FINAL LECTURE

1
FINAL LECTURE

• Wrap up B2BX
• Review Relationship/service/fulfillment
• Course Review
• Future of the Internet

2
B2BX SUMMARY

• Why Most Fail
• Not Consider Relationship/Trust
• Long Term Contracts Dominate
• Problem is eProcurement/Partners -- PVN
• 3rd Party Fail Unless Wider CBP
• Manufacturer Power -- Consortia or In House
• Not Able to Run with the Big Dogs -- Telcos,
  Manufacturers, Oracle/IBM
• Lesson
• Talk to Customers
• Refine Understanding of Need and Relationships
• CBP Not Only Technology

3
Relationship

• Life Time Value
• Trust -- confidence -- relationship
• CRM -- multichannel communication
• Segment -- focus to build depth
• Permissive Marketing -- promotion and price for
  loyalty
• Channel -- Service Function
• Evaluation -- Loyalty measures

4
SERVICE/FULFILLMENT

• Critical element in satisfaction/relationship
• Internet Can Help
• Tracking -- FedEX
• Dell -- same file as 800 and service
• Xerox/Sun -- self service
• eService -- priority, track, resolve, evaluate
• Channel Partner Software
• Link TQM to Internet
• Continuing Innovation -- product design

5
Understanding Customers Consumer Behavior B2C vs
B2B
Strategy Formulation Trust vs. Push Product
Design Segmentation Positioning
Customer Acquisition Advertising / PR /
Selling Pricing Promotion
Distribution Channel Logistics
Relationship Building Fulfillment Service
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CONSUMER BEHAVIOR

• Concept/Theory
• Information Processing
• Behavioral Theory
• Tool
• Flow Chart
• Steps, Information, Decision Rules, Actions, Post
  Purchase
• Decision Unit, Multiple Participants
• Action
• Design site for Conversion and Retention
• Case
• Mother Nature Acquisition and Retention
• Dell Conversion
• Marketsoft Sell to Pain

7
Questions to Ask

• What starts process?
• Role of past experience?
• Friends make input?

• Source of input.
• ADS/catalogs/email?

INITIATION

• Sources of information Friends / media / web/
  store?
• Active search? How much time?
• Where shop store / catalog / internet?
• What learn? Products / technology / user
  experience / trends?

AWARE/LEARN

• Compare products?
• Role of price / quality evaluation criteria
• Need to touch and feel?
• Impact of brand and trust?

DECIDE

• Special offers
• Guarantees / refund policies?

• How do buyers gain confidence?
• Security / privacy assurance needed?
• Need push to action close sale

BUY

• Word of month to friend/community
• Relationship contract

• Life time service?
• Delivers promised value

POST PURCHASE
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TRUST

• Concept/Theory
• Psychology
• Trust Cues and Perception
• Tool -Virtual Advisor
• Trust Cues
• Actions
• Decide on Push -- Trust Dimension
• Design in Trust -- Currency of the Internet
• Real or Virtual Advisors
• Alternative Methodologies
• Case
• InSite Advisor
• Dell Recommend / Learning

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Push Commodity Price most important Deal prone
segment Need short term results
Full Trust Have best product Have good design
feedback Buyers getting info anyway
(infomediaries) Trust key element
Expensive/complex products
Culture to sell our products only Strong channel
attitudes Evolutionary stop Have both price and
relationship segments
How much trust should you have in your eBusiness
strategy?
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PRODUCT DESIGN

• Concept/Theory
• Build Process
• Tool
• Models / Market Research
• Information Acceleration
• Listen In
• Actions
• Prevent Failure
• Do Research and Budget
• Hire Modeling Capability
• Case
• Market Soft eLeads and eOffers suite
• Prime Response Depth - Breadth

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SEGMENTATION

• Concept/Theory
• Taxonomy
• Segment for Competitive Advantage
• Tool
• Clustering
• Demographic, Psychographic, Product
• Data Mining
• Action
• Decide Basis of Segmentation
• Use Data and Analytic Services
• Personalize
• Case
• Mother Nature Lifestyle Data Mining
• Dell Sophisticated Buyers
• MarketSoft Marketing Manager
• Prime Response Vertical Markets
• Terra Lycos

