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Title: Virtual Marketing


1
Virtual Marketing
2
  • Role of the Internet technological
    development,development of e-Commerce, different
    commercial models, diverse roles of websites.
  • Internet strategy virtual value chain
  • dis-intermediation, cybermediaries
  • Business to Business Intranets and Extranets
    communication , recruitment and procurement ,
    exchanges.
  • Consumer behavior flow theory Hoffmans Many
    to- Many model Internet branding and loyalty
    Internet communities how the Internet is
    changing consumer behavior.
  • Internet market research secondary research,
    online focus groups, MEGS , web surveys , Email
    surveys.
  • Internet retailing reducing role of location ,
    online shopping.

3
7. Internet promotion advertising types ,
measurement, effectiveness , integration
affiliation marketing , PR word-on-line
direct marketing. 8. Website design website
design guidelines , best practice , building
traffic. Convergence and future development
interactive TV , mobile internet , PDA ,
groupware , SMS , interactive appliances.
4
Role Of Internet
5
  • Role of Internet
  • With the use of internet, it is possible to
    transmit/receive information containing images,
    graphics, sound and videos. ISP industry can
    offer services as
  • Linking consumers and businesses via internet.
  • Monitoring/maintaining customer's Web sites.
  • Network management/systems integration.
  • Backbone access services for other ISP's.
  • Managing online purchase and payment systems.
  • The internet is designed to be indefinitely
    extendible and the reliability of internet
    primarily depends on the quality of the service
    providers' equipments.

6
  • Benefits of Internet
  • Doing fast business.
  • Trying out new ideas.
  • Gathering opinions.
  • Allowing the business to appear alongside other
    established businesses.
  • Improving the standards of customer
    service/support resource.
  • Supporting managerial functions.
  • Limitations
  • Security
  • Privacy
  • Threats Hackers, viruses etc.

7
  • Managing in the Virtual World - Market Space
  •  
  • What is Market Place
  • Physical World of Resources to create products/
    services
  •  What is Marketspace
  • Virtual World of Info. that complements/
    substitutes the physical world

8
Business have been looking for ways to increase
their profits and market share . The search for
more efficient ways of doing business has been
driving another revolution in the conduct of
business .This revolution is known as electronic
commerce which is any purchasing or selling
through an electronic communications medium.
Business planners in institutions and
organizations now see technology not only as a
supportive cofactor, but as a key strategic
tool. They see electronic commerce as a wave of
future. Information technology has
revolutionized and digitalized economic activity
, and made it a truly global phenomenon .One of
the most visible icons of the IT Revolution is
the internet the world wise web. Which is a
gigantic anarchic network of computers world wide
, which is essentially used for communicating ,
interaction , interactive long distance computing
and exchange of information giving rise to a host
of applications from military and government to
business , education and entertainment.
9
E-commerce exists because of internet. It has
been born on the net and is growing with the net
. It involves carrying business on and through
the net . E-commerce is a product of the digital
economy. It is a source of a paradigm shift , in
redefining technology, individual and global
societies , as well as national and global
economies. Electronic commerce is a symbolic
integration of communications , data management ,
and security capabilities to allow business
applications within different organizations to
automatically exchange information related to the
sale if goods and services . Communication
services support the transfer of information from
the originator to the recipient. Data
management services define the exchange format of
the information.Security mechanisms authenticate
the source of information, guarantee the
integrity of the information received , prevent
disclosure of information to inappropriate users
, and document that the information was received
by the intended recipient.
10
Prior to the development of e-commerce, the
process of marketing and selling goods was a
mass-marketing and sales-force driven process .
Customers were viewed as passive targets of
advertising campaigns .Selling was conducted in
well-insulated channels .Consumers were trapped
by geographical and social boundaries, unable to
search widely for the best price and quality
. E-commerce has challenged much of this
traditional business thinking.
11
E-Commerce Defined The use of internet and the
WEB to transact business . More formally ,
digitally enabled commercial transactions
between and among organizations and
individuals. Electronic commerce is commerce
via any electronic media , such as TV,fax, and
online networks.Internet-based commerce makes use
of any Internet facility and service. Web-based
commerce focuses on the opportunity of the World
Wide Web apparatus , in particular , its ubiquity
and its ease of use .
12
  • Benefits/Features of E-Commerce
  • Electronic commerce increases the speed,accuracy,
    and efficiency of business and personal
    transactions. The benefits of E-commerce include
    the following
  • Ubiquity E-commerce is ubiquitous, meaning that
    it is available just about everywhere , at all
    times.It liberates the market from being
    restricted to a physical space and makes it
    possible to shop from your desktop, at home, at
    work , or even from your car using mobile
    commerce .From customer point of view , ubiquity
    reduces transaction costs the costs of
    participating in a market.To transact it is no
    longer necessary to spend time and money
    traveling to market.At a broader level, the
    ubiquity of e-commerce lowers the cognitive
    energy required to transact in a marketplace .
    Cognitive energy refers to the mental effort
    required to complete a task.

13
  • Global Reach E-commerce technology permits
    commercial transactions to cross cultural and
    national boundaries far more conveniently and
    cost effectively than is true in traditional
    commerce.As a result, the potential market size
    for e-commerce merchants is roughly equal to the
    size of the worlds online population.The total
    number of users or customers an e-commerce
    business can obtain is a measure of its reach.
  • Universal Standards The technical standards for
    conducting e-commerce , are universal standards
    they are shared by all nations around the world.
    The universal technical standards of e-commerce
    greatly lower the market entry costs - the cost
    merchants must pay just to bring their goods to
    market. At the same time , for consumers ,
    universal standards , reduce search cost the
    effort required to find a suitable products.

