MIS 4453 - Technologies of e-Commerce Course Overview Successful E-Commerce Web site 20% of course grade Business Principles Technologies -HTML -FrontPage -Access -VBScript -Flash -Forms -Shopping cart Business Models Customer Interface Management Metrics Driving Traffic CRM

Term Project 20% of your course grade – more than just a term paper. Project graded 40% on the Web site (Dr. Seydel) and 40% on the Business plan (Dr. Fish); 20% of the term project grade will be your oral class presentation. Refer to class Web site for guidelines in development. Oral presentations begin April 15th; All written presentations due April 15

Oral Presentations 10 minutes each – be concise, practice getting it down to 10 minutes. (10 minutes on Business Model, 3 minutes showing the site) Must have: Title Slide, Value Cluster, Market Space Offering (Egg Diagram), Resource System, Revenue, 7Cs model, Driving Traffic, CRM, Management Metrics Bring two hard copies of oral presentation on the day you present.

Written Presentation Written elaboration of oral presentation 7-15 pages total with exhibits. Use sub-headings on various sections. Use exhibits to shorten text and then use text to go in-depth on exhibits. Walk reader through exhibits. Don’t throw in exhibits as after thought. Number all pages and exhibits. Proof read - no grammatical or spelling errors. Must have cover page with URL Turn-in two copies

Networked Economy Example Porter Strategy Model Key concepts: There are only three basic strategies Each implies a different business model Firms can pursue only one strategy at the time Possible Strategies Differentiation Cost Niche Requires constant innovation and leadership on the benefits that matter most to the customer Focus on gaining competitive advantage on costs while maintaining parity level on differentiation Focus the business on a particular segment of the market and then pursue either differentiation or cost strategy Business Model Networked Economy Example Travelocity.com Lowestfare.com Lastminute.com

Components of a Business Model Developing a business model in the networked economy requires four key choices on the part of the senior management: Value Cluster Specify the value proposition or the value cluster for the business Marketspace Offering Articulate the online product, service and information offer Resource System Define how the company needs to align its resources to deliver the value proposition Financial Model Define and select the most appropriate revenue model to pursue

Value Proposition/Cluster The definition of the value proposition is the result of a combination of choices about the customers, the benefits offered and the unique capabilities of the firm: Target Segments Key Benefits Offered Unique Capabilities Value Proposition + + “

Product/Service Offering Egg Diagram Decision Process Need Recognition Product/Service Offering Build Relationship Search for Ideas and Offerings Post-Sale Support and Perks Evaluation of Alternatives Message Selection Purchase Decision

Step No. 1 — Identify Core Benefits The core benefits must be identified in the construction of the value cluster: 1-800-Flowers.com serves the “mid- to high-end market” with a broad gift assortment, fresh flowers, reasonable prices and easy access because of its strong brand name, product and media partnerships and bricks-and-mortar network of franchises. Broad Assortment of Gifts High Quality of Flowers Customer Service Widespread, Easy Access

Step No. 2 — Link Capabilities to Benefits Managers need to identify which capabilities are required to deliver each benefit, regardless (at this point) of the ability of the company to access or develop that capability: For 1-800-Flowers.com, the benefit “widespread, easy access” is linked to four capabilities: strong brand name, wide reach to customers, multiple points of contacts and a popular website. Broad Assortment of Gifts High Quality of Flowers Popular Website Multiple Contact Points Customer Service Widespread, Easy Access Wide Reach to Customers = Core benefits Strong Brand Name = Capabilities

Step No. 3 — Link Resources to Capability After the capabilities are identified, the firm should determined the resources necessary to deliver each capability: Broad Assortment of Gifts High Quality of Flowers Popular Website Telephone 3,000 Affiliates Online Franchise Stores Multiple Contact Points Catalog Customer Service Widespread, Easy Access Wide Reach to Customers Strong Brand Name = Core benefits = Activities & assets = Capabilities

Product, Service, Information Revenue Models While firms can pursue a number of revenue models, some are used most frequently: Advertising Advertising revenues can be generated through the selling of ads, site sponsorships, event underwriting, etc. (e.g., Yahoo, AOL, Business2.com) Product, Service, Information Revenues can be generated from the sales of goods and services (e.g., Amazon, CDNow, Buy.com) Transaction Revenues can be accrued from charging a fee or taking a portion of the transaction sum for facilitating a customer-seller transaction (e.g., Schwab, eBay) Subscription Website can gain revenues by offering subscription services for information (e.g., FT.com, NYTimes.com)

The 7Cs of Lands’ End Context Content Community Customization Landsend.com utilizes both aesthetic and functional design elements to communicate its core benefits Content Landsend.com includes content pertaining to its product offerings, services and offline support. The content is conveyed through a combination of text, photographs and graphics. Community “Shop with a Friend” allows two users to shop simultaneously, creating a virtual shopping experience. Customization Personal shopping accounts are used to facilitate use of the site and tailor future visits to the customer’s individual needs. Communication “Lands’ End Live” allows users to talk directly to a customer service representative via phone or live text chat. Connection Landsend.com does not link to any other sites; their affiliate program, however, links other sites to Landsend.com. Commerce Landsend.com has typical transactional capability, providing the customer with a confidential and convenient way to shop online.

Driving Traffic to a web site E-mail Search Engines Domain Name E-commerce Web site External Links Public Relations Advertisements Promotions

Goals of CRM Retention rate: CRM, relationship building, increases customer loyalty which increase revenue per customer and frequency of purchases. Referrals: CRM can turn customers into advocates. Referrals typically have higher retention rates and spending rates than other newly acquired customers. Increased sales: CRM leads to increased cross-selling, upgrades, or simply more products by existing customers. Reduced costs: CRM can lead to more cost effective marketing; avoids expenses of mass marketing, free-up sales professionals, reduces direct mailings.

Develop Management Metrics

Return to slides at class Web site for additional details.