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Internet Marketing
Dr. Mary Wolfinbarger
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O À e series of value-adding activities

connecting a company¶s supply side (raw
materials, inbound logistics and
production processes) wit its demand
side (outbound logistics, marketing and
sales).
O À e process can be mapped via a flow
diagram and t en ³re-engineered´ to
increase value or reduce costs
O Idea developed by Mic ael Porter to
analyze sources of competitive advantage
O Fundamental core concept of business
strategy
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O À e c ain consists of a series of

activities t at create and build
value.
O À ey culminate in t e total value
delivered by an organization.
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O ^y analyzing stages of a value

c ain, can redesign internal and
external processes to improve
efficiency and effectiveness
ΠImprove t e value of w at you do
ΠAnd/or do it c eaper
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O èriginal VC model treats info only as a

supporting element
O ^ut info itself can be a source of value
ΠExample: FedEx online tracking
O DHL now can notify you via email w en
package is delivered at your ome
ΠExample: Amazon recommendations
O Idea is to look for ways to create value
using info
O Info includes just about anyt ing you can
digitize
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rayport and Sviokla suggest

businesses operate in two worlds:
O A p ysical world (J
 )

O A virtual world (J
 )

Œ À e two spaces are ³two interacting
value-adding processes´
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Example:
O A p one answering mac ine is in t e
marketplace (it¶s p ysical)
O Electronic answering services are in
(virtual) marketspace
O Most businesses now operate in bot
types of spaces ±e.g. e-commerce;
newspapers
O Anyt ing t at can be digitized can be
done in t e ³marketspace´


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Involves Information:
1. Gat ering info

2. èrganizing info

3. Selecting info

4. Synt esizing info

5. Distributing info


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³Just as someone takes raw material

and refines it into somet ing
useful ± as in t e sequence of
tasks involved in assembling an
automobile on a production line ±
so a manager today collects

 
J  and adds value

t roug t ese steps.´
 



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1. Visibility: improve t e ability to track

p ysical operations more effectively
2. Mirroring capability: substitute
virtual activities for p ysical ones
3. Create new customer relations ips:
use info to deliver value to
customers in new way
 

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O Info tec nology allows managers to

³see´ or ³track´ operations more
effectively
Œ Example: Frito-Lay¶s ³info revolution´
initiative
O Managers can visualize t e entire c ain from
ordering corn to planning local promos


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O How does Frito-Lay do it?
ΠEmployees in field collect info on sales of
products daily and feed it to co.
ΠField employees collect store info about
sales and promo of competing and new
products
ΠFrito-Lay continuously optimizes, reducing
inventory and supplier risk, planning truck
routing
O Still ± tec nology and info are playing a
support role only w en visibility is
improved
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³W en companies move activities

from t e place to t e space,
t ey begin to create a virtual
value c ain t at parallels but
improves on t e p ysical value
c ain.´
  



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O Goes beyond simply using info in a

support role
O Central issue: How can activities be
moved from t e J
 
to t e
J
  to become faster,
better, more flexible, c eaper?
Œ èr, ow do we digitize w at we already
do?
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Example: Ford¶s ³virtual design

team´
Πtesting of prototypes in simulated
environments wit colleagues over a
computer network around t e world
ΠSuppliers are drawn into t e design
process
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³Every manager knows t at staying
competitive today depends on
ac ieving ig er levels of
performance for customers w ile
incurring lower costs in r & D and
production«èn t e VVC, companies
may find dramatic low-cost
approac es to delivering
extraordinarily ig -value results to
customers.´
 



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O Mirroring may move customers from t e
³place´ to t e ³space´
O À e question is: w at do we do offline t at
we can do online (or ot erwise digitally)?
ΠExample: eCommerce
Œ Example: ènline customer service
ΠExample: Email marketing
Œ Example: ènline course registration
Œ Example: ènline surveys
â
 
 
O âot just creating values in ³t e
space,´ but extracting new value
from it
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O ùou are at t is new level w enever some
new functionality is offered or w en going
digital magnifies mirroring greatly
Œ ènline maps: Are t ey simply a ³mirror´ of offline
maps?
Œ Amazon¶s recommendation system (built on
collaborative filtering)
ΠPackage tracking
ΠPersonalized topic notification systems
Π^rand or product communities t roug listservs or
blogs (e.g. Prius, Engadget.com)
O An example of magnifying ± customer
communities on steroids
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More Examples:
O Customer as insider (e.g. sitting in on
artist recording sessions or replaying
t em; watc ing a video of a commercial
being filmed)
O Personalized content and product pages
(for ^2C & ^2^)
O Affiliate programs (Customer as
salesperson) (MèÀL)
O ùour idea ere«.
   


³In t e marketspace, many of

t e business axioms t at ave
guided managers don¶t apply.´
-- 



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å
 
  
O Digital assets not used up
w en consumed
O Music, content, entertainment,
pictures«.
O Can price aggressively
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O Personalized services t at rely on
info can efficiently be utilized
ΠExample: Musicmatc allows users to
customize styles of music or artists on
your personalized ³radio station´
ΠZappos notifies you w en new styles
of a brand are added
O âotify w en your size comes back in
stock
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*  

O Can expand scope of
operations by using present
customer info
O Amazon¶s strategy, rig t?
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A
  

O À e ³transaction cost´ of collecting
info about customers is lower t an
ever
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5. rebalancing supply and demand

Œ Combines previous 4 principles ±
focus is s ifting from supply-side to
demand-side t inking
Œ More opportunities to ³sense and
respond´ to customer desires
O Example: Amazon sends email w en an aut or
I¶ve previously purc ased releases a new book ±
t ey know I want it before I do!
O Sending ³sweeteners´ to customers w o abandon
s opping carts
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How does and ow could CSUL^ and/or t e

Marketing department (or any department
on campus) use t e Internet in order to
1. Increase  of operations ( int: t ink in
terms of moving students t roug t eir educations
efficiently and effectively)?
 


activities currently carried on in t e
marketplace (p ysical world) in t e
marketspace (virtual world)?
3. Create new customer (student)
relations ips?
^