E-commerce Business

The buying and selling of products and services by businesses and consumers through an electronic medium, without using any paper documents.

E-commerce is widely considered the buying and selling of products over the internet, but any transaction that is completed solely through electronic measures can be considered e-commerce.

E-commerce is subdivided into three categories: business to business or B2B (Cisco), business to consumer or B2C (Amazon), and consumer to consumer or C2C (eBay).

Various forms of E-commerce

B2B(Business-to-Business)

Companies doing business with each other such as manufacturers selling to distributors and wholesalers selling to retailers. Pricing is based on quantity of order and is often negotiable.

B2C(Business-to-Consumer)

Businesses selling to the general public typically through catalogs utilizing.

Companies doing business with each other such as manufacturers selling to distributors and wholesalers selling to retailers. Pricing is based on quantity of order and is often negotiable.

C2B(Consumer-to-Business)

A consumer posts his project with a set budget online and within hours companies review the consumer's requirements and bid on the project. The consumer reviews the bids and selects the company that will complete the project. Enlace empowers consumers around the world by providing the meeting ground and platform for such transactions.

C2C(Consumer-to-Consumer)

There are many sites offering free classifieds, auctions, and forums where individuals can buy and sell thanks to online payment systems like PayPal where people can send and receive money online with ease. eBay's auction service is a great example of where person-to-person transactions take place everyday since 1995

E-Commerce Success factor

A Basic fact of internet retailing is that all retail Web sites are created equal as far as the “location”  imperative of success related is concerned.

Selection and value

Obviously, a business must offer Web shopping a good selection of attractive product and service at competitive price, or the shoppers will quickly click away from a web store.

Performance and service

People don’t want to be kept waiting when browsing , selecting, or paying in a web store. A must be efficiently designed for ease of access, shopping, buying, with sufficient server  power and network capacity to support web site traffic .

Advertising and incentives

Some web store may advertise in traditional media, most advertise on the web with targeted and personalized banner and other web page and E-mail promotions. Most B2C site also offers shopping incentive to buy and return.

Personal attention

Personalizing your shopping experience encourages you to buy and make return visits. Thus, e-commerce software can automatically record details of your visits and build user profiles of you and other web shopping.

Security and reliability

As a customer of success web store, you must feel conflict that your credit card, personal information, and details of your transaction are secure from unauthorized use. You must also feel that you are dealing with a  trustworthy business whose products and other web site information you can trust to be advertised.

Wholeseling

It includes all the activities involved in selling goods or services to those who buy for resale or business use

How do wholesalers differ from retailers

1)   Pay less attention to promotion, atmosphere and location

2)   Their transactions are usually larger than retail transactions

3)   Government regulations are different for wholesalers and retailers

Types

1)   Merchant Wholesalers ( own business that takes title of products they handle)

2)   Full service wholesalers ( Carry stock, have sales force, offer credit, make deliveries etc)

3)   Limited service wholesalers

4) Brokers( works on commission of selling price) and agents ( represents seller on a more permanent basis)

5)   Manufacturer’s and retailers branches and offices

Functions

1)   Selling and promoting

2)   Buying and assortment building

3)   Bulk breaking

4)   Warehousing

5)   Transportation

6)   Financing

7)   Risk bearing

8)   Market information

9)    Management Service and counseling

Retailing

It is defined as all the activities involved in selling goods and/or services directly to final consumer for personal, non business use

Retailing

Retailing

Types of Retail Outlet

Specialty stores - specializing on specific merchandise, such as toys, shoes, etc.

Department stores- Department stores are general merchandisers. They offer to the customers mid- to high-quality products like "Westside" and "Lifestyle"--popular department stores.

Super market - A supermarket is a grocery store that sells food and household goods. They are large, most often self-service and offer a huge variety of products.

Hyper market(1,00,000 squaremeter to 1,50,000 squaremeter) - Big Bazaar and Reliance Fresh are hypermarkets that draw enormous crowds.

