Transcript What is E-Commerce?

Review Slides of Chapter 8
8-1 E-Commerce
The Expanding World of ECommerce
• E-Commerce- involves business
activities, including the exchange of
goods, services, and information,
completed electronically via the
Internet.
• Includes purchasing and selling products
online, providing and exchanging
business information, and offering
customer service and support.
The Expanding World of ECommerce
• The introduction of the personal
computer happened in the late
1970s.
• The World Wide Web was introduced
in 1991.
• The Internet is an important way for
businesses to reach both final
consumers and other businesses.
The Expanding World of ECommerce
• By 2007 more than 200 million people
in the United States or about 70
percent of the population has internet
access.
• By 2007 there were over 1 billion users
worldwide, a 209 percent increase
since 2000.
• Almost all businesses of significant size
use computers and the Internet in their
daily operations.
Business on the Net
• Not all businesses can complete all of their
activities online
• Companies that can complete almost all of
their business online are called click-only
companies.
• Companies that complete most of their
activities by means other than the internet
are called brick-and-mortar businesses.
• Companies that use both the internet and
traditional businesses operations are called
brick-and-click businesses.
Stages of Development
• Businesses progress through three stages as they
develop their e-commerce presence on the
Internet.
• Information Only:
Develop a simple website, which is a form of
of one way communication through the Web.
Provides basic information.
Customers can’t use the website to interact
with the business directly.
Must still visit business in person or call them
directly to obtain more information or make a
purchase.
Stages of Development
• Interaction Stage:
In addition to providing information, the company
uses its website to interact with the customers (ex:
email).
Companies can add a database in which customers
can search for specific information, check
availability, calculate costs with shipping charges,
and determine how long it will take to be delivered.
Site may contain an order form, customers can
email or fax the form to the company but cant place
an order directly on the website.
Stages of Development
• Full Integration:
An entire business transaction can be completed on
an integrated site.
Can place an order, pay for it, track it until it’s
delivered, and obtain assistance before and after
the sale- all using the Internet.
Success in E-Commerce
• To be successful, businesses need to
identify target markets and develop the
marketing mix that meets the target
market’s needs.
• They must also provide a high level of
service and complete all marketing
activities.
Advantages of E-Commerce
• Immediate access to prospective customers
all over the world.
• Can introduce new products or update
product information instantaneously.
• Customer’s questions and concerns can be
sent to a business at anytime and a response
can be delivered immediately.
• Customers can order products day or night
any day of the year.
• Companies can enter international markets by
translating the language of the website.
Disadvantages of E-Commerce
• Not all businesses started online understand what is necessary
for success.
• Products aren't always what they seem, not delivered on time,
can be damaged when received.
• Errors can be made during order processing.
• Returning products is difficult.
• Much more difficult to predict demand for products.
• Customers expects service and support 24/7 which puts
pressure on the businesses employees.
• The changing nature of competition and the purchasing
behavior of customers is difficult to predict.
• Online companies have to compete for business worldwide.
• Many consumers use websites to compare prices and don’t
actually buy something.
•
The Marketing Concept Applied to
E-Commerce
A companies information can be viewed by many people in
many locations so it’s important to understand the needs and
wants of their target market and how those wants/needs can
be satisfied.
• Business must be able to offer the products and services
customers want and distribute them effectively, make
purchases affordable, make ordering and paying online east,
and provide adequate descriptions and pictures to answer
important customer questions.
• Must also provide service after the sale and provide expected
services during the sale.
• All parts of the marketing mix are essential to successful
E-Commerce.
Review
• Many businesses use E-Commerce to conduct business.
• E-Commerce does not include only sales made by businesses using
the internet.
• The World Wide Web was introduced in 1991.
• Around the world as of 2007, the internet was used by about 1 billion
people.
• The three stages of development for business websites are
Information Only (the most basic stage), Interaction, and Full
Integration.
• Companies have access to customers around the world.
• Small businesses can compete more effectively against large
businesses on the internet.
• The internet has resulted in the development of new products.
• Click-only businesses preform almost to all of their business online.
• All marketing mix elements are important to a business using ECommerce.
Section 8.2
The Growing Importance
of E-Commerce
You can work in Internet marketing with just a high school diploma
The Internet was first developed in the
1950s as a military and research tool.
Over 120 million businesses, organizations, and
individual registered websites were active
worldwide in 2007; millions are added each year.
The United States has an est. 211 million
online users (highest number of users in
the world).
Businesses use the web to learn about their
competitors’ prices as well as credit terms.
Small businesses use the Internet to identify with other
businesses: distribution, customer services, billing, and
collecting payments.
Internet can make small businesses international by
giving them resources to reach customers located in
other countries.
B2C
B2B
▪ Business-To-Consumer
▪ 2006… Internet sales
were $110 billion
▪ Small percentage of an
individual’s purchases
are online
▪ Business-To-Business
▪ 2007… Internet sales
were over $800 billion
▪ Online sales will likely increase by millions and
even billions of dollars in future years
Benefits of businesses using the Internet:
● Communication
● Gathering Information
● Improving Operations
Who provides information for the Internet?
