1. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 0 in Chapter 2 Chapter 2 Adapting Marketing to the New Economy PowerPoint by Karen E. James Louisiana State University - Shreveport

2. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 1 in Chapter 2 Objectives  Identify the major forces driving the new economy.  Understand how business and marketing practices are changing as a result of the new economy.

3. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 2 in Chapter 2 Objectives  Explore how the Internet has changed the way marketers use customer databases.  Understand how marketers practice customer relationship management.

4. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 3 in Chapter 2 Drivers of the New Economy  Digitalization and connectivity –The Internet, intranets & extranets are key  Disintermediation and reintermediation  Customization and customerization  Industry convergence

5. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 4 in Chapter 2 Changes in Business Practices Old Economy –Product unit organization –Profitable transactions –Financial scorecard –Stockholders –Marketing does the marketing New Economy –Customer segment organization –Lifetime value of customer –Marketing scorecard –Stakeholders –Everyone does the marketing

6. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 5 in Chapter 2 Changes in Business Practices Old Economy –Build brands via advertising –Customer acquisition –No customer satisfaction measurement –Overpromise, underdeliver New Economy –Build brands via performance –Customer retention –Measure customer satisfaction and retention rates –Underdeliver, overpromise

7. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 6 in Chapter 2 How Marketing Practices are Changing  E-Business  Setting up web sites  Customer relationship marketing

8. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 7 in Chapter 2 How Marketing Practices are Changing: E-business  Business practices are changing... –E-business uses electronic means and platforms to conduct business. –E-commerce web sites facilitate the online sale of products and services. –E-purchasing from online suppliers. –E-marketing efforts include those that inform, communicate, promote, and sell products and services over the Internet.

9. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 8 in Chapter 2 How Marketing Practices are Changing: E-business Internet Domains  B2C  B2B  C2C  C2B  B2C = Business-to- Consumer  Benefits include: greater ordering convenience, lower cost, easier information and price gathering

10. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 9 in Chapter 2 How Marketing Practices are Changing: E-business Internet Domains  B2C  B2B  C2C  C2B  B2B = Business-to- Business  Volume is 10-15% higher than B2C.  Benefits include: lower costs via B2B auctions, buying alliances, greater access to information.

11. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 10 in Chapter 2 How Marketing Practices are Changing: E-business Internet Domains  B2C  B2B  C2C  C2B  C2C = Consumer-to- Consumer  Transactions occur via online trading sites such as eBay.  Consumers are creating online product information via newsgroup and chat room dialogues.

12. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 11 in Chapter 2 How Marketing Practices are Changing: E-business Internet Domains  B2C  B2B  C2C  C2B  C2B = Consumer- to-Business  Facilitate communication between customer and businesses.

13. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 12 in Chapter 2 How Marketing Practices are Changing: E-business  Brick and click firms have often faced channel conflict issues  Brick and click firms tend to be more successful than pure click e-tailer competitors because... –Customer acquisition costs are lower –Resources, knowledge, customer base, supplier relationships are superior

14. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 13 in Chapter 2 How Marketing Practices are Changing: Web Site Design  Context  Content  Community  Communication  Connection  Commerce  Customization The Seven “C’s” of Web Site Design

15. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 14 in Chapter 2 How Marketing Practices are Changing: Web Site Design  Placing Ads and Promotions Online –Banner ads –Sponsorships –Microsite –Interstitials –Browser ads –Alliances and affiliate programs

16. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 15 in Chapter 2 How Marketing Practices are Changing: Web Site Design  Advertising income  Sponsorship income  Alliance income  Membership and subscription income  Profile income  Product and service sales income  Transaction commissions and fees  Market research/ information  Referral income Dot.com revenue and profit models:

17. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 16 in Chapter 2 How Marketing Practices are Changing: CRM  Customer Relationship Marketing (CRM) allows companies to: –Deliver real-time customer service –Customize market offerings, products, services, media, and messages

18. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 17 in Chapter 2 How Marketing Practices are Changing: CRM  Effective Customer Relationship Marketing requires: –Reducing customer defection rates –Extending the life of the customer relationship –Enhancing customer sales / profit potential –Making low-profit customers MORE profitable or terminating them –Focusing on high value customers

19. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 18 in Chapter 2 How Marketing Practices are Changing: CRM  CRM Leads to One-on-One Marketing –Four Steps for One-to-One Marketing Don’t go after everyone, carefully identify your prospects and customers. Group customers by their needs and their value to the company; aggressively pursue the most valuable customers. Build stronger relationships with customers via individual interaction. Customize messages, services, and products for each customer.

20. ©2003 Prentice Hall, Inc.To accompany A Framework for Marketing Management, 2 nd Edition Slide 19 in Chapter 2 How Marketing Practices are Changing: CRM  Customer Databases and Database Marketing are the key to Effective CRM  Database uses include: –Best prospect identification –Matching offers to customers –Deepening customer loyalty –Reactivating customer purchasing –Avoiding serious mistakes