Electronic Commerce Eighth Edition

1. Electronic CommerceEighth Edition Chapter 4Marketing on the Web

2. Learning Objectives In this chapter, you will learn about: When to use product-based and customer-based marketing strategies Communicating with different market segments Using advertising on the Web Electronic Commerce, Eighth Edition Electronic Commerce, Eighth Edition 2 2

3. Learning Objectives (cont’d.) E-mail marketing Technology-enabled customer relationship management Creating and maintaining brands on the Web Search engine positioning and domain name selection Electronic Commerce, Eighth Edition Electronic Commerce, Eighth Edition 3 3

4. Product-Based Marketing Strategies • Web presence must integrate with image, brand • Product-based organization • Managers think of physical objects sold or used • Customers think in terms of product categories • Examples • Web office supply stores (Staples) • Previous print catalog sales (Sears) • Both examples: • Organized Web sites from internal viewpoint Electronic Commerce, Eighth Edition 4

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7. Customer-Based Marketing Strategies • Identify customer groups sharing common characteristics • Example: Saber Holdings • Four main groups (with potential subgroups) • Technique pioneered on B2B sites first • Customized product and service offerings • Match customers’ needs • B2C sites • Adding customer-based marketing elements • Example: university Web sites • Web sites designed with links for specific stakeholders Electronic Commerce, Eighth Edition 7

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9. Communicating with DifferentMarket Segments • Communications media selection to carry message • Physical world • Use building construction and floor space design • Example: Banks • Online firm • No physical presence • Customer contact through media and Web site • Communications media selection is critical • Online firm challenge • Customer trust with no physical presence Electronic Commerce, Eighth Edition 9

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11. Market Segmentation • Divides potential customer pool into segments • Defined in demographic characteristics terms • Micromarketing • Practice of targeting very small market segments • Three categories to identify market segments • Geographic segmentation • Demographic segmentation • Psychographic segmentation • Television advertisers • Use three categories or combination Electronic Commerce, Eighth Edition 11

12. Companies try to: • Match advertising messages to market segments • Build sales environment for a product or service • Corresponds to market segment trying to reach Electronic Commerce, Eighth Edition 12

13. Advertising on the Web • Effective advertising involves communication • Five-stage customer loyalty model: helpful in creating messages • Awareness stage • Advertising message should inform • Exploration stage • Message should explain how product, service works • Encourage switching brands • Familiarity stage • Message should be persuasive Electronic Commerce, Eighth Edition 13

14. Advertising on the Web (cont’d.) • Five-stage customer loyalty model (cont’d.) • Commitment stage • Reminder messages • Separation stage • Not targeted • Online advertising • Always coordinate with existing advertising efforts Electronic Commerce, Eighth Edition 14

15. Banner Ads • Banner ad • Small rectangular object on Web page • Displays stationary or moving graphic • Includes hyperlink to advertiser’s Web site • Versatile • Attention-grabbing • Uses animated GIFs and rich media objects • Created using Shockwave, Java, Flash • Marketing unit (IMU) ad formats • Voluntary standard banner sizes Electronic Commerce, Eighth Edition 15

16. Banner Ads (cont’d.) • Leaderboard ad • Designed to span Web page top or bottom • Skyscraper ad • Designed to be placed on Web page side • Remains visible as user scrolls through page • Advertising agencies • Create banner ads for online clients • Price range: $100 to more than $2000 • Companies can make their own banner ads Electronic Commerce, Eighth Edition 16

17. Banner Ads (cont’d.) • Banner ad placement • Use a banner exchange network • Coordinates ad sharing • Sites run one company’s ad • Company’s site runs other exchange members’ ads • Find Web sites appealing to company’s market segments • Pay sites to carry ad • Use a banner advertising network • Acts as broker between advertisers and Web sites that carry ads Electronic Commerce, Eighth Edition 17

18. Banner Ads (cont’d.) • New strategies for banner ads • Banner ads were a novelty initially • They now have decreased ability to attract attention • Solutions • Introduced animated GIFs with moving elements • Created ads displaying rich media effects (movie clips) • Added interactive effects (Java programs): respond to user’s click with some action • See Figure 4-8 Electronic Commerce, Eighth Edition 18

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20. Text Ads • Short promotional message • No graphic elements • Usually placed along Web page top or right side • Simple but very effective • Example: Google • Initially criticized for including obtrusive ads on its pages • Now clearly labels ads (to prevent confusion) • Inline text ad • Text in stories displayed as hyperlinks Electronic Commerce, Eighth Edition 20

21. Other Web Ad Formats • Pop-up ad • Appears in its own window • When user opens or closes Web page • Extremely annoying • Must click close button (small) in window of ad • Pop-behind ad • Pop-up ad followed by command (quick) • Returns focus to original browser window • Ad-blocking software • Prevents banner ads and pop-up ads from loading Electronic Commerce, Eighth Edition 21

22. Other Web Ad Formats (cont’d.) • Interstitial ad • User clicks link to load page • Interstitial ad opens in its own browser window • Instead of page user intended to load • Many close automatically • Others require user to click a button • Rich media ads (active ads) • Generate graphical activity that “floats” over the Web page itself Electronic Commerce, Eighth Edition 22

23. Site Sponsorships • Web sites offer advertisers opportunity to sponsor all (or parts) of their sites • More subtle way to promote products, services, brands • Goals similar to sporting event sponsors, television program sponsors • Tie company (product) name to an event (set of information) • Ethical concerns raised • If sponsor is allowed to create content or weave advertising message into site’s content Electronic Commerce, Eighth Edition 23

