© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Part One: Chapter Four Individuals Online “I know you. You tell me what you want. I make it. I remember next time.” D. Peppers and M. Rogers, Tools for Competing in the Interactive Age

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Individualizing the Internet Changing the nature and quality of online interactions

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Individualizing the Internet Changing the nature and quality of online interactions Reacting to the user’s knowledge and level of technological sophistication

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Individualizing the Internet Changing the nature and quality of online interactions Reacting to the user’s knowledge and level of technological sophistication Tailoring a mass market message to an individual’s wants and needs

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Individualizing the Internet Changing the nature and quality of online interactions Reacting to the user’s knowledge and level of technological sophistication Tailoring a mass market message to an individual’s wants and needs Building intelligence into business systems and planning

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Online Marketing Direct interaction creates customer value and sets the stage for relationship building This creates opportunities for –personalization –community building –real-time marketing Customers use sites more as companies add more interactive content

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Patterns of Internet Use Where we go online: Share of time among U.S. users Source: Nie, Simpser, Stepanikova and Zheng

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Patterns of Internet Use What we do online: The tasks of everyday life Activity % Who Have Tried Online Online OnlyOffline Only Both Online and Offline Use Looking up Directions 87%56%14%31% Checking Weather Getting News Finding Phone Numbers Checking Sports Scores Paying Bills Buying Books, CDs, Groceries Source: Pew Internet Project

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Patterns of Internet Use About 60 percent of the population is online in advanced economies Who’s Online? The role of age, income and education

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Patterns of Internet Use About 60 percent of the population is online in advanced economies Across the globe, people under 24 show highest Internet use rates Who’s Online? The role of age, income and education

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Patterns of Internet Use About 60 percent of the population is online in advanced economies Across the globe, people under 24 show highest Internet use rates In the U.S., college education is key factor in likelihood of Internet use Who’s Online? The role of age, income and education

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Patterns of Internet Use About 60 percent of the population is online in advanced economies Across the globe, people under 24 show highest Internet use rates In the U.S., college education is key factor in likelihood of Internet use 80% of U.S. households with income >$75,000 have Internet access; 40% of households with income <$25,000 Who’s Online? The role of age, income and education

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Patterns of Internet Use Who’s Online? The role of age, income and education U.S. Net Use by Educational Attainment Education BackgroundSeptember 2001October 2003 Less than High School High School Diploma High School GED Some College Bachelor’s Degree Beyond Bachelor’s Degree Source: U.S. Census Bureau

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Online Behavior & Interactivity Interactivity depends on –Direct communication –Individual choice –Friendly technology Let’s take a look at each of these

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Direct Communication From Broadcast to Dialogue Dialogue is possible when there’s direct communication between marketer and customer –Intermediaries can filter or block feedback One-to-Many Broadcast (same message to all) Direct Targeting (one direction, different messages) One-to-One Interactive (unique messages to individuals)

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Comparing Communication Methods The Web is a Flexible technology It’s evolving into a personal and dynamic Communication medium

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Individual Choice Selection + Suggestion = Value The modern economy presents a staggering amount of variety –Typical supermarkets contain 25,000 different items –Variety expands even further without the physical constraints of inventory and shelf space Choice is confusing without a way to compare, evaluate & select among the huge number of possibilities –New technologies combine selection and suggestion –Enable consumers to make more effective choices

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Impact on Consumer Choice

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Friendly Technology Televisions, radios, telephones, and VCRs have market penetrations > 85% The Web must become even easier & friendlier to reach the 98% household penetration of TV As Web access devices becomes more appliance- like, increasing numbers of consumers will be online Internet marketers must understand consumer behavior online Technology is technology only if it was invented after you were born

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Online Consumer Behavior Users relate to virtual information in many of the basic social ways they interact with people in their everyday lives Users treat machines and software much like they treat real people For marketers, judgments and assumptions made in real life campaigns are generally valid online The Media Equation Media = Real Life

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Online Consumer Behavior The human brain isn’t well adapted to 21th century media New media is engaging old brains Why Are There Social Responses to Information Technology?

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Online Consumer Behavior Manners matter are critical in online & computer messages : –Users prefer polite computers and respond favorably to flattery online –Good Manners = positive responses Users react favorably to websites and online messages matching their own personality Biases and stereotypes persist online just as they exist in the real world Behavior that is considered rude in real life is considered rude onscreen Simple Technological Features Can Elicit Strong Social Responses

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Online Consumer Behavior Social Cues lacks the social cues that a phone conversation or a face-to-face meeting provide Misunderstandings develop more easily because people it’s harder to judge confusion –People don’t get the signals that make them stop and explain themselves in face-to-face discussion People tend to use stronger language and express themselves more frankly And they tend to circulate their thoughts to a much wider audience

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Online Consumer Behavior Social Cues Unhappy customers may resort to flaming – makes it easy to escalate negative word of mouth –Flaming can lead to bad press Customer service reps have to be careful not to respond similarly –Requires deliberate policy and training

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Online Consumer Behavior Cognitive Difficulty One of the challenges of providing online information is making it accessible to users Providing effective search functionality is key Site developers must understand how their users are likely to search and browse

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Individualization Ability to link individuals to specific products, information and companies allows fundamental change in marketing strategy

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Individualization Ability to link individuals to specific products, information and companies allows fundamental change in marketing strategy While digital computing and networking well-established technologies, individualization still emerging and more controversial

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Individualization Ability to link individuals to specific products, information and companies allows fundamental change in marketing strategy While digital computing and networking well-established technologies, individualization still emerging and more controversial Concerns about invasion of privacy and government abuses

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Individualization and Authentication Identifying a user or device online Tokens – such as passwords or other information – used to identify users Every authenticated system requires a proprietor; no universal system exists Breakdowns in authentication security often result of human, not technical, error or cunning

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Individualization and Association Connecting observable online choices with a customer profile EXAMPLE: Amazon.com and suggestions for reading selections Precision matters – mistakes in inference and association can damage customer relationship

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Individualization and Interaction Online activities should reflect the specific needs and wishes of individual users Each increase in interactivity should build and deepen customer relations Different communication modes employed for different customers

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Individualization and Interaction Dell Computer’s Approach to Customer Interaction

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Study Question 1 Which of the following is NOT a strong indicator of at-home Internet access: A.Religion B.geography C.Income D.education

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Study Question 2 Which of the following is a key factor in developing individualized Internet services? A.Income B.authentication C.education D.digitization

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Study Question 3 Despite its rapid growth, the Internet must become as widespread in American homes as the television? A.Bolder B.Quieter C.Calmer D.friendlier

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Study Question 4 The so-called “media equation” holds that which of the following is true? A)Internet users behave online much like they do in real life B)Internet users behave online more aggressively than in real life C)Internet users behave online more passively than in real life D)Internet users behave unpredictably online

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Study Question 5 Which population is most likely to use the Internet: A)high school dropouts B)high school graduates C)college students D)college graduates