●
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Businesses
Government Agencies
Colleges
Universities
Libraries
Businesses send email messages, exchange
documents, offer training, and update
records online.
Internet sales to consumers represent about 3% of all consumer purchases
8.3 Marketing Via the Internet
What is virtual marketing?
It is the completion of marketing activities primarily through the
use of computer and internet technologies.
Examples include:
•
•
•
•
Online surveys
Distribution of electronic products
Electronic payments
Communication and promotion strategies
Pros and Cons of Virtual
Marketing
Pros:
Cons:
•
• The marketing plan
is more difficult for
e-commerce
• Purchasing online
can be risky, people
can possibly get your
credit card
information
•
•
•
Customers can
purchase products
from any company
Customers have more
choices when it
comes to stores
By using search
engines you can
easily find
venders/suppliers
It can be shipped to
stores instead of your
home
Distribution for E-commerce
Distribution is the marketing function that determines success
or failure of a company that are engaged in e-commerce
 With internet access customers can locate and purchase
products from a company that has a website.
 More and more companies are integrating product
purchasing on websites.
 Information must be sent to the county department for
billing and processing of payments.
Distribution Problems and Solutions
 The key distribution problems facing many e-commerce business
are security of transactions, expanded distribution requirements
and customer services demands.
 Over half of all internet consumers make at least one online
purchase every three months.
 A product fulfillment center provides some or all of the activities
required to fill customers orders.

#goducks
Cookies
• Cookies are small files that a web server sends to your
web browser when you access a site
Distribution for E-Commerce
• Effective distribution is an
important part of
satisfying customer
needs.
• Major distribution
changes in e-commerce
have been in access to
products and services,
order processing, and the
methods used to
distribute products from
the business to its
customers.
Finding and Buying Products
• With Internet access consumers have more choices of
companies and products.
• Consumers and companies can easily find suppliers and
vendors on the Internet by using a search engine.
• The Internet has made it easier for a company to
process an order.
• Online shopping carts have been designed to make it
easy to complete an order, make immediate payment,
and submit the order securely.
• Eventually U.S. consumers will make up only a small
percentage of individuals shopping on the Internet.
Order Processing
• The Internet has streamlined order
processing and reduced the
amount of paper that must be
handled to complete a sales
transaction.
• The customer or salesperson can
check on the status of the order at
any time it is processed, filled, and
shipped.
• The use of the Internet for order
processing reduces the number of
errors since the accuracy of the
order can be more easily checked.
PRODUCT
SAVINGS
Computer
Software
99%
Banking
Services
89%
Airline Tickets
87%
Stocks
78%
Books
56%
Toys/Gifts
48%
Product Distribution
• Express packages, fresh
flowers, and gourmet
foods can be transported
on airplanes to insure
rapid shipment, so it is not
possible for those types of
products to be distributed
using the Internet.
• The Internet allows many
services to be easier to
process and products less
expensive to distribute.
• Companies have had to
change the form of their
products to be able to
distribute them using the
internet. Ex. Airlines and
E-tickets.
Distribution Problems and Solutions
• The key distribution problems
include the security of
transactions, expanded the
distribution requirements, and
customer service demands.
• Privacy concerns have led some
users to distrust and avoid sites
that use cookies (small files that
a web server sends to your
browser when you access a site)
because the cookies can be sent
to a users computer without
their permission.
Transaction Security
• One of the greatest concerns express by
customers is the security of their personal
information they must provide to the
company when placing an order.
• The most important is that their credit card
number will be stolen.
• There are alternatives to using a credit card to
purchasing a product on the internet for
example; pre arranged payments.
• Consumers are also afraid the business will
misuse the information after the order has
been processed. To meet this concern,
companies have purchased security
technology.
Expanded Distribution and
Customer Service
• Businesses found that they had to distribute their
products in different ways to many more locations than
before. For example; books can be electronically
delivered to a customer but flowers cannot (most
products can be electronically ordered).
• Companies such as UPS and FedEx have expanded their
services and offer overnight shipping.
• E-businesses offer complete return policies and
procedures on their websites, while some have made
arrangements to make returns at local stores.
• Customer service centers have been improved by 24/7
online help centers, FAQ’s, and product warranties.
8.4 The Role of Promotion for
E-Commerce
Promotion Methods
Online Advertising - Companies compete online for the attention of
internet users. Online Advertising is reviewed by the Internet Advertising
Bureau which established standards for size, appearance and use of
methods. There are different types of methods to use for online
advertising such as..
Pop-Up ads, which is an advertisement that opens in a new window when a
web page is being viewed.
Rich Media include a variety of digital technologies that provide interactive
multimedia experiences for users.
❏
Web Sponsoring - A way to build recognition of a company's name and
products. The sponsor's name is included on the website so that visitors
see the name each time they access the site.
