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Topics in E-Business New x (Economy +Business Rules +Business Models +etc.)

Şule ÖzmenMarmara University

Department of Business Administration

ozmens@yore.com sozmen@e-dersane.com URL:www.feas.marun.edu.tr/business/homepages/suleozmen

www.e-dersane.com/suleozmen

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AGENDA New (Digital) Economy New Business Rules E-Business, e-commerce Redefining Business New Business Models (e-business models) First movers in e-world E-Marketing Q&A

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The New Economy –Digital Economy

Industry era Information era Biological era

Information economy First stage (based on computers)

Data processing, spreadsheets, word processing

Second stage ( based on networks) Connectivitiy, networks and teradata

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Business Rules in New Economy

Time –Speed Time between business processes gets shorter real time responses

Space - Distance Connectivity decreased the importance of

locations Value – Intangibles

Economic value shifted from tangibles to intangibles value is added by information (CRM,SCM)

Consumers are empowered

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Business Rules in New Economy(continued)

Value comes from abundance rather than scarcity (ecomomic value was stemming from scarcity in old economy).

The more connection the more value gained.

Factors of production Talent, innovation also become the

factors of production

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INTERNET & GLOBALIZATION Geographical distances have been

overcome by the internet technologies (Neither central management nor ownership) Markets expanded. Global Markets. Purchasing manufacturing marketing

can be achieved at any convenient places.

Global competition. Global markets changed who are the competitors.

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E-conomy, e-business e-commerce, e-competition

Sense Process Respond

HOW ?????By e-commerce, by e-business, by new business modelsCRM, SCM, ERP, Data Warehousing

WHY???Traditional : Make and sell New: Sense and respond

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Definition of e-business

e-business is a new way of doing business on the e-economy.

Key business processes are transformed for this new way of doing business through the extensive use of computer and internet technologies

e - business involves openness, connectivity and integration

Saying electronic commerce is merely buying and selling products on the World Wide Web is like arguing the PC makes a good typewriter

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Transformation of business to

e-business Changing the way of doing business,

business tasks Changing the organization’s business

model Changing the way of performing the

managerial functions and activities Key success factors Vision, leadership, commitment Strategy and managementIt is both cheaper and profitable to absolete yourself

than it is to let your competitor do it for youPeter Drucker

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e-business reconstruct value chains

e-business adds value for everyone involved in all the way throughout the chain. what we call the value chain, which is the interconnection of raw materials suppliers, through manufacturers, all the way out to the retailers and the consumers.

Businesses, customers, producers, suppliers, employees, managers,

Suppliers, supplier’s supplier, customers, customer’s customer

Benefits, ease, convenience, timely, cheaper, higher quality, etc.

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Impact of e-economy, e-business e-commerce on consumers and marketers

What type of changes are you expecting in purchasing behavior of consumers ? ? ?

What do you propose to marketers to do? ? ? ?

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Who is your customer in digital economy?

Who doesn’t buy every product or service you offer like in “old good days”

Equipped with information

Less brand loyal, runs away to your rival by a click

But when? if not satisfied

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Redefinition of business Products and services (offers) are

redefined (info. about the product or the service can be more valuable than the product itself)

Market (buyers) are redefined Relationships are redefined

B2B (Supply Chain Management) B2C (Customer Relationship Management) C2C (Web borned business models)

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E-Business Models(Purpose of Interaction) Agora - eBay priceline Aggregations (Portal) (Infomediary) Yahoo, Amozon, Travelocity, Expedia Value Chains – Cisco, Dell, Intel,

AutoXchange Alliances – MP3, Linux, Java Distributive Networks (enabler)–

AOL, Fed Ex

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E-Business Models (Participants) B2B www.cisco.com

www.autoXchange.com www.dell.com

B2C www.amazon.com Yahoo, Msn www.yahoo.com

www.msn.con Travelocity, expedia

Msnbc www.msnbc.com (Online Media)

