MAR 4333521

1
MAR 4333-521

• E-Commerce Marketing
• Fall 2002Sarasota
• Business Models
• Rich Gonzalez
• Ocotober 19, 2002 (Week 8 Saturday)

2
For Site/Model Evaluation

• Today Please peruse Nielsen Tahir
  bookHomepage Usability
• Select a site if you can

3
URLs (Well probably Visit Today)

• google.com------Groups
• www.flyertalk.com
• www.djangos

4
Agenda October 12, 2002

• Finish Info, Info, Info
• Business Model--CDP
• Due For October 26

5
For Today October 19

• AOL Is Relearning Its ABCs, p52, BusinessWeek,
  October 14, 2002
• Wired Villages, p116, BusinessWeek, October 14,
  2002
• Chapter 5

6
For October 26

• Prices Just Keep Plunging, p38, BusinessWeek,
  October 21, 2002
• Chapter 5

7
Last time

• Bots
• Info Gathering
• CDP

8
Customer Decision Process

• Origination (Recognize Problem)
• Information Gathering
• Evaluation
• Purchase Decision
• Post-purchase Results

9
Rating Sites

• www.bizrate.com
• www.dealtime.com
• shopping.yahoo.com
• www.pricegrabber.com
• www.cnet.com

10
Digital Camera Word of Net

• What did people say?
• Camedia 720 was easy to use!
• Kodak dx 4900 is the cheapest 4 MP camera out
  there.
• The LCD was bright (visible) in the sun.
• Optical and Electronic viewfinders are
  different.
• Electronic viewfinder drains battery.
• Special design of popup flash for Nikon CP 995
  better deals with red eye.

In Class Exercise
11
Stewart Brand

• Information wants to be free.

12
Customer Orientation

• A philosophy incorporating the marketing concept
  that emphasizes first identifying unmet needs,
  then satisfying them.
• Marketing Mantra
• Know your customer(s).

13
Pick up to finish
14
Sources of Information

• Advocate
• Non-advocate
• Neutral/Independent
• Personally Motivated--Sprint
• Web Sites
• Usenet
• Listservs

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Advocate

• Company
• Seller
• Manufacturer

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Personally Motivated

• Sprint
• www.ctyme.com/sprint/index.htm

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For Hire

• www.bargain.com
• Bidders Edge

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Stewart Brand

• Information wants to be expensive.

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Non-Advocate

• Usenet Newsgroups

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Customer Orientation

• A philosophy incorporating the marketing concept
  that emphasizes first identifying unmet needs,
  then satisfying them.
• Marketing Mantra
• Know your customer(s).
• http//online.wsj.com/public/contact_us?pageConta
  ctUs

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Customer Satisfaction Definition

• Performance Expectations CS

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Customer Behavior

• They are looking for security.
• They are looking for uncertainty reduction.
• They are looking for reduction in perceived risk.

23
Consumers Want

• Trust
• Expectations
• Information

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Web Site
25
FlyerTalk

• Business Professionals
• Airline Loyalty Programs
• Rules, Benefits, Gimmicks
• Community (talk, chat, etc.)
• www.flyertalk.com

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Shoppers

• Comparison Shoppers?
• Internet Shoppers?
• Comparison Shopper Internet Shopper

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Independent
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Information, Valuable?

• http//www.nyc.gov/html/doh/
• Queens, example
• After 5

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Word of Net

• Fast, Very Fast
• Wide
• Accuracy Varies
• Not Controllable
• Very Important
• Not Paid Enough Attention--Yet

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Value Proposition/Cluster
The first step in the articulation of the
business model is clearly specifying the value
proposition or the value cluster for the
business

• Defining the value proposition or the value
  cluster requires answering the following
  questions
• Which target segments should the company focus
  on?
• What is the combination of customer benefits
  that is offered?
• What makes the firm and its partners better
  positioned to deliver the offering than anybody
  else?

