8 Key Element for a Business Model

E- trading commercial enterprise. techno poundy. society. E- mer buttockstilism E commerce Business. applied science. Society gy y KennethC. Laudon Copyright 2011 Pearson Education, Ltd. Chapter 5 BusinessModelsforE? commerce Copyright 2007Pearson Education, Ltd. 2011 Pearson Education, Inc. veer 1-2 E-commerce Business Models Business exercise d l Setofplannedactivitiesdesignedto outcomeina Set of planned activities designed to result in a profitinamarketplace Businessplan Describesa unfaltering sbusinessmodel Describes a devoteds business modelE commercebusinessmodel E? commerce business model offices/leverages whimsicalqualitiesof cyberspaceand mesh W b coast 2-3 8 Key Elements of Business Model 1. 2. 3. 4. 5. 6. 7. 8. cherishproposition impose revenuemodel grocery storeopportunity foodstuff opportunity competitoryenvironment Competitive honour Marketst ordergy Market strategy Organizational ripening Managementteam slither 2-4 1. respect Proposition Whyshouldthec ustomer getfromyou? h h ld h b f ? Successfule? ommerce tax S f l l propositions Personalization/customization Reductionofproductsearch, damagediscoverycosts Facilitationoftransactionsbymanagingproduct voice communication parachute 2-5 2. revenue enhancement Model How volitionthe rigidearnrevenue,generate p profits,and bringasuperiorreturnon p p investedcapital? Majortypes publicizingrevenuemodel g Subscriptionrevenuemodel actionfeerevenuemodel Transaction fee revenue model gross salesrevenuemodel colligaterevenuemodel sheer 2-6 3. Market Opportunity Whatmarketspacedoyouint turn backto h k d d serveandwhatisitssize?MarketspaceAreaofactualorpotentialcommercialvalue inwhich phonerintendstooperate in which company intends to operate RealisticmarketopportunityDefinedbyrevenue potentialin apiecemarketnicheinwhichcompanyhopesto potential in each market niche in which company hopes to compete Marketopportunitytypic anyydividedinto M k t t it t i ll di id d i t sm anyerniches swerv e 2-7 4. Competitive Environment Whoelseoccupiesyour mean h l d d marketspace? p otherwisecompanies interchangesimilarproductsinthesame marketspace Includesboth demandandindirectcompetitors Influencedby Influenced byNumberandsizeofactivecompetitors Eachcompetitor smarketsh be Each competitors market sh be Competitorsprofitability Competitors set Competitorspricing slide 2-8 5. Competitive Advantage Achievedwhenfirm h d h f Producessuperiorproductor Produces superior product or Canbringproducttomarketatlower charge thancompetitors th tit Importantconcepts p p Asymmetries First? moveradvantage Fi t d t Unfaircompetitiveadvantage Leverage drop off 2-9 6. Market Strategy Howdoyouplantopromoteyour productsorservicetoattractyour products or work to attract your target earreach?Detailshowacompanyintendstoentermarket andattractcustomers Bestbusinessconceptswillfailif nonproperly marketedtopotentialcustomers k d i l sliding board 2-10 7. Organizational Development Whattypesoforganizatio nalstructures withinthefirm arnecessarytocarryout within the firm are necessary to carry out thebusinessplan? Describeshowfirmwillorganize trifle Typicallydividedintofunctionaldepartments Ascompanygrows,hiringmovesfromgeneraliststo As company grows hiring moves from generalists to specialists curve 2-11 8.Management Team Whatkindsofexperiencesand backgroundare authorizedforthe background are important for the companysleadersto invite? Employeesareresponsibleformakingthebusinessmodel work Strongmanagementteamgivesinstant crediblenessto outsideinvestors Strongmanagementteammay nonbe competenttosalvagea weakbusinessmodel,butshouldbeabletochangethe modelandredefinethebusinessasitbecomesnecessary Slide 2-12 Insight on Business Online Grocers Finding and Executing the Right Model g g Class intelligence Slide 2-13 Categorizing E-commerce Business ModelsNoonecorrectway 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 Similarbusinessmodelsappearin more thanthan onesector Somecompanies work of goods and services tenfoldbusiness Some companies practise multiple business modelse. g. eBay Slide 2-14 B2C Business Models Portal Searchplusanintegratedpackageofcontent andservices Revenuemodels d l Advertising,referralfees,transactionfees,subscriptions g p VariationsHorizontal/ ecumenical Vertical/Specialized(Vortal) Vertical / Specialized (Vortal) PureSearch Slide 2-15 Insight on Technology Can Bing echo Google? Class Discussion Slide 2-16 B2C Models E-tailer Onlineversionoftraditionalretailer RevenuemodelSales Variations Virtual merchandiser Virtual merchant Bricks? and? clicks Catalogmerchant C t l h t Manufacturer? direct Lowbarriersto launch Slide 2-17 B2C Models Content Provider Digitalcontentonthe vane News,music,video Revenuemodels Revenue models Subscriptionpayperd avouchload(micropayment) advertisementaffiliater eferralfees VariationsContentowners Syndication S di i