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MIMS – E-commerce

MIMS – E-commerce. B.P.S. Murthi PhD- Carnegie Mellon 1993. Objectives of this course. To understand Different business models Technology Adoption Life Cycle (TALC) and how it impacts performance

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MIMS – E-commerce

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  1. MIMS – E-commerce B.P.S. Murthi PhD- Carnegie Mellon 1993

  2. Objectives of this course • To understand • Different business models • Technology Adoption Life Cycle (TALC) and how it impacts performance • Online consumer behavior, customer relationship management (CRM), tracking and personalization technologies in B2C • business to business (B2B) transactions • how marketing has changed in e-commerce with respect to advertising, pricing, new product development, brand management etc.

  3. Concepts and tools • Forecasting using Bass model • Life time value • Advertising metrics

  4. Text • Principles of Internet Marketing by Ward Hanson Grades • Case report – 75% • Assignment and class participation – 25%

  5. Case report • Objective: • Write a case similar to a Harvard Business School case on a company that is participating in the e-commerce arena. • E.g. CommerceOne, Ameritrade, Cooking.com, WebMD OR • Write a survey report on a topic that is unique to e-commerce • E.g. online banking, online stock trading, personalization, affiliate marketing, shopping bots

  6. Introduction

  7. A Brief History of Internet • 1969 - first link UCLA to Stanford Research Institute • 1971 - email and use of @ symbol • 1972 - remote access of computers -telnet • 1973 - multiple person chat sessions • 1973 - file transfer protocol • Was meant to be an emergency military communication and sharing of ideas among academic community - funded by NSF • 1994 - NSF withdrew funding - private web browsers and servers - WWW - hypertext

  8. Stages of development of internet • Publishing sites – static pages • Databases and forms – dynamic pages • Personalization – users reveal identity • Consumer auctions • Market transactions and monitoring

  9. Quotes on e-commerce “In five years’ time all companies will be Internet companies or they won’t be companies at all” -- Andy Grove, Intel founder “Non-store retailing could account for as much as 55% of ‘total retail sales’ by 2010” -- Kurt Salmon Associates “The Internet is a tidal wave. It will wash over nearly all industries drowning those who don’t learn to swim in its waves” -- Bill Gates “There are lots and lots of other products that will sell well online” -- Jeff Bezos, C.E.O. Amazon.com

  10. The Rise and Rise of E-Commerce

  11. Is internet the revolutionary technology? • Radio in 1922 • RCA used the “worldwide wireless” logo • Technology: Wireless telegraphy and telephony to communicate with remote locations such as ships • 5 stations in 1921 to 575 in 1922 ! • Value : Simultaneity did not need proximity - Global events could be experienced • Radio affected marketing, and culture. Till 1926,they did not know how to make profit.

  12. How marketing is affected by internet?

  13. Production concept Selling concept Product/Brand management Customer management Marketing concept evolution

  14. Marketing defined • Marketing is a process used by sellers and buyers to initiate and complete transactions • Need • Buyers • Sellers • Each has something of value to offer • They can voluntarily complete the transaction

  15. Some thoughts… • Who is in charge of the process? • What is the role of the customer? • Who is doing the “planning and executing”?

  16. Exchanges • Who initiates the exchange? • Who controls the exchange? • How does information flow? • Reduction in Information Asymmetry • Move to information democracy

  17. Information democracy • Customers will post messages • Customers will disagree with company’s view • Customers will expect privacy

  18. The new exchange architecture Mohan Sawhney Industrial Age • Marketer initiated • Marketer controlled • Monologue • One time • Information Age • Customer initiated • Customer controlled • Conversation • Ongoing

  19. Towards new marketing assumptions The death of the transaction the rise of the relationship The death of the passive consumer the rise of the active co- creator The death of opaqueness the rise of transparency The death of the product the rise of the experience The death of the monologue the rise of the conversation

  20. The rise of reverse marketing Reverse promotions Opt-in promotions (Yoyodyne, NetCentives, FreeShop) Reverse mediation Buyer aggregators (Mercata, Accompany) Comparison shoppers(MySimon) Reverse pricing Demand tendering (Priceline. com) Reverse customization Customer configuration (Garden.com, Starbelly. com) Reverse new product design –        Texas Instruments TI- 82, Fiat, Yahoo!

  21. Brands as experiences • A firm has always had two sets of links with the customer - Physical link that delivers the offering - Cognitive link that contributes to building the brand • Now a third link - the performance link thatthe customer experiences in directly interactingwith the firm and its partners, affiliates, and complementors. • The challenge is to assure the quality of the customer experience when the firm does not directly control the end- to-end experience.

  22. Rethinking the marketing organization • From marketing as mediator to marketing as facilitator. • From brand management to customer management and partner management. • From technology-supported marketing to technology-enabled marketing.

  23. Summary: Marketing in the online economy • The exchange – from asymmetry to democracy • The assumptions – from transactions to relationships • The framework – from functional view to systems view • The activities – from marketer- led to customer- driven • The brand – from brand as belief to brand as experience • The organization – from object- focus to connection- focus

  24. Industry Players

  25. Industry structure Players and arenas Users Communication service providers Suppliers

  26. Users • E-commerce (Cisco, Amazon) • Content aggregators (AOL, Yahoo) • Media companies, content providers • Market makers - intermediaries (Schwab, E*Trade) • Internet Service providers (EMC, EDS)

  27. Communication services • Backbone service - (MCI, Sprint) • Internet Service provider (ISP) – connection only (UUNet, Netcom) • Online Service Provider (OSP) – connection + content (AOL, MSN) • Last mile companies - local telephone companies (AT&T, Bell Atlantic)

  28. Suppliers • Communications and computer hardware - Lucent, Cisco, 3Com • E-commerce software – Microsoft, Oracle • EDI (electronic data interchange) • Shopping cart technologies • Payment processing • Encryption • Micropayments • Database management • Media/content - text, music, video, art - Disney

  29. Content aggregators AOL Yahoo 400 m Excite 200 m CNET 200 m Lycos 100 m E-commerce Cisco systems - $ 9100 million AOL $ 5700 Intel $ 5600 Dell $ 4500 IBM $ 3500 Service providers IBM EDS Computer Sciences EMC Pitney Bowes Market makers Schwab 1100 Citigroup 800 Etrade 400 Sabre 300 Ebay 300

  30. Backbone MCI 33.0% Sprint 9.7% Intermedia 7.7% Cable and Wireless 6.4% Electric Lightwave 5.3% ISP / OSP AOL 22.2 m users Netzero 3.8 m Earthlink 3.3 m Compuserve 2.7 m MSN 2.5 m Content creators Time Warner 27,000 Walt Disney 24,500 Knight Ridder 3,300 Dow Jones 2,100 Ziff-Davis 700 Last Mile AT&T 62,400 SBC 49,500 MCI 33,300 Bell Atlantic 33,200 GTE 25,300

  31. Software Microsoft 19700 Oracle 8800 NCR 6200 Computer Associates 5300 SAP 5000 Hardware IBM 87,500 HP 42,400 Lucent 38,700 Compaq 38,500 Motorola 31,000

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