1. Şule Özmen1 Topics in E-Business New x (Economy +Business Rules +Business Models + etc. ) Şule Özmen Marmara University Department of Business Administration ozmens@yore.com sozmen@e-dersane.com URL: www.feas.marun.edu.tr/business/homepages/suleozmen www.e-dersane.com/suleozmen

2. Şule Özmen2 AGENDA New (Digital) Economy New Business Rules E-Business, e-commerce Redefining Business New Business Models (e-business models) First movers in e-world E-Marketing Q&A

3. Şule Özmen3 The New Economy –Digital Economy Industry era Information era Biological era Information economy First stage (based on computers) Data processing, spreadsheets, word processing Second stage ( based on networks) Connectivitiy, networks and teradata

4. Şule Özmen4 Business Rules in New Economy Time –Speed Time between business processes gets shorter real time responses Space - Distance Connectivity decreased the importance of locations Value – Intangibles Economic value shifted from tangibles to intangibles value is added by information (CRM,SCM) Consumers are empowered

5. Şule Özmen5 Business Rules in New Economy (continued) Value comes from abundance rather than scarcity (ecomomic value was stemming from scarcity in old economy). The more connection the more value gained. Factors of production Talent, innovation also become the factors of production

6. Şule Özmen6 INTERNET & GLOBALIZATION Geographical distances have been overcome by the internet technologies (Neither central management nor ownership) Markets expanded. Global Markets. Purchasing manufacturing marketing can be achieved at any convenient places. Global competition. Global markets changed who are the competitors.

7. Şule Özmen7 E-conomy, e-business e-commerce, e-competition Sense Process Respond HOW ????? By e-commerce, by e-business, by new business models CRM, SCM, ERP, Data Warehousing WHY??? Traditional : Make and sell New: Sense and respond

8. Şule Özmen8 Definition of e-business e-business is a new way of doing business on the e-economy. Key business processes are transformed for this new way of doing business through the extensive use of computer and internet technologies e - business involves openness, connectivity and integration Saying electronic commerce is merely buying and selling products on the World Wide Web is like arguing the PC makes a good typewriter

9. Şule Özmen9 Transformation of business to e-business Changing the way of doing business, business tasks Changing the organization’s business model Changing the way of performing the managerial functions and activities Key success factors Vision, leadership, commitment Strategy and management It is both cheaper and profitable to absolete yourself than it is to let your competitor do it for you Peter Drucker

10. Şule Özmen10 e-business reconstruct value chains e-business adds value for everyone involved in all the way throughout the chain. what we call the value chain, which is the interconnection of raw materials suppliers, through manufacturers, all the way out to the retailers and the consumers. Businesses, customers, producers, suppliers, employees, managers, Suppliers, supplier’s supplier, customers, customer’s customer Benefits, ease, convenience, timely, cheaper, higher quality, etc.

11. Şule Özmen11 Impact of e-economy, e-business e- commerce on consumers and marketers What type of changes are you expecting in purchasing behavior of consumers ? What do you propose to marketers to do? ?

12. Şule Özmen12 Who is your customer in digital economy? Who doesn’t buy every product or service you offer like in “old good days” Equipped with information Less brand loyal, runs away to your rival by a click But when? if not satisfied

13. Şule Özmen13 Redefinition of business Products and services (offers) are redefined (info. about the product or the service can be more valuable than the product itself) Market (buyers) are redefined Relationships are redefined B2B (Supply Chain Management) B2C (Customer Relationship Management) C2C (Web borned business models)

14. Şule Özmen14 E-Business Models (Purpose of Interaction ) Agora - eBay priceline Aggregations (Portal) (Infomediary) Yahoo, Amozon, Travelocity, Expedia Value Chains – Cisco, Dell, Intel, AutoXchange Alliances – MP3, Linux, Java Distributive Networks (enabler)– AOL, Fed Ex

15. Şule Özmen15 E-Business Models ( Participants) B2B www.cisco.com www.autoXchange.com www.dell.com B2C www.amazon.com Yahoo, Msn www.yahoo.com www.msn.con Travelocity, expedia Msnbc www.msnbc.com (Online Media) C2B: Priceline www.priceline.com C2C: www.eBay.com

