.
    
    

  Task 5

  In the example of Chain Reaction Cycles(http://www.chainreactioncycles.com), what problems might the business face as a result of only operating online and not having a 'traditional' shop?

  Do the advantages of operating solely online outweigh the disadvantages of having a 'traditional' shop?

  
  
• Direct marketing - Some Web sites require users to register before using them. These businesses can then send direct mailings (either through email or via the postal service) to people who have already expressed an interest in the company. This information is easy to collect but required registration can put people off, and there are other associated issues with collecting personal data, as we will see below.
  
  
• Cost effective marketing - A business may also upload video or print ad campaigns to their Web site, thereby gaining greater exposure than through television or printed media alone (for example, The Honda 'cog' advert(http://www.boardsmag.com/screeningroom/commercials/581/) or printed adverts for the International Mountain Bicycling Association(http://www.imba.com/resources/logos/)). This is particularly useful if the adverts are popular... "I missed the new Honda ad on TV last night but I went to their Web site and watched it instead".
  
  
• Novel content delivery - Content from one company can be made available for use on other Web sites. A business can then be promoted on other Web sites and gain greater exposure (for example, syndicating content from Biz/ed(http://www.bized.co.uk/homeinfo/feeds.htm)).
  
  
• Rapid response to changing trends - Online content can be changed very rapidly, allowing businesses to publish details of new products and services more rapidly than through more traditional media (for example, adverts in magazines or television commercials).

What else should a business consider?

• Expense - It seems that everyone knows someone who can produce Web pages. However, high quality Web sites can cost a lot of money and require experienced professionals. Inexperienced Web developers may produce sites that only display correctly in a small range of Web browsers, discriminate against disabled users (see legal issues below), contain typographical/factual errors and are difficult to use. These problems give a poor impression of the company and customers are unlikely to return to the site.
  

  Image: Cutting corners financially can lead to a frustrating experience for a Web site's users. Copyright: Jesper Noer, stock.xchng

  Many businesses feel it's important to have an online presence but rush to get something online without considering what they're trying to achieve or undertaking much quality assurance. The people most likely to visit a new Web site are those who already know about the business and are most likely to be regular customers. Unfortunately, it's these people who suffer the initial 'teething troubles' of a new Web site and are unlikely to return, even after errors have been corrected.

  Professional development of a Web site may appear expensive (experienced developers may charge anything between £200 - £600 a day depending on the complexity of the work required) but companies using less experienced developers must assess the risk to their business caused by lost custom through less-than-favourable first impressions.

  The Total Cost of Ownership of a Web site is often overlooked. However, as this fictitious scenario illustrates, the costs can be enormous: Understanding Total Cost of Ownership(http://www.aspnews.com/trends/article.php/945501). The case study refers to a content management system (CMS). A CMS is a software program that allows the content of a Web site to be changed (usually without requiring an in-depth knowledge of Web design).

• Legal issues - most businesses are aware of their legal obligations regarding their physical premises (for example, providing ramps for wheelchair access) but many are unaware of similar obligations for their Web site.

  In the UK (and many other countries) it is illegal to produce a Web site and not make 'reasonable adjustment' to ensure that the information and services provided through it can used by everyone irrespective of their disabilities. Failure to address these issues can lead to a business being sued for unlimited damages under the Disability Discrimination Act 1995(http://www.opsi.gov.uk/acts/acts1995/1995050.htm) and the Special Educational Needs and Disability Act 2001(http://www.hmso.gov.uk/acts/acts2001/20010010.htm). Further details on accessibility (ensuring your Web site can be used by people with disabilities) will be covered in the 'Simple Business Web site' resource. In addition to accessibility, organisations must be aware of issues arising from the Freedom of Information Act 2000(http://www.bized.co.uk/educators/16-19/business/external/lesson/foi1.htm) and the Data Protection Act 1998(http://www.informationcommissioner.gov.uk/eventual.aspx?id=302), especially if their Web site is used to collect personal data via a registration system. Experienced developers will be aware of the these issues and can advise accordingly. If these issues are not addressedm, can the business risk the financial cost and negative publicity resulting from being sued?

