chapter 4-5-6 - ecommerce - m- commerce

7/28/2019 Chapter 4-5-6 - ECommerce - M- Commerce

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Chapter 5 1

Chapter 5

Information Technology For Management 6th EditionTurban, Leidner, McLean, Wetherbe

Lecture Slides by L. Beaubien, Providence College

John Wiley & Sons, Inc.

E-Business and E-

Commerce



Chapter 5 2

Learning Objectives

• Describe electronic commerce, its scope, benefits,limitations, and types

• Understand auctions and bartering

• Describe the major applications of business-to-consumer commerce, including service industries, and major issuesfaced by e-tailers

• Describe business-to-business applications

• Describe emerging EC applications such as intrabusiness

and B2E commerce



Chapter 5 3

Learning Objectives (Continued)

• Describe e-government activities and consumer-to-consumer e-commerce

• Describe the e-commerce support services, specifically payments and logistics

• Discuss the importance and activities of online advertising

• Discuss some ethical and legal EC issues

• Describe EC failures and strategies for success



9-4

• Identify the major categories and trends of e-commerce applications

• Identify the essential processes of an

e-commerce system, and give examples of how they are implemented in e-commerce

applications

• Identify and give examples of several key factorsand Web store requirements need to succeed in

e-commerce

Learning Objectives



9-5

Learning Objectives

• Identify and explain the business value of severaltypes of e-commerce marketplaces

• Discuss the benefits and trade-offs of several

e-commerce clicks and bricks alternatives



Chapter 5 6

The Structure of E-Commerce



9-7

Introduction to e-Commerce

• Electronic commerce encompasses the entireonline process of

• Developing

• Marketing

• Selling

• Delivering

• Servicing

• Paying for products and services

• It relies on the Internet and other information

technologies to support every step of the process



9-8

The Scope of e-Commerce



9-9

E-Commerce Technologies


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Categories of e-Commerce

• Business-to-Consumer • Virtual storefronts, multimedia catalogs,

interactive order processing, electronic payment,

online customer support

• Business-to-Business

• Electronic business marketplaces, direct links

between businesses, auctions and exchanges

• Consumer-to-Consumer

• Online auctions, posting to newspaper sites,

personal websites, e-commerce portals



Essential e-Commerce Architecture



Access Control and Security

• E-commerce processes must establish mutualtrust and secure access between parties

• User names and passwords

• Encryption key

• Digital certificates and signatures

• Restricted access areas

• Other people’s accounts

• Restricted company data

• Webmaster administration areas



Profiling and Personalizing

• Profiling gathers data on you and your website behavior and choices

• User registration

• Cookie files and tracking software

• User feedback

• Profiling is used for

• Personalized (one-to-one) marketing

• Authenticating identity• Customer relationship management

• Marketing planning

• Website management



Search Management

• Search processes help customers find thespecific product or service they want

• E-commerce software packages often include

a website search engine

• A customized search engine may be acquired

from companies like Google or Requisite

Technology

• Searches are often on content or by parameters



Content and Catalog Management

• Content Management Software• Helps develop, generate, deliver, update, and

archive text and multimedia information at

e-commerce websites

• Catalog Management Software

• Helps generate and manage catalog content

• Catalog and content management software works

with profiling tools to personalize content

• Includes product configuration and

mass customization



Workflow Management

• E-business and e-commerce workflow manage-ment depends on a workflow software engine

• Contains software model of business processes

• Workflow models express predefined• Sets of business rules

• Roles of stakeholders

• Authorization requirements

• Routing alternative

• Databases used

• Task sequences



Example of Workflow Management



Event Notification

• Most e-commerce applications are event driven• Responds to such things as customer’s first

website visit and payments

• Monitors all e-commerce processes

• Records all relevant events, including problem

situations

• Notifies all involved stakeholders

• Works in conjunction with user-profiling

software



Collaboration and Trading

• Processes that support vital collaborationarrangements and trading services

• Needed by customers, suppliers, and other

stakeholders

• Online communities of interest

• E-mail, chat, discussion groups

• Enhances customer service

• Builds loyalty



Electronic Payment Processes

• Complex processes• Near-anonymous and electronic nature

of transactions

• Many security issues

• Wide variety of debit and credit alternatives

• Financial institutions may be part of the process



Electronic Payment Processes

• Web Payment Processes• Shopping cart process

• Credit card payment process

• Debit and other more complex processes

• Electronic Funds Transfer (EFT)

