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From Commerce to E-Commerce (and from Marketing to E- Marketing ) E-Commerica 2005

From Commerce to E-Commerce (and from Marketing to E- Marketing ) E-Commerica 2005. Dr. Efthymios Constantinides Assistant Professor Faculty of Business, Public Administration and Technology (BBT) University of Twente e.constantinides@utwente.nl. What’s so exciting about Internet?

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From Commerce to E-Commerce (and from Marketing to E- Marketing ) E-Commerica 2005

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  1. From Commerce to E-Commerce(and from Marketing to E- Marketing )E-Commerica 2005 Dr. Efthymios Constantinides Assistant Professor Faculty of Business, Public Administration and Technology (BBT) University of Twente e.constantinides@utwente.nl

  2. What’s so exciting about Internet? • Is E-Commerce really important?

  3. Fact 1: Internet=More Customer Power US • Auto: 70% go to Internet and save $450 • Travel: 2/3 use the Internet, 15% of tickets, zero commission, lower rates (Travelocity, Expedia greater market capture than most airlines) • Over 2.000 travel agencies closed, airlines discontinued commissions to agents • Health: 80% search • E-bay $ 34,2 bill (+44% over 2003) 11,1 bill used cars!!! • Finance • Stock trading, Insurance, mortgages, real estate

  4. NL • Travel: 35% of vacations in 2004 booked online • 140 travel agencies out of business last year • Insurance: 60% use the Internet for orientation, 10% of insurance contracts sold online • 2004: 1,6 bln Euro online, 2005: (6 months) over 1 bln Euro online

  5. Why the Internet boosts consumer power? • Easy access to market information / transparency: savvy, information-driven consumers • More alternatives and choice • Easier transaction

  6. Fact 2: Traditional media power decreases • US (2) • Audiences ratings TV shows, prime TV viewers down (50% since 1970 for the major channels) • Customers exposed to ads: 1/3 watch, 2/3 mute-switch-leave • Internet vs. TV: Internet users average about three hours a day working with the network, about 50 percent more time than the average television viewer watches TV. • Internet users watch about 20 minutes less TV than the average viewer. • 10% of users prefer to miss TV than Internet • McKinsey: TV advertising in 2010: 35% as effective as in 1990 • And Advertising costs increasing Nederlanders zien slechts 18% van uitgezonden reclame 12 jan 2005

  7. 6 Sept 2005

  8. Why is E-Commerce / E-Marketing important? • Revolution in almost all aspects of Marketing • New channel, new pricing options, individual reach and promotions, new media communication • Opportunities to find new product needs and launch new products • Supports improved distribution and services

  9. E-BusinessE-Commerce E-MarketingInternet: the backbone

  10. E- Commerce E- Marketing SCM E- Procurement Partner Alliances E- Business E- Logistics ERP E- Finance Employee services Knowledge sharing

  11. What is E-Commerce?

  12. E-Commerce(today) A collection of Web - based technologies, tools and business processes improving, supporting, supplementing or replacing traditional commercial practices E. Constantinides

  13. What Traditional Practices? • MARKETING RELATED (E-Marketing): Customer Recruitment, Acquisition, Retention • Communication and interaction • Advertisement, Promotion, PR etc • Customer Data Collection, Direct Marketing • Market Research, R&D • Collaborative development of new products, services • Retailing - Selling, Invoicing, Payments, Delivery • Customer Service and CRM • PROCUREMENT (E-Procurement) • SCM, LOGISTICS, Internet based EDI • Online financial transactions (banking, investment, insurances) • etc

  14. More and more traditional firms adopt the Web as commercial strategy • Why • Traditional brick-and-mortar companies face increasing pressures in a competitive marketing environment • Internet: Major information source for consumer and professional buyer A possible response is to introduce a variety of e-commerce initiatives that can improve • supply chain operation • information • raw materials purchase • increase customer service • open up markets to more customers

  15. Internet: An Economic, Technological and Social Phenomenon • Online transactions revenues – volume: (2010 10% of US retailing) • Penetration rate: 1995 16 mil, today close to 1 bill users • A new business environment • Social effects and trends

  16. E-Marketing and the Web-Marketing Mix

  17. Traditional Marketing Virtual Marketing ? Marketing Planning Product Price Promotion Place

  18. 4P Marketing Mix is unfit for E-Marketing • The 4Ps are not the critical factors. This because the Mix: - is focused on mass products / services - ignores customer needs, lacks interactivity - is tactical: lacks strategic dimensions - ignores the complexity of the online environment: you need more than the 4Ps to create and maintain a competitive proposition • Role of the 4Ps in E-Marketing: elements of the Web Experience

  19. 4S Web-Marketing mix • Identifies the critical factors of the Online Marketing • Proposes an integrative approach for online marketing • Allows for: - Shorter planning periods and - “Flexible” strategy • Easy to conceptualize, remember,apply

