E marketing[1]

• Markets and e-marketspace• E-marketing strategies

– Product development strategy– Pricing on the Internet– Branding and traffic building– Web site promotion and advertising

• Types of e-Markets (product, pricing)• Advertising (placement, promotion)• Search engine positioning (example)

1

Agenda : E - Marketing

Consumer Behavior• The process and activities people engage in

when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and wants

• The study of when, why, how, and where people do or do not buy a product. It blends elements from psychology, sociology, social

anthropology and economics

Economics• Consumer Choice and Budget Constraint

• Utility Maximizing Rule

• “The consumer is a rational person, who tries to use his or her money income to derive the greatest amount of satisfaction, or utility, from it “

• Preferences: Each consumer has preferences for certain of the goods and services that are available in the market. Utility will be different for every individuals because all individuals have different taste and preferences

Consumer Decision Making

Postpurchase evaluation

Purchase decision

Alternative evaluation

Information search

Problem recognition

Decision-MakingDecision-Making

Learning

Integration

Attitude formation

Perception

Motivation

Psychological ProcessPsychological Process

Sources of Problem Recognition

Out of StockOut of Stock DissatisfactionDissatisfaction New Needsor Wants

New Needsor Wants

Related Products, Purchases

Related Products, Purchases

Market-InducedRecognition

Market-InducedRecognition

NewProducts

NewProducts

Maslow’s Hierarchy of NeedsSelf-actualization needs (self-development,

realization)

Self-actualization needs (self-development, realization)

Physiological(hunger, thirst)Physiological

(hunger, thirst)

Safety (security, protection)

Safety (security, protection)

Social (sense of belonging, love)

Social (sense of belonging, love)

Esteem(self-esteem, recognition, status)

Esteem(self-esteem, recognition, status)

Information Search

Market sources

Personal sources

Public sources

Personal experience

Perception

• Marketers want to know– How consumers sense external information– How they select and use sources of information– How information is interpreted and

given meaning

Evaluation of AlternativesAll Available Brands

Brand A Brand B Brand C Brand D Brand E

Brand F Brand G Brand H Brand I Brand J

Brand K Brand L Brand M Brand N Brand O

Evoked Set of Brands

Brand B Brand E

Brand I

Brand M

Brand F

Evaluative Criteria

Objective AttributesObjective Attributes

Price

Features

WarrantyService

Price

Features

WarrantyService

Image

Style

Performance

Image

Style

Performance

Subjective Attributes

Subjective Attributes

Brand EvaluationBrand Evaluation

Purchase Decision and Evaluation

Integration processes

Integration processes

Pre-evaluationPre-evaluation DecisionDecision

Purchase intentionPurchase intention

Brand loyaltyBrand loyalty

Post evaluationPost evaluation

SatisfactionSatisfaction

Cognitive dissonance

Cognitive dissonance

Dis-satisfactionDis-satisfaction

• Impulsive buyers: purchase quickly

• Patient buyers: make some comparisons first

• Analytical buyers: do substantial research before buying

12

Categories of consumers

Functions of markets

Three main functions of markets

– Matching buyers and sellers

– Facilitating the exchange of information, goods, services, and payments associated with market transactions

– Providing an institutional infrastructure, such as a legal and regulatory framework, that enables the efficient functioning of the market

13

14

E-Marketplaces• Electronic marketplaces (e-marketplaces or

marketspaces), changed several of the processes used in trading and supply chains

– Greater information richness – Lower information search costs for buyers– Diminished information asymmetry between sellers and buyers– Ability of buyers and sellers to be in different locations

15

E-Marketplacese-marketspace

A marketplace in which sellers and buyers exchange goods and services for money (or for other goods and services), but do so electronically

infomediariesElectronic intermediaries that control information flow in cyberspace, often aggregating information and selling it to othersE.g., http://www.abebooks.com

16

E-Marketplaces• Marketspace components

front endThe portion of an e-seller’s business processes through which customers interact, including the seller’s portal, electronic catalogs, a shopping cart, a search engine, and a payment gateway

back endThe activities that support online order-taking. It includes fulfillment, inventory management, purchasing from suppliers, payment processing, packaging, and delivery

17

Market Mechanisms

• Electronic catalogs• Search engines• Electronic shopping cart• Auctions

– Forward– Backward

• Dynamic pricing• E-Bartering• Mobile computing/commerce

18

Electronic Catalogs and Other Market Mechanisms

electronic catalogsThe presentation of product information in an electronic form; the backbone of most e-selling sites

• Issues to consider:1. Interactivity2. The degree of customization3. Integration with business processes4. Search capabilities5. Ease of updating

19

Electronic Catalogs and Other Market Mechanisms

• Two approaches to creating customized catalogs

– Let the customers identify the parts of interest to them from the total catalog

