Joel Reedy and Shauna Schullo

1
Chapter 16

• Special Opportunities for Business-to-Business
  Situations

2
The Brave, New World of the Web

• For competitive pressures, business management is
  looking inward to evaluate its own strengths and
  weaknesses, defining the corporate competencies
  and shoring up or outsourcing its deficiencies
• A minimum of 32 million business users worldwide
  account for at least 46 of the total traffic
  volume

3
The Brave, New World of the Web

• Additional findings
• The business universe- according to
  RelevantKnowledge, 34 of all Web users fit the
  definition of an active business user
• With a current estimate of 93.8 million Internet
  users worldwide, that would amount to some 32
  million business users worldwide
• Site universe-Dun Bradstreet reports that more
  than 40 million companies are listed on its
  worldwide database

4
The Brave, New World of the Web

• Additional findings continued
• Web usage-a recent Thomas Register and Visa USA
  online survey of 2000 American and Canadian
  business (out of a possible 155,000
  Register-listed companies) shows that 40 say
  they used the Web at least once in the past
  month, primarily for quick research
• Fortune 500 sites-in October, 1997, IDC estimated
  that 80 of all Fortune 500 companies had Web
  sites in1996
• Volumetrics-Media Metrics reports that business
  users devote 65 more time on the Web than home
  users

5
The Brave, New World of the Web segmentation

• Small/medium/large segmentation-in 1997, IDC
  estimated that small business users made up 17
  of total Net use, while businesses with more
  than one hundred employees make up 28
• Worldwide, IDC estimates that medium and large
  business will account for 49 million users by
  2000
• Small Business-according to Cyber Dialogues U.S.
  Small Business Interview Survey, that was based
  on interviews with one thousand U.S. business
  with less than one hundred employees, 37 are
  online equivalent to 2.6 million small business
  employees out of a 7 million universe

6
The Logic of Web Usage by Business-to-Business
Organizations

• The way commercial enterprises conduct business
  has changed drastically through the nineties, and
  few managers, marketing included, could have
  foretold how technology would entangle itself in
  the Web of business
• Business are finding methods to adjust their
  business practices in the Information Economy

7
The Logic of Web Usage by Business-to-Business
Organizations

• Marketers recognize the greatest benefit of the
  Web to the business sector is its efficiency
• Products can be rushed to the market
• Production costs can be reduced by computer-aided
  design and computer-aided manufacturing
• The marketing process gauging customer
  satisfaction can be made more efficient with
  electronic resources

8
The Logic of Web Usage by Business-to-Business
Organizations

• Efficiency continued
• Targeting prospects can be enhanced with Web
  sites, listservs, or Usenet discussion groups,
  which are directed specifically to electronic
  commerce support, of entrepreneurial, or venture
  capital funds
• Advertising messages can seek out viewers chosen
  by these viewers site selections and search
  engine choices electronic publicity releases
  covering e-business topics find their way to news
  wires

9
The Opportunities for Electronic Marketing
Resources in Business-to-Business Transactions

• The first order of e-business for many companies
  was toward automated procurement because much of
  the material handling involved numbers easily
  recognized by computer interfaces
• Open Buying on the Internet (OBI) became the
  standard way for exchanging and trading
  information

10
The Opportunities for Electronic Marketing
Resources in Business-to-Business Transactions

• Values delivered by e-business as described by
  PricewaterhouseCoopers
• Achieve market leadership
• Reach new markets
• Create new products and services
• Build customer loyalty
• Optimize business processes
• Enhance human capital
• Harness technology
• Manage risk and compliance

11
The Opportunities for Electronic Marketing
Resources in Business-to-Business Transactions

• Information is the key commodity in
  business-to-business transactions
• E-business strategies are selling products and
  services
• E-business is conducive for presentation through
  the catalog medium
• The Web serves the catalog medium well
• Listings, color photographs, diagrams, prices,
  and details subject to quickly change are popular
  product specifications
• Web site selling keeps product information
  updated