• Competition - For most businesses, their online competitors are only a 'click' away. If, for whatever reason, a business Web site doesn't give the correct impression, a customer can easily find the Web site of a competitor.
  
  
• Maintenance and Security - a poorly maintained or out-of-date Web site creates a bad impression of the business. Businesses must ensure that, once launched, they have the staff to maintain and update their Web site. The business must also ensure that the computer hosting the Web site is protected from hackers (a person who tries to gain unauthorised access to a computer) and that the software running the Web site is bug free (for example, BBC: Barclays re-opens online banking site)(http://news.bbc.co.uk/1/hi/business/860104.stm).
  
  
• Loss leading - the dot com boom and subsequent crash showed that just having an online presence will not guarantee customers and overnight success. It can take months for a Web site to appear in search results for the most popular search engines (for example, Google(http://www.google.co.uk)). During this time, promotion for a business Web site must be through other means: for example, print adverts. Even the most well known online retailers can struggle to make a profit; it was almost eight years before Amazon.com had a profitable quarter period of a year (source: Monday Memo: Jeff Bezos and Amazon.com: Profit by the Numbers(http://www.mondaymemo.net/040202feature.htm)).

Impact on customers

Having considered why a business may have an online presence, what is the impact on the customers?

Image: Shopping around for the best price on electrical items such as the iPod mini is easy when you know where to look on the Web. Copyright: Elisa Nobe, stock.xchng

• Choice - customers are no longer restricted to shopping in a particular geographical area. They can browse and buy items from shops anywhere in the world. Shoppers not only have a wide choice of retailers but price comparison is easy and can be automated (for example, Froogle(http://www.froogle.com)).

  Customers can also base purchasing decisions on ethics rather than purely fiscal grounds - a choice not always possible on the high street. For example: Howies®(http://www.howies.co.uk) is a company producing high quality clothing that has the lowest possible impact on the environment. Consumers who are concerned about the environmental impact of chemical use in the production of cotton can choose to buy products from Howies® safe in the knowledge that the products are made from 100% organic cotton.

• Flexibility - the 'always on' nature of the World Wide Web means that customers are not restricted to shopping within traditional hours. Orders can be placed at any time and then goods tracked online so the customer knows when to expect delivery.
  
  
• Grey imports - buying online may mean that the product is actually a 'grey import'. Grey imports are products intended for consumers in one country but then sold in a different country (for example, cars(http://www.autotrader.co.uk/CARS/buy/ba/buyingadvice_ba-14.jsp)). Grey imports are often cheaper due to tax or exchange rate differences between the two countries. However, consumers may find that grey imports have different specifications and warranty conditions than the product available in the consumer's country of origin.
  
  
• Pre-sales and After-sales care:
  • Good - through the use of online Frequently Asked Questions (FAQs), forums, help pages and online versions of product manuals, customers can get rapid help with their purchases. This help may come from other consumers, the retailer or the manufacturer. For example, the customer reviews on Amazon(http://www.amazon.co.uk/exec/obidos/ASIN/0273655744/qid=1112801716) or negative publicity sites such as BT suck(http://btsuck.org/).
  • Bad - in order to keep operating costs low, some retailers only offer email support. This means that if something goes wrong with a product you may only be able to contact the retailer by email. They may be slow to respond or may be in a completely different time-zone, thereby increasing the time it takes to resolve the problem.
  
  
• Impressions and trust - inexperienced Web users may have difficulty assessing the quality of a particular shop based on their Web site alone. Choices based solely on price rather than critically appraising the Web site (and hence the type of business you're dealing with) may result in the customer receiving a poor level of service. Advice of 'What to do before you buy' is available from the Office of Fair Trading(http://www.oft.gov.uk/Consumer/Your+Rights+When+Shopping+From+Home/Online+shopping/Before+you+buy.htm).

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