Management Information Systems MANAGING THE DIGITAL FIRM 12

Management Information Systems MANAGING THE DIGITAL FIRM, 12 TH EDITION GLOBAL EDITION Session 5 E-COMMERCE M-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS

Management Information Systems CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS Learning Objectives • What are the unique features of e-commerce, digital markets, and digital goods? • What are the principal e-commerce business and revenue models? • How has e-commerce transformed marketing? • How has e-commerce affected business-to-business transactions? Case study Ford • What is the role of m-commerce in business and what are the most important m-commerce applications? • What issues must be addressed when building an e-commerce Web site? 2

The New Economy The Putting-out Economy Industrial Economy Services Economy Digital Economy

The service economy

Management Information Systems CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS E-commerce and the Internet • E-commerce today: – Began in 1995 and grew exponentially, still growing even in a recession – Companies that survived the dot-com bubble burst and now thrive – E-commerce revolution is still in its early stages – Use of the Internet and Web to transact business; digitally enabled transactions 5

Management Information Systems Internet users 6

Management Information Systems CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS E-commerce and the Internet THE GROWTH OF E-COMMERCE FIGURE 10 -1 7 Retail e-commerce revenues grew 15– 25 percent per year until the recession of 2008– 2009, when they slowed measurably. In 2010, e-commerce revenues are growing again at an estimated 12 percent annually.

Different category of Business 8 Government Business Consumers Government G 2 G G 2 C Business G 2 B B 2 G B 2 B B 2 C Consumers C 2 G C 2 B C 2 C

Management Information Systems CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS E-commerce: Business and Technology • Types of e-commerce • Business-to-consumer (B 2 C) • Business-to-business (B 2 B) • Consumer-to-consumer (C 2 C) • Consumer-to-business (C 2 B) • Mobile commerce (m-commerce) 9

Management Information Systems Types of e-commerce To Consumer From Business C 2 C B 2 C • e. Bay • Peer to Peer • Blogs and communities • Product recommendation • Social networks : My. Space, FB… C 2 B Business 10 Consumer • Transactional : Amazon • Relationship building : BP • Brand building : Unilever • Media owner – news corp. • Comparison intermediary : Kelkoo B 2 B • Priceline • Transactional : Euroffice • Consumer feedback, communities • Relationship building : BP or campaign • Media owned : Emap business publications • B 2 B marketplace : EC 21

Management Information Systems E-Commerce Opportunities • Large reach medium – No time space, no geographical limits • Richness – Cognitive medium • Personalization 11 Risks Technical website fail, hacking, spam, phishing Organizational supply, logistic, customer services efficiency No inertia : how to lock in your consumers ? Legal Can I buy everything everywhere ? (ex. Royalties) National legislation

Benefits of personalization Benefits of co-creation Benefits of integrating communication channels in one channel Benefits of e-communication Benefits Virtual Communities Benefits of DISINTERMEDIATION 12

Benefits of digital goods

Management Information Systems CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS Key concepts in e-commerce Digital goods • Goods that can be delivered over a digital network – E. g. Music tracks, video, software, newspapers, books • Cost of producing first unit almost entire cost of product: marginal cost of 2 nd unit is about zero • Costs of delivery over the Internet very low • Marketing costs remain the same; pricing highly variable • Industries with digital goods are undergoing revolutionary changes (publishers, record labels, etc. ) 14

Benefits of personalization

Management Information Systems MANAGING THE DIGITAL FIRM, 12 TH EDITION GLOBAL EDITION • Key concepts in e-commerce 2. The benefits of personalization

A General Image of Utility/personalization Product Co-creation

Customization

Customized standardization

Kickers : customized standardization

Longchamp bag : tailored customization

Total success. New Fiat 500 : • Continuous ways of customizing the car – The 500 ooo th (http: //www. 500 wantsyou. fr/)

Example of a Total failure : GINA

Pure customization

Benefits of DISINTERMEDIATION

Management Information Systems CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS E-commerce and the Internet Key concepts in e-commerce 3. THE BENEFITS OF DISINTERMEDIATION TO THE CONSUMER FIGURE 10 -2 27 The typical distribution channel has several intermediary layers, each of which adds to the final cost of a product, such as a sweater. Removing layers lowers the final cost to the consumer.

Benefits of integrating channels: In one Web site

Web site? Photos and videos Maps Contact persons Informations

E-Marketing: The Website • Consumers want in a website: – 1 stop shopping with integrated solutions. – Effective web navigation – Quick downloads – Clear site organization – Attractive/useful site design – Secure and private transactions – Free information/services - consumers used to online culture of getting something for free.

Integrating all channels in an Ultimate channel as part of integrated e-marketing strategy

EXAMPLE

Security and privacy

Trust in the Web

Customers Privacy • Guarding Consumer Privacy – Privacy a major concern; burden on marketers to use info responsibly and not be too intrusive – CRM based on trust - key is relationship building through dialogue and better targeting. – Better to have consumers opt-in, may get less consumers but they will be open to message. – Remember retention more profitable than acquisition; relationship capital.

