The case Tommy Hilfiger Replatforms describes some of the factors involved
and questions that must be asked to determine the hardware and software that
will be needed to build an effective Web presence. The case describes the
factors that drive new or established companies to re-build their Web sites
periodically. Some questions that you can analyze while reading the case are:
What reasons were behind Hilfigers choice of ATG for its Web site
solution?
Why did Hilfiger decide it needed to replatform in 2011?
How can apply some of the site-building options for operators of
smaller Web sites?
As we discussed in topic 2 (Business models for e-commerce) before you can
start thinking about your companys web page design, it is important to have a
business model. Chapter 4 of Laudons book starts by asking some questions
and posing some challenges that you must complete that will drive the
development and implementation of your online presence:
The six main pieces of the e-commerce site puzzle are: the organizational
capabilities and human resources you will need to build and manage the site,
the hardware, the software, the telecommunications infrastructure you will
need to meet the demands of your customers, and the site design you will
need to implement your business objectives.
Regardless of whether you decide to build the site yourself, use specialized
software to help you develop the pages, or hire somebody else to build the
system (outsource) you need to know exactly what it is you need the system to
do. The systems development life cycle (SDLC) is a methodology for
Much of what you can do on a web page is a function of the hardware, software
and communications platform used. The more sophisticated the hardware and
software, the more ways you can sell goods. In choosing the best platform to
use for your Web site, the three main factors to consider are:
The anticipated number of simultaneous users who will likely visit your site.
The customer user profile with their expected requests and behavior while at
the site.
The nature of the content on your site.
The more visitors you have, the greater the demand will be on your system. If
the users will be viewing dynamic pages and large multimedia files, far more
capacity will be required.
You can use tools to develop your own webpage, like web application server
software, which are programs that provide specific business functionality
required of a web site, such as catalog display, mail server, ad server, etc. Ecommerce merchant server software provides the basic functionality needed
for online sales, including online catalog, order taking via an online shopping
cart, and online credit card processing. You can also opt for a merchant server
software package, or e-commerce suite, and house your system in a providers
computer (such as Yahoo Merchant Solutions).
The key point to take away from this topic is that building an e-commerce
presence is a complex undertaking similar to building an entirely new
information system. Major physical and human resources are required, and
many firms find it cost-effective to outsource a part or all of the effort to
specialized firms. On the other hand, building an e-commerce presence has
never been easier or cheaper.
Eight criteria/functionalities
Functionality: The site must have pages that load quickly, perform correctly, and send the user to
the requested information about the product offerings.
Informational: The site must have links that the customer can find easily in order to obtain
information about the company and the products it offers.
Ease of use: The site must have a simple foolproof navigation scheme.
Redundant navigation: The site must have alternative paths to reach the same content.
Ease of purchase: There should be no more than one or two clicks required for the purchasing
procedure.
Multi-browser functionality: The site should work with the popular browsers.
Simple graphics: The site should not use distracting graphics and/or sounds that the user cannot
control.
Legible text: The site should avoid the use of backgrounds that distort text or make it difficult to
read.
The case Cyberwar: MAD 2.0 pinpoints the increasing vulnerability of the Web
to large-scale attacks. Think about how your daily life might be affected as a
result of large scale attacks on the net. Some of the questions that you may
want to discuss about the case are:
Security
Security is a complex issue when using the Internet. There are many points
where the information can be tapped, modified or copied: at the senders
computer, on the communication channels, or at the receiving end. When a
message is sent over the internet, it passes through many computers in a
process known as packet switching (see topic 8). Users want to make sure that
the messages and information they are receiving is complete, private and
comes from the person it says it does. There are six characteristics of the
information that are required for good site operation:
Integrity
This is the ability to ensure that information being displayed on a Web site or
being transmitted/received over the Internet has not been altered in any way
by an unauthorized party. One type of integrity security breach would be an
unauthorized person intercepting and redirecting a bank wire transfer into a
different account.
Nonrepudiation
The ability to ensure that e-commerce participants do not deny their online
actions. An example of a repudiation incident would be a customer ordering
merchandise online and later denying that he or she had done so. The credit
card issuer will usually side with the customer because the merchant has no
legally valid proof that the customer ordered the merchandise.
Authenticity
Authenticity is the ability to identify the identity of a person or entity you are
transacting with on the Internet. One instance of an authenticity security
breach is spoofing, in which someone uses a fake e-mail address, or poses as
someone else. This can also involve redirecting a Web link to a different
address.
