Professional Documents
Culture Documents
Agenda
Marketing Commerce History of Internet Computer, Networks Intro to E-commerce History of E-commerce WWW What is E-commerce Forces shaping E-commerce E-commerce today Categories of E-commerce What is a web based business E-commerce marketing strategies Setting up for E-marketing (online) Benefits of E-commerce Strategy Formulation Business Model
Definition of Marketing
Philip Kotler
Social and Managerial process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products of value with others.
This definition rests on the following core concepts: needs, wants, demands, products, value, cost and satisfaction, exchange and transactions, relationships and networks, markets, marketers and prospects.
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Definition (cont)
Needs exist in biology they are not created by marketers i.e. shelter, food, clothing, safety, belonging, esteem Wants Need food want hamburger, fries, coke. Desire Wants for specific products backed by an ability and willingness to buy them
Definition of Commerce
The exchange of goods and services for money Consists of: Buyers - these are people with money who want to purchase a good or service. Sellers - these are the people who offer goods and services to buyers. Producers - these are the people who create the products and services that sellers offer to buyers.
Elements of Commerce
You need a Product or service to sell You need a Place from which to sell the products You need to figure out a way to get people to come to your place. You need a way to accept orders. You also need a way to accept money. You need a way to deliver the product or service, often known as fulfillment. Sometimes customers do not like what they buy, so you need a way to accept returns. You need a customer service and technical support department to assist customers with products.
- Hub and spokes can be useless if the hub is destroyed. - Network can continue to be functional even if some nodes are destroyed, as long as information can pass through other nodes.
In the 1980s
Personal computers or terminals were connected to a server. The server was a mainframe, or connected to a mainframe computer. The mainframe was connected to another mainframe of the company in another location via dedicated lines. Only large companies could afford the expense and investment in equipment.
Today
Connections across countries and continents made through dedicated fast lines. A company may have one local network (LAN) in NY, which is connected to the Internet through a Regional network. Well established in N.A., Europe and certain Asian countries
Computer classifications
Mainframes: - term for very large computers - used to handle large amount of data or complex processes - main advantage is reliability Midrange: - medium sized, less expensive and smaller - usually a server Micro-computer: - work stations with computing capabilities - single-users systems linked to form a network
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What is a network
Series of points or nodes interconnected by communication paths Node is a connection point for transmitting data Network can interconnect with other networks to form global networks
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Benefits of a network
Facilitates resource sharing Provides reliability Cost effective Provide a powerful medium across geographical divide
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Geographical Distance
Local area network (LAN): small area, share a single server Metropolitan area network (MAN): a wider network, can bridge several LANs Wide area network (WAN): a broader area covered, can include several MANs Internet: a network of networks that covers the entire globe
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Assimilation of Technology
Technology first adopted to increase efficiency doing the same tasks faster e.g. word processing instead of typing
Technology next adopted to increase effectiveness doing tasks not only faster but better e.g. spreadsheets transformed finance and accounting (as well as science and other fields)
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Introduction to E-commerce
E-Commerce, Web, Networks, Internet The evolution of new businesses The adoption of Brick and Mortar companies to the new economy Market failures and economic explanations for the new economy
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History of E-commerce
Limited to:
- Large corporations - Financial institutions - A few other daring businesses
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E-Commerce Mechanisms
Multimedia documents:
- Text - Images - Sounds - Drawings - Video
Hypertext:
- Links to other documents - Can begin execution of a program
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Web Browsers
Netscape and Internet Explorer The Microsoft legal trouble due to the Explorer.
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Web Servers
Computers that run server software. A server waits for request to arrive from a user.
The server sends (serves) the document to the requesting computer. Sometimes the server allows a user to fill in information on a document, and the then transfers the information to another program or a server.
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What is E-commerce
Distributing, buying, selling and marketing products and services over electronic systems E-business for commercial transactions Involves supply chain management, e-marketing, online marketing, EDI Uses electronic technology such as: - Internet - Extranet/Intranet - Protocols
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Internet Explosion
Explosive worldwide growth forms the heart of the New Economy. Increasing numbers of users each month. Companies must adopt Internet technology or risk being left behind.
