Transcript Document

Slide 5.1
Chapter 5
E-business strategy
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.2
Learning outcomes
• Follow an appropriate strategy process model
for e-business;
• Apply tools to generate and select e-business
strategies;
• Outline alternative strategic approaches to
achieve e-business.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.3
Management issues
• How does e-business strategy differ from
traditional business strategy?
• How should we integrate e-business strategy
with existing business and IS strategy?
• How should we evaluate our investment
priorities and returns from e-business?
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.4
Michael Porter on the Internet
‘The key question is not whether to deploy
Internet technology – companies have no
choice if they want to stay competitive – but
how to deploy it.’
Porter, M. (2001) Strategy and the Internet,
Harvard Business Review, March 2001, 62–78.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.5
Alternative definitions of strategy
What is strategy?
– “Defines how we will meet our objectives”
– “Sets allocation of resources to meet goals”
– “Selects preferred strategic options to
compete within a market”
– “Provides a long-term plan for the development
of the organization”.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.6
Figure 5.1
Different forms of organizational strategy
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
e-Business development
Going
Forward
Environment Support Levels
Enterprise Development Levels
Slide 5.7
Security &
Trust
Legal &
Regulatory
Taxation &
Finance
ICT adoption
& use
Investment in
e-Business
Research &
Development
Growth
in numbers of
e-Businesses
Numbers
employed
E-business
Development
National
Infrastructure
E-Business
Market Size
E-Government
Support
Services
Skills
Education
National
Strategy
Number of
e-Commerce
transcations
Electronic
Business
Processes
E-Business
Export growth
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.8
eBusiness evolution and
business benefit
Key Technology Trends
and Strategies Going Forward
Supplier
Integration
Web
page
INFORM
Full supply
chain
integration
Order
taking,
making
and
tracking
Intranet
/
Webmail
eBusiness
functionality
implemented
INTERACT
TRANSACT
INTEGRATE
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.9
What is working?
• Pornography
• Travel / Tourism
• Retail - items that don’t need personal touch - objectivity in
product quality and performance
– music, books, gifts, Computers, electronic items
– Auctions
• Real Estate - houses and investment properties.
• Customer support services
• More efficient and effective processes between businesses (B 2
B)
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.10
What is not working?
• Items which require “touch and trial”
– Luxury goods
– Clothes - beyond Tshirts
• Groceries - it works for some people but
market is restricted
Note: Many OFF line factors determine success
of Online service. Eg. Transport network, customer
profiles,
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.11
Sell-side E-commerce strategy (Chapters 8 & 9)
or E-marketing/E-CRM Strategy
• Sell-side e-commerce is a channel strategy
• Objectives for online contribution percentage
should drive our strategy
• Our e-commerce strategy defines how we should:
• Hit our channel leads & sales targets
– Acquisition, Conversion, Retention, Service, Profitability
•
•
•
•
Communicate benefits of using this channel
Prioritise products available through channel
Prioritise audiences targeted through channel
Select partners for this channel
• Channel strategy thrives on differentials
• BUT, need to manage channel integration.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.12
Buy-side E-commerce strategy (Chapters 6 & 7)
or E-supply chain management strategy
• Buy-side e-commerce strategy is about maximizing
operational efficiencies while improving customer
service quality
• Operational efficiency KPIs should drive our strategy
• Our buy-side e-commerce strategy defines how we
should:
• Automate internal processes
• Link internal resource management systems with external
purchasing systems
• Prioritize suppliers/partners collaborating using this channel
• Prioritize applications for E-SCM – create a roadmap
• Involves selection of appropriate strategic partners.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.13
E-business strategy
• For me, an IS strategy or change
management strategy (Chapter 10) which
ensures resources are managed effectively to
achieve opportunities from Buy-side and Sellside e-commerce. Also involves deploying IS
to manage administrative internal process and
employee knowledge
• Involves management of information systems
resources (e-business applications,
infrastructure/hardware and people/change/
knowledge management).
