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Final Revision Internet For Business
Final Revision Internet For Business
Transactional e-commerce sites: These enable purchase of products online. The sites also
support the business by providing information for customers that prefer to purchase products
offline. These include retail sites, travel sites, and online banking services (Amazon).
Services-oriented relationship-building web sites: provide information to stimulate purchase
and build relationships. Products are not available for purchase online, but information is
provided through the web site and e-newsletters to inform purchase decisions. Such sites also
add value to existing customers by providing them with detailed information to help support
They are typically for low-value, high-volume fast-moving consumer goods for customers.
Portal, publisher or media sites: portal refers to a gateway of information about a range of
topics. Portals have diversity of options for generating revenue including advertising,
commission-based sales, sale of customer data (Yahoo). Social network or community site
(Facebook).
3. Identify different types of business models. Explain three of them with example
Business model is a summary of how a company will generate a profit identifying its core
product or service value proposition, target customers in different markets, position in the
competitive online marketplace or value chain and its projections for revenue and costs.
E-auctions: e-auction is an online negotiation tool. The buyer with the lowest bid will
win the auction. eg: E-bay offers both B2B and B2C offerings
Value-chain service providers: specialize in providing functions for a specific part of
the value chain eg: logistics company UPS
Trust and Other Services: trust services authenticate the quality of service provided
by companies trading on website eg: Internet Shopping is Safe-ISIS, or TRUSTe
4. Indentify and classify the drivers and barriers of adoption of e-business for business
Drivers
Cost/efficiency drivers
Increasing speed with which supplies can be obtained
Increasing speed with which goods can be dispatched
Reduced sales and purchasing costs
Reduced operating costs
Competitiveness drivers
Customer demand
Improving the range and quality of services offered
Avoid losing market share to businesses already using e-commerce
Potential for increased revenue
Barriers:
Consumers doubt about mismatching between product and image display
Leaking out of important information
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Hackers
Lack of face-to-face contact
5. Understand the different internet revenue models
Revenue models describe methods of generating income for an organization
o Brokerage:
bringing buyers and sellers together
Kelkoo, eBay
o Advertising
Yahoo
Google sponsored links
Google content-targeted-advertising ads by google
o Infomediary ( information intermediaries)
DoubleClick
AC Nielsen NetRatings internet marketing research
o Merchant
Virtual retailer like Amazon
Catalogue Merchant like LandsEnd
o Manufacturer (Direct)
Dell
o Affiliate
Divert traffic to partner sites, eg Barnes & Noble
o Community
Access to the community is free but there is a charge for premium services.
Many dating sites use this and also business / software communities like RedHat.
o Subscription
Can be similar to the community model, eg FriendsReunited allows users to join
free but an annual subscription must be paid in order to contact other members
o Utility
This model is based on the electricity or water model, ie pay according to your
consumption. Slashdot offers subscriptions based on consumption of (access to)
IT related articles.
The relationship between a company and its channel partners can be dramatically altered by the
opportunities afforded by the internet.
selling through the channel. (Example: Digital music, Video downloads to 3G phones)
Reintermediation: the creation of new intermediaries between suppliers and customers
providing services such as supplier search and product evaluation. (Example: Kelkoo)
Countermediation: creation of a new intermediary by an established company
7. Define digital marketing and provide example.
Digital marketing has a similar meaning to electronic marketing both describe the
management and execution of marketing using electronic media such as the web, e-mail,
interactive TV, and wireless media in conjunction with digital data about customers
characteristics and behavior. For example:
Feed or RSS feed: blogs, news or other content is published by an XML standard and
syndicated for other sites or read by users in RSS reader services such as Google Reader,
appropriate players.
Social network: a site that facilitates peer-to-peer communication within a group or between
individuals through providing facilities to develop user-generated content and to exchange
messages and comments between different users
sector
and
adoption
company examples
Sell to and serve Using the internet for sales and service through an B2B
SMEs
online channels
Account-managed
channel
adoption
encouraged
by
Account
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clients
through
companies managers.
either Customer
larger clients
channel
adoption
encouraged
by
practice
is
levels for different determine the value of customers and then assess common
amongst
customer types
services
companies,
phone
mobile
network
As well as new business and revenue models, constantly reviewing innovation in services to
improve the quality of experience offered is important for e-business. Flexibility in the business
model should not be to the companys detriment through losing focus on the core business.
Finally, we can note that companies can make less radical changes to their revenue models
through the internet which are less far-reaching nut may be worthwhile.
been possible.