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Definitions
Internet:
- A collection of computers that speak a common language protocol
Intranet: - Private version of the Internet - Main purpose to share company information and computing resources among employees Extranet: - Private network that users outside the company can access - Requires security and privacy - Collaborate with other companies
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Create value largely through gathering, synthesizing and distribution of information Formulate strategies that make management of the enterprise and technology convergent Compete in real time rather than in cycle time Operate in a world characterized by low barriers to entry, near-zero variable costs of operation and shifting competition Organize resources around the demand side rather than supply side Manage better relationships with customers through technology
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E-commerce Today
The Internet is the perfect vehicle for ecommerce because of its open standards and structure. No other methodology or technology has proven to work as well as the Internet for distributing information and bringing people together. Its cheap and relatively easy to use it as a medium for connecting customers, suppliers, and employees of a firm. No other mechanism has been created that allow organizations to reach out to anyone and everyone like the Internet.
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E-commerce Today
The Internet allows big businesses to act like small ones and small businesses to act big. The challenge to businesses is to make transactions not just cheaper and easier for themselves but also easier and more convenient for customers and suppliers. Its more than just posting a nice looking Web site with lots of cute animations and expecting customers and suppliers to figure it out Web-based solutions must be easier to use and more convenient than traditional methods if a company hopes to attract and keep customers.
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Consumers
B2B
C2B
Consumers
B2C
C2C
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Business to Business (B2B) refers to the full spectrum of ecommerce that can occur between two organizations. This includes purchasing and procurement, supplier management, inventory management, channel management, sales activities, payment management &service and support. Examples: FreeMarkets, Dell and General Electric Business to Consumer (B2C) refers to exchanges between business and consumers, activities tracked are consumer search, frequently asked questions and service and support. Examples: Amazon, Yahoo and Charles Schwab & Co
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Peer to Peer (C2C) exchanges involve transactions between and among consumers. These can include third party involvement, as in the case of the auction website Ebay. Examples: Owners.com, Craiglist, Monster Consumer to Business (C2B) involves when consumers band together to present themselves as a buyer in group. Example: www.planetfeedback.com
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Consumers
Consumers search out sellers, offers and initiate purchases from Amazon
And Selling to
Business
Consumers
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Business that uses the WWW to fulfill its business process Four basic business processes: - information dissemination - data capture - promotions and marketing - transacting with stakeholders Business objectives interact with web based applications
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Organizational culture- attitudes to R&D, willingness to innovate and use technology Commercial benefits- impact on financial performance of the firm Skilled/committed workforce- willing and able to implement and use new technology Requirements of customers/suppliers- in terms of product and service Competition- stay ahead of or keep up with competitors
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Appeal of E-commerce
Lower transaction costs - if an e-commerce site is implemented well, the web can significantly lower both order-taking costs up front and customer service costs Larger purchases per transaction - Amazon offers a feature that no normal store offers Integration into the business cycle People can shop in different ways. The ability to build an order over several days
The ability to configure products and see actual prices The ability to easily build complicated custom orders The ability to compare prices between multiple vendors easily The ability to search large catalogs easily
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Limitations of E-commerce
To organizations: lack of security, reliability, standards, changing technology, pressure to innovate, competition, old vs. new technology To consumers: equipment costs, access costs, knowledge, lack of privacy for personal data, relationship replacement To society: less human interaction, social division, reliance on technology, wasted resources, JIT manufacturing
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Technical limitations
There is a lack of universally accepted standards for quality, security, and reliability The telecommunications bandwidth is insufficient Software development tools are still evolving There are difficulties in integrating the Internet and EC software with some existing (especially legacy) applications and databases. Special Web servers in addition to the network servers are needed (added cost). Internet accessibility is still expensive and/or inconvenient
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Business Opportunity
The Internet revolutionized ways of doing business Entrepreneurs found ways to exploit market failures and earn economic rents New businesses were created that were not feasible earlier The new economy poses threats to old economy firms that do not wish to adapt The transformation is still in process. The evolution continues
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Challenges
Cannibalization Channel
conflict confusion
Access
Customer Investor
Scalability
confusion
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Direct user interface with business processes Accessible via WWW Front-end systems: - e-CRM - e-marketing - e-services - e-marketplace - e-auction
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Companies need to retain old skills and practices but add new competencies
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E-business is conducting business on the Internet E-business is the transformation of business processes through the Internet
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It consists of companies purchasing goods, services, and information from online suppliers.
