1. Marketing on the Internet E-Marketing (2nd Edition) Judy Strauss & Raymond Frost
Chapter 1
© Prentice Hall 2001

2. Chapter 1: Introduction to E-Marketing

3. Learning Objectives Marketing Review
Describe the marketing planning process
Define the marketing concept
Explain the value proposition
Describe the new rules for e-marketing.
Discuss the components of e-business.
Compare and contrast marketing and
e-marketing.

4. Learning Objectives
Define Internet, Web, intranet, extranet, and corporate portal, portal, and hub.
Identify several e-marketing challenges and opportunities.
Discuss the characteristics of the Net’s two generations.
Name and describe e-marketing models for each of the 4P strategies.

5. The Yahoo! Story
Click here Yahoo.com
Marketing Concept: Meeting organizational goals while serving customers needs
Currently has 500,000 sites classified into 25,000 categories
Currently the most popular site on the Internet.
3,566 advertisers and merchants use Yahoo!
New Rules for E-Marketing

6. Ten Rules of E-Marketing
Power Shift from sellers to buyers
Increasing Velocity
Death of Distance
Global reach
Time compression
Knowledge management is key
Market deconstruction
Interoperability
Interdisciplinary focus
Intellectual capital rules (Digital City)

7. Its’ Bigger Than the Internet
Electronic marketing reaches far beyond the web.
Examples:
and Newsgroups
Web TV, Cell Phones, and text-only browsers
Bar Code Scanners
Cable Modem and DSL connections

8. What is E-Business (EB)?
Defined as the continuous optimization of a firm’s business through digital technology
[EB = EC + BI + CRM + SCM + ERP]
Where,
EI = e-commerce
BI = business intelligence
CRM = customer relationship management
SCM = supply chain management
ERP = enterprise resource planning

9. E-Business continued
EC - uses digital technologies to enable buying/selling
BI - collecting primary/secondary information
CRM - strategy to satisfy customers and build long-lasting relationships; high interaction with customers
SCM – delivery of products efficiently and effectively; high interaction with distributors
ERP – optimize business processes and lowering costs
Order entry and purchasing
Invoicing and inventory control

10. Exhibit 1 - 2 Level of commitment to e-business Source: adapted from www.mohanbirsawhney.com

11. What is E-Marketing? Marketing: E-Marketing:
Use of 4 “P’s” to meet customer’s needs
E-Marketing:
Use of technology to increase efficiency of marketing
Increases company profitability and adds customer value

12. The Big Picture Too much digital technology creates:
Decreasing cultural/language differences
Workaholism; less family time
Social class divisions because of high literacy requirements
Digital economies are interdisciplinary
Marketing, MIS/CIS, Finance, Strategists
Human Resources, Production/Operations

13. Networks In order of its relative size: Intranet smallest
Corporate portal
Extranet
Hub
Portal
Lycos
Excite
Web
Internet largest

14. The Internet Statistics: Forrester.com; ACNielsen
Computer Industry Almanac estimates that worldwide users will reach 490 million by 2002; and the US is estimated to reach 165 million users
In 2001, consumer online advertising will grow only 25%, while and promotions will grow 100% and 38%, respectively.
By 2002, E-Commerce may exceed $1.2 trillion
15 million virtual grocery shoppers predicted by 2007

15. End of the Beginning High growth, but negative profits
Fewer E-Companies truly succeed
E.Schwab.com
Must rely on traditional marketing strategies
Dot-com drop-outs and mergers occurring
E-business drops the ‘e’ as electronic business is the way things will be done

16. Exhibit 1 - 4 Entering the Second Generation of E-Business Source: Adapted from the Gartner Group.

17. E-Marketing Challenges and Opportunities
Markets
Revenge of the Consumer
Businesses
Technology

18. Five Markets Business-to-Consumer (B2C) Business-to-Business (B2B)
Example:
Business-to-Business (B2B)
Example:
Consumer-to-Consumer (C2C)
Example:
Business-to-Government (B2G)
Government-to-Consumer (G2C)

19. Revenge of the Consumer
Caveat emptor (“let the buyer beware”)
2000s:
Consumers have control
What consumers want:
Privacy
To safeguard their children
Permission before being sent commercial

20. Businesses Challenges: Opportunities: Quality customer service
Information overload
Opportunities:
Ways of generating revenue
Greater interdependence in their value chain

21. Exhibit 1 - 5 Amazon.com Uses Mass Customization to Personalize Web Pages
Source: Amazon.com is a registered trademark or trademark of Amazon.com, Inc. in the United States and/or other countries. © 2000 by Amazon.com. All rights reserved.

