The article that I chose is about online advertising and how advertisers can almost instantly change their ads based on the number of clicks that one ad received compared to another. According to Darren Herman, the president Varick Media Management, online advertising company, this can completely change the way advertising companies operate. Until the Internet advertising required heavy research and investment, and it was difficult to evaluate the effectiveness of those ads. Also, advertisers had to book TV spots months before the season began, and if the show wasn't successful, it was too late. So advertisers would spend months doing research, and then wait for months to find out whther the ad worked or not. With online advertising it is possible to get instant measurements of the ad's effectiveness and revise the ad quickly.
Thanks to various computer and Internet technologies it is possible to compare the number of clicks among different ads and figure out which one is more effective. Of course, a click doesn't necessarily result in a transaction, but it is obvious that the more clicks an ad generates, the more transactions will probably result. It is also possible for advertising companies, such as Varick, to look at the sites where the ads ran, when they ran and what kind of people responded to them. Varick can exploit massive amounts of data and adjust the ads almost instantly. Moreover, advertisers can try out their ideas online first before investing massive amounts of capital into traditional advertising campaigns on TV.
Varick's strategy is centered around systems called exchanges that help online publishers like Yahoo.com sell advertising space. And since ad agencies can now use different sources to gather specific demographic info on visitors, online publishers can sell random ad space that ad agencies weren't willing to buy before. Advertisers extensively use the cookie technology to gather information about vistors of different sites. These cookies are sold on the exchange, and companies like Varick, make bids on them. The combination of real-time data and ad exchanges has made previously throwaway online space profitable.
I think this article can be related to the topic of knowledge management discussed in chapter 11. This article shows how an advertising company use the data and knowledge it collects to customize their campaings almost instantly to the target audience.
References:
1. Put Ad on Web. Count Clicks. Revise. By Stephanie Clifford May 30, 2009.
http://www.nytimes.com/2009/05/31/business/media/31ad.html?
pagewanted=1&th&emc=th
Sunday, May 31, 2009
Case study: Can Knowledge Systems Help Boeing Trounce Airbus?
Question 2.
Up until 1990s Boeing didn't have much of a knowledge management system; everything was on paper which made designing and manufacturing processes very lengthy and inefficient. In the early 1990s, however, Boeing began switching to the "paperless design". This process computerized the design and manufacturing of airplanes. The paperless model matched Boeing's business strategy much better. Boeing's business strategy is to produce fuel efficient airplanes that would carry passengers non-stop between their destinations. For example, Boeing 777 uses lighter materials and can fly with 2 pilots and 2 engines cutting operating and fuel costs. Boeing used CATIA computer-aided design software to design and produce its 777 plane.
Question 3.
Boeing is using its new strategy in the implementation of the 787 "Dreamliner". Boeing decided to use a new production process by basically outsourcing design and construction of 80% of the plane to several hundred other companies. Knowledge management and sharing are very important for the new strategy to succeed. To enhance communication among designers Boeing and its suppliers are using software that allows designers around the world exchange information and collaborate which minimizes mistakes and improves communication between different departments. Boeing also purchased 5,000 more licenses of the Product Life Cycle Management software which allows more people to have access to the software when they need it. Boeing key suppliers also had to integrate their systems to work with Boeing. However, it seems that as the deadline for the 787 delivery was approaching, Boeing was faced with some technical and production problems. I think as long as Boeing is capable of overcoming these issues and is able to start delivering the plans to the customers, its strategy will be successful.
Question 4.
From the facts described in the case study it seems to me that Airbus has a long way to go in terms of its knowledge management systems. Airbus needs to be able to involve its suppliers into the design and production processes. It seems that delays in 380 delivery were caused in part by communication problems between engineering and production.
Up until 1990s Boeing didn't have much of a knowledge management system; everything was on paper which made designing and manufacturing processes very lengthy and inefficient. In the early 1990s, however, Boeing began switching to the "paperless design". This process computerized the design and manufacturing of airplanes. The paperless model matched Boeing's business strategy much better. Boeing's business strategy is to produce fuel efficient airplanes that would carry passengers non-stop between their destinations. For example, Boeing 777 uses lighter materials and can fly with 2 pilots and 2 engines cutting operating and fuel costs. Boeing used CATIA computer-aided design software to design and produce its 777 plane.
Question 3.
