TA 15-1 Percent of B2B Commerce from Internet 1. This acetate forecasts the amount of B2B commerce that’s expected to be conducted on the Internet in the future. 2. The purpose of this acetate is to illustrate to students the tremendous growth of B2B commerce in the early years of the 21st century. You might point out to them that in 1997 B2B was a mere 0.2% of business transactions. It is forecasted to be 9.4% by 2003. This equates to an average annual growth rate of nearly 90%. The message, B2B is here to stay 3. See if students can explain what implications B2B will have on traditional methods of distribution.
TA 15-3 Is It Becoming a Wal-Mart World? 1. The retailer of the 1990s and the 21st century in the U.S. was clearly Wal-Mart. Wal-Mart has tried to work its magic globally and has expanded into different markets detailed in the acetate. As students will notice, Wal-Mart has even moved into the People’s Republic of China. 2. Ask students what problems Wal-Mart can expect to face in its global ventures. You could assign students to go on the Internet or to the library and find what significant problems Wal-Mart has experienced in such diverse markets as Brazil and Mexico. What opportunities have they enjoyed diversifying into global markets? 3. See if students can answer why companies like Wal-Mart, with close to 3,000 stores in the U.S., would take the risk of expanding into global markets. You might see if they recall form Chapter 3 the different forms of entry into global markets companies can consider (I.e., export, franchising, licensing, joint ventures, contract manufacturing, direct investment, etc.) and the degree of risk associated with each strategy.
TA 15-2 E-Business Expectations 1. This acetate illustrates how CEOs feel the Internet is expected to impact on company revenues today vs. in 5 years. 2. The way to read this is that Now approximately 35% of the CEOs say they receive “None” of their revenues from the Internet and 6% receive more than 20% of their revenues from the Internet. On the other hand, in five years only 8% will receive “None” of their revenues from the Internet and 20% will receive more than 20% of their revenues from the Internet. This is a significant shift in sources of revenue within a very short period of time. 3. It can be seen that while the CEOs recognize the majority of their income comes from traditional sources increased revenue will grow as e-business transactions through the Internet rise.
TA 15-6 Has The Internet Changed Your Shopping Habits. 1. This acetate provides additional information that suggests that the Web is cutting hours at the mall. 2. The survey was conducted with Americans who have Internet access who say they go to the store/mall less often because they shop online. As the acetate’s information highlights, we are rapidly approaching the point where one-half of all people who use the Internet more than 15 hours per week agree they spend less time in the mall. A logical questions students might ask is “are people staying at home to shop on the Internet or are they spending so much time online that they don’t have time to go to the mall? See how students respond to these facts and see how many of them agree that they spend more time online as opposed to frequenting the shopping malls. 3. It might be interesting to ask the class, “What are the future implications for marketing if consumers are spending more time online?” Is the store salesperson of the future going to be a robot with an Internet connection?
TA 15-7 What Online Shoppers Bought Per Month in 2000 1. This acetate illustrates what buyers are purchasing in their virtual shopping experiences. 2. Ask students if they are surprised by this breakdown? Students will probably agree that it’s natural that online shoppers would buy more technology-oriented products such as computer hardware and software or toys and video games? Why do you suppose they are buying travel? See if students have a good answer for this and see how many of them have purchased travel online. They should be able to recognize both convenience and price options available here by purchasing online.
TA 15-8 What does it take to persuade consumers to buy online? 1. This acetate illustrates what assurances people who do not buy online would need to be persuaded to purchase products online. 2. It’s obvious that privacy/security of personal information (e.g., credit card number) and price are the drivers of success for a seller online. Therefore, in marketing their Internet sites, it’s imperative that this information be communicated to prospective customers. If consumer’s seem content about security and sense value, the seller will reap the rewards. 3. Do students feel it’s important to be able to return unwanted products to a brick-and-mortar store? What if there was no cost of shipping to the buyer? Would that make a difference?
