E-commerce

E-commerce

Session 2
The Roadmap

e-business strategy
From strategy to e-etrategy: Concepts and Overview
Strategy
A broad-based formula for how a business is going to accomplish its mission, what its goals should be, and what plans and policies will be needed to carry out those goals
E-strategy (e-strategy)
The formulation and execution of a vision of how a new or existing company intends to do business electronically

E-Business Strategy

Strategic Planning Tools

1. SWOT analysis
A methodology that surveys external opportunities and threats and relates them to internal strengths and weaknesses

2. Competitor analysis grid
A strategic planning tool that highlights points of differentiation between competitors and the target firm

Strategic Planning Tools
E-Strategy Formulation
What happens when there is no e-business strategy?
Missed opportunities for additional sales on the sell-side and for more efficient purchasing on the buy-side
Fall-behind competitors in delivering online services -may become difficult to catch-up, for example, Tesco, Dell
Poor customer experience from poorly integrated channels

e-Marketing strategy

No Other Media has all of the Advantages of eMarketing.
Cost effectiveness
Global reach
Interactive response
Measurability
Personalization
Real-time feedback

But E-marketing Suffers From
Lack of understanding of technology by marketers
Fast moving and turbulent arena
Changing technologies
Lack of trained personal
Senior management barriers
Corporate culture

Augmented Product
Pricing: Yield Management
There are two online pricing trends are:
Dynamic pricing îthis strategy applies different price levels for different customers or situations. The Internet allows firms to price items automatically and on the fly while users view pages,

Online bidding îthis presents a way to optimize inventory management.

E.g. Priceline.com, eBay.com
Promotion: Relationship Management Strategies
E-marketing communication strategies help build relationships with a firm’ s partners, supply chain members, or customers using:
Customer relationship management (CRM) software to retain customers and increase average order values and lifetime value,
Partner relationship management (PRM) software to integrate customer communication and purchase behavior into a comprehensive database,
Life time value
Retail and Wholesale
Electronic retailing (e-tailing): the direct sale from business to consumer through electronic storefronts, typically designed around an electronic catalog and shopping cart model
Cybermall: a single Web site that offers many products and services at one Internet location
Manufacturing, repair, and operations (MRO) goods and services

There are three extra Ps as the extended marketing mix:

People: Right person, trained well, motivated

Process: Providing services to customers

Physical evidence: Case studies, testimonials
PROCESS
A process is the method and sequence of actions in the e-service performance.
Process is a way of undertaking transaction, supplying information and providing e-services on a way which is acceptable to the e-customer and effective to the organization.
E-services are rendered and experienced simultaneously, therefore it is the process through which consumers go in interaction with service provider.
Types of E-Markets (cont.)
E-marketplace: An online market, usually B2B, in which buyers and sellers exchange goods or services; the three types of e-marketplaces are private, public, and consortia

Private e-marketplaces: Online markets owned by a single company; can be either sell-side or buy-side marketplaces
Sell-side e-marketplace: A private e-market in which a company sells either standard or customized products to qualified companies
Buy-side e-marketplace: A private e-market in which a company makes purchases from invited suppliers
Public e-marketplaces: B2B markets, usually owned and/or managed by an independent third party, that include many sellers and many buyers; also known as exchanges
Consortia: E-marketplaces owned by a small group of large vendors, usually in a single industry

The e-commerce strategy
E-commerce Strategy:

Creating customer value
Creating Customer Value Online

Never has competition for online customer attention and dollars been more fierce.

To succeed, firms must employ that result in

Customer value = Benefits -Costs.

Creating Customer Value Online
But what exactly is value?

The entire product experience:
Customer’ s first awareness of a product,
All customer touch points (including the Web site experience and e-mail from a firm),
The actual product usage and postpurchase customer service,
The compliments a consumer gets from friends while using the product.

Value is defined wholly by the customer.
Value involves customer expectations; if the actual product experience falls short of their expectations, customers will be disappointed.
Value is applied at all price levels.

Creating eBusiness Model

A Business Model
A business model can best be described through nine basic building blocks that show the logic of how a company intends to make money.
The nine blocks of the following model cover the four main areas of a business:
Customers
Offer
Infrastructure
Financial viability
The business model is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems.
Customer Segments
For whom are we creating value?
Who are the most important customers?
Mass Market
Niche Market
Segmented
Diversified
Multi-sided platform

Value Propositions
Value Propositions describes what creates value for a targeted Customer Segment.
Channels
Value Propositions are delivered to customers through communication, distribution and sales channels.
How a company communicates with and reaches its customer segments to deliver a value proposition.
Which Channels do our Customer Segments want to be reached? How are we reaching them now? Which are working best (or not working)?
Enabling customers to evaluate a firm’ s products
Allowing customers to purchase
Providing post-purchase customer support
Channels
Customer Relationships
The types of relationships the firm establishes with its customers. What types of relationships does our customer expect and how much does this cost? How does this support the value proposition?
Personal Assistance
Dedicated Personal Assistance
Self-service
Automated Services
Communities
Co-Creation
Revenue Streams
For what value are our customers really willing to pay?
Asset sale [product sale]
Usage fee
Subscription fee
Lending / Renting / Leasing
Licensing
Brokerage fees
Advertising
Service
Revenue Streams
Key Resources
The most important assets required to deliver our value proposition, distribution channel, and customer relationships
Physical
Intellectual
Human
Financial
Production
Platform
Key Activities [Capabilities]
The most important activities a company must do, in order to deliver its value proposition, and makes its business model work.
Marketing
Engineering
Managing
Selling
Logistics
Problem solving
Managing

Key Partners
Who are key partners in terms of suppliers and intermediaries between the firm and its end-users? Which key resources are we acquiring from partners? Which key activities do partners perform?
Motivations for Partnerships
Optimization and economy
Reduction of risk and uncertainty
Acquisition of particular resources and activities
Cost Structure
What are the most important costs inherent in delivering the value proposition? Which key resources are most expensive? Which key activities are most expensive?
Is our business model more Cost
driven or Value driven?
Types of costs
Fixed
Variable
Economies of scale
Economies of scope

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