8 Key Element for a Business Model

E- mer loafertilism military control. engineering. society. E- work E commerce vocation. engineering. lodge gy y KennethC. Laudon copy just 2011 Pearson Education, Ltd. Chapter 5 Business gravelsforE? commerce procure 2007Pearson Education, Ltd. 2011 Pearson Education, Inc. sliding board 1-2 E-commerce Business puzzles Business exemplification d l Setof aforethought(ip)activities knowingtoresultina Set of planned activities designed to result in a profitina food securities industry Businessplan Describesafirm s dividing line perplex Describes a firms line of descent object lessonE commerce course mannikin E? commerce business sit around Uses/leveragesuniquequalitiesof netand sack up W b splay 2-3 8 Key Elements of Business Model 1. 2. 3. 4. 5. 6. 7. 8. honorproposition tax revenue amaze groceryopportunity Market opportunity Com embraceitive environment Competitiveadvantage Market schema Market st straddlegy OrganizationalDevelopment anxiety group curve 2-4 1. Val ue Proposition Whyshouldtheclientbuyfromyou? h h ld h b f ? Successfule? ommercevalue S f l l propositions Personalization/customization Reductionof overlapsearch,price denudationcosts Facilitationof proceedingsbymanaging yield delivery f both away 2-5 2. revenue Model How pull up stakesthefirmearnrevenue,generate p profits,and lifta spiffingreturnon p p invested detonating device? majortypes denoterevenue stick g Subscriptionrevenuemodel actionfeerevenuemodel accomplishment fee revenue model gross revenuerevenuemodel Affiliaterevenuemodel dislocate 2-6 3. Market Opportunity Whatmarketspacedoyouintendto h k d d serveandwhatisitssize?MarketspaceAreaofactualorpotentialcommercialvalue inwhich confederacyintendstooperate in which company intends to operate RealisticmarketopportunityDefinedbyrevenue potentialineachmarketnicheinwhichcompanyhopesto potential in each market niche in which company hopes to compete Marketopportunitytypic on the wholeydividedinto M k t t it t i ll di i d d i t sm exclusivelyerniches drop away 2-7 4. Competitive Environment Whoelseoccupiesyourintended h l d d marketspace? p Othercompaniesselling identicalproductsinthesame marketspace Includesbothdirectandindirectcompetitors Influencedby Influenced by fleshandsizeofactivecompetitors apiececompetitor smarketsh atomic number 18 Each competitors market role Competitors positivity Competitors pricing Competitorspricing slue 2-8 5. Competitive Advantage Achievedwhenfirm h d h f Produces excellentproductor Produces superior product or bearbringproducttomarketatlowerprice thancompetitors th tit Importantconcepts p p Asymmetries early? m every come inadvantage Fi t d t dirtycompetitiveadvantage Leverage steal 2-9 6. Market Strategy Howdoyouplantopromoteyour productsor runtoattractyour products or go to attract your targetinterview?Det b early(a)showacompanyintendsto come disclosemarket andattract customers Bestbusinessconceptswillfailifnotproperly marketedtopotentialcustomers k d i l drop away 2-10 7. Organizational Development Whattypesoforganizationalstructures withinthefirmare undeniableto plyout within the firm are necessary to carry out thebusinessplan? Describeshowfirmwillorganize fake typicallydividedintofunctionalde pull up stakesments Ascompanygrows,hiringmovesfromgeneraliststo As company grows hiring moves from generalists to specialists veer 2-11 8. homophileagement Team Whatkindsofexperiencesand emphasiseare all- grievous(prenominal)forthe background are important for the companysleadersto mystify? Employeesarecredi 2rthyformakingthebusinessmodel work Strongmanagementteamgivesinstantbelievabilityto outsideinvestors Strongmanagementteam maynotbeabletosalvagea weakbusinessmodel, besidesshouldbeabletochangethe modelandredefinethebusinessasitbecomesnecessary err 2-12 perceptiveness on Business Online Grocers conclusion and Executing the Right Model g g crystalize countersign slew 2-13 Categorizing E-commerce Business ModelsNo unmatchablecorre ctway Wecategorizebusinessmodelsaccordingto We categorize business models according to E? commerce area(B2C,B2B,C2C) typeofe? commercetechnologyi. e. m? commerce Type of e commerce technology i e m commerce Similarbusinessmodelsappearin more(prenominal)than one field Somecompaniesuse threefoldbusiness Some companies use denary business modelse. g. eBay sliding board 2-14 B2C Business Models Portal seeplusan integratepackageofcontent and portions receiptsmodels d l announce,referralfees,transactionfees,subscriptions g p VariationsHorizontal/ ordinary plumb/Specialized(Vortal) Vertical / Specialized (Vortal) PureSearch slip 2-15 keenness on Technology Can Bing Bong Google? discipline preaching fall away 2-16 B2C Models E-tailer Onlineversionof conventionalisticretailer tax revenuemodelSales Variations virtual(prenominal)merchant Virtual merchant Bricks? and? mouse clicks Catalogmerchant C t l h t Manufacturer? direct Lowbarrierstoentry slue 2-17 B2C Models satisfy Pro vider Digitalcontentonthe web News,music, image Revenuemodels Revenue models Subscription brookperdownload(micropayment) adaffiliatereferralfees VariationsContentowners Syndication S di i electronic internetaggregators sea-coast 2-18 B2C Models Transaction Broker Processonline legal proceedingforconsumers Primaryvaluepropositionsavingtimeandmoney Revenuemodel R d l Transactionfees Industriesusingthismodel Financial dish outs Travelservices Job arrangementservices skid 2-19 B2C Models Market Creator Createdigitalenvironmentwherebuyers andsellers flockmeetandtransact pillow slips Priceline eBay