14
  • Richness Information richness refers to the
    complexity and content of a message.
  • Interactivity E-commerce technologies are
    interactive , meaning they allow for two-way
    communication between merchant and consumer .It
    allows an online merchant to engage a consumer in
    ways similar to a face-to face experience , but
    on a much more massive , global scale.
  • Information Density the internet and the Web
    vastly increase information density the total
    amount and quality of information available to
    all market participants , consumers, and
    merchants alike.E-commerce technologies reduce
    information collection, storage , processing ,
    and communication costs .At the sale time, these
    technologies increase greatly, the accuracy and
    timeliness of information-making information more
    useful and important than ever.As a result
    information becomes more plentiful,cheaper and of
    higher quality.

15
  • Personalization/Customization E-commerce
    technologies permit personalization merchants
    can target their marketing messages to specific
    individuals by adjusting the message to a
    persons name,interests , and past
    purchases.The technology also permits
    customization changing the delivered product or
    service based on a users preference or prior
    behavior.Given the interactive nature of
    e-commerce technology, a great deal of
    information about the consumer can be gathered in
    the marketplace at the moment of purchase.With
    the increase in information density , a great
    deal of information about the consumers past
    purchases and behavior can be stored and used by
    online merchants.The result is increase in the
    level of personalization and customization.

16
  • Types of E-Commerce
  • There are different types of e-commerce and many
    different ways to characterize these types .
  • The five major types of e-commerce are
  • B2C
  • B2B
  • C2C
  • P2P
  • M-Commerce

17
B2C (Business-to-Consumer) The most commonly
discussed type of e-commerce is
Business-to-Consumer (B2C) e-commerce, in which
online business attempt to reach individual
consumers is done .It has grown exponentially
since 1995, and is the type of e-commerce that
most consumers are likely to encounter . Within
the B2C category there are many different types
of business models portals , online retailers ,
content providers , transaction brokers , market
creators , service providers , and community
providers.
18
B2B (Business-to-Business) In this type of
e-commerce , one business focuses on selling to
other business .It is the largest form of
e-commerce.The ultimate size of B2B e-commerce
could be huge . At first, B2B e-commerce
primarily involved inter-business exchanges , but
a number of other B2B business models have
developed, including e-distribution , B2B service
providers , matchmakers , and info-mediaries that
are widening the use of e-commerce.
19
C2C Consumer-to-Consumer C2C e-commerce
provides a way for consumers to sell to each
other , with the help of an online market maker
such as the auction site .In C2C e-commerce , the
consumer prepares the product for market , places
the product for auction or sale, and relies on
the market maker to provide catalog , search
engine ,and transaction clearing capabilities so
that products can be easily displayed ,
discovered , and paid for.
20
P2P (Peer-to-Peer) Peer-to-Peer technology
enables Internet users to share files and
computer resources directly without having to go
through a central Web server. In peer-to-peers
purest form, no intermediary is required .
Entrepreneurs and venture capitalists have
attempted to adapt various aspects of
peer-to-peer (P2P) e-commerce. E.g. Napster.com
established to aid internet users in finding and
sharing music files (mp3 files). It is partially
peer-to-peer because it relies on a central
database to show which users are sharing music
files.
21
M-commerce Mobile commerce or m-commerce ,
refers to the use of wireless digital devices to
enable transactions on the Web . These devices
utilize wireless networks to connect cell phones
and handheld devices to the Web. Once connected ,
mobile consumers can conduct many types of
transactions , including stock trades, banking,
travel reservations , and more. B2G
Business to Government
22
E-Commerce Business Models A business model is
a set of planned activities (sometimes referred
to as business process) designed to result in a
profit in a marketplace. The business model is at
the center of the business plan. A business plan
is a document that describes a firms business
model . An e-commerce business model aims to use
and leverage the unique qualities of the internet
and the World Wide Web.
23
  • There are Eight Key Ingredients of a Business
    Model
  • Value proposition It defines how a companys
    product or service fulfils the needs of the
    customers.To develop and/or analyze a
    proposition, the following questions need to be
    answered
  • - Why will customers choose to business with
    your firm instead of another company ?
  • - What will your firm provide that other firms
    do not and cannot ?
  • From the consumer point of view ,
    successful e-commerce value propositions include
    personalization and customization of product
    offerings, reduction of product search costs,
    reduction of price discovery costs, and
    facilitation of transactions by managing product
    delivery.

