MAR 6936902

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MAR 6936-902

• E-Commerce Marketing
• Spring 2003Tampa--MBA
• Blown To Bits
• Rich Gonzalez
• February 3, 2003 (Week 5)

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URLs

• www.carfax.com
• wsj.com

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Agenda February 3, 2003

• WSJ Online
• Porter
• Blown To BitsDiscussion
• Due For February 6
• Finish Pics

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Grading Criteria

• Start Out With 125 Points
• Areas for ImprovementF Format (Cover page,
  Headings, T ThoroughnessA AnalysisL Late
  (20 a day)

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Ontain Ordering System

• 10 Minutes In Line Is Way Too Long
• Starbucks, Boston Market, etc.

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Why Wait For Your Morning Latté?

• Starbucks Express
• 60 Stores TestDenver Boulder, CO
• Register Online
• Charge 20Prepaid Balance
• Create Profile
• Order 1 tall half-decaf, extra hot, vanilla
  latte, blueberry scone.
• Order 2 small regular coffee.

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Why Wait For Your Morning Latté? contd

• Cell phone callwith menu item select (up to 5
  menu items)
• Website orders, too
• 25 Charge
• Why Denver? Like Technology, Innovation
• Online OrderingBoost Sales?
• Next McDonalds, Subway

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Starbucks Express

• https//www.starbucks-express.com/info/allLocation
  s.aspx
• Demo

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PayPal Final Notes

• For Sending , For Personal Accounts.
• Price 0.00 per transaction/amount
• We deliver a product ideally suited for small
  businesses, online merchants, individuals and
  others currently underserved by traditional
  payment mechanisms.

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Services

• Relatively Intangible
• Simultaneous Production/Consumption
• Perishable
• Non-Standardized

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For February 10

• Blown to Bits, p.99 167
• Analysis Paper 3
• WSJ Online After the Bust, William Boston,
  WSJ Online, January 27, 2003
• BusinessWeekThe Start of A Dot-Comeback, BW,
  February 3, 2003http//www.businessweek.com/magaz
  ine/content/03_05/b3818061.htm

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For Today February 3

• Blown to Bitsp.1 - 97
• Weekly Analysis Paper 2 Due

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Weekly Analysis Paper 2

• Subject Blown To Bits
• Length 1.5 Pages -------125 points
• Cover PageNo Folders
• Due on February 3
• Subjects (use bolded headings)1. Information
  Asymmetries2. Deconstruction3.
  Disintermediation
• 4. YOUR Subject (killer app, Moores Law,
  tradeoff)

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Last Time

• Moores Law
• Metcalfes Law
• Critical Mass
• Economics of things/information
• Customer Orientation
• C-O Metrics

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Metcalfes Law
Net Utility
Nodes
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Killer Application

• The killer app is a software product that
  entices a user to adopt a larger technology.
• Spreadsheets were the killer apps for PCs.
• Email is the killer app for the Internet.

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Killer App

• def. a new good or service that establishes an
  entirely new category and, by being first,
  dominates, returning several hundred percent on
  the initial investment
• Generative or destructive?

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Figure 8.1 Lifecycles of the Telegraph,
Telephone, Cell Phone
U.S. Figures
Telephone Life Cycle
Number of users
Cell Phone Life Cycle
Telegraph Life Cycle
1840 1876 1877 1880 1900 1930
1945 1982 2002
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Marketing Concept
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Customer Satisfaction

• Definition

Expectations
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Customer Decision Process

• Recognize Problem
• Information Gathering
• Evaluation
• Purchase Decision
• Postpurchase Results

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1 to 1 Marketing

• Personalization
• Customization

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Luddites
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Diffusion of Innovations

• Innovation
• Discontinuous vs. Continuous
• WWW? (Figure 8.5) p227
• Adoption Factors p228
• Killer App
• Marketers As Change Agents

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Follow-On Innovations

• www.hammertap.com

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The Adoption Curve
The adoption curve is used as a model to
understand who is likely to be an innovator and
how interpersonal influence passes to later
adopters of innovations.
2.5 13.5 34 34
16 Innovators Early Early Late
Laggards Non- Adopters
Majority Majority Adopters Early Adoption
Late Adoption
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3 Fundamental Business Shifts

• 1. Most transactionsB2C, B2B, C2C and C2C will
  become self-service digital transactions.
• 2. Customer service will become the primary
  value-added function in every business.
• 3. The pace of transactions and customer needs
  for customer service will force firms to adopt
  digital processes---for survival.

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New Economics of Information

• The evolving and advancing technologies for
  sharing and using information to
• Transform business
• Industry
• Competitive Advantage
• Britannica Example...
• ...is generalizable

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Strategic Competitive Advantage--Porter

• A competitive advantage is a super strength of a
  company, relative to competitors, that provides a
  distinctive value proposition to consumers, and
  is significantly valued by those consumers.
• It is sustainable.

