3-1 Visit UMT online at © UMT 2004 MKT100Version: Visit UMT online at PRINCIPLES OF MARKETING University of Management and Technology 1901 N. Fort Myer Drive Arlington, VA USA Phone: (703) Fax: (703) Website:

3-2 Visit UMT online at © UMT 2004 MKT100Version: Visit UMT online at CHAPTER 3: Marketing in the New Internet Economy Armstrong, G. & Kotler, P. Marketing: An Introduction (6th ed.) Prentice Hall © 2003.

3-3 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Road Map: Previewing the Concepts Identify the major forces shaping the new Internet Age. Explain how companies have responded to the Internet and other powerful new technologies with e-business strategies, and how these strategies have resulted in benefits to both buyers and sellers. Describe the four major e-commerce domains. Discuss how companies go about conducting e-commerce to profitably deliver more value to customers. Overview the promise and challenges that e-commerce presents for the future.

3-4 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Major Forces Shaping the Internet Age (Fig. 3-1)

3-5 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Major Forces Shaping the Internet Age Digitalization & Connectivity Intranets – connect people within a company. Extranets – connect a company with its suppliers. Internet – connects users all around the world. Internet Explosion Explosive growth forms the heart of the New Economy. Companies must adopt Internet technology or risk being left behind.

3-6 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Company Customizes the Market Offering Customers Design the Market Offering Old Economy Revolved Around Manufacturing Companies. New Economy Revolves Around Information Businesses. Customization and Customerization

3-7 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Marketing Strategy in the New Internet Age Conducting business in the new Internet Age will call for a new model for marketing strategy and practice. All buying and selling may involve direct electronic connections between companies and customers. Marketing should play the lead role in shaping new company strategy.

3-8 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at e-Business, e-Commerce, and e- Marketing in the Internet Age e-Business Involves the Use of Intranets, Extranets & the Internet to Conduct a Companys Business e-Commerce Involves Buying & Selling Processes Supported by Electronic Means E-Marketing e-selling side of e-commerce

3-9 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Benefits to Buyers Convenient Buying is Easy and Private Greater Product Access and Selection Access to Comparative Information Buying is Interactive and Immediate e-commerce Yields the Following Benefits to Buyers

3-10 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Benefits to Sellers Customer Relationship Building Reducing Costs & Increasing Speed and Efficiency Offers Greater Flexibility Truly Global Medium e-commerce Yields the Following Benefits to Sellers

3-11 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at E-Commerce Domains (Fig. 3-2)

3-12 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at B2C (Business to Consumer) Sales expected to increase from $34 billion in 2001 to $130 billion by Provides e-marketers with access to consumers in all age groups. More customer-initiated and customer-controlled.

3-13 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at B2B (Business to Business) Estimates are that B2B e- commerce will reach $3.6 trillion in By 2005, more than 500,000 enterprises will participate as buyers, sellers, or both. Much e-commerce takes place in open trading networks: Some companies are also setting up private trading networks (PTNs)

3-14 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at C2C (Consumer to Consumer) Occurs between people over a wide range of products and services. EBays C2C transacted more than $5 billion in trades last year. Involves interchanges of information through: Forums Newsgroups

3-15 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at C2B (Consumer to Business) Todays consumers can contact and communicate with companies. Consumers can search out sellers on the Web, learn about their offers, and initiate purchases. Example: Using consumers can bid for airline tickets, hotel rooms, etc. Then, sellers decide whether to accept their offers.

3-16 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Types of e-Marketers (Fig. 3-3)

3-17 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Click-Only Companies Click-Only Companies Enabler Sites Content Sites Transaction Sites Types of Click-Only Companies E-tailers Search Engines & Portals Internet Service Providers

3-18 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Reasons for Dot.com Failures Prices and margins were often very low Lack of good distribution delivery processes Poorly designed Web sites Attention on gathering new customers instead of building brand loyalty Spending offline to establish brand identities Spin & hype instead of marketing strategies Failure to research or plan

3-19 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Click-and-Mortar Companies Many resisted adding e-commerce because of potential for channel conflict and cannibalization. Many are doing better than brick or click-only operations i.e. Why? Trusted brand names & financial resources, Large customer bases, Knowledge & experience, Good relationships with key suppliers, Ability to offer customers more options, Buy online & return unwanted merchandise to store.

3-20 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Setting Up for e-Marketing (Fig. 3-4)

3-21 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Creating a Web Site Types of Web Sites Corporate – builds customer goodwill Marketing – moves customers closer to a direct purchase

3-22 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at SonyStyle.com Marketing Web Site This marketing web site offers engages consumers in an interaction that will bring them closer to a direct purchase, all with a few clicks of the mouse button.

3-23 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Designing Attractive Web Sites Create value & excitement to get people: to the site, look around (hopefully to buy) and come back again. Value of the sites content that will do all of the above. 7 Cs of effective Web Site Design Context Content Community Customization Communication Connection Commerce

3-24 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Placing Ads and Promotions Online Online advertising - used to build Internet brands or attract visitors. Forms of online advertising & promotion: Banner ads & tickers (move across the screen) Skyscrapers (tall, skinny ads at the side of a page) Rectangles (boxes larger than banner) Interstitials (online ads that pop up between changes) Browser ads (sponsors pay viewers to watch) Content sponsorships (sponsoring content on sites) Microsites (limited areas managed by an external co.) Viral marketing (Internet word-of-mouth)

3-25 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Other e-Marketing Methods Creating or Participating in Web Communities Allow members to exchange views on issues of common interest. Share common interests & well-defined demographics. or Webcasting mainstay for B2C & B2B Webcasting automatically downloads customized information to recipients PCs.

3-26 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Promise and Challenge of e-Commerce Limited exposure and buying Skewed demographics and psychographics Chaos and clutter Security Ethical concerns

3-27 Visit UMT online at © UMT 2004 MKT100 Visit UMT online at Version: Visit UMT online at Road Map: Reviewing the Concepts Identify the major forces shaping the new Internet Age. Explain how companies have responded to the Internet and other powerful new technologies with e-business strategies, and how these strategies have resulted in benefits to both buyers and sellers. Describe the four major e-commerce domains. Discuss how companies go about conducting e-commerce to profitably deliver more value to customers. Overview the promise and challenges that e-commerce presents for the future.