MKTG 3043 Test 1
Eight key elements of a business model
1. Value proposition 2. Revenue model 3. Market opportunity 4. Competitive environment 5. Competitive advantage 6. Market Strategy 7. Organizational development 8. Management team
Consolidation Stage
2001-2006
Reinvention Stage
2007-current emergence of the mobile platform, social networks, web 2.0 app, attracted huge audiences in a short time
Sales revenue model
A business derives revenue by selling goods, content, and/or services
Freemium strategy
A business gives away a certain level of product or services for free but then charges a subscription fee for premium levels of the product or service
Advertising revenue model
A business provides a forum for advertisements and receives fees from advertisers
Information asymmetry
Any disparity in relevant market information among parties in a transaction
Value proposition
Defines how a company's product of service fulfills the needs of of customers
Revenue model
Describes how a business will earn revenue, generate profits, and produce a superior return on invested capital
Social e-commerce
E-commerce enabled by social networks and online social relationships
Local e-commerce
E-commerce that is focused on engaging consumers based on their current geographic location
Marketspace
Marketplace extended beyond traditional boundaries and removed from a temporal and geographic location, area of actual or potential commercial value in which a business intends to operate
Packet switching
Method of slicing digital messages comprised of bits into packets, sending them along different communication paths as they become available, and then reassembling the packets once they arrive at their destination
Richness
The complexity and content of a message
Incubators
Typically provide a small amount of funding and also an array of services to startup companies
Router
special-purpose computer that interconnects the computer networks that make up the Internet and routes packets to their ultimate destination as they travel the Internet
E-commerce business model
A business model that aims to use and leverage the unique qualities of the internet, the web, and the mobile platform
Subscription revenue model
A business offers its suers content or services and charges a subscription fee for access to some or all of its offerings
Transaction fee revenue model
A business receives a fee for enabling or executing a transaction
Affiliate revenue model
A business steers customers to an "affiliate" and receives a referral free or percentage of the revenue from any resulting sales
Online retailer (e-tailer)
A business that enables customers to shop and purchase via a website and/or mobile app
E-procurement company
A company that helps businesses automate their procurement process (the range of activities involved in obtaining goods and services)
E-distributor
A company that provides an online catalog of products from different manufacturers that are available for purchase by individual businesses
Market opportunity
A company's intended marketspace and the potential financial opportunities available to the business in that marketspace
first-mover advantage
A competitive market advantage that results from being the first into a marketplace with a serviceable product or service
Business plan
A document that describes a firm's business model
First mover
A firm that is first to market in a particular area and that moves quickly to gather market share
Perfect market
A market in which there are no competitive advantages or asymmetries because all businesses have equal access to all the factors of production
Business model
A set of planned activities designed to result in a profit in a marketplace
Commoditization
A situation where there are no differences among products or services, and the only basis of choosing is price
Friction free commerce
A vision of commerce in which information is equally distributed, transaction costs are low, prices can be dynamically adjusted to reflect actual demand, intermediaries decline, and unfair competitive advantages are eliminated
Competitive advantage
Achieved by a business when it can produce a superior product and/or bring the product to market at a lower price than most, or all, of its competitors
Industry structural analysys
An effort to understand and describe the nature of competition in an industry, the nature of substitute products, the barriers to entry, and the relative strength of consumers and suppliers
Exchange
An independent digital marketplace that connects suppliers and buyers
World Wide Web (the Web)
An information system running on the internet infrastructure and that provides access to trillions of web pages
Ubiquity
Available just about everywhere and at all times
Market creator
Builds a digital environment (market) in which buyers and sellers can meet, display and search for products and services, establish prices for products and transact
Customization
Changing the delivered product or service based on a user's preferences or prior behavior
Scope strategy
Competing in all markets around the globe, rather than just local, regional, or national markets
Consumer-to-consumer (C2C) e-commerce
Consumers selling to other consumers with the help of an online market maker
Transmission Control Protocol/Internet Protocol (TCP/IP)
Core communications protocol for the internet
Community provider
Creates an online environment where people can 'meet' online to connect and communicate, buy things
Private B2B network
Digital network designed to coordinate the flow of communications and supply chains among firms engaged in business together.
