MIS Chapter 5: Electronic Commerce: Strategies for the New Economy – Flashcards
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The Internet
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Adults spend 29% of their time there Advertisers spend only 8% of $$ there
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The Newspaper
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Adults spend only 8% of their time there Advertisers spend 20% of $$ there
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Electronic commerce (e-commerce)
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commerce, but it is commerce accelerated and enhanced by IT - Build powerful relationships with customers - Build powerful relationships with suppliers - Build powerful relationships with partners - But e-commerce is still commerce You must have a clear path-to-profitability (P2P), a formal business plan that outlines key business issues
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path-to-profitability (P2P)
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a formal business plan that outlines key business issues such as... - Customer targets - Marketing strategies - Operations strategies - Projected income statement and balance sheet targets`
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Business to Government (B2G) e-commerce
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when a business sells products and services to a government entity. - Lockheed providing products and services to DoD - Fairly large e-commerce model in terms of revenue
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Consumer to Government (C2G) e-commerce
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when an individual sells products and services to a government entity - You selling something to the government - This market is quite small and unremarkable
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Government to Business (G2B) e-commerce
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when a government entity sells products and services to businesses - SBA providing surety guarantees, disaster assistance, ombudsmen, etc to small businesses - TSA holding auctions and selling off confiscated items (most times, you must be a "business" to participate in these auctions)
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Government to Consumer (G2C) e-commerce
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e-commerce activities performed between a government and its citizens - Does not fit well at all within the traditional supply-and-demand e-commerce notion - Paying taxes, registering vehicles, etc
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Government to Government (G2G) e-commerce
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e-commerce activities within a nation's government (can also refer to e-commerce activities between 2 or more nations' governments)
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Business to Business (B2B) e-commerce
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when a business sells products and services to customers who are primarily other businesses - Where all the e-commerce money is - Basically, it's about businesses doing business with other businesses - Supply chain management (from Chapter 2) is a big part of B2B e-commerce demand aggregation is present
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Business to Consumer (B2C) e-commerce
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when a business sells products and services to customers who are primarily individuals - B2C is the glitzy e-commerce like iTunes, eBay, etc - B2C is a primary focus of the later sections in this chapter varying demographics and lifestyle mass customization necessary in some instances
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Consumer to Business (C2B) e-commerce
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when an individual sells products and services to a business - True economic inversion of the B2C model - Fotolia is a good example (www.fotolia.com) - You can also advertise businesses on your personal Web site (called an affiliate program) and receive monies for visitors who jump from your site to the business' Web sites
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Consumer to Consumer (C2C) e-commerce
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when an individual sells products and services to another individual. - You selling to another person (or the reverse) - Usually occurs through an intermediary such as eBay
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To be successful, you must...
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1. Define your products and services 2. Define your target customers - B2B (other businesses) - B2C (individuals) 3. Define your customers perception of the value of your products and services
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B2C: Convenience Versus Specialty
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Convenience - Lower priced - Purchased frequently - Example: common food items Specialty - Higher priced - Purchased less frequently - Example: Stereos, computers
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B2C: Commoditylike and Digital
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Commoditylike - Same no matter where you purchase it - Examples: books, music, movies - Price and ease of ordering are important Digital - Purchased and delivered over the Internet - Best product type for B2C e-commerce - Examples: Music, software
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B2C: Mass Customization
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Mass customization - the ability of an organization to give its customers the opportunity to tailor its products or services - Dell - customized computer purchases - Apple iTunes - only the music you want (not necessarily the whole album)
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B2B: MRO Versus Direct
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Maintenance, repair, and operations (MRO) materials (indirect materials) - materials necessary for running a company but do not relate to the company's primary business activities - Similar to convenience items in B2C - Office supplies, repair parts, lubricating oils
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MRO Materials
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- Buyers in B2B make large purchases - Can then demand a discount (not true in B2C) - Can team up with other buyers to create demand aggregation - Demand aggregation - combining purchase requests from multiple buyers which justifies a larger discount
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Demand Aggregation
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combining purchase requests from multiple buyers which justifies a larger discount
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Direct Materials
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materials that are used in production in a manufacturing company or are placed on the shelf for sale in retail environments - Relate directly to a company's primary business activities - Quality, quantity, and delivery timing are important - Buyers can participate in reverse auctions for direct materials - Reverse auction - process in which a buyer posts its interests in buying items and sellers compete by submitting successively lower bids - The lowest bidder wins
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Reverse auction
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process in which a buyer posts its interests in buying items and sellers compete by submitting successively lower bids - The lowest bidder wins
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B2B: Horizontal Versus Vertical
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B2B e-commerce takes advantage of e-marketplaces Electronic marketplace (e-marketplace) - interactive business providing a central market where multiple buyers and sellers can engage in e-commerce - Horizontal e-marketplaces - Vertical e-marketplaces
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Electronic marketplace (e-marketplace)
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interactive business providing a central market where multiple buyers and sellers can engage in e-commerce - Horizontal e-marketplaces - Vertical e-marketplaces
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Horizontal e-marketplace