Value Cluster
Marketspace Offering
Resource System
Financial Model
32
Value Proposition/Cluster
The definition of the value proposition is the
result of a combination of choices about the
customers, the benefits offered and the unique
capabilities of the firm
Target Segments
Key Benefits Offered
Unique Capabilities
Value Proposition


The special occasion segment

• Online experience
• Unique, broad product line of complementary gifts

PC Flowers Gift

• Fresh flowers
• Complementary gifts
• Low prices

PC Flowers Gift serves the special occasion
segment by providing fresh flowers and unique
complementary gifts
Mid- to high-end market

• Strong brand name
• Market Communication
• Supplier network

• Easy delivery of flowers

FTD.com provides the mid- to high-end market
with the easiest way to send flowers thanks to
its extended network of suppliers
FTD.com
33
Flowers Competitors p145

• PC Flowers Gifts
• Proflowers.com
• FTD.com
• 1-800-Flowers.com

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PC Flowers and Gifts

• October 19, 2002
• www.pcflowers.com/

35
Marketspace Offering
The next step is to articulate the online
product, service and information offering
Value Cluster

• Defining the Marketspace offering requires
  managers to complete the following sequential
  tasks
• Identify the scope of the offering
• Identify the customer decision process
• Map the offering to the consumer decision process

Marketspace Offering
Resource System
Financial Model
36
Marketplace Offering

• 1. Scope of OfferingCategory Specific Dominance
  Single CategoryCross-Category Dominance Many
  related categories
• 2. Identify the Customer Decision Process (CDP)
• 3. Map the Offering to CDP

37
Customer Decision Process
The second step in the construction of the online
offering is the articulation of the customer
decision process for the various product
categories
Flowers Example
Problem Recognition

• Need recognition, potentially triggered by a
  holiday, anniversary or everyday events

• Search for ideas and offerings, including
• Available online and offline stores
• Gift ideas and recommendations
• Advice on selection style and match

Prepurchase
Information Search
Evaluation of Alternatives

• Evaluation of alternatives along a number of
  dimensions, such as price, appeal, availability,
  etc.

Purchase
Purchase Decision

• Purchase decision
• Message selection (medium and content)

Satisfaction

• Post-sales support
• Order tracking
• Customer service

Postpurchase
Loyalty

• Education on flowers and decoration
• Post-sale perks

Disposal
38
Mapping the Offering to CDP
The last step in the construction of the online
offering is mapping the products and services
onto the customer decision process

• What occasions trigger the need for my product?
  What tactics can be used to stimulate demand?

Customer Decision Process

• Need Recognition

• What information would the consumer need to make
  a selection?

• Search for Ideas and Offerings

• Post-Sale Support and Perks

• What post-sale services can the website offer to
  create loyalty?

• Evaluation of Alternatives

• What are the key evaluation criteria that the
  consumer will use to evaluate my product/service?
  What information should the website offer to make
  the consumer comfortable with his or her choice?

• Purchase Decision

• What functionality should the site present to
  communicate privacy, trust and security?

39
Components of a Business Model
Developing a business model in the networked
economy requires four key choices on the part of
the senior management
Value Cluster

• Specify the value proposition or the value
  cluster for the business

Marketspace Offering

• Articulate the online product, service and
  information offer

Resource System

• Define how the company needs to align its
  resources to deliver the value proposition

• Define and select the most appropriate revenue
  model to pursue

Financial Model
40
What Do Customers Care About?
41
Myth Consumers Care Only About Prices Online
Percentage of Customers Who Care About Attribute
Attribute
Source JP Morgan Report etailing and the five
Cs
42
Argument

• The Internet Leads to Commoditization of All
  Products, i.e., Palm VII
• True?

43
Value Proposition/Cluster
The first step in the articulation of the
business model is clearly specifying the value
proposition or the value cluster for the
business

• Defining the value proposition or the value
  cluster requires answering the following
  questions
• Which target segments should the company focus
  on?
• What is the combination of customer benefits
  that is offered?
• What makes the firm and its partners better
  positioned to deliver the offering than anybody
  else?