Disintermediation
Displacement of market middlemen, who traditionally are intermediaries between producers and consumers, by a new, direct relationship between producers and consumers
Digital disruption
Disruption driven by changes in information technology
Content provider
Distributes digital content, such as news, information, music, photos, and videos
Scale economies
Efficiencies that arise from increasing the size of a business
Management team
Employees of the business responsible for making the business model work
Asymmetry
Exists whenever one participant in a market has more resources than other particpants
Customer intimacy
Focuses on developing strong ties with customers in order to increase switching costs
Crowdfunding
Involves using the internet to enable individuals to collectively contribute money to support a project
Ch. 1 Societal Perspective
Major issues include privacy and government surveillance, protection of intellectual property, online security, and governance of the internet
Ch.1 Technological Perspective
Mobile platform has finally arrived with a bang, driving growth in mobile advertising and making true mobile e-commerce a reality
Technology theme
Need a basic understanding of information technologies upon which e-commerce is built, including the internet, the web, and the mobile platform, and a host of complementary technologies - cloud computing, desktop computers, smartphones, tablet computers, local area networks, client/server computing, packet-switched communications, protocols such as TCP/IP, web servers, HTML, and relational and non-relational databases, among others
Unfair competitive advantage
Occurs when one develops an advantage based on a factor that other businesses cannot purchase
Network effect
Occurs when users receive value from the fact that everyone else uses the same tool or product
Strategy of cost competition
Offering products and services at a lower cost than competitors
Portal
Offers users search tools as well as an integrated package of content and services all in one place
Ch. 1 Business Perspective
One of the most important trends to note is that all forms of e-commerce continue to show very strong growth
Business-to-conumer (B2C) e-commerce
Online business selling to individual consumers
Business-to-business (B2B) e-commerce
Online business selling to other businesses
Competitive environment
Other businesses selling similar products in the same marketspace, the presence of substitute products and potential new entrants, and the power of customers and supplies over the business
Global Reach
Permits commercial transactions to cross cultural and national boundaries far more conveniently and cost-effectively than is true in traditional commerce
Marketplace
Physical space you visit in order to transact
Organizational development
Plan that describes how a business will organize the work that needs to be accomplished
Business strategy
Plans for achieving superior long-term returns on the capital invested in a business
Transaction broker
Provides online processing for transactions that were previously handled in person, by phone, or by mail
Mobile platform
Provides the ability to access the internet from a variety of mobile devices such as smartphones, tablets, and ultra-lightweight laptop computers via cellular telephone networks and wifi networks, primary way to access the internet
Industry Structure
Refers to the nature of the players in an industry and their relative bargaining power
Complementary resources
Resources not directly involved in the production of the product but required for success, such as marketing, management, financial assets, and reputation
Web 2.0
Set of applications and technologies that enable user-generated content
Elevator pitch
Short, two-to-three minute presentation aimed at convincing investors to invest
Universal standards
Standards that are shared by all nations around the world
Disruptive techonolgies
Technologies that underpin a business model disruption
Interactivity
Technology that allows for two-way communication between merchant and consumer and among consumers
e-business
The digital enabling of transactions and processes within a firm, involving information systems under the control of the firm
Packets
The discrete units into which digital messages are sliced for transmission over the internet
Invention Stage
The early years were a success, digital infrastructure solid enough to sustain significant growth, mixed business success, with a significant revenue growth and customer usage but low profit margins
Market strategy
The plan a business puts together that details exactly how it intends to enter a market and attract customers
Society Theme
The pressures that global e-commerce places on contemporary society are critical to being successful in the e-commerce marketplace. Primary issue - intellectual property, individual privacy, and public policy
Firm value chain
The set of activities a firm engages in to create final products form raw inputs
Value chain
The set of activities through which a product or service is created and delivered to customers.
Personalization
The targeting of marketing messages to specific individuals by adjusting the message to a person's name, interests, and past purhcases
Social technology
The technology supports user-generated content (UGC), creators, and social networks and provides a many-to-many model of mass communication. Wide scale, large audiences
Information density
The total amount and quality of information available to all market participants
Barriers to entry
The total cost of entering a new marketplace
Reach
The total number of users or customers that an e-commerce business can obtain
e-commerce
The use of the internet, the web, and mobile apps and browsers running on mobile devices to transact business. More formally, digitally enabled commercial transactions between and among organizations and individuals
Venture capital investors
Typically invest funds they manage for other investors, usually later-stage investors
Seed capital
Typically, an entrepreneur's personal funds derived from savings, credit card advances, home equity loans, or money from family and friends
Angel investors
Typically, wealthy individuals or a group who invest their own money in exchange for an equity share in the stock of the business: the first outside investors
Mobile e-commerce (m-commerce)
Use of mobile devices to enable online transactions
Differentiation
Ways producers can make their products or services unique and different to distinguish them from those of competitors
Leverage
When a business uses its competitive advantage to achieve more advantage in surrounding markets
Business Theme
While technology provides the infrastructure it is the business application (the potential for extraordinary returns on investment) that create the interest and excitement in e-commerce. Also need to understand digital markets, information goods, business models, firm, and industry value chains, industry structure, and consumer behavior
Internet
Worldwide network of computer networks built on common standards
Focus/market niche strategy
competing within a narrow market or product segment
Routing algorithm
computer program that ensures that packets take the best available path toward their destination
Industry consortium
industry-owned vertical digital market.
