Copyright © 2010 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Slide 6-1...

Copyright © 2010 Pearson Education, Inc.Copyright © 2009 Pearson Education, Inc. Slide 6-1

Chapter 6

E-commerce Marketing Concepts

Copyright © 2007 Pearson Education, Inc. Slide 7-2

Online Activities

Around 200 million Americans (72% of all households) had Internet access in 2009

73% of all American adults are online each day Top Online Activities – page 346 Find “buy a product”….room for growth?!


Demographics (chart on 348)

Some demographic groups have much higher percentages of online usage than other groups

But the “Digital Divide” is narrowing quickly! Demographics to examine include:

Gender – Reversal Age – big divide, though rapid growth in 50-64 & 65+ Ethnicity – Hispanic now > White in usage % Community Type – Rural lagging, but gap is closing Income – usage ties to costs for equipment, service Education – Growth at all levels of education


Consumer Behavior

Similar to cars, clothing, and other goods, E-commerce usage is influenced by neighbors and friends

Increased internet usage means less time spent exposed to “traditional” media, including magazines, TV, radio, and newspapers

Copyright © 2010 Pearson Education, Inc.

Marketing Communications: Online vs. Traditional (Offline) Marketing

Figure 6.3, Page 355

Slide 6-5


Consumer Behavior – Discussion Topic

Intense Internet usage may cause a decline in traditional social activities like talking/being with friends and family – do you agree?!

Internet usage may replace “free time” including exercise or reading – do you agree?

Internet usage keeps children from face to face activity and outdoors play – do you agree?


Consumer Behavior

Why consumers choose the online channel:

* See chart on page 353

Conclusions: Consumers are not primarily price driven The #1 driving force is convenience. If it isn’t convenient, consumers won’t return to

your site even if the pricing is favorable


Online Consumer Behavior

Online consumer behavior is comparable to traditional consumer behavior with the following additional factors to account for:

Consumer skills – navigate, locate, purchase Consumer confidence in security of site Website layout, speed, and navigability Consumer clickstream behavior – the path

they take from the time they log onto their computers through purchase (or not)


A Model of Online Consumer Behavior

Clickstream factors that are tracked: Number of days since last visit Speed of clickstream behavior Products viewed during visit Number of pages viewed Supplying personal information (trust level) Number of days since last purchase Total time spent on site Path taken Drop Point

Slide 6-9


Online Shoppers and Buyers


Slide 6-10SOURCE: Based on data from eMarketer, Inc., 2009b.


Online Shoppers = Browsers and Buyers

70% of online users are buyers, 14% are browsers who shop online and buy off-line

30% of offline retail purchases influenced by online activities

Significance of online browsing for offline purchasing and vice versa should not be underestimated – sites must accommodate both groups.


What Consumers Buy Online

Check out the next slide and tell me if this stimulates any entrepreneurial interest in anyone…


What (Goods) Consumers Buy Online


Slide 6-13SOURCES: Internet Retailer, 2009a; eMarketer, Inc., 2009b; authors’ estimates.


What Consumers Shop for and Buy Online

Big ticket items ($500 or more) Travel, computer hardware, consumer electronics Consumers growing in confidence in purchasing

costlier items

Small ticket items ($100 or less) Apparel, books, office supplies, software, etc. Physically small items (shipping) High margin items preferable Broad selection of products available

Slide 6-14


Intentional Acts: How Shoppers Find Vendors Online

37% use search engines 33% go directly to site 17% use comparison shopping sites 15% use product rating sites Online shoppers are highly intentional, looking

for specific products, companies, services

Q. What are the marketing implications of this data?

Slide 6-15

Copyright © 2010 Pearson Education, Inc. Slide 6-16Table 6.6, Page 362 SOURCES: eMarketer, Inc., 2007b; Internet Retailer, 2006.


Why More People Don’t Shop Online

Q. Does Amazon address these concerns? www.Amazon.com


TRUST!!

Asymmetry of information can lead to opportunistic behavior by sellers

Trust is perhaps the most important factor shaping the decision to purchase online (or not)

This is one of the basic premises of E-Bay. www.Ebay.com Sellers can develop trust by building strong reputations for

honesty, fairness, delivery through their online business and their actions before the internet existed

Fact – online sellers who develop trust with their customers can charge more for their products


Branding

Branding is in large part related to trust Research indicates that brands are alive and well on the

Internet, and that consumers are willing to pay premium prices for products and services they view as differentiated

Points of difference (POD’s) extend beyond traditional marketing to the internet experience and offerings: Personalization Customization Speed of obtaining goods Selection – “the library effect” (we have everything) Cool factor


Branding

Brand leveraging - Some strong off-line brands have become strong on-line players due in large part to leveraging their existing brand equity:

ESPN Fidelity Best Buy NBC

Same applies for on-line brands when they seek expansion: E-bay (Cars), Amazon (Used Books), Google (Maps)


Marketing Research -- Internet Marketing Technologies

Databases and data mining – capturing and consolidating data via all on-line and off-line contact and then marketing to individuals or groups based upon past purchases

Shopping cart database – records all shopping, purchase, payment, and shipping info

Web transaction logs – records clickstream behavior on a website. Customers are recognized by cookies or by logging in.

