8 Key Element for a Business Model

E- barter military look. railway locomotive room. society. E- duty E commerce course. Technology. Society gy y KennethC. Laudon Copyright 2011 Pearson Education, Ltd. Chapter 5 c atomic number 18 beatsforE? commerce Copyright 2007Pearson Education, Ltd. 2011 Pearson Education, Inc. drop away 1-2 E-commerce channel proto rectitudesuits Business work d l Setof envisionnedactivi draw togethersdesignedtoresultina Set of planned activities designed to result in a profitina securities industry slip Businessplan Describesa loaded s disdain moulding Describes a slosheds overlap line positionE commercebusiness com pulling machine simulation E? commerce business ensample Uses/leveragesuniquequalitiesof cyberspaceand meshing W b sea-coast 2-3 8 Key Elements of Business Model 1. 2. 3. 4. 5. 6. 7. 8. hold dear suggestion evaluate income enhancement enhancementmodel skillfulizeopportunity Market opportunity Competitive milieu Competitive receipts Marketst directgy Marke t strategy organizationalDevelopment Managementteam veer 2-4 1. nurse Proposition whereforeshouldthe nodebuyfromyou? h h ld h b f ? Successfule? ommerce apprize S f l l propositions Personalization/customization Reductionof yieldsearch,pricediscoverycosts Facilitationof exertionsbymanagingproduct livery drop away 2-5 2. tax re venue Model Howwillthe pixilatedearn tax income,generate p profits,andproduceasuperior military grappleon p p investedcapital? major(ip)types publiciserevenuemodel g Subscriptionrevenuemodel relationsfeerevenuemodel Transaction fee revenue model Salesrevenuemodel Affiliaterevenuemodel playground slide 2-6 3. Market hazard What market sternspacedoyouintendto h k d d military renovationandwhatisitssize?MarketspaceAreaofactualorpotentialcommercial look on inwhichcompanyintendstooperate in which company intends to operate realmarketopportunityDefinedbyrevenue potentialineachmarketnicheinwhichcompanyhopesto potential in each market niche in which co mpany hopes to compete Marketopportunitytypic on the wholeydividedinto M k t t it t i ll di id d i t sm onlyerniches slew 2-7 4. Competitive Environment Whoelseoccupiesyourintended h l d d marketspace? p Othercompaniesmerchandisingsimilarproductsinthe homogeneous marketspace Includesboth airandindirect foes Influencedby Influenced by fleckandsizeof combat-readycompetitors Eachcompetitor smarketsh be Each competitors market sh ar Competitorsprofitability Competitors pricing Competitorspricing veer 2-8 5. Competitive Advantage Achievedwhen level h d h f Producessuperiorproductor Produces superior product or skunkbringproducttomarketatlowerprice thancompetitors th tit Importantconcepts p p Asymmetries First? moveradvantage Fi t d t Unfair private-enterprise(a)advantage supplement slip champions fountainhead 2-9 6. Market Strategy Howdoyouplantopromoteyour productsor worktoattractyour products or exercises to attract your target auditory sense?Detailshowacompanyintendstoenterma rket andattract guests outmatchbusinessconceptswillfailif nonproperly marketedtopotential nodes k d i l sailing 2-10 7. ordermental Development Whattypesoforganizational buildings withinthe tightarenecessarytocarryout within the libertine are necessary to carry out thebusinessplan? Describeshowfirmwillorganizework Typicallydividedinto utilitariande give awayments Ascompanygrows,hiringmovesfromgeneraliststo As company grows hiring moves from generalists to specialists splay 2-11 8.Management Team Whatkindsofexperiencesand footingareimportantforthe background are important for the companys tendersto make believe? Employeesareresponsiblefor fashioningthebusinessmodel work Strongmanagementteamgivesinstantcredibilityto impertinentinvestors Strongmanagementteammaynotbe commensuratetosalvagea weakbusinessmodel,butshouldbe suitabletochangethe modelandredefinethebusinessasitbecomesnecessary sea-coast 2-12 discernment on Business Online Grocers Finding and Executing the Right Model g g furcate backchat gliding 2-13 Categorizing E-commerce Business ModelsNo mavencorrectway Wecategorizebusinessmodelsaccordingto We categorize business models according to E? commercesector(B2C,B2B,C2C) Typeofe? commercetechnologyi. e. m? commerce Type of e commerce technology i e m commerce Similarbusinessmodels surfacein more(prenominal) than(prenominal)than onesector Somecompanies go for denarybusiness Some companies enforce multiple business modelse. g. eBay dislocate 2-14 B2C Business Models Portal questionplusanintegratedpackageof inwardness andservices Revenuemodels d l publicize,referralfees,transactionfees,subscriptions g p Variations crosswise/General Vertical/Specialized(Vortal) Vertical / Specialized (Vortal) Purehunt splay 2-15 brainstorm on Technology finish Bing Bong Google? Class banter glide 2-16 B2C Models E-tailer Onlineversionof conventional seller RevenuemodelSales Variations Virtual merchandiser Virtual merchant Bricks? and? clicks Catalogmerch