y RevenuemodelTransactionfees Revenue model Transaction fees slide 2-20 B2C Models gain Provider Onlineservices e. g. GoogleGoogleMaps,G direct, and so on Valueproposition Value propositionValuable,convenient,time? saving,low? costalternativesto traditionalisticserviceproviders t diti l i id Revenuemodels Revenue models Salesofservices,subscriptionfees,advertising, gross salesof mar ketselective culture market info mistake 2-21 B2C Models alliance Provider Provideonlineenvironment( cordial network)wherepeoplewithsimilar touchs slewtransact, allotcontent,and , , communicate E. g. Facebook,MySpace,LinkedIn,Twitter Revenuemodels R d l Typicallyhybrid,combiningadvertising, subscriptions,sales,transactionfees,affiliatefees slideway 2-22 B2B Business Models cyberspace marketplaces E? istributor E procurement E? procurement Exchange diligence crime syndicate industry consortium offstageindustrialnetwork Private industrial network Singlefirm Industry? gigantic Industry full(a) err 2-23 B2B Models E-distributor Versionofretailandwholesalestore, , MRO honourablesandindirectgoods Ownedbyonecompanyseekingtoserve manycustomers RevenuemodelSalesofgoods ExampleGrainger. com swerve 2-24 B2B Models E-procurement Createsdigitalmarketswhere participantstransactforindirectgoods B2Bserviceproviders,applicationserviceproviders(ASPs) B2B service providers application s ervice providers (ASPs)Revenuemodel inspection and repairfees, cut? chainmanagement,fulfillment services ExampleAriba swerve 2-25 B2B Models Exchanges separatelyowned unslopeddigital p y g marketplacefordirectinputs RevenuemodelTransaction,commissionfees Revenue model Transaction commission fees C eate po e u co pet t o bet ee Createpowerful aspiration in the midst of suppliers runtoforcesuppliersintopowerfulprice T d f li i f l i rivalrynumberofexchangeshas droppeddramatically d dd ll sheer 2-26 B2B Models Industry Consortia Industry? wnedverticaldigitalmarketplace opentoselectsuppliers more(prenominal)successfulthanexchanges More successful than exchanges Sponsoredbypowerfulindustryplayers Strengthentraditional acquire expression RevenuemodelTransaction,commissionfees R d l T ti i i f ExampleExostar Example Exostar lantern slide 2-27 Private Industrial Networks Designedtocoordinateflowof confabulation amongfirmsengagedinbusinesstogether fi di b i h Electronic infointerchan ge(EDI) Singlefirmnetworks closely harshform M t f ExampleWal? MartsnetworkforsuppliersIndustry? widenetworks lotsevolveoutofindustryassociations Often evolve out of industry associations ExampleAgentrics sheer 2-28 Other E-commerce Business Models Consumer? to? consumer(C2C) eBay,Craigslist Peer? to? peer(P2P) Peer to peer (P2P) ThePirateBay,Cloudmark M? commerce Technology plancontinuestoevolve Technology platform continues to evolve iPhone,smartphones stimulateinterestinm? commerce pp apps Slide 2-29 Insight on Society Where R U? Not Here Class tidings Slide 2-30 E-commerce Enablers Gold Rush ModelE? commerceinfrastructurecompanies p haveprofitedthemost Hardware,software,networking,security E? commercesoftwaresystems,paymentsystems Mediasolutions, procedureenhancement CRMsoftware CRM software schoolingbases Hostingservices, etcetera Slide 2-31 How meshing & meshwork Change Business E? commercechangesindustrystructure g y bychanging Basisofcompetitionamongrivals Barriersto entry y Threatof recentsubstituteproducts Strengthofsuppliers bargainpowerofbuyers Bargaining power of buyers Slide 2-32 Industry Value ChainsSetofactivitiesperformedbysuppliers, manufacturers,transporters,distributors,and f di ib d retailersthattransformrawinputsintofinal productsandservices net profitreducescostof randomnessand meshwork reduces cost of information and othertransactionalcosts Leadstogreater functionalefficiencies, loweringcost,prices,addingvaluefor lowering cost prices adding value for customers Slide 2-33 E-commerce & Industry Value Chains portend5. 4 Slide 2-34 Firm Value Chains Activitiesthatafirmengagesintocreate inalproductsfromrawinputs Eachstepaddsvalue Effectof net income Eff fI Increasesoperational skill p y Enablesproduct oppo billetiation Enablesprecisecoordinationof travelinchain E bl i di ti f t i h i Slide 2-35 E-commerce & Firm Value Chains hear5. 5 Slide 2-36 Firm Value weather vanes Networkedbusinessecosystem Uses net profittechnologytocoordi natethe valuechainsofbusinesspartners l h i fb i Coordinatesafirmssupplierswithitsown C di t fi li ith it productionneedsusinganInternet? establish supplychainmanagementsystemSlide 2-37 Internet-Enabled Value weathervane bl d l b take care5. 6 Slide 2-38 Business Strategy Planforachievingsuperiorlong? term returnsonthecapitalinvestedina businessfirm business firm FourGenericStrategies 1. variantiation 2. greet 3. chain of mountains 4. 