Entrepreneurship on the Internet

Why set up an enterprise on the Internet Learning objectives why Internet business is worth for your enterprise the benefits an e-shop can offer to your enterprise the benefits your e-shop can offer to your customers

Benefits for the enterprise Constant promotion and operation of your enterprise Promotion of your products through an interactive communication medium Multimedia capabilities, interactivity, lower costs Less supply chain rings "intermediaries" can be eliminated, faster and cheaper customer service Reduced costs Information transfer cost Product catalogue issuing cost Customer preservation/acquisition cost Production and distribution cost

Benefits for the customers Immediate customer satisfaction For certain products (music, video, software, articles etc.) technology enables their direct (online) delivery. Wider product range for your customers in more competitive prices Increased competition results in either better quality or lower prices. 24-hour customer support Customized services based on EACH customer's needs customers' purchasing profile are monitored and recorded

Goals, strategies and success possibilities Issues to consider: How will the Internet change my enterprise? How will I discover new opportunities? How will I utilize this new communication medium for my customer and associate relationships? How will I create loyal online customers, given that Internet competition is only "a click away"? How will my Internet business change the product or services I offer to my customers? Will there be any negative consequences for my enterprise from its Internet business? How will I measure the success of my Internet presence?

Setting goals (1) Financial goals profit increase return-on-investment Product goals sales increase pre-sales and after-sales services Promotion and communication goals more intense advertising of your company to your audience higher frequency of communication with your audience higher quality of the relationships you want to develop with your audience establishment of relationships with associates, suppliers, banks etc.

Setting goals (2) Distribution channel goals geographical coverage you want to achieve through your e-shop information to distribution channels (stock control, prices, discounts, other product-related issues) Market research goals market size and trends, information on competition etc. Other goals such as revenues you want to generate through third-party advertisements on your website, sponsor attraction, subscriber attraction etc. or alliances you want to establish with other websites

Strategic options for your Internet business General strategic options. These strategies refer to how your company will utilize the Internet. Use of the Internet only for advertising purposes Product selling through the Internet as well, by KEEPING any "regular" shop or office you may have. Product selling ONLY through the Internet those who sell services or resell products not manufactured by themselves

Positioning the company Competition strategies and partnership strategies. These strategies refer to how you will position your company (on the Internet) against competition. Partnership strategies: Joint venture. In this case, partner companies set up a third business entity by maintaining, of course, their initial business activities Value-chain partnership. This is an agreement between a company and a supplier or distributor more specific strategies that you can follow in order to differentiate from competition, irrespective of your choices in the two cases above.

More specific strategies Global / local sales. If your company's strength (financial condition, name, sales network, product) allows sales in the global market, go ahead! If not, stay within the familiar "territory" of your country. Member-only sales. This scenario involves transactions between businesses (business to business - B2B). Intermediary sales. Your Internet business can bring sellers and buyers of one or several items close to each other. Collection of products/services. In this case you "collect" products and services that used to be "dispersed". Specialization in a single product, service, consumer type or geographical reason.

Criteria for success establishment of "one-to-one" relationships with your customers establishment of your reliability establishment of transaction security creation of attractive and updated content on your website diffusion of your Internet presence product delivery speed

Strategic Development of a Marketing Plan

Marketing Learning objective: know how to prepare a simple marketing plan for your enterprise. Definition: Marketing is a series of a company's actions and activities to record consumer desires, create the products and services that will cover these needs and sell them more effectively and more efficiently than its competitors, offering the consumer the highest possible value.

Marketing plan A marketing plan has three parts Assess the current level of the enterprise. Define where do you want to lead your enterprise to – in other words, set TARGETS. Decide HOW to implement the goals

Current situation examines the market, the products, the competition and the macro-economic environment.

Market size of the market and its growth rate during the last five years. Market information on any different geographical locations in which the company is active. Information on consumer preferences. Product Sales and sales growth rate in the last five years. Sales information on any different geographical locations in which the company is active. Information on consumer opinion as regards the company's products. Competitors Their number & market share. Their goals and strategies. The quality of their products and services. Consumer views on each one of them. Distribution channels Assess the existence and importance of each channel through which products are delivered to consumers. macro-economic environment Economic trends. Technology. The social and legal framework.

