Marketing and

E-Commerce
 Scientific content:
• Introduction to concepts and basics of Marketing and E-
commerce
• Types of Marketing and E-Commerce methods
• Elements, contents and applications of Marketing and E-
commerce
• Methodologies and tools of Design/Build Applications of
Marketing and E-commerce
• Safety and Security on the Internet, in general, and Security of
Marketing and E-commerce methods, in particular.
• Support methods for Information Security elements
• Special programs of Marketing and E-commerce methods
• Local and global practical models of E-commerce applications
on the Internet
• Definition and using of Info media revolution in Marketing and
E-commerce methods e.g.(online banks , shops and eBooks)
 E-commerce 2017
business. technology. society.
13th edition

Chapter 1
The Revolution Is Just
Beginning
• E-commerce can be defined as digitally enabled
commercial transactions between and among
organizations and individuals
• Digitally enabled transactions include all
transactions mediated by digital technology
• Transactions that occur over the Internet, the
Web, and/or via mobile devices
• Commercial transactions involve the exchange
of value (e.g., money) across organizational or
individual boundaries in return for products
and services
• E-business to refer primarily to the digital
enabling of transactions and processes
within a firm, involving information
systems under the control of the firm.

• E-business does not include commercial

transactions involving an exchange of
value across organizational boundaries.
The Difference Between E-commerce and E-business

E-commerce primarily involves transactions that cross firm

boundaries. E-business primarily involves the application of digital
technologies to business processes within the firm.
Technological Building Blocks Underlying
E-commerce
• Internet
• World Wide Web
– HTML
– Deep Web vs. “surface” Web

• Mobile platform
– Mobile apps
The mobile platform provides the ability to access the Internet
from a variety of mobile devices such as smartphones, tablets, and
other ultra-lightweight laptop computers via wireless networks or
cell phone service.
Technological Building Blocks Underlying E-commerce (Deep Web vs.
“surface” Web)

Deep Web is reportedly 500 to 1,000 times greater than the surface Web. The deep
Web contains databases and other content that is not routinely indexed by search
engines such as Google
• The Internet is a worldwide network of computer
networks built on common standards. Created in the late
1960s to connect a small number of mainframe computers
and their users, the Internet has since grown into the
world’s largest network.
• The World Wide Web (the Web) is an information
system that runs on the Internet infrastructure. The
Web was developed in the early 1990s
• The Web provides access to billions of web pages indexed
by Google and other search engines. These pages are
created in a language called HTML (HyperText Markup
Language). HTML pages can contain text, graphics,
animations, and other objects
• In essence, the Web added color, voice,
and video to the Internet, creating a
communications infrastructure and
information storage system that rivals
television, radio, magazines, and libraries.

• There is no precise measurement of the

number of web pages in existence,
• Google has identified over 30,000 trillion
unique uniform resource locators (URLs),
commonly known as web addresses, up
from 1 trillion in 2008,
• In addition to this “surface” or “visible”
Web, there is also the so-called deep Web
that is reportedly 500 to 1,000 times greater
than the surface Web. The deep Web
contains databases and other content that is
not routinely indexed by search engines such
as Google
• The mobile platform provides the ability
to access the Internet from a variety of
mobile devices such as smartphones,
tablets, and other ultra-lightweight
laptop computers via wireless networks
or cell phone service
Technological Building Blocks Underlying E-commerce (INTERNET
ACCESS IN THE UNITED STATES, 2016)

✓ Over 80% of all

Internet users in the
United States (217
million people) go
online using both a
desktop/laptop and
mobile device.
✓ Almost 12% (31
million) only go
online by using a
mobile device.
✓ Just over 7% (19
million) use only a
desktop or laptop
computer to access
the Internet.
Unique Features of E-commerce Technology
Unique Features of E-commerce Technology
1. Ubiquity:
o Available just about everywhere, at all times.
o Marketspace is virtual (migration from marketplace
to marketspace).
o Transaction costs reduced (the costs of
participating in a market).
o Example: being able to surf the web on your
mobile device while riding a bus or train.
2. Global reach
o Transactions cross cultural and national
boundaries.
o The potential market size for e-commerce
merchants is roughly equal to the size of the
world’s online population.
 Unique Features of E-commerce Technology
3. Universal standards:
o Standards that are shared by all nations around the world.
o lower market entry costs—the cost merchants must pay
just to bring their goods to market.
o Reduce search costs—the effort required to find suitable
products.
o Price discovery becomes simpler, faster, and more
accurate.
o Possible to easily find many of the suppliers, prices,
and delivery terms of a specific product anywhere in the
world
4. Information richness
o Refers to the complexity and content of a message.
o Supports video, audio, and text messages.
o Are interactive and can adjust the message to
individual users.
 Unique Features of E-commerce Technology
5. Interactivity
o technology that allows for two-way
communication between merchant and
consumer and among consumers.
o Interactivity allows an online merchant to
engage a consumer in ways similar to a face-to-
face experience.
o Comment features, community forums, and
social networks with social sharing functionality
such as Like and Share buttons all enable
consumers to actively interact with merchants and
other users.
o Example: using a chat window to interact with
technical support at a merchant’s website.
 Unique Features of E-commerce Technology
6. Information density
o the total amount and quality of information available to
all market participants, consumers and merchants
alike.
o information becomes more plentiful, less expensive,
and of higher quality.
o reduction in information asymmetry among market
participants (consumers and merchants).
o More Price transparency: the ease with which consumers
can find out the variety of prices in a market.
o More cost transparency: the ability of consumers to
discover the actual costs merchants pay for products.
o Allows for greater market segmentation and price
discrimination: selling the same goods, or nearly the
same goods, to different targeted groups at different
prices.
 Unique Features of E-commerce Technology
7. Personalization/customization
o personalization: merchants can target their marketing
messages to specific individuals by adjusting the
message to a person’s name, interests, and past
purchases.
o customization—changing the delivered product or
service based on a user’s preferences or prior
behavior.
o A result of increased information density.
8. Social technology
– much more social by allowing users to create and
share content with a worldwide community.
– E-commerce technologies provide a unique, many-to-
many model of mass communication.
 Types of E-commerce
• Business-to-Consumer (B2C)
• Business-to-Business (B2B)
• Consumer-to-Consumer (C2C)
• Mobile e-commerce (M-commerce)
• Social e-commerce
• Local e-commerce
Figure 1.5: The Growth of B2C E-commerce Worldwide
Figure 1.6: Room to grow of B2C E-commerce Worldwide