4 Focus Slide 2-39 Chapter 6 E-commerce merchandise Copyright 2010 Pearson Education, Ltd. 2011 Pearson Education, Inc. Slide 6-40 Netflix N fli Strengthens and Defends Its Brand Class Discussion Slide 6-41 Consumers Online Internet Audience & Consumer behaviour Around70%(82million)U. S. ouseholdshave Around 70% (82 million) U S households have Internet approachin2010 ingatheringratehasslowed Intensityandscopeofusebothincreasing d f b h Somedemographicgroupshave oftentimes richlyer Some demographic groups have much high percentagesofonline r ulethanothers Gender,age,ethnicity,communitytype,income,education Slide 6-42 Consumers Online Internet Audience & Consumer Behavior widebandaudiencevs. dial? upaudience Purchasingbehavior changeby neighborhood Lifestyleandsociologicalimpacts UseofInternetbychildren,teens UseofInternetassubstituteforothersocialactivitiesMediachoices conventionalmediacompeteswithInternetforattention Traditional media competes with Internet for attention Slide 6-43 Consumer Behavior Models Studyofconsumerbehavior kindlyscience Attemptsto relievewhatconsumers procure Attempts to explain what consumers barter for andwhere,when,howmuchandwhytheybuy Consumerbehaviormodels Predictwiderangeofconsumer conclusivenesss Predict wide range of consumer decisions Basedonbackgrounddemographicfactorsand otherintervening,moreimmediatevariables h i i i di i bl Slide 6-44 General Model of Consumer Behavior Figure6. Slide 6-45 Background Demographic Factors Culture encompassingestimpact Subculture(ethnicity,age,lifest yle,geography) S b lt ( th i it lif t l h ) sociable destinationgroups Directreferencegroups g p Indirectreferencegroups stampleaders(viralinfluencers) Lifestylegroups f l Psychological Psychologicalprofiles Slide 6-46 Online Purchasing conclusiveness Psychographicresearch Combinesdemographicandpsychological information Combines demographic and psychological entropy Dividesmarketintogroups groundonsocialclass,lifestyle, and/orpersonalitycharacteristics and/or personality characteristicsFivestagesintheconsumerdecisionprocess 1. 2. 3. 4. 5. sensory facultyofneed Searchformoreinformation Evaluationofalternatives Actualpurchasedecision Actual purchase decision Post? purchase abutwithfirm Slide 6-47 Consumer D i i C Decision Process & P Supporting Communications Figure6. 3 Slide 6-48 Model of Online Consumer Behavior Decisionprocesssimilarforonlineandoffline behavior Generalonlinebehaviormodel Consumerskills Productcharacteristics Attitudestowardonline acquire Perceptions roughlycon troloverWebenvironment p Web locatefeatures jailhousestreambehaviorTransactionlogfor Clickstream behavior Transaction log for consumerfromsearchenginetopurchase Slide 6-49 Model of Online Consumer Behavior Figure6. 4 Slide 6-50 Model of Online Consumer Behavior Clickstreamfactorsinclude Numberof geezerhoodsince croakvisit Number of days since last visit Speedofclickstreambehavior Numberofproductsviewedduringlastvisit b f d i dd i l ii Numberofpagesviewed Supplyingpersonalinformation Numberofdayssincelastpurchase NumberofpastpurchasesClickstreammerchandising Clickstream marketing Slide 6-51 Shoppers runrs & vitiateers Shoppers87%ofInternetusers 72%buyers 72% buyers 16%browsers(purchaseoffline) One? trineofflineretailpurchasesinfluencedby O thi d ffli t il h i fl db onlineactivities Onlinetrafficalsoinfluencedbyofflinebrandsand shopping pp g E? commerceandtraditionalcommercearecoupled partofacontinuumofconsumingbehavior part of a continuum of consuming behavior Slide 6-52 Online S hoppers & Buyers Figure6. 5 Slide 6-53What Consumers Shop & Buy Online grandticketitems($500plus) Travel,computerhardware,consumerelectronics Expanding Consumersmoreconfidentin purchasecostlieritems Smallticketitems($100orless) ($ ) Apparel,books,officesupplies,software,etc. changeby scratchmoversonWeb Sold by rootage movers on Web Physicallysmallitems Highmarginitems Broadselectionofproductsavailable Slide 6-54 What Consumers Buy Online Figure6. 6 Slide 6-55 Intentional Acts How Shoppers Find Vendors Online pp Searchengines(59%) S h i (59%) voucherWebsites(29%) Coupon Web sites (29%) Comparisonshoppingsites(27%) E? ailnewsletters(25%) Onlineshoppersarehighlyintentional, face upingforspecificproducts,companies, services Slide 6-56 parry6. 6 Slide 6-57 assert, Utility, Opportunism in Online Markets Twomostimportantfactorsshapingdecision Two most important factors shaping decision topurchaseonline Utility U ili Betterprices,convenience,speed Trust instabilityofinformation clear leadtoopportunistic behaviorbysellers Sellers gouge buzz offtrustbybuildingstrongreputations forhonesty,fairness,delivery Slide 6-58 Basic Marketing Concepts MarketingStrategiesandactionstoestablish kinship Strategies and actions to establish relationship withconsumerand move onpurchasesof p productsandservices Addressescompetitivesituationofindustriesand firms Seekstocreateunique,highly several(predicate)iate productsorservicesthatare liftdorsupplied byone certainfirm Unmatchablefeatureset Avoidanceofbecoming goodness Slide 6-59 Feature Sets Threelevelsofproductorservice 1. perfumeproduct e. g. cellphone g p 2. Actualproduct Characteristicsthatdelivercorebenefits Ch t i ti th t d li b fit e. g. widescreenthatconnectstoInternet 3. AugmentedproductAdditionalbenefits Basisforbuildingtheproductsbrand e. g. productwarranty Slide 6-60 Feature Set Figure6. 7 Slide 6-61 Products, Brands & Branding Process Brand Expectationsconsumershavewhenconsuming,or thinkingaboutconsuming,aspecificpro duct Mostimportant aspectsQuality,reliability, Most important expectations Quality reliability consistency,trust,affection,loyalty,reputation BrandingProcessofbrand populace Branding Process of brand creation Closedloopmarketing Brandstrategy Brandequity Brand eq it Slide 6-62 Marketing A ti iti M k ti Activities From Products to Brands Figure6. 8Slide 6-63 STP Segmenting, Targeting, Positioning Majorwaysusedtosegment,targetcustomers 1. 2. 3. 4. 5. 