E-Business in Contemporary Marketing. CHAPTER 4. Chapter Objectives. Define e-business and discuss how marketers use the Internet to achieve business success. Distinguish between a corporate Web site and a marketing Web site. List the major forms of B2B marketing.
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E-Business in Contemporary Marketing
Define e-business and discuss how marketers use the Internet to achieve business success.
Distinguish between a corporate Web site and a marketing Web site.
List the major forms of B2B marketing.
Explain business-to-consumer (B2C) e-marketing.
Identify online buyers and sellers.
Describe some of the challenges associated with online marketing and e-business.
Discuss how marketers use the communication function of the Web as part of their online marketing strategies.
Outline the steps involved in developing successful e-business Web sites and identify methods for measuring Web site effectiveness.
• E-business Firm that targets customers by collecting and analyzing business information, conducting customer transactions, and maintaining online relationships with customers.
• Online retails sales in the U.S. totaled nearly $86 billion in a recent year.
• 205 million Americans access the Internet as of May 2006, according to World Internet Statistics.
• One billion people worldwide access the Internet.
• More than 25 million Americans have sold something online.
• A recent report estimates that the average Brit and average American spend more time online than watching television.
• E-tailing, virtual storefronts on Web sites.
• Business-to-business transactions.
• Electronic data interchanges, the B2B exchange of data.
• E-mail, instant messaging and other Web-enabled communication tools.
• The gathering and use of demographic, product, and other information through Web contacts.
• E-marketing Strategic process of creating, distributing, promoting, and pricing goods and services to a target market over the Internet or through digital tools. Examples:
• Researching computer printers on CNet.com and then placing an order at Newegg.com.
• Legally downloading music and videos from Apple Computer’s iTunes Web site.
• Corporate Web site Site designed to increase a firm’s visibility, promote its offerings, and provide information to interested parties.
• Purpose is to build customer goodwill and assist channel members in their marketing efforts.
• Marketing Web site Site whose main purpose is to increase purchases by visitors.
• Many try to engage visitors in interactions that move them closer to a desired marketing outcome.
• Business-to-business (B2B) e-marketing Use of the Internet for business transactions between organizations.
• Accounts for 90 percent of all e-business activity.
• Accounts for 10 percent of all B2B transactions.
• Increases efficiency of business transactions, which typically involve more steps than consumer transactions.
ELECTRONIC DATA INTERCHANGE, WEB SERVICES, EXTRANETS, AND PRIVATE EXCHANGES
• Electronic data interchange.
• Computer-to-computer exchanges of price quotations, purchase orders, invoices, and other sales information between buyers and sellers.
• Cuts paper flow, speeds the order cycle, and reduces errors.
• Allows companies to set production schedules to better match demand.
• Requires compatible hardware and software systems.
• Web services.
• Internet-based systems that allow parties to communicate electronically with one another regardless of the computer operating system they use.
• Rely on open source XML.
ELECTRONIC DATA INTERCHANGE, WEB SERVICES, EXTRANETS, AND PRIVATE EXCHANGES
• Secure networks used for e-marketing and accessible through the firm’s Web site by external customers, suppliers, or other authorized users.
• Give selected outsiders access to internal information.
• Private exchanges.
• A secure Web site at which a company and its suppliers share all types of data related to e-marketing, from product design through delivery of orders.
• Sometimes called c-business, “c” for “collaboration.”
• Often used for collaborating on product ideas, production scheduling, distribution, order tracking, and other business functions.
ELECTRONIC EXCHANGES AND E-PROCUREMENT PRIVATE EXCHANGES
• Electronic exchanges.
• Online marketplaces that bring buyers and sellers together in one electronic marketplace and cater to a specific industry’s needs.
• Use has declined because suppliers weren’t happy with process and buyers preferred to develop long-term relationships with buyers they knew.
• Web-based systems that enable all types of organizations to improve the efficiency of their bidding and purchasing processes.
• Streamlines purchasing process and reduces costs.
• Example: In North Carolina, state and local government agencies, public schools, and other public entities use e-procurement to purchase from vendors.
ONLINE SHOPPING AND B2C E-MARKETING PRIVATE EXCHANGES
• Business-to-consumer (B2C) e-marketing Selling directly to consumers over the Internet. Also called e-tailing.
• Growing rapidly by convenience and improved security for transferring credit card information.
• Service providers such as banks are an important segment of e-tailing.
• Two types of B2C Web sites
• Shopping sites such as Gap.com where customers can get product information and make purchases online.
• Information sites such as Toyota.com where customers can get product information but cannot make purchases online.
ELECTRONIC STOREFRONTS PRIVATE EXCHANGES
• Electronic storefront Company Web site that sells products to customers.
• Example: Walmart’s electronic storefront.
• Example: Land’s End’s electronic storefront.
• Items for purchase are placed in an electronic shopping cart.
• Growth anticipated with the increase in broadband connections.
