Transcript Slide 1
P5: Explain the competitive pressures on selected, contrasting business organisations to develop their use of e-business M2: D1: Evaluate how successful a selected business organisation has been in preparing for the growing use of e-business www.teachme.in Explain how two selected, contrasting business organisations have responded to competitive pressures to develop their use of e-business UNDERSTAND HOW ORGANIZATION ADAPT TO TRENDS IN THE USE OF E-BUSINESS Marketing benefits Cost benefits Benefits to customers MARKETING BENEFITS Responding to competitive forces The world economy is increasingly global This means that today our industry faces growing and far more sophisticated competition from all over the world. Particularly from fast-emerging economies like China, Philippines Kenya and India. Wherever they are, businesses can compete on Price, on quality of the products offered, on quality of customer service, on product features or on availability. The use of e-commerce via the internet has now become almost a necessity. Having an effective, well-managed web presence can help a business to compete. A • • • • • survey in 2006 on e-business trends in manufacturing by SVM (www.svmsolutions.com) showed that. 78 percent of manufacturers intended to increase spending on their website. 60 per cent intended to increase investment in email marketing 48 per cent were boosting spending on search engine marketing 25 per cent were reducing spending on magazine advertising 17 per cent were reducing spending on trade shows ACTIVITY 1. Visit www.svmsolutions.com And from Portfolio read case studies. And Answer the following What resulting competitive forces were measured in the following companies: RubberFab and B. Carter Products Company by svm solutions A. 2. What response and actions taken by the company. Marketing benefits: The Internet helps businesses to acquire a good knowledge of customers because it is a way of connecting everyone who is online. Millions of pounds, dollars and Euros and many other currencies pass through wires linking computers all over the world. According to ClickZStats (www.clickz.com) , the worldwide internet population in 2010 is 1.8 billion Not only will more people be online, but the comfort and ease with which they use the internet, will improve and fears about security issues will diminish. Reformulating the marketing mix: Traditional marketing uses tactics based on the marketing mix: Product Price Promotion Internet marketing specialists refer to a ‘remix’ of these, so that traditional marketing is re-applied in different ways in the online world. This e-marketing remix changes the traditional marketing tools and adds one or two new ingredients, designed specifically for the online community. To make visitors want to stay, as website has to offer something that is of value to a visitor. This is an online value proposition (OVP) and It is a similar concept to the unique selling proposition (USP) commonly referred to in traditional marketing. In the case of the USP, marketers are trying to communicate something unique about a physical product that will make people want to buy it more than other products Similarly, The OVP is the special set of characteristics about a website that will make people want to stick around on the site and make a purchase Implementing the Marketing Remix Online Product Place Price Promotion Personalisation People Physical evidence Processes 24-hour global presence and flexible location: The use of the Internet in marketing means that products may be displayed and offered online 24 hours a day, all over the world. Catalogues can be made available showing images and giving full details. 2. Promotion can happen 24 hours a day using search engine marketing (SEM) and banners 3. Prices are competitive because of low overheads. 4. Prices can also be dynamic, they change according to market conditions and feedback from customers. 5. Products (non-digital)can be made available anywhere, because there is the possibility of flexible location. 6. Digital products download immediately. 7. People can contact call centers or use email. Finally, processes, for example, easy Jet flight bookings , are simple. 1. Some more marketing benefits are but not limited to: Personalisation and feedback Opportunities for competitor analysis Opportunities to communicate with customers Key term: Personalisation – adjusting the web page that is returned to a visitor so that it offers information that is personal, based on their previous visits to the website. COST BENEFITS Premises and location Reduced staffing costs Cash flow advantages Disintermediation of the supply chain PREMISES AND LOCATION Internet gives immediate geographic spread, without the need for relocation. example: For Online business is virtual, dealing in digital Some retailers can sell their products, using the Internet, from a base in information. the Channel Island to gain tax advantages for themselves and so offer prices to their customers gaining an edgein over their competitors. lower No immediate need for–investment physical premises. If necessary be confined to third party distributor, depending on the nature of the product sold. Positioning of premises can be important factor when an organisation does business online. REDUCED STAFFING COSTS The potential for cutting staff costs is strong for businesses that begins to use the web for etransactions. In a traditional business, there is an enormous amount of paperwork and records that need to be kept, such as invoices, orders, delivery notes, credit notes and so on. An organisation has to employ administrative staff to deal with paperwork. When a business uses electronic means of conducting transactions, it reduces the need for administrative records and also therefore administrative staff. CASH FLOW ADVANTAGES A business depends on good cash flow. Cash flow refers to the stream of revenue that comes into a business from sales activities so that working capital can be maintained. This allows it to pay for wages and salaries as well as operating costs. Many businesses fail because of poor cash flow. By opening up a new web-based sales channel, there is an opportunity to improve income. DISINTERMEDIATION OF THE SUPPLY CHAIN Everything has to come from somewhere A business that makes railway carriages depends The supply chain can consist of many links. Once raw material (for on other businesses that produce the parts that example, timber) is sourced, it is then transported to a merchant. go into railway The merchant may carriages. alter the raw material in some way before Disintermediation: selling to a customer use.railway The transport, the merchant, The The parts gofor into carriages are orof removal ofthat intermediaries (‘middle men’) from the process distributors are all ‘Intermediaries’. This mean they work in getting products made to wherefrom consumers buy them.or other themselves raw can materials between. The web is capableparts. of cutting out these intermediaries – a process know components as disintermediation. This helps to cut costs. The supply chain refers to the way in which raw materials and parts find their way eventually to the customer. BENEFITS TO CUSTOMERS The Internet offers a vast range of products and services to customers. These products and services are accessible 24 hours a day, from anywhere. Customers are now able to choose products from a wider range of businesses irrespective of their location. Personalised offers: Remembering your shopping list favourites week after week when you do your grocery shopping online.