MK0008 – E - Marketing

Assignment Set- 1

1a. What is e-marketing? What are its benefits?

Answer: E-marketing, also referred to as online marketing or

internet marketing, is marketing that uses the Internet. The Internet
has brought many unique benefits to marketing, including low costs
in distributing information and media to a global audience. The
interactive nature of Internet media, both in terms of instant
response, and in eliciting response at all, are both unique qualities
of Internet marketing. E-marketing ties together creative and
technical aspects of the internet, including design, development,
advertising and sales. E-marketing methods include search engine
marketing, display advertising, e-mail marketing, affiliate
marketing, interactive advertising and viral marketing. E-marketing
is the process of growing and promoting an organization using
online media. E-marketing does not simply mean ‘building a
website’ or ‘promoting a website’. Somewhere behind that website
is a real organization with real goals. E-marketing strategy includes
all aspects of online advertising products, services, and websites,
including search engine marketing, public relations, social media,
market research, email marketing, and direct sales. The E-marketer
selects the best of these vehicles, given the organization’s goals
and audience.

E-Marketing can also be defined as a subset of e-Business that

utilizes electronic medium to perform marketing activities and
achieve desired marketing objectives for an organisation. Internet
Marketing, Interactive Marketing and Mobile Marketing for example,
are all a form of e-Marketing.

Benefits of E-marketing

Some of the benefits associated with E-marketing include the

availability of information. Consumers can access the Internet and
learn about products, as well as purchase them, at any hour, any
day. Companies that use Internet marketing can also save money
because of a reduced need for a sales force. Overall, E-marketing
can help expand from a local market to both national and
international market places. Compared to traditional media, such as
print, radio and TV, Internet marketing can have a relatively low
cost of entry. Since exposure, response and overall efficiency of
Internet media is easy to track, through the use of web analytics for
instance, compared to traditional "offline" media, E-marketing can
offer a greater sense of accountability for advertisers.

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Following are some of the other advantages of e-Marketing:

• Reduction in costs through automation and use of electronic

media

• Faster response to both marketers and the end user

• Increased ability to measure and collect data

• Opens the possibility to a market of one through

personalization

• Increased interactivity

1b. List the key features of the web.

Answer: The web leverages the key features of the Internet and
makes them widely accessible to the public. Key features of the web
in particular are its ease of use, universal accessibility, and ability to
be quickly searched:

• Ease of use. The web can be immediately used by anyone

already familiar with a computer window. The only special
features are links, which are as natural and intuitive to use as
pressing a button. This ease of use enabled the rapid adoption
of the web in the 1990's, and led to the establishment of the
Internet around the world.

• Universal access. The open design of the web makes it easy to

build web browsers for a wide range of devices. Web browsers
have been deployed on cell phones and personal organizers,
and the web is now the standard interface for providing
access to information.

• Search capabilities. The development of search sites greatly

multiplied the power and usefulness of the web by providing
the capability to effectively search the content of millions of
web pages in seconds. Search sites significantly enabled the
web to realize an automated library system.

2a. Give a note on internet privacy.

Answer: Internet privacy consists of privacy over the media of the

Internet, the ability to control what information one reveals about
oneself over the Internet, and to control who can access that
information.

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Internet privacy forms a subset of computer privacy. Experts in the
field of Internet privacy have a consensus that Internet privacy does
not really exist. Privacy advocates believe that it should exist.

People with only a casual interest in Internet privacy need not

achieve total anonymity. Regular Internet users with an eye to
privacy may succeed in achieving a desirable level of privacy
through careful disclosure of personal information and by avoiding
spyware. On the other hand, some people desire much stronger
privacy. In that case, they may use Internet anonymity to ensure
privacy use of the Internet without giving any third parties the
ability to link the Internet activities to personally-identifiable
information of the Internet user.

Those concerned about Internet privacy often cite a number of

privacy risks, events that can compromise privacy , which one may
encounter through Internet use. Unfortunately, given the complexity
of Internet privacy, many people do not understand the issues.

