CPIS380 CH04 Consumer Behaviour and Advertising

8/2/2019 CPIS380 CH04 Consumer Behaviour and Advertising

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Chapter 4

Consumer Behavior, MarketResearch and Web Advertisement


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The purpose of a CUSTOMER BEHAVIOUR model is: to help vendors understand how a customer make a purchasing decision.

to show factors that effects consumer behaviour


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Electronic Commerce Prentice Hall 2006 3

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Consumer DSS supports specificdecisions

product brokeringDeciding what product to buymerchant brokering

Deciding from whom (from what merchant)to buy a product

Provide EC mechanisms, communicationand collaborations


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3 basic approaches used in Marketing and Advertising:1. Mass

Targeted to everyone2. market segmentation

The process of dividing a consumer market into logical groups for conductingmarketing research and analyzing personal information

3. one-to-one marketing (relationship marketing)Marketing that treats each customer in a unique way


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Electronic Commerce Prentice Hall 2006 5

The one-to-one New Marketing Model

Start at (1). Then customer decides to buy or not (2). When sales is made (3) customerinformation is collected (4) and place in database (5). Then, customer profile is developed(6) and the four P are generated on one-to-one basis (7). Based on this individualisedprofile, appropriate advertisement prepared (8) that will hopefully lead to another purchase.Then the cycle repeats. All of this can be done in Web environment.

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Personalization in EC

Personalization

The matching of services, products, and advertisingcontent with individual consumers and theirpreferences.

Based on what on a company knows about individual user and

called user profileUser profile

Defines the requirements, preferences, behaviors,and demographic traits of a particular customer.

Behavioral Targeting is the method to compile userprofile, that uses information collected about anindividuals Web-browsing behavior, such as the pagesthey have visited or the searches they have made, to

select an advertisement to display to that individual


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Method of Behavioral targeting

Collaborative filtering

Method that uses customer data to predict, based on formulasderived from behavioral sciences, what other products or servicesa customer may enjoy; predictions can be extended to othercustomers with similar profiles. E.g those who bought theseitems also bought the following items ..

Rule-based filtering Based on a series of yes/no or MCQs Range from personal to

specific information custoer is looking on a speficis Web. E.g. ifcustomer age is greater than 35, income is above $35000.00, soads Car A, else show Car B

Content-based filtering Identify customer preferences by attributes of products they intend

to buy. E.g. recommend a electronic commerce book to customerwho have shown interest in EC.

Activity-based filtering By watching the user activities on the Web


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CUSTOMER LOYALTY

Customer Loyalty refres to adeep commitment tp rebuy aprefrred product or services continually in future. Customer acquisition and retention. e-loyalty

Customer loyalty to an e-tailer or loyalty programs

delivered online or supported electronically Business Intelligence and Analytical Software Merchant rating, customer reviews.

SATISFACTION IN EC Satisfaction is one of the most important success

measures in the B2C online environment TRUST IN EC

trustThe psychological status of willingness to depend onanother person or organization

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Satisfaction in EC

A repeat web purchase is mainly due tocustomer satisfaction


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Trust in EC


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Online Market Research Methods

A critical success factor to B2C is to find out what the

customer want, so that the merchants can make thecustomer happy

Cheaper, faster, geographically diverse audience (largesample)

Representative Market Research Approaches1. Market Segmentation Research2. Online Sampling Methods through email,

questionnaire placed on Web, Voting Polls,3. Online Surveys Web-based, online focus group,

4. Hearing Directly from Customers5. Data Collection in the Web 2.0 Environment

polling, blogging, chatting, Tagging, Multimedia


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Online Market Research Methods

6. Observing Customer Movements online

Keep track of consumers movement (what people are doing) on theWeb by observing customer behaviour rather that by asking themquestions

Sometimes customer are not aware; illegal and unethical Uses:

Transaction log (log file)is a record of user activities at a companys

Web site clickstream behavior , customer movements on the Internet clickstream data, data that occur inside the Web environment. they provide a

trail of the users activities (the users clickstream behavior) in the Web site

Cookies,A data file that is placed on a users hard drive by a remote Webserver, frequently without disclosure or the users consent, that collectsinformation about the users activities at a site. It allow a Web site to storedata on the users PC, when customer return to the site, the cookies can beused to find what the customer did in the past

Web bugs, tiny graphics files embedded on e-mail messages and in Websites that transmit information about the users and their movements to aWeb server

Spyware is software that gathers user information over an Internetconnection without the users knowledge. Then send you e-mails or pop upsbased on what they learn about customer.


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Web Advertising

Advertising is an attempt to disseminate information inorder to affect buyer-seller transaction.

Interactive advertising Online marketing, enabled by the Internet, in which advertisers can

interact directly with customers and consumers can interact withadvertisers/vendors.

A customer can click an ad on the Web to obtain more information orsend an e-mail to ask a question.

Two major business models for advertising online:

Using the Web as a channel to advertise a firms own productsand services

Making a firms site a public portal site and using captive

audiences to advertise products offered by other firms


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Web Advertising - Terminology

ad views

The number of times users call up a page that has a banner on itduring a specific period; known as impressions or page views.

Button A small banner that linked to a Web site. Can contain down

loaded software.