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Encyclopaedia Britannica contd

• Strategic Competitive Advantage
• Quality Volume
• Sales Force
• 1,500 PriceLarge Margins
• Thoroughness

• Strategic Competitive Disadvantage
• Too Big For CD
• Commissions
• 75--50--0
• Too Slow To React

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Scenario

• Sales-----Up
• Profits-----Growth
• Employees---Growth
• Credit -------Up
• Reputation---Up
• Stock-----------Up
• What should you do?

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Themes in Blown To Bits

• SCA to SCD
• Legacy Assets
• Speed
• Seeing (what is visible)
• Not Zero-Sum

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Porters Competitive Business Model
New Entrants
BP of Sellers
BP of Buyers
Intraindustry Rivalry
Substitutes
Which is affected?
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The Porter framework

• The Porter Generic Strategy framework is well
  established.
• Three generic strategies -- Differentiation, Low
  Cost and Focus
• Strengths of the Porter approach are that it is
  well known, easy to understand and adaptable to
  e-commerce.

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Strategy

• The essence of strategy is choosing to perform
  activities differently than rivals do.
• Must be flexible to respond rapidly to
  competitive and market changes. Michael E.
  Porter
• What Is Strategy?, Nov-Dec 1996, HBR

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Figure 8.9 Internet Product Life Cycle
Prices Number of
Users Stage Time Line
Development Intro- Growth Maturity
Decline duction Positive
Profits Negative
Dial-up Access
Broadband Access
Wireless Access
Free ISP Access
Web TV
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Business Model

• Value Proposition
• What you give and what you get
• Value and Revenues
• How will the business win?

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Superior Value Proposition

• The value proposition is the total market
  offering to customers and is closely related to
  the Four-P marketing mix.
• A superior value proposition can be based on a
  superior product, price, distribution or
  promotion or a superior combination of these.

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Most Important Factor In E-Commerce?

• Information
• Information
• Information

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Information Asymmetry

• Knowledge a Transaction Participant Possesses
  Which You Are Not Privy To.
• How does this affect transactions?

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Information Asymmetries

• Vendors
• Consumers
• Buyers
• Price
• Assumption is that they exist

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Big Concepts

• Information
• Amplification
• Asynchronicity

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Evans Wurster

• Who are these guys?

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Blown To Bits Recommendations

• Clayton Christensen
• Edgar Bronfman, Jr. Seagrams
• Jacques Nasser, Ford Motor Co.
• Toby Lenk, eToys
• Jean-Marie Messier, Vivendi
• Shikhar Ghosh, Open Market, iBelong

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Weekly Analysis Paper 2

• Subject Blown To Bits
• Length 1.5 Pages -------125 points
• Cover PageNo Folders
• Due on February 3
• Subjects (use bolded headings)1. Information
  Asymmetries2. Deconstruction3.
  Disintermediation
• 4. YOUR Subject (killer app, Moores Law,
  tradeoff)

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Information Asymmetry

• Disparity in info that affect BP
• Tradeoff between richness reach
• Auto Purchase is a prime example
• Info Asym is declining due to more access to info
  channels
• Changing how channels do business
• Leveling the playing field
• Democratization effect
• Precursor to deconstruction

In Class Exercise
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Deconstruction

• Dismantling and reformulation of traditional
  business structures.

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Deconstruction

• Dismantling and reformulation of trad. biz
  structures
• Death of packaging and averagingyoure judge by
  every product/piece of value chain
• Competitors will find weakest part/most valuable
  of your value chainbetter find it yourself
• More investment in legacy assets inhibits self
  deconstruction

In Class Exercise
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Disintermediation

• Shift of richness/reach curve to right
• Traditional disintermediation (along curve)
• New disintermediation (curve shifts)
• Brokerage/stock information new
  disintermediation
• Tool that cuts out the middleman
• Dell sales model minimizes inventory
• Intermediaries being replaced with
  navigatorsintermediaries must add value

In Class Exercise
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Disintermediated

• Stockbrokers
• Publishers
• Insurance agents
• Music industry
• Video rentals--Netflic

In Class Exercise
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Other PointsYour Choice

• Comment here about other salient points...

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• Adding Richness Is the Best Way To Forestall
  Deconstruction

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Change, Techno, Info, Process...

• The Only Sure Winner Is the Customer

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What Is Wrong With This?
More info, more SCA
Its Linear
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E W Say
SCA
More info, LOTS more SCA
Information
Not Linear
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Causes

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Information Is The Glue

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Weekly Analysis Paper 3

• Subject Blown To Bits
• Length 1.5 Pages, Cover Page--125 pts
• Due February 10
• Subjects (use bolded headings)1. Competing on
  Reach2. Competing on Richness 3. Competitive
  Advantage

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End Here