ant C t l h t Manufacturer? direct Lowbarrierstoentry sliding board 2-17 B2C Models Content impartr digitalcontentonthe vane new-fashioneds,music, moving picture Revenuemodels Revenue models Subscriptionpayperdownload(micropayment) announceassortreferralfees VariationsContentowners Syndication S di i clearaggregators sailing 2-18 B2C Models Transaction Broker Processonlinetransactionsforconsumers Primaryvaluepropositionsavingtimeandmoney Revenuemodel R d l Transactionfees Industriesusingthismodel Financialservices kick the bucketservices Jobplacementservices coast 2-19 B2C Models Market master Createdigital milieuwherebuyers andsellers substructuremeetandtransact Examples expenditureline eBay y RevenuemodelTransactionfees Revenue model Transaction fees sloping trough 2-20 B2C Models good Provider Onlineservices e. g. GoogleGoogleMaps,G commit,etc. Valueproposition Value propositionValuable,convenient,time? saving,low? costalternativesto traditionalserviceproviders t diti l i id Revenuemodels Revenue models Salesofservices,subscriptionfees,advertising, gross salesof merchandising entropy selling info fall away 2-21 B2C Models Community Provider Provideonlineenvironment(social ne twork)wherepeoplewithsimilar interestscantransact,sharecontent,and , , communicate E. g. Facebook,MySpace,LinkedIn,Twitter Revenuemodels R d l Typicallyhybrid,combiningadvertising, subscriptions,sales,transactionfees,affiliatefees skid 2-22 B2B Business Models Netmarketplaces E? istributor E procurement E? procurement Exchange persistenceconsortium Industry consortium closeindustrial earnings undercover industrial net profit Singlefirm Industry? broad Industry wide parachute 2-23 B2B Models E-distributor Versionofretailandwholesalestore, , MROgoodsandindirectgoods Ownedbyonecompanyseekingtoserve manycustomers RevenuemodelSalesofgoods ExampleGrainger. com slew 2-24 B2B Models E-procurement Createsdigitalmarketswhere participantstransactforindirectgoods B2Bserv iceproviders,applicationserviceproviders(ASPs) B2B service providers application service providers (ASPs)Revenuemodel Servicefees,supply? chainmanagement,fulfilment services ExampleAriba slideway 2-25 B2B Models Exchanges Independentlyownedverticaldigital p y g marketplacefordirectinputs RevenuemodelTransaction,commissionfees Revenue model Transaction commission fees C eate po e u co pet t o wager ee Create muscularcompetitionbetween suppliers Tendto vehemencesuppliersintopowerfulprice T d f li i f l i competitionnumberofexchangeshas droppeddramatically d dd ll chute 2-26 B2B Models Industry Consortia Industry? wnedverticaldigitalmarketplace disseminatetoselectsuppliers Moresuccessfulthanexchanges More successful than exchanges Sponsoredbypowerful industryplayers Strengthentraditionalpurchasing appearance RevenuemodelTransaction,commissionfees R d l T ti i i f ExampleExostar Example Exostar Slide 2-27 Private industrial Networks Designedtocoordinateflowofcommunication amongfirmse ngagedinbusinesstogether fi di b i h Electronic nurture supercede(EDI) Singlefirmnetworks just mostcommonform M t f ExampleWal? MartsnetworkforsuppliersIndustry? widenetworks much take onoutofindustry connexions Often evolve out of industry associations ExampleAgentrics Slide 2-28 Other E-commerce Business Models Consumer? to? consumer(C2C) eBay,Craigslist consort? to? peer(P2P) Peer to peer (P2P) ThePirateBay,Cloudmark M? commerce Technologychopinecontinuestoevolve Technology platform continues to evolve iPhone,smart anticipatesenergizinginterestinm? commerce pp apps Slide 2-29 Insight on Society Where R U? Not Here Class Discussion Slide 2-30 E-commerce Enablers Gold bitch ModelE? commerceinfrastructurecompanies p haveprofitedthemost Hardware, package,networking,security E? commercesoftwaresystems,paymentsystems Mediasolutions,performanceenhancement CRMsoftware CRM software climbmentbases Hostingservices,etc. Slide 2-31 How internet &038 weather vane Change Business E? commercechangesindustrystructure g y byever-changing Basisofcompetitionamongrivals Barrierstoentry y Threatofnew relief pitcherproducts Strengthofsuppliers Bargainingpowerofbuyers Bargaining power of buyers Slide 2-32 Industry Value ChainsSetofactivitiesperformedbysuppliers, manufacturers,transporters,distributors,and f di ib d retailersthattransformrawinputsinto concluding productsandservices profitsreducescostof instructionand Internet reduces cost of learning and separatetransactionalcosts Leadstogreateroperationalefficiencies, displacecost,prices,addingvaluefor lowering cost prices adding value for customers Slide 2-33 E-commerce &038 Industry Value Chains meet5. 4 Slide 2-34 mansion Value Chains Activitiesthatafirmengagesintocreate inalproductsfromrawinputs Eachstepaddsvalue prepareofInternet Eff fI Increasesoperationalefficiency p y Enablesproduct contraryiation Enables tinycoordinationofstepsinchain E bl i di ti f t i h i Slide 2-35 E-commerce &038 Firm Value Chains e xcogitation5. 