ICTacceptance

ICT and Strategy

Competition and strategy

Competitive advantage

Companies as drivers of change

Transaction costs, value chain

The Information Society

The New Capitalism

E-Business: the perspectives

Technology perspective

(2)

Financial perspective (4)

Industry perspective (3)

Consumer perspective (1)

E-Business

Perspectives

• Financial

• Industry

Business model (how toearn money)

Strategy, competitors,industry structure (how tobeat the competitors)

Perspectives

• Technology

• Consumer

Technology acceptancemodels (when, why do consumers use IT systems)

Consumer behaviour,product/service characteristics(who uses why the Internet forwhat)

E-Business: the perspectives

Technology perspective

(2)

Financial perspective (4)

Industry perspective (3)

Consumer perspective (1)

E-Business

A quick scan• Make a list of the products/services for which you used the

Internet to search for information during the last month• Which of these products/services did you buy and where

(Internet, shop, catalog)• Make a list of the products/services your parents bought the

last month through the Internet• Make a list of the products/services your grandparents

bought last month through the Internet• Make a list of the products/services you think your fellow

students bought last month through the Internet

1. Marketing perspective

• 1.1 Nature of product/service

• 1.2 Stages of the decision making process

• I.3 Consumer characteristics

Test the audience

• In groups of 3/4 students: which products/services are suitable to sell through the Internet and why?

1.1 Nature of services/products

• PRODUCTS- Physical- Standardization- Production separate

- Possible to store

• SERVICES- Intangible- Heterogenity- Simultaneous

production- Perishability

Koiso-Kantilla (2004)

Classification according to tasks

• Perceived risk

• Frequency of purchase

• Functional versus expressive value

Zeng and Reinartz (2003)

Evaluation stage

• High touch versus low touch

• High information content versus low information content

• Demand on consumer expertise

The information component

• Search goods

• Experience goods 1

• Experience goods 2

• Credence goods

Girard et al. (2003)

Information and tangibility

Experience goods

Search goods

Low tangibility E.g. Advisory services

E.g. Stock market quotes

High tangibility E.g. Personal items

E.g. Music CD’s

Poon (1999)

Positive and negative reinforcement products

% who have shopped online

% who have purchased online

Purchase/shop ratio

Travel services

69% 44 % 63 %

CD/Music 53% 35% 66%

Wine 16% 4% 25%

Sporting goods

41% 21% 51%

Virus detection software

17% 9% 49%

Insurance 13% 1% 8%

Tires 9% 2% 23%Perotti et al. (2003)

Service process matrix

High

Interaction

and customization

Low

Low High

Labor intensity

Service shop Professional service

Service factory Mass service

Junglas and Watson, 2004

Internet service process matrix

High

Customization

Low

Low High

Interaction

Service center The club

Utility Mass entertainment

Junglas and Watson, 2004

Conclusions?

• Books• Cds/dvds• Travel• Tickets• Pornography

• (Not the shopping goods, which were predicted in 1967 by Doody and Davidson, HBR, )

Marketing perspective (1.2)

• The stages of decision making

Test the audience

• Assume you are intending to buy a new TV. How do you come to your decide which television you are going to buy?

Stages of decision making

• Problem recognition

• Information search

• Evaluation of alternatives

• Purchase decision

• Post purchase behavior

Howard and Sheth (1969), Engel et al. (1994), Kotler (2003)

Information search paradox

Number of

important features

Product familiarity

Stages and channel preferencesPro off-line Pro on-line

Problem recognition No arguments No arguments

Information search Reduction of the search effort for price and product information

Evaluation Feel and touch; perceived risk

Only price and other specific attributes

Purchase Delivery time

Perceived risk

Digitized products/services (delivery time)

Gupta et al. (2004)

Channel use during orientation stage

0

10

20

30

40

50

60

70

80

90

100

books mortgage audio/video travel clothes computers health insurance

% o

f house

hold

s w

ho b

ought

pro

duct

duri

ng last

six

month

s

shop

internet

catalogue

telephone

Doffer et al. (2005)

