TODAY’S CLASS 5:00-6:00 Case discussion: Boston.com 6:00-6:15 Break 6:15-7:15 Final reflections on the course 7:15 End of semester celebration

END OF SEMESTER CELEBRATION! THURSDAY 6:00 PM Nicks Sports Rock Cafe 1143 13th Street, Boulder

Should Boston.com “Upsell” Classified Ads? PLUS 1. Revenue opportunity/ recapture revenue erosion 2. Online rates are lower 3. Educate customers about value 4. Incentives to workforce 5. Show revenue before IPO MINUS 1. Threaten biggest advantage: number of listings 2. De-links online listings from printed newspaper 3. Exacerbates internal conflicts

“Get Big Fast” Approach - Online revenue expected over next few years - Brand loyalties are malleable - “Winner-take-all” dynamics Network effect Scale economies Intrinsic ability to retain customers - Lifetime value of customer exceeds acquisition’s cost - Risks of competitor preemption is high - Can manage operational “growing pains” - Capital market rewards market leaders

Boston.com: Hawk or Dove? Hawkish Choices - Separate physical location - Separate brand - Dedicated sale forces - Separate management - Separate reporting structure Dovish Choices - Sharing content - Insider CEO - Heavy cross-promotion - Double commissioning - Shared support systems

“Get it Right First” Approach - Protecting quality and brand is paramount - “Learning by doing” yields a big payoff

FOLLOW-UP Feb 2000 Began upselling recruitment ads 80% “compliance” rate Globe staff sold online upgrades Boston.com staff banners & sponsorship May 2000 Created “Abuzz,” community of experts Introduced new services: - Restaurant reviews/reservations - Travel services / ticketing June 2000 Impact of Internet stock prices crash still unclear

The Clicks-and-Mortar Spectrum Integration - established brand - shared information - purchasing leverage - distribution efficiencies Separation - greater focus - more flexibility - access to venture funding Strategic Joint In-house Spin-off partnership venture division Barnesand/ Rite Aid and Kbkids.com Staple.com nobles.com Drugstore.com

Which Clicks-and-Mortar Approach? Separation Integration Brand extends to Internet Different customer segment/product mix Price differently online and in stores Have Internet skills/experience Willing to judge Internet different Channel conflict Threaten current business model Distribution system translate well IS a solid foundation to build Are systems a competitive advantages Having trouble attracting/retaining talent Need outside capital to fund venture Is a supplier, distributor, or other partner key Brand Management Operations Equity

Key Resources - Projects: Signal Soft, Time Warner Telecom, Level 3 - Cases: BET.com, Priceline Webhouse Club, InSite Marketing Technology, Service and Value in e-Commerce, eBricks.com, Webvan, Amazon, Boston.com - Speakers: Ed Gac, Mohanbir Sawhney, Paul Strupp, Don Hazell, and Steve Harris - Textbook and articles: Rayport and Jaworski, 2000 - Articles: Many.. - Support: Accenture Consultants, Project Sponsors, and instructors

THE PRIMARY OBJECTIVES OF BOSTON.COM CASE STUDY WERE: 1) Discuss the threat and opportunity presented by the Internet to traditional media players. 2) Explore the strategic, operational, and financial questions an incumbent faces when implementing a Web initiative. 3) Evaluate the tensions between pursuing a “Get Big Fast” versus a “Get it Right First” implemen- tation strategy for incumbents who faces cannibalization.

The Balanced Scorecard Strategy Into Operational Terms Financial To succeed financially, how should we appear to our shareholders? Customer To succeed financially, how should we appear to our shareholders? Internal Business Process To satisfy our shareholders and customers, what businesses must we excel at? Vision and Strategy Learning And Growth To succeed financially, how should we appear to our shareholders? Source: Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review 74 (January-February): 76, 1996

The Performance Dashboard Steps of Strategy Market Opportunity Assessment Business Model Customer Interface Branding and Implementation Evaluation Opportunity Metrics Business Model Metrics Branding and Implementation Metrics Customer Interface and Outcome Metrics Financial Metrics Performance Dashboard

Crossfire: Which is Better -- Online or Offline Data Sources?

TOPICS COVERED - Framing e-Business market opportunities - E-Business models - The customer interface for e-Business - Communications and branding issues in e-Business - Legal and privacy issues in the Internet age - Logistical support for e-Business - Valuation of e-Businesses - Implementation of e-Businesses - Metrics for evaluating e-Businesses

“Student-Centered” Teaching Approach Team, Companies, Consultants, & TAs Cases, Textbook and guests Research Topic, Team Discussions Group, and individualized discussions Collaborative work Student Project reports, presentations, final report Final Project Instructors - Marketing - IS

The Accenture Graduate Seminar in e-Business Spring 2001 THANK YOU!!!