Confidentiality
The ability to ensure that messages and data are available only to authorized
viewers. One type of confidentiality security breach is sniffing in which a
program is used to steal proprietary information on a network including e-mail
messages, company files, or confidential reports.
Privacy
The ability to control the use of information a customer provides about him or
herself to an e-commerce merchant. An example of a privacy security breach is
a hacker breaking into an e-commerce site and gaining access to credit card or
other customer information. This violates the confidentiality of the data and
also the privacy of the people who supplied the data.
Availability
This is the ability to ensure that an e-commerce site continues to function as
intended. One availability security breach is a DoS (Denial of Service) attack in
which hackers flood a Web site with useless traffic that causes it to shut down,
making it impossible for users to access the site.
malicious code
potentially unwanted programs (PUPs)
phishing and identity theft
hacking
cybervandalism and data breaches
DoS/dDos attacks
and spoofing/pharming
Some (but not all) types of security threats can be ameliorated through
technological means. Some tools used to protect Internet data include a series
of encryption techniques, such as public key encryption; they address issues of
integrity, authenticity, and confidentiality of messages. However, there are
limitations to technical security measures, and they often presume a secure
organizational environment before they can work. If you lose the password,
there is no point in encoding the data. The biggest threats are at the ends of
the communication lines, where human elements are included. Encryption of
any kind is susceptible to disloyal or disgruntled employees and poor client side
security (such as keeping your passwords on an insecure PC directory).
Encryption also slows processors and the entire transaction process; the better
the security, the worse the performance.
Payment systems
primary exception to this is PayPal, which still relies on the stored value
provided by credit cards or checking accounts.
Glosario Modulo 2
The case Internet Free Speech: Who Decides? discusses the different aspects
of free speech on the Internet. There are many conflicting values involved.
Some questions for your analysis are:
Is the Internet a form of public speech?
How can the different national perspectives on free speech be managed in a
global environment like the Internet?
Given that the Internet is supported by governments and private companies,
should these institutional and corporate needs supersede the free speech
rights of individuals on the Internet?
The discussion focuses on three levels: individual (ethical dilemmas), society
(social choices), and policy (laws and regulation).
Ethics is the study of principles that individual or organizations can use to
determine what is right and what is wrong. The three basic principles of ethics
are responsibility, accountability, and liability. As free moral agents, individuals,
organizations, and societies are responsible for the actions they take and
should be held accountable to others for the consequences of those actions.
Liability is a characteristic of political systems in which a body of law is in place
so that accountability can be enforced. It allows individuals to recover damages
for the actions of other individuals, systems, or organizations that cause them
damage. Due process is a feature of law-governed societies and refers to a
process in which laws are known and understood and there is an ability to
appeal to higher authorities to ensure that the laws have been applied
correctly.
An ethical dilemma is a situation in which there are at least two diametrically
opposed actions, each of which supports a desirable outcome. Analyzing an
ethical dilemma requires five steps:
1.
2.
3.
4.
5.
There are eight candidate ethical principles that can guide you when
making ethical decisions: golden rule, universalism, slippery slope,
utilitarian principle, risk aversion, no free lunch, the New York Times
test, and the social contract rule.
Next to privacy, the most controversial issue related to e-commerce is
Intellectual Property Rights (the protection of the tangible and intangible
products of the human mind). The three main ways society has chosen to
protect intellectual property are copyright, patent, and trademark.
all rich. This personalized view of ethics fails to take into account the
perceptions of customers, regulators, suppliers, employees, and business
partners, as well as the long-term interests of shareholders. Others may say,
As long as my business stays within the law, we are OK. Once again, this view
fails to recognize that trust and the perception, let alone the reality, of fairness
demand a higher standard than the law. Customers often expect a higher
standard of treatment than the minimal treatment required by law.
A second challenge of the topic is to understand that ethical, social, and
political awareness are an important part of business life. Most employers do
not want to hire employees who have no ethical convictions or who believe that
business is a jungle where the end justifies the means. Many job interviewers
will seek to identify the ethical sensibility of potential recruits. You should be
prepared for these questions.
Have you ever made a purchase based on something you have read or
seen on Facebook? What was the product and what made you
interested?
What obstacles does Facebook face in monetizing itself as a marketing
and advertising platform?
Are there other ways for Facebook to make a profit from marketers and
advertisers?
To understand consumers behavior in the Internet you must first know the type
of person that you can find there: Around 75% (89 million) U.S. households
have Internet access and its growth rate has slowed (everyone who wanted or
needed an Internet connection probably already has one). However, the
intensity and scope of use are both increasing. Some demographic groups have
much higher percentages of online usage than others (for example, while about
96% of high income households have Internet access, only 76% of medium
level ranges households have direct access). People are accessing the Internet
via broadband, but there are still a number of people accessing Internet via
dial-up, and a new mobile audience is emerging.
