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2nd week: e-commerce

Marketing in the Digital Age

credit to Dr. Nasim Z. Hosein

E-commerce as the Networked


Economy
l
l
l
l

l
l

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

credit to Dr. Nasim Z. Hosein

E-commerce Today
n The

Internet is the perfect vehicle for e-commerce


because of its open standards and structure.

n No

other methodology or technology has proven to


work as well as the Internet for distributing
information and bringing people together.

n Its cheap

and relatively easy to use it as a medium


for connecting customers, suppliers, and employees
of a firm.

n No

other mechanism has been created that allow


organizations to reach out to anyone and everyone
like the Internet.

credit to Dr. Nasim Z. Hosein

E-commerce Today
n The

Internet allows big businesses to act like small


ones and small businesses to act big.

n 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.

n Its more

than just posting a nice looking Web site


with lots of cute animations and expecting
customers and suppliers to figure it out

n Web-based

solutions must be easier to use and


more convenient than traditional methods if a
company hopes to attract and keep customers.

credit to Dr. Nasim Z. Hosein

Four Categories of E-Commerce


Business originating from...

Business

Business

Consumers

B2B

C2B

B2C

C2C

And selling
to...

Consumers

credit to Dr. Nasim Z. Hosein

Distinct Categories of E-Commerce


l

Business to Business (B2B) refers to the full spectrum


of e-commerce 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

credit to Dr. Nasim Z. Hosein

Distinct Categories of E-Commerce


(contd)
l

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

credit to Dr. Nasim Z. Hosein

Convergence of e-Commerce
Categories

Business

Publishers order
paper supplies
from paper
companies

Consumers

And Selling
to

Business originating
fromConsumers
Business

credit to Dr. Nasim Z. Hosein

Amazon orders
from publishers

Consumers buy
thousands of
Harry Potter
books from
Amazon

Consumers
search out
sellers, offers
and initiate
purchases from
Amazon

Consumers resell
copies on eBay

What is a web-based business


n Business

that uses the WWW to fulfill its business

process
n Four

basic business processes:


- information dissemination
- data capture
- promotions and marketing
- transacting with stakeholders

n Business

objectives interact with web based


applications

credit to Dr. Nasim Z. Hosein

Key Drivers of E-commerce


n Technological

degree of advancement of
telecommunications infrastructure

n Political

role of government, creating legislation,


funding and support

n Social

IT skills, education and training of users

n Economic

general wealth and commercial health


of the nation

credit to Dr. Nasim Z. Hosein

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Key Drivers of E-business


n Organizational

culture- attitudes to R&D,


willingness to innovate and use technology

n Commercial

benefits- impact on financial


performance of the firm

n Skilled/committed

workforce- willing and able


to implement and use new technology

n Requirements

of customers/suppliers- in terms
of product and service

n Competition-

competitors

credit to Dr. Nasim Z. Hosein

stay ahead of or keep up with

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Appeal of E-commerce
n

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
n The ability to configure products and see actual prices
n The ability to easily build complicated custom orders
n The ability to compare prices between multiple vendors
easily
n The ability to search large catalogs easily

Larger catalogs

Improved customer interactions - company.

credit to Dr. Nasim Z. Hosein

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Limitations of E-commerce
n To

organizations: lack of security, reliability, standards,


changing technology, pressure to innovate, competition,
old vs. new technology

n To

consumers: equipment costs, access costs,


knowledge, lack of privacy for personal data,
relationship replacement

n To

society: less human interaction, social division,


reliance on technology, wasted resources, JIT
manufacturing

credit to Dr. Nasim Z. Hosein

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Technical limitations
n There

is a lack of universally accepted standards for


quality, security, and reliability

n The

telecommunications bandwidth is insufficient

n Software

development tools are still evolving

n There

are difficulties in integrating the Internet and


EC software with some existing (especially legacy)
applications and databases.

n Special

Web servers in addition to the network


servers are needed (added cost).

n Internet

accessibility is still expensive and/or


inconvenient

credit to Dr. Nasim Z. Hosein

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Web based technology


n Websites
n E-mail
n Search engines
n Interactive communications

credit to Dr. Nasim Z. Hosein

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Old Economy Firms


n Brick

and Mortar companies need to adopt to the


new economy
- Create a new Internet company.
- Create a new subsidiary.
- Invest in an Internet competitor.
- Buy the technology from a consultant.
- Work with other firms to create an exchange.
- Integrate with suppliers and or customers.

credit to Dr. Nasim Z. Hosein

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Old Economy Firms


n Failure

of old economy companies to adopt may


result in:
- Loss of market share.
- Inability to meet new economy competitorsprices.
- Reduced profits and cash flows.
- Inability to raise new financing.
- Loss of control in an acquisition by a new economy
firm.

credit to Dr. Nasim Z. Hosein

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Business Opportunity
n The

Internet revolutionized ways of doing business

n Entrepreneurs

found ways to exploit market failures


and earn economic rents

n New

businesses were created that were not feasible


earlier

n The

new economy poses threats to old economy


firms that do not wish to adapt

n The

transformation is still in process. The evolution


continues

credit to Dr. Nasim Z. Hosein

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Benefits & Challenges of E-commerce

Benefits
lPersistent c onnection with

Challenges
lCannibalization

customers
lChannel c onflict
lNew value for customers
lCustomer c onfusion
lAccess to new customers
lInvestor c onfusion
lScalability

credit to Dr. Nasim Z. Hosein

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Front end systems


n

Direct user interface with business processes

Accessible via WWW

Front-end systems:
- e-CRM
- e-marketing
- e-services
- e-marketplace
- e-auction

credit to Dr. Nasim Z. Hosein

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Marketing Strategy in the Digital Age

