KOLEJ TUNKU ABDUL RAHMAN

SCHOOL OF BUSINESS STUDIES

DIPLOMA IN BUSINESS STUDIES

(E-COMMERCE & MARKETING)

ABDT 3234

Marketing Strategy for E-Commerce

NAME : LOKE WEI WEN

REG NO. : 08PBD03076

CLASS : Y2M25

LECTURER : Mr. Ang TB

The 4 level of commitment

Companies can become involved in e-business at the:-

a)Activity level

b)Business process level

c)Enterprise level

d)Pure play level

a)Activity level

The activity level is the lowest level of the pyramid affects individual business activities that can save the firm money if automated using information technology or the internet. In this low-risk area, the firm realizes cost reductions through e-business effective and efficiencies.

The main e-business models at the activity level includes online purchasing, order processing, e-mail, content publishing, order processing, e-mail, content publishing, business intelligence, online advertising, online sales promotion, and dynamic pricing strategies. There are some descriptions of the business model:-

a. Order Processing - This model occurs when online retailers automate internet

transactions created by customers.

b. Online Purchasing - Firms can use the Web to place orders with suppliers, thus

automating the activity. Normally this activity is not a marketing function, but when

retailers such as Wal-Mart created automated order processing throughout the supply

chain, it had a huge impact on marketing.

c. Content Publishing- In this model, companies create valuable content or services on

their Web sites, draw lots of traffic, and sell advertising. In another type of content

publishing, the firm posts information about its offerings on a Web site, thus saving

printing costs. See the “Let’s Get Technical” box for streaming audio as subscription-

based content.

d. E-mail - When organizations send e-mail communications to stakeholders, they save

their printing and mailing costs.

e. Business Intelligence (BI) - This activity refers to the low-cost online gathering of

secondary and primary information about competitors, markets, customers, and more.

f. Online Advertising and Public Relations (PR) - As an activity, the firm buys

advertising on someone else’s e-mail or Web site. When the firm sells advertising, it is

engaging in content sponsorship, a higher-level process. Online PR includes a firm’s own

Web site, as well as online press releases, and more.

g. Online Sales Promotions - Companies use the internet to send samples of digital

products such as music and software, or to run sweepstakes, among other tactics.

h. Pricing Strategies - With dynamic pricing, a firm presents different prices to various

groups of customers, even at the individual level. Online negotiation through auctions is

one type of dynamic pricing initiated by the buyer instead of the seller. Technology

allows this activity to be automated.

Advantages

The business world is busy. The streets are filled with people with their coat and ties on and

carrying their suitcases, rushing to get to daily work – imagine the view of Wall Street in New

York.

You find it quite difficult to schedule and to accomplish multiple tasks simultaneously. Good

thing, the online technology makes our stressful lives somehow lighter. Businesses, suppliers,

and other services offer their goods online. Because of this, you need not visit stores to buy your

supplies or to order your office needs. This is the advantages of using the activity-level model.

Disadvantages

The disadvantages of using activity-level business model can be include when in the online

purchasing, by using a credit card online, you could be over-extending yourself, and incurring

costs that you don't know how you will pay for right away. Also, by having the stores open 24/7

to you, you are more likely to buy more, thus spending more money than if you were at a store in

person. Using "virtual" funds, it does not seem like you are spending quite as much as when you

have to hand the cashier money, or sign the credit card receipt. Another disadvantage is that lots

of web-sites have you pay shipping and handling charges depending on the product that you

order.

Example of company:-

1) Wall-Mart Company

Wal-Mart is the largest retail store in the United States, and is larger than any other retail

chain in the world. Currently Wal-Mart operates over 4,150 retail facilities globally. Also,

the company is the dominant retail store in Canada, Mexico, and the United Kingdom

(www.walmart.com). According to the Fortune 500 index of the wealthiest and most

powerful corporations in the world, Wal-Mart holds the number one spot, ranked by its total

sales. The company is ranked as the second most admired company in the world by Fortune

(www.fortune.com) Wal-Mart provides general merchandise: family apparel, health &

beauty aids, household needs, electronics, toys, fabrics, crafts, lawn & garden, jewelry and

shoes. Also, the company runs a pharmacy department, Tire & Lube Express, and Photo

processing center as well.

