E-Marketing

1
E-Marketing

• Basics
• Web Retailing
• 1-1 Marketing
• Web Customer Satisfaction

2

• On-line Retailing Issues
• Product what products are suitable?
• Software interface ease of use, search time,
  help
• Process how can the process be re-engineered?
• Pricing willingness-to-pay
• Payment which methods?
• Market penetration build a loyal customer base

3
Determinants of Customer Delivered Value
Product value
Services value
Total customer value
Personnel value
Image value
Customer delivered value
Monetary cost
Time cost
Total customer cost
Effort cost
Psychic cost
4
Individual Characteristics
Environmental Characteristics
Stimuli Marketing Others
Buyers Decision
Consumers Decision Making Process
Vendors System Logistics Technical Customer
Service
5
Consumer Evaluation of Products
Clothing Jewelry Furniture Houses Automobiles Rest
aurants Vacation Haircut Child care TV
Repair Legal services Root canal Auto
repair Medical Diagnostics
Hard to evaluate
Most goods
Most services
Easy to evaluate
High in search quality High in experience
High in credence
Product Type Product Evaluation Time
High in search qualities Before purchase
High in experience qualities After purchase
High in credence qualities Not even after purchase
6
What sells on the Internet?

7
Consumer Adoption Process
Adoption probability
Early adopters 13.5
Early majority 34
Late majority 34
Innovators 2.5
Laggards 16
Time of adoption
Consumer type Key characteristic
Innovators Risk takers
Early adopters Opinion leaders
Early majority Deliberate adopters
Late majority Skeptical
Laggards Tradition bound
8
Deterrents to B2C

• Cost of delivery, receipt, return
• Start-up and site maintenance costs
• Differentiation and profitability achievement
• Security / privacy / reliability / ease of use
• Lack of hands-on experience / human contact
• Shopping no longer a social experience
• Consumer expectations / Speed / Bandwidth

9
Improvement Based Marketing Models
Goal Examples
Enhancement Brand building Category building Quality Disney (games, prizes) Intel (games, tours, videos) NPR (Images from Jazz shows)
Efficiency Cost reduction Free trial Cisco operating/staff/software distribution Encyclopedia Britanica trial
Effectiveness Dealer support Supplier support Information collection GM Buyer Power GE TPN DoubleClick custom ad
10
Revenue Based Marketing Models
Method Examples
Provider Pays Sponsorship Alliances Spot advertising Prospect fees Sales commissions ACO sponsors Dilbert on newspaper site Excite linking to Amazon TechWeb Edmunds to Auto-by-tell Amazon Associates
User Pays Product sales Pay per use Subscriptions Bundle sales Grainger Wet Foot Press Wall Street Journal Science Magazine
11
E-Marketing

• Basics
• Web Retailing
• 1-1 Marketing
• Web Customer Satisfaction

12
Product/service search and discovery in the
information space
Comparison shopping and product selection based
on various attributes
Pre-purchase interaction
Negotiation of terms, e.g., price, delivery times
Placement of order
Purchase consummation
Authorization of payment
Receipt of product
Customer service and support (if not satisfied in
X days, return product)
Post-purchase interaction
Consumer Mercantile Model
13
Marketing Communication Objectives
Effectiveness
Low High
Web?
Personal selling
Mass ads
14
Conversion Process on the Web
Surfers
Include web address in broadcast ads on product
packaging, etc.
Aware Surfers
Active Info Seekers
Passive Info Seekers
Passives Hot links, sponsored sites
Actives Multiple sites, speed, bandwidth
Web Site Hits
Make it an interesting visit visual appeal -
graphics, sound, video, ease of use
Active Investigators
Simplicity of establishing a dialogue, quality
and speed of response
More Dialogue
Respond to dialogue simplicity and security of
ordering order status.
Purchase
Exploit transaction database purchase
satisfaction and feedback.
Re-purchase
15
Measuring Effectiveness Awareness efficiency
People aware of site / People with Web
access Attractability efficiency Hits on site
/ People with Web access Contact efficiency
Active visitors / Hits on site Conversion
efficiency Purchases / Active visitors
Retention efficiency Repurchases /
Purchases Web site efficiency Caching and
undercounting
16
Some E-Tailing Fallacies