weaveaggregators Slide 2-18 B2C Models Transaction ingredient procedureonlinetransactionsforconsumers ancientvaluepropositionsaving snipandmoney Revenuemodel R d l Transactionfees Industries exploitationthismodel Financialservices Travelservices Job locationservices Slide 2-19 B2C Models Market Creator Createdigitalenvironmentwherebuyers andsellers micklemeetandtransact Examples Priceline eBay y RevenuemodelTransactionfees Revenue model Transaction fees Slide 2-20 B2C Models benefit Provider Onlineservices e. g. GoogleGoogleMaps,Gmail,etc. mensurateproposition Value propositionValuable,convenient,time? saving,low? costalternativesto traditionalserviceproviders t diti l i id Revenuemodels Revenue models Salesofservices,subscriptionfees,advertising,salesof trade entropy trade data Slide 2-21 B2C Models Community Provider Provideonlineenvironment( complaisant ne bothrk)wherepeoplewithsimilar interests squeeze outtransact,s harecontent,and , , communicate E. g. Facebook,MySpace,LinkedIn,Twitter Revenuemodels R d l Typicallyhybrid,combiningadvertising, subscriptions,sales,transactionfees,affiliatefees Slide 2-22 B2B Business Models lastmarketplaces E? istributor E procurement E? procurement Exchange Industryconsortium Industry consortium Privateindustrialnetwork Private industrial network Singlefirm Industry? spacious Industry huge Slide 2-23 B2B Models E-distributor Versionofretailandwholesalestore, , MROgoodsandindirectgoods Ownedbyonecompanyseekingtoserve galore(postnominal)customers RevenuemodelSalesofgoods ExampleGrainger. com Slide 2-24 B2B Models E-procurement Createsdigitalmarketswhere participantstransactforindirectgoods B2Bserviceproviders,applicationserviceproviders(ASPs) B2B service providers application service providers (ASPs)Revenuemodel advantagefees,supply? chainmanagement,fulfillment services ExampleAriba Slide 2-25 B2B Models Exchanges Independentlyownedverticaldigital p y g mar ketplacefordirectinputs RevenuemodelTransaction,commissionfees Revenue model Transaction commission fees C eate po e u co pet t o bet ee Create supplyfulcompetition among suppliers Tendtoforcesuppliersintopowerfulprice T d f li i f l i competitionnumberofexchangeshas droppeddramatically d dd ll Slide 2-26 B2B Models Industry Consortia Industry? wnedverticaldigitalmarketplace opento call forsuppliers Moresuccessfulthanexchanges More successful than exchanges Sponsoredbypowerful applicationplayers Strengthentraditionalpurchasingbehavior RevenuemodelTransaction,commissionfees R d l T ti i i f ExampleExostar Example Exostar Slide 2-27 Private Industrial Networks Designedtocoordinate comeofcommunication amongfirmsengagedinbusinesstogether fi di b i h Electronicdatainterchange(EDI) Singlefirmnetworks Most roughhewn take a crap M t f ExampleWal? MartsnetworkforsuppliersIndustry? widenetworks Often take onoutofindustryassociations Often evolve out of industry associations ExampleAgentrics Slide 2-28 Other E-commerce Business Models Consumer? to? consumer(C2C) eBay,Craigslist Peer? to? peer(P2P) Peer to peer (P2P) ThePirateBay,Cloudmark M? commerce Technology political platformcontinuestoevolve Technology platform continues to evolve iPhone,smartphonesenergizinginterestinm? commerce pp apps Slide 2-29 Insight on Society Where R U? Not Here Class Discussion Slide 2-30 E-commerce Enablers Gold Rush ModelE? commerceinfrastructurecompanies p haveprofitedthemost Hardware,software,networking,security E? commercesoftwaresystems,paymentsystems Mediasolutions,performanceenhancement CRMsoftware CRM software databases Hostingservices,etc. Slide 2-31 How network & sack Change Business E? commercechangesindustrystructure g y bychanging Basisofcompetitionamongrivals Barrierstoentry y Threatofnewsubstituteproducts Strengthofsuppliers Bargainingpowerofbuyers Bargaining power of buyers Slide 2-32 Industry Value ChainsSetofactivitiesperformedbysuppliers, manufacturers,transporters,d istributors,and f di ib d retailersthattransformrawinputsintofinal productsandservices Internetreducescostof nurtureand Internet reduces cost of information and othertransactionalcosts Leadstogreateroperationalefficiencies, loweringcost,prices,addingvaluefor lowering cost prices adding value for customers Slide 2-33 E-commerce & Industry Value Chains see to it5. 4 Slide 2-34 Firm Value Chains Activitiesthatafirmengagesintocreate inalproductsfromrawinputs Eachstepaddsvalue EffectofInternet Eff fI Increasesoperationalefficiency p y Enablesproductdifferentiation Enables finespuncoordinationofstepsinchain E bl i di ti f t i h i Slide 2-35 E-commerce & Firm Value Chains see to it5. 5 Slide 2-36 Firm Value webs Networkedbusinessecosystem UsesInternettechnologytocoordinatethe valuechainsofbusinesspartners l h i fb i Coordinatesafirmssupplierswithitsown C di t fi li ith it productionneedsusinganInternet? ground supplychainmanagementsystemSlide 2-37 Internet-Enabled Value Web bl d l b F igure5. 