2) Golden Screen Cinema(GSC) Company

The GSC has makes an excellent information system model. It serves up to millions of

customer using its powerful e-ticketing systems. The customer can now books their tickets

and reserving their seats by using this system. It become easier and more convenient

compared to the old manual way. The customer now can book their tickets and then pay the

tickets price by using credit cards, for example Eon cards, Visa cards and etc.

Business Process Level

The next level of the pyramid changes to business processes and this process will increase the

firm’s effectiveness.

The main e-business models at the business process level are customer relationship management,

knowledge management, supply chain management, knowledge management, supply chain

management, community building online, database marketing, enterprise resource planning, and

mass customization.

a. Customer relationship management (CRM) – It involves retaining and growing business

and individual customers through strategies that ensure their satisfaction with the firm and its

products. CRM seeks to keep customers for the long term and to increase the number and

frequency of their transactions with the firm. In the context of e-business, CRM uses digital

processes and integrates customer information collected at every customer “touch point.”

Customers interact with firms in person at retail stores or company offices, by telephone, via

email, or through the internet. The results of interactions at all these touch points are

integrated to build a complete picture of customer characteristics, behaviour, and preferences

which all stored in electronic databases.

b. Knowledge management (KM) - It is a combination of a firm’s database contents, the

technology used to create the system, and the transformation of data into useful information

and knowledge. KM systems create a storehouse of reports, customer account information,

product sales, and other valuable information managers can use to make decisions.

c. Supply chain management (SCM) - It involves coordination of the distribution channel to

deliver products more effectively and efficiently to customers. For example, when a user

orders from certain Web sites, FedEx’s computers receive the instruction to pick up product

from a warehouse and deliver it quickly to customer. Similarly, when consumers buy a

product at the grocery store, the bar code scanner at the checkout tells the store’s computer to

reduce the inventory count by one and then automatically orders more cases of the product

from warehouses or suppliers if inventory in the back room is low.

d. Enterprise resource planning (ERP) – It refers to a back-office system for order entry,

purchasing, invoicing, and inventory control. ERP systems allow organizations to optimize

business processes while lowering costs. Many ERP systems predate the Web. ERP is not a

marketing function, but it is so important that it must be included in this list.

e. Affiliate programs - This is occur when firms put a link to someone else’s retail Web site

and earns a commission on all purchases by referred customers. Amazon.com pioneered this

e-business model. When viewed from an Amazon affiliate’s perspective, it is operating as a

selling agent for Amazon’s products.

Avantages

By using the business process level model, the company can reduce operating costs. You may be

able to handle some customer queries by less-expensive Web or e-mail communications instead

of through a call centre. If your business struggles to maintain multiple mailing lists for different

groups of customers and prospects, the CRM can help you better organize your customer

communications. Besides that, it also can help your company open up more cross-selling

opportunities with a single contact point. This will let you sell more products and services to

existing customers. CRM can help turn prospects into new customers. It can help you close

orders quicker due to improved handling of requests for information and leads. A good system

will ensure that sales leads aren’t dropped due to lack of follow-up.

Disadvantages

Here are a number of other mistakes sales and marketing managers make when selecting to use the CRM under the business process level model.

Not integrating with accounting and marketing information, focusing too much on how sales people use CRM.

Not connecting with service departments, forgetting that customer relationships span the entire lifecycle of a service engagement.

Not planning or staging roll out with a systematic approach shaping the software to your company not the other way around.

Forgetting to set baseline measures then testing new features to drive improvements in your selling system.

Expecting customer relationships management to improve customer retention without implementing specific retention efforts.

