1. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 1 Chapter 4 E-Commerce: Marketing in the Digital Age

2. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2 Chapter Objectives 1. Define e-commerce and give examples of each function of the Internet. 2. Describe how marketers use the Internet to achieve their firms’ objectives. 3. Explain how online marketing benefits organizations, marketers, and consumers. 4. Identify the goods and services marketed most often on the Internet and the demographic characteristics of the typical online shopper. 5. Identify the primary online marketing channels. 6. Explain how marketers use interactive tools as part of their online marketing strategies. 7. Discuss how an effective Web site can enhance customer relationships. 8. Describe how to measure the effectiveness of online marketing efforts.

3. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 3 What is E-Commerce? Electronic commerce Electronic commerce (e-commerce): Targeting customers by collecting and analyzing business information, conducting customer transactions, and maintaining online relationships with customers by means of computer networks. Electronic marketing Electronic marketing (e-marketing): Strategic process of creating, distributing, promoting, and pricing goods and services to a target market over the Internet or through digital tools. Digital tools: Fax machines, PDAs, smart phones, and DVDs.

4. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 4 Capabilit y DescriptionExample Global reach The ability to reach anyone connected to a PC anywhere in the world eBay—the online auction site—links buyers and sellers throughout the world One-to-one marketing Creating products to meet customer specifications, also called personalization Lands’ End offers online shoppers custom-made shirts, slacks, and jeans. Interactive marketing Buyer–seller communications through such channels as the Internet and interactive kiosks Best Buy stores have a “Computer Creation Station” that lets customers design and order custom-made personal computers.

5. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 5 Capabilit y DescriptionExample Right-time marketing The ability to provide a product at the exact time needed UPS customers can place service orders online and track shipments 24/7. Integrated marketing Coordination of all promotional activities to produce a unified, customer-focused promotional message Southwest Airlines use the slogans “A Symbol of Freedom” and You’re Now Free to Move around the Country” in both online and offline promotions.

6. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 6 Interactivity and E-Commerce Interactive Marketing Buyer-seller communications in which the customer controls the amount and type of information received from a marketer through such channels as the Internet, and virtual reality kiosks.

7. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 7 The Internet The Internet Over 132 million active users in the USA Intranets Internal corporate network that allows employees within an organization to communicate with each other and gain access to organizational information Extranets Secure network accessible through a Website by external customers or organization for electronic commerce. It provides more customer-specific information than a public site.

8. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 8 Four Web Functions Four Web Functions Communication E-mail; Instant messaging; Chat rooms and bulletin boards; Online communities Information Search engines; Online publications; Newsgroups; Internet forums; Electronic bulletin boards; Web communities

9. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 9 Four Web Functions Four Web Functions Entertainment Games; Radio and TV programming, including music; Streaming video of live news reports, sports, and musical performances; Electronic books E-Commerce Online auctions B2B: electronic exchanges; Extranets and private exchanges B2C: Electronic storefronts and cybermalls; Web kiosks, Online ticketing; Matchmaking

10. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 10 Internet Service Provider (ISP): Organization that provides access to the Internet via a telephone, satellite TV service, or cable TV network. Wi-Fi Search engines Portals Accessing the Internet

11. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 11 E-Commerce and the Economy Business-to-Business Online Marketing Business-to-Business Online Marketing Involves professional buyers and sellers Requires less glitz and glamour Much more money involved than business-to- consumer online marketing Electronic exchanges Search marketing

12. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12 Benefits of Business-to-Business Online Marketing Benefits of Business-to-Business Online Marketing Finding new markets and customers Cost savings in every area of the marketing mix Time reduced in reaching markets Easy commerce

13. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 13 Online Consumer Marketing Online Consumer Marketing Lower Prices Bots (short for robots): programs that check hundreds of sites, gather and assemble information, and bring it back to the sender Convenience Worldwide access, Day or night, Customized products and information Personalization Improves the quality of the shopping experience Improves customer satisfaction

14. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 14 Benefits of Online Consumer Marketing Benefits of Online Consumer Marketing Relationship Building Crucial to success Online’s personalization helps Easier for small businesses with small budgets Customer service is the key Increased Efficiency Greater profit margins Educating customers online frees salespeople from answering routine questions

15. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 15 Cost Reductions Reduced start-up costs Reduced operating costs Frees funds for new marketing efforts A More Level Playing Field Even small firms with small budgets can compete in the global marketplace Helps eliminate discrimination and allow minority businesses to succeed on their own merits

16. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 16 Online Marketing is International Marketing Online Marketing is International Marketing Examples of Global Web Sites Netsprint.pl Polish version of infoseek Us.starmedia.com Spanish- and Portuguese-language Star Media Network Homeuol.com.br Universo Online, the largest Internet portal serving Brazil Sify.com Offering users of Indian ancestry “all the India you want to know.”

17. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 17 Security and Privacy Issues Security and Privacy Issues Critical factors in building a relationship online Electronic signature Credit card security Authenticity of item offered Payment guarantees Fraud protection  Truste: Ensuring Internet Privacy

18. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 18 Online buyers Online buyers Annual household income of $30K-$75K Demographic continue to change The next generation of online shoppers will be more representative of offline consumers Online sellers Online sellers At first, offered familiar products like books and computer hardware Now offering a wider variety of goods including toys, groceries, consumer electronics and prescription drugs

19. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 19 Company Web Sites Company Web Sites Corporate Web sites and Marketing Web sites Electronic Storefronts and Cybermalls Electronic Storefronts and Cybermalls Advertising on Other Web sites Advertising on Other Web sites Banner ads; Pop-up ads; Search ads Online Communities Online Communities Electronic bulletin boards Other Interactive Marketing Links Other Interactive Marketing Links Web kiosks Smart cards Virtual coupon and online sample Blogs

20. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 20 Creating an Effective Web Presence Includes the following ongoing elements: Building an effective web site Managing a web site Measuring Effectiveness

21. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 21 Building an Effective Web Site Building an Effective Web Site Establish a Mission for the company’s site Identify the purpose of the site Satisfy customer needs and wants through a clear site design Managing a Web Site Managing a Web Site Update the site frequently Flag new merchandise and services Ensure that site appears to be current Update software as needed Track costs and revenues

22. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 22 Ways to Measure Web site Effectiveness Research Studies Profitability Web site traffic counts Click-through rates Conversion rates