16. Şule Özmen16 Value Chains – Cisco a winner in e-business Sells 80% of its products on line (about a million dollars a month) Reduced its operating costs Communication among all the participants is encouraged order – to - delivery cycle times are reduced

17. Şule Özmen17 Value Chains – Intel a winner in e-business Sells more than 1 billion worth of product per month Sales intermediaries are able to check prices, view product road maps and buy products through a password protected, customized Web site Reduction in transaction costs of products sold Fewer errors in order processing Reduced order – to –delivery cycle

18. Şule Özmen18 B2B Models What to do: Connecting the participants (other businesses) in the supply chain Make all parties win Costs: Reduced operating costs Ordering Transaction Time: Reduced order – to –delivery cycle time Efficiency: Increased efficiency in resource utilization. Elimination of errors like order processing errors

19. Şule Özmen19 B2C Models: Objectives and Strategies What to do: Driving customers to your sites About 1000s of web page, customer will find you, more than that they will bookmark you, more than that make a transaction from your site!!!!! How to do: Know your customer (target your customer, niche market) Understand your customer ( data warehouse management, data mining) Retain your customer ( loyalty programs)

20. Şule Özmen20 First Mover Advantages “ First” and “different ” Capturing most profitable customers Higher margin, higher market share Exploit the value of their brands early Pick the best partners, participants before competitors enter Attract most talented and innovative human resource Media and academic coverage – referring the first movers as examples of e-business winners Building trust - security You can be a first mover without having to invent something new. Offer differentiated services with greater convenience and lower cost Different isn’t always better, but the best is always different Net Ready by Hartman & Sifonis; 2000;Mc Graw Hill

21. Şule Özmen21 Market Adoption Sequence: Traditional and Internet Life Cycles

22. Şule Özmen22 MARKETING PROCESS New and Traditional Buyer Identifying the needs, wants, desires Seller Search promote Order and paymentDelivery Product / service design

23. Şule Özmen23 Technology is enabler in new marketing process Collect teradata amounts of data to identify their needs. Current and potential needs. Offer the products or service faster through alternative distribution channels Receive orders and accept payment through internet Follow your customer after delivery Don’t lose contact with your customer once interacted you Communicate with your customer on the basis of the knowledge obtained from the data warehouse

24. Şule Özmen24 It is now possible to Know who your customers are and who your best customers are Stimulate what they buy or know what they won’t buy Know the time when and how they buy Learn customers’ preferences and shape the offer accordingly Formulate strategies to make your customers loyal customers to keep your customers for many years Define characteristics that make up a great/profitable customer Model channels best to address a customer’s need Predict what they may or will buy in the future

25. Şule Özmen25 E-Marketing Process There are some specific on line marketing strategies to increase; Number of customers visiting web site Purchases from web site in B2C models  Use non-internet marketing media  Co-operative marketing (exchanging links and banner advertisement)  Place web store within a search engine Place web store within a virtual mall

26. Şule Özmen26 e-business opportunities Reduced Costs General and administrative expenses decrease Marketing and selling expenses decrease Cost of goods sold decrease Revenue enhancement New markets, new customers, new products Fast and efficient information flow- near real time decision making. Faster time to market Access to global market Improved customer satisfaction- CRM Loyal and profitable customers

27. Şule Özmen27 e-business threats Lack of technical knowledge and experience – (before initiating) Lack of support from senior management - (during transformation) Technology- user friendly interfaces, fast access and speedy transactions – (after transformation) Security concerns - (after transformation) Ignoring e-business – threat of losing competitive position threat for survival

28. Şule Özmen28 MYTHS AND REALITIES MYTH NO. 1: It's Easy. MYTH NO. 2: It's cheap. MMYTH NO. 3: Everyone's doing it. M YTH NO. 4: It's lucrative. MYTH NO. 5: The Web levels the playing field. MYTH NO. 6: It leads to disintermediation. MYTH NO. 7: It means the end of mass marketing. MYTH NO. 8: It leads to product commodization.