Requires a new model for marketing strategy


and practice
Some suggest that all buying and selling will
eventually be done electronically
Companies need to retain old skills and
practices but add new competencies
credit to Dr. Nasim Z. Hosein

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E-Business in the Digital Age


n Involves

the use of electronic platforms to conduct


company business.
n Web sites for selling and customer relations
n Intranets for within-company communication
n Extranets connecting with major suppliers and
distributors

credit to Dr. Nasim Z. Hosein

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E-Commerce in the Digital Age


n More

specific than e-business.

n Involves

buying and selling processes supported


by electronic means, primarily the Internet.

n Includes:
n e-marketing
n e-purchasing

credit to Dr. Nasim Z. Hosein

(e-procurement)

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E-commerce vs. E-business


n E-commerce

is about doing business electronically

n E-commerce

conducting financial transactions

electronically

n E-business
n E-business

is conducting business on the Internet

is the transformation of business


processes through the Internet

credit to Dr. Nasim Z. Hosein

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E-Marketing in the Digital Age


n The

marketing side of e-commerce.

n Includes

efforts to communicate about, promote, and


sell products and services over the Internet.

n E-purchasing

is the buying side of e-commerce.


n It consists of companies purchasing goods, services,
and information from online suppliers.

credit to Dr. Nasim Z. Hosein

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Types of e-Marketers

credit to Dr. Nasim Z. Hosein

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Click-Only Companies

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E-tailers
Search Engines
and Portals

Enabler Sites

Types of
Sites
Internet Service
Providers

Content Sites

Transaction Sites
credit to Dr. Nasim Z. Hosein

Reasons for dot.com Failures

Poor research or planning.

Relied on spin and hype instead of marketing strategies.

Spent too heavily on brand identities.

Devoted too much effort to acquiring new customers instead


of building loyalty.

credit to Dr. Nasim Z. Hosein

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Click-and-Mortar Companies
n Most

established companies resisted adding


Web sites because of the potential for channel
conflict and cannibalization.

n Many

are now doing better than click-only


companies.

n Reasons:
n Trusted

brand names and more resources


n Large customer bases
n More knowledge and experience
n Good relationships with suppliers
n Can offer customers more options
credit to Dr. Nasim Z. Hosein

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Setting Up for E-Marketing


Online Marketing

credit to Dr. Nasim Z. Hosein

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Setting up for E-Marketing


Options

nCorporate
n

nCreating

websites

nPlacing

online ads and


promotions
nCreating

or using Web
communities
nUsing

Build goodwill and


relationships; generate
excitement

nMarketing
n

E-mail

credit to Dr. Nasim Z. Hosein

websites

Engage consumers
and attempt to influence
purchase

nWebsite
n

websites

design

7 Cs of effective website
design

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Conducting E-Commerce

Seven Cs of Website Design


nContext

nCommunication

nContent

nConnection

nCommunity

nCommerce

lCustomization

credit to Dr. Nasim Z. Hosein

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The 7Cs of Website design


Context

Content

Sites layout and design

Text, pictures, sound and video


that web pages contain

Commerce

Community

Sites capabilities to enable


commercial transactions

7 C for
website
design

The ways s ites enable user-to-


user communication

Connection

Customization

Degree site is linked to other


sites

Sites ability to self-tailor to


different users or to allow users
to personalize the site

Communication

credit to Dr. Nasim Z. Hosein

The ways s ites enable site-to-


user communication or two-way
communication

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Fit and Reinforcement of Cs

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4

Business Model

Individually Supporting Fit

Context

Content

Community

Customization

Communication

Consistent Reinforcement

credit to Dr. Nasim Z. Hosein

Connection

Commerce

Setting up for E-Marketing

Options
nCreating

websites
nPlacing online ads
and promotions
nCreating or using
Web communities
nUsing E-mail
credit to Dr. Nasim Z. Hosein

nOnline

forms of ads and


promotions
n
n
n
n
n
n

Banner ads/tickers
Skyscrapers
Interstitials
Content sponsorships
Microsites
Viral marketing

nFuture

of online ads

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Web Advertising
n

Banner ads: allows for more targeted 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
n

Skyscrapers: An advertisement on a Web site that is vertically


oriented on the page and larger than the
typical banner ad

credit to Dr. Nasim Z. Hosein

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Web Advertising
n Interstitials: are usually full-page ads displayed while a
user is in transit from one page to another, triggered by code
included in the link

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credit to Dr. Nasim Z. Hosein

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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credit to Dr. Nasim Z. Hosein

Web Advertising
n

Microsites: limited areas on the Web managed and

paid for by external companies

http://www.autotrader.com/

credit to Dr. Nasim Z. Hosein

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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.
credit to Dr. Nasim Z. Hosein

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Setting up for E-Marketing

Options
nCreating

websites
nPlacing online ads
and promotions
nCreating or using
Web communities
nUsing E-mail
credit to Dr. Nasim Z. Hosein

nWeb

communities allow
members with special
interests to exchange
views
n
n

Social communities
Work-related communities

nMarketers

find welldefined demographics


and shared interests useful
when marketing

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Setting up for E-Marketing

Options
n E-mail

nCreating

websites

online ads and


promotions

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

nPlacing

nCreating

or using Web
communities
nUsing

E-mail

credit to Dr. Nasim Z. Hosein

marketing

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Benefits of E-commerce
n

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

credit to Dr. Nasim Z. Hosein

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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
credit to Dr. Nasim Z. Hosein

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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
credit to Dr. Nasim Z. Hosein

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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

credit to Dr. Nasim Z. Hosein

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Discussion Questions
nWhat

features do you look for on a


Web site that you feel make the
site appealing?

nWhat

are your major concerns


about making online purchases?

nWhat

types of things can an online


retailer do to create a more secure
buying environment?

credit to Dr. Nasim Z. Hosein

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