Website Marketing and Design

Websites and Advanced Business Issues-

Partnerships, Distribution 1

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B2B eCommerceThe Profit Pool Concept

• Increasing the total amount of business done with a particular customer means that firms need to take advantage of opportunities to add products and services that fit well with current customer purchases and add profit to the firm

• Alliance partners can help to make this happen

• The profit pool is a useful tool to identify and evaluate potential online online partners

• A profit pool identifies the different products in an industry and calculates their industry share of revenue and their profitability

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B2B eCommerce

3 Categories of profit pools

1. Anchor Services – Service providers that form the basis of an e-commerce Web site

2. Extension Services – Alliance partners with an anchor service

3. Neutral Services – Profit pool components without high profits or customer contact frequency

Desirable Features of Online E-Commerce Allies Anchor Service Extension Service

High customer acquisition cost Profitable pool component

Frequent customer content High profit/revenue ratio

Strong positioning Consistent position to anchor

Trusted Effective, reliable

Part 1 - Introduction to Ecommerce I Perry & W Robson

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Distribution Strategies

Figure 12.13

Alternative Channel Responses

Channel Division

Electronic

CommercePhysical

Distribution

Manufacturer

DirectCybermediary

Existing

Retailers

Online

Traditional

Retailers

Experience

Economy

Channel Structure Options

• Shift sales entirely to manufacturer direct (Dell, Cisco)

• Use existing retailers and their web sites (autos, perfume)

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Distribution Strategies

• Three sources of channel conflict

1. Goal divergence – objectives of manufacturer or service provider differ

2. Responsibility disputes – pertain to customer handling, territorial assignments, functions to be served and technology to be used

3. Differing perceptions of reality – actions may be misconstrued and lead to conflict

Channel ConflictTraditional distribution channels are

threatened by online commerce

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Distribution Strategies

Figure 12.14 Likelihood of Channel Conflict

12.7%

I ndustrial Manuf acturers

I ndustrial Customers

Manuf acturer's

Representative

I ndustrial

Distributor

Manuf acturer's

Sales Branches

I ndustrial

Distributor

Manuf acturer's

Sales Branches

Manuf acturer's

Representative

I ndustrial

DistributorDirect

Sales

Low

16.8%

3.6% 48.7%

8.6%

9.6%

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Distribution StrategiesE-Commerce and the Proper Distribution

System

• Build-to-Order

– Direct selling enables mass customization

– Allows companies to manufacture unique products quickly and cost effectively

– Lowers the cost of holding inventory

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Distribution StrategiesReal-Time Marketing

• Personally customized goods or services continuously update themselves – Continuously track changing customer

needs– Without intervention by corporate

personnel– Often without conscious or overt input

from the customer

• Requires direct sales and direct distribution

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Distribution Strategies

However, intermediaries reduce the total number of contacts a firm has

Channel Contacts and Learning

• Advantages of using intermediaries

– They know more about customers

– They have greater knowledge of local markets

– They carry a broader product line within a category

– They carry multiple product categories

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Distribution StrategiesData-Driven Intermediaries

• Advantages of using intermediaries– They can build a profile of customer choices

based on a much wider array of business than a direct seller would acquire

• Incentives for using intermediaries– Customer coalitions – customers join

intermediaries that protect their privacy while sharing appropriate knowledge to vendors

– Seller scope – a multi-product vendor can learn much more about customers and use this info across product categories

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Distribution StrategieseCommerce and the Proper Distribution

System

• Disintermediation occurs when layers of a distribution channel are dropped

Example – online brokerages substituting for stock brokers• Reintermediation occurs when

layers of a distribution channel are added

Example – services such as auto-locating that combine multi-vendor information and comparison shopping

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Disintermediation & Re-intermediation

• Disintermediation —removal of orgs or business process layers responsible for certain intermediary steps in given value chain

• eliminating traditional intermediaries, such as wholesalers, distributors, & retailers, to reduce cost

• Re-intermediation —shifting or transfer of intermediary functions, not elimination

• intermediation such as electronic shopping malls, directory & search engine service, & comparison aids using agents creates role of re-intermediation

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Disintermediation

• Internet bypasses classical intermediate stages; it offers supplier a direct channel to their customers

• Danger: Cannibalising of the prior sales channels (intermediate trade)

CustomerEnterprises

Suppliers Wholesale Retail Trade

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Disintermediation ‘collapses’ the

distribution chain

Grower Jobber$8.00

Wholesaler$12.00

Florist$24.00

Customer$60.00

Customer$54.00

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New Forms of Intermediaries

• ISPs • Guarantor / Certificate Authorities / Trusted

Third Parties • Directories, search services • e-Malls • Web site Evaluation / recommendation service • Financial intermediary• Market organiser (auctions, stock

exchanges...) • etc..

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Trade Vertical Supply Chains efficiently move spare parts from Manufacturer to End User.

Manufacturer

SupplierSupplier

Industrial End Users

Manuf’s & Supp’s maximise profit by fast stock turn & small inventory. Stock must be visible & accessible to sell.

Eventually, uneconomic support older equip as demand, & hence stock turnover, slows. Then trade Vertical Supply Chain fails - may mean expensive plant closure.

Insurance spares held by End Users have low stock turn. May hold for many years (is where in Supply Chain majority spare parts). Inter-company visibility poor though what for disposal for 1 firm heavily sought by another.

sparesFinder.com opens up the Horizontal Supply Chain for internal and inter-company trade of surplus engineering

parts

Re-intermediation creates Horizontal Supply Chains

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Session 16: The Future of the Web, Final Discussion and

Assessment 1

Poitiers, September 23-27

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The Future … ?

• Web evolve to a 3-D medium– Virtual communities– Gaming

• Interactivity– True Global ‘web’ in real-time

• Ubiquitous Devices– Mobile, 3G, Continuous Access– ‘Wearable’ computing

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The Future … ?

• Interfaces– HCI – voice, digital, Medical

• Data Aggregation and Analysis– Analytics

• Impact on Healthcare– Bio-informatics

• The ‘Digital Divide’– Impact on socio-economic status– eCommerce influence via IP, Portable

transactions, Service Economy, etc.

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Final Assessment and Project Review

1

Poitiers, September 23-27

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Final Grade

• First Half:– Group project– See Link Here for Grading Criteria:

• http://www.leuchtner.com/course2002/webdesign/final.ppt

• Second Half:– Exam

• Course presentations• 1 or 2 documents provided to Peter• Short essay answer

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End of Course:Thank You!

1

Poitiers, September 23-27