Example of company:-

1) Digi-Net Company

Groopz™ (http://www.groopz.com/)- Groopz is Digi-Net’s flagship product. Groopz allows

onlinemerchants and eBusinesses to provide real-time sales assistance and customer support

through text messaging (chat), co-browsing and other technologies. Groopz allows them to

intelligently qualify those whom are most likely to purchase a product or service and proactively

offer them a “digital handshake.” The Digital Handshake™ allows an e-merchant to approach a

potential customer though the Web in much the same way that a traditional salesperson would

approach a potential customer in a brick-and-mortar store. By bridging the gap between how

sales are traditionally done and implementing that style to the Web, Groopz empowers e-

Businesses to do significantly more business and aggressively go out and pursue customers.

Groopz is the only software on the market with these groundbreaking capabilities and the results

speak for themselves: Sites using the proactive Groopz sales technology have seen sales revenue

and customer acquisition rate increases of seventy-five percent (75%) and more.

2) Hotlink Company

Hotlink is a company that specializes in branded products. the company offers creative, unique

and exciting promotional branded items. They create programs to solve customer challenges and

achieve their goals so if you are looking for creative gift ideas for any upcoming customer

loyalty programs, trade shows, employee recognition, or any other special program, they will

certainly do their best to offer the lowest prices, high quality products, and excellent service.

ENTERPRISE-LEVEL MODELS

At the enterprise level of the pyramid, the firm automates many business processes in a unified

system that is demonstrating a significant commitment to e-business. The firms believe that their

future will depend on e-business activity.

The main e-business models at the enterprise level are e-commerce, portal, social networking,

online broker (online exchange and online auction), and online agent (manufacturer’s agent,

shopping agent, and reverse auction).

Normally, at this level people conduct their business through E-commerce.

a. E-commerce – This refer to the online transaction or direct selling that is selling goods

and services on the internet, either in one transaction or over time with an ongoing

subscription price. Online retailers are firms that buy products and resell them online.

One type of online retailer sells physical products and uses traditional transportation

methods to deliver them. The other type sells digital products such as information,

software, music, and deliver them through internet. Many online retailers maintain brick-

and-mortar stores as well. Virtual worlds often create revenue through subscription.

b. Portal - A point of entry to the internet such as Yahoo!. It is portal because it provides

many services in addition to search capabilities. It includes destination for news, games,

maps, shopping, mail and so forth in addition to being jump-off points for content

provided by others. Some portals focus on vertical industries such as Edmund’s.com for

automobiles.

c. Social networking – It is the sites that bring users together to share interest and personal

or professional profiles. They use the community building models previously describes,

but social networks are communities with the purpose of connecting like-minded

individuals for friendship or business.

d. Online brokers – The intermediaries who assist in the purchase negotiation without

actually representing either buyers or sellers. The revenue stream in these models is

commission or fee based. Brokers usually create a market space for exchanges to occur,

taking a piece of the action. A B2B exchange is a special place because it allows buyers

and sellers in a specific industry to quickly get connected. Online auctions occur in the

both B2B and B2C markets, with the online broker providing the website and technology

in exchange for a commission on all sales.

Advantages

It allows businesses to connect with both customers and other associated businesses. By linking

to other businesses in the same or related fields, small businesses have the opportunity to form

mutually beneficial alliances and cross promote. Besides that, advertising through social

networking sites has the potential to reach many more customers than using traditional forms of

advertising. If you run an ad on the radio, it will only run as many times as you pay for it, but

your profile can be viewed an infinite amount of times online. Small businesses can also

advertise on some social networking sites using traditional forms of Internet marketing such as

pay per click, though not all social networking sites offer this form of advertising.

Disadvantages

One of the disadvantages is there are a large number of safety concerns that could be considered

disadvantages as well. Unfortunately, the internet has made it easy for individuals to claim to be

someone who they are not. Essentially, this means that you could be starting an online

relationship with someone who is not as they look in their photos or their personality is not as

they described to you. While this will not only lead to disappointment when you find out, it

could also lead to danger. There have been numerous reports of instances where online dates

resulted in abuse or murder; therefore, you are always urged to be careful and meet your dates in

a safe, public place.

