Chapter 5 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. E-BUSINESS: MANAGING THE CUSTOMER EXPERIENCE 1

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Objectives 1. Describe the growth of Internet use worldwide. 2. Define e-business and e-marketing, and list the opportunities e-marketing presents. 3. Distinguish between a corporate website and a marketing website. 4. List the major forms of B2B e-marketing. 5. Explain business-to-consumer (B2C) e- marketing. 2

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Objectives 6. Identify online buyers and sellers. 7. Describe some of the challenges associated with online marketing and e-business. 8. Discuss how marketers use the communication function of the Web as part of their online marketing strategies. 9. Outline the steps involved in developing successful e-business websites and identify methods for assessing website effectiveness. 3

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience The Digital World ▮ More than three-quarters of the U.S. population access the Internet at home, school, work, or public access sites ▮ What do people do online? United States – Communication, information, and purchases China – Downloading, streaming music, online gaming, videogaming, and social networking 4

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience The Digital World ▮ In spite of the past success and future potential of the Internet, issues and concerns relating to e-business remain ▮ The benefits and potential of e-business outweigh the concerns and problems 5

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience E-Business ▮ Wide range of business activities that take place via Internet applications ▮ It can be divided into five broad categories: E-tailing Business-to-business transactions Electronic data interchanges (EDI) 6

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience E-Business , instant messaging, blogs, podcasts, vlogs (video blogs), and other Web-enabled communication tools The gathering and use of demographic, product, and other information through Web contacts 7

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience E-Marketing ▮ Strategic process of creating, distributing, promoting, and pricing goods and services to a target market over the Internet or through digital tools ▮ Application of electronic tools to contemporary marketing has the potential to: Greatly reduce costs Increase customer satisfaction 8

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience E-Marketing ▮ Online marketing - Activities that connect buyers and sellers electronically through interactive computer systems 9

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Table Marketing Capabilities 10

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Web Business Models ▮ Corporate website - Designed to increase a firm’s visibility, promote its offerings, and provide information to interested parties Build customer goodwill Assist channel members in their marketing efforts ▮ Marketing website - Main purpose is to increase purchases by visitors 11

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience B2B E-Marketing ▮ Use of the Internet for business transactions between organizations Generates sales revenue Provides detailed product description when required Increases efficiency of business-to-business transactions 12

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience B2B E-Marketing ▮ Tools used: EDI Web services Extranets Private exchanges Electronic exchanges E-procurement 13

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Proprietary B2B Transactions ▮ Electronic data interchange Exchange of sales information between buyers and sellers Requires compatible hardware and software systems Cuts paper flow, speeds the order cycle, and reduces errors Allows companies to set production schedules to better match demand 14

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Proprietary B2B Transactions ▮ Web services - Internet-based systems Allow parties to communicate electronically with one another regardless of the computer operating system they use Rely on open source XML standards ▮ Extranets - Secure networks Used for e-marketing and accessible through the firm’s website by external customers, suppliers, or other authorized users 15

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Proprietary B2B Transactions ▮ Intranets Secure internal networks that help companies share information among employees ▮ Private exchanges A secure website at which a company and its suppliers share all types of data related to e- marketing Sometimes called c-business 16

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience E-procurement on Open Exchanges ▮ E-Procurement - Use of the Internet to solicit bids and purchase goods and services from suppliers Offers benefits to the public sector 17

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience B2C E-Marketing ▮ Selling directly to consumers over the Internet ▮ Also called e-tailing ▮ Driven by convenience and improved security for transmitting financial information ▮ Service providers are important participants in e-tailing 18

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Electronic Storefronts ▮ Company website that sells products to customers ▮ Items for purchase are placed in an electronic shopping cart Electronic shopping cart - File that holds items the online shopper has chosen to buy ▮ Increased capability of smartphones influence the growth of online shopping 19

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Benefits of B2C E-Marketing ▮ Competitive pricing An ideal method for savvy shoppers to compare prices from dozens of sellers Easy price comparisons with the aid of bots For example: pricegrabber.compricegrabber.com ▮ Access and convenience - Allows customers to Place orders from anywhere at anytime Track products 20

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Benefits of B2C E-Marketing ▮ Personalized service Software analyzes past user purchases to customize experience Goal is to create loyal customers who make repeat purchases 21

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Online Buyers and Sellers ▮ More than half of all users make at least one purchase online each month ▮ Half of all shoppers spend three quarters of total shopping time doing product research ▮ Many online shoppers are loyal and buy mostly from a single site ▮ Consumers’ online shopping experiences have been steadily improving in quality and convenience 22

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Figure Characteristics of U.S. Internet Users – need new figure 23

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Challenges in E-Business and E- Marketing ▮ Safety of online payment Companies have developed secure payment systems to protect customer information Encryption - Encoding data for security purposes Secure Sockets Layer - Technology that encrypts information and provides authentication 24

