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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.

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chapter 4

Chapter 4

E-Commerce: Marketing in the Digital Age

chapter objectives
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
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.
interactivity and e commerce
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
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 – [China]
    • Government –
    • Also, Entertainment, B2B portals
  • Search engines – Google, ASK
e commerce and the economy
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 []
    • 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
Online Marketing is International Marketing
    • Examples of Global Web Sites – P.134
      • Polish version of infoseek
      • Spanish- and Portuguese-language Star Media Network
      • Universo Online, the largest Internet portal serving Brazil
      • 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
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
creating an effective web presence



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