1.Understand the decision-making process of consumer purchasing online. 2.Describe how companies are building one-to-one relationships with customers. 3.Explain how personalization is accomplished online. 4.Discuss the issues of e-loyalty and e-trust in EC. 5.Describe consumer market research in EC. 6.Describe the objectives of Web advertising and its characteristics. 4-1 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

7.Describe the major advertising methods used on the Web. 8.Understand how advertising is done in social networks and the Web 2.0 environment. 9.Describe various online advertising strategies and types of promotions. 10.Describe permission marketing, ad management, localization, and other advertising-related issues. 4-2 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

A GENERIC PURCHASING-DECISION MODEL 1.Need identification 2.Information search product brokering Deciding what product to buy. merchant brokering Deciding from whom (from what merchant) to buy products. 3.Evaluation of alternatives 4.Purchase decision and delivery 5.Postpurchase behavior 4-3 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

CUSTOMER DECISION SUPPORT IN WEB PURCHASING In the web-based environment decision support is available in each phase PLAYERS IN THE CONSUMER DECISION PROCESS – Initiator – Influencer – Decider – Buyer – User ONE-TO-ONE MARKETING – Treats each customer in a unique way to fit marketing and advertising with customer’s profile and needs – One of the greatest benefits of EC is its ability to match products with individual consumers 4-4

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personalization 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. 4-6 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

The major strategies used to compile user profiles include: 1.Solicit information directly from the user 2.Observe what people are doing online 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, that collects information about the user’s activities at a site. 3.Build from previous purchase patterns 4.Perform marketing research 5.Make inferences : infer from information provided by customers on other issues or by analyzing similar customers behavioral targeting The use of information collected on an individual’s Internet browsing behavior to select which advertisements to display to that individual. 4-7

One of the major objective of one-to-one marketing is to increase customer loyalty Attracting and retaining loyal customers remains the most important issue for any selling company Increased customer loyalty can bring cost savings customer loyalty strengthen a company's market position customer loyalty can led to decrease in price sensitivity and an increase in word-of-mouth advertising Loyalty programs: reward points, gift reward …. The introduction of EC decreases loyalty in general. Why? e-loyalty :Customer loyalty to an e-tailer or loyalty programs delivered online or supported electronically. Companies can foster e-loyalty by learning about their customers’ needs, interacting with customers,and providing superb customer services Harrah’s example 4-8

SATISFACTION IN EC TRUST IN EC – trust The psychological status of willingness to depend on another person or organization. – Both parties in a transaction assume some risk in the E-marketplace – EC vendors need to establish high levels of trust with current and potential customers – Trust is particularly important in global EC transactions – Trust in EC infrastructure 4-9

The goal of market research is: – to discover marketing opportunities and issues – to establish marketing and advertising plans – to better understand the purchasing process – to evaluate marketing performance – On the web :to turn browsers into buyers methods for conducting market research online – Market research that uses the internet is faster and more efficient and allows the researcher to access a more geographically diverse audience – On the web,market researcher can conduct a very large study much more cheaply 4-10 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

What are marketers looking for in EC market research? – By looking at a personal profile that includes observed behaviors on the web, it is possible for marketers to explain and predict online buying behavior – Typical questions that online market research attempts to answer: 1.What are the purchase patterns for individuals and groups? 2.What factors encourage online purchasing? 3.How can we identify those who are real buyers from those who are just browsing? – Internet-based market research is often done in an interactive manner, and it provides companies with greater ability to understand the customer, the market, and the competition 4-11 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Market research for one-to-one 1.Direct Solicitation of Information – Hearing directly from the customers :one-to-one communication with specific customers by , e-bulletin board, chat rooms, blogs, wikis, newsgroup, e-forums, – Online Focus Groups : panels of qualified participants – Implementing web-based surveys :may be passive or interactive – Conduct online voting polls: popular on social networks 2.Data Collection in the Web 2.0 Environment Discussion forums, polling, blogging, chatting, live chat, chatterbots, collective wisdom for intelligence, find expertise, folksonomy, data in videos, photos, and other rich media 4-12 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