24
2. Revenue model The firms revenue model
describes how the firm will earn revenue ,
generate profits,and produce a superior return on
invested capital.The function of business
organizations is both to generate profits and to
produce returns on invested capital that exceed
alternative investments. The advertising model
A website that offers its users content,
services , and/or products also provides a forum
for advertisements and receives fees from
advertisers. Those websites that are able to
attract the greatest viewer ship and are able to
retain user attention are able to charge higher
advertising rates.
25
Subscription Revenue Model In the
subscription revenue model , a Web site that
offers its users content or services charges a
subscription fee for access to some or all of its
offerings . Transaction fee revenue model
In this model a company receives a fee for
enabling or executing a transaction. (e.g. Online
auction websites taking some commission from
buyer as well as the seller). Sales Revenue
Model In the sales revenue model , a companies
derive revenue by selling goods, information , or
services to customers . E.g. amazon.com
26
Affiliate Revenue model In the affiliate
revenue model , sites that steer business to an
affiliate receive a referral fee or percentage
of the revenue from any resulting sales.
27
3.Market Opportunity The term market
opportunity refers to the companys intended
marketplace and the overall potential financial
opportunities available to the firm in that
marketplace . The market opportunity is usually
divided into smaller market niches. The realistic
market opportunity is defined by the revenue
potential in each of the market niches . 4.
Competitive Environment The firms competitive
environment refers to the other companies
operating in the same marketplace selling similar
products . The competitive environment for a
company is influenced by several factors how
many competitors are active, how large their
operations are , what the market share of each
competitor is , how profitable these firms are ,
and how they price their products.
28
5.Competitive Advantage Firms achieve a
competitive advantage when they can produce a
superior product a superior product and/or bring
the product to market at lower than most, or all,
of their competitors . Firms also compete on
scope .Some firms can develop global markets
while other firms can only develop a national or
regional market .Firms that can provide superior
products at lowest cost on global basis are truly
advantaged. 6. Market strategy Market strategy
is the plan the company put together that
details exactly how the company intend to enter
the market and attract new customers.
29
7.Organizational Development Describes how the
company will organize the work that needs to be
accomplished. 8. Management Team Employees of
the company responsible for making the business
model work.
30
Categorizing E-Commerce Business Models
31
  • Major B2C business models
  • There are a number of different models being used
    in the B2C e-commerce arena . The major models
    include the following
  • Portal -Offers powerful search tools plus an
    integrated package of content services typically
    utilizes a combined subscription/advertising
    revenue/transaction fee model may be general or
    specialized.
  • E-tailer - Online version of traditional
    retailer includes virtual merchants (online
    retail stores) , clicks and mortar e-tailers
    (online distribution channel for a company that
    also has a physical store)catalog merchants
    (online version of direct mail catalog) online
    malls (online version of mall)manufacturers
    selling directly over the Web.

32
  • Content Provider - Information and entertainment
    companies that provide digital content over the
    Web typically utilizes an advertising ,
    subscription ,or affiliate referral fee revenue
    model.
  • Transaction broker - Process online sales
    transactions typically utilizes a transaction
    fee revenue model.
  • Market creator - Uses Internet technology to
    create markets that bring buyers and sellers
    together typically utilizes a transaction fee
    revenue model.
  • Service provider - Offers services online.
  • Community provider - Provides an online
    community of like-minded individuals for
    networking and information sharing revenue is
    generated by referral fees , advertising , and
    subscription.

33
  • Major B2B business models
  • The major business models used to date in B2B
    arena include
  • Hub, also known as marketplace/exchange
    electronic market place where suppliers and
    commercial purchasers can conduct transactions
    may be general (a horizontal marketplace ) or
    specialized (a vertical marketplace) .
  • E-distributor - Supplies products directly to
    individual businesses.
  • B2B service provider - Sells business services
    to other firms.
  • Matchmaker - Link business together , changes
    transaction on usage fees.
  • Infomediary - Gathers information and sells it
    to business .

34
  • Major C2C business models
  • A variety of business models can be found in the
    customer-to-customer e-commerce , peer-to-peer
    e-commerce, and m-commerce areas
  • C2C business models connect consumers with other
    consumers .The most successful has been the
    market creator business model used by eBay.com .
  • P2P business models enable consumers to share
    files and services via Web without common
    servers. A challenge has been finding a revenue
    model that works.
  • M-commerce business models take traditional
    e-commerce models and leverage emerging wireless
    technologies to permit mobile access to the Web.
  • E-commerce enablers business models focus on
    providing the infrastructure necessary for
    e-commerce companies to exist, grow, and prosper.

35
  • Key business concepts and strategies applicable
    to e-commerce
  • Industry structure The nature of players in an
    industry and their relative bargaining power by
    changing the basis of competition among rivals ,
    the barriers to entry , the threat of new
    substitute products , the strength of suppliers ,
    and the bargaining power of buyers.
  • Industry value chains The set of activities
    performed in an industry by suppliers ,
    manufacturers , transporters , distributors and
    retailers that transforms raw inputs into final
    products and services by reducing the cost of
    information and other transaction costs.
  • Firm value chains The set of activities
    performed within an individual firm to create
    final products from raw inputs by increasing
    operational efficiency .

36
  • Business strategy A set of plans for achieving
    superior long-term returns on the capital
    invested in a firm by offering unique ways to
    differentiate products , obtain cost advantages ,
    compete globally , or compete in a narrow market
    or product segment.

