1

E-Marketing

• Basics

• Web Retailing

• 1-1 Marketing

2

On-line Retailing Issues

• Product – what products are suitable?

• Software interface – ease of use, search time, help

• Process – how can the process be re-engineered?

• Pricing – willingness-to-pay

• Payment – which methods?

• Market penetration – build a loyal customer base

3

Product value

Services value

Personnel value

Image value

Total customer value

Monetary cost

Time cost

Effort cost

Psychic cost

Total customer cost

Customer delivered value

Determinants of Customer Delivered Value

4

Individual Characteristics

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Environmental Characteristics

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Stimuli

Marketing Others

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Buyer’s Decision

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Vendor’s System

Logistics Technical Customer Service

… … …

… … …

Consumer’s Decision Making Process

5

Clo

thin

g

Jew

elry

Fu

rnit

ure

Ho

use

s

Au

tom

ob

iles

Res

tau

ran

ts

Vac

atio

n

Hai

rcu

t

Ch

ild c

are

TV

Rep

air

Leg

al s

ervi

ces

Ro

ot

can

al

Au

to r

epai

r

Med

ical

Dia

gn

ost

ics

Most goods

Most services

Easy to evaluate

Hard to evaluate

High in search quality High in experience High in credence

Product Type Product Evaluation Time

High in search qualities Before purchase

High in experience qualities After purchase

High in credence qualities Not even after purchase

Consumer Evaluation of Products

6

What sells on the Internet?

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Consumer Adoption Process

Time of adoption

Ado

ptio

n pr

obab

i lity

Consumer type Key characteristicInnovators Risk takers

Early adopters Opinion leaders

Early majority Deliberate adopters

Late majority Skeptical

Laggards Tradition bound

Innovators 2.5%

Early adopters 13.5%

Early majority

34%

Late majority

34%Laggards

16%

8

Deterrents to B2C

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9

E-Marketing

• Basics

• Web Retailing

• 1-1 Marketing

10

Product/service search and discovery in the information space

Comparison shopping and product selection based on various attributes

Customer service and support (if not satisfied in X days, return product)

Negotiation of terms, e.g., price, delivery times

Authorization of payment

Placement of order

Receipt of product

Pre-purchase interaction

Purchase consummation

Post-purchase interaction

Consumer Mercantile Model

11

Marketing Communication ObjectivesObjectives Tasks

1. Generateawareness

Prospecting

2. Featurecomprehension

Open relationship

3. Lead generation Qualify prospect

4. Performancecomprehension

Present salesmessage

5. Negotiation,customization

Close sales

6. Reassurance Account service

Effectiveness

Low High

Personal selling

Mass ads

Web?

12

Surfers

Aware Surfers

Active Info Seekers Passive Info Seekers

Web Site Hits

Active Investigators

More Dialogue

Purchase

Re-purchase

Conversion Process on the WebInclude web address in broadcast ads; on product packaging, etc.

Passives: Hot links, sponsored sites Actives: Multiple sites, speed, bandwidth

Make it an interesting visit; visual appeal - graphics, sound, video, ease of use

Simplicity of establishing a dialogue, quality and speed of response

Respond to dialogue; simplicity and security of ordering; order status.

Exploit transaction database; purchase satisfaction and feedback.

13

Measuring Effectiveness

Awareness efficiency = People aware of site / People with Web access

Attractability efficiency = Hits on site / People with Web access

Contact efficiency = Active visitors / Hits on site

Conversion efficiency = Purchases / Active visitors

Retention efficiency = Repurchases / Purchases

Web site efficiency

Caching and undercounting

14

Model of Internet Consumer Satisfaction

Customer Satisfaction

After-Sales

Sales Activity

Product

Web-site Store Front

3rd PartySeal of Approval

Trust inWeb-shopping

VendorReputation

Repeat Web Purchase (Brand Loyalty)

Security

Authentication

Privacy Transaction Safety

Non-repudiationIntegrity

SystemReliability

Speed of Operation

Ease of Use

Content,Quality

Format

Reliability

Completeness

Timeliness

15

Web Storefronts: Pros & Cons

Feature Pro Con1. Multimedia

2. Delivery lag

3. Dynamic Price

4. Customer Data Capture

5. Convenience

6. Search Engines

7. New Communication Channels

8. Push-pull

16

Some E-Tailing Fallacies

• Focus of competition away from quality, features and service to price

• Dubious measures of sales (lower price inflates sales volume, some revenue in form of stocks of partner dot-coms)

• Wrong metrics (number of customers or site visitors)

• Lower estimation of costs (infrastructure needs, customer acquisition, employee compensation schemes)

• Business model not sustainable

17

E-Marketing

• Basics

• Web Retailing

• 1-1 Marketing

18

Evolution of 1-1 Marketing

• Mass Marketing: One price for all

• Direct Marketing: Target market segments

• Micro Marketing: Variable pricing for micro-segments

• One-to-one Marketing: Unique pricing for individuals

19

MASS MARKETING

Average customer

Customer anonymity

Standard product

Mass production

Mass distribution

Mass advertising

Mass promotion

One-way message

Economies of scale

Share of market

All Customer

Customer attraction

ONE-TO-ONE MARKETING

Individual customer

Customer profile

Customized market offering

Customized production

Individualized distribution

Individualized message

Individualized incentives

Two-way messages

Economies of scope

Share of customer

Profitable customers

Customer retention

20

Customer Relationship ManagementIntegrated sales, service and marketing intelligence

Benefits Challenges

21

One-to-one Marketing: Steps

• Identify customers– Collect more customer names– Collect more customer information– Verify and update customer data

• Differentiate customers – Who are the top customers? Who’s unhappy?

Who’s buying less? Who’s missing in the list?– Which customers drain your resources?

– Rank customers into A, B and C categories

22

One-to-one Marketing: Steps (continued)

• Interact meaningfully– Just call top 2-3 people at 5% customers

– Call your company / competitor posing as a customer– Evaluate paper / voice / email communication

• Customize your behavior– Customize / personalize communication– Find what / how often customers want to hear from you– Ask top ten customers what they want

23

Customer Resources Life Cycle

1. Search: Help customer find your

product

2. Selection: Assist customers choosing your products

6. Repurchase / Disposal

3. Acquisition: Help buy

4. Use: Making best use

5. Stewardship: Inform about offerings

24

Online Market Research for EC

Benefits Challenges

25

Key Points

• Internet only approach may be limited

• Web can cut costs, enhance customer satisfaction, may produce new revenue

• On-line market research is one alternative