3.Observing Customers’ Movements Online Transaction log: A record of user activities at a company’s Web site. – With log file analysis tools,it is possible to get a good idea of where visitors are coming from,how often they return, and how they navigate through a site Clickstream behavior: Customer movements on the Internet, which can be seen in their transaction logs Cookies, web bugs, and spyware – Can be used to supplement transaction-log methods Web bugs: Tiny graphics files embedded in messages and in Web sites that transmit information about users and their movements to a Web server. Spyware : Software that gathers user information over an Internet connection without the user’s knowledge. 4-13

– Analysis of B2C Clickstream Data 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 The use of data mining techniques for discovering and extracting information from Web documents(content) and Web usage. The usage analysis is derived from clickstream data 4-14 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

4.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. Legal and Ethical Issues in Collaborative Filtering – Several vendors offer permission-based personalization tools 4-15 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Limitations of online market research and how to overcome them Too much data may be available >data warehousing & data mining, business intelligence Accuracy of responses and the ethics and legality of web tracking Online Focus group responses can lose eye contact and body language The lack of representativeness in samples of online users The lack of clear understanding of the online communication process and how online respondents think and interact in cyberspace Companies can outsource their market research needs 4-16

One problem with web analytics is that we observe and follow a computer not knowing who is actually moving the mouse Biometric marketing – Biometrics :An individual’s unique physical or behavioral characteristics that can be used to identify an individual precisely (e.g. fingerprints). – By applying the technology to computers, we can improve both security and learn about the user’s profile precisely 4-17 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

OVERVIEW OF WEB ADVERTISING Mass advertising: impersonal Telemarketing & direct mail advertising : expensive and slow 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 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

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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. Button: A small banner that is linked to a Web site. It can contain downloadable software. 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. 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 FYI

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Conversion rate: The percentage of clickers who actually make a purchase. CPM (cost per thousand impressions): The fee an advertiser pays for each 1,000 times a page with a banner ad is shown. Hit: A request for data from a Web page or file. Page: An HTML (Hypertext Markup Language) document that may contain text, images, and other online elements, such as Java applets and multimedia files. It can be generated statically or dynamically. Stickiness: Characteristic that influences the average length of time a visitor stays in a site. Unique visits: A count of the number of visitors entering a site, regardless of how many pages are viewed per visit. Visit: A series of requests during one navigation of a Web site; a pause of a certain length of time ends a visit. 4-22

Why internet advertising ? Advertising Online and Its Advantages – Cost – Richness of format – Personalization – Timeliness – Location-basis – Linking – Digital branding 4-23 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

1.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. They are effective for companies that want to narrow their target audience – Random banners Banner ads that appear at random, not as the result of the user’s action. For companies that want to introduce new products or promote their brands – Personalized banners :most effective 4-24

– Benefits of Banner Ads The major benefit of banner ads is that, by clicking on them, users are directly transferred to the shopping page of an advertiser’s site. The ability to customize them for individual surfers or a market segment of surfers. Viewing of banners is common because customers are forced to see them May include attention-grabbing multimedia – Limitations of Banner Ads The major disadvantage of banners is their cost A limited amount of information can be placed on the banner 4-25 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

2.POP-UP AND SIMILAR ADS One of the most annoying phenomena in web surfing is the increased use of pop-up pop-up ad An ad that appears in a separate window before, after, or during Internet surfing or when reading . 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. Many users strongly object to this method Most browsers provide an option to block pop-ups Legal attempts have been made to control pop-ups because they are basically a form of spam 4-26

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3. ADVERTISING continues to enjoy popularity and has become acknowledged as a legitimate marketing channel The advantages are :low cost, the ability to reach wide variety of targeted audiences,can combine advertising and customer services,it can include a direct link act like banner Most companies have a database of customers to whom send massages. a mailing list is a powerful tool to target a group of people Using to send ads without the receivers’ permission is considered spamming In the future, ads will be targeted to individuals based not only on their user profile but also on their physical location at any point in time 4-28

4.CLASSIFIED ADS Can be found on special sites, on online newspapers, exchanges, and portals 5.SEARCH ENGINE ADVERTISEMENT URL Listing – Advertisers should register URLs with as many search engines as possible – It is free, anyone can submit a URL to a search engine and be listed – The major drawback is location on the engine’s list Keyword Advertising – Google has created a new advertising technology by linking an advertisement with the user’s keywords – This can increase the likelihood that the advertisement will be viewed because of its high relevance to user interests – Google allows the advertisers to bid for the order of appearance 4-29