– Let the system automatically identify customer characteristics based on the customer’s transaction records

20

Electronic Catalogs and Auctions as EC Market Mechanisms

electronic shopping cartAn order-processing technology that allows customers to accumulate items they wish to buy while they continue to shop

auctionA competitive process in which a seller solicits consecutive bids from buyers (forward auctions) or a buyer solicits bids from sellers (backward auctions). Prices are determined dynamically by the bids

21

Auctions As ECMarket Mechanisms

• Limitations of Traditional Off-line Auctions– The rapid process may give potential buyers little

time to make a decision– Bidders must usually be physically present at

auctions– Difficult for sellers to move goods to an auction

site– Commissions are fairly high

22

Auctions As ECMarket Mechanisms

forward auctionAn auction in which a seller entertains bids from buyers

reverse auction (bidding or tendering system)Auction in which the buyer places an item for bid (tender) on a request for quote (RFQ) system, potential suppliers bid on the job, with the price reducing sequentially, and the lowest bid wins; primarily a B2B mechanism

23

Auctions As ECMarket Mechanisms

“name-your-own-price” modelAuction model in which a would-be buyer specifies the price (and other terms) he or she is willing to pay to any willing and able seller. It is a C2B model that was pioneered by Priceline.com

24

Auctions As ECMarket Mechanisms

• Limitations of E-Auctions– Minimal security– Possibility of fraud

25

Bartering and Negotiating Online

barteringThe exchange of goods or services

e-bartering (electronic bartering)Bartering conducted online, usually by a bartering exchange

bartering exchangeA marketplace in which an intermediary arranges barter transactions

26

EC in the Wireless Environment:M-Commerce

mobile commerce (m-commerce)E-commerce conducted via wireless devices

m-businessThe broadest definition of m-commerce, in which e-business is conducted in a wireless environment

The essential issues of marketing are also referred to as the four Ps of marketing mix:

• Product: Physical item or service that a company is selling

• Pricing: Amount the customer pays for the product

• Placement: How the product/service gets to the customer, sometimes called “place” referring to “where” a product/service is sold

• Promotion: Any means of spreading the word about the product

27

E-Marketing Strategies

There are extra three Ps as the extended marketing mix:

• People: Right person, trained well, motivated

• Process: Providing services to customers

• Physical evidence: Case studies, testimonials

28

E-Marketing Strategies (cont.)

• The identification of specific portions of a market and targeting them with specific advertising messages

• Divides the pool of potential customers into segments

• The practice of targeting very small market segments - micromarketing

29

Market segmentation

Market Segmentation

• Segmenting Consumer Markets

• Segmenting Business Markets

• Segmenting International Markets

• Geographical segmentation– Marketing mixes are

customized geographically• Demographic segmentation

– Most popular type– Demographics are closely

related to needs, wants and usage rates

• Psychographic segmentation- Lifestyle, social class, and personality-based segmentation

• Behavioral segmentation• Using multiple segmentation

variables

Key TopicsKey Topics

Market SegmentationGeographic Geographic

Segmentation VariablesSegmentation Variables

City or City or Metro SizeMetro Size

NeighborhoodNeighborhood

DensityDensity

ClimateClimate

World Region World Region or Countryor Country

CountryCountry RegionRegion

CityCity

Market SegmentationDemographic Demographic

Segmentation VariablesSegmentation Variables

• Age• Gender• Family size• Family life cycle• Income• Ethnicity

OccupationOccupationEducationEducationReligionReligion

GenerationGenerationNationalityNationality

Market Segmentation

Behavioral Behavioral Segmentation VariablesSegmentation Variables

• Occasions• Benefits• User Status• User Rates

Loyalty StatusLoyalty Status

Readiness StageReadiness Stage

Attitude Toward Attitude Toward the Productthe Product

7- 34

Market Segmentation

• Segmenting Consumer Markets

• Segmenting Business Markets

• Segmenting International Markets

• Demographic segmentation– Industry, company size, location

• Operating variables– Technology, usage status,

customer capabilities

• Purchasing approaches• Situational factors

– Urgency, specific application, size of order

• Personal characteristics– Buyer-seller similarity, attitudes

toward risk, loyalty

Key TopicsKey Topics

7- 35

Market Segmentation

• Segmenting Consumer Markets

• Segmenting Business Markets

• Segmenting International Markets

• Geographic segmentation– Location or region

• Economic factors– Population income or level of

economic development

• Political and legal factors– Type / stability of government,

monetary regulations, amount of bureaucracy, etc.

• Cultural factors– Language, religion, values,

attitudes, customs, behavioral patterns

Key TopicsKey Topics

• The first step in doing business on the web is to acquire or draw visitors to the site itself

• The second step is converting those first time visitors into customers by persuading them to make a purchase or register with the site, etc.

