McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-1 internet business models text and cases tom eisenmann.

Slides:



Advertisements
Similar presentations
Price Chapter Ten. Copyright © Houghton Mifflin Company. All rights reserved.10–2 Chapter Ten Learning Objectives To identify factors that affect how.
Advertisements

Thought Leadership Portals: Drive for Transparency NAW Large Company Technology Networking Conference June 17, 2008 NAW Large Company Technology Networking.
BUSINESS DRIVEN TECHNOLOGY
McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved. BUSINESS DRIVEN TECHNOLOGY Chapter Eleven: Building a Customer-Centric Organization.
MARKETING MANAGEMENT 12 th edition 5 Creating Customer Value, Satisfaction, and Loyalty KotlerKeller.
Business-to-Business E-Commerce
Industry Analysis Chapter 03. Industry Analysis Chapter 03.
© The McGraw-Hill Companies, Inc., 2002 McGraw-Hill/Irwin Operational Budgeting Lecture 23.
1 Thomas S. Weber Vice President - Financial Strategy RBC Capital Markets North American Technology Conference August 3, 2005.
Risk Evaluation for Internet Investments Anya Eldan Managing Partner, Platinum Venture Capital 18 February, 2002.
Lecture 8 Net Present Value and Calculating the Best Alternative.
© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Project Analysis and Evaluation Chapter Eleven.
8 - 1 Copyright © 2009 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin.
© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Working with Financial Statements Chapter Three.
© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Financial Leverage and Capital Structure Policy Chapter Seventeen.
© 2003 UMFK. 1-1 internet business models Online Brokers Introduction Tony Gauvin.
© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Raising Capital Chapter Sixteen.
Case Study of Monster Inc. By Donatas Sumyla. Content Introduction Introduction Online Brokers Online Brokers Company Overview Company Overview Monster.com.
Chapter One What is Business? © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin Introduction to Business.
© 2004 The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Net Present Value and Other Investment Criteria Chapter Nine.
© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Discounted Cash Flow Valuation Chapter Six.
© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Determining the Target Cash Balance Chapter Twenty A.
© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Risk Management: An Introduction to Financial Engineering Chapter Twenty- Three.
Creating Customer Value, Satisfaction, and Loyalty
McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. internet business models text and cases tom eisenmann.
Conducting an Industry Analysis. Seven Questions for Industry Analysis 1. What are the industry dominant economic traits? 2. What competitive forces are.
ELC 498 Day 12. DAY 12 Agenda Today October 20 –BMG Entertainment - Kristin –Recap of Online Content Providers –Intro to Online retailers October 24 –Staples.com.
McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 2-1 DAY 6 Agenda Today September 26 –Intro to Online Portals -Tony –Yahoo!
5 Creating Long-Term Loyalty Relationships
Yum! Brands, Pizza Hut, and KFC Jeffrey A. Krug
© 2005 UMFK. 1-1 Wit Capital Chapter 5, Case 4 internet business models text and cases Steven Young COS498.
McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
chapter 16 Customer Metrics McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
ELC 498 Day 9. 2 DAY 8 Agenda Today October 6 –Intro to Online Content Providers -Tony –Boston.com - Steve –Midterm exam Posted in WebCT Due Oct 13 at.
© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Return, Risk, and the Security Market Line Chapter Thirteen.
How to Grow Revenues Through Supply Chain Relationship Management Bill Burke President, CEO ePlains, Inc.
Chapter 1: Managers, Profits, and Markets McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.
The Exclusive Networks Group. Hands up VADs Everyone claims to be a VAD Overused, undervalued What do you mean you're a VAD?
Chapter 1: Managers, Profits, and Markets McGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.
For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 1999 Irwin/McGraw-Hill Chapter 18: Price Setting in the Business World.
CHAPTER THREE E-BUSINESS: ELECTRONIC BUSINESS VALUE
Copyright 2009 C Welcome Real-time 1 Innovation of loyalty and rewards for retail banks Welcome Real-time Mavis Liew, Vice President, Marketing Hong Kong,
McGraw-Hill/Irwin McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
© 2003 The McGraw-Hill Companies, Inc. All rights reserved. Project Analysis and Evaluation Chapter Eleven.
Chapter 3 Government Control of Prices in Mixed Systems.
McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
MARKETING MANAGEMENT 12 th edition 5 Creating Customer Value, Satisfaction, and Loyalty KotlerKeller.
ELEVEN QUESTIONS THAT CAN AFFECT YOUR FUTURE FINANCIAL SECURITY Adapted from Fortune, December 22, 2003 Content by Ralph Seger (c) Ralph Seger.
For use only with Perreault and McCarthy texts. © The McGraw-Hill Companies, Inc., 2000 Irwin/McGraw-Hill Chapter 17: Price Setting in the Business World.
For use only with Perreault and McCarthy texts. © 2006 McGraw-Hill Companies, Inc. McGraw-Hill/Irwin CHAPTER SEVENTEEN CHAPTER SEVENTEEN.
8 - 1 Copyright © 2006, The McGraw-Hill Companies, Inc. All rights reserved.
McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. CHAPTER 11 Financial Statement Analysis McGraw-Hill/Irwin © 2008 The McGraw-Hill.
MARKETING MANAGEMENT 12 th edition 5 Creating Customer Value, Satisfaction, and Loyalty KotlerKeller.
6-1. Sales Knowledge: Customers, Products, Technologies Chapter 6 Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
Contemporary Engineering Economics, 6 th edition Park Copyright © 2016 by Pearson Education, Inc. All Rights Reserved Engineering Economic Decisions Lecture.
E-Commerce Systems Chapter 8 Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
Presented by Ruth Gorski Introducing the American Express OnePoint ® Program This document contains unpublished confidential and proprietary information.
McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Example 1-Ad A.
1 Research term paper Five major sections: Company background / introduction Competitive strengths Financial analysis (focus section) Stock valuation analysis.
McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter 12 Marketing Profitability Analysis.
Sales Knowledge: Customers, Products, Technologies Chapter 6 Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
Business-to-Business E-Commerce
MARKETING MANAGEMENT 12th edition
Chapter 4 B2B E-Commerce.
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
MARKETING MANAGEMENT Adapting marketing for the new economy and Creating Customer Value, Satisfaction, and Loyalty Kotler Keller.
Chapter 4 B2B E-Commerce.
Customer lifetime value (CLV)
Presentation transcript:

McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-1 internet business models text and cases tom eisenmann

McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-2 Access Provider Lecture Chapter One

McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-3 Get Big Fast Accelerated investment in customer acquisition Premise: first-mover advantage Tactics –Massive marketing campaigns –Giveaways, subsidies, deep discounts –Mergers

McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-4 Get Big Fast When Businesses exhibit “Winner-Take-All” structural characteristics –Strong network effects, scale economies, and customer retention rates –In Netspeak: viral, scalable, sticky! 2. Competitive risks are “reasonable” –Avoid full-frontal assault on entrenched leader –Avoid wars of escalation and attrition 3. Lifetime value of a customer is positive 4. Capital markets reward first movers (or you have cash on hand) –Euphoria, overtrading, revulsion

McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-5 Get It Right First When Ensuring reliability is crucial to customers 2. Learning-by-doing is important

McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-6 GBF Payoff for Access Providers TCI Teledesic Geocast EarthLink –48% of 2000 revenue on sales and marketing –1.7 million subs B.O.Y. ‘99  4.8 million B.O.Y. ‘01 –Stock price down 91% NetZero stock price down 96% from 52-week high AOL stock price down 10%

McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-7 Network Effects Connectivity-related –Communications: chat, IM, videoconference, IP phone –Collaboration: document sharing, calendars –Community-generated: multi-player games, photos, message boards –Commerce: auctions, exchanges, classifieds, bill payment, wallets, loyalty programs Software-supply related

McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-8 Strength of Network Effect Proprietary networks (walled gardens) –Joint: boost industry demand –Risk: stall Sensitivity to aggregate participation rates Probability of Prospect Joining Network % of Prospect’s Existing Offline Partners Already Active in Online Network

McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-9 Comparison Scale Economies

McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved Scale Economies Variable contribution margin –80% of revenue for content provider, portal, market maker –20% of revenue for online retailer –34% of revenue for ISP ISP Economics –Revenue$20.00 –Variable costs customer support 5.80 network (½ POPs; ½ leased lines) 7.40

McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved Network effects Differentiation (sustainable??) –Skills/execution –Different tastes Switching costs ISP churn: 4% per month, so keep 61.3% of customers after one year –Average life of customer relationship = where x = annual retention rate –For ISPs, = 2.6 years Retention –Reintegration of information systems –Forfeiture on transaction profile –Risk of disruption –Hassles opening/closing accounts –Retraining –Cost of data re-entry

McGraw-Hill/Irwin © 2002 The McGraw-Hill Companies, Inc., All Rights Reserved Lifetime Value of ISP Customer Variable contribution margin = [($ ) per month  12] = $81.60/year %  NPV is $134 For EarthLink, average customer acquisition cost for 2001 projected to be $168 (down from $200 in late 2000!) So, LVC is negative!