1 Dickson K.W. Chiu PhD, SMIEEE, SMACM, Life MHKCS Jelassi & EndersJelassi & Enders: Chapter 11 COMP7880: E-Business Strategies Interaction with customers

Strategy options External analysis Internal analysis Sustaining competitive advantage Internal organisation Implementation Exploring new market spaces Interaction with suppliers Interaction with users/customers Creating and capturing value Strategic analysis Strategy implementation E-business strategy Mobile e-commerce strategy 12 Opportunities/ threats Strengths/ weaknesses Our Roadmap Strategy formulation COMP7880-IC-2

'What criteria determine who will be our most profitable customers?' 'How can we acquire this customer in the most efficient and effective way?' 'How can we increase the loyalty and the profitability of this customer?' 'How can we keep this customer for as long as possible?' Customer acquisition Customer selection Customer extension Customer retention Customer relationship management cycle Customer relationship management consists of four elements COMP7880-IC-3

Firm infrastructure Human resource management Research & development Information & communication technology Elicitation of customer preferences Order- specific inbound logistics Order- specific construction Marketing/ sales forecast General purpose inbound logistics Order- neutral pre- operations Order- specific operations Order- specific outbound logistics Customer service/ building a learning relationship Order-neutralOrder-specific Support activities Primary activities Source: Adapted from F. Piller (2006), p Mass-customization value chain puts the user in charge of many traditional steps COMP7880-IC-4

E-marketing strategy essentials E-marketing strategy is a channel strategy Objectives for online contribution % - sales, service, profitability should drive our strategy E-marketing strategy defines how we should: 1. Communicate benefits of using this channel 2. Prioritise audiences targeted through channel 3. Prioritise products available through channel 4. Hit our channel leads & sales targets Acquisition, Conversion, Retention Channel strategies thrives on differentials BUT, need to manage channel integration COMP7880-IC-5

Internal and external influences on Internet marketing strategy COMP7880-IC-6

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Hierarchy of organisation plans including e-marketing plans COMP7880-IC-9

Problems if no E-marketing strategy 1 Underestimated demand for online services 2 Market share loss 3 Resource duplication 4 Insufficient resource 5 Insufficient customer data 6 Efficiencies available through online marketing 7 Opportunities for applying online marketing tols 8 Changes required to internal IT systems 9 Inadequate tracking 10 Senior management support limited COMP7880-IC-10

Usage of detailed e-marketing plans in UK e-commerce organizations Source: EConsultancy (2008) COMP7880-IC-11

The SOSTAC® planning framework applied to digital Internet marketing strategy development Figure 4.4 Source: Chaffey and Smith (2008) COMP7880-IC-12

Linkages between CRM and related marketing approaches COMP7880-IC-13

Differences between relational and transactional marketing Transactional paradigmRelational paradigm Market segmentIndividual customer Transaction durationLifetime MarginLifetime value Market shareMost valued customers and customer share Mass market broadcastDialogue and tailored communications Passive consumersEmpowered clients COMP7880-IC-14

5Is for CRM Identification – can the customer be recognised for different channel contacts? Individualisation – can communications and products be tailored? Interaction – are communications two-way? Integration – is there a 360 degree view of the customer? Integrity – is the relationship built on trust? COMP7880-IC-15

CRM applications 1. Sales force automation 2. Customer service management 3. Managing the sales process 4. Campaign management 5. Analysis COMP7880-IC-16

CRM data Personal and profile data Contact details Preferences Transaction data Sales history Communications data Campaign history Research / Feedback / Support queries Contact reports (B2B) COMP7880-IC-17

Categoriszng customers according to value COMP7880-IC-18

E-CRM benefits Customer development Managing list quality Implementing marketing Data mining Personalisation and customization Customer service quality and multi-channel experience COMP7880-IC-19

Permission marketing Not interruption marketing Not SPAM Requires opt-in (online to ) Opt-out Learning about the customer Initial and continued relationship is based on incentives COMP7880-IC-20

Options for mass customization and personalization using the Internet COMP7880-IC-21

Summary of an effective process of permission- based online relationship building COMP7880-IC-22

Matrix of customer touch points for collecting and updating customer contact / profile COMP7880-IC-23

Extent to which different types of segmentation variables tend to be predictive of response COMP7880-IC-24

Elements of the IDIC framework COMP7880-IC-25

Different representations of lifetime value calculation COMP7880-IC-26

An example of an LTV-based segmentation plan COMP7880-IC-27

Relationship between service quality, customer satisfaction, loyalty COMP7880-IC-28

Peers Social networking site Instant messaging VoIPChats Boards/ groups Private messages Communication tools Matching Profile Contact data Multimedia Personal network … Person A Profile Contact data Multimedia Personal network … Person B A B Social networking offers communication motives of discovery, homogeneity, sharing COMP7880-IC-29

Richness bandwidth customization interactivity Reach (Number of people interacting) The Internet Sales- person Tele marketing Postal mailing TV advertising Source: Adapted from P. Evans and T. Wurster (1999) Internet help dissolve the trade- off between richness and reach COMP7880-IC-30

When seeding a message, one has to concentrate on 3 types of people Connectors Maven Salesmen People who have expertise in various products, prices or places. They enjoy sharing their knowledge with friends and acquaintances on Internet platforms. People who have the skills to persuade others when they are unconvinced. People with an extraordinary high number of contacts, friends and acquaintances, who ideally belong to ‘different worlds’; i.e. different areas of life. Source: M. Gladwell (2000). COMP7880-IC-31

Source: Adapted from Anderson C. (2006). Downloads Titles, ranked by popularity 25,000 50, ,000900, ,000 10,000 Songs available at Rhapsody and Wal- Mart Songs available only at Rhapsody ‘Long tail’ represents large addition to product range of traditional retailers COMP7880-IC-32

Contacts ranked by frequency Networking frequency Source: Adapted from Anderson C. (2006). Contact pool acessible via traditional networking tools Additional network potential of online networking ‘Long tail’ of social networking provides access to previously inaccessible market niches COMP7880-IC-33

Implications for companies to access and leverage the ‘long tail’ Lengthen the tail Fatten the tail Drive demand down the tail SNS uses a variety of mechanisms to enrich communication between users and thereby fattens the tail by increasing the frequency of interaction. This can be achieved by shifting users’ attention to content that normally is not as easy to find. By giving people access to a large pool of individuals, SNS lengthens the tail of potential social contacts. Source: Anderson C. (2006). COMP7880-IC-34