Slide 7.1

E-procurement

Chapter 7

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Management issues

• What benefits and risks are associated with e-procurement?

• Which method(s) of e-procurement should we adopt?

• What organizational and technical issues are involved in introducing e-procurement?

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How important is procurement?

We estimate that for every dollar a company earns in revenue, 50 cents to 55 cents is spent on indirect goods and services—things like office supplies and computer equipment.

That half dollar represents an opportunity: By driving costs out of the purchasing process, companies can increase profits without having to sell more goods. Hildebrand (2002)

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The 5 rights of e-procurement

• at the right price• delivered at the right time• are of the right quality• of the right quantity• from the right source.

Baily et al., 1994

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Figure 7.1 Key procurement activities within an organization

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Figure 7.3 E-business e-value gridSource: Riggins and Mitra (2007)

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Figure 7.4 Use of different information systems for different aspects of thefulfilment cycle

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Figure 7.6 Document management software for reconciling supplier invoice with purchase order dataSource: Tranmit plc

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Figure 7.7 The three main e-procurement model alternatives for buyers

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Figure 7.8 Integration between e-procurement systems and catalogue data

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Figure 7.9 An online catalogue of items for purchaseSource: Tranmit plc

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Case Study: Cambridge Consultants

1. Given the scale of the purchasing operation at Cambridge Consultants, what benefits do you think e-procurement has brought?

2. Why are procurement costs currently as high as £60–100 per order?

3. How are procurement costs reduced through e-procurement?

4. What staff benefits accrue to Cambridge Consultants as a result of e-procurement?

Slide 7.17

E-marketing

Chapter 8

Slide 7.18

Management issues

• How do we integrate traditional marketing approaches with e-marketing?

• How can we use electronic communications to differentiate our products and services?

• How do we redefine our marketing and communications mixes to incorporate new media?

Slide 7.19

E-marketing

• The definition of marketing by the Chartered Institute of Marketing (http://www.cim.co.uk/)is:

Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitability

• Which e-marketing tools can assist?– Web, e-mail, databases, wireless and digital

television

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Figure 8.1 The operational and management processes of e-marketingSource: Econsultancy (2008)

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Figure 8.1 The operational and management processes of e-marketing (Continued)Source: Econsultancy (2008)

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Figure 8.2 The e-marketing plan in the context of other plans

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Figure 8.3 SOSTAC™ – a generic framework for e-marketing planning

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Figure 8.5 Inputs to the e-marketing plan from situation analysis

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Demand analysis questions

• What percentage of customer businesses have access to the Internet?

• What percentage of members of the buying decision in these businesses have access to the Internet?

• What percentage of customers are prepared to purchase your particular product online?

• What percentage of customers with access to the Internet are not prepared to purchase online, but are influenced by web-based information to buy products offline?

• What is the popularity of different online customer engagement devices such as Web 2.0 features such as blogs, online communities and RSS feeds?

• What are the barriers to adoption amongst customers of different channels and services and how can we encourage adoption?

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Figure 8.6 Example SWOT analysis

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Figure 8.6 Example SWOT analysis (Continued)

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Benchmarking organizationale-marketing capabilities

• Financial performance – current profitability of e-channel activities

• Marketplace performance – market share and sales trends and significantly the proportion of sales achieved through the Internet.

• Business and revenue models – do these differ from other marketplace players?

• Marketing communications techniques – is the customer value proposition of the site clear? Does the site support all stages of the buying decision from customers who are unfamiliar with the company through to existing customers? Are special promotions used on a monthly or periodic basis? Beyond the competitor’s site, how do they make use of intermediary sites to promote and deliver their services?

Slide 7.29 Benchmarking organizationalE-marketing capabilities

(Continued)• Services offered – what is offered beyond brochureware? Is online purchase possible, what is the level of online customer support and how much technical information is available?

• Implementation of services – these are the practical features of site design such as aesthetics, ease of use, personalization, navigation and speed.

• The 7Ps

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Figure 8.7 Customer demand analysis for the car market

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Figure 8.8 Benchmark comparison of corporate websitesSource: Bowen Craggs & Co (www.bowencraggs.com)

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http://www.bowencraggs.com/ftindex April 2011

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Another approach to goal setting

• Business effectiveness. Contribution of site to revenue, profitability and any indications of the corporate mission for the site. The costs of producing and updating the site will also be reviewed, that is cost-benefit analysis

• Marketing effectiveness. These measures may include:– leads; sales; retention; market share; brand

enhancement and loyalty;• Customer service

– These measures will be assessed for each of the different product lines delivered through the web site. The way in which the elements of the marketing mix are utilized will also be reviewed

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Another approach to goal setting(Continued)

• Internet effectiveness. These are specific measures that are used to assess the way in which the web site is used, and the characteristics of the audience– hits and page impressions that are collected from the

log file,– focus groups and questionnaires to existing customers. – how clear the value proposition of the site is for the

customer should be noted

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De Kare Silvers Electronic Shopping Test

1. Product characteristics. Does the product need to be physically tried, or touched before it is bought?

2. Familiarity and confidence. Considers the degree the consumer recognises and trusts the product and brand.

3. Consumer attributes. These shape the buyer’s behaviour – are they amenable to online purchases in terms of access to the technology skills available and do they no longer wish to shop for a product in a traditional retail environment?

Practical

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Table 8.6 Product scores in de Kare-Silver (2000), electronic shopping potential test

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Online value proposition

• A clear differentiation of the proposition from competitors based on product features or service quality

• Target market segment(s) that the proposition will appeal to

• How the proposition will be communicated to site visitors and in all marketing communications. Developing a tag line can help this

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Online value proposition (Continued)

• How the proposition is delivered across different parts of the buying process

• How the proposition will be delivered and supported by resources – is the proposition genuine? Will resources be internal or external?

