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Introduction to E-Commerce. Internet Technology Provides the Vehicle for E-Commerce . Electronic Commerce is the buying, selling, and trading of goods on the Internet. Introduction to E-Commerce. Benefits of E-Commerce. Introduction to E-Commerce. Shop-at-home convenience

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slide1

Introduction to E-Commerce

Internet Technology Provides the Vehicle for E-Commerce

Electronic Commerce is the buying, selling, and trading of goods on the Internet.

benefits of e commerce

Introduction to E-Commerce

Benefits of E-Commerce

improved customer service

Introduction to E-Commerce

Shop-at-home convenience

Detailed product information

Customer controls transaction

Simplified ordering

Open 24/7/365

Improved Customer Service

expanded markets

Introduction to E-Commerce

Elimination of Boundaries

Direct to customer

(no middleman)

Expanded Markets

cost cutting

Introduction to E-Commerce

Streamlined order processing

Fewer errors in order entry

Increased speed

Lower marketing costs

Cost Cutting

higher profits

Introduction to E-Commerce

Additional sales channel

User fee income

Advertising Income

Lower marketing costs

Higher Profits

e commerce challenges

Introduction to E-Commerce

Security & privacy

Scams & Fraud

Down time & poor service

Awkward design & functionality

Lack of retail experience

E-Commerce Challenges

slide8

Introduction to E-Commerce

Where to Use E-Commerce

  • Value Chain Analysis
  • SWOT Analysis
chapter 2

Chapter 2

Technology Infrastructure:

