Monday, September 3, 2007

How e-business can help organizations to develop and sustain competitive advantage?


The increase in the internet usage all over the world has made the world a small place to live in. One can assess variety of data and derive large amount of useful information. Internet had proved to be the biggest tool used to globalize the world. The internet usage is increasing day by day.
Internet has created lots of opportunities for new and existing businesses. The concept of e-marketing, e-business, e-commerce, e-CRM, e-procurement, etc have helped them to create competitive edge over rivals all over the world.

According to Deloitte & Touché Consulting Group, E-business can be defined as “The use of electronics networks for business (usually with web technology).”

The IBM defines it as, “The transformation of key business processes through the use of Internet technologies.”

E-business is primarily about selling online or the ability to transact online. This includes e-tailing, online banking and shopping – which involves transactions where buyers actually buy and shoppers actually shop. (Smith & Chaffey 2006).

The crux is that the buying and selling online can be defined as e-business. The sellers and buyers meets through electronics media and transaction is done at agreed terms. The revenue generated from sales is credited to the seller and a buyer is delivered the product within agreed time limit.

For example, e-bay, amazon.com, zoop, etc are into e-business.


The benefits from consumer point of view:



  • The major advantage of e-marketing is removal of intermediaries from the process of value chain. The intermediaries such as wholesalers, retailers, and dealers are removed and through internet the products and services are directly sold to the consumers. So, the products are cheaper.

  • Customers are bombarded with lots of information for products, which they are even thinking to buy

  • Customers can get the products according to their desired specifications
    Lead time (time between ordering and actually receiving the product) had been reduced comprehensively

The benefits from organization point of view:



  • Efficiency and effectiveness is increasing in the production processes and delivering the products to end users.

  • The relationships between the customer and seller had strengthen through e-customer relationship management

  • Companies have direct access to suppliers and ancillaries for speeding up the production process through exchange of information through internet. Just-in-time technology is one of the examples of such type.

  • The companies tend to gain competitive advantage over competitors by useful information flow between them and consumers. Being first to inform about your products to consumers will definitely let you have competitive edge over the others and also to have larger market share.

  • The feedback from the existing and new users in instant which is used to later on modify products in future.

The companies try to differentiate themselves in terms of Generic competitive strategies matrix elements: Cost Leadership, Cost Focus, and Differentiation.

For example,
Mc Donalds, Google, KFC, and Pizza hut are cost leaders having larger access to market share at low cost.

Nando’s chicken follows differentiation focus strategy having differentiated product called ‘Peri-Peri Grilled chicken’ and narrowly focused as casual dining for customers.
Russian Standard Vodka focused themselves as having larger market share with highly differentiated product for super premium category of customers.

Amazon as compared to all is focused equally on all the three elements, that why it’s shown in the centre of generic strategy model.


The companies use international communication strategy to convey their message online. The elements of integrated marketing communication are:



  1. Identifying the target audience: Such as porn sites especially targets younger generation.

    For example, the debonairblog.com, an Indian porn site targets the younger one, and warns people below 21 years of age on home page. (http://www.debonairblog.com/)

  2. Determining the message: “the message should gain attention, hold interest, arouse desire, and elicit action (AIDA model).” (Kotler 2005).
    For example, HSBC bank tagline on web page is “World’s Local Bank”, a unique and solid message. (http://www.hsbc.com/)

  3. Budget decision: the allocation of total budget in making up the web page and time to time changes in promotional mix offered.

Communication mix strategy: includes advertising, sales promotion, Personal selling, public relations, and direct advertising (Cherunilam, 2005).

For example, the promotional activities used by HMV.co.uk to give discount and off on music CDs and DVDs.

E-business models are revenue generation methods for any organization. With help of e-business models, companies can keep themselves as ‘going concern’. The companies may use any of the e-business models mentioned below to sustain themselves.

1) Brokerage models: The broker charges certain amount of agreed fee or commission, from both the ends, i.e. from buyers and sellers for each transaction made. The transactions can be of B2B, B2C, or C2C types. The brokerage models include:

Market place exchange: customers are offered full range of products and services and after full assessment and negotiations comes to conclusion to end the buying process.