Decision 6: Positioning and differentiating strategies
Product performance excellence: enhance by providing online product customization
Price performance excellence: use the facilities of the internet to offer favorable pricing
to loyal customers or to reduce prices where demand is low
Transactional excellence: combining pricing information with dynamic availability
information on products listing number in stock
Relationship excellence: personalization features to enable customers to review sales
order history and place repeat orders.
Advantages: website will be more attractive since customers can involve in exchanging
information. Furthermore, information can be transferred quickly and it is easy to create huge
effect on community due to large number of portal website users
Disadvantages: information posted by customers cannot be controlled
Advantages: the brand name appears in the event if they sponsor for it.
Disadvantages: customers may not differentiate our brand names with others because many
businesses will take part in the event
Interactive ads: put an ads on the third party websites or place in our website
Viral marketing: transmit a promotion message to another potential customers through wordof-moth
E-CRM
1. What are the driving factors to adopt E-CRM?
-
Technology allows all customer information to be integrated in one system, allowing the
restructuring of business processes
Customer is empowered, impatient, has a short attention span, many choices and low
switching costs
2. Provide three benefits of E-CRM with separate example for each benefit. (487)
-Targeting more cost effectively: traditional method which may target the wrong market
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Example: The ABC Company wants to target affluent customers in Ho Chi Minh City and uses
postcodes of district 1, 2, 3 to reach them via direct mail. However, the population in each
district is heterogeneous, causing poor targeting and results in very low response rate. With the
application of E-CRM, the company can filter affluent customers easily and cost-effectively
based on frequency and value of each transaction saved in customer database.
-Lower cost: contact customers by email less cost than using physical mail. The most important
is the information only needs to be sent to those customers who have expressed a preference for
it, resulting less mail- out
Example: when doing targeting, FPT sends direct mail to the customers. This tactic allows the
company to reduce great expenses since while sending direct mails demands spending on postal
costs, adopting email costs it almost nothing.
-Increase depth, breadth and nature of relationship
Example, Dell provides customers specific information and frequently contact with them thus
Dell will increase the relationship with users and can know more about customers buying
behaviors.
3. Mention two tactics and one goal for each of the following. Provide at least one example
for each of the tactics to help the organization.(499-451)
Customer acquisition
Tactics
- From push to pull
Example: Advertisements are posted on portal sites (yahoo, MSN, etc), gaining customers
attention. This physical stimulus must be attractive enough to make customers want to visit the
site. Next, the site must be optimized for search engines (obtaining popular keywords, etc ) to
assist customers effectively when they try to find it.
-From one-to many to many to-many communications
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Example: eBay allows many-to-many interactions between customers throughout eBay websites.
Goal
-
Acquire new customers to a website that can (hopefully) be converted into sales
Customer retention
Tactics:
-
Examble: if a company gives their clients the option to tell their service center when and how to
contact them, that's also personalization. Amazon.com is an example of personalization where
the latter learns your interests and adapts to your need
Dell and many auto makers are good examples of companies providing mass customization
-
Online community: a customer-to-customer interaction delivered via e-mail groups, webbased discussion forums or chat (C2C: email groups, forums, chat)
Example: Forums are created to enhance the interaction between customers as well as between
customers and the site.
Goals:
-
On-site promotion. Example: More promotions posted on the website for attracting more
customers to visit and purchase.
Goals:
-
Search engine marketing SEM: provide an index of content on registered sites that can
be searched by keywords. It is the primary method of finding information about a
company and its product
Example: Shoes.com looks for the most popular keywords by using Alexa (an website
analysis tool) and utilizes them in its meta tags or headings to improve SEO of the site,
which will consequently lead more customers to Shoes.com.
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products are purchased or leads are generated for Ninomax, Vnexpress will earn a transaction fee
accordingly
5. Explain the relation for Google search with Search engine marketing? You can draw
the Google search page and highlight different Search engine marketing techniques
there.(505)
6. How can social networking website be used for viral marketing? Explain with
example.
-
Viral marketing: Social networking website is used as a tool for viral marketing. Pass
along messages/note (a clever/shocking idea, etc), media tool (a game, a video clip, etc.)
and so on are shared among members of social networking sites. The company makes use
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of the network/ the community of such sites to spread out information about the
company, its promotion campaign or for other commercial purposes.
