Download e-business

E-commerce
Antoine Harfouche
Session 2
From the e-business strategy
to the e-business Model
The Roadmap
E-commerce
Marketing Website
Business Managerial Strategy
Strategy vision
Logistics
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
– 3. Scenario planning
A strategic planning methodology that generates
plausible alternative futures to help decision
makers identify actions that can be taken today
to ensure success in the future
– 4. Balanced scorecard
A management tool that assesses organizational
progress toward strategic goals by measuring
performance in a number of different areas
– 5. Business plan
A written document that identifies the company’s
goals and outlines how the company intends to
achieve those goals
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
E-Marketing Strategy
Differentiation
Tier 1
tasks
Tier 2
tasks
Segmentation
Positioning
Targeting
E-Marketing
Strategy
Offer
CRM/PRM
Communication
Value
Distribution
Exhibit 3 - 1 Formulating E-Marketing Strategy in Two Tiers
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—this 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—this 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
E-Marketing Strategies (cont.)
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
21
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:
1. Customers
2. Offer
3. Infrastructure
4. Financial viability
• The business model is like a blueprint for a strategy to be implemented
through organizational structures, processes, and systems.
Source: Business Model Generation, Osterwalder and Pigneur 2010
Customer Segments
For whom are we creating value?
 Who are the most important customers?
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Mass Market
Niche Market
Segmented
Diversified
Multi-sided platform
Value Propositions
Value Propositions describes what
creates value for a targeted
Customer
 Newness Segment.  Cost reduction


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
Performance
Customization
“Getting the job done”
Brand / Status
Design

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
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Risk reduction
Accessibility
Convenience
Usability
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
Channel Phases
Direct
Own
Channel Types
Sales force
Web sales
Indirect
Partner
Own stores
Partner stores
Partner web sales
Wholesaler
1. Awareness
2. Evaluation
3. Purchase
How to raise
awareness about
the product?
How to help
customers
evaluate the
product's value
proposition.
How do we allow
customers to
purchase specific
products and
services?
4. Delivery
5. After Sales
How do we
How to provide
deliver a Value
post-purchase
Proposition to customer support?
Customers?
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
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
Revenue Streams
Pricing Mechanism
Fixed Menu Pricing
Dynamic Pricing
Predefined prices are based on static variables
Prices change based on market conditions
List Price
Product
Feature
Customer
Segment
Volume
dependent
Price set by product, service, or other
Value Propositions
Price depends on the number and quality
of Value Proposition features
Price depends on the type and
characteristic of a Customer Segment
Price as a function of quantity purchased
Negotiation Price determined by bargaining skills and
leverage
Yield Price depends on inventory and time of
Management purchase
Price is determined dynamically based on
Real-time-market supply and demand
Auctions
Price determined by outcome of
competitive bidding
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
Partnerships can be
motivated by needs to
acquire knowledge,
licenses, or access to
customers.
Example: Mobile phone
companies that license
Android, or insurance
companies that rely on
independent brokers.
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
Some business models,
are more cost-driven
than others. “No frills”
airlines, for instance,
have built business
models entirely around
Low Cost Structures.