Transcript Session8-MarketingAWebSiteAndPromotingProductsAndServices

Electronic Commerce
Session 8: Marketing a Web Site and Promoting Products
and Services
2
Session Objectives
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The objectives of this session are:
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To provide a general introduction to Web marketing
To discuss product and customer-based marketing
strategies
To categorise individuals into various market
segments
To analyse Web customer behaviours through the use
of customer relationship models
To describe methods used to promote your Web site
What is Marketing?
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This is the process of
planning and
executing the
conception, pricing,
promotion and
distribution of ideas,
goods and services to
satisfy customers2.
What is Marketing Cont’d?
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Marketing is more than sales; it is those set
of activities that
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Grabs a potential customer
Encourages them to buy your product
Actually gets them to purchase your product
Makes them a repeat customer
What is Marketing Cont’d?
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Marketing theory describes the 4 P’s
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Product: a company sells a physical product or
offers a service
Price: the amount paid for the product or service
Promotion: the communication of the existence of
the product to the market
Place (or distribution): ensuring that the right product
or service is offered at the right place at the best time
Each of these “P”s contribute to your marketing
mix
Marketing Strategies
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The first stage (of a marketing strategy) is setting
marketing objectives (where the organisation
wants to be at the end of the strategic planning
period) and goals (the objectives with specific
numerical benchmarks and deadlines attached to
allow management to measure achievement)3.
Marketing Strategies Cont’d
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The second stage (of a marketing strategy)
is specifying the core marketing strategy,
i.e. specific target markets, competitive
positioning and key elements of the
marketing mix3.
Marketing Strategies Cont’d
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The third (stage of a marketing strategy) is
the implementation of tactics to achieve the
core strategy3.
Marketing Strategies Cont’d
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Marketing strategies may come in two
forms
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Product-based marketing strategy
Customer-based marketing strategy
Marketing Strategies Cont’d
Product-based Marketing Strategy
 When a customer is likely to buy or think
about products in categories, a productbased marketing strategy is appropriate:
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An example is an office supplier store where
a customer may be looking for an office desk;
the customer immediately thinks about the
product category “office furniture”
See http://www.officedepot.com/
Marketing Strategies Cont’d
Customer-based Marketing Strategies
 Due to the great flexibility of Web sites (as
opposed to traditional mass media) they can offer
products and services that are targeted towards
specific type of customers
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First the customer types must be identified
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A Web site on its home page might allow the user to select
the required customer type
This approach is more common on B2B sites than on
B2C sites
Communicating With Different
Marketing Segments
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Trust and Media Choice
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The Web is an intermediate step between
mass media and personal contact
Mass media (e.g. TV) offers the lowest level
of trust yet is still widely used today
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The cost of mass media can be spread over a large
number of people
Personal contact offers the highest level of
trust; it is also the most expensive
Communicating With Different
Marketing Segments Cont’d
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In 1996 as companies began doing business
online a splintering of the mass market occurred
due to rising consumer expectations and reduced
product differentiation
This led to a reduction of the usefulness of mass
marketing
Advertisers subsequently began to identify
market segment and sell to them
Market Segmentation
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Market segmentation is the identification
and targeting of specific portions of a
market
Demographic characteristics are usually
used to create market segments
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E.g. age, gender, martial status, income level
and geographic location
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Ring tones on Cell phones target market might be
younger people between the ages of 10-20
Market Segmentation Cont’d
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Market segments have traditionally been
identified through the following categories:
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Geographic segmentation
Demographic segmentation
Psychographic segmentation
Market Segmentation Cont’d
Geographic Segmentation
 When a company divides its customers into
groups based on where they live or work
this is referred to as geographic
segmentation
Market Segmentation Cont’d
Demographic segmentation
 Demographic segmentation uses
characteristics of people, for example age,
gender, family size, income education,
religion or ethnicity to group customers
Market Segmentation Cont’d
Psychographic segmentation
 Psychographic segmentation groups
customers based on social class,
personalities or approach to life
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For example auto car companies may focus
sports car advertising to people who have a
high need for achievement
Market Segmentation Cont’d
Web Market Segmentation
 The design of the site can immediate appeal to
different market segments, for example
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For the young fashion-conscious buyer you may have
a site with a wide variety of typefaces, bold graphics
and bright colour product photos
For the older more established buyer you may have a
more muted conservative style
Market Segmentation Cont’d
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Companies can offer a form of one-to-one
marketing by allowing customers to
customise the retailer’s Web site
One example of this is Dell.com
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Offers each customer its own Web site
Allows individual employees of its customers
to create their own personalised pages
Market Segmentation Cont’d
Behavioural Segmentation
 This allows companies to target specific
customers in different ways at different times
 A person tends to have different requirements on
different occasions
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E.g. a person wanting a meal might go one place for
breakfast and another for lunch
As a result a different user experience must be
created depending on the behaviour of the user
Market Segmentation Cont’d
Usage-based Market Segmentation
 A person may visit the same Web site at different
times for different reasons, as a result we must
identify behavioural patterns
 Some key behavioural patterns are:
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Browser
Buyer
Shopper
Customer Behaviours
The Behaviour of a Browser
 A browser enters your Web site to browse
or surf
 In order to generate and maintain interest
Web sites should use trigger words
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These words jog the memory of visitors,
reminding them to buy from the site
As a result users stay longer at the site
Customer Behaviours Cont’d
The Behaviour of a Browser Cont’d
 A Web site should include extra content
related to the product or service offered
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For example a company that sells printers
could provide extra information about
different types of paper and its use in desktop
publishing
Customer Behaviours Cont’d
The Behaviour of a Shopper
 Shoppers arrive at a Web site wanting to
buy a product or service, but require more
information before purchasing, so they will
get the best deal and the best-suited product
Customer Behaviours Cont’d
The Behaviour of a Shopper Cont’d
 What is important to shoppers are:
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Comparison tools
Product reviews
A list of features
User control product/service level of detail
One day a user might be a browser, the
next a shopper
Customer Behaviours Cont’d
The Behaviour of a Buyer
 Buyers arrive at your Web site ready to make a
purchase
 A good Web site design would prevent anything
from getting in the way of the purchase
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As a result a Web catalog might provide a box on the
home page to enter the catalog number (e.g.