TA 15-9 The Supply Chain 1 Supply chain management is a key to effective distribution in the 21 st century-company. This acetate illustrates to students how supply chains are structured and implemented in the market. 2. Make note to students that cooperation at every level of the supply chain is essential for the system to work. Companies like Wal-Mart have come close to perfecting the implementation of this system, even though suppliers often feel a real sense of pressure. 3. Ask if any students in class have experience working with a company that has an operational supply chain. We have found that several students (especially our evening students) offer rather effective synopses of how they work within a supply chain.
Chapter 15 Distributing Products Quickly and Efficiently 15-
Channel of Distribution from raw materials to distribution <ul><li>Marketing Intermediaries </li></ul><ul><ul><li>Wholesaler – sells to retailers </li></ul></ul><ul><ul><li>Retailer – sells to public </li></ul></ul><ul><ul><li>Brokers – brings buyers to seller </li></ul></ul><ul><li>Role of Intermediaries </li></ul><ul><ul><li>Create Efficiency </li></ul></ul><ul><ul><li>Value vs. Cost </li></ul></ul>
Types of Utility Form Time Place Possession Information Service OPEN 24 HRS using raw materials when needed where wanted transfer ownership two-way communication before during & after sale
Wholesale Intermediaries <ul><li>Merchant Wholesalers </li></ul><ul><ul><li>Rack Jobbers </li></ul></ul><ul><ul><li>Cash-and-Carry </li></ul></ul><ul><ul><li>Drop Shippers </li></ul></ul><ul><li>Business to Business (B2B) </li></ul>XYZ Warehouse take ownership to goods they handle furnish racks full of merchandise to retailers wide assortment to small businesses goods shipped from producer to buyer
Percent of B2B Commerce from Internet *Excludes Service Industries Source: Forrester Research Inc.
How Retailers Compete <ul><li>Price </li></ul><ul><li>Service </li></ul><ul><li>Location </li></ul><ul><li>Selection </li></ul><ul><li>Entertainment </li></ul>
Is it Becoming a Wal-Mart World? *There are 2,985 stores in the U.S. Source: Wal-Mart Annual Report 2000
Retail Store Distribution <ul><li>Intensive </li></ul><ul><li>Selective </li></ul><ul><li>Exclusive </li></ul>
E-Business Expectations Share of company revenues CEOs say come from e-business Now vs. In 5 years Source: USA Today
Why People Don’t Shop Online <ul><li>It isn’t secure </li></ul><ul><li>It will jeopardize my privacy </li></ul><ul><li>Usually must pay shipping charges </li></ul><ul><li>Not enough selection </li></ul><ul><li>Can’t touch/try things first </li></ul><ul><li>No satisfaction guarantee </li></ul><ul><li>Returns are a hassle </li></ul><ul><li>Won’t arrive on time </li></ul><ul><li>Hard to find things online </li></ul><ul><li>Enjoy getting out of house to shop </li></ul>Source: blink , www.earthlink.net/blink
Has The Internet Changed Your Shopping Habits? Survey of Americans who have high* Internet use vs. those with low use * high use = 15+ hours per week Source: USA Today
What Online Shoppers Bought* Per Month in 2000 *In thousands of dollars Source: Forrester Research
What does it take to persuade consumers to buy online? * Survey of 1,944 Web users that had not made an online purchase Source: CIO Web Business , 10/1/1999
Channel Cooperation to compete with online retailers <ul><li>1. Corporate Distribution </li></ul><ul><li>2. Administered Distribution </li></ul>all distribution orgs. are owned by same firm (Sherwin-Williams) producers manage all marketing functions at retail level. Beer?
3. Contractual Distribution <ul><li>Franchise Systems </li></ul><ul><li>Wholesaler-Sponsored Chains </li></ul><ul><li>Retail Cooperatives </li></ul>members bound to cooperate through contracts McDonald’s, KFC Ace Hardware, IGA Foods
The Supply Chain 4. Supply Chain Management all organizations from raw materials to final customer