3E.

004U
System Analysis
33 Copy Right : Rai University
Introduction:
Do you know the meaning of e-business?
Simple. It describes the use of electronics means
and platforms to conduct a companys business
In the preceding chapters we had stated that
though marketing on the web is one form of di-
rect marketing, we would handle it in an exclu-
sive lesson in view of its unique characteristics
and in the interest of comprehensiveness of cov-
erage.
This lesson deals with the various components of
e-commerce i.e.B2C, B2B, G2C, G2B, B2G and
C2G. We already know the components of B2B
and B2C, which involve marketing on the web.
They correspond to business buyers and the ulti-
mate customers.
The recent additions to these components are
government to consumers, government to busi-
ness, business to government, and consumers to
government.
You all might be aware of the David Vs. Goliath
story, where the giant Goliath is feared across
as he is mighty and anyone dare challenging him,
gets killed in the process and the Goliath started
misusing his strengths.
People started fearing Goliath, there was a small
kid David, who was quite small, less strong at
physique, but strong mentally, wanted to fight with
Goliath, inspite of warnings from his friends and
well wishers, he had a fight with Goliath, and at
the end he was successful in killing the Goliath.
This task he could achieve using his mind and not
his physique, as he knew that if he uses his phy-
sique, he can never fight Goliath, so to defeat
Goliath, he need to use another strategy or strength
which will help him achieve his Goal, which was
the secret of his success.
Pure-click versus brick-and-click
companies
We can distinguish between pure-click compa-
nies, those that launched a Web site with out any
previous existence as a firm, and brick-and-click
companies, existing companies that added an
online site for information and/or e-commerce.
PURE-CLICK COMPANIES There are several
kinds of pure-click companies: Search engines,
Internet Service Providers (ISPs), commerce
sites, transaction sites, content sites, and enabler
sites.
Search engines and portals such as Yahoo! And
Alta Vista started as search engines and later
added services such as news, weather, stock re-
ports, entertainments, and store fronts hoping to
become the users point of entry on the Internet.
ISPs such as AOL and CompuServe provide
Internet and e-mail connections for a fee. Com-
merce sites sell books, music, toys, insurance,
stocks, clothes, financial services, and so on.
Among the most prominent ones are Amazon,
rediff.com and bazee.com. Transaction sites such
as auctions and brokerages like fabmart.com and
others take a commission for transactions con-
ducted on their sites. Content sites such as The
Street, New York Times, and Encyclopedia
Britannica provides financial, research, and other
information. Enabler sites provide the hardware
and software that enable Internet communica-
tion and commerce.
These sites compete using various strategies:
automartindia, a leading website for car buying
and related services; travelmartindia, the infor-
mation leader in travel needs.
Pure-click Web businesses reached astronomi-
cal capitalization levels in the late 1990, in some
cases for exceeding the capitalization of major
Unit - 1
Examining Concepts of Marketing Management
Chapter 2 - E - marketing
Lesson 6 - Components of E-commerce (B2B, B2C)
34 3E.004U
System Analysis
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companies such as United Airlines or Pepsi-Cola.
They were considered a major threat to tradi-
tional businesses until the investing frenzy col-
lapsed in 2000.
Dot-coms failed for a variety of reasons: Many
rushed into the market without proper research
or planning. They had poorly designed Web sites
with problems of complexity, poor navigation, and
downtime. They lacked adequate infrastructures
for shipping on time and for answering customer
inquiries. They believed that the first company
entering a category would win category leader-
ship. These companies wanted to exploit network
economies, namely the fact that the value of a
network to each of its members is proportional to
the number of other users (Metacalfes Law).
Some just rushed into the market in the hope of
launching an initial public offering (IPO) while
the market was hot.
To acquire customers, dot-coms spent large
amounts on mass marketing and offline advertis-
ing. They relied on spin and buzz instead of using
target marketing and word-of-mouth marketing,
and they devoted too much effort to acquiring
customers instead of building loyal and more fre-
quent users among their current customers. They
did not understand customer behavior when it
came to online surfing and purchasing.
Many dot-coms did not build a sound business
model that would deliver eventual profits. The
ease of entry of competitors and the ease of cus-
tomers switching Web sites in search of batter
prices forced dot-coms to accept margin-killing
low prices. Webvan, the online grocer, illustrates
how dot-coms failed to understand their market-
place.
At the same time, many pure-click dot-coms are
surviving and even prospering. Others are show-
ing losses today, but their business plans are fun-
damentally good.
BRICK AND CLICK COMPANIES
many incumbent companies moved quickly to
open web sites describing their business but re-
sisted adding e-commerce to their sites. They
felt that selling their product or services online
would produces channel conflict they would
be competing with their offline retailers and
agents, for example, Compaq feared that its re-
tailers would droop its line of computers If
Compaq off red to sell the same computer di-
rectly online. Merrill lynch hesitated to introduce
online stock trading to compete with ETTrade,
Schwab, and other online brokerages fearing that
its own brokers would rebel. Even the store
based bookseller Barnes & Noble delayed open-
ing an online site to challenge Amazon.
These companies struggled with the question of
how to conduct online sales with out cannibaliz-
ing their own stores, resellers, or agents. Here
are examples of how some companies resolved
this conflict.
Although brick and- slick firms face channel con-
flict issues, they probably will have more online
success than their pure click competitors. First,
companies such as Compaq, Merrill Lynch, and
Barnes & noble have better known brand names;
their cost of acquiring a new customer is $12
compared to the $82 that pure click e-tailers spend
to acquire a new customer.