Set goals Financial goals: Return on investment Sales Profits Marketing goals: Advertising policy Market share Other goals

Implementation (1) Identify target audience: The process of "classifying" consumers in various groups is called market segmentation, while the selection of specific groups is called targeting. Segmentation can be based on geographical location of consumers, their demographical data (age, income, education, profession), their life style and personality, or the method and situations in which they use the products

Implementation (2) Products’ placement it refers to the consumer's perception of our product vis-à-vis competitive products. Product and service offering Here the entrepreneur has to decide which type of products and services they will offer. Set prices (uniqueness, manufacturing and distribution cost, the existence of any substitute products, the company's name in the market, the consumer's perception of the product, seasonality of the product, etc)

Implementation (3) Distribution Channels How to cover the market. What the profit margin for each distribution channel will be Advertising Advertising as a tool allows for a fast and extensive presentation of the company's message, as well as its "live" promotion through image, sound and motion. Direct marketing the sales force, Telemarketing (contacting consumers through the phone), the Internet (channels and ), letters and product catalogues, information kiosks.

Implementation (4) The sales force build personal relationships with customers and their main concern is to record customer needs and find solutions to their problems Finding and creating new customers Formal visits to existing customers Sales promotion Discounts, gifts, more product quantity for the same money, samples, free tryouts and competition prizes

Marketing plan implementation schedule ActionResponsible entityExecution timeCost Advertising in X, Y, Z trade publications Advertising company1/04/ /07/2007 5,00 0€ s to old customers Marketing department On the 1st and 15th of each month from April to Reconstruction of corporate website Marketing department, Internet consulting company Ready on 15/03/2007 2,00 0€ etc.

Promotion through Internet

Internet advertising  Advertising is an attempt to disseminate information in order to affect a buyer-seller transaction  Benefits of web advertising: It places the right message to the right person at the right time It presents the message in a better way It reduces the cost of renewing and re- displaying messages The number of message recipients can be recorded

Web marketing  web marketing: marketing that allows a consumer to interact with an online seller  Two-way communication and capabilities  Vendors also can target specific groups and individuals  Enables truly one-to-one advertising

Web marketing models Brand-building or direct response stimulation advertising on highly visited websites by advertising on major but more specialized websites and offering gifts that would stimulate the direct response you desire Address the masses or smaller groups Passive and active approach

Internet Advertising Terminology  Ad views: number of times users call up a page that has a banner on it during a specific time period; known as impressions  Button: a small banner that is linked to a Web site  Page: HTML document  Click: a count made each time a visitor clicks on an advertising banner to access the advertiser ‘s Web site (ad clicks and click throughs)  Hit: request for data from a Web page or file  Visit: a series of requests during one navigation of a Web a site; a pause of request for a certain length of time ends a visit

Main promotion methods (1) Banners: small graphic icons (usually 2Χ6 cm or 468Χ60 pixels), linked to the advertiser's website show advertisements, collect demographical data and interact with the visitor. consider their size: it should not exceed 10Kb. main aim: have it clicked by as many Internet users as possible Button banners (electronic buttons with a small message) Click-through banners refers to internal pages of your website, other than the home page

Main promotion methods (2) Rich media ads An alternative form of "enriched advertising", emerged as a solution to user bombardment with banners Rich media ads can be audio, video, animation or even games Higher bandwidth is required to play them They have higher cost compared to simple banners, since they require graphics, design and programming work. Check out for more:

Promotion sites Mass gathering sites ISP homepages Online directories & search engines The most popular mass-advertising sites Content sites such as newspapers & magazines, Portals and thematic websites

Measuring the effectiveness of web advertising Website popularity measurement Hits: The total number of files requested from a web server Requests or Page Views:Requests refer to the total number of HTML files displayed to users Impressions: shows how many times a banner was displayed Visits or sessions: The times the same user visited a site within the same day but at different times Average requests per visit: shows how many pages were viewed (requested) by the average visitor during each visit.

Website popularity measures Request duration: The time spent by the visitor on each page before requesting another page of the same site. Visit duration: the sum of each user's request durations Entry pages: These are the pages loaded first by a site's visitors Exit pages: The last pages viewed by users before leaving the site. Referrals: These are the keywords used by users of a search engine which finally led them to the site.

Campaign effectiveness Advertising agencies can check the effectiveness of a campaign and record the following: the number of impressions of several ads on the sites used for their advertising campaign (which ad brings the highest number of clicks to the advertiser's site) the click throughs on each ad the times and days of the week when ads are mostly clicked on the movements of a particular user after he/she entered the advertiser's site (pages visited, purchases per product, forms filled in etc.) from each ad run in the campaign.