24. Online Advertising Cost and Effectiveness • Web sites make favorable impression on potential customers • Raises issue of measuring Web site effectiveness • Cost per thousand (CPM) • “M” from Roman numeral for “thousand” • Dollar amount paid for every thousand people in the estimated audience • Measuring Web audiences (complicated) • Web’s interactivity • Value of visitor to an advertiser • Depends on information site gathers from visitor Electronic Commerce, Eighth Edition 24

25. Online Advertising Cost and Effectiveness (cont’d.) • Visit • Occurs when visitor requests a page from Web site • Trial visit • First time a particular visitor loads Web site page • Repeat visits: subsequent page loads • Ad view: occurs if page contains an ad • Impression: each time banner ad loads • Click (click-through) • Action whereby visitor clicks banner ad to open advertiser’s page Electronic Commerce, Eighth Edition 25

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27. Online Advertising Cost and Effectiveness (cont’d.) • New metrics to evaluate number of desired advertising yield outcomes • Measure number of new visitors who buy first time after arriving at site • By way of click-through • Calculate advertising cost of acquiring one customer on the Web • Compare to how much it costs to acquire one customer through traditional channels Electronic Commerce, Eighth Edition 27

28. E-mail Marketing • Key element • Obtain customers’ approvals • Before sending marketing or promotional e-mail message Electronic Commerce, Eighth Edition 28

29. Permission Marketing • Opt-in e-mail • Practice of sending e-mail messages to people who request information • Part of marketing strategy: permission marketing • More successful than sending general promotional messages through mass media • Cost effective • Can cost less than one cent if company already has customer’s e-mail address Electronic Commerce, Eighth Edition 29

30. Combining Content and Advertising • Using articles, news stories of interest to specific market segments • Advertisers send content by: • Using inserted hyperlinks into e-mail messages • Takes customers to advertiser’s Web site content • Induces customer to stay on the site and consider making purchases Electronic Commerce, Eighth Edition 30

31. Outsourcing E-Mail Processing • Number of customers who opt-in to information-laden e-mails • Can have rapid growth • Outgrow capacity of information technology staff • Solution • Use e-mail processing service provider Electronic Commerce, Eighth Edition 31

32. Technology-Enabled Customer Relationship Management • Clickstream • Information Web site gathers about visitors • Technology-enabled relationship management • Firm obtains detailed customer’s information to: • Set prices, negotiate terms, tailor promotions, add product features, and customize its entire relationship with that customer • Customer relationship management (CRM) • Technology-enabled customer relationship management • Electronic customer relationship management (eCRM) Electronic Commerce, Eighth Edition 32

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34. Viral Marketing Strategies • Viral marketing • Relies on existing customers • Tell other people (prospective customers) about products or service • Use individual customers to spread the word about a company • Example: BlueMountain Arts • Electronic greeting cards • E-mail messages that include link to greeting card site Electronic Commerce, Eighth Edition 34

35. Search Engine Positioning and Domain Names • Ways that potential customers find Web sites • Referred by friend • Referred by affiliate marketing partner • See site’s URL in print advertisement, television • Arrive unintentionally after mistyping similar URL • Use a search engine or directory Web site Electronic Commerce, Eighth Edition 35

36. Search Engines and Web Directories • Search engine • Web site that helps people find things on the Web • Contains three major parts • Spider (crawler, robot, bot) • Program automatically searches Web to find potentially interesting Web pages for people • Index (database) • Storage element of search engine • Search utility • Takes terms, finds matching Web page entries in index Electronic Commerce, Eighth Edition 36

37. Search Engines and Web Directories (cont’d.) • Web directories • Provide classified hierarchical lists of categories • Search engine ranking • Weighting of factors • Search engines uses factors to decide URLs that appear first on searches for a particular search term • Search engine positioning (search engine optimization, search engine placement) • Results from the combined art and science of having a particular URL listed near the top of search engine Electronic Commerce, Eighth Edition 37

38. Paid Search Engine Inclusion and Placement • Paid placement (sponsorship, search term sponsorship) • Option of purchasing top listing on results pages for a particular set of search terms • Buy banner ad space at the top of search results pages that include certain terms • Search engine positioning: complex subject • Spending on online advertising • See Figures 4-13 and 4-14 Electronic Commerce, Eighth Edition 38

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41. Paid Search Engine Inclusion and Placement (cont’d.) • Search engine placement brokers • Companies that aggregate inclusion and placement rights on multiple search engines • Sell those combination packages to advertisers • Google does not use placement broker • Sells services directly (Google AdWords program) • Contextual advertising (potential flaw) • Ads placed in proximity to related content • Localized advertising • Ads related to location on search results Electronic Commerce, Eighth Edition 41

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43. Summary • Achieve Web marketing goals • Use principles of marketing strategy • Use the four Ps of marketing • Product-based marketing strategy • Customer-based strategy • Web enables companies to mix • Market segmentation works well on the Web • Online advertising • More intrusive since introduction • Various types Electronic Commerce, Eighth Edition 43

44. Summary (cont’d.) • Use Web to manage customer relationships • Focused CRM efforts • More successful than earlier comprehensive attempts • Use rational branding instead of emotional branding techniques on the Web • Critical to success • Successful search engine positioning • Domain name selection Electronic Commerce, Eighth Edition 44