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Chapter 05 – Electronic Commerce: Strategies for the New Economy

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• This slide provides the definitions for mobile computing and mobile

commerce

• This slide presents Figure 5.13 on page 149

• It illustrates the growth of mobile commerce

Chapter 05 – Electronic Commerce: Strategies for the New Economy

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CLOSING CASES

CLOSING CASE STUDY ONE (p. 151)

WHEN YOU’RE BIG, YOU CAN BE YOUR OWN B2B E-MARKETPLACE

In this first case study your students will explore the use of an e-marketplace in the B2B e-

commerce business environment. But this isn’t an ordinary e-marketplace. It supports only

QUESTIONS

1. Volkswagen operates its own proprietary B2B e-marketplaces in which its suppliers

participate. What are the disadvantages to Volkswagen of not using a generic B2B e-

marketplace with even more suppliers? What are the advantages to Volkswagen of

developing and using its own proprietary B2B e-marketplace?

DISCUSSION

• Potentially, Volkswagen could be missing out on using a new supplier entering into the

2. When Volkswagen needs a new part design, it uses VWsupplygroup.com to get its suppliers

involved in the design process early. This creates a tremendous amount of inter–

organizational collaboration. What are the advantages to the suppliers and to Volkswagen

in doing so?

DISCUSSION

• The suppliers receive the advantages of working closely with one of their biggest buyers.

Chapter 05 – Electronic Commerce: Strategies for the New Economy

3. How is Volkswagen’s VWgroupsupply.com B2B e-marketplace an example of a vertical e-

marketplace implementation? How is it an example of a horizontal e-marketplace

implementation? Why is it necessary that Volkswagen combine both of these e–

marketplaces into one e-marketplace? What would be the drawbacks to creating two

different e-marketplaces – one for suppliers of direct materials and one for suppliers of

MRO material?

DISCUSSION

• Volkswagen’s e-marketplace is a vertical e-marketplace because it is only for it and

4. To make effective purchasing decisions, Volkswagen’s purchasing agents need business

intelligence. What kind of business intelligence does iPAD provide to purchasing agents for

carrying out their tasks? What additional kinds of business intelligence not discussed in this

case could Volkswagen’s purchasing agents take advantage of to make more effective

decisions?

DISCUSSION

• IPAD provides a variety of business intelligence including the need for inventory parts,

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5. IPAD manages the workflow for purchasing agents. Describe how iPAD manages this

process including information provided, steps to be executed, and the presentation of

information.

DISCUSSION

• IPAD manages the workflow process in many ways.

Chapter 05 – Electronic Commerce: Strategies for the New Economy

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CLOSING CASE STUDY TWO (p. 153)

THE MOBILE COMMERCE EXPLOSION

This second closing case study builds on the emerging e-business trend of mobile commerce.

QUESTIONS

1. Take a survey in one of your classes. What percentage of students own smartphones?

Gather some data regarding how they use their smartphones for shopping. Do they use a

smartphone to compare prices? Do they use a smartphone to read product reviews? For

what other shopping-related activities do they use their smartphones?

DISCUSSION

2. How do you think large brick-and-mortar retailers like Best Buy and Walmart can compete

in a world quickly moving to smartphone-enhanced shopping? Do you think smartphone-

enhanced shopping will outrageously transform brick-and-mortar retail, perhaps putting

many retail chains out of business? Why or why not?

DISCUSSION

3. Many retailers are creating proprietary in-store apps for shoppers. Some of these apps help

shoppers find the location of products in the store, while others recommend

complementary products based on product searches. For an in-store app, say for a Best Buy

store, identify and describe three additional features that you believe shoppers would

benefit from and encourage them to make purchases in the store.

DISCUSSION

Chapter 05 – Electronic Commerce: Strategies for the New Economy

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4. Esurance (www.esurance.com) has a slogan that states, “People when you want them,

technology when you don’t.” This speaks very much to the increasing role of technology in

customer service. What do you think about this? Can (and should) technology take over

the primary customer-facing role for an organization, especially a retail store? Will stores

like Nordstrom lose their competitive advantage based on superior customer service?

DISCUSSION

5. What about people who can’t afford a smartphone? Will they disadvantaged while

shopping? When do you think smartphones will become affordable to all, say in the price

range of $40 to $50?

