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Internet Marketing & e-Commerce Ward Hanson Kirthi Kalyanam Requests for permission to copy any part of the material should be addressed to: PERMISSIONS.

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Presentation on theme: "Internet Marketing & e-Commerce Ward Hanson Kirthi Kalyanam Requests for permission to copy any part of the material should be addressed to: PERMISSIONS."— Presentation transcript:

1 Internet Marketing & e-Commerce Ward Hanson Kirthi Kalyanam Requests for permission to copy any part of the material should be addressed to: PERMISSIONS DEPARTMENT THOMSON BUSINESS and ECONOMICS 5109 Natorp Boulevard Mason, OH Phone: (800)

2 Part One: Chapter Five Web Business Models
“A good business model begins with an insight into human motivations and ends in a rich stream of profits.” Joan Magretta, Why Business Models Matter

3 The Value of Customer Contact
Web-based business models fundamentally change the way businesses interact with customers

4 The Value of Customer Contact
Web-based business models fundamentally change the way businesses interact with customers Shift from occasional transaction to continuous analysis of customer behavior

5 The Value of Customer Contact
Web-based business models fundamentally change the way businesses interact with customers Shift from occasional transaction to continuous analysis of customer behavior Shift from value distribution to value creation

6 Closed Loop Marketing Tracking customers from ad click to page views to purchase or exit Learning from and responding to customer interaction at each level Expanded accountability Accelerated learning curve on pricing, product quality and other variables

7 Closed Loop Marketing

8 Evaluating Customer Contact
Online customer contact comes in many forms Website visits Banner advertising promotions Cell phone price checks

9 Evaluating Customer Contact
Web Chain Analysis calculates the effectiveness of online strategies

10 Evaluating Customer Contact
Web Chain Analysis calculates the effectiveness of online strategies Expected value of a contact: the unified contact value

11 Evaluating Customer Contact
Web Chain Analysis calculates the effectiveness of online strategies Expected value of a contact: the unified contact value Expected value of a prospect: the unified visit value

12 Evaluating Customer Contact
Web Chain Analysis calculates the effectiveness of online strategies Expected value of a contact: the unified contact value Expected value of a prospect: the unified visit value Expected value of a new customer

13 Evaluating Customer Contact
Web Chain Analysis calculates the effectiveness of online strategies Expected value of a contact: the unified contact value Expected value of a prospect: the unified visit value Expected value of a new customer Expected value of a repeat buyer

14 Evaluating Customer Contact

15 Customer Lifetime Value
The ability to track, store and analyze individual behavior online allows firms to calculate the present value of the future cash flow attributed to the relationship with any one customer

16 Customer Lifetime Value
The ability to track, store and analyze individual behavior online allows firms to calculate the present value of the future cash flow attributed to the relationship with any one customer Not every customer is created equal; high support costs can drive some customer relationship below zero value

17 Customer Lifetime Value

18 Web Benefits to Business
Online strategies can bring direct and indirect benefits to firms Not every online tactic is profitable No formula for successful online business model Scale matters

19 Web Benefits to Businesses
Cost reduction In banking, the switch from teller windows to ATMs to online transactions Supply chain coordination At Dell Computers, reduced inventory and faster response to changes in the market Also: improved customer knowledge, enhanced product quality and advanced branding

20 Revenue Benefits Online capabilities create new revenue opportunities

21 Revenue Benefits Online capabilities create new revenue opportunities
Incremental benefits Advertising last-minute tee times for a reduced price (lastminutegolfer.com)

22 Revenue Benefits Online capabilities create new revenue opportunities
Incremental benefits Advertising last-minute tee times for a reduced price (lastminutegolfer.com) Entirely new streams of revenue Selling music by the song at iTunes

23 Revenue Benefits Online capabilities create new revenue opportunities
Incremental benefits Advertising last-minute tee times for a reduced price (lastminutegolfer.com) Entirely new streams of revenue Selling music by the song at iTunes Enhanced products drive revenue At Science, online content helps drive the magazine’s print sales

24 Revenue Models Permission sponsorship Banner advertising Prospect fees
Sales commissions

25 Revenue Models Factors in selecting payment structure:
Attitude toward risk Ability to monitor performance Current market emphasis Negotiating power

26 Selecting a Payment Structure
Risk for Advertiser Risk for Ad Network Sponsorship Fixed Payment Banner Ads Impressions Prospect Fees Click through Commissions Purchase Increasingly Performance Based and Higher Rise for Web Site

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