Privacy measures are provided on several, if not all, social

networking sites. On Orkut for example, a site especially popular
among teens, privacy settings are available for all registered users.
The utilization of these settings is simple and quick, although their
availability is not always taken advantage of. The settings available
on Orkut include the ability to block certain individuals from seeing
your profile, the ability to choose your "friends," and the ability to
limit who has access to your pictures and videos. While privacy on
the internet is a very real concern, social networking sites are taking
adequate precautionary measures to provide protection for their
users. Now that safety settings have been made easily accessible on
many sites, it is the responsibility of the user to apply them when
providing personal information and pictures on the internet. There
are other means by which there is infringement of privacy on the
net.

2b. Discuss the challenges of e-marketing in future?

Answer: Challenges of e-marketing in future:

• Underhanded marketing may get worse. The Internet has

plenty of both cooperation and cutthroat competition.
Because humans tend to be short-term thinkers, many e-
marketers will choose highly competitive strategies over
cooperative ones.
• Governments will get more involved. The initial high ethical
standards on the Web have not held firm. A growing epidemic
of fraudulent sales practices online will increase the concern
for consumer protection, raising calls for more government
oversight.

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 • "Branding" will rival price. Building consumer trust
relationships will drive many e-businesses. Trust comes from
positive media exposure, connection to other trusted
institutions through marketing alliances, and having a good
reputation before marketing online.
• Basic marketing principles will hold true. Successful e-
marketers will continue to offer the classic elements of a
quality sales pitch: something new and surprising, something
useful or essential, or something that touches the emotions.

3. Explain the following terms used in e-marketing:

Intellectual property, Safe Harbor principles and Click-wrap
agreement.

Answer:

Intellectual Property

When dealing with ethics in a B2B company and B2C clients there is
a major degree of trust and responsibility that is imparted to a
person or group that maintains the Web site. It is very important
from both an ethical values based e business and legal B2B and B2C
perspective to make sure that the written words and what is
portrayed about a company are factual. Because issues arise
involving marketing ethics and the importance of understanding a
business for Internet marketing issues and advertising purposes,
there are potential areas for revealing trade secrets or intellectual
property if proper B2B ethical behavior is not followed.

Email correspondence should be private and confidential. While

certain individuals might not see any harm quoting it on the Web
from an email sent, it is always advisable to get a person’s consent
prior to publishing anything. While the person might give consent,
they might not realize the full implications, on line privacy issues, or
impact of having it published online. Therefore, it would be wise to
consider it very carefully before even asking for their approval.

Safe Harbor Principles

The US Safe Harbor Arrangement is a streamlined process for US

companies to comply with EU Directive on the protection of personal
data, developed by the US Department of Commerce in consultation
with EU.

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US companies can opt into the program as long as they adhere to
the 7 principles outlined in the Directive. These principles must
provide:

• Notice – Individuals must be informed that their data is being

collected and about how it will be used.

• Choice – Individuals must have the ability to opt out of the

collection and forward transfer of the data to third parties.

• Onward Transfer – Transfers of data to third parties may only

occur to other organizations that follow adequate data
protection principles.

• Security – Reasonable efforts must be made to prevent loss of

collected information.

• Data Integrity – Data must be relevant and reliable for the

purpose it was collected for.

• Access – Individuals must be able to access information held

about them, and correct or delete it if it is inaccurate.

• Enforcement – There must be effective means of enforcing

these rules.

Companies must also re-certify every 12 months. They can either

perform a self-assessment to verify they comply with these
principles, or hire a third-party to perform the assessment. There
are also requirements for ensuring that appropriate employee
training and an effective dispute mechanism is in place.

Click Wrap Agreement

A clickwrap agreement (also known as a "click through" agreement

or clickwrap license) is a common type of agreement (often used in
connection with software licenses). Such forms of agreement are
mostly found on the Internet, as part of the installation process of
many software packages, or in other circumstances where
agreement is sought using electronic media. The name "clickwrap"
came from the use of "shrink wrap contracts" in boxed software
purchases, which "contain a notice that by tearing open the shrink-
wrap, the user assents to the software terms enclosed within".

