INTERNET MARKETING CHAPTER 2 Online buyer behavior and models

1. INTERNET MARKETINGCHAPTER 2Online buyer behavior and models Pranjoy Arup Das

2. Topics to be covered as per syllabus 1. Introduction to Internet Marketing: meaning, scope and importance of internet marketing, Application of internet marketing, Internet versus Traditional marketing. Business to Consumer and Business to Business Internet Marketing, Internet Marketing Strategy 2.  Online buyer behavior and models: The marketing mix in an online context : product, price, distribution, promotion, people, process and physical evidence ; Managing the Online customer experience : planning website design, Understanding site user requirements, site design and structure, developing and testing content, service quality. 3. Characteristics of interactive marketing communications: Integrated internet marketing communication (IIMC) ; Online Promotion techniques : Search engine marketing, online PR, Interactive advertising, online partnerships, viral marketing, opt-in-e-mail, offline communications 4.  Foundation of Social Marketing: definition, scope and importance; Social Marketing Challenges ; Conceptual Framework of Social Marketing, Social Markets Segmentations, Marketing Mix : product, pricing, promotion and distribution strategies 5. Business Models & revenue models over Internet: Introduction to E-Business - Electronic business, Electronic Commerce, Types of Electronic Commerce, Benefits, E-Commerce Models, Value chain in E-commerce, E-commerce in India, E-governance, Digital Commerce, Mobile Commerce, Strategies for E-commerce, Internet based Business Model, Emerging trends in e-business, 6.   Electronic Payment Systems: concept of e-money, Electronic payment system, types of electronic payment systems, smart cards, stored value cards and electronic payment systems, B2B electronic payments, infrastructure issues in EPS, Electronic fund transfer.

3. Chapter 2 Part 1Session 3 – Internet Marketing mix24.07.13

4. An internet marketers strategies typically include: 1) Designing a unique and informative website of their company and their products and services with appealing content. 2) Encouraging public, prospects and offline consumers to go online and interact through the website. 3) Increase traffic into the website to attract other sites to advertise on it. 4) Getting featured on the first page of a search engine like google.com whenever a consumer types any search words related directly or indirectly to the company’s website or the products.

5. Traditional marketing Vs Internet marketing • Physical office, shop, showroom, salespersons Vs Website • Direct mail Vs E-mail • Print, TV & Radio Vs Search Engines, Social media, Blogs • One way communication Vs Interactive communication • Surveys, polls, research Vs Web analytics • Traditional PR Vs Online PR • Word of mouth Vs Viral

6. Marketing mix in an online context • Before designing the internet marketing mix, marketers need to make sure that: 1) Their product/brand gains an identity through traditional marketing methods. 2) They follow a system of monitoring the activities of the consumers and competitors. 3) They have a website, a social media account, a blog etc which they use as marketing tools or as a marketing destination. • While designing the marketing mix, internet marketers need to keep in mind that the online consumer looks for: - Chic-ness with cheapness - Clarity - Comparability - Choices - Credibility - Convenience - Customisation - Control - Communication

7. Against the consumers perspective, the internet marketer has to carefully design the marketing mix which includes 7 P’s : - Product - Price - Place - Promotion - People - Processes - Physical Evidence

8. PRODUCT

9. PRODUCT: (Based on Clarity, Communication, Credibility, Customisation, Convenience) • Marketers deal with two kinds of product related decisions: - Core product : Related to the actual offered product or service. - Extended product: Related to the information about the features and benefits of the core product or service. (Websites, Digital versions, etc) • Core product decisions involve : - providing information and assistance for new product development & design incorporating the consumers needs and wants identified from comments, reviews, blogs, etc. and matching them with the core utility of the product. - Designing the website content and appearance, providing full information to customers about the quality, features, utility and appearance of the products through text, photos, videos & links on the website. • Extended product decisions involve: - Terms & conditions of Warranties, Guarantees, Money Back Offers. - Developing interactive Customer Service, Information and Assistance tools. - Endorsements, Awards, Testimonials, Customer lists, Customer comments.

