Overview E-Commerce

 Businesses trading with other businesses and

internal processes (Schneider, 2011)
 Electronic commerce refers to the buying and
selling of information, products and services
via computer networks. (Kalakota & Whinston, 1996)
 Using electronic commerce, businesses have
 Created new products and services
 Improved promotion, marketing, and delivery of
existing offerings
 Overview E-Commerce
The incentives for engaging in e-commerce are listed as
follows:
Selection and Value

Performance and Service

Look and Feel

Advertising and Incentives

Personal Attention

Community Relationships

Security and Reliability

E-COMMERCE TECHNOLOGIES
 Internet, intranets, and extranets - network
infrastructure or foundation of e-commerce.
 Customers - secure information, marketing,
transaction, processing, and payment services.
 Trading and business partners - exchange information
and accomplish secure transactions; including
electronic data interchange (EDI), supply chain,
financial systems and databases.
 Company employees - resources to communicate and
collaborate in E-Commerce work activities.
 Information system professionals and end users -
manage the content and operations of the websites
and other E-Commerce resources
E-COMMERCE TECHNOLOGIES
E-Commerce technology basics:
Internet and World Wide Web
Dynamic Content Generation
Web Client/Server Architectures
Advertising on the web
E-mail marketing
Technology-Enabled Customer Relationship Management (CRM)
Branding
Search engine
Domain Names
E-COMMERCE TECHNOLOGIES
Internet and World Wide Web

Internet World Wide Web

 E-COMMERCE TECHNOLOGIES
Dynamic Content Generation

 Dynamic content is non static information constructed in

response to a Web client’s request.
 Can give user an interactive
experience with the web site.
 Dynamic content can be
created using two basic
approach:
 Client-side scripting
– ASP, PHP, JSP, etc.
 Server-side scripting
– CGI, etc.
E-COMMERCE TECHNOLOGIES
Web Client/Server Architectures

Message flows in a two-tier client/server network

 E-COMMERCE TECHNOLOGIES
Advertising on the Web
 Advertising is all about communication.
 Banner Ads
 Small rectangular object on a Web page that display a
stationary or moving graphic and includes hyperlink to the
advertiser’s Web site.
 Versatile advertising vehicles
 Serve both informative and persuasive functions
 Text Ads
 Short promotional message
 Do not use graphic elements
 Placed along the top or right side of a
Web page
 Short text ads for products or services
 Very effective
 E-COMMERCE TECHNOLOGIES
E-Mail Marketing

 E-mail can be powerful element in advertising

strategy
 Send e-mail messages to customer on new
products or sales on existing product
 Combine useful content with an advertising e-
mail message
 Use hyperlink in e-mail messages –
link to the company’s web site
 E-COMMERCE TECHNOLOGIES
Technology-Enabled Customer Relationship Management (CRM)
 Technology-enabled relationship management is
important when promoting and selling on the Web
Distribution
Channels
Promotion & Pricing @
Discounts Service of
offered Product

New Product
Targeting
Features

Measure
Advertising
CRM customer
relationship
 E-COMMERCE TECHNOLOGIES
Branding
 A powerful statement of quality, value and other desirable
characteristics in one recognizable element
 Branded product are easier to advertise and promote

Relevance

Perceived
Differentiation
value

Elements
of a
brand
 E-COMMERCE TECHNOLOGIES
Search Engines

 Help people find things on the Web

 3 major parts:
 Spider/crawler/robot – to search the Web
 Index/database – to check the stored web page

 Search utility – find matching search terms

 Search engine ranking

 Search engine positioning
 E-COMMERCE TECHNOLOGIES
Domain Names

 Obtain the domain names can be important

part of establishing a web presence
 Companies often buy more than one domain
name
 Yahoo.com & Yahow.com
 Buying, selling and leasing domain names
Consumer Behavior

 Consumer behavior is the study of when, why,

how, and where people do or do not buy a product.

 It attempts to understand the buyer decision

making process, both individually and in groups.

