FINAL LECTURE

• Wrap up B2BX

• Review Relationship/service/fulfillment

• Course Review

• Future of the Internet

B2BX SUMMARY

• Why Most Fail:– Not Consider Relationship/Trust– Long Term Contracts Dominate– Problem is eProcurement/Partners -- PVN– 3rd Party Fail Unless Wider CBP– Manufacturer Power -- Consortia or In House– Not Able to Run with the Big Dogs -- Telcos, Manufacturers,

Oracle/IBM• Lesson

– Talk to Customers– Refine Understanding of Need and Relationships– CBP Not Only Technology

Relationship

• Life Time Value

• Trust -- confidence -- relationship

• CRM -- multichannel communication

• Segment -- focus to build depth

• Permissive Marketing -- promotion and price for loyalty

• Channel -- Service Function

• Evaluation -- Loyalty measures

SERVICE/FULFILLMENT

• Critical element in satisfaction/relationship

• Internet Can Help

– Tracking -- FedEX

– Dell -- same file as 800 and service

– Xerox/Sun -- self service

– eService -- priority, track, resolve, evaluate

• Channel Partner Software

• Link TQM to Internet

• Continuing Innovation -- product design

Understanding Customers

Consumer Behavior

B2C vs B2B

Relationship Building

Fulfillment

Service

Distribution

Channel

Logistics

Customer Acquisition

Advertising / PR / Selling

Pricing & Promotion

Strategy Formulation

Trust vs. Push

Product Design

Segmentation

Positioning

CONSUMER BEHAVIOR

• Concept/Theory

– Information Processing

– Behavioral Theory

• Tool

– Flow Chart

– Steps, Information, Decision Rules, Actions, Post Purchase

– Decision Unit, Multiple Participants

• Action

– Design site for Conversion and Retention

• Case

– Mother Nature: Acquisition and Retention

– Dell: Conversion

– Marketsoft: Sell to Pain

INITIATION

AWARE/LEARN

DECIDE

BUY

POST PURCHASE

•What starts process?

•Role of past experience?

•Friends make input?

•Sources of information; Friends / media / web/ store?

•Active search? How much time?

•Where shop – store / catalog / internet?

•What learn? Products / technology / user experience / trends?

•Compare products?

•Role of price / quality – evaluation criteria

•Need to touch and feel?

•Impact of brand and trust?

•How do buyers gain confidence?

•Security / privacy assurance needed?

•Need push to action – close sale

•Word of month to friend/community

•Relationship contract

Questions to Ask•Source of input.

•ADS/catalogs/email?

•Life time service?

•Delivers promised value

•Special offers

•Guarantees / refund policies?

TRUST

• Concept/Theory

– Psychology

– Trust Cues and Perception

• Tool -Virtual Advisor– Trust Cues

• Actions

– Decide on Push -- Trust Dimension

– Design in Trust -- Currency of the Internet

– Real or Virtual Advisors

– Alternative Methodologies

• Case

– InSite: Advisor

– Dell: Recommend / Learning

PushCommodity

Price most important

Deal prone segment

Need short term results

Full TrustHave best product

Have good design feedback

Buyers getting info anyway (infomediaries)

Trust key element

Expensive/complex products

Culture to sell our products only

Strong channel attitudes

Evolutionary stop

Have both price and relationship segments

How much trust should you have in your eBusiness strategy?

PRODUCT DESIGN

• Concept/Theory

– Build Process

• Tool

– Models / Market Research

– Information Acceleration

– Listen In

• Actions

– Prevent Failure

– Do Research and Budget

– Hire Modeling Capability

• Case

– Market Soft: eLeads and eOffers – suite

– Prime Response: Depth - Breadth

SEGMENTATION

• Concept/Theory– Taxonomy– Segment for Competitive Advantage

• Tool– Clustering– Demographic, Psychographic, Product– Data Mining

• Action– Decide Basis of Segmentation– Use Data and Analytic Services– Personalize

• Case– Mother Nature: Lifestyle – Data Mining– Dell: Sophisticated Buyers– MarketSoft: Marketing Manager– Prime Response: Vertical Markets– Terra Lycos

POSITIONING

• Concept/Theory– Psychology– Perception Simplicity

• Tool– Perceptual Map– Needs Seen by Customers– Preference Vectors

• Action Do Maps– Find Competitive Value Added– Do Vectors and Benefit Segmentation– Be First in But Position in Best Spot

