For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 1 What is E-Business E-business, or electronic business, systems use a number of information technology- based business practices to enhance relationships between the business and the customer. E-business includes changes in marketing communication, distribution systems, and business models.

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 2 Business Models New information technologies are allowing businesses to redesign business models and change business practice –A business model, or commerce model, is the basic process flow indicating how a business operates. It indicates how business functions are linked together. Internet based business models requires fewer hard assets (bricks and mortar assets) –Brick and mortar businesses have tangible physical assets such as factories, office buildings, warehouses

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 3 E-Business Industry Terms E-Commerce: Uses electronic information based systems to engage in transactions or commerce online. Extranet: An Internet based connection between a business and its suppliers, distributors, and partners. This is not open to the general public. Intranets: Internal private network that use the same types of hardware, software, and connections as the Internet.

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 4 Changing Nature of Business Capture data electronically at the point of sale and route that information from the retailer to the supplier and/or the manufacturer. Electronically linked distribution systems are speeding products through the channel of distribution and helping to forge strong relationships between firms. The World Wide Web is allowing businesses to reach customers around the world rather than just local markets. Information on the customer’s shopping behavior is being stored in databases to profile individuals for targeted promotions and customized products.

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 5 What Are The Business’ Goals? Pure Play Internet? –Communicate or Sell? Multi-Channel Sales Approach? Support Brick and Mortar? –Hold Current Customers? Enhance Relationship Development?

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 6 Generic Business Model

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 7 The Traditional Business System Target Customers Communication Information Flow Payment Flow Product Price Distribution Flow Distribution Flow

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 8 Generic E-Business Model

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 9 The Traditional Marketing System Environment: Technological Competitive Political and Legal Social Strategic Plan Strategic Goal Supply Chain

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 10 E-Business Systems E-Business Systems are fostering a number of changes to the marketing system: –Customized production. –Increasing price pressure resulting in lowering prices. –Shorter channels of distribution dominated by facilitators. –Extranet-enhanced supply chain management. –Non-linear promotions. –Electronic transfer of funds. –Database information management systems.

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 11 E-Business Systems Market-of-One Customer Customized Non-Linear Promotion Customized Production Dynamic Pricing Shorter Channels Dominated by Facilitators Knowledge Management & Data Warehousing Knowledge Management & Data Warehousing Electronic Payments

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 12 The E-Business System Environment: Constant Technological Change Increased Competitive Pressure Weakened Political and Legal Influence Greater Social Acceptance of Change Strategic Plan Strategic Goal Supply Chain Extranet

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 13 Vignette: General Electric (1) Suppliers linked through Extranet deliver just-in-time. Suppliers bid online. Web page provides information and ordering. Consumer product delivered through distributors or shippers. Product shipped from inventory or order is routed to factory. Database monitors equipment Payments are made online through Web page. Customer gathers information and purchases through Web page.

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 14 Creating Value Businesses create value for their customers by providing quality goods and services at acceptable prices. A business model that provides more benefits to its customers and/or sells at a lower the price will take market share away from competitors. –A commerce or business model is the basic process by which a business obtains its inventory, produces the good or service, and how they deliver that to the customer.

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 15 Seven Value Creation Strategies Online purchasing strategy: allows for buying and selling of products and information on the Internet and other online services. Digital communication strategy: allows for delivery of digital information, products, services, or payments online. Service strategy: allows for the cutting of costs, improving of the quality of goods, and increasing the speed of service. Business process strategy: allows automation of business transactions and work flows. Market-of-one strategy: allows for developing products for a single customer with close to the same costs as mass production. Auction based strategy: allows automation of bidding for products or customers online. Pricing Strategy: Allows businesses to pursue market share by selling at low prices or giving away products and services for free.

For use with Strategic Electronic Marketing: Managing E-Business, 2 e Copyright 2003 South-Western College Publishing Chapter 1 Slide: 16 Creating Value Online Purchasing We thought you'd like to know that the following items have been shipped to: Brad Kleindl 614 W. Jaccard Place Joplin MO using UPS Ground (3-7 business days). For your reference, the number you can use to track your package is 1Z38EW You can refer to our web site's customer service page or king.html Digital Communication and Service Business Process Market-of- One Auctions Pricing