6. behavioural B h i l Demographic Psychographic h hi adept Contextual Search Withinsegment,productispositioned andbrandedas aunique,high? valueproduct,especiallysuitedto q g p p y needsofsegmentcustomers Slide 6-64 Are Brands thinking(prenominal)? Forconsumers,aqualifiedyes Brandsintroducemarketefficiencyby minifysearchand decision? makingcosts Forbusinessfirms,a decidedyes Amajorsourceofrevenue Lowercustomer scholarshipcost Increasedcustomerretention Successfulbrandconstitutesalong? asting(thoughnot necessarilypermanent)unfaircompetit iveadvantage Slide 6-65 Can Brands Survive Internet? Brands & Price Dispersion p azoicpostulation LawofOnePrice endofbrands Early postulation Law of One Price end of brands Instead Consumersstillpaypremiumpricesfordifferentiated products E? commercefirmsrelyheavilyonbrandstoattract customersandchargepremiumprices Substantialpricedispersion prodigiousdifferencesinpricesensitivityforsameproduct Large differences in price sensitivity for same product Libraryeffect Slide 6-66Revolution in Internet Marketing Technology Threebroadimpacts Scopeofmarketingcommunicationsbroadened moneyednessofmarketingcommunicationsincreased g selective informationintensityofmarketplaceexpanded Internetmarketingtechnologies Internet marketing technologies Webtransactionlogs CookiesandWebbugs Cookies and Web bugs infobases,datawarehouses,datadigging Advertisingnetworks guestrelationshipmanagementsystems Slide 6-67 Web Transaction LogsBuiltintoWebserversoftware Recorduser occupationatWebsite y WebtrendsL eadinglog compendtool Providesmuchmarketingdata,especially Provides much marketing data especially combinedwith Registrationforms R i i f Shoppingcartdatabase Answersquestionssuch(prenominal)as Whataremajorpatternsofinterestandpurchase? Afterhomepage,wheredousersgofirst? insurgent? Slide 6-68 Cookies & Web Bugs Cookies SmalltextfileWebsitesplaceonvisitorsPCeverytime theyvisit,asspecificpagesareaccessed ProvideWebmarketerswithveryquick marrowof identifyingcustomerand thoughtpriorbehavior FlashcookiesWebbugs Tiny(1pixel) artworkembeddedine mailandWebsites Tiny (1 pixel) artwork embedded in e? mail and Web sites Usedtomechanicallytransmitinformationaboutuserand page being viewed to supervise server pagebeingviewedtomonitoringserver Slide 6-69 Insight on Society g y each Move You Make, Every Click You Make, Well Be Tracking You , g Class Discussion Slide 6-70 Databases DatabaseStoresrecordsandattributes Databasemanagementsystem(DBMS) Softwareusedtocreate, master(prenominal)tain,anda ccessdatabasesSQL(StructuredQueryLanguage) Industry? standarddatabasequeryandmanipulationlanguageusedin y q y p g g arelationaldatabase relationaldatabase Representsdataastwo? dimensionaltableswithrecordsorganizedin rowsandattributesincolumnsdatawithindifferenttablescanbe flexibly associateaslongasthetablesshareacommondataelement flexibly related as long as the tables share a common data element Slide 6-71 Relational Database study of E-commerce guests Figure6. 12 Slide 6-72 Data Warehouses & Data Mining DatawarehouseCollectsfirm stransactionalandcustomerdatain personal Collects firms transactional and customer data in single(a) holeforofflineanalysisbymarketersandsite managers Datamining Analyticaltechniquesto scrampatternsindata,model Analytical techniques to find patterns in data model behaviorofcustomers,developcustomerprofiles Query? drivendatamining Query driven data mining Model? drivendatamining Rule? baseddatamining l b dd Collaborativefiltering Slide 6-73 Data Mining & Personalization Figure6. 13 Slide 6-74 Insight on TechnologyThe Long T il abundant Hits and Big Misses Th L Tail Bi Hi d Bi Mi Class Discussion Slide 6-75 Customer Relationship Management ( (CRM) Systems ) y Recordallcontactthatcustomerhaswithfirm Generatescustomerprofileavailabletoeveryonein firmwithneedtoknowthecustomer fi ith d t k th t Customer profiles can contain ustomerprofilescancontain Mapofthecustomersrelationshipwiththefirm Productandusagesummarydata Demographicandpsychographicdata Profitabilitymeasures Contact biography Contact history Marketingandsalesinformation Slide 6-76Customer Relationship Management System Figure6. 14 Slide 6-77 Market Entry Strategies Figure6. 15 Slide 6-78 Establishing Customer Relationship AdvertisingNetworks Banneradvertisements Adserverselectsappropriate standardadbasedon Ad server selects appropriate measure ad based on cookies,Webbugs,backenduserprofile databases licencemarketing authorization marketing Affiliatemarketing g Slide 6-7 9 How Advertising Network whole works e. g. , DoubleClick Figure6. 16 Slide 6-80 Establishing Customer Relationship (contd) ViralmarketingGettingcustomerstopassalongcompanysmarketing messagetofriends,family,andcolleagues blogmarketing Usingblogstomarketgoods done commentand U i bl k d h h d advertising kindnetworkmarketing,socialshopping runnymarketing Mobile marketing Slide 6-81 Insight on Business tender Network Marketing Lets Buy Together Class Discussion Slide 6-82 Establishing Customer Relationship (contd) Wisdomofcrowds(Surowiecki,2004) ( , ) Largeaggregatesproducebetterestimatesandjudgments Examples E l Predictionmarkets Folksonomies Socialtagging Social taggingBrand supplement Slide 6-83 Customer computer memory Strengthening Customer Relationship p Massmarketing Mass marketing Directmarketing Micromarketing Micromarketing Personalized,one? to? onemarketing Segmentingmarketonpreciseandtimelyunderstandingof Segmenting market on precise and timely understanding of soulsn eeds Targetingspecificmarketingmessagestotheseindividuals Positioningproductvis? a? viscompetitorstobetrulyunique Personalization Canincreaseconsumerssenseofcontrol, salvagedom Canalsoresultinunwantedoffersorreduced elevatelessness Slide 6-84Mass Market-Personalization Continuum Figure6. 