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P5:
Explain the competitive pressures on selected,
contrasting business organisations to develop their
use of e-business
M2:
D1:
Evaluate how successful a selected business
organisation has been in preparing for the growing
use of e-business
www.teachme.in
Explain how two selected, contrasting business
organisations have responded to competitive
pressures to develop their use of e-business
UNDERSTAND HOW ORGANIZATION ADAPT
TO TRENDS IN THE USE OF E-BUSINESS
Marketing benefits
Cost benefits
Benefits to customers
MARKETING BENEFITS
Responding to competitive forces
The world economy is increasingly global
This means that today our industry faces
growing and far more sophisticated
competition from all over the world.
Particularly from fast-emerging economies
like China, Philippines Kenya and India.
Wherever they are, businesses can compete
on
Price, on quality of the products offered, on
quality of customer service, on product
features or on availability.
The use of e-commerce via the
internet has now become
almost a necessity. Having
an effective, well-managed
web presence can help a
business to compete.
A
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survey in 2006 on e-business trends in
manufacturing by SVM (www.svmsolutions.com)
showed that.
78 percent of manufacturers intended to increase
spending on their website.
60 per cent intended to increase investment in
email marketing
48 per cent were boosting spending on search
engine marketing
25 per cent were reducing spending on magazine
advertising
17 per cent were reducing spending on trade
shows
ACTIVITY
1.
Visit
www.svmsolutions.com
And from Portfolio read case studies.
And
Answer the following
What resulting competitive forces were measured
in the following companies:
RubberFab and
B. Carter Products Company
by svm solutions
A.
2.
What response and actions taken by the
company.
Marketing benefits:
The Internet helps businesses to acquire a good
knowledge of customers because it is a way of
connecting everyone who is online.
Millions of pounds, dollars and Euros and many other
currencies pass through wires linking computers all over
the world. According to ClickZStats (www.clickz.com) ,
the worldwide internet population in 2010 is 1.8 billion
Not only will more people be online, but the comfort and
ease with which they use the internet, will improve and
fears about security issues will diminish.
Reformulating the marketing mix:
Traditional marketing uses tactics based on the marketing
mix:

Product

Price

Promotion
Internet marketing specialists refer to a ‘remix’ of these, so
that traditional marketing is re-applied in different ways in
the online world.
This e-marketing remix changes the traditional marketing
tools and adds one or two new ingredients, designed
specifically for the online community.
To make visitors want to stay, as website
has to offer something that is of value to
a visitor. This is an online value
proposition (OVP)
and
It is a similar concept to the unique selling
proposition (USP) commonly referred to
in traditional marketing.
In the case of the USP, marketers are trying to
communicate something unique about a physical
product that will make people want to buy it
more than other products
Similarly,
The OVP is the special set of characteristics about
a website that will make people want to stick
around on the site and make a purchase
Implementing the Marketing Remix Online
Product
Place
Price
Promotion
Personalisation
People
Physical
evidence
Processes
24-hour global presence and flexible location:
The use of the Internet in marketing means that products may be
displayed and offered online 24 hours a day, all over the world.
Catalogues can be made available showing images and giving
full details.
2.
Promotion can happen 24 hours a day using search engine
marketing (SEM) and banners
3.
Prices are competitive because of low overheads.
4.
Prices can also be dynamic, they change according to market
conditions and feedback from customers.
5.
Products (non-digital)can be made available anywhere, because
there is the possibility of flexible location.
6.
Digital products download immediately.
7.
People can contact call centers or use email.
Finally, processes,
for example, easy Jet flight bookings , are simple.
1.
Some more marketing benefits are but not limited
to:
Personalisation and feedback
 Opportunities for competitor analysis
 Opportunities to communicate with
customers

Key term: Personalisation – adjusting the web page that
is returned to a visitor so that it offers
information that is personal, based on their
previous visits to the website.
COST BENEFITS
Premises and location
 Reduced staffing costs
 Cash flow advantages
 Disintermediation of the supply chain

PREMISES AND LOCATION
Internet gives immediate geographic spread,
without the need for relocation.
example:
For
Online
business is virtual, dealing in digital
Some retailers can sell their products, using the Internet, from a base in
information.
the Channel Island to gain tax advantages for themselves and so offer
prices to their customers
gaining an edgein
over
their competitors.
lower
No immediate
need for–investment
physical
premises.
 If necessary be confined to third party
distributor, depending on the nature of the
product sold.
 Positioning of premises can be important factor
when an organisation does business online.

REDUCED STAFFING COSTS
The potential for cutting staff costs is strong for
businesses that begins to use the web for etransactions.
 In a traditional business, there is an enormous
amount of paperwork and records that need to be
kept, such as invoices, orders, delivery notes, credit
notes and so on.
 An organisation has to employ administrative staff
to deal with paperwork.
 When a business uses electronic means of
conducting transactions, it reduces the need for
administrative records and also therefore
administrative staff.

CASH FLOW ADVANTAGES
A business depends on good cash flow.
 Cash flow refers to the stream of revenue that
comes into a business from sales activities so that
working capital can be maintained.
 This allows it to pay for wages and salaries as well
as operating costs.
 Many businesses fail because of poor cash flow.
 By opening up a new web-based sales channel,
there is an opportunity to improve income.

DISINTERMEDIATION OF THE SUPPLY CHAIN
Everything has to come from somewhere
 A business that makes railway carriages depends
The supply chain can consist of many links. Once raw material (for
on other businesses that produce the parts that
example, timber) is sourced, it is then transported to a merchant.
go
into
railway
The
merchant
may carriages.
alter the raw material in some way before
Disintermediation:
selling
to a customer
use.railway
The transport,
the merchant,
The
The
parts
gofor
into
carriages
are orof
removal
ofthat
intermediaries
(‘middle men’)
from the process
distributors are all ‘Intermediaries’. This mean they work in
getting
products made
to wherefrom
consumers
buy them.or other
themselves
raw can
materials
between.
The
web is capableparts.
of cutting out these intermediaries – a process know
components
as disintermediation. This helps to cut costs.
 The supply chain refers to the way in which raw
materials and parts find their way eventually to
the customer.
BENEFITS TO CUSTOMERS
The Internet offers a vast range of products and
services to customers.
These products and services are accessible 24 hours
a day, from anywhere.
Customers are now able to choose products from a
wider range of businesses irrespective of their
location.
Personalised offers:
Remembering your shopping list favourites week
after week when you do your grocery shopping
online.