Click-wrap is the electronic equivalent of the shrink-wrap method

which allows users to read the terms of the agreement before
accepting them. The content and form of clickwrap agreements vary
widely. Most clickwrap agreements require the end user to manifest
his or her assent by clicking an "ok" or "agree" button on a dialog

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box or pop-up window. A user indicates rejection by clicking cancel
or closing the window. Upon rejection, the user can no longer use or
purchase the product or service. Classically, such a take-it-or-leave-
it contract was described as a "contract of adhesion, which is a
contract that lacks bargaining power, forcing one party to be
favored over the other". The terms of service or license do not
always appear on the same webpage or window, but they are
always accessible before acceptance. If the terms of service are not
visible, courts have found the notice requirement to be lacking.

MK0008 – E-marketing -6-

 MK0008 – E – Marketing

Assignment Set- 2

1. Give an account of customer behaviour in a B2B e-

marketing.

Answer: Internet-based business-to-business (B2B) e-commerce is

conducted through industry-sponsored marketplaces and through
private exchanges set up by large companies for their suppliers and
customers. Of course, companies also sell to business customers
through their own Web sites.

Business-to-business (B2B) e-commerce is significantly different

from business-to-consumer (B2C) e-commerce. While B2C
merchants sell on a first-come, first-served basis, most B2B
commerce is done through negotiated contracts that allow the seller
to anticipate and plan for how much the buyer will purchase. In
some cases B2B is not so much a matter of generating revenue as it
is a matter of making connections with business partners.

B2B is far and away the largest sector of e-commerce. Comparing

B2B with B2C e-commerce, the U.S. Department of Commerce
reported that B2B online sales accounted for 90 percent of all online
transactions. It attributed the high percentage of B2B e-commerce
sales to the longstanding use of proprietary networks, such as EDI,
in the B2B sector. The manufacturing industry was the leader in e-
commerce.

The internet B2B transactions in industrial inputs such as steel,

chemicals, automobile components, etc. have been most successful.
These businesses have been benefited in the following ways by such
internet transactions:

• Reduced procurement costs by resorting to e-tendering,

reverse auction, etc.

• Online ordering resulting in substantial order cycle time

reduction & increased customer satisfaction.

• Tighter inventory control & fewer out of stock situations due

to rapid inventory adjustments.

B2B e-commerce is being driven from two sides. At one level are
businesses looking to use technology to develop improved ways of
working and relationships with trading partners up and down the
supply chain. At the other end of the spectrum are the e-commerce

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product and service providers who are developing new ideas and
concepts and hoping that some will succeed. Much of the attention
given to B2B relates to the emerging and embryonic developments
such as e-marketplaces, and e-exchanges, but in reality most of the
actual use is at a lower level in the e-commerce implementation
cycle.

B2B e-commerce is of interest to a wide variety of large and small

businesses. B2B e-commerce is used for following purposes:

• To attract, develop, retain, and cultivate relationships with

customers

• To streamline the supply chain, manufacturing, and

procurement processes and automate corporate processes to
deliver the right products and services to customers quickly
and cost effectively

• To capture, analyse, and share information about customers

and company operations in order to make better and more
informed decisions

2a. What are the targeting strategies involved for e-

marketing?

Answer: Once the variables that form a lucrative cluster of

customer base for the product is identified, advertising campaigns
are decided to target those customers. The marketer arrives at the
second stumbling block here "portals". Portals have the most
popular URLs on the web today. They claim to be a one-stop
solution for anything and everything that the netizen looks for. For
the netizen it means less URLs to remember and a place to meet
people & socialise. It could have, in most probability, also been the
place of a successful electronic transaction before, quelling his/her
security concerns. Although portals deny their comparison with the
supermarkets of the real world, they are doing just that right now. A
portal is not exactly a marketers’ paradise. He would rather prefer
sites, which have a niche target audience in sync with his
requirements. After all the difference between a ‘Passion’ & a
‘Channel No.5′ (perfumes) is more in the customer’s mind (brand
image) than is olfactory. But as long as Amazon sells more toys than
ToysRUs, there is a real problem on hand.