• Major payment system in banking, retail

• Variety of information technologies capture

and process money and credit card transfers

• Most point-of-sale terminals in retail stores

are networked to bank EFT systems



Electronic Payment Example



Securing Electronic Payments

• Network sniffers easily recognize credit cardformats• Encrypt data between customer and merchant

• Encrypt data between customer and financial

institution• Take sensitive information off-line



Chapter 5 24

Components of EC (Continued)

To execute these applications, companies need the rightinformation, infrastructure, and support services. Asshown:

People: Sellers, buyers, intermediaries, information systems

specialists and other employees, and any other participants Public policy: Legal and other policy and regulating issues, such as

privacy protection and taxation

Marketing and advertising: Like any other business, EC usually

requires the support of marketing and advertising

Support services: Many services are needed to support EC. Theyrange from payments to order delivery and content creation

Business partnerships: Joint ventures, e-marketplaces, and

partnerships are some frequently occurring relationships in e-

business



Chapter 5 25

Auctions

The major mechanism for buying and selling on theInternet is the electronic catalog. Common mechanisms

used in its implementation: electronic auctions

Electronic Auctions (e-Auctions): A market mechanism bywhich sellers place offers and buyers make sequential bids

Forward auctions are auctions where sellers place items at

sites for auction and buyers bid continuously for the items.

Reverse auctions, have one buyer, usually an organization,that wants to buy a product or a service. Suppliers are invited

to submit bids.

Auctions are used in B2C, B2B, C2B, e-government, and C2C commerce



Developing a Web Store

• Build a website• Choose or set up web hosting

• Use simple design tools and templates

• Include a shopping cart and payment support

• Market the website

• Include Web page and e-mail advertising

and promotions

• Exchange advertising with other Web stores

• Register with search engines and directories

• Sign up for affiliate programs



Serving Your Customers

• Convert visitors into loyal customers• Develop one-to-one relationship with customers

• Create incentives to encourage registration

• Use Web cookies to identify visitors

• Use tracking services to record and analyze

website behavior and customer preferences

• Create an attractive, friendly, efficient store

• Offer fast order processing and payment

• Notify when orders are processed and shipped

• Provide links to related websites



Managing a Web Store

• Manage both the business and the website• Record and analyze traffic, inventory, sales

• Use CRM features to help retain customers

• Link sales, inventory data to accounting systems

• Operate 24 hours a day, seven day a week

• Protect transactions and customer records

• Use security monitors and firewalls• Use redundant systems and power sources

• Employ passwords and encryption

• Offer 24-hour tech support

Seven Design Elements



gof Customer Interface

• Context• Functional look and feel• How it is presented

• Content• What is presented

• Community

• Consumers and firm• Consumers to consumers• Chat room and message board

• Customization• Ability to modify itself

• Communication• Dialog between website and its users

• Connection• Links between the site and other sites

• Commerce• Transactional capacity



The 7Cs of Customer Interface

Context

Site’s layout and design

Commerce

Site’s capabilities to enablecommercial transactions

Connection

Degree to which a site is linked to other sites

Communication

The ways sites enable site-to-

user communication or two-way communication

Customization

Site’s ability to self -tailor todifferent users or to allow users

to personalize the site

Community

Site’s ability to enable user -to-user communication

Content

Text, pictures, sound, and videothat webpages contain



Commonly used customization features:

• E-mail accounts: Users can send and receive e-mail from the site, using a

free, unique e-mail address

• Content and layout configuration: Users can design their own homepage,

within limits, by choosing background colors, layout design, and content

sources

• Storage: Users can store e-mail, URLs, favorite content, or items they want

to buy

• Agents: Computer programs can perform simple tasks upon request, such as

notifying a user via e-mail when a product is in stock

Individualizing a Website: Customization

Personalization by User Example



Personalization by User Example—MyLook.com



Personalization by User Example— mylook.com



Tailoring by Site Example

Tailoring Example Amazon Homepage



Tailoring Example—Amazon Homepage

for Two Users

Amazon com Homepage for Two



Amazon.com Homepage for Two

Different Customers

Communications



Communications

• Types of communications

• Broadcast (1 way)

• Mass mailing

• FAQs

• E-mail newsletters• Content update notifications

• Broadcast events

• Interactive (2 way)

