Electronic marketing channels Week 13 Instructor: Jungwan Lee.

Electronic marketing channels

Week 13

Instructor: Jungwan Lee

Electronic marketing Auto-By-Tel.com Autoweb.com

Auto dealers pay monthly fees to web sites operators who then refer consumers to the dealers. The dealer respond to consumers with their best offers via e0mail and phone. The consumer then picks out the best deal from his computer screen and visits the dealer to take delivery of the car.

New jargons Electronic marketing channel Doing business on the WWW Electronic commerce Internet commerce Internet shopping Shopping on-line Shopping in cyberspace Electronic distribution

What is electronic marketing channel?

..the use of the Internet to make products and services available so that the target market with access to computers or other enabling technologies can shop and complete the transaction for purchase via interactive electronic means.

Structure of electronic marketing channels

Disintermediation versus re-intermediation

The information flow versus the product flow

Virtual channel structure versus physical channel structure

Case study1-reintermediation

Amazon.com versus Barns & Nobles 예스 24.com versus 교보문고 .com

Book publisher->wholesale book distributor->virtual retailer->consumer

Book publisher->retail superstore->consumer

Case study2-reintermediation

Auto-By-Tel corp. and channel structure

Conventional channel: manufacturer->dealer->consumer

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

Case study3-disintermediation

Dell computer corp.

Implication of case studies Both consumer and auto dealers who have used the

Internet channel like the arrangement. The car buyers have access to a vast array of

information and choice of dealers via the Internet and the dealers have access to a much wide customer base and lower selling costs because they can reduce advertising costs and sales commissions.

While the jury is still out, this Internet based channel, even though it involves a lengthening of channel structure rather than shortening, appears to be gaining acceptance as an effective and efficient way of selling cars.

Information flow versus the product flow

Product flow-some limitation Negotiation flow Ownership flow Information flow Promotion flow

Virtual channel structure versus conventional channel structure

Who is winner?

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 relationship capabili

ties->e-crm, cyber money, cookies, log-in, e-mail marketing…

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

Disadvantages of electronic marketing channels Lack of contact with actual products and delayed p

ossession Fulfillment logistics not at Internet speed or efficie

ncy-> majority of products and services still require old-fashioned nuts and bolts logistic challenges

Clutter, confusion, and cumbersomeness of Internet-> Amazon pay 44milion on AOL, Search engines

Nonpurchase motives for shopping not addressed Security concerns of customers

Why do people shop? Personal motives- play the role of shopper, diversi

on from daily life, self-gratification, learning new trends, physical activities, sensory stimulation

Social motives- gaining social experience outside the home, communication with others having similar interests, peer group attraction, status and authority, pleasure of bargaining

Source by Edward M. Tauber

Profiles of online shoppers

Age range of online shoppers 20s, 30s, 40s

Educational attainment Above college

Geographical areas Suburbs of major metropolitan areas

Reasons for using the Internet for shopping

More convenience More choice/variety Save money More fun

Shopping patterns on the Internet

Products purchased Compueter related goods, books, travel, clothin

g, music.. Frequency of online shopping

2-4 times, $100-200/year

Reasons given by retailers for not using the Internet

Product not appropriate for Internet sales- limitation of product flow

Don’t see significant opportunity Too expensive-entry costs Technology not ready Selling online conflicts with core

business channel

Retailer’s objectives for Internet channels

Market expansion Customer retention Differentiation Cost reduction Competitive positioning

Implications for marketing channel strategy Objectives and strategies of the firm and electronic

marketing channels-> pure channel, multi channels, supportive channel ex) Dell computer- differential advantage based on distribution strategy

Role of electronic marketing channels in the marketing mix-> product, price, promotion by perfect information flow, however place may gain a sustainable competitive advantage via electronic marketing channels.

Channel design and electronic marketing channels->channel design decisions must now include consideration of the Internet as a marketing channel.

Implications for marketing channel strategy (continued) Channel member selection and electronic ma

rketing channels->less than 10% of manufacturers currently use the Internet as an electronic marketing channel->disintermediation versus more intermediaries

Channel management and electronic marketing channels-> more challenging

Evaluation and electronic marketing channel