22. Technology Can lower costs on staff and paperwork
Can be a costly investment
Security issues
New payment instruments
Low bandwidth

23. Value = Benefits – Costs
E-Marketing Delivers
Value = Benefits – Costs
Value - customer perceptions of the product’s benefits
Benefits - attributes, brand name, etc…
Add benefits through mass customization and personalization
Costs - time, money, energy, and psychic
Lower costs through 24/7 convenience and one-stop shopping

24. E-Business Model
A method of doing business that contributes to the firm’s profitability whether by increasing revenue or decreasing costs
Necessary for models to identify value for the customer

25. Marketing Mix Components
Product
Price
Distribution
Marketing Communication
Relationship Marketing

26. Exhibit 1 - 6 Selected E-Business Models
Marketing Mix Component
Chapter
Business Model
Product 4
Digital value through new products
Price
Cost reduction using e-marketing
Negotiation
Segmented pricing
Distribution 5
Content sponsorship
Direct selling
Infomediary
Intermediaries
Broker: Online exchange
Online auction
Agent: Manufacturer’s agent
Affiliate program
Metamediary
Virtual mall
Shopping agent
Reverse auction
Buyer cooperative
E-tailer Bit vendor
Tangible products
Marketing Communication 6
Online advertising
Online sales promotion
Content publishing
Relationship Marketing 7
CRM
Community building
Exhibit Selected E-Business Models

27. Product Through E-Marketing numerous new products emerged
Breakthrough software, hardware, and services that created digital value

28. Price Efficiencies have been manifested through E-Marketing
No need for a sales force with all order processing, billing and payments are transacted between customer and Website
Cost savings return a larger profit margin and lower prices

29. Distribution
A primary E-Marketing application that creates customer value
New ways for selling and distributing products
Affects all manufacturers, service providers and intermediaries
Models:
Content Sponsorship Model
Direct Selling Model
Infomediary Model
Intermediaries Model

30. Content Sponsorship Model
Companies create valuable content or services on their Websites
Self-advertising
Examples:
Yahoo!
gURL.com

31. Direct-Selling Model
Manufacturers eliminating channel intermediaries and sell directly to consumers
Known as “Disintermediation”
Dell Computers

32. Infomediary Model
An organization that collects and sells information about consumers or businesses
Similar to a Market Research firm
Hoover’s

33. Intermediary Model
Brokers and agents bring buyers and sellers together but neither purchase nor take possession of the actual products
Brokerage firms
E-Trade, E-Bay, Metalsite
Agent firms
Travelocity
E-tailers are firms that buy products and resell them online
“Click and mortar” stores
Example: E-Toys

34. E-Marketing Communication
Accomplished through promotion mix elements:
Advertising
Sales Promotion
Direct Marketing
Public Relations
Models:
Online Advertising Model
Online Sales Promotion Model
Content Publishing Model
Model

35. Online Advertising Model
Firms purchase advertising space on Websites owned by other firms
Does not include a firm’s own Website
Dogpile

36. Online Sales and Promotion Model
Sampling digital products
Allows consumer to view products before purchasing
E-Music

37. Content Publishing Model
A company’s Website
The displaying of a firm’s information about their product offerings on the Website to Internet users
Brochureware
Does not involve transactions
Directed towards stakeholders
Pure Fishing

38. E-Mail Model Three types: Target Promotions Reverse Channel
Companies target users through research and data mining to send
Bulk Software Marketing
Reverse Channel
User to firm
Customer service
Bass Pro Shops
Consumer-to-Consumer
Word of mouth

39. Relationship Marketing
Customer Relationship Marketing (CRM)
E-Marketing is able to build long-term relationships due to:
Online FAQs
Automatic responders
Customized Websites
Fax-on-demand
Supply chains integrated with the firm’s functions
Model:
Community Building Model

40. Community Building Model
Website developed to create a special interest community
Users may provide information for products or services
Bring consumer to concise location, making them more available for communication by a firm
Creates social bonds and enhances customer relationships
Ivillage

41. Marketing Plan Tasks Situation Analysis
Environmental Factors – Marketers collect and analyze external elements that include economic analysis, social and demographic trends, and more
Market opportunity analysis – This entails a supply and demand analysis along with a SWOT analysis. The SWOT analysis determines the strengths, weaknesses, opportunities, and threats.
Selecting Target Market – marketers select the type of customer they are looking to attract.

42. Marketing Plan Tasks continued
Setting objectives – marketers set the objectives according to the firm’s mission and resources.
Designing marketing mix strategies – Develop product, pricing, distribution, and promotion strategies
Action Plan – Plan the actual marketing plan implementation
Budget – Set a budget for the marketing plan
Evaluation Plan – Continuously evaluate the plan to make sure objectives are met.