12
The Opportunities for Electronic Marketing
Resources in Business-to-Business Transactions

• E-consulting, management and advisory services
  are other forms of worthwhile information gaining
  awareness and sales momentum on the Web
• Consultative selling, situations where the
  outside representative becomes a trusted team
  member of the clients management team and the
  salespersons input is highly valued, is a most
  profitable activity
• IBM has created a virtual seminar for
  e-business

13
The Opportunities for Electronic Marketing
Resources in Business-to-Business Transactions

• The electronic marketing resources for e-business
• Commercial auctions to sell surpluses carried
  with live price boards for common knowledge,
  either buyer or seller
• Virtual consulting using videoconferencing or
  virtual reality Web sites
• Speech recognition for routing telephone sales
  inquiries and security authentication

14
The Opportunities for Electronic Marketing
Resources in Business-to-Business Transactions

• Marketing resources continued
• Automated kiosks for guard-less entry of lodging
  facilities after hours, retail order-taking by
  push key, or printed or graphical information
  dispensing such as maps or brochures
• Automated procurement and reordering
• Robot shopping for availability of item and best
  price
• Order or delivery tracking

15
The Opportunities for Electronic Marketing
Resources in Business-to-Business Transactions

• Marketing resources continued
• Customer and prospect profiling for company
  preferences and buying patterns
• Inventory control and balancing
• Custom communications networks
• Suppliers extranets for partnering and
  collaboration
• EDI for fast and efficient passing of large
  amounts of data
• Company marketing presence via Web advertising
  and customer communications and Web-enabled
  product and service ordering
• Customer service e-mail and call routing systems
  for customer communications

16
The Opportunities for Electronic Marketing
Resources in Business-to-Business Transactions

• Marketing resources continued
• Virtual seminars and CD-ROM training of personnel
• Partnering with specialized companies to
  strengthen all technology and service areas of an
  e-commerce organization
• On many Web sites the user will find search
  engines that are time-savers in locating
  information contained within the site

17
Internal Considerations for Business Operations

• Business should always be searching for the best
  methods for doing business
• Competitive forces are pushing many companies to
  assess the Internet as a competitive tool

18
Disadvantages of Online Business-to-Business
Commerce

• While the strength of e-business is streamlined
  efficiency, companies employing e-business lose
  contact with their distribution channels and
  sales personnel
• The biggest disadvantage is the threat of
  alienating distributors and therefore loss of
  physical distribution points

19
Disadvantages of Online Business-to-Business
Commerce

• Different companies are trying different
  strategies to address the distributor or
  salesperson displeasure
• Compaq had introduced its own Web commerce site,
  selling computers at rock-bottom prices directly
  to small business and individuals
• IBM has tried using their Internet sites mainly
  to direct prospects to online ordering sites
  operated by long-established dealers

20
Disadvantages of Online Business-to-Business
Commerce

• Strategies continued
• Radius, Inc., began online sales of its software
  for handling digital photo
• Many other industries have been long partnering
  with distributors or third-party resellers, and
  e-business marketing strategies should be set
  with the prospect of gaining or losing key
  personnel or distribution outlets at any time

21
Disadvantages of Online Business-to-Business
Commerce

• Some companies abhor the prospect of limiting its
  sales over the Internet
• 3M lists hundreds of its products on its Web
  site, but generally does not provide a way to
  order these products directly from the company

22
E-Business Sales Forecasts by Industry

• The e-commerce specialist, Forrester Research,
  expects business-to-business e-commerce revenues
  to jump from 109 billion in 1999 to 1.3
  trillion by 2003
• In making marketing decisions and plans, the
  marketer should probably adopt a conservative
  strategy, projecting the industrys sales volume
  and her companys market share and volume no
  further than two years hence
• Study the industry projections to see which are
  reasonable for the environmental conditions of
  today and hopefully of tomorrow