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connects buyers and sellers across many industries - Primarily for MRO materials - All industries need office supplies, travel, and the like
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Vertical e-marketplace
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connects buyers and sellers in a given industry - Primarily for direct materials - Each industry has unique direct material needs - Covisint (www.covisint.com) - automotive - Many others
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Business to Consumer
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Need to determine your marketing mix
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Marketing mix
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set of marketing tools your organization will use to pursue its marketing objectives in reaching and attracting potential customers - drives customer's to website
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B2C Marketing Mix Tools
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- Registering with search engines - Online ads - Viral marketing - Affiliate programs
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Online Ads
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Online ads (banner ads) - small advertisements that appear on other sites Two variations are: - Pop-up ad - small Web page advertisement that appears on your screen outside the current Web site - Pop-under ad - pop-up ad you do not see until you close your current browser window
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Pop-up ad
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small Web page advertisement that appears on your screen outside the current Web site
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Pop-under ad
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pop-up ad you do not see until you close your current browser window
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Viral marketing
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encourages users of a product or service supplied by a B2C business to encourage friends to join in as well - Blue Mountain Arts (www.bluemountain.com) - Send a card - Card has link so the other person can send you a card back
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Affiliate program
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arrangement between two e-commerce sites that directs viewers from one site to another - If viewers buy at the second site, the second site pays a small fee to the first site - Usually a percentage of the sale Click-throughs and conversion rates are important
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Click-through
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count of the number of people who visit one site and use an ad to get to another
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Conversion rate
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percentage of potential customers who actually buy something ways to measure success
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Business to Business Marketing
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- Much more personal - Not usually done with generic ads designed for mass distribution - doesn't include broad or generic marketing mix - Often take place in e-marketplaces - Once a contact is made, the relationship must be established - This often requires face-to-face meetings - Must also integrate the IT systems to the supplier business and customer business - requires establishing formal business relationship
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B2C Payment Systems
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Credit cards Financial cybermediaries Electronic checks Electronic Bill Presentment and Payment Smart cards
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Financial Cybermediary
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Internet-based company that makes it easy for one person to pay another person or organization over the Internet - PayPal (www.paypal.com) is the most well-known
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Electronic check
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mechanism for sending money from your checking or savings account to another person or organization - Many implementations - Most common implementation is online banking
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Electronic Bill Presentment & Payment
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system that sends bills over the Internet and provides an easy-to-use mechanism (perhaps a button) to pay for them if the amount looks correct - Available through Checkfree (www.checkfree.com) and Quicken (www.quicken.com)
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Smart Card
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plastic card (the size of a credit card) that contains an embedded chip on which digital information can be stored and updated - Debit cards are an implementation
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B2C Payment Systems
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Must move money and other information such as shipping address Digital wallets can help Digital wallet - software and information - Software provides transaction security - Information includes delivery information and other forms of necessary information Business Customers - Make large purchases - Will not pay with credit card or financial cybermediary - Use financial EDI - Pay for many purchases at once (perhaps the end of the month)
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Digital wallet
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software and information - Software provides transaction security - Information includes delivery information and other forms of necessary information digital wallet can be Can be... Client-side - you create this digital wallet and keep it on your computer Server-side (also called a thin wallet) - an organization creates this for you and keeps it on its servers
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Client-side
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you create this digital wallet and keep it on your computer
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Server-side (also called a thin wallet)
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an organization creates this for you and keeps it on its servers
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Electronic data interchange (EDI)
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direct computer-to-computer transfer of transaction information in standard business documents, such as invoices and purchase orders, in a standard format How businesses communicate with each other Used in e-marketplaces and value-added networks (VANs) - B2B service that offers information-sharing services among organizations - VANs support the sending and receiving of purchase orders, for example
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value-added networks (VANs)
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B2B service that offers information-sharing services among organizations - VANs support the sending and receiving of purchase orders, for example
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Financial EDI
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an electronic process used primarily within B2B for the payment of purchases - This is electronic money in B2B - Often occurs through an automated clearing house
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Security is very important when moving money Some security measures...
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- Encryption - Secure Sockets Layers - Secure Electronic Transactions - Many, many others
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Encryption
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scrambles the contents of a file so that you can't read it without having the right decryption key Often through public key encryption (PKE) - uses two keys: a public key for everyone and private key for only the recipient of the encrypted information
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public key encryption (PKE)
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uses two keys: a public key for everyone and private key for only the recipient of the encrypted information
