E-Marketing and Customer Relationship Management 6 E-Marketing and Customer Relationship Management

Objectives To define electronic marketing and electronic commerce and recognize their increasing importance in strategic planning To understand the characteristics of electronic marketing—addressability, interactivity, memory, control, accessibility, and digitalization—and how they differentiate electronic marketing from traditional marketing activities Copyright © Houghton Mifflin Company. All rights reserved.

Objectives (cont’d) To examine how the characteristics of electronic marketing affect marketing strategy To understand how electronic marketing and information technology can facilitate customer relationship management To identify the legal and ethical considerations in electronic marketing Copyright © Houghton Mifflin Company. All rights reserved.

Marketing on the Internet Customer Relationship Management Chapter Outline Marketing on the Internet Customer Relationship Management Legal and Ethical Issues in E-Marketing Copyright © Houghton Mifflin Company. All rights reserved.

Marketing on the Internet Electronic Commerce (E-Commerce) Sharing business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks Electronic Marketing (E-Marketing) The strategic process of creating, distributing, promoting, and pricing products for targeted customers in the virtual environment of the Internet Copyright © Houghton Mifflin Company. All rights reserved.

Benefits of E-Marketing Open and instantaneous flows of information Enhanced customer service efficiencies Worldwide scope of the electronic market Copyright © Houghton Mifflin Company. All rights reserved.

Basic Characteristics of Electronic Marketing: Addressability Addressability is a marketer’s ability to identify customers before they make a purchase How e-merchants attain addressability Limit access to areas of their website to encourage customer registration Offer contests and prizes in exchange for consumer information Place “cookies” on visitor’s computer to track visitor usage and preferences Copyright © Houghton Mifflin Company. All rights reserved.

Basic Characteristics of Electronic Marketing: Interactivity Interactivity is the ability to allow customers express their needs and wants directly to the firm in response to the firm’s marketing communications Real-time interaction with customers Broader market coverage at a lower cost Community refers to a sense of group membership or feeling of belonging Virtual communities on the Web Copyright © Houghton Mifflin Company. All rights reserved.

Basic Characteristics of Electronic Marketing: Memory Memory is the ability to access databases or data warehouses containing individual customer profiles and past purchase histories and to use these data in real-time to customize a marketing offer. A database is a collection of information arranged for easy access and retrieval. Copyright © Houghton Mifflin Company. All rights reserved.

Basic Characteristics of Electronic Marketing: Control Control refers to customers’ ability to regulate the information they view and the rate and sequence of their exposure to that information. A portal is a multiservice website that serves as a gateway to other websites. Copyright © Houghton Mifflin Company. All rights reserved.

Basic Characteristics of Electronic Marketing: Accessibility Accessibility is the ability to obtain information available on the Internet. Informs and educates the inquiring consumer about competing products and prices Creates competition for the consumer’s attention Helps make information available to employees to service customers Copyright © Houghton Mifflin Company. All rights reserved.

Basic Characteristics of Electronic Marketing: Digitalization Digitalization is the ability to represent a product, or at least some of its benefits, as digital bits of information. Copyright © Houghton Mifflin Company. All rights reserved.

E-Marketing Strategies E-Marketing Strategy Considerations Distribution Systems Target Markets Product Marketing Promotion Mediums Pricing Copyright © Houghton Mifflin Company. All rights reserved.

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Customer Relationship Management Focuses on using information about customers to create marketing strategies that develop and sustain desirable long-term relationships A focus on CRM is possible in e-marketing because of marketers’ ability to target individual customers. The ability to identify individual customers allows marketers to shift their focus from increasing share of market to increasing share of customer. CRM is often based on the use of information technology. Copyright © Houghton Mifflin Company. All rights reserved.

80 percent of business profits come from 20 percent of customers. The 80/20 Rule 80 percent of business profits come from 20 percent of customers. Technology allows marketers to profile customers in real-time and assess their lifetime value (LTV) to the firm. Some customers may be too expensive to retain given the low level of profits they generate. Firms should focus on developing and managing long-term relationships with more profitable customers. Copyright © Houghton Mifflin Company. All rights reserved.

Technology Drives CRM Customer support and call center software Provides customer interaction and improved service Captures information about all interactions Sales automation Links sales force to applications that facilitate selling and providing service Provides information to determine the best solution for customers Determines order status, tracks deliveries, and identifies service problems Copyright © Houghton Mifflin Company. All rights reserved.

Technology Drives CRM (cont’d) Should not be used just as a cost-reduction tactic Should not be overwhelmed by gathering unnecessary data Should be used as a tool to sustain long-term relationships Copyright © Houghton Mifflin Company. All rights reserved.

Legal and Ethical Issues in E-Marketing Personal privacy issues Unauthorized placement of cookies on personal computers Website information requirements for registration Collection of information from children Use of spyware in software Spam Unsolicited commercial e-mail (UCE) Misappropriation of intellectual property Illegal copying of copyrighted software, movies, CDs, and other creative materials Copyright © Houghton Mifflin Company. All rights reserved.

The BBBOnLine Privacy Seal and Program Explanation Reprinted by permission of the Council of Better Business, Inc. FIGURE 4.1 Copyright © Houghton Mifflin Company. All rights reserved.

Copyright © Houghton Mifflin Company. All rights reserved.

Copyright © Houghton Mifflin Company. All rights reserved.

After reviewing this chapter you should: Be able to define electronic marketing and electronic commerce and recognize their increasing importance in strategic planning. Understand the characteristics of electronic marketing—addressability, interactivity, memory, control, accessibility, and digitalization—and how they differentiate electronic marketing from the traditional marketing environment. Copyright © Houghton Mifflin Company. All rights reserved.

After reviewing this chapter you should: Have examined how the characteristics of electronic marketing affect marketing strategy. Understand how electronic marketing and information technology can facilitate customer relationship management. Be aware of legal and ethical considerations associated with electronic marketing. Copyright © Houghton Mifflin Company. All rights reserved.