Chapter 12:
E-Commerce
Strategies for
Business Markets
PowerPoint by:
Ray A. DeCormier, Ph.D.
Central Ct. State U.
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 Applications
Successful Web sites:
1. Provide customers with information
2. Are interactive
a. Offer online catalogs
b. Process fulfillment
c. Process payment
d. Provide interactive communications
through chat/video applications
e. Provide a FAQ to address questions
f. Provide customer service at less cost
g. Allow customization of service & product offerings
E-Commerce Types
Business-to-Customer E-Commerce
E-commerce can
play pivotal role
across all functional
business areas.
1.
2.
3.
4.
5.
Product Information
Sales
Service
Payment
Marketing Research
Intra-Organizational E-Commerce
1. Workgroup Communications
2. Electronic Publishing
3. Sales Force Productivity
Inter-Organizational E-Commerce
1. Supplier Management
2. Inventory Management
3. Distribution Management
4. Channel Management
5. Payment Management
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.
2.
3.
4.
Order management
Product configuration
Design configuration
Tailor products to meet exact
requirements in real time
5. Any other ways?
Reduce Transaction Costs
• The Internet allows low-cost access to:
a.
b.
c.
d.
e.
Order entry
Order tracking
24/7 service
Self-service product information search
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. Forecast
2. Production plans
3. Delivery schedules
4. Inventory tracking
5. Determination of inventory levels at all points
6. 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. Products
2. Customers
3. Competitive situation
4. 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 Objectives
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Target specific groups
Build recognition of company name / brand
Convey a cutting edge image
Conduct marketing research
Interact with customers
Provide real-time information
Sell products and services
Advertise in the new medium
Generate leads
Provide a medium for customer service
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. Software
b. Movies
c. Music
d. 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%
87%
72%
68%
64%
60%
to find components and suppliers
to find product specifications
for news
for research
for pricing
for technical application ideas
• The Internet is a powerful tool that can deliver
information at critical points in the purchase
decision process.