Suitablility and use of the Internet

0

10

20

30

40

50

60

70

80

books mortgage audio/video travel clothes computers healthinsurance

% o

f house

hold

s w

ho

bought

the p

roduct

duri

ng

the la

st s

ix m

onth

s

used for orientation

suitable for transaction

used for transaction

Doffer et al. (2005)

Test the audience

• What is the profile of the Internet buyer

• What is the explanation for this profile

Marketing perspective (1.3)

• Consumer characteristics

Internet use and age

0

20

40

60

80

100

120

total

12- 15 years

15- 25 years

25- 35 years

35- 45 years

45- 55 years5

55- 65 years

65- 75 years

CBS (2005)

Internet use and income level

0

10

20

30

40

50

60

70

80

90

100

total

low level

low middle level

middle level

high middle level

high level

CBS (2005)

Intenet use and educational level

0

20

40

60

80

100

120

total

lower level

middle level

higher level

CBS (2005)

Reasons

• The higher educated, the higher the efficiency (less time, therefore lower transaction costs)

• The higher the experience (age, education, gender) the higher the efficiency (lower prices)

E-Business: the perspectives

Technology perspective

(4)

Financial perspective (3)

Industry perspective (2)

Consumer perspective (1)

E-Business

2. The strategy perspective

• 2.1 (Structure-Conduct-Performance model (Porter, 1980, 1985)

• 2.2 Resource Based View (Barney, 1991, 1994)

• 2.3 Multi channel strategy

2.1 The five forces model to define attractiveness of industry (Porter, 1980)

THREAT OF THREAT OF

ENTRY BUYERS

RIVALRY AMONG EXISTING FIRMS

THREAT OF THREAT OF SUBSTITUTES SUPPLIERS

Test the audience

• Are there industry characteristics (based on the five forces model) which explain the use of the Internet as a channel?

Disappearance of barriers of entry

• Economies of scale

• Product differentiation

• Switching costs

• Access to distribution channels

(Shin, 2001; Lucas, 2002)

Existing rivalry

• Winner takes all

• First mover advantage

(Source: Coltman, 2001)

Strategies to realize competitive advantage (Porter, Treacy and

Wiersema)

• Cost leadership/operational excellence• Differentiation/product leadership• Focus/customer intimacy

Test the audience

• Mention examples of companies that use the Internet to create a competitive advantage

Results

• Multi-channel strategy as access-based positioning

• Multi-channel strategy as a defense by increasing barriers to entry

2.2 Resource based view (Penrose, 1959, Barney, 1991)

• The firm as a bundle of resources

• Competitive advantage when resources are:

- Valuable

- Rare

- Costly to imitate

- Organized

Results

• e-Technology as a resource• IT-knowledge as resource• Back-end integration as resource• Direct channel experience (economy of

scope)• Advantage of scale and scope disappear• Switching costs by multi channel strategy• Focus on brand(s)

Resources

• Catalog sellers

• Channel conflicts

• Disruption in retailing (Christensen and Tedlow, 2000)

Reasons for using the internet

Channel Price

per transaction

Web $ 1

Call $ 10

Retail $ 50

Personal sales $ 200Simons et al. (2002)

2.3 Strategy perspective

• The multi-channel strategy

Advantages internet

• Costs reduction

• Differentiation

• Defensive

Disadvantages internet

• Perceived risk (lack of trust)

• Delivery and return problems

• Impersonal relationship

• No psychical inspection

The solution

• BRICKS AND CLICKS

Adding the internetChannel used

Original purchase

Purchases during 24

month period

Catalog only 76.2 % 68.8 %

Internet only 6.5 % 5.6 %

Store only 17.3 % 13.3 %

Multiple channels

12.3 %

Dholakia (2005)

Channel used in 24 month period

Customer’s channel of entry into database

Catalog Internet Store Catalog only 87.1 % 4.0 % 5.8 % Internet only 2.9 % 50.4% 0.9 % Store only 1.1 % 0.1 % 80.2 % Multichannel 8.8 % 45.5 % 13.1 % Dholakia et al. (2005)

Results

• Multi-channel enhances loyalty, although the results are mixed

• Multi-channel customers buy more (?)

