Internet has changed the way of doing business traditionally. Nowadays businesses and customers are more concerned about online services due to greater advantages. Different companies use different types of e-business models such as:
' Storefront model
' Auction model
' Portal model
' Dynamic pricing model
According to the case study, Ryanair operates an airline business which uses an e-business platform to deals with his/her clients. Generally, most airline industries uses a dynamic pricing strategy. Dynamic pricing model allow a company to set flexible prices for its products or services in response to real-time supply and current market demands.The aim of dynamic pricing is to make businesses sells goods or services online and/or via mobile application as well as to adjust prices according to customers demand. Below are some dynamic pricing strategies:
1) Peak pricing: Peak pricing allows a company to take greater advantages when demand of a product or service changes. A company will increase prices when demand is high or when competitors have low stock. For example in Ryanair case, price will go up during summer as more people would go on vacations.
2) Time-based pricing: The goal of using time-based pricing is to increase revenue of a business by using price discrimination strategy on customers. That is the company will take into account the types of customers, customer's location, the time of day, the level of demand and supply of good/ services and the competitors' price.
3) Penetration pricing: When a company is launching new products/ services in its market, it will use penetration pricing. This is because they don't know the buying behaviour of customers. Therefore, with the help of penetration pricing, the company will set low prices than other markets so that to attract more customers, where Ryanair has use a lot to gain competitive advantage.
'Lower price beats higher price every time'
' Micheal O'Leary, chief executive
Additionally, evidences that shows that Ryanair uses a dynamic pricing model are as follows.
Firstly, thesecondary airports that Ryanair uses offer significant direct and indirect cost advantages. The fees charged for landing on secondary airports are usually much cheaper than for landing on any other major airport.Also secondary airports have a simple check-in facility and easy baggage systems which results in low cost carriers.
Secondly Ryanair give the facility of direct online services for tickets booking. This means that less money will be spent on paperwork and administrative work as everything will be done online. There will be a quick check-in process with the online service which will reduce congestion in the airport.
Additionally, it uses a single type of aircraft for the entire fleet which reduces its buying price as benefits from bulk-buying and also the cost of maintaining the aircrafts is reduced. Also low staff training costs as only one type of simulation facilities and training staff are required. Ryanair increased the productivity per employee and hired fewer employees per plane as compared to other airlines. This helped the company with their decision to fly short and medium haul point-to-point flights which involves smaller number of personnel than other major airlines.
Ryanair has also introduce low fare cost so that to prevent airplane taking off with many vacant seats but at the same time keeping some seats reserve for potential walk-up passengers.
Another evidence is Ryanair favors no frills which means non important features have been removed to keep the prices low and therefore passengers will have to pay for their own extra baggage which supports the dynamic pricing model.
The 4-main e-business strategies used by Ryanair are online booking, E'ticketing Check'N'GO service, internal communication and dynamic Packaging Offers. Below are listed each one's competitive advantages that Ryanair take advantage of.
An important competitive advantage Ryanair gained is Online Booking.An online booking system is a software which allows a potential customer to book and pay for an activity or service directly through your website. That is, since the moment a customer make their mind they want to book to choosing a date, picking a time and paying for the booking, everything is handled online and therefore, greatly reducing the workload on their staff and removing the opportunity for double-bookings and multiple use of the ticket for Ryanair.
Advanced systems used like online booking allow customers to make reservations through a range of methods online, including mobile, considerably expanding the potential for bookings for Ryanair, and better leveraging an increasingly social internet.
Also, there is reduction in the number of check-in desks and other airport handling facilities. That is, through online booking, all the stress, strain, mistakes and time out of arranging bookings of Ryanair is reduced. With its setting up, Ryanair is able to control every aspect of the booking procedure and allow customers to quickly and easily book online.
In addition, rather than being restricted by working hours and telephone capacity, Ryanair is able to take countless and simultaneous bookings at any moment, thus, removing the friction that alternative booking systems introduce.
One of competitive advantage Ryanair gained through its e-business strategies is E-ticketing. An e-ticket offers many advantages for both travellers and airlines, including security, flexibility, cost and convenience. At the same time, it also provides the standard assurances of the traditional paper ticket, such as seating choice, travel time options and other flexibilities.
