Chapter 10 Service Industries, Online Publishing, and Knowledge Dissemination Prentice Hall, 2002 1
Learning Objectives Understand how broker-based services are performed online Describe online travel tourism services and their benefits Discuss the impact of EC on the travel industry Describe the online job market, its drivers and benefits Describe the electronic real estate and online insurance markets Prentice Hall, 2002 2
Learning Objectives (cont. ) Understand how stock trading and global exchanges work online and their benefits Discuss cyberbanking, its drivers and capabilities Discuss implementation and other important issues of online financial services and its future Prentice Hall, 2002 3
Learning Objectives (cont. ) Describe online publishing Describe online knowledge dissemination and distance learning Discuss disintermediation and reintermediation Prentice Hall, 2002 4
Opening Vignette: Ordering Journals Electronically How a large university automated the purchasing of magazines and journals, saving $365, 000/year Direct E-Marketing: Buyer-to-seller; orders and payments Market maker charges $5/transaction vs. about $32 (conventional agents) Ordering time reduced by up to 80% Rowe. com—Internet IPO that survived the stock market in the industry Prentice Hall, 2002 5
Figure 10 -1 Electronic Commerce in Magazine Subscriptions Prentice Hall, 2002 6
Broker-Based Services Brokers work as intermediaries between buyers and sellers Agents basically make the markets Agents provide many services Most of the value-added tasks of brokers can be automated Prentice Hall, 2002 7
Broker-Based Services (cont. ) Major electronic agent-based services Electronic auctions At-home banking Insurance Travel Employment Real estate Stocks Prentice Hall, 2002 8
Broker-Based Services (cont. ) Service Industries vs. Manufacturing and Product Retailing Service Industries Pure EC: substantially reduced cost Bank and brokerage houses Possible digitation of the entire process Travel and real estate agents Viewing an online video clip or seeing photos of a hotel or a house for sale Prentice Hall, 2002 9
Broker-Based Services (cont. ) Service Industries vs. Manufacturing and Product Retailing (cont. ) Manufacturing and product retailing Physical delivery cost may be high Prentice Hall, 2002 10
Travel and Tourism Services Any experienced traveler knows that good planning and shopping around can save money The Internet is an ideal place to plan, explore, and arrange almost any trip Travel-related information available at many sites including: Expedia. com Travelocity. com Asiatravel. com Travelweb. com Trip. com Priceline. com Prentice Hall, 2002 11
Travel and Tourism Services (cont. ) Services provided: Information and booking of airlines, hotels, cars, and even golf courses Fare comparisons 360 degree video tours of top destinations Electronic Travel magazine Converting 200 currencies Providing maps Pictures of major attractions Information about entertainment and ticket purchasing (ticketmaster. com) Tips provided by people that experienced certain situations (like a visa problem) Prentice Hall, 2002 12
Travel and Tourism Services (cont. ) Services provided: Special discount information Chat rooms and bulletin boards Shopping for travel accessories and books Experts’ options Frequent flier deals Restaurant reviews Current status of flights (real time) Driving directions in the US Travel news Fare tracker (free e-mail alerts on low fares) Major international news Worldwide business and places locator Special interest vacations Bed and breakfast recommendations E-mail to intermediary Weather watch Prentice Hall, 2002 13
Travel and Tourism Services (cont. ) Auctions, bids, and special sales American airlines (aa. com) auctions tickets during low-volume seasons Cathay (cathaypacific. com) auctions tickets on competitive routes Aer Lingus (aerlingus. ie) auctions tickets that expire in 1 or 2 weeks Priceline (priceline. com) asks consumers to specify the price they are willing to pay Prentice Hall, 2002 14
Travel and Tourism Services (cont. ) Special services Wireless services Direct marketing Alliances and consortia Other services Interactive kiosks in hotels Internet access in hotels Prentice Hall, 2002 15
Travel and Tourism Services (cont. ) Benefits Limitations Free information is tremendous Free information is accessible anytime Substantial discounts Not all people use the Internet It may take a long time to find what you want People are still reluctant to provide credit card numbers Prentice Hall, 2002 16
