International MBA Refresher

E-Marketing /Technological Marketing

Professor: Jacques Nantel, Ph.D HEC Montréal Canada

Content• Adding value to the business plan (10 min)

• Retailing (20 min)– Workout session : Amazon.com (30 min)

– Presentations (15 minutes)

• Advertising (15 min)

• Market places (15 min)

• Break (30 min)

• Data base marketing (20 min)– Workout session : MSN passport (30 min)

– Presentations (15 minutes)

• Conclusion (10 min)

Starting positions

• E-marketing is not a strategy

• It is merely a catalyst

• To apply it is not necessarily a plus

• To ignore it is a minus

• It can help the firm by– reducing costs– Increasing revenues

The e-sky is falling!(Amazon.com)

Yet….

• There are more consumers surfing

• Who stay longer on the net

• And who buy more and more

“…global marketing information from a global research company, with

unequalled expertise and experience in internet issues …”Taylor Nelson Sofres Taylor Nelson Sofres

Interactive -Interactive -GGloballobaleeCommerceCommerceRReport 2001eport 2001

Taylor Nelson Sofres Taylor Nelson Sofres Interactive -Interactive -GGloballobaleeCommerceCommerceRReport 2001eport 2001

E-commerceWorld growth

Countryaverage2001

Countryaverage2002

Year on yearchange

Lowest Highest

Internet users 31% 27% +4% 4%Indonesia

63%Norway

Online shoppers 15% 10% +5% 1%Turkey

33%USA

Online dropouts 15% 15% No change 0%Hungary

34%Korea

Offline shoppers 15% 13% +2% 0%Hungary

31%Hong Kong

Futures onlineshoppers

17% 14% +3% 0%Hungary

41%Japan

Internet users across the world 2001

4 4

911

13 1315 15 16 16 17

19

2426 26

3033 33 33 34

3639 40 40

4345

48 4851 52

5760

62 63

0

10

20

30

40

50

60

70

Indo

nesi

a

Ukr

aine

Lith

uani

a

Phi

lippi

nes

Indi

a

Latv

ia

Por

tuga

l

Pol

and

Turk

ey

Arg

entin

a

Hun

gary

Thai

land

Mal

aysi

a

Spa

in

Cze

ch

Italy

Fra

nce

Bel

gium

Est

onia

Gre

at B

ritai

n

Ger

man

y

Irela

nd

Isra

el

Taiw

an

Hon

g K

ong

Fin

land

Sin

gapo

re

Aus

tral

ia

Kor

ea

Net

herla

nds

US

A

Can

ada

Den

mar

k

Nor

way

Per

cen

tag

e o

f to

tal a

dult

popu

latio

n

Percentage of the population who have personally used the Internet during the past month

Country average (31%)

GeR

Japan results = 68% (data collected in the TNS AP M-commerce study)China results = 23% (data collected in the TNS AP M-commerce study)

1 12 2 3 3 3 3 3 4 5 6 6 6 7 7 8 9 9 9

1012

1416

17 17 18 18 18 18 18 19 19

24

28

33

0

5

10

15

20

25

30

35

40

Tu

rke

y

Ph

ilip

pin

es

Th

aila

nd

Ind

ia

Ind

on

es

ia

La

tvia

Lith

ua

nia

Arg

en

tina

Hu

ng

ary

Ma

lays

ia

Po

lan

d

Es

ton

ia

Ch

ina

Ukr

ain

e

Ita

ly

Ho

ng

Ko

ng

Ta

iwa

n

Be

lgiu

m

Sin

ga

po

re

Sp

ain

Cze

ch R

ep

ub

lic

Fra

nce

Po

rtu

ga

l

Isra

el

Fin

lan

d

Ja

pa

n

Au

str

alia

De

nm

ark

Ne

the

rla

nd

s

Ca

na

da

Ire

lan

d

No

rwa

y

Ko

rea

Gre

at B

rita

in

Ge

rma

ny

Us

a

Per

cen

tag

e o

f In

tern

et u

sers

Percentage of Internet users who have bought goods or services onlineduring the past month

• The USA retains its position as the nation with the greatest proportion of online shoppers at 33%. This compares with the global average of 15%.

• In India, the Philippines,Thailand and Turkey, 2% or less of the online population shop online.

