MAR 4933002

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MAR 4933-002

• E-Commerce Marketing
• Fall 2002Tampa
• Business Models
• Rich Gonzalez
• October 2, 2002 (Week 6 Wednesday)

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For Site/Model Evaluation

• Today Please peruse Nielsen Tahir
  bookHomepage Usability
• Pick a site if you wish and write it in on sign
  up sheet.

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URLs (Well probably Visit Today)

• www.cnn.com/2002/TECH/ptech/10/01/bc.gettingunwire
  d.ap/index.html
• www.eweek.com/article2/0,3959,562642,00.asp
• coba.usf.edu
• This one shows Bill Tobin's Statement on a small
  biz websitef
• http//smallbusinessschool.org/webapp/sbs/sbs/inde
  x-ie.jsp?Size800Speed250pagehttp3A//www.sb20
  00.com/tobin.html

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Agenda October 2, 2002

• PC TabletFinal Issues
• Software Scams--BusinessWeek
• Hot(Routine) Business Model/Ideas
• Business ModelsChapter 5
• Due For October 7

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For Today October 2

• Software Scams On Internet Time, Wildstrom, p26,
  BusinessWeek, September 30, 2002
• Chapter 5, Business Models
• WSJ OnlineIdentify any one article relating to
  e-commerce and post to the listserv about
  it(opinion/observation please...)

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PC Tablet

• www.eweek.com/article2/0,3959,562642,00.asp
• Microsoft ePeriodicals
• Acer
• H-P
• 2,200

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Software Scams--BW

• Name Brand Norton SystemWorks
• No Direct Connection To Norton
• Security
• Regularly checks out the product being sold on
  the Web...
• Consumer Perspective? Risk?
• Amplification

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For October 7---BusinessWeek 2

• Make Your PDA a Health Partner, p138,
  BusinessWeek, October 7, 2002
• Chapter 5, Business Models
• Hold for laterNeeded Now Laws To Can Spam,
  p100, BusinessWeek, October 7, 2002

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CNN.net/Technology, 10/1/02

• Wireless technology spurs innovations
• Vending future? Heat raises soda price

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E-CommerceChanges

• SAN DIEGO (AP) -- How strange. The price of sodas
  in that amusement park vending machine rises with
  the temperature. In the blazing midday sun, they
  cost double what the machine demands on a cool
  cloudy evening. While such radio-controlled price
  manipulation may just be hypothetical, the
  technology isn't. As wireless data networks
  spread the Internet, previously dumb machines are
  being connected and endowed with intelligence
  while portable communications devices are getting
  smarter. Proponents haven't yet agreed on an
  adjective for the dawning new era in computing
  Pervasive. Ubiquitous. Continuous. Persistent.
  It's a piece down the road, this unwired world.
  Three to five years is the consensus among
  industry analysts
• But there's no shortage of good ideas percolating
  -- the soda machine scenario was one, posited by
  an IBM executive...
• www.cnn.com/2002/TECH/ptech/10/01/bc.gettingunwire
  d.ap/index.html

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Analysis Paper 3

• Due on Monday October 5

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Last Time We Talked About

• Music Industry
• AmplificationPeer-to-Peer
• AmplificationBots
• Digital CameraKnowledge
• Word of Net
• Failed dot.commers

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Stewart Brand

• Information wants to be free.
• Information wants to be expensive.

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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).

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Customer Decision Process

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

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Business Models

• Would you rather be a Dot-Com or a
  Bricks-and-Mortar business?

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

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

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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
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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
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Flowers Competitors p145

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

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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

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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

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PC Flowers and Gifts

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

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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
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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

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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
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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?

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Egg Diagram for 1-800-Flowers.com

• Gift reminder service
• Holiday specials
• Everyday celebrations suggestions
• Special occasion suggestions

Ideas and Information

• Care and handling
• Do it yourself
• Special events and educational workshops held at
  stores

• Floral ideas
• Garden ideas
• Home ideas
• Gift ideas
• Gourmet ideas
• Store locator
• Recommendations by budget
• Bestsellers

Flower / Gift Decision Process

• Need Recognition

Product Offering
Gift Recommendations

• Education on Flowers and Decoration

• Search for Ideas and Offerings

• Gift guru
• Favorite gifts
• Gift frequency
• Gift impossible
• Gift baskets
• Corporate gift services

Post-Sale Support

• Order receipt e-mail
• eQA online customer service
• FAQ
• Customer service inquiry form

• Post-Sale Support and Perks

• Evaluation of Alternatives

• Product price
• Product picture
• Product description
• Delivery information
• Delivery availability

Perks

• Miles earned with flower purchases
• Free gifts
• Discounts at AOL BN.com with flower purchases
• Member specials

• Purchase Decision

• Message Selection

• Shopping basket
• E-commerce transaction
• Special shopping features
• Delivery outside US
• 1-800-lasfloras.com

• Gizmo fully-animated greeting cards
• Physical cards in gifts

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Analysis Paper 3

• Subject Pocket PC Phone Edition (p4 of
  BusinessWeek)
• Context Business/Innovation Analysis
• Criteria (use bolded headings)Value (Cluster)
  Proposition (not financial model yet)
  StandardsMarketing Opportunities
• Use the WWW and search WSJ Online for at least
  one reference to the product/company/technology
  details.
• Length 1.5 Pages, single-space, stapled cover
  sheet
• Due Monday October 5

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End Here

• Continue Chapter 5 next time