 It studies characteristics of individual consumers

such as demographics and behavioral variables in
an attempt to understand people's wants.
(source
from Wikipedia)
Buyer and Seller Roles in e-
Commerce

Make payment

Arrange for Delivery Invoice and bill customer

Inspection, testing & acceptance Receive & process customer payments

Arrange for Delivery

 CONSUMER VALUES IN E-
COMMERCE
Utilitarian Experiential
Consumer Value Categories Value Value

Money saving Entertainment

Time saving Visual

Consumer Value Components

Larger
Escape
selection

Excellence
Interaction
Service

Source: Lee & Overby, 200

 Consumer Values : Utilitarian
Value
 People who believe the most important thing is to
do whatever promotes to the highest amount of
happiness
 Relate to goal-oriented shopping: value is
obtained by acquiring products / services in an
efficient manner
 Positively related to customer preference,
attitude, satisfaction, loyalty, behavioral
intentions and the amount spent by
customers
 Consumer Values : Utilitarian
Value
 Money saving
- Economic value dimension
- Product that are offered at right
prices given the quality derive
value for the consumer
- Value for money
 Excellence service
- Involves quality judgments for
the services being offered
- Quality of product /service
Consumer Values : Utilitarian
Value
 Time saving
- Importance to consumers who are
pressed for time and need to conserve it
 Larger selection
- Wide online selection contribute to
customer satisfaction in e-commerce
 Consumer Values : Experiential
Value
 Refers to the appreciation of an experience :
an effective way to meet customers’ need during
online shopping session and help effectively to
complete their purchase tasks.
 Creating unique and memorable experience in
business as well as personal life when engage
with e-commerce platform
 Consumer Values : Experiential
Value
 Entertainment
- Consumer may browse through many
different sites just for entertainment and fun

 Visual appeal
- The aesthetic and outlook of the sites may
create visual appeal for online shoppers
 Consumer Values : Experiential
Value
 Escapism

- Refers to the online consumer’s out of routine

experience and letting them escape the
every day life and worries

 Interaction
- Refers to the value added and benefits gained
through interaction with the marketer and other
consumers
Influencing Factors of Customer
Behavior
Consumer/
Personal
Factors

E- Merchant &
Commerce Intermediary
Factors
Systems Customer’s
Decision

Product/
Environmental
Services
Factors
Factors

Source: Marek Maurizio, 201

 Influencing Factors of Customer
Behavior
 Environmental Factors
- The environment can influence a buyer decision
- Social variables: influence by friends, internet
communities, social networks opinions
- Community / Cultural variables : difference in behavior
between countries/ regions

 Product / Services Factors

- Pricing, promotions, quality of the products,
customer services
 Influencing Factors of Customer
Behavior
 Merchant & Intermediary Factors
- Online transaction can be affected by the merchant
that handle the product
- Reputation, trust, marketing

 Consumer / Personal Factors

- Demographic factors: age, gender, status, ethnic,
income, education, occupation
- Individual preference, behavior characteristics
- More experience in online shopping = more online
shopping
Influencing Factors of Customer
Behavior
 E-Commerce Systems