Everyday Privacy and Security Problem

Everyday Privacy and Security Problem

Cookies and Web Bugs • Cookies: – Small text file Web sites place on visitor’s PC every time they visit, as specific pages are accessed – Provide Web marketers with very quick means of identifying customer and understanding prior behavior • Web bugs: – Tiny (one pixel) graphic files embedded in e-mail messages and on Web sites – Used to automatically transmit information about user and page being viewed to monitoring server

Fast Facts on Phishing • A semantic attack aimed directly at people rather than computers – “Please update your account” – “Fill out survey and get $25” – “Question about your auction” • Rapidly growing in scale and damage – Estimated 3. 5 million phishing victims – ~7000 new phishing sites in Dec 2005 alone – ~$1 -2 billion in damages – More profitable (and safer) to phish than rob a bank

Little Attention Paid to URLs • Only 55% of participants said they had ever noticed an unexpected or strange-looking URL • Most did not consider them to be suspicious

Explains how to identify Diagram Intervention a phishing scam

Virtual Communities

Virtual communities

Virtual communities • Building virtual Communities – Internet ideal for gathering people with similar ideas/tasks (communities). – Communities form at web sites in chat rooms, bulletin boards, and distributed e-mail lists. – If a firm builds/maintains the “watering hole” where community gathers, can build relationship with them.

Exemplar Blog/Brand Communities • Nike Blog – The Art of Speed • Red Hat Blog [http: //blogs. redhat. com/] – Road show and executive blogs • Channel 9 - Microsoft [http: //channel 9. msdn. com/] – Microsoft employees and developers talking, learning, and listening globally. • General Motors Blogs [http: //smallblock. gmblogs. com/] – Community for small block enthusiasts • Google Blog – Insight into the news, technology, and culture of Google.

Second life and avatars

• Sharply lowered entry barriers (blogs) – Creating a blog takes minutes (literally!)

e-communication

Types of Internet advertising/marketing • Banner ads: most popular, different sizes and styles • Pop-up ads: popular, another type is pop-behind • E-mail marketing: powerful, economical, legal implications, spam • Affiliate marketing: commission-based, benefit of the selling site’s brand in exchange for the referral 49

Search Engine Positioning • Potential customers find web sites in many different ways • Some site visitors will be referred by a friend, others by affiliates, some will see the site’s URL in a print advertisement or on television • Many site visitors will be directed to the site by a search engine

Search Engine Positioning (cont. ) • A search engine helps people find things on the web • A search engine has three major parts: 1. A spider, a crawler, or a robot 2. Index or database 3. Search utility • Search engine positioning is also called: • • Search engine optimization Search engine placement

Web spiders

Special Advertising Topics 453 • Wireless Advertising • Ad Content

The concept of FLOW • Consumer Navigation Behavior – Attention • Flow is the state occurring during network navigation that is (1) characterized by a seamless sequence of responses facilitated by machine interactivity, (2) intrinsically enjoyable, (3) accompanied by a loss of selfconsciousness, and (4) self-reinforcing. – Attention is a desirable and scarce commodity.

Management Information Systems CHAPTER 10: E-COMMERCE: DIGITAL MARKETS, DIGITAL GOODS E-commerce: Business and Technology • E-commerce marketing – Internet provides marketers with new ways of identifying and communicating with customers – Long tail marketing: Ability to reach a large audience inexpensively – Behavioral targeting: Tracking online behavior of individuals on thousands of Web sites – Advertising formats include search engine marketing, display ads, rich media, and e-mail 55 © Pearson Education 2012

More Interactivity then traditional media 2 way medium • Active not passive • Respond to demand • Opt in, not opt out • Interactive Dialogue

E-commerce marketing • Power to the customer • Demand what they want and when • Closer to the customer • Raises importance of customer service • Service response • Speed of delivery • Saying & doing – delivering on time

http: //www. youtube. com/watch? v=G 3 PAE 8 x. A U-8 http: //www. youtube. com/watch? v=m. Qx 97 f 9 g. Iv M

More individualization Summary of degree of individualization for (a) traditional media (same message), (b) new media (unique messages and more information exchange between customers)

Advergames

Management Information Systems CONCLUSION

Management Information Systems Productivity of Search Web 3. 0 The Intelligent Web 4. 0 2020 - 2030 The Semantic Web 3. 0 The Social Web 2. 0 2000 2010 The World Wide Web 1. 0 1990 - 2000 The Desktop PC Era 1980 - 1990 Reasoning Semantic Search 2010 - 2020 Natural language search Tagging Keyword search Directories Files & Folders Databases Amount of data 63

Management Information Systems From companies to open companies YOURCOMPANY Back Office Your. Supplier E-Procurement / E-Purchasing Your. Customer CRM Invoicing Finance HRM MRP SCM System Integration: ERP System SCM Supplier of Your. Supplier Front Office $ Customer of Your. Customer Online Intermediaries CRM System Information E-Marketing Transaction E-Commerce E-Business Dis-Intermediation ERP Enterprise Resource Planning MRP Materials Requirement Planning CRM Customer Relationship Management SCM Supply Chain Management Internet Infrastructure Intranet: members of Your. Company Extranet: extended for third parties Client - Server System

From Mktg to e. Mktg ‘Marketing is no longer an art, it is a science’, (Schulman)

Le Slip Français French Election Campaign 2012: Le changement de slip c’est maintenant Parody of the official candidate posters