Chapter 4 Consumer Behavior, Internet Marketing, and Advertising E-marketing Chapter 4 Consumer Behavior, Internet Marketing, and Advertising

Learning Objectives Describe the factors that influence consumer behavior online. Understand the decision-making process of consumer purchasing online. Describe segmentation and how companies are building one-to-one relationships with customers. Explain how consumer behavior can be analyzed for creating personalized services. Discuss the issues of e-loyalty and e-trust in electronic commerce (EC). Describe consumer market research in EC.

Learning Objectives Describe the objectives of Web advertising and its characteristics. Describe the major advertising methods used on the Web. Describe various online advertising strategies and types of promotions. Describe permission marketing, ad management, localization, and other advertising-related issues. Relate Web 2.0 and social networks to Internet market research and advertising.

The Consumer Purchasing Decision-Making Process A GENERIC PURCHASING-DECISION MODEL Five major phases: Need identification Information search product brokering Deciding what product to buy merchant brokering Deciding from whom (from what merchant) to buy a product Alternative evaluation Purchase and delivery Postpurchase behavior

Mass Marketing, Market Segmentation, and One-to-One Marketing FROM MASS MARKETING TO ONE-TO-ONE MARKETING Mass Marketing and Advertising market segmentation The process of dividing a consumer market into logical groups for conducting marketing research and analyzing personal information one-to-one marketing (relationship marketing) Marketing that treats each customer in a unique way

Personalization and Behavioral Marketing The matching of services, products, and advertising content with individual consumers and their preferences user profile The requirements, preferences, behaviors, and demographic traits of a particular customer cookie A data file that is placed on a user’s hard drive by a remote Web server, frequently without disclosure or the user’s consent, which collects information about the user’s activities at a site

Personalization and Behavioral Marketing behavioral targeting Targeting that uses information collected about an individual’s Web-browsing behavior, such as the pages they have visited or the searches they have made, to select an advertisement to display to that individual Do You Know Enough About Your Visitors? How Different Are Your Consumers? Do You Have a diverse Products and Services portfolio?

Personalization and Behavioral Marketing collaborative filtering A market research and personalization method that uses customer data to predict, based on formulas derived from behavioral sciences, what other products or services a customer may enjoy; predictions can be extended to other customers with similar profiles

Loyalty, Satisfaction, and Trust In EC CUSTOMER LOYALTY e-loyalty Customer loyalty to an e-tailer or loyalty programs delivered online or supported electronically Business Intelligence and Analytical Software SATISFACTION IN EC Satisfaction is one of the most important success measures in the B2C online environment TRUST IN EC trust The psychological status of willingness to depend on another person or organization

Market Research for EC Observing Customers’ Movements Online transaction log A record of user activities at a company’s Web site clickstream behavior Customer movements on the Internet Number of days since last visit Speed of clickstream behavior Number of products viewed, etc. Web bugs Tiny graphics files embedded in e-mail messages and in Web sites that transmit information about users and their movements to a Web server

Market Research for EC spyware Software that gathers user information over an Internet connection without the user’s knowledge clickstream data Data that occur inside the Web environment; they provide a trail of the user’s activities (the user’s clickstream behavior) in the Web site Web mining Data mining techniques for discovering and extracting information from Web documents; explores both Web content and Web usage

Market Research for EC LIMITATIONS OF ONLINE MARKET RESEARCH Accuracy of responses Loss of respondents because of equipment problems The ethics and legality of Web tracking The difficulty in obtaining truly representative samples The lack of understanding of the online communication process and how online respondents think and interact in cyberspace

Market Research for EC HOW TO OVERCOME THESE LIMITATIONS Identify the intended target audience or demographic so that the right kind of sampling can be performed Anonymity for target respondents may encourage them to be more truthful in their opinions Concerns about the security of the information transmitted should be minimized Companies may outsource their market research to large and experienced companies that have specialized market research departments and expertise

Web Advertising Advertising is an attempt to disseminate information in order to affect buyer–seller transactions In traditional marketing, advertising was impersonal, one-way mass communication that was paid for by sponsors interactive marketing Online marketing, facilitated by the Internet, by which marketers and advertisers can interact directly with customers, and consumers can interact with advertisers/vendors

Web Advertising ad views The number of times users call up a page that has a banner on it during a specific period; known as impressions or page views page An HTML (Hypertext Markup Language) document that may contain text, images, and other online elements, such as Java applets and multimedia files; may be generated statically or dynamically

Web Advertising Terminology click (click-through or ad click) A count made each time a visitor clicks on an advertising banner to access the advertiser’s Web site CPM (cost per thousand impressions) The fee an advertiser pays for each 1,000 times a page with a banner ad is shown conversion rate The percentage of clickers who actually make a purchase

Web Advertising click-through rate The percentage of visitors who are exposed to a banner ad and click on it click-through ratio The ratio between the number of clicks on a banner ad and the number of times it is seen by viewers; measures the success of a banner in attracting visitors to click on the ad hit A request for data from a Web page or file

