INFO 1500 Introduction to Information Technology Fundamentals Outline 11. ecommerce and ebusiness 1. E Commerce and the Internet 2. E Commerce: Business and Technology 3. Emotion oriented ecommerce Alexander Nikov 11-2 E commerce today The Growth of E-Commerce Use of the Internet and Web to transact business; digitally enabled transactions Began in 1995 and grew exponentially, still growing even in a recession Companies that survived the dot com bubble burst and now thrive E commerce revolution is still in its early stages FIGURE 10-1 Retail e-commerce revenues grew 15 25 percent per year until the recession of 2008 2009, when they slowed measurably. In 2012, e- commerce revenues are growing again at an estimated 15 percent annually.. 11-3 11-4
8 unique features 1. Ubiquity Internet/Web technology available everywhere: work, home, etc., anytime. Marketplace removed from temporal, geographic locations to become marketspace Enhanced customer convenience and reduced shopping costs Reduces transaction costs Costs of participating in market 2. Global reach The technology reaches across national boundaries, around Earth Commerce enabled across cultural and national boundaries seamlessly and without modification Marketspace includes, potentially, billions of consumers and millions of businesses worldwide 11-5 11-6 3. Universal standards One set of technology standards: Internet standards Disparate computer systems easily communicate with each other Lower market entry costs costs merchants must pay to bring goods to market Lower consumers search costs effort required to find suitable products 4. Richness Supports video, audio, and text messages Possible to deliver rich messages with text, audio, and video simultaneously to large numbers of people Video, audio, and text marketing messages can be integrated into single marketing message and consumer experience 11-7 11-8
5. Interactivity The technology works through interaction with the user Consumers engaged in dialog that dynamically adjusts experience to the individual Consumer becomes co participant in process of delivering goods to market 6. Information density Large increases in information density the total amount and quality of information available to all market participants Greater price transparency Greater cost transparency Enables merchants to engage in price discrimination 11-9 11-10 7. Personalization/Customization Technology permits modification of messages, goods Effect Personalized messages can be sent to individuals as well as groups Products and services can be customized to individual preferences 8. Social technology The technology promotes user content generation and social networking Effect New Internet social and business models enable user content creation and distribution, and support social networks Many to many model 11-11 11-12
Effect of the Internet on the marketplace Reduces information asymmetry Offers greater flexibility and efficiency because of: Reduced search costs and transaction costs Lower menu costs Greater price discrimination Dynamic pricing May reduce or increase switching costs May delay gratification: effects dependent on product Increased market segmentation Stronger network effects More disintermediation The Benefits Of Disintermediation To The Consumer 11-13 FIGURE 10-2 The typical distribution channel has several intermediary layers, each of which adds to the final cost of a product, such as a sweater. Removing layers lowers the final cost to the consumer. 11-14 Digital markets compared to traditional markets Outline 1. E Commerce and the Internet 2. E Commerce: Business and Technology 3. Emotion oriented ecommerce 15 11-15 11-16
Types of e commerce Business to consumer (B2C) Example: BarnesandNoble.com Business to business (B2B) Example: ChemConnect Consumer to consumer (C2C) Example: ebay How Internet changes the markets for digital goods Mobile commerce (m commerce) 11-17 18 11-18 ecommerce business models E commerce revenue models 1. Advertising 2. Sales 3. Subscription 4. Free/Freemium 5. Transaction Fee 6. Affiliate 19 11-19 11-20
Web 2.0: Social networking and the wisdom of crowds Most popular Web 2.0 service: social networking Social networking sites sell banner ads, user preference information, and music, videos and e books Social shopping sites Swap shopping ideas with friends (Kaboodle, ThisNext) Wisdom of crowds/crowdsourcing Large numbers of people can make better decisions about topics and products than a single person Prediction markets: Peer to peer betting markets on specific outcomes (elections, sales figures, designs for new products) E commerce marketing Internet provides new ways to identify and communicate with customers. Long tail marketing: Ability to reach a large audience inexpensively Behavioral targeting: Tracking online behavior of individuals on thousands of Web sites Internet advertising formats Search engine marketing, display ads, rich media, e mail, and so on 11-21 11-22 Online marketing and advertising formats (billions) Web Site Visitor Tracking 23 11-23 FIGURE 10-3 E-commerce Web sites have tools to track a shopper s every step through an online store. Close examination of customer behavior at a Web site selling women s clothing shows what the store might learn at each step and what actions it could take to increase sales. 11-24
