Chapter 10 INFO 360

Location-based services and applications

- Geosocial services - Geoadvertising *Economic foundation for m-commerce* - Geoinformation

Business-to-business (B2B) e-commerce: *Challenges*

- Changing existing systems of procurement - Implementing new Internet B2B solutions

Interactivity

- The technology works through interaction with the user *Effect:* - Consumers engaged in dialog that dynamically adjusts experience to the individual. - Consumer becomes co-participant in process of delivering goods to market.

Original e-commerce marketing:

- Web sites - Display ads - Measures "eyeballs" and impressions of display ads

Electronic Data Interchange (EDI)

Companies use EDI to automate transactions for B2B e-commerce and continuous inventory replenishment. Suppliers can automatically send data about shipments to purchasing firms. The purchasing firms can use EDI to provide production and inventory requirements and payment data to suppliers.

A Net Marketplace

Net marketplaces are online marketplaces where multiple buyers can purchase from multiple sellers.

Phase 2: *Web site development*

*Activity:* Acquire content; develop a site design; arrange for hosting the site *Milestone:* Web site plan

Phase 5: *Social Media Implementation*

*Activity:* Develop Facebook, twitter, and pint rest presence *Milestone:* Functioning social media presence

Exchanges

- Independently owned third-party Net marketplaces. - Connect thousands of suppliers and buyers for spot purchasing. - Typically provide vertical markets for direct goods for single industry (food, electronics). - Proliferated during early years of e-commerce; many have failed. *Competitive bidding drove prices down and did not offer long-term relationships with buyers or services to make lowering prices worthwhile.*

Private industrial network (private exchange)

- Large firm using extranet to link to its suppliers, distributors, and other key business partners - Owned by buyer

A Private Industrial Network

A private industrial network, also known as a private exchange, links a firm to its suppliers, distributors, and other key business partners for efficient supply chain management and other collaborative commerce activities.

E-Commerce Presence Map

An e-commerce presence requires firms to consider the four different types of presence, with specific platforms and activities associated with each.

Develop a timeline: milestones

Breaking a project into discrete phases

Social networks have huge audiences

Facebook: 144 million U.S. monthly visitors

Social media:

Fastest growing media for branding and marketing

Web Site Personalization

Firms can create unique personalized Web pages that display content or ads for products or services of special interest to individual users, improving the customer experience and creating additional value.

E-Commerce Marketing

Internet provides marketers with new ways of identifying and communicating with customers.

Consolidated Mobile Commerce Revenues

Mobile e-commerce is the fastest growing type of B2C e-commerce although it represents only a small part of all e-commerce in 2011.

The Benefits of Disintermediation to the Consumer

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.

Behavioral targeting:

Tracking online behavior of individuals on thousands of Web sites.

Phase 3: *Web Implementation*

*Activity:* Develop Keywords and metatarsi; focus on search engine optimization; identify potential sponsors *Milestone:* A functional web site

Phase 6: *Mobile Plan*

*Activity:* Develop a mobile plan; consider options for porting you web site to smartphones *Milestone:* A mobile media plan

Phase 1: *Planning*

*Activity:* Envision web presence; determine personnel *Milestone:* Web mission statement

Phase 4: *Social Media Plan*

*Activity:* Identify appropriate social platforms and content for your products and services *Milestone:* A social media plan

Develop an e-commerce presence map

*Four areas:* Web sites, e-mail, social media, offline media

Main areas of growth:

*Retail sales at top Mobile* 400 companies Amazon, Apple *Sales of digital content* Music, TV and movies

Social Networking and the Wisdom of Crowds

*Social networks* - Fastest growing area of e-commerce revenues - Social shopping sites: Pinterest, Kaboodle, ThisNext *Wisdom of crowds* *Crowdsourcing* - Large numbers of people can make better decisions about topics and products than a single person. *Prediction markets* - Peer-to-peer betting markets on specific outcomes (elections, sales figures, designs for new products)

Why E-Commerce Is Different

*Ubiquity* - Internet/Web technology available everywhere: work, home, and so on, anytime *Effect:* - Marketplace removed from temporal, geographic locations to become "marketspace" - Enhanced customer convenience and reduced shopping costs

Types of E-Commerce

- *Business-to-consumer (B2C)* BarnesandNoble.com - *Business-to-business (B2B)* ChemConnect - *Consumer-to-consumer (C2C)* eBay

E-Commerce Revenue Models

- Advertising - Sales - Subscription - Free/Freemium - Transaction fee - Affiliate

Social e-commerce

- Based on idea of digital social graph Mapping of all significant online relationships - The purchases of one person influence others' purchases

Business-to-business (B2B) e-commerce: *Commercial transactions between firms*

- Complex - Require considerable human intervention - Consume significant resources For example: $100 in administrative costs for each procurement purchase

Electronic data interchange (EDI)

- Computer-to-computer exchange of standard transactions such as invoices, purchase orders. - Major industries use EDI standards to define structure and information fields. - More companies increasingly moving away from private networks to Internet for linking to other firms.

