E-business basics Unit 1 objectives

1. E-business basics Unit 1 objectives E-business is just business today “Gartner Group”

2. E-Commerce and E-Business Units 1-4 objectives • Define e-commerce vs. e-business • Describe e-marketplace and electronic purchasing • CRM Customer Relationship Management • List and describe e-commerce security issues • Explain Internet fraud issues and compare leading companies in the field of e-commerce

3. What is e-business? • E-Business is any Internet-enabled business activity that: • Transforms internal and external relationships • Creates new value – shop 24/7 • Exploits market opportunities – the world is your market • Is driven by new rules of the connected economy – social capitalism allows for a consumer driven economy • Death of Distance, Deconstruct Markets, Atoms to Bits, Consumer Driven, Efficient – E-Business is just Business • E-Commerce • Involves financial transactions

4. E-business • Equation Intellectual Capital (Ideas) + Social Capitalism (Networking) = Entrepreneur E-Opportunities • Value - Technology is Cheap (Internet is the great equalizer) • History – Facebook, MySpace, YouTube all small start up or college students • Revenue models - advertising, partnerships, affiliate, hard goods, soft goods, services, aggregators

5. E-Business Models • Business-to-Consumer (B2C) • Business-to-Employee (B2E) • Business-to-Government (B2G) • Government-to-Consumer (G2C) • Consumer-to-Consumer (C2C) • Business-to-Business (B2B)

6. E-Business Models • E-business models • A business model describes how people, systems, and technology are organized and applied to achieve business objectives: • Not easily copied • Defined by the hidden complexity • Unique (patentable) • Business-to-Government (B2G) • Acquire and service business deals with local, state, federal, and international governments • Government-to-Consumer (G2C) • State social services • Licensing • Government forms • Taxes

7. E-Business Models • Business-to-Consumer (B2C) • Success/failure criteria: • Individuality • Personalization • Customer care • Business-to-Employee (B2E) • Intranet-based delivery replacing department delivery: • HR portal–permits changes to employee data, benefits packages, etc. • Improves services to employees and lowers costs to serve employees • Desktop delivery of software applications

8. E-Business Models • Consumer-to-Consumer (C2C) • Online auctions • User uploads • Time sequencing • Financial and credit transactions • Rating systems • Business-to-Business (B2B) • Sophisticated access controls • Catalogs with custom views • Parametric searches • Order entry functions

9. E-business model characteristics • User interface – customizable, Amazon when you login you get mystery books, MySpace customize your page, products • Pricing • Partnership • Integration – of legacy systems (old systems) • Trade – bartering • Success/failure criteria: • Individuality • Personalization • Customer care

10. Key drivers of e-business • Communication technologies • Impact of ubiquitous computing • Increasing globalization of world economics • Marketplace demands • The e-business continuum

11. Bricks vs. Clicks • Brick and click hybrid: the Wal-Mart example • Virtual companies: the Amazon.com example • Bricks vs. clicks • Storefronts (bricks) • Traditional business models • Significant investments • High barriers to market entry • Virtual companies (clicks) Key drivers of e-business • Less investments – compare click start up vs. virtual • Low barriers to market entry • Rapid proliferation – intellectual capital (age of ideas)

12. Communication technologies • Increased speed • Reduced transaction cost • Improved distance collaboration • Increased access to choices • Reduced direct labor • The ability to do 24/7 global business

13. Traditional models of e-commerce • Telephone sales • Telex or teletype ordering/invoicing • E-mail, phone, or fax ordering/invoicing • Electronic Data Interchange (EDI) • Electronic Funds Transfer (EFT)

14. New channels to the marketplace • A channel is the way a company delivers its products to the marketplace (distribution channel) • E-commerce has shifted traditional buying and selling relationships • Old marketing paradigms such as television ads do not work anymore • E-commerce has created a buyer’s market • Consumer now have the power over companies • Building Online Relationships • E-Business allows company to have a one to one relationship with consumers • CRM Customer Relationship Management • SCM Supply Chain Management

15. The E-Marketplace Unit 2

16. The e-marketplace • E-Commerce – involves financial transactions • Virtual equivalent of traditional marketplace • Two buyer groups: • Consumers • Organizational • Three types of markets that represent the organizational buyer: • industrial • reseller • government

