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Infrastructure & Technology Part 2 CPS 181s March 27, 2003

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2 eCommerce Enablers Page 86, Table 2.6

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Unique Feature of eCommerce Technology

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4 Seven Unique Feature of eCommerce Technology Ubiquity Global Reach Universal Standards Richness Interactivity Personalization/Customization Information Density

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5 Seven Unique Feature of eCommerce Technology Ubiquity Alters industry structure by creating new marketing channels and expanding size of overall market Creates new efficiencies in industry operations and lowers cost of firms sales operations Enables new differentiation strategies

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6 Seven Unique Features of eCommerce Technology Global Reach Changes industry structure by lowering barriers to entry, but greatly expands market at the same time Lowers cost of industry and firm operations through production and sales efficiencies Enables competition on global scale

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7 Seven Unique Features of eCommerce Technology Universal Standards Changes industry structure by lowering barriers to entry and intensifying competition within an industry Lowers costs of industry and firm operations by lowering computing and communications costs Enables broad-scope strategies

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8 Seven Unique Features of eCommerce Technology Richness Alters industry structure by reducing strength of powerful distribution channels Change industry and firm operations costs by lessening reliance on sales force Enhances post-sale support strategies

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9 Seven Unique Features of eCommerce Technology Interactivity Alters industry structure by reducing threat of substitutes through enhanced customization Reduces industry and firm costs by lessening reliance on sales force Enables differentiation strategies

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10 Seven Unique Features of eCommerce Technology Personalization/Customization Alters industry structure by reducing threats of substitutes, raising barriers to entry Reduces value chain costs in industry and firm by lessening reliance on sales forces

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11 Seven Unique Features of eCommerce Technology Information Density Changes industry structure by weakening powerful sales channels, shifting bargaining power to consumer Reduces industry and firm operations costs by lowering costs of obtaining, processing, and distributing information about suppliers and consumers

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12 How the Internet and the Web Change Business: Basic Business Concepts Industry Value Chains set of activities performed in an industry by suppliers, manufacturers, transporters, distributors, and retailers that transform raw inputs into final products and services reducing the cost of information and other transactional costs Firm Value Chains set of activities performed within an individual firm to create final products from raw inputs increasing operational efficiency

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13 eCommerce and Industry Value Chains Page 90, Figure 2.4

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14 eCommerce and Firm Value Chains Page 92, Figure 2.5

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15 Pieces of the Site-building Puzzle Page 180, figure 4.1

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16 Building an eCommerce Web Site: A Systematic Approach Planning: the systems development life cycle Systems analysis: identify business objectives, system functionality, and information requirements System design: hardware and software platforms Building the system: in-house vs. Outsourcing Testing the system Implementation and maintenance

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17 Systems Analysis: Identify Business Objectives, System Functionality, and Information Requirements Business objectives A list of capabilities you want your site to have System functionalities A list of types of information systems capabilities you will need to achieve your business objectives Information requirements The information elements that the system must produce in order to achieve the business objectives

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18 System Design: Hardware and Software Platforms System design specification Description of the main components in a system and their relationship to one another Logical design Describes the flow of information at your eCommerce site The processing functions that must be performed The databases that will be used The security and emergency backup procedures that will be instituted The controls that will be used in the system Physical design Translates the logical design into physical components

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19 Merchant Server Software Packages (eCommerce Suites) Offers an integrated environment that provides most or all of the functionality and capabilities needed to develop a sophisticated, customer-centric site. Key factors to consider Functionality Support for different business models Business process modeling tools Visual site management tools and reporting Performance and scalability Connectivity to existing business systems Compliance to standards Global and multicultural capability Local sales tax and shipping rules

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Customer Relationship Management (CRM) Customer relationship management, also called one-to-one marketing or permission marketing, enables a company to provide excellent customer service in real time by focusing on relationship development with each individual customer through the effective use of individual account information Behavior patterns can help customers become lifetime customers Goals of effective CRM are: to achieve long-running customer dialogue across all customer access points to provide more effective cross-sell and up-sell to increase customer retention and loyalty to increase customer profitability to achieve higher responses to marketing campaigns to provide extraordinary service and support

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CRM...CRM... Achieving Long-running Customer Dialogue Across All Customer Access Points: manage input through call centers, the Internet, or mail through a centralized database, 24 x 7, regardless of the sales channel More Effective Cross-selling and Up-selling: profiles in databases and conversations allow for collaborative filtering and focusing Increase Customer Retention and Loyalty: better understanding of behavior leads to increased sales and higher retention

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CRM...CRM... Achieving Higher Customer Profitability: CRM places a greater value on customers, in depth examination of those in the Pareto (Pareto Principle or 80/20 rule) range helps managers focus on the top tier Achieving Higher Responses to Marketing Campaigns: integrated information from sales and service departments help increase overall sales and identify potential bottlenecks Provide Extraordinary Service and Support: technology helps companies and their customer find information 24 x 7

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Customer Relationship Management Web Tele-center Direct Sales Retailer Reseller Distribution Direct Channels Customers and Prospects Customers and Prospects Indirect Channels Customer Relationship Management Customer Relationship Management Source: New York Times. 2000. Know thy customer, 14 February.

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How Will the Increased Use of the Internet Effect Public Policy and Politics? Privacy Cookies tracking every keystroke Use of personal information Issue of reliability of privacy statements and regulations Taxation Debates between federal, state, and local authorities The 19-member Advisory Commission of Electronic Commerce, created by Congress, voted to extend the tax moratorium for five years after it expires in October 2001, with divided interests Patents Amazon.coms One-click ordering system have lead critics to complain that these software developments are rather trivial, and that much of software development is incremental, and that patent examiners do not do a good job at looking at similar existing software on the Internet

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How Will the Increased Use of the Internet Effect Public Policy and Politics?... Access The entry price into the Internet is higher than a telephone, prompting a wired and unwire haves and have-nots society, prompting governments and organizations to make computers more accessible at public schools and libraries Free Speech Police fear Internet access provides disenchanted members of society an easier opportunity to communicate with one another and other disgruntled outcasts, building communities that runs counter to the public interest Network Economics and Monopolies Media convergence, both among media providers and information distributors, have raised issues of conflict of interest, antitrust, and concentration of media power such as AOL-Time Warner