It is said in the case study that Ryanair's e-ticketing Check'N'GO service enables passengers to check in online within three days prior to the proposed flight and up to 4 hours before take-off. Thus Ryanair will save on the cost of maintaining ticket printers and ticket inventory control. Unlike the traveler who leaves his ticket at the office or home, e-tickets are impossible to "lose" because they reside in a computer database network. For this reason, they are hard to steal, as well. Therefore using an e-ticket will gets the passenger through the gate and on the plane quicker and with less hassle than a paper ticket. Moreover Ryanair estimated that between 40 to 50 % of its passengers will ultimately use online check-in and thus this will help them to reduce the number of check-in desks and other airport handling facilities.
A traveler also may find it easier to make changes to their travel journey using an e-ticket, Ryanair airline need only update their database with the requested changes rather than incur the expense of physically issuing a new ticket. Thus after the sale, the company can more easily track down passengers to inform them of itinerary adjustments, cancellations and other last-minute changes. Airlines and travel agencies also are plugging into the growing numbers of devices travelers use to communicate and manage their lives.
Finally, using e-tickets is a more environmentally friendly approach. The IATA estimates the industry would save the equivalent of 50,000 mature trees per year, about 3 square miles of forest, if it used e-tickets exclusively.
Ryanair's competitor, the EasyJet allows passengers to print off their boarding passes at the time of booking however Ryanair passengers have to log in again a short time before travel to be able to print their ticket. This can be a big disadvantage for the passenger if ever the forget to print their ticket at last minute.
It is very important for any business to have an effective internal communication. An engaged workforce feels valued, involved and that they genuinely matter. High levels of engagements improve moral, boast productivity and lead to a better working environment in general. Effective communications ensure that employees fully understand the company; its values and purposes, what is expected of them to achieve the company goals and how to fully engage with their own roles. To deliver a sustain great internal communication, is to research the audience, listen to what they say, tailor the communication, tone of voice and medium to their needs.
The power of communication lies in keeping your audience involved in its evolution, because it is their interaction and interests that will mean the difference between communication that goes nowhere and is read by no one, and communication that can motivate entire workforce. With an effective internal communication, Raynair business will keep on thriving to success and its will be sure to meet customer expectation as well as customer satisfaction.
The dynamic packaging in an online travel portal help you to get maximum benefits in your holiday packages. Ryanair offers Packages like Flight + discounted hotel rooms + Car rental + travel insurancewhich attract several categories of customer. So as a customer know they will be getting all essentials things in a package they will be more likely to take advantage of these offers which will boost sales and the reputation of the company will be enhanced. This may result to overall profitability.
E-CRM is nowadays a company's most powerful asset in identifying its customer needs. E-CRM refers to an integrated online sales, marketing and service strategy that is used to identify, attract and retain an organisation's customers. It is also defined as customer relationship management methods used by online companies in the electronic commerce.
According to Starky, Woodcock (2000) Customer Relationship Management is defined as a business attitude. 'Customer Relationship Management (CRM) is an IT-enhanced value process, which identifies, mature, combine and focuses the various capabilities of the organisation to the customers opinion in order to deliver long term exceptional customer value, at a profit, to well-known existing and future customer segments.'
E-CRM may help to attract more customers for Ryanair's company due to its various benefits and some benefits how e-crm will help Ryanair to attract more customer are explained below.
E-CRM consists of finding out about customers purchasing habits and preferences are which Ryanair could use to increases the quality and type of services which he is going to provide to its clients and therefore customer satisfaction will be enhanced.
Furthermore customer's opinions, enquiry status and correspondences are easily obtained through E-CRM which will help to better helps Ryanair to locate where problems are found and will be able to find efficient solutions and enhance the company reputation and will establish itself in a very competitive position in the market.
Also there is going to have easy access to customer information and history which will allow Ryanair team to better meet its customer demands by providing, for e.g if a flight from location X to location Y is more researched then they will be better able to know that to have more flights doing this track or will know when to put promotional advertisement. It will be more about knowing its customer better.
E-CRM can also help in identifying new potential customer and the type of market that Ryanair should focus on more.
There will be improved profitability since the company will be only going to focus on the most profitable customers and dealing with the unprofitable in more cost effective ways
An e-payment system is a way of making transactions or paying for goods and services through an electronic medium, without the use of checks or cash. It's also called an electronic payment system or online payment system. In fact when setting up an online store, finding out which types of payment methods to use is essential for your business. Not only because there are different types to choose from, but certain types are optimized to maximize revenue opportunities.