Travel and Tourism Services (cont. ) Corporate Travel: New Business Model The Impact of EC on the Travel Industry Porter’s framework of competitive advantage (the five forces) Focus: Environment Competitive responses Firm’s strategy The industry is clearly transformed Taking away some functions traditionally performed by travel agents Prentice Hall, 2002 17
Travel and Tourism Services (cont. ) Impacts on the industry Multimedia helps customers understand the products Offering of lower-cost trips Providing a more personalized service Saving money in a paperless environment Increasing the convenience of getting information at home Supporting a customer-focused strategy (such as targeted advertisement and integration of products); push information to customers Prentice Hall, 2002 18
Travel and Tourism Services (cont. ) Travel agencies, as we know them today, will disappear Only their complex value-added activities will not be automated These complex activities will be performed by a new breed of intermediaries Survival strategy Minor improvements due to process changes BPR with significant improvements Organizational transformation Prentice Hall, 2002 19
Figure 10 -2 The Travel Industry Chain Source: Block and Segev “The Impact of Electronic Commerce on the Travel Industry” Proceedings, HICSS 31, Hawaii © 1997 IEEE. Prentice Hall, 2002 20
Travel and Tourism Services (cont. ) Intelligent agents Step 1: turn on PC and enter Desired destination Dates Available budget Special requirements Desired entertainment Step 2: computer dispatches an intelliget agen that “shops around” Prentice Hall, 2002 21
Travel and Tourism Services (cont. ) Intelligent agents (cont. ) Step 3: agent attempts to match your requirements with what is available, negotiates with vendors Step 4: agent returns within minutes with suitable alternatives, modifies as per your wishes, books the vacation Voice communication with agent Prentice Hall, 2002 22
The Employment Placement: Deficiencies of Manual Market Job markets Employers are looking for employees with specific skills, and individuals are looking for jobs Very volatile market Moved to the Internet Millions of job seekers, hundreds of thousands of jobs Prentice Hall, 2002 23
The Employment Placement: Deficiencies of Manual Market (cont. ) Driving forces of electronic job market Cost—classified ads are expensive Life cycle—the life of the ads is only days or weeks Place—most ads are local; nationwide and international ads are more expensive Minimum information—because of the high cost, the information provided is minimal Search—Time consuming for individuals to find all relevant newspapers Prentice Hall, 2002 24
The Employment Placement: Deficiencies of Manual Market (cont. ) Driving forces of electronic job market (cont. ) Finding applicants—during pre-Internet era, job seekers did not place ads about their availability making it difficult for companies to find employees with special skills Matching—it was difficult to match candidates to open jobs, supply and demand Lost and dated material—some applications or letters of response tended to get lost, or arrive late Prentice Hall, 2002 25
The Employment Placement: Deficiencies of Manual Market (cont. ) Driving forces of electronic job market (cont. ) Speed—communication by mail and processing of a large number of applications is slow; employers lose good employees, the applicant had taken another job being afraid to wait too long Comparisons—difficult for job seekers to compare monetary value of available positions Prentice Hall, 2002 26
The Employment Placement: Deficiencies of Manual Market (cont. ) The Internet Job Market The Internet offers a perfect environment; it is especially effective for technology-oriented jobs Job seekers Job offerers Recruiting firms Government agencies and institutions Prentice Hall, 2002 27
The Employment Placement: Deficiencies of Manual Market (cont. ) The Advantage of the Electronic Job Market For job seekers Find very detailed and timely information on a large number of jobs world-wide Quickly communicate with potential employers Post resumes for largevolume distribution Search for jobs quickly from any place at any time Obtain several support services at no cost Find employer profile & industry guides (valuereports. Com) Prentice Hall, 2002 28
The Employment Placement: Deficiencies of Manual Market (cont. ) The Advantage of the Electronic Job Market For employers Advertise to a large number of job seekers Save on advertisement costs Lower the cost of processing (using electronic application forms) Provide greater (‘equal opportunity’) for job seekers Find highly skilled employees Conduct tests quickly, online Change and update ads quickly Fill up positions rapidly Interviewing from distance Prentice Hall, 2002 29
