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Chapter 7: E-Business: Doing Business Online.

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Chapter 7
E-Business: Doing
Business Online
Define e-business and discuss
1 how it can help achieve business
Describe some of the challenges
associated with e-business.
Discuss how organizations use
Internet communications to
advance their objectives.
Distinguish between a corporate
and a marketing Web site.
3 List the major forms of B2B
Explain B2C e-business and
identify the products most often
sold online.
Discuss Web sites and identify
methods for measuring
Web site effectiveness.
Explain the global scope
of e-business.
Electronic business (e-business) - Conducting business
via the Internet.
1. E-tailing, or virtual storefronts on Web sites.
2. Online business-to-business transactions.
3. Electronic data interchange (EDI), the business-to-business
exchange of data using compatible software.
4. E-mail, instant messaging, and other Web-enabled communication
tools and their use as media for reaching prospective and existing
5. The gathering and use of demographic, product, and other
information through Web contacts.
• Global Reach. Goods and services can be sold to
customers worldwide.
• Personalization. Companies can customize products and
reduce inventory.
• Interactivity. Customers and suppliers can negotiate
prices online.
• Right-time and integrated marketing. Online retailers
provide products when and where customers want them
and promotions can be directed to individual customers.
• Cost savings. E-business can reduce costs.
University of Phoenix
Boston Symphony Orchestra
 Increase a firm’s visibility, promote its offerings, and
provide information to interested parties.
пѓј Build customer goodwill and assist retailers and
other resellers in their marketing efforts.
пѓј Disseminate financial information to investors.
пѓј Enable prospective employees to apply online for
are frequently
used for marketing to attract
• Business-to-business e-business (B2B)
Electronic business transactions
between businesses using the Internet.
• B2B transactions total $2.5 trillion.
• By some estimates, account for 90% of
all e-commerce activities.
• Can reduce cost of B2B transactions by
almost 25 percent.
• Electronic data interchange (EDI) is a
computer-to-computer exchange of invoices,
purchase orders, price quotations and other
sales information.
• Extranets offer an efficient way for business to
collaborate with vendors, partners and
• Private Exchanges are the next generation of
extranets where all types of data related to ebusiness is shared.
• Business-to-consumer (B2C)
• E-tailing accounts for 4% of all U.S.
• Growing at a rate of 18%.
• Services like banking and brokerage are key
aspects of e-tailing
• Many retailers have electronic storefronts.
• Growth of broadband is aiding e-tailing.
пѓј Typical user is young, highly
educated, urban or suburban,
and affluent.
пѓј Demographics are shifting;
there is decreasing difference
in Internet purchasing habits
among groups.
Lower Prices
• Many products cost less online.
• Internet allows customers to easily compare prices from multiple
• Can order products from around the world anytime, day or night.
• Can register customer information to streamline transactions.
• Emphasis on personalized, one-on-one marketing to increase
repeat purchases.
• Through encryption, data is encoded for security
• Many companies use Secure Sockets Layer (SSL)
technology to encrypt information and verify senders
and receivers.
• An electronic wallet contains credit card and
identification information. Customers can avoid
retyping purchase information.
пѓј Privacy is among the top concerns of Internet users.
пѓј E-business sites often require passwords and use electronic
signatures, an electronic form of identity verification.
 Companies can track customers’ shopping and viewing habits
through cookies.
пѓј Customers usually prefer that companies do not share their
personal information. Merchants have responded by joining
privacy organizations.
пѓј Privacy protections may soon become legally required.
пѓј Employees also have concerns that employers are monitoring
their Internet behavior.
пѓј Companies worry about data theft.
• Internet Crime Complaint Center logs more than 200,000
complaints annually.
• 50% of the complaints referred to law enforcement
agencies deal with online auctions.
• Phishing is a growing form of Internet fraud that uses email or pop-up messages to get unsuspecting victims to
disclose personal information.
• Vishing, or voice phishing, involves phone calls to credit
card customers to obtain personal and banking
• Payment fraud is growing.
• 50% of shopping carts are abandoned before any
purchase is made.
– Lack of Information
– Inability to find the information they need
– Feeling overwhelmed by too much information
• Companies that have brick-and-mortar experience often
have better success satisfying customers than Internetonly retailers.
• Online sales can compete with business partners such
as retailers and distributors causing disputes called
channel conflict.
• Web has four main functions: e-business,
entertainment, information, and communication.
• Communication is Web’s most popular function.
• Firms use e-mail to communicate with customers,
suppliers, and other partners.
• Online Communities: Internet forums, newsgroups,
electronic bulletin boards, and Web communities that
appeal to people who share common interests.
• Spam is junk e-mail.
• Blog - short for Web log, an online journal written by
a blogger.
• May incorporate wikis, a Web page that anyone can
• Some incorporate podcasts, video & audio
recordings. Feedburner services more than 200,000
• Corporate blogs can help build brand trust.
– Example: Apple’s iLounge builds the iPod brand and gives
Apple ideas for product improvement.
• Employee blogs may present ethical issues.
• Banner Ads – messages placed on frequently visited
• Pop-up Ads – ads that appear in separate windows
• Pre-roll Video Ads – advertisements that roll as
soon as a page is loaded
• Search marketing – companies pay for top visibility
in search results
Some companies, such as ValPak Marketing
Systems, offer virtual, searchable coupons.
пѓј Future growth of many companies is linked to a global
strategy that incorporates e-business.
пѓј U.S. leads world in Internet users but ranks only 5th in
Internet penetration.
пѓј E-Bay may dominate most markets, but Chinese
company has 83% of the auction business
in China.
пѓј Three of four Web pages are written in English.
пѓј E-business can heighten competition in the global
It is easier to create a bad website than a good one.
Organizations must think about:
пѓјPlanning and Preparation
пѓјContent and Connections
пѓјCosts and Maintenance
• Click-through rate - percentage of people presented with a
Web banner ad who click on it.
• Conversion rate - percentage of visitors to a website who make
a purchase.
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