- The platform for online transaction: useful, ease of use,

interactive
- Content element: aesthetics, marketing mix
- Security, protection, payment mechanism, etc.
- Consumers are more likely to buy from well designed
e-commerce system
 Sites with large set of functions
 Functions to prevent possible trouble
Factors affecting the online
consumer’s behavior
Web experience
 Online shopping experience or virtual
experience as a crucial e-commerce marketing
issues.
 Online shopping experience as a process of
four stages describing the successive steps of
an online transaction - Tamimi et al. (2003).
 Consider online customer as someone who
has access to information around them.
 Online experience is a more complicated issue
than the physical shopping experience.
Definition of Web Experience
“…..consumer’s total impression about the
online company (Watchfire Whitepaper Series,
2000) resulting from his/her exposure to a
combination of virtual marketing tools “...under
the marketer’s direct control, likely to influence
the buying behavior of the online consumer”
(Constantinides, 2002, p. 60).”
Case study 1: Dieringer Research
Group
 Quality of online experience requiring special attention:
poorly designed and dysfunctional Web sites are a
potential threat not only to the company’s virtual
business but also a hazard for their physical activities.
- Changed opinions towards brand ( due to the bad experiences
during buying online)
- Opinions changed, switched brands at purchase, whether
virtually or physically.
 Customers visiting well designed Web sites like J.
Crew’s and Bloomingdale’s are ten times more likely to
visit the brick-and-mortar stores; visitors of Nieman
Marcus.com are 18 times more likely to visit a Nieman
Marcus physical store.
Web sites to deliver
web experience.
 Sites delivering excellent Web experience are
designed not only offering the customer’s
product needs and expectations but also
assisting the customers through the steps of
the buying process.
 E-commerce infrastructure (O’Keefe and
McEachern, 1998) is also of crucial
importance.
 Web sites must be seen therefore as vital
instruments of customer service and
persuasion rather than simply as online
brochures or catalogues of the company’s
Web experiences elements
Functionality factors
 Factors enhancing the online experience by
presenting the virtual client with an good
functioning, easy to explore, fast, interactive Web
site.
 Functionality includes “Usability” and “Interactivity”
elements.
 Slow, dysfunctional Web pages and poor
interactivity prompt most online customers to look
for alternatives, since time saving and shopping
convenience are important motives to do business
online for the majority of Internet users.
Sources: Efthymios Constantinides (2004)
Sources: Efthymios Constantinides (2004)
Psychological factors
 Web sites must communicate integrity and
credibility in order to persuade customers to
stop, explore them and interact online.
 Psychological factors are those playing a
crucial role in helping online customers
unfamiliar with the vendor or unfamiliar with
online transactions to overcome fears of fraud
and doubts as to the trustworthiness of the
Web site and vendor.
Sources: Efthymios Constantinides (2004)
Content factors
 Referring to creative and marketing mix related
elements of the Web site. These factors exercise
a direct and crucial influence on the Web
experience. There are two elements:
 Aesthetics embrace the artistic and creative
elements of the online presentation, aiming at a
pleasing appearance or effect (Merriam-
Webster’s Online Dictionary, n.d.).
 These elements communicate the Web site’s
atmosphere, something important for attracting online
customers by inducing positive and powerful motives
for visitors to stop, explore and possibly interact with
the site.
 Marketing mix’s 4Ps – including fulfillment – are
essential contributors to the Web experience
Sources: Efthymios Constantinides (2004)
Sources: Efthymios Constantinides (2004)
 Web Marketing Strategies

• Marketing mix
– Element combination to achieve goals
•Selling and promoting products and services
• Marketing strategy
– Marketing mix with elements defined
• Four Ps of marketing
– Product
•Physical item or service sold
•Brand: customers’ product perception
 Web Marketing Strategies (cont’d.)

• Four Ps of marketing (cont’d.)

– Price
•Amount customer pays for product
•Customer value: customer benefits minus total cost
– Promotion
•Any means to spread word about product
– Place (distribution)
•Need to have products or services available in many
different locations
•Getting right products to the right places at the best time
to sell them
Electronic Commerce, Ninth Edition 47
 Product-Based Marketing Strategies

• Web presence must integrate with image and brand

• Managers often think in terms of physical objects
– Useful Web site design when customers use product
categories
•Web site examples: Home Depot, Staples, Sears
– Not a useful Web site design when customers look to
fulfill a specific need
• Advice: design Web site to meet individual customer
needs
– Offer alternative shopping paths

Electronic Commerce, Ninth Edition 48

 Customer-Based Marketing Strategies

• Web sites to meet various types of customers’

specific needs
– First step: identify customer groups sharing common
characteristics
– Second step: identify subgroups
•Example: Sabre Holdings
• Strategy pioneered on B2B sites
• B2C sites now adding customer-based marketing
elements
– Example: university Web sites

Electronic Commerce, Ninth Edition 49

 FIGURE 4-1 Sabre home page

Electronic Commerce, Ninth Edition 50

 Communicating with Different
Market Segments
• Communications media selection to carry message
– Physical world
•Uses building construction and floor space design
– Online firm
•Communications media selection: critical
•No physical presence
•Customer contact made through image projected
through media and Web site
– Online firm challenge
•Obtain customer trust with no physical presence

Electronic Commerce, Ninth Edition 51

 Market Segmentation

• Divides potential customer pool into segments

– Defined in demographic characteristics terms
• Micromarketing
– Practice of targeting very small market segments
– Hampered by cost increases
• Three categories to identify market segments
– Geographic segmentation
– Demographic segmentation
– Psychographic segmentation
• Television advertisers use all three categories
Electronic Commerce, Ninth Edition 52
 FIGURE 4-3 Television advertising messages tailored to program audience