C2B: Priceline www.priceline.com C2C: www.eBay.com

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Value Chains – Cisco a winner in e-business Sells 80% of its products on line

(about a million dollars a month) Reduced its operating costs Communication among all the

participants is encouraged order – to - delivery cycle times are

reduced

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Value Chains – Intel a winner in e-business Sells more than 1 billion worth of

product per month Sales intermediaries are able to check

prices, view product road maps and buy products through a password protected, customized Web site

Reduction in transaction costs of products sold

Fewer errors in order processing Reduced order – to –delivery cycle

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B2B Models What to do:

Connecting the participants (other businesses) in the supply chain

Make all parties win Costs: Reduced operating costs

Ordering Transaction

Time: Reduced order – to –delivery cycle time

Efficiency: Increased efficiency in resource utilization. Elimination of errors like order processing errors

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B2C Models: Objectives and StrategiesWhat to do: Driving customers to your sitesAbout 1000s of web page, customer will find you,

more than that they will bookmark you, more than that make a transaction from your site!!!!!

How to do: Know your customer (target your customer, niche

market) Understand your customer (data warehouse

management, data mining)

Retain your customer (loyalty programs)

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First Mover Advantages“First” and “different” Capturing most profitable customers Higher margin,

higher market share Exploit the value of their brands early Pick the best partners, participants before competitors

enter Attract most talented and innovative human resource Media and academic coverage – referring the first

movers as examples of e-business winners Building trust - security

You can be a first mover without having to invent something new. Offer differentiated services with greater convenience and lower cost

Different isn’t always better, but the best is always different

Net Ready by Hartman & Sifonis; 2000;Mc Graw Hill

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Market Adoption Sequence: Traditional and Internet Life Cycles

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MARKETING PROCESS New and Traditional

Buyer Identifying the needs, wants, desires

Seller

Search promote

Order and payment Delivery

Product / service design

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Technology is enabler in new marketing process Collect teradata amounts of data to identify their

needs. Current and potential needs. Offer the products or service faster through

alternative distribution channels Receive orders and accept payment through

internet Follow your customer after delivery Don’t lose contact with your customer once

interacted you Communicate with your customer on the basis of

the knowledge obtained from the data warehouse

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It is now possible to

Know who your customers are and who your best customers are

Stimulate what they buy or know what they won’t buy

Know the time when and how they buy Learn customers’ preferences and shape the offer

accordingly Formulate strategies to make your customers

loyal customers to keep your customers for many years

Define characteristics that make up a great/profitable customer

Model channels best to address a customer’s need Predict what they may or will buy in the future

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E-Marketing Process There are some specific on line marketing

strategies to increase; Number of customers visiting web site Purchases from web site

in B2C models Use non-internet marketing media Co-operative marketing (exchanging

links and banner advertisement) Place web store within a search engine Place web store within a virtual mall

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e-business opportunities

Reduced Costs General and administrative expenses decrease Marketing and selling expenses decrease Cost of goods sold decrease

Revenue enhancement New markets, new customers, new products

Fast and efficient information flow- near real time decision making.

Faster time to market Access to global market Improved customer satisfaction- CRM

Loyal and profitable customers

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e-business threats Lack of technical knowledge and

experience – (before initiating)

Lack of support from senior management - (during transformation)

Technology- user friendly interfaces, fast access and speedy transactions – (after transformation)

Security concerns - (after transformation) Ignoring e-business – threat of losing

competitive position threat for survival

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MYTHS AND REALITIES MYTH NO. 1: It's Easy. MYTH NO. 2: It's cheap. MMYTH NO. 3: Everyone's doing it. MYTH NO. 4: It's lucrative. MYTH NO. 5: The Web levels the playing field. MYTH NO. 6: It leads to disintermediation. MYTH NO. 7: It means the end of mass marketing. MYTH NO. 8: It leads to product commodization.