Example: A note on facebook about the development of Shoes Century/the topic of a new
advertising campaign is written in the form of a fairytale with interesting characters and
appealing content. To be effective, it must be interesting enough to make people want to share
with others. The more people send around this note (via facebook, leaving links on Yahoo or
other communities), the better customer awareness about Shoes Century and its campaign.
Confident brand shoppers: members of this group are happy to use the Internet for the next
time they want to make a purchase in excess of 500 with this confidence stemming from the
importance they lay on purchasing well known brands and the necessity to shop around.
Carefree shoppers: these consumers are prepared to purchase from unknown companies and do
not consider that purchase should be restricted to well known brands. Furthermore, they are
willing to make the purchase without seeing the product first.
Cautious shoppers: these shoppers are not likely to purchase goods through an online auction,
have concerns over the quality of products they purchase and would like to see the product prior
to making a purchase.
Bargain hunters: this group would buy from an unknown company or any web site as long as it
was the cheapest and is driven not by the convenience of the medium but by price.
Unfulfilled shoppers: this group finds it difficult to find the products they wish to purchase on
the Internet, they would not buy from any web site or through an auction and they think it takes
too long for products purchased online to be delivered.
Searching behavior
Directed information seekers: Will be looking for product, market or leisure information such
as details of their football clubs fixtures. This type of user tends to be experienced in using the
web and is proficient in using search engines and directories.
Undirected information seekers: These are the users usually referred to as surfers, who like to
browse and change sites by following hyperlinks. This group tends to be novice users (but not
exclusively so) and they may be more likely to click on banner advertisements. This behavior is
now less common.
Directed buyers: These buyers are online to purchase specific products. For such users, brokers
or cybermediaries who compare product features and prices will be important locations to visit.
Bargain Hunters: These users want to use the offers available from sales promotions such as
free samples or prizes.
Entertainment seekers: Users looking to interact with the web for enjoyment through entering
contests such as quizzes.
4. List and explain with an example the steps of the online buying process
1-Problem recognition
Importance of online/offline marketing integration: an organisation needs an integrated online
and offline marketing strategy to inform consumers who recognise that they have a problem
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Directed (B2B)
Non-directed (surfers)
3-Evaluation
Communicate relevant benefits
Personalisation
Product selection
4-Decision
Mixed mode messages: reinforce the benefits
Incentives to capture contact details to reinforce benefits
5 - Purchase
Slick, user-centred design to make purchase easy
Security and privacy issues:
-
Reassure customers
Offer other channels
6 - Post-purchase support
Email confirmation and tracking to improve service
CRM
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Mixed mode buying is the process by which customer changes between online and offline
channels during the buying process. It is a key aspect of devising online marketing
communications since the customer should be supported in changing from one channel to
another.
See figure 8.17 to explain:
For example, Dell has a prominent web-specific phone number on their website that encourages
customers to ring a representative in the call centre to place their order.
E-MARKETING
1. How can we distinguish between e-marketing, e-business and e-commerce? Provide
example to explain you answer.(p.10, 13, 43, 417&418)
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2. Write briefly with example how you can perform following activities for an organization?
(p.421-426)
a. Demand analysis: assessment of the demand for e-commerce services amongst existing and
potential customer segments. It examines current and projected customer use of each digital
channel and different services within different target markets.
For example, savvy e-marketers use tools provided by search engine services such as Google to
evaluate the demand for their products or services based on the volume of different search terms
typed in by search engine users. Then, they can calculate the total potential opportunity and the
current share of search terms for a company.
b. Competition analysis: Review of e-business services offered by existing and new competitors
and adoption by their customers.
3. What is the difference between ORC and OVP? Explain with example. Provide at least one
different with one example for each difference. (p.290,304 and 442).
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ORC
An assessment of the direct or indirect
contribution of the internet to sales, usually
expressed as a percentage of overall sales
revenues.
OVP
A statement of the benefits of online services
reinforces the core proposition and
differentiates from an organizations offline
offering and those of competitors.
1.
Direct ORC is revenue earned selling directly online using a transactional website.
Indirect ORC is revenue earned selling offline from a lead started through an online channel.
E.g. If I purchase a book online from Amazon using my credit card, this is considered part of Direct
ORC, however if I didnt have a CC and/or Amazon has a bricks and mortar store, I could visit
Amazons site and then go to their store to buy directly this is indirect ORC, since it started as an
online channel.
A business would want to increase ORC over time (1/2). Apart from the fact that increasing
revenue is the aim of business, an online business is cheaper and more efficient to run compared to
offline to therefore a business would want to move offline revenue to online revenue this is one of
the goals of retention in the 3 phases of CRM. (1/2 mark for reasonable argument)
Traditional media communication has one way communication by using push technique from
company to customer. This leads to limited interaction with customer.
