Percent of Internet Users

1
From Commerce to E-Commerce(and from Marketing
to E- Marketing )E-Commerica 2005
Dr. Efthymios Constantinides Assistant Professor
Faculty of Business, Public Administration and
Technology (BBT) University of Twente e.constantin
ides_at_utwente.nl
2

• Whats so exciting about Internet?
• Is E-Commerce really important?

3
Fact 1 InternetMore Customer Power

• US
• Auto 70 go to Internet and save 450
• Travel 2/3 use the Internet, 15 of tickets,
  zero commission, lower rates (Travelocity,
  Expedia greater market capture than most
  airlines)
• Over 2.000 travel agencies closed, airlines
  discontinued commissions to agents
• Health 80 search
• E-bay 34,2 bill (44 over 2003)
• 11,1 bill used cars!!!
• Finance
• Stock trading, Insurance, mortgages, real estate

4

• NL
• Travel 35 of vacations in 2004 booked online
• 140 travel agencies out of business last year
• Insurance 60 use the Internet for orientation,
  10 of insurance contracts sold online
• 2004 1,6 bln Euro online, 2005 (6 months) over
  1 bln Euro online

5
Why the Internet boosts consumer power?

• Easy access to market information / transparency
  savvy, information-driven consumers
• More alternatives and choice
• Easier transaction

6
Fact 2 Traditional media power decreases

• US (2)
• Audiences ratings TV shows, prime TV viewers down
  (50 since 1970 for the major channels)
• Customers exposed to ads 1/3 watch, 2/3
  mute-switch-leave
• Internet vs. TV Internet users average about
  three hours a day working with the network, about
  50 percent more time than the average television
  viewer watches TV.
• Internet users watch about 20 minutes less TV
  than the average viewer.
• 10 of users prefer to miss TV than Internet
• McKinsey TV advertising in 2010 35 as
  effective as in 1990
• And Advertising costs increasing

Nederlanders zien slechts 18 van uitgezonden
reclame
12 jan 2005
7
6 Sept 2005
8
Why is E-Commerce / E-Marketing important?

• Revolution in almost all aspects of Marketing
• New channel, new pricing options, individual
  reach and promotions, new media communication
• Opportunities to find new product needs and
  launch new products
• Supports improved distribution and services

9
E-BusinessE-Commerce E-MarketingInternet
the backbone
10
E- Commerce
E- Marketing
SCM
E- Procurement
Partner Alliances
E- Business
E- Logistics
ERP
E- Finance
Employee services
Knowledge sharing
11
What is E-Commerce?
12
E-Commerce (today)
A collection of Web - based technologies, tools
and business processes improving, supporting,
supplementing or replacing traditional commercial
practices E. Constantinides
13
What Traditional Practices?

• MARKETING RELATED (E-Marketing) Customer
  Recruitment, Acquisition, Retention
• Communication and interaction
• Advertisement, Promotion, PR etc
• Customer Data Collection, Direct Marketing
• Market Research, RD
• Collaborative development of new products,
  services
• Retailing - Selling, Invoicing, Payments,
  Delivery
• Customer Service and CRM
• PROCUREMENT (E-Procurement)
• SCM, LOGISTICS, Internet based EDI
• Online financial transactions (banking,
  investment, insurances)
• etc

14
More and more traditional firms adopt the Web as
commercial strategy

• Why
• Traditional brick-and-mortar companies face
  increasing pressures in a competitive marketing
  environment
• Internet Major information source for consumer
  and professional buyer
• A possible response is to introduce a variety of
  e-commerce initiatives that can improve
• supply chain operation
• information
• raw materials purchase
• increase customer service
• open up markets to more customers

15
Internet An Economic, Technological and Social
Phenomenon

• Online transactions revenues volume (2010 10
  of US retailing)
• Penetration rate
• 1995 16 mil, today close to 1 bill users
• A new business environment
• Social effects and trends

16
Factors Driving E-Commerce
Build up- maintain Customer Trust
Tactical improvement of everyday operations /
support of business strategy
Targeted customer marketing - New business
Opportunities E-Boom
Functionality
Supply chain efficiencies
Improved customer service
Operating cost reduction
ECR
1988
1996
1993
2000
2005
Source Silicon Graphics(adapted)
17
B 2 B
E-commerce types
Supplier
Procurement
Producer
Customer
C2C
Procurement Selling
Retailer
Peer to Peer ICQ, MSN Messenger Napster, United
Technologies
Marketing - Selling
Customer
B 2 C / C 2 B(reverse auction)
18
E-Marketing and the Web-Marketing Mix
19
Marketing Planning

• Traditional Marketing

• Virtual Marketing
• ?