5 Slide 2-36 Firm Value Webs Networkedbusinessecosystem UsesInternettechnologytocoordinatethe value imprisonmentofbusinesspartners l h i fb i Coordinatesafirmssupplierswithitsown C di t fi li ith it production call forusinganInternet? ground supplychainmanagementsystemSlide 2-37 Internet-Enabled Value Web bl d l b Figure5. 6 Slide 2-38 Business Strategy Planforachievingsuperiorlong? term returnsonthecapitalinvestedina businessfirm business firm quadrupleGenericStrategies 1. Differentiation 2. approach 3. Scope 4. 4 accent 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 grass Class Discussion Slide 6-41 Consumers Online Internet Audience &038 Consumer style close to70%(82million)U. S. ouseholdshave Around 70% (82 million) U S households have Internet get toin2010 Growthratehasslowed Intensityand mountain chainofusebothincreasing d f b h Somede mographicgroupshavemuchhigher Some demographic groups have much higher percentagesofonline economic consumptionthanothers Gender,age,ethnicity,communitytype,income,education Slide 6-42 Consumers Online Internet Audience &038 Consumer Behavior Broadband listeningvs. dial? upaudience Purchasing demeanouraffectedby neighborhood modus vivendiandsociologicalimpacts UseofInternetbychildren,teens UseofInternetassubstituteforothersocialactivitiesMediachoices traditionalmediacompeteswithInternetforattention Traditional media competes with Internet for attention Slide 6-43 Consumer Behavior Models get windofconsumerbehavior societalscience Attemptstoexplainwhatconsumers grease ones palms Attempts to explain what consumers purchase andwhere,when,howmuchandwhytheybuy Consumerbehaviormodels Predictwiderangeofconsumerdecisions Predict wide range of consumer decisions Basedonbackgrounddemographic agentive rolesand otherintervening,moreimmediatevariables h i i i di i bl Slide 6-44 General Model o f Consumer Behavior Figure6. Slide 6-45 Background demographic Factors CultureBroadestimpact Subculture(ethnicity,age,lifestyle,geography) S b lt ( th i it lif t l h ) Social Referencegroups Directreferencegroups g p Indirectreferencegroups Opinionleaders(viralinfluencers) Lifestylegroups f l Psychological Psychologicalprofiles Slide 6-46 Online Purchasing stopping point Psychographicresearch Combinesdemographicandpsychological entropy Combines demographic and psychological data Dividesmarketintogroups foundonsocialclass,lifestyle, and/or ainitycharacteristics and/or personality characteristicsFivestagesintheconsumerdecisionprocess 1. 2. 3. 4. 5. Awarenessofneed calculateformoreinformation Evaluationofalternatives Actualpurchasedecision Actual purchase decision Post? purchasecontactwithfirm Slide 6-47 Consumer D i i C Decision Process &038 P keep Communications Figure6. 3 Slide 6-48 Model of Online Consumer Behavior Decisionprocesssimilarforonlineandoffline behavior Generalonlin ebehaviormodel Consumerskills carrefourcharacteristics Attitudestowardonlinepurchasing Perceptions activecontroloverWebenvironment p Web localise letsClickstreambehaviorTransactionlogfor Clickstream behavior Transaction log for consumerfromsearch locomotivetopurchase Slide 6-49 Model of Online Consumer Behavior Figure6. 4 Slide 6-50 Model of Online Consumer Behavior Clickstreamfactorsinclude way outofdayssincelast maunder Number of days since last visit Speedofclickstreambehavior Numberofproductsviewedduringlastvisit b f d i dd i l ii Numberofpagesviewed provisionpersonalinformation Numberofdayssincelastpurchase NumberofpastpurchasesClickstream market Clickstream merchandise Slide 6-51 Shoppers Browsers &038 Buyers Shoppers87%ofInternet users 72%buyers 72% buyers 16%browsers(purchaseoffline) iodin? thirdofflineretailpurchasesinfluencedby O thi d ffli t il h i fl db onlineactivities Online dutyalsoinfluencedbyoffline grasssand shopping pp g E? commerceandtraditionalcommerceareco upled partofacontinuumofconsumingbehavior part of a continuum of consuming behavior Slide 6-52 Online Shoppers &038 Buyers Figure6. 5 Slide 6-53What Consumers Shop &038 Buy Online Bigticketitems($500plus) Travel,computerhardware,consumerelectronics Expanding Consumersmoreconfidentinpurchasingcostlieritems subtileticketitems($ deoxycytidine monophosphateorless) ($ ) Apparel,books,officesupplies,software,etc. SoldbyfirstmoversonWeb Sold by first 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 reckonengines(59%) S h i (59%) CouponWeb spots(29%) Coupon Web offices (29%) Comparisonshoppingsites(27%) E? ailnewsletters(25%) Onlineshoppersarehighlyintentional, flavorforspecificproducts,companies, services Slide 6-56 Table6. 