43. Exhibit 1 - 7 Marketing Plan Tasks
Environmental Scan
1.        Situation analysis
—Environmental factors
—Market opportunity
analysis (demand, supply, and
SWOT: strengths, weaknesses
opportunities, threats)
2.        Select target market(s)
3.        Set objectives
4.        Select marketing mix: Product, price, distribution promotion
5.        Action plan (tactics)
6.        Budget
7.        Evaluation plan
Exhibit Marketing Plan Tasks

44. Review Questions

45. 1. List the 10 new rules for e-marketing
1.List the 10 new rules for e-marketing. Which in your mind is the most important and why?

46. Question 1:
·         Power shift from sellers to buyers.
·         Increasing velocity.
·         Death of distance.
·         Global reach.
·         Time compression.
·         Knowledge management is key.
·         Market deconstruction.
·         Interoperability.
·         Interdisciplinary focus.
·         Intellectual capital rules.
The most important is the first—Power shift from sellers to buyers. This is because it affects all marketing strategies. A good case probably can be made for each of the others, however.

47. 2. Define e-business and e-marketing

48. Question 2:
E-business is the continuous optimization of a firm’s business activities through digital technology. It involves attracting and retaining the right customers and business partners. It includes digital communication, e-commerce, online research, and it is used by every business discipline. The following formula is simply a graphical representation of important e-business components.
EB = EC + BI + CRM + SCM + ERP
E-marketing is the use of electronic data and applications for planning and executing the conception, distribution, promotion, and pricing of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. It affects traditional marketing by increasing efficiency in traditional marketing functions, and the technology of e-marketing transforms many marketing strategies.

49. 3. How many users are connected to the Internet worldwide
3. How many users are connected to the Internet worldwide? How many in the United States?

50. Question 3:
Approximately 266 million users are connected to the Internet worldwide and 122 million of those are in the United States.
Note: This number will have increased since publication.

51. 4. Explain the difference between intranet, extranet, and corporate portal.

52. Question 4:
Intranet—A network that runs internally in a corporation but that uses Internet standards such as HTML and browsers.
Extranet—An intranet to which value chain partners have admission for strategic reasons.
Corporate Portal—A second-generation intranet. The goal of a corporate portal is to merge all of the employees’ information and communication needs into a single interface. Thus, corporate portals access internal documents, data warehouses, groupware, , and calendars, in addition to the Web. From largest to smallest: Extranet, Corporate Portal, Intranet. The latter two are usually proprietary to the firm’s employees, while an Extranet is open to a firm’s partners, customers, and other selected stakeholders.

53. 5. Explain the difference between a portal and a vertical portal
5. Explain the difference between a portal and a vertical portal. Give examples of each.

54. Question 5:
A portal is a point of entry to the Internet. Many portals such as Yahoo!, Lycos, and Excite were originally just search engines. What makes them portals is that they now provide many services in addition to searching.
A vertical portal is a portal that specializes in one topic, market, or product area. An example is that specializes in women’s issues concerning the home.
Note: This review question requires outside research due to an omission in the text.

55. 6. Explain how a higher-priced item can deliver more value.

56. Question 6:
Value includes customer perceptions of the product’s benefits: specifically its attributes, brand name, and support services. Subtracted from benefits is the cost in acquiring the product: monetary, time, energy, and psychic. Higher priced items can deliver more value by adding more benefits or by lowering time, energy and psychic costs.

57. 7. What is a business model?

58. Question 7:
A business model is a method of doing business that contributes to the firm’s profitability either by increasing revenue or decreasing costs.

59. 8. How are business models related to customer value?

60. Question 8:
When firms decrease costs through e-marketing, they can pass this along to customers via lower prices.
E-marketing can also lower costs by saving customers time and making it easier to purchase products. Many business models increase customer benefits, thus enhancing value.

61. 9. What is the difference between a broker and an agent?

62. Question 9:
Brokers and agents bring buyers and sellers together but neither purchase nor take possession of the products.
Brokers assist in the negotiation and don’t actually represent either side, whereas agents tend to represent either the buyer or seller, taking a commission for their work.

63. 10. What are three ways in which e-mail can be used for marketing communication?

64. Question 10:
The first concerns to target promotions to specific users. The targeting can be very sophisticated—for example, targeting users when they are most receptive to a promotional offering based on data mining of past purchase patterns.
The second form of is the reverse channel: from the user to the firm.
The third form of is from consumer to consumer. This is the modern-day equivalent of word of mouth.

65. The End.