Country average (15%)

GeR

12

4 4 4 45

6 67 7

8 89

10 10 10 1011

1415 15 15

16 1618

1920 20

21 2122

25 25

28

31

0

5

10

15

20

25

30

35H

un

ga

ry

Ind

ia

Arg

en

tina

Gre

at B

rita

in

Ph

ilip

pin

es

Po

rtu

ga

l

Ind

on

es

ia

Lith

ua

nia

Tu

rke

y

Fin

lan

d

Ukr

ain

e

Ch

ina

Ire

lan

d

La

tvia

Es

ton

ia

Ma

lays

ia

Po

lan

d

Th

aila

nd

Sin

ga

po

re

Cze

ch

Fra

nce

Isra

el

Ta

iwa

n

Be

lgiu

m

De

nm

ark

Ne

the

rla

nd

s

Sp

ain

Au

str

alia

Ca

na

da

Italy

US

A

Ko

rea

Ge

rma

ny

Jap

an

No

rwa

y

Ho

ng

Ko

ng

Per

cen

tag

e o

f In

tern

et u

sers

Percentage of Internet users who have bought goods or services offlineas a result of information found online during the past month

• The Internet as an information channel for offline purchasing continues to be important.

• Hong Kong, demonstrates this well, supplementing online purchasing with substantial offline revenues.

Country average (15%)

GeR

Products purchased online

26

17

13

11 10 109

87

5 5 4 4 4 4 42

1

18

0

5

10

15

20

25

30

Books

Mus

ic/ C

Ds

Clothe

s

Electro

nics/

Electri

cal G

oods

PC Har

dwar

e

PC Sof

twar

e

Holida

ys/ L

eisu

re T

rave

l

Groce

ries/

Foo

d

Tick

ets t

o Th

eatre

/ Cine

ma

etc

Toys

/ Gam

es

Video

s

Sports

Equ

ipm

ent

Toile

tries

/ Cos

met

ics

Trav

el (b

usine

ss o

nly)

Stock

s/ sh

ares

/ mutu

al fun

ds

Furnit

ure/

hous

ehold

furn

ishing

s

Jewell

ery/

Fashio

n Acc

esso

ries

Car

Other

Per

cen

tag

e o

f In

tern

et u

sers

who

sho

p on

line

GeR

In brief, a growing market but one has to understand the real

opportunities

• Internet will not be the revolution that some had predicted

• It will not be a fad

• For most retailers it will be a necessary evil

• Building a new distribution network does not create any new demand

• There are not two types of consumers one virtual the other one tangible

• Forget the first mover’s advantage

• Technology is important but having a decent profit making business plan is still crucial.

Some dying myths

Different strategies for different products

Different strategies for different productsStrategy Type of

productsDigital

products(music,video,

software)

Services(Banks,brokers,medical

services)

Productswith local

inventories(Food,drugs,

clothing)

Specialized products or tailormade

(automobiles, furniture,antiques)

Distribution Download Downloadsand mortar

ClickAnd mortar

Click

Barriers Few entrybarriers,

could createexit barriers

No entrybarriers.High exitbarriers(banks)

Few entrybarriers.

Could createexit

barriers(e-passports)

Few barriers

Branding Artist not site Key Key Product not site

Price sensitivity High High Low Variable

1-Digital products

• New networks

• Cost and price reduction

• Standard technology

Sales of music on the Internet(000 $ us)

0

1000

2000

3000

4000

5000

6000

2000 2001 2002 2003 2004 2005

CD Download

Source: Forrester Sept 2001

Source: MediaMetrix oct 2001

2- Services

• Travel agencies, Law, Medical services

• Cost reduction, standardization of basic functions

• Cross marketing and up-selling

• Ex: Merrill Lynch

3- Convenience goods

• Most of them are available within 1 mile from the source of demand

• 80% of consumption is made by 20% of goods (Pareto law)

Thus...

• Consumers will want to shop in store AND surf on the net

• Retailers must provide both opportunities

• Retailers must provide real time information including their stocks

• Sell popular products in store with low margins

• Sell products with slow turnovers on line with increased margins

4- Specialty products

• Car, furnitures

• Inventory cost are often huge

• Yet consumers are still waiting often more than a month

Workout session:

Amazon.com

2- What about advertising ?

Yet, there are opportunities

• Focus on the consumer not on the content

• Keep in mind that the consumer is active and searching

• Provide indication for your ROI

• Use personalization

Various strategies

• Banner ads

• Permission marketing (yesmail.com)

• Viral marketing

• Affiliate marketing

• Product placement

Market Places B2B

• The marginal contribution of e-commerce where EDI was already established– True opportunities for the standardization of protocols

• Winners: SAP, Oracle etc.– Important order givers gained power over small suppliers

• Market places– For commodities and indirect inputs

• Verticalnet Vs Dell computers

• Changing business models– From registration fees to transaction fees– Volume is the key

Market places can be profitable if

• The operate in areas where buyers seek and compare several suppliers

• Trade indirect inputs or commodities

• Are able to capture critical masses

CRM systems

What they do

• The critical importance of owning a central data basis

• Data basis must be updated

• Sales force must be part of it

• ROI must be evaluated

Workout session:

MSN.com