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.14
Figure 5.2
Relationship between e-business strategy and other strategies
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.15
Business and E-commerce Strategy
•E-commerce has changed business strategy.
•A strategy is a broad-based formula for how a business is going to
compete, what its goals should be, and what plans and policies will
be needed to carry out those goals.1
1Michael
Porter “What is Strategy”, Harvard Business Review, November 1996, pp. 69-84.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.16
E-commerce Strategy
•
An e-commerce strategy is a …
•
To build an e-commerce strategy requires two view of an organization’s
strategy: what is wants to do (conceptual) and how it will do it
(technology strategy).
•
One strategy being used by many companies is customer relationship
management which enables them to create to one-to-one marketing
experience for their customers.
•
Other e-commerce strategies include virtual showrooms, increased
channel choices, wider component choice, and use of mobile
technology.
•
Mobile commerce is …
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.17
E-commerce Business Models (cont.)1
Business
Model
Description
Brokerage
Brokers bring buyers
and sellers together
for a fee.
There are many types of
brokerage models in all
types of e-commerce.
Advertising
An extension of the
traditional media
broadcasting model in
which ads appear on
Web sites.
There are many different
types of advertising, but all
depend on a large volume
of viewer traffic.
Merchant
Sell products, both
physical and
electronic, to
consumers
Commonly referred to as etailers, merchants can use
pure e-commerce or a
combination (click and
mortar).
1Adapted
Examples
Comments
from Micheal Rappa, http://digitalenterprise.org/models/models.html.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.18
E-commerce Business Models (cont.)1
Business Model
Description
Manufacturer
Direct
Make and sell
products directly to
customer
Products can be
purchased (PCs), leased
(servers), or licensed
(software).
Affiliate
Affiliate Web sites
are paid a fee
when purchases
come through
them.
Can also include banner
ad exchange between
affiliated sites as well as
revenue-sharing.
Community
Based on user loyalty
because of high
investment of time
and emotion.
Revenue is generated
through sale of ancillary
products or voluntary
contributions
1Adapted
Examples
Comments
from Micheal Rappa, http://digitalenterprise.org/models/models.html.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.19
E-commerce Business Models (cont.)1
Business
Model
Description
Subscription
Users are charged
fee to subscribe to
service to service
or information
source
Subscription may be for
premium services;
advertising model may
be combined with this
model
Infomediary
Provides data on
consumers and
consumption habits
Usually aimed at helping
businesses rather than
consumers
Coopetitive
Enable competitors
to cooperate on a
Web site
Usually aimed at
individuals or small
businesses that cannot
attract customers to
their own Web site.
1Adapted
Examples
Comments
from Micheal Rappa, http://digitalenterprise.org/models/models.html.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.20
Web Sites Classified By Purpose
Web Site Type
Purpose
Example
Business Model
Portal
A gateway to many
other Web sites
Advertising,
Affiliate
Search Engine
Finds Web sites that
contain a word or
phrase
Advertising,
Affiliate,
Infomediary
Browse or
search and buy
Sell goods and
services
Merchant,
Infomediary,
Manufacturer
Direct, Coopetitive
Sales Support
To provide
information on a
product before or
after the sale
Community,
Infomediary
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.21
Web Sites Classified By Purpose (Cont.)
Web Site Type
Purpose
Example
Information
Service
To provide news,
information,
commentary, and so on.
Subscription,
Community,
Affiliate
Auction
Facilitate sales between
third parties
Brokerage
Travel
Sell travel tickets and
tours
Merchant,
Brokerage,
Coopetitive
Special Interest Provide information,
or Services
product sales and
support, and contacts
between visitors
Business Model
Community,
Merchant,
Affiliate,
Infomediary,
Advertising
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.22
B2B Business Models
• Strategic sourcing is often carried out through a one-to-one
business model, but company-centric and exchange models are
also used.
• In the one-to-one business model …
• In the company-centric business model …
• The single company dominates the market and controls the
information systems that supports the transactions. Electronic
data interchange (EDI) or an extranet is often used to link trading
partners.