Reasons introducing online banking

INNOVATION CHARACTERISTICS

SECTOR CHARACTERISTICS

DRIVERS Availability of technology

Suitability of banking to online

Costs reductions poss ible

Ability to deal with customers

Other banks adopting

Competitive forces

Consumer demand (long term)

Government influence

INHIBITORS Ability to deal with customers

Rapidity of technological change

Legacy systems

Bandwidth

Lack of innovative culture

Consumer demand (short term)

Source: Bradley and Stewart, 2003

Factors influencing multi-channel strategy in financial industry

Transaction cost analysis Marketing considerations Strategic considerations

Asset specificity

Behavioral uncertainty

Environmental uncertainty

Customer target heterogeneity

Brand position

Size/dispersion of the

consumer target

Channel conflict

Product sophisticat ion

Purchase importance to

consumers

Channel capabilities

Resources and scale

and scope economies

Competitive intensity

Competitive strength

Relative bargaining power

Strategic goals

Source: Coelho and Easingwood, 2003

The research shopper

• Attribute driven decision making

• Lack of channel lock-in

• Cross channel synergy

Verhoef et al. (2005)

The research shopper

Transaction offline Transaction online Information Same channel/retailer 69.2 % 73.6 % Other retailer/other channel 20.4% 24.6 % Same retailer/other channel 10.4 % 1.8%

Van Baal and Dach (2005)

E-Business: the perspectives

Technology perspective

(4)

Financial perspective (3)

Industry perspective (2)

Consumer perspective (1)

E-Business

3: Financial perspective

Electronic Business Models

Content

• Definitions

• Old & new business models

• Business models

• Cases

• Assignment

Business model

• What is a business model

Definition (Timmers, 1999)

• An architecture for product, service and information flows, including a description of the various business actors and their roles; and a description of the potential benefits for the various business actors; and a description of the sources of revenue

Business models

• Old business models

• New business models

Old business models (or strategy)

• Operational excellence/cost leadership

• Product excellence/differentiation (enhancing the service/product)

• Customer intimacy

New business models

• E-Shop• E-procurement• E-malls• E-auctions• Virtual communities• Collaboration platforms• Third-party marketplaces• Value chain integrators• Value chain service providers• Information brokerage• Trust and other services

Test the audience

• Mention a company per business model

• Restructure the list

Business models and revenues

• E-Shop• E-procurement• E-malls• E-auctions• Virtual communities• Collaboration platforms• Third-party marketplaces• Value chain integrators• Value chain service providers• Information brokerage• Trust and other services

Top 10 web shops Netherlands (turnover, 2007)

• 1. Transavia.com, 456 million

• 2. TUI.nl, 420 million

• 3. Wehkamp.nl, 270 million

• 4. Sundiogroup.com, 246 million

• 5. Airtrade.nl (Airtrade Holding), 240 million

• 6. Bol.com, 171 million

• 7. D-reizen.nl, 110 million

• 8. Albert.nl, 107 million

• 9. Landal.nl (Landal GreenParks), 100 million

• 10. Dexcom.nl (o.a. Dixons en Coolblue) , 100 million

Top 10 webshops Netherlands (No. of purchases,

2006, last three purchases) • Bol.com (14%)• Marktplaats (11%)• Wehkamp (7%)• E-bay (4%)• Neckermann (3%)• ECI (2%)• Ticketservice.nl (1%)• Amazon.com (1%)\• Pabo (1%)• Otto (1 %)

Top 20 by no. of visitors per month (first half of 2008)

• 1 (1) Google.nl• 2 (8) Hyves.nl• 3 (4) Live.com• 4 (3) Marktplaats.nl• 5 (67) Buienradar.nl• 6 (2) Startpagina.nl• 7 (7) nl.Wikipedia.org• 8 (6) Postbank.nl• 9 (9)

