Chapter 5 © 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. E-BUSINESS: MANAGING THE CUSTOMER EXPERIENCE 1

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience New E-terms ▮ E-business ▮ E-marketing ▮ E-commerce ▮ E-tailing ▮ E-zine ▮ ▮ E-space ▮ E-procurement

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience The Digital World ▮ More than three-quarters of the U.S. population access the Internet at home, school, work, or public access sites ▮ What do people do online? United States – Communication, information, and purchases China – Downloading, streaming music, online gaming, videogaming, and social networking 3

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience The Digital World ▮ In spite of the past success and future potential of the Internet, issues and concerns relating to e-business remain ▮ The benefits and potential of e-business outweigh the concerns and problems 4

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience 1. Define Electronic Commerce (E-Commerce).

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience E-Commerce ▮ Electronic commerce ▮ Electronic commerce (e-commerce): Targeting customers by collecting and analyzing business information, conducting customer transactions, and maintaining online relationships with customers by means of computer networks

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience E-Business ▮ Wide range of business activities that take place via Internet applications ▮ It can be divided into five broad categories: E-tailing Business-to-business transactions Electronic data interchanges (EDI) 7

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience E-Business , instant messaging, blogs, podcasts, vlogs (video blogs), and other Web-enabled communication tools The gathering and use of demographic, product, and other information through Web contacts 8

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience 2. Define Electronic Marketing (E-Marketing).

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience E-Marketing ▮ Strategic process of creating, distributing, promoting, and pricing goods and services to a target market over the Internet or through digital tools ▮ Application of electronic tools to contemporary marketing has the potential to: Greatly reduce costs Increase customer satisfaction 10

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience Online Marketing ▮ Online marketing - Activities that connect buyers and sellers electronically through interactive computer systems 11

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience 3. What are the many opportunities for E- Commerce?

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience Table Marketing Capabilities 13

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience 4. Define Interactive Marketing.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience Interactive Marketing ▮ Interactive Marketing Buyer-seller communications in which the customer controls the amount and type of information received from a marketer through such channels as the Internet, and virtual reality kiosks.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience 5. Define Internet.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience Internet ▮ Worldwide network of interconnected computers that lets anyone with access to a personal computer send and receive images and data anywhere

The Internet World Internet Users 1990 – Fewer than 1 Million 1995 – 50 Million 2001 – 490 Million2005 – 766 Million 70% of Internet Users - USA 2006 – 50% outside the USA The Birth and Rise of Ecommerce

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience ▮ The Internet Over 143 million active users in the USA Intranets Internal corporate network that allows employees within an organization to communicate with each other and gain access to organizational information Extranets Secure network accessible through a Website by external customers or organization for electronic commerce. It provides more customer-specific information than a public site.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience The Internet (1 of 2) ▮ Taken from the paper “International Internet Marketing (IIM)” by Philip, R. (2004). In 1990, fewer than 1 million users were connected to the Internet. By 1995, the figure had risen to 50 million. In 2001, it grew to 490 million. In the US, where Internet usage is most advanced, 58 percent of the population had Internet access at home by July 2001 (Cantrell, 2001). The internet has become more powerful with the growing use of broadband. Broadband permits the rapid transmission of much greater quantities of information, including moving pictures. In 2002, Korea’s 15 million households had broadband service (Moon, 2002). By 2004, more than 152 million people in the United States were online with over one-third having broadband connections (Fost, 2004).

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience The Internet (2 of 2) ▮ In 2000 there were nearly 350 million internet users world-wide and by 2005 the number of users could be more than double to nearly 766 million (Wall street journal, 2000). ▮ Also the number of internet users is growing in other countries; this should be of concern for firms wanting to enter foreign markets. For example, although 70% of today’s internet users are currently based in the United States (Harrison-Walker, 2002), more research done by Heckman & Schmidt (2000) and Struass and Frost (2001) predict that by 2005 more than 50% of internet users will be based outside the US, and that the percent of users in the European Union will exceed the percent of users in the United States.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience 6. What are the four web functions?

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience ▮ Four Web Functions

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience ▮ Four Web Functions Communication ; Instant messaging; Chat rooms and bulletin boards; Online communities Information Search engines; Online publications; Newsgroups; Internet forums; Electronic bulletin boards; Web communities

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience ▮ Four Web Functions Entertainment Games; Radio and TV programming, including music; Streaming video of live news reports, sports, and musical performances; Electronic books E-Commerce Online auctions B2B: electronic exchanges; Extranets and private exchanges B2C: Electronic storefronts and cybermalls; Web kiosks, Online ticketing; Matchmaking

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience 7. What are the benefits of shopping online?

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience ▮ Online Consumer Marketing Lower Prices Bots (short for robots): programs that check hundreds of sites, gather and assemble information, and bring it back to the sender Convenience Worldwide access, Day or night, Customized products and information Personalization Improves the quality of the shopping experience Improves customer satisfaction

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience ▮ Benefits of Online Consumer Marketing Relationship Building Crucial to success Online’s personalization helps Easier for small businesses with small budgets Customer service is the key Increased Efficiency Greater profit margins Educating customers online frees salespeople from answering routine questions

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience Cost Reductions Reduced start-up costs Reduced operating costs Frees funds for new marketing efforts A More Level Playing Field Even small firms with small budgets can compete in the global marketplace Helps eliminate discrimination and allow minority businesses to succeed on their own merits – AutoNetwork.com

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience 8. How does one build an effective web presence?

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience Creating an Effective Web Presence Measuring Effectiveness Measuring Effectiveness Managing a Web Site Creating an Effective Web Site

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience ▮ Building an Effective Web Site Establish a Mission for the company’s site Identify the purpose of the site Satisfy customer needs and wants through a clear site design ▮ Managing a Web Site Update the site frequently Flag new merchandise and services Ensure that site appears to be current Update software as needed Track costs and revenues

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience Assessing Site Effectiveness ▮ Web-to-store shoppers - Consumers who use the Internet as a tool to aid them at brick-and- mortar retailers ▮ Click-through rate - Percentage of people presented with a banner ad who click on it ▮ Conversion rate - Percentage of visitors to a Web site who make a purchase ▮ Engagement - Amount of time users spend on sites 33

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience Figure Measures of Website Effectiveness 34

MEASURING WEB SITE EFFECTIVENESS Click-through rate Percentage of people presented with a banner ad who click on it. Conversion rate Percentage of visitors to a Web site who make a purchase.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience 9. What is the future of online marketing?

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience Future of online marketing ▮ More information ▮ More innovation ▮ The rise of customer power ▮ The rise of the trust, the fall of the untrustworthy 37

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience 10. What are two concerns of online marketing?

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Chapter 5 E-Business: Managing the Customer Experience Future of online marketing ▮ Internet profitability ▮ Legal and ethical issues 39