1. ELECTRON''C FUNDS TRANSFER (EFT)
Electronic Fund Transfer (EFT) can be defined as the electronic communication used to transfer money from one bank account to another directly without the need of any paper work. EFTs includes direct-debit transactions, pay by phone system, wire transfers, direct deposits as well as Automated Teller Machine (ATM) withdrawals. It is mostly used in Business to Business (B2B) area where the transfer of money can be done using ATM or through processed through the Automated Clearing House (ACH) computer network. For example; company A makes a purchase online, the money will be deducted and transfer directly from its own bank account and deposited directly to the other bank account of company B electronically. Once the transfer has been done properly, company A will get a notification that the fund is well transferred to company B bank account.
Advantages of EFT:
' Productivity and efficiency increases.
' Less paper work.
' Faster delivery which improve turnover.
' Users can email notification when a transaction is made or when they make a deposit.
' Cash flow remains up-to-date.
' Improve safety and control.
Disadvantages of EFT:
' Increase in frauds.
' Hacker can get access to financial or personal information.
2. Credit card & Debit card
' Credit Cards
As a global payment solution, credit cards are the most frequent way for customers to pay online. It is simple to use as the customer has to just enter their credit card number and date of expiry in the appropriate area on the seller's web page. Merchants can reach out to an international market with credit cards, by integrating a payment gateway into their business. To improve the security system, increased security measures, such as the use of a card verification number (CVN), have been introduced to on-line credit card payments. The CVN system helps detect fraud by comparing the CVN number with the cardholder's information.
' Debit cards
Customers who want to spend online within their financial limits prefer to pay with their Debit cards. With the debit card, the customer can only pay for purchased goods with the money that is already there in his/her bank account as opposed to the credit card where the amounts that the buyer spends are billed to him/her and payments are made at the end of the billing period.
3. Smart Cards
A smart card is typically a type of chip card, a plastic card that contains an embedded computer chip'either a memory or microprocessor type that stores and transacts data. Customer can access smart cards only by using a PIN that is assigned to them. The card data is usually processed via a reader that is part of a computing system. Below shows a smart card reader and a smart card:
Smarts offers a lot of facilities to its users such as:
' Smart cards are secure, as they store information in encrypted format
' The cards can manage and control expenditures with automatic limits and reporting.
' Micro Payments that is paying nominal costs without transaction fees associated with credit cards
' The card can carry personal account, credit and buying preference information that can be accessed with a mouse click instead of filling out forms.
4. E-cash & E-wallet
' ELECTRON''C CASH (E-CASH)
Similar to regular cash, e-cash enables transactions between customers without the need for banks or other third parties. When using e-cash, it gets transferred directly and immediately to the participating merchants and vending machines. Electronic cash is a secure and convenient alternative to bills and coins. This payment system complements credit, debit, and charge cards and adds additional convenience and control to everyday customer cash transactions. Usually, E-cash operates on a smart card, which includes an embedded microprocessor chip. The microprocessor chip stores cash value and the security features that make electronic transactions secure.
E-cash is transferred directly from the customer's desktop to the merchant's site.
Therefore, e-cash transactions usually require no remote authorization or personal identification number (PIN) codes at the point of sale. E-cash can be moved over a telephone line or over the Web. The microprocessor chip embedded onto the card keeps track of the e-cash transactions. Using e-cash the customer has two options: a stand-alone card containing e-cash or a combination card that incorporates both e-cash and debit.
How a classic e-cash system works: A customer or merchant gets involved with one of the participating banks or financial institutions. The customer receives specific software to install on his or her computer. The software allows the customer to download 'electronic coins' to his or her desktop. The software manages the electronic coins. The initial purchase of coins is charged against the customer's bank account or against a credit card. When buying goods or services from a web site that accepts e-cash, the customer simply clicks the 'Pay with e-cash' button. The merchant's software initiates a payment request, describing the item(s) purchased, price, and the time and date. The customer can then accept or reject this request. When the customer accepts the payment request, the software residing on the customer's desktop subtracts the payment amount from the balance and creates a payment that is sent to the bank or the financial institution of the merchant, and then is deposited to the merchant's account. The attractive feature of the entire process is its turnaround time which is a few seconds. The merchant is notified and in turn ships the goods.
Some common examples of E-Cash are transit cards, meal plans, and PayPal. E-Cash also signifies any kind of electronic payment.