10. Online purchasing options : • Subscriptions • Pay-per-view • Bundling • Ad – supported content • Customisation

11. PRICE

12. PRICE: (Based on Chic-ness with cheapness, Comparability, Clarity, Credibility) • For internet marketers, there is always a constraint regarding price. • Price has to be high enough to cover costs at the same time low enough to attract and retain consumers. • In traditional marketing, marketers can charge different prices for different markets. • Internet marketers do not have that freedom as the internet serves as one big global marketplace for online consumers where there is ready access to information regarding prices, offers, discounts etc. of any supplier, of any market.

13. For proper pricing, marketers have to understand the effect of price change on demand, a concept popularly called ‘price elasticity of demand’. • Price elasticity of demand co-efficient is a ratio of the percentage change in demand (quantity, in units) of a product to a change in the price of that product. • A product is called ‘elastic’ if a small change in its price causes a substantial increase or decrease in the demand for that product. • A product is called ‘in-elastic’ if a significant or large change in its price causes an insignificant or small change in demand for that product. • Knowing the elasticity of a product will help a marketer take decisions regarding pricing of that product.

14. Marketers may follow some guidelines while pricing: • Focus on volume • Focus on a targeted Return On Investment (ROI) • Charge what consumers are willing to pay • Charge visually appealing prices and focus on volume. • Focus on charging high and compensating with free offers, convenient payment modes, replacement guarantees, money back offers, cash back offers. • Focus on Bundling and charging a collective price.

15. PLACE

16. PLACE : (Based on convenience, credibility, customisation, control) • For majority of consumers - ‘Seeing & feeling is believing’. • Place related decisions primarily involve whether to sell products online or offline or use both channels. • Selling online saves both time and money. • Selling offline gives a marketer a better control over price and customer service. • Place decisions depend upon two factors: - Importance given by the consumer to physical inspection of the product prior to purchase. (Eg. Test drive before buying a car is considered important, Tasting ) - Nature of the product or service, i.e, whether physical inspection of the product prior to purchase is possible or not. (Eg. Possible for software, Not possible for fast food)

17. These two factors determine an organisations dependence on the internet, more specifically whether to sell online or offline. Backed by Warranties, Guarantees, Money Back Offers, Discounts on online purchases, Endorsements, etc.

18. In todays world, organisations cannot help but embrace internet based virtual systems in their day to day functioning. • However, use of internet in organisations differs on three levels: Half fusion organisation – Minimal use of internet. (Eg. Email, Searching, e-tendering etc.) Fusion organisation – use in specific business processes (Procurement of raw materials, online bidding etc.) E-organisation – Use internet for all business processes. (Internet, Intranet & Extranet)

19. PROMOTION

20. PROMOTION (Based on all the factors, mainly communication) • Promotion essentially involves using the internet tools and techniques as communication tools to communicate with customers and other stakeholders.

21. Promotion involves investment. There are three key investment decisions a marketer needs to take: - How much to spend on promotion compared to creating and maintaining a website? > A sensible balance needs to be maintained. - How much to spend on online promotion compared to offline promotion? > Which of the two has better reach in a segment? > Which is used more frequently by the segment? > Which is more cost effective? - How much to spend on different online promotion techniques? > What will build more traffic for the site?

22. PEOPLE, PROCESS & PHYSICAL EVIDENCE SELF STUDY ASSIGNMENT (SSA3)

23. BRAIN SCRATCHING TIME OUT • Case Study 8.3 – The new Napster changes music marketing mix.

24. Chapter 2 Part 2Session 4- Managing the online customers experience30.07.13

25. People go online for : - Communicating - Networking - Entertainment - Learning - Searching info. about people, places, products etc - Shopping - Updating & upgrading news, knowledge, software, browsers etc. • There are 150 million internet users in India.

26. Competition in the internet market • Competition in internet marketing context means: - getting more and more people to log on to a company’s website compared to competitors websites. • Why? 1) Increase sales of the company’s products & services 2) Increase popularity to attract ad’s from other websites. 3) Get recognised by Search Engines and get featured. 4) Attract affiliates.

