Transcript Chapter2: Understanding E

What is E-Business
E-business, or electronic business, systems
use a number of information technologybased business practices to enhance
relationships between the business and the
customer. E-business includes changes in
marketing communication, distribution
systems, and business models.
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 1
Business Models
• New information technologies are allowing
businesses to redesign business models and
change business practice
– A business model, or commerce model, is the basic
process flow indicating how a business operates. It
indicates how business functions are linked together.
• Internet based business models requires fewer
hard assets (bricks and mortar assets)
– Brick and mortar businesses have tangible physical
assets such as factories, office buildings, warehouses
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 2
E-Business Industry Terms
• E-Commerce: Uses electronic information based
systems to engage in transactions or commerce
online.
• Extranet: An Internet based connection between a
business and its suppliers, distributors, and
partners. This is not open to the general public.
• Intranets: Internal private network that use the
same types of hardware, software, and connections
as the Internet.
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 3
Changing Nature of Business
• Capture data electronically at the point of sale and route
that information from the retailer to the supplier and/or the
manufacturer.
• Electronically linked distribution systems are speeding
products through the channel of distribution and helping to
forge strong relationships between firms.
• The World Wide Web is allowing businesses to reach
customers around the world rather than just local markets.
• Information on the customer’s shopping behavior is being
stored in databases to profile individuals for targeted
promotions and customized products.
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 4
What Are The Business’ Goals?
• Pure Play Internet?
– Communicate or Sell?
• Multi-Channel Sales Approach?
• Support Brick and Mortar?
– Hold Current Customers?
• Enhance Relationship Development?
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 5
Generic Business Model
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 6
The Traditional Business System
Distribution
Flow
Product
Price
Communication
Target
Customers
Information Flow
Payment Flow
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 7
Generic E-Business Model
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 8
The Traditional
Marketing System
Strategic
Plan
Strategic
Goal
Environment:
Supply
Chain
Technological
Competitive
Political and Legal
Social
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 9
E-Business Systems
E-Business Systems are fostering a number
of changes to the marketing system:
– Customized production.
– Increasing price pressure resulting in lowering prices.
– Shorter channels of distribution dominated by
facilitators.
– Extranet-enhanced supply chain management.
– Non-linear promotions.
– Electronic transfer of funds.
– Database information management systems.
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 10
E-Business Systems
Shorter Channels
Dominated by
Facilitators
Customized
Production
Dynamic
Pricing
Customized
Non-Linear
Promotion
Market-of-One
Customer
Knowledge Management
& Data Warehousing
Electronic Payments
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 11
The E-Business System
Strategic
Plan
Extranet
Supply
Chain
Strategic
Goal
Environment:
Constant Technological Change
Increased Competitive Pressure
Weakened Political and Legal Influence
Greater Social Acceptance of Change
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 12
Vignette: General Electric
www.GE.com
Suppliers linked
through Extranet
deliver just-in-time.
Suppliers bid
online.
Product shipped
from inventory or
order is routed to
factory.
(1)
Consumer product
delivered through
distributors or shippers.
Web page
provides
information and
ordering.
Customer gathers
information and
purchases through
Web page.
Database monitors equipment
Payments are made online
through Web page.
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 13
Creating Value
• Businesses create value for their customers by providing
quality goods and services at acceptable prices.
• A business model that provides more benefits to its
customers and/or sells at a lower the price will take market
share away from competitors.
– A commerce or business model is the basic process by which a
business obtains its inventory, produces the good or service, and
how they deliver that to the customer.
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 14
Seven Value Creation Strategies
• Online purchasing strategy: allows for buying and selling of products and
information on the Internet and other online services.
• Digital communication strategy: allows for delivery of digital information,
products, services, or payments online.
• Service strategy: allows for the cutting of costs, improving of the quality of
goods, and increasing the speed of service.
• Business process strategy: allows automation of business transactions and
work flows.
• Market-of-one strategy: allows for developing products for a single
customer with close to the same costs as mass production.
• Auction based strategy: allows automation of bidding for products or
customers online.
• Pricing Strategy: Allows businesses to pursue market share by selling at
low prices or giving away products and services for free.
For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 15
Creating Value
Online Purchasing
Market-of- One
Digital
Communication
and Service
Business
Process
Pricing
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For use with Strategic Electronic Marketing:
Managing E-Business, 2e
Copyright 2003 South-Western College Publishing
Chapter 1 Slide: 16