Copyright © 2002 Pearson Education, Inc. Slide 7-1

Copyright © 2002 Pearson Education, Inc. Slide 7-2 CHAPTER 7 Created by, David Zolzer, Northwestern State University—Louisiana E-commerce Marketing Concepts

Copyright © 2002 Pearson Education, Inc. Slide 7-3 Internet Marketing Technologies Web transactions logs Cookies Web bugs Databases, data warehouses, data mining, and profiling Advertising networks Internet Marketing Technologies Customer Relationship Management (CRM) systems

Copyright © 2002 Pearson Education, Inc. Slide 7-4 Impact of Unique Features of E- commerce Technology on Marketing Page 361, Table 7.6

Copyright © 2002 Pearson Education, Inc. Slide 7-5 Web Transaction Logs Records user activity at a Web site Registration forms gather personal data on name, address, phone, zip code, address, and other optional self- confessed information on interests and tastes Shopping cart database captures all the item selection, purchase, and payment data

Copyright © 2002 Pearson Education, Inc. Slide 7-6 A Web Transaction Log From Azimuth-Interactive.com Page 362, Figure 7.12

Copyright © 2002 Pearson Education, Inc. Slide 7-7 Marketing Uses of Data From Web Transaction Logs Page 363, Table 7.7

Copyright © 2002 Pearson Education, Inc. Slide 7-8 Questions That Can Be Answered by Web Transactions Logs What are the major patterns of interest and purchase for groups and individuals? After the home page, where do most users go first, and then second and third? What are the interests of specific individuals (those we can identify)? How can we make it easier for people to use our site so the can find what they want?

Copyright © 2002 Pearson Education, Inc. Slide 7-9 Questions That Can Be Answered by Web Transactions Logs How can we change the design of the site to encourage visitors to purchase our high margin products? Where are visitors coming from (and how can we optimize our presence on these referral sites)? How can we personalize our messages, offerings, and products to individual users?

Copyright © 2002 Pearson Education, Inc. Slide 7-10 Cookies Cookie is a small text file that Web sites place on visitor’s client computers every time they visit, and during the visit, as specific pages are visited. Cookies provide Web marketers with a very quick means of identifying the customer and understanding his or her prior behavior

Copyright © 2002 Pearson Education, Inc. Slide 7-11 Cookies Placed by Amazon.com Page 365, Figure 7.13

Copyright © 2002 Pearson Education, Inc. Slide 7-12 Web Bugs Web bugs are tiny (1 pixel) graphic files hidden in messages and on Web sites Web bugs are used to automatically transmit information about the user and the page being viewed to a monitoring server

Copyright © 2002 Pearson Education, Inc. Slide 7-13 Databases, Data Warehouses, and Data Mining Database is a software application that store records and attributes Database management system (DBMS) is a software application used by organizations to create, maintain, and access databases SQL is an industry standard database query and manipulation language used in relational databases

Copyright © 2002 Pearson Education, Inc. Slide 7-14 Databases, Data Warehouses, and Data Mining Relational databases represent data as two-dimensional tables with records organized in rows and attributes in columns; data within different tables can be flexibly related so long as the tables share a common data element Data warehouse is a database that collects a firm’s transactional and customer data in a single location for offline analysis

Copyright © 2002 Pearson Education, Inc. Slide 7-15 A Relational Database View of E- commerce Customers Page 369, Figure 7.14

Copyright © 2002 Pearson Education, Inc. Slide 7-16 Databases, Data Warehouses, and Data Mining Data mining is a ser of analytical techniques that look for patterns in the data of a database or data warehouse, or seek to model the behavior of customers Customer profile is simply a description of the typical behavior of a customer or a group of customers at a Web site Query-driven data mining is data mining based on specific queries

Copyright © 2002 Pearson Education, Inc. Slide 7-17 Databases, Data Warehouses, and Data Mining Model-drive data mining involves the use of a model that analyzes the key variables of interest to decision makers Role-based data mining examines demographic and transactional data of groups and individuals at a Web site and attempts to derive general rules of behavior for visitors Collaborative filtering is where site visitors classify themselves into affinity groups characterized by common interests; products are then recommended based on what other people in the group have recently purchased

Copyright © 2002 Pearson Education, Inc. Slide 7-18 Advertising Networks Present users with banner advertisements based on a database of user behavioral data Ad server selects an appropriate banner ad based on the user’s previous purchases, interests, demographics, or other data in the profile

Copyright © 2002 Pearson Education, Inc. Slide 7-19 How an Advertising Network such as DoubleClick Works Page 374, Figure 7.15

Copyright © 2002 Pearson Education, Inc. Slide 7-20 Customer Relationship Management Systems A repository of customer information that records all of the contacts that a customer has with a firm and generates a customer profile available to everyone in the firm with a need to “know the customer”

