Transcript Marketing & Technology

Electronic Commerce
BADM 561
Dr. Cara Peters
Key Terms
 Marketing: process of exchange
 Internet: world’s largest matrix of
interconnected computer networks
 World Wide Web: media-rich, commercial
information system on the Internet
Stages in Marketing
1. Mass Production
2. Personal Selling
3. Branding
4. Customer Relationship Management
Marketing Trends
Production
Selling
Branding
CRM
Product
Single product
1 to few
Global, target
segment
Global,
individual
Market size
Large as
possible
Nationwide to
global
Global, target
segment
Global,
individual
Competitive
Tools
Price,
manufacture
Price,
channels, ads
Positioning,
brands,
features
Brands,
customize,
ease of use
speed,
dialogue
Technology
Mass
production,
transportation
Radio,
telephone
TV, mainframe, TV, database,
database,
email, www
logistics
Internet Marketing
 Marketing in electronic environments or
selling Internet-related products
• Combines technology, networks, economics, &
customers
• Branding remains important
• But now marketers can focus on
–the individual customer
Does the Internet change
marketing?

Increased personalization
• Right place, Right time, Right message

Less expensive

Hyper-competition

Changes in customer behavior

Differences in the marketing mix
E-commerce
 Any business activity conducted on the
Internet, web, or an electronic network
– A production process that converts digital inputs
into value-added outputs through a set of
intermediaries
 Not unique to the Internet
• EDI--Electronic Data Interchange
Modes of E-commerce
 Communications:
 Business process:
delivery of information
automation of business
transactions
 Service:
maintenance of relationships
 Transactions:
exchange products/services
Types of E-commerce
 B2B
• Managing different types of exchange
between two business parties
 B2C
• Managing interactions and exchange
between businesses and consumers
Types of E-commerce
 Intra-organizational e-commerce
• Called an intranet
• workgroup communications, electronic publishing,
sales force productivity
 Inter-organizational e-commerce
• inventory, channel management, payment
management
• Existence of an extranet
E-commerce has an impact offline
 Impact of the Internet on external
purchases
• customer research
• price comparison
• relationship to phone & store purchases
 Industries that have seen strong
competitive effects
• travel, books, securities, electronics
E-Business: Advantages
 Access to a growing customer population
– 5.7 billion people yet to go online
 Instant worldwide exposure
 Reduced inventory costs
 Build customer satisfaction via CRM

 Quicker order & delivery time
E-Business: Disadvantages
 Competitive retail environment
• price—more transparent online
• assortment--less expensive to display & stock more
products
• convenience--superior timing, location & buying
process
• entertainment—important online
The Internet
The world’s largest matrix of
interconnected computer networks.
Beginning of Computing
 Abacus (Babylonia, 2500 BC)
 Babbage:
first computing engine
– Circa 1800, computed Bernoulli numbers
 Bryon: first computer programmer
– Circa 1800
Beginning of Computing
 Hollerith: punch card system
– Analyzed 1880 census data
– Became IBM in 1924
 ENIAC: World’s first large scale digital
computer
– Electronic Numerical Integrator Analyzer &
Computer
– University of Pennsylvania, 1945
– Prepared bombing tables for WWII
Beginning of the Internet
 Non-commercial
• Military driven, Cold war fears
• Department of Defense
– ARPA (Advanced Research Projects Agency, 1958)
– Created ARPANet
– national nuclear-proof communication network
– Wide area, packet-switching, resource- sharing
communication network
Beginning of the Internet
 Four University computer nodes were
linked for host-to-host data exchange
• UCLA, Stanford, UCSB, & Utah (1969)
• 15 nodes connected 23 universities, NASA, &
other facilities (1971)
 National Science Foundation: working on a
high-speed network backbone
• NSFNet, major component of Internet (1986)
Beginning of the Internet
 Initially banned commercial use
 Led to development of an “Internet Culture”
 Tomlin invented email (1971)
• ARAPNet contractor
• Became largest Internet service
• Driving growth among the masses
Beginning of the Internet
 Transmission Control Protocol/Internet
Protocol standard became common
operating standard (1983)
 Non-commercial restrictions removed
(1986)
• NSFNet backbone open to all users
• By 1987, number of Internet hosts 10,000+
Beginning of the Internet
 Berners-Lee created a program that
created hypertext links (1991)
• Browser interface & beginning of the World
Wide Web
 The web took off in the 1990s
• graphical user interface
• mix media (picture, sound, video, etc.)
• ripe for commercialization
Early Internet use
 Early web sites lacked features which are
common today
 Had to program in HTML code, compared to
today’s WYSIWIG format
 Consumer fascination & commercialization
spurred growth of web
Internet Services
Email
 Usenet Bulletin
Boards
 File Transfer Protocol
 Telnet
 Internet Relay Chat
 CU-See-Me
 World Wide Web