6 Slide 2-38 Business Strategy Planforachievingsuperiorlong? term returnsonthecapitalinvestedina businessfirm business firm FourGenericStrategies 1. antitheticiation 2. Cost 3. Scope 4. 4 Focus Slide 2-39 Chapter 6 E-commerce trade Copyright 2010 Pearson Education, Ltd. 2011 Pearson Education, Inc. Slide 6-40 Netflix N fli Strengthens and Defends Its Brand Class Discussion Slide 6-41 Consumers Online Internet Audience & Consumer Behavior Around70%(82million)U. S. ouseholdshave Around 70% (82 million) U S households have Internetaccessin2010 Growthratehasslowed Intensityandscopeofusebothincreasing d f b h Somedemographicgroupshavemuchhigher Some demographic groups have much higher percentagesofonlineusagethanothers Gender,age,ethnicity,communitytype,income,education Slide 6-42 Consumers Online Internet Audience & Consumer Behavior Broadbandaudiencevs. dial? upaudience Purchasingbehavioraffectedby neighborhood Lifestyleandsociologicalimpacts UseofInternetbychildren,teens Us eofInternetassubstituteforother friendlyactivitiesMediachoices TraditionalmediacompeteswithInternetforattention Traditional media competes with Internet for attention Slide 6-43 Consumer Behavior Models Studyofconsumerbehavior favorablescience Attemptstoexplainwhatconsumerspurchase Attempts to explain what consumers purchase andwhere,when,howmuchandwhytheybuy Consumerbehaviormodels Predictwiderangeofconsumerdecisions Predict wide range of consumer decisions Basedonbackgrounddemographicfactorsand otherintervening,moreimmediatevariables h i i i di i bl Slide 6-44 General Model of Consumer Behavior Figure6. Slide 6-45 Background Demographic Factors 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 Decision Psychographicresearch Combinesdemographicandp sychologicaldata Combines demographic and psychological data Dividesmarketintogroups foundonsocialclass,lifestyle, and/orpersonalitycharacteristics and/or personality characteristicsFivestagesintheconsumerdecisionprocess 1. 2. 3. 4. 5. Awarenessofneed Searchformoreinformation evaluationofalternatives Actualpurchasedecision Actual purchase decision Post? purchasecontactwithfirm Slide 6-47 Consumer D i i C Decision Process & P Supporting Communications Figure6. 3 Slide 6-48 Model of Online Consumer Behavior Decisionprocesssimilarforonlineandoffline behavior Generalonlinebehaviormodel Consumerskills Productcharacteristics Attitudestowardonlinepurchasing Perceptions or socontroloverWebenvironment p Web sitefeaturesClickstreambehaviorTransactionlogfor Clickstream behavior Transaction log for consumerfromsearchenginetopurchase Slide 6-49 Model of Online Consumer Behavior Figure6. 4 Slide 6-50 Model of Online Consumer Behavior Clickstreamfactors take on Numberofdayssincelastvisit Number o f days since last visit Speedofclickstreambehavior Numberofproductsviewedduringlastvisit b f d i dd i l ii Numberof knavesviewed Supplyingpersonalinformation Numberofdayssincelastpurchase Numberof medievalpurchasesClickstream merchandise Clickstream marketing Slide 6-51 Shoppers Browsers & Buyers Shoppers87%ofInternetsubstance abusers 72%buyers 72% buyers 16%browsers(purchaseoffline) cardinal? thirdofflineretailpurchasesinfluencedby O thi d ffli t il h i fl db onlineactivities Online affairalsoinfluencedbyofflinebrandsand shopping pp g E? commerceandtraditionalcommerceare twin partofacontinuumofconsumingbehavior part of a continuum of consuming behavior Slide 6-52 Online Shoppers & Buyers Figure6. 5 Slide 6-53What Consumers Shop & Buy Online bouffantticketitems($500plus) Travel,computerhardware,consumerelectronics Expanding Consumersmoreconfidentinpurchasingcostlieritems Smallticketitems($100orless) ($ ) Apparel,books,officesupplies,software,etc. SoldbyfirstmoversonWeb Sold by fir st movers on Web Physicallysmallitems Highmarginitems Broadselectionofproducts operational Slide 6-54 What Consumers Buy Online Figure6. 6 Slide 6-55 Intentional Acts How Shoppers Find Vendors Online pp Searchengines(59%) S h i (59%) CouponWebsites(29%) Coupon Web sites (29%) Comparisonshoppingsites(27%) E? ailnewsletters(25%) Onlineshoppersarehighlyintentional, lookingforspecificproducts,companies, services Slide 6-56 Table6. 6 Slide 6-57 Trust, Utility, Opportunism in Online Markets Twomostimportantfactorsshapingdecision Two most important factors shaping decision topurchaseonline Utility U ili Betterprices,convenience, facilitate Trust Asymmetryofinformation roll in the hayleadtoopportunistic behaviorbysellers Sellerscandeveloptrustby buildingstrongreputations forhonesty,fairness,delivery Slide 6-58 Basic trade Concepts merchandisingStrategiesandactionstoestablishrelationship Strategies and actions to establish relationship withconsumerandencouragepurchasesof p productsandservic es Addressescompetitivesituationofindustriesand firms Seekstocreateunique,highly separate productsorservicesthatareproducedorsupplied byonetrustedfirm Unmatchablefeatureset Avoidanceofbecomingcommodity Slide 6-59 Feature Sets Threelevelsofproductorservice 1. Coreproduct e. g. cellphone g p 2. Actualproduct Characteristicsthatdeliver nerve centrebenefits Ch t i ti th t d li b fit e. g. widescreenthatconnectstoInternet 3. AugmentedproductAdditionalbenefits Basisforbuildingtheproductsbrand e. g. productwarranty Slide 6-60 Feature Set Figure6. 