27. Designing a user-centric website A user-centric website needs to be an E. A . R . N . E . R • E – Easy (Understandable, Navigable, Concise) • A – Appealing (Eye-catching, Attention grabbing, Influencing) • R – Reliable (Trust, Credibility, Privacy) • N – Novel (Innovative, Relevant, Updated, Unique) • E – Elaborate (Informative, Detailed, Complete) • R – Responsive & Responsible (Instant, Communicative, Correct, Age appropriate)

28. Some important considerations for developing a user centric website • Who are the important users? • What is their purpose for accessing the site? • How frequently will they visit the site? • What experience and expertise do they have? • What nationality are they? Can they read English? • What type of information are they looking for? • How will they want to use the information: read it on the screen, print it or download it? • What type of browsers will they use? How fast will their communication links be? • How large a screen/window will they use, with how many colours?

29. Steps in creating a website • Decide an appropriate Domain Name, i.e., address for the website. The domain name should identify with your company and your business. A domain name has several levels. - Top Level domains: .com, .org, .us, .uk. Eg. www.dbim.ac.in - Second level domain: Eg. www.dbim.ac.in - Third level domain : Eg. www.dbim.ac.in - Server description: Eg. www.dbim.ac.in

30. TOP LEVEL DOMAIN NAMES

31. Steps in creating a website • Decide an appropriate Domain Name, i.e., address for the website. The domain name should identify with your company and your business. A domain name has several levels. - Top Level domains: .com, .org, .us, .uk. Eg. www.dbim.ac.in - Second level domain: Eg. www.dbim.ac.in - Third level domain : Eg. www.dbim.ac.in - Server description: Eg. www.dbim.ac.in • Next, get the domain name registered. > Registration is done globally by an L.A. based non profit organisation called ICANN (Internet Corporation for Assigned Names & Numbers) through country specific Accredited Registrars. > Registration fee amount will depend upon choice of top level domain name. (www.bigrock.in)

33. 3) Next, choose a hosting provider or a web host to host your website. Getting a website hosted is like taking a rented premises for your office or shop. A web host is basically a company that has many computers connected to the Internet. When you place your website on their computers, everyone in the world will be able to connect to it and view them. You will need to sign up for an account with a web host so that your website has a home. (www.bigrock.in) 4) Next comes building the website which has two parts, designing & testing. Internet marketers may choose to design the website themselves with their in-house resources or may choose to outsource it to a professional web designer. The website has to : - Create an experience for the customer. - Support the customers need to perform all desired actions. (browse, enquire, buy, compare, download, search, complaint, tell others, register their contact details, give comments, views & ratings about products, experiences)

34. Elements of site design There are three essential elements of site design: > Site design & Structure > Page design > Content design

35. Site design & Structure: Depends upon the audience and site’s purpose. - Site style: Font, Colours, Background, Images etc. - Site personality: Fun or Formal, Graphical or Mild etc. - Site organisation schemes: Exact, Ambiguous, Hybrid - Site navigation schemes: Narrow & deep, Broad & Shallow, Site search engine, site maps etc. Information Architecture – Systematically organising and labeling information within a website to enable efficient and effective navigation for users. • It uses principles of actual landscape and building design and architecture to digital landscapes. • Three processes are involved in Information Architecture : - Card Sorting: Organising by grouping similar information

37. Site design & Structure: Depends upon the audience and site’s purpose. - Site style: Font, Colours, Background, Images etc. - Site personality: Fun or Formal, Graphical or Mild etc. - Site organisation schemes: Exact, Ambiguous, Hybrid - Site navigation schemes: Narrow & deep, Broad & Shallow, Site search engine, site maps etc. Information Architecture – Systematically organising and labeling information within a website to enable efficient and effective navigation for users. • It uses principles of actual landscape and building design and architecture to digital landscapes. • Three processes are involved in Information Architecture : - Card Sorting: Organising by grouping similar information - Blueprints or Sitemaps show the linkage between pages containing different and / or related information.

39. Site design & Structure: Depends upon the audience and site’s purpose. - Site style: Font, Colours, Background, Images etc. - Site personality: Fun or Formal, Graphical or Mild etc. - Site organisation schemes: Exact, Ambiguous, Hybrid - Site navigation schemes: Narrow & deep, Broad & Shallow, Site search engine, site maps etc. Information Architecture – Systematically organising and labeling information within a website to enable efficient and effective navigation for users. • It uses principles of actual landscape and building design and architecture to digital landscapes. • Three processes are involved in Information Architecture : - Card Sorting: Organising by grouping similar information - Blueprints or Sitemaps show the linkage between pages containing different and / or related information. - Wireframes or Schematics: Basic layout of each page. The wireframes are then transformed into the website template where stylish fonts, background colours, images etc. are added.