37
Technology Infrastructure for E-Commerce The
Internet and World Wide Web E-Commerce
Infrastructure
38
The Internet Technology Background The
Internet is an interconnected network of
thousands of networks and millions of computers
(sometimes called as host computers or just
hosts) linking business , educational
institutions , government agencies , and
individuals together .The internet provides
services such as e-mail, news-groups, shopping,
research , instant messaging , music videos and
news . No one organization controls the Internet
or how it functions , nor it is owned by anybody
, yet it has provided the infrastructure for a
transformation in commerce, scientific research,
and culture .The word internet is derived from
the word internetwork or the connecting together
of two or more computer networks.The World Wide
Web is one of the internets most popular
services, providing access to over one billion
Web pages , which are documents created in a
programming language called HTML and which can
contain text , graphics , audio, video, and other
objects, as well as hyperlinks that permit a
user to jump from one page to another.
39
The Internet Key Technology Concepts Based in
the definition , the internet means a network
that uses the IP (Internet Protocol) addressing
scheme, supports the Transmission Control
Protocol (TCP), and ,makes services available to
users much like a telephone system makes voice
and data services available to the public. Behind
this formal definition are three extremely
important concepts that are the basis for
understanding the Internet packet switching ,
the TCP/IP communications protocol , and
client/server computing .Although the Internet
has evolved and changed dramatically, these three
concepts are at the core of how the Internet
functions today and are the foundation for
Internet.
40
Packet Switching It is a method of slicing
digital messages into parcels called packets
sending the packets along different
communication paths as they become available ,
and then reassembling the packets once they
arrive at their destination .Prior to the
development of packet switching , early computer
networks used leased , dedicated telephone
circuits to communicate with terminals and other
computers. In packet-switched networks , messages
are first broken down into packets.Appended to
each packet are digital codes that indicate a
source address(the origination point) and the
destination address, as well as sequencing
information and error-control information for the
packet.Rather than being sent directly to the
destination , in a packet network , the packets
travel from computer to computer until they reach
their destination. The computers are called
Routers . Routers are special purpose computers
that interconnect thousands of different
computer networks that make up the internet and
route packets along to their ultimate destination
as they travel.To ensure that packets take the
best available path towards their destination,
the routers use computer programs called routing
algorithms. Packet switching makes full use of
almost all available communication lines and
capacity.If some lines are disabled or too busy ,
the packets can be sent on any available line
that eventually leads to the destination point.
41
TCP/IP TCP refers to the Transmission Control
Protocol . IP refers to the Internet Protocol. A
protocol is a set of rules for formatting ,
ordering , compressing , and error checking
messages.It may also specify the speed of
transmission and means by which devices on the
network will indicate they have stopped sending
and/or receiving messages. Protocols can be
implemented in either hardware or software
.TCP/IP is implemented in Web software called
server software .It is the agreed upon protocol
for transmitting data packets over the Web.TCP
establishes connections among sending and
receiving Web computers , handles the assembly of
packets at the point of transmission , and their
reassembly at the receiving end.
42
IP addresses TCP handles the packetizing and
routing of Internet messages . IP provides the
Internets addressing scheme .Every computer
connected to the Internet must be assigned an
address otherwise it cannot send or receive TCP
packets .When a user signs onto the Internet
using a dial-up telephone modem, the computer is
assigned a temporary address by the Internet
service provider. Internet addresses known as IP
addresses , are 32-bit numbers that appear as a
series of four separate numbers marked off by
periods such as 201.61.186.227. Each of the four
numbers can range from 0-255. This dotted quad
addressing scheme contains up to 4 billion
addresses of the computer ( 2 to the 32nd
power).The leftmost number typically indicates
the network address of the computer , while
remaining numbers help to identify the specific
computer within the group that is sending (or
receiving) messages.
43
Domain Names and URLs Most people cannot
remember 32-bit numbers .IP addresses can be
represented by a natural language convention
called domain names.The domain name system (DNS)
allows expressions to stand for numeric IP
addresses. Uniform Resource Locators (URLs ) are
addresses used by Web browsers to identify the
location of content on the web, also use domain
names as a part of the URL.A typical URL contains
the protocol to be used when accessing the
address, followed by its location. The protocol
used is HTTP (Hypertext Transfer Protocol).A URL
can have more than one paths.
44
Client/Server computing It is a model of
computing in which very powerful personal
computers called Clients are connected together
in a network together with one or more server
computers.These clients are sufficiently powerful
to accomplish complex tasks such as displaying
rich graphics , storing large files, and
processing graphics and sound files , all on a
local desktop or hand held device. Servers are
networked computers dedicated to common functions
that their client machines on the network need.
Such as storing files , software applications,
utility programs such as Web connections , and
printers.
45
Other Internet Protocols SMTP Simple mail
transfer protocol POP Post Office
Protocol IMAP Internet message access
protocol FTP File Transfer Protocol for
transferring files SSL Secure Socket Layers
for Security
For Sending Email
46
E-Commerce Security Environment
47
It is difficult to estimate the actual amount of
e-commerce crime for a variety of reasons . In
many instances , e-commerce crimes are not
reported because companies ear of losing the
trust of legitimate customers. And even when
crimes are reported , it may be hard to quantify
the losses incurred .The most serious losses
involved theft of proprietary information and
financial fraud.Online credit card fraud is
perhaps the most high profile form of e-commerce
crime. In some cases , the criminals aim to just
deface , vandalize and/or disrupt a Web site,
rather than steal goods or services . The cost of
such an attack includes not only the time and
effort to make repairs to the site but also
damage done to the sites reputation and image as
well as revenues lost as a result of the attack.
Estimates of the overall cost of the various
forms of cyber vandalism range into billions.
48
What is Good E-Commerce Security ? What is a
secure commercial transaction ? Anytime a user
goes into a market place , he/she takes risks,
including the loss of privacy (information about
what you purchased).The prime risk as a customer
is that you do not get what you paid for.As a
merchant in the market , you dont get paid for
what you sell,.Thieves take merchandise and then
either walk off without paying anything , or pay
you with a fraudulent instrument , stolen credit
card , or forged currency. Burglary, breaking and
entering , embezzlement , trespass , malicious
destruction, vandalism all crimes in
traditional commercial environment are also
present in e-commerce.However , reducing risks in
e-commerce is a complex process that involves new
technologies, organizational policies and
procedures, and new laws and industry standards
that empower law enforcement officials to
investigate and prosecute offenders.
49
  • Security Threats in the E-Commerce Environment
  • From the technology perspective , there are three
    key points of vulnerability when dealing with
    e-commerce the client, the server and the
    communication pipeline.
  • Malicious Code
  • It includes a variety of threats such as viruses
    , worms , Trojan horses , and bad applets . A
    virus is a computer program that has the ability
    to replicate or make copies of itself , and
    spread to other files. In addition to the ability
    to replicate , most computer viruses deliver a
    payload(destroying files,reformatting the
    computers hard drive or causing programs to rum
    improperly.

