CHAPTER THREE: TECHNOLOGY OF MARKETING

INFORMATION SYSTEMS 

1.1 Components of information system

An information system (IS) is a coordinated network of components that collect (or retrieve),
process, store, and distribute information to support decision making, coordination, control,
analysis, and visualization in an organization. These components are crucial for the effective
functioning of information systems within organizations.

Each component of an information system plays a critical role in its overall functionality.
Hardware and software provide the technological foundation, databases organize and store
data, networks ensure connectivity and communication, and human resources bring the
system to life by designing, maintaining, and using it to achieve organizational goals.

These components are crucial for the effective functioning of information systems within
organizations. The components of an information system are typically categorized into five
major components:
 1. Computer Hardware

Hardware refers to the physical components of a computer system that one can directly
interact with, such as the main system unit (including towers, desktops, laptops), along with
internal and external devices like keyboards and monitors. These tangible parts of the
computer, including peripheral devices that might use either wired or wireless connections,
interface with the system's core through software, highlighting the tangible aspect of
technology that users interact with.

This includes:

 Computers: Desktops, laptops, and servers.

 Input Devices: Keyboards, mice, scanners, and barcode readers for entering data into
the system.

 Output Devices: Monitors, printers, and speakers for presenting information.

 Storage Devices: Hard drives, solid-state drives, and USB flash drives for data storage.

2. Computer Software

Software acts as the directive force for hardware, telling it how to operate and perform
specific tasks. It's broadly categorized into system software and application software. The
operating system, like Windows or macOS, is a critical system software that controls
hardware operations. Conversely, application software addresses particular user tasks such as
spreadsheet management, document creation, or website design, emphasizing the intangible
components that drive system functionality. There are two main types:

 System Software: Includes operating systems (like Windows, macOS, Linux) that
manage hardware resources and provide common services for application software.

 Application Software: Programs that perform specific tasks for users, such as word
processors, spreadsheets, database management systems, and more specialized
applications tailored to specific business needs.
3. Database

A database is a structured collection of data that allows for the efficient retrieval, insertion,
and deletion of data. It serves as the central repository for storing and managing data within
an information system. Databases support:

 Data Management: Organizing, storing, and managing access to data.

 Data Retrieval: Providing efficient access to data through queries.

 Data Manipulation: Allowing for the addition, deletion, and modification of data.

4. Network

Networks define the connectivity framework that links multiple systems through transmission
media, facilitating the exchange of information. This connectivity is vital for the seamless
flow of data across different components of the information system, enabling both the receipt
and dissemination of information. Networks underscore the interconnected nature of modern
information systems, providing a crucial backbone for communication and data exchange

Networks connect the various hardware components and enable them to communicate with
each other, both within and outside the organization. Networks are composed of:

 Networking Hardware: Routers, switches, modems, and the physical cabling or

wireless technology that connects devices.

 Networking Software: Operating systems and applications that manage network

resources and security protocols to ensure data integrity and confidentiality.

 Internet Connectivity: Enables access to the World Wide Web, email, and cloud-based
applications and services.

5. Human Resource

The human component is paramount in an information system, encompassing all users who
operate and interact with the system. This includes individuals who manage, maintain, and
use the system, ensuring that data is transformed into actionable knowledge. The interplay
between people and technology is essential for extracting valuable insights from vast data
 repositories, making the human element indispensable in leveraging technology for informed
decision-making.

People are an essential component of an information system and include:

 End Users: Individuals who use the information system for various tasks, such as
entering data, querying databases, or creating documents.

 IT Professionals: Include system analysts, database administrators, network

administrators, and software developers who design, implement, maintain, and support
information systems.

 Management: Decision-makers who use information generated by the system to plan,

organize, and run operations.
1.2 Data Resource Management

Data resource management is a managerial, administrative, and technical function that uses
IT systems to ingest, store, organize, maintain, and secure an organization's data. It aims to
ensure data accuracy, accessibility, and reliability to meet business needs, utilizing tools like
database management systems (DBMS), data warehouses, and data mining to turn data into
actionable insights. Key components include data governance, database administration, and
security, essential for driving business efficiency and supporting strategic decision-making.