DeTelefoongids.nl• 10 (5) Msn.com

• 11 (48) RelatiePlanet.nl• 12 (11) nl.Bol.com• 13 (16) 9292ov.nl• 14 (10) Nu.nl• 15 (13) Hotmail.com• 16 (14) Web-log.nl• 17 (20) RTL.nl• 18 (17) Neck.nl• 19 (12)

ZylonGames.com• 20 (28) Schoolbank.nl8

Value creation (based on 59 e-businesses; Amit and Zott, 2001)

Novelty-new transaction structures

-new transactional content

-new participants

Efficiency-search costs

-selection range

-symmetric information

-speed/simplicity

-scale economies

Lock in

-switching costs

- positive network externalities

Complementaries-between products and services

-between online and offline assets

-between technologies

-between activities

VALUE CREATION

Testing the audience

• Combine the list of business models with the list of value adding; explain by examples

What’s really new about the models

• iTunes

• eBay

• Amazon.com

• Google

E-Business: the perspectives

Technology perspective

(4)

Financial perspective (3)

Industry perspective (2)

Consumer perspective (1)

E-Business

II. Technology perspective: the Internet as a channel

Test the audience

• Think about the last new technology you tried (e.g. Mobile telephone, MP3, Internet). What were the reasons for trying it.

• What were the reasons for using (or not using) it after trying.

Relevant theories (1)Theory of Reasoned Action (TRA), Fishbein and Ajzen (1975)

Human behaviour in general Attitude is used and transferred to channel choice set; subjective norms are used to explain the use of a channel; not specific for ICT enabled channels

Theory of Planned Behaviour (TPB), Ajzen and Madden (1986)

Behaviour in situations in which the actor has no complete control

Not used as Perceived Behavior Control is for working situations

Technology Acceptance Model, Davis (1989)

Based on TRA and TPB to explain the use of information systems

Explanation for the trial of electronic channels

Innovation Diffusion Theory (IDT), Rogers (1962)

Adoption of innovations in general

Not used as constructs are not operationalized and it lacks the IT-related variables, which have become important in prediction the use of ICT enabled channels (Pavlou and Fygenson, 2006)

Task Technology Fit (TTF), Goodhue and Thompson (1995)

Use and success of the use of information systems in organizations

Not used as it is a specific model for explaining IS use, originally in working situatons

Information Richness, Daft and Lengel, 1986

Use of different information channels for different situations in organizations

Not used as empirical results are not favourable (Rice and Shook, 1990; Ngwenyam and Lee, 1997; Carlson and Davis, 1998; Otondo et al., 2008)

Relevant theories (2)

Expectancy Disconfirmation Theory (EDT), Oliver (1980)

The continued use of product/services by consumers

Used to explain continuous use

DeLone & McLean IS Success Model, DeLone and McLean, (1992)

Success of an Information System

Not used as user satisfaction does not predict system usage satisfactorily

Social Cognitive Theory (SCT), Bandura, 1986

Behavior of individuals which is influenced by (among others) the behavior itself

Not used as the constructs are included in other theories

Uses & Gratifications (U&G),

The use of different media is formed by diffe rent needs

Not used as gratifications are similar to EDT

Switching behaviour, Keaveney (1995); Roos (1999)

Switching of consumers between service providers

Not used as multi-channel implies the use of several channels

SERVQUAL, Parasuraman, Zeithaml and Berry, 1985

Model for measuring service quality

Used in the definitions of end-states

Consideration set (evoked set), Howard (1963)

Consumer choice of a brand Used in explaining decision making process and transferred to channel choice set

Multi attribute attitude model (Fishbein, 1963)

Consumer decision making model

Used in explaining decision making process

TAM

• Theory of reasoned action (Fishbein and Azjen, 1975)

• Theory of planned behavior (Azjen and Madden, 1986)

• Technology acceptance model (Davis, 1989)

ATTITUDE

SUBJECTIVE NORMS

BEHAVIORAL INTENTION BEHAVIOR

Theory of reasoned action

ATTITUDE

SUBJECTIVE NORMS

BEHAVIORAL INTENTION BEHAVIOR

PERCEIVED BEHAVIORAL CONTROL

Theory of planned behavior

Notani (1998)

