C HAPTER 14 Marketing in the Digital Age

Copyright 2007, Prentice-Hall Inc.14-2  Discuss how the digital age is affecting both consumers and the marketers who serve them.  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-marketing domains.  Discuss how companies go about conducting e-marketing to profitably deliver more value to customers.  Overview the promise and challenges that e-commerce presents for the future. Roadmap: Previewing the Concepts

Copyright 2007, Prentice-Hall Inc.14-3 Background  Began selling books; now markets many other merchandise lines.  One of the best-known names on the Web.  Sales have been strong but firm did not turn a profit until  Skeptics predict tougher times in years to come. Marketing Efforts  Customer-driven: strives to design the best customer experience on the Web.  Personalized sign-on pages and recommendations, huge selection, good value, and convenience result in strong buyer relationships.  Will Amazon become the Wal-Mart of the Web? AMAZON.COM – Online Pioneer

Copyright 2007, Prentice-Hall Inc.14-4  Digitalization and Connectivity –Intranets  connect people within a company. –Extranets  connect a company with its suppliers, distributors, and outside partners. –Internet  connects users around the world. Forces Shaping the Digital Age

Copyright 2007, Prentice-Hall Inc.14-5  Requires a new model for marketing strategy and practice, as the Internet offers new opportunities for creating value and building relationships.  The digital age has changed consumers’ ideas of convenience, speed, price, product information, and service.  Companies need to retain old skills and practices but add new competencies. Marketing Strategy in the Digital Age

Copyright 2007, Prentice-Hall Inc.14-6  Involves the use of electronic platforms to conduct company business. –Web sites for selling and customer relations. –Intranets for within-company communication. –Extranets connecting with major suppliers and distributors. E-Business in the Digital Age

Copyright 2007, Prentice-Hall Inc.14-7 E-Commerce in the Digital Age  More specific than e-business.  Involves buying and selling processes supported by electronic means, primarily the Internet.  Includes: –e-marketing –e-purchasing (e-procurement)

Copyright 2007, Prentice-Hall Inc.14-8 E-Commerce Network Rusbiz.com is a global B2B portal offering trade leads, a marketplace, e-catalog, and more. Marketing in Action

Copyright 2007, Prentice-Hall Inc.14-9  The marketing side of e-commerce.  Includes efforts to communicate about, promote, and sell products and services over the Internet.  E-purchasing is the buying side of e-commerce. –It consists of companies purchasing goods. E-Marketing in the Digital Age

Copyright 2007, Prentice-Hall Inc Benefits to Buyers  Convenience.  Buying is easy and private.  Provides greater product access and selection.  Provides access to comparative information.  Buying is interactive and immediate.

Copyright 2007, Prentice-Hall Inc Benefits to Sellers  Powerful tool for building customer relationships.  Can reduce costs.  Can increase speed and efficiency.  Offers greater flexibility in offers and programs.  Is a truly global medium.

Copyright 2007, Prentice-Hall Inc Figure 14-1 E-Marketing Domains

Copyright 2007, Prentice-Hall Inc  The online selling of goods and services to final consumers. –Expected to generate $316 billion in 2010, or 13 percent of retail sales. –There is increasing diversity in buyers.  This provides increasing opportunities for targeting markets. –Is customer initiated and controlled, requiring new marketing approaches. Business to Consumer (B2C)

Copyright 2007, Prentice-Hall Inc  B2B sales dwarf B2C sales: –B2B e-commerce was nearly $4 trillion in –Uses trading networks, auction & barter sites, spot exchanges, online product catalogues, and more.  Most major B2B marketers offer online product information, purchasing, and support.  Open trading exchanges: –huge specialty e-marketspaces to conduct transactions.  More private trading exchanges are being developed for B2B transactions. Business to Business (B2B)

Copyright 2007, Prentice-Hall Inc B2B Open Trading Exchange Plasticsnet.com is an Internet marketplace that connects more than 200 suppliers with over 90,000 buyers monthly. Marketing in Action

Copyright 2007, Prentice-Hall Inc  Occurs on the Web and includes a wide range of products and services. –Auction sites such as eBay offer marketplaces to buy or exchange goods. –Blogs and forums facilitate information interchanges.  Blog: online journals where people post thoughts on a specific topic.  Forums: discussion groups located on commercial online services. Consumer to Consumer (C2C)

Copyright 2007, Prentice-Hall Inc iPoditude.com Blog Some blogs such as iPoditude offer saavy marketers advertising opportunities. Marketing in Action

Copyright 2007, Prentice-Hall Inc Consumer to Business (C2B)  Consumers can search out sellers, view offers, initiate purchases, and give feedback. –At Priceline.com, consumers can name their own price for a flight.

Copyright 2007, Prentice-Hall Inc Movietickets.com sells movie theatre tickets over the Internet. Why do or don’t you use this service to buy movie tickets? If you don’t use the Web site, what could it do to earn your business? Let’s Talk!