The next step is to select segments for targeting online that are
most attractive in terms of growth and profitability. These may be
similar or different from the segments targeted offline. Some
examples of customer segments that are targeted online include:

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 • the most profitable customers – using the Internet to provide
tailored offers to the top 20 per cent of customers by profit
may result in more repeat business and cross-sales;

• larger companies (B2B) – an extranet could be produced to

service these customers, and increase their loyalty;

• smaller companies (B2B)- large companies are traditionally

serviced through sales representatives and account
managers, but smaller companies may not warrant the
expense of account managers. However, the Internet can be
used to reach smaller companies more cost-effectively. The
number of smaller companies that can be reached in this way
may be significant, so although individual revenue of each one
is relatively small, the collective revenue achieved through
Internet servicing can be large;

• particular members of the buying unit (B2B) – the site should

provide detailed information for different interests which
supports the buying decision, for example, technical
documentation for users of products, information on savings
from e-procurement for IS or purchasing managers and
information to establish the credibility of the company for
decision makers;

• customers who are difficult to reach using other media an

insurance company looking to target younger drivers could
use the Web as a vehicle for this.

• customers who are brand-loyal services to appeal to brand

loyalists can be provided to support them in their role as
advocates of a brand;

• customers who are not brand-loyal – Conversely, incentives,

promotion and a good level of service quality could be
provided by the web site to try and retain such customers.

Such groupings can be targeted online by using navigation options

to different content groupings such that visitors self-identify. This
approach has potential for subsidiary navigation on other sites.
Other alternatives are to setup separate sites for different
audiences. Once customers are registered on a site, profiling
information in a database can be used to send tailored e-mail
messages to different segments.

The most sophisticated segmentation and targeting schemes are

often used by E-retailers, who have detailed customer profiling
information and purchase history data and they seek to increase
customer lifetime value through encouraging increased use of

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online services through time. However, the general principles of this
approach can also be used by other types of companies online. The
segmentation and targeting approach used by E-retailers is based
on five main elements which in effect are layered on top of each
other. The number of options used and so, the sophistication of the
approach will depend on resource available, technology capabilities
and opportunities afforded by the list:

1. Identify customer lifecycle groups:

As visitors use online services they can potentially pass through

seven or more stages. Once companies have defined these groups
and setup the customer relationship management infrastructure to
categorise customers in this way, they can then deliver targeted
messages, either by personalized on-site messaging or through E-
mails that are triggered automatically due to different rules.

First time visitors can be identified by whether they have a cookie

placed on their PC. Once visitors and then registered, they can be
tracked through the remaining stages. Two particularly important
groups are customers who have purchased one or more times. For
many e-retailers, encouraging customers to move from the first
purchase to the second purchase and then onto the third purchase
is a key challenge. Specific promotions can be used to encourage
further purchases. Similarly, once customers become inactive, i.e.
they have not purchased for a defined period such as 3 months,
they become inactive and further follow-ups are required.

2. Identify customer profile characteristics:

This is a traditional segmentation based on the type of customer.

For B2C e-retailers this will include age, sex and geography. For B2B
companies, this will include size of company and the industry sector
or application they operate in.

3. Identify behaviour in response and purchase:

As customers progress through the lifecycle, by analysis of their

database, they will be able to build up a detailed response and
purchase history which considers the details of frequency, monetary
value and category of products purchased.

4. Identify multi-channel behaviour (channel preference):

Regardless of the enthusiasm of the company for online channels,

some customers will prefer using online channels and others will
prefer traditional channels. This will, to an extent be indicated by
RFM and response analysis since customers with a preference for

MK0008 – E-marketing - 10 -
online channels will be more responsive and will make more
purchases online. Drawing a channel chain for different customers is
useful to help understand this. It also useful to have a flag within the
database which indicates the customers channel preference and by
implications, the best channel to target them by. Customers that
prefer online channels can be targeted mainly by online
communications such as e-mail, while customers who prefer
traditional channels can be targeted by traditional communications
such as direct mail or phone.

