Relationship Formation in Marketplace - Case Study Example

Relationship formation in Marketspaces and relationship formation in Marketplace Introduction The e-commerce market has faced many changes since the past decade, the e-commerce or e-business market has been growing at record breaking levels since the time it had been discovered. E-business came into existence since the time people discovered the internet. This immense growth in the e-commerce industry is due to a single factor that is the most vital part for any kind of business; this factor is the need of communication. The people who saw internet as the novel and innovative trend or technique to conduct business realized the meaning of the term e-commerce and the term ‘e-business’ came into existence. This revolution led to the renovation of a marketplace into marketspace, where businesses and communications were carried on not physically but virtually. But still many marketspaces faced a lot of problems in the field of virtual customer relationship management or CRM. Building relations with clients or suppliers virtually is very tough due to the trust factor, i.e. it is very hard for people (clients, suppliers, dealers, or people related to the e-business or marketspace) to trust somebody that they have never ever met. This used to be a very serious issue because this was one of the largest disadvantages that the e-commerce industry had faced, not only a disadvantage but slowly and slowly this became a setback for the industry. But eventually just as any problem that technology has faced in the previous centuries, this disadvantage for this industry is gradually being removed and more and more reliable ways to deal with the e-commerce industry are being fabricated. E-Commerce The History of “Marketspace” The term e-commerce had been originated in the late 1970’s. At that time the term e-commerce was introduced only for online transfer transactions such as data transfers, purchase orders, funds transfers and codes transfers; that is, all the data transfer that was related to business and was done electronically was termed as e-commerce. (e-commerce land, 2007) E-commerce has surpassed itself from just being a technology, instead e-commerce or e-business is a whole new revolution in the marketing, CRM (Customer Relationship Management) and management industry. (CRM, better management.com) Since the beginning, e-businesses have proven to be a much better way to stay in contact with the consumers and to have a better approach towards the markets via creating virtual marketspaces and eliminating the geographical boundaries. These fresh techniques (e-business & marketspace) grew at a lightning pace because of their geographically irrespective temperament and also due to the fact that creating a virtual marketplace for any business was not too costly, in fact it was much cheaper as and when compared to the expenses that were born on other marketing strategies or techniques. The New face of e-commerce The e-commerce environment has incurred many changes since the past couple of decades. Most of these changes have brought about a new revolution in the World Wide Web and some of these changes have now been given a revolutionized name “Web 2.0”. The name Web 2.0 itself states that it is the second generation of communities, web based marketspaces and aim for better connectivity. (ecom. Guide, 2007) These changes in the e-commerce industry have not only given birth to the term “Web 2.0” but also all the MMORPGs are also an example for the constantly changing marketspace and e-commerce environment. MMORPG or ‘massively multiplayer online role – playing game’ is the latest in the virtual space gismo. MMORPG is basically a new generation of CRPG’s or ‘computer role playing games’ which lets the players correspond in a virtual reality manner. Some of the most successful MMORPGs are Second-Life and Ragnarok. If you have not heard of the virtual reality world of second life you have probably been living under a rock. Of course the e-commerce industry has evolved into something greater and led to the generation of Web 2.0 and MMORPG, but that not just it, the e-commerce industry has also led to other major advancements and innovations such as B2B’s, B2c’s, C2C’s, G2C’s and G2B’s. Amongst all of these B2B’s or Business – to – Business portals are currently leading with the highest turnovers of all. Provoking the E-commerce Success The e-commerce industry achieved a record breaking turnover worth USD 12.8 trillion in the year 2006. Also in the same year B2B’s were at the lead amongst all other e-commerce sub – divisions. B2B’s such as the China’s Alibaba.com and U.S.A.’s onesource.com are some of the dominant leaders of the industry, although the chief players and the most major turnover generators of the e-commerce industry are from the developed countries like the U.S.A. and U.K., still the developing countries like China are keeping their pace to catch up and firmly hold the e-commerce industry. CMR – Customer Managed Relationships CMR is yet a newer version of CRM (Customer relationship management). The term CMR came into existence since the past 2 years and the difference between CRM and CMR is that CMR is a concept which works on ‘self – service’ principles and the customer of the organization providing the CMR solutions will get a ready base on which the customer could develop whatever he/she wants. For example, yahoo e-commerce solutions, which instead of building the website of their client, they provide am easy to use software through which the client can build his/her own website. Another prominent example for the CMR technique is the Google’s ad words, which allows the customer to choose his/her own keyword and lets the customer manage his/her own SEO technique. So, What is a better amongst the 2, CMR or CRM? Well… each of these two concepts have their own pros and cons, like if you opt for the CRM concept you get better professionalism in your product because of the fact that professionals with years of experience have built it, whereas in CMR concept you get to apply your knowledge of the industry which is also essential because you know your product better than anybody. Relationship Creation and Management Marketspaces vs. Marketplaces View Marketspaces Marketplaces Area Unlimited area of contact, a client can be contacted from just about anywhere in the whole wide world through the help of the world wide web. Limited area of correspondence, a client may only be contacted within the reach of the marketplace, this area may usually be measured in miles or city limits. Nature of Correspondence The client is contacted virtually, but the goodwill of the company using marketspaces may be calculated by its brand name in the market or various logo agencies like “VeriSign” and “Secure” may also be helpful in judging the authenticity of the company or seller. The client may not be contacted virtually instead all correspondences are taken care of wither physically (by physically meeting the clients) or by using the telephone (the use of telephone only in the case where the client already knows the supplier and a relationship between the supplier and the client has already been established. Types Types for marketspaces may be: 1. B2B. 2. B2C. 3. C2C. 4. G2B. 5. G2C. Examples for marketplaces may be: 1. Retail general stores. 