Chapter 1 Marketing in the Digital Age 14 Marketing in the Digital Age

ROAD MAP: Previewing the Concepts Identify the major forces shaping the new Digital Age. Explain how companies have responded to the Internet and other powerful new technologies with e-business strategies, and how these strategies have resulted in benefits to both buyers and sellers. Describe the four major e-commerce domains. Discuss how companies go about conducting e-commerce to profitably deliver more value to customers. Overview the promise and challenges that e-commerce presents for the future.

Forces Shaping the Digital Age

Forces Shaping the Digital Age Digitalization & Connectivity Intranets – connect people within a company. Extranets – connect a company with its suppliers, distributors, and outside partners. Internet – connects users around the world. Internet Explosion Explosive worldwide growth forms the heart of the New Economy. Increasing numbers of users each month. Companies must adopt Internet technology or risk being left behind.

Forces Shaping the Digital Age New Types of Intermediaries: Direct selling via the Internet bypassed existing intermediaries (disintermediation). “Brick-and-mortar” firms became “click-and-mortar” companies. As a result, some “click-only” companies have failed.

Forces Shaping the Digital Age Customization and Customerization: With customization, the company custom designs the market offering for the customer. With customerization, the customer designs the market offering and the company makes it.

Marketing Strategy in the Digital Age Requires a new model for marketing strategy and practice Some suggest that all buying and selling will eventually be done electronically Companies need to retain old skills and practices but add new competencies

E-Business in the Digital Age Involves the use of electronic platforms to conduct company business. Web sites for selling and customer relations Intranets for within-company communication Extranets connecting with major suppliers and distributors

E-Commerce in the Digital Age More specific than e-business. Involves buying and selling processes supported by electronic means, primarily the Internet. Includes: e-marketing e-purchasing (e-procurement)

E-Commerce Networks Global eXchange Services (GXS) consists of more than 100,000 trading partners in 58 countries. GXS completes some 1 billion transactions each year, accounting for $1 trillion worth of goods and services.

E-Marketing in the Digital Age The marketing side of e-commerce. Includes efforts to communicate about, promote, and sell products and services over the Internet. E-purchasing is the buying side of e-commerce. It consists of companies purchasing goods, services, and information from online suppliers.

Benefits to Buyers Convenience Buying is easy and private Provides greater product access and selection Provides access to comparative information Buying is interactive and immediate

Benefits to Sellers Powerful tool for building customer relationships Can reduce costs Can increase speed and efficiency Offers greater flexibility in offers and programs Is a truly global medium

E-Marketing Domains

B2C (Business to Consumer) The online selling of goods and services to final consumers. Expected to generate $428 billion in 2004. There is increasing diversity in buyers. This provides increasing opportunities for targeting markets. Is customer initiated and controlled.

B2B (Business to Business) By 2005, more than 500,000 enterprises will participate as buyers, sellers, or both. Most major B2B marketers offer product information, purchasing, and support services online. Open trading exchanges—huge specialty e-marketspaces to conduct transactions. Click Here to Visit Covisint's Web Site More private trading networks being developed.

C2C (Consumer to Consumer) Occurs on the Web and includes a wide range of products and services. Forums: discussion groups located on commercial online services. Newsgroups: the Internet version of forums.

C2B (Consumer to Business) Consumers can search out sellers, view offers, initiate purchases, and give feedback. Example: on priceline.com, one can bid for airline tickets, hotel rooms, etc. and decide whether to accept company offers. Click Here to Visit priceline.com

Interactive Student Assignment Chapter 1 Choose a partner and talk about the types of online purchases you have made. What are your major concerns about making online purchases? What types of things can an online retailer do to create a more secure buying environment?

Types of e-Marketers

Click-Only Companies Types of Sites E-tailers Chapter 1 Click-Only Companies E-tailers Enabler Sites Search Engines and Portals Types of Sites Content Sites E-tailers: Amazon.com, CDNow Search Engines & Portals: Yahoo, Excite, Google ISPs: Juno, AOL Transactions Sites: auction sites Content Sites: Newspapers, other databases Enabler Sites: Provide hardware and software the enable internet communication. Internet Service Providers Transaction Sites

Reasons for dot.com Failures Poor research or planning. Relied on spin and hype instead of marketing strategies. Spent too heavily on brand identities. Devoted too much effort to acquiring new customers instead of building loyalty.

Click-and-Mortar Companies Most established companies resisted adding Web sites because of the potential for channel conflict and cannibalization. Many are now doing better than click-only companies. Reasons: Trusted brand names and more resources Large customer bases More knowledge and experience Good relationships with suppliers Can offer customers more options

Setting Up for E-Marketing

Types of Web Sites Corporate Web Site: Designed to build customer goodwill and supplement other sales channels. Offers information to customers. Builds closer customer relationships. Generates excitement about the company. Marketing Web Site: Engages consumers in an interaction that moves them closer to a direct purchase. Provides information about the products.

Designing Attractive Web Sites Chapter 1 Designing Attractive Web Sites Context Content Community Customization Communication Connection Commerce The 7 Cs of Effective Web Site Design Context: site’s layout and design Content: text, pictures, sound, and video that the website contains. Community: the ways that the site enables user-to-user communications Customization: site’s ability to tailor itself to different users or to allow users to personalize the site. Communication: The ways the site enables site-to-user, user-to-site, or two-way communication. Connection: degree that the site is linked to other sites Commerce: site’s capabilities to enable commercial transaction

Chapter 1 Discussion Question What features do you look for on a Web site that you feel make the site appealing?

Online Ads and Promotion Forms of online advertising & promotion: Banner ads & tickers (move across the screen) Skyscrapers (tall, skinny ads at the side of a page) Rectangles (boxes that are larger than a banner) Interstitials (pop up between changes on Web site) Content sponsorships (sponsoring special content) Microsites (limited areas paid for by an external company) Viral marketing (Internet version of word-of-mouth)

Viral Marketing Gillette used viral marketing to introduce the 3-bladed Venus razor for women, greatly expanding the audience reached by its “Reveal the Goddess in You” truck tour and beach-site promotions.

The Future of Online Advertising Web communities: Allows members to congregate online and exchange views on issues of common interest E-mail: Use of “enriched” e-mail messages Backlash against spam can be problem Allow people to opt-out of promotions

Legal and Ethical Issues Online privacy Online security Internet fraud Segmentation and discrimination Access by vulnerable or unauthorized groups

Rest Stop: Reviewing the Concepts Chapter 1 Rest Stop: Reviewing the Concepts Identify the major forces shaping the Digital Age. Explain how companies have responded to the Internet and other powerful new technologies with e-business strategies, and how these strategies have resulted in benefits to both buyers and sellers. Describe the four major e-commerce domains. Discuss how companies go about conducting e-commerce to profitably deliver more value to customers. Overview the promise and challenges that e-commerce presents for the future.