Key Aspects of Data Resource Management

 Core Functions: The process includes capturing, maintaining, and processing data, ensuring
it is secure and available to stakeholders.

 Database Management Systems (DBMS): These are used to store and organize data into
logical structures such as files, records, and fields.

 Data Warehousing & Mining: Organizations consolidate data from various sources into
data warehouses for analysis, while data mining identifies patterns and trends for better
decision-making.

 Data Governance & Stewardship: Dedicated, skilled personnel (data stewards) are required
to maintain data quality and establish standards.
 Security: Protection of data against unauthorized access and breaches is a critical aspect,
requiring strict policies and auditing.

Benefits and Importance

 Improved Decision-Making: Facilitates better-informed decisions through reliable, timely

data.

 Operational Efficiency: Enhances business operations and reduces costs.

 Regulatory Compliance: Helps in adhering to data privacy and protection laws.

 Competitive Advantage: Enables identification of trends for improved marketing and

customer relationship management.

1.3 E-business

In today's digital age, businesses must adapt to changing technologies and consumer
expectations to remain competitive. Companies are doing this by leveraging e-business or
electronic business processes to conduct their operations online. In this article, we will
explore the definition of e-business and its importance in the current business landscape.

Definition of E-Business

E-business, short for electronic business, refers to using digital technologies to conduct
business processes online. E-business encompasses a wide range of customer, internal, and
management-focused processes. These processes include buying and selling goods and
services, managing supply chains, processing payments, and collaborating with business
partners.

Simply put, E-business is the use of electronic technologies such as the internet, mobile
devices, and other digital platforms to conduct business operations. The definition of e-
business varies depending on the context, but it generally involves using technology to
improve and streamline various business processes, such as marketing, sales, customer
service, supply chain management, and more. E-business can help organizations reduce costs,
increase efficiency, and expand their reach to a global audience.
In a business context, e-business refers to using electronic technologies to conduct various
business operations, including buying and selling products and services, marketing, and
customer relationship management. It involves the integration of technology, processes, and
people to create new business models and improve existing ones. E-business allows
businesses to reach a wider audience, increase efficiency, reduce costs, and provide better
customer experiences. It has become a crucial aspect of modern business, especially with the
increasing adoption of digital technologies and the growth of online marketplaces.

In technology, e-business refers to the use of digital technologies to conduct business

activities, such as buying and selling goods and services, managing supply chain processes,
and interacting with customers. It encompasses a range of electronic tools and technologies,
including e-commerce platforms; electronic data interchange (EDI) systems, online payment
systems, and customer relationship management (CRM) software. E-business is often used
interchangeably with e-commerce, although e-business has a broader scope that includes all
types of digital interactions between businesses and their stakeholders.

In management, e-business refers to the integration of electronic technologies into all aspects
of a business, including internal operations, interactions with customers and suppliers, and
the creation of new business models. It involves using digital tools and platforms to optimize
business processes, improve customer experiences, and drive innovation. E-business can help
organizations to achieve greater efficiency, flexibility, and competitiveness in the fast-paced
digital marketplace.

In operations management, e-business refers to the use of internet technologies to conduct

business operations and manage the production and delivery of goods and services. This
includes the use of electronic networks and systems to automate and streamline supply chain
management, order processing, inventory management, and customer service. E-business can
improve operational efficiency, reduce costs, and increase flexibility in responding to
changing market conditions.

In computer science, e-business (electronic business) refers to the use of the internet and
other digital technologies to conduct business processes, including buying and selling of
goods and services, marketing, customer service, and other related activities. E-business
enables organizations to streamline and automate their operations, improve customer
engagement and experience, and expand their reach to global markets. It involves the
integration of various technologies such as electronic data interchange (EDI), online
transaction processing, and supply chain management systems. E-business has become
essential to modern business strategies, enabling organizations to remain competitive in a
rapidly evolving digital landscape.