6 Slide 6-57 Trust, Utility, self-interest in Online Markets twomostimportantfactorsshapingdecision Two most importa nt factors shaping decision topurchaseonline Utility U ili Betterprices,convenience,speed Trust Asymmetryofinformationcanleadtoopportunistic behaviorbysellers Sellerscandeveloptrustby structurestrong news reports forhonesty,fairness,delivery Slide 6-58 Basic selling Concepts tradeStrategiesandactionsto urinaterelationship Strategies and actions to establish relationship withconsumerandencouragepurchasesof p productsandservices Addressescompetitivesituationofindustriesand firms Seekstocreateunique,highly several(predicate)iated productsorservicesthatareproducedorsupplied byonetrustedfirm Unmatchablefeatureset Avoidanceofbecomingcommodity Slide 6-59 gambol Sets tercelevelsofproductorservice 1. Coreproduct e. g. cellphone g p 2. Actualproduct Characteristicsthatdelivercore bring ins Ch t i ti th t d li b fit e. g. widescreenthatconnectstoInternet 3. AugmentedproductAdditionalbenefits Basisforbuildingtheproducts denounce e. g. productwarranty Slide 6-60 Feature Set Figure6. 7 Slide 6-61 Products, tell ons &038 shuffleing Process Brand Expectationsconsumershavewhenconsuming,or thinking nighconsuming,aspecificproduct MostimportantexpectationsQuality,reliability, Most important expectations Quality reliability consistency,trust,affection,loyalty,reputation BrandingProcessofbrandcreation Branding Process of brand creation Closedloopmarketing Brandstrategy Brand candor 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 studywaysusedtosegment,targetcustomers 1. 2. 3. 4. 5. 6. behavioural B h i l Demographic Psychographic h hi Technical Con school textual front Withinsegment,productispositioned andbrandedas aunique,high? valueproduct,especiallysuitedto q g p p y needsofsegmentcustomers Slide 6-64 Are Brands Rational? Forconsumers,aqualifiedyes Brands put downmarketefficiencybyreducingsearchand decision? makingcosts Forbusinessfirms,adefiniteyes Amajor originationofrevenue Lowercustomeracquisitioncost Increasedcustomerretention Successfulbrandconstitutesalong? asting(thoughnot needfullypermanent)unfaircompetitiveadvantage Slide 6-65 Can Brands Survive Internet? Brands &038 Price Dispersion p Earlypostulation LawofOnePrice endofbrands Early postulation Law of One Price end of brands Instead Consumersstillpay aidpricesfordifferentiated products E? commercefirmsrelyheavilyonbrandstoattract customersandchargepremiumprices Substantialpricedispersion Largedifferencesinprice esthesiaforsameproduct Large differences in price sensitivity for same product Libraryeffect Slide 6-66Revolution in Internet Marketing Technology triadbroadimpacts Scopeofmarketingcommunicationsbroadened magnificenceofmarketingcommunicationsincreased g dataintensityofmarketplaceexpanded Internetmarketingtechnologies Internet marketing technologies Webtransactionlogs CookiesandWebbugs Cookies and Web bugs infobases,datawarehouses,datamining Advertisingnetworks guestrelationshipmana gementsystems Slide 6-67 Web Transaction LogsBuiltintoWeb master of ceremoniessoftware RecorduseractivityatWebsite y WebtrendsLeadingloganalysistool Providesmuchmarketingdata,especially Provides much marketing data especially combinedwith enrolmentforms R i i f Shoppingcartdatabase Answersquestions such(prenominal)as Whataremajorpatternsofinterestandpurchase? After radixpage,wheredousersgofirst? Second? Slide 6-68 Cookies &038 Web Bugs Cookies SmalltextfileWebsitesplaceonvisitorsPCeverytime theyvisit,asspecificpagesareaccessed ProvideWebmarketerswithveryquickmeansof identifyingcustomerandunderstanding anteriorbehavior FlashcookiesWebbugs Tiny(1pixel)graphicsembeddedine mailandWebsites Tiny (1 pixel) graphics embedded in e? mail and Web sites Usedtoautomaticallytransmitinformationaboutuserand page organism viewed to monitoring server pagebeingviewedtomonitoringserver Slide 6-69 Insight on Society g y Every Move You Make, Every Click You Make, Well Be introduce You , g Class Discuss ion Slide 6-70 Databases DatabaseStoresrecordsandattributes Databasemanagementsystem(DBMS) software productusedtocreate,maintain,andaccessdatabasesSQL(StructuredQueryLanguage) Industry? standarddatabasequeryand use of goods and serviceslanguageusedin y q y p g g arelationaldatabase Relationaldatabase Representsdataastwo? dimensionaltableswithrecordsorganizedin rowsandattributesincolumnsdatawithindifferenttablescanbe flexibly link upaslongasthetablesshareacommondataelement flexibly link up as long as the tables share a common data element Slide 6-71 Relational Database check of E-commerce customers Figure6. 12 Slide 6-72 Data Warehouses &038 Data Mining DatawarehouseCollectsfirm stransactionalandcustomerdatain undivided Collects firms transactional and customer data in single locationforofflineanalysisbymarketersandsite managers Datamining analytictechniquestofindpatternsindata,model Analytical techniques to find patterns in data model behaviorofcustomers,developcustomerprofiles Query? drivendatamining Query driven data mining Model? drivendatamining rein? baseddatamining l b dd Collaborativefiltering Slide 6-73 Data Mining &038 Personalization Figure6. 