Web Advertising visit A series of requests during one navigation of a Web site; a pause of a certain length of time ends a visit unique visit A count of the number of visitors entering a site, regardless of how many pages are viewed per visit stickiness Characteristic that influences the average length of time a visitor stays in a site

Web Advertising advertising networks Advertising Online and Its Advantages Cost Richness of format Personalization Timeliness Location-basis Linking Digital branding advertising networks Specialized firms that offer customized Web advertising, such as brokering ads and targeting ads to select groups of consumers

Online Advertising Methods BANNERS banner On a Web page, a graphic advertising display linked to the advertiser’s Web page keyword banners Banner ads that appear when a predetermined word is queried from a search engine e.g Google Adwords random banners Banner ads that appear at random, not as the result of the user’s action

Online Advertising Methods Benefits and Limitations of Banner Ads major benefit is users are transferred directly to an advertiser’s site, often the shopping page major disadvantage of banners is their cost banner swapping An agreement between two companies to each display the other’s banner ad on its Web site banner exchanges Markets in which companies can trade or exchange placement of banner ads on each other’s Web sites

Online Advertising Methods POP-UP AND SIMILAR ADS pop-up ad An ad that appears in a separate window before, after, or during Internet surfing or when reading e-mail pop-under ad An ad that appears underneath the current browser window, so when the user closes the active window the ad is still on the screen E-MAIL ADVERTISING NEWSPAPER-LIKE AND CLASSIFIED ADS

Online Advertising Methods SEARCH ENGINE ADVERTISEMENT URL Listing Keyword Advertising search engine optimization (SEO) The craft of increasing site rank on search engines; the optimizer uses the ranking algorithm of the search engine (which may be different for different search engines) and best search phrases, and tailors the ad accordingly

Basic SEO Best Practices Optimal Page Title Structure Inclusion of Meta Descriptions Include targeted content on the page Verify no broken links Include Sitemap SEO-Friendly URL Structure Inclusion of Alternate Image Tags Do Cross browser testing Check site speed

Search Engine Advertising Almost 50% of online ad spending in 2010 Types: Paid inclusion or rank Inclusion in search results Sponsored link areas Keyword advertising e.g. Google AdWords Network keyword advertising (context advertising) e.g. Google AdSense

Search Engine Advertising (cont’d) Nearly ideal targeted marketing Issues: Disclosure of paid inclusion and placement practices Click fraud Ad nonsense

Online Advertising Methods GOOGLE—THE ONLINE ADVERTISING KING ADVERTISING IN CHAT ROOMS OTHER FORMS OF ADVERTISING Advertising in Online Newsletters Posting Press Releases Online Video Ads advergaming The practice of using computer games to advertise a product, an organization, or a viewpoint

Advertising Strategies and Promotions social network advertising Online advertising that focuses on social networking sites Types of Social Network Advertising Direct advertising that is based on your network of friends Direct advertising placed on social network site e.g facebook, youtube, etc Indirect advertising by creating “groups” or “pages” Sponsored Reviews by Bloggers

Advertising Strategies and Promotions VIDEO ADS ON THE WEB AND IN SOCIAL NETWORKING Tracking the Success of an Online Video Campaign Web video analytics A way of measuring what viewers do when they watch an online video viral marketing Word-of-mouth marketing by which customers promote a product or service by telling others about it Viral Marketing in Social Networks http://www.milliondollarhomepage.com/

Advertising Strategies and Promotions OTHER ADVERTISING STRATEGIES affiliate marketing A marketing arrangement by which an organization refers consumers to the selling company’s Web site Ads as a Commodity (Paying People to Watch Ads) Selling Space by Pixels Personalized Ads Webcasting A free Internet news service that broadcasts personalized news and information, including seminars, in categories selected by the user

Advertising Strategies and Promotions ONLINE EVENTS, PROMOTIONS, AND ATTRACTIONS Live Web Events mobile advertising Ads sent to and presented on mobile devices Mobile Marketing e.g Admob

Special Advertising and Implementation Topics PERMISSION ADVERTISING spamming Using e-mail to send unwanted ads (sometimes floods of ads) permission advertising (permission marketing) Advertising (marketing) strategy in which customers agree to accept advertising and marketing materials (known as opt-in)

Special Advertising and Implementation Topics SOME IMPLEMENTATION ISSUES admediaries Third-party vendors that conduct promotions, especially large-scale ones Ad Exchanges Advertisement as a Revenue Model Measuring Online Advertising’s Effectiveness

Special Advertising and Implementation Topics ad management Methodology and software that enable organizations to perform a variety of activities involved in Web advertising (e.g., tracking viewers, rotating ads) localization The process of converting media products developed in one environment (e.g., country) to a form culturally and linguistically acceptable in countries outside the original target market

Special Advertising and Implementation Topics Automatic Versus Manual Web Page Translation Using Internet Radio for Localization Internet radio A Web site that provides music, talk, and other entertainment, both live and stored, from a variety of radio stations AD CONTENT