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Welcome to
A Presentation on
E-Marketing Channels
Cornelius Bothma
24 February 2011
[email protected]
The Internet
The Internet (or sometimes just called the
Net) is a world-wide interconnected network
of computers that lets a computer in one part
of the world communicate with a computer
or computer network located somewhere
else in the world, using either an ordinary
telephone line or a special dedicated data
line.
Internet
ISP
Telephone
line
Modem
Software
Computer
The World Wide Web
The World Wide Web (which is also simply known as the Web)
is a way of looking at and organising the information on the
Internet. The web is basically a subset of the Internet and
organises information according to pages - more than 30
billion of them - that lie all over the Internet.
These pages are interlinked with each other using hypertext
(also called hyperlinks). In other words, each page is
connected to other pages, that are connected to other pages,
that in turn are connected to still more pages, and so on, much
like a spider’s web - hence the name, the Web.
Number of websites – 108 million (2007) – Boutell.com
Number of web pages – 29.3 billion (2007) – Boutell.com
Defining e-commerce
e-Commerce is a dynamic set of technologies,
applications and management systems that
enable and manage relationships between an
enterprise, its functions and processes and
those of its customers, suppliers, value chain,
community or industry
Based on the GartnerGroup definition of e-commerce
The Micro, Market & Macro
environments
MACRO
Socio-cultural
forces
Customers
Political/legal
forces
Interest
rates
Competitors
Inflation
Economic
forces
MARKET
MICRO
Mission
Resources
Price
Product
Promotion
Place
Suppliers
Facilitators
Infrastructure
& geography
Government
Technology
Intranets, Extranets & Internet
MACRO
Socio-cultural
forces
Customers
Political/legal
forces
Interest
rates
Economic
forces
MARKET
MICRO
Mission
Resources
Intranet
Price
Product
Promotion
Place
Internet
Competitors
Inflation
Suppliers
Government
Extranet
Facilitators
Infrastructure
& geography
Technology
Marketing & the Internet
Information
Market research
MACRO
Economic
forces
Socio-cultural
forces
MARKET
Customers
Mission
Resource
s
Price
Product
Promotio
n
Place
Political/legal
forces
Interest
rates
MICRO
Competitors
Inflation
Suppliers
Facilitators
Government
Technology
Target audience & segmentation
Product quality
Customisation &
personalisation
Branding
Customer
support
Changing supply/
value chains
Online distribution
Promotion
Infrastructure
Online advertising
& geography
E-mail marketing
Pricing
Price setting Price comparison
Advantages of the Web

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

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It is a multimedia environment
Immediately available to a global audience
It is interactive
It is easy and intuitive to use
It is affordable
It is a 24-hour environment
It allows you reach to the masses (+1 billion users)
It allows you to customise for one
Transact sales directly
Distribute digital information
Large amounts of information can be easily stored on the
Web and made available to customers
It is a non-linear form of communication
Integrate, automate and synchronise business systems
Speed
Direct Distribution