Copyright © 2002 Pearson Education, Inc. Slide 7-21 Customer Relationship Management Systems Customer profiles can contain map of customer’s relationship with the institution Product and usage summary data Demographic and psychographic data Profitability measures Contact history summarizing the customers contacts with the institution across most delivery channels Marketing and sales information containing programs received by the customer and the customer’s responses

Copyright © 2002 Pearson Education, Inc. Slide 7-22 A Customer Relationship Management System Page 376, Figure 7.16

Copyright © 2002 Pearson Education, Inc. Slide 7-23 E-commerce Marketing & Branding Strategies Internet marketing strategies for market entry for new firms include: pure clicks/first mover mixed “clicks and bricks”/alliances for existing firms pure clicks/fast follower mixed “clicks and bricks”/brand extender

Copyright © 2002 Pearson Education, Inc. Slide 7-24 Generic Market Entry Strategies Page 378, Figure 7.17

Copyright © 2002 Pearson Education, Inc. Slide 7-25 Establishing the Customer Relationship Permission marketing is a marketing strategy in which companies obtain permission from consumers before sending them information or promotional messages Affiliate marketing is where one Web site agrees to pay another Web site a commission for new business opportunities it refers to the site

Copyright © 2002 Pearson Education, Inc. Slide 7-26 Establishing the Customer Relationship Viral marketing is the process of getting customers to pass along a company’s marketing message to friends, family, and colleagues Leveraging brands refers to the process of using the power of an existing brand to acquire new customers for a new product or service

Copyright © 2002 Pearson Education, Inc. Slide 7-27 Customer Retention One-to-one marketing means segmenting the market based on a precise and timely understanding of an individual’s needs, targeting specific marketing messages to these individuals, and then positioning the product vis-à-vis competitors to be truly unique

Copyright © 2002 Pearson Education, Inc. Slide 7-28 The Mass Market Personalization Continuum Page 384, Figure 7.18

Copyright © 2002 Pearson Education, Inc. Slide 7-29 Customer Retention Customization means changing the product, not just the marketing message, according to user preferences Customer co-production in the Web environment, takes customization one step further by allowing the customer interactively create the product

Copyright © 2002 Pearson Education, Inc. Slide 7-30 Customer Retention Transactive content results from the combination of traditional content, such as articles and product descriptions, with dynamic information culled from product databases, tailored to each user’s profile

Copyright © 2002 Pearson Education, Inc. Slide 7-31 Customer Service tools: Frequently asked questions (FAQ) is a text-based listing of common questions and answers, provide an inexpensive way to anticipate and address customer concerns Real-time customer service chat systems, in which a company’s customer service representatives interactively exchange text-based messages with one or more customers on a real-time basis

Copyright © 2002 Pearson Education, Inc. Slide 7-32 Customer Service Tools Automated response systems send order confirmations and acknowledgements of inquiries

Copyright © 2002 Pearson Education, Inc. Slide 7-33 Net Pricing Strategies Pricing, putting a value on goods and services, is an integral part of marketing strategy Demand curve is the quantity of goods that can be sold at various prices Fixed costs are the costs of building the production facility Variable costs are the costs involved in running the production facility

Copyright © 2002 Pearson Education, Inc. Slide 7-34 Net Pricing Strategies Price discrimination is selling products to different people and groups based on their willingness to pay

Copyright © 2002 Pearson Education, Inc. Slide 7-35 A Demand Curve Page 390, Figure 7.19

Copyright © 2002 Pearson Education, Inc. Slide 7-36 Net Pricing Strategies It’s Free! -- can be used to build market awareness Versioning is creating multiple versions of the good and selling essentially the same product to different market segments at different prices Bundling offers consumers two or more goods for one price

Copyright © 2002 Pearson Education, Inc. Slide 7-37 The Demand for Bundles of Goods Page 392, Figure 7.20

Copyright © 2002 Pearson Education, Inc. Slide 7-38 Net Pricing Strategies Dynamic pricing Auctions establish the instant market price for goods Yield management -- managers set prices in different markets, appealing to different segments, in order to sell excess capacity

Copyright © 2002 Pearson Education, Inc. Slide 7-39 Channel Strategies Channel refers to different method by which goods can be distributed and sold Channel conflict occurs when a new venue for selling products or services threatens to destroy existing venues for selling goods

Copyright © 2002 Pearson Education, Inc. Slide 7-40 Online Market Research Market research involves gathering information that will help a firm identify potential products and customers Primary research involves gathering first- hand information using techniques such as surveys, personal interviews, and focus groups Secondary research relies on existing, published information as the basis for analyzing the market

Copyright © 2002 Pearson Education, Inc. Slide 7-41 Types of Survey Questions Page 396, Table 7.8

Copyright © 2002 Pearson Education, Inc. Slide 7-42 Some Popular Secondary Research Tools Page 399, Table 7.9