Chapter 1: Framework for internet marketing & e-commerce

Question 1

What are the different management philosophies that have preceded the evolution towards our digital economy? What stage do we find ourselves in at this very moment?

Answer 1

60's: Product efficiency
70's: Strategic planning
80's: Total quality management
90's: Creating value and relationships
00's: Customer co-creation (passive customers --> active customers)
10's: Social networks
10's-20's: Content marketing
20's: On-demand economy
--> We now find ourselves in between the content marketing and on-demand economy stages

Question 2

Explain the major implications of our emerging digital economy!

Answer 2

1. Paradox: speed vs knowledge
2. Globalization due to internet leads to global comptetion (especially for products or services with a 100% digital fit like movies or music)
3. Virtual marketplaces replace the physical ones. This leads to greater transparancy, which makes it so that competitors can learn from eachother very rapidly which leads to shorter product/service life cycle.
4. High emphasis on relationship building, networking and partnering.
5. Creation of ecosystems
6. New business models
7. More efficient business processes (value chain needs to be more streamlined in order to shorten the time between purchase and reception of the product.

Question 3

How would you define one-to-one versus many-to-many marketing? How do they represent major marketing opportunities?

Answer 3

One-to-many marketing = traditional mass communication where everyone gets the same message. There is also lower targeting or focus possibilities.
–> Opportunity: you reach a large number of people.

One-to-one internet marketing = personalized messages to specifically targeted customers in stead of the mass.
–> Opportunity: greater cost efficiency for the campaign + More targeting.

Many-to-many marketing = all activities on social networks and media. Customers and organizations are all present on these social networks and create content.
–> Opportunity: interaction and engagement + personalized messages + targeting

Question 4

Provide a brief history on E-commerce thereby distinguishing 3 stages! Moreover, what were some of the early visions on E-commerce that were not fulfilled? Explain!

Answer 4

1. 1995 - 2000: Invention
   = simple websites and web applications. Euphoric visions of: friction-free commerce and first-mover advantages. –> no strategy, companies just did things because they could.
   = primairly retail
   2000: dot-com crash = overvaluation of online companies.
2. 2001 - 2006: Consolidation
   = Companies gained strategic vision –> Higher focus –> More sophisticated products. Search Engine Advertising became more and more important.
   = Retail, but also services now
3. 2007 - Present: Reinvention due to mobile
   = Smartphones created an app economy that sparked rapid growth of:
   - Social networks
   - Mobile platforms
   - Local commerce
   - On demand services
   –> Transformation of internet use, but also marketing
   = Retail, services, and content

Some early visions that weren’t fulfilled:

• Friction-free commerce: considerable price dispersion and less price sensitivity
• Perfect competition: information asymmetries still persist, blocking perfect competition.
• Disintermediation did occur
• First mover advantages: they weren’t as large. The followers usually overtake the first mover, since the latter makes all the mistakes that the former can learn from.
• -> Suprise: the rise of mobile.

Question 5

Describe the unique features of E-commerce technology!

Answer 5

Unique features of e-commerce consist of:

• Ubiquity = available anytime, any place
• Global reach
• Universal standards = standards in use of technology to make it possible for devices to communicate (ex. coding language).
• Information richness
• Interactivity
• Information density = cost of information is low, while quality is high.
• Personalization/customization
• Social technology

Question 6

Describe the different types of E-commerce and provide an example for each!

Answer 6

Different types of E-commerce consists of:
Classification based on the market:
- B2C –> ex. Bol.com
- B2B –> ex. Exact online
- C2C –> ex. Ebay
Classification based on the used technology:
- Social e-commerce –> ex. Facebook marketplace
- Mobile e-commerce –> ex. App store, mobile apps of e-commerce firms, …
- Local e-commerce –> ex. Groupon (= you get certain discounts based on your location)

Question 7

Describe the tradeoff between information richness and reach and how it was affected by the internet. What are the implications of the effect of the internet on this trade-off?

Answer 7

There used to be a clear trade-off between richness and reach –> Marketers had to decide which one they prefered since both couldn’t really co-exist. Internet shifted this relationship upwards: reach and richness are more compatible due to the existence of the internet. This is because the internet grants access to a large number of people while also delivering rich information.

Implications:

• Accesibility = a lot more people have access to rich information
• Entry barriers lowered or disappeared.
• Disintermediation
• Buyer search costs reduced
• Mass customization = No longer standard messages for the mass.
• Relationship marketing

Question 8

Describe e-commerce and e-business. What is there relationship to eachother?

Answer 8

E-commerce = Digitally enabled commercial transactions between and among organizations and individuals.

E-business = the use of internet technology for the implementation of business processes, electronic commerce and communication and cooperation within the company, between company & customer, supplier & other business partners.

E-commerce is a part of E-business.