1. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. E-Marketing Lecture 2 Sandeep Krishnamurthy

2. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Strategic Objectives q Maximizing Profit –Commerce-based strategy: Selling products to consumers for a profit. –Traffic-based strategies »Banner Advertising »Associates/affiliates programs »Subscription models q Service-based approach –Creating traffic to own and other sites. –Building product awareness/knowledge. –Brand-building. –Building relationships with customers.

3. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Benefits to the Firm- Distribution q Reduction in distribution and selling costs –Low inventory. –Reduction in salesforce. –Product training to sales people reduced. q Direct interaction between buyers and sellers leading to disintermediation. –Manufacturers can sell directly to consumers eliminating wholesalers and retailers.

4. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Benefits to the Firm- Distribution q Transactional Convenience –Open 24/7 to global market. –Time to complete transactions reduced. –Transfers tasks to consumers. q Allows capture of consumer information.

5. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Benefits to the Firm- Communication q Allows for rational arguments –Detailed information can be provided. –Complicated arguments can be explained using examples and charts. q Narrowcasting –Birth of very specialized segments. –Consumers opt in. q Interactivity –Consumers’ voice in the design of the marketing mix. e.g. Customization

6. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Goals q Generate Traffic –To own site –To other sites q Increase community density –Size of community –Number of linkages q Maximize Revenue –E-commerce –Banner advertising –Subscriptions (Global vs. local)

7. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Customer Traffic- Discussion Questions q What are the advantages of increasing customer traffic to a site? q What can be done to increase customer traffic to a site?

8. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Shikar’s Ideas on Customer Magnets q Product Magnet (e.g. Amazon.com) q Service Magnet (e.g. Yahoo) q Customer Segment Magnet (e.g. momsonline.com, seniornet.org) q Industry Magnets (e.g. realtor.com) q Business Model Magnets (e.g. onsale)

9. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Deconstructing Customer Traffic q Surfers vs. Purposive Visitors q Browsers vs. Buyers q Offense vs. Defense –Encourage new customers to visit your site. –Encourage customers who have visited your site in the past to return. –Encourage repeat customers to view more pages.

10. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Search Engine Optimization q Individuals are more likely to visit the top few sites that pop up in search engines. q Laundry list approach is viewed as spamming and the sites will not pull you up. q Hence, you need to find the right balance.

11. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Metrics for evaluating a site. q Number of hits or impressions. q Number of unique customers. q Average visit length. q Average number of pages visited. q Average number of banner ads clicked. q Average number of individuals contacted in community.

12. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Metrics for commerce sites only q Average number of items viewed. q Average number of items purchased.

13. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Value Chain q Internet Service Provider (e.g. Microsoft, AT&T, GTE, Mindspring) q Portal (e.g. MSN, Yahoo, Excite) q E-malls (e.g. emall.com) q E-tailers (e.g. Amazon.com, egghead.com) q Delivery Company (e.g. UPS, FedEx, USPS)

14. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Website Quality q Information Quality q Information Structure Quality. q Experiential Quality.

15. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Information Quality q Consumers define quality of information. q High quality= high relevance for consumer.

16. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Types of Information Consumers Value q Product –Choices available, Detailed product information, Links to third-party sites, Product quality data, Feature information, On-line demonstrations. q Price –Total Price= Shelf Price+ Shipping and Handling Cost; Special Deals.

17. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Types of Information Consumers Value q Promotion –Consumers appreciate special deals (e.g. coupons, price promotions, web-specials etc.) q Community –Knowledge of other consumers, their experiences and their perceptions.

18. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Information Structure Quality q Valid Information Structure –Categories are mutually exclusive. –Each category has sufficient audience size. –Different audiences for different categories. q Quality of Information –Simplicity –Substantive –Relevant and actionable

19. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Experiential Quality q Pleasantness –Pleasant look and feel. q Speed of access –Graphics may be an issue. q Navigational ease –What was the “transaction cost”? Were consumers able to find the information they wanted easily?

20. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. Quality Uncertainty on the Web q Two types of products- –Search products- Quality can be ascertained from objective information- e.g. PCs –Experience products- Quality can be ascertained only after experiencing the product- e.g. Books, Jewelry, Art. q Avoiding the uncertainty of the quality of experience products a big issue.

21. Copyright  1999, Sandeep Krishnamurthy. All rights reserved. How can quality uncertainty be reduced? q Site Reputation –Well known, High site traffic, Reputation for quality. –Manufacturer vs. Retailer reputation q Reducing post-consumption risk –Money-back guarantees, Satisfaction guarantees, Liberal return policies. –Sampling (e.g. song and book samples) –Try-outs (e.g. shareware)