PowerPoint by: Ray A. DeCormier, Ph.D. Central Ct. State U. Chapter 12: E-Commerce Strategies for Business Markets.

PowerPoint by:Ray A. DeCormier, Ph.D.Central Ct. State U.

Chapter 12:

E-Commerce Strategies for Business Markets

E-Commerce Defined

E-commerce involves business communications and transmissions over networks and through computers specifically for the purpose of buying and selling products and services, and transferring funds through digital communications.

Internet ApplicationsSuccessful Web sites:

1. Provide customers with information2. Are interactive

a. Offer online catalogsb. Process fulfillmentc. Process paymentd. Provide interactive communications through chat/video applicationse. Provide a FAQ to address questionsf. Provide customer service at less costg. Allow customization of service & product offerings

E-Commerce Types

E-commerce can play pivotal role across all functional business areas.

Intra-Organizational E-Commerce1. Workgroup Communications2. Electronic Publishing3. Sales Force Productivity Inter-Organizational E-Commerce

1. Supplier Management2. Inventory Management3. Distribution Management4. Channel Management5. Payment Management

Business-to-Customer E-Commerce1. Product Information2. Sales3. Service4. Payment5. Marketing Research

According to Porter• Companies will not be able to survive without

Internet applications but will not gain a competitive advantage from them either.

• It is traditional strengths such as…– Unique products– Proprietary content– Superior product and product knowledge– Strong service & relationships…that will determine the success or failure of a

business.

Enhanced Customer Focus Means:

• Align with customers on:

1.Order management2.Product configuration3.Design configuration4.Tailor products to meet exact

requirements in real time5.Any other ways?

Reduce Transaction Costs• The Internet allows low-cost access to:

a. Order entryb. Order trackingc. 24/7 serviced. Self-service product information searche. Repair manuals and programs

Integrated Supply Chain• Internet allows suppliers and vendors from all over the

world to integrate into the production-marketing process to make it appear seamless.

• The key to effective supply-chain operations is the sharing of the: 1. Forecast2. Production plans3. Delivery schedules4. Inventory tracking5. Determination of inventory levels at all points6. Actual-to-planned activity in real time

Crafting an E-Commerce Strategy Developing a B2B strategy for e-commerce is no

different than developing a strategy for any other marketing activity.

Start by evaluating the company’s…1. Products2. Customers3. Competitive situation4. Resources 5. Operations…and understand how all these elements mesh within

an e-commerce strategy.

Questions to Guide E-Commerce Strategy Formulation

AIDA

• The Web can create:

• Attention• Interest• Desire• Action

Creates Interest & Action

The Internet can work as an effective tool, providing information as well as stimulating customer action--as demonstrated by this Web site.

Common Objectives1. Target specific groups2. Build recognition of company name / brand3. Convey a cutting edge image4. Conduct marketing research5. Interact with customers6. Provide real-time information7. Sell products and services8. Advertise in the new medium9. Generate leads10. Provide a medium for customer service11. Build strong relationships with customers and vendors

Implementing Internet Strategies

• Once Internet objectives have been defined, the marketing strategists needs to address its Web site in terms of:

• Product Presentation• Pricing• Distribution• Promotion: Web Design

Successful Web Sites• The heart of a successful e-commerce strategy

is to develop an interesting and effective company Web site.

• The site should be easy for the customer to: • Navigate• Find product information• Purchase (if appropriate)• Meet service needs

Successful Web Sites• Should be:

• Secure• Fast• Logical

• Should include:• Internet catalog• Search capability• Auction or reverse auction abilities• Contact tabs to include e-mail, telephone numbers, addresses, fax

numbers, etc.• Links to other related sites• Just to name a few…

Reverse Auction (RA)

• A reverse auction is one buyer and many sellers• Buyer gets sellers to bid down the contract

• The pressure facilitates competition and keeps prices low• It is effective when the sellers are qualified or preferred

vendors

• RAs can result in damaging buyer/seller relations• RAs could force suppliers to consolidate thus increasing

their power over sellers

Private Exchanges• Are a new form of reverse auctions whereby:

– They are “invitation only” networks that connect a single company to its vendors, customers or both

– They provide a secure, one-on-one communication

– They enhance shared supply chain processes• Inventory management• Production planning• Order fulfillment

Channel Considerations• The Internet is a channel too, and as a result it can

compete with a marketer’s other channels.

• To reduce conflict, marketers needs to consider its effect on:– Channel efficiencies– Current market intermediaries– Information sharing among channel members– Ability to deliver product rapidly– The outsourcing of key channel functions

Disintermediation Is:• The process of reducing the number of traditional

intermediaries through better connectivity between and among contributing firms because of the Internet.

• Travel agencies are on the wane due to the ability of airlines to do business online.

• The consumer can attain air flight tickets, hotel reservations and an automobile by simply clicking a few buttons.

• What other industries are affected that way?

Internet as a Channel• The Internet is an effective channel for certain but:

1. Rarely do B2B marketers depend solely on the Internet to create business.

2. They employ salespeople to contact their customers and use the Internet to facilitate the exchange.

Internet is Exceptionally Effective for:

1. Remote marketing used to market software

2. Anything that can be digitized can be sold over the Internet such as:

a. Softwareb. Moviesc. Musicd. Printing services

Digital Channel Advantages• Can be customized to buyer’s needs

• Provides a wide referral source range such as search engines, Web pages, shopping agents, newsgroups, chat rooms, e-mail, etc.

• It’s always open for business

Internet’s Effect on Pricing• The Internet allows buyers to quickly assess pricing,

and this has bolstered buyers’ power.• The Internet has increased worldwide competition

(supply) while informing the market (demand).• The net effect has been to lower prices.• One result has been to make more products

commodities.• Thus the rise of the “Branded Commodity”

B2B Trends• According to GlobalSpec Engineering Trends

Survey:• Engineering Professionals use the Internet:

– 91% to find components and suppliers– 87% to find product specifications– 72% for news– 68% for research– 64% for pricing– 60% for technical application ideas

• The Internet is a powerful tool that can deliver information at critical points in the purchase decision process.