E-Commerce Strategies for Business Markets

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Chapter 12 E-Commerce Strategies for Business
Markets
PowerPoint by Ray A. DeCormier, Ph.D. Central
Ct. State U.
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E-Commerce Defined
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• E-commerce involves business communications and
  transmissions over networks and through computers
  specifically for the purpose of buying and
  selling products and services, and transferring
  funds through digital communications.

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Internet Applications
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• Successful Web sites
• 1. Provide customers with information
• 2. Are interactive
• a. Offer online catalogs
• b. Process fulfillment
• c. Process payment
• d. Provide interactive communications
• through chat/video applications
• e. Provide a FAQ to address questions
• f. Provide customer service at less cost
• g. Allow customization of service product
  offerings

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E-Commerce Types
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• Business-to-Customer E-Commerce
• Product Information
• Sales
• Service
• Payment
• Marketing Research

E-commerce can play pivotal role across all
functional business areas.

• Intra-Organizational E-Commerce
• Workgroup Communications
• Electronic Publishing
• Sales Force Productivity

• Inter-Organizational E-Commerce
• Supplier Management
• Inventory Management
• Distribution Management
• Channel Management
• Payment Management

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According to Porter
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• Companies will not be able to survive without
  Internet applications but will not gain a
  competitive advantage from them either.
• It is traditional strengths such as
• Unique products
• Proprietary content
• Superior product and product knowledge
• Strong service relationships
• that will determine the success or failure of a
  business.

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Enhanced Customer Focus Means
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• Align with customers on
• Order management
• Product configuration
• Design configuration
• Tailor products to meet exact requirements in
  real time
• Any other ways?

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Reduce Transaction Costs
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• The Internet allows low-cost access to
• Order entry
• Order tracking
• 24/7 service
• Self-service product information search
• Repair manuals and programs

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Integrated Supply Chain
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• Internet allows suppliers and vendors from all
  over the world to integrate into the
  production-marketing process to make it appear
  seamless.
• The key to effective supply-chain operations is
  the sharing of the
• Forecast
• Production plans
• Delivery schedules
• Inventory tracking
• Determination of inventory levels at all points
• Actual-to-planned activity in real time

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Crafting an E-Commerce Strategy
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• Developing a B2B strategy for e-commerce is no
  different than developing a strategy for any
  other marketing activity.
• Start by evaluating the companys
• Products
• Customers
• Competitive situation
• Resources
• Operations
• and understand how all these elements mesh
  within
• an e-commerce strategy.

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Questions to Guide E-Commerce Strategy
Formulation
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AIDA
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• The Web can create
• Attention
• Interest
• Desire
• Action

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Creates Interest Action
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The Internet can work as an effective tool,
providing information as well as stimulating
customer action--as demonstrated by this Web site.
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Common Objectives
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1. Target specific groups
2. Build recognition of company name / brand
3. Convey a cutting edge image
4. Conduct marketing research
5. Interact with customers
6. Provide real-time information
7. Sell products and services
8. Advertise in the new medium
9. Generate leads
10. Provide a medium for customer service
11. Build strong relationships with customers and
    vendors

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Implementing Internet Strategies
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• Once Internet objectives have been defined, the
  marketing strategists needs to address its Web
  site in terms of
• Product Presentation
• Pricing
• Distribution
• Promotion Web Design

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Successful Web Sites
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• The heart of a successful e-commerce strategy is
  to develop an interesting and effective company
  Web site.
• The site should be easy for the customer to
• Navigate
• Find product information
• Purchase (if appropriate)
• Meet service needs

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Successful Web Sites
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• Should be
• Secure
• Fast
• Logical
• Should include
• Internet catalog
• Search capability
• Auction or reverse auction abilities
• Contact tabs to include e-mail, telephone
  numbers, addresses, fax numbers, etc.
• Links to other related sites
• Just to name a few

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Reverse Auction (RA)
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• A reverse auction is one buyer and many sellers
• Buyer gets sellers to bid down the contract
• The pressure facilitates competition and keeps
  prices low
• It is effective when the sellers are qualified or
  preferred vendors
• RAs can result in damaging buyer/seller relations
• RAs could force suppliers to consolidate thus
  increasing their power over sellers

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Private Exchanges
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• Are a new form of reverse auctions whereby
• They are invitation only networks that connect
  a single company to its vendors, customers or
  both
• They provide a secure, one-on-one communication
• They enhance shared supply chain processes
• Inventory management
• Production planning
• Order fulfillment

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Channel Considerations
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• The Internet is a channel too, and as a result it
  can compete with a marketers other channels.
• To reduce conflict, marketers needs to consider
  its effect on
• Channel efficiencies
• Current market intermediaries
• Information sharing among channel members
• Ability to deliver product rapidly
• The outsourcing of key channel functions

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Disintermediation Is
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• The process of reducing the number of traditional
  intermediaries through better connectivity
  between and among contributing firms because of
  the Internet.
• Travel agencies are on the wane due to the
  ability of airlines to do business online.
• The consumer can attain air flight tickets, hotel
  reservations and an automobile by simply clicking
  a few buttons.
• What other industries are affected that way?

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Internet as a Channel
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• The Internet is an effective channel for certain
  but
• Rarely do B2B marketers depend solely on the
  Internet to create business.
• They employ salespeople to contact their
  customers and use the Internet to facilitate the
  exchange.

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Internet is Exceptionally Effective for
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• Remote marketing used to market software
• Anything that can be digitized can be sold over
  the Internet such as
• Software
• Movies
• Music
• Printing services

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Digital Channel Advantages
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• Can be customized to buyers needs
• Provides a wide referral source range such as
  search engines, Web pages, shopping agents,
  newsgroups, chat rooms, e-mail, etc.
• Its always open for business

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Internets Effect on Pricing
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• The Internet allows buyers to quickly assess
  pricing, and this has bolstered buyers power.
• The Internet has increased worldwide competition
  (supply) while informing the market (demand).
• The net effect has been to lower prices.
• One result has been to make more products
  commodities.
• Thus the rise of the Branded Commodity

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B2B Trends
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• According to GlobalSpec Engineering Trends
  Survey
• Engineering Professionals use the Internet
• 91 to find components and suppliers
• 87 to find product specifications
• 72 for news
• 68 for research
• 64 for pricing
• 60 for technical application ideas
• The Internet is a powerful tool that can deliver
  information at critical points in the purchase
  decision process.