Slide 11.1 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Strategies for e - Business CONCEPTS and CASES Creating Value through Electronic and Mobile Commerce Chapter 11: Choosing the appropriate e-business strategy for interacting with users

Slide 11.2 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited The Internet and social commerce Chapter at a glance 11.3 Increasing the richness of interactions with customers 11.2 The trade-off between richness and reach Electronic customer relationship management (e-CRM) The concept of mass customisation The advent of Web Web 2.0 services Understanding user behaviour on the social web 11.4 Increasing the reach of interactions with customers Viral growth The 'tipping point' concept The 'long tail' of Internet-based social networks

Slide 11.3 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 After this session you should be able to:  Understand the technological developments leading to the advent of Web 2.0.  Recognise how these technological developments brought about user-generated content and change of behaviour.  Use the insights gained from the ‘mass-customisation’ and ‘long tail’ concepts to increase the richness of interactions with customers.  Use the insights gained from the ‘tipping point’, network externality effects and ‘viral growth’ concepts to increase the reach of interactions with customers. Learning outcomes

Slide 11.4 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Web 2.0 services Blogs Wikis Social networking sites (SNS) Media and information- sharing platforms These websites display content that users can incorporate as is or modify at will. In order to assure the quality of its content, Wikipedia, for instance, relies on users’ mutual content control. Users can upload, index, share and rate all kinds of media such as videos or photos. YouTube, Flickr These online communities enable users to communicate and connect with each other, build up a personal network, as well as share personal content. MySpace, Facebook User-generated websites containing continuously updated entries in periodical order. Blogger or Wordpress Web-based tools Web-based desktop applications A variety of services can be accessed directly from the web but offer a degree of customisation and functionality that rather resembles conventional programs and desktop applications. GoogleMaps Even though these applications use the web as a platform, they can be downloaded and installed on a local computer, not just accessed through an Internet browser. Skype Social bookmarking Users can collect their favourite websites as bookmarks, using ‘tags’; instead of the traditional browser-based folder taxonomy. Delicious 11.1 The Internet and social commerce

Slide 11.5 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Peers Social networking site Instant messaging VoIPChats Boards/ groups Private messages Communication tools Matching Profile Contact data Multimedia Personal network … Person A Profile Contact data Multimedia Personal network … Person B A B Exhibit 11.1 Social networking sites help users to pursue their communication motives of discovery, homogeneity and sharing 11.1 The Internet and social commerce

Slide 11.6 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Richness bandwidth customisation interactivity Reach Number of people interacting The Internet Sales- person Tele marketing Postal mailing TV advertising Source: Adapted from P. Evans and T. Wurster (1999) Exhibit 11.2 The advanced capabilities of the Internet help to dissolve the trade-off between richness and reach 11.2 The trade-off between richness and reach

Slide 11.7 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 'What criteria determine who will be our most profitable customers?' 'How can we acquire this customer in the most efficient and effective way?' 'How can we increase the loyalty and the profitability of this customer?' 'How can we keep this customer for as long as possible?' Customer acquisition Customer selection Customer extension Customer retention Customer relationship management cycle Exhibit 11.3 Customer relationship management consists of four elements 11.3 Increasing the richness of interactions with customers

Slide 11.8 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Firm infrastructure Human resource management Research & development Information & communication technology Elicitation of customer preferences Order- specific inbound logistics Order- specific construction Marketing/ sales forecast General purpose inbound logistics Order- neutral pre- operations Order- specific operations Order- specific outbound logistics Customer service/ building a learning relationship Order-neutralOrder-specific Support activities Primary activities Source: Adapted from F. Piller (2006), p Exhibit 11.4 The mass-customisation value chain puts the user in charge of many steps traditionally performed by the company 11.3 Increasing the richness of interactions with customers

Slide 11.9 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Viral growth ■Lack of control over people ■Lack of control over content 11.4 Increasing the reach of interactions with customers

Slide Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Malcolm Gladwell’s concept of the ‘tipping point’ builds on the idea of viral growth. Connectors Maven Salesmen People who have expertise in various products, prices or places. They enjoy sharing their knowledge with friends and acquaintances on Internet platforms. People who have the skills to persuade others when they are unconvinced. People with an extraordinary high number of contacts, friends and acquaintances, who ideally belong to ‘different worlds’; i.e. different areas of life. Source: M. Gladwell (2000) Increasing the reach of interactions with customers ■The law of the few ■The stickiness factors ■The power of context - Outer circumstances - Small sub-movements

Slide Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Exhibit 11.5 The ‘long tail’ represents a large addition to the product range of traditional retailers Source: Adapted from Anderson C. (2006). Downloads Titles, ranked by popularity 25,000 50, ,000900, ,000 10,000 Songs available at Rhapsody and Wal-Mart Songs available only at Rhapsody 11.4 Increasing the reach of interactions with customers

Slide Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Contacts ranked by frequency Networking frequency Exhibit 11.6 The ‘long tail’ of social networking can give users access to previously inaccessible market niches Source: Adapted from Anderson C. (2006). Contact pool acessible via traditional networking tools Additional network potential of online networking 11.4 Increasing the reach of interactions with customers

Slide Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 The implications for companies that want to access and leverage the ‘long tail’ for their customers are three-fold Lengthen the tail Fatten the tail Drive demand down the tail SNS uses a variety of mechanisms to enrich communication between users and thereby fattens the tail by increasing the frequency of interaction. This can be achieved by shifting users’ attention to content that normally is not as easy to find. By giving people access to a large pool of individuals, SNS lengthens the tail of potential social contacts. Source: Anderson C. (2006) Increasing the reach of interactions with customers

Slide Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Summary ■This chapter provided an overview of Web 2.0. It explained how advances in network infrastructure and software development led to an increased number of web users and a richer user experience. Furthermore, the chapter depicted the Web 2.0 service variety and showed how it enables better networking and sharing of information and content among peers. ■Social networking sites (SNS) allow their members to manage more contacts more efficiently than is possible offline; therefore, they increase personal contact reach. In addition, users have more information about their contacts or potential contacts due to visible virtual profiles; therefore SNS increase personal information richness. ■Through the mass customization approach, manufacturers or service providers try to elicit customer preferences and then tailor the product or service to their client’s liking. ■Businesses that want to benefit from ‘viral growth’ need to provide incentives for users to invite others to join the service. These incentives can be intrinsic when users know that inviting others to join the platform will ultimately enrich their own experience. ■Viral marketing is a tool that has a strong potential for building brand awareness. Therefore, finding a way (e.g. Gladwell’s ‘tipping point’) of controlling viral growth is essential for companies. ■By giving members access to a large pool of other individuals, SNS lengthen the ‘long tail’ of potential social contacts. They further use a variety of mechanisms to enrich users’ communications, thereby fattening the tail by increasing the frequency of interactions. Driving demand down the tail can be achieved by shifting users’ attention to content that normally is not as easy to find.