• Focus of competition away from quality, features
  and service to price
• Dubious measures of sales (lower price inflates
  sales volume, some revenue in form of stocks of
  partner dot-coms)
• Wrong metrics (number of customers or site
  visitors)
• Lower estimation of costs (infrastructure needs,
  customer acquisition, employee compensation
  schemes)
• Business model not sustainable

17
E-Marketing

• Basics
• Web Retailing
• 1-1 Marketing
• Web Customer Satisfaction

18
Evolution of 1-1 Marketing

• Mass Marketing One price for all
• Direct Marketing Target market segments
• Micro Marketing Variable pricing for
  micro-segments
• One-to-one Marketing Unique pricing for
  individuals

19

• MASS MARKETING
• Average customer
• Customer anonymity
• Standard product
• Mass production
• Mass distribution
• Mass advertising
• Mass promotion
• One-way message
• Economies of scale
• Share of market
• All Customer
• Customer attraction

• ONE-TO-ONE MARKETING
• Individual customer
• Customer profile
• Customized market offering
• Customized production
• Individualized distribution
• Individualized message
• Individualized incentives
• Two-way messages
• Economies of scope
• Share of customer
• Profitable customers
• Customer retention

20
Customer Relationship ManagementIntegrated
sales, service and marketing intelligence
Benefits Challenges
? ?
? ?
? ?
? ?
21
One-to-one Marketing Steps

• Identify customers
• Collect more customer names
• Collect more customer information
• Verify and update customer data
• Differentiate customers
• Who are the top customers? Whos unhappy? Whos
  buying less? Whos missing in the list?
• Which customers drain your resources?
• Rank customers into A, B and C categories

22
One-to-one Marketing Steps (continued)

• Interact meaningfully
• Just call top 2-3 people at 5 customers
• Call your company / competitor posing as a
  customer
• Evaluate paper / voice / email communication
• Customize your behavior
• Customize / personalize communication
• Find what / how often customers want to hear from
  you
• Ask top ten customers what they want

23
Using Web Data

• Registration Forms
• Shopping Cart Data
• Transaction logs
• Cookies
• Web Bugs

24
Establishing Customer Relationship

• Permission Marketing Obtain customers
  permission to send messages
• Affiliate Marketing Paying another Web site for
  customer referral
• Viral Marketing Customers transmit message to
  friends and families
• Brand Leveraging Using an existing brand to
  promote another

25
E-Marketing

• Basics
• Web Retailing
• 1-1 Marketing
• Web Customer Satisfaction

26
Model of Internet Consumer Satisfaction
Customer Satisfaction
27

Product
Customer Satisfaction Sources

After Sales
Sales Activity
Vendor Reputation
28
Customer Satisfaction from Product
Satisfaction Components Online Methods
Design Messages quality signals Sales support effectiveness Product information Additional, related products FAQs
Feedback and Incentives Early users E-mail from users Usenet groups
Sourcing Manufacturing Customer contact Quality Cost Collaborative design with suppliers Intranets Extranets

29
Customer Satisfaction from Sales Activity
Satisfaction Components Online Methods
Messages Overt Covert Web site positioning Information / editorial content Personalization
Attitudes Sales force training Sales force rewards Brand reinforcement by site Ease of use Responsiveness
Intermediaries Incentives Selection Training Monitoring Dealer support information Advance support to dealers using extranets On-line product / service information

30
Customer Satisfaction from After-Sales
Satisfaction Components Online Methods
Support Services Coverage Quality performance Self-help problem solving On-line tech support User groups
Feedback Restitution Coverage Responsiveness Customer service e-mail Repair tracking Warranty explanations
31
Customer Satisfaction from Vendor Reputation
Satisfaction Components Online Methods
Formal Symbols Mission statement Performance standards Compensation On-line image and branding Performance measures on-line
Informal Symbols Beliefs Values Public work involvement Social activities
32
Online Market Research for EC
Advantages Problems
? ?
? ?
? ?
? ?
33
Key Points

• Internet only approach may be limited
• Web can cut costs, enhance customer satisfaction,
  may produce new revenue
• On-line market research is one alternative