Chapter Fourteen

1. Chapter Fourteen Marketing in the Digital Age

2. Discuss how the digital age is affecting both consumers and the marketers who serve them. • Explain how companies have responded to the Internet and other powerful new technologies with e-business strategies, and how these strategies have resulted in benefits to both buyers and sellers. • Describe the four major e-marketing domains. • Discuss how companies go about conducting e-marketing to profitably deliver more value to customers. • Overview the promise and challenges that e-commerce presents for the future. Copyright 2007, Prentice Hall, Inc.

3. Background Began selling books; now markets many other merchandise lines. One of the best known names on the Web. Sales have been strong but firm did not turn a profit until 2003. Skeptics predict tougher times in years to come. Marketing Efforts Customer-driven: strives to design the best customer experience on the Web. Personalized sign-on pages and recommendations, huge selection, good value, and convenience result in strong buyer relationships. Will Amazon become the Wal-Mart of the Web? Case Study Amazon.com – Online Pioneer Copyright 2007, Prentice Hall, Inc.

4. Forces Shaping the Digital Age • Digitalization andConnectivity • Intranets • connect people within a company. • Extranets • connect a company with its suppliers, distributors, and outside partners. • Internet • connects users around the world. Copyright 2007, Prentice Hall, Inc.

5. Forces Shaping the Digital Age • Internet Explosion • Explosive worldwide growth forms the heart of the New Economy. • Increasing numbers of users worldwide, and broadband users in the U.S. • Greater numbers of consumers are accessing information on the Internet. • Companies must adopt Internet technology or risk being left behind. Copyright 2007, Prentice Hall, Inc.

6. Marketing Strategy in the Digital Age • Requires a new model for marketing strategy and practice. • Companies need to retain old skills and practices but add new competencies. Copyright 2007, Prentice Hall, Inc.

7. E-Business in the Digital Age • Involves the use of electronic platforms to conduct company business. • Web sites for selling and customer relations. • Intranets for within-company communication. • Extranets connecting with major suppliers and distributors. Copyright 2007, Prentice Hall, Inc.

8. E-Commerce in the Digital Age • More specific than e-business. • Involves buying and selling processes supported by electronic means, primarily the Internet. • Includes: • e-marketing • e-purchasing (e-procurement) Copyright 2007, Prentice Hall, Inc.

9. E-Marketing in the Digital Age • The marketing side of e-commerce. • Includes efforts to communicate about, promote, and sell products and services over the Internet. • E-purchasing is the buying side of e-commerce. • It consists of companies purchasing goods. Copyright 2007, Prentice Hall, Inc.

10. Benefits to Buyers • Convenience. • Buying is easy and private. • Provides greater product access and selection. • Provides access to comparative information. • Buying is interactive and immediate. Copyright 2007, Prentice Hall, Inc.

11. Benefits to Sellers • Powerful tool for building customer relationships. • Can reduce costs. • Can increase speed and efficiency. • Offers greater flexibility in offers and programs. • Is a truly global medium. Copyright 2007, Prentice Hall, Inc.

12. E-Marketing Domains • Business to consumer (B2C) • Business to business (B2B) • Consumer to consumer (C2C) • Consumer to business (C2B) Copyright 2007, Prentice Hall, Inc.

13. Business to Consumer (B2C) • The online selling of goods and services to final consumers. • Expected to generate $316 billion in 2010, or 13% of retail sales. • There is increasing diversity in buyers. • This provides increasing opportunities for targeting markets. • Is customer initiated and controlled, requiring new marketing approaches. Copyright 2007, Prentice Hall, Inc.

14. Business to Business (B2B) • B2B sales dwarf B2C sales: • B2B e-commerce was nearly $4 trillion in 2003. • Uses trading networks, auction & barter sites, spot exchanges, online product catalogs, and more. • Most major B2B marketers offer online product information, purchasing, and support. • Open trading exchanges: • huge specialty e-marketspaces to conduct transactions. • More private trading exchanges are being developed for B2B transactions. Copyright 2007, Prentice Hall, Inc.