The Internet and the World Wide Web

technology overview
Technology Overview
  • Computer networks and the Internet form the basic technology structure for electronic commerce.
  • The computers in these networks run such software as:
    • Operating systems, database managers, encryption software, multimedia creation and viewing software, and the graphical user interface
packet switched networks
Packet-Switched Networks
  • A local area network (LAN) is a network of computers close together.
  • A wide area network (WAN) is a network of computers connected over a great distance.
  • Circuit switching is used in telephone communication.
  • The Internet uses packet switching
    • Files are broken down into small pieces (called packets) that are labeled with their origin, sequence, and destination addresses.
routing packets
Routing Packets
  • The computers that decide how best to forward each packet in a packet-switched network are called ‘routers’.
  • The programs on these routers use ‘routing algorithms’ that call upon their ‘routing tables’ to determine the best path to send each packet.
  • When packets leave a network to travel on the Internet, they are translated into a standard format by the router.
  • These routers and the telecommunication lines connecting them are referred to as ‘the Internet backbone’.
internet protocols
Internet Protocols
  • A protocol is a collection of rules for formatting, ordering, and error-checking data sent across a network.
internet protocols1
Internet Protocols
  • The open architecture has four key rules that have contributed to the success of the Internet.
    • Independent networks should not require any internal changes to be connected to the network.
    • Packets that do not arrive at their destinations must be retransmitted from their source network.
    • Router computers act as receive-and-forward devices; they do not retain information about the packets that they handle.
    • No global control exists over the network.
internet protocols2
Internet Protocols
  • The Transmission Control Protocol (TCP) and the Internet Protocol (IP) are the two protocols that support the Internet operation (commonly referred to as TCP/IP).
  • The TCP controls the disassembly of a message into packets before it is transmitted over the Internet and the reassembly of those packets when they reach their destination.
  • The IP specifies the addressing details for each packet being transmitted.
ip addresses
IP Addresses
  • IP addresses are based on a 32-bit binary number that allows over 4 billion unique addresses for computers to connect to the Internet.
  • IP addresses appear in ‘dotted decimal’ notation (four numbers separated by periods).
domain names
Domain Names
  • To make the numbering system easier to use, an alternative addressing method that uses words was created.
  • An address, such as www.course.com, is called a domain name.
  • The last part of a domain name (i.e., ‘.com’) is the most general identifier in the name and is called a ‘top-level domain’ (TLD).
web page delivery
Web Page Delivery
  • Hypertext Transfer Protocol (HTTP) is the set of rules for delivering Web pages over the Internet.
  • HTTP uses the client/server model
    • A user’s Web browser opens an HTTP session and sends a request for a Web page to a remote server.
    • In response, the server creates an HTTP response message that is sent back to the client’s Web browser.
  • The combination of the protocol name and the domain name is called a uniform resource locator (URL).
hypertext markup language
Hypertext Markup Language
  • HTML is a simplified programming language that includes tags defining the format and style of text elements in a document.
html tags
HTML Tags
  • An HTML document contains both document text and elements.
  • Tags are codes that are used to define where an HTML element starts and (if necessary) where it ends.
  • In an HTML document, each tag is enclosed in brackets (<>).
  • A two-sided tag set has an opening tag and a closing tag.
html links
HTML Links
  • Hyperlinks are bits of text that connect the current document to:
    • another location in the same document
    • another document on the same host machine
    • another document on the Internet
  • Hyperlinks are created using the HTML anchor tag.
html editors
HTML Editors
  • HTML documents can be created in any general-purpose text editor or word processor.
  • Sophisticated editors can create full-scale, commercial-grade Web sites with database access, graphics, fill-in forms, and display the Web page along with the HTML code.
  • Microsoft FrontPage and Macromedia Dreamweaver are examples of Web site builders.
international nature of electronic commerce
International Nature of Electronic Commerce
  • Companies with established reputations
    • Often create trust by ensuring that customers know who they are
    • Can rely on their established brand names to create trust on the Web
  • Customers’ inherent lack of trust in “strangers” on the Web
    • Logical and to be expected
language issues
Language Issues
  • To do business effectively in other cultures
    • Must adapt to culture
  • Researchers have found that
    • Customers are more likely to buy products and services from Web sites in their own language
  • Localization
    • Translation that considers multiple elements of local environment
culture issues
Culture Issues
  • Important element of business trust
    • Anticipate how the other party to a transaction will act in specific circumstances
  • Culture
    • Combination of language and customs
    • Varies across national boundaries
    • Varies across regions within nations
infrastructure issues
Infrastructure Issues
  • Internet infrastructure includes
    • Computers and software connected to Internet
    • Communications networks over which message packets travel
  • Organization for Economic Cooperation and Development’s (OECD)
    • Statements on Information and Communications Policy
      • Deal with telecommunications infrastructure development issues
infrastructure issues continued
Infrastructure Issues (Continued)
  • Flat-rate access system
    • Consumer or business pays one monthly fee for unlimited telephone line usage
    • Contributed to rapid rise of U.S. electronic commerce
  • Targets for technological solutions
    • Paperwork and processes that accompany international transactions