Advantages of Hypermedia
 Open: allows data transfer across different
platforms to other computers
 Interactive: allows instant access to topics
within documents, pages, or servers
 Dynamic: make changes quickly, easily
 Media rich: allows for simultaneous use of
text, pictures, sound, & video
Sharing
 Openness
 Low connection costs lead to sharing
 Common standards
• Internet Protocol (IP)/Transmission Control
Protocol (TCP)
• Communication sending standards for the
Internet
Ubiquity
 Interactive & Dynamic
 Networks are ever-present
• anywhere, anytime, any equipment
 Value of a network increases with the
square of the number of participants
• Metcalfe’s law
• Suggests value of a network rises when more
people participate
Ubiquity continued
 So, value depends on growth
 Reach point of inflection or critical mass
 Too much growth can be a negative
• presence of unwanted individuals
– too many who clog the system
– spammers
– crime
Redundancy Keeps it Running
 Reliability
• decentralized, distributed networks with
multiple connections
 Efficiency
• messages broken into packets with multiple
users on one phone connection
 Scalability
• open standards, capability to grow the network
rapidly
Technology Behind the Internet
 Digital underpinnings:
its properties &
information are strings of zeros/ones
• Bytes of information
 Three factors give power to bytes
• Moore’s law
• Digital environments
• Convergence
Moore’s law
 Describes falling cost of technology
 Moore (Intel, 1965) noticed that engineers
kept packing circuits more closely
together
• miniaturization was about 30% smaller every
18months
• in fact, surface area needed for same number
of components was about half
Moore’s law
 Each new generation of chip technology,
which has been released about every 18
months, can pack the same number of
elements into half the space
• smaller, cheaper yet more power
 Critics:
law cannot continue
• separation becomes too small
Digital environments
 Digital technology can create life-like
environments
 Encyclopedic: store information
 Procedural: follow programmed rules
 Participatory: user choice, command, or
preference
 Spatial: virtual space
The Power of Digital Environments
 Digitization can change industries
• Adult entertainment
– These sites generate $2 Billion in sales
– Most profitable consumer sector on web
– Over 11 million sites come up when search “Porn”
– Yet few providers convey most of the content
– “Sex” is consistently the top term on search
engines
The Power of Digital Environments
 Adult entertainment
• Preview to pay
– $25-40 per month for pictures & video
– High margins
• Upgrading sites for competition
– Reliable streaming video
• Increased customer service
– Credit cards, personal funds transfer, telephone
subscriptions
The Power of Digital Environments
 Adult entertainment
• Playboy
• Danny’s hard drive
• Club Jenna dot com
• Importance of search engine optimization
• What will virtual reality bring about?
Convergence
 Merging of industries, technologies, and
content which used to be separate
 Computing, communications, & media
content coming together
– AOL/Time Warner Merger (Spring 2000)
The Internet Does Have Problems
 Breakdowns/Outages or Delays/Lags
 Bandwidth: amount of data transmitted
through communication channel
• broadband, direct connection to National
Internet Backbone, large bandwidth
– Cable, DSL
• dial-up, indirect path through ISP, narrowbandwidth
– 77% of Internet users
File size & access times
File type
File size
Download
time
Comments
Minimum
technology
Email
4 KB
.6 seconds
Standard
phone line
14.4K modem
Typical web
page
64 KB
8.8 seconds
10% graphics, 28.8K modem
rest text
Fancy web
page
220 KB
31 seconds
75% graphics
Power point
1MB
2.5 minutes
Or 20 secs AM 56K modem
sound file
Video clip on
web page
3.2 MB
7.5 minutes
Low quality
56K modem
Full screen
video
11 MB
36 minutes
TV quality
Broadband
28.8K modem
Diffusion
How Innovations Spread
Throughout Society
Technology Diffusion Rates (US)*
Fax
 Radio
 Television
 Personal Computer
 Internet

