E-Commerce and Internet Marketing Class #2 Sept 19, 2012 In the news:• iPhone 5’s being sold on eBay —way above retail price! •Groupon announces mobil payments device for small biz

Today we explain the Team projects & get started on it!But start with a Review of HW: buying books online, nexus & examples of winners vs losers: Zappos vs Pets.com--------------------------------------------------New Topics: Understanding the dotcom boom/bust cyclesValue Proposition & Target MarketSee last 2 slide for Homework…..

Review from Class#1 & the term “web 2.0”

“• E-Commerce is defined as the buying and selling of goods and services using the Internet “

e-commerce is the use of the Internet to conduct business

For our class…EC does require a website!But, ……we do not require an online transaction! (for example: the buying and selling off eBay may not be an online

transaction--but it certainly is e-commerce!)

• Web 2.0 ….. a dotcom or website that uses extensive ‘user-generated’ content. Examples: wikipedia, facebook

Review: 5 key Marketing activities…

Product Mktg—product positioning, pricing, competitive analysis, data sheets, interface to prod development,…

Market & Customer Research

Marketing Communications (PR, events, Advertising,..)

Typically 1-way communications Marketing Campaigns - demand generation • get ‘action’ from prospects: trials, leads, new customers

Educate the target customers -required for many new products or services

Review homework for today’s class: Comparison of buying our textbook

e-Commerce 8th edition Laudon,Traver(2012)

• Buying in SCU Bookstore: a key value for their customers=• Buying the textbook online: Values for us - the customer =

Choices online are: new, …………, ………….Lowest price you found: __________Source for lowest price book: ____________•What are 3 elements that make up the total price & a new

element to consider when when buying a book online?

•What is nexus –and why did it matter for online e-commerce?

Renting the textbook as an option..

Textbook #1: e-Commerce, by Laudon, Traver 8th edition (2012) ISBN 013-801881-2 Pearson Prentice Hall You can rent the textbook from Bookrenter.com using the special discount code: SCECOMM2012 is It is good for 10% off all rentals between now and September 30, 2012. or consider buying this textbook online -note: the International edition with softcover has the same content but some chapters in a different order.

Winners vs Losers in E-Commerce Comparing Zappos.com vs Pets.com

Watch youtube video:

http://www.youtube.com/watch?v=8F4LiqYzBZY

Visit the website of Zappos & wikipedia:

.

Comparing Pets.com vs Zappos

Let’s Examine some of the key factors for dotcoms that engage in e-commerce

Target Customers Value Propositions Cost factors: Operations, Mktg, Shipping CompetitionNote: (how can we describe a ‘winner”, a ‘ loser’, or a company

that’s in the middle?)

“Zappos Value Propositions” –why people buy from Zappos

• Zappos telephone # on every page! 1800 927-7671••

Pets.com and their “sock puppet” 1998-2000 a very short life for a company

-

• in Nov 2000, Pets.com-laid off 320 employees and shut down their web site. They ran out of money!

Target Customers =__________________• what did Mgmt think was compelling for target customers? (ie: what was their value proposition)__________

• what were their costs areas? Marketing, Website Operations, Order fulfillment, Shipping, Inventory of pet food, etc

• Extreme Marketing choices they made---sock puppet TV…SuperBowl advertising.. $mega/minute

Amazon just launched a new version of Pet.s com and call it WAG.com

Quite a Surprise given the bad history of Pet.som

Read this article on nytimes:

http://bits.blogs.nytimes.com/2011/07/06/would-you-like-some-dog-food-with-your-diapers/

Great headline: ‘Would you like some dogfood with your diapers’

Note: Amazon recently bought Diapers.com, Soap.com,

Zappos, and Woot,com

WebVan: the online grocer 1999-2001

lost over $1 Billion of investors money

Foster City's Webvan raised $1.2 B to build itsSupply chain operations & infrastructure. -Hired a top exec from Anderson Consulting-Bought trucks, hired & trained drivers, stocked warehouses and built a

nationwide supply chain.Target Market for Webvan=Value proposition for Webvan=Take an online order and deliver to a

home within 30 minutes!--started in SF, La, Seattle, San Diego and Atlantabottom line: razor-thin margins, not enough customers to cover aggressive expansion to 26 cities. Distribution costs. The company closed in July 2001, putting 2,000 out of work and

leaving San Francisco's new ballpark with a Webvan cup holder at every seat.

Fresh Direct--online or in the textbook- (Manhattan, NYCity)

E-Commerce failures in Year 2000!On April 4, 2000 Nasdaq Index drops 500 pts in 1 day

WebVan.com- burned thru $1 billion in fundingPets.com: shut down on Nov 7, 2000Etoys.comFurniture.com shut down.Politics.com shut down.Stamps.com laid off 240 employees.Drugstore.com laid off 10 percent of its staff.Jewelry.com shut down.Garden.com laid off 40 percent of its staff.Food.com laid off 50 percent of its staff.More.com sold off assets.WebMD.com laid off 1,100 employees.Living.com shut down.Auctions.com shut down.Hardware.com shut down.Petstore.com shut down.Reel.com shut down.

What can we learn by the Pets.com and webvan.com experiences?

1. Just because you are first in a new business, does not mean it will be successful

2. Just building a web site -does not mean the customers will come knocking at your door!

What can we learn by the Pets.com and webvan.com experiences?

3. Every Company needs to pay attention to: • their target Customers--having a compelling

value proposition (why a customer will buy from them..again & again) • Competition for their target customers • their Costs—cost to acquire a new customer(Marketing, Selling, Operations, Administrative)

With a broader perspective..What can we say about E-Commerce in its early years?