Retailing on the basis of service

1)   Wheel of retailing hypothesis

2)   Retailing on the basis of services – self service, self selection, limited service and full service

3)   Retailing can also be divided into two categories – store retailing and non store retailing

3)  Non store retailing – Direct selling ( Amway, Eureka), Direct marketing ( telemarketing, internet selling – flipkart, amazon.com), Automatic vending machine

Brand Equity

Brand Equity is the set of assets and liabilities linked with a brand.It is the added value endowed to the products and services reflected in how consumers think, feel and act with respect to the brand

Customer based brand equity is the differential effect that brand knowledge has on consumer response to the marketing of that brand

Brand knowledge consists of thought, feelings, images, experiences, beliefs that are associated with the brand

Brand promise it is the marketer's vision of what the brand must be and do for consumers

Brand Equity Models

Young and Rubicam’s Brand Asset valuator  according to which there are four key components

1)   Differentiation – degree to which the brand is seen as different from others

2)   Relevance – measures the breadth of a brand’s appeal

3)   Esteem – measures how well the brand is regarded and respected

4)   Knowledge – measures how familiar and intimate consumers are with the brand

  

Brand

Aaker’s  model of  Brand equity is a set of five categories of brand assets and liabilities linked to a brand that add and subtract from the value provided by a product or service to a firm. The categories are.

1)   Brand awareness

2)   Brand loyalty

3)   Perceived Quality

4)   Brand associations

5)   Proprietary assets like patents, copyrights

 

Measuring Brand Equity

Direct approach - assess the actual impact of brand knowledge on consumer response to different aspects of marketing

Indirect impact - assess potential sources of brand equity by identifying and tracking consumer brand knowledge structures.

Channel Design Decisions

Customer’s desired service output levels channels produce five service outputs

1)  Lot size - Number of units the channel permits a typical customer to purchase on one occasion

2)   Waiting and delivery time- Average time customers of that channel wait for receipt of goods

3)   Spatial convenience - Degree to which channel makes it easy for customers to purchase the product

4)   Product variety-  Assortment of products that the channel can supply to the customer -  more variety , better the chance of getting what the customer wants

5)   Service back up- Add o services like credit, delivery, installation and repairs are provided by the channel

Establishing objectives and constraints

1) Channel objectives vary with product characteristics – perishable products need direct marketing, bulky products need less shipping distance and less handling, customized products and high value products need company’s sales force

2)   Strength and weakness of the different  channels also needs to be studied

Identifying major channel alternatives – channel alternatives are identified by three elements

1)   The types of intermediaries needed

2)   The number of intermediaries needed

3)   Terms and responsibilities of each channel member – which include – price policy, conditions of sale, territorial rights, mutual services and responsibilities

Evaluating the major alternatives

1)   Economic criteria - cost and sales. Example: company’s sales force are trained to sell the company’s product.

2)   Control criteria - Control issue Example: agent might not know the technical details or handle sales brochure properly

3)    Adaptive criteria - some duration of commitment and loss of flexibility.

Marketing Management

Marketing deals with identifying and meeting the human & social needs.

AMA – marketing is an organizational function & set of processes for creating, communicating & delivering value to customers & for managing customer relationship in ways that benefit the organization & its stake holders.

Marketing Management as the art & science of choosing target markets & getting, keeping & growing customers through creating, delivering & communicating superior customer value.

Exchange & Transactions

Exchange: obtaining a product in exchange of something

Transactions: exchange with terms & conditions.

What is marketed?

1)   Goods

2)   Services

3)   Events

4)   Experiences

5)   Persons

6)   Places

7)   Properties

8)   Organizations

9)   Information

Who does Marketing?

1)   Marketers & Prospects

2)   Marketer is someone who seeks a response from another party called Prospect

3)   Marketer are skilled in stimulating demand for a company’s products.

4)   Prospect may be the customer or the consumer

Key Customer Markets?