Boeing is using its new strategy in the implementation of the 787 "Dreamliner". Boeing decided to use a new production process by basically outsourcing design and construction of 80% of the plane to several hundred other companies. Knowledge management and sharing are very important for the new strategy to succeed. To enhance communication among designers Boeing and its suppliers are using software that allows designers around the world exchange information and collaborate which minimizes mistakes and improves communication between different departments. Boeing also purchased 5,000 more licenses of the Product Life Cycle Management software which allows more people to have access to the software when they need it. Boeing key suppliers also had to integrate their systems to work with Boeing. However, it seems that as the deadline for the 787 delivery was approaching, Boeing was faced with some technical and production problems. I think as long as Boeing is capable of overcoming these issues and is able to start delivering the plans to the customers, its strategy will be successful.
Question 4.
From the facts described in the case study it seems to me that Airbus has a long way to go in terms of its knowledge management systems. Airbus needs to be able to involve its suppliers into the design and production processes. It seems that delays in 380 delivery were caused in part by communication problems between engineering and production.
Sunday, May 17, 2009
Case study: Can E-Bay Continue Growing?
Question 1.
eBay.com is an online auction service that does not sell anything of its own. It brings buyers and sellers together to the online marketplace where sellers list items they are willing to sell, and buyers bid for the items they are willing to buy. eBay currently has operations in 32 countries, and it continues expanding. The company's strategy has been very successful. The earnings come from several different sources: first, sellers have to pay a fee of $.25 to $4.80 for listing their items on eBay. Secondly, eBay charges a fee for a sold item that starts at 5.25% of the selling price. eBay also collects revenue from direct advertising as well as from various service providers, such as PayPal.
eBay's growth strategy is focused on geographical expansion as well as introduction of new products and services. For example, eBay has been very successful in some European countries, such as France, England and Germany. eBay has also been able to launch eBay Motors, "Buy It Now" application and eBay Stores, all of which have been very successful.
Question 2.
One of the problems that eBay has encountered is maintaining its growth. While the company's growth is still outstanding internationally, it has been slowing down domestically. eBay also has some problems on the Asian market where Yahoo is trying to set up competing auction sites. On the other hand, laws differ greatly in different countries, and it may be challenging for eBay to monitor its compliance in so many different countries where it does business. For example, it may be difficult for eBay to make sure that prohibited items are not sold on its web-site, and the company may be liable if it fails to prevent illegal transactions. Another problem that eBay has faced is an increasing number of buyers who have been defrauded by sellers. And finally, eBay is having some problems with customer service. eBay has two types of customers, buyers and sellers, and what works for buyers does not necessarily works for sellers.
Question 3.
To solve the problem of slowing growth, eBay acquired Shopping.com which is an online shopping comparison site, as well as Skype. By purchasing Skype eBay hopes to get into high end markets, such as real estate and travel where buyers are more likely to need more information from sellers. However, I'm not sure if this was a sound decision because some analysts claim that a lot of sellers are not willing to add Skype to their business models because they hardly keep up with e-mails on eBay.
To handle competition, eBay entered into agreements with other players, such as Yahoo and Google by giving them exclusive rights to provide advertisements for eBay's sites domestically and internationally. In my opinion, this is a good idea to collaborate with the competitors although these companies still remain rivals.
In regards to increasing fraud, some users claim that eBay has not adequately addressed the issue. The company needs to provide a safe trade environment. However, when eBay gets complains about fraud, buyers often get an automated e-mail that encourages buyers and sellers to resolve disputes on their own. I do not think it is a solution to the problem. eBay needs to be more hands-on when it comes to identity theft and fraud problems.
eBay.com is an online auction service that does not sell anything of its own. It brings buyers and sellers together to the online marketplace where sellers list items they are willing to sell, and buyers bid for the items they are willing to buy. eBay currently has operations in 32 countries, and it continues expanding. The company's strategy has been very successful. The earnings come from several different sources: first, sellers have to pay a fee of $.25 to $4.80 for listing their items on eBay. Secondly, eBay charges a fee for a sold item that starts at 5.25% of the selling price. eBay also collects revenue from direct advertising as well as from various service providers, such as PayPal.
eBay's growth strategy is focused on geographical expansion as well as introduction of new products and services. For example, eBay has been very successful in some European countries, such as France, England and Germany. eBay has also been able to launch eBay Motors, "Buy It Now" application and eBay Stores, all of which have been very successful.
Question 2.
One of the problems that eBay has encountered is maintaining its growth. While the company's growth is still outstanding internationally, it has been slowing down domestically. eBay also has some problems on the Asian market where Yahoo is trying to set up competing auction sites. On the other hand, laws differ greatly in different countries, and it may be challenging for eBay to monitor its compliance in so many different countries where it does business. For example, it may be difficult for eBay to make sure that prohibited items are not sold on its web-site, and the company may be liable if it fails to prevent illegal transactions. Another problem that eBay has faced is an increasing number of buyers who have been defrauded by sellers. And finally, eBay is having some problems with customer service. eBay has two types of customers, buyers and sellers, and what works for buyers does not necessarily works for sellers.