• E-mail

• Chat room

• User feedback

• Hybrid

Keeping in Touch with Users:



Keeping in Touch with Users:

Communication

Communication Archetypes

• One-to-Many, Non-Responding User: Site messages are

announcements that users receive without needing to respond

• One-to-Many, Responding User: Site messages are invitations to

users to submit their comments and responses

• One-to-One, Non-Responding User: User receives personalized

messages to address specific interests or needs without a need to respond

• One-to-One, Responding User: User responds to personalized

messages sent by the site



9-39

B2B E-Commerce

• B2B is the wholesale and supply side of the commercial process• Businesses buy, sell, or trade with other

businesses

• Relies on multiple electronic informationtechnologies• Catalog systems

• Trading systems• Data interchange

• Electronic funds transfers



9-40

E-Commerce Portals

• B2B e-commerce portals offer multiplemarketplaces• Catalogs

• Exchanges

• Auctions

• Often developed and hosted by third-party

market-maker companies

• Infomediaries serve as intermediaries ine-business and e-commerce transactions



Market Research for EC

market segmentation

The process of dividing a consumer market into logical

groups for conducting marketing research, advertising, andsales

• Segmentation is done with the aid of tools such

as data modeling and data warehousing



Electronic Commerce


• Tracking Customer Movements

transaction log

A record of user activities at a company’s Web

site

clickstream behavior

Customer movements on the Internet




Web bugsTiny graphics files embedded on e-mail messages

and in Web sites that transmit information aboutthe users and their movements to a Web server

spyware

Software that gathers user information over anInternet connection without the user’s knowledge




• Limitations of Online Market Research• Too much data may be available• To use data properly, it should be organized, edited, condensed,

and summarized• The solution to this problem is to automate the process by using

data warehousing and data mining• Some of the limitations of online research methods are:

• Accuracy of responses• Loss of respondents because of equipment problems

• The ethics and legality of Web tracking• Lack of representativeness in samples of online users



Electronic Commerce

Web Advertising

• Some Internet Advertising Terminologyad viewsThe number of times users call up a page that has a banner on it

during a specific time period; known as impressions or page views

Button

Page

click (click-through or ad click)A count made each time a visitor clicks on an advertising banner to

access the advertiser ’s Web site



Web Advertising

CPM (cost per thousand impressions)The fee an advertiser pays for each 1,000 times a

page with a banner ad is shown

conversion rateThe percentage of visitors who actually make a

purchase

click-through rate (or ratio)The percentage of visitors that are exposed to a

banner ad and click on it



Web Advertising

click-through ratioThe ratio between the number of clicks on a banner ad and

the number of times it is seen by viewers; measures the

success of a banner in attracting visitors to click on the ad

hitA request for data from a Web page or file

visit

A series of requests during one navigation of a Web site; a pause of a certain length of time ends a visit



Electronic Commerce

Web Advertising

unique visit

A count of the number of visitors to a site,

regardless of how many pages are viewed per visit

stickiness

Characteristic that influences the average length

of time a visitor stays in a site



Electronic Commerce

Web Advertising

• Why Internet Advertising?• Television viewers are migrating to the Internet• Advertisers are limited in the amount of

information they can gather about the televisionand print ads• Other reasons why Web advertising is growing

rapidly:• Cost• Richness of format• Personalization• Timeliness• Location-basis• Digital branding

Ad i i M h d



Electronic Commerce

Advertising Methods

• Bannersbanner

On a Web page, a graphic advertising display linked to theadvertiser’s Web page

keyword banners

Banner ads that appear when a predetermined word is

queried from a search enginerandom banners

Banner ads that appear at random, not as the result of the

user’s action

Ad ti i M th d



Advertising Methods

• Benefits of Banner Ads• By clicking on them users are transferred to an

advertiser’s site, and frequently directly to theshopping page of that site

• The ability to customize them for individual

surfers or a market segment of surfers

• Viewing of banners is fairly high because “forcedadvertising” is used

• Banners may include attention-grabbing

multimedia

Ad ti i M th d



Electronic Commerce

Advertising Methods

• Limitations of Banner Ads• Cost

• A limited amount of information can be placed onthe banner

• Viewers have become somewhat immune to

banners and simply do not notice them as they

once did

Ad ti i M th d



Electronic Commerce

Advertising Methods

banner swapping

An agreement between two companies to eachdisplay the other’s banner ad on its Web site