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Challenges in E-Business and E- Marketing ▮ Privacy issues Customers’ top security concern is protection of their personal information Through electronic signatures, parties can enter into legal contracts online Electronic signatures - Electronic identification that allows legal contracts such as home mortgages and insurance policies to be executed online Cookies and spyware allow online companies can track their customers’ shopping and viewing habits 25

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Challenges in E-Business and E- Marketing To reassure customers, many online merchants have signed on with online privacy organizations such as TRUSTe Companies install firewalls to protect private corporate data Firewall - An electronic barrier between a company’s internal network and the Internet that limits access into and out of the network 26

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Challenges in E-Business and E- Marketing ▮ Frauds and scams Complaints about Internet fraud are received by the Internet Crime Complaint Center (IC3) Phishing - High-tech scam that uses authentic- looking or pop-up messages to get unsuspecting victims to reveal personal information 27

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Challenges in E-Business and E- Marketing Vishing - Scam that collects personal information through voice response systems; stands for voice phishing Payment fraud 28

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Challenges in E-Business and E- Marketing ▮ Site design and customer service Not all websites are well designed and easy to use Merchandise delivery and returns pose challenges Companies that have traditional stores have more success satisfying customers than Internet-only retailers 29

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Challenges in E-Business and E- Marketing ▮ Channel conflicts and copyright disputes Channel conflicts - Conflicts among manufacturers, wholesalers, and retailers Conflicts in the area of copyright law When a site hosts content to which someone else holds the rights 30

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Marketing and Web Communication ▮ The Internet has four main functions: E-business Entertainment Information Communication – Most popular function 31

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Online Communities and Social Networks ▮ Firms use Internet forums, newsgroups, electronic bulletin boards, and social networks that appeal to people who share common interests ▮ Electronic bulletin board - Internet forum that allows users to post and read messages on a specific topic 32

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Online Communities and Social Networks ▮ Social networking sites have grown dramatically Example: Facebook, TwitterFacebookTwitter 33

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Blogs and Podcasts ▮ Blog - An online journal for an individual or organization ▮ Some blogs incorporate wikis, a Web page that anyone can edit ▮ Podcast - Online audio or video file that can be downloaded to other digital devices 34

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Blogs and Podcasts ▮ Many companies encourage, employees to start their own blogs ▮ Employee blogs present ethical issues Companies have strict policies about the content of employee blogs Employees can be disciplined over improper blogging 35

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Promotions on the Web ▮ Banner ad - Strip message placed in high- visibility areas of frequently visited websites ▮ Pop-up ad - Separate window that pops up with an advertising message 36

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Promotions on the Web ▮ Preroll video ad - Marketing messages that play before an online video ▮ Widget - Tiny interactive applications that Internet users can copy and add to their own pages to play music, video, or slide shows 37

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Promotions on the Web ▮ Search marketing - Paying search engines a fee to make sure that the company’s listing appears toward the top of the search results ▮ Companies use online coupons to promote their products Example: AeropostaleAeropostale 38

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Building an Effective Web Presence ▮ An e-business website can: Broaden customer bases Provide immediate access to current catalogs Accept and process orders Offer personalized customer service 39

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Successful Site Development ▮ Internet merchants need to attract customers who conduct business on the spot ▮ Entrepreneurs define business goals by creating a community of enthusiasts to: Build up sales in advance Pay due attention to tried-and-true marketing tools that can complement Internet efforts 40

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Establishing Goals ▮ What is the company’s goal for its website? ▮ Objectives for the website determine the scope of the project ▮ Key decisions include: Whether to create and maintain a site in-house Whether to contract with outside designers 41

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Implementation and Interest ▮ Content - Determines whether visitors return to a site ▮ Available resources should be: Relevant to viewers Easy to access and understand Updated regularly Written or displayed in a compelling, entertaining way 42

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Pricing and Maintenance ▮ Variety of costs: Development Placing the site on a Web server Maintaining and updating the site Promoting the site ▮ Important for a website to stay current 43

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Assessing Site Effectiveness ▮ Web-to-store shoppers - Consumers who use the Internet as a tool to aid them at brick-and-mortar retailers ▮ Click-through rate - Percentage of people presented with a banner ad who click on it ▮ Conversion rate - Percentage of visitors to a Web site who make a purchase ▮ Engagement - Amount of time users spend on sites 44

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Figure Measures of Website Effectiveness 45

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Strategic Implications of Marketing in the 21st Century ▮ Bright future for marketers who continue to take advantage of the tremendous potential of e-business and e-marketing ▮ Cutting edge technology of today will be eclipsed within the next decade by newer technologies ▮ A marketing evolution for organizations has occurred It embraces Internet technologies as essential parts of their marketing strategies 46

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 5 E-Business: Managing the Customer Experience Scripps Networks Interactive & Food Network Video 47 Hubway Video videos/part1.html videos/ch05.html