E-COMMERCE AND E-COMMERCE AND MARKETING STRATEGYMARKETING STRATEGY

Fahri KarakayaFahri Karakaya

D. Steven WhiteD. Steven White

Charlton College of BusinessCharlton College of Business

University of Massachusetts University of Massachusetts DartmouthDartmouth

Number of Internet UsersNumber of Internet Users

• 148.7 million users in North America

• 86.6 million users in Western Europe

• 57.6 million users in Asia Pacific,

• 10.8 million users in South/Central

America,

• 9.5 million users in Eastern Europe, and

• 7.5 million users in Middle East/Africa.

Source: Business Week (Sept. - 1999)

Web Users By RegionWeb Users By Region(Millions at Year end 1999)(Millions at Year end 1999)

US

38%

Japan 9%AP 9%

WE

36%

Other 8%

327MSource: ICMM V6.1, IDC 2000

Web Users By SegmentWeb Users By Segment(at Year end 1999)(at Year end 1999)

Home

55%

Med/Lrg Bus

18%

Small Bus

13%

Ed/Gov

15%

Total:327MSource: ICMM V6.1, IDC 2000

Users & Devices On The WebUsers & Devices On The Web(Millions at Year end)(Millions at Year end)

0

100

200

300

400

500

600

700

800

1997 1998 1999 2000 2001 2002 2003

DevicesUsers

756M devices

602M users

Source: ICMM V6.1, IDC 2000

Digital Homes & ConsumersDigital Homes & Consumers

• 40% of US homes now online

• 26M homes with broadband by 2003

Adults Ordering On-Line

0

10

20

30

40

50

60

70

1997 1998 1999 2000 2001 2002 2003

Source: CyberDialogue

Ecommerce on the WebEcommerce on the Web

• Worldwide commerce will double between 1999 and 2000 (to $270B)

• Web spending by international buyers is growing dramatically. In fact, 2000 will be the last year the US accounts for the majority of web spending.

• By the end of 2000, two-thirds of worldwide PCs and network computers will be accessing the web.

• This year the web will see almost 100 million unique web buyers.

Ecommerce on the WebEcommerce on the Web

• the number of publicly accessible Web pages is expected to grow from 800 million in 1999 to 8 billion by 2002.

• By 2002, e-commerce among U.S. businesses alone (b2b) will be $327 billion up from 1998 year's estimate of $17 billion.

B2B Marketplace OpportunityB2B Marketplace Opportunity

• Estimates– Forrester - $1.3 trillion by 2003 and

92% of all Internet commerce– Goldman Sachs - $1.5 trillion by 2004– IDC - $1.1 trillion by 2003

• Huge efficiency gains possible

Cost ofCost ofGoodsGoodsSoldSold

Gross Gross ProfitProfit

OverheadOverhead

Net ProfitNet Profit

DEVELOPING EFFECTIVE MARKETING DEVELOPING EFFECTIVE MARKETING STRATEGIESSTRATEGIES

Target Market Identification and Targeting:Target Market Identification and Targeting:traditional marketing research

online surveys (registration forms)

e-mails sent to companies (e-leads)

Products and Services:Products and Services: not everything can be sold via the web

customers are still wary about purchasing on the web

customers gather info. on products then go to stores or call 800# (e.g. autos.)

Products and ServicesSuccessful business categories:Successful business categories:

Book resellers & music retailers Airlines Financial services (e.g.,brokers and online banking) Publishers Package delivery businesses Computer and software firms.

New Business offeringsNew Business offerings Search Engines Pricing and reservation services (e.g., expedia.com, priceline.com)

PLACE - Does it apply?PLACE - Does it apply?

• Convenience- from your living room

• Disintermediation - reduction in the # of intermediaries in distribution

• Some argue that the fastest growing businesses on the WWW are intermediaries

• In some cases, the Internet is both a retail store and the delivery medium

• pressure on delivery services to increase their speed, accuracy and geographical reach

PROMOTIONPROMOTION• Web sites need promotion

• Web sites need to be findable

• Need to register with as many search engines or directories

• Registration services (register.com) $40-50

• Banner Ads, static ads, pop up ads-search engines

• Traditional media• Companies offer incentives such as

sweepstakes or some small free gift for customers to register

PRICINGPRICING

• "shopbots" or automated shopping agents, are here to search the Net, for deals on behalf of buyers.

• Discounting - bypassing distributors and earning higher margins.

• Impact on distributor relationship?• Auction houses affect the pricing of

products. Ebay.com, Yahoo’s auction link.

• Auction houses may provide good info. for companies when pricing

Discussion & ConclusionDiscussion & Conclusion• Many firms use the Internet without

considering the fit between current marketing strategy,

• Need to have synergy between the traditional mkt. stg. and the Internet mkt. stg.

• alienating distribution channel members is a concern.

• Secure transaction software - outsourcing

• Customer service will be a major part of e-commerce business services

• There is a new industry called dot.coms