Transcript chapter 3 - courses.psu.edu

Marketing in the
Digital Age
Chapter 3
Objectives
Be able to identify the major
forces shaping the digital age.
Understand how companies
have responded to the Internet
with e-business strategies.
Be able to describe the four
major e-commerce domains.
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Objectives
Understand how companies
use e-commerce to profitably
deliver greater value to
customers.
Realize the promise and
challenges that e-commerce
presents for the future.
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CharlescSchwab
Invented discount
brokerage category
First U.S. major player to
go online
Initially offered twotiered trading system
to protect profits / stop
cannibalization
Later became first true
click-and-mortar fullservice brokerage
Now world’s largest
e-commerce site
85% online trades; 21%
of trade volume; Strong
stock return
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Figure 3-1:
Forces Shaping the
Internet Age
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Major Forces Shaping the
Digital Age
Digitalization & Connectivity
 The flow of digital information
requires connectivity

Intranets,
Extranets
and the
Internet
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Major Forces Shaping the
Digital Age
The Internet
Explosion
 Key driver
of the New
Economy
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Major Forces Shaping the
Digital Age
New Types of Intermediaries
 Brick-and-mortar
firms often face
disintermediation
from click-only
competitors
 The click-and-mortar business
model has been highly successful
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Major Forces Shaping the
Digital Age
Customization and Customerization
 Information businesses are at
the heart of the New Economy

Has enhanced marketer’s
ability to customize
and “customerize”
product offerings
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Major Forces Shaping the
Digital Age
Customerization:
Reflect.com allows
clients to create their
own beauty products.
What other businesses
could implement
customization to better
serve their customers?
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Marketing Strategy in the
Digital Age
E-business:
 uses
electronic
means and
platforms to
conduct
business.
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Marketing Strategy in the
Digital Age
E-commerce:
 facilitates the
sale of products
and services by
electronic
means.
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Marketing Strategy in the
Digital Age
E-marketing:
 Includes
efforts that
inform,
communicate,
promote, and
sell products
and services
over the
Internet.
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Marketing Strategy in the
Digital Age
Buyer Benefits of E-Commerce:
 Convenience
 Easy and private
 Greater product access/selection
 Access to comparative information
 Interactive and immediate
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Marketing Strategy in the
Digital Age
Seller Benefits of E-Commerce:
 Relationship building
 Reduced costs
 Increased speed and
efficiency
 Flexibility
 Global access
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Figure 3-2
E-Marketing
Domains
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E-Commerce Domains
Major Domains
B2C
B2B
C2C
C2B
Online consumers
 Now more mainstream
and diverse
Offers new targeting
opportunities
 Online behavior differs
by age

 Online consumers
differ from traditional
off-line consumers
They initiate and control
the exchange process
 Value information highly

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E-Commerce Domains
Major Domains
B2C
B2B
C2C
C2B
B2B sales far exceed
B2C sales
 B2B sales are
estimated to reach
$4.3 trillion in 2005
Open trading networks
 E-marketspace
bringing sellers and
buyers together
Private trading networks
 Links sellers with their
own trading partners
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E-Commerce Domains
Major Domains
B2C
B2B
C2C
C2B
C2C web sites help
consumers exchange
goods or information
 eBay is one example
Auction sites facilitate
the exchange process
 Allow access to a
much larger audience
Newsgroups / forums
 Help consumers to
find and share
information
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E-Commerce Domains
Major Domains
B2C
B2B
C2C
C2B
Allow consumers to
search out sellers,
learn about offers,
initiate purchase, or
dictate purchase
terms
 Ex: Priceline.com
Some sites facilitate
the feedback process
between customers
and companies
 Ex: Planetfeed.com
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Figure 3-3:
Types of E-Marketers
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Conducting E-Commerce
Click-Only Competitors
 E-tailers
 Search engines
and portals
 ISPs
 Transaction sites
 Enabler sites
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Conducting E-Commerce
Dot.coms failed for many reasons
 Lack of planning and research
 Overemphasis
on acquisition
 Poor web site
design and
distribution
problems
 Low margins
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Conducting E-Commerce
Click-and-Mortar Companies
 Channel conflict was initially a concern
 E-commerce often
created new buyers,
rather than
cannibalizing
existing ones
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Conducting E-Commerce
Click-and-Mortar Companies
 Many firms now enjoy greater
success than their click-only
competition