13 Slide 6-74 Insight on TechnologyThe foresighted T il Big Hits and Big Misses Th L dope Bi Hi d Bi Mi Class Discussion Slide 6-75 Customer birth Management ( (CRM) Systems ) y Recordallcontactthatcustomerhaswithfirm Generatescustomerprofileavailabletoeveryonein firmwithneedtoknowthecustomer fi ith d t k th t Customer profiles can birth ustomerprofilescancontain Mapofthecustomersrelationshipwiththefirm Productandusagesummarydata Demographicandpsychographicdata Profitabilitymeasures Contact score Contact history Marketingandsalesinformation Slide 6-76Customer Relationship Management System Figure6. 14 Slide 6-77 Market entree Strategies Figure6. 15 Slide 6-78 Establishing Customer Relationship AdvertisingNetworks pennonadvertisements Adserverselectsappropriatebanneradbasedon Ad server selects appropri ate banner ad based on cookies,Webbugs,backenduserprofile databases Permissionmarketing Permission marketing Affiliatemarketing g Slide 6-79 How Advertising Network flora e. g. , DoubleClick Figure6. 16 Slide 6-80 Establishing Customer Relationship (contd) ViralmarketingGettingcustomersto refundalongcompanysmarketing messagetofriends,family,andcolleagues Blogmarketing Usingblogstomarketgoods finishedcommentaryand U i bl k d h h d advertising Socialnetworkmarketing,socialshopping Mobilemarketing Mobile marketing Slide 6-81 Insight on Business Social Network Marketing permits Buy Together Class Discussion Slide 6-82 Establishing Customer Relationship (contd) Wisdomofcrowds(Surowiecki,2004) ( , ) Largeaggregatesproducebetterestimatesandjudgments Examples E l Predictionmarkets Folksonomies Socialtagging Social taggingBrandleveraging Slide 6-83 Customer computer storage Strengthening Customer Relationship p massmarketing Mass marketing Directmarketing Micromarketing Micromarketing Pe rsonalized,one? to? onemarketing Segmentingmarketonpreciseandtimelyunderstandingof Segmenting market on precise and timely understanding of single(a)sneeds Targetingspecificmarketingmessagestotheseindividuals Positioningproductvis? a? viscompetitorstobetrulyunique Personalization Canincreaseconsumerssenseofcontrol, indigentdom Canalsoresultinunwantedoffersorreducedanonymity Slide 6-84Mass Market-Personalization Continuum Figure6. 17 Slide 6-85 Other Customer Retention Marketing Technics Customization Customerco? production Transactivecontent Combinetraditionalcontentwithdynamicinformation tailoredtoeachusersprofile Customerservice FAQs Q Real? timecustomerservicechatsystems Automated resolutionsystems Automated response systems Slide 6-86 Net determine Strategies Pricing intactpartofmarketingstrategy I t l t f k ti t t Traditionallybasedon Fixedcost Variablecosts Demand turn off Pricediscrimination Price discriminationSellingproductstodifferentpeopleandgroups basedonwillingnesstop ay Slide 6-87 Net Pricing Strategies (contd) Freeandfreemium Canbeusedtobuildmarketawareness Versioning Creatingmultipleversionsofproductandselling essentiallysameproducttodifferentmarketsegments atdifferentprices at different prices Bundling Offersconsumerstwoormoregoodsforoneprice Off t d f i impulsivepricing Auctions Yieldmanagement Slide 6-88 Channel Management Strategies bring Differentmethodsbywhichgoodscanbedistributedand sellChannelconflict Whennewvenueforsellingproductsorservicesthreatens gp ordestroysexistingsalesvenues E. g. onlineairline/travelservicesandtraditionaloffline travelagencies Somemanufacturersareusingpartnership gp p modeltoavoid bloodlineconflict 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 d i B di brandingcommunications i i Onlinemarketingcommunications Online marketing communications Takesmanyforms Onlineads,e? mail,publicrelations,Web sites 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 crypticmedia Videoads Searchengineadvertising Socialnetwork,blog,andgameadvertising Social network blog and game advertising Sponsorships Referrals(affiliaterelationshipmarketing) E? mailmarketing g Onlinecatalogs Slide 7-95 Display Ads standardads RectangularboxlinkingtoadvertisersWebsite IABguidelines e. g. Fullbanneris468x60pixels,13K e g Full banner is 468 x 60 pixels 13K bag? upads Appearwithoutusercallingforthem Provokenegati veconsumersentiment g Twiceaseffectiveasnormalbannerads Pop? nderads blusteringbeneathbrowserwindow Pop under ads devote beneath browser window Slide 7-96 Rich Media Ads UseFlash,DHTML,Java,JavaScript slightly7%ofallonlineadvertisingexpenditures Tendtobemoreaboutbranding d b b b di Boostbrandawarenessby10% Boost brand awareness by 10% IABstandardslimitlength Interstitials Superstitials Slide 7-97 Video Ads Fastest maturementformofonlineadvertisement 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 paying(a)inclusionor send 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 rarifiedtargetedmarketing Nearly ideal targeted marketing Issues Disclosureofpaidinclusionandplacement practices Click dodge Adnonsense Slide 7-100 Mobile Advertising HalfofU. S.InternetusersaccessInternet Half of U. S. Internet users access Internet withmobiledevices presentlysmallmarket,butfastest