The success measure in early years(1995—2000) was eyeballs – people visiting/using a website

Most services were FREE to millions of users!

There was the belief that “if you Build it(website), and its cool - they will come”

With a broader perspective..What can we say about E-Commerce & its first 17 years? 1995 - 2012

Thousands of dot coms struggle to get $$s(revenue) to cover their costs.

Most Web services are FREE--with Advertising the key source of revenues for many online companies!

Reality hits in 2001!--- Internet Bust! It is time for better measures of Survival and winning in the

marketplace. Have a plan for revenues and capability to make a profit

2002-2006: Back to Business basics( revenues & profits are the measures);

2006-2010 broad participation, big firms experiment with the EC channel

• 2010--the mobile Internet, social networking; Some big B2B companies like Oracle, Salesforce, acquire social media co’s.

Let’s explain the team projects

-- set up 5 teams: 4 people ---2 teams 5 people ---3 teams

-- explaining the team projects

-- key dates & key deliverables

Candidadates: ‘Groupon, yelp, woot, plentyoffish, Threadless, mint, twitter, etsy, gilt.com, Show their homepage! what is their business? their target

mktg, their biz model, their interaction with their target market, any web 2.0 features, any measure of # of users or size of the company. Their use of the mobil web.

Dates for your team presentation of a dotcom brief:

Oct 1 Team #1 Team #2 Oct 3Oct 8 Team #3 Team #4 Oct 15Oct 24 Team #5Team captain sends Dr K an email with their candidate for dotcom

briefWith a note on what’s unique or interesting about the dotcom… - put some wow in your preso!

Team Project#1: 10 minute briefs on a ‘unique’ & ‘successful’ dotcom Tell us what’s unique & interesting about them….

Team project #2: Create and execute anInternet Mktg plan for one local Small Business• Set up a blog or weekly activity plan for your team

collaboration.

Phase 1: market research: Identify 10 small business in the Bay Area that qualify for this Internet Mktg project they must have a current website, and between 2 and 10

employees, and want many more new customers

Phase 2 : filter the list down to 2 firms using interviews- willing to experiment with Google , email, and facebook.- Currently spend $300 per month for mktg purposes. - have >50 email addresses - Show a willingness to work with your team for 4-5 weeks.

Team project #2: Create and execute an Internet Mktg plan for a local Small Business

Phase 3: Organize the team to plan & execute:

--website improvements-create a mockup -- a email mktg campaigns-- two Google Campaigns-- an improved facebook Page-- two facebook ad campaigns

Phase 4: Analyze the work, present & report on the results

Small Biz Team project : Create, execute, present an Internet Mktg plan for a local Small Business

Timeline:Week 3/4 : October 3-8— select 2 final candidates √Start detailed interviewing process √Is this a good company to work with over next 5 weeks

Weeks 4-5-6-7-8 organize to execute mktg activities√ changes needed for their web site to be more effective.√ Execute online campaigns; measure results, estimate costs & responses for each activity

Weeks 9 & 10√ Team Presentations √ Team Written Report due 11/26

Good examples of local small businesses that were used by previous classes

woodenhorsetoys.com Testarosa Winery BookRenter.com DiverDans Calmar Bicycles--See eres for small biz that have already been used by previous ec mktg classes will be posted on eres

Tips & examples for your ‘small biz’ team research to identify small biz candiates:

Take advantage of your ‘network,’ online & local events, print media, Sunset Magazine, GoDaddy,….

website services show samples of their small biz customers

√ Open Studio Santa Cruz -- 240 artists showing their productsEx: humorous pet sculptures-- StephanieSchriver.com √ OliveRevolution.com = A 5 person business in Los Olivos, Ca. gourmet mustard, olive oil products source: Sunset Magazine√ Blazzing Saddles Bike Rentals√ GoCar Tours--San Francisco

The Small Business Market & Target Market Segmentationthese are 25 million firms with 1-25 employees.. or companies with < $5 in annual sales.

1. Small Businesses can be ‘targeted’ as a generic market.ex: Intuit markets “QuickBooks” acctg software to all small biz

2. Segment into “Vertical Segments” and prioritize mktg on just a few that meet a criteria. Ex: Pbworks.com

3. Other Segmentation;--by number of employees: < 5, 5-15, < 50

--by ownership: example Women-Owned-Businesses, - by geographic location < ex: Bay Area>

Why do segmentation? Because marketing effectiveness is all about focus & a better understanding of a target market!

Homework –Slide 1 of 2:

1. Get the textbook (8/e) and Read Chapters 1 & 2 ‘e-Commerce’ by Laudon & Traver

2. Get your team organized & start your research into identifying small businesses for your Team Project

3. Read: Amazon is dealing state by state on online sales tax:

Gov. Jerry Brown signed into law a bill that requires Amazon and certain out-of-state online merchants to collect sales taxes on purchases by Californians. http://articles.latimes.com/2011/sep/23/business/la-fi-amazon-sales-tax-20110924

Homework –Slide 2 of 2: Target Market Homework--identify & prioritize small business segments for a new facebook e-commerce service

1. List 15 small biz segments: example: Certified Public Accountants (CPA’s) What are ways to identify small business segments; that is

what sources did you use? We will review this more in class

2. Of the 15 small biz segments you listed for part 1, select 2 segments which would be the best candidates for having a transaction capability off their facebook page. That is --which small business segments could benefit the most from being able to take an online order for products or services (vs just having a ‘static’ facebook page). What are measures you can use to rate or to rank

the small biz segments to be the best candidates?3. Can you find any companies that offer this capability now?