Copyright  1999, Sandeep Krishnamurthy. All rights reserved. E-Marketing Lecture 2 Sandeep Krishnamurthy

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Strategic Objectives q Maximizing Profit –Commerce-based strategy: Selling products to consumers for a profit. –Traffic-based strategies »Banner Advertising »Associates/affiliates programs »Subscription models q Service-based approach –Creating traffic to own and other sites. –Building product awareness/knowledge. –Brand-building. –Building relationships with customers.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Benefits to the Firm- Distribution q Reduction in distribution and selling costs –Low inventory. –Reduction in salesforce. –Product training to sales people reduced. q Direct interaction between buyers and sellers leading to disintermediation. –Manufacturers can sell directly to consumers eliminating wholesalers and retailers.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Benefits to the Firm- Distribution q Transactional Convenience –Open 24/7 to global market. –Time to complete transactions reduced. –Transfers tasks to consumers. q Allows capture of consumer information.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Benefits to the Firm- Communication q Allows for rational arguments –Detailed information can be provided. –Complicated arguments can be explained using examples and charts. q Narrowcasting –Birth of very specialized segments. –Consumers opt in. q Interactivity –Consumers’ voice in the design of the marketing mix. e.g. Customization

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Goals q Generate Traffic –To own site –To other sites q Increase community density –Size of community –Number of linkages q Maximize Revenue –E-commerce –Banner advertising –Subscriptions (Global vs. local)

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Customer Traffic- Discussion Questions q What are the advantages of increasing customer traffic to a site? q What can be done to increase customer traffic to a site?

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Shikar’s Ideas on Customer Magnets q Product Magnet (e.g. Amazon.com) q Service Magnet (e.g. Yahoo) q Customer Segment Magnet (e.g. momsonline.com, seniornet.org) q Industry Magnets (e.g. realtor.com) q Business Model Magnets (e.g. onsale)

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Deconstructing Customer Traffic q Surfers vs. Purposive Visitors q Browsers vs. Buyers q Offense vs. Defense –Encourage new customers to visit your site. –Encourage customers who have visited your site in the past to return. –Encourage repeat customers to view more pages.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Search Engine Optimization q Individuals are more likely to visit the top few sites that pop up in search engines. q Laundry list approach is viewed as spamming and the sites will not pull you up. q Hence, you need to find the right balance.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Metrics for evaluating a site. q Number of hits or impressions. q Number of unique customers. q Average visit length. q Average number of pages visited. q Average number of banner ads clicked. q Average number of individuals contacted in community.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Metrics for commerce sites only q Average number of items viewed. q Average number of items purchased.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Value Chain q Internet Service Provider (e.g. Microsoft, AT&T, GTE, Mindspring) q Portal (e.g. MSN, Yahoo, Excite) q E-malls (e.g. emall.com) q E-tailers (e.g. Amazon.com, egghead.com) q Delivery Company (e.g. UPS, FedEx, USPS)

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Website Quality q Information Quality q Information Structure Quality. q Experiential Quality.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Information Quality q Consumers define quality of information. q High quality= high relevance for consumer.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Types of Information Consumers Value q Product –Choices available, Detailed product information, Links to third-party sites, Product quality data, Feature information, On-line demonstrations. q Price –Total Price= Shelf Price+ Shipping and Handling Cost; Special Deals.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Types of Information Consumers Value q Promotion –Consumers appreciate special deals (e.g. coupons, price promotions, web-specials etc.) q Community –Knowledge of other consumers, their experiences and their perceptions.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Information Structure Quality q Valid Information Structure –Categories are mutually exclusive. –Each category has sufficient audience size. –Different audiences for different categories. q Quality of Information –Simplicity –Substantive –Relevant and actionable

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Experiential Quality q Pleasantness –Pleasant look and feel. q Speed of access –Graphics may be an issue. q Navigational ease –What was the “transaction cost”? Were consumers able to find the information they wanted easily?

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Quality Uncertainty on the Web q Two types of products- –Search products- Quality can be ascertained from objective information- e.g. PCs –Experience products- Quality can be ascertained only after experiencing the product- e.g. Books, Jewelry, Art. q Avoiding the uncertainty of the quality of experience products a big issue.

Copyright  1999, Sandeep Krishnamurthy. All rights reserved. How can quality uncertainty be reduced? q Site Reputation –Well known, High site traffic, Reputation for quality. –Manufacturer vs. Retailer reputation q Reducing post-consumption risk –Money-back guarantees, Satisfaction guarantees, Liberal return policies. –Sampling (e.g. song and book samples) –Try-outs (e.g. shareware)