The Employment Placement: Deficiencies of Manual Market (cont. ) The Limitations of Electronic Job Markets Many people do not use the Internet Security Privacy Lack of face-to-face contact Examples of online job services Locating jobs Writing and posting resumes Career planning Newsgroups Prentice Hall, 2002 30
The Employment Placement: Deficiencies of Manual Market (cont. ) Examples of career services on the Internet Recruiters online network Staff. NET Global employment network Employment opportunities Intranet job market Intelligent agents for job seekers (jobsleuth. com) Intelligent agents for employers (resumix. com) Prentice Hall, 2002 31
Figure 10 -3 The Virtual Job Employment Agent Prentice Hall, 2002 32
Real Estate You can view many properties on the screen You can sort and organize properties You can find detailed information about the properties You can search, compare and apply for loans Prentice Hall, 2002 33
Real Estate (cont. ) Real Estate Applications International Real Estate Directory and News is the most comprehensive Web site ired. com National listing of real estate properties cyberhomes. com Commercial real estate directory comspace. com Prentice Hall, 2002 34
Real Estate (cont. ) Real Estate Applications (cont. ) Mortgage comparisons, calculations, and other financing information; mortgage application eloan. com Searching residential real estate in multiple databases Homescout. com (now homegain. com) Real estate related maps are available on mapquest. com Automating the closing of real estate transactions, which is overwhelmed by paperwork datatrac. com Prentice Hall, 2002 35
Real Estate (cont. ) Real Estate Applications (cont. ) The National Association of Realtors, realtor. com has links to property listings in all major US cities To find how much house you can afford, consult: replace. com Mortgage brokers can pass on loan applications over the Net and receive bids from lenders that want to issue the mortgages Prentice Hall, 2002 36
Real Estate (cont. ) Real Estate Applications To find mortgage interest rates online use: Lendingtree. com Eloan. com Homeside. com. au Insurance—auto, home life, health at substantial discount Insureate. com Order. com Quotesmith. com Prentice Hall, 2002 37
Investing and Trading Stocks Online stock trading Costs between $7 and $29 per transaction (vs. $10 - $35 in traditional brokerage) No waiting on busy telephone lines No oral communication, less chance for errors Place orders from anywhere, any time, day or night No biased broker to push you Considerable amount of free information Prentice Hall, 2002 38
Figure 10 -4 The Process of Electronic Stock Trading Prentice Hall, 2002 39
Trading Stocks Online (cont. ) Investment Information For current financial news: cnn. com, hoovers. com, and bloomberg. com For municipal bond pricing: bloomberg. com For overall market information and many links: cyberinvest. com For free Guru advice see: upside. com Prentice Hall, 2002 40
Trading Stocks Online (cont. ) Investment Information (cont. ) For stock screening and evaluation: multexinvestor. com and cnnfn. com For articles from the Journal of the American Association of Individual Investors: aaii. com For reports the latest findings and pricing of IPOs hoovers. com/ipo Prentice Hall, 2002 41
Trading Stocks Online (cont. ) For chart lovers bigcharts. com For mutual funds evaluation and other interesting investment information morningstar. com For earning estimates and much more money. cnn. com/news/companies/firstcall/ For almost anything you need yahoo. com Prentice Hall, 2002 42
Trading Stocks Online (cont. ) Initial public offerings (IPOs) Related markets Spring Street Brewing Offers initial and secondary securities trading over the Internet See ipo. com Global stock exchanges— around-the-clock global trading Financial derivatives Commodities Mutual funds Individual investors and day trading Electronic trading of interest rate derivatives Prentice Hall, 2002 Swapswire. com Forbes. com 43
Cyberbanking and Personal Finance Capabilities of home banking Electronic banking Saves time and money for users Offers an inexpensive alternative to branch banking Application Case: Cyberbanking at Wells Fargo Get current account balances any time Obtain charge and credit card statements Pay bills Download account transactions Transfer money between accounts Prentice Hall, 2002 44
Cyberbanking and Personal Finance International and multiple-currency banking Some international retail purchasing can be done by credit card Other transactions may require international banking support Hong Kong Bank’s HEXAGON provides e-banking in Asia Mark Twain Bank in the U. S. uses e-cash to support trading in 20 foreign currencies Bank of America and other banks offer: International capital raising Cash management Other services on an international level Prentice Hall, 2002 45
