Prentice Hall, Virtual Communities Creating economic value Members input useful information in the form of comments, feedback, elaborating their attitudes and beliefs, and information needs of the community The community brings together consumers of specific demographic and interest Communities charge members content fees for downloading certain articles, music, or pictures

Prentice Hall, Figure 18-2 Value Creation in Electronic Communities Source: Kannen et al. “Marketing Information on the I-Way,” Communications of the ACM, June Kannen et al. © 1998 AMC, Inc. Reproduced by permission.

Prentice Hall, Virtual Communities (cont.) Financial viability of communities Based on sponsorship and advertisement Expenses are very high because of the need to provide: Fresh content Free services Free membership This model did not work well, many companies sustained heavy losses in ; too few members, too few purchases

Prentice Hall, Key Strategies for Successful Online Communities Be member-centric from the start Define community’s focus Involve community members Weigh internal staffing and outsourcing Buying vs. building technologies Provide personalization

Prentice Hall, Key Strategies for Successful Online Communities (cont.) Minimize need for participants to go elsewhere for: Content Service Trading Facilitate communication among members Keep an open door to the outside Build alliances and partnerships

Prentice Hall, Key Strategies for Successful Online Communities (cont.) Eight principles for community success: Increase traffic and participation in community Focus on needs of members (use facilitators and coordinators) Encourage free sharing of opinions and information Financial sponsorship is a must

Prentice Hall, Key Strategies for Successful Online Communities (cont.) Eight principles for community success (cont.): Consider the cultural environment Communities are not just discussion groups; provide tools and activities Members must be involved in activities and recruiting Guide discussions, provoke controversy, raise sticky issues

Prentice Hall, Global Electronic Commerce While geographical market boundaries may be falling, global interest-based communities will spring up Mainly in support of business-to-business financial and other repetitive, standard transactions, e.g. EFT & EDI The emergence of the Internet and the extranets resulted in an inexpensive and flexible infrastructure that can greatly facilitate global trade

Prentice Hall, Barriers to Global Electronic Commerce (cont.) Financial Issues Customs and taxation Electronic payment systems Other Issues Identification of buyers and sellers Trust Security (for example, viruses)

Prentice Hall, Barriers to Global Electronic Commerce (cont.) Other Issues (cont.) Cultural diversity International agreements (multi-lateral agreements) Role of government Purchasing in local currencies Language and translation

Prentice Hall, Global Electronic Commerce Localization—just translating from one language to another is inadequate Localize content Adapt local business practices Globalization and joint ventures Joining marketplaces

Prentice Hall, Breaking down the Global EC Barriers Value the human touch Be strategic Know your audience Be a perfectionist Remember, it’s the Web Integrate properly Keep the site flexible and up-to-date Synchronize content OECD (oecd.org) “Dismantling the Barriers to Global EC”

Prentice Hall, The Opportunities for Small Businesses Inexpensive Source of information Way of advertising Way of conducting market research Way to build (or rent) a storefront Way of providing catalogs Way to reach worldwide customers

Prentice Hall, The Opportunities for Small Businesses (cont.) Lower transaction cost Niche market, specialty products (cigars, wines, sauces) are the best place to be Image and public recognition can be accumulated fast

Prentice Hall, Risks and Disadvantages for Small Businesses Inability to use EDI, unless it is EDI/Internet Lack of resources to fully exploit the Web Lack of expertise in legal issues, advertisement Less financial risk tolerance than a large company

Prentice Hall, Risks and Disadvantages for Small Businesses (cont.) Disadvantage when a commodity is the product (for example, CDs) No more personal contact, which is a strong point of a small business No advantage to being in a local community

Prentice Hall, Success Factors for Small Businesses Niche products Low volume Not carried by regular retail stores Small volume E.g., special books Old technical International products Not easily available to off-line customers Information GartnerGroup provides access to online research material by subscription Smaller companies may provide specialized information (home and gardening)

Prentice Hall, Success Factors for Small Businesses (cont.) Capital investment must be small Inventory should be minimal or non-existent Electronic payments schema exist Payment methods must be flexible Logistical services must be quick and reliable

Prentice Hall, Success Factors for Small Businesses (cont.) Web site design should follow basic principles Understand your customers and their buying habits and market to proper customer segments Price product or service correctly Anticipate cash flow needs

Prentice Hall, Success Factors for Small Businesses (cont.) Monitor your: Competition Technology Marketplace changes Keep growth slow and steady Delegate Develop good internal communications

Prentice Hall, Research in EC Behavioral Issues Consumer behavior Building consumers behavioral profiles and identify ways to utilize them Seller’s behavior and motivation Issue-oriented research (e.g., trust, intermediaries) Internet usage pattern and willingness to buy Mental model of consumer product search process, comparison process, and negotiation How to build trust in the e-marketspace

Prentice Hall, Research in EC (cont.) Technical Issues Methods that help customers find what they want Models for extranet design and management Natural language processing and automatic language translation Integrating smart card technology with on-line and off-line payment mechanisms

Prentice Hall, Research in EC (cont.) Technical Issues (cont.) Integrating EC with existing corporate information systems, databases, etc. Retrieval of information from an electronic industry directory Establishing standards for international trade Building a mobile Internet distribution command system

Prentice Hall, Managerial Research Issues Advertisement Measuring the effectiveness, integration and coordination Applications Creating a methodology of finding EC business applications

Prentice Hall, Managerial Research Issues (cont.) Strategy Designing strategic advantage strategy for EC Initiating “where to market” strategy Finding way to integrate EC into organizations Impacts Identify the necessary organization structure and culture Integration with ERP and SCM

Prentice Hall, Figure 18-4 Framework for B2C EC Research

Prentice Hall, The Future of Electronic Commerce Opportunities for buying Increase rapidly Internet usage Increase exponentially Access via cell phones! M-commerce No need for a computer brings more people to the web

Prentice Hall, The Future of Electronic Commerce (cont.) Purchasing incentives Increase buyers’ advantages Increased security and trust Significant improvement is expected Efficient information handing Accessible from anywhere Innovative organizations Restructured and reengineered

Prentice Hall, The Future of Electronic Commerce (cont.) Virtual Communities Spreading rapidly Payment systems Ability to use e-cash cards and make micropayments is getting close to reality Business-to-business Continues to grow rapidly

Prentice Hall, The Future of Electronic Commerce (cont.) B2B exchanges Provide infrastructure Auctions Increasing rapidly Going global Most appealing benefit of EC

Prentice Hall, The Future of Electronic Commerce (cont.) E-government--comprehensive Government-to-consumers (G2C) Government-to-government (G2G) Government-to-business (G2B) Government-to-employees (G2E) Intrabusiness EC Improving internal supply chain

Prentice Hall, Managerial Issues Finding a community that matches your business Going global Threats—difficult to accomplish, especially on large scale Opportunities—create collaborative projects with partners in other countries (last a long time)

Prentice Hall, Managerial Issues (cont.) Small can be beautiful Competing on commodities with the big guys is very difficult (especially in cyberspace) Finding niche markets is advisable More opportunities in providing support services than in trading The future of EC is very bright, but planning is a must.