50
A Trojan horse does something other than expected
. The Trojan horse is not itself a virus because
it does not replicate , but is often a way for
viruses or other malicious code to be introduced
into a computer system. Bad applets also referred
to as malicious mobile code , are expected to
become an increasing problem as java and Active X
controls become more commonplace. Malicious code
is a threat to the systems integrity and
continued operation, often changing how a system
functions or altering documents created on the
system . In many cases the user is unaware of
the attack until it affects the system and the
data on the system.
51
  • Hacking and Cyber vandalism
  • A hacker is an individual who intends to gain
    unauthorized access to a computer system . Within
    the hacking community , the term cracker is
    typically used to denote a hacker with criminal
    intent although in the public press , the terms
    hacker and cracker are used interchangeably.
    Hackers and crackers get unauthorized access by
    finding weaknesses in the security procedures of
    Web sites and computer system , often taking
    advantages of various features of internet that
    make it an open system that is easy to use.
  • Cyber vandalism is intentionally
    disrupting,defacing , or even destroying the
    site.
  • Group of hackers called as tiger teams are
    used by corporate security departments to test
    their own security measures.By hiring hackers to
    break into the system from outside , the company
    can identify weaknesses in the computer systems.

52
  • Credit Card Frauds
  • The fear that the credit card information will be
    stolen frequently prevents the users from making
    online purchases . In e-commerce the greatest
    threat to the consumer is that the merchants
    server with which the customer is transacting
    will lose the credit information to permit it
    to be diverted for a criminal purpose.Credit card
    files are the major targets of Web site hackers.

53
  • Dimensions of E-Commerce security
  • There are six dimensions to e-commerce security
  • Integrity
  • No repudiation
  • Authenticity
  • Confidentiality
  • Privacy
  • Availabilty

54
Integrity refers to the ability to ensure that
information being displayed on a Web site , or
transmitted or received over the internet , has
not been altered in any way by an unauthorized
party.e.g. an unauthorized person intercepts and
changes the contents of an online communication ,
such as by redirecting a blank wire transfer into
a different account , the integrity of the
message has been compromised because the
communication no longer represents what the
original sender intended . Non repudiation
refers to the ability to ensure that e-commerce
participants do not deny (I.e. repudiate) their
online actions.
55
Authenticity refers to the ability to identify
the identity of a person or entity with whom you
are dealing on the internet. How does the
customer know that the Web site operator is who
it claims to be ? How can the merchant be
assured that the customer is really who he/she
say he/she is ? Someone who claims to be someone
they are not is spoofing or misinterpreting
themselves. Confidentiality refers to the ability
to ensure that messages and data are available
only to those who are to view them .
Confidentiality is something confused with
privacy , which refers to the ability to control
the use of information a customer provides about
himself or herself to an e-commerce
merchant. Availability refers to the ability to
ensure that an e-commerce site continues to
function as intended .
56
E-Commerce security is designed to protect these
six dimensions.When any one of them is
compromised , it is a security issue.
57
Security of Data During Transmission Business
with computers containing confidential data
connected to the Internet do not want the public
to have unauthorized access to specific parts of
their files at the same time they might want the
public to have access to specific parts of their
information base.Business that offer services
that require payment by methods including credit
card transactions need to be cautious .If these
transactions are not secured, hackers can access
the users account information.
58
Internet Strategy
59
What is Value Chain? Value chain is a high-level
model of how businesses receive raw materials as
input, add value to the raw materials through
various processes, and sell finished products to
customers. Today's Challenges Old-fashioned
command-and-control companies were merely trying
to manage the "white space" in their
organizational charts. Today's companies must
manage the white space in entire value chains.
A critical pre-requisite for success in digital
economy is the implementation of an integrated
value chain that extends across - and beyond -
the enterprise.
60
  • In an information society the value of
    information has become significant. Every
    business has an information component in its
    product/services and operations. For example,   a
    firm may have an information product (eg
    newspaper) or an information intensive operations
    (eg insurance). The proportion of information
    content varies from industry to industry. In some
    industries information plays a core role while in
    others it plays a peripheral role. Significant
    transformations can be expected in industries
    where information plays a core role. For example,
    industries such as publishing, music,financial
    services, entertainment, etc., where information
    plays a core role are undergoing significant
    transformation while in other industries such as
    manufacturing the transformation is more limited.

61
  • New information technologies and the ubiquitous
    internet have enabled cheap and easy methods for
    data storage, analysis, and distribution of
    information. They have created new opportunities
    to generate value from the organization's
    information.  Some firms tend to exploit the
    information content more than the other. The
    concept of marketspace is to examine the
    opportunities for extracting value from the
    information assets of organization.

62
  • Traditionally there has been a trade off between
    reach and richness. Reach refers to breadth of
    audience and richness refers to the quality of
    information in terms of delivery mode, media
    choice, information content and amount, relevance
    etc. New technologies are changing the tradeoffs
    causing changes in industry structure. For
    example, we have always used standard information
    in a broadcast mode (eg TV) for reaching a broad
    audience. However, with the internet we have the
    possibility of providing customized information
    in an interactive mode to a broad audience.

63
  • Some companies operate in marketplace, some in
    market-space, and others in both. Managers have
    to create value in both physical and virtual
    world to sustain the competitive advantage. Value
    is created by gathering, organizing, selecting,
    synthesizing, and distributing information. The
    ability to create value with information may
    bring in competitors from outside the industry
    who have expertise with handling information. A
    few examples are online travel agents, stock
    brokers, online auto dealers, online retailers
    etc.