41. Page design: The layout, i.e., Header, Footer, Navigation & Content using HTML, CSS, JAVASCRIPT etc. - Proportionate spacing - Consistent layout throughout the website. - Allow re-sizing text, screen resolution - Option of printing directly - Option of searching within the site and also the web. Content design: relates to the information the website will be carrying. - Clear - Concise - Correct - Complete - Catchy

42. Website testing • Online customer experience - Asking users about different emotional and rational aspects of their experience from using the website to assess whether they consider the website as E.A.R.N.E.R? • Usability or User-friendliness : - How easy in the website to use? - Get users to perform specific tasks on the website, like placing an order, and observe what they do and how they do it - Take help of experts to identify the technical problems and solve them • Eye-tracking. • Use – case analysis

43. Use-Case analysis – for design aspects relating to users online transactions and feedback such as registering, subscribing, enquiring, ordering, making payments, lodging complaints, writing reviews, giving ratings etc. • Prior to applying use case method, an internet marketer tries to understand the different personas of their website visitors and the different scenarios surrounding the visitors. • Accordingly they develop website personas by creating alternative courses of action suitable for each type of user. For Eg. Business customers may be directed to a more formally laid out version of their website. • Four stages are involved in use case method: - Identify Actors: Actors are typically application users such as customers and employers. - Identify Use – Cases: The sequence of transactions between an actor and a system that support the activities of the actor. - Relate actors to use – cases

45. Use-Case analysis – for design aspects relating to users online transactions and feedback such as registering, subscribing, enquiring, ordering, making payments, lodging complaints, writing reviews, giving ratings etc. • Prior to applying use case method, an internet marketer tries to understand the different personas of their website visitors and the different scenarios surrounding the visitors. • Accordingly they develop website personas by creating alternative courses of action suitable for each type of user. For Eg. Business customers may be directed to a more formally laid out version of their website. • Four stages are involved in use case method: - Identify Actors: Actors are typically application users such as customers and employers. - Identify Use – Cases: The sequence of transactions between an actor and a system that support the activities of the actor. - Relate actors to use – cases - Develop use – case scenarios: Primary scenario (nothing goes wrong) and subsequent scenarios (involving - what if?)

47. Session 5, 31.07.13

48. Brain Scratching Time Out • Case study 11.1 • Notes: - Use – case method to develop website personas & scenarios. (SELF STUDY ASSIGNMENT SSA 4) - Static & dynamic webpages > Static page content remains the same everytime a user opens it. > Dynamic page content varies according to either the users request or to some changes in the environment. - Website security > Infection by virus or malicious software > Misuse of information by own staff > Attacks by unauthorised outsiders (hackers) > Theft or fraud using computers & networks > System failure or data corruption

49. Brain Scratching Time Out • Case study 11.1 questions: > How much importance do you think dabs.com gives to customer experience? > What is dabs.com’s strategy as regards B2B business? > What methods did they use to design and test their website? > What can you identify about their product mix and price mix? > Why do you think dabs.com needs to update their website more regularly at the same time keep their prices competitive? > ACTIVITY : Browse through the sites www.dabs.com, www.ebay.com, www.flipkart.com and www.shopping.indiatimes.com and give of them your ratings on the attributes E . A . R . N . E . R based on your experience.

50. Knowledge corner • URL: Uniform Resource Locator refers to the specific web address of specific sections of web pages of a website. Eg. www.dbim.ac.in/admissions/form. • HTML – HYPER TEXT MARKUP LANGUAGE is a standard format used to define the text and layout of web pages. Simple static webpages can be created using simple HTML tools such as dreamweaver, microsoft word, notepad, open office etc. For creating graphical and dynamic pages advanced graphic tools such as Adobe Photoshop, Macromedia Flash and Director Shock wave are used.