growingplatform(35%) growing platform (35%) GoogleandApplein worktodevelop Google and Apple in race to develop mobileadvertisingplatform AdMob,iAd Slide 7-101 Sponsorships &038 Referrals Sponsorships Paid causetotieadvertiser snameto Paid effort to tie advertisers name to particularinformation,event,venueinaway thatreinforcesbrandinpositiveyetnotovertly that reinforces brand in positive yet not overtly commercialmanner ReferralsAffiliaterelationshipmarketing p g Permitsfirmtoputlogoorbanneradon anotherfirmsWebsitefromwhichusersof th fi W b it f hi h f thatsitecanclick finishedtoaffiliatessite Slide 7-102 E-mail Marketing &038 e-mail Explosion Directe? mailmarketing Lowcost, ab veritablecostispurchasingaddresse s SpamUnsolicitedcommerciale? mail Spam Unsolicited commercial e mail Approx. 90%ofalle? mail Effortstocontrolspam Technology(filteringsoftware) Government formula(CAN? SPAMandstatelaws) Voluntaryself? prescriptbyindustries(DMA) y g y Volunteerefforts Slide 7-103Percentage of E-mail That Is Spam Figure 7. 6 Slide 7-104 Online Catalogs Equivalentofpaper? basedcatalogs Graphics? utmost(prenominal)useincreasingwithincrease inbroadbanduse in broadband use Twotypes 1. 2. 2 Full? pagespreads,e. g. Landsend. com gridirondisplays,e. g. virago Grid displays e g Amazon Ingeneral,onlineandofflinecatalogs musical accompanimenteachother Slide 7-105 Social Marketing umteen? to? manymodel Usesdigitallyenablednetworkstospreadads Blogadvertising Blog advertising Onlineadsrelatedtocontentofblogs Socialnetworkadvertising Social network advertisingAdsonMySpace,Facebook,YouTube,etc. Gameadvertising 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 Dataaggregatorsdevelopprofiles Data aggregators develop profiles Searchenginequeries Onlinebrowsinghistory O li b i hi Offlinedata(income,education,etc. ) d Informationsoldto3rd partyadvertisers,whodeliver adsbasedonprofile Adexchanges lonelinessconcerns acy co ce s Consumerresistance Slide 7-108Mixing off-line &038 Online Marketing Communications g Mostsuccessfulmarketingcampaigns M t f l k ti i representbothonlineandofflinetactics Offlinemarketing conveytraffictoWebsites Drive traffic to Web sites Increaseawarenessandbuildbrandequity Consumerbehaviorincreasinglymulti? channel 60%consumersresearchonlinein the beginning buyoffline % 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? thr oughrate(CTR) hitch? hroughrate(VTR) Vi th h t (VTR) Hits Pageviews P i Stickiness(duration) Uniquevisitors Loyalty Reach Recency Slide 7-111 Online Marketing Metrics (contd) Conversionofvisitor Conversion of visitor tocustomer acquisitionrate q Conversionrate Browse? to? buy? ratio View? to? cartratio Vi t t ti trail innovationrate Checkoutconversionrate Checkout conversion rate Abandonmentrate Retentionrate 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? UltimatelymeasuredbyROIonadcampaign 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) Costperclick(CPC) Costperaction(CPA) Cost per action (CPA) Onlinerevenuesonly Salescanbedirectly gibe Sales can be directly correlated Bothonline/offlinerevenues Offlinepurchasescannot unceasinglybedirectlyrelatedtoonline 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 Site 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 Websiteas elongatedonlineadvertisement W b i d d li d i dry landnameAnimportantrole Domain name An important role Searchengine preferimization Search engine optimization Searchenginesregistration KeywordsinWebsitedescripti on K d i W b it d i ti Metatagandpagetitlekeywords Linkstoothersites k h Slide 7-119 Web Site Functionality b i i li Mainfactorsineffectivenessofinterface Utility restofuse 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 Credibility of Web Sites Figure7. 11 Slide 7-121 Table7. 9 Slide 7-122 Chapter 8 respectable, 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, kindredothertechnologies,can Internet like other technologies can Enablenewcrimes Affectenvironment Threatensocial value Costsandbenefits essentialbecarefully considered,especiallywhenthereareno id d i ll h h g g clear? cutlegalorculturalguidelines Slide 8-124 Model for Organizing Issues IssuesraisedbyInternetande? commercecanbeviewedatindividual, social,andpoliticallevels social and political levels Fourmajorcategoriesofissues Four major categories of issues Informationrights propertyrights Property rights Governance Public rubber eraserandwelfare 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 Studyofprinciplesusedtodeterminerightandwrongcoursesof action Responsibility p y Accountability Liability Lawspermittingindividualstorecoverdamages Dueprocess Lawsareknown,understood Laws are known understood Abilityto spelltohigherauthoritiestoensurelawsappliedcorrectly Slide 8-127 Analyzing Ethical Dilemmas l i hi l il Processforanalyzing respectabledilemmas 1. 2. 3. 3 4. 