Trusted brand names, greater
financial resources, larger
customer base, industry
knowledge and strong supplier
relationships were key advantages
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Figure 3-4:
Setting Up For
E-Marketing
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Conducting E-Commerce
E-Marketing
Creating web sites
Placing online ads
and promotions
Creating or using
web communities
Using E-mail and
webcasting
Corporate web sites
 Build goodwill and
relationships;
generate excitement
Marketing web sites
 Engage consumers
and attempt to
influence purchase
Web site design
 7 Cs of effective
web site design
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Conducting E-Commerce
Evaluate the iVillage
website with respect
to the 7 C’s:
•
•
•
•
•
•
•
Context
Content
Community
Communication
Connection
Commerce
Customization
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Conducting E-Commerce
E-Marketing
Creating web sites
Placing online ads
and promotions
Creating or using
web communities
Using E-mail and
webcasting
Online forms of ads
and promotions





Banner ads/tickers
Skyscrapers
Interstitials
Browser ads
Content
sponsorships
 Microsites
 Viral marketing
Future of online ads
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BusinessNow
Findwhat.com Video Clip
Findwhat.com is a
search engine
company. Paid
search is a key
revenue tool.
Click the picture above to play video
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BMWFilms.Com
Viral Marketing . . .
Creating a Marketing Event
The Problem:
BMW’s market research revealed
that the brand was not appealing to
younger luxury car buyers. Also,
competition was increasing.
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BMWfilms.com
The Solution
Objectives:
 Make BMW cool and
relevant to 25-44 yearold buyers new to the
luxury-car market
without alienating
existing customers
 Capture qualified
buyers and ultimately
increase sales
Target Market:
 Doesn’t watch a lot of
TV; tends to resent
marketing
 Thinks of technology
as their friend
 85% of this group use
the Web to research
cars before visiting
dealerships
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BMWfilms.com
The Solution
BMWfilms.com Instead
of using traditional TV
advertising, BMW
launched five short
Internet films in April
2001, featuring edgy
stars, action-oriented
plots, and famous
directors.
Web Promotion: Three
months prior to the
premiere, Internetmovie rumor sites,
chat rooms, and fan
sites were seeded
with information.
These efforts formed
the core of viral
marketing campaign.
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BMWfilms.com
The Solution
Off-line PR
Strategy:
 PR firm pitched the
films as reviewable
movies to Time,
Entertainment
Weekly, NY Times,
and generated
reviews in the film
section.
Off-line Ad
Strategy:
 BMW ran 15-second
teasers resembling
movie trailers on
A&E, Bravo, &
Independent Film
Channel with tag,
“Now playing at
BMWfilms.com”
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BMWfilms.com
The Results
As of March 2002,
over 11 million
people had logged
onto the BMWfilms
web site.
Traditional buyers
(median age 32, HH
income $88,000)
were majority of
those requesting
more information.
85% perception increase
among film viewers vs.
nonviewers
Planned dealer visits for
target market film
viewers rose 550%
12.5% sales increase in
2001 despite no major
product launches; 3series increase of 37% in
4 months that films ran.
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Discussion Question
Visit the Babycenter.com web site
What forms of online ads and promotion
does this site feature?
Were you surprised by any of the ads
featured on this site? Why?
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Conducting E-Commerce
E-Marketing
Creating web sites
Placing online ads
and promotions
Creating or using
web communities
Using E-mail and
webcasting
Web communities
allow members with
special interests to
exchange views
 Social communities
 Work-related
communities
Marketers find welldefined demographics
and shared interests
useful when marketing
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Conducting E-Commerce
E-Marketing
Creating web sites
Placing online ads
and promotions
Creating or using
web communities
Using E-mail and
webcasting
E-mail marketing
 Key tool for B2B and
B2C marketing
 Clutter is a problem
 Enriched forms of
e-mail attempt to
break through clutter
Webcasting
 Auto downloading of
customized content
to recipients’ PCs
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Is this the Future
of E-mail?
E-mail is the golden child of
web marketing due to its:
•
•
•
•
low cost per contact
quick response time
response tracking ability
response rates
Enriched e-mail executions
(see ad at left) are on the rise.
What are the drawbacks of
using the enriched e-mail format
for your marketing messages?
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Promise and Challenges of
E-Commerce
The Promise
 The future
of B2B
E-commerce
is bright
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Promise and Challenges of
E-Commerce
The Promise
 A few click-only companies may
succeed
 Most companies will integrate
online marketing into the overall
marketing mix, rather than treat it
as a separate component.
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Promise and Challenges of
E-Commerce
Challenges: The Web’s Darker Side
 Few B2C companies
are profitable:
Limited exposure,
and skewed
demographics
 Navigating the
web is often
problematic

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Promise and Challenges of
E-Commerce
Challenges: The Web’s Darker Side




Online privacy and security concerns
Internet fraud
The digital divide
Access by
vulnerable or
unauthorized
groups
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