The retail e-commerce market is still just a small part of

the overall global retail market, but with much room to
grow in the future.
Figure 1.7: The Growth of B2B E-commerce in the U.S.

✓ B2B e-commerce in the United States is about 10 times the size of

B2C e-commerce.
✓ In 2020, B2B e-commerce is projected to be over $9 trillion. (Note:
Does not include EDI transactions.)
 Figure 1.8: The Growth of M-commerce in the EU5

It is anticipated that retail m-commerce will continue to grow at

double-digit rates over the next five years as consumers become
more and more accustomed to using mobile devices to purchase
products and services.
 Social E-commerce
o Social e-commerce is e-commerce that is enabled by
social networks and online social relationships.
o The growth of social e-commerce is being driven by
a number of factors, including:
▪ social sign-on (signing onto websites using your
Facebook or other social network ID)
▪ network notification (the sharing of approval or
disapproval of products, services, and content),
▪ online collaborative shopping tools.
▪ social search (recommendations from online trusted
friends), and
▪ the increasing prevalence of integrated social
commerce tools such as Buy buttons
 Local E-commerce
o form of e-commerce that is focused on
engaging the consumer based on his or her
current geographic location.
o Local merchants use a variety of online
marketing techniques to drive consumers to
their stores.
Figure 1.8: The relative size of different types of E-commerce in the US
 E-commerce: A Brief History (1 of 4)
Precursors (before e-commerce)
– Baxter Healthcare modem-based system
– Order entry systems
– Electronic Data Interchange (EDI) standards
– French Minitel (videotext system that combined
a telephone with an 8-inch screen).
➢more than 3 million had been deployed, with more than
13,000 different services available, including ticket
agencies, travel services, retail products, and online
banking.
➢continued in existence until December 31, 2006, when
it was finally discontinued by its owner, France Telecom.
 E-commerce: A Brief History (2 of 4) –
1995–2000: Invention
– Sale of simple retail goods
– Limited bandwidth and media
– Euphoric visions
▪ Friction-free commerce: a vision of commerce in
which:
▪ information is equally distributed,
▪ transaction costs are low,
▪ prices can be dynamically adjusted to
reflect actual demand,
▪ intermediaries decline, and
▪ unfair competitive advantages are
eliminated.
▪ First-mover advantages
– Dot-com crash of 2000
 E-commerce: A Brief History (2 of 4)
1995–2000: Invention
✓Internet and digital markets have changed the way
companies conduct business
✓Information asymmetry reduced:
– nearly perfect competitive market: where price,
cost, and quality information are equally
distributed.
✓Menu costs, search and transaction costs reduced.
– national or regional prices in traditional retailing
(what are called menu costs) that one national
price was the norm.
– merchants know much more about consumers
– It is possible for merchants to know more about
other merchants than was ever true in the past.
 E-commerce: A Brief History (2 of 4)
1995–2000: Invention
✓For merchants & Producers (friction-free commerce):
– direct access to hundreds of millions of customers.
– the cost of searching for customers would also fall,
– advertisements could be personalized to the needs of every
customer.
– producers could dynamically price their products to reflect
actual demand
– Allow for price discrimination: selling the same goods, or
nearly the same goods, to different targeted groups at
different prices.
– The resulting intense competition, the decline of
intermediaries, and the lower transaction costs would
eliminate product brands, and along with these, the possibility
of monopoly profits based on brands, .
– Unfair competitive advantages would be reduced.
 E-commerce: A Brief History (2 of 4)
1995–2000: Invention
✓For real-world entrepreneurs:
– access to millions of consumers worldwide who used the
Internet and a set of marketing communications
technologies (e-mail and web pages)
– Allows better segmentation, targeting, and positioning.
– Extraordinary profits would go to first movers—those
firms who were first to market in a particular area.
– inhibit competitors (new entrants) by building in switching
costs for their customers through proprietary interface
designs and features available only at one site.
– The idea for entrepreneurs was to create near monopolies
online based on size, convenience, selection, and brand.
– The emphasis was on disrupting (destroying) traditional
distribution channels and disintermediating existing channels,.
 E-commerce: A Brief History (2 of 4)
1995–2000: Invention
✓For Consumers:
– search costs —the cost of searching for prices,
product descriptions, payment settlement, and order
fulfillment— would all fall drastically.
