Chapter 4: Marketing on the Web

Objectives In this chapter, you will learn about: When to use product-based and customer-based marketing strategies Communicating with different market segments Customer relationship intensity and the customer relationship life cycle Using advertising on the Web E-mail marketing Technology-enabled customer relationship management Creating and maintaining brands on the Web Search engine positioning and domain name selection

Web Marketing Strategies Four Ps of marketing Product Physical item or service that the company is selling Price Amount a customer pays for the product Promotion Any means of spreading the word about the product Place Need to have products or services available in different locations

How do you reach customers? Identify groups of potential customers Select the appropriate media Build the right message (write to your reader) Content (e.g., product presentation) Context (e.g., trust)

Customer-Based Marketing Strategies How do you build a customer-based marketing strategy? Rudimentary approaches start by identifying groups of customers who share common characteristics

Market Segmentation Market segmentation is dividing the pool of potential customers into segments and targeting specific portions of the market with advertising messages Segments are usually defined in terms of demographic characteristics Micromarketing is a term suggesting that we can target very small market segments

Market Segmentation Geographic segmentation: Where are they? Demographic segmentation: Income, race, education, etc. Psychographic segmentation: variables such as social class, personality, or lifestyle

Geographic Segmentation

Trust and Media Choice The Web is an intermediate step between mass media and personal, FTF, contact Companies can use the Web to capture some of the benefits of personal contact, yet avoid some of the costs inherent in FTF customer management Trust is often related to proximity

Product-Based Marketing Strategies The product-based strategy views the world from the perspective of the firm and its products For example, stores such as Staples and Sears believe customers organize their needs into product categories and they organize their sites accordingly

Beyond Market Segmentation: Customer Behavior and Relationship Intensity Behavioral segmentation: Creation of separate experiences for customers based on their behavior Occasion segmentation: Behavioral segmentation based on things that happen at a specific time Usage-based market segmentation: Customizing visitor experiences to match the site usage behavior patterns of each visitor

Beyond Market Segmentation: Customer Behavior and Relationship Intensity Behavior-based categories include: Simplifiers like convenience Surfers use the Web to find information and explore new ideas Bargainers are in search of a good deal Connectors use the Web to stay in touch with other people Routiners return to the same sites over and over again

Customer Relationship Intensity and Life-Cycle Segmentation One goal of marketing is to create strong relationships between a company and its customers Good customer experiences can help create an intense feeling of loyalty Touchpoints Online and offline customer contact points Touchpoint consistency: provide similar levels and quality of service at all touchpoints

Acquisition, Conversion, and Retention of Customers Acquisition cost Money a site spends to draw one visitor to the site Conversion Converting a first-time visitor into a customer Conversion cost: the cost of inducing one visitor to make a purchase, sign up for a subscription, or register Retained customers Customers who return to the site one or more times after making their first purchases

Customer Acquisition, Conversion, and Retention: The Funnel Model Funnel model: Used as a conceptual tool to understand the overall nature of a marketing strategy that is similar to the customer life-cycle model

Advertising on the Web Terms and Concepts Banner ad Small rectangular ad Interactive marketing unit (IMU) ad formats Standard banner sizes Banner exchange network Coordinates ad sharing Banner advertising network Acts as a broker between advertisers and Web sites that carry ads

Advertising on the Web Terms and Concepts Cost per thousand (CPM) Pricing metric used when a company purchases mass media advertising Trial visit First time a visitor loads a Web site page Page view Each page loaded by a visitor Impression Each time the banner ad loads

Advertising on the Web Terms and Concepts Pop-up ad Appears in its own window when the user opens or closes a Web page Ad-blocking software Prevents banner ads and pop-up ads from loading Interstitial ad When a user clicks a link to load a page, the interstitial ad opens in its own browser window Clickstream Information (e.g., page visits, duration, etc.) that a Web site can gather about its visitors

Site Sponsorships Advertisers are given an opportunity to sponsor all or part of a website. Helpdesk.com

E-Mail Marketing Dangerous Territory or Priceless Opportunity? Email is cheap! But, customers hate spam How should a firm use email? Opt-in e-mail is should be the rule. Conversion rates are higher and complaints are fewer Combine email content with appropriate, targeted ads

Technology-Enabled Customer Relationship Management Customer relationship management (CRM): processes and technologies used to manage relationships with clients Relationship management: collecting, managing, and analyzing information about a customer’s behavior, buying patterns, etc., and using it to customize the interactions with the customers

Creating and Maintaining Brands on the Web Elements of branding include: Differentiation: How is our product unique? Relevance: How does our product fit into our customers’ lives? Perceived value: What is value of our product to a potential customer?

Emotional Branding vs. Rational Branding Emotional branding is the norm; let’s make customers feel good about our product, themselves as users of our product, or others affective paths to persuasion Coca Cola video game ad (1st QTR) Rational branding relies on the cognitive appeal of the specific service offered, not purely on a broad emotional appeal Toyota Tundra truck ad (1st QTR) Brand Leveraging is done to extend the image or value of a successful brand to other product offerings Sprint Broadband ad (2nd QTR) Nationwide Insurance ad (3rd QTR)

Affiliate Marketing Strategies One firm’s Web site includes descriptions, reviews, ratings, or other information about a product that is linked to another firm’s site Affiliates receive compensation from the selling site’s brand in exchange for the referral Cause marketing is a type of affiliate marketing program that benefits a charitable organization

Viral Marketing Strategies Relies on existing customers to tell other people about products or services they have enjoyed using Example: Blue Mountain Arts Woot gmail

Search Engine Positioning and Domain Names Search engines have 3 major parts: Spiders, crawlers, or robots Programs that automatically searches the Web Index or database Storage element of a search engine Search utility Uses terms provided to find Web pages that match

Search Engine Positioning and Domain Names Nielsen//NetRatings Frequently issues press releases that list the most frequently visited Web sites Search engine ranking Weighting factors used by search engines to decide which URLs appear first on searches

Search Engine Positioning and Domain Names Search engine positioning or search engine optimization is the process of tuning a site so that it is listed in the top 10 of results

Paid Search Engine Inclusion and Placement Paid placements involve purchasing a top listing on the results pages for a particular set of search terms e.g., Google Adwords Search engine placement brokers are companies that aggregate inclusion and placement rights on multiple search engines

Web Site Naming Issues Domain names An important part of selling online can be the domain name for the site. If you want a car, might you give cars.com a try?

URL Brokers and Registrars Sell, lease, or auction domain names ICANN Maintains a list of accredited registrars Domain name parking Permits the purchaser of a domain name to maintain a simple Web site so that the domain name remains in use

Summary Four Ps of marketing Market segmentation Types of online ads Product, price, promotion, and place Market segmentation Using geographic, demographic, and psychographic information can work well on the Web Types of online ads Pop-ups, pop-behinds, and interstitials

Summary Technology-enabled customer relationship management can provide better returns for Web businesses Firms on the Web can use rational branding instead of emotional branding techniques Critical for many businesses is successful search engine positioning and domain name selection