revenue models1
Revenue Models
  • Revenue model of selling goods and services on the Web
    • Based on mail order catalog revenue model that predates the Web Spiegel
  • Mail order or catalog model
    • Proven to be successful for wide variety of consumer items
  • Web catalog revenue model
    • Taking the catalog model to the Web
computers and consumer electronics
Computers and Consumer Electronics
  • Apple, Dell, Gateway, and Sun Microsystems
    • Have had great success selling on the Web
  • Dell
    • Created value by designing entire business around offering high degree of configuration flexibility to its customers
books music and videos
Books, Music, and Videos
  • Retailers using the Web catalog model to sell books, music, and videos
    • Among the most visible examples of electronic commerce
  • Jeff Bezos
    • Formed Amazon.com
  • Jason and Matthew Olim
    • Formed online music store they called CDnow
    • Used the Web catalog revenue model
luxury goods
Luxury Goods
  • People are still reluctant to buy through a Web site
  • Web sites of Vera Wang and Versace
    • Constructed to provide information to shoppers, not to generate revenue
  • Web site of Evian
    • Designed for a select, affluent group of customers
clothing retailers
Clothing Retailers
  • Lands’ End
    • Pioneered idea of online Web shopping assistance with its Lands’ End Live feature in 1999
  • Personal shopper
    • Intelligent agent program that learns customer’s preferences and makes suggestions
  • Virtual model
    • Graphic image built from customer measurements
flowers and gifts
Flowers and Gifts
  • 1-800-Flowers
    • Created online extension to its telephone order business
  • Chocolatier Godiva
    • Offers business gift plans on its site
digital content revenue models
Digital Content Revenue Models
  • Firms that own intellectual property
    • Have embraced the Web as a new and highly efficient distribution mechanism
  • Lexis.com
    • Provides full-text search of court cases, laws, patent databases, and tax regulations
  • ProQuest
    • Sells digital copies of published documents
advertising supported revenue models
Advertising-Supported Revenue Models
  • Broadcasters provide free programming to an audience along with advertising messages KOMOKING
  • Success of Web advertising hampered by
    • No consensus has emerged on how to measure and charge for site visitor views
      • Stickiness of a Web site: ability to keep visitors and attract repeat visitors
    • Very few Web sites have sufficient visitors to interest large advertisers
web portals
Web Portals
  • Web directory
    • A listing of hyperlinks to Web Pages
  • Portal or Web portal
    • Site used as a launching point to enter the Web
    • Almost always includes a Web directory and search engine
    • Example: Yahoo, AOL, Altavista
advertising subscription mixed revenue models
Advertising-Subscription Mixed Revenue Models
  • Subscribers
    • Pay a fee and accept some level of advertising
    • Typically subjected to much less advertising
  • Used by
    • The New York Times and The Wall Street Journal
advertising subscription mixed revenue models continued
Advertising-Subscription Mixed Revenue Models (continued)
  • Business Week
    • Offers some free content at its Business Week onlinesite
    • Requires visitors to buy subscription to Business Week print magazine
fee for transaction revenue models
Fee-for-Transaction Revenue Models
  • Businesses offer services and charge a fee based on number or size of transactions processed PayPal
  • Disintermediation
    • Removal of an intermediary from value chain
  • Reintermediation
    • Introduction of a new intermediary
fee for service revenue models
Fee-for-Service Revenue Models
  • Fee based on value of service provided
  • Services
    • Range from games and entertainment to financial advice
  • Online games
    • Growing number of sites include premium games in their offerings
    • Site visitors must pay to play these premium games
fee for service revenue models continued
Fee-for-Service Revenue Models (Continued)
  • Concerts and films
    • As more households obtain broadband access to the Internet
      • Companies are providing streaming video of concerts and films to paying subscribers
  • Professional Services
    • State laws
      • One of the main forces preventing U.S. professionals from extending their practices to the Web
revenue models in transition
Revenue Models in Transition
  • Subscription to Advertising-Supported Model
    • Microsoft founded its Slate magazineWeb site
      • An upscale news and current events publication
      • Charged annual subscription fee after a limited free introductory period
      • Was unable to draw sufficient number of paid subscribers
      • Now operated as an advertising-supported site
advertising supported to advertising subscription mixed model
Advertising-Supported to Advertising-Subscription Mixed Model
  • Salon.com
    • Operated for several years as an advertising-supported site
    • Now offers optional subscription version of its site
    • Subscription offering
      • Motivated by company’s inability to raise additional money from investors
advertising supported to fee for services model
Advertising-Supported to Fee-for-Services Model
  • Xdrive Technologies
    • Opened its original advertising-supported Web site in 1999
    • Offered free disk storage space online to users
    • After two years, was unable to pay costs of providing the service with the advertising revenue generated
    • Later switched to a subscription-supported model
advertising supported to subscription model
Advertising-Supported to Subscription Model
  • Northern Light
    • Founded in August 1997 as a search engine with a twist
    • Revenue model
      • Combination of advertising-supported model plus a fee-based information access service
    • January 2002
      • Converted to a new revenue model that was primarily subscription supported
multiple transitions
Multiple Transitions
  • Encyclopædia Britannica
    • Original offerings
      • The Britannica Internet Guide
        • Free Web navigation aid
      • Encyclopædia Britannica Online
        • Available for a subscription fee or as part of CD package
    • 1999
      • Converted to a free, advertiser-supported site
    • 2001
      • Returned to a mixed model
if you build it they will come you hope