• Companies try to:

– Match advertising messages to market segments
– Build sales environment for a product or service
•Corresponds to market segment trying to reach

Electronic Commerce, Ninth Edition 53

 Market Segmentation on the Web

• Web opportunity
– Present different store environments online
•Juicy Couture site targets young, fashion-conscious
buyers
•Talbots site targets older, more established buyers
• Limitations of physical retail stores
– Floor and display space
– Must convey one particular message
• Web stores
– Separate virtual spaces for different market segments
Electronic Commerce, Ninth Edition 54
 Segmentation Using Customer
Behavior
• Same person
– Needs different combinations of products and
services
•Depending on the occasion
• Behavioral segmentation
– Creation of separate customer experiences based on
their behavior
– Occasion segmentation
•Behavioral segmentation based on things happening at
a specific time or occasion

Electronic Commerce, Ninth Edition 55

 Segmentation Using Customer
Behavior (cont’d.)
• Online world single Web site design
– Easier to meet needs of different behavioral modes
– Can include elements appealing to different
behavioral segments
• Usage-based market segmentation
– Customizing visitor experiences to match the site
usage behavior patterns of each visitor or type of
visitor
• Categories of common patterns of online behavior
– Browsers, buyers, and shoppers

Electronic Commerce, Ninth Edition 56

 Segmentation Using Customer
Behavior (cont’d.)
• Browsers
– Visitors just surfing or browsing
– Web site: must offer something to pique visitors’
interest
– Trigger words
•Prompt visitor to stay and investigate products or
services
• Have links to site explanations, instructions
• Include extra content related to product, service
– Leads to favorable impression (bookmark)

Electronic Commerce, Ninth Edition 57

 Segmentation Using Customer
Behavior (cont’d.)
• Buyers
– Ready to make a purchase right away
– Offer direct route into purchase transaction
• Shopping cart
– Part of the Web site
•Keeps track of selected items for purchase
•Automates purchasing process
– Page offers link back into shopping area
• Primary goal: get buyer to shopping cart as quickly
as possible
Electronic Commerce, Ninth Edition 58
 Segmentation Using Customer
Behavior (cont’d.)
• Shoppers
– Motivated to buy
– Looking for more information before purchase
• Offer comparison tools, product reviews, and
features lists
• People do not retain behavioral categories from one
visit to the next
– Even for the same Web site

Electronic Commerce, Ninth Edition 59

 Segmentation Using Customer
Behavior (cont’d.)
• Alternative models
– McKinsey & Company’s six behavior-based
categories
•Simplifiers (convenience)
•Surfers (find information, explore new ideas, shop)
•Bargainers (search for good deal)
•Connectors (stay in touch with other people)
•Routiners (return to same sites over and over)
•Sportsters (spend time on sports, entertainment sites)
• Must identify groups and formulate ways of
generating revenue

Electronic Commerce, Ninth Edition 60

Scenario: comparison of Zalora
and The PopLook
 Shopping Zalora The PopLook
experience
Usability Yes, but too crowded Yes, simple and easy to
with information use.

Payment Yes, they provide Yes, they provide

convenience payment convenience payment
method method

Service & Delivery Very poor Good

Useful Too many product Displayed clearly if the

displayed but most of product is not available.
them are sold out and
need to restock.
Testimonial Most customers feel Most customer satisfied
disappointed with the with service and delivery
service and delivery provided.
provided.
Advantages of E-Commerce

Speed Cost Savings

Advantages

No Ease of
Boundaries Networking
 ADVANTAGES OF E-COMMERCE
Advantages to Customer

 Reduced Prices
 Global Marketplace
 24-Hour Access
 More Choices
 Quicker Delivery
 Faster feedback
 ADVANTAGES OF E-COMMERCE
Advantages to Businesses

 Increased Potential Market Share

 Low-cost Advertising
 Low Barriers to Entries
 Strategic Benefit
Disadvantages of E-commerce
 Hidden Costs
 Network Unreliability
 The Cost of Staying in Business
 Lack of Security
 Lack of Privacy
 Low Service Levels
 Legal Issues
ISSUES IN IMPLEMENTING
E- COMMERCE
 Cost
 Value
 Security
 Leveraging existing systems
 Interoperability