Copyright 2007, Prentice-Hall Inc Figure 14-2 Types of E-Marketers

Copyright 2007, Prentice-Hall Inc Click-Only Companies  E-tailers  Search engines and portals  Shopping comparison sites  Internet service providers  Transaction sites  Content sites What type of click-only company is iWon.com? How likely are you to use their services in the future? Why? Video Snippet

Copyright 2007, Prentice-Hall Inc  Poor research or planning.  Relied on spin and hype instead of marketing strategies.  Spent too heavily on brand identities.  Devoted too much effort to acquiring new customers instead of building loyalty. Reasons for dot.com Failures

Copyright 2007, Prentice-Hall Inc  Established firms initially resisted adding Web sites because of channel conflict and cannibalization concerns.  Risk of online competition forced firms to become click-and-mortar companies. Most are now doing better than click-only companies because of: –Trusted brand names and more resources –Large customer bases –More knowledge and experience –Good relationships with suppliers –Can offer customers more options Click-and-Mortar Companies

Copyright 2007, Prentice-Hall Inc Figure 14-3 Setting Up for Online Marketing

Copyright 2007, Prentice-Hall Inc Types of Web Sites  Corporate Web Site: Designed to build customer goodwill and supplement other sales channels. –Offers information to customers. –Builds closer customer relationships. –Generates excitement about the company.  Marketing Web Site: Engages consumers in an interaction that moves them closer to a direct purchase or other marketing outcome. –May include catalogues, shopping tips, promotional features, and more.

Copyright 2007, Prentice-Hall Inc Marketing Web Site The MINI marketing Web site does more than just provide information or sell cars: it keeps customers engaged, from designing their very own MINI to tracking it from factory to delivery. Marketing in Action

Copyright 2007, Prentice-Hall Inc  The 7 Cs of Effective Web Site Design: –Context: layout and design. –Content: text, picture, sounds, etc. –Community: the ways the site enables user-to- user communication. –Customization: ability of site to personalize or tailor itself to various users. –Communication: how communication is enabled between the user and the site. –Connection: the degree to which the site is linked to others. –Commerce: site’s ability to conduct transactions. Designing Attractive Web Sites

Copyright 2007, Prentice-Hall Inc Using the criteria for good Web site design, evaluate the site shown at right. Let’s Talk!

Copyright 2007, Prentice-Hall Inc Online Ads  Forms of online advertising: –Banner ads:  Tickers (move across the screen)  Skyscrapers (tall, skinny ads at the side of a page)  Rectangles (boxes that are larger than a banner) –Interstitials (pop up OR pop under between changes on Web site) –Search-related ads (contextual advertising) –Rich media ads (incorporate animation, video, sound and interactivity)

Copyright 2007, Prentice-Hall Inc Forms of Online Ads Pennlive.com takes the mystery out of buying online ads, by showing samples of common formats available for purchase. Visit the Interactive Advertising Bureau for additional information. Marketing in Action

Copyright 2007, Prentice-Hall Inc Search Engine Marketing For an interactive example of search engine marketing, visit the search engine of your choice, and enter a term such as “pet” or “computer” and watch what pops up under the sponsored links. Marketing in Action Search engine marketing is one of the fastest growing forms of online advertising.

Copyright 2007, Prentice-Hall Inc Online Promotion  Forms of online promotion: –Content sponsorships (sponsoring special content) –Microsites (limited areas paid for by an external company) –Alliances and affiliate programs (work with firms to promote each other) –Viral marketing (Internet version of word- of-mouth)

Copyright 2007, Prentice-Hall Inc Viral Marketing Marketing in Action Got Milk? Apparently aliens didn’t until they started abducting our cows. The cowabduction.com Web site is an by the California Milk Processors Board to promote milk in a fun fashion, and to stimulate viral marketing.

Copyright 2007, Prentice-Hall Inc  May grow to 10-15% of media mix for low-involvement product categories.  Web communities: –Allow members to congregate online and exchange views on issues of interest.  –Use of “enriched” messages. –Backlash against spam can be problem. –Allow people to opt-out of promotions. The Future of Online Advertising

Copyright 2007, Prentice-Hall Inc  Likely that online marketing will remain a technique working with full IMC mix.  Internet profitability remains problematic for B2C firms.  Navigation difficulties continue as the number of Web sites grows.  Dot.com retailers are facing growing competition.  Legal and ethical issues also exist. E-Commerce Promises and Challenges

Copyright 2007, Prentice-Hall Inc  Online privacy is the number one e-commerce concern of consumers. –Consumers are worried about how their personal information is being used.  Online security concerns are still common regarding credit card numbers.  Governmental responses have been limited to date: OPPA, COPPA.  TRUSTe is a private entity devoted to online privacy issues. Legal and Ethical Issues

Copyright 2007, Prentice-Hall Inc  Internet fraud: –identity theft (phishing), investment fraud, financial scams.  Segmentation and discrimination due to the digital divide.  Access by vulnerable or unauthorized groups –Bidding on eBay and access of adult content by children. Legal and Ethical Issues

Copyright 2007, Prentice-Hall Inc Privacy Issues Marketing in Action The TRUSTe seal on Avis’s Web page and privacy statement verify the company’s privacy practices have been reviewed by TRUSTe and meet their guidelines.

Copyright 2007, Prentice-Hall Inc  Discuss how the digital age is affecting both consumers and the marketers who serve them.  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-marketing domains.  Discuss how companies go about conducting e-marketing to profitably deliver more value to customers.  Overview the promise and challenges that e-commerce presents for the future. Rest Area: Reviewing the Concepts