5. Tone and style preference:

In a similar manner to channel preference, customers will respond

differently to different types of message. Some may like a more
rational appeal in which case a detailed e-mail explaining the
benefits of the offer may work best. Others will prefer an emotional
appeal based on images and with warmer, less formal copy.
Sophisticated companies will test for this in customers or infer it
using profile characteristics and response behaviour and then
develop different creative treatments accordingly. Companies that
use polls can potentially use this to infer style preferences.

Targeting Online Customers: Marketers must select the best

potential segments for targeting:

• Review the market opportunity analysis,

• Consider findings from the SWOT analysis,

• Look for the best fit between the market environment and the
firm’s expertise and resources.

• Sometimes it is easy to discover a new segment and

experiment with offers that might appeal to this group. Other
times it is a lengthy and thorough process. To be attractive,
an online segment must be accessible through the Internet,
sizable, growing, and hold great potential for profit.

E-marketers select among the following four targeting strategies:

• Mass marketing: undifferentiated targeting; when the firm

offers one marketing mix for the entire market.

• Multi-segment marketing; when a firm selects two or more

segments and designs marketing mix strategies specifically
for each. Most firms use a multi-segment strategy.

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 • Niche marketing; when a firm selects one segment and
develops one or more marketing mixes to meet the needs of
that segment.

• Micromarketing; individualized targeting; when a firm tailors

all or part of the marketing mix to a very small number of
people.

The Internet’s big promise is individualized targeting, giving

individual consumers exactly what they want at the right time and
place.

Targeting Communities on the Internet: The Internet is ideal for

gathering people with similar interests and tasks into communities.

Business communities also play a big role in B2B commerce. Most

professionals subscribe to discussion groups containing information
in their field, and many Web sites promote community. In discussion
groups, users feel part of the site by posting their own information
and responding to other users. For example, Amazon allows users to
write their own book reviews and read the reviews of others. These
kinds of Web sites encourage users to return again and again and
see what their cyber friends are discussing and doing online.

2b. What do you mean by e-CRM?

Answer: eCRM (also occasionally e-CRM) is the electronically

delivered or managed subset of CRM. The user of an eCRM solution
uses the resources of the internet or other digital media (for
example SMS, mobile data or interactive Television) to deliver
elements of a marketing relationship with the customer. Some web-
based CRM tools can help manage the relationships between
Central Sales Management, Regional Sales Offices and salespeople
by creating rules-based links between different data-sets based on
customer purchase cycles, product cycles, sales cycles and other
product development, marketing or behavioural patterns. Other
eCRM systems can act as an automated data mining tool, enabling
system owners to automate customer communications based on
sets of pre-defined rules.

At its most sophisticated, eCRM can be defined as an enterprise-

wide technology driven approach to the management of all data
relating directly or indirectly to customers, in turn helping to define
overall product development and marketing strategies. The term
eCRM is also be used to describe the customer-facing, digitally-
delivered portion of CRM. The term usually implies capabilities like
self-service knowledge bases; automated, semi-automated or
structured email marketing communications (based on preference,
behaviour, previous response etc.); personalisation (either by an

MK0008 – E-marketing - 12 -
individual member of the database or according to rules set by the
administrator) of content; etc.

At its most basic, eCRM can be seen as enhanced email marketing,

and as such is regulated by organisations such as the Direct
Marketing Association (DMA) and in law by anti-spam regulations.

3. Analyse the distribution function in e-marketing.

Answer: Distribution determines how the customer receives a

product or service, which determines brand image. Marketers set
strategies for availability, access, and distribution service.
Distribution channel is a group of interdependent firms that work
together to transfer product and information from the supplier to
the consumer. This is composed of:

• Producers, manufacturers, or originators of the product or

service,

• Intermediaries- firms that match buyers and sellers and

mediate the transactions among them,

• Consumers, customers, or buyers who consume or use the

product or service.

