Understanding customer needs and online behaviour
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Understanding Customer Needs and Online Behaviour. MARK 430 Week 2. Error in Assignment 1 instructions. Question 2c It should read Your operational margin seems a bit low . If you increase it to 60% from 50%, what impact does that have on the “Average Order Contribution” and the CLTV?.

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Error in assignment 1 instructions
Error in Assignment 1 instructions

  • Question 2c

  • It should read

    • Your operational margin seems a bit low. If you increase it to 60% from 50%, what impact does that have on the “Average Order Contribution” and the CLTV?


During this class we will be looking at
During this class we will be looking at:

  • How customers make buying decisions

    • Model for customer decision making

  • Market research methods to understand customer needs


4 steps to successful marketing strategy
4 steps to successful marketing strategy

Understanding customer needs and online behaviour (market research, data mining, web analytics)

Formulate a strategy to fill needs

Implement effectively and efficiently (web usability, stickiness, advertising, search engine optimization, email marketing, pricing, distribution, product development)

Build trusting relationships with customers


Customer centric marketing process 3 elements
Customer-Centric Marketing Process: 3 elements

Marketing Research

Marketing Strategy

and Tactics

Focus for this week

Database Marketing

Acquire/Up-Sell

Cross-Sell

Customer Relationship

Management

Sales Force Management

and Customer Experience


Benefits of internet marketing research
Benefits of Internet Marketing Research

Quickly gain crucial market intelligence

Act upon first-mover advantages

Stay afloat in a fast-paced environment

Reduce market research costs

Many more…


Model for customer decision making what do we need to know about our customers
Model for customer decision making: what do we need to know about our customers?

Initiation

  • What starts the process? Source of input? Role of past experience? Friends make input? Advertising, catalogues, email?

  • Source of information: friends, media, web, store? Active Search? How much time? Where to shop? Store, catalogue, web? What to learn? Products / technology / user experience / trends?

  • Compare products? Role of price / quality? Evaluation criteria? Need to touch and feel? Impact of brand and trust?

  • How do buyers gain confidence? Special offers? Security / privacy assurance needed? Guarantees / refund policy? Need push to action - close sale?

  • Word of mouth to friends / community? Lifetime service? Relationship contract? Delivers promised value?

Awareness / learning

Decision

Buy

Post purchase


Popular uses of marketing research
Popular Uses of Marketing Research about our customers?

How to segment the market?

Who are mycustomers?

What is

the price

elasticity?

Conjoint Analysis

Customer Identification

Discrete Choice Modeling

MarketingResearch

Whendo theypurchase?

What are the growth trends?

Environmental Studies

Buying-Habit Studies

Opinion Research

Competitive Analysis

Who are my competitors?

What do

they like?


3 main sources of data that e marketers use for research purposes
3 main sources of data that e-marketers use for research purposes

  • Internal company records

  • Secondary data

  • Primary data


Source 1 internal company records
Source 1: Internal Company Records purposes

  • Non-marketing Data:

    • The accounting department generates data about sales, cash flow, marketing expenses

      • A firm introducing a new product on its Web site wants immediate feedback on its sales.

  • Sales Force Data:

    • sales force automation software, allows representatives to input results of sales calls to both prospects and current customers

  • Customer Characteristics and Behavior

    • Web Analytics, Clickstream analysis and Data Mining

    • complete customer profile from all “touch points”


Source 2 secondary data
Source 2: Secondary Data purposes

  • When are they used?

    • Need specific information not available in company or partner databases,

    • Need information that can be collected more quickly and less expensively than primary data.

  • But:

    • They may not meet the e-marketer’s information needs, because they were gathered for a different purpose,

    • The quality of secondary data need to be checked,

    • They are often out of date.

  • Internet provides easy access to secondary data about environmental factors and trends.


Source 2 secondary data1
Source 2: Secondary Data purposes

  • Marketing intelligence = Marketers continually scan the firm’s macro-environment for threats and opportunities.

  • What type of information do marketers need?