TAM

Schubert (2002)

Two most important variables

• Perceived usefulness (PU)

• Perceived ease of use (PEOU)

• Cf. Rogers’

- Relative advantage

- Compatibility and complexity

The results from the literature

• Perceived usefulness is the number one factor

• Is linked with a number of other constructs (trust, perceived risk, control, task or decision making stage, enjoyment)

DeLone & McLean Success Model (1992)

• System quality

• Information quality

• Information use

• User satisfaction

• Individual impact

• Organization impact

DeLone and McLean 2004

Results

• Satisfaction with content (information)

• Satisfaction with performance

• Satisfaction is seen as an external variable (Wixam and Todd, 2005)

Innovation of diffusion theory (Rogers, 1962)

ATTRIBUTES THAT INFLUENCE ADOPTION:

• Relative advantage (economic, status)

• Compatibility (values, beliefs, needs, life style)

• Complexity

• Triability

• Observability (visible to others)

Innovation possibilities

• Improvement of existing attributes• New attributes to existing products or

services• Entirely new product or service

Bagozzi and Lee, 1999

Results

• Later adopters discontinue more than early adopters (expectation-reality gap)

• Hardly used for e-Commerce research

Expectation-disconfirmation theory

Expectation (t1)

Perceivedperformance(t2)

Confirmation(t2)

Satisfaction(t2)

Repurchaseintention(t2)

Results

• Satisfaction (and perceived usefulness) are strong predictors of the intention to continuous use

• Desires versus expectations in explaining satisfaction (desire with trial and expectation with adoption)

Other aspects

• Habits

• Past behavior/experience

Test the audience

• Form groups of four students

• Prepare a laddering interview

• Subject: use of a channel for financial services

Building the model: TAM as an explanation for trial of the new channel

Perceived Usefulness (PU)

Perceived Ease of use (PEOU)

Behavioral Intention to Use (BI)

Actual system use

External Variables

Attitude toward using (A)

(green = TRA; red = TAM)

Building the model: TAM and the channel choice set

Perceived Usefulness (PU)

Perceived Ease of use (PEOU)

Channel choice set (BI)

Actual channel use

External Variables

Attitude toward using (A)

(TRA; TAM; Consideration set)

The channel choice set: multi-attribute model

Attribute Evaluation Beliefs (weight) Channel 1 Channel 2 Channel 3 Risk + 3 + 2 + 2 + 1 Advice + 1 + 3 + 1 - 1 Speed + 2 - 1 + 1 + 3 Ease of use + 4 + 2 + 1 + 1 Total 15 13 12

The model

PU

PEOU

Channel choice set

Actual channel use

External Variables

Attitude

(Dis)confirmation of expectations

Context specific weight factors

Trial of newICT enabled channel

Multi channel use

(TRA; TAM; Consideration set; multi attribute model; EDT)

Defining the attributes based on research literature

• Problem: research results on different levels

Means-end model

Desired end-states (E) (describes the goals of the person)

Consequences (C) (describes the user/service interaction)

Attributes (A) (describes the service)

Literature research results (1)TAM LITERATUR E OTHER IS THEORIES SERVICE

QUALITY LITERATUR E

OTHER MARKETING LITERATUR E

Performance (C) Convenience (E) Efficiency (E) Assortment (A)

Speed (A) Trust (C) Fulfilment (E) Information available (A)

Effectiveness (E) Efficacy of information acquisition (A)

Availability (of the system) (A)

24/7 availability (A)

Easier (C) Efficiency (E) Privacy (A) Social interaction (C)

Productivity (C) Ease of use (C) Ease of use (C) No waiting (C)

Useful Performance (C) Information accuracy (A)

No transportation time (C)

Greater control (C) Perceived control (C) Functionality (A) Chance of a better deal (C)

Quality of decision making (C)

Convenience (E) Perceived risk (E)

Better decisions (C) Perceived risk (C) Switching costs (A)

Saves money (C) Time saving (C) No physical inspection (A)