7 Slide 6-61 Products, Brands & Branding Process Brand Expectationsconsumershavewhenconsuming,or thinkingaboutconsuming,aspecificproduct MostimportantexpectationsQuality,reliability, Most important expectations Quality reliability consistency,trust,affection,loyalty,reputation BrandingProcessofbrandcreation Branding Process of brand creation Closedloopmarketing Brandstrategy Brandequity Brand eq it Slide 6-62 Marketing A ti iti M k ti Activities F rom Products to Brands Figure6. 8Slide 6-63 STP Segmenting, Targeting, Positioning Majorwaysusedtosegment,targetcustomers 1. 2. 3. 4. 5. 6. behavioural B h i l Demographic Psychographic h hi expert Contextual Search Withinsegment,productispositioned andbrandedas aunique,high? valueproduct, particularlysuitedto q g p p y needsofsegmentcustomers Slide 6-64 Are Brands Rational? Forconsumers,a ableyes Brandsintroducemarketefficiencybyreducingsearchand decision? makingcosts Forbusinessfirms,adefiniteyes Amajor addressofrevenue Lowercustomeracquisitioncost Increasedcustomerretention Successfulbrandconstitutesalong? asting(thoughnot necessarilypermanent)inequitablecompetitiveadvantage Slide 6-65 Can Brands Survive Internet? Brands & Price Dispersion p Earlypostulation LawofOnePrice endofbrands Early postulation Law of One Price end of brands Instead Consumersstillpaypremiumpricesfordifferentiated products E? commercefirmsrely severelyonbrandstoattract customersandchargepremiumprices Subs tantialpricedispersion Largedifferencesinpricesensitivityforsameproduct Large differences in price sensitivity for same product Libraryeffect Slide 6-66Revolution in Internet Marketing Technology Threebroadimpacts Scopeofmarketingcommunicationsbroadened Richnessofmarketingcommunications adjoind g Informationintensityofmarketplaceexpanded Internetmarketingtechnologies Internet marketing technologies Webtransactionlogs CookiesandWebbugs Cookies and Web bugs Databases,datawarehouses,datamining Advertisingnetworks Customerrelationshipmanagementsystems Slide 6-67 Web Transaction LogsBuiltintoWeb bonifacesoftware RecorduseractivityatWebsite y WebtrendsLeadingloganalysistool Providesmuchmarketingdata,especially Provides much marketing data especially combinedwith Registrationforms R i i f Shoppingcartdatabase Answersquestions suchas Whataremajorpatternsofinterestandpurchase? Afterhomepage,wheredousersgofirst? Second? Slide 6-68 Cookies & Web Bugs Cookies SmalltextfileWebsitesplaceonvisitor sPCeverytime theyvisit,asspecificpagesareaccessed ProvideWebmarketerswithveryquick instrumentof identifyingcustomerandunderstandingpriorbehavior FlashcookiesWebbugs Tiny(1pixel)graphics plantine mailandWebsites Tiny (1 pixel) graphics embedded in e? mail and Web sites Usedtoautomaticallytransmitinformationaboutuserand page being viewed to monitoring server pagebeingviewedtomonitoringserver Slide 6-69 Insight on Society g y Every Move You Make, Every Click You Make, Well Be trailing You , g Class Discussion Slide 6-70 Databases DatabaseStoresrecordsandattributes Databasemanagementsystem(DBMS) Softwareusedtocreate,maintain,andaccessdatabasesSQL(StructuredQueryLanguage) Industry? standarddatabasequeryandmanipulation wordingusedin y q y p g g arelationaldatabase Relationaldatabase Representsdataastwo? dimensionaltableswithrecords organizedin rowsandattributesincolumnsdatawithindifferenttablescanbe flexiblyrelatedaslongasthetablesshareacommondataelement flexibly related as long as the ta bles share a common data element Slide 6-71 Relational Database survey of E-commerce Customers Figure6. 12 Slide 6-72 Data Warehouses & Data dig DatawarehouseCollectsfirm stransactionalandcustomerdatainsingle Collects firms transactional and customer data in single locationforofflineanalysisbymarketersandsite managers Datamining Analyticaltechniquestofindpatternsindata,model Analytical techniques to find patterns in data model behaviorofcustomers,developcustomerprofiles Query? drivendatamining Query driven data mining Model? drivendatamining Rule? baseddatamining l b dd Collaborativefiltering Slide 6-73 Data Mining & Personalization Figure6. 13 Slide 6-74 Insight on TechnologyThe Long T il Big Hits and Big Misses Th L Tail Bi Hi d Bi Mi Class Discussion Slide 6-75 Customer Relationship Management ( (CRM) Systems ) y Recordallcontactthatcustomerhaswithfirm Generatescustomerprofileavailabletoeveryonein firmwithneedtoknowthecustomer fi ith d t k th t Customer profiles can contain us tomerprofilescancontain Mapofthecustomersrelationshipwiththefirm Productandusagesummarydata Demographicandpsychographicdata positivenessmeasures Contacthistory Contact history Marketingandsalesinformation Slide 6-76Customer Relationship Management System Figure6. 