    • Demographic trends,

    • Competitors,

    • Technological forces,

    • Natural resources,

    • Social and cultural trends,

    • World and local economies,

    • Legal and political environments.


Source 2 secondary data publicly generated data
Source 2: Secondary Data purposesPublicly Generated Data

  • Most Canadian and U.S. agencies provide online information in their respective areas. Stats Canada

  • Many global organizations, such as the International Monetary Fund (www.imf.org) are also good sources of data.

  • Most universities provide extensive information through their libraries, and many faculty post their research results online.

  • Industry- or profession-specific information is available at the sites of professional associations such as the American Marketing Association.

  • Most of this information is free and available to all Internet users.


Source 2 secondary data privately generated data
Source 2: Secondary Data purposesPrivately Generated Data

  • Company Web sites provide a great overview of the firm’s mission, products, partners, and current events.

  • Individuals often maintain sites with useful information about companies as well.

  • Sites that provide statistics etc relating specifically to Internet markets such as the ClickZ Network and Jupiter Research

  • Large research firms put sample statistics and press releases on their sites or offer e-mail newsletters. (eg. Forrester)

  • Infomediaries: firms that monitor a number of media sources, presenting selected resources to users either by “pushing” material to the user’s desktop via e-mail, or by allowing users to “pull” it from a specially tailored Web site.

    • Free source is “Google Alerts”


Source 2 secondary data online databases
Source 2: Secondary Data purposesOnline Databases

  • Commercial online databases contain publicly available information that can be accessed via the Internet. (fee based, such as Dialog)

  • Thousands of databases are available online, some free, some subscription-based:

    • News,

    • Industry data,

    • Encyclopedias,

    • Airline routes and fares,

    • Yellow Page directories, etc.


Source 2 secondary data competitive intelligence
Source 2: Secondary Data purposesCompetitive Intelligence

  • Competitive intelligence (CI) = analyzing the industries in which a firm operates as input to the firm’s strategic positioning and to understand competitor vulnerabilities.

  • 40% of all firms regularly conduct CI activities

  • Some sources of CI:

    • Competitor press releases,

    • New products,

    • Alliances and co-brands,

    • Trade show activity,

    • Advertising strategies.


Source 2 secondary data competitive intelligence1
Source 2: Secondary Data purposesCompetitive Intelligence

  • The Internet simplified CI:

    • Competitive marketing strategies: observed on competitors’ Web sites

    • Web sites linked to competitors’ pages: type link:companyname.com in search tools. Why are these sites linking to my competitor and not to me?

    • Third-party, industry-specific sites can also provide information about competitive activities. Company profiles for public firms are available in the SEC’s online EDGAR database + investment firm sites.

    • User conversation: e-mail lists, newsgroups, blogs (eg. re BMWs)


Source 3 primary data
Source 3: Primary Data purposes

  • Primary data = information gathered for the first time to solve a particular problem.

    • When secondary data are not available managers may decide to collect their own information.

    • They are more expensive and time-consuming to gather than secondary data.

    • They are current and more relevant to the marketer’s specific problem.

    • They are proprietary, therefore unavailable to competitors.


Source 3 primary data internet based research approaches
Source 3: Primary Data purposesInternet-Based Research Approaches

  • The Internet is increasingly being used for primary data collection.

  • Why? Declining cooperation from consumers using traditional research approaches. Telephone survey refusal rates = 40- 60%.

  • Increasing number of consumers online:

  • inexpensive and quick method

  • In North America, over 70% of all research firms use various online methodologies.


Main internet based research approaches
Main Internet-Based Research Approaches purposes

  • Online experiments

  • Online focus groups

  • Online observation

  • Usability testing

  • Online Survey Research

    • E-mail surveys

    • Web surveys


Online experiments
Online Experiments purposes

  • Experimental research attempts to test cause-and-effect relationships:

  • Marketers can easily test alternative web pages, banner ads, or promotional offers

    • A firm might send e-mail notification of 2 different pricing offers (with a link to the website), each one to a different set of customers

    • By tracking the click-through rate it will be a simple matter to track which pricing offer has the better “pull”


Online focus groups
Online Focus Groups purposes

  • Focus group research:

    • A qualitative methodology that attempts to collect in-depth information from a small number of participants.