The structure of the distribution channel makes or impedes possible

opportunities for marketing on the Internet. When a consumer
purchases online, he must perform the search function himself &
with an automated transaction, he could save money by performing
some distribution functions himself. There are four elements of a
company’s channel structure: 1) Types of channel intermediaries,2)
Length of the channel,3) Functions performed by members of the
channel & 4)Physical and informational systems that link the
channel members and provide for coordination and management of
their collective effort to deliver the product or service.

Types of channel intermediaries:

Channel intermediaries include:

• Wholesalers: who buy products from the manufacturer &

resell them to retailers.

• Retailers (brick-and-mortar & online): who buy products

from wholesalers & sell them to consumers.

• Brokers: facilitate transactions between buyers and sellers

without representing either party. They are also called market
makers.

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 • Agents: represent the buyer/seller & facilitate transactions
between buyers and sellers but do not take title to the goods.
Manufacturer’s agents represent the seller & purchasing
agents represent the buyer.

• For digital products (software), the entire distribution

channel may be Internet based & the supplier can deliver it
over the Internet to the buyer’s computer.

• Non-digital products (flowers/wine) may be purchased

online but must be delivered physically. The exact location of
that shipment can be tracked using a Web-based interface.

Length of the channel

The length of the channel represents the number of intermediaries

between supplier and consumer. In a direct distribution channel,
there are no intermediaries & the manufacturer deals directly with
the consumer. For example, Dell Computer sells directly to
customers. In an indirect channel, the system consists of one or
more intermediaries’ like- suppliers, manufacturers, wholesalers,
retailers & end consumers. These intermediaries help to perform
many important functions.

Dis-intermediation means eliminating traditional intermediaries. The

Internet was predicted to eliminate intermediaries. It can potentially
reduce costs. Taken to its extreme, dis-intermediation allows the
supplier to transfer goods and services directly to the consumer in a
direct channel. Complete dis-intermediation is an exception because
intermediaries can handle channel functions more efficiently than
producers.

Initially, the Internet was thought to eliminate costly intermediaries

in USA. This line of reasoning failed to recognize some important
facts. The U. S. distribution system is the most efficient in the world.
Using intermediaries allows companies to focus on what they do
best. Traditional intermediaries have been replaced with Internet
equivalents.

Online intermediaries are often more efficient than their brick-and-

mortar counterparts since online storefront has no rent,
maintenance, and staff for retail space. Such marketing needs an
inexpensive warehouse which is an acceptable storage location for
goods sold online. However, online stores involve costs of setting up
& maintaining their sites. These charges can be significant, but they
do not outweigh the savings realized by eliminating the physical
store.

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The Internet has added new types of intermediaries. For example-
Yahoo! Broadcast aggregates multimedia content & is a record
store, audio bookstore, radio broadcaster, and TV broadcaster all
rolled into one. Other intermediaries are Shopping agents, buyer
cooperatives, and metamediaries.

Functions performed by members of the channel:

Many functions must be performed in moving products from

producer to consumer. Internet based distribution channel initially
involves market deconstruction (removing distribution channel
functions from the players that normally perform them) & then
reconstruction (reallocating those functions to other intermediaries
in novel ways).

Online retailers normally hold inventory and perform the pick, pack,
and ship functions in response to a customer order. Alternative
scenario, the retailer might outsource the pick, pack, and ship
functions to a logistics provider such as GATI or Blue Dart. In this
system, the order is forwarded to a GATI warehouse where the
product waits in storage or GATI picks, packs, and ships the product
to the consumer.

Distributors perform many value-added functions. Some of them

are:

Transactional Functions which include:

• Making contact with buyers and using marketing

communication strategies to make them aware of products.

• Matching product to buyer needs, negotiating price, and

processing transactions.