14 Slide 6-77 Market Entry Strategies Figure6. 15 Slide 6-78 Establishing Customer Relationship AdvertisingNetworks Banneradvertisements Adserverselectsappropriate standardadbasedon Ad server selects appropriate banner ad based on cookies,Webbugs,backenduserprofile databases authoritymarketing Permission marketing Affiliatemarketing g Slide 6-79 How Advertising Network utilisations e. g. , DoubleClick Figure6. 16 Slide 6-80 Establishing Customer Relationship (contd) ViralmarketingGettingcustomerstopassalongcompanysmarketing messagetofriends,family,andcolleagues Blogmarketing Usingblogstomarketgoods by means ofcommentaryand U i bl k d h h d advertising Socialnetworkmarketing,socialshopping Mobilemarketing Mobile marketing Slide 6-81 Insight on Business Social Network Marketing Lets Buy Together Class Discussion Slide 6-82 Establishing Customer Relationship (contd) Wisdomofcrowds(Surowiecki,2004) ( , ) Largeaggregatesproduce mendestimatesandjudgments Examples E l Predictionmarkets Folksonomies Socialtagging Social taggingBrandleveraging Slide 6-83 Customer Retention Strengthening Customer Relationship p Massmarketing Mass marketing Directmarketing Micromarketing Micromarketing Personalized,one? to? onemarketing Segmentingmarketonpreciseandtimelyunderstandingof Segmenting market on precise and timely understanding of individualsneeds Targetingspecificmarketingmessagestotheseindividuals Positioningproductvis? a? viscompetitorstobetrulyunique Personalization Canincreaseconsumerssenseofcontrol,freedom Canalsoresultinunwantedoffersorreducedanonymity Slide 6-84Mass Market-Personalization Continuum Figure6. 17 Slide 6-85 Other Customer Retention Marketing Technics Customization Customerco? production Transa ctivecontent Combinetraditionalcontentwithdynamicinformation tailoredtoeachusersprofile Customerservice FAQs Q Real? timecustomerservicechatsystems Automatedresponsesystems Automated response systems Slide 6-86 Net Pricing Strategies Pricing Integralpartofmarketingstrategy I t l t f k ti t t Traditionallybasedon Fixedcost Variablecosts Demandcurve Pricediscrimination Price discriminationSellingproductstodifferentpeopleandgroups basedonwillingnesstopay Slide 6-87 Net Pricing Strategies (contd) Freeandfreemium Canbeusedtobuildmarketawareness Versioning Creatingmultipleversionsofproductandselling essentiallysameproducttodifferentmarketsegments atdifferentprices at different prices Bundling Offersconsumerstwoormoregoodsforoneprice Off t d f i Dynamicpricing Auctions Yieldmanagement Slide 6-88 Channel Management Strategies Channels Differentmethodsbywhichgoodscanbedistributedand exchangeChannel difference Whennewvenueforsellingproductsorservicesthreatens gp ordestroysexistingsalesvenues E. g. onlineairline/travelservicesandtraditionaloffline travelagencies Somemanufacturersareusingpartnership gp p modeltoavoid lineconflict Slide 6-89 Chapter 7 E-commerce Marketing Communications Chapter 7 E-commerce Advertising Copyright 2010 Pearson Education, Ltd. 2011 Pearson Education, Inc. Slide 7-90 Video Ads Shoot, Click, Buy Class Discussion Slide 7-91 Marketing Communications TwomainpurposesSales promotionalsalescommunications Branding b di B di brandingcommunications i i Onlinemarketingcommunications Online marketing communications Takesmanyforms Onlineads,e? mail,publicrelations,Web 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 Advertise ments Displayads Richmedia Videoads Searchengineadvertising Socialnetwork,blog,andgameadvertising Social network blog and game advertising Sponsorships Referrals(affiliaterelationshipmarketing) E? mailmarketing g Onlinecatalogs Slide 7-95 Display Ads Bannerads RectangularboxlinkingtoadmansWebsite IABguidelines e. g. justbanneris468x60pixels,13K e g Full banner is 468 x 60 pixels 13K toss off? upads Appearwithoutusercallingforthem wind upnegativeconsumersentiment g Twiceaseffectiveasnormalbannerads Pop? nderadsOpenbeneathbrowserwindow Pop under ads Open beneath browser window Slide 7-96 Rich Media Ads UseFlash,DHTML,Java,JavaScript About7%ofallonlineadvertisingexpenditures Tendtobemoreaboutbranding d b b b di Boostbrandawarenessby10% Boost brand awareness by 10% IABstandardslimitlength Interstitials Superstitials Slide 7-97 Video Ads Fastestgrowingformofonlineadvertisement IABstandards Linearvideoad Non? linearvideoad In? bannervideoad In? textvideoad Ad placement Advertisingnetwo rks Advertisingexchanges BannerswappingSlide 7-98 Search railway locomotive Advertising h i d i i Almost50%ofonlineadspendingin2010 Types Paidinclusionor array 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) Nearlyidealtargetedmarketing Nearly ideal targeted marketing Issues Disclosureofpaidinclusionandplacement