Once companies understand who is online, they need to focus on how they
behave online. Kotler and Armstrong present a general model of consumer
behavior indicating that buying decision is influenced by in-store behavior and
some intervening variables, which are influenced by independent demographic
variables. When the consumer is using the Internet, the in-store behavior is
related with what he/she does on the companys web page, and the intervening
variables can be modified by tools such as social networks, and Internet
communications. The online purchasing decision is strongly influenced by
shopping convenience, easier to compare prices, free shipping, trusted seller
and price.
The five stages in the buyer decision process and the online and offline
marketing activities used to influence them are:
The Digital Commerce Marketing Platform section reviews some basic concepts
in marketing and applies them to the online world. Brands allow firms to
differentiate themselves in the marketplace, charge premium prices for their
products, and thus achieve superior long-term returns on invested capital. It is
important to note here that during e-commerces early years, many predicted
the end of brands in a more or less perfect digital marketplace (the Web). In
fact, brands have been the key ingredient for survival on the Web and have
helped firms avoid the pitfalls of relentless price competition.
With the advent of new technology, we have learned that the objectives
of business have remained the same, to make a profit. Marketing online has the
same objectives as marketing offline, except that the tools and the rules of the
game are different. It is important to recognize the profile and behavior of an
online customer and learn how to take advantage of the capabilities available
with the Internet. As you could see, this topic focuses on understanding the
customer and some basic concepts in marketing that apply to the online world.
The case Insight on Business case, Mobile Marketing: Land Rover Seeks
Engagement on the Small Screenillustrates some of the ways mobile
marketing is different from traditional online marketing. The questions for
discussion of this case include:
The totality of conversations a firm has with its customers through a variety of
media and marketing channels is called customer engagement. There are four
generic market entry strategies: first mover, fast follower, alliances and brand
extenders. The Internet can be used to extend the customers experience.
Some traditional tools include: search engine marketing, display ad marketing,
e-mail and permission marketing, affiliate marketing, lead generation
marketing, and sponsorship marketing.
The Internet and the Web provide marketers with a whole set of exciting
marketing technologies. This section covers Web logs, cookies, Web beacons,
databases, data warehouses, data mining, Big Data, and customer
relationship management systems. You will want to spend some time on each
of these technologies, noting that many of them come with a social cost,
namely, the loss of privacy.
Internet provides consumers with a whole new environment for interacting with
firms because online behavior is different from offline behavior. It provides
consumers a powerful new set of tools to either support, or dismiss, products,
and to have these opinions propagate very rapidly. The Internet presents
marketers with risks as well as opportunities. Some tools are old enough to be
considered classic (such as search engines) others have only appeared in the
last five to ten years, like social network tools. It is important to understand
that the tools and technologies for online marketing are very different from
those for offline marketing and specialists must understand their potential and
uses.
The main challenge in this topic is to understand the many new types of
marketing communications available on the Web, describe their advantages or
disadvantages, and outline their changing effectiveness and cost.
The case on video advertising Video Ads: Shoot, Click, Buy shows interesting
examples of how video ads are growing in frequency and effective, rivaling the
power of television and movie placement ads. Some questions to discuss about
the case include:
Online marketing communications offer immediacy and precision that are not
possible in the offline world. The most effective communications plans combine
both offline and online communications.
Online advertising constitutes only about 15% of the total advertising market
because advertisers are still concerned about its cost versus its benefits and
about how to accurately measure its results. The kinds of products that are
most suited to being advertised online are high-consideration, informationintensive products that consumers will typically want to research prior to
purchasing. Computer hardware, automotive and financial services companies
are among the heaviest online advertisers for this reason. Financial and travel
services, which have significant online commercial potential, are also wellsuited to Internet advertising. Media products (books, music, and movies) are
also suited to online advertising although the advertising windows appear to be
quite short after initial introduction.
Internet provides a new set of tools that can be used for marketing
communications, many of which were not available only a few years ago
(display ads, rich media/video ads, paid search engine inclusion, sponsorships,
affiliate relationships, e-mail marketing, and social advertising on blogs, and via
social networks and games). It is important to understand how they work and
how those tools can be used to enhance a companys marketing efforts.
Remember that the most effective communications plans combine both offline
and online communications.