• Case– InSite: Advisor– Market Soft: Suite– Prime Response: Campaign Management versus New Competition– Terra Lycos

ADVERTISING

• Concept– Psychology– Communication

• Tool– Copy Evaluation Framework

• Action– Advertising Goals– Multichannel -- Sales/PR/Telemarketing

• Case– SemiSales– Mother Nature -- Acquisition

– Dell -- Catalog (separate URL)

AD EVALUATION FORM

ATTENTION 1 2 3 4 5 6 7

BRAND ASSOCIATION 1 2 3 4 5 6 7

BRAND RECALL 1 2 3 4 5 6 7

PERCEPTION

INFORMATION 1 2 3 4 5 6 7

CBP/CSP 1 2 3 4 5 6 7

POSITIONING 1 2 3 4 5 6 7

EMOTION 1 2 3 4 5 6 7

ACTION – VISIT SITE / BUY 1 2 3 4 5 6 7

CREATIVITY 1 2 3 4 5 6 7

TARGET GROUP 1 2 3 4 5 6 7

OTHER 1 2 3 4 5 6 7

Extre

mely

Bad

Extre

mely

Goo

d

PRICE AND CHANNELS• Concept

– Economic Theory– Logistics

• Tool– Avoid Price War by Differentiation and Segmentation– Channel Function Map

• Action– Consider Incentive Site– Manufacturer Direct as Complement– B2BX lessons

• Case– Terra/Lycos

– SemiSales/ANX/Logistics.com

– Mother Nature and Kozmo price to profit

PALM.COM

BIG CHAINS (PD, I, IV, S)

PALM

(S)

DISTRIBUTOR (I, PD, IV)

WHOLESALE (I, PD, IV)

SMALL ELECTRONICS (I, IV, S)

MACS MERCHANDISE (I, IV, S)

CUSTOMER

eCOM SITES

(I,S)

RELATIONSHIP• Concept

– Psychology– Customer Satisfaction

• Tool– Trust Based Marketing– CRM

• Action– DO IT -- obvious– Trust/Franchise/Long Run– Service/Fulfill -- TQM

• Case– Mother Nature -- Life Time Value– Dell -- Premier Pages/Repeat -- E2E– InSite -- Advisor builds relationship– Prime Response -- Communicate– B2BX -- all about Relationships

FAILED ASSUMPTIONS

• People will Flock to the Internet to Buy• Self Service Sites are Enough for Conversion• The Internet Technology will Create a New Economy• B2BX Have to Work Because Can Match Information• Must Be First -- Claim High Ground• Worry About Business Model Later• Frictionless Prices -- Price Competition and Comparators• Established Companies are Not Innovative• VC Capital Will Keep Coming • Need Young New Thinking Tech Management• Buzz and PR are the Key to Success• Must Set Up Internet as Separate Company• Internet will Replace Existing Channels

LESSONS FROM FAILURES

• Must have Strong CBP to Attract and Communicate It • Design Site to Support and Complete Decision Process• Internet will Improve Exisiting Economy• B2BX is relationships -- Talk to Customer• Be Right and First• Start with Business Model and CBP• Differentiate and Segment for Success• When the Dinosaurs Dance the Grass gets Crushed• VC Fads Come and Go -- Bubbles Burst• Must Know Fundamentals of Management• Focus and Fulfill Promises to Customers and Investors• Structural Integration is Key to Success• Multichannel Marketing will dominate

FUTURE• Bright

– Solid growth B2C, B2B, Infrastructure– Drivers -- life cycle adoption, global, technology, trust

• Existing Players– Manufactures– Click and Mortar– Survivors Figure out ROI

• Multichannel– Communication -- customer experience– Distribution

• Innovation Opportunities– Start ups (VC will be back)– Existing Players– Fundamental Management Skill

BUILDING A NEW INTERNET STRATEGY

NEED RECOGNITION

•Introspection

•Customer Focus

•Customer Response

•Decision Process

TECHNOLOGY DEVELOPMENT

•Transfer in

•Internet Capability

COME BENEFIT PROPOSITION

•Trust vs. Push

•Segment

•Product Design

BUILDING A NEW INTERNET STRATEGY (cont’d)

BUILD RELATIONSHIP

•Trust

•Service

•Fulfillment

INNOVATE

PROFIT ABILITY – BUSINESS MODEL

•Venture Capital (internal / external)

•Customer Acquisition / Retention

•Advertising / PR / Selling

•Logistics / Channel

•Pricing