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Types of e-Marketers
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Click-Only Companies
E-tailers Enabler Sites
Content Sites
Types of Sites
Transaction Sites
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Click-and-Mortar Companies
Most established companies resisted adding Web sites because of the potential for channel conflict and cannibalization. Many are now doing better than click-only companies. Reasons:
Trusted brand names and more resources Large customer bases More knowledge and experience Good relationships with suppliers Can offer customers more options
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Corporate
websites
websites Placing online ads and promotions Creating or using Web communities Using E-mail
websites
design
Conducting E-Commerce
Seven Cs of Website Design
Context Content Communication Connection Commerce
Community
Customization
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Content
Text, pictures, sound and video that web pages contain
Commerce
Sites capabilities to enable commercial transactions
Community
The ways sites enable user-touser communication
Connection
Degree site is linked to other sites
Customization
Sites ability to self-tailor to different users or to allow users to personalize the site
Communication
The ways sites enable site-touser communication or two-way communication 69
Context
Content
Community
Customization
Communication
Connection
Commerce
Consistent Reinforcement
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Creating
websites Placing online ads and promotions Creating or using Web communities Using E-mail
forms of ads and promotions Banner ads/tickers Skyscrapers Interstitials Content sponsorships Microsites Viral marketing Future of online ads
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Web Advertising
Pop-up ads: pop-under ads are displayed in a separate browser window beneath your main browser window and remain there until you close them
This is a pop-up ad
Click here to close me
Skyscrapers: An advertisement on a Web site that is vertically oriented on the page and larger than the typical banner ad
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Web Advertising
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Web Advertising
Content Sponsorship: are sites that pay for placement in search
results on keywords that are relevant to their business
The upper: This is the part of the shoe that wraps around and over the top of the foot. It may be made of leather or a synthetic material that is lighter and breathable (to reduce heat from inside the running shoe). The tongue of the upper should be padded to cushion the top of the foot against the pressure from the laces. Often, at the back of the running shoe, the upper is padded to prevent rubbing and irritation against the achilles tendon. The heel counter: This is a firm and inflexible cup which is built into the upper of running shoes and surrounds the heel. It is usually very firm so that it can control motion of the rearfoot. Post or footbridge: This is the firm material in the midsole which increases stability along the inner side (arch side; medial side) of the running shoe.
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Web Advertising
http://www.autotrader.com/
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Viral Marketing
Gillette used viral marketing to introduce the 3-bladed Venus razor for women, greatly expanding the audience reached by its Reveal the Goddess in You truck tour and beach-site promotions.
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websites Placing online ads and promotions Creating or using Web communities Using E-mail
Web
communities allow members with special interests to exchange views Social communities Work-related communities Marketers find welldefined demographics and shared interests useful when marketing
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websites Placing online ads and promotions Creating or using Web communities Using E-mail
marketing
Key tool for B2B and B2C marketing Clutter is a problem Enriched forms of e-mail attempt to break through clutter Spam is a problem
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Benefits of E-commerce
To consumers: 24/7 access, more choices, price comparisons, improved delivery, competition To organizations: International marketplace (global reach), cost savings, customization, reduced inventories, digitization of products/services To society: flexible working practices, connects people, delivery of public services
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Benefits to Consumers
Convenience Buying is easy and private Provides greater product access and selection Provides access to comparative information Buying is interactive and immediate
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Benefits to Organizations
Powerful tool for building customer relationships Can reduce costs Can increase speed and efficiency Offers greater flexibility in offers and programs Is a truly global medium
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Benefits to Society
More individuals can work from home Benefits less affluent people Third world countries gain access Facilitates delivery of public services
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Discussion Questions
What
features do you look for on a Web site that you feel make the site appealing? What are your major concerns about making online purchases? What types of things can an online retailer do to create a more secure buying environment?