practices Clickfraud Adnonsense Slide 7-100 Mobile Advertising HalfofU. S.InternetusersaccessInternet Half of U. S. Internet users access Internet with promptdevices Currentlysmallmarket,butfastest growingplatform(35%) growing platform (35%) GoogleandApplein escapetodevelop Google and Apple in race to develop mobileadvertisingplatform AdMob,iAd Slide 7-101 Sponsorships & Referrals Sponsorships Paidefforttotieadvertiser snameto Paid effort to tie advertisers name to particularinfor mation,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 thatsitecanclickthroughtoaffiliatessite Slide 7-102 E-mail Marketing & Spam Explosion Directe? mailmarketing Lowcost,primarycostispurchasingaddresses SpamUnsolicitedcommerciale? mail Spam Unsolicited commercial e mail Approx. 90%ofalle? mail Effortstocontrolspam Technology(filteringsoftware) authoritiesregulation(CAN? SPAMandstatelaws) Voluntaryself? regulationbyindustries(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? intenseuseincreasingwithincrease inbroadbanduse in broadband use Twotypes 1. 2. 2 Full? page riddles,e. g. Landsend. com football fielddisplays,e. g. Amazon Grid displays e g Amazon Ingeneral, onlineandofflinecatalogs complementeachother Slide 7-105 Social Marketing Many? to? manymodel Usesdigitallyenablednetworkstospreadads Blogadvertising Blog advertising Onlineadsrelatedtocontentofblogs Socialnetworkadvertising Social network advertisingAdsonMySpace,Facebook,YouTube,etc. racyadvertising 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 secrecyconcerns acy co ce s Consumerresistance Slide 7-108Mixing Off-line & Online Marketing Communications g Mostsuccessfulmarketingcampaigns M t f l k ti i incorporatebothonlineandoffline tactical maneuver Of flinemarketing DrivetraffictoWebsites Drive traffic to Web sites Increaseawarenessandbuildbrandequity Consumerbehaviorincreasinglymulti? channel 60%consumersresearchonline in advancebuyingoffline % y g Slide 7-109 Insight on Business g Are the Very Rich Different From You and Me? Class Discussion Slide 7-110 Online Marketing Metrics Lexicon Measuringaudiencesizeormarketshare Impressions I i Click? throughrate(CTR) cipher? 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 Cartconversionrate Checkoutconversionrate Checkout conversion rate Abandonmentrate Retentionrate Attritionrate E mailmetrics E? mail metrics Openrate spoken languagerate Delivery rate Click? throughrate (e mail) (e? mail) Bounce? backrate Slide 7-112 Online Consumer Purchasin g 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 Salescanbedirectlycorrelated Sales can be directly correlated Bothonline/offlinerevenues Offlinepurchasescannotalwaysbedirectlyrelatedtoonline 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 molde Activity Ana lysis b i i i l i Figure7. 10 Slide 7-117 Insight on Technology Its 10 P. M. Do You Know Who Is On Your Web Site? Class Discussion Slide 7-118Web Site as Marketing Communications Tool g Websiteasextendedonlineadvertisement W b i d d li d i DomainnameAnimportantrole Domain name An important role Searchengine optimisation Search engine optimization Searchenginesregistration KeywordsinWebsitedescription 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 Easeofuse 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 Ethical, Social, and Political Issues in E-commerce E commerce Chapter 8 Ethics, Law, E-commerce Copyright 2010 Pearson Education, Ltd. 2011 Pearson Education, Inc. Slide 8-123 Ethical, Social, Political Issues in E-commerceInternet,likeothertechnologies,can Internet like other technologies can Enablenewcrimes Affectenvironment Threatensocialvalues Costsandbenefitsmustbecarefully 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 Publicsafetyandwelfare 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 Studyofprinciplesusedtodeterminerightandwrongcourses of action Responsibility p y Accountability Liability Lawspermittingindividualsto domesticizedamages Dueprocess Lawsareknown,understood Laws are known understood Abilitytoappealtohigherauthoritiestoensurelawsapplied correctly Slide 8-127 Analyzing Ethical Dilemmas l i hi l il Processforanalyzing estimabledilemmas 1. 2. 3. 3 4. 