E corporation and their busine
E-corporation and their busineE-Corporation and their Business Model
Selling businesses, products or services has become much more complex through the Internet. As Hugh Patission mentioned, “The E-Corporation - Competition today is not between products, it's between business models”. This explains the complexity of the whole marketing of a product or service via net. Which way is more efficient, cheaper, updated, or which model to use for a specific product? Should companies go directly to consumers via the Web or protect their traditional channels? These are the daily questions of many corporations selling on the net.
The World Wide Web is a large environment progressing and changing at a very erratic pace, and only companies quick in trying, learning and adapting will survive and win this new battle. A thing that has changed in fact, is the approach of product/service towards consumer. Off-line the consumer is told to “check out” the new store next door, but online the consumer checks out what he wants. The consumer is able to travel through 50 different stores in different countries in one afternoon whilst it would probably take him weeks or months to do the same off-line. One of the features about surfing on the net is that one normally surfs on the page he or she wants, therefore the consumer almost gathers the total control of what to buy, choose, compare with, or how much information to retrieve. This change brings the first difficulty for companies, the bargain of a product. Obviously one of the major new facilities for consumers with the advantage of being able to compare prices much easier, efficient and less expensive, consumers become more picky and more specific in what they want or need. It is not a situation anymore in which the consumer has to satisfy its need with a similar object, or has to wait for a specific order or is even a victim of lack of information (e.g. pays more for a product than he should). Corporations are offering the consumer any possible variation on their products, e.g. consumer can order a digital camera in green not having to wait and fill-out a specific order in a store.
This enlarges the information or the access to available information giving the consumer the possibility to compare features, price and performance of the desired product and make a better choice. In other words companies battle fields have shifted towards space to put information, and ways and tricks to gain new passing eyes, potential new customers.
A number of different models used to approach the consumer on the net are as follow:
The Business Models of Lawrence Et.
The Business Models of Timmers
Real Time Business Model
They have been created with the aim to increase or maintain their market share in this new battle-field, the Cyberspace. Each product may apply a different strategy of models or combinations of models due to its shape, weight, time dependence or the segment the product is targeting.
The following will present and explain some of these models, the Advertising Model, the Subscription Model, the 3.5.7 Model by Lawrence Et. and, the Real Time Model, and also evaluating them.
As mentioned before each product or service has its own model in which a product is more successfully marketed.
How does a not-so-well known company show what they have, or how does a known company attack new segments seeking more consumer attention? Since the rolls on the net became voiceovers, the consumer retrieves what it wants, and the producer has to be hunted. The advertising model is based on using creative advertising banners and links in very frequented web-pages. Some companies have successfully advertised their new products and services through this system making sure their ads are more creative and attractive for the roaming eyes of the consumer. The biggest winner here though, is the page that offers that space. Search engines like Amazon or Yahoo have made big use of this model. All the services they offer (e.g. chats, games, e-mail, search engine etc.) are for free, charging companies for the use of space for ads on their Web-pages. The more frequented a page is the more it costs to display an ad. Companies starting to use this model are definitely at an advantage for their present position and the its cost.
The Subscription Model has become a very popular model with a high range of success. By subscribing in any service or company on the net, all your given information is stored on a special data base that is used to classify users. With this data-base that has all the records of visited products and purchases, the providers are able to target the visitors on a more personal basis. An example of this is Hotmail. Hotmail is not only one of the most popular, free e-mail services, but it also belongs to Microsoft. The new way to link the customer to the wanted page can also be manipulated by the new “Passport” system of Hotmail. All the information given in subscription to Hotmail is automatically transferred to other services Microsoft offers. Say you entered, your hobby is to travel, therefore you will get e-mails about travel with new offers on where to fly, it also facilitates one with the advantage of not having to re-enter all their personal details all over again when subscribing in a new company run by Microsoft. This model is very powerful and it does not end there, consumers are followed through their life cycle becoming aware of what the company has to offer to the specific consumers. It is more likely that a father will consider the idea of a family insurance rather than a child. For the child, the company will target for example new bikes. This model divides the segments even further, making sure that the consumer feels special, with not costing much extra.
The two models mentioned before are more aggressive and more suitable for newcomers to the net while the 3.5.7 Model tries more to maintain the customer happy and loyal. The model consists of 3 steps to focus better, a 5 dimensional strategy and a 7 point tactical Guide. This can be achieved with the help of the other models.
The focus is present in the physical and the electronic environment. Statistics have shown that purchasing through the net has increased but mostly the consumer gathers information off the net and purchases the item afterwards. Therefore the link between the physical and electronic environments have to be maintained and not be forgotten. The other aspect suggests the advantage of having cheap communication costs between the consumer and the company. The same e-mail can be sent to millions of people all at the same time.
The strategies mainly place importance in maintaining the communication with already existing customers, providing closer, faster service and support and not to forget the potential of future customers. This can be helped by the proper use of brand-links and stored data-base for example. The model’ tactical guide suggests to build brand awareness and loyalty, direct response promotions, education of the marketspace, product demonstration and distribution, research and product development and service and support. In other words the guide is based on the support and service. Efficiency advantages and low prices will not be enough to compete in the almost perfect compatible environment. Companies will have to come up with new ideas and use their competitive advantages more efficiently.
