Chapter 4: E Business Revenue Models. Web Catalog Revenue Models. Adapted from traditional catalog based model

Transcription

1 E Business Chapter 4: E Business Revenue Models Web Catalog Revenue Models Adapted from traditional catalog based model Seller established brand image Sold through printed information Mailed to prospective buyers Web sites expand traditional model Replace or supplement print catalogs Offer flexibility Order through Web site or telephone Payment though Web site, telephone, or mail Creates additional sales outlet 1

2 Web Catalog Revenue Models Computers and consumer electronics Apple, Dell, Gateway, LG, Samsung Books, music, and videos Amazon, Barnes & Noble, CDNow, itunes Luxury Goods Vera Wang and Versace, BlueNile Clothing retailers Abercrombie & Fitch, Ralph Lauren, Nike Flowers, gifts, general discounters E Mart Web Catalog Examples Walmart Allied Electronics 2

3 Digital Content Revenue Models Highly efficient distribution mechanism ProQuest: sells published documents digital copies Dow Jones newspaper publisher subscriptions Digitized newspaper, magazine, and journal content Association for Computer Machinery: digital library Sellers of adult digital content Pioneered online credit card payment processing Advertising Revenue Models United States network television Provides free programming and advertising messages Site visitor views problem (measuring and charging) Stickiness Keeping visitors at site and attracting repeat visitors Exposed to more advertising in sticky site Demographic Information Characteristics set used to group visitors 3

4 Advertising Revenue Models Successful sites attract specific groups About.com, HowStuffWorks, Drudge Report Web portals Yahoo! First Web directory Search engine results presented on separate page pg Search term triggered advertising Advertising Revenue Models Newspaper publishers Publish print content on Web Internet Public Library Online Newspapers page Links to worldwide newspaper sites Newspaper s Web presence Provides greater exposure and advertising audience Print edition sales loss (difficult to measure) Operating costs not covered by advertising revenue 4

5 Advertising Revenue Models Targeted classified advertising sites More successful at generating adverting revenue Web site profit potential Specialize in classified advertising Targeted classified advertising sites (cont d.) Craigslist Facebook Revenue Model Cash flow positive for the first time: Sep Network Externalities Revenue Model Advertising (Targeted Ads) E Commerce (Virtual Gifts) Applications (User selected) Targeted Facebook ads Available to anybody (individuals or companies) Based on demographics, keywords, profiles 5

6 Advertising Subscription Review Models Subscribers Pay fee and accept advertising Typically less advertising Compared to advertising supported sites Web sites offer different degrees of success The New York Times (today) Bulk of revenue derived from advertising The Wall Street Journal (mixed model) Subscription revenue weighted more heavily Advertising Subscription Review Models Business Week Mixed revenue model variation Free content at online site Requires paid subscription to print magazine Archived article additional charge (over five years old) ESPN Leverages brand name from cable television business Sells advertising, offers free information Collects Insider subscriber revenue 6

7 Fee for Transaction Revenue Model Service fee based on transaction number or size Web site offers visitor personal service Formerly, human agents provided service Value chain Disintermediation Intermediary (human agent) removed Reintermediation New intermediary (fee for transaction Web site) introduced Fee for Transaction Revenue Model Online Travel Agents (Travelocity, Expedia, Orbitz) Automobile Sales (carsdirect) Stockbrokers (etrade) Insurance Brokers (Progressive) Event Tickets (Ticketmaster) Online Banking (Shinhan, Daegu Bank) 7

8 Fee for Service Revenue Model Companies offer web service Music Movies Television Video Games Professional Services Privacy Protection Web Hosting Online Dating Revenue Models in Transition Need to change revenue model When Web users needs change Conditions after 2000 Funding became scarce Unprofitable growth phase Change model or go out of business Change model or go out of business Understand your customers! 8

9 Revenue Strategy Issues Implementations issues Channel conflict and cannibalization Strategic alliances and channel distribution management Mobile commerce Channel Conflict Channel conflict (cannibalization) Company Web site sales activities interfere with existing sales outlets Retail distribution partner issues Levis: stopped selling products on company Web site Site now provides product information 9

10 Strategic alliance Strategic Alliances Two or more companies join forces Undertake activity over long time period Joining Web sites with channel distribution management firms Amazon.com Joined with Target, Borders, CDnow, ToyRUs Mobile Commerce Few companies successful generating i ifi significant revenues NTT s DoCoMo I Mode service (Japan cell phone) Send short messages, play games, obtain weather forecasts AvantGo (United States) Offers channels of information as PDA downloads Mobile commerce: $30 billion by 2015 mcommerce accounted for 1% of EC Sales in 2010 Smart Phones are now leading the way! 10

11 Creating an Effective Web Presence Organization s presence Public image conveyed to stakeholders Stakeholders Customers, suppliers, employees, stockholders, neighbors, general public Effective Web presence Critical Even for smallest and newest Web operating firms America versus Korea? How important is a web presence? Identifying Web Presence Goals Business physical space Focus on very specific objectives Not image driven Must satisfy many business needs Fails to convey good presence Good Web site design Provides effective image creation features Provides effective image enhancing features Serves as sales brochure, product showroom, financial report, employment ad, customer contact point 11

12 Identifying Web Presence Goals Making Web presence consistent with brand image Different firms establish different Web presence goals Coca Cola pages Usually include trusted corporate image (Coke bottle) Traditional position as a trusted classic Pepsi pages Usually filled with hyperlinks to activities and productrelated promotions Upstart product favored by younger generation Achieving Web Presence Goals Effective site creates attractive presence Meets business or organization objectives Objectives Attract visitors to the Web site Make site interesting Convince visitors to follow site s links Createimpression consistent withorganization s desired image Build trusting relationship with visitors Reinforce positive image Encourage visitors to return 12

13 Web Site Usability Current Web presences Few businesses accomplish all goals Most fail to provide visitors sufficient interactive contact opportunities Improve Web presence Make site accessible to more people Make site easier to use Make site encourage visitors trust Develop feelings of loyalty toward organization Web Site Visitors Successful Web businesses: Realize every visitor ii is a potential il customer (partner) Crafting Web presence is an important concern Know visitor characteristic variations Visitor at site for a reason Visitors have: Various needs, experience, expectations, technology 13

14 Visitor Motivations Learning about company products or services Buying products or services Obtaining warranty, service, repair policy information Obtaining general company information Obtaining financial information Identifying people Obtaining contact information Web Site Accessibility Build Interface Flexibility Offer text only version Use description tags for images (hearing impaired) Use smaller (optimized) graphic images Provide two way communication channel Choose a domain name that is easy to remember 14

15 Trust and Loyalty Creates relationship value Good service leads to seller trust Delivery, order handling, help selecting product, after sale support Satisfactory service builds customer loyalty It costs more money to attract a new customer than it does to keep an existing customer Connecting With Customers Important element of a corporate Web presence Identify and reach out to customers 15

16 Nature of Web Communication Personal contact (prospecting) Employees individually id search for, qualify, contact tpotential ti customers Mass media Deliver messages by broadcasting Addressable media Advertising efforts directed to known addressee Internet medium Occupies central space in medium choice continuum Web Communications 16

17 Summary Six main approaches to generate Web revenue Web Catalog Revenue Models dl Digital Content Revenue Models Advertising Revenue Models Advertising Subscription Review Models Fee for Transaction Revenue Model Fee for Service ServiceRevenue Model Web site usability Customer focus 17