1)   Consumer Markets

2)   Business Markets

3)   Global Markets

Market concepts

1)   Market Places

2)   Market Spaces

3)   Meta Markets

Company Orientation towards Marketplace

1)   The Production Concept

2)   The Product Concept

3)   The Selling Concept

4)   The Marketing Concept

5)   The Holistic Marketing Concept

Holistic Marketing concept

Internal Marketing

1)   marketing department

2)   Senior mgmt

3)   Other departments

Integrated Marketing

1)   Product / services

2)   Communications

3)   Channels

Socially Responsible Marketing

1)   Ethics

2)   Environment

3)   Legal

4)   Community

Relationship Marketing

1)   Customers

2)   Channel

3)   Partners

Fundamental Marketing Concepts

1)   Needs, Wants & Demands

2)   Target Market, Positioning & Segmentation

3)   Offering & Brands

4)   Value & Satisfaction

5)   Marketing Channel

6)   Supply Chain

7)   Competition

Marketing Strategy Of Market Follower

Some years ago, Theodore levitt wrote an article entitle “innovative imitation,” in which he argued that strategy of product imitation might be as a profitable as a strategy of product innovation. Innovator bears the expense of developing the new product, getting it into distribution, and informing and educating the market. The reward for all this work and risk is normally market leadership. However, another firm can come along and copy or improve on the new product.

That’s not to say that market followers lack strategies. A market follower must know how to hold current customers and win a fair share of new ones. Each follower tries to bring distinctive advantages to its target market-location, services, financing. Because the follower is often a major target of attack by challengers.

Types

Counterfeiter

The counterfeiter duplicates the leader’s product and packages and sells it on the black market or through disreputable dealers. Music firms, Apple, and Rolex have been plagued by the counterfeiter problem.

Cloner

The cloner emulates the leader’s products, name, and packaging, with slight variations.

Imitator

The imitator copies some things from the leader but maintains differentiation in terms of packaging, advertising, pricing, or location. The leader doesn’t mind the imitators as long as the imitator doesn’t attack the leader aggressively. Fernandez Pujals grew up in Fort Lauderdale, Florida, and took Domino’s home delivery idea to Spain, where he  borrowed $80,000 to open his first store in Madrid.

Adapter

The adapter takes the leader’s products and adapts or improves them. The adapter may choose to sell to different markets, but often it grows into the future challenger, as many Japanese firms have done after improving products developed elsewhere.

Market logistics

Physical distribution is now explained by a broader term known as Supply chain management

Activities that involves procuring the right inputs ( raw material, components and capital equipment), converting them efficiently into finished products and dispatching them to the final destinations

Market logistics involves planning the infrastructure to meet demand, then implementing and controlling the physical flows of materials and final goods from point of origin to points of use to meet customer requirement at a profit.

Market Logistics Planning

1)   Deciding the  company’s value preposition to its customer

2) Deciding the best channel design and network strategy for reaching the customers

3) Developing operational excellence in sales forecasting, warehouse management, transportation management and materials management

4)   Implementing the solution with the best information systems, equipment, policies and procedures

Market Logistics Decisions

1)   How should orders be handled ? – Order processing

2)   Where should stocks be located ? - Ware housing

3)   How much stock should be held ? – Inventory

4)     How should good should be shipped ? - Transportation

Channel Systems

Here are three types of channel systems

1.   Vertical,

2.   Horizontal

3.   Multi channel

Vertical Marketing System

It comprises of producer, wholesaler and retailer acting as a unified system. One channel member – the channel captain owns the others or franchises them

Types

Corporate VMS

combines successive stages of production and distribution under one ownership –  Apple

Administered VMS

Successive stages of production and distribution is coordinated through the size and power of one of the members – Dominant brands secure distribution in this manner – Wal-Mart

Contractual VMS

Independent firms at different levels of production and distribution integrate their programs on a contractual basis to obtain more economies or sales impact that they could achieve alone. Its types are –

1.   Wholesaler sponsored

2.   Retailer sponsored

3.   Franchise organization

Horizontal Marketing Systems

Two or more unrelated companies put together resources or programs to exploit an emerging marketing opportunity. IOC – ICICI petro card, McDonald- Walt Disney

  Multi channel Marketing Systems

It occurs when a single firm uses two or more marketing channels to reach one or more customer segments.