Product
Price
Promotion
Place
20
4P Marketing Mix is unfit for E-Marketing

• The 4Ps are not the critical factors. This
  because the Mix
• - is focused on mass products / services
• - ignores customer needs, lacks interactivity
• - is tactical lacks strategic dimensions
• - ignores the complexity of the online
  environment you need more than the 4Ps to create
  and maintain a competitive proposition
• Role of the 4Ps in E-Marketing elements of the
  Web Experience

21
4S Web-Marketing mix

• Identifies the critical factors of the Online
  Marketing
• Proposes an integrative approach for online
  marketing
• Allows for
• - Shorter planning periods and
• - Flexible strategy
• Easy to conceptualize, remember,apply

22
The Web - Marketing Mix
Scope
Site
Synergy
System
Strategic Issues
Operational Issues
Organizational Issues
Technological Issues
Source E. Constantinides 1999
23
Typical stages of an E-Commerce Project
Strategic and Marketing Plan
Identification of control processes of
communication interface
Definition of ordering and fulfilment
processes
Identification of site control, support and
maintenance processes
Construction of Web front and EDI interface
Site testing
Construction of Communication interface
Site online
24
The Web - Marketing Mix
Scope
Golden rule Frequent Strategy Review

• - Strategic Mission and Objectives
• - Market Analysis
• Competition Basis Functionality, Reliability,
  Convenience, Price
• Competitive analysis
• - Potential Customers / Profiles
• motivation, behaviour, needs, goals, priorities,
  current way of fulfilling needs,
• customer value, Online segmentation?
  Technographics (Forrester), eTypes
• Market Potential, Forecast, Trends
• - Internal Analysis
• Internal Resources, Processes, Values Internet
  is sustaining or disruptive technology?
• - Strategic Role
• In relation to Resources, Processes and Values
• Generic Roles Informational, Promotional,
  Relational, Transactional, Educational etc.
• Intranet, Extranet possible added value for the
  organisation
• Business model

25
(No Transcript)
26
(No Transcript)
27
(No Transcript)
28
Source E. Constantinides
Source Constantinides E., 2004, Strategies for
Surviving the Internet meltdown The Case of Two
Internet Incumbents, Management Decision Journal,
vol 42, nr 1, pp 89-107
29
Source E. Constantinides
Source Constantinides E., 2004, Strategies for
Surviving the Internet meltdown The Case of Two
Internet Incumbents, Management Decision Journal,
vol 42, nr 1, pp 89-107
30
131 product categories
www.amazon.com
31
(No Transcript)
32
The Web - Marketing Mix
The Online Experience Gold Rule 8 seconds,
3-clicks
Scope
Site

• Customer Oriented Content Important questions to
  be asked
• - What does the customer expect to find in my
  site?
• - Why the customer will make use of my site?
• - What could motivate the customer to come back
  to the site?
• Web Experience depends on a combination of
  factors affected by
• Domain Name, Design, Layout, Atmosphere
• Simplicity, Functionality, Speed,
• Findability, Navigation, Searchability (2005
  research of Oneupwebonly one in eight Fortune
  100
• sites well optimized for search engines 1of
  11 last year, 1 of 25 in 2002)
• Interactivity, Customisation
• Service Online, User Feedback
• Retention Strategy, Fresh Information, Fresh
  Features
• Links
• Privacy policy, customer protection
• Perceived and actual security level
• 4 Ps
• Customer Oriented Positioning Web Unique Selling
  Proposition

33
Positive Web Experience drives more Customers
to physical outlets
34
Main problem in creating the right online
experience

• Lack of knowledge on online consumers and
  business customers behavior
• Motivation
• Decision-making process
• Factors influencing the adoption of products /
  services online

35
Source Constantinides E., 2004, Influencing The
Online Consumers Behavior The Web Experience,
Internet Research Electronic Networking
Applications and Policy, vol 14, nr 2, pp.
111-126
36
The Web Experience Building Blocks
Source Constantinides E., 2004, Influencing The
Online Consumers Behavior The Web Experience,
Internet Research Electronic Networking
Applications and Policy, vol 14, nr 2, pp.
111-126
37
The Web - Marketing Mix
Scope
Site
Synergy

• Front Office
• Integration with Marketing Activities
• - Advertisement
• - Promotions
• - Communication, PR
• - Distribution
• Back Office
• Integration with Organisational Processes, Values
• - Production, Logistics
• - EDI, ECR
• - Delivery, Invoicing, Fulfilment
• - Total Quality Management, Control Systems
• - Legacy Integration MIS, ERP Systems, Databases
• Third parties

38
The Web - Marketing Mix
Scope
Site
Synergy
System
- Technology trends - Programming tools, browser
independence - Content Management - Security
level(s) - Payment systems - Hosting - Back ups -
Interfacing - Traffic Data monitoring,
Performance Analysis - System Administrator -
Communication Interfaces - Site Support and
Maintenance