Resources The best-known popularity analysis services are: WebTrends ( IBM's SurfAid Analytics ( andhttp://surfaid.dfw.ibm.com HitBox Enterprise (

The website development process

Why build an e-shop Make yourselves known and expand to new markets Reduce marketing, information and product trading costs Inform your customers and associates on new products, changed prices etc. faster Upgrade your services to customers and associates (e.g. with the use of an order tracking system) Create an additional distribution channel (in the case of products distributed through the Internet) "Sell" advertising space to third parties

Development process Step one: give a name to the e-shop Step two: develop the content Step three: formalize the character of the e-shop Step four: make it easy to navigate Step five: apply mass customization

Domain name Step one: find your name in web There are certain suffixes indicating several categories of sites (commercial, education, government, military etc.) and countries (e.g. for Serbia.yu) The most typical name takes the form When planning to expand to several countries, register your corporate name in all of them

Step two: the content of the e-shop Focus on electronic catalogue present products propose supplementary products (this is called cross-selling). propose upgraded products or other products bought by customers with the same purchasing habits and the same profile (this is called up-selling) are linked with the payment process, the accounting system, the warehouse, the company's supplier extranet

Design of e-catalogues (1) Navigation On the buttons use clear terms: "Place your Order" instead of "Select", "Change Details" instead of "Change", "Cancel Form" instead of "Cancel" Build a search engine and a site map Navigation bars should contain symbols for: your homepage the main page of your departments or product groups contact information (include ALL the ways a customer can use to contact your company: telephone and fax numbers, ) your offers, the order form the exit to the cashier

Design of e-catalogues (2) Make your catalogue fast Do not load your pages with graphics. Use a reduced-size version of images and let the visitors decide whether they want to view the full- size image Give a physical existence to your e-shop your company's history and short CVs of your main executives. your company's financial information information on your partnerships with banks and other financial organizations (MasterCard, Visa, Diners etc.), as well as with transaction security organizations

Design of e-catalogues (3) Structure the order form carefully: explain how your ordering, payment and delivery system works. Give an estimate on product delivery time Clearly and thoroughly explain how the customer is charged. Itemize the charge (money the customer will pay for the product, its delivery and tax). Stress and explain your refunds policy. Explain the transaction security system In addition to credit card payment, provide your customers with the option of other payment methods, e.g. cash-on-delivery

Step three: build the e-shop character Character should be based on the personality of your targeted audience. Tools for building the character: The text (styles, fonts, colors) the page colors technologies such as java, real audio and streaming video the graphics, images and pictures

Step four: make it easy to navigate Homepage menu and sub-page menu (make several sections visible) Site map Search engine dedicated to your e-shop Navigation bars Word links

Step five: apply mass customization Customized services according to the customers’ profiles Loyal customers give demographics and information on their consuming habits easier. provide customized pages that will attract more visitors from your targeted audience Provide customers with usernames and passwords – provide them customized e- catalogues

While designing pay attention Poor page resolution take into account the settings of the users’ computer (the average 800 Χ 600 resolution is always the best) "Heavy“ and cobweb pages Incompatible pages Dead links Boring pages Not too much text, find the right balance between text and graphics

Last but not least Test for usability Usability refers to the quality of interaction between the user and –in this case- the e- shop Focus on interface design and users’ needs Test early and often Identify usability problems and redesign Heuristic test (experts) or user tests

Evaluating your business progress on the Internet

Learning objectives how to evaluate the progress of your business on Internet based on the goals you have set and measured how to evaluate the progress of your business on the Internet based on a comparison with your competitors

Goal-based evaluation Goal based evaluation is the best evaluation method, as long as the goals set are measurable, realistic and understandable by those who will work towards achieving them Financial goals Product-related goals Marketing goals

Financial goals Profits. As profit you must calculate the profit generated by your Internet activity Return on invested capital. As return on invested capital you will take the ratio of profit to invested capital expressed as a percentage. Investments’ costs cover issues such as hardware, software, telecommunications services, personnel hiring, permanent personnel, business consultants Other expenses such as subscription to e-business service providers (e-marketplaces, etc.) Check out also the other costs that can be eliminated due to the internet activities

Product-related goals (1) Sales measure and evaluate the sales generated by your e-shop and calculate the profit it generates check out which sales have been completed in the regular shop but started from a visit in the e-shop. attribute the merit to the Internet, but also to know how visitors use your e-shop

Product-related goals (2) Services you provide before and after sales Before sale service (e.g. read excerpts from the contents of several books and listen to parts of CDs) contributes to the making of the sale, while after sale service (e.g. newsletter informing about new products of interest to each customer) contributes to building a faithful customer base Measure the results – sales Ask customers, use online surveys, s etc.