17. New channel intermediaries • E-market makers • Infomediaries • Yahoo • Trading hubs/ vertical and horizontal exchanges • Auctions • Aggregators • Bring buyers and sellers together (E-bay) • Meta-aggregators • Serves a very specific industry such as Chemdex

18. Understanding Internet Markets • Design Begins with Understanding the Customer • Customer Relationship Management (CRM) – the web can save money • Optimizing profitability • Increasing revenue • Improving customer satisfaction • E-commerce • Application of communication and information-sharing tools among trading partners to deliver products to end user • Building systems, services, models, and relationships to support the most effective electronic buying and selling mechanisms • Supply Chain Management (SCM) • Optimizing internal practices and interactions with suppliers and customers to bring products to market more efficiently

19. Market segments • Identifying segments to serve profitably • Identifying segments that can be reached efficiently • Segmentation variables: • Geographic • Demographic • Psychographic • Behavioral

20. Aggregators • Permit consumers to: • Select among various vendors in a market • Find best value from aggregated information about the suppliers, products, and prices • Don’t necessarily sell goods themselves but facilitate consumer selection and buying • Bring buyers and sellers together

21. Online auctions • Virtual equivalent of physical auction houses • Individuals can post items for sale • Individuals can bid on items • Third party handles the transactions • Some retailers sell excess inventory

22. Electronic purchasing • Electronic processes cost less than paper transactions • Three main steps in processing an electronic purchase transaction: • Authorization • Clearance • Settlement

23. Digital money • Credit cards • E-cash • Electronic wallets: • Account information downloads into payment forms • Uses Electronic Commerce Modelling Language (ECML) for credit card processing • Micropayment technologies

24. Menu of Strategic E-Business Models • A key element in setting strategic objectives is to take stock of the company's current situation and decide the level of commitment to e-business in general and e-marketing in particular. • Questions prior to embarking on any e-business strategies: • .Are the business models likely to change in my industry? • .What does the answer to question 1 mean to my company? • .When do I need to be ready? • .How do I get there from here?

25. Models

26. E-Business Models at Various Levels of Commitment • Each level of the pyramid indicates a number of opportunities for the firm to provide stakeholder value and generate revenue streams using information technology. • Because there is no single, comprehensive, ideal taxonomy of e-business models, we categorize the most commonly used models based on the firm's level of commitment.

27. Models

28. Activity Level E-Business Models • Online purchasing. Firms can use the Web to place orders with suppliers, thus automating the activity. • Order processing. This occurs when online retailers automate Internet transactions created by customers. • E-mail. When organizations send e-mail communications to stakeholders, they save printing and mailing costs. • Content publisher. Companies create valuable content or services on their Web sites, draw lots of traffic, and sell advertising.Another type of content publishing, the firm posts information about its offerings on a Web site, thus saving printing costs =brochureware.

29. Activity Level E-Business Models • Business intelligence (BI). This refers to the gathering of secondary and primary information about competitors, markets, customers, and more. • Online advertising. As an activity, the firm buys advertising on someone else’s e-mail or Web site. • Online sales promotions. Companies use the Internet to send samples of digital products (e.g., music or software), or electronic coupons, among other tactics. • Pricing strategies. With dynamic pricing, a firm presents different prices to various groups of customers, even at the individual level.

30. Business Process Level E-Business Models • Customer relationship management (CRM) = retaining + growing business / individual customers through strategies that ensure their satisfaction with the firm and its products = keep customers for the long term + increase the number and frequency of their transactions. • Knowledge management (KM) = combination of a firm’s database contents + the technology used to create the system + the transformation of data into useful information and knowledge. • Supply chain management (SCM) = coordination of the distribution channel to deliver products more effectively and efficiently to customers. • With community building, firms build Web sites to draw groups of special-interest users. Firms invite users to chat / post e-mail on their Web sites to attract potential customers to the site.

31. Business Process Level E-Business Models • Affiliate programs = when firms put a link to someone else’s retail Web site and earn a commission on all purchases by referred customers. • Database marketing = collecting, analyzing, and disseminating electronic information about customers, prospects, and products to increase profits. • Enterprise resource planning (ERP) = a back-office system for order entry, purchasing, invoicing, and inventory control. • Mass customization = Internet’s unique ability to customize marketing mixes electronically and automatically to the individual level.

