Transcript e-commerce: digital markets, digital goods

Management Information Systems
MANAGING THE DIGITAL FIRM, 12TH EDITION GLOBAL EDITION
Session 5
E-COMMERCE M-COMMERCE:
DIGITAL MARKETS, DIGITAL GOODS
Management Information Systems
CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS
Learning Objectives
• What are the unique features of e-commerce, digital
markets, and digital goods?
• What are the principal e-commerce business and revenue
models?
• How has e-commerce transformed marketing?
• How has e-commerce affected business-to-business
transactions? Case study Ford
• What is the role of m-commerce in business and what are
the most important m-commerce applications?
• What issues must be addressed when building an
e-commerce Web site?
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The New Economy
The Putting-out Economy
Industrial Economy
Services Economy
Digital Economy
The service economy
Management Information Systems
CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS
E-commerce and the Internet
• E-commerce today:
– Began in 1995 and grew exponentially, still
growing even in a recession
– Companies that survived the dot-com bubble
burst and now thrive
– E-commerce revolution is still in its early
stages
– Use of the Internet and Web to transact
business; digitally enabled transactions
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Internet users
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Management Information Systems
CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS
E-commerce and the Internet
THE GROWTH OF E-COMMERCE
FIGURE 10-1
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Retail e-commerce revenues grew 15–25 percent per year until the recession of 2008–2009, when they
slowed measurably. In 2010, e-commerce revenues are growing again at an estimated 12 percent annually.
Different category of Business
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Government
Business
Consumers
Government
G2G
G2B
G2C
Business
B2G
B2B
B2C
Consumers
C2G
C2B
C2C
Management Information Systems
CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS
E-commerce: Business and Technology
• Types of e-commerce
• Business-to-consumer (B2C)
• Business-to-business (B2B)
• Consumer-to-consumer (C2C)
• Consumer-to-business (C2B)
• Mobile commerce (m-commerce)
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Types of e-commerce
To
Consumer
From
Business
C2C
B2C
•eBay
•Peer to Peer
•Blogs and communities
•Product recommendation
•Social networks : MySpace, FB…
C2B
Business
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Consumer
•Transactional : Amazon
•Relationship building : BP
•Brand building : Unilever
•Media owner – news corp.
•Comparison intermediary : Kelkoo
B2B
•Priceline
•Transactional : Euroffice
•Consumer feedback, communities •Relationship building : BP
or campaign
•Media owned : Emap business
publications
•B2B marketplace : EC21
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E-Commerce
Opportunities
• Large reach medium
– No time space, no
geographical limits
• Richness
– Cognitive medium
Risks
 Technical
 website fail, hacking, spam,
phishing
 Organizational
 supply, logistic, customer
services efficiency
 No inertia : how to lock in your
consumers ?
 Legal
• Personalization
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 Can I buy everything
everywhere ? (ex. Royalties)
 National legislation
Benefits of personalization
Benefits of co-creation
Benefits of integrating communication channels in
one channel
Benefits of e-communication
Benefits Virtual Communities
Benefits of DISINTERMEDIATION
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Benefits of digital goods
Management Information Systems
CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS
Key concepts in e-commerce
Digital goods
• Goods that can be delivered over a digital network
– E.g. Music tracks, video, software, newspapers, books
• Cost of producing first unit almost entire cost of
product: marginal cost of 2nd unit is about zero
• Costs of delivery over the Internet very low
• Marketing costs remain the same; pricing highly
variable
• Industries with digital goods are undergoing
revolutionary changes (publishers, record labels, etc.)
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Benefits of personalization
Management Information Systems
MANAGING THE DIGITAL FIRM, 12TH EDITION GLOBAL EDITION
• Key concepts in e-commerce
2. The benefits of personalization
A General Image of Utility/personalization
Product Co-creation
Customization
Customized standardization
Kickers : customized
standardization
Longchamp bag : tailored
customization
Total successNew Fiat 500 :
• Continuous ways of customizing the car
– The 500 ooo th (http://www.500wantsyou.fr/)
Example of a Total failure : GINA
Pure customization
Benefits of
DISINTERMEDIATION
Management Information Systems
CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS
E-commerce and the Internet
Key concepts in e-commerce
3. THE BENEFITS OF DISINTERMEDIATION TO THE CONSUMER
FIGURE 10-2
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The typical distribution channel has several intermediary layers, each of which adds to the final cost of a
product, such as a sweater. Removing layers lowers the final cost to the consumer.
Benefits of integrating
channels: In one Web site
Web site?
Photos and
videos
Contact
persons
Informations
Maps
E-Marketing: The Website
• Consumers want in a website:
– 1 stop shopping with integrated solutions.
– Effective web navigation
– Quick downloads
– Clear site organization
– Attractive/useful site design
– Secure and private transactions
– Free information/services - consumers used to
online culture of getting something for free.
Integrating all channels in an Ultimate
channel as part of integrated e-marketing
strategy
EXAMPLE
Security and privacy
Trust in the Web
Customers Privacy
• Guarding Consumer Privacy
– Privacy a major concern; burden on marketers to
use info responsibly and not be too intrusive
– CRM based on trust - key is relationship building
through dialogue and better targeting.
– Better to have consumers opt-in, may get less
consumers but they will be open to message.
– Remember retention more profitable than
acquisition; relationship capital.