– Prices and even costs would be increasingly
transparent to the consumer, who could now know
exactly and instantly the worldwide best price, quality,
and availability of most products (reduced
information asymmetry).
✓For Distributors and Wholesalers:
– Disintermediation: displacement of market
middlemen who traditionally are intermediaries
between producers and consumers by a new direct
relationship between producers and consumers.
 E-commerce: A Brief History (2 of 4)
1995–2000: Invention
The Benefits of Disintermediation to the Consumer
 E-commerce: A Brief History (3 of 4)
2001–2006: Consolidation
– Emphasis on business-driven approach: large traditional
firms learned how to use the Web to strengthen their market
positions.
– Traditional large firms expand presence
– Start-up financing shrinks
– More complex products and services sold: such as travel
and financial services.
– Growth of search engine advertising: targeted to user
queries, rich media and video ads, and behavioral
targeting of marketing messages based on ad networks
and auction markets.
– Business Web presences expand: included websites, e-
mail, display, and search engine campaigns; multiple
websites for each product; and the building of some limited
community feedback facilities.
 E-commerce: A Brief History (4 of 4)
2007–Present: Reinvention
✓e-commerce has been transformed by the rapid growth
of:
– Web 2.0 (a set of applications and technologies that enable
user-generated content, such as online social networks,
blogs, video and photo sharing sites, and wikis),
– widespread adoption of mobile devices such as smartphones
and tablet computers,
– the expansion of e-commerce to include local goods and
services, and
– the emergence of an on-demand service economy enabled
by millions of apps on mobile devices and cloud computing.
✓Entertainment content develops as source of revenues
✓Transformation of marketing
– increasing use of social networks, word-of-mouth, viral
marketing, and much more powerful data repositories and
analytic tools for truly personal marketing.
Figure 1.10: Periods in the Development of E-commerce
 Digital Goods
• Goods that can be delivered over a digital
network
• Cost of producing first unit is almost entire cost
of product
• Costs of delivery over the Internet very low
• Marketing costs remain the same; pricing highly
variable
• Industries with digital goods are undergoing
revolutionary changes (publishers, record labels,
etc.)
 Assessing E-commerce (1 of 2)
• Stunning technological success
• Early years a mixed business success
– Few early dot-coms have survived
– Online sales growing rapidly
– Thousands of firms have failed, and those few that
have survived dominate the market.
– The idea of thousands of suppliers competing on price
has been replaced by a market dominated by giant
firms.
– Consumers use the Web as a powerful source of
information about products they often actually
purchase through other channels, such as at a
traditional store.
 Assessing E-commerce (1 of 2)
• Many early visions not fulfilled
– Price dispersion: Prices are sometimes lower
online, but the low prices are sometimes a
function of entrepreneurs selling products below
their costs. In some cases, online prices are
higher, as consumers are willing to pay a small
premium for the convenience of buying online.
– The concept of one world, one market, one
price has not occurred in reality as entrepreneurs
discover new ways to differentiate their products
and services.
 Assessing E-commerce (1 of 2)
• Many early visions not fulfilled
– brands remain very important in e-
commerce—consumers trust some firms
more than others to deliver a high-quality
product on time and they are willing to pay for
it.
– The “perfect competition” model of extreme
market efficiency has not come to pass.
– e-commerce has created many opportunities
for middlemen to aggregate content,
products, and services and thereby introduce
themselves as the “new” intermediaries.
 Assessing E-commerce (2 of 2)
• Other surprises
– First-mover advantage appears to have succeeded
only for a very small group of companies, albeit some
of them extremely well-known, such as Google,
Facebook, Amazon, and others.
– Fast-follower advantages: firms with the right
complement of financial, marketing, legal, and
production assets needed to develop mature markets,
and this has proved true for e-commerce as well.
– Impact of mobile platform: understanding of personal
behavior than even Google has achieved.
– Emergence of on-demand e-commerce: enables
people to use their mobile devices to order up
everything from taxis, to groceries, to laundry service.
 Major Trends in E-commerce
• Business trends include:
– All forms of e-commerce show very strong
growth
• Technology trends include:
– Mobile platform has made mobile e-
commerce reality
• Societal trends include:
– Increased online social interaction and
sharing