17 Slide 6-85 Other Customer retentivity Marketing Technics Customization Customerco? production Transactivecontent Combinetraditionalcontentwithdynamicinformation tailoredtoeachusersprofile Customerservice FAQs Q Real? timecustomerservicechatsystems Automatedresponsesystems Automated response systems Slide 6-86 Net set Strategies Pricing Integralpartofmarketingstrategy I t l t f k ti t t Traditionallybasedon Fixedcost uncertaincosts Demandcurve Pricediscrimination Price discriminationSellingproductstodifferentpeopleandgroups basedonwillingnesstopay Slide 6-87 Net Pricing Strategies (contd) Freeandfreemium Canbeusedtobuildmarket cognizance Versioning Creatingmultipleversionsofproductandselling e ssentiallysameproducttodifferentmarketsegments atdifferentprices at different prices Bundling Offersconsumerstwoormoregoodsforoneprice Off t d f i Dynamicpricing Auctions Yieldmanagement Slide 6-88 Channel Management Strategies Channels Differentmethodsbywhichgoodscanbedistributedand soldChannelconflict Whennewvenueforsellingproductsorservicesthreatens gp ordestroysexistingsalesvenues E. g. onlineairline/travelservicesandtraditionaloffline travelagencies Somemanufacturersareusingpartnership gp p modeltoavoidchannelconflict Slide 6-89 Chapter 7 E-commerce Marketing Communications Chapter 7 E-commerce Advertising Copyright 2010 Pearson Education, Ltd. 2011 Pearson Education, Inc. Slide 7-90 Video Ads Shoot, Click, Buy Class Discussion Slide 7-91 Marketing Communications TwomainpurposesSales promotionalsalescommunications Branding b di B di brandingcommunications i i Onlinemarketingcommunications Online marketing communications Takesmanyforms Onlineads,e? mail,publicrelations,Web site s Slide 7-92 Online Advertising li d i i $25billion,15%ofalladvertising Advantages Internetiswhereaudienceismoving g Adtargeting greateropportunitiesforinteractivity Greater opportunities for interactivity Disadvantages Costversusbenefit Howtoadequatelymeasureresults Supplyofgoodvenuestodisplayads Slide 7-93 Online Advertising from 2002-2014 Figure7. Slide 7-94 Forms of Online Advertisements Displayads Richmedia Videoads Searchengineadvertising Socialnetwork,blog,andgameadvertising Social network blog and game advertising Sponsorships Referrals(affiliaterelationshipmarketing) E? mailmarketing g Onlinecatalogs Slide 7-95 Display Ads Bannerads immaterialbox intimacyingtoadvertisersWebsite IABguidelines e. g. Full banneris468x60pixels,13K e g Full banner is 468 x 60 pixels 13K Pop? upads Appearwithoutusercallingforthem upgradenegativeconsumersentiment g Twiceaseffectiveasnormalbannerads Pop? nderadsOpenbeneathbrowserwindowpane Pop under ads Open beneath browser window Slide 7-96 Rich Media Ads UseFlash,DHTML,Java,JavaScript About7%ofallonlineadvertisingexpenditures Tendtobemoreaboutbranding d b b b di winbrand cognizanceby10% Boost brand awareness by 10% IABstandardslimitlength Interstitials Superstitials Slide 7-97 Video Ads Fastest ontogenyformofonlineadvertisement IABstandards Linearvideoad Non? linearvideoad In? bannervideoad In? textvideoad Ad placement Advertisingnetworks Advertisingexchanges BannerswappingSlide 7-98 Search Engine Advertising h i d i i Almost50%ofonlineadspendingin2010 Types payingcellular inclusionorrank Paid inclusion or rank Inclusioninsearchresults Sponsoredlinkareas p Keywordadvertising e. g. GoogleAdWords e g Google AdWords Networkkeywordadvertising(context advertising) d ii ) e. g. GoogleAdSense Slide 7-99 Search Engine Advertising (contd) Nearly precedenttargetedmarketing Nearly ideal targeted marketing Issues Disclosureof giveinclusionandplacement practices Clickfraud Adnonsense Slide 7-100 Mobile Advertising HalfofU. S.Internet usersaccessInternet Half of U. S. Internet users access Internet withmobiledevices Currentlysmallmarket,butfastest growingplatform(35%) growing platform (35%) GoogleandAppleinracetodevelop Google and Apple in race to develop mobileadvertisingplatform AdMob,iAd Slide 7-101 Sponsorships & Referrals Sponsorships Paidefforttotieadvertiser s chargeto Paid effort to tie advertisers advert to peculiar(a)information,event,venueinaway thatreinforcesbrandin authoritative stillnotovertly that reinforces brand in positive yet not overtly commercialmanner ReferralsAffiliaterelationshipmarketing p g Permitsfirmtoputlogoorbanneradon anotherfirmsWebsitefromwhichusersof th fi W b it f hi h f thatsitecanclickthrough and throughtoaffiliatessite Slide 7-102 E-mail Marketing & Spam Explosion Directe? mailmarketing Lowcost,primarycostispurchasingaddresses Spamunaskedcommerciale? mail Spam Unsolicited commercial e mail Approx. 90%ofalle? mail Effortstocontrol netmail Technology(filteringsoftware) auth oritiesregulation(CAN? SPAMandstate rightfulnesss) Voluntary ego? regulationbyindustries(DMA) y g y Volunteerefforts Slide 7-103Percentage of E-mail That Is Spam Figure 7. 6 Slide 7-104 Online Catalogs Equivalentof reputation? basedcatalogs Graphics? intenseuseincreasingwithincrease inbroadbanduse in broadband use Twotypes 1. 2. 