Digital market effects:

- Decreased *information asymmetry* - Reduced *search costs and transaction costs* - *Delayed gratification:* effects dependent on product - Reduced menu costs - Increased *dynamic pricing* - Increased *price discrimination* - Increased *market segmentation* - *Switching costs:* effects dependent on product - Stronger *network effects* - More *disintermediation*

Most important management challenges

- Developing clear understanding of business objectives - Knowing how to choose the right technology to achieve those objectives

E-Commerce Today

- E-commerce: use of the Internet and Web to transact business; digitally enabled transactions. - Began in 1995 and grew exponentially; still stable even in a recession. - Companies that survived the dot-com bubble burst now thrive. - E-commerce revolution is still in its early stages.

Digital goods

- Goods that can be delivered over a digital network For example: music tracks, video, software, newspapers, books - Cost of producing first unit almost entire cost of product: marginal cost of producing 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.)

Information density

- Large increases in information density—the total amount and quality of information available to all market participants *Effect:* - Greater price transparency - Greater cost transparency - Enables merchants to engage in price discrimination

Other mobile commerce services

- Mobile banking - Mobile display advertising - Coupon services

Universal standards

- One set of technology standards: Internet standards - *Effect:* - Disparate computer systems easily communicate with one another. - Lower market entry costs—costs merchants must pay to bring goods to market. - Lower consumers'search costs—effort required to find suitable products.

E-Commerce Business Models

- Portal - E-tailer - Content provider - Transaction broker - Market creator - Service provider - Community provider (social networks)

Permits sharing of:

- Product design and development - Marketing - Production scheduling and inventory management - Unstructured communication (graphics and e-mail)

M-Commerce

- Represents 10 percent of all e-commerce - Fastest growing form of e-commerce Especially popular in online travel industry

Social network marketing:

- Seeks to leverage individuals influence over others in social graph - Target is a social network of people sharing interests and advice - Facebook's "Like button"

Net marketplaces (e-hubs)

- Single market for many buyers and sellers. - Industry-owned or owned by independent intermediary. - Generate revenue from transaction fees, other services. - Use prices established through negotiation, auction, RFQs, or fixed prices. - May focus on direct or indirect goods. - May be vertical or horizontal marketplaces.

Social, mobile, local e-commerce marketing:

- Social media: Facebook, Twitter, Pinterest - Mobile, localized ads and apps - Measures "conversations" and "engagement"

Four features of social e-commerce driving growth

- Social sign-on - Collaborative shopping - Network notification - Social search (recommendations)

Richness

- Supports video, audio, and text messages *Effect:* - Possible to deliver rich messages with text, audio, and video simultaneously to large numbers of people. - Video, audio, and text marketing messages can be integrated into single marketing message and consumer experience.

Personalization/Customization

- Technology permits modification of messages, goods *Effect:* - Personalized messages can be sent to individuals as well as groups. - Products and services can be customized to individual preferences.

Social technology

- The technology promotes user content generation and social networking *Effect:* - New Internet social and business models enable user content creation and distribution, and support social networks. - Many-to-many model

Global reach

- The technology reaches across national boundaries, around Earth *Effect:* - Commerce enabled across cultural and national boundaries seamlessly and without modification. - Marketspace includes, potentially, billions of consumers and millions of businesses worldwide.

E-Commerce Presence Timeline

1. Planning 2. Web site development 3. Web Implementation 4. Social Media Plan 5. Social Media Implementation 6. Mobile Plan

Long tail marketing:

Ability to reach a large audience inexpensively.

How an Advertising Network Works

Advertising networks and their use of tracking programs have become controversial among privacy advocates because of their ability to track individual consumers across the Internet.

Web Site Visitor Tracking

E-commerce Web sites have tools to track a shopper's every step through an online store. Close examination of customer behavior at a Web site selling women's clothing shows what the store might learn at each step and what actions it could take to increase sales.

Internet advertising formats

include search engine marketing, display ads, rich media, and e-mail.