OUTLINE
The New Economy
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CASE STUDY: CHARLES
SCHWAB
THE MAJOR DRIVERS OF
THE NEW ECONOMY
Invented
Digitalization
Two
discount brokerage category
sequential decisions were faced by
The
& Connectivity
Internet Explosion
Disintermediation
Customization and Cutomerization
Industry Convergence
him:
Should it go online?
Should it integrate its online and offline
trading systems?
Major forces
driving the new
economy
Major forces
driving the new
economy
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Procter & Gamble’s Reflect.com site allows customers
to design their own beauty products
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BUYER BENEFITS OF EECOMMERCE
Convenience
Easy
and private
Greater
Access
product access/selection
to comparative information
Interactive
Major forces
driving the new
economy
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and immediate
E-Commerce
domains
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SELLER BENEFITS OF EECOMMERCE
Figure 3-2
E-MARKETING DOMAINS
Relationship
building
transaction costs
Increased speed and efficiency
Flexibility
Global access, global reach
Reduced
E-Commerce
domains
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Lower
consumer search costs;
can contact consumers
directly;
More intensive price competition
among firms?
Any online loyalty from customers?
Disintermediation?
More
information and lower transaction
costs;
Prices are transparent;
Buying alliances;
Differentiation or price competition?
More efficient markets.
Manufacturers
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E-Commerce
domains
C2C EE-COMMERCE
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C2B EE-COMMERCE
Helping
consumers exchange goods or
information, e.g., eBay.
Auction sites facilitate the exchange
process;
Newsgroups / forums
E-Commerce
domains
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THE IMPACTS OF B2B
SITES
THE IMPACT OF B2C WEB
SITES
E-Commerce
domains
E-Commerce
domains
Allow
consumers to search out sellers,
learn about offers, initiate purchase, or
dictate purchase terms;
Some
sites facilitate the feedback
process between customers and
companies.
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E-Commerce
domains
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THE REASONS FOR THE
FAILURE OF MANY DOTDOT-COMS
PURE CLICK COMPANIES
Search
Engines and Portals;
Service Providers, e.g., AOL
Commerce Sites, e.g., Amazon, CDNow
Transaction Sites: eBay;
Content Sites, e.g., New York Times
Low
entry barrier and intensive competition;
mass marketing;
Over emphasis on acquisition vs. retention
Poor web site design / distribution systems
No sound business model which can deliver
profits.
Internet
Challenges faced
by Click-only
companies
Conducting
Challenges faced
by Click-only
companies
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BRICK AND CLICK
COMPANIES
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E-MARKETING
Channel
Setting
E-commerce
Placing
up web sites
online ads and promotions
Creating or using web community
Using e-mail and webcasting
conflict was initially a concern;
often created new
customers, rather than cannibalizing
existing one;
Many firms now enjoy greater success
than their click-only competition. Why?
Challenges faced
by Click-only
companies
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E-Marketing
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SEVEN C’
C’S OF WEB SITE
DESIGN
Content
Context
Community
Communication
Connection
Commerce
Customization
E-Marketing
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E-Marketing
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CREATING OR
PARTICIPATING IN WEB
COMMUNITIES
ONLINE FORMS OF ADS
AND PROMOTIONS
Banner
ads
Content sponsorships
Microsites
Viral marketing
Attracting
consumers with common
interests and well-defined
demographics;
Offering targeting opportunities to
advertisers.
E-Marketing
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CHARLES SCHWAB
Invented discount
Later became first
true click-andbrokerage category
mortar full-service
First U.S. major player brokerage
to go online
Now world’s largest
Initially offered twoe-commerce site
tiered trading system
85% online trades;
to protect profits /
21% of trade
stop cannibalization
volume; Strong
stock return
E-Marketing
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E-Marketing
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