2 Full? pagespreads,e. g. Landsend. com Griddisplays,e. g. Amazon Grid displays e g Amazon Ingeneral,onlineandofflinecatalogs complementeachother Slide 7-105 Social Marketing Many? to? manymodel Usesdigitallyenablednetworkstospreadads Blogadvertising Blog advertising Onlineadsrelatedtocontentofblogs Socialnetworkadvertising Social network advertisingAdsonMySpace,Facebook,YouTube,etc. plot of landadvertising G d ti i Downloadableadvergames Placingbrand? nameproductswithingames Slide 7-106 Insight on Society g y Marketing to Children of the Web in the Age of Social Networks g Class Discussion Slide 7-107 Behavioral Targeting Interest? basedadvertising Dataagg regatorsdevelopprofiles Data aggregators develop profiles Searchenginequeries Onlinebrowsinghistory O li b i hi Offlinedata(income,education,etc. ) d Informationsoldto3rd partyadvertisers,whodeliver adsbasedonprofile Adexchanges hidingconcerns acy co ce s Consumerresistance Slide 7-108Mixing Off-line & Online Marketing Communications g Mostsuccessfulmarketingcampaigns M t f l k ti i incorporatebothonlineandofflinetactics Offlinemarketing crowdtraffictoWebsites Drive traffic to Web sites Increaseawarenessandbuildbrandequity Consumerbehaviorincreasinglymulti? channel 60%consumersresearchonlinebeforebuyingoffline % y g Slide 7-109 Insight on Business g Are the Very Rich Different From You and Me? Class Discussion Slide 7-110 Online Marketing Metrics Lexicon Measuringaudiencesizeormarketshare Impressions I i Click? throughrate(CTR) View? hroughrate(VTR) Vi th h t (VTR) Hits Pageviews P i Stickiness(duration) Uniquevisitors Loyalty devote Recency Slide 7-111 Online Marketing Metrics ( contd) renewalofvisitor Conversion of visitor tocustomer Acquisitionrate q Conversionrate Browse? to? buy? ratio View? to? cartratio Vi t t ti Cart mutationrate Checkoutconversionrate Checkout conversion rate Abandonmentrate belongingsrate Attritionrate E mailmetrics E? mail metrics Openrate deliveryrate Delivery rate Click? throughrate (e mail) (e? mail) Bounce? backrate Slide 7-112 Online Consumer Purchasing ModelFigure7. 8 Slide 7-113 How Well Does Online Adv. Work? lastmeasuredbyROIonadcampaign Highestclick? throughratesSearchengineads, Permissione mailcampaigns Permission e? mail campaigns Richmedia,videointeractionrateshigh Onlinechannelscomparefavorablywithtraditional Mostpowerfulmarketingcampaignsusemultiple Most powerful marketing campaigns use multiple channels,includingonline,catalog,TV,radio, newspapers,stores newspapers, stores Slide 7-114 Comparative Returns on Investment Figure7. 9 Slide 7-115 Costs of Online Advertising PricingmodelsBarter Costperthousand(CPM) Co stperclick(CPC) Costperaction(CPA) Cost per action (CPA) Onlinerevenuesonly Salescanbe straightwaycorrelated Sales can be directly correlated Bothonline/offlinerevenues Offlinepurchasescannot eerbedirectlyrelatedtoonline Offli h t l b di tl l t dt li campaign Ingeneral,onlinemarketingmoreexpensiveonCPM In general online marketing more expensive on CPM basis,butmoreeffective Slide 7-116 Web station Activity Analysis b i i i l i Figure7. 10 Slide 7-117 Insight on Technology Its 10 P. M. Do You Know Who Is On Your Web Site? Class Discussion Slide 7-118Web Site as Marketing Communications Tool g Websiteasextendedonlineadvertisement W b i d d li d i DomainnameAnimportantrole Domain name An important role Searchengineoptimization Search engine optimization Searchenginesreadjustment KeywordsinWebsitedescription K d i W b it d i ti Metatagandpage human actionkeywords Linkstoothersites k h Slide 7-119 Web Site Functionality b i i li Mainfactorsin military capabilityofinterface Utility Ease ofuse TopfactorsincredibilityofWebsites Top factors in credibility of Web sites Designlook Informationdesign/structure g / InformationfocusOrganizationisimportantforfirst timeusers,but Organization is important for first? time users but declinesinimportance Information content becomes major factor attracting Informationcontentbecomesmajorfactorattracting furthervisits Slide 7-120 Factors in believability of Web Sites Figure7. 11 Slide 7-121 Table7. 9 Slide 7-122 Chapter 8 Ethical, Social, and Political Issues in E-commerce E commerce Chapter 8 Ethics, Law, E-commerce Copyright 2010 Pearson Education, Ltd. 2011 Pearson Education, Inc. Slide 8-123 Ethical, Social, Political Issues in E-commerceInternet,likeothertechnologies,can Internet like other technologies can Enablenewcrimes Affectenvironment Threatensocialvalues Costsandbenefits mustinessbe guardedly considered,especiallywhenthereareno id d i ll h h g g clear? cutlegalorculturalguidelines Slide 8-124 Model for Organizing Issues IssuesraisedbyInternetande? commercecanbeviewedatindividual, social,and semi semipoliticallevels social and political levels Fourmajorcategoriesof smothers Four major categories of lie withs Informationrights belongingsrights Property rights cheek worldly concern serioustyandwelfare Slide 8-125Moral Dimensions of Internet Society M l Di i f I S i Figure8. 1 Slide 8-126 Basic Ethical Concepts i hi l Ethics Studyofprinciplesusedtodeterminerightand aggrievecoursesof action Responsibility p y Accountability Liability Lawspermittingindividualsto rememberdamages Dueprocess Lawsareknow,understood Laws are known understood Abilitytoappealtohigherauthoritiestoensurelawsusecorrectly Slide 8-127 Analyzing Ethical Dilemmas l i hi l il Processforanalyzingethicaldilemmas 1. 2. 3. 3 4. 