• Customers who return to the site one or more times after making their first purchases are retained customers

36

Acquisition, conversion, retention

• Advertising is all about communication between:– a company/organization and its current

customers– a company/organization and potential

customers– a company/organization and its former

customers

• To be effective, firms should send different messages to each of these audiences

37

Advertising

• Banner ads: most popular, different sizes and styles

• Pop-up ads: popular, another type is pop-behind

• E-mail marketing: powerful, economical, legal implications, spam

• Affiliate marketing: commission-based, benefit of the selling site’s brand in exchange for the referral

38

Types of Internet advertising/marketing

E-mail Marketing• Fast, cheap, far-reaching• Define the reach

– The span of people you would like to target, including geographic locations and demographic profiles

• Determine the level of personalization– Personalized direct e-mail targets consumers with specific

information and offers by using customer names, offering the right products at the right time and sending promotions

• Response rate– Shows campaign success or failure by measuring the percentage

of responses generated from the target market

E-mail Marketing• Improve customer service

– Add an e-mail link to Web site – E-mail systems set up so that incoming e-mails will be sorted

automatically and directed to the appropriate people – Track location of orders, inform customers of when to expect

delivery and possible delays and providing information such as the carrier’s name

• Permission-based marketing– A company can market its products and services to people who

have granted permission – Internet mailing lists include contact information for people who

have expressed interest in receiving information on certain topics

• Potential customers find web sites in many different ways

• Some site visitors will be referred by a friend, others by affiliates, some will see the site’s URL in a print advertisement or on television

• Many site visitors will be directed to the site by a search engine

41

Search Engine Positioning

Search Engines

• Search-engine ranking important to bring consumers to a site– Method used by search engines to rank your Web

site will determine how "high" your site appears in search results

• Make sure all Web pages have been published on the Web and linked correctly

• By registering with search engines a company will increase traffic to its site

META Tags• META tag

– An HTML tag that contains information about a Web page

– Does not change how Web page is displayed

– Can contain description of page, keywords and title of page

• Most search engines rank your site by sending out a spider to inspect the site– The spider reads the META tags, determines the relevance of the

Web page’s information and keywords and ranks the site according to that visit’s findings

• Examine competitors’ sites to see what META tags they are using

• Top ten results

Search-Engine Registration• Submit keywords and a description of business • Search engine will add information to its database• Registering will increase the possibility that a site

will make an appearance in search-engine results• Many search engines do not charge a fee for

registering – AltaVista, Yahoo!, Lycos, Excite, Google and Ask Jeeves

• Ask Jeeves uses natural-language technology that allows people to enter their search subjects in the form of questions

Banner Advertising

• Banner ads– Located on Web pages, act like small billboards, usually

contain graphics and an advertising message

– Benefits include:• Increased brand recognition, exposure and possible revenue

– Side panel ads or skyscraper banners• Advertisements that lie vertically on Web sites

– Banner advertisements are losing their effectiveness• Industry has calculated click-through rates at around .5 percent

– Place logo on banners, enhancing brand recognition

Buying and Selling Banner Advertising

• Buy advertising space on sites that receive a large number of hits and target a similar market

• Selling ad space provides additional income

• Monthly charges for online advertising rarely used

• CPM (cost per thousand)– A designated fee for every one thousand people who

view the site on which your advertisement is located

Buying and Selling Banner Advertising

• Unique visitors versus total number of hits– Visiting any site registers one unique visit

– Hits are recorded for each object that is downloaded

– To determine the value of a Web site for advertising purposes, use the number of unique visitors, not total hits

• Advertising payment options– Pay-per-click: you pay the host according to the number of click-

throughs to your site

– Pay-per-lead: you pay the host for every lead generated from the advertisement

– Pay-per-sale: you pay the host for every sale resulting from a click-through

Buying and Selling Banner Advertising

• Selling advertising space – Provide appropriate contact information on your

Web site

– Register with organizations that will sell your space for you

• These companies typically charge a percentage of the revenue you receive from the advertisements placed on your site

• ValueClick, DoubleClick, AdSmart and LinkExchange

ValueClick Feature

• ValueClick acts as a broker for people who want to buy and sell advertising space

• Gives you the option of targeting specific markets

• To buy advertising through ValueClick:– Design a banner

– Contact a representative of ValueClick to determine what program best fits your advertising needs

– Pre-pay for the service based on the number of visitors you want to receive, a minimum fee is required

ValueClick Feature

• Offers many segmented markets for advertising– Segmented markets are people or companies that are grouped

together based on similar characteristics

• Earnings depend on number of click-throughs resulting from the advertisements

• Pays host monthly if revenues are greater than certain amount

• Offers four options for publishing advertisements on your site– ValueClick Affiliate, Premium, AdVantage and AdVantage Plus

programs