• Broadband shoppers typically spend 34 percent more online than narrowband shoppers.
BENEFITS OF B2C E-MARKETING PRIVATE EXCHANGES
• In a recent survey, more than half of consumers said they prefer shopping online more than in stores.
• Sixty percent of online shoppers cite lower prices as the reason for shopping online.
• Internet allows easy price comparisons, including through bots such as Shopping.com.
• Allow orders from anywhere at anytime; product tracking.
• Software analyzes past user purchases to customize experience.
• Goal is to create loyal customers who make repeat purchases.
ONLINE BUYERS AND SELLERS PRIVATE EXCHANGES
• Demographics of customers are changing as Internet penetration grows.
E-BUSINESS AND E-MARKETING CHALLENGES PRIVATE EXCHANGES
ONLINE PAYMENT SYSTEMS
• Companies have developed secure payment systems to protect customer information.
• Encryption, process of encoding data for security purposes.
• Secure Sockets Layer, technology that encrypts information and provides authentication.
• Electronic wallet, a computer data file at an e-business site’s checkout counter that contains credit card information and owner identification.
PRIVACY ISSUES PRIVATE EXCHANGES
• Customers’ top security concern is protection of their personal information.
• Through electronic signatures, parties can enter into legal contracts such as mortgages and insurance policies online.
• Cookies and spyware allow companies to personalize Internet experience but also invade computer users’ privacy.
• To reassure customers, many online merchants have signed on with online privacy organizations such as TRUSTe.
• Companies install firewalls to protect private corporate data.
INTERNET FRAUD PRIVATE EXCHANGES
• Complaints about Internet fraud are compiled by the Internet Crime Complaint Center.
• Logged more than 231,000 complaints in a recent year.
• Sixty-five percent of complaints referred to law enforcement concern online auctions.
• Phishing High-tech scam that uses authentic-looking e-mail or pop-up messages to get unsuspecting victims to reveal personal information.
• Payment fraud is also growing.
• Cardholder fraudulently claims ordered merchandise was never delivered and asks credit issuer for a chargeback.
WEB SITE DESIGN AND SERVICE PRIVATE EXCHANGES
• As many as 70 percent of Internet shopping carts are abandoned before any purchase is made.
• Negative experiences on Web sites can hurt a company’s future online and in-store sales.
• Delivery and returns pose challenges.
• Companies that have brick-and-mortar experience often have more experience satisfying customers than Internet-only retailers.
• Direct sales to customers can compete with business partners such as retailers and distributors, disputes called channel conflicts.
• Example: Mattel sells only specialty products online.
USING THE WEB’S COMMUNICATION FUNCTION PRIVATE EXCHANGES
• Web has four main functions: e-business, entertainment, information, and communication.
• Communication is Web’s most popular function.
• Firms use e-mail to communicate with customers, suppliers, and other partners.
• Spam Popular name for junk e-mail.
• Internet forums, newsgroups, electronic bulletin boards, and Web communities that appeal to people who share common interests.
BLOGS PRIVATE EXCHANGES
• Blog Short for Web log, an online journal written by a blogger.
• Some incorporate wikis, a Web page that anyone can edit.
• Some incorporate podcasts, video recordings that are posted online. According to iPodder.org, more than 3,000 podcasts operate worldwide.
• Corporate blogs can help build brand trust.
• Example: Apple’s iLounge
• Builds iPod brand.
• Gives Apple ideas for product improvement.
• Employee blogs present ethical issues.
• Negative comments can harm company.
• Form of free speech that humanizes a company.
WEB-BASED PROMOTIONS PRIVATE EXCHANGES
• Companies buy banner ads and pop-up ads on Web sites customers are likely to visit.
• Search marketing Paying search engines, such as Google, a fee to make sure that the company’s listing appears toward the top of the search results.
• Companies use online coupons to promote their products.
• Example: ValPak Marketing Systems.
MANAGING A WEB SITE PRIVATE EXCHANGES
DEVELOPING SUCCESSFUL WEB SITES
Planning and Preparation PRIVATE EXCHANGES
• What is the company’s goal for its Web site?
• Determines content and design.
• Determines scope.
• Will the site be maintained in-house or by a contractor?
• What will the site be named?
Content and Connections
• Content an important factor for whether visitors return to a site.
• Available resources should be relevant to viewers, easy to access and understand, updated regularly, and written or displayed in a compelling, entertaining way.
• Most small businesses are better off outsourcing to meet their hosting and maintenance needs.
Costs and Maintenance PRIVATE EXCHANGES
• Variety of costs:
• Placing the site on a Web server.
• Maintaining and updating the site.
• Promoting the site.
MEASURING WEB SITE EFFECTIVENESS PRIVATE EXCHANGES
Click-through rate Percentage of people presented with a banner ad who click on it.
Conversion rate Percentage of visitors to a Web site who make a purchase.