Examples of company:-

1)Dell Company

Dell is reinventing the way the world uses information technology, and how they demonstrate

their commitment to responsible and sustainable business practices. Dell places their product

online in the web and sells it to consumer. They sell their product through commerce and believe

that in the future they will depend on the e-business activity.

2)Edmund Company

Edmund provide spaces for the consumer to place their product to sell and also allow the

consumers to buy their liked product that other people sell. They provide online transaction or

direct selling that is selling goods and services on the internet, either in one transaction or over

time with an ongoing subscription price.

PURE PLAY

The final level of the pyramid is comprised of internet pure plays. Pure plays are businesses that

began on the internet, even if they subsequently added a brick and mortar presence. Amazon and

Newegg are pure plays that ranked first and tenth in sales among all online retailers in 2005,

according to Morgan Stanley (office Depot was second).

Pure plays face significant challenges: they must compete as new bands and take customers away

from established brick-mortar business. The successful ones have been able to do so by industry

redefinition (I.e., changing the rules of the game) (Modahl 2000). One way to change the rules is

to invent a new e-business model as Yahoo!, MySpace and eBay did. In fact some observers

believe that eBay has the only truly viable pure play model in existence. The key to pure play

success is offering greater customer value. For example, buy.com increases customer value by

utilizing a content sponsorship model combines with direct sales. The ad inventory sold on the

site helps to subsidize process for the consumer.

Advantages

When you open an ecommerce shopping cart, your presence is not required for the entire day.

Your online system will take care of most of the things and if you are dealing with products

sales, you will have to just make sure to ship those products. If you are selling a product that can

be received online by your customers, then you will have nothing to work on except to maintain

your accounts book and to perform a periodic check up of your system to ensure that everything

is working fine. As you can see, there is a great room for automation of your online system,

which will free up a lot of your time.

Disadvantages

1. Requires tech savvy and know-how. You need to be at least computer literate to operate a

web business. It is important that you know how to write and edit text in an HTML

environment, create tables, add graphics, and upload files to your server. As you go along,

you need to learn how to automate tasks by installing scripts (there are many available for

free).

2. Business can easily be copied. With your business presented on your site, complete with

detailed descriptions of your services or pictures of your products, people can easily study

what you have to offer and decide to open a similar business to compete with yours. More so

if they perceive your business to be a success. The Internet has allowed your business to be

copied so easily!

3. Greatly depends on your selection of your web hosting company. Unless you are hosting

the site yourself, the continued functioning of your site (and hence your business) depends

solely on a third party -- your web host. Hence, your choice of the web host is extremely

crucial at the very start of your Internet business.

Example of company:-

1) EBay Company

Members from all over the world buy and sell on eBay. EBay offers a wide variety of features

and services that enable members to buy and sell on the site quickly and conveniently. Buyers

have the option to purchase items in auction-style format or items can be purchased at fixed price

through a feature called Buy-It-Now. In addition, items at fixed price are also available

Half.com, an eBay company. EBay is dedicated to its community of members, and has numerous

services which enhance the trading experience.

2) Yahoo! Company

Through use of a hierarchical index and search engine, Yahoo! helps turn the unwieldy content

of the Net into something grasp-able and meaningful. Yahoo! has developed a set of features to

help do just that.

Search Engine - Yahoo!'s search engine enables users to find information about topics of

interest through simple keyword queries. Searches can be restricted to titles, Uniform Resource

Locator (URL) addresses or comments. Boolean searches can also be performed. Search results

are returned along with their locations within Yahoo!'s hierarchical index.

Content - Yahoo!'s newsfeeds and other timely content keep Internet users abreast of the latest

developments on and off the Net. A news summary page allows users to quickly scan current

news and identify stories of interest. Complete articles can be retrieved by simply clicking on

related story summaries. Yahoo! also highlights Internet sites that contain information about

current events.