Everyday Privacy and Security Problem
Everyday Privacy and Security Problem
Cookies and Web Bugs
• Cookies:
– Small text file Web sites place on visitor’s PC every time
they visit, as specific pages are accessed
– Provide Web marketers with very quick means of
identifying customer and understanding prior behavior
• Web bugs:
– Tiny (one pixel) graphic files embedded in e-mail messages
and on Web sites
– Used to automatically transmit information about user and
page being viewed to monitoring server
Fast Facts on Phishing
• A semantic attack aimed directly at people
rather than computers
– “Please update your account”
– “Fill out survey and get $25”
– “Question about your auction”
• Rapidly growing in scale and damage
–
–
–
–
Estimated 3.5 million phishing victims
~7000 new phishing sites in Dec 2005 alone
~$1-2 billion in damages
More profitable (and safer) to phish than rob a bank
Little Attention Paid to URLs
• Only 55% of participants said they had ever
noticed an unexpected or strange-looking URL
• Most did not consider them to be suspicious
Explains how to identify
Diagram Intervention
a phishing scam
Virtual Communities
Virtual communities
Virtual communities
• Building virtual Communities
– Internet ideal for gathering people with similar
ideas/tasks (communities).
– Communities form at web sites in chat rooms,
bulletin boards, and distributed e-mail lists.
– If a firm builds/maintains the “watering hole” where
community gathers, can build relationship with
them.
Exemplar Blog/Brand Communities
• Nike Blog
– The Art of Speed
• Red Hat Blog [http://blogs.redhat.com/]
– Road show and executive blogs
• Channel 9 - Microsoft [http://channel9.msdn.com/]
– Microsoft employees and developers talking, learning, and listening
globally.
• General Motors Blogs [http://smallblock.gmblogs.com/]
– Community for small block enthusiasts
• Google Blog
– Insight into the news, technology, and culture of Google.
Second life and avatars
• Sharply lowered entry barriers (blogs)
– Creating a blog takes minutes (literally!)
e-communication
Types of Internet advertising/marketing
• Banner ads: most popular, different sizes and styles
• Pop-up ads: popular, another type is pop-behind
• E-mail marketing: powerful, economical, legal
implications, spam
• Affiliate marketing: commission-based, benefit of the
selling site’s brand in exchange for the referral
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Search Engine Positioning
• Potential customers find web sites in many
different ways
• Some site visitors will be referred by a friend,
others by affiliates, some will see the site’s
URL in a print advertisement or on television
• Many site visitors will be directed to the site
by a search engine
Search Engine Positioning (cont.)
• A search engine helps people find things on
the web
• A search engine has three major parts:
1. A spider, a crawler, or a robot
2. Index or database
3. Search utility
• Search engine positioning is also called:
•
•
Search engine optimization
Search engine placement
Web spiders
Special Advertising Topics
• Wireless Advertising
• Ad Content
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The concept of FLOW
• Consumer Navigation Behavior
– Attention
• Flow is the state occurring during network navigation that
is (1) characterized by a seamless sequence of responses
facilitated by machine interactivity, (2) intrinsically
enjoyable, (3) accompanied by a loss of selfconsciousness, and (4) self-reinforcing.
– Attention is a desirable and scarce commodity.
Management Information Systems
CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS
E-commerce: Business and Technology
• E-commerce marketing
– Internet provides marketers with new ways of
identifying and communicating with customers
– Long tail marketing: Ability to reach a large
audience inexpensively
– Behavioral targeting: Tracking online behavior of
individuals on thousands of Web sites
– Advertising formats include search engine
marketing, display ads, rich media, and e-mail
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© Pearson Education 2012
More Interactivity then traditional media
2 way
medium
• Active not passive
• Respond to
demand
• Opt in, not opt
out
• Interactive
Dialogue
E-commerce marketing
• Power to the customer
• Demand what they want and when
• Closer to the customer
• Raises importance of customer service
• Service response
• Speed of delivery
• Saying & doing – delivering on time
http://www.youtube.com/watch?v=G3PAE8xA
U-8
http://www.youtube.com/watch?v=mQx97f9gIv
M
More individualization
Summary of degree of individualization for (a) traditional
media (same message), (b) new media (unique messages
and more information exchange between customers)
Advergames
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CONCLUSION
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Productivity of Search
Web 3.0
The Intelligent Web
Web 4.0
2020 - 2030
The Semantic Web
Web 3.0
Reasoning
Semantic Search
2010 - 2020
The Social Web
Web
2.0
2000
2010
The World Wide Web
Web
1.0
1990 - 2000
The Desktop
PC Era
1980 - 1990
Natural language search
Tagging
Keyword search
Directories
Files & Folders
Databases
Amount of data
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From companies to open companies
YOURCOMPANY
Back Office
YourSupplier
E-Procurement / E-Purchasing
YourCustomer
CRM
Invoicing
HRM
Finance
SCM System
MRP
Integration:
ERP System
SCM
Supplier of
YourSupplier
Front Office
$
Customer of
YourCustomer
Online
Intermediaries
CRM System
Information  E-Marketing
Transaction  E-Commerce
E-Business
Dis-Intermediation
ERP  Enterprise Resource Planning
Internet Infrastructure
MRP  Materials Requirement Planning
Intranet: members of YourCompany
CRM  Customer Relationship Management
Extranet: extended for third parties
SCM  Supply Chain Management
Client - Server System
From Mktg to eMktg
‘Marketing is no
longer an art, it
is a science’,
(Schulman)
Le Slip Français
French Election Campaign 2012: Le changement de
slip c’est maintenant
Parody of the official candidate posters