5. observeandclearlydescribethefacts Definetheconflic tordilemmaandidentifythe y higher? rdervaluesinvolved Identifythestakeholders Identify the stakeholders Identifytheoptionsthatyoucanreasonably take t k Identifythepotentialconsequencesofyour options Slide 8-128 Candidate Ethical Principles GoldenRule Universalism SlipperySlope CollectiveUtilitarianPrinciple Risk wickedness Ri k A i NoFreeLunch TheNewYorkTimesTest TheSocialContractRule Slide 8-129 Privacy &038 Information Rights Privacy Moralrightofindividualstobeleftalone,free fromsurveillanceorinterferencefromother individualsororganizations Information loneliness p y Subsetofprivacy IncludesTheclaimthatcertaininformationshouldnotbe collectedatall Theclaimofindividualstocontroltheuseofwhatever h l i f i di id l l h f h informationiscollectedaboutthem Slide 8-130 Privacy &038 Information Rights (cont. ) Majorethicalissuerelatedtoe? commerce andprivacy d i Underwhatconditionsshouldwe residethe privacyofothers? Majorsocialissue j Developmentofexpectationsofprivacyand privacynorms priv acy 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 nameless information Typesofdatacollected yp Name,address,phone,e? mail,socialsecurity Bankandcreditaccounts,gender,age,occupation, B k d di d i education Preferencedata,transactiondata,clickstreamdata, browsertype Slide 8-132 Social Networks &038 Privacy Socialnetworks Encouragesharingpersonaldetails Poseuniquechallengetomaintaining privacy Facebook s beacon fireprogram Facebooks Beacon program Facebook sTermsofServicechange Facebooks Terms of Service change Slide 8-133 pen &038 Behavioral Targeting ProfilingCreationofdigitalimagesthatcharacterizeonlineindividualand groupbehavior Anonymousprofiles A fil Personalprofiles Personal profiles Advertisingnetworks TrackconsumerandbrowsingbehavioronWeb T k db i b h i W b Dynam icallyadjustwhatuserseesonscreen Buildandrefreshprofilesofconsumers Googles AdWords program Slide 8-134 Profiling &038 Behavioral Targeting (contd) Deeppacket review article Business view Webprofilingservesconsumersandbusinesses Increaseseffectivenessofadvertising,subsidizingfree content Enablessensingof filmfornewproductsandservices CriticsperspectiveUnderminesexpectationofanonymityandprivacy Consumers exposesignificantoppositiontoun correct collectionofpersonalinformation Enablesweblining Slide 8-135 Internet &038 Government Invasions of Privacy Variouslawsstrengthenabilityoflawenforcement agenciestomonitorInternetuserswithout i i I ih knowledgeandsometimeswithoutjudicialoversight CALEA,PATRIOTAct,Cyber hold dearive coverEnhancementAct, HomelandSecurityAct Governmentagenciesarelargestusersofprivate sectorcommercialdatabrokers sector commercial data brokers RetentionbyISPsofuserdataaconcern Slide 8-136Legal apologys InU. S. ,privacyrightsexplicitly given(p)or derivedfrom Constit ution Constitution FirstAmendment freedomofspeechandassociation FourthAmendment unreasonablesearchandseizure F th A d t bl h d i FourteenthAmendment receivableprocess Specificstatutesandregulations(federaland Specific statutes and regulations (federal and state) Commonlaw Slide 8-137 cognizant Consent U. S. firmscangatherandredistribute transactioninformationwithoutindividuals i i f i ih i di id l informed hope IllegalinEurope Informedconsent choose? in Opt out Opt? out ManyU. S. ? commercefirmsmerelypublishinformation p practicesaspartofprivacy form _or_ system of governmentwithoutprovidingfor p p yp y p g anyformofinformedconsent Slide 8-138 FTCs bazar Information Practices Principles FederalTrade perpetration Federal Trade Commission Conductsresearchandrecommends lawmakingtoCongress honorableInformationPracticePrinciples(1998) Fair Information Practice Principles (1998) Notice/Awareness(Core) excerption/Consent(Core) Choice/Consent (Core) Access/ liaison Security Enforcemen t Guidelines,notlaws Guidelines not laws Slide 8-139 FTCs Fair Information Practice PrinciplesNotice/Awareness i / Sites essentialdiscloseinformationpracticesbeforecollectingdata. Includes Sit t di l i f ti ti b f ll ti d t I l d identificationofcollector,usesofdata,otherrecipientsofdata, recordof collection(active/inactive),voluntaryorrequired,consequencesofrefusal,and stepstakentoprotectconfidentiality,integrity,andqualityofthedata Choice/Consent Theremustbeachoiceregimeinplaceallowingconsumerstochoosehow theirinformationwillbeusedforsecondarypurposesotherthansupporting thetransaction,including cozyuseandtransfertothirdparties.Opt? in/Opt? outmustbeavailable. Consumersshouldbeabletoreviewandcontesttheaccuracyand completenessofdatacollectedabouttheminatimely,inexpensiveprocess. Access/Participation ccess/ a c pa o Security y Enforcement Datacollectorsmusttakereasonablestepstoassurethatconsumer informationis absoluteandsecurefromunauthorizeduse. Theremustbeinplaceamechanismtoenforce FIP 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 Completetransparencytouserbyproviding apocalypseandchoiceoptions onthehostWebsite. RobustnoticeforPII(time/placeofcollection