Cyberbanking and Personal Finance (cont. ) Implementation issues in banking and online stock trading Securing financial transactions Application case: Bank of America Online Using the extranet Banks provide large business customers with personalized service by allowing them access to the bank’s intranet Access accounts Historical transactions Intranet-based decision-support applications Prentice Hall, 2002 46
Cyberbanking and Personal Finance (cont. ) Imaging systems—allow customers to view images of all: Incoming checks Invoices Other related online correspondence Pricing online vs. off-line services Some banks offer free services (fee per check or transfer) Some banks charge $5 to $10 Risks—especially in international banking Prentice Hall, 2002 47
Cyberbanking and Personal Finance (cont. ) Banking: 4 scenarios Building alliances quickly with banks, software vendors, and information providers Effective outsourcing without neglecting to build in-house skills (customer information systems) Focusing on the profitable customers to provide broad channels for services and products Keeping a central role in the payment environment Prentice Hall, 2002 48
The Future of Online Banking Three core strategies to pursue 1. Customers Agents—banks unable to achieve economies of scale Offer customers the widest possible choices Include products from multiple sources Provide the customers with integrated information services Prentice Hall, 2002 49
The Future of Online Banking (cont. ) Three core strategies to pursue (cont. ) 2. Product Manufacturers—banks able to achieve economies of scale Strengthen a trend that can already be seen in a number of product segments In core processing services for small and medium-sized institutions Prentice Hall, 2002 50
The Future of Online Banking (cont. ) Three core strategies to pursue (cont. ) 3. Integrated Players—banks with a strong brand position from manufacturing to delivery Many banks will adopt a hybrid strategy Every player needs to make crucial decisions about which areas are strategically too risky: To outsource Which capabilities need to be built up in-house Prentice Hall, 2002 51
The Future of Online Banking (cont. ) Personal finance online Bill paying and e-checks Tracking bank accounts etc. Portfolio management Investment tracking Quotes and prices (past and current) Budget organization Record keeping Tax computations Retirement goals, planning and budgeting Prentice Hall, 2002 52
Billing Online Automatic transfer of mortgages This method has existed for several years The payer authorizes its bank to pay the mortgage, including tax escrow payments Automatic transfer of funds to pay monthly utility bills Since 1997, the city of Long Beach has allowed its customers to pay their gas and water bills from their bank accounts Many utility companies worldwide provide this option Prentice Hall, 2002 53
Billing Online (cont. ) Paying bills from online banking account Can be made into any bank account Monthly rent and other bills paid directly into the payee’s bank accounts Prentice Hall, 2002 54
Billing Online (cont. ) A merchant-to-customer direct billing A merchant posts bills on its Web site Customers can view and pay their bill Customers have to go to many Web sites to pay all their bills Several utilities in Los Angeles allow customers to pay bills on the utilities’ Web site (20 cents per transaction ) Prentice Hall, 2002 55
Billing Online (cont. ) Using an intermediary A third party consolidates all bills related to each customer in one site in a standard format Collects a certain commission Makes it convenient to complete transactions E*Trade and Intuit Prentice Hall, 2002 56
Billing Online (cont. ) ISPs services Trying to sell customized solutions Do not have adequate billing platforms See moneymain. com Prentice Hall, 2002 57
Online Publishing The electronic delivery of newspapers, magazines, news, and other information through the Internet Online Publishing Today and Tomorrow Today— mainly used for disseminating information and for conducting sales transactions interactively Tomorrow— include more customized material that the reader will receive free, or will pay for Prentice Hall, 2002 58
Online Publishing (cont. ) Publishing Modes Newspapers Magazines News Textbooks Music Artwork Video clips Movies Prentice Hall, 2002 59
Online Publishing (cont. ) Publishing Methods Online archive: digital archive (library catalogs, bibliographic databases) New medium: extra comprehensiveness to issue or topic Publishing intermediation: online directory for news services Dynamic or just-in-time: create content in real-time and transmit on the fly Prentice Hall, 2002 60