*To reach 50 million people
75 years
 38 years
 13 years
 16 years
 5 years

Diffusion
 A process by which an innovation is
communicated through certain channels
over time among members of a social
system
• social change
• spread
– diseases, products, ideas
– Similar pattern
Four Main Elements of Diffusion
 Innovation
 Communication
 Time
 Social system
Diffusion Networks
 Opinion leadership
• Degree to which an individual is able
informally to influence other individual’s
attitudes/behavior with relative frequency
 Adopters model and imitate
their peers’
behaviors
• follow other consumers & innovations spread
Diffusion networks
 Consumers are linked by relationships and
communication
• both strong and weak ties
 Eventually get a critical mass of adopters
• Point at which enough individuals have
adopted an innovation so further rate of
adoption is self-sustaining
Diffusion networks continued
 S-shaped curve
• X axis: time/Y axis: rate of adoption
• Critical mass occurs at point of inflection in
curve
 Marketers can build a critical mass
• target groups
• shape perceptions of innovation
• provide incentives
What affects rate of adoption
 Relative advantage
• degree to which an innovation is perceived as
better than what it supercedes
 Compatibility
• degree to which an innovation is perceived as
consistent with existing values, past
experiences, and needs of potential adopters
What affects rate of adoption?
 Complexity
• degree to which an innovation is perceived as
relatively difficult to understand and use
 Trialability
• degree to which an innovation may be
experimented with on a limited basis
What affects rate of adoption?
 Observability
• degree to which the results of an innovation
are visible to others
 Examples
Adopter Categories
 Consumers can be categorized by their
innovativeness
 Adopter category growth is related to the
spread of the innovation
 Five common categories
• innovators, early adopters, early majority, late
majority, & laggards
Innovators
 First group
 2.5% of adopters
 Venturesome
 Obsessed with innovations
 Gate keepers
Early Adopters
 The second group
 13.5% of adopters
 Social and Localites
 Integrated into social systems
 Often opinion leaders
Early Majority
 The third group
 34% percent of adopters
 Deliberate
 Interact frequently with peers
 Important link in diffusion process
• provide connections in network
Late Majority
 The Fourth group
 34% of adopters
 Skeptical
 Adoption may be economic necessity and
/or result of peer pressure
 Adopt after most others
Laggards
 Last 16% of adopters
 Traditional
 Almost no opinion leaders
 Near isolates in social system
 Suspicious of innovations & change
 Some people never adopt
Online Auctions
Online auctions
 Consumer Auctions as a business model
 Blurs commerce & fun
 Affects pricing, research
 Addictive
 Many enterprises not figured out how to
effectively apply the business model
Ebay
 Stickiest e-commerce site
– 27 minutes per visit
 Founded in 1995
 Has more than 5 million items for sale at
any one time
 Branching out into other auction arenas
Other Technologies
Interactive kiosks, iTV,
& m-commerce
Interactive kiosks
 Strategically placed in high-traffic areas of
stores
 Information rich, “ultimate salesperson”
 Low overhead, can provide incremental
sales
 Acceptance of machines by consumers is
vital
Kiosks
 Early tests of kiosks not successful
•
•
•
•
slow, broken, not updated, few graphics
misapplied content
lack of consumer interest
sales did not cover cost of machine
 As problems have been addressed,
consumer acceptance has increased
• 151,000 used in 2001
Kiosks
 Definition:
electronic information centers
 Goal:
provide increased level of service at
reduced cost to the retailer
• Anticipate questions & provide information in
effortless manner
Kiosks
 Applicable to various industries
• 66% of Kiosks are in retail locations
– ATMs prepared consumers for kiosks
– Wedding or Baby Registry
– Record stores
• Service providers, Governments, & Schools
– Court houses and libraries
Interactive Television

Television with interactive content &
enhancements
• convergence of computer, telephone, & TV
 Provides richer entertainment, interaction
& more information
– pertaining to shows, props and people involved
– programming can include richer graphics, links to
Web sites, communication with others, & ecommerce
iTV

Three forms:

set-top box-

2-screen TV

Mobile phone
• and to a lesser extent
PDA
iTV
 Consumers get greater choice of content,
when they want to see it, & how to act on it
• video & information on demand
• interactive programming
• diverse communication & purchasing options
 Control shifting to viewer
• more personalized, relevant content
Possible iTV features

Programming credits available
anytime

Trivia questions in real time
during show

Customized/localized
information (news/ weather)

Videoconferencing, distance
learning

Constant update across shows

Photo display services.

