Download Week 2 - cda college

Slide 2.1
Chapter 2
E-commerce fundamentals
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.2
Learning outcomes
• After completing this chapter the reader
should be able to:
– Complete an online marketplace analysis to
assess competitor, customer, and intermediary
and competitor use of the Internet as part of
strategy development
– Identify the main business and marketplace
models for electronic communications and
trading
– Evaluate the effectiveness of business and
revenue models for online businesses.
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.3
Management issues
• What are the implications of changes in
marketplace structures for how we trade with
customers and other partners?
• Which business models and revenue models
should we consider in order to exploit the
Internet?
• What will be the importance of online
intermediaries and marketplace hubs to our
business and what actions should we take to
partner these intermediaries?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.4
Figure 2.1
The environment in which e-business services are provided
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.5
Activity – the e-commerce environment
• For each of the environment influences shown
in Figure 2.1, give examples of why it is
important to monitor and respond in an ebusiness context.
• For example, the personalization mentioned in
the text is part of why it is important to
respond to technological innovation.
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.6
Environment constraints and
opportunities
• Customers – which services are they offering via
their web site that your organization could support
them in?
• Competitors – need to be benchmarked in order to
review the online services they are offering – do
they have a competitive advantage?
• Intermediaries – are new or existing intermediaries
offering products or services from your competitors
while you are not represented?
• Suppliers – are suppliers offering different methods
of procurement to competitors that give them a
competitive advantage?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.7
Environment constraints and
opportunities (Continued)
• Macro-environment
• Society – what is the ethical and moral consensus on
holding personal information?
• Country specific, international legal – what are the
local and global legal constraints for example, on
holding personal information, or taxation rules on sale
of goods?
• Country specific, international economic – what are
the economic constraints of operating within a country
or global constraints?
• Technology – what new technologies are emerging by
which to deliver online services such as interactive
digital TV and mobile phone-based access?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.8
Strategic Agility
• Capability to respond to environmental opportunities
and threats to gain competitive advantages
• Read the pp. 58-59 Mini Case Study 2.1
• The video may be searched form Google video
search.
• Discuss the key points of strategic agility
• P. 59, Activity 2.1 Give examples of why it’s important
to monitor and respond in an e-business context
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.9
Professor Donald Sull of London Business School talks about
strategic agility
Figure 2.2
Source: www.ft.com
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.10
Figure 2.3
An online marketplace map
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.11
Online Marketplace Analysis
• Customer Segment
– The phase that the customer is at in his/her lifecycle
http://academic.brooklyn.cuny.edu/economic/friedman/mmmarketsegmentation.htm
– Psychographic segmentation is sometimes also referred to
as behavioural segmentation.
http://tutor2u.net/business/marketing/segmentation-psychographic.html
• Search Intermediaries
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.12
Online Marketplace Analysis
• Intermediaries and Media Sites
– Mainstream news media sites or portal, e.g., cbc.ca, Google
– Niche or vertical media sites, e.g., e-consultancy
– Price comparison sites (also called aggregator), e.g.,
http://www.pricecanada.com/
– Super-affiliates
– Niche affiliate or bloggers—often small or individual sites
• Destination Sites
– The sites that the marketer tries to generate traffic to
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.13
Resource for Analysing e-Marketplace
• Ref. pp. 63-64, Tab 2.2. Some websites have
changed and some need registration
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.14
Google trends for web sites – useful for benchmarking the growth of online
intermediaries and destination sites
Figure 2.4
Source: http://trends.google.com/websites
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.15
Marketplace Channel Structure
• It describes the way a manufacture / supplier
delivers products and services to its
customers
• Fig. 2.5 and Fig 2.6 display variety of options
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.16
B2B and B2C interactions between an organization, its suppliers and its
customers
Figure 2.5
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.17
B2B and B2C characteristics
Characteristics
B2C
B2B
Proportion of adopters with
access
Low to medium
High to very high
Complexity of buying
decisions
Relatively simple –
individual and influencers
More complex – buying
process involves users,
specifiers, buyers, etc.
Channel
Relatively simple – direct or
from retailer
More complex, direct or via
wholesaler, agent or
distributor
Purchasing characteristics
Low value, high volume or
high value, low volume.
May be high involvement
Similar volume/value. May
be high Involvement.
Repeat orders (rebuys)
more common
Product characteristic
Often standardized items
Standardized items or
bespoke for Sale
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.18
Disintermediation of a consumer distribution channel showing (a) the
original situation, (b) disintermediation omitting the wholesaler, and
(c) disintermediation omitting both wholesaler and retailer
Figure 2.6
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.19
Reinter-mediation
• The creation of new intermediaries between
customers and suppliers, such as search
engine, price comparator, etc. such as
http://www.esurance.com/, http://www.pricecanada.com/
• Supplies need to
– Be represented with new intermediaries
– Monitor other suppliers via intermediaries
– Create own intermediaries
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.20
Figure 2.7
From original situation (a) to disintermediation (b) and reintermediation (c)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.21
Countermediation
• Creation of a new intermediary by an
established company
• Example:
–
–
–
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B&Q www.diy.com
Opodo www.opodo.com
Boots www.wellbeing.com www.handbag.com
Ford, Daimler (www.covisint.com)
• Partnering with existing intermediary –
Mortgage broker Charcol and Freeserve
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.22
Trading Location
• Trading can be done on seller-controlled site,
buyer-controlled side, or neutral third-party
site
• P. 67, Table 2.3 and P. 69 Fig. 2.8 present
various options
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.23
Figure 2.8
Variations in the location and scale of trading on e-commerce sites
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.24
Commercial Mechanisms
• There are several ways for closing a
transactions
• Ref. p. 69, Table 2.4 for detail
• Priceline.com uses a new model that allows
client to bid on the services such as hotel,
airline ticket
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.25
Figure 2.9
Priceline Hong Kong service (www.priceline.com.hk)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.26
Multi-channel Marketplace Model
• Consumers use a combination of channels for
their purchases.