    • Used to help marketers understand important feelings and behaviors prior to designing survey research.

      • 15- 30% of advertising agencies and market research firms use the Internet to conduct online focus groups.


Online focus groups advantages and disadvantages
Online Focus Groups – Advantages and disadvantages purposes

  • Advantages over traditional focus groups:

    • The Internet can bring together people who do not live in the same geographic area.

    • Because participants type their answers at the same time, they are not influenced as much by what others say.

    • Quicker and less expensive to operate than offline versions.

  • Disadvantages

    • Nonverbal communication is lost online.

    • The authenticity problem = Without seeing people in person, it is difficult to be sure they are who they say they are (need to verify respondent authenticity).


Online observation
Online Observation purposes

  • Observation research monitors people’s behavior by watching them in relevant situations.

  • Online it takes the form of monitoring consumer chatting and e-mail posting through chat rooms, bulletin boards, mailing lists and blogs.

    • on the company site and on 3rd party and / or public sites


Usability testing
Usability Testing purposes

  • Web site usability studies to watch users as they click through the firm’s Web site:

    • Subject and observers sometimes in the same room, sometimes watch through one-way glass

    • Subjects usually given specific tasks

    • Observers can pinpoint site design and usability problems


Online survey research
Online Survey Research purposes

  • E-marketers conduct surveys using 2 main methods

    • Sending questionnaires to individuals via e-mail,

    • Posting a survey form on the Web


E mail surveys
E-Mail Surveys purposes

  • To prepare an e-mail survey, an organization can:

    • Draw a sample of e-mail addresses from its database,

    • Purchase a list,

    • Gather e-mail addresses from the Web or Usenet newsgroups.

    • Select a specialized + representative group to research to control who gets the questionnaire.

    • The researcher can send e-mail reminders to participants who have not yet responded: response rates are just as high for e-mail surveys as for traditional contact methods.


Web surveys
Web Surveys purposes

  • Many companies post questionnaires on their Web pages.

  • Purpose:

    • Gather statistics about a site’s visitors (e.g. Web site registration forms)

      • Required, or not required?

    • More formal survey research on a particular topic

      • Response rates to online surveys are as good as or better than surveys using traditional approaches, sometimes reaching as much as 40%.


Web surveys advantages
Web surveys - advantages purposes

  • Fast and inexpensive:

    • Instantaneously worldwide delivery of questionnaires,

    • No cost for postage or an interviewer,

    • No printing, collating, and mailing time,

    • Those who complete the questionnaires do so in the first three days,

    • Easy to send multiple reminders if using e-mail invitations.

    • Can be very low cost or no-cost eg. Zoomerang has a basic service for free, and a subscription service for $599 USD

  • Web surveys reduce errors:

    • Technique reduces the complexity and time involved for respondents,

    • Respondents enter their answers - eliminates data entry errors when converting answers from paper questionnaires.


Web surveys disadvantages
Web surveys - Disadvantages purposes

  • Sample representativeness and measurement validity

    = No ability to draw a random sample

    = Researchers cannot generalize results to the entire population being studied.

  • Online research entails several measurement issues:

    • Different browsers, computer screen sizes, and resolution settings = researchers worry that colors will look different and measurement scales will not display properly online.

    • A comparison study between telephone and online surveys found that online users were less likely to use the two extreme scale points on a five-point scale.


Technology enabled approaches
Technology-Enabled Approaches purposes

  • The Internet is an excellent place to observe user behavior

    • The technology automatically records actions in a format that can be easily, quickly, and mathematically manipulated for analysis.

  • Client-side data collection (cookies)

  • Server-side data collection

    • Log file analysis

    • Real-time profiling (tracking user Clickstream analysis)

  • Data Mining

  • These techniques did not exist prior to the Internet.

    • They allow marketers to make quick and responsive changes in Web pages, promotions, and pricing.

  • We will look at these techniques in detail next week


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