For example, Thomas Cook Traveler provides various options to consumers to fulfill their traveling desires. (http://www.thomascook.com/content/homepage/homepage/homepage.asp?campaign=google1&keyword=thomas_cook)



· Buy and Sell fulfillment: customers can buy or sell their products online taking charge of even price and delivery.



For example, e-bay helps people to buy sell their merchandising on their website which behaves as common platform. (e-bay.co.uk)



· Demand collection system: final bid is made by buyer and broker arranges for settlements.
· Auction broker: Brokers’ conducts auctions for sellers and charges a nominal fee in form of commission per transaction through continuous offering and bidding n prices of products and services offered.



· Transaction broker: acts as third party payment solution for buyers and sellers, proving to be secure and safe deal.



Pay Pal which was founded in 1998, an eBay Company, enables any individual or business with an email address to securely, easily and quickly send and receive payments online.



· Distributor: Broker behaves as intermediary between real manufacturers and key persons in distribution such as wholesalers and retailers, providing them with all details of products being available.



For examples, MarketNewZealnd.com, web site profiles only the very best New Zealand products and services from export-ready companies.



· Search agents: helps in finding the products and services according to the availability of buyers quoted price.


For example, Edmunds.com, which provides The Edmunds True Market Value (TMV) an exclusive system for calculating what others are paying for new and used vehicles, based on real sales data from your geographic area.



· Virtual Market place: a place where automatic transactions are generated and buyers and sellers interact and pay agreed amount of fee or commission.
For example, Indiabulls Securities Ltd, an Indian stock brokers which is earning revenues in form of brokerage from their clients on buying and selling of shares online and offline.



2) Advertising models: for advertising the products and services offered in the form of well established websites or pop ups. The company tries to simplify their products mix along with price tags to the viewing customers.

Portals: a search engine offered free to view product offerings to larger volume of customers.

For example, Oracle Portal, a member of the Oracle Fusion Middleware family of products, offers a complete and integrated framework for building, deploying, and managing enterprise portals.

Classifieds: members to a particular site viewing and enjoying the information access.

For example: MySpace.com, bringing friends together at one platform from all over the world to chat and share views.

User registration: Just asking for demographic data over net, so that similar information can be provided to the user who gets registered.

For example, Ask.com's innovative search technologies deliver fast and relevant information for millions of people every day.



3) Informediary model: the information about customers is stored at one place which is further utilized and analyzed to target marketing campaigns.

Merchant model: are directly selling agents on web, asking for listed prices for products.

For example, Amazon.com sells various items at listed prices.



4) Manufacturer’s Direct Model: The manufacturer asks for specifications for the desired product directly from consumer. The product is manufactured keeping in mind efficiency, improved customer service, and after better understanding of customer’s preferences.

For example, Dell computers assemble laptops on customers’ specifications.



5) Affiliate model: where affiliates are paid for each click made by user.

For example, Jeevansaathi.com, an Indian matrimonial website, to find idle match.



6) Subscription model: customers subscribe to enjoy future services.

For example, Modeljobs.biz is largest source for Model, Talent and Casting jobs on net.


In conclusion, businesses around the world use almost all of the above stated theories and e-businesses models to create competitive advantage for themselves. The companies need to adopt dynamic behavior and keep on updating the information available on their websites. The businesses which do not adapt themselves according to changing environment are either dissolved or swallowed by big players.



Please contact me (anuragloach@gmail.com) for original document.


Many thanks,


Anurag Loach.

4 comments:

Anurag Loach said...

Hiya, this is my second post in this section. This is all about e-business, advantages, e-business models, with examples. Hope you will enjoy while reading. Please don't hasitate to ask the original document on mail......cheers.

Virinder Urf Funda-Mentor said...

This was certainly a great read. keep posting anurag

Rajat Soni said...

Hey Anurag...ur article is indeed a g8 blend of marketing n strategy...I also published a post relting e-business to consumer behavior and u have lnked itbeautifully with strategy...appreciate it...

Renata UK said...

With electronic commerce growing so rapidly, businesses need to examine critical elements that could influence users' perceptions of business-to-business and business-to-consumer electronic commerce. http://www.infyecommercesolution.com/

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