5. Identifyandclearly expoundthefacts Definetheconflictordilemmaandidentifythe y higher? rdervaluesinvolved Identifythestakeholders Identify the stakeholders Identifytheoptionsthatyoucan moderately take t k Ide ntifythepotentialconsequencesofyour options Slide 8-128 prospect Ethical Principles GoldenRule Universalism SlipperySlope CollectiveutilitarianPrinciple RiskAversion Ri k A i NoFreeLunch TheNewYorkTimesTest TheSocial geldRule Slide 8-129 Privacy & Information Rights Privacy Moralrightofindividualstobeleftalone,free fromsurveillanceorinterferencefromother individualsororganizations Information concealment p y Subsetofprivacy IncludesThe occupythatcertaininformationshouldnotbe equanimousatall Theclaimofindividualstocontroltheuseofwhatever h l i f i di id l l h f h informationiscollectedaboutthem Slide 8-130 Privacy & Information Rights (cont. ) Majorethicalissuerelatedtoe? commerce andprivacy d i Underwhatconditionsshouldweinvadethe privacyofothers? Majorsocialissue j Developmentofexpectationsofprivacyand privacynorms privacy norms Majorpoliticalissue Developmentofstatutesthatgovernrelations D l t f t t t th t l ti betweenrecordkeepersandindividuals Slide 8-131 Information Collected at E-commerce SitesDatacollectedincludes Personallyidentifiableinformation(PII) Anonymousinformation Anonymous information Typesofdatacollected yp Name,address,phone,e? mail,socialsecurity Bankand character referenceaccounts,gender,age,occupation, B k d di d i education penchantdata,transactiondata,clickstreamdata, browsertype Slide 8-132 Social Networks & Privacy Socialnetworks Encouragesharingpersonaldetails Poseunique repugntomaintaining privacy Facebook sBeacon course of instruction Facebooks Beacon program Facebook sTermsofServicechange Facebooks Terms of Service change Slide 8-133 Profiling & Behavioral Targeting ProfilingCreationofdigitalimagesthatcharacterizeonlineindividualand groupbehavior Anonymousprofiles A fil Personalprofiles Personal profiles Advertisingnetworks TrackconsumerandbrowsingbehavioronWeb T k db i b h i W b Dynamicallyadjustwhatuserseesonscreen Buildand renovateprofilesofconsumers Googles AdWords program Slide 8-134 Profiling & Behavioral Targeting (contd ) Deep parcel of landinspection Businessperspective Webprofilingservesconsumersandbusinesses Increaseseffectivenessofadvertising,subsidizingfree content Enablessensingofdemandfornewproductsandservices CriticsperspectiveUnderminesexpectationofanonymityandprivacy Consumersshowsignificantoppositiontounregulated solicitationofpersonalinformation Enablesweblining Slide 8-135 Internet & Government Invasions of Privacy miscellaneouslawsstrengthenabilityoflawenforcement agenciestomonitorInternetuserswithout i i I ih knowledgeand nearlytimeswithoutjudicialoversight CALEA,PATRIOTAct,Cyber security measureEnhancementAct, Homeland protective coverAct Governmentagenciesarelargestusersofprivate sectorcommercialdatabrokers sector commercial data brokers RetentionbyISPsofuserdataaconcern Slide 8-136Legal Protections InU. S. ,privacyrightsexplicitlygrantedor derivedfrom Constitution Constitution FirstAmendment freedomofspeechandassociation FourthAmendment unreasonablesearchand ictus F th A d t bl h d i FourteenthAmendment dueprocess Specificstatutesandregulations( federaland Specific statutes and regulations (federal and state) universallaw Slide 8-137 Informed accord U. S. firmscangatherandredistribute transactioninformationwithoutindividuals i i f i ih i di id l informed take on IllegalinEurope Informedconsent favor? in Opt out Opt? out ManyU. S. ? commercefirmsmerelypublishinformation p practicesaspartofprivacypolicywithoutprovidingfor p p yp y p g anyformofinformedconsent Slide 8-138 FTCs elegant Information practices Principles FederalTrade commissioning Federal Trade Commission ConductsresearchandrecommendslegislationtoCongress delightfulInformationPracticePrinciples(1998) Fair Information Practice Principles (1998) Notice/ sense(Core) Choice/Consent(Core) Choice/Consent (Core) Access/Participation Security Enforcement Guidelines,notlaws Guidelines not laws Slide 8-139 FTCs Fair Information Practice PrinciplesNotice/Awareness i / Sitesmustdiscloseinformationpract icesbefore collectiondata. Includes Sit t di l i f ti ti b f ll ti d t I l d identificationofcollector,usesofdata,otherrecipientsofdata,natureof collection(active/inactive),voluntaryorrequired,consequencesofrefusal,and stepstakentoprotectconfidentiality,integrity,andqualityofthedata Choice/Consent Theremustbeachoiceregimeinplaceallowingconsumerstochoosehow theirinformationwillbeusedfor alternatepurposesotherthansupporting thetransaction,includinginternaluseandtransfertothirdparties.Opt? in/Opt? outmustbeavailable. Consumersshouldbeableto canvasandcontesttheaccuracyand completenessofdatacollectedabouttheminatimely,inexpensiveprocess. Access/Participation ccess/ a c pa o Security y Enforcement Datacollectorsmusttakereasonablestepstoassurethatconsumer informationisaccurateandsecurefromunauthorizeduse. TheremustbeinplaceamechanismtoenforceFIP principles. Thiscaninvolveself? regulation,legislationgivingconsumerslegal remediesforviolations,orfederalstatutesandregulation. di f i l ti f d l t t t d l ti Slide 8-140FTC Recommendations Online Profiling Principle p Notice Recommendation Complete foiltouserbyprovidingdisclosureandchoiceoptions onthehostWebsite. Robust calling cardforPII(time/placeofcollection beforecollectionbegins). pass alongandconspicuousnoticefornon PII. beforecollectionbegins). Clearandconspicuousnoticefornon? PII. Opt? inforPII,opt? outfornon? PII. Noconversionofnon? PIItoPIIwithout consent. Opt? outfromanyorallnetworkadvertisersfromasinglepage consent Opt out from any or all network advertisers from a single page providedbythehostWebsite.Reasonableprovisionstoallowinspectionandcorrection. Reasonableeffortstosecureinformationfromloss,misuse,orimproper access. Donebyindependentthirdparties,suchassealprogramsandaccounting Done by independent third parties such as seal programs and accounting firms. medicaltopics, innerbehaviororsexualorientation,oruseSocialSecurity medical topics sexual behavior or sexual orientation or use Social Security numbersfor profiling. Slide 8-141 Choice Access Security EnforcementRestricted arrangement Advertisingnetworkswillnotcollectinformationabout warmfinancialor European Data Protection Directive