Lecture 3: Serving the Customer

1
CS5038 The Electronic Society

• Lecture 3 Serving the Customer
• Lecture Outline
• Consumer Behaviour
• Demographics of Internet Surfers
• Major Roles in Purchasing
• Purchasing decision-making model
• Consumer Satisfaction
• One-to-One Marketing
• Personalisation
• Customer Service
• Market Research
• Data Mining
• Intelligent Agents

2
Consumer Behaviour
Prentice Hall, 2002
3
Consumer Behavior Online

• Consumer types
• Individual consumers
• Commands most of the medias attention
• Organizational buyers
• Governments and public organizations
• Private corporations
• Resellers
• Purchasing types and experiences
• 2 dimensions of shopping experiences
• Utilitarianto achieve a goal
• Hedonicbecause its fun
• 3 categories of consumers
• Impulsive buyerspurchase quickly
• Patient buyersmake some comparisons first
• Analytical buyersdo substantial research before
  buying

4
Demographics of Internet Surfers

• Environmental variables
• Social variables influenced by peers
• Cultural variables
• Psychological variables
• Other environmental variables - e.g. government
  restrictions
• Personal characteristics / demographics
• Consumer resources and lifestyle
• Age gender marital status
• Knowledge and educational level
• Attitudes and values
• Motivation
• Personality
• Ethnicity
• More experience on Web ? more to buy online
• Two major reasons people do not buy online
• Security
• Difficulty judging the quality of the product

5
Major Roles in Purchasing

• 5 major roles
• Initiator
• Suggests/thinks of buying a particular product or
  service
• Influencer
• Advice/views carry weight in making a final
  buying decision
• Decider
• Makes a buying decision or any part of it
• Buyer
• Makes the actual purchase
• User
• Consumes or uses a product or service

6
Purchasing decision-making model

• 5 major phases
• Need identification
• marketer must get customer to recognise need
• Banner and URL advertising, community discussions
• Information search
• Web directories, search engines
• Alternatives evaluation
• Newsgroup discussions, cross-site comparisons
• Purchase and delivery
• Electronic cash, virtual banking
• After-purchase evaluationcustomer service
• Discussions in newsgroups

7
Consumer Satisfaction
Prentice Hall, 2002
8
One-to-One Marketing

• Build a long term association
• Meeting customers cognitive needs
• Customer may have novice, intermediate or expert
  skill
• E-loyaltycustomers loyalty to an e-tailer
• costs Amazon 15 to acquire a new customer
• costs Amazon 2 to 4 to keep an existing
  customer
• Trust in EC
• Deterrence-based threat of punishment
• Knowledge-based reputation
• Identification-based empathy and common values
• Referrals Viral Marketing
• Personalisation

9
Personalisation - Marketing ModelTreat
different customers differently
Prentice Hall, 2002
10
Personalisation

• Process of matching content, services, or
  products to individuals preferences
• Build profiles N.B. Privacy Issues
• Solicit information from users
• Use cookies to observe online behavior
• Use data or Web mining
• Personalisation applied through
• Rule-based filtering (35ltagelt40 ? Jeep Cherokee)
• Content-based filtering (based on stated
  favourites)
• Constraint-based filtering (based on
  demographics)
• Learning-agent technology (intelligent, e.g. from
  cookies)
• Collaborative filtering examples
• Predict preferences based on similarities with
  other customers

11
Customer Service

• Provide search and comparison capabilities
• Provide free products and services
• Provide specialized information and services
  ge.com
• Allow customers to order customized products and
  services dell.com
• Enable customers to track accounts or order
  status e.g. FedEx, Amazon
• Personalized Web pages - record purchases and
  preferences aa.com
• FAQs - Customers find answers quickly
• Troubleshooting toolsassist customers in solving
  their own problems
• Chat rooms discuss with experts and other
  customers
• E-mail (most popular inexpensive and fast) and
  automated response
• Help desks and call centers
• Well trained personnel with access to customer
  history, purchases
• Metricsstandards to determine appropriate level
  of support
• Response to problem (hours for human, real-time
  for agents)
• Site availability and download times (lt30
  seconds)
• Up-to-date site and availability of relevant
  content
• Order fulfillment fast
• Return policy

12
Market Research for EC

• Market segmentation - divide consumer market into
  groups to conduct marketing research,
  advertising, sales
• E.g. by geography, demographics or psychographics
• (psychological characterization the study of the
  psychological profiles of potential buyers of a
  product, to improve its marketing)
• Tailor mailing campaigns to each segment
• Easier and cheaper than one-one personalisation
• Online market research methods
• Conducting Web-based surveys
• Track customer activities possibly illegal
• Limitations of online research
• Skewed toward educated males with high income
• gt40 answers to questionnaires inaccurate

How to analyse the gathered data? ? Data Mining
13
Data Mining
searching for valuable information in extremely
large databases

• Automated prediction of trends and behaviors
• Example from data on past promotional mailings,
  find out targets most likely to respond in future
• Automated discovery of previously unknown
  patterns
• Example find seemingly unrelated products often
  purchased together
• Example Find anomalous data representing data
  entry errors
• Mining tools
• Neural computing
• Intelligent agents
• Association analysis - statistical rules
• Web Mining - Mining meaningful patterns from Web
  resources
• Web content mining searching Web documents
• Web usage mining searching Web access logs

14
Intelligent Agents in Customer Applications

• Need identification - determine what to buy to
  satisfy a need
• looks for product information and evaluates -
  Querybot.com
• Product brokering find best product to match
  need
• Merchant brokering - find vendor offering best
  deal
• Jango (embedded in excite program)
• Negotiation - determine price and other terms of
  transaction
• Kasbah - users create agents for selling or
  buying goods
• Purchase and deliveryarrange payment and
  delivery of goods
• After sale service and evaluation - automatic
  answering
• Auction support agents
• Fraud and detection protection agents eFalcon
• Character-based interactive (animated) agents
  extempo.com
• Future agents - Delegation

15
Summary

• Consumer Behaviour characteristics, stimuli
  ?decisions
• Consumer Behavior Online consumer types and
  purchasing experiences
• Demographics of Internet Surfers environmental,
  personal
• Major Roles in Purchasing 5 roles
• Purchasing decision-making model 5 stages
• Consumer Satisfaction ? loyalty
• One-to-One Marketing
• Personalisation build profiles, filter
  information
• Customer Service personalised information, help
  desks
• Market Research surveys, surreptitious tracking
• Data Mining extracting useful information about
  customers
• Intelligent Agents gather data, facilitate
  customer

16

• QUIZ 4