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Example OVPs

• ‘Compare. Buy. Save’. Kelkoo (www.kelkoo.com)• ‘Earth’s biggest selection’. Amazon

(www.amazon.com)• ‘Search the largest inventory of cars and trucks

on the Internet. More than 1.5 million listings, updated daily’ (www.autotrader.com)

• The Citibank site design (www.citibank.com) uses a range of techniques to illustrate its core proposition and OVP. The main messages are– Welcome to Citibank: The one-stop solution for all

your financial needs– Look for a product or service; Learn about a

financial product; Find a location

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Table 8.7 A range of targeting and segmentation approaches for a digital campaign

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Figure 8.12 The extent to which different types of segmentation variables tend to be predictive of response

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Figure 8.14 Summary of communication models for (a) traditional media,(b) new media

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Figure 8.15 Summary of degree of individualization for (a) traditional media(same message), (b) new media (unique messages and more informationexchange between customers)

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Figure 8.16 Channels requiring integration as part of integrated e-marketing strategy

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Figure 8.17 Channel integration required for e-marketing and mixed-mode buying

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Issues with varying the mix online

• Do we vary the mix online or replicate offline?• Is the offer clear – brand proposition, online

offer?• Is online differentiation defined?• Is online differentiation communicated?• Key online mix variables

– Product– Price– Place– Promotion– Service: People, Process, Physical evidence

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Online mix options

• Product– Extend range (Tesco)

– Narrow range (WH Smith iDTV)

– Online-only products (banks)

– Develop new brand (Egg)

– Migrate existing brand (HSBC)

– Partner with online brand (Waterstones and Amazon)

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• Price– Differential pricing:

• Reduce online prices due to price transparency and competition (easyJet)

• Maintain price to avoid cannibalization of offline sales (Dixon)

– New pricing options (software, music):• Rental• Pay per use• Reverse auctions (B2B)• Dynamic pricing (Concert tickets)

Online mix options (Continued)

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• Place = avoiding channel conflicts– Disintermediation – sell direct

– Reintermediation – partner with new intermediaries

– Countermediation:• Form new intermediaries

• Partner with existing intermediaries• Distance from intermediaries

Online mix options (Continued) Slide 7.50

• Promotion– Selective use of new online tools for different

stages of the buying process and customer lifecycle

– Online only campaigns

– Integrated campaigns – incorporating online tools into communications mix

Online mix options (Continued)

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• Service– People

• Automate – use web self-service, offer customer choice

– Process• Change process for service – contact strategies

– Physical evidence• Site design – differentiate or support brand

• Fulfillment quality

Online mix options (Continued) Slide 7.52

Debates

(A) A separate e-marketing plan is not necessary as part of the marketing planning process

VS(B) e-Marketing can and should be integrated into

existing marketing plans.

(C) Online brands must mirror offline brands in order to be successful

VS(D) Online brands should be different to offline brands

to be successful

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Branding

Leslie de Chernatony and Malcolm McDonald described ‘brand’ in their classic 1992 book, Creating Powerful Brands, as

• an identifiable product or service augmented in such a way that the buyer or user perceives relevant unique added values which match their needs most closely.

• its success results from being able to sustain these added values in the face of competition.

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Aaker – brand equity

• Brand awareness• Perceived quality• Brand associations• Brand loyalty

How can these be enhanced online for the B2C Company?

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Table 8.9 Traditional measures of brand equity and online measures of brand equity

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Figure 8.19 Zipf’s law, showing decrease in popularity of items within an ordered sequence

Slide 7.57

Customer relationship management

Chapter 9

Slide 7.58

Management issues

• What are the practical success factors digital media need to make customer acquisition more effective?

• What technologies can be used to build and maintain the online relationship?

• How do we deliver superior service quality to build and maintain relationships?

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E-CRM – a definition

• E-CRM is:

• Applying…Internet and other digital technology…(web, e-mail, wireless, iTV, databases)

• to…acquire and retain customers (through a multi-channel buying process and customer lifecycle)

• by…improving customer knowledge, targeting,service delivery and satisfaction

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Marketing applications of CRM

• A CRM system supports the following marketing applications:• Sales force automation (SFA). Sales representatives

are supported in their account management through tools to arrange and record customer visits

• Customer service management. Representatives in contact centres respond to customer requests for information by using an intranet to access databases containing information on the customer, products and previous queries

• Managing the sales process. This can be achieved through e-commerce sites, or in a B2B context by supporting sales representatives by recording the sales process

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Marketing applications of CRM(Continued)

• Campaign management. Managing ad, direct mail, e-mail and other campaigns

• Analysis. Through technologies such as data warehouses and approaches such as data mining, customers characteristics, their purchase behaviourand campaigns can be analysed in order to optimize the marketing mix

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Figure 9.1 The four classic marketing activities of customer relationship management

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Figure 9.3 A summary of how the Internet can impact on the buying process for anew purchaser

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Figure 9.4 A model of the relationship between different aspects of trust andconsumer response based on the categories of Bart et al. (2005)

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Figure 9.6 Online and offline communications techniques for e-commerce

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Figure 9.7 Measures used for setting campaign objectives or assessing campaignsuccess increasing in sophistication from bottom to top

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Debate

• Some remote customer service contacts will always require personal, human interaction rather than automated electronic responses

VS

• Some remote customer service contacts will never require personal, human interaction rather than automated electronic responses