15. Consumer to Consumer (C2C) • Occurs on the Web and includes a wide range of products and services. • Auction sites such as eBay offer marketplaces to buy or exchange goods. • Blogs and forums facilitate information interchanges. • Blog: online journals where people post thoughts on a narrowly defined topic. • Forums: discussion groups located on commercial online services. Copyright 2007, Prentice Hall, Inc.

16. Consumer to Business (C2B) • Consumers can search out sellers, view offers, initiate purchases, and give feedback. • Example: on priceline.com, one can bid for airline tickets, hotel rooms, etc., and decide whether to accept company offers. Copyright 2007, Prentice Hall, Inc.

17. Click-Only Companies • E-tailers • Search engines and portals • Shopping comparison sites • Internet service providers • Transaction sites • Content sites Copyright 2007, Prentice Hall, Inc.

18. Reasons for dot.com Failures • Poor research or planning. • Relied on spin and hype instead of marketing strategies. • Spent too heavily on brand identities. • Devoted too much effort to acquiring new customers instead of building loyalty. Copyright 2007, Prentice Hall, Inc.

19. Click-and-Mortar Companies • Established firms initially resisted adding Web sites because of channel conflict and cannibalization concerns. • Risk of online competition forced firms to become click-and-mortar companies. Most are now doing better than click-only companies because of: • Trusted brand names and more resources • Large customer bases • More knowledge and experience • Good relationships with suppliers • Can offer customers more options Copyright 2007, Prentice Hall, Inc.

20. Online Marketing • Creating a Web site • Placing ads and promotions online • Setting up and participating in Web communities • Using e-mail Copyright 2007, Prentice Hall, Inc.

21. Types of Web Sites Corporate Web Site: • Designed to build customer goodwill and supplement other sales channels. • Offers information to customers. • Builds closer customer relationships. • Generates excitement about the company. Copyright 2007, Prentice Hall, Inc.

22. Types of Web Sites Marketing Web Site: • Engages consumers in an interaction that moves them closer to a direct purchase or other marketing outcome. • May include catalogs, shopping tips, promotional features, and more. Copyright 2007, Prentice Hall, Inc.

23. Designing Attractive Web Sites • The 7 Cs of Effective Web Site Design: • Context • Content • Community • Customization • Communication • Connection • Commerce • Constant change helps encourage repeat visits. Copyright 2007, Prentice Hall, Inc.

24. Online Ads • Forms of online advertising: • Banner ads: • Tickers (move across the screen) • Skyscrapers (tall, skinny ads at the side of a page) • Rectangles (boxes that are larger than a banner) • Interstitials (pop up OR pop under between changes on Web site) • Search-related ads (contextual advertising) • Rich media ads (incorporate animation, video, sound, and interactivity). Copyright 2007, Prentice Hall, Inc.

25. Online Promotion • Forms of online promotion: • Content sponsorships (sponsoring special content) • Microsites (limited areas paid for by an external company) • Alliances and affiliate programs (work with firms to promote each other) • Viral marketing (Internet version of word-of-mouth) Copyright 2007, Prentice Hall, Inc.

26. The Future of Online Advertising • May grow to 10-15% of media mix for low-involvement product categories. • Web communities: • Allow members to congregate online and exchange views on issues of interest. • E-mail: • Use of “enriched” e-mail messages. • Backlash against spam can be problem. • Allow people to opt-out of promotions. Copyright 2007, Prentice Hall, Inc.

27. E-Commerce Problems and Challenges • Likely that online marketing will remain a technique working with full IMC mix. • Internet profitability remains problematic for B2C firms. • Navigation difficulties continue as the number of Web sites grows. • Dot.com retailers are facing growing competition. • Legal and ethical issues also exist. Copyright 2007, Prentice Hall, Inc.

28. Legal and Ethical Issues • Online privacy • Online security • Internet fraud • Segmentation and discrimination • Access by vulnerable or unauthorized groups Copyright 2007, Prentice Hall, Inc.

29. Discuss how the digital age is affecting both consumers and the marketers who serve them. • Explain how companies have responded to the Internet and other powerful new technologies with e-business strategies, and how these strategies have resulted in benefits to both buyers and sellers. • Describe the four major e-marketing domains. • Discuss how companies go about conducting e-marketing to profitably deliver more value to customers. • Overview the promise and challenges that e-commerce presents for the future. Copyright 2007, Prentice Hall, Inc.