64
  • What is physical Value chain
  • Series of value adding activities that link the
    supply side to demand side
  • Supply side - inbound logistics, production,
    design etc
  • Demand side - outbound logistics, marketing,
    sales, service etc.
  • Information is a supporting element to control
    and monitor the processes in chain

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66
  • Virtual Value Chain
  • Create value with information in the Marketspace
  • It may mirror the physical value chain or have
    totally new products
  • It will require a change in way of thinking
  • Senior managers need to understand about virtual
    value chain and how to exploit it
  • Marketing managers have to learn to market in
    marketspace
  • Value created by gathering, organzing, selecting,
    synthesizing, and distributing info

67
Stages of Transformation from Marketplace to
Marketspace Firms go through various stages of
transformation in the use of IT. They start using
IT as a control system to monitor performance
(visibility stage) and progress into exploiting
the information in the value chain. Finally, they
tend to find new value in the information to
create new products/services or add value to
existing product.
68
  •  Visibility
  • Info. Systems are considered as control systems
  • Improve efficiency thro' better monitoring
  • Reduce cost
  •  Mirroring Capability
  • substitute virtual activities for physical
    activities
  • create parallel value in market space

69
  •  New Customer Relationships
  • add value to products/ services
  • draw on info. in virtual value chain to deliver
    value to customers
  • Exploit the value matrix
  • gather
  • organize
  • select
  • synthesize
  • Distribute

70
  •  Value for a product is dependent on
  • Information Content
  • Context - the way it is presented
  • Infrastructure - to distribute the information.

71
Dis-intermediation
72
Disintermediation is giving the user or the
consumer direct access to information that
otherwise would require a mediator, such as a
salesperson, a librarian, or a lawyer. Observers
of the Internet and the World Wide Web note that
these new technologies give users the power to
look up medical, legal information, travel, or
comparative product data directly, in some cases
removing the need for the mediator (doctor,
lawyer, salesperson) or at the very least
changing the relationship between the user and
the product or service provider.
73
In economics, disintermediation is the removal
of intermediaries in a supply chain cutting out
the middlemen". Instead of going through
traditional distribution channels, which had some
type of intermediate (such as a distributor,
wholesaler, broker, or agent), companies may now
deal with every customer directly, for example
via the Internet. One important factor is a drop
in the cost of servicing customers directly.
74
Disintermediation initiated by consumers is
often the result of high market transparency, in
that buyers are aware of supply prices direct
from the manufacturer. Buyers bypass the
middlemen (wholesalers and retailers) in order to
buy directly from the manufacturer and thereby
pay less. Buyers can alternatively elect to
purchase from wholesalers. Often, a B2C
intermediary functions as the bridge between
buyer and manufacturer.
75
  • To illustrate, a typical B2C supply chain is
    composed of four or five entities (in order)
  • Supplier
  • Manufacturer
  • Wholesaler
  • Retailer
  • Buyer

76
In the past, traditional channels of
distribution have always had a place for the
middleman. It was through these third party
channel partners that many companies could bring
their products or services to market in the most
economical manner possible. Middlemen have
handled not only the sale of product, but also a
number of other functions including, lead
generation, specification of equipment,
assistance with credit approval, warehousing and
aftermarket support.
77
  • A middleman can take a number of different
    forms. He or she could be a wholesaler,
    distributor, retailer, sales agent or a
    manufacturer's representative. Their sole purpose
    is to unite the producer with the customer. Their
    value is in the ability to find the customer,
    define the customer's needs, close the sale and
    support the manufacturer.

78
However, as a result of advancing technologies
and the proper application of Internet
strategies, it is no longer business as usual for
the middleman. The Internet changes all the
rules. For some established businesses these
changes, such as reverse auctions, marketplaces,
industry portals and virtual buying groups,
represent a clear threat to the status quo
enjoyed by many performing middleman functions.
This threat is continuing to lend credence to the
feared concept of dis-intermediation.
79
New methods and new technologies are being
developed everyday that make it possible to drop
the third party middlemen and reduce
transactional costs. When the middleman is
deleted from the process or dis-intermediated, he
or she is not party to the profits previously
generated in the transaction. The end result is
their ultimate demise. 
80
But has the middleman been eliminated and
replaced with the World Wide Web? Or has their
role been morphed into a greater opportunity as a
result of the Internet? By re-examining their
business models many of these entrepreneurs have
re-established themselves in the business cycle
and elevated their value in the eyes of both
their customers and the manufacturers they
represent. 
81
The Destruction of the Middleman The Internet
has changed all the rules and has posed a threat
for many established distribution channels. At
risk are the agents and distributors that man
these channels. New business models such as
reverse auctions, industry portals and virtual
buying groups have emerged lending credence to
the feared concept of dis-intermediation. 
82
e-Commerce pundits have long predicted the
demise of these middlemen as a result of going
direct. In some cases these predictions have
become realities. Travel agents have already
experienced the shortening of supply chains as
airlines encourage their customers to purchase
tickets directly from their web site. Many
airlines have provided lucrative incentives for
customers that book on-line rather than through
travel agents. The reason for this online push is
simple Airlines save an estimated 15 - 25 per
transaction when travelers use their Web sites.
83
The manufacturers own web site can pose a threat
to the middleman as well. Leads generated here
can be handled directly by the principal and
eliminate the need for the middleman. Aftermarket
parts are especially vulnerable to this
occurrence. Most consumers refer to the nameplate
on equipment they are dealing with then contact
the web site of the manufacturer when they have a
need for service or parts replacement. The
middleman is completely circumvented in this
instance and that dramatically affects his
revenue. 
84
  • This may also be the case when a purchaser has
    the need for either a replacement unit or an
    exact match to sit beside an existing piece of
    equipment. The middleman could have sold the
    original equipment and be completely bypassed
    when the customer refers to a manufacturer's web
    site. 