12
POSITIONING

• Concept/Theory
• Psychology
• Perception Simplicity
• Tool
• Perceptual Map
• Needs Seen by Customers
• Preference Vectors
• Action Do Maps
• Find Competitive Value Added
• Do Vectors and Benefit Segmentation
• Be First in But Position in Best Spot
• Case
• InSite Advisor
• Market Soft Suite
• Prime Response Campaign Management versus New
  Competition
• Terra Lycos

13
ADVERTISING

• Concept
• Psychology
• Communication
• Tool
• Copy Evaluation Framework
• Action
• Advertising Goals
• Multichannel -- Sales/PR/Telemarketing
• Case
• SemiSales
• Mother Nature -- Acquisition
• Dell -- Catalog (separate URL)

14
Extremely Bad
Extremely Good
15
PRICE AND CHANNELS

• Concept
• Economic Theory
• Logistics
• Tool
• Avoid Price War by Differentiation and
  Segmentation
• Channel Function Map
• Action
• Consider Incentive Site
• Manufacturer Direct as Complement
• B2BX lessons
• Case
• Terra/Lycos
• SemiSales/ANX/Logistics.com
• Mother Nature and Kozmo price to profit

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SMALL ELECTRONICS (I, IV, S)
WHOLESALE (I, PD, IV)
DISTRIBUTOR (I, PD, IV)
MACS MERCHANDISE (I, IV, S)
PALM (S)
CUSTOMER
eCOM SITES (I,S)
BIG CHAINS (PD, I, IV, S)
PALM.COM
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RELATIONSHIP

• Concept
• Psychology
• Customer Satisfaction
• Tool
• Trust Based Marketing
• CRM
• Action
• DO IT -- obvious
• Trust/Franchise/Long Run
• Service/Fulfill -- TQM
• Case
• Mother Nature -- Life Time Value
• Dell -- Premier Pages/Repeat -- E2E
• InSite -- Advisor builds relationship
• Prime Response -- Communicate
• B2BX -- all about Relationships

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FAILED ASSUMPTIONS

• People will Flock to the Internet to Buy
• Self Service Sites are Enough for Conversion
• The Internet Technology will Create a New Economy
• B2BX Have to Work Because Can Match Information
• Must Be First -- Claim High Ground
• Worry About Business Model Later
• Frictionless Prices -- Price Competition and
  Comparators
• Established Companies are Not Innovative
• VC Capital Will Keep Coming
• Need Young New Thinking Tech Management
• Buzz and PR are the Key to Success
• Must Set Up Internet as Separate Company
• Internet will Replace Existing Channels

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LESSONS FROM FAILURES

• Must have Strong CBP to Attract and Communicate
  It
• Design Site to Support and Complete Decision
  Process
• Internet will Improve Exisiting Economy
• B2BX is relationships -- Talk to Customer
• Be Right and First
• Start with Business Model and CBP
• Differentiate and Segment for Success
• When the Dinosaurs Dance the Grass gets Crushed
• VC Fads Come and Go -- Bubbles Burst
• Must Know Fundamentals of Management
• Focus and Fulfill Promises to Customers and
  Investors
• Structural Integration is Key to Success
• Multichannel Marketing will dominate

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FUTURE

• Bright
• Solid growth B2C, B2B, Infrastructure
• Drivers -- life cycle adoption, global,
  technology, trust
• Existing Players
• Manufactures
• Click and Mortar
• Survivors Figure out ROI
• Multichannel
• Communication -- customer experience
• Distribution
• Innovation Opportunities
• Start ups (VC will be back)
• Existing Players
• Fundamental Management Skill

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BUILDING A NEW INTERNET STRATEGY

• NEED RECOGNITION
• Introspection
• Customer Focus
• Customer Response
• Decision Process

• TECHNOLOGY DEVELOPMENT
• Transfer in
• Internet Capability

• COME BENEFIT PROPOSITION
• Trust vs. Push
• Segment
• Product Design

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BUILDING A NEW INTERNET STRATEGY (contd)

• PROFIT ABILITY BUSINESS MODEL
• Venture Capital (internal / external)
• Customer Acquisition / Retention
• Advertising / PR / Selling
• Logistics / Channel
• Pricing

• BUILD RELATIONSHIP
• Trust
• Service
• Fulfillment

INNOVATE