© Marketing Insights Limited 2004 OHT 1.1 Chapter 1 Introduction to e-business and e-commerce

© Marketing Insights Limited 2004 OHT 1.2 Learning objectives Define the meaning and scope of e-business and e-commerce and their different elements; Summarise the main reasons for adoption of e-commerce and e-business and barriers that may restrict adoption; Use resources to define the extent of adoption of the Internet as a communications medium for consumers and businesses; Outline the business challenges of introducing e- business and e-commerce to an organization.

© Marketing Insights Limited 2004 OHT 1.3 Issues for managers How do we explain the scope and implications of e-business and e-commerce to staff? What are the full-range of benefits of introducing e-business and what are the risks? How great will the impact of the Internet be on our business? What are the current and predicted adoption levels? How do we assess the validity of forecasts?

© Marketing Insights Limited 2004 OHT 1.4 The impact of Internet on business Andy Grove, Chairman of Intel, one of the early adopters of e-commerce, has made a meteorological analogy with the Internet. He says: Is the Internet a typhoon force, a ten times force, or is it a bit of wind? Or is it a force that fundamentally alters our business? (Grove, 1996)

© Marketing Insights Limited 2004 OHT 1.5 The impact on one industry - banking MetricMay 1995Dec Financial institutions with Web banking (WW)16,000 Financial institutions with Web sites (WW)5014,000 Total online banking households (WW)5 million100 million Total online banking households (US)300,00028 million Monthly bank and credit card Web traffic (US)100,00050 million Monthly credit apps submitted via Web (US)01.5 million Table years of web banking. Source: Online banking report, Number 89, December 10, Source: Online Banking Report estimates, +/- 25%, 11/02

© Marketing Insights Limited 2004 OHT 1.6

© Marketing Insights Limited 2004 OHT 1.7 The Internet’s impact on you How many of you have purchased something on the Internet in the last 6 months? How many times have you used the Internet as an information source, before buying offline?

© Marketing Insights Limited 2004 OHT 1.8 Popularity of online purchases Source: The Internet Monitor, BMRB, November 2001 (

© Marketing Insights Limited 2004 OHT 1.9 Definitions You are asked to distinguish between e- commerce and e-business at a job interview. Write down your definitions. Use examples to illustrate your points.

© Marketing Insights Limited 2004 OHT 1.10 E-commerce defined ‘All electronically mediated information exchanges between an organization and its external stakeholders’ Examples: –Buying books online (transactional) –Selecting a car online (informational) –Interacting with brand online (relationship building / experiential, e.g. –Asking a customer service query, e.g.

© Marketing Insights Limited 2004 OHT 1.11 E-business defined All electronically mediated information exchanges, both within an organization and with external stakeholders supporting the range of business processes Examples: –Purchasing from suppliers (e-procurement) –A company intranet (defined in Ch 3) –Supplying partners with information through an extranet (see Ch 3)

© Marketing Insights Limited 2004 OHT 1.12 The distinction between buy-side and sell-side e-commerce Figure 1.1 The distinction between buy-side and sell-side e-commerce

© Marketing Insights Limited 2004 OHT 1.13 Recap – which is correct? Figure 1.2 Three definitions of the relationship between e-commerce and e-business

© Marketing Insights Limited 2004 OHT 1.14 Activity – drivers and barriers to adoption You are in a team of advisers at a local Business Link (a local government agency encouraging adoption of e-commerce) List: –Drivers to adoption of sell-side e-commerce by business and how you can reinforce these by marketing benefits –Barriers to adoption of sell-side e-commerce by business and how you can reinforce these by stressing benefits

© Marketing Insights Limited 2004 OHT 1.15 DriverMarketing approach 1 Reduced costsGive real examples 2 Increase reach to new marketsGive examples of SME 3 Customer demandData on those researching and buying online 4 Competitive threatsDitto 5 6 Business drivers to going online

© Marketing Insights Limited 2004 OHT 1.16 BarrierMarketing approach 1 SecurityReassurance 2 No needIllustrate with data of businesses researching and buying online 3 CostsIllustrate low cost options 4 SkillsSummarise skills alternatives 5 6 Business barriers to going online

© Marketing Insights Limited 2004 OHT 1.17 Drivers for e-commerce Figure 1.6 Attitudes to benefits of online technologies Source: DTI (2002)

© Marketing Insights Limited 2004 OHT 1.18 Barriers to e-commerce Figure 1.7 Barriers to development of online technologies Source: DTI (2002)

© Marketing Insights Limited 2004 OHT 1.19 Intro to B2B Company Employs 600 people worldwide Turnover £100m Products – composites and speciality polymers –See Distribution – 90 companies worldwide via joint ventures and agents Competitors: –Derakan ( –Scott Bader ( –Owens Corning (

© Marketing Insights Limited 2004 OHT 1.20 Intro to B2C Company Established 1984, 80 staff Products – Kitchenware Distribution –Through retailers and transactional web sites Competitors –Cooking.com ( –Lakeland ( –Tupperware (

© Marketing Insights Limited 2004 OHT 1.21 Activity - Benefits to B2B and B2C Company See activity 1.6 Give examples of these benefits of an online presence. Which of these are most important to each: –Cost reduction –New capability –Communication –Customer service –Control –Competitive advantage

© Marketing Insights Limited 2004 OHT 1.22 Activity – Changes required by e-commerce What changes to the overall business would be required by e-commerce for the B2C and B2B Company?

© Marketing Insights Limited 2004 OHT 1.23 Answer – the 7 Ss Figure 1.9 The McKinsey 7S framework