Firms can create unique personalized Web pages that display content or ads for products or services of special interest to individual users, improving the customer experience and creating additional value. Web Site Personalization How An Advertising Network Such As DOUBLECLICK Works Advertising networks have become controversial among privacy advocates because of their ability to track individual consumers across the Internet. FIGURE 10-5 FIGURE 10-4 11-25 11-26 B2B e commerce M commerce U.S. B2B trade in 2012 is $16 trillion U.S. B2B e commerce in 2012 is $4.1 trillion Procurement requires significant overhead costs, which Internet and networking helps automate Variety of Internet enabled technologies used in B2B Electronic data interchange (EDI) Private industrial networks (private exchanges) Net marketplaces Exchanges In 2012 is 10% of all e commerce Fastest growing form of e commerce Some areas growing at 50% Four billion mobile phone users worldwide Main areas of growth Retail sales at top Mobile 400 (Amazon, ebay, etc.) Sales of digital content (music, TV, etc.) Local search for restaurants, museums, stores 11-27 11-28
Consolidated Mobile Commerce Revenues Outline 1. E Commerce and the Internet 2. E Commerce: Business and Technology 3. Emotion oriented ecommerce Figure 10-9 Mobile e commerce is the fastest growing type of B2C e commerce although it represents only a small part of all e commerce in 2011. 11-29 11-30 Emotions expression in politics and animal world Affect, Mood, and Emotion Emotion: a concept involving three components Subjective experience Expressions (audiovisual: face, gesture, posture, voice intonation, breathing noise) Biological arousal (ANS: heart rate, respiration frequency/intensity, perspiration, temperature, muscle tension, brain wave) Affect: some more than emotions, including personality factors and moods Mood: long-term emotional state, typically global and very variable over the time, dominates the intensity of each short-term emotional states. 11-31 11-32
Six Universal Facial Expressions of Emotions Understanding Emotion Emotion is not phenomenon, but a construct Components of emotion: cognitive processes, subjective feelings, physiological arousal, behavioral reactions a) Happiness b) Surprise c) Fear d) Sadness e) Anger f) Disgust 11-33 11-34 Intelligent Emotion Recognition Moving from Non-Purchasing Decisions to Purchasing Decisions 11-35 11-36
Facial Expression Recognition Audio-based emotion recognition Pantic & Rothkrantz in PAMI 2000 performed a survey of the field Recognize a generic procedure amongst all systems: Extract features (provided by a tracking system, for example) Feed the features into a classifier Classify to one of the pre-selected emotion categories (6 universal emotions, or 6+neutral, or 4+neutral, etc.) Audio Signal Audio Feature Extraction Automatic Emotion Classification Speech Rate Pitch Intensity Spectrum Analysis Mel Frequency Cepstral Coefficients (Short-term Power Spectrum of Sound) 11-37 11-38 Emotion recognition from physiological measurements (biosignals) EEG Brain waves Respiration Breathing rate BVP- Blood volume pulse GSR Skin conductivity Acoustics and noise Temperature EMG Muscle tension EKG Heart rate Kansei engineering Kansei Engineering is a consumer-oriented product development method, which identifies consumers feelings concerning a product and therewith correlated design elements. Kansei engineering is a technique for product development (e.g. Nagamachi 1994) which takes into account the desirable features of products, as perceived by end users themselves. The correlation between consumers feelings and design elements can help companies to design products that presents the desired attributes. Kansei is a Japanese term which means psychological feeling or image of a product. Kansei engineering refers to the translation of consumers' psychological feeling about a product into perceptual design elements. Kansei engineering is also sometimes referred to as "sensory engineering" or "emotional usability." This technique involves determining which sensory attributes elicit particular subjective responses from people, and then designing a product using the attributes which elicit the desired responses. 11-39 11-40
Who is using Kansei Engineering Miata Results Automobile Apparel Electronics Mazda, Mitsubishi, Nissan, Toyota, Honda, Isuzu, Ford, GM, Delphi Wacoal, Goldwin Matsushita, Sanyo, Sharp, Samsung, LG Electronics, Fuji, Canon Miata stick shift at 9.5cm optimizes feeling of sportiness and control. Home/ Interior Cosmetics Matsushita, Toto, Inax, YKK, Tateyama, Ube, Kansai Elec Shiseido, Noevia, Milbon "This car is alive. It breathes and flexes its muscles and generally behaves more like an organism than a machine... a flat-out blast to drive. 11-41 11-42 Model of Kansei Engineering in ecommerce website 11-43