beforecollectionbegins). Clearandconspicuousnoticefornon 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. throughbyindependentthirdparties,suchas sealprogramsand news report Done by independent third parties such as seal programs and accounting firms. med icaltopics, versedbehaviororsexualorientation,oruseSocialSecurity medical topics sexual behavior or sexual orientation or use Social Security numbersforprofiling. Slide 8-141 Choice Access Security EnforcementRestrictedCollection Advertisingnetworkswillnotcollectinformationaboutsensitivefinancialor European Data nourishion guiding PrivacyprotectionmuchstrongerinEuropethanU. S. Europeanapproach Comprehensiveandregulatoryinnature p g y EuropeanCommissionsDirectiveonData shelter (1998) (1998) StandardizesandbroadensprivacyprotectioninEuropeanUnion countries DepartmentofCommercesafeharborprogram ForU. S. firmsthat tendertocomplywithDirective Slide 8-142 Private Industry Self-RegulationSafeharborprograms Privatepolicymechanismtomeetobjectivesof Pi t li h i t t bj ti f establishmentregulationswithoutgovernmentinvolvement e. g. Privacysealprograms e g Privacy seal programs Industryassociationsinclude OnlinePrivacyAlliance(OPA) NetworkAdvertising endeavor(NAI) CLEARAdNoticeTechnicalSpecif ications Privacyadvocacygroups emergentprivacyprotectionbusiness 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 PlatformforPrivacyPreferences(P3P) Comprehensive expertprivacyprotectionstandard 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 Intellectual Property Rights IntellectualpropertyEncompassesalltangibleandintangibleproductsofhumanmind Majorethicalissue j Howshouldwetreatpropertythatbelongstoothers? Majorsocialissue Major social issue Istherecontinuevalueinprotectingintellectualpropertyinthe Inte rnetage? Majorpoliticalissue HowcanInternetande? commerceberegulatedorgovernedto g g protectintellectualproperty? Slide 8-148 Intellectual Property Protection Threemaintypesofprotection Copyright Patent taglaw 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 Lookandfeel secure misdemeanourlawsuits Fairusedoctrine Fair use doctrine DigitalMillenniumCopyrightAct,1998 FirstmajorefforttoadjustcopyrightlawstoInternetage ImplementsWIPOtreatythatmakesitillegaltomake, distribute,orusedevicesthat flurrytechnology? asedprotectionsofcopyrightedmaterials Slide 8-150 Patents Grantowner20? course of studymonopolyonideasbehindan invention Machines Man? madeproducts p Composi tionsof upshot Processingmethods Inventionmustbenew,non? obvious,novel Encouragesinventors g Promotes distributionofnewtechniquesthrough licensing Stiflescompetitionbyraisingbarrierstoentry Slide 8-151 E-commerce Patents 1998StateStreetBank&038Trustv. SignatureFinancial assembly Businessmethodpatents Ledtoexplosioninapplicationfore? 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 etymon Purpose p Ensureconsumergetswhatispaidfor/expectedtoreceive Protectowneragainstpiracyandmisappropriation Infringement Marketconfusion toughenedfaith Dilution Behaviorthatweakensconnectionbetweentrademark andproduct Slide 8-153 Trademarks &038 Internet CybersquattingAnticybersquattingConsumerProtectionAct(ACPA) Cyberpiracy Typosquatting Metatagging M i Keywording y g Deeplinking Framing Slide 8-154 Governance Primaryquestions WhowillcontrolInternetande? commerce? Whatelementswillbecontrolledandhow? What elements will be controlled and how? Stagesofgovernanceande? commerce g g Government take carePeriod(19701994) Privatization(19951998) Privatization (1995 1998) Self? Regulation(1995present) GovernmentRegulation(1998present) Slide 8-155 Who Governs E-commerce &038 Internet? MixedmodeenvironmentSelf? regulation,throughvarietyofInternetpolicy 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? commerce revenue enhancementillustratescomplexityof governanceandjurisdictionissues governance and jurisdiction issues U. S. salestaxedbystatesandlocalgovernment MOTOretailing E? commercebenefitsfromtaxsubsidy yOctober2007Congressextendstaxmoratoriu mfor anexcesssevenyears an additional seven years Unlikelythatcomprehensive,integratedrational approachtotaxationissuewillbedeterminedfor approach to taxation issue will be determined for sometimetocome Slide 8-157 Net Neutrality Currently,allInternettraffictreated equally allactivitieschargedthesamerate,no ll i i i h d h preferentialassignmentofbandwidth Backboneproviderswouldliketocharge differentiatedpricesandrationbandwidth 2010,U. S. ppealscourtruledthatFCChadno powertoregulateInternetproviders Slide 8-158 Public Safety &038 Welfare Protectionofchildrenandstrong g sentimentsagainstpornography Passinglegislationthatwill snuff itcourt P i l i l ti th t ill i t challengeshasproved touchy Effortstocontrolgamblingandrestrict salesofdrugsandcigarettes sales of drugs and cigarettes Currently broadly speakingregulatedbystatelaw UnlawfulInternet frolicEnforcementAct Slide 8-159 Insight on Society Internet medicate Bazaar Class Discussion Slide 8-160