Digital base

Immediacy

Availability

Automation

Cost savings

Reach
Direct Distribution

Music

Software

Consulting

Marketing materials

Publishing/books

Insurance

Tourism

Gaming and entertainment

Air travel

Work seeking

Video

Medical

Gambling

Military
Facilitating Distribution

Information

Tracking

Follow-up

Systems integration

Enabling supply chain
management
The Supply Chain
Sourcing
of inputs
Marketing
of products
Contract
negotiation
Business Entity
S
B
Business Entity
B
Peers
Ordering
Supply and
invoicing
Payment
Raw
materials
S
Sourcing
of inputs
Marketing
of products
Contract
negotiation
Ordering
Supply and
invoicing
Business Entity
Payment
Conversion
process
Buying
Business Entity
B
Market
offerings
Selling
Business Entity
B
Business Entity
S
Business Entity
Inputs
B
S
S
SUPPLY
CHAIN
Distributors
Process
PROCESS
FLOW
Outputs
SUPPLY
CHAIN
Distributors
B
S
The supply chain
Raw material
supplier
Raw material
supplier
Sub-assembly
manufacturer
Component
supplier
Manufacturer
Supply of
information
Distributor
Wholesaler
Supply
of goods
Distributor
Retailer
Customer
The supply chain
disintermediation
Raw material
supplier
Raw material
supplier
Sub-assembly
manufacturer
Component
supplier
Manufacturer
Distributor
Customer
The supply chain
supply of information
Raw material
supplier
Raw material
supplier
Sub-assembly
manufacturer
Component
supplier
Manufacturer
Distributor
Wholesaler
Distributor
Retailer
Customer
Factors affecting increased
adoption of e-tailing & e-commerce
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Accessibility – more users
necessary
Costs
Reaching new markets
Technical considerations eg
broadband
Logistics – backing up the sale
Internal inhibitors and
facilitators
Environmental inhibitors and
facilitators
Comparative advantage over
retail channels (cheap 24/7,
quick, everywhere)
Order-taking and distribution
Order
taking
Product
delivery
Product
support
Delivery
tracking
Followup
Online distribution issues
Pharmaceutical sales
•
•
•
•
•
•
•
Licensing
Enforcement
Jurisdiction
Product quality
Patient identity
Medical records
Privacy
Traditional vs online
distribution model
Distribution of hotel inventory via today's main distribution
channels, GDS/travel agent and call centre/reservation office,
is inefficient and expensive, especially in light of the current
weak economic situation. Focusing only on traditional
distribution channels will result in lower occupancy rates,
and higher distribution and operational costs.
Here are just a few examples of the cost savings of online vs.
offline bookings
(PhoCusWright):
• Hilton: saves $25 online vs. travel agency booking
• Hyatt: Web $3 vs. Call Center $9
• 6 Continents: Web $3.20 vs. Call Center $8
• Marriott: Web $3.50 vs. Call Center $8
Physical vs digital
download comparison
Source: http://en.wikipedia.org/wiki/Music_industry_in_the_21st_century
Physical vs digital
download comparison
Source: http://en.wikipedia.org/wiki/Music_industry_in_the_21st_century
Examples of legitimate online
music providers
• Apple iTunes
– Over 750,000 songs
– Compatible with iPod & iPhone
• Napster
– Over 1 millions songs.
• Sony Connect
– Over 300,000 songs.
– Only compatible with Sony
products
Alternative channels
• Peer to Peer Network (P2P)
– BitTorrent, Kazaa, limewire, The
Pirate Bay
• File sharing (direct download)
– Rapidshare, savefile.com
• Social-Networks
– Myspace, Friendster
• YouTube
Analysis of Online Music Distribution
Porter’s 5 Forces Analysis
Threat of Substitute Products
• Physical music records such as Compaq Disc.
However, there are various types of digital music
format – each competing with each other to win
market share.
Threat of New Entrants
• Barrier of entry is lowered as traditional value
chain providers. New and independent artist can
market its music directly to the end consumer.
Analysis of Online Music Distribution
Porter’s 5 Forces Analysis
Bargaining Power of Suppliers
• Artist and Record Labels have greater ability to
reach the consumers directly.
• Further consolidation of Music Labels through
Merger and Acquisition could still take place due
to high competitiveness nature of the industry.
Bargaining Power of Customers
• Customers are able to reach the cheapest cost
supplier using Internet.
• Customers have easy access to free music by
using P2P Networks.
Analysis of online music distribution
Porter’s 5 Forces Analysis
The Intensity of Competitive Rivalry
• The number of major music labels was reduced
to four from five and are holding on a significant
majority of the market share
• “Bricks and Mortar” music stores retailing is
getting more competitive with integration with
online distribution channel as well as competition
from other supermarket chains.
The value chain and
evolving business models
• Shifting the power centers and introducing new
players.
• Artists are increasingly getting more involved in
the production, marketing and distribution
• Three categories of digital music retailers have
entered the market
• pure play : digital retailers whose main focus is music
sales (Napster)
• vertically integrated players : who use music as a
means to promote their core offerings (iTunes)
• diversified players : who have included music in their
service offerings (Amazon MP3 Store)
The value chain and
evolving business models
• Independent and unsigned artists are using the digital
channels to distribute their content directly to the
listeners, bypassing the traditional intermediaries
• Music companies are increasingly using their music
along with other media and entertainment forms such as
TV, mobile games, advertisements, etc
• Music companies are also partnering with ISPs and
mobile handset manufacturers and portable music
device manufacturers to broaden their customer reach
The value chain and
evolving business models
Source: The Digital Music Market Outlook, Business Insight 2009
Counter-strategies available to music
labels and “Bricks & Mortar” channels
• Encoding a wide variety of songs in widely
accepted industry standards and selling these
songs via the Net
• Offering facilities in stores for compiling songs
onto albums and charging a premium for these
services
• Turning physical retail stores into social
gathering places with appropriate ambience for
music lovers
Strategies available to music
industry to address piracy problem
Defend Core Assets
Nip It in the
Bud (prevent
misappropriati
on)
preempt
deny
assets
Prescribe a
Sedative (lower
the competitive
intensity)
outinnovate
threaten to
retaliate
Market Strategies
Dig a Honey Pit
(entangle key
assets)
create
synergies
among
related
business
Make a Bundle
(combine a
secure with
insecure
products)
Marry
assets to
compleme
ntary
products
preserve
the core
with addons
Embrace the Threats
Move the
Goalposts
(redefine the
firm’s
boundaries)
expand into
rivals’
business
Let the Dogs
Out (relinquish
your core
assets)
narrow your
own
business
reallocate
resource to
adjacent
business
Source: How Market Smarts Can Protect Property Rights, Harvard Business Review, 2004
What can we conclude
• The industry need to embrace the
inevitable of online music distribution
channel through integration of the
channels
• The internet as delivery medium and
innovations of handheld devices will
continue to be the key to growth
• Piracy is expected to widespread among
younger generation
• Key to success shall be execution speed
and flexibility to adapt to consumer
demand
Other examples
Distributing your product on the Net
Online distribution
Online distribution
Online distribution
Online distribution
Online distribution
Online distribution
Online distribution
http://www.youtube.com/watch?v=2twLVL_jyP4