The different definitions of e-business reflect the fact that the term can have different
meanings depending on the context in which it is used. For example, the definition of e-
business in computer science may focus on the technical aspects of conducting business
online, while the definition in business may focus more on the strategic and economic
implications of e-business for organizations.

Similarly, the definition in technology may emphasize the role of digital platforms and tools
in enabling e-business, while the definition in management may focus on the organizational
and managerial challenges associated with implementing and leveraging e-business
strategies.

Finally, the definition in operations management may focus on how e-business can improve
operational efficiency and supply chain management. Overall, the specific context in which
e-business is being discussed can significantly impact how the term is defined and
understood.

Importance of E-Business in the Current Business Landscape

With the increasing availability and reach of the internet, e-business has become a vital
component of modern business operations. Companies that leverage e-business processes can
conduct their operations online, streamline workflows, and improve efficiencies. E-business
also allows businesses to reach a broader customer base and provide personalized experiences
that meet customer expectations.

Furthermore, the COVID-19 pandemic has highlighted the importance of e-business in

enabling remote work and online transactions. Many businesses that previously relied on
traditional brick-and-mortar operations had to pivot to e-business processes to stay afloat
during the pandemic.
Types of E-Business

E-business is classified into different types based on the nature of the transactions and parties
involved. Here are the four main types of e-business:

Business-to-Consumer (B2C) Model

B2C e-business involves selling products and services directly to consumers through digital
channels. This model allows businesses to reach a wider customer base and offer
personalized experiences. Examples of B2C e-business include online retailers such as
Amazon and clothing brands such as ASOS.

Business-to-Business (B2B) Model

B2B e-business involves transactions between two or more businesses. These can include
buying and selling goods and services and collaborating on research and development
projects. B2B e-business is often used in supply chain management to streamline operations
and reduce costs. Examples of B2B e-business include Alibaba, a global e-commerce
platform that connects businesses with suppliers.

Consumer-to-Business (C2B) Model

C2B e-business is a reverse of the traditional business model where consumers create their
demand and value. In this model, consumers sell products or services to businesses.
Examples of C2B e-business include freelance platforms such as Fiverr and Upwork, where
individuals offer their skills and services to businesses.

Consumer-to-Consumer (C2C) Model

C2C e-business involves transactions between consumers through third-party platforms.

Examples of C2C e-business include online marketplaces such as eBay and Craigslist, where
consumers can buy and sell goods and services with other consumers.

Benefits of E-Business

E-business has transformed how businesses operate, bringing numerous benefits to

organizations of all sizes. Here are ten benefits of e-business:
  Increased Productivity and Efficiency

E-business automates many previously manual tasks, including invoicing and payments,
order processing, and customer service. Automation reduces the workload for employees,
freeing up their time to focus on higher-value tasks. For example, Fossil, an American
fashion brand, implemented an e-commerce platform that automated its order processing and
increased its productivity by 15%.

 Lower Costs

E-business eliminates many costs associated with traditional business models, such as rent,
utilities, and physical inventory. Online businesses can operate with smaller teams, lower
overheads, and reduced marketing expenses. For example, Dollar Shave Club, a subscription-
based razor company, eliminated the need for physical storefronts and focused on online
marketing to reach its customers, reducing its marketing costs by 90%.

 Global Reach and Accessibility

E-business allows businesses to reach a broader customer base, regardless of geographic

location. This reach increases the potential for sales and revenue and provides customers with
24/7 access to products and services. For example, Airbnb, an online marketplace for short-
term rentals, has a global presence, connecting hosts with guests worldwide.

 Improved Customer Interactions and Experiences

E-business allows businesses to provide personalized customer experiences, improving

customer satisfaction and loyalty. Personalization includes personalized recommendations,
customized pricing, and tailored marketing messages. For example, Spotify, a music
streaming platform, uses data analytics to provide customized music recommendations to its
users, increasing engagement and retention rates.

 Better Data Management and Analysis

E-business generates vast amounts of data, which is analyzed to gain insights into customer
behavior, market trends, and business performance. This analysis helps businesses make data-
driven decisions and optimize their operations. For example, Starbucks, a global coffee chain,
uses data analytics to track customer purchases and preferences, enabling it to tailor its
marketing campaigns and menu offerings to meet customer demand.