Improving a company’s search engine ranking (optimization) – Because the URL appearing at the top of the search engine results usually receives more attention,each company wants its URL to be placed at the top – search engine optimization 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 phases, and tailors the ad accordingly. Google: The Online Advertising King 4-30

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6.VIRAL MARKETING – Word-of-mouth method by which customers promote a product or service by telling others about it. – This can be done by s, text messaging, chat rooms, instant messaging, news group messages, e-forums, and social networks – Can be used to build brand awareness at a minimal cost, because the people who pass on the message are paid very little or nothing for their effort – Ex: facebook, hotmail 4-33 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Social network advertising – Online advertising that focuses on social networking sites. – The major benefit is that advertisers can tale advantage of the users demographic information and target appropriate ads to the users – Types of Social Network Advertising: Direct advertising that is based on your network of friends Direct advertising placed on your social network site Indirect advertising by creating “groups” or “pages” – Sponsored Reviews by Bloggers: companies are soliciting the help of paid bloggers to briefly mention their brand in regular blog entries or in video chip 4-34

Advertising in chat rooms and forums – Vendors frequently sponsor chat rooms. The sponsoring vendor place a chat link on its site and the chat vendor does the rest – Chat room ad allows advertisers to cycle through messages and target the chatters again and again – Chat room ad can become more thematic – Chat rooms are used as one-to-one connection Video ads on the web and in social networking – video ads are very popular in the web 2.0 environment and social networking – Many companies are using consumers-generated videos and combining several of them to tell a story,then they show the story as an online ad or on TV – You tube has emerged as the largest advertising platform for video ads – tracking the success of an online video campaign FYI Viral marketing in social networks – Social networks are ideal place for viral marketing 4-35

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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) at mypoints.com consumers fill out data on personal interests and then they receive targeted banners based on their personal profiles. each banner is labeled with the amount of payment that will be paid if the consumer reads the ad Selling space by pixels milliondollarhomepage.com the website sell advertising space on pages at 1 dollar per pixel 4-37 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Personalized ads and other personalization – Broadvision.com provides a customized ad service platform called Broadvision e marketing.It is a customers database that can be used by companies to send customized ads to consumers based on their profile – webcasting a free internet news service that broadcasts personalized news and information, including seminars, in categories selected by the user. – Ads for adobe PDF files Online events, promotions, and attractions – live web events 4-38

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PERMISSION ADVERTISING – spamming Using 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”) Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

ADVERTISEMENT AS A REVENUE MODEL – Many of dot-com failures in 200 to 2002 were caused by revenue model that contained advertising income as the major or only revenue source – Too many websites are competing for advertising money.therefore almost all portals are adding other sources of revenue – A small sites can survive by concentrating on a niche area MOBILE MARKETING AND ADVERTISING – mobile advertising (m-advertising) Ads sent to and presented on mobile devices. – Enables the advertisers to send unique,personalized, and customized ads to mobile devices 4-42

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AD CONTENT – Finding a good ad agency to write content and shape the advertising message is one of the key factors in any advertising campaign – Content is especially important to increase stickiness SOFTWARE AGENTS IN MARKETING AND ADVERTISING APPLICATIONS – We demonstrated how intelligent agents help online shoppers find and compare products and services LOCALIZATION The process of converting media products developed in one environment (e.g. country) to a form culturally and linguistically acceptable in environments outside the original target market. 4-44

1.Do we understand our customers? 2.Who will conduct the market research? 3.Are customers satisfied with our Web site? 4.How can we use social networks for advertising? 5.How do we decide where to advertise? 6.What is our commitment to Web advertising, and how will we coordinate Web and traditional advertising? 4-45 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

7.Should we integrate our Internet and non- Internet marketing campaigns? 8.What ethical issues should we consider? 9.Are any metrics available to guide advertisers? 10.Which Internet marketing/advertising channel should you use? 4-46 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

In order to gain CH 4 point, you need to do one of the following : 1.Answer one of the chapter cases Or 2.Choose two of the internet exercises (page 209) and answer them I recommend number 7,10,12,13,15 Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 4-47