New media communication encourages two way communications through push and pulls
technique between company and customer.
For example, Nestl use the website (Nescafe.co.uk) as a method of generating interaction by
providing competitions and sales promotions to encourage the customer to respond with their
names, addresses and profile information such as age and sex.
Benefits of E-SCM:
Increased efficiency of individual processes
Reduced complexity of the supply chain
Improved data integration between elements of the supply chain
Reduced cost through outsourcing
Innovation
2.
o
o
Differentiate between push and pull SC with respect to virtual and vertical integration
Push Model
That emphasizes distribution of a product to passive customers.
The push model is illustrated by a manufacturer who perhaps develops an innovative
product and identified a suitable target market. A distribution channel is then created to
push the product to the market.
o The typical motivation for a push approach is to optimize the production process for cost
and effective.
Pull Model
o An emphasis on using the supply chain to deliver value to consumers who actively involved
in product and service specification.
o It focuses on the customer needs and starts with analysis of their requirements through
market research and close cooperation with customers and suppliers in new product
development. The supply chain is constructed to deliver value to the customer by reducing
costs and increasing service quality.
o The typical motivation for the pull approach is to optimize the production process for
customer response, cost and efficiency.
o Modern car manufacturers now not only provide a choice of color but thousands of
permutation of trim and accessories backed up by three year warranty.
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Figure 6.4 Two alternative models of the value chain: (a) traditional value chain model (b)
revised (virtual) value chain model (HR, Finance & IS no longer just support: now critical)
4. List, discuss and apply interpret the benefits of IS for a business SCM
Increased efficiency of individual process: the cycle time to complete a process and
recourses needs to execute it are reduced. Benefit: reduce cycle time and cost per order
Reduced complexity of the supply chain: this is the process of disintermediation. The
company will offer the facility to sell direct for its e-commerce site rather than through
distributors or retailers. It leads to reducing cost of distribution and sale.
Improved data integration b/w elements of the supply chain: sharing information b/w
parties may result in reducing cost of paper processing
Reducing cost through outsourcing: the company can outsource or use virtual integration
to transfer assets and costs such as inventory holding costs to the third parties. Benefits lower
costs through price competition and reduced spend on manufacturing capacity and holding
capacity. Better service quality through contractual arrangements.
Innovation: E-SCM should make it possible to be more flexible in delivering a more diverse
range of products and to reduce time to market. For example, the B2B Company may use ecommerce to enable its customers to specify the mixture of chemical compounds and
additives used to formulate their plastics and refer to a history of pervious formulations.
Benefit better customer responsiveness.
An alternative perspective on the benefits of E-SCM:
o Increased convenience through 24 hours a day, 7days per week, 365days a year ordering
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o
o
o
o
Technical infrastructure
integration
Technical issues in merging
company systems
Strategic alliance
Preferred suppliers
Competitive tendering
Short term contracts
Spot markets and auctions
Examples
Purchases of Booker
(distribution company) by
Iceland (retailer). Since 1993
Cisco has made over 30
acquisition (not all SCMrelated)
Cisco has also made over 40
investments in hardware and
software suppliers
Cable and wireless, Compaq
and Microsoft new e-business
solution called a-Services
Arrangement sometimes used
for IS outsourcing
ISPs have performance and
availability SLAs with penalty
clauses
Tesco Information Exchange
(case study 6.2)
Buyer-arranged auctions (see
chapter 2 )
As above
B2B marketplaces (e.g.
www.freemarket.com)
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E-Procurement
1. Define E-Procurement and explain four drivers of E-commerce with example:
- The electronic integration and management of all procurement activities including
purchase request, authorization, ordering, delivery and payment between a purchaser and
a supplier
- Four drivers:
The primary driver is cost reduction. In many cases the cost of ordering exceeds
the value of the product purchased
Greater profitability
Process efficiencies
The cycle time between order and use of suppliers can be reduced, greater
flexibility in ordering goods from different suppliers according to best value.
2. Identify and list key procurement activities in an organization:
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List, discuss and apply interpret the benefits of IS for a businesss e-Procurement:
Reduced purchasing cycle time and cost
Enhanced budgetary control
Elimination of administrative errors
Increasing buyers productivity
Lowering prices through product standardization and consolidation of buys
Improving information management
Improving the payment process
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