Ad ti i M th d



Electronic Commerce

Advertising Methods

pop-up ad

An ad that appears in a separate window before,during, or after Internet surfing or when reading e-mail

pop-under adAn ad that appears underneath the current browser window, so when the user closes the activewindow, he or she sees the ad

interstitialAn initial Web page or a portion of it that is usedto capture the user’s attention for a short timewhile other content is loading

Ad ti i M th d



Advertising Methods

• E-Mail Advertising• E-Mail Advertising Management — Four

guidelines that marketers should consider to

leverage customer insights throughout the e-mailmarketing campaign lifecycle:

1. Thinking about customer experience;2. Making privacy protection a part of their brand

promise;3. Ensuring their recipients know about their privacy protection; and

4. Measuring impact.

Advertising Strategies



Electronic Commerce

d e s g S a eg es

and Promotions Online

affiliate marketingA marketing arrangement by which an organizationrefers consumers to the selling company’s Web site

viral marketingWord-of-mouth marketing by which customers promotea product or service by telling others about it

S i l Ad ti i T i



Electronic CommercePrentice Hall © 2006

57

Special Advertising Topics

• Permission Advertising

spamming

Using e-mail to send unwanted ads (sometimesfloods of ads)

permission advertising (permission marketing)

Advertising (marketing) strategy in whichcustomers agree to accept advertising and

marketing materials

E C St t Ch kli t



9-58

E-Commerce Strategy Checklist

• Questions to ask and answer • What audiences are we attempting to reach?

• What action do we want those audiences to take?

• Who owns the e-commerce channel within the

organization?

• Is the e-commerce channel planned alongside

other channels?

• Is there a process for generating, approving,releasing, and withdrawing content?

• Will our brand translate to the new channel?

• How will we market the channel itself?



Chapter 559

Managerial Issues

Managing resistance to change. Electronic commerce can result in afundamental change in how business is done. Resistance to change from

employees, vendors, and customers may develop. Education, training,

and publicity over an extended time period offer possible solutions to the

problem.

Integration of e-commerce into the business environment. E-

commerce needs to be integrated with the rest of the business. Integration

issues involve planning, competition for corporate resources with other

projects, and interfacing EC with databases, existing IT applications, and

infrastructure.

Lack of qualified personnel and outsourcing. Very few people have

expertise in e-commerce. There are many implementation issues thatrequire expertise, such as when to offer special promotions on the Internet,

how to integrate an e-market with the information systems of buyers and

sellers, and what kind of customer incentives are appropriate under what

circumstances. For this reason, it may be worthwhile to outsource some e-

commerce activities.



Chapter 560

Managerial Issues (Continued)

Alliances. It is not a bad idea to join an alliance or consortium of companies to explore e-commerce. Alliances can be created at any time.

Some EC companies (e.g., Amazon.com) have thousands of alliances.

The problem is which alliance to join, or what kind of alliance to form and

with whom.

Implementation plan. Because of the complexity and multifaceted nature

of EC, it makes sense to prepare an implementation plan. Such a plan

should include goals, budgets, timetables, and contingency plans. It

should address the many legal, financial, technological, organizational,

and ethical issues that can surface during implementation.

Choosing the company’s strategy toward e-commerce. Generally

speaking there are three major options: (1) Lead: Conduct large-scaleinnovative e-commerce activities. (2) Watch and wait: Do nothing, but

carefully watch what is going on in the field in order to determine when EC

is mature enough to enter it. (3) Experiment: Start some e-commerce

experimental projects (learn by doing).



Chapter 561

Managerial Issues (Continued)

Privacy. In electronic payment systems, it may be necessary to protect

the identity of buyers. Other privacy issues may involve tracking of

Internet user activities by intelligent agents and cookies, and in-house

monitoring of employees’ Web activities.

Justifying e-commerce by conducting a cost-benefit analysis is verydifficult. Many intangible benefits and lack of experience may produce

grossly inaccurate estimates of costs and benefits. Nevertheless, a

feasibility study must be done, and estimates of costs and benefits must

be made.

Order fulfillment. Taking orders in EC may be easier than fulfilling them.

Managing the impacts. The impacts of e-commerce on organizational

structure, people, marketing procedures, and profitability may be dramatic.

Therefore, establishing a committee or organizational unit to develop

strategy and to manage e-commerce is necessary.



Chapter 5

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