DISCUSSION

Chapter 05 – Electronic Commerce: Strategies for the New Economy

SHORT-ANSWER QUESTIONS (p. 155)

1. What is electronic commerce?

2. How can use you a B2B e-marketplace to reduce your dependency on a particular supplier?

3. How do convenience and specialty items differ in the B2C e-commerce business model?

4. Why do commoditylike and digital items sell well in the B2C e-commerce business model?

5. What is mass customization?

6. How does a reverse auction work?

7. How are vertical and horizontal e-marketplaces different?

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8. What can a marketing mix include for a B2C e-commerce business?

9. What are the major types of B2C e-commerce payment systems?

10. What is the difference between a client-side digital wallet and a server-side digital wallet?

11. How are Secure Sockets Layers (SSLs) and Secure Electronic Transactions (SETs) different?

How are they the same?

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Chapter 05 – Electronic Commerce: Strategies for the New Economy

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ASSIGNMENTS & EXERCISES (p. 155)

1. YOUR STATE AND LOCAL GOVERNMENT E-COMMERCE ACTIVITIES Visit the Web sites for

your state and local governments. Do some looking around and make a list of what

services, information deliveries, and transaction processing they offer that you previously

could handle only by visiting a physical building. How are these different from and similar

to comparable e-government activities now offered by the U.S. federal government?

2. DEALING WITH THE GREAT DIGITAL DIVIDE The great digital divide addresses the concerns

of many people that the world is becoming one marked by the “have’s” and “have not’s”

with respect to technology. That is, the traditional notion of a third world economy is now

being defined by the extent to which a country has access to and uses technology. Find out

what, if anything, the United Nations is doing about this issue and express an opinion on

whether or not you believe its efforts will be successful. Determine if there are

organizations such as private companies or foundations that have the issue high on their

agendas. Do the same thing for any such organizations you find: Evaluate their efforts and

express an opinion on whether or not they will be successful. Finally, search for a lesser

developed country that is making significant local efforts to deal with the digital divide. If

you can’t find one, prepare a list of the countries you reviewed.

DISCUSSION

• This assignment is one that students could easily do on their own.

3. RESEARCHING A BUSINESS TO BUSINESS E-MARKETPLACE Biz2Biz

(www.biz2biz.com/Marketplace/) is a B2B e-marketplace. Connect its site and do some

looking around. What sort of marketing services does it provide through its

Biz2BizCommunication program? What sort of services does it provide for creating and

maintaining an electronic catalog? If you owned a business and wanted to join, what

process would you have to go through? How much does it cost your organization to join

Biz2Biz? What buyer tools does Biz2Biz provide its membership?

Chapter 05 – Electronic Commerce: Strategies for the New Economy

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DISCUSSION

• This is a good project for your students because they will explore the services and costs

4. LONG-TAIL EXAMPLES The Long Tail is all around you, not just in electronic commerce.

Consider the Long Tail graph of students and their participation in class. Some students talk

a great deal and then there are students who say nothing at all. (The latter are in the tail.)

Consider peoples’ first names. Some are very common (the fat part of the tail) and some

are unique (i.e., in the tail) like Moon and Dweezil, both children of Frank Zappa. Think of

three other non-commerce Long Tail examples. For each, build a Long Tail graph.

DISCUSSION

• This is a great break-out in-class project.

5. FINDING THE MOST POPULAR B2C E-COMMERCE SITES Connect to the Web and do some

research to find the most popular B2C e-commerce Web sites in terms of number of hits or

views per month. What are the sites? Which of the sites in some way or another supports

the concept of an e-marketplace where end consumers can gather?

DISCUSSION

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Chapter 05 – Electronic Commerce: Strategies for the New Economy

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DISCUSSION QUESTIONS (p. 156)

1. In what ways can shopping over the Internet be more convenient for consumers? In what

ways can it be less convenient? List at least five products you would have no hesitation in

buying over the Internet, five products you may want to think about a bit before you do it,

and five products you would never consider buying over the Internet. Justify your reasons in

each case.

DISCUSSION

• Internet shopping can be more convenient because

2. In your opinion, according to Porter’s Five Forces Model, has competition increased or

decreased overall as a result of the Internet and e-commerce. Specifically address each of

the five forces in Porter’s model.

