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Copyright © Houghton Mifflin Company. All rights reserved. 4-1
In the news……….
• YouTube
• Click Fraud
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Week 5
• Analysis of e-business models
• Internet-based software and e-business solutions.
• Characteristics of Internet-based software and e-business solutions.
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What do we mean by a model?
• A plan
• In business, a model is a blueprint to emulate
• Using best practice
models
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Business Model
• A group of shared or common characteristics, behaviors, and methods of doing business that enables a firm to generate profits through increasing revenues and reducing costs
• A method of doing business by which the company can sustain itself, i.e. make money
• The question to ask: how does the company generate revenue?
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Models in E-Business
• A descriptive representation of the fundamental components of a business that operates partially or completely on the Internet.
• So how does the company do business on the Internet? What is their model?
• Companies usually have more than one model.
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A History Lesson
Content provider (AOL) Model
Advertising Model
E-Commerce Model of Tangibles
E-Commerce of Non-tangibles
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e-Business Models
• Brokerage• Advertising• Subscription, Pay-per-View, or Membership• Distribution Channel Member • Affiliation• Community• Infomediary• Portal • Others…
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e-Business Models
• Intellectual property
• Protected by patents?
• America Online
• Ebay
• Netflix
• Yahoo
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Brokerage e-Business Model
An e-business model that covers online marketplaces in which buyers and sellers are brought together in an organized environment to facilitate the exchange of goods.
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Brokerage e-Business Models
• Marketplace Exchange model - Orbitz• Buy/Sell Fulfillment – carsdirect• Demand Collection System – priceline• Auction Broker – ebay • Transaction Broker – Paypal or Escrow• Distributor • Search Agent - cheapesttextbooks• Virtual Marketplace – Amazon
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Close Up of a Brokerage Model
www.cheapesttextbooks.com
•Target Audience?
•Primary purpose of website?
•What can you do on website?
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Advertising e-Business Model
• An e-business model based on earning revenues in exchange for the display of advertisements on a firm’s web site.
• Banner ads – major source of revenue
• Model works best when traffic is large or highly specialized
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Advertising e-Business Model
• Portal - Yahoo• Classifieds - Craigslist• User Registration - NYTimes• Query-Based Paid Placement - Google• Behavioral Marketing – Claria • Content-Targeted Advertising - Google• Intromercials – Jaguar• Ultramercials – Mercedes Benz
Mercedes Benz
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Close Up of a Advertising Model
CraigsList
•Target Audience?
•Primary purpose of website?
•What can you do on website?
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Advertising e-Business Model
Under which circumstances would advertising online be a failure?
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Subscription e-Business Model
• An e-business model in which access to a site is controlled by a subscription fee.
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Subscription e-Business Model
• Content Services - Netflix
• Person to Person Networking Services - Classmates
• Trust Services – Truste
Truste
• Internet Service Providers – AOL
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Close Up of a Subscription Model
http://www.classmates.com/
•Target Audience?
•Primary purpose of website?
•What can you do on website?
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Pay-Per-View or Utility e-Business Model
• An e-business model in which access to a site is controlled by a charge to view single items.
• On-demand model based on pay as you go approach
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Pay-Per-View or Utility e-Business Model
• Metered Usage Model
• Metered Subscriptions –
• Slashdot
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Close Up of a Pay Per View
http://slashdot.org/
•Target Audience?
•Primary purpose of website?
•What can you do on website?
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Pay-Per-View or Utility e-Business Model
• For which online content providers would pay-per-view most likely succeed and for which would it likely be a failure?
• What advantages and disadvantages are there for selling one item at a time online?
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Membership e-Business Model
• Access to a site is controlled by membership fees.
• Similar to Subscription and Pay-Per-View
• Example: Netflix
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Membership vs Pay Per View
• For what kind of situations would the Pay Per View model be more successful than the subscription model?