Product-related goals (3) Innovations radical changes to existing products or entirely new products. contribute to differentiating yourself Customers can be the best source of ideas and proposals for innovations. Use online surveys, s etc.

Marketing goals (1) Measurement criteria for Promotion, advertising and communication goals Number of persons that have seen the name of your e-shop which advertising actions manage to make the name of your e-shop known and to what extent in combination with the cost of each activity (e.g. placing a banner for 1 month on website X), you could choose the activities you wish to continue and those you wish to stop.

Marketing goals (2) Number of persons that have visited your e-shop how many people directly entered (by typing your address in the address line of their browser) and how many use a link leading to your e-shop. how many of those who know about your e- shop have bothered to visit it where they visited you from (which websites, and even countries) –

Marketing goals (3) Frequency of visits to your e-shop shows you the potential customers Problem: this measure recognizes the computers that have been connected to your website. They are unable, however, to recognize if a given computer is used by one or more users Overcoming the problem: Create a space for members only (i.e. a newsletter) or offer discounts to members only

Marketing goals (4) Duration of stay in your e-shop provides a strong indication of how interesting your shop is to visitors and how easy and fast it is to navigate it. Number of products browsed by your e- shop visitors shows how interesting your shop is to visitors, but also what are the interests of EACH individual visitor. Interface design implications

Marketing goals (5) Number of order process interruptions and the stages in which such interruptions took place Poor design, personal information request, unavailability of other forms of payment Number of visitors who communicate by and number of subscribers to your e-newsletter This count indicates the percentage of your potential or faithful customers.

Competition-based evaluation (1) A competitor is another company that addresses the same needs catered by the products and services of your company at roughly the same prices Competitors can give you an indication of where you stand with regard to the rest of the market. Identify and compare against your real competitors Do not compare the results of your e-shop with those of a competitor’s e-shop with a longer presence in the market, better known to the public and with better infrastructure

Competition-based evaluation (2) Adopt the strong points of your competitors, BUT try to create your own unique products, services and image Practical methods Regularly visit your competitors' websites Join discussion groups Ask the visitors for the strong and weak points of your internet presence

Expanding your activities

Internationalizing your website Internationalization broadens the horizons and customer base of your business and allows you to find cheaper resources (machinery, money, raw materials, products) It is not just translating the content of your website in some languages. Internationalization aims to approach and build relations with customers, vendors, and partners.

Main steps The steps towards internationalizing e-shops are: Strategy selection Implementation Management

Strategy selection Select the target groups you wish to approach along the following criteria: buying customs competitive products - quality of such products quantities they buy ways in which they pay distribution networks culture - lifestyle Proceed to a pilot application Select the name(s) for your website(s) Build one website or one website for each country For SMEs there is always the “umbrella website” solution ( with multilingual content.

Implementation Translate Check whether your offer applies to everyone along the following criteria: Final price, which is affected by transportation expenses, possible taxes Order methods Packaging. See whether some countries require that certain products be transported in specific packaging, Minimum order Delivery times - consider any delays at customs houses and due to local transport Localize the content: strengthen the local character of your website, (local news and events regarding the product)

Management Central or local management? Coordination general guidelines from headquarters let people (employees, partners, representatives) abroad to add local character Information updating

Training activities Prompt the trainees find local “internationalized” sites and evaluate them. Check out the following resources: Alvarez, M. G., Kasday, L. & Todd, S. (1998). How we made the Web site international and accessible: A case study. Conference Proceedings. Available: ings/alvarez/ Marcus, A., & Gould, E.W. (2000). Cultural dimensions and global web user-interface design. Interactions, July/August, Shannon, P. (2000). Including language in your global strategy for B2B e-commerce. World Trade, 13(9),

Participation in Β2Β e- marketplaces

B2B marketplaces Β 2 Β Marketplaces are “electronic meeting points” for sellers and buyers you can search for products in electronic catalogues and buy them you can participate in auctions you can enjoy added value services such as: customization of the buy list to your needs, services for the promotion of your products in the market, financial services and supply services (logistics, product storage). After each trade transaction and if there is the appropriate software the departments (accounting, warehouse, sales) of both the buyer and the vendor are informed; technological support is provided.