• M-Channel Defines how different marketing
channels should integrate and support each
other
• Fig. 2.10 (p.71) shows an example channel
chain map
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.27
Example channel chain map for consumers selecting an estate agent to
sell their property
Figure 2.10
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.28
Types of Online Intermediary
• Infor-mediaries— intermediaries that capture,
profile, and sell customer information
• Metamediaries— intermediaries that assist
with selection and discussion of about
different product and services; they connects
customers with the providers
– Example: http://www.metacritic.com/
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.29
Figure 2.11
Metacritic (www.metacritic.com)
Source: CBS Interactive
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.30
Types of Intermediary
• Intermediaries changed quite a lot since Ecommerce first started.
• For a comprehensive list of intermediaries,
ref. p. 75, table 2.5
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.31
Interactive activity – portals
Q1. Define portal (p.74)
Q2. Is a search engine the same as a
portal? Yes, No
Q3. Is a search engine the same as a
directory? Yes, No
Q4. List search engines / portals you use
and explain why
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.32
Meta services
Search engines
Portal
Directories
‘A gateway to
information
resources and
services’
News aggregators
MR aggregators
Comparers
Exchanges
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.33
Figure 2.12
Number of searches through the Google Keyword Tool
Source: Google https://adwords.google.com/select/KeywordTool
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.34
Business model
Timmers (1999) defines a ‘business model’ as:
An architecture for product, service and
information flows, including a description of
the various business actors and their roles;
and a description of the potential benefits for
the various business actors; and a description
of the sources of revenue.
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.35
Business model
Key elements
1.
2.
3.
4.
5.
6.
7.
8.
Value proposition-products & services to offer
Market or audience
Revenue models and cost base
Competitive environment
Value chain and marketing positioning
Representation in the physical & virtual world
Organizational structure
Management
Complete Activity 2.3 on page 79
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.36
Business model
Timmers identified 11 different types of business
models. –ref. p. 78
Alternative Perspectives on Business Model
1. Marketplace position perspective
2. Revenue model perspective
3. Commercial arrangement perspective
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.37
Figure 2.13
Alternative perspectives on business models
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.38
Revenue model
•
•
•
It describes how a business generate revenue
What are traditional ways?
The New Ways
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.39
Revenue Model- Publisher Example
•
•
•
•
•
•
•
•
Advertising CPM (cost per thousand/mille)
Advertising CPC (cost per click)
Sponsorship of section, content, or widget
Affiliate Revenue (CPA or CPC)
Transaction Fee
Subscription access to content or services
Per-per-view Access to document
Subscription Data Access for e-mail Marketing
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.40
Figure 2.14
Alex Tew’s Million Dollar Home Page (www.milliondollarhomepage.com)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.41
Online Business Revenue Calculation
• What factors to consider?
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–
–
–
–
Number and size of ad units
Ads Capacity to be sold
Fee level negotiated for different ads models
Traffic
Visitor engagement (time to stay)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.42
Example spreadsheet for calculating a site revenue model. Available for
download at www.davechaffey.com/Spreadsheets
Figure 2.15
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.43
Example spreadsheet for calculating a site revenue model. Available for
download at www.davechaffey.com/Spreadsheets (Continued)
Figure 2.15
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.44
Online Business Revenue Calculation
• Lab exercise: Activity 2.4 on page 85.
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.45
Figure 2.16
Econsultancy (www.econsultancy.com)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.46
Revenue Model- Auction Example
Roles for auction (Klein 1997)
• Price discovery
• Efficient Allocation mechanism
• Distribution mechanism—attracting audience
• Coordination mechanism
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.47
Business Model- Auction Example
Types of auction
• English—forward or upward, initiated by seller
this is more of conventional auctions we
commonly seen in physical world and on virtual
market
•
Dutch—Reverse, downward, initiated by buyer
This is more commonly seen in large manufacture
procurement
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.48
Business Model- Auction Example
•
•
Read the Case Study 2.1 on page 87-88. Discuss
the questions.
Research on the web to find Reverse auction
examples in Canada
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.49
Business Model-Start-ups
1. Many dot.com start-ups failed. Some succeeded
and newer ones are still created.
2. Value the Internet start-ups (pp. 90-91)
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–
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–
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Concept
Innovation
Execution—promotion, performance, availibility,
security
Traffic
Financing
Profile—publicity and awareness in the market
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.50
Lab Exercises
Case Study 2.2 on Pages 91-93
– Read the case
– Discuss the question 1-3 on page 93
Mini Case Study 2.3 on pages 93-94
– What’s business model of Firebox?
– What made it a success?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.51
Figure 2.17
Firebox (www.firebox.com)
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.52
Lab Exercises
Case Study 2.3 on Pages 95-98
– What is Zopa’s business model?
– Do you think it can succeed and develop further
and why?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009
Slide 2.53
Next Class
Preview the E-consultancy Interview.107-109
Prepare to discuss the following
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What’re the impacts of the Internet to publishing
industry
How are publish industry coping with the challenges?
How do they reach online readers?
How do they use social network for their advantage?
What a role do digital content and ecommerce play in
their business?
From this interview, how do you feel about the
publishing industry and where it is going?
Dave Chaffey, E-Business and E-Commerce Management, 4th Edition, © Marketing Insights Limited 2009