  20. The Web - Marketing Mix Scope Site Synergy System Strategic Issues Operational Issues Organizational Issues Technological Issues Source: E. Constantinides 1999

  21. Typical stages of an E-Commerce Project Strategic and Marketing Plan Identification of control processes of communication interface Definition of ordering and fulfilment processes Identification of site control, support and maintenance processes Construction of Web front and EDI interface Site testing Construction of Communication interface Site online

  22. The Web - Marketing Mix Scope Golden rule: Frequent Strategy Review • - Strategic Mission and Objectives • - Market Analysis • Competition Basis : Functionality, Reliability, Convenience, Price • Competitive analysis • - Potential Customers / Profiles: • motivation, behaviour, needs, goals, priorities, current way of fulfilling needs, • customer value, Online segmentation? Technographics (Forrester), eTypes • Market Potential, Forecast, Trends • - Internal Analysis • Internal Resources, Processes, Values : Internet is sustaining or disruptive technology? • - Strategic Role • In relation to Resources, Processes and Values • Generic Roles: Informational, Promotional, Relational, Transactional, Educational etc. • Intranet, Extranet: possible added value for the organisation • Business model

  23. Source: E. Constantinides Source: Constantinides E., 2004, Strategies for Surviving the Internet meltdown: The Case of Two Internet Incumbents, Management Decision Journal, vol 42, nr 1, pp 89-107

  24. Source: E. Constantinides Source: Constantinides E., 2004, Strategies for Surviving the Internet meltdown: The Case of Two Internet Incumbents, Management Decision Journal, vol 42, nr 1, pp 89-107

  25. 131 product categories www.amazon.com

  26. The Web - Marketing Mix The Online Experience; Gold Rule: 8 seconds, 3-clicks Scope Site • Customer Oriented Content: Important questions to be asked: • - What does the customer expect to find in my site? • - Why the customer will make use of my site? • - What could motivate the customer to come back to the site? • Web Experience depends on a combination of factors affected by: • Domain Name, Design, Layout, Atmosphere • Simplicity, Functionality, Speed, • Findability, Navigation, Searchability (2005 research of Oneupweb:only one in eight Fortune 100 • sites well optimized for search engines – 1of 11 last year, 1 of 25 in 2002) • Interactivity, Customisation • Service Online, User Feedback • Retention Strategy, Fresh Information, Fresh Features • Links • Privacy policy, customer protection • Perceived and actual security level • 4 Ps • Customer Oriented Positioning: Web Unique Selling Proposition

  27. Top 10 Retail Web Sites IntegratingOnline & In-Store Traffic, U.S. Home & Work, Winter2003 Positive Web Experience drives more Customers to physical outlets Retail Store Brands Index Number Coach 2,707 Neiman Marcus 1,862 J. Crew 1,077 Bloomingdale's 1,002 Williams-Sonoma 956 Pottery Barn 831 Crate & Barrel 784 Nordstrom 568 Eddie Bauer 508 Macys.com 476 Source: Nielsen//NetRatings @Plan

  28. Main problem in creating the right online experience: Lack of knowledge on online consumer’s and business customer’s behavior: • Motivation • Decision-making process • Factors influencing the adoption of products / services online

  29. Source: Constantinides E., 2004, Influencing The Online Consumer’s Behavior: The Web Experience, Internet Research: Electronic Networking Applications and Policy, vol 14, nr 2, pp. 111-126

  30. FUNCTIONALITY FACTORS PSYCHOLOGICAL FACTORS CONTENT FACTORS USABILITY INTERACTIVITY TRUST AESTHETICS MARKETING MIX Convenience Customer service /after sales Transaction security Design Professional Communication Site navigation Interaction with company personnel Customer Data Misuse Presentation Quality Product assortment Information architecture Customisation Customer Data Safety Design elements Reliability of Fulfilment process Ordering/payment process Network Effects Uncertainty reducing elements Style / atmosphere Price Search facilities and process Guarantees/return policies Attractive Promotions Site speed Findability /accessibility The Web Experience Building Blocks Source: Constantinides E., 2004, Influencing The Online Consumer’s Behavior: The Web Experience, Internet Research: Electronic Networking Applications and Policy, vol 14, nr 2, pp. 111-126

  31. The Web - Marketing Mix Scope Site Synergy • Front Office • Integration with Marketing Activities • - Advertisement • - Promotions • - Communication, PR • - Distribution • Back Office • Integration with Organisational Processes, Values • - Production, Logistics • - EDI, ECR • - Delivery, Invoicing, Fulfilment • - Total Quality Management, Control Systems • - Legacy Integration: MIS, ERP Systems, Databases • Third parties

  32. The Web - Marketing Mix Scope Site Synergy System - Technology trends - Programming tools, browser independence - Content Management - Security level(s) - Payment systems - Hosting - Back ups - Interfacing - Traffic Data monitoring, Performance Analysis - System Administrator - Communication Interfaces - Site Support and Maintenance

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