' ELECTRON''C WALLETS (E-WALLETS)
Electronic wallets being very useful for frequent online shoppers are commercially available for pocket, palm-sized, handheld, and desktop PCs. They offer a secure, convenient, and portable tool for online shopping. They keep personal and financial information such as credit cards, passwords, PINs, and many more. To facilitate the credit-card order process, many companies are introducing electronic wallet services. E-wallets allow you to keep track of your billing and shipping information so that it can be entered with one click at participating merchants' sites. E-wallets can also store e-checks, e-cash and your credit-card information for multiple cards.
It is a very simple and increasingly popular method of online payment. First, the buyer must log in to a specific supplier, and then he receives a bank account number to which he should pay money. Then everything looks like a traditional payment for the service. When we do shopping, we can use the wallet and transfer money from our account to others. The entire transaction runs quickly. Most often, this payment method is completely free. Probably the most popular e-wallet is PayPal, and in China Alipay. 21.7% of the whole market comprises of only e-wallet payments. The e-wallet evolves from the direction most convenient for the client. You do not have to enter the same data repeatedly to ensure your safety. You can pay with this online payment method at most places in the world. The e-wallet can be used both online and in applications. This is a very secure payment method. Due to the fact of e-portfolios taking customer needs into account as much as possible, the popularity grows from year to year.
Micropayment involved online business transaction for small amount of money usually varying from a few pennies to a few dollars. Today's many businesses are often willing to sell intangible products such as information for a small amount of money. The major problem of e-business, however is to keep transactions cost low. There are several model to compete with this problem and each has there pros and cons that vary accordingly to the type of business transaction and consumer purchase preferences.
' Prepay model
This approach to micropayments often takes the form of a subscription that allows users for a prescribed period of time or amount of usage. Prepay advantages include gift card for consumers without credits card and purchase price that is high enough to cover business transactions costs and a potential disadvantages are that the requirements for buyers to pay a lump sum upfront and the need to record individual personal information and usage of credits.
' Collaborative model
For online publishers, the most workable micropayments models involve a business collaboration approach linking multiple sites. A publisher, Thomas Baekdal, has named this model the 'Associated Micropayment system' because of similarities to the creation of associated press within the news industry. Its advantages are that many online publishing businesses could receive additional income for written content. Moreover, its disadvantages are the challenge of creating a practical system that consumers will accept.
' Pay-as-you-go Model
As the name suggest, this form of payment involves paying as each transactions occurs. The primary advantages of pay-as-you-go is in favor of consumers who in the end are paying only for what they want and its disadvantages is that profit-minded business are unlikely to support this model because of the possibility of losing money on too many transactions.
E-Marketing is a matter that takes a lot of strength today, a time where social networking accounts have different types of users with different interest such as social, economic, cultural, political'and so on. It goes beyond creating a website. It focuses on online communications through the use of direct dialogues with user, overall reaching potential customers. Because of this type of marketing business can be done in a simpler way.
According to Kotler, e- marketing 'is what a company does to publicize, promote and sell products and services online'. This means that e-marketing globalizes all activities businesses perform with the use of internet, so that they can generate more business and develop its brand identity, overall reaching their target audience. With this form of marketing companies can increase sales, improve visibility and brand recognition.
In simple terms, e-marketing refers to the marketing of products and services online.
E-marketing has become popular to the extent that internet service providers are becoming more accessible. Over a third of consumers who have internet access in their homes have reported that they use the internet as a means to make their purchases. There may be lots of advantages associated with E-Marketing. However, there are also some disadvantages to both the consumers and companies related to this which are listed below.
The main disadvantage for the consumers is the risk of a burglary, a fake account, and hackers, among others, for direct payment to the credit card or pre-delivery consignment exposed to any of the aforementioned types of fraud. Also not having the opportunity to touch, feel or try on products to buy (physical products). It does not guarantee that the product you receive is exactly like the one you saw on the pictures.
Here are some disadvantages to companies:
Companies are that online advertisement can prove to be costly. As it involves a lot of cost before which are the cost of a web site design, a software & hardware, maintenance of the business site, online distribution costs and the invested time.
' Lack of trust
Many users still don't trust in the electronic methods of paying and give up buying online. There is a lack of trust of the users because of the constant virtual promotions that appear to be frauds. This is an aspect that deteriorates the reputation of quality and honest companies.
It is important to note that spam filters that have become very essential to majority of the users are a major limitation to the effectiveness of e-marketing. There are concerns over the high number of commercial messages being filtered because the spam filters consider them illegitimate.
