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MARK 404 Advanced Internet Marketing. Tim Beal Session 2 – 15 July 2002. Today. Administration Overview of the Internet. Administration. Allocation of sessions Topics Any other business?. Overview of the Internet and Web. Hanson chapter 1 With comments and disagreements

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Mark 404 advanced internet marketing l.jpg

MARK 404 Advanced Internet Marketing

Tim Beal

Session 2 – 15 July 2002

Today l.jpg

  • Administration

  • Overview of the Internet

Administration l.jpg

  • Allocation of sessions

  • Topics

  • Any other business?

Overview of the internet and web l.jpg
Overview of the Internet and Web

  • Hanson chapter 1

    • With comments and disagreements

    • Updated and additional material

Hanson s topics l.jpg
Hanson’s Topics

  • The original WWW

  • Commercial beginnings

  • A .com world

  • Marketing and technology

  • Our approach in the book

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Radio revolution

  • Hanson compares WWW with radio revolution

  • First consider two main aspects of Internet

    • Email

    • WWW

  • Differences between two

  • Necessity to utilize both appropriately

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  • Proactive

    • Needs recipient’s address

      • Spam ineffective because doesn’t have the right recipients

  • Text based

  • Cheap

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  • Reactive

    • Needs to attract visitors

  • Far greater functionality

    • Multimedia, interactivity, personalisation, transfer of money

  • More expensive

  • Now to Hanson and radio

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The Original WWW

  • It’s 1922

  • Radio suddenly transitions from a technology used primarily by the military and the shipping industry to a consumer and business phenomenon

  • At the end of 1921, there are 5 radio stations

  • A year later, there are 575

  • Starting radio stations is the height of entrepreneurship

  • Listening to radio is a runaway consumer fad

  • “Combing the ether” is the hit of the day

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The Original WWW

  • Radio’s impact on 1920s society

    • It changes the way people think about distance and time

    • Simultaneity no longer requires proximity

    • Global events are experienced as they happen

    • Performances in different cities can be heard in the neighbor’s living room

    • Fast-breaking world stories and even the local weather are available at the flip of a switch and the turn of the dial

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The Original WWW

  • Radio changed business, especially marketing

    • It accelerated the economy’s transition to a mass market

    • It facilitated the creation of national brands

    • Firms could launch national marketing campaigns simultaneously

    • New product store introductions could be synchronized with ad campaigns to build consumer interest

    • Product positioning became more flexible

  • Businesses learned to use this new, powerful method of reaching customers

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The Original WWW

  • As an industry, radio struggled with generating a self-sustaining revenue base

    • In 1926, radio stations were failing at a rate of 15% per month

    • Consumers still rushed to buy radios

    • Ultimately, national networks of stations emerged

    • A combination of national and local advertising made radio profitable

  • Internet marketing shows many of these same uncertainties

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Books to Internet

  • Succeeding communication revolutions

  • Printing

    • Books, newspapers

  • Radio

  • TV

  • Internet

  • Discussion: what are similarities and differences?

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Hanson on changes

  • The Internet changes the way companies connect to their customers

  • It expands the opportunities for branding, innovation, pricing, and selling

  • It leads to new ways of thinking about time and distance

  • It opens up new distribution channels and markets

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Virtuous Web Cycle

  • Is a business system with positive feedback

  • Each element in the business system feeds off another element in the system and feeds into yet another element in the system

  • If the cycle is strong enough, it can actually be a self-fulfilling expectation

Virtuous cycle for net growth l.jpg

Consumer and Business Internet Access

Popular Fascination

  • Providers see the developing opportunity and rush to create new brands & services, which creates more hype

Web Sites and Web Content

  • The buzz feeds back into consumers’ interest and desire to experiment with the new technology

Virtuous Cycle for Net Growth

Let’s look at how it works

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A Dot Com World

  • The virtuous Web cycle leads to rapid growth of

    • Consumer access

    • Internet usage

    • Content online

Dot com to dot bomb l.jpg to dot.bomb

  • Hanson’s optimism too glib

  • Much of the effect of Internet has happened offline

    • I.e. bricks and mortar companies using Internet

  • Dot bomb may have peaked

  • But

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  • Internet Shutdowns and Bankruptcies Pass 800 Mark in February

  • And

  • Internet users still not buying online

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  • There ahs been rapid growth in users, hosts, activity…

