Naysheen Collins Chapter 3 I.

Revenue Models

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a. Mail Order or Catalog Model - proven to be successful for a number of items b. Web Catalog Revenue Model - taking the catalog model to the web 1. Computers and Consumer Electronics - Apple, Dell, Gateway, and Sun Microsystems have had great success selling on the Web. 2. Books, Music, and Videos - Retailers use the Web catalog model to sell books, music, and videos 3. Luxury Goods - People are reluctant to buy luxury goods through a Web site. The Web sites of high-end retailers such as Vera Wang and Versace were constructed to provide information to shoppers, not to generate revenue. The Evian Web site was designed for a select, affluent group of customers. 4. Clothing Retailers a. Personal shopper - an intelligent agent program that learns the customer's preferences and makes suggestions (i.e. Amazon's recommendations) b. Virtual model - a graphic image built from customer measurements on which customers can try clothes II. Digital Content Revenue Models Digital Content Revenue Models - Firms that own intellectual property have embraced the Web as a new and highly efficient distribution mechanism a. Lexis.com - Provides full-text search of court cases, laws, patent databases, and tax regulations b. ProQuest - Sells digital copies of published documents III. Advertising-supported Revenue Models 1. Advertising-supported Revenue Models - a model used by network television in the U.S. Broadcasters provide free programming to an audience along with advertising messages.

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Success of online advertising has two major problems: - No consensus on how to measure and charge for site visitor views - Very few Web sites have sufficient visitors to interest large advertisers The stickiness of a website is increasingly important. The stickiness of a website is its ability to keep visitors at the site and attract repeat visitors. 2. Demographic information - a set of characteristics that marketers use to group visitors. These characteristics can include address, age, gender, income level, type of job held, hobbies, and religion. 3. Web Portals - a site that people use as a launching point to enter the Web. Web directories and search engines were some of the first portals. It also includes other features to help visitors find what they are looking for on the Web. Yahoo!, AOL, Google, etc. are general purpose portals that are launch points for many people into the web. a. Web directory - a listing of hyperlinks to Web pages. IV. Advertising-subscription Mixed Revenue Models - Subscribers pay a fee and accept some level of advertising; typically subscribers are subjected to much less advertising. (i.e. New York Times and The Wall Street Journal) V. Fee for transaction Models - Models where businesses offer services and charge a fee based on the number or size of transactions processed. (i.e. travel agents, real estate, ticket sales, automobile sales) a. Disintermediation - The removal of an intermediary from a value chain. b. Reintermediation - The introduction of a new intermediary. c. Digital Rights Management (DRM) - software that limits the number of copies that can be made VI. Fee-for-service Revenue Models - a fee based on the value of the service provided. Services range from games and entertainment to financial advice.

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VII. Revenue Models in Transition - Subscription to advertising-supported model. (i.e. Slate Magazine). VIII. Advertising-supported to Advertising-subscription Mixed Model - has an ad supported website but also offers an optional subscription version of the site. Subscribers pay an annual fee to view a version of the magazine called Salon Premium, which is free of advertising and can be downloaded for storage and later offline reading on the subscriber's computer. IX. Advertising-supported to Fee-for-services Model - advertising supported websites that was unable to pay the costs of providing the service with the advertising revenue. Therefore, it switched to a part free, part subscription-supported model. X. Advertising-supported to Subscription Model - Revenue model was originally a combination of advertising-supported plus a fee-based information access service. It then converts to a model that is primarily subscription supported. XI. Multiple Transitions - a company can use a free site to attract users to the paid subscription site. A company can then convert back to a free advertiser-supported site. Britannica offered free summaries of encyclopedia articles and free access to the Merriam-Webster's Collegiate Dictionary on the Web, with the full text of the encyclopedia available through a subscription plan. XII. Revenue Strategy Issues 1. Channel Conflict and Cannibalization a. Channel conflict (or cannibalization) - Sales activities on a companys Web site interfere with existing sales outlets (e.g., Levi Strauss) b. Channel cooperation - Giving customers access to the companys products through a coordinated presence in all distribution channels (e.g., Staples, Eddie Bauer) 2. Strategic Alliances and Channel Distribution Management

Naysheen Collins

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a. Strategic alliance - when two or more companies join forces to undertake an activity over a long period of time. b. Channel distribution managers (aka fulfillment managers) - firms that take over the responsibility for a particular product line within a retail context. XIII. Creating an Effective Web Presence a. An organizations presence is the public image it conveys to its stakeholders. b. Stakeholders of a firm include customers, suppliers, employees, stockholders, neighbors, and the general public. 1. Achieving Web Presence Goals - objectives of the business include: a. Attracting visitors to the Web site b. Making the site interesting enough that visitors stay and explore c. Convincing visitors to follow the sites links to obtain information d. Creating an impression consistent with the organizations desired brand image e. Building a trusting relationship with visitors f. Reinforcing positive images that the visitor might already have about the organization Profit-driven Organizations - goal is to make money. Not-for-Profit Organizations - goal is information dissemination. The key element on any successful electronic commerce Web site is the combination of information dissemination and a two-way contact channel. XIV. Web Site Usability 1. Various Motivations of Web Site Visitors include: a. Learning about products or services that the company offers b. Buying products or services that the company offers c. Obtaining information about warranty, service, or repair policies for products they purchased d. Obtaining general information about the company or organization e. Obtaining financial information for making an investment or credit granting decision

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f. Identifying the people who manage the company or organization g. Obtaining contact information for a person or department in the organization