Chapter 4 E-Commerce: Marketing in the Digital Age
Chapter Objectives • Define e-commerce and give examples of each function of the Internet. • Describe how marketers use the Internet to achieve their firms’ objectives. • Explain how online marketing benefits organizations, marketers, and consumers. • Identify the goods and services marketed most often on the Internet and the demographic characteristics of the typical online shopper. • Identify the primary online marketing channels. • Explain how marketers use interactive tools as part of their online marketing strategies. • Discuss how an effective Web site can enhance customer relationships. • Describe how to measure the effectiveness of online marketing efforts.
What is E-Commerce? • Electronic commerce (e-commerce): Targeting customers by collecting and analyzing business information, conducting customer transactions, and maintaining online relationships with customers by means of computer networks. • Electronic marketing (e-marketing): Strategic process of creating, distributing, promoting, and pricing goods and services to a target market over the Internet or through digital tools. • Digital tools: Fax machines, PDAs, smart phones, and DVDs.
AutoTrader.com: An Example of a Service Marketer Connecting Buyers and Sellers Online
Interactivity and E-Commerce • Interactive Marketing • Buyer-seller communications in which the customer controls the amount and type ofinformation received from a marketer through such channels as the Internet, and virtual reality kiosks.
The World Wide Web – a collection of thousands of interlinked computers, called servers • The Internet - a global collection of linked computer networks • Intranets • Internal corporate network that allows employees within an organization to communicate with each other and gain access to organizational information • Extranets • Secure network accessible through a Website by external customers or organization for electronic commerce. It provides more customer-specific information than a public site.
Four Web Functions • Communication • E-mail; Instant messaging; Chat rooms and bulletin boards; Online communities • Information • Search engines; Online publications; Newsgroups; Internet forums; Electronic bulletin boards; Web communities
Four Web Functions • Entertainment • Games; Radio and TV programming, including music; Streaming video of live news reports, sports, and musical performances; Electronic books • E-Commerce • Online auctions • B2B: electronic exchanges; Extranets and private exchanges • B2C: Electronic storefronts and cybermalls; Web kiosks, Online ticketing; Matchmaking
Figure 4.3 • Online Matchmaking for Fun and Profit
Accessing the Internet • Internet Service Provider (ISP): Organization that provides access to the Internet via a telephone, satellite TV service, or cable TV network. • Wi-Fi – Wireless Internet Access • Portals: Starting points for Web access and search – Yahoo!, AOL, MSN • Vertical – Chemdex [chemical industry] • Horizontal – Verticalnet [business trade community • Regional – Sina.com [China] • Government – USA.gov • Also, Entertainment, B2B portals • Search engines – Google, ASK
E-Commerce and the Economy • Business-to-Business Online Marketing • Involves professional buyers and sellers • Requires less glitz and glamour • Much more money involved than business-to-consumer online marketing • Electronic exchanges – electronic exchanges that cater to a specific industry’s needs [auctions – not popular with suppliers] • Search marketing – fee based “pop-ups” after using a search engine
Benefits of Business-to-Business Online Marketing • Finding new markets and customers • Cost savings in every area of the marketing mix - PPPD • Time reduced in reaching markets
Roadway Express • An example of an advertisement explaining Business-to-Business use of the Web
Online Consumer Marketing • Lower Prices • Bots (short for robots): programs that check hundreds of sites, gather and assemble information, and bring it back to the sender [travelocity.com] • Convenience • Worldwide access, Day or night, Customized products and information • Personalization • Improves the quality of the shopping experience • Improves customer satisfaction
Benefits of Online Consumer Marketing • Relationship Building • Crucial to success • Online’s personalization helps • Easier for small businesses with small budgets • Customer service is the key • Increased Efficiency • Greater profit margins • Educating customers online frees salespeople from answering routine questions
Cost Reductions • Reduced start-up costs • Reduced operating costs • Frees funds for new marketing efforts • A More Level Playing Field • Even small firms with small budgets can compete in the global marketplace • Helps eliminate discrimination and allow minority businesses to succeed on their own merits • AutoNetwork.com
Online Marketing is International Marketing • Examples of Global Web Sites – P.134 • Netsprint.pl • Polish version of infoseek • Us.starmedia.com • Spanish- and Portuguese-language Star Media Network • Homeuol.com.br • Universo Online, the largest Internet portal serving Brazil • Sify.com • Offering users of Indian ancestry “all the India you want to know.”
Security and Privacy Issues • Critical factors in building a relationship online • Electronic signature • Credit card security • Authenticity of item offered • Payment guarantees • Fraud protection
American Express • Promoting the use of its card on the Web by guaranteeing the Web users will not be held responsible for any unauthorized charge
Who Are the Online Buyer and Sellers? • Online buyers • Annual household income of $30K-$75K • Demographic continue to change • The next generation of online shoppers will be more representative of offline consumers • Online sellers • At first, offered familiar products like books and computer hardware • Now offering a wider variety of goods including toys, groceries, consumer electronics and prescription drugs
Figure 4.11 • Popular Products Sold Online
Company Web Sites • Corporate Web sites and Marketing Web sites • Electronic Storefronts and Cybermalls • Advertising on Other Web sites • Banner ads; Pop-up ads; Search ads • Online Communities • Electronic bulletin boards • Other Interactive Marketing Links • Web kiosks • Smart cards • Virtual coupon and online sample • Blogs
Measuring Effectiveness Managing aWeb Site Building an Effective Web Site Creating an Effective Web Presence
Building an Effective Web Site • Establish a Mission for the company’s site • Identify the purpose of the site • Satisfy customer needs and wants through a clear site design • Managing a Web Site • Update the site frequently • Flag new merchandise and services • Ensure that site appears to be current • Update software as needed • Track costs and revenues
Promoting Web Sites • Hire an advertising agency specializing in Web site promotion • Notify Usenet groups • Register the site with search engines • In your Yellow Pages ad • E-mail from your data base • Put web address on every piece of advertising and promotion you do
Getting Visitors to Come Back – “Stickiness” • Use engaging, interactive features • Incorporate current news, weather, sports as is appropriate to your business • Link to exciting information • Sponsor contests • Use videos, pictures • Employ easy to use navigational tools [a site search engine, a site index, icons] • Host customer message board, discussion groups • Update, Update, Update!
Effective Web Content • Put your best-selling products in a prominent place • Post the price, shipping/handling, and other fees clearly • Write clearly so everyone can understand • Post testimonials • Set up a shopping cart that is easy to use
Measuring Effectiveness of a Web Site • Click-through rate – the percentage of people presented with a Web banner who click it • Conversion rate – the percentage of visitors to a Web site who make a purchase • Install software to track all web activity • Profitability