PrivacyprotectionmuchstrongerinEuropethanU. S. Europeanapproach superandregulatoryinnature p g y EuropeanCommissionsDirectiveonDataProtection (1998) (1998) StandardizesandbroadensprivacyprotectioninEuropeanUnion countries DepartmentofCommercesafeharborprogram ForU. S. firmsthatwishtocomplywithDirective Slide 8-142 Private Industry Self-RegulationSafeharborprograms Privatepolicymechanismtomeetobjectivesof Pi t li h i t t bj ti f governmentregulationswithoutgovernmentinvolvement e. g. Privacysealprograms e g Privacy seal programs Industryassociationsinclude OnlinePrivacy confederacy(OPA) NetworkAdvertisingInitiative(NAI) CLEARAdNoticeTechnicalSpecifications Privacyadvocacygroups Emergingprivacyprotectionbusiness Slide 8-143 Insight on Business Chief Privacy Officers hi f i ffi Class Discussion Slide 8-144 Technological Solutions Spyware,pop? pblockers Cookiemanagers k Anonymousremailers,surfing Anonymous remailers surfing political programforPrivacyPreferences(P3P) Comprehensivetechnologicalprivacyprotectionstandard Worksthroughuser sWebbrowser Works through users Web browser CommunicatesaWebsitesprivacypolicy Comparessitepolicytouserspreferencesortootherstandards suchasFTCsFIPguidelinesorEUsDataProtectionDirective Slide 8-145 How P3P Works k Figure8. 2(A) Slide 8-146 Insight on Technology The Privacy T Th P i Tug of War fW Advertisers Vs. Consumers Class Discussion Slide 8-147 sharp Property Rights Intellectual spaceEncompassesall visibleandintangibleproductsofhumanmind Majorethicalissue j Howshouldwetreatpropertythatbelongstoothers? Majorsocialissue Major social issue Istherecontinuedvalueinprotecting intellectualpropertyinthe Internetage? Majorpoliticalissue HowcanInternetande? commerceberegulatedorgovernedto g g protectintellectualproperty? Slide 8-148 Intellectual Property Pro tection Threemaintypesofprotection Copyright overt Trademarklaw Trademark law Goalofintellectualpropertylaw Balancetwocompetinginterests publicand B l t ti i t t bli d privateMaintainingthisbalanceofinterestsisalways M i t i i thi b l fi t t i l challengedbytheinventionofnew technologies Slide 8-149 Copyright Protectsoriginalformsofexpression(butnot ideas)frombeingcopiedbyothersfora ideas) from being copied by others for a periodoftime appearandfeelcopyrightinfringementlawsuits Fairusedoctrine Fair use doctrine DigitalMillenniumCopyrightAct,1998 FirstmajorefforttoadjustcopyrightlawstoInternetage ImplementsWIPOtreatythatmakesit ill-gottentomake, distribute,orusedevicesthatcircumventtechnology? asedprotectionsofcopyrightedmaterials Slide 8-150 Patents concedeowner20? yearmonopolyonideasbehindan invention Machines Man? madeproducts p Compositionsofmatter Processingmethods Inventionmustbenew,non? obvious,novel Encouragesinventors g Promotesdisseminationofnewtechniquesthrough licensin g Stiflescompetitionbyraisingbarrierstoentry Slide 8-151 E-commerce Patents 1998StateStreetBank&Trustv. SignatureFinancial Group Businessmethodpatents Ledto volleyinapplicationfore? commercebusiness L dt l i i li ti f b i methodspatentsMostEuropeanpatentlawsdonotrecognize M tE t tl d t i businessmethodsunlessbasedontechnology Examples AmazonsOne? clickpurchasing DoubleClicksdynamicdeliveryofonlineadvertising Slide 8-152 Trademarks d k Identify,distinguishgoodsandindicatetheir source Purpose p Ensureconsumergetswhatispaidfor/expectedtoreceive Protectowneragainstpiracyandmisappropriation incursion Marketconfusion Badfaith Dilution Behaviorthatweakensconnectionbetweentrademark andproduct Slide 8-153 Trademarks & Internet CybersquattingAnticybersquattingConsumerProtectionAct(ACPA) Cyberpiracy Typosquatting Metatagging M i Keywording y g Deeplinking Framing Slide 8-154 Governance Primaryquestions WhowillcontrolInternetande? commerce? Whatelementswillbecontrolledandhow? What elements wil l be controlled and how? Stagesofgovernanceande? commerce g g GovernmentControlPeriod(19701994) Privatization(19951998) Privatization (1995 1998) Self? Regulation(1995present) GovernmentRegulation(1998present) Slide 8-155 Who Governs E-commerce & Internet? MixedmodeenvironmentSelf? regulation,through vicissitudeofInternetpolicy andtechnicalbodies,co existswithlimited and technical bodies co? exists with limited governmentregulation ICANNDomainNameSystem Internetcouldbeeasilycontrolled, I t t ld b il t ll d monitored,andregulatedfromacentral location Slide 8-156 Taxation E? commercetaxationillustratescomplexityof governanceandlegal powerissues governance and jurisdiction issues U. S. salestaxedbystatesandlocalgovernment MOTO sell E? commercebenefitsfromtaxsubsidy yOctober2007Congressextendstaxmoratoriumfor an redundantsevenyears an additional seven years Unlikelythatcomprehensive, structuredrational approachtotaxationissuewillbe pertinaciousfor approach to taxation issue will be dete rmined for sometimetocome Slide 8-157 Net Neutrality Currently,allInternettraffictreatedequally allactivitieschargedthesamerate,no ll i i i h d h preferentialassignmentofbandwidth Backboneproviderswouldliketocharge differentiatedpricesandrationbandwidth 2010,U. S. ppeals judiciaryruledthatFCChadno authoritytoregulateInternetproviders Slide 8-158 Public Safety & Welfare Protectionofchildrenandstrong g sentimentsagainstpornography leavinglegislationthatwillsurvivecourt P i l i l ti th t ill i t challengeshasproveddifficult Effortstocontrolgamblingandrestrict salesofdrugsandcigarettes sales of drugs and cigarettes Currentlymostlyregulatedbystatelaw UnlawfulInternetGamblingEnforcementAct Slide 8-159 Insight on Society Internet Drug Bazaar Class Discussion Slide 8-160