Most research has demonstrated that display ads are effective for producing
both brand recognition and immediate sales, and that this effect is positive
even when consumers do not click. Some people may find it surprising that
many untargeted impressions may only lead to a tiny level of purchases. This
can be improved dramatically by targeting the advertisement or using e-mail or
pay for inclusion communications. Indeed, e-mail response rates are
considerably higher than direct mail, banner ads, or even traditional media ads.
In general, online advertising is more cost-effective than traditional advertising
via offline media such as television, radio, and newspapers.
Using the Web Site as a Marketing Tool underscores the fact that the Web site
itself is a major marketing communications tool. Although this is not a Web site
design course, business managers should at least familiarize themselves with
effective Web design.
Some Web site design features that impact online purchasing are:
Internet provides a new set of tools that can be used for marketing
communications, many of which were not available only a few years ago. One
of the concerns about online marketing is to understand whether it really
works, and how to adequately measure its costs and benefits. The chapter
provides a list of measurements that can be used to assess the effectiveness of
on-line communications. It is important to understand how online
communications work and how those tools can be used to enhance a
companys marketing efforts.
Certainly, things were not always wonderful. By the 1950s, the world had
already gone through two World Wars and witnessed the annihilation of millions
of people at concentration camps and the proliferation of nuclear weapons. We
did, however, have the UN, color motion pictures, satellites, and transoceanic
cables.
By the late 20th century, computers became commonplace and cellular phones
appeared, as did MP3 music, microwave ovens, and the Internet. The world in
2005 is as different from 1955 as 1955 was from 1905.
Forecasting what companies in the mid-21st century will be like seems like a
task more suitable for crystal ball readers. Nevertheless, a look at what has
happened in the past may help identify trends that can then be extrapolated
with a fair amount of certainty. Forecasting the future requires analyzing what
has changed and what has remained constant. Things that have changed are
certain to continue changing, whereas constants are likely to remain so.
Technology Focus
It does not take a visionary to know that technology will become cheaper, more
powerful, and more flexible. It will be possible to store and find huge amounts
of information using powerful search engines, which means that even the
storage model will not be as critical. It is not hard to see, either, that the
Internet, or whatever technology replaces it, will have an impact on civilization
perhaps as significant as the automobile had on 20th century cities.
Large companies will be able to grow even more without loss of control, while
small businesses, through formal and informal networking, will be able to tackle
almost any market or project by partnering with specialists and other small
companies throughout the world as determined by project needs.
Product Focus
Prior to the Industrial Revolution, products were made to order, one at a time,
using very expensive processes. The Industrial Revolution and mass production
gave rise to mass-produced goods, using cheaper processes that meant
customers had to adapt to whatever was available. The Technology Revolution
will allow us to make products that are customized for each individual
customer, but on a mass scale, using cheaper processes that will make highquality, tailor-made products available to more and more people.
Marketing Focus
Before marketing came of age, people used to learn about products through a
word-of-mouth process. Offerings were customized for individual customers but
reach was extremely limited. With the emergence of mass media, advertising
was then designed for the masses, with tremendous reach but with the same
content for everyone. Advances in Internet customization technology and
changes in television, electronic paper, and on-demand music stations will
make it possible to design advertising for each individual customer, with
tremendous reach and low cost.
Government Focus
Just like companies, governments will also offer customized products and
services. They will be able to take advantage of technology to offer services
anytime, anywhere, and in any format, thereby fulfilling their mission of serving
the people. Electronic democracy will promote increased citizen involvement
and better accountability, as well as improved use of resources.
As in any story, looking into the future is not without certain dangers. We can
classify them as follows: the security risk (just as tangible assets are
protected today, company knowledge and access to hardware and systems will
have to be protected); the vulnerability to critical failure (whereby a glitch
could bring down a whole system, something like the "Jurassic Park" film
syndrome, in which a computer malfunction sets the park's dinosaurs free,
endangering its visitors), and loss of privacy (high information availability will
make it very tempting to have a "Big Brother" overseeing every step people
take).
In looking at how things are different, we have failed to see that things, in
reality, remain the same. Technology may change, problems may be different,
but people, their needs, and fulfillments, remain unaltered. The scale of human
necessities, consisting of food, shelter, and socialization, will continue to apply
to individuals. Overall, the outlook is optimistic. There will be better products,
better information, and better quality of life. The challenges are considerable
but surmountable. Forecasting what the world of tomorrow will be like requires
understanding the world of today, as well as the steps we have taken to get to
where we are. It is up to us to make sure the world takes the shape that we
want through hard work and an ongoing analysis of the changes that occur and
their effects on society.