Example: A bank could sponsor a website that helps consumers understand
how to lease or finance a automobile.
❏
Promotion Methods
Priority Placement - Some search engines display the sponsor's name,
link to the website, and a brief description or promotional message in a
column beside the search results.
Example : Google and Yahoo
❏
Information Web Sites - Companies and organizations develop free
websites on topics of interest to their prospective customers. Companies
believe that when customers better informed, they are more likely to
purchase related products and services.
Example : Petersons.com (provides information on choosing a college)
❏
Other Types of Promotion
• Internet use has developed many creative ways to promote
and sell products.
• A company can purchase email lists from other companies
and then email those people promotions/coupons.
• Internet promotions are used to encourage consumers to
ask for free samples of the product.
• New audio-visual technology allows businesses to provide
detailed products information
• new personalized methods of promotion includes online
newsletters, email messages, and business blogs.
Planning the Shopping Experience
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The reasons for higher satisfaction in online shopping includes convenience,
saving time, and getting everything from one source
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It is much easier to compare competitive pricing online rather than in stores
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The design of the website is significantly important because it helps attract
consumers to the business and finalize a purchase
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When companies carefully plan the shopping experience for internet customers,
provide needed information, and make shopping easy and enjoyable, customers
will be willing to buy online
Effective Promotion Methods
Promotion can be more than just advertising
Promotional tools for e commerce include
• simple website name that is easy for people to remember
• email promotions that might include an incentive that would increase
visits to the website
• other advertisements not online, such as newspapers and tv
• a customer service area on the website for people to ask questions
• collect information about the target market
Strong
Hint!!!!
What is E-Commerce?
Review questions for Chapter 8
Test
True or False?
The Internet was developed as a military
and research tool in the 1950’s.
True
True or False?
Internet sales to consumers represent
less than three percent of all consumer
purchases.
True
True or False?
Many established businesses use
e-commerce to conduct business.
True
True or False?
E-commerce includes only sales made on
the Internet.
False
True or False?
All businesses can complete all business
activities using the Internet.
False
True or False?
There are no disadvantages for
businesses operating on the Internet.
False
True or False?
Businesses go through three stages as
they develop their e-commerce
presence on the Internet.
*** You need to know these stages!!!
True
True or False?
Businesses on the Internet have
immediate access to prospective
customers all over the world.
True
True or False?
The Internet has resulted in the
development of new products that can
be delivered to customers’ computers.
True
True or False?
Many businesses believe that the Internet
is not useful for the type of business
activities they perform.
True
True or False?
Businesses can use the Internet to
distribute information to customers but
not to employees.
False
True or False?
The Internet has not affected a company’s
ability to find information about its
customers.
False
True or False?
Businesses can use the Internet to
distribute information to customers but
not to employees.
False
True or False?
• Small businesses cannot benefit
competitively from using the Internet
False
True or False?
Most businesses do not use the Internet
to gather information because they
have to pay for almost all of the
information.
False
• Around the world, the Internet is used
by
•
a) 500 million people
• b) 500,000 people
• c) 50 million people
• d) 1 billion people
• D
• A business that performs almost all of
its business activities through the
Internet is referred to as a
•
a) Web.com business.
• b) click only business
• c) Bricks and mortar business.
• d) Traditional business.
• B
• From the very beginning of the
Internet, the primary way people have
communicated using Internet
technology is through
•
a) E-mail.
• b) Web pages.
• c) Commercial transactions.
• d) All of the above
A
Why were many of the first dot.com or
click only companies unsuccessful?
A. They had poor web site designs.
B. They didn’t promote their products.
C. They didn’t understand the
marketing concept.
D. They set prices too low.
C
•
Which of the following is an advantage
of e-commerce?
•
•
•
•
a) Small companies can more easily
compete with larger companies.
b) All business expenses are lower.
c) Businesses don’t need to perform
every marketing activity.
d) There is almost no competition.
•
A
•
The use of the Internet as a place to
buy and sell products had its
beginnings:
•
•
•
•
a)
b)
c)
d)
Just after World War II
In the early 1970’s
About 1985
In the mid - 1990’s
•
D
•
•
•
•
What are the 3 stages of web development and
what a web site in each stage would provide.
Information – the website provides basic information
to help prospective customers as they gather
information about products and companies.
Interaction – gives all of the above and an email to
interact questions with…. the company uses its website
to interact with its consumers. They can check product
availability, calculate product costs and shipping charges,
and determine how long it will take to have an order
delivered.
Integration – With all of the internet tools available ,
an entire business transaction can be completed on an
integrated site. Customers can get necessary product,
pricing, and shipping information . (Companies with
integrated use of the internet do not have to be a
dot.com business. )
What are Please list 2 types of
business-to-business Internet
communications (besides e-mail):
Answers will vary…
• From our notes, please list two
advantages and two disadvantages of
the Internet:
• Answers will vary…
On tomorrow’s test you will also have
to know the following:
How to calculate market potential
How to calculate market share
How to calculate breakeven point.