Chapter 2

1. Chapter 2 Adapting Marketing to the New Economy PowerPoint by Karen E. James Louisiana State University - Shreveport To accompany A Framework for Marketing Management, 2nd Edition

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. To accompany A Framework for Marketing Management, 2nd Edition

3. Objectives • Explore how the Internet has changed the way marketers use customer databases. • Understand how marketers practice customer relationship management. To accompany A Framework for Marketing Management, 2nd Edition

4. Drivers of the New Economy • Digitalization and connectivity • The Internet, intranets & extranets are key • Disintermediation and reintermediation • Customization and customerization • Industry convergence To accompany A Framework for Marketing Management, 2nd Edition

5. 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 Changes in Business Practices To accompany A Framework for Marketing Management, 2nd Edition

6. 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 Changes in Business Practices To accompany A Framework for Marketing Management, 2nd Edition

7. How Marketing Practices are Changing • E-Business • Setting up web sites • Customer relationship marketing To accompany A Framework for Marketing Management, 2nd Edition

8. How Marketing Practices are Changing: E-business • Business practices are changing . . . • E-business uses electronic means and platforms to conduct business. • E-commerceweb sites facilitate the online sale of products and services. • E-purchasing from online suppliers. • E-marketingefforts include those that inform, communicate, promote, and sell products and services over the Internet. To accompany A Framework for Marketing Management, 2nd Edition

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

10. 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. How Marketing Practices are Changing: E-business To accompany A Framework for Marketing Management, 2nd Edition

11. 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. How Marketing Practices are Changing: E-business To accompany A Framework for Marketing Management, 2nd Edition

12. Internet Domains B2C B2B C2C C2B C2B = Consumer-to-Business Facilitate communication between customer and businesses. How Marketing Practices are Changing: E-business To accompany A Framework for Marketing Management, 2nd Edition

13. 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 To accompany A Framework for Marketing Management, 2nd Edition

14. Context Content Community Communication Connection Commerce How Marketing Practices are Changing: Web Site Design The Seven “C’s” of Web Site Design • Customization To accompany A Framework for Marketing Management, 2nd Edition

15. How Marketing Practices are Changing: Web Site Design • Placing Ads and Promotions Online • Banner ads • Sponsorships • Microsite • Interstitials • Browser ads • Alliances and affiliate programs To accompany A Framework for Marketing Management, 2nd Edition

16. 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 How Marketing Practices are Changing: Web Site Design Dot.com revenue and profit models: To accompany A Framework for Marketing Management, 2nd Edition

17. 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 To accompany A Framework for Marketing Management, 2nd Edition

18. 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 To accompany A Framework for Marketing Management, 2nd Edition

19. 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. To accompany A Framework for Marketing Management, 2nd Edition

20. 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 To accompany A Framework for Marketing Management, 2nd Edition