• Logistical Functions which include:

o Physical distribution activities viz. transportation or

inventory storage &

o Product aggregation.

o Logistical functions are often outsourced to third-party

logistics specialists. A big problem for online retailers is
the expense of delivering small quantities to homes and
businesses. Often the recipient is not there to receive
the product.

o 25% of deliveries require multiple delivery attempts.

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 o 30% of packages are left on doorsteps, with possibilities
for theft.

• Innovative firms are introducing solutions like 1)the Smart

box, 2) Retail aggregator model i.e. delivery at convenience
stores or service stations, 3) E-stops & 4) Order online for
offline retail delivery.

• Facilitating Functions (performed by channel members):

• Market Research: This is a major function of the distribution

channel. This results in an accurate assessment of the size &
characteristics of the target audience. The Internet affects the
value of market research in five ways:

1. Information available for free.

2. Research conducted from the office (limits travel

expenses).

3. Information is timelier.

4. Information in digital form which e-marketers can easily

load it into a spreadsheet or other software.

5. Because so much consumer behavior data can be

captured online, e-marketers can receive detailed
reports.

• Research requires investment in human resources to distill the

material & firms need access to costly commercial
information.

• Financing: Financing purchases is an important facilitating

function in consumer/business markets. Intermediaries want
to make it easy for customers to pay in order to close the sale.
Online consumer purchases are financed through credit cards
or special financing plans. Consumers are however concerned
about divulging credit card information online.

• Online merchants have to know they are dealing with a valid

consumer using a legitimate credit card by using Secure
Electronic Transactions (SET).

Scope of the Distribution System

There are three ways to define the scope of the channel as a

system. 1) Distribution functions that are downstream from the
manufacturer to the consumer, 2) The supply chain, upstream from

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the manufacturer, working backwards to raw materials and 3)
Consider the supply chain, manufacturer and distribution channel as
an integrated system called the value chain or integrated logistics.

Supply chain management (SCM) refers to the coordination of the

flow of material, information and finance. Key functions of supply
chain management are continuous replenishment and build to order
to eliminate inventory. Supply chain participants use enterprise
resource planning (ERP) systems to manage inventory and
processes. Their goal is to increase inventory turns & decrease
working capital.

Channel management requires coordination, communication and

control to avoid conflict among channel members. Electronic data
interchange (EDI) is effective for establishing structural relationships
among businesses. The goal is to create an Internet based, open
system so that suppliers and buyers can integrate their systems.
Extensible Markup Language (XML) is the probable technology for
achieving the goal.

Classifying Online Channel Members: Online intermediaries can

be classified according to their business model- 1) Content
sponsorship, 2) Direct selling, 3) Infomediary and 4) Intermediaries
in the distribution channel.

Content sponsorship: In this model, firms create web sites,

attract traffic and sell advertising. All the major portals like AOL,
Yahoo! & MSN utilize this model. Content sponsorship is often used
in combination with other models. For example, newspapers charge
fees for archived articles.

Direct selling: In this model the manufacturer sells directly to the

consumer or business customer. This has been successful in B2B
and B2C markets. Examples are- Digital products & Perishable
products such as flowers and fresh food. Dell is the best example of
direct selling on the internet.

Infomediary: The infomediary aggregates and distributes

information. Market research firms are examples of infomediaries.
Some infomediaries compensate consumers for sharing
demographic and psychographic information and receiving ads
targeted to their interests.

Intermediaries in the distribution channel: Three intermediary

models are in common use on the Internet: 1) Brokerage models, 2)
Agent models & 3) Online retailing models.

Brokerage models: The Broker creates a market in which buyers

and sellers negotiate and complete transactions. E*Trade and
Ameritrade allow customers to place trades online. The B2B market

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has spawned brokerages. Converge is the leading exchange for
global electronics. Online auctions are available in the B2B, B2C and
C2C markets.

Agent models: May represent sellers or buyers.

Agents that represent sellers are:

• Selling agents

• Manufacturers’ agents

• Metamediaries

• Virtual malls

Agents that represent buyers are:

• Shopping agents

• Reverse auctions

• Buyer Cooperatives

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