The following model describes a technological advantage not used by many yet looking to be very successful in the near future. The Real Time Model saves on time cost but it is not very useful for all items. This model allows customers to build their own needs with not much extra cost. A consumer can be surfing on the net in search of a good offer for desktops. Through www.dell.com to hungry hunter can build its own machine, put in what he wants what he does not want, get a price and be told when it would arrive. Levi’s has a similar system that allow people to fit jeans through specific cameras that measure the customer on the other side. Here but the accessibility to those cameras plus the cost make the scenario harder. Herewith is time saved by the consumer and money saved by the producer. The inventory reduces and therefore cost. The consumer does not have to leave the house search for a shop, a parking, fit the pants etc.
It is said that the Internet facilitates the customer with more reliable and varied information. Free services, sponsored by banners or links, facilitate this, having comparisons of all items from different categories for free and therefore everything becomes an auction with no geographical limits.
Is this the future of future purchases? No need to interact face to face or even leave the house?
Consumers need human interaction, they want to feel what they are buying,. It changes from consumer to consumer whether she feels comfortable to deliver reliable information on the subscription form or the need to touch the object that is purchased. Is it secure enough to enter credit-card numbers on the net? What about if a buyer is under 18 and has no credit card? Speculative people say it is as secure as paying in a restaurant since they also keep a copy of your number, why do all navigators tell you after any introduction of codes that this is not 100% secure and that others could have access? What about all the offers people do not even have access to, since they do not promote over the net or over the compared pages? What about the market without net access, who is going to target and satisfy it?
The other day I was sitting on the bus and I could overhear a frustrated worker explain his misadventure with trying to find and purchase specific items for the company. The man was rather disappointed and had the feeling of it being a time-consuming operation and also commented how off-line would be more efficient. There hits the factor of having the precise equipment that fasten up the search and this can often be an impediment for the consumer to have enough knowledge about its proper use and its possibilities. The time factor is also very relative. What is more comfortable to wait for a two week delivery or to spent one day shopping around and acquiring it the same day what you want? An other issue is the female? Who is going to explain to a female that loves to shop around and has the pleasure to talk to salespeople, to be more efficient and do the shopping over the net?
Companies will have to find the perfect way to combine both, on-line and off-line shopping and the way to target the whole segment successfully. Statistics have proven that most of the information is gathered of the net though then the actual purchase happens through the shop.
The fact that Internet cuts through the geographical hurdle, it is a huge market, lets the consumer be in almost total control (e.g. through the actions in almost everything) and has no time restrictions “it is always open”, it increases the importance of this powerful tool day by day. This increases the market on the net but does not necessarily decrease the one off-line since as we said before consumers are more likely to touch the object before they purchase it. Future models will aim to perfect a combination of these two environments, like Dell has or probably even better.
References:
Hamel G.,Sampler J.(1997), ”E-Corporation”, Fortune, Vol. 23
(December), 44-56
http://www.business2.com/
http://www.compare.com/
http://www.dell.com/
http://www.amcity.com/boston/stories/
http://www.lucent.com/enterprise
http://www.cosmocom.com/
Appendix:
Creating an Internet marketing plan requires at least seven steps.
1. Conduct a situation analysis.
Review the existing marketing plan and any other information that can be obtained about the company and its brands.
Examine environmental factors related to online marketing.
Develop a market opportunity analysis (includes a SWOT analysis).
2. Identify target stakeholders.
3. Set objectives. Some objectives are global while others apply to specific targets.
4. Design marketing-mix strategies to meet the objectives.
5. Design an action plan (tactics to implement the strategies).
6. Develop a budget.
7. Develop an evaluation plan.
This following model explains the new approach of instant delivery of any picture over the net. Bill gates together with J. Paul Getty Jr. discovered the fact that the access to specific pictures were not as accessible as other items on the net even though the fact that at least in every third e-mail a picture is attached. It is fast and easy to send pictures around the web. Digital Stock Photo is supposed to deliver any wanted picture instantly. Consumers are able to purchase any picture wanted and are able to just download it.
The objective of this service is to target any segment and any ”net-surfer” who is interested in pictures of all types. How will these two businessmen achieve the goal and sell the service.
As we know Microsoft has many web-pages where links can and are already be set so that frequent users are able to notice the new service. The service offered and the sold product does not require for need of touch, smell or personal interaction. The off-line aspect does not make a difference at all. Consumers visit the web-page, searches for the wanted and downloads the picture.
Through this specific service and the two creators of it, shorten ups the model in a very unique and simple form. The model consists of advertising the service in a dynamic way and to be aware of new coming products such as specific hardware that could improve even more such facility. The former point, dynamic advertisement is very easy to follow for Microsoft through their ”Passport” system. In a simple way they will choose and lead the consumer to its new need by suggesting to take a ride on the new page. This simple model is also very easy to evaluate by registering which, how many and how often pictures have been purchased. This is an example of how models can be changed around depending on the marketed product or service.