Exploring E-Commerce

Marketing on the Web

If you build it they will come

– you hope!

marketing

Exploring E-Commerce

The management process responsible for identifying, anticipating, and satisfying customer’s requirements.

Marketing

The commercial functions involved in transferring goods from producer to consumer.

product based strategies product categories

Exploring E-Commerce

Staples

Home Depot

Costco

Musical Instruments

More Musical Instruments

Product-based Strategies:

product categories

customer based strategies meeting specific needs

Exploring E-Commerce

Sabre

Business Services

Web Marketing

Customer-based Strategies:

Meeting specific needs

target marketing

Exploring E-Commerce

Target Marketing

Micromarketing (go for the “niche”)

Geographic Marketing

Demographic Marketing

Psychographic Marketing

micromarketing

Exploring E-Commerce

Micromarketing

Body Jewelry

Manx Cats

geographic marketing

Exploring E-Commerce

Geographic Marketing

Living in France

Coastal California

demographic marketing

Exploring E-Commerce

Demographic Marketing

Retired People

Generation X,Y, Z

psychographic marketing

Exploring E-Commerce

Psychographic Marketing

Goth Stuff

High IQ

customer behavior strategies

Exploring E-Commerce

Browsers

Buyers

Shoppers

Customer Behavior Strategies

customer behavior strategies1

Exploring E-Commerce

Browsers – use of “triggers”.

Sports Outfitter

Customer Behavior Strategies

customer behavior strategies2

Exploring E-Commerce

Buyers – ready to buy.

Barnes and Noble

Customer Behavior Strategies

advertising strategies

Exploring E-Commerce

Acquiring – cost.

Conversion – cost.

Retain – cost.

Advertising Strategies

next advertising on the web

Exploring E-Commerce

NEXT:

Advertising on the Web

banner ads
Banner Ads
  • Most advertising on the Web uses banner ads.
  • A banner ad is a small rectangular object on a Web page that displays a stationary or moving graphic and includes a hyperlink to the advertiser’s Web site.
  • The most common sizes of banner ads are:
    • Full banner
    • Half banner
    • Square button
banner ad placement
Banner Ad Placement
  • There are three different ways to arrange for other Web sites to display your banner ads.
  • A banner exchange network coordinates ad-sharing so that other sites run your ad while your site runs other exchange members’ ads.
  • The second way is to find Web sites that appeal to one of the company’s market segments and then pay them to carry the ads.
  • A third way is to use a banner advertising network.
other web ad formats
Other Web Ad Formats
  • Another format of Web advertising is the pop-up ad.
  • A pop-up ad is an ad that appears in its own window when the user opens or closes a Web page.
  • Another type of pop-up ad is called the pop-behind ad.
  • A pop-behind ad is a popular ad that is followed very quickly by a command that returns focus to the original window
    • The window is parked behind the user browser waiting to appear when the browser is closed.
e mail marketing
E-Mail Marketing
  • Unsolicited e-mail is often considered to be Spam.
  • Sending e-mail messages to Web site visitors who have expressly requested the e-mail messages is a completely different story.
  • The practice of sending e-mail messages to people who have requested them is a part of marketing strategy called permission marketing.
search engine positioning
Search Engine Positioning
  • Potential customers find Web sites in many different ways.
  • Some site visitors will be referred by a friend, others by affiliates, some will see the site’s URL in a print advertisement or on television.
  • Many site visitors will be directed to the site by a search engine.
search engine positioning1
Search Engine Positioning
  • A search engine helps people find things on the Web.
  • A search engine has three major parts
    • The first part is called a spider, a crawler, or a robot
    • The second part is called its index or database
    • The third part of the search engine is the search utility
search engine positioning2
Search Engine Positioning
  • Marketers want to make sure that when a potential customer enters search items that relate to their products or services, their companies’ Web site URL appears among the first 10 returned listings.
  • The combined art and science of having a particular URL listed near the top of a search engine results is called search engine positioning.
  • Search engine positioning is also called:
    • Search engine optimization
    • Search engine placement
web site naming issues
Web Site Naming Issues
  • The legal and marketing aspects of Web site naming can be complicated.
  • Obtaining identifiable names to use for branded products on the Web is important.
  • URL brokers sell or auction domain names.
  • The Internet Corporation for Assigned Names and Numbers (ICANN) maintains a list of accredited domain name registrars.