Value Cluster
Marketspace Offering
Resource System
Financial Model
44
Value Proposition/Cluster
The definition of the value proposition is the
result of a combination of choices about the
customers, the benefits offered and the unique
capabilities of the firm
Target Segments
Key Benefits Offered
Unique Capabilities
Value Proposition


The special occasion segment

• Online experience
• Unique, broad product line of complementary gifts

PC Flowers Gift

• Fresh flowers
• Complementary gifts
• Low prices

PC Flowers Gift serves the special occasion
segment by providing fresh flowers and unique
complementary gifts
Mid- to high-end market

• Strong brand name
• Market Communication
• Supplier network

• Easy delivery of flowers

FTD.com provides the mid- to high-end market
with the easiest way to send flowers thanks to
its extended network of suppliers
FTD.com
45
Flowers Competitors p145

• PC Flowers Gifts
• Proflowers.com
• FTD.com
• 1-800-Flowers.com

46
CarPoint Example
CarPoints value cluster offers benefits that
address multiple segments of customers
Target Segments
Key Benefits Offered
Unique Capabilities
Value Cluster


CarPoint

• The efficiency of the Internet makes selecting
  and purchasing your car easier

• Knowledge of the Internet
• Software development expertise

• Information about cars and their prices
• Help on how to deal with dealers (tactics used,
  etc.)

• The intimidated by the process

• The information seekers

• Microsoft brand name
• Network of partners

• Extensive information
• In different formats (3D views, pictures,
  videos)
• From different sources (i.e., Kelley Blue Book)

• Provides a one-stop source with all the
  necessary information to make a car purchase

47
PC Flowers and Gifts

• "I had to do it. I had to do it. Everybody said
  it couldn't be done. Everybody said, It won't
  work.' " Bill Tobin 1998

48
PC Flowers and Gifts

• October 2, 2002
• www.pcflowers.com/

49
Marketspace Offering
The next step is to articulate the online
product, service and information offering
Value Cluster

• Defining the Marketspace offering requires
  managers to complete the following sequential
  tasks
• Identify the scope of the offering
• Identify the customer decision process
• Map the offering to the consumer decision process

Marketspace Offering
Resource System
Financial Model
50
Marketplace Offering

• 1. Scope of OfferingCategory Specific Dominance
  Single CategoryCross-Category Dominance Many
  related categories
• 2. Identify the Customer Decision Process (CDP)
• 3. Map the Offering to CDP

51
Customer Decision Process
The second step in the construction of the online
offering is the articulation of the customer
decision process for the various product
categories
Flowers Example
Problem Recognition

• Need recognition, potentially triggered by a
  holiday, anniversary or everyday events

• Search for ideas and offerings, including
• Available online and offline stores
• Gift ideas and recommendations
• Advice on selection style and match

Prepurchase
Information Search
Evaluation of Alternatives

• Evaluation of alternatives along a number of
  dimensions, such as price, appeal, availability,
  etc.

Purchase
Purchase Decision

• Purchase decision
• Message selection (medium and content)

Satisfaction

• Post-sales support
• Order tracking
• Customer service

Postpurchase
Loyalty

• Education on flowers and decoration
• Post-sale perks

Disposal
52
Mapping the Offering to CDP
The last step in the construction of the online
offering is mapping the products and services
onto the customer decision process

• What occasions trigger the need for my product?
  What tactics can be used to stimulate demand?

Customer Decision Process

• Need Recognition

• What information would the consumer need to make
  a selection?

• Search for Ideas and Offerings

• Post-Sale Support and Perks

• What post-sale services can the website offer to
  create loyalty?

• Evaluation of Alternatives

• What are the key evaluation criteria that the
  consumer will use to evaluate my product/service?
  What information should the website offer to make
  the consumer comfortable with his or her choice?

• Purchase Decision

• What functionality should the site present to
  communicate privacy, trust and security?

53
Djangos

• Need Recognition
• Support
• Facilitition
• Post-Purchase

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