' Audience Representation
Companies that use Internet surveys never know who will fill them out therefore this could cause a lack of target audience representation in the online survey.But the people who respond to the survey may not be from the target customer base. Without a way of identifying respondents, the wrong people may be participating in the online survey, skewing the survey results with information that does not apply to the store or its customer base.
' Face-to-Face Contact is Limited
Limited face to face contact is one of the major drawbacks of e- marketing. Businesses that are carried out solely online do not usually get to build strong personal rapport with their customers. Consequently, they may eventually lose some of their customers to their traditional competitors who engage strong customer service tactics.
' Time consuming.
On-line marketing needs to be updated frequently as per changing technologies in order to cope up with the futuristic prevailing trends in the field of electronic media. Wise anticipation in the forementioned regard is essential. Also, advertisement need to be updated for example based on seasons, type of people or festivals. Therefore, this involves a lot of research and can be time consuming.
' Poor navigation
Also, no replacement is there for good old fashioned customer service. The majority of online marketers lack inquiry response programs and customer service. Therefore, your many online visitors will already have painted your website as poor service before contacted you. Also, the majority of sites have poor navigation that makes it tough for the visitor to find what they are looking for. Many sites were created without a customer service point of view.
When running an internet based business, an individual is most likely to encounter a number of differences to traditional bricks and mortar companies. This includes the company approaches to marketing, sales and distribution. Moreover, there are many companies nowadays that integrate elements of internet technology into their business, even though they do not run an internet only business. Hence these should concerned e-business legal issued as well.
Just as physical business can, E-business can be legally incorporated in various ways such as ; sole proprietorship, a partnership, a limited liability etc. One of the first steps of an e-business is to choose the corporation structure, as each business type has different legal and tax consequences. E-business is allegedly subject to a surpassing level of financial vulnerability than a traditional business. Therefore, it is highly recommended to select a structure entity that separates the owner and the business both financially and legally. If the company is created as a separate entity it will not be responsible for bankrupt or incurs unanticipated debt. Though, after incorporation a business is able to change their structure to a more advanced entity form, if desired in the future.
Every company must have a brand, it is very important. With so many companies at the click of a mouse your marketing and product must stand out from among the competitors. To secure an appropriate web address or name is the first step. The address need to reflect the business and should be easier for the consumer to remember. Moreover, it should be a legal business name and not a name already taken or something similar to another business name. even if your e-business may sell the same product and services as another company, its logo, brand and web address should differ. If a company fails to do so, it will find itself n legal trouble. In addition, the logo of a company and is brand should match the consumer's preferences as well as the 'look' it is going for.
Protecting your Trademark
Trademark the logo and product name of a company to protect its legal status. Since one company should not create a brand and logo similar to another company. The latter would not want another business to have the same features and elements of your logo or brand close to your own. A trademark on your company's name help to protect, it also allowed the owner to undertake legal action against the other company, if there was framed. This, however, only happen if the domain name is unique as claim and not already taken, the only the web address or domain name can be register as a trademark. The trick is to find a name that is suitable enough to apply for legal protection but generic enough that customers can easily find it online.
Back then, curtained jurisdiction traditionally allowed e-business to operate without paying sales tax, nowadays however, most states have rules and regulations on taxes for internet based sales. These laws are generally similar almost identical to the laws on mail order sales. There are also taxes on product that the company sends abroad. If the company fails to pay those taxes, the IRS (Internal Revenue Service) may sue your company. The type of business entity a company incorporate may has n impact on its tax liability. If the company has doubt on their tax status they should contact the state tax agency for further information. It is important that the company knows what taxes apply to the numerous product and services it is selling to ensure that they are meeting their legal obligations.
Copyright is a legal right created by the law of a country that grants the creator of original works exclusive rights for its use and distribution. It can also relate to computer codes for computer programs. The new 'Copyright Modernization Act' was adapted in November 2012, thus changing the Canadian law to adapt them to digital economy. This new act is more efficient inn providing protection to the rights of the creator and giving users a great amount of legal activities at the same time. However, it is important to know that this modern act apply only for non-commercial purpose. Below are some key of the Act:
' Users have greater freedom to include copyrighted content in their work, as long as it does not affect the creator's market and reputation. It must also be for a non-commercial purpose
' Users can back-up copies of material as long as they are not protected by digital lock or part of an on-demand devices.
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