• E-procurement is often the name for B2B e-commerce in the
many-to-one business model.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.23
Company Centric Business Model
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.24
Exchange Model
• In the exchange business model, many companies
use an exchange to buy and sell from each other
through spot-buying transactions.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.25
Mobile Commerce
• Mobile commerce (m-commerce) relies on the
use of wireless devices, such as personal
digital assistants, cell phones, and smart
phones, to place orders and conduct business
• Issues confronting m-commerce
– User-friendliness of the wireless device
– Network speed
– Security
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.26
What happens where there is
no e-business strategy?
• Missed opportunities for additional sales on
the sell-side and more efficient purchasing on
the buy-side
• Fall-behind competitors in delivering online
services – may become difficult to catch-up,
e.g. Tesco, Dell
• Poor customer experience from poorly
integrated channels.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.27
Electronic Payment Systems
• Digital certificate: an attachment to an e-mail message
or data embedded in a Web page that verifies the
identity of a sender or a Web site
• Certificate authority (CA): a trusted third party that
issues digital certificates
• Secure Sockets Layer (SSL): a communications
protocol used to secure sensitive data
• Electronic cash: an amount of money that is
computerized, stored, and used as cash for e-commerce
transactions
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.28
Figure 5.3
BA communicates their online value proposition (www.britishairways.com)
Source: Based on Revolution (2005)
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.29
Figure 5.4
A generic strategy process model
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.30
Figure 5.5
Dynamic e-business strategy model
Source: Adapted from description in Kalakota and Robinson (2000)
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.31
Figure 5.6
Elements of strategic situation analysis for the e-business
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.32
Figure 5.7
Summary applications of a portfolio analysis for The B2B Company
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.33
Figure 5.8
SWOT analysis for The B2B Company
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.34
Figure 5.9
Customer demand for e-marketing services for The B2B Company
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.35
Figure 5.10
Competitive threats acting on the e-business
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.36
Porter’s five forces
Bargaining
powers of
customers
Power of
suppliers
The business
Extent of rivalry
between
competitors
Threat of
substitutes
Threat of new
entrants
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.37
Activity – impact of Internet
• For one of the industries below, assess how
the Internet has changed the competitive
forces, e.g. has it increased or decreased
power of suppliers and customers
• Industries:
– Banking
– Supermarkets
– Oil industry
– Rail industry
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.38
Figure 5.11
Elements of strategic objective setting for the e-business
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.39
An evaluation tool relating information to business value. An
organization’s use of information on each axis can be assessed from 1 (low use
of information) to 10 (high use of information)
Figure 5.12
Source: Marchand et al. eds (1999)
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.40
Figure 5.13
Capital One web site (www.capitalone.co.uk)
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.41
Figure 5.14
Direct and indirect Internet contributions for fast-growth companies in
the USA
Source: PricewaterhouseCoopers (2000)
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.42
Grid of product suitability against market adoption for transactional
e-commerce (online purchases)
Figure 5.15
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.43
Table 5.5
Vision of online revenue contribution for The B2B Company
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.44
Figure 5.16
Elements of strategy definition for the e-business
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.45
Strategic options for a company in relation to the importance of the
Internet as a channel
Figure 5.17
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.46
Right Channelling
• Right channelling can be summarized as:
– Reaching the right customer
– Using the right channel
– With the right message or offering
– At the right time
• Examples:
– B2B serve SMEs through e-channels and larger clients
through personal service
– Encourage consumers to buy and serve through lower
cost electronic channels
– Encourage offline fulfillment/conversion as appropriate
– Different levels of service/promotion for different
customers.
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.47
Figure 5.18
Liveperson – an example of a service to assist with ‘right-channelling’
Source: www.liveperson.com
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.48
Figure 5.19
Using the Internet to support different growth strategies
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.49
Figure 5.20
smile (www.smile.co.uk)
Source: Reprinted by permission of The Co-operative Bank
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.50
Figure 5.21
Dabs.com (www.dabs.com)
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007
Slide 5.51
Figure 5.22
Elements of strategy implementation for the e-business
Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007