Chapter15_Electronic Marketing Channels

8/12/2019 Chapter15_Electronic Marketing Channels

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Electronic marketing channels

Week 13

Instructor: Jungwan Lee


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Electronic marketing

Auto-By-Tel.com

Autoweb.com

Auto dealers pay monthly fees to web sitesoperators who then refer consumers to thedealers. The dealer respond to consumers withtheir best offers via e0mail and phone. The

consumer then picks out the best deal from hiscomputer screen and visits the dealer to takedelivery of the car.


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New jargons

Electronic marketing channel

Doing business on the WWW

Electronic commerce

Internet commerce

Internet shopping

Shopping on-line

Shopping in cyberspace

Electronic distribution


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What is electronic marketing

channel?

..the use of the Internet to makeproducts and services availableso thatthe target market with access tocomputers or other enablingtechnologiescan shop and complete thetransaction for purchase via interactiveelectronic means.


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Structure of electronic marketing

channels

Disintermediation versus re-intermediation

The information flow versus the productflow

Virtual channel structure versus physicalchannel structure


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Case study1-reintermediation

Amazon.com versus Barns & Nobles

24.com versus .com

Book publisher->wholesale bookdistributor->virtual retailer->consumer

Book publisher->retail superstore->consumer


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Case study2-reintermediation

Auto-By-Tel corp. and channel structure

Conventional channel: manufacturer->dealer->consumer

Internet channel: manufacturer->dealer->Internet Auto Broker->consumer


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Case study3-disintermediation

Dell computer corp.


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Implication of case studies

Both consumer and auto dealers who have used theInternet channel like the arrangement.

The car buyers have access to a vast array of informationand choice of dealers via the Internet and the dealers

have access to a much wide customer base and lowerselling costs because they can reduce advertising costsand sales commissions.

While the jury is still out, this Internet based channel, eventhough it involves a lengthening of channel structurerather than shortening, appears to be gaining acceptanceas an effective and efficient way of selling cars.


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Information flow versus the product

flow

Product flow-some limitation

Negotiation flow Ownership flow nformation flow Promotion flow


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Virtual channel structure versus

conventional channel structure

Who is winner?


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Advantages of electronic

marketing channels

Global scope and reach- information flow Convenience/rapid transaction processing

Information processing efficiency and

flexibility- ex) airline tickets

Data-based management and relationshipcapabilities->e-crm, cyber money, cookies,log-in, e-mail marketing

Lower sales and distribution costs- ex) Dellcomputer corp., Virtual Vineyards


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Disadvantages of electronic

marketing channels

Lack of contact with actual products anddelayed possession

Fulfillment logistics not at Internet speed orefficiency-> majority of products and servicesstill require old-fashioned nuts and boltslogistic challenges Clutter, confusion, and cumbersomeness of

Internet-> Amazon pay 44milion on AOL,Search engines

Nonpurchase motives for shopping notaddressed

Security concerns of customers


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Why do people shop?

Personal motives- play the role of shopper,diversion from daily life, self-gratification,learning new trends, physical activities, sensorystimulation

Social motives- gaining social experienceoutside the home, communication with othershaving similar interests, peer group attraction,

status and authority pleasure of bargaining Source by Edward M. Tauber


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Profiles of online shoppers

Age range of online shoppers

20s, 30s, 40s

Educational attainment Above college

Geographical areas

Suburbs of major metropolitan areas


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Reasons for using the Internet for

shopping

More convenience

More choice/variety

Save money More fun


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Shopping patterns on the Internet

Products purchased

Compueter related goods, books, travel,clothing, music..

Frequency of online shopping

2-4 times, $100-200/year


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Reasons given by retailers for not

using the Internet

Product not appropriate for Internetsales- limitation of product flow

Dont see significant opportunity

Too expensive-entry costs

Technology not ready

Selling online conflicts with corebusiness channel


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Retailers objectives for Internet

channels

Market expansion

Customer retention

Differentiation Cost reduction

Competitive positioning


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Implications for marketing channel

strategy

Objectives and strategies of the firm and electronicmarketing channels-> pure channel multi channelssupportive channelex) Dell computer- differentialadvantage based on distribution strategy

Role of electronic marketing channels in the marketingmix-> product, price, promotion by perfect informationflow, however place may gain a sustainable competitiveadvantage via electronic marketing channels.

Channel design and electronic marketing channels-

>channel design decisions must now includeconsideration of the Internet as a marketing channel.


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Implications for marketing channel

strategy (continued)

Channel member selection and electronicmarketing channels->less than 10% ofmanufacturers currently use the Internet

as an electronic marketing channel->disintermediation versus moreintermediaries

Channel management and electronic

marketing channels-> more challenging Evaluation and electronic marketing

channel

Chapter15_Electronic Marketing Channels

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