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Chapter 3
Objectives
• Be able to identify the major forces
shaping the new digital age.
• Understand how companies have
responded to the Internet with
e-business strategies.
• Be able to describe the four major e-
commerce domains.
3-2
Objectives
• Understand how companies use e-
commerce to profitably deliver
greater value to customers.
• Realize the promise and challenges
that e-commerce presents for the
future.
3-3
Case Study
Charles Schwab
• Invented discount • Later became first true
brokerage category click-and-mortar full-
• First U.S. major service brokerage
player to go online • Now world’s largest
• Initially offered two- e-commerce site
tiered trading • 85% online trades;
system 21% of trade volume;
to protect profits / Strong stock return
stop cannibalization 3-4
Major Forces Shaping the
Digital Age
• Digitalization and Connectivity
The flow of digital information requires
connectivity
Intranets, Extranets, and the Internet
• The Internet Explosion
Key driver of the “new economy”
3-5
Major Forces Shaping the
Digital Age
• New Types of Intermediaries
Brick-and-mortar firms often face
disintermediation from click-only
competitors
The click-and-mortar business model
has been highly successful
• Customization and Customerization
3-6
Marketing Strategy in the
Digital Age
• E-business:
uses electronic means and platforms to
conduct business.
• E-commerce:
facilitates the sale of products and
services by electronic means.
3-7
Marketing Strategy in the
Digital Age
• E-marketing:
Includes efforts that inform,
communicate, promote, and sell
products and services over the Internet.
• E-commerce benefits both buyers and
sellers
3-8
Marketing Strategy in the
Digital Age
• Buyer Benefits of E-Commerce:
Convenience
Easy and private
Greater product access/selection
Access to comparative information
Interactive and immediate
3-9
Marketing Strategy in the
Digital Age
• Seller Benefits of E-Commerce:
Relationship building
Reduced costs
Increased speed and efficiency
Flexibility
Global access, global reach
3 - 10
E-Commerce Domains
E-Marketing Domains
Targeted to Targeted to
consumers businesses
Initiated by
businesses
B2C B2B
Initiated by
consumers
C2C C2B
3 - 11
E-Commerce Domains
• Online consumers
Major Domains Now more mainstream and
diverse
Has created new targeting
opportunities
• B2C Online behavior differs by
age
• B2B Online consumers differ
from traditional off-line
• C2C consumers
They initiate and control
the exchange process
• C2B Value information highly
3 - 12
E-Commerce Domains
• B2B sales far exceed B2C
Major Domains sales
B2B sales are estimated to
reach $4.3 trillion in 2005
• B2C • Open trading networks
E-marketspace bringing
• B2B sellers and buyers together
• Private trading networks
• C2C Links sellers with their
own trading partners
• C2B
3 - 13
E-Commerce Domains
• C2C web sites help
Major Domains consumers exchange goods
or information
eBay is one example
• B2C • Auction sites facilitate the
exchange process
• B2B Allow access to a much
larger audience
• C2C • Newsgroups / forums
Help consumers to find
• C2B and share information
3 - 14
E-Commerce Domains
• Allow consumers to
Major Domains search out sellers, learn
about offers, initiate
purchase, or dictate
• B2C purchase terms
Ex: Priceline.com
• B2B • Some sites facilitate the
feedback process between
• C2C customers and companies
Ex: Planetfeed.com
• C2B
3 - 15
Conducting E-Commerce
• Click-Only-Competitors
E-tailers, search engines and portals, ISPs,
transaction sites, enabler sites
• Dot.coms failed for many reasons
Lack of planning and research
Over emphasis on acquisition vs. retention
Poor web site design / distribution systems
Low margins
3 - 16
Conducting E-Commerce
• Click-and-Mortar Companies
Channel conflict was initially a concern
E-commerce often created new customers,
rather than cannibalizing existing ones
Many firms now enjoy greater success than
their click-only competition
Trusted brand names, greater financial
resources, larger customer base, industry
knowledge, and strong supplier relationships
were key advantages
3 - 17
Conducting E-Commerce
E-Marketing • Corporate web sites
Build goodwill and
relationships; generate
• Creating web sites excitement
• Placing online ads • Marketing web sites
and promotions Engage consumers
and attempt to influence
• Creating or using purchase
web communities • Web site design
• Using E-mail and 7 Cs of effective web site
webcasting design
3 - 18
Conducting E-Commerce
• Context • Communication
• Content • Connection
• Community • Commerce
• Customization
3 - 19
Conducting E-Commerce
E-Marketing • Online forms of ads
and promotions
• Creating web sites Banner ads/tickers
Skyscrapers
• Placing online ads Interstitials
and promotions Browser ads
• Creating or using Content sponsorships
web communities Microsites
Viral marketing
• Using E-mail and
webcasting • Future of online ads
3 - 20
Conducting E-Commerce
E-Marketing • Web communities allow
members with special
interests to exchange
• Creating web sites views
• Placing on-line ads Social communities
and promotions Work-related
communities
• Creating or using
• Marketers find well-
web communities defined demographics
• Using E-mail and and shared interests
webcasting useful when marketing
3 - 21
Conducting E-Commerce
E-Marketing • E-mail marketing
Key tool for B2B and
B2C marketing
• Creating web sites Clutter is a problem
• Placing on-line ads Enriched forms of
and promotions e-mail attempt to break
through clutter
• Creating or using
• Webcasting
web communities
Auto downloading of
• Using E-mail and customized content to
webcasting recipients’ PCs
3 - 22
Promise and Challenges of
E-Commerce
• The Promise of E-Commerce
The future of B2B E-commerce is bright
A few click-only companies may
succeed
Most companies will integrate online
marketing into the marketing mix
3 - 23
Promise and Challenges of
E-Commerce
• Challenges: The Web’s Darker Side
Few B2C companies are profitable
Limited exposure, skewed demographics
Navigating the web is often problematic
• Challenge: Legal and Ethical Issues
Online privacy and security concerns
Internet fraud, the digital divide, access by
vulnerable or unauthorized groups
3 - 24