Home shopping (movies/CDs)

Communications (chat/email)

Interactive Entertainment
Guides


Surveys during a program
Information acquisition (retail
locations; details on a news
story; order a sample)

Interactive Game Shows

Interactive Sports (pick angle)
• gambling
iTV
 Early tests did not materialize
• consumers would not fully use nor pay for the
service
– Initial target market: participants in interactive
services
– Use of PC & TV are different
 PC/task oriented versus TV/socially
oriented
The Future of iTV
 Consumers want additional facts
pertaining to programming, alternative
commentaries, & Web support
• enhancements to programming
 27+ million US homes have iTV today
• To grow: must find those applications in which
benefits > costs
• Marketing research & product placement
Interactive telephone
 In 1980s, marketers programmed phones to
do a number of marketing functions
– build databases, sell products, enhance image,
facilitate customer service, collect data
– prepaid phone cards
 Now with the growth of cell phones, the
telephone has become part of mcommerce
M-commerce
 Mobile or Wireless Commerce
• cell phones or PDAs
• 110 million cell phone service subscribers
– In 2000, 5 million consumers used m-commerce
– By 2006, 85 million will use m-commerce
 Growth due to needs outside the home
– Europe and Japan
M-commerce
 Large profit potential, yet face challenges
•
•
•
•
narrow band-width
slow connections & roaming areas
signal blocks & security breaches
physical (carpal tunnel/eye strain/cancer)
 Growth predicted among 10-24 year olds
• 50% will use m-commerce by 2006
Web Site Construction
Design & Content
Key Terms
• HTTP: hyper-text transfer protocol
– Standard for transferring files on web
• HTML: hyper-text mark-up language
–WYSIWYG
• Applets: application programs
embedded in web pages (JAVA)
Key Terms
• URL: uniform resource locator
– Web address that browser reads
• Portals: gateways to the web
– AOL, Netscape, Alfy
• Upfront: what site visitor sees
• Backend: Technology that supports
content
Development Considerations
•
•
•
•
•
•
•
Goals
Targets
Content
Size
Timing
Budget
Backend
Design
 Various software can do this
• FrontPage, Dreamweaver, Netscape (free)
• Demonstration
 Free Web Hosting Sites
http://www.qsites.com/, http://www.50megs.com/,
http://www.angelfire.com/, http://www.bcity.com/,
http://www.cybercities.com/, http://www.freeservers.com/,
http://www.geocities.com/ , http://www.gurlpages.com/,
http://www.tripod.com/, http://www.webprovider.com/
 Look at site across different browsers
Web Site Content
 Study with designers & consumers
• optimal complexity level
– one logo on each page, few graphics
• design for lowest common technological
denominator
• should be a quick download (<7 second rule)
• key features on which to be competitive?
– Search, shopping cart, returns, quality photos,
contact information, FAQs, feedback options
Web Site Content
 Other considerations
• Fresh content
• Most sites are text based
– information should be chunked
– teasers link to full text (NEW!)
• Simplicity is important
– generally no animation, blinking images, loud
colors, & blaring sounds
Web Site Content
 Content should be based on goals of site &
why people are there
 3-click rule: users should be able to get to
the reason they are there within 3-clicks
– not always realistic
• Some firms take content from other media &
move it online
• Copyright issues
Web Site Content
 Front page should let consumer know what
the firm is about
 Should contain:
– logo, contact information, navigation bar, &
appealing image representing enterprise and its
goals
• no scrolling on front page
• most important content on top 1/3 of screen
Design
 Combination of aesthetics & usability
• detail, functionality, & creativity
• practice, practice, practice
 A few advertising considerations:
• non-linearity of design
• most users do not read, may skim
• consistency
– adopt page model & use it throughout the site
– consider flow of page
Layout Issues
 Layout & Design Tips online
• http://webmonkey.wired.com/webmonkey/

Considerations:
• Top Heading
• Typeface (Arial, Chicago, Courier, Times or Geneva)
– do not use ALL CAPS
• Left justify text (with exception of navigation bar)
• Small segments of text, chunk information, link into multiple
pages
• Use several small tables
• If have 20+ pages, use site map
More Layout Considerations

Colors
•
•
•
•

can be powerful communication tool
In 2001, study found most web sites were blue
darker background, lighter type
some color combinations hard to read & may vary
across screens
Links
• no page should dead end, all should link back to home
• should have operational front & back button on every
page
Graphics
 Simplicity is best
• many features overdone, including page fadeins & flash
• consider small, appropriate graphics or
randomize graphics to display an array of
images & avoid clutter
• under construction signs are negative
• streaming audio/video notoriously slow
Privacy and Security important
 66% of web users leave a site when asked
for personal information
 21% give false information to gain access
 Sites that have prominent privacy &
security statements are more sticky
Development Costs
 Small-scale, B2C sites
• $20-$300 per page
 Full-scale, B2B sites
• $65,000 for small site
• $250,000 for large site
 Monthly maintenance fees of complex sites
• $2,500 for small sites
• $14,000 for large sites
Web Storyboarding
 Design of text, content, and links to be
contained in a site
• Note cards
• PowerPoint
• Specialized software
 Knifeauctions.net
 Review of software