Question 3.
To solve the problem of slowing growth, eBay acquired Shopping.com which is an online shopping comparison site, as well as Skype. By purchasing Skype eBay hopes to get into high end markets, such as real estate and travel where buyers are more likely to need more information from sellers. However, I'm not sure if this was a sound decision because some analysts claim that a lot of sellers are not willing to add Skype to their business models because they hardly keep up with e-mails on eBay.
To handle competition, eBay entered into agreements with other players, such as Yahoo and Google by giving them exclusive rights to provide advertisements for eBay's sites domestically and internationally. In my opinion, this is a good idea to collaborate with the competitors although these companies still remain rivals.
In regards to increasing fraud, some users claim that eBay has not adequately addressed the issue. The company needs to provide a safe trade environment. However, when eBay gets complains about fraud, buyers often get an automated e-mail that encourages buyers and sellers to resolve disputes on their own. I do not think it is a solution to the problem. eBay needs to be more hands-on when it comes to identity theft and fraud problems.
Article: Just Browsing? A Web Store May Follow You Out the Door.
I read this article in New York Times online and thought that it related just great to our topic of E-Commerce.
This article is about a new web service, called Abandonment Tracker Pro, that will alert a subscribing web store that a customer put items in a shopping cart but did not complete the transaction. The difference between Abandonment Tracker and other similar services is that it is able to start "remarketing" immediately in real time. Mr. Nicholls, the founder of the company SeeWhy that came out with the new service, recommends online stores to ask shoppers to register and provide their e-mail address and telephone numbers on the first page. This way it will make it much easier for Abandonment Pro to capture the information about the shopper. The next step for the online store would be to follow up with the shopper either via e-mail or phone. When asked about possibly turning off potential customers by annoying e-mails or, even worse, phone calls, Mr. Nicholls replied that everything depends on the tone and manner. The message should sound more like,"Was there a problem? How can we help?" Mr Nicholls also believes that online stores will most likely lose sales if they wait for a couple of days before they follow up with the customer. According to Mr. Nichols, Abandonment Tracker may alleviate the problem of increasing shopping cart abandonment when shoppers place items in their shopping carts but do not make a purchase.
Personally, I would never come back to the web-site that would try to chase me after I decide not to make a purchase. I think it is annoying, and it is invasion in people's privacy. If I decided not to complete the transaction, then there was a reason for it. And imagine you visited five different web-sites looking for the same thing, you bought it from one site, and the other four had Abandonment Tracker, and all four of them would harass you 5 minutes later about why you did not buy from them. That would be insane, I would probably stop shopping online altogether.
References:
1. The New York Times. "Just Browsing? A Web Store May Follow You Out the Door." Stross, Randall. http://www.nytimes.com/2009/05/17/business/17digi.html?_r=1&ref=business May 16, 2009
This article is about a new web service, called Abandonment Tracker Pro, that will alert a subscribing web store that a customer put items in a shopping cart but did not complete the transaction. The difference between Abandonment Tracker and other similar services is that it is able to start "remarketing" immediately in real time. Mr. Nicholls, the founder of the company SeeWhy that came out with the new service, recommends online stores to ask shoppers to register and provide their e-mail address and telephone numbers on the first page. This way it will make it much easier for Abandonment Pro to capture the information about the shopper. The next step for the online store would be to follow up with the shopper either via e-mail or phone. When asked about possibly turning off potential customers by annoying e-mails or, even worse, phone calls, Mr. Nicholls replied that everything depends on the tone and manner. The message should sound more like,"Was there a problem? How can we help?" Mr Nicholls also believes that online stores will most likely lose sales if they wait for a couple of days before they follow up with the customer. According to Mr. Nichols, Abandonment Tracker may alleviate the problem of increasing shopping cart abandonment when shoppers place items in their shopping carts but do not make a purchase.
Personally, I would never come back to the web-site that would try to chase me after I decide not to make a purchase. I think it is annoying, and it is invasion in people's privacy. If I decided not to complete the transaction, then there was a reason for it. And imagine you visited five different web-sites looking for the same thing, you bought it from one site, and the other four had Abandonment Tracker, and all four of them would harass you 5 minutes later about why you did not buy from them. That would be insane, I would probably stop shopping online altogether.
References:
1. The New York Times. "Just Browsing? A Web Store May Follow You Out the Door." Stross, Randall. http://www.nytimes.com/2009/05/17/business/17digi.html?_r=1&ref=business May 16, 2009
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