Ease of use (C) Service quality (E) Delivery time (A)

Literature research results (2)

TAM LITERATUR E OTHER IS THEORIES OTHER MARKETING LITERATUR E

Perceived usefulness (C)

Time and place independent (A)

Shopping enjoyment (E)

System quality (A) Queue avoidance (A) Product quality (A)

Information quality (A)

Subjective norm (C) Communication cost (C)

Service quality (E) Enjoyment (E) Convenience

Trust (C) Uncertainty (C) Communication time (C)

Perceived risk (E) Transaction cost (C)

Enjoyment (E) Transaction time (C)

Social Presence (C) Security (C)

Delivery cost (C)

Delivery time (C)

Post-sale service (A)

Results regrouped

(E) Convenience/ efficiency (TAM)

Uncertainty reduction

Fulfilment (outcome) (EDT)

Social status (TRA)

Enjoyment

(C) Performance, Control, Cheaper, Time saving, Waiting, Transportation time, Communication time, Communication costs, Transaction costs, Transaction time, Delivery cost, Delivery time, Switching costs, Queue avoidance

Trust, Security

Change of a better deal, Cheaper, Quality of decision making, Better decisions,

Subjec-tive norm

Social interaction, Social presence

(A) Easy, Ease of use, Functionality, Availability, Efficacy of information acquisition, Assortment, Information available, Time and place independent,

Physical inspection, Post sale service, Privacy, Information accuracy

Information quality, system quality, Product quality

Next step: laddering

• Laddering technique (means - consequences - end)• Soft/hard laddering• 30 interviews (of which 15 soft

laddering)• Two methods for “generating” attributes:

advantage and ranking

Preliminary results (based on 15 soft laddering interviews)

Plaats onafhankelijk

4

Tijd onafhankelijk5

Direct antwoordPersoonlijk

contact8

Goed geinformeerd

zijn4

Altijd beschikbaar

4

Bespaart tijd16

Meer zekerheid

4

Geen reistijd4

2 2

2

Minder zorgen4

Geen fouten2

2

Soft laddering op basis van kanalen op volgorde van

voorkeur zetten en vervolgens verschillen benoemen tussen kanaal 1 en 2, 2 en 3 etc .

Respondenten :

- 28 jr student- 30 jr systeembeheerder- 36 jr servicemonteur wegenbouw

- 40 jr gehandicaptenverzorgster- 41 jr manager financiele administratie

- 44 jr financieel adviseur- 45 jr assistant begeleider gehandicaptenzorg- 62 jr coordinator kinderopvang

Overzichtelijk4

Gebruikers-vriendelijk

2

Weten hoe het gaat

4

M inde

r foutge

voelig1

M inde

r verwa

rrend1

Minder opletten

2

Sneller kunnen

handelen8

3

6

2

41 1

1 1

Minder inspanning

1

1

Tijd voor belangrijke zaken

in het leven

14

Juiste keuze

4

Goede gemoedsrust

4

1

Vertrouwelijk

1

Bande

n verste

rken

2

Voldoening2

Betere

behandeling

1

1

1

1

4 1

4 1

Snelheid3

13

5

1

1

Wanneer ik wil

3

Onafhankelijkheid

1

1

1

Controle

4

1

2

Makkelijk

communiceren

4

4

3

2

1

Sociaal1

1

1

3

Laatste moment betalen

3

Meer rente3

Geld voor

belangrijke zaken in het leven

2

2

2

2

3

1Veilig

gevoe

l1

1

1

2

1

1

1

A

C

C

C

V

Test the audience

• The results from Finland

Attributes

• (Personal) interaction (10)• Availability: time (9)• Availability: location (7)• Overview (6)• Transportation time (4)• User friendly (3)• Speed (3)• Security (2)

Consequences

• Time efficient (20)• Control (6)• Certainty/no mistakes (6)• Preferable outcome (5)• Guarantee privacy (2)• Effort (1)

Desired end states (values)

• Time for important issues in life (17)

• Peace of mind (10)

• Independency (3)