Marketing Channels

They are sets of interdependent organizations involved in the process of making a product or service available for use or consumption

Ex.

1.   Intermediaries like wholesalers and retailers who buy, take title and sell are known as – Merchants

2.   Some others who act on behalf of the producer but do not 

take title are known as - agents.

 Importance

1.   It must convert potential buyers to profitable order

2.   It must not only serve markets but also ‘make markets’

3.   Push v/s Pull strategy needs to be worked out

4.   Push is for low brand loyalty, impulse item

5.   Pull is for high brand loyalty, high involvement item

Channel development

1.   Usual intermediaries – agents, wholesalers, retailers, trucking companies (transporters) and warehouses

2.   Hybrid channels : use of sales force, internet, home shopping, telephone along with usual intermediaries

Role

1.   Intermediaries bring in pooled financial resource

2.   They help in breaking bulk and create assortment for customer

3.   They are most cost effective due to specialization

4.   They are most helpful in small value items which cannot be sold through direct marketing

Function

1.   Gather information from the marketing environment

2.   Develop and send persuasive communication to customers

3.   Reach price agreement and transfer ownership

4.   Acquire funds to finance inventories at different levels

5.   Provide storage and movement to products

6.   Provide customer with retail financing

7.   Carry the risk associated with the channel work

Brand - The Marketing Strategy

A name, term, sigh, symbol or design or combination of them, intended to identify the goods or services of one seller and to differentiate them from those of the competitors

Branding

Brand tracking - collection of brand based information from customers on a routine basis

Brand valuation- estimating  the total financial value of the brand

Brand reinforcement - Reinforcing the values of a existing brand to generate loyalty

Brand revitalization - return to roots or generate new sources of brand equity

Brand Audit

1)   It is a consumer focused exercise  that involves a series of procedures to assess the health of the brand, uncover its sources of brand equity an suggest ways to improve and leverage its equity

2)   Brand inventory – comprehensive profile of how all the products and services sold by a company are marketed and branded

3)   Brand exploratory : Research activity conducted to understand what consumers think and feel about the brand and its corresponding product category to identify sources of brand equity

Branding Strategy

In case of new product

1)   new brand elements

2)   apply existing brand elements

3)   use combination of new and old brand elements

Brand extension - established brand is used to launch a new product which is also called sub brand

Branding Strategy

Established brand is known as parent brand an if it is associated with multiple brands it is family brand

Brand extension is of two types

1)   line extension – parent brand is used to launch new product that targets new market segment within same product category

2)   category extension – parent brand is used to enter a different product category from currently served by parent band

Brand Portfolio

Set of all brands and brand lines a firm offers for sale to buyer in a particular  category

Types

1)  Flankers - fighter or defense brands positioned with respect to rivals’ brands

2)   Cash cows - strong brands with dwindling sales

3)   Low end entry level

4)     High end prestige.  

Public Relation



Public Relation



Public is any group that has an actual or potential interest in or  impact on a company’s ability to achieve its objectives

Public Relation involves a variety of programs designed to promote or protect a company’s image or its products

Functions

1)  Press relations – presenting news and information a bout the firm in positive light

2)   Product publicity – Sponsoring efforts to publicize specific products

3)  Corporate communications – Promoting understanding of the organization through internal and external communications

4)   Lobbying – Dealing with govt officials to promote better relations

5) Counseling – advising management about public issues and company positions and image during good times and bad

Marketing Public relations

Its old name was publicity – which meant getting editorial space to promote or hype the product or service – but MPR is more than that !!!