 Faster Decision-Making

E-business enables businesses to make faster and more informed decisions, reducing the time
it takes to respond to market changes and customer needs. These decisions include real-time
inventory management, agile development, and rapid prototyping. For example, Zara, a
Spanish fashion retailer, uses e-business to quickly respond to fashion trends and bring new
products to market in as little as two weeks.

 Ability to Offer Personalized Experiences

E-business allows businesses to offer personalized customer experiences based on their

preferences and behaviour. Personalization increases customer engagement and loyalty and
can lead to higher conversion rates and sales. For example, Netflix, a video streaming
platform, uses data analytics to personalize its recommendations to each user, increasing its
user engagement and retention rates.

 Greater Flexibility and Scalability

E-business allows businesses to adapt quickly to changing market conditions and scale their
operations up or down as needed. This ability includes cloud-based services, remote work,
and on-demand staffing. For example, Amazon Web Services, a cloud computing platform,
allows businesses to quickly and easily scale their IT infrastructure to meet changing
demands.

 Innovation and New Business Models

E-business enables businesses to develop new products and services and create innovative
business models. These services and models include platform-based companies, subscription
models, and peer-to-peer marketplaces. For example, Uber, a ride-hailing platform, disrupted
the traditional taxi industry by creating a new business model that connects riders with
drivers through a mobile app.
  Competitive Advantage

E-business gives businesses a competitive advantage, allowing them to differentiate

themselves from their competitors and capture market share. Differentiation includes faster
delivery times, lower prices, and better customer experiences. For example, an e-commerce
company that can offer free and fast shipping may attract more customers than a competitor
that charges for shipping or has longer delivery times. E-businesses that provide personalized
experiences, such as recommendations based on a customer's purchase history, can also stand
out from competitors.

Moreover, e-businesses can quickly adapt to changing market trends and customer demands.
They can gather and analyze data on customer behavior, preferences, and purchasing habits,
allowing them to tailor their offerings and marketing strategies accordingly. This agility and
flexibility is a competitive advantage in a fast-paced and dynamic business environment.

In addition, e-businesses can also leverage technology to develop innovative business models
and revenue streams. For instance, the rise of the sharing economy and peer-to-peer platforms
is mainly due to the advancements in e-business technology.

Overall, e-business can provide businesses with various competitive advantages crucial for
success in today's digital landscape. By embracing e-business strategies and technologies,
companies can stay ahead of the competition and grow their customer base and revenue.

Examples of E-business

E-business has transformed how businesses operate, and there are numerous examples of
successful e-businesses across various industries. Here are some notable examples:

 Amazon is one of the world's largest online retailers and marketplaces. It has used its
e-business model to disrupt and expand into numerous industries, including
publishing and supermarkets. Amazon has streamlined the shopping experience
through its digital capabilities, offering personalized recommendations, fast shipping,
and easy returns.
 Uber: Uber built its business by matching drivers with people needing rides,
disrupting the taxi and livery services industries. Uber has expanded its e-business
with the launch of Uber Eats, a food ordering and delivery platform.
  Expedia: Expedia is an online travel agency that enables consumers to research, plan
and book all or pieces of their trips based on personalized criteria, such as price,
consumer ratings, and location. The company operates in over 70 countries and offers
various services, including flights, hotels, car rentals, and activities.
 Schindler Group: Schindler Group is a multinational elevator and escalator company
founded in 1874. Schindler has incorporated e-business using IoT and other
technologies to add internet and mobility services to its product offerings. Its digital
capabilities enable it to offer predictive maintenance, energy efficiency services, and
smart building solutions.
 Shopify: Shopify is a platform providing infrastructure and e-commerce capabilities
for customers to create online stores and sell their goods. Shopify has enabled the
creation of entirely new business models, offering new avenues to sell goods and
services, such as email marketing.

These companies have leveraged e-business to grow and expand their operations, innovate
their business models, and offer personalized experiences for their customers.

