Reactive Electronic Department Store (cont.). Marks & Spencer in the UK, La Redoute in[r]
(1)1
Chapter 2
Retailing in
(2)Learning Objectives
Define the factors that determine the business
models of electronic marketing
Identify the critical success factors of direct marketing Design the desirable relationship in a direct marketing
setting
Analyze the critical success factors of electronic
brokers
Identify the typical products that are sold well in the
(3)
Observe the reactive strategy of traditional
department stores
Discuss whether electronic commerce should
always target global markets
Identify the consumer’s shopping procedures on
the Internet
Discuss the types of aiding-comparison-shopping
devices
Describe the impact of EC on disintermediation
and re-intermediation in retailing
(4)Overview of Electronic Marketing Structure
Business-oriented Electronic Marketing (B2B)
needs more precise record keeping, trackability,
accountability, and formal contracts, usually with the high volume of transactions and large amount payments conversation
Consumer-oriented Electronic Marketing (B2C)
mostly online Internet
(5)Advantages of Electronic Marketing
Direct marketing Customization
Online customer service Electronic shopping malls:
Broker (e.g Internet Mall)
Stores (e.g Amazon, J.C.Penney Online)
electronic brokers Global marketing
Customers can order from cyberstores 24
(6)Forecast of the B2C Electronic Markets
Forecast of Business-to-Consumer Electronic
Market Size
(7)
Kinds of items was sold
Forecast of the B-to-C Electronic Markets
(cont.)(Unit: Millions of U.S Dollars)
Items 1997 2000
Apparel 46 322
Gifts/flowers 45 658
Books 16 Not available
Food/drink 39 336
Clothing 89 322
Entertainment 85 1,250
Subscription services 120 966
Pornography 52 Not available
Music 9 186
Online games 127 1,013
Consumer finance 68 Not available
Consumer insurance 30 1,110
[Source: OECD, Setp 1997]
(8)What’s sells on the Internet?
Forecast of the B-to-C Electronic Markets
(cont.) Items with high brand recognition
hard goods that can be transformed to digitized goods
like the books, music, and video
items with security guarantee given by highly reliable or
known vendors
relatively cheap items
repetitively purchasing items such as grocery commodities with standard specification
items whose operating procedures can be more
effectively demonstrated by a video
packaged items which are well known to customers and
(9)Business Models of Electronic Marketing
Direct Marketing Manufacturersv.s
Indirect Marketing Manufacturers
Full Cybermarketing v.s Partial Cybermarketing Electronic Store v.s Electronic Broker Electronic Mall v.s Electronic Store
Active Strategic Posture v.s
Reactive Strategic Posture
(10)
Proactive
vs.
Reactive Strategic toward
Cybermarketing
Proactive strategic posture toward cybermarketing
a company’s main distribution channel is the Internet, and
internal management such as inventory and operations management is focused to affect the benefit of
cybermarketing
Reactive Strategic posture toward cybermarketing
the traditional physical distribution channel is left as the
company’s main distribution channel even though the company has opened an online distribution channel
Global
vs.
Regional Marketing
Sales
vs.
Customer Services
(11)
Active and Full direct Marketing
Direct Marketing
Dell Computer Corporation Case
Founding Spirit of Dell : Telemarketing Astonishingly High Growth and Returns Revenue via Internet
(12)
Dell’s Critical Success Factors
Direct Marketing
(cont.)
Price competitiveness owing to
mass-customization
Database marketing and customer intimacy Global reach and value added services at a
single contact point
High reliability and reputation Delivery support
(13)
Reactive and Partial Direct Marketing
Direct Marketing
(cont.)
sell their products mainly through traditional channels
like department stores, discount stores, and franchises
Ford Case
including dealers as partners is optimal because orders
that are received directly by the automakers may not be physically fulfilled without the cooperation of dealers
the received orders can then be assigned to the nearest
dealer who owns the desired car in the inventory
the dealer’s inventory information should be shared by
(14) Ford’s reactive direct marketing model (procedure)
Direct Marketing
(cont.)