  • Let’s look at some data

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Fig 2 Internet Users by region, 2002

Fig 1 Internet Users by region

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Internet in Asia markets

  • Japan, though the most developed Asian economy has lagged in utilisation of the Internet and although broadband is growing fast it seems likely this will continue

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Internet in Asia markets

  • The city states of Singapore and Hong Kong will continue to be the most advanced Internet places in Asia. However other Asian cities should not be overlooked. In particular country data on China tends to give a misleading impression and there are reports of very high Internet access in cities such as Beijing, Shanghai and Guangzhou Perhaps the same is happening in Bangalore, Hyderabad and Karachi

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Internet in Asia markets

  • Beyond cities and city states South Korea and Taiwan will jostle for leadership in Asia

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Internet in Asia markets

  • China, with its rapidly growing economy, and its large language area will soon be the major Internet market in Asia. Given the network effect, whereby the value of a network to its users grows exponentially with the size of the network, this has huge implications, especially for East Asian SMEs

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Internet users markets

  • Rich countries?

  • Profile of US users

  • Reasons why other countries may not follow US pattern

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Some other key results of this 10 usersth survey in 1998 were:

  • Race

  • The American respondents were overwhelmingly ‘white’ (88%), followed by Afro-Americans (2.3%) and Asians (2.1%). This can be compared with the ethnic breakdown in the 1990 United States census where 80% were white, 12% black (Afro-American) and 2.9% were ‘Asian or Pacific islander’. Blacks were clearly under-represented in the Internet community

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GVU results: usersLocation

  • 33% of the US respondents were urban, 52% suburban and 14% rural. In the 1990 census, 75% of the population were urban and 25% rural. It seems that internet users were disproportionately urban/suburban

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GVU results: usersEducation

  • 64% had college or some college, 17% had Masters, 3.4% had a PhD, and 3.5% a professional qualification. In 1990, only 13% of the general population had a Bachelor’s degree and a further 7% had a graduate or professional degree. Internet users were considerably better educated than average.

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GVU results: usersIncome

  • Median family income was in the band $50-74, 000. In 1998 the median household income in the United States was $39,744. Survey respondents had significantly higher incomes than average, even though 9.4% were students.

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GVU results: usersOccupation

  • Trained professional: 28.5%; middle management 11%; student: 9.4%; self-employed: 9.9%, upper management: 6.8%. By comparison, although the categories are different, the 1990 census gave 12% managerial and 14% professional. This suggests, as we would expect, that the Internet users were working in more highly skilled occupations than average

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User profile users

  • Users in US, and other mature Internet markets, are now much closer to average

    • Less distinguishable from ordinary population

  • Lessons for follower countries?

    • Process of changing user profile may be quicker

    • Process of adoption may vary in three ways

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Variations 1 and 2 users

  • Leapfrogging of technologies and business models

    • Eg use of wireless overcome shortage of wireline in China

  • Adoption truncation

    • US pattern of tickle down class and education ladder not good guide

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Variation 3 users

  • Local variation

    • Internet use affected by

      • Local physical infrastructure

        • Eg broadband cheaper in high density urban places like S, HK and ROK

      • Political, social and cultural constraints

        • Sex has been big driver of internet in US, not likely in Asia

      • Business practices

        • Lack of credit cards in China

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Types of websites users

  • Static billboards

  • Dynamic billboards

    • updated (advantage over print)

  • Database-driven

    • interactive

    • links customers and products

  • Storefronts

    • e-commerce - purchase, pay (consume) online

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Hanson’s approach users

  • Look at Hanson

  • Comments on website design from SME perspective

    • More relevant to your major assignment

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Innovative Applications users

  • Stage I: Publishing sites

  • Stage II: Databases and Forms

  • Stage III: Personalization

Stage i publishing site l.jpg

Info Links users


Stage I: Publishing Site

Figure 1.7

Stage i l.jpg
Stage I users

What makes this aStage I Website?

BroadcastsDisseminates Information

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Stage II: Databases and Forms users

Figure 1.8

To find out the travel distances between the host cities:

Select your starting point

Select your destination





Toulouse Marseille – 404km

Stage ii l.jpg
Stage II users

What Makes this aStage II Website?

Ability to retrieve information to respond to user requests

Example of database driven site l.jpg
Example of database driven site users

  • Air New Zealand

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Stage III: Personalization users

Figure 1.11

If you area team WC98 member and are using a computer other than the one you originally joined WC98, enter your nickname and password now.

