Internet Marketing - b2c Business Models and Strategies

8/3/2019 Internet Marketing - b2c Business Models and Strategies

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Page 2Prof. Rushen Chahal

ECONOMICS OF E-

BUSINESS1. Shift From An Economy of Scarcity to One ofAbundance.

2. Both Businesses and Consumers Have a Glut ofMarketplace Choices.

3. Transaction and Coordination Costs areDisappearing.

4. It is Possible to Calculate Demand With Precision.

5. Switching Costs Approach Zero in the Absence ofActions by Marketers.

6. Costs for Many Products Have High Fixed Costs ofDevelopment and Virtually No Variable Cost ofProduction.

7. Scale is More Likely to be Defined by Number ofCustomers Than by Production Capacity.

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THE CUSTOMERHAS NOMORETIME

The Struggle toAcquire

Customers is Exceeded

Only by the Struggle toRetainThem.

MARKETER

VISITOR

Internet Time is not ReadilyDevoted to theAdvertising

There.


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3-4SHIFTFROMAN ECONOMYOF

SCARCITYTOONEOFABUNDANCEAmazon is a Good Example ofInformation

Becoming More ValuableAs It Is Shared

Broad and DeepAssortment of Products

Much Content Provided by Visitors

Use of Data to Provide Personalized

Purchase Recommendations

Customer Behavior on Site

Behavior of Similar Customers


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3-5BOTHBUSINESSESAND CONSUMERS

HAVEAGLUTOFCHOICES

IN THEMARKETPLACE

Used with permission of HotHotHot.com


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TRANSACTIONAND COORDINATION

COSTSARE DISAPPEARING

AffiliateMarketingas Portrayed

ByAmazon

Used with permission of Amazon.com


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ITIS POSSIBLETO CALCULATE

DEMAND WITH PRECISION

InformationFlows

Quickly

Freely

Up and Down the Value Chain

Winners and Losers Can beSpotted Quickly


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3-8SWITCHING COSTSAPPROACH

ZEROIN THEABSENCEOFACTIONS BYMARKETERS

The CommonTCP/IPPlatformMakes It Easy

to Move FromOne Site

toAnother

Retention/Relationship

MarketingKey


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3-9COSTS FORMANY PRODUCTS FOLLOWA

MODELOFHIGHFIXED DEVELOPMENT

COSTSAND VIRTUALLY NO VARIABLE COSTOF PRODUCTION.

High Up-Front Costs for

NecessaryTechnology

ServingAnIncremental

CustomerAlmost Cost-

Free Except forDistribution

Stair-Step Fixed Costs


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3-10SCALEIS MORE LIKELYTOBE

DEFINED BYNUMBEROFCUSTOMERS

THAN BY PRODUCTION CAPACITY.

FewerResources Devoted to

Physical Production

Serving a Large Customer

Base is Cost Effective

BUTIt is Important to

Devote Sufficient Resources

to Distribution and Customer

Service


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3-11

THEADVERTISING-DRIVEN MODEL

Content

Advertising

Monetize


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REVENUEMODELS

Access

Membership/Subscription

Syndication/Licensing

Advertising

Transactions

Services


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STRATEGYRECOMMENDATION

Web Sites Need

Multiple Revenue Streams.


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ENTERPRISE VALUE

CREATION

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MAPPING CONSUMER

NEEDSTO RETAIL TACTICS

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Source: Jupiter Communications


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DIMENSIONSOFVALUEAccording to Rayport and Svoikla

Content

Context

Infrastructure


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ELEMENTS OFTHE VALUE PROPOSITION

According to Kim and Mauborgne

Eliminate

Reduce

Raise

Create


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QUICKENS VALUE CURVE3-18


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3-19DEFINITION OF BUSINESS MODELThe Functions of a Business Model

According to Chesbrough and Rosenbloom:

Articulate the Value Proposition

Identify a Market Segment Define the Structure of the Value Chain

Estimate the Cost Structure and Profit Potential

Describe the Position of the Firm in the ValueNetwork

Formulate the Competitive Strategy


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INTERNETBUSINESS MODELS

The B2C Space The B2B Space

Aggregator ASP

Bricks N Clicks Infomediary

Content Provider Marketplace

Consumer Portal Machine-To-Machine

Peer-To-Peer


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INTERNET BUSINESS

MODELS

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The B2C Space

AggregatorBricks N Clicks

Content Provider

Consumer Portal

Peer-To-Peer


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3-22

CONTENT PROVIDER

The Traditional Media Model

Content Free to Visitors

Revenue FromAdvertising

Difficult to Realize SufficientAdvertisingRevenue

OtherRevenue StreamsSubscriptions

Syndication


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CONSUMERPORTALS

A Doorway to Major Collections

of Content and to the Internet

Niche

Voice


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AGGREGATOR

As Intermediaries, Provide Selection,

Organization, Price, Convenience, Matching,

and Fulfillment (Tapscott,Ticoll and Lowy)

Not Unlike Physical World Retailers

Many Successful on Web

New OpportunitiesIntegrating Financial Services


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BRICKS N CLICKS

Combination ofOnline and Offline Retailing

Physical Products

Services

Degree ofIntegration Depends on

Brand, Management, Skills, Resources (Gulati andGarino)


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PEER-TO-PEER

File Transfer BetweenIndividuals

Napster

Gnuetlla and Other Emerging File-

Swapping Services


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STRATEGIC SUMMARY

Take Advantage of the New Economics

Value =f(Customer Needs, Core

Competencies)

Multiple Revenue Streams Essential

Viable B2C Models Are Evolving

Little Distinction Between B2C and B2B Models

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Internet Marketing - b2c Business Models and Strategies

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