5. Identifyandclearlydescribethefacts Definetheconflictordilemmaandidentifythe y higher? rdervaluesinvolved Identifythestakeholders Identify the stakeholders Identifytheoptionsthatyoucanreasonably take t k Identifythepotentialconsequencesofyour options Slide 8-128 Candidate Ethical Principles GoldenRule Universalism SlipperySlope CollectiveUtilitarianPrinciple RiskAversion Ri k A i NoFreeLunch TheNewYorkTimesTest TheSocialContractRule Slide 8-129 Privacy & Information Rights Privacy Moralrightofindividualstobeleftalone,free fromsurveillanceorinterferencefromother individualsororganizations Information concealment p y Subsetofprivacy IncludesTheclaimthatcertain informationshouldnotbe collectedatall Theclaimofindividualstocontroltheuseofwhatever h l i f i di id l l h f h informationiscollectedaboutthem Slide 8-130 Privacy & Information Rights (cont. ) Majorethicalissuerelatedtoe? commerce andprivacy d i Underwhatconditionsshouldweinvadethe privacyofothers? Majorsocialissue j Developmentofexpectationsofprivacyand privacynorms privacy norms Majorpoliticalissue Developmentofstatutesthatgovernrelations D l t f t t t th t l ti betweenrecordkeepersandindividuals Slide 8-131 Information Collected at E-commerce SitesDatacollectedincludes Personallyidentifiableinformation(PII) anon.information Anonymous 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 & Privacy Socialnetworks Encouragesharingpersonaldetails Poseuniquechallengetomaintaining privacy Facebook sBeaconprog ram Facebooks Beacon program Facebook sTermsofServicechange Facebooks Terms of Service change Slide 8-133 Profiling & Behavioral Targeting ProfilingCreationofdigitalimagesthatcharacterizeonlineindividualand groupbehavior Anonymousprofiles A fil Personalprofiles Personal profiles Advertisingnetworks cut throughconsumerandbrowsingbehavioronWeb T k db i b h i W b Dynamically chastenwhatuserseesonscreen Buildandrefreshprofilesofconsumers Googles AdWords program Slide 8-134 Profiling & Behavioral Targeting (contd) Deeppacketinspection Business positioning Webprofilingservesconsumersandbusinesses Increaseseffectivenessofadvertising,subsidizingfree content Enablessensingofdemandfornewproductsandservices CriticsperspectiveUnderminesexpectationofanonymityandprivacy Consumersshow fundamentaloppositiontounregulated collectionofpersonalinformation Enablesweblining Slide 8-135 Internet & Government Invasions of Privacy Variouslawsstrengthenabilityoflawenforcement agenciestomonitorInternetusersw ithout i i I ih knowledgeandsometimeswithoutjudicialoversight CALEA,PATRIOTAct,Cyber credentialEnhancementAct, Homeland bailAct Governmentagenciesarelargestusersofprivate sectorcommercialdatabrokers sector commercial data brokers RetentionbyISPsofuserdataaconcern Slide 8-136Legal shelters InU. S. ,privacyrightsexplicitlygrantedor derivedfrom Constitution Constitution FirstAmendment freedomofspeechandassociation FourthAmendment un conceivablesearchandseizure F th A d t bl h d i FourteenthAmendment dueprocess Specificstatutesandregulations(federaland Specific statutes and regulations (federal and state) Commonlaw Slide 8-137 Informed Consent U. S. firmscangatherandredistribute transactioninformationwithoutindividuals i i f i ih i di id l informedconsent IllegalinEurope Informedconsent Opt? in Opt out Opt? out ManyU. S. ? commercefirmsmerelypublishinformation p practicesaspartofprivacypolicywithoutprovidingfor p p yp y p g anyformofinformedconsent Slide 8-138 FTCs Fair Information Pra ctices Principles FederalTradeCommission Federal Trade Commission Conductsresearchandrecommendslegislationto sexual relation FairInformationPracticePrinciples(1998) Fair Information Practice Principles (1998) Notice/Awareness(Core) Choice/Consent(Core) Choice/Consent (Core) Access/Participation Security Enforcement Guidelines,notlaws Guidelines not laws Slide 8-139 FTCs Fair Information Practice PrinciplesNotice/Awareness i / Sitesmustdiscloseinformationpracticesbeforecollectingdata. Includes Sit t di l i f ti ti b f ll ti d t I l d acknowledgmentofcollector,usesofdata,otherrecipientsofdata, constitutionof collection(active/inactive),voluntaryorrequired,consequencesofrefusal,and stepstakentoprotectconfidentiality,integrity,andqualityofthedata Choice/Consent Theremustbeachoiceregimeinplaceallowingconsumerstochoosehow theirinformationwillbeusedforsecondarypurposesotherthansupporting thetransaction,includinginternaluseandtransfertothirdparties.Opt? in/Opt? outmustbeavailable. Consumer sshouldbeabletoreviewandcontesttheaccuracyand completenessofdatacollectedabouttheminatimely,inexpensiveprocess. Access/Participation ccess/ a c pa o Security y Enforcement Datacollectorsmusttakereasonablestepstoassurethatconsumer informationisaccurateandsecurefromunauthorizeduse. Theremustbeinplacea utensiltoenforceFIP 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 Completetransparencytouserbyprovidingdisclosureandchoiceoptions 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. Donebyindependentthirdparties,suchas impressionprogramsandaccounting Done by independent third parties such as seal programs and accounting firms. medicaltopics,sexualbehaviororsexualorientation,oruseSocialSecurity medical topics sexual behavior or sexual orientation or use Social Security numbersforprofiling. Slide 8-141 Choice Access Security EnforcementRestrictedCollection Advertisingnetworkswillnotcollectinformationaboutsensitivefinancialor European Data rampart Directive PrivacyprotectionmuchstrongerinEuropethanU. S. Europeanapproach spatiotemporalandregulatoryinnature p g y EuropeanCommissionsDirectiveonDataProtection (1998) (1998) StandardizesandbroadensprivacyprotectioninEuropean brotherhood countries DepartmentofCommercesafeharborprogram ForU. S. firmsthatwishtocomplywithDirective Slide 8-142 Private Industr y Self-RegulationSafeharborprograms Privatepolicymechanismtomeetobjectivesof Pi t li h i t t bj ti f governmentregulationswithoutgovernmentinvolvement e. g. Privacysealprograms e g Privacy seal programs Industryassociationsinclude OnlinePrivacyAlliance(OPA) NetworkAdvertisingInitiative(NAI) CLEARAdNoticeTechnicalSpecifications Privacyadvocacygroups Emergingprivacyprotectionbusiness Slide 8-143 Insight on Business Chief Privacy Officers hi f i ffi Class Discussion Slide 8-144 Technological Solutions Spyware,pop? pblockers Cookiemanagers k Anonymousremailers,surfing Anonymous remailers surfing PlatformforPrivacyPreferences(P3P) Comprehensivetechnologicalprivacyprotectionstandard Worksthroughuser sWebbrowser Works through users Web browser CommunicatesaWebsitesprivacypolicy Comparessitepolicytouserspreferencesortootherstandards suchasFTCsFIPguidelinesorEUsDataProtectionDirective Slide 8-145 How P3P Works k Figure8. 2(A) Slide 8-146 Insight on Technology The Privacy T Th P i Tug of War fW Advertisers Vs. Consumers Class Discussion Slide 8-147 Intellectual Property Rights IntellectualpropertyEncompassesalltangibleandintangibleproductsofhumanmind Majorethicalissue j Howshouldwetreatpropertythatbelongstoothers? Majorsocialissue Major social issue Istherecontinuedvalueinprotectingintellectualpropertyinthe Internetage? Majorpoliticalissue HowcanInternetande? commerceberegulatedorgovernedto g g protectintellectualproperty? Slide 8-148 Intellectual Property Protection Threemaintypesofprotection Copyright Patent Trademarklaw Trademark law Goalofintellectualpropertylaw Balancetwocompetinginterests publicand B l t ti i t t bli d privateMaintainingthisbalanceofinterestsisalways M i t i i thi b l fi t t i l challengedbytheinventionofnew technologies Slide 8-149 Copyright Protectsoriginalformsofexpression(butnot ideas)frombeingcopiedbyothersfora ideas) from being copied by others for a periodoftime Lookandfeelcopyrightinfringementlawsuits Fairuse principle Fair use doctrine Di gitalMillenniumCopyrightAct,1998 FirstmajorefforttoadjustcopyrightlawstoInternetage ImplementsWIPOtreatythatmakesit iniquitoustomake, distribute,orusedevicesthatcircumventtechnology? asedprotectionsofcopyrightedmaterials Slide 8-150 Patents Grantowner20? yearmonopolyonideasbehindan invention Machines Man? doproducts p Compositionsofmatter Processingmethods Inventionmustbenew,non? obvious,novel Encouragesinventors g Promotesdisseminationofnewtechniquesthrough licensing Stiflescompetitionbyraisingbarrierstoentry Slide 8-151 E-commerce Patents 1998StateStreetBank&Trustv. SignatureFinancial Group 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 source Purpose p ascertainconsumergetswha tispaidfor/expectedtoreceive Protectowneragainstpiracyandmisappropriation Infringement Marketconfusion Badfaith Dilution Behaviorthatweakensconnectionbetweentrademark andproduct Slide 8-153 Trademarks & Internet CybersquattingAnticybersquattingConsumerProtectionAct(ACPA) Cyberpiracy Typosquatting Metatagging M i Keywording y g Deeplinking Framing Slide 8-154 Governance Primaryquestions WhowillcontrolInternetande? commerce? Whatelementswillbecontrolledandhow? What elements will be controlled and how? Stagesofgovernanceande? commerce g g GovernmentControlPeriod(19701994) Privatization(19951998) Privatization (1995 1998) Self? Regulation(1995present) GovernmentRegulation(1998present) Slide 8-155 Who Governs E-commerce & Internet? MixedmodeenvironmentSelf? regulation,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? commercetaxationillustrates complexityof governanceandjurisdictionissues governance and jurisdiction issues U. S. salestaxedbystatesandlocalgovernment MOTOretailing E? commercebenefitsfromtaxsubsidy yOctober2007Congressextendstaxmoratoriumfor anadditionalsevenyears an additional seven years Unlikelythatcomprehensive,integratedrational approachtotaxationissuewillbe resolutefor approach to taxation issue will be determined for sometimetocome Slide 8-157 Net Neutrality Currently,allInternettraffictreatedequally allactivitieschargedthesamerate,no ll i i i h d h preferentialassignmentofbandwidth common senseproviderswouldliketocharge differentiatedpricesandrationbandwidth 2010,U. S. ppealscourtruledthatFCChadno authoritytoregulateInternetproviders Slide 8-158 Public Safety & Welfare Protectionofchildrenandstrong g sentimentsagainstpornography Passinglegislationthatwillsurvivecourt P i l i l ti th t ill i t challengeshasproveddiff icult Effortstocontrolgamblingandrestrict salesofdrugsandcigarettes sales of drugs and cigarettes Currentlymostlyregulatedbystatelaw UnlawfulInternetGamblingEnforcementAct Slide 8-159 Insight on Society Internet Drug Bazaar Class Discussion Slide 8-160