8
second, they have
greater financial resources and access to funds.
Third, they have deeper industrial knowledge and
experience, good relationships with key suppli-
ers, and a large customer base. Fourth, they can
now be reached 24 hours a day, 7 days a week
and merchandise can be returned to their 9 to 5
stores. And fifth, the Internet allows them to reach
and serve additional customers who may be for
away from their store locations. Gap illustrates
the advantages of a brick-and-click operation over
a pure-click operation.
E-business
Do you know the meaning of e-business?
Simple. It describes the use of electronics means
and platforms to conduct a companys business.
The advent of the Internet has greatly increased
the ability of companies to conduct their business
faster, more accurately, over a wider range of
time and space, at reduced cost, and with the
ability to customize and personalize customer of-
ferings. Countless companies have set up Web
sites to inform and promote their products and
services. They have created Intranets to facili-
tate employees communicating with one another
and to facilitate downloading and uploading in-
formation to and from the companys comput-
ers. Companies have also set up Extranets with
3E.004U
System Analysis
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major suppliers and distributors to facilitate in-
formation exchange, orders, transactions, and
payments. Bill Gates of Microsoft climes that
Microsoft is almost entirely run electronically;
there is hardly any paper flowing through the
company because everything is one the computer
screen.
E-commerce
What is e Commerce then?
It is more specific than e-business; it means that
in addition to providing information to visitors about
the company, its history, policies, products, and
job opportunities, the company or site offers to
transact or facilitate the selling of products and
services online.
E-commerce has given rise in turn of e purchas-
ing and e-marketing.
E-Purchasing means companies decide to pur-
chase goods, services, and information from
various online suppliers.
Smart e purchasing has already saved compa-
nies millions of dollars
E marketing describes company efforts to in-
form, communicate, promote, and sell its prod-
ucts and services over the Internet.
The e term is also used in terms such as e-fi-
nance, e-learning , and e-service. But as some-
one observed, the e will eventually be dropped
when most business practice is online.
E-business and e-commerce take place over four
major Internet domains: B2C (business to con-
sumer), B2B (business to business), C2C (con-
sumers to Consumers), and C2B (consumers to
business. (We will omit government relations like
G2C, G2B, B2G and C2G).
Internet domains:
As discussed in the beginning of the lesson,
internet has unleashed a number of domains of
e- business/commerce. We begin by discussing
the business to consumer domain.
Activity
For instructor: Please hold a 10-minute discus-
sion on the following question.
Which is more important for developing an e-pres-
ence: the agility of a pure click company, or the
well defined and readily identifiable resources of
atraditional brick and mortar company?
B2C (business to consumer)
The popular press has paid the most attention to
consumer Web sites. In 2000, more than 106 mil-
lion Americans went online, with 80 percent look-
ing for information, 73 percent researching a prod-
uct or service before buying it, 68 percent look-
ing for travel information, and 65 percent looking
for information on movies, books and leisure ac-
tivities.
The most frequent online consumer purchases
(in terms of the percentage of online buyers say-
ing they have purchased in the category) have
been books (58%), music (50%), software (44$),
air tickets (29%), PC peripherals (28%), clothing
(26%), views (24%), hotel reservations (20%),
toys (20%), flowers (17%), and consumer elec-
tronics (12%). The Internet is most useful for
products and services when the shopper seeks
greater ordering convenience (e.g., automobiles
or computers). Individuals are also using the
Internet to search for others to meet or date on
such sites as bharatmatrimony.com, shaadi.com,
Companies must set up and operate their e-com-
merce Web sites carefully, as the Marketing
Memo: Succeeding with Electronic Commerce
shows.
Internet domains: B2B (Business to
business)
Although the popular press has given the most
attention to business-to-consumer (B2C) web
sites, even more activity is being conducted on
business-to-business (B2B) sites. The B2B sites
are changing the supplier-customer relationship
in profound ways. Forrester and Gartner, major
research firms on online commerce, estimate that
B2B commerce is 10 to 15 times greater than
B2C commerce. Gartner estimates that by 2005,
more than 500,000 enterprises will participate in
e-markets as buyers, sellers, or both. These firms
are using B2B auction sites, spot exchanges, online
product catalogues, barter sites, and other online
resources to obtain better prices. Many major
enterprises, including Chevron, Ford Motor Com-
pany, GE, and Merck, have invested millions in
36 3E.004U
System Analysis
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Web procurement systems. The result: Invoices
that used to cost $ 100 to process now cost as
little as $ 20.
Activity:
Has e marketing changed the attitude of the cus-
tomer-discuss this with appropriate examples
B2G - Business to Government
Internet commerce
This term refers to the use of the Internet by
Government to reach its citizens for a variety of
information dissemination purposes and transac-
tions. For example, the Australian Taxation Of-
fice allows taxpayers to download forms, submit
electronic tax returns, submit Business Activity
Statements (BAS), ask questions and receive in-
formation on a variety of tax matters. As another
example, the WA Government Electronic Mar-
ketplace (GEM) uses the internet to provide a
comprehensive government buying service. These
GEM services cover the full range of govern-
ment buying including purchasing of low value
commodities and public tendering for high value
goods and services.
Activity:
1. Discuss in brief the Boom and the fall of the
Dot Com era.
Points to ponder