32. Enterprise Level E-Business Models • E-commerce refers to online transactions: selling goods and services on the Internet, either in one transaction or over time with an ongoing subscription. • Direct selling refers to a type of e-commerce in which manufacturers sell directly to consumers, eliminating intermediaries such as retailers. • Content sponsorship online is a form of e-commerce in which companies sell advertising either on their Web sites or in their e-mail. • A portal is point of entry to the Internet, such as the Yahoo! and AOL Web sites. They are portals because they provide many services in addition to search capabilities.

33. Enterprise Level E-Business Models • A portal is point of entry to the Internet, such as the Yahoo! and AOL Web sites. They are portals because they provide many services in addition to search capabilities. • Online brokers are intermediaries that assist in the purchase negotiations without actually representing either buyers or sellers. The revenue stream in these models is commission or fee-based: • The brokerage model are E*Trade (online exchange), and eBay (online auction), • A B2B exchange is a special place because it allows buyers and sellers in a specific industry to quickly connect.

34. Enterprise Level E-Business Models • Online agents represent either the buyer or the seller and earn a commission for their work. • Selling agents help a seller move product. • Manufacturer’s agents represent manufacturing firms that sell complementary products to avoid conflicts of interest. • The catalog aggregator, brings together many catalog companies to create a new searchable database of products for buyers. • A special type of agent = the metamediary, it represents a cluster of manufacturers, online retailers, and content providers organized around a life event or major asset purchase

35. Enterprise Level E-Business Models • Purchasing agents represent buyers. • Shopping agents help individual consumers find specific products and the best prices online (e.g., www.mysimon.com). • The reverse auction, allows individual buyers to enter the price they will pay for particular items at the purchasing agent’s Web site, and sellers can agree or not. • An online purchasing agent is called a buyer cooperative or a buyer aggregator. • A virtual mall is similar to a shopping mall in which multiple online merchants are hosted at a Web site.

36. Pure Play • Pure plays = businesses that began on the Internet, even if they subsequently added a brick-and-mortar presence. • E.g. E*Trade is a pure play, beginning with only online trading • Pure plays face significant challenges: They must compete as new brands and take customers away from established brick-and-mortar businesses. • One way to change the rules is to invent a new e-business model, as Yahoo! and eBay did.

37. An Optimized System of E-Business Models • A fully optimized e-business that uses the Internet to sell is the sum of multiple e-business activities and processes: E-commerce, business intelligence, customer relationship management, supply chain management, and enterprise resource planning as represented in the following equation: • EB = EC + BI + CRM + SCM + ERP

38. Customer Relationship Management (CRM) Unit 3

39. Customer Relationship Management (CRM) Unit 3 Objectives Unit objectives • Discuss E-CRM, the CRM model, and profiling tools • Discuss marketing campaign management and Internet marketing tools and technologies • Discuss relationship optimization • Discuss the E-CRM continuum

40. What is CRM? • Integrating customer information • Easy access to personalized information, order status, account history, and special offers • Leveraging intranets and extranets • Creating new sales channels

41. Why CRM is important • Differentiates you from the competitors • Costs much less to retain customer than find new one • CRM provides better customer service and support

42. CRM & E-CRM Benefits • Integrated and balanced product, sales, and service channels • Product, sales, and service customization • Lower product support costs • Short time to the market • Greater knowledge of customer • E-CRM – An electronic version of CRM continued

43. Customer analysis • A market comprises all potential customers who: • Have a common need or want • Are willing to transact with other parties to satisfy that need or want

44. E-business changing segmentation • Internet users are resembling the population at large • Consumer tastes are becoming more and more similar

45. Personalization • The ability for the customer to personalize their website once their logged on to their account (backgrounds, interests, pictures, personal choices etc…) • Increases depth of knowledge about customers • Reduces customer-acquisition costs • Builds brand loyalty • Site becomes more efficient • Streamlines shopping tasks

46. Interface requirements • Visual appeal • Ease of use • Simple shopping experience • Satisfies customer needs • Personalization • Performance • Internationalization • Customer self-service • Equal access

47. Usability testing and considerations • An easy-to-learn user interface: • Is well designed • Can be used right away • Offers intuitive navigation

48. International localization issues • Cultural preferences and customs • Content • Language • Data formats • Business practices • Currencies • Legal barriers • Access channels

49. User’s perception of added value • What is important to the customer? • What does the customer expect? • What does the user interface need to be?

50. Shipping and return policies • Successful e-tailers: • Manage the customer from order, to delivery, to return • Often partner with fulfilment firms • Establish zero-risk return policies