DISCUSSION

• Your students should state competition has increased significantly because of the

Chapter 05 – Electronic Commerce: Strategies for the New Economy

3. Under what circumstances would it be appropriate to consider using viral marketing? See if

you can think of an organization with an online presence that could benefit from viral

marketing but is not currently using it. It could be your school, for example, or it could be an

organization you are involved with. How would you suggest the organization go about using

viral marketing in order for it to achieve the desired results? What are some of the other

marketing techniques available for an e-commerce Web site to use? Why is it important to

consider a mix of techniques rather than just relying on a single one?

DISCUSSION

• Viral marketing should be used when a prospective customer would be pleased to

4. Throughout this chapter, we’ve illuminated numerous differences between businesses and

end consumers as customers. Review those differences and then write down what you

believe to be the three most significant ones. For each, record how businesses and end

consumers are different. For the differences that you did not choose as the three most

important, be prepared to justify your decision.

DISCUSSION

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5. In this chapter, we focused much of our discussions on using such technologies as B2B e–

marketplaces to create tighter supply chain managements, thereby driving out costs. If you

refer back to Chapter 2, another major business initiative is that of customer relationship

management (CRM). How can B2C e-commerce businesses utilize the Internet to further

enhance their CRM initiatives? How can B2B e-commerce businesses utilize the Internet to

further enhance their CRM initiatives? Will become easier to harder to maintain

relationships with customers as businesses move toward more “electronic” commerce?

Why or why not?

DISCUSSION

• B2C businesses can use the Internet to create more personalization with their

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Chapter 05 – Electronic Commerce: Strategies for the New Economy

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INDUSTRY & GLOBAL PERSPECTIVES

GLOBAL PERSPECTIVE – Can You Name the Top 20 Web Sites? (p. 136)

• This is always a fun class exercise… you might want to engage your class in naming the top

Web sites before assigning the reading of this chapter.

• Your students will get very few correctly, beyond the obvious ones like Google, Facebook,

and YouTube.

INDUSTRY PERSPECTIVE – The World of Facebook Now Includes a Full Economy (p. 139)

• At the time we wrote this book, Facebook had just announced its use of Facebook credits

• By the time you use this book, Facebook’s economy will be in full swing

INDUSTRY PERSPECTIVE – Google Ups the Ante in the Mobile Payments Market (p. 141)

• Every company wants a piece of the mobile payments market pie

• Why? Because shoppers are becoming increasingly more comfortable with mobile

shopping and/or paying by phone

INDUSTRY PERSPECTIVE – Crowds Create “Value” Through Funding (p. 150)

• If your class has any sort of entrepreneurial focus, you need to cover this industry

perspective

• There are many sites on which you can advertise a business idea and have people fund it

using small amounts of money

Chapter 05 – Electronic Commerce: Strategies for the New Economy

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ADDITIONAL ASSIGNMENTS AND EXERCISES

YOUR PERCEPTION OF PRODUCT AND SERVICE VALUE

Note: Use this in the section on understanding your business, products, services, and customers

Within the Business to Consumer e-commerce model not all consumers are the same. Not only

do they have different tastes and needs, consumers also have different perceptions of product

PRODUCT/SERVICE

CONVENIENCE

SPECIALTY

CUSTOMIZATION

Fiction book

Textbook

Cell phone

Internet access

Job search

Computer

Checking account

Living space (e.g., apartment)

Music

Car stereo

Home stereo

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DEVELOPING A MARKETING MIX STRATEGY FOR MONSTER.COM

Note: Use this in the section on finding customers and establishing relationships

You’ve been hired by Monster.com to create a marketing mix strategy. Your tasks are

many. Complete the table below by filling in the appropriate information. If you feel that it is

not in the best interest of Monster.com to advertise in a certain media, leave that part of the

table blank.

B2B

B2C

TELEVISION ADVERTISING

• What type of TV station(s)

• What type of shows

• What time of day

NEWSPAPER ADVERTISING

• What day of the week

• What section of the newspaper

INTERNET ADVERTISING

• What sites for online ads

• What sites for affiliate programs

• What types of viral marketing

OTHER ADVERTISING

• Anything not listed in the above

three categories

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DEFINING YOUR BUSINESS TO CONSUMER E-COMMERCE BUSINESS

Note: Use this at the end of the chapter

It’s now time for you to gather everything you’ve learned in this chapter and use it to create the

overall strategy for a B2C e-commerce business. As a group, you are to define a B2C e-

commerce business to operate. It can anything from selling tutoring services to music on the

Your B2C e-commerce business

(provide a one paragraph

description)

your competitive space according to

Your customers (provide their

demographics and lifestyles)

Your customer’s perception of value

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