E-business has revolutionized the business world, allowing organizations to increase reach,
lower costs, and improve their processes. From established legacy companies to newer
digitally-oriented organizations, e-business has become essential to any business strategy.

E-commerce vs. E-business

E-commerce and e-business are different but often used interchangeably. E-commerce refers
to buying and selling products or services online, while e-business encompasses a broader
range of activities, including supply chain management, electronic order processing, and
customer relationship management.

The key differences between e-commerce and e-business are:

 Scope: E-commerce is a subset of e-business. E-commerce refers to online

transactions involving the buying and selling of goods and services. On the other
hand, E-business refers to the broader range of activities that involve using electronic
networks to conduct business processes.
  Function: E-commerce focuses on online transactions, such as shopping carts,
payment gateways, and product catalogs. E-business encompasses various functions,
including supply chain management, electronic order processing, and customer
relationship management.
 Purpose: E-commerce primarily focuses on generating revenue through online sales.
However, E-business focuses on improving business processes, increasing efficiency,
and reducing costs.
 Technology: E-commerce requires a specific technology infrastructure, including
online payment systems and shopping carts. E-business requires a broader range of
technologies, including enterprise resource planning (ERP) systems, customer
relationship management (CRM) systems, and supply chain management systems.

In summary, while e-commerce is a crucial aspect of e-business, it is only one part of a

broader set of activities. Understanding the difference between the two concepts is essential
for businesses developing a comprehensive digital strategy.

Components of E-business

E-business involves a broad range of activities and processes conducted electronically. While
the specific components of e-business can vary depending on the nature of the business,
several key components are common to most e-businesses:

 Supply chain management: E-business involves using electronic networks to manage

the flow of goods and services from suppliers to customers. Supply chain
management systems help businesses manage inventory, track shipments, and
streamline logistics.
 Electronic order processing: E-businesses use electronic networks to process customer
orders and payments. Electronic order processing systems help businesses automate
the order process, reduce errors, and improve efficiency.
 Customer relationship management: E-businesses use customer relationship
management (CRM) systems to manage customer interactions. CRM systems help
businesses track customer preferences, analyze customer behavior, and personalize
the customer experience.
 Marketing and advertising: E-businesses use digital marketing and advertising to
reach customers online. Digital marketing channels include search engine
 optimization (SEO), social media advertising, email marketing, and online
advertising.
 Data analysis and management: E-businesses generate large volumes of data, which is
analyzed to improve business operations and customer experiences. Data analysis
tools help businesses extract insights from data, track business performance, and
identify trends and patterns.
 Other vital components: Other critical components of e-business include enterprise
resource planning (ERP) systems, human resource management systems (HRMS),
and online collaboration tools.
Challenges of E-business

E-business offers many benefits, but it also comes with challenges that businesses must
navigate. Here are some of the critical challenges of e-business:

 Cyber security threats: E-businesses face a wide range of cybersecurity threats, from
data breaches to hacking attempts. Businesses must invest in robust security
measures, such as firewalls, encryption, and multi-factor authentication, to protect
sensitive data and prevent unauthorized access.
 Scalability and performance issues: As e-businesses grow, they may need help to keep
up with demand and maintain high-performance levels. They may need to invest in
additional infrastructure and resources, such as cloud computing and load balancing,
to ensure they can scale quickly and efficiently.
 Technological advancements and changes: E-businesses must keep up with
technological advances and changes to remain competitive. They must be willing to
adopt new tools and technologies, such as artificial intelligence and machine learning,
to improve their operations and stay ahead of the curve.
 Skill gaps and training needs: E-businesses require skilled workers to navigate
complex technological systems and keep up with rapid changes. However, finding
and retaining these workers can be challenging, and businesses must invest in training
and development programs to keep their workforce up to speed.
 Integration challenges: E-businesses may face challenges integrating different systems
and tools, such as customer relationship management (CRM) software and supply
chain management (SCM) systems. Integration issues can lead to data inconsistencies,
delays, and other problems impacting performance and customer satisfaction.