Online Publishing (cont. ) Content providers and distributors Challenges moving into areas with lessdeveloped infrastructures Issues of intellectual property is a consideration Akamai. com Digisle. com Edgix. com Prentice Hall, 2002 61
Online Publishing (cont. ) Publishing music, videos, and games Major issue is payment of intellectual property fees People-to-people (P 2 P) model—people swap files 3 rd-party organizer may be in violation of copyright laws (Napster) Prentice Hall, 2002 62
Online Publishing (cont. ) Digital delivery of documents—secure environment U. S. Postal Service, UPS, E-parcel. com Encryption Software for digital signature Authentication Notarization Prentice Hall, 2002 63
Online Publishing (cont. ) Edutainment—combination of: Education Entertainment Games Goal: encourage students to become active learners Managerial issues Educational games delivered as CD-ROMs Distance-learning format Prentice Hall, 2002 64
Online Publishing (cont. ) Electronic books Frequent updates possible Contain up-to-the-minute information Special e. Book device necessary to view books See: Wizap. com Ebookconnections. com Netlibrary. com Prentice Hall, 2002 65
Knowledge Dissemination Virtual teaching and online universities Distance learning and virtual universities Many universities offer limited courses and degrees, but use innovative teaching methods and multimedia support Prentice Hall, 2002 66
Knowledge Dissemination (cont. ) Virtual teaching and online universities (cont. ) MBA program in Hong Kong Lectures delivered on interactive TV (i. TV), now on the Web Students decide what and when they “attend” the lecture Lecture, support material exercises, etc. , provided on the Web Prentice Hall, 2002 67
Figure 10 -6 Education as EC Forces Drive the Transition Source: Hamalainen et al. , “Electronic Marketing for Learning: Education Brokerages on the Internet, ” Communications of the ACM, June 1996. Hamalainen et al. © 1996 ACM, Inc. Reprinted with permission. Prentice Hall, 2002 68
Knowledge Dissemination (cont. ) Online advice and consulting Medical advice—provide consultation with top experts Management consulting—provide accumulated expertise from knowledge bases Legal advice—delivery of legal consultation services to business has considerable prospects Prentice Hall, 2002 69
Knowledge Dissemination (cont. ) Online advice and consulting (cont. ) Financial advice— offer extensive financial advice Other service online Healthcare Matchmaking Electronic stamps Prentice Hall, 2002 70
Disintermediation and Reintermediation Change the role of agents to: Assists in comparison shopping from multiple sources Providing total solutions by combining services from several vendors Providing certifications and trusted third party control and evaluation systems Prentice Hall, 2002 71
Disintermediation and Reintermediation (cont. ) Issues impacting future of intermediaries The success of intelligent agents Travel intelligent agents Agents that support job matching Agents that interpret resumes The more intelligent the software agents become, the less human agents will be needed Prentice Hall, 2002 72
Disintermediation and Reintermediation (cont. ) Issues impacting future of intermediaries (cont. ) Customer attitudes and behavior are important Good experience with online agencies means fewer customers use human agents Insurance purchasing Stock purchasing Virtual travel agencies Prentice Hall, 2002 73
Disintermediation and Reintermediation (cont. ) New roles of electronic marketing intermediaries To extend what we are familiar with in physical markets to the virtual world (e. g. , search services and electronic malls) To extend payment clearing functions into the Internet (e. g. , electronic cash and digital credit card services) Prentice Hall, 2002 74
Disintermediation and Reintermediation (cont. ) Disintermediation in B 2 B Exchanges decrease number of calls a sales rep pays on purchasing managers Reengineering marketing and sales organizations is necessary Prentice Hall, 2002 75
Disintermediation and Reintermediation (cont. ) Cybermediation Electronic intermediary (rowe. com) Affects most market functions Hypermediation—human/electronic intermediation; may profit greatly from EC Prentice Hall, 2002 76
Managerial Issues Effectiveness of out-of-town recruitment Privacy may be in danger International legal issues may impact services more than products Ethical issues are prevalent in services The intermediaries and their roles are changing Alliances for online initiatives are spreading rapidly Prentice Hall, 2002 77
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