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Business Pressures
The term business environment refers to the social, economic, legal, technological, and political actions that affect business activities Business pressures are divided into the following categories:
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Organizational Responses
Strategic systems
- Provide organizations with strategic advantages, enabling them to:
Increase their market share Better negotiate with their suppliers Prevent competitors from entering into their territory
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Organizational Responses
Business alliances
- Alliances with other companies, even competitors, can be beneficial - Virtual corporationelectronically supported temporary joint venture
Electronic markets
- Optimize trading efficiency - Enable their members to compete globally - Require the collaboration of the different companies and competitors
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Organizational Responses
Strategy Formulation
Porters three generic strategies for business: - focus - low cost leadership - differentiation Differentiation in the new e-commerce sector is the key to success
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Goals
External Analysis Internal (Company) Analysis
Strategy Formulation
Corporate Business-unit Functional Operating
Implementation
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Technology: goal must be Leadership: vision of CEO for eunderstood within its market and commerce industry Infrastructure: technology Market: must determine its target support for new model of market and whether it is still business open to new entrants Organizational Learning: does Service: must know its the organization support internal customers expectations learning Brand: must understand if it has the ability to create a strong brand
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Technology Leadership
Involves more than hardware and software Seven major areas: - strategy: focus upon alignment and planning - structure: focus upon becoming an e-organization - systems: technology integration - staffing: developing a strong pool of skills - skills: developing the necessary knowledge - style: add value to customers - shared values: must build value to the organization
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Service Leadership
Established strategies of customer still apply Internet service strength derived from providing additional information to the customer Internet provides a low-cost, high-quality service channel with a global reach Call centre strategy must be defined E-mail interface channel must be defined
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Brand Leadership
Branding strength comes from being a first mover Brand reinforcement is a continuous task Brand positioning can be defined using the Internet service value chain Brand followers need to reposition as quickly and effectively as possible Four brand
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Ensure that the project is backed by senior management Develop a strategy before a Web presence Develop a strategy by focusing on technology, branding, marketing and service Identify and use knowledge in the organization Strategy must add value for customers and must change as the requirements of the customers change
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Resources
Leverage resources
Simple Rules
Pursue opportunities
Jump into the confusion Keep moving Seize opportunities Finish strong
How should we proceed? Key processes and unique simple rules Rapidly changing, ambiguous markets Unpredictable Managers will be too tentative in executing on promising opportunities Growth
Strategic Question
Unique, valuable position Unique, valuable, inimitable resources activity system Slowly changing, wellstructured markets Sustained It will be too difficult to alter position as conditions change Profitability Moderately changing, well structured markets Sustained Company will be too slow to build new resources as conditions change Long-term dominance
Duration of Advantage
Risk Performance Goal
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Business Model
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Business Models
A method of doing business by which a company can generate revenue to sustain itself Spells out where the company is positioned in the value chain Business models are a component of a business plan or a business case
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Business plan: - A written document that identifies the business goals and outlines the plan of how to achieve them
Business case: - A written document that is used by managers to garner funding for specific applications or projects; its major emphasis is the justification for a specific investment
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Mission statement and company description The management team The market and the customers The industry and competition The specifics of the products and/or services
Marketing and sales plan Operations plan Financial projections and plans Risk analysis Technology analysis
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Transaction costs
Cost of providing some good or service through the market Effects of e-commerce and the internet that impacts the business model Searching for an obtaining information Participating in a market Policing and enforcing transactions Bargaining and decision costs Actual cost of buying or selling the product
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Value Stream
Create long-term sustainability Benefit for business stakeholders Can be achieved in four ways: - creation/participation in an e-marketplace - creation/participation of virtual communities - additional value offers - exploitation of offers
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Creation/participation in an e-marketplace
Reduce transaction costs directly/indirectly Economics of e-market similar to traditional market Can be setup by supplier/buyer or run independently Buyer value: - reduced costs - improved service - convenience Supplier value: - reduced costs - differentiation - reduced lead time
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Exploitation of offers
E-commerce/Internet economy founded on information Value can be added by using this information Target customers demographically Can bridge the uncertainty gap Can post RFPs
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Revenue Stream
Short-term realization of value proposition Direct: - cost reduction - free offerings of service/products - pricing strategies Indirect: - internet advertising - selling customer information - joining affiliate programs
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Logistical stream
Examines organization restructure to deliver value added and revenue streams Issues such as: - organizational culture - pre/post restructuring - implementing information - communication and training - reward systems for motivation
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New Business
Personalized Customer Pull Direct Open Fast Easier Global Niche Virtual
Distribution
Communications Finance Markets Assets
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PRE-PURCHASE
PURCHASE
Purchase Decision
Satisfaction
POST-PURCHASE
Loyalty Disposal
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Pre-Purchase
Information Search
Search for ideas and offerings, including: Available on-line and off-line stores Gift ideas and recommendations Advice on selection style and match Evaluation of alternatives along a number of dimensions, such as price, appeal, availability, etc.
Evaluation of Alternatives
Purchase
Purchase Decision
Satisfaction
Post-sales support Order tracking Customer service Education on flowers and decoration Post sales perks
PostPurchase
Loyalty
Disposal
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Metrics
Metrics: If it moves, measure it! Measures of performance; may be quantitative or qualitative