85
Online Market Research
86
Marketing research is often needed to ensure
that we produce what customers really want and
not what we think they want. Research often
help us reduce risks associated with a new
product, but it cannot take the risk away
entirely. It is also important to ascertain
whether the research has been complete. For
example, Coca Cola did a great deal of research
prior to releasing the New Coke, and consumers
seemed to prefer the taste. However, consumers
were not prepared to have this drink replace
traditional Coke.
87
Several tools are available to the market
researchere.g., mail questionnaires, phone
surveys, observation, and focus groups. Surveys
are useful for getting a great deal of specific
information. Surveys can contain open-ended
questions (e.g., In which city and state were
you born? ____________) or closed-ended, where
the respondent is asked to select answers from a
brief list (e.g., __Male ___ Female. Open ended
questions have the advantage that the respondent
is not limited to the options listed, and that
the respondent is not being influenced by seeing
a list of responses. However, open-ended
questions are often skipped by respondents, and
coding them can be quite a challenge. In general,
for surveys to yield meaningful responses, sample
sizes of over 100 are usually required because
precision is essential.
88
Surveys come in several different forms. Mail
surveys are relatively inexpensive, but response
rates are typically quite lowtypically from
5-20. Phone-surveys get somewhat higher response
rates, but not many questions can be asked
because many answer options have to be repeated
and few people are willing to stay on the phone
for more than five minutes. Surveys, as any
kind of research, are vulnerable to bias. The
wording of a question can influence the outcome a
great deal.
89
Focus groups are useful when the marketer wants
to launch a new product or modify an existing
one. A focus group usually involves having some
8-12 people come together in a room to discuss
their consumption preferences and experiences.
The group is usually led by a moderator, who will
start out talking broadly about topics related
broadly to the product without mentioning the
product itself. Focus groups are well suited
for some purposes, but poorly suited for others.
In general, focus groups are very good for
getting breadthi.e., finding out what kinds of
issues are important for consumers in a given
product category.
90
Personal interviews involve in-depth questioning
of an individual about his or her interest in or
experiences with a product. The benefit here is
that we can get really into depth (when the
respondent says something interesting, we can ask
him or her to elaborate), but this method of
research is costly and can be extremely
vulnerable to interviewer bias. Projective
techniques are used when a consumer may feel
embarrassed to admit to certain opinions,
feelings, or preferences. For example, many older
executives may not be comfortable admitting to
being intimidated by computers. It has been found
that in such cases, people will tend to respond
more openly about someone else. Thus, we may
ask them to explain reasons why a friend has not
yet bought a computer, or to tell a story about a
person in a picture who is or is not using a
product. The main problem with this method is
that it is difficult to analyze responses.
91
Observation of consumers is often a powerful
tool. Looking at how consumers select products
may yield insights into how they make decisions
and what they look for. For example, some
American manufacturers were concerned about low
sales of their products in Japan. Observing
Japanese consumers, it was found that many of
these Japanese consumers scrutinized packages
looking for a name of a major manufacturerthe
product specific-brands that are common in the
U.S. (e.g., Tide) were not impressive to the
Japanese, who wanted a name of a major firm like
Mitsubishi or Proctor Gamble. Observation may
help us determine how much time consumers spend
comparing prices, or whether nutritional labels
are being consulted.
92
Physiological measures are occasionally used to
examine consumer response. For example,
advertisers may want to measure a consumers
level of arousal during various parts of an
advertisement. Some cautions should be heeded
in marketing research. First, in general,
research should only be commissioned when it is
worth the cost. Secondly, marketing research
can be, and often is, abused. Managers frequently
have their own agendas (e.g., they either would
like a product to be launched or would prefer
that it not be launched so that the firm will
have more resources left over to tackle their
favorite products). Often, a way to get your way
is to demonstrate through objective research
that your opinions make economic sense.
93
Online Market Research Techniques Market
research involves gathering information that will
help a firm identify potential products and
customers .There are two general types of market
research . Primary research involves gathering
first-hand information using techniques such as
surveys , personal interviews and focus
groups.This type of research is typically used to
gain feedback on brands, products , or new
marketing campaigns where no previous study has
been done.
94
Secondary research relies on existing , published
information as the basis for analyzing the market
. Both primary and secondary research can be
completed online more efficiently , less
expensively , and more accurately than offline.In
addition to two different approaches to market
research , there are two types of data to be
studied . Quantitative data is data that can be
expressed as a number , such as percentage .
Quantitative data can be analyzed using
statistical programs that identify relationship
between certain variables , or factors that
affect how someone responds. Qualitative data is
data that cannot be easily quantified , such as
opinions , survey questions that yield
qualitative responses are analyzed by grouping
responses into similar sub segments based on the
answer given . One type of analysis is content
analysis , which tries to identify the major
categories of responses given.
95
Primary Research Surveys and questionnaires are
the most popular and frequently used market
research tools.Using a survey instrument , which
is a list of questions , researchers can approach
groups of people to ask their views on virtually
any imaginable topic. Online surveys can be
typically be administered more quickly and less
expensively than traditional mail or telephone
surveys.Companies can hire an outside market
research firm to conduct the survey or create and
administer their own . Online surveys also make
it possible to track respondents and follow up
with those who havent yet completed survey,
which help to improve response rates , the
percentage of people who complete a survey. A low
response rate can damage the validity , or
believability , of a surveys results.
96
Feedback forms, which ask users to provide input
regarding a sites operations in a set format ,
are another type of inline survey. Requesting
regular input from site visitors may provide more
qualitative data , which is more difficult to
analyze , but the resulting information can
assist in improving and enhancing site
performance. Personal interviews are another
primary research tool . The interview is
generally guided by a set of questions very
similar to survey instrument. Although it is more
difficult to incorporate personal interviews
within Web sites , it is possible to conduct
research online via live chat or e-mail , with
trained researcher interacting with the study
participants .Personal interviews offer an
opportunity to gather more in-depth information
on a topic.In some cases , personal interviews
are used as second phase of a research project ,
following initial information gathering by survey.
97
Secondary Research It involves gathering
information using WEB sites as the information
source. The Key to being efficient and effective
as a researcher is identifying the WEB sites most
likely to provide answers to the questions posed
in the research .By establishing and agreeing on
the key question to be answered through market
research , as well as why that information will
be useful , researchers can zero in on their
information needs. Understanding how the
information will impact other decisions also
helps to further refine information collection.
98
  • Some popular secondary research tools ( Web
    Sites)
  • Factiva.com
  • Businesswire.com
  • Hoovers.com
  • Localeyes.com
  • Thomasregister.com
  • Corporateinformation.com
  • sec.gov
  • Aol.com (America Online)