Tasks

1)   Assisting in launch of new products

2)   Assisting in re positioning a mature product

3)   Building interest in a product category

4)   Influencing specific target groups

5)   Defending products that have encountered public problems

6)   Building the corporate image in a way that reflects favorable on its products

Major tools of Marketing Public relations

1)   Publications

2)   Events

3)   Sponsorship

4)   News

5)   Speeches

6)   Public service activities

7) Identity media – a visual identity that the public immediately recognizes and is carried on all stationary, buildings, uniforms, identity cards

Advertising - Marketing Tool

It is an paid form of non personal communication and promotion of ideas, goods and services by an identified sponsor

5 M's of advertising

Mission – Sales goals ad Advertising objectives 

Money – Stage in the PLC, Market share, Competition and clutter, Advertising frequency, product sustainability 

Message – message generation, message evaluation and selection, message execution and social responsibility review 

Media – Reach, Frequency, impact, media vehicles, media timing, geographical allocation 

Measurement – communication impact and Sales impact

Objectives

1)   Informative advertising

2)   Persuasive advertising

3)   Reminder advertising

4)   Reinforcement advertising

Deciding the Advertising Budget

1)   Five factors to be considered

2)   Stage in the PLC

3)   Market share and consumer base

4)   Competition and clutter

5)   Advertising frequency

6)   Product substitutability

Developing the Advertising Campaign

1)   Message generation and evaluation

2)   Creative development and execution – Television ads, Print ads, Radio ads and film ads

3)   Socio responsibility review

Evaluating advertising effectiveness

Communication effect research - seeks to determine whether ad is communicating effectively

Pretest  can be done before the ad is launched and there are 3 ways of  doing them

1) Consumer feedback method – ask consumers for their reactions to a proposed ad

2)  Portfolio tests – ask consumer to view or listen to a portfolio of ads and then ask them to recall all the ads with their content – aided or unaided

3)  Laboratory tests – use of equipment to measure physiological reactions – heart beat, blood pressure, pupil dilation, galvanic skin response to an ad.

Five best practices in purchasing

1.   Examine your supplier relationships on a regular basis. When is the last time you reviewed your supplier relationships? Long-term supplier relationships should be based on competitive pricing, a continuing flow of new, "better, faster, less expensive" ideas, constantly improving quality and excellent service; not free lunches and tickets to sporting events.

2.   Develop a scorecard to track supplier service, quality, delivery and price. Quantify mutually agreeable performance expectations and then measure the performance. Build in goals for annual improvement targets and ask suppliers for recommendations on how they can achieve them. On the back end, be sure to thank suppliers who meet or exceed your expectations. A little appreciation can really stimulate extra effort.

3.   Right size your supplier list to leverage value. Examine suppliers by category and look for ways to consolidate purchases; more volume through fewer suppliers typically results in lower unit costs and always results in reduced soft costs (invoice processing, accounts payable, supplier meetings, etc.). Then, create an approval process that limits the addition of new suppliers.

4.   Get the executive team behind purchasing 100%. Like many other company-wide initiatives, achieving excellence in purchasing practices requires support from the top down. Many small companies can't afford purchasing departments, but someone should be accountable for and have authority to control purchasing outlays. Lack of accountability is an enabler of higher operating expenses. The purchasing group (or person) should report to the CFO, COO or CEO to ensure direct access for key expense discussions.

5. Focus on improved supplier contract development and management. Companies are regularly trapped in hard-to-end "evergreen" contracts or in contracts skewed to the benefit of suppliers. Good contracts should contain key performance indicators as well as service level agreements with appropriate carrots and sticks to incent the desired supplier performance. Good centralized record keeping on contract terms can be enormously valuable, yet few companies seem to do it. All new contracts should be stored in a common database for easy future reference. 

Ten Keys to Effective Purchasing

1.   Improve your vendor relationships.

2.  Develop a scorecard for keeping track of vendors’ service.

3. Obtaining the right information = right sizing your vendor list and vendor costs.

4.  Create a purchasing staff with the following characteristics.

Analytical - Ability to work in other parts of the organization (Sales, operations, finance) - Business knowledge - Compliance to policies - Legal knowledge - Great negotiation skills.

5.  Get the executive team behind purchasing 100%

6.  Enforce a preferred vendor list

7.  Structure centrally led, but locally implemented teams

8.  Develop strong negotiation skills

9.  Use technology to propel yourself ahead of your competition

10. Design an incentive program that actually profits the individual and the company