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A question on IVP, IBS and Customer Value

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Introduction

Management Development Institute of Singapore A question on IVP, IBS and Customer Value (Internet and E-commerce) UNIVERSITY OF WALES MASTER OF BUSINESS ASMINISTRATION MBWD5 0306A SONG YANG G0262693X 28/Jul/04 TABLE OF CONTENTS Page Introduction --------------------------------------------------------------------3 Concepts------------------------------------------------------------------------4 How the IVP affect the choice of the IBS----------------------------------7 -Three Major Differences of IVP-----------------------------------------------------7 Value-based Strategy - Specific Values of Customer is the Core-----------------------------------------11 Recommendation ------------------------------------------------------------14 Bibliography ----------------------------------------------------------------16 Introduction In the offline world, products and services are advertised based on their unique selling point (USP). In the online world, an organisation's website must be able to convey the online equivalent of the USP, the Internet Value Proposition (IVP). As organisations develop their e-business and create corporate, micro, product, and brand sites, it is extremely important to define the Internet value proposition. The IVP is the unique attributes that differentiate a site from its competitors. The importance of this is emphasised online as competitor sites are only a click away. This assignment will first discuss the relationship between the Internet value proposition and the Internet business strategy, and secondly, the specific values of the Internet customer to consider when developing the Internet value proposition. Concepts of IVP and IBS Though the new way of business - digital economy, appear big opportunity to the firm, success of Internet business cannot be achieved as easily as expected. This is because the characteristics of digital media on which Internet business takes places give firms threats as well as opportunities. Characteristics of Internet such as low access cost and ease of use allow more suppliers to do business, also resulting in more furious competition. In addition, the connectivity of Internet makes it possible for customers to switch to other suppliers with more ease, resulting in huge customer fluidness. These characteristics of Internet environment made it difficult for the Internet business firms to gain profit. Moreover, the characteristics of digital media affect the market with different economic rules from those in the conventional markets. ...read more.

Middle

In the case of e-mail card (e-card) business, though final offerings to the customer are electronic card and its delivery service, customers can get much value through the process of transaction. A customer can be given a lot of benefits if he/she is notified on the birthday of his/her best friend, recommended the type of card or gift that his/her friend may like to receive, or if he/she perform the transaction in a convenient and comfortable way. In addition, the role of information in value adding activities is getting more important. In conventional business, information is considered a supporting element in value adding processes. Under Internet environment, information becomes the main source of value and value-adding activities are performed through and with information (Rayport and Sviokla,1995). Information becomes one of the major offerings in Internet business. In conventional business, most of information is categorized as information product, information service, or as the addition to the product for the constraints of the physical media that restrict the distribution of information as separate offering. As rich information of diverse format can be distributed freely and rapidly, demand of information becomes increased and information is recognized as important resources in Internet environment. On the contrary, the business that creates and provides information as main offering becomes viable and appears important business area. Information, which lies at the heart of the digital good, can be easily transformed and increased in their value. For this value-adding possibility of information, many of product and services transformed as digital format. Information plays an important role even in value improvement of product or service that cannot be transformed as digital. Value of these types of offering can be added by providing additional information. Most products as well as services are composed of both physical and information component. Information component means everything that the customer needs to know to obtain the product and use it to achieve the desired results (Porter 1985). ...read more.

Conclusion

The value-based strategy can be the most attractive in that it is the action to preserve strengths, offset weaknesses, avert threats, and capitalize on opportunities. Opportunity The most important thing among the opportunities given to the firms that performs business in Internet may be the possibility to create and improve value for the customer. As offerings and transactions become digitalized, they can be improved in their value for the customer. The possibility to know about the customer in detail makes it possible for firms to create and provide the value that fit the requirements of the individual customer. Value-based strategy gives firms directions to exploit the opportunities of Internet business. Another opportunity of Internet business is the market enlargement, which means that firms can do business with wider range of customers. Values that are created or improved in Internet business can be distributed to a large number of customers without requiring additional costs. Firms can utilize the opportunities of digital media by establishing high value to the customer as their strategic objective. Threat The threats given by the digital media such as fierce competition, high requirement and low switching cost of customer, cannot be overcome by short-term tricks or myopic solutions. It requires fundamental measures that overcome the threats, and the benefits to the customer can be used as the essential tool to lighten these threats. Strength and Weakness The strengths and weaknesses of the firm should be evaluated by their capabilities to create and improve value to the customer. A firm cannot create every type of value to the customer. A firm should focus on the value that it feels the most confident it can create within their resources and capabilities. The weak point of their capabilities to create value for the customer should be complemented in the first place. In the long run, organizational competence should be focused on to accumulate the capabilities to create and improve value for the customer. In this context, creating and providing higher value to the customer can be the best strategic direction that capitalizes on opportunities and mitigates threats of Internet business environment. ...read more.

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