2. Super markets. 3. Malls. 4. Petty specific stores such as tobacco or cigarette stores, milk and milk products stores, ice-cream parlors, etc. 5. Garage sales. Providing services Providing services in a marketspace might be a huge hurdle if the sold item is a physical product and that product has been sold away from the reach of the service facility of the seller. This is by far the largest problem being faced by the sellers because it is really tough for the seller to explain to his customer to how will the seller fulfill his promise of providing the repair and maintenance services on his product which has been sold across the ocean or at an area where the seller may not reach the customer and the transportation cost of the product may far exceed the profits. Providing services in a marketplace is far easier in a marketplace then in a market - space because the area of operations in a marketplace is limited to the service providing area. Not only that but the consumer also trusts the seller in a marketplace because of the fact that the client knows the seller physically and he knows that a seller can not just disappear into thin air unlike then that in a marketspace of which the consumer knows that there is a chance of fraud, because of a known fact that some domain names could not be traced easily. Mode of Advertisements The modes of advertisements in the marketspaces differ a lot from the ones on marketplaces. The modes of advertisement used in marketspaces are: 1. SEO (Search Engine optimization). 2. Ad banners on other more popular websites. 3. PPC (pay per click). 4. Paid visitors. 5. TV Advertisements. 6. Radio Advertisements. 7. Telecom. 8. Newspaper advertisements. The modes of advertisement used for a business in a marketplace are: 1. Ad banners on streets. 2. TV advertisement. 3. Radio Advertisements. 4. Telecom. 5. Newspaper advertisements. Obtaining clients Obtaining clients for a marketspace is much easier then obtaining clients in a marketplace due to the fact that in a marketspace people from just about anywhere that require the product or service for sale may contact the company by just searching by the product name (thus SEO mode of advertisement is considered as one of the most important step for any marketspace) Getting clients for a marketplace is quite tougher when compared top a marketspace. The advertisement costs are much higher, also a brand name matters a lot while operating a business in a marketplace. Maintaining relations with clients Maintaining relations with clients is a step that is quite similar in both the marketspaces and the marketplaces. Because a customer may only return back to your company for further purchases if the quality of your product is good and the prices are justified. The only thing that matters is the quality of service and correspondence. Maintaining relations with clients is a step that is quite similar in both the marketspaces and the marketplaces. Because a customer may only return back to your company for further purchases if the quality of your product is good and the prices are justified. The only thing that matters is the quality of service and correspondence. Examples 1. Amazon.com: Amazon creates relations via its clients by the mode of contacting them through SEO technique and offering them a wide range of products at several different costs so that the client could make the better choice. 2. eBay.com: eBay.com also works similarly to Amazon.com and has many sellers on the network and lets the clients interact directly with the sellers via online messaging technique so that a wide area of land could be covered. 1. Wal-mart: Wal-mart similar to Amazon.com has a wide range of products of several different companies so that the client could choose better, but they manage the relations personally and physically. 2. Mc Donald’s: The largest burger chain of the world cannot work as similar to the Marketspaces since the products that it sells cannot be transported to a wide area. Conclusion The differences above clearly state the difference between both the concepts, ‘Marketspace and Marketplace’. Their will always be a disparity between both these concepts… Although the major part of the difference lies in the concept of ‘nature of correspondence’ which is virtual in the marketspaces and practical in marketplaces, that is, in a marketspace the consumer and the supplier or as a matter of fact any and all the parties involved in a transaction might be unseen until the parties want to do so. Except for this other differences are also presented such as the area of correspondence and methods of obtaining clients. References Marshal Brian, HSF, Oct. 2006: Brian, Marshal 2006, ‘How e-commerce works?’, ‘How Stuff Works’, viewed 13th December 2007 CRM: Knowledge@Wharton 2005, ‘We are reinventing a brand and a company’, ‘Bettermangement.com’, viewed 13th December 2007. http://www.bettermanagement.com/library/library.aspx?l=14628. ecom. Guide, 2007: Carter McNamara, MBA, PhD, Authenticity Consulting, LLC. 2007, ‘Understanding the Electronic Data interchange’, ‘Basic Guide to E-commerce’, viewed 12th December 2007. Scotthrdlicka, 2006: Anonymous informative article, ‘Marketspace vs. marketplace’, viewed 12th December 2007, found at: http://www.scotthrdlicka.com/marketspace.php. E-commerce land, 2007: Anonymous informative article, ‘History of e-commerce’, viewed 12th December 2007, found at: http://www.ecommerce-land.com/history_ecommerce.html. Bibliography ecom. Guide, 2007: Carter McNamara, MBA, PhD, Authenticity Consulting, LLC. 2007, ‘Understanding the Electronic Data interchange’, ‘Basic Guide to E-commerce’, viewed 12th December 2007, pg. no. 03 - 69. Read More