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2. E-commerce fundamentals. Figure 2.1 The environment in which e-business services are provided.
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Figure 2.1 The environment in which e-business services are provided For each of the environment influences shown in Figure 2.1, give examples of why it is important to monitor and respond in an e-business context. For example, the personalization mentioned in the text is part of why it is important to respond to technological innovation.
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?
Environment constraints and opportunities … • 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?
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
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
Figure 2.5 B2B and B2C interactions between an organization, its suppliers and its customers Marketplace Channel Structure- It describes the way a manufacture / supplier delivers products and services to its customers
Figure 2.6 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 2.7 From original situation (a) to disintermediation (b) and reintermediation (c)
Figure 2.10 Example channel chain map for consumers selecting an estate agent to sell their property 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
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/
Business model • 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. • Key elements • 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
Business Models & Revenue Models • Business model- Alternative Perspectives • Marketplace position perspective • Revenue model perspective • Commercial arrangement perspective • Revenue model • It describes how a business generate revenue • What are traditional ways? • The New Ways
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
Figure 2.15 Example spreadsheet for calculating a site revenue model. Available for download at www.davechaffey.com/Spreadsheets Continued …
Online Business Revenue Calculation- What factors to consider? Number and size of ad units, Ads Capacity to be sold, Fee level negotiated for different ads models, Traffic, Visitor engagement (time to stay) Figure 2.15 Example spreadsheet for calculating a site revenue model. Available for download at www.davechaffey.com/Spreadsheets (Continued)
Business Model-Start-ups • Many dot.com start-ups failed. Some succeeded and newer ones are still created. • Value the Internet start-ups (pp. 90-91) • Concept • Innovation • Execution—promotion, performance, availibility, security • Traffic • Financing • Profile—publicity and awareness in the market
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.
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?
Class discuss Preview the E-consultancy Interview.107-109 Prepare to discuss the following • 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?