CRM systems – databases which include purchases, shopping, contact history, demographics, psychographics, product usage, responses to marketing actions, and profitability measures


Customer Relationship Management (CRM) Systems

CRM Usage:• Sell greater volumes of products• Expand breadth of products purchased• Develop new products• Retain customers, especially the most

valuable ones• Communicate efficiently and appropriately• Improve loyalty and satisfaction


Market Entry Strategies

Prof Zatz’s latest can’t-miss idea is E-Gasoline.

4 Different types of companies could enter this industry:

1. Existing gasoline company – Exxon

2. Existing other type of company – UPS

3. Start-up company (pure click) – Egas.com

4. Start-up company (click & brick) – Tankuverymuch

Q. What are the pro’s & con’s for each company?

Q. What are the advantages and disadvantages for being a “first mover” vs. a “fast follower”?


Marketing Communications -- Acquiring New Customers via Internet Marketing Techniques

1. Permission marketing: Obtain permission before sending consumer information or promotional messages. Default: Opt in vs. Opt out. Unsubscribe option now required.

2. Affiliate marketing: One web site agrees to pay another web site a commission for new business opportunities it refers to the site. Revenue earned could be % of purchase, flat flee on click-throughs, or a set amount for the link Potential negative – brand confusion or erosion

3. Viral marketing: Process of getting customers to pass along a company’s marketing message to friends, family, and colleagues…on-line “word of mouth” Free/inexpensive, highly credible source, good prospects


Acquiring New Customers (cont’d)

4. Blog marketing: Blog – personal webpage created by an individual or corporation to communicate with readers

Using blogs to market goods through commentary and advertising

5. Social network marketing: Similar to viral marketing, though utilizing sites like FaceBook, Twitter, and MySpace


Social Network Marketing: New Influencers Among the Chattering Masses (page 397)Class Discussion

Review “Lexicon” – 8 bullets…

Q. What do you think of all this intentional marketing where users allegedly control the content?!

Q. In what ways do social networks represent a promising opportunity for marketers?

Slide 6-26


Acquiring New Customers (cont’d)

6. Advertising Networks: Companies that specialize in selling “slots” for banner ads on websites based upon consumer:

Demographics Geographics Clickstream behavior Online behavior (such as different sites visited)


How an Advertising Network such as DoubleClick Works


Slide 6-28


Marketing Communications – Retaining Existing Customers via Internet Marketing Techniques

1. Personalization – the ultimate form of segmentation, targeting, and position where the segment is the individual. Ex: Amazon (again!) “Hello, Dave Zatz”, cc info, shipping info, shopping cart 22 e-mails in 60 days ranging from shipping status to

“Amazon.com has new recommendations for you based on items you purchased or told us you own” to

“We've noticed that customers who have purchased or rated Planet Earth - The Complete BBC Series have also purchased Savage Planet: Volcanic Killers on DVD. For this reason, you might like to know that Savage Planet: Volcanic Killers is now available. You can order yours for just $9.98 by following the link below.”



Personalization – one additional point:

On-line personalization is no substitute for in-person personal attention, but when done right, it can offset one of the greatest advantages bricks have over clicks.

Q. How do you feel about on-line personalization?



2. Customization: Changing the product (not just the marketing message) according to user preferences. Customers are willing to pay more to be unique. Customer co-production – when the customer

interactively creates the product Ex: http://www.vw.com/vwfeatures/gti/en/us/


Other Customer Retention Marketing Techniques (cont’d)

3. Customer service tools: Frequently asked questions (FAQs) Real-time customer service chat systems Automated response systems

* Most on-line consumers want self-service as long as its efficient and effective. But when they want/need human assistance, they demand competency and problem resolution.


Pricing Strategies

Free products/services: Can be used to build brand awareness or tease into future purchase (ex: WinZip 30 day trial)

Versioning: Creating multiple versions of a product and selling slightly different products to different market segments at different prices (often free option)

We will turn off the ads for more $ Dynamic pricing:

Auctions – true supply and demand in action Yield management – airlines’ ticket prices change

constantly


Distribution

Channel conflict: Occurs when a new venue for selling products or services threatens or destroys existing venues for selling goods In this case, when clicks compete against bricks

Q. What would be the pro’s and con’s if Toyota decided to sell car parts online as well as through it’s dealership network?

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