Benefits of Β2Β marketplaces Benefits for the seller increase your sales opening of new markets, Auctions, product stock, increase the speed at which your products are sold Reduce costs reduced expenses from the creation, reproduction and projection of advertising material indirect cost reduction as a result of correct order processing indirect cost reduction from the possibility of drawing on statistics to forecast sales per customer, product, geographical area

Benefits for buyers reduced buying cost offers from sellers less time consuming procedures for order processing easy and fast market survey largest product and vendor variety reduced procurement time lower prices due to combined purchases

Β2Β marketplace models The seller model A typical scenario: The seller model is used by companies with a very wide variety of products and meet many buyer needs. customers visit the seller’s Β2Β website and after registering as wholesale customers, they place their orders using a product catalog and price list especially tailored to them on the basis of quantities, turnover, and special negotiations. (e.g. Plaisio, the buyer model A typical scenario: The model is used by very big companies with high order volumes. Such companies attract vendors that offer good rates and tailor their products to cater for the needs of buyers, precisely because of the very high order volumes. (e.g. CISCO, General Electric etc.)

The intermediary model An intermediary, creates a website to bring buyers and sellers together. The profit of an intermediary is a combination of an initial subscription, a monthly or annual fee for using their services, and their commission on sales. Check out

Success requirements for B2B marketplaces A successful B2B Marketplace must: reflect the history of each customer, their recent choices, billing particularities (contract, discount for turnover and terms of payment), but also make browsing and product selection easier. use additional sales channels (salespeople, direct marketing, telephone sales) and contact channels (fax, , telephone), which must be activated for as long and whenever a customer desires. enable customers to decide on their buys on the basis of information such as prices, availability, delivery times, evaluation of products and be in line with systems such as CRM

Training activities Have trainees argue about and decide which B2B model is appropriate for their enterprise and what benefits possible participation in the B2B e-marketplace will offer. Prompt them to describe the main Β2Β marketplace operations (intermediate, buyer or seller) they want to create.

e-Customer Relationship Management

What is CRM? CRM: The correct use of humans, technologies, strategies, and procedures for the company to create, improve and maintain its relationships with its customers so as to increase their lifecycle and increase sales to them A combination of marketing, sales, service and technology to create faithful customers

Main goals Gain customers Build & develop sales Extend and deepen the relationships with customers. How: collecting information and knowledge about customers conveying that knowledge to all the executives of a business involving customers in product design and development better serving them without cost increases for them addressing their needs better than your competitors

CRM Philosophy It is more customer oriented than product oriented It requires changes to traditional corporate procedures, systems, and culture. Systems and business processes must be designed for customer’s ease of use It includes sales, marketing and support procedures. It includes traditional distribution channels, as well as the Internet. It supports the company’s vendor network.

CRM in practice It is about efficient management of customers’ information and communication helps the marketing department analyse the characteristics of good customers, thus better targeting its advertising campaigns Communication with customers helps the salespeople build better relationships Customer account management becomes easier because customer information has been collected, sorted and is available to all employees The employees have the information they need to meet the needs of customers, solve their problems, but also to generate additional sales

e-CRM Before Internet, CRM was a specialized activity performed only by large businesses, due to its cost and complexity. Now all companies can collect information from their customers through their website or questionnaires sent by and offer their customers one more service channel. Simply through the use of Newsletters. These are electronic magazines sent by . Advertising campaigns based on specific events or dates, e.g. Applications that automatically answers to specific questions

Applications (1) Information collection, such as for instance purchase history and preferences, demographics, etc., and use of such information to provide the best service possible to customers Keeping customers through better service. dissemination of information for each customer Communication scenarios, recognition of opportunities for increased sales drawing on the information that the company takes from the customer

Applications (2) Customer & campaign analysis. e - shops can calculate the long-term value of visitors - customers by recording visits, buys, the response top offers made at the shop etc. Through this procedure the e - shop can decide a. how much time and what amount of resources (e.g. personalization) it must dedicate to the customer b. how willing each customer is to make new buys, in order to send them messages about offers and discounts Cooperation with other, non-competitive companies and data purchase or exchange.

Cost of implementing a CRM system Number of CRM Software users Geographical areas coverage telecommunications cost for interconnecting the points where the system will be installed Business operations coverage The more the procedures supported the higher the cost. The volume of configurations required customization of a CRM product can lead to a cost increase up to 28%. Requirements for CRM interconnection with existing information systems. one of the most important cost increase and delay (up to 12 months) factors.

Cost of implementing a CRM system (2) IT infrastructure IT and telecommunications equipment Management of changes in the company help the personnel get involved in the implementation of the project train the personnel to prevent it from fearing the new operation environment listen to their concerns reward those who help in the transition to the new situation explain the benefits for the company and the personnel

Evaluation criteria customer satisfaction increase increase of sales better targeting and performance of promotion and advertising activities increase of customers increase of faithful customers employee productivity increase creation of new products through interaction with customers

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