Page An HTML (Hypertext Markup Language) document that may contain

text, images, and other online elements, such as Java applets andmultimedia files; may be generated statically or dynamically.

Click (click-through or ad click)

A count made each time a visitor clicks on an advertisingbanner to access the advertisers Web site

CPM (cost per thousand impressions) The fee an advertiser pays for each 1,000 times a page with a

banner ad is accessed by viewers.


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Conversion rate

The percentage of visitors who actually make a purchase. Click-through rate

The percentage of visitors that are exposed to a banner adand click on it.

Hit

Any request for data from a Web page or file. visit

A series of requests during one navigation of a Web site; apause of a certain length of time ends a visit

Unique visit

A count of the number of visitors to a site, regardless ofhow many pages are viewed per visit.

Stickiness Characteristic that influences the average length of time a

visitor stays in a site.


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ButtonUnique visit


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Web Advertising

advertising networks Specialized firms that offer customized Web advertising,

such as brokering ads and targeting ads to select groupsof consumers.

E.g. DoubleClick (a Google company) E.g. Bannnerserver.com

Advertising Online and Its Advantages Cost Richness of format Personalization

Timeliness Location-basis Linking Digital branding


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Online Advertising MethodsBanner

Banner is a graphic advertising display linked to the advertisers Web

page major benefit is users are transferred directly to an advertisers

site, often the shopping page major disadvantage of banners is their cost

keyword banners

Banner ads that appear when a predetermined word is queried from asearch engine, have target audiences

random banners Banner ads that appear at random, not as the result of the users action

Static banners Always on the Web page

banner swapping An agreement between two companies to each display the others banner

ad on its Web site

banner exchanges Markets in which companies can trade or exchange placement of banner

ads on each others Web sites Swapping is a problem : a match is frequently not possible


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Advertising MethodsBanner


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Advertising MethodsPop-up

pop-up ad An ad that appears in a separate window before,

during, or after Internet surfing or when reading e-mail

It appear in front of the active window, automatically

pop-under ad An ad that appears underneath the current browser

window, so when the user closes the activewindow, he or she sees the ad

interstitial (splash screen) An initial Web page or a portion of it (box) that is

used to capture the users attention for a short timewhile other content is loading.


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Advertising MethodsPop-up

Pop-up ad

Splash screen


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Advertising Methods E-Mail Advertising

Most companies have database of customers to send e-mails or can purchase them, low cost Using email without the consumers permission is called

spamming and have lots of junk mail.

Advertising in chat rooms one-to-one, virtualmeeting ground, more effective than banner,

Advertising in newsletters/papers Advertising in social networks

Online advertising that focuses on socialnetworking sites

Types of Social Network Advertising Direct advertising that is based on your network of friends

Direct advertising placed on your social network site

Indirect advertising by creating groups or pages

Sponsored Reviews by Bloggers


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Advertising Methods

Search Engine Advertisement URL Listing: Most search engine allows the companies to submit the

internet address, URL, for free so that these URLs can be searchelectronically

Keyword Advertising: Linking an ad with the users keywords.Advertisements appears on the screen along with the search resultswhen the chosen keywords are searched. Advertiser who pay more

will appear higher on the list

Improving companys search engine optimization SEO: To be placed at the top of results. The craft of increasing site rank

on search engines; the optimizer uses the ranking algorithm of thesearch engine (which may be different for different search engines)

and best search phrases, and tailors the ad accordingly. e.g.Google ranks Web sites by linkage their popularity and giveweight to link to major companies, government organisation, sitebuild on .edu domain.

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Advertising Methods

Associated ad display (text links)

An advertising strategy that displays a banner ad related to a termentered in a search engine

E.g amazon.com. When a customer reads about a book, a list ofbooks is displayed under the heading Customer who bought this

book also bought The ads appear only as a reaction to user actions.

Affiliate marketing

A marketing arrangement by which an organization refers consumersto the selling companys Web site

Amazon.com have 500,000 affiliates sites

viral marketing

Word-of-mouth marketing by which customers promote a product orservice by telling others about it

Ad i i S i d P i


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Advertising Strategies and PromotionsOnline

Customizing Ads

Filtering irrelevant information by providing consumerswith customized ads

Based on users profiles. Select from menu, say whenregistration only select sports, news and travel.

Webcasting

A free Internet news service that broadcastspersonalized news and information, including seminars,

in categories selected by the user Comparison ads

comparestoreprices.co.uk/compare-prices/daewood


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Special Advertising Topics

Permission Advertising

Spamming - Using e-mail to send unwanted ads (sometimesfloods of ads)

permission advertising (permission marketing) - Advertising(marketing) strategy in which customers register with advertisersand agree to accept advertising and marketing materials

Localisation

The process of converting media products developed in oneenvironment (e.g., country) to a form culturally and linguisticallyacceptable in countries outside the original target market

E.g. web translation, dates, Internet Radio Ad Content (Business Content)

The content of ads is extremely important, and companies usead agencies to help in content creation for the Web just as theydo for other advertising media

The right content can drive the traffic to a site, remain at thesite, read its content carefully and make a purchase.

Content is especially important to increase stickinessfactorremain at a site read its contents make a purchase

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CPIS380 CH04 Consumer Behaviour and Advertising

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