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Distribution Channel Member e-Business Model
• An e-business model that includes activities of retailers, wholesalers, and manufacturers carrying on business through the Internet.
• Merchant models• Direct (manufacturer) models
• Example: Dell
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Distribution Channel Member e-Business Model
• Merchant models:• Virtual Merchant – Amazon• Catalog Merchant – LandsEnd• Click and Mortar – Barnes and Noble• Bit Vendor – Apple iTunes Music Store
• Direct models: • Purchase• Lease (terms of use sale)• License – software licensing • Brand Integrated Content - BMWfilms
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Close Up of Two Distribution Channel Models
Amazon.com versus Barnes & Noble
• How are these two the same?
• Different?
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Distribution Channel e-Business Models
• What advantages does an existing bricks-and-mortar retailer have over a new start-up if it should set up an online shopping site?
• What reasons might explain why an existing bricks-and-mortar retailer would choose not to create an online shopping site?
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Affiliation e-Business Models
• An e-business model that involves payments to website operators for customers who find their way to a company’s site and either buy merchandise or services or perform some other action, such as registering and providing certain information.
• Contrast with the portal model• Examples are Barnes & Noble and Amazon.com
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Affiliation e-Business Models
• Banner Exchange
• Pay Per Click
• Revenue Sharing
• What risks and benefits are associated with an affiliation arrangement for both parties as well as any customers?
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Close Up of an Affiliate
www.amazon.com
•Target Audience?
•Primary purpose of website?
•What can you do on website?
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Community e-Business Model
• An e-business model built around the idea that a group of online users can be regularly brought together at a commonly used website for commercial purposes.
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Community e-Business Model
• Open Source – Red Hat
• Open Content - Wikipedia
• Public Broadcasting – WCPE.org
• Social Networking Services – Flickr, Friendster, Orkut
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Close Up of a Community Model
Wikipedia
•Target Audience?
•Primary purpose of website?
•What can you do on website?
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Infomediary e-Business Model
• An e-business model based on the collection and sale of online information.
• Infomediaries include research firms that post their reports on their websites (Forrester.com) as well as firms that produce lists and directories with links to articles and websites (Clickz.com).
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Infomediary e-Business Model
• Advertising Networks - DoubleClick
• Audience Measurement Services – Nielsens/Netratings
• Incentive Marketing - Coolsavings
• Metamediary - Edmunds
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Close Up of an Infomediary
Coolsavings.com
•Target Audience?
•Primary purpose of website?
•What can you do on website?
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Portal e-Business Model
• A type of infomediary that earns revenues by drawing users to its site and serving as a gateway or portal to information located elsewhere on the Internet.
• MSN, Yahoo!, and Google
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Close Up of an Portal Model
Yahoo.com
•Target Audience?
•Primary purpose of website?
•What can you do on website?
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Horizontal Portals
• Portals that have a wide general reach into different informational topics.
• Examples include MSN and Yahoo!
• What are some other examples?
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Vertical Portals
• Portals that have a narrow focus into a particular informational topic.
• Examples include every college and university website as well as any corporate website where users are might be expected to begin their online activities
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Internet-Based Software Solutions: how do they fit?
• Website
• e-Commerce
• Customer Relationship Management
• Supply-Chain Management
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Customer Relationship Management (CRM)
• Software used to manage the tasks of communicating with customers and sharing this information with employees
• CRM requires a standardized approach to handling customers and information.
• Oracle, IBM, SAS
• http://www.salesforce.com/• What are the benefits of following a standardized
approach to handling customers and information?
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Supply-Chain Management (SCM)
• Software used to improve communication between the suppliers and users
• Requires a standardized approach to handling suppliers
• SAP, IBM
• What are the benefits of following a standardized approach to dealing with suppliers?
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Fundamental Characteristics of Internet-Based Software and e-Business Solutions
• Efficiency and Productivity
• Quality, Standardization, and Customization of Products and Services
• Adding Value and Creating Competitive Advantage Online
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