Stage iii l.jpg
Stage III users

What Makes this aStage III Website?

More than ask-respondAnticipatesSuggests

Example l.jpg
Example users


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Consumer-to-Consumer Commerce users

  • Businesses deploy chat room technology

    • Enables consumers to interact directly with each other

    • Accelerates word of mouth

    • Facilitates consumer-to-consumer commerce

      • eBay

      • Yahoo! Auctions

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Consumer-to-Consumer Commerce users

  • Consumer-to-consumer sites must build trust

    • Systems that rate seller credibility

    • Verify identities of buyers and sellers

    • Insurance against fraud

    • Escrow accounts to ensure products are shipped

    • Bans on sellers who bid on their own products

    • Bans on buyers who win, but don’t complete the sale

  • Successful auction sites blur the distinction between business and fun

Business to business commerce l.jpg
Business-to-Business Commerce users

  • $ volume much larger than e-tailing, and more rapidly growing

  • Intra & extranets provide a seamless link between businesses and their suppliers

  • Companies create in-depth Web sites for their main customers

    • Special pricing

    • Special configurations

    • Dedicated support

  • This builds loyalty and repeat purchases

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B2B users

  • Dell computers

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Marketing Evolves as Technology Changes users

  • Technological innovation brought about the factory system & enabled mass production

    • Marketing emphasis was on logistics & supply chain management

  • Radio enabled national roll-out of brands

    • Marketing emphasis was on selling

  • Television coincided with the product & brand management system of marketing

  • Mainframe computers enabled new methods of segmentation & customer management

  • The Internet enables mass customization

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Digital users




Internet Marketing



An Internet Framework

Figure 1.15

The Web is fundamentally about individuals using a networkto access digitalproducts

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Is Hanson right? users

  • Partly, but

  • Much of the Internet effect happens offline

    • For most businesses it is the INTEGRATION of online and offline (Delivery, shop sales, brand…) that is important

  • Purely firms will always be small part of e-commerce

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SMEs and Internet – managerial implications users

  • Be wary of ‘technology fetishism’

  • Guiding principle: business objectives come first, technology second

  • Internet is a tool – more simple and sharper the better

  • SME should no be over-awed by technical experts

    • Need understanding of limits, potential and function of technology

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3 dimensions of website users

  • Websites have 3 dimensions

    • Static, Dynamic, Interactive

  • Interactive

    • Manual

    • Automatic

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Interactive users

  • Manual

    • Contact email

    • Vital that emails are answered

      • Promptly

      • Correctly

  • Does the SME have resources (inc language skills)?

  • Automatic

    • Not so appropriate for SMEs

    • If you can’t afford to do it properly, forget it

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Static and dynamic users

  • Static – not much of a problem

  • Dynamic

    • Offers one of the web’s greatest advantage over traditional media

      • Ease, cheapness and speed of amending

      • Preserves data integrity – always the latest version on display

    • BUT…

    • SME must give highest priority to having as much control and management as possible

      • Even if this means having less ‘attractive’ site

Website design l.jpg
Website design users

  • Catchwords

    • Simplicity

    • Economy

    • Minimalism

  • Guiding principle

    • Ockham’s razor

      • Business objectives and functions achieved in the simplest manner

      • Website commensurate with resources of SME

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Internet users

Hi-tech global firm













New economy firm


Modern firm






Geographic focus



Internet accelerates modernization

Traditional crafts

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SME imperatives users

  • Broaden geographical focus

    • Not necessarily global

  • Narrow business focus and develop distinctive competency

  • Constantly analyse environment

    • Technological, political, social

  • Constantly question business model and process

  • Re-examine relationship with customers, suppliers, distribution channels

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SME imperatives users

  • Beware of hype surrounding Internet

    • B2C has glamour but,

    • B2B cost savings and efficiency gains

  • Technology does not work on its own

    • Staff training and support vital

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Conclusions users

  • Internet and other communication revolutions – similarities and differences

  • Rapid growth of Internet

    • Where customers are

    • What customers are like

    • How (US) past is uncertain guide

  • Types of websites

  • Internet and Marketing interaction

  • How SMEs should approach Internet

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Next week users

  • Lizzie and Aaron on Chapter 2 – Digital world

  • I will be away in Taiwan Tues-Sun

    • Ensure e-marketing topic is chosen and started on