E-COMMERCE BUS2513(Diploma in International Business)Chapter 1: Core Marketing Concepts
Introduction to E-Commerce• What is E-Commerce? The process of buying, selling, or exchanging products, services and information via computer networks. King D. , Turban E. The art and science of selling products and/or services over the Internet. sbinfocanada.about.com The sharing of business information, maintaining business relationships, and the conducting business transactions by means of telecommunication networks. Zwass.
4 different types of information technology areconverging to create the discipline of e-commerce:• Electronic messages, email and fax• Sharing a corporate digital library• Electronic document interchange utilizing Electronic Data Interchange (EDI) and electronic funds transfer• Electronic publishing to promote marketing, advertising, sales, and customer support
Differences between E-Commerce and traditional commerce E-Commerce Traditional Commerce• Using internet or other • Face-to-face, telephone network communication lines, or mail systems technology • Manual processing of• Automated processing of traditional business business transactions transactions• Individual involved in all stages of transactions • Individual involved in all stages of business• Pulls together all activities of business transactions, transactions marketing and advertising as • Separated activities of well as service and customer business transactions. support
Why E-Commerce?In the short term:The top line: Access to a Global Market - the ability to reach new customers and create more intimate relationships with all customersThe bottom line: Dramatic Reduction in distribution costs - drastic cost reductions for distribution and customer service
In the long term:The internet may well change the structure of the competitive landscape.Internet communications will transform - the relationship between business and their customers. - the conversion from physical to digital will displace the source of business value.
Marketing Channel• Mechanism through which goods/services are moved from the manufacturer/service provider to the user/ consumer.• Also known as distribution or intermediaries.
Types of intermediaries• Wholesaler : buy from producers in a large quantity and resell to retailer.• Agent : secure an order for producer and will take commission for success transaction• Retailer : directly sell goods to customer. They might have strong personal relationship with the customer• Internet : e-commerce technology
Marketing Defined• Kotler’s social definition: “Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others.”
Marketing Defined• The AMA managerial definition: “Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.”
The Marketing Process A Five-Step Process1. Understand the marketplace and customer needs and wants2. Design a customer-driven marketing strategy3. Construct a marketing program that delivers superior value4. Build profitable relationships and create customer delight5. Capture value from customers to create profits and customer quality
Marketing Concepts• Target markets and market • Exchange and transactions, segmentation & Relationship and• Marketplace, market-space, networks metamarkets • Marketing channels• Marketers & prospects • Supply chain• Needs, wants, demands • Competition• Product offering and brand • Marketing environment• Value and satisfaction • Marketing program
Customer Key Concepts• Customer loyalty Customer loyalty is all about attracting the right customer, getting them to buy, buy often, buy in higher quantities and bring you even more customers.• Share of customer The percentage of customers that buy a companys product of all customers purchasing in that product category.
• Customer equity Value: a fair return or equivalent in goods, services, or money for something exchanged. Brand: An identifying symbol, words, or mark that distinguishes a product or company from its competitors. Customer retention: Keep a company’s customer and to retain their revenue contribution. Aim is to prevent customers from defecting to alternative brands / going to the competition.
Challenges and Issues in E-Commerce• Digital Age Growth of internet Advances in telecommunications, information provided, transportation, etc.• Globalization Geographical & culture distances have shrunk Greater in market coverage Higher competition from foreign competitors• Ethics & Social Responsibility Technical Issues Security and privacy IT skills shortage
Benefits of E-Commerce• Business Benefits Reduced costs Reduces inventories and warehouse Increased access to real-time inventory information, speed-up ordering & purchasing processing time Easier enter into new markets in an efficient way Easily create new markets & get new customers Automated business processing
• Marketing Benefits Improved market analysis, product analysis, and customer analysis. Low-cost advertising Easy to create and maintain customer on client database• Customer Benefits Wide scale information dissemination Wide selection of good products and goods at the low price Rapid inter-personal communications and information accesses Wider access to assistance and to advice from experts and peers Save shopping time and money Fast service and delivery
Internet Marketing• E-commerce (EC) : the process of buying, selling or exchanging products, services or information via computer network.• E-business : A broader definition of EC Includes not just the buying and selling of goods and services. Servicing customers. Collaborating with business partners. Conducting electronic transaction within an organisation.
• Online Marketing : company efforts to market products and services, and build customer relationship over the internet.• Internet : a vast public web of computer networks that connects users all around the world to each other and to an amazingly large ‘information repository’.
EC Organisations• Brick-And-Mortar : old-economy organisations that perform most of their business off-line, selling physical products by means of physical agent• Virtual/Pure-Play/Click Only : organisations that conduct their business activities solely online• Click-And-Mortar : organisations that conduct some e-commerce activities, but do their primary business in the physical world
Internet Advertising Terminology• Hit: a request for data from a Web page or file• Visit: a series of requests during one navigation of a web site; a pause of a certain length of time ends a visit• Unique Visit: a count of a number of visitors to a site, regardless of how many pages are viewed per visit• Stickiness: characteristic that influences the average length of time a visitor stays in a site.
Advertising Strategies & Promotions Online• Affiliate Marketing: a marketing arrangement by which an organisation refer consumers to the selling company’s Web site• Viral Marketing: word-of-mouth marketing by which customers promote a product or service by telling others about it• Webcasting: a free Internet news service that broadcasts personalized news and information, including seminars, in category selected by the user
Web Advertising• Interactive Marketing: Online marketing, enabled by the Internet, in which advertisers can interact directly with customers and consumer can interact with advertisers/vendors
Major Business Models for Advertising Online• Using the Web as a channel to advertise a firm’s own products and services.• Making a firm’s site a public portal site and using captive audiences to advertise products offered by other firms.
Internet Advertising Methods• Banner: on a Web page, graphic advertising display linked to the advertiser’s Web page.• Keyword Banners: banner ads that appear when a predetermined word is queried from a search engine.• Random Banners: banner ads that appear at random, not as the result of the user’s action.
Benefits of Banner Ads• By clicking on them, users are transferred to an advertiser’s site, and frequently direct to the shopping page of that site.• The ability to customize them for individual surfer or a market segment of surfers.• Viewing of banner is fairly high because “force advertising” is use.• Banners may include attention-grabbing multimedia.
Limitations of Banner Ads• Costly.• A limited amount of information can be places on the banner.• Viewers have become somewhat immune to banners and simply do not notice them as they once did.
Types of Banner Ads• Banner Swapping: an agreement between two companies to display the other’s banner ad on its Web site.• Banner Exchanges: markets in which companies can trade or exchange placement of banner ads on each other’s Web sites.• Pop-Up Ad: an ad that appears in a separate window before, during, or after Internet surfing or when reading e-mail.
• Pop-Under Ad: an ad that appears underneath the current browser window, so when the user close the active window, he or she can sees the ads.• Interstitial: an initial Web page or a portion of its that is used to capture the user’s attention for a short time while other content is loading.
Why Internet Advertising?Reasons ExplanationsCost Cheaper and can update at anytimeRichness of Format Use of text, audio, graphics, animationsPersonalization Interactive, targeted to specific groups/individual and focusing on medium segmentLocation-Basis Internet ads can be send to customer whenever they are in specific location and timeDigital Branding Online shoppers are willing to pay premiums for brands they trust.Timeliness Ads can be fresh and up-to-the minute