Internet Marketing & e-Commerce

1. Internet Marketing & e-Commerce

2. Part One: Chapter TwoA Digital World “When if ever will the astounding increase in the productivity growth, and in the growth of productivity growth, of computers end?” W. Nordhaus, The Progress of Computing

3. The State of Being Digital • Something is digital when all of its properties and information are stored as a string of zeroes and ones • Those zeroes and ones are called bits • A bit is a single piece of information • A bit has no color, size, or weight, and it can travel at the speed of light • Everything on the Internet is digital • The falling cost of digital technology is one of the most powerful forces in the modern economy

4. Understanding Moore’s Law Intel co-founder Gordon Moore observed that each generation of computer memory chips – released about every 18 months – could pack the same technology into half the space Source: AP/World Wide Photos

5. Understanding Moore’s Law • Moore’s Law applies broadly to computing and technology costs • Computer speed since the 1970s has increased roughly 75 billion times • The cost of technology and storage, meanwhile, has dropped sharply

6. The Fast Fall of Digital Storage Costs Source: Brian Hayes, “Terabyte Territory,” American Scientist 90 (May–June 2002)

7. Sales Calls Newsprint Time Energy Moore’s Law Makes it Cheap to Substitute Marketing Bitsfor Marketing Atoms

8. Opportunities forSaving Software Distribution Net Surveys Online Customer Support Corporate Intranets User Manuals Where do the savings come from?

9. Putting Moore’s Law to WorkSubstituting digital material when possible can lead to substantial savings

10. Putting Moore’s Law to WorkSubstituting digital material when possible can lead to substantial savings • Sun Microsystems as early as 1995 saved hundreds of thousands of dollars by moving to online customer support

11. Putting Moore’s Law to WorkSubstituting digital material when possible can lead to substantial savings • Sun Microsystems as early as 1995 saved hundreds of thousands of dollars by moving to online customer support • Online software distribution saved Sun an estimated $1.5 million per quarter compared to traditional distribution

12. Digital Substitution Other examples: • Online banking services, such as automatic payroll deposit • Wireless laptops for sales representatives working in the field Other potential uses: • Automatic online language translations

13. Digital Environments • Technology allows users to create virtual spaces to display information, tell stories, educate or amuse • For marketers, new ways to reach consumers and promote a product

14. Digital EnvironmentsAugmented reality and the virtual first down line Source: ELIOT J. SCHECHTER/EPA/Landov

15. Key Features of Digital Environments • Procedural: Computers must be taught what to do in a digital environment

16. Digital Environments Are Procedural • Computers are logic engines - they follow rules • However, well-programmed computers can create wonderful illusions of intelligence, spontaneity, and attention to detail • For example: digital actors can create the illusion of social interaction • Imagine digital actors as hosts on a Wal-Mart Web site • Digital actors can make the online site feel “more like Wal-Mart

17. Key Features of Digital Environments • Procedural: Computers must be taught what to do in a digital environment • Participatory: Effectiveness depends on ease of consumer use and interactive potential

18. Digital Environments Are Participatory • Digital environments encourage participation • Users input requests and other information • Software systems • retrieve relevant information • enable customized responses and experiences

19. Key Features of Digital Environments • Procedural: Computers must be taught what to do in a digital environment • Participatory: Effectiveness depends on ease of consumer use and interactive potential • Spatial: Realistic features are important but hard to create in business setting

20. Digital Environments Are Spatial • Digital technologies enable the creation of virtual spaces • Current connection speeds and bandwidth limit widespread use of virtual spaces for marketing purposes • Spatial elements are being used to provide familiarity and comfort to users

21. Key Features of Digital Environments • Procedural: Computers must be taught what to do in a digital environment • Participatory: Effectiveness depends on ease of consumer use and interactive potential • Spatial: (Virtual Space) Realistic features are important but hard to create in business setting • Encyclopedic: Low cost allows almost endless storage capacity

22. Digital Environments Are Encyclopedic • Digital information can be stored cheaply • So, it’s possible to archive huge amounts of information and make it available • movie databases • online technical help & solutions

23. Digital Convergence • Cheap and powerful digital technology has contributed to the merging of industries, technology and content

24. Digital Convergence • Cheap and powerful digital technology has contributed to the merging of industries, technology and content • One crucial area: convergence of computing, communications and media content

25. Content Computing Interactive Multimedia Experience Communications Digital Convergence

26. Digital Convergence • Cheap and powerful digital technology has contributed to the merging of industries, technology and content • One crucial area: convergence of computing, communications and media content • When barriers between industries fall, marketers have greater flexibility to choose the best medium for the pitch

27. Content Interactive Multimedia Communi-cations Computing Convergence • Internet capabilitiesaugmenttraditional power of mass market media • DTV means that Net marketing willgrowdramatically Adds Flexibility

28. Retain and digitize existing materials Substitute digital materials into marketing process Change marketing processes to better use digital features Digitizing the Marketing Process Archive Substitute Redesign

29. Involve Customers in Design Process Market & Sell Products & Services Understand Markets & Customers Deliver Value Through Distribution Manage Customer Information Provide Customer Care Marketing ProcessesThat Can Be Digitized

30. Digitizing the Marketing Process • Digital capabilities allow businesses to better understand their customer Key example: The online focus group

31. Digitizing the Marketing Process • Digital capabilities allow businesses to better understand their customer Key example: The online focus group • Digital capabilities allow businesses to redesign and streamline transactions Key example: Airlines and the evolution of e-ticketing

32. Study Question 1 Something is digital when its properties are stored as which of the following? A. a string of zeroes and ones B. a combination of dots and dashes C. a continuum along the color spectrum D. a mix of negative and positive signs

33. Study Question 2 Each of these is an example of a digital consumer financial transaction EXCEPT: A. automatic payroll deposit B. direct deposit of Social Security pensions C. automated payments of state lottery tickets D. mortgage payment receipt books

34. Study Question 3 To launch its Treo Smartphone, Handspring employed which of these concepts? A. digital convergence B. Moore’s Law C. digital environments D. all of the above E. none of the above

35. Study Question 4 Which of these does not describe the basic framework of an effective digital environment? A. static B. encyclopedic C. procedural D. participatory

36. Study Question 5 Of the following marketing costs, which has fallen dramatically in recent years? A. energy B. sales calls C. newsprint D. digital bits