Reactive and Partial Direct Marketing
Select the brand of car or truck that interests you
Choose the body style you most desire
Select the option package(s) that appeals to you
Add other individual options
to build your most comfortable, useful customized vehiclePick the interior upholstery that suits your tastePick your favorite exterior paint color Then the Online Shopping Service System will provide
you with a “Vehicle Summary”
You can change options to accommodate the budget, and finalize the configuration
Decide whether to lease or buy,
with the aid of Payment Calculator System Search a dealer online by
dealer name, city, or state
Send the “Vehicle Summary” to the dealerThe dealer will contact you
with a price and availability of the vehicle you configuredApply for financing
Ford supports a Pre-owned Showroom in the following way :
Enter your ZIP code Search the inventory
Enter your personal informationSecure your vehicle
(15)Online Customer Service
Provided in conjunction with online sales
Provided to products which are sold offline
Example:
Service and Support homepage of
Hewlett Packard (HP)
By using computer telephone integration (CTI)
technology, the same screen that a customer
sees can be automatically displayed to the
human agent (and vice versa) who responds to
the customer’s call watching the online data
(16)Active Electronic Intermediaries
Pure electronic mall
Company’s retailing business exists only on the Internet
Electronic distributors
take full responsibility of fulfilling orders and collecting payments
Electronic brokers
assist the search process of finding the appropriate
products and their vendors
Partial electronic mall
(17)
Generalized Electronic Brokers
Active Electronic Intermediaries
(cont.)
Examples : Internet Mall, and iMall
Provide a directory, keyword search engine, message
encryption, optional Web site hosting service and a common platform of electronic payments
Necessary factors to make shopping successful
Screening quality and reliability for Assurance
• customers need a reliable screening capability of quality and reliability of brands and companies
• e-brokers should create a trusted third party
Competing Electronic Channels
(18)
Specialized Electronic Distributors
Active Electronic Intermediaries
(cont.)
Cyber Bookstores
Amazon, Barnes and Noble Cyber CD Stores
Columbia House, Music Boulevard, CD Universe,
and CDNow
Digitized Products and Services Stores
Sold software, games, CDs, and videos together
Cyber Flower Stores
(19)Reactive Electronic Department Store
The J.C Penney Case
An Internet-based
revenues amounts to only to 2% of $30.5 billion
total sales of 1997
Catalog 13% Drug Stores 32% Insurance 3% Internet-based 1% Department Stores 51%
Updating prices and adding
new items to the electronic catalogs is convenient and inexpensive
Overcoming the limitations of
paper catalogs without
(20)
Electronic Department Stores Worldwide
Reactive Electronic Department Store
(cont.)
Marks & Spencer in the UK, La Redoute in
France, Jusco in Japan, Nordstrom in the USA, and Lotte and Hyundai in Korea
Common strategy is finding significant benefits
from merchandising online
Offering electronic service on the Internet is a
supplementary channel of advertisement
By 1999, 3% of all US major retailers will sell
(21)Regional Shopping Service
Peapod Case the leading Internet supermarket, providing
consumers with broad product choices and local delivery services
provide pictures, nutritional contents, past purchase
records
users : middle and upper class people, some of who
are single parents, and all of that are very busy
$4.95/month membership fee, and $6.95 service free + 5% of the purchased amount
(22)Procedures for Internet Shopping :
The Consumer’s Perspective
1.
Preliminary requirement determination to
meet the needs
2.
Search for the available items that can
meet the requirements
3.
Compare the candidate items with
multiple perspectives: specification, price,
delivery date, and other terms and
(23)4.
Place an order
5.
Pay the bill
6.
Receive the delivered items and inspect;
possible while using
7.
Contact the vendor to get service and
support, or to return if disappointed
Procedures for Internet Shopping :
(24)Aiding Comparison Shopping
Search on Hypertext Files by Agents
Search on a Web-based Database both for
Human and Agents within an e-Mall
Comparable Item Retrieval and Tabular
Comparison
Comparisons over Multiple Malls
Comparisons as a Multiple Criteria Decision
(25)The Impact of EC on Traditional Retailing System
Disintermediation and Re-intermediation
Disintermediation - the removal of organizations or
business process layers responsible for certain intermediary steps in a given value chain
eliminating the traditional intermediaries, such as
wholesalers, distributors, and retailers, to reduce the price
Re-intermediation - the shifting or transfer of the
intermediary functions, rather than the complete elimination
intermediation such as electronic shopping malls,
(26)
Impact on Manufacture’s Distribution Strategy
The Impact of EC on Traditional Retailing System
(cont.)
Manufacturer’s monopolistic Internet-based
distribution: Levi’s not allow any one else to sell the Levi’s product on the Internet.
Coexistence with the dealers: This is the case in the
car distribution.
Regionally mixed strategy: Nike sells on the Internet,
but only in the U.S.A.
Mass Customization for Make-to-Order:
Manufacturers have to be adoptive to the customized orders of ultimate consumers This means the
(27)Managerial Issues
From a manufacturer’s point of view:
Fully committed to direct marketing,
restructuring the current manufacturing and distribution systems
(28)
From an intermediary’s point of view:
Commit to the directory service
Retailing a specialized breed
of items OR
Managerial Issues
(cont.)
For existing retailer in the physical space:
How to transform its business posture to get the