99
Online Marketing
100
  • Technologies that support Online Marketing
  • Web transaction logs Records that document user
    activity at the Web site .
  • Transaction logs Coupled with data from
    the registration forms and shopping cart database
    , these represent a treasure trove of marketing
    information for both individual sites and the
    online industry as a whole.
  • Cookies A small text file that Web sites
    place on visitors /client computers every time
    they visit , and during the visit , as specific
    pages visited . Cookies provide Web marketers
    with a very quick means of identifying the
    customer and understanding his or her prior
    behavior at the site.

101
  • Web bugs Tiny graphic files hidden in
    marketing e-mail messages and on Web sites . Web
    bugs are used to automatically transmit
    information about the user and the page being
    viewed to a monitoring server.
  • Databases , data warehouses, data mining , and
    profiling Technologies that allow marketers
    to identify exactly who the online customer is
    and what they want , and then to present the
    customer with exactly what they want, when they
    want it, for the right price.
  • Advertising networks best known for their
    ability to present users with banner
    advertisements based on a database of user
    behavioral data . Specialized ad servers are used
    to store and send users the appropriate banner ad.

102
CRM systems A repository of customer
information that records all of the contacts that
a customer has with a firm and generates a
customer profile available to everyone in the
firm who has a need to know the customer.
103
  • IT enabled marketing and branding strategies
  • Online marketing techniques to online customers
    include permission marketing , affiliate
    marketing , viral marketing , and brand
    leveraging.
  • Online techniques for strengthening customer
    relationships include one-to-one marketing
    customization , transactive content and
    customer service (CRMs,FAQs,live chat ,
    intelligent agents , and automated response
    system).
  • Online pricing strategies include offering
    products and services for free ,versioning ,
    bundling , and dynamic pricing.
  • Strategies to handle the possibility of channel
    conflict.

104
Direct E-mail marketing E-mail marketing
messages sent directly to interested users
(direct e-mail marketing) has proven to be one of
the most effective forms of marketing
communications. The key to effective direct
e-mail marketing is interested users. Direct
e-mail marketing is not spam . SPAM involves
sending unsolicited e-mail to a mass audience of
Internet users who have expressed no interest in
the product . Instead , direct e-mail marketing
messages are sent to an opt in audience of
Internet users who have expressed at one time or
another an interest in receiving messages from
the advertiser. By sending e-mail to an opt-in
audience , advertisers are targeting interested
customers. Because of the comparatively high
response rates and low cost, direct e-mail
marketing is the fastest growing form of online
marketing.
105
The primary cost of e-mail marketing is for the
purchase of the list of names to which the e-mail
will be sent . Due to the cost savings possible
with e-mail , the short time to market , and high
response rates , companies are expected to
increasingly use e-mail to communicate directly
with customers.
106
Online Catalogs Online Catalogs are the
equivalent of paper-based catalog. The basic
function of a catalog is to display the
merchants wares. The electronic version
typically contains a color image of each
available product , a description of the item ,
as well as size , color, material composition ,
and pricing information . While simple catalogs
are , technically , hard coded HTML pages and
graphics displaying softwares , most sites with
more than 15-20 products generate catalog pages
from a product and price database that be easily
changed . Simply by clicking on an order button
at the site , customers can make a purchase
instantly.
107
Public Relations Another marketing
communications tool used to increase awareness of
a site , and potentially boost traffic , is
public relations. Public Relations (PR) involves
communicating with target audiences, pr publics ,
using methods other than advertising . Some of
these methods include publicity (media coverage),
special events , such as a grand opening
celebration or press conference and
publications , such as newsletters and customer
bulletins. Public Relations firms can also
support a Web site by creating promotional
strategies , developing relationships with
reporters and producers of interest to the client
company , proposing articles and TV program
subjects , and generally keeping the press aware
of any good news regarding an online company.
Some firms specialize in dot-coms or have an
online media specialty .The major advantage of
public relations is the low cost relative to
other media exposure.
108
  • Online Marketing Metrics
  • Impression
  • Clickthrough Rate (CTR)
  • Hits
  • Page Views
  • Stickness (Duration)
  • Unique visitors
  • Loyalty
  • Reach
  • Continued

109
9. Recency 10. Acquisition rate 11. Conversion
rate 12. Attrition rate 13. Abandonment rate 14.
Retention rate
110
  • Impressions are the number of times an ad is
    served .
  • Clickthrough
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