www.argos.co.uk) and then allow the user to add the
product to a shopping cart
Customer Behaviours Cont’d
The Behaviour of a Buyer Cont’d
 The primary goal is to get the the buyer to the
shopping cart as quickly as possible
 The shopping cart
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Allows the buyer to create an account
Allows the user to log in after placing items into the
cart
Logging in should be left to the end so that barriers
are not placed in the shopping process
Customer Behaviours Cont’d
The Behaviour of a Buyer Cont’d
 Amazon.com offers a patented 1-click
feature allowing:
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Customers to purchase items with a single
click
Any items purchased within 90 minutes of
each other are aggregated into one order
Customer Behaviours Cont’d
Alternative Behavioural Modes
 A survey of 50,000 participants identified six
groups of Internet users:
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Simplifiers: who like convenience and are attracted
to sites that could make life easier
Surfers: searches the Web for information and shop.
They spend a lot of time on the Web and like to be
entertained
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To attract surfers, the content must be attractive, well
displayed and updated regularly
Customer Behaviours Cont’d
Alternative Behavioural Modes Cont’d
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Bargainers: search for a good deal therefore frequent
sites like eBay.com. This represents about 10% of the
on-line population.
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Bargainers are willing to search sites for the best terms and
prices
Connectors: stay in touch with people over the Web.
They use applications such as chat rooms, instant
messaging services, electronic greeting cards and
Web email
Customer Behaviours Cont’d
Alternative Behavioural Modes Cont’d
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Routiners: visit the same sites all of the time,
e.g. to check news, or stock quotes
Sportsers: frequent sports and entertainment
sites
It is important to note that these are results
from only one study; however, other
studies have found similar groups
Customer Relationship Intensity
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There is a need to
create a strong
relationship between
a company and its
customers
A good relationship
creates loyalty
amongst customer
Customer Relationship Models
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Two customer relationship model are:
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Five stage model of customer loyalty
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The stages are awareness, exploration, familiarity,
commitment and separation
The Funnel Model
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The stages are customer acquisition, conversion
and retention
Customer Relationship Models
Cont’d
Five Stage Model of Customer Loyalty
 Researchers have identified five stages of
customer loyalty
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Awareness: the name of the company/or its products
are recognised. No interaction with the company has
been made
Exploration: in this stage the customer finds out more
about the products of the company. Communication
may be through a Web site, the telephone or e-mail.
This stage is about information interchange
Customer Relationship Models
Cont’d
Five Stage Model of Customer Loyalty Cont’d
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Familiarity: The customer has completed several
transactions with the company, although the customer
is still willing to shop with competitors
Commitment: The customer is satisfied with the level
of service and is therefore a repeat customer.
Customers at this point are wiling to tell others about
the service
Separation: This may result from disappointment in
the level of service or product quality
Customer Relationship Models
Cont’d
Five Stage Model of Customer Loyalty
Cont’d
 These five stages are sometimes referred to
as the customer life cycle
 Grouping customers based on these stages
is called life-cycle segmentation
Customer Relationship Models
Cont’d
The Funnel Model
 Managers often want to identify the best
way to attract and retain customers
 The funnel model is a tool that managers
use to analyse the effectiveness of their
marketing strategy
 This model is less abstract than the five
stage model
Customer Relationship Models
Cont’d
The Funnel Model Cont’d
 This funnel model allows companies to
determine which advertising and promotion
strategies actually work
 It is divided into three parts:
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Customer acquisition
Customer conversion
Customer retention
Customer Relationship Models
Cont’d
The Funnel Model Cont’d
Customer Acquisition
 This is the process of attracting new
visitors to your site
 The total amount of money that a Web site
spends to attract one visitor is called the
acquisition cost
Customer Relationship Models
Cont’d
The Funnel Model Cont’d
Customer Conversion
 This is the process of converting a first time
visitor of a site to a customer
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For advertising-supported sites this is the point when
a visitor registers, or when they return several times
For sites with other revenue models this would be
when a visitor purchases a good or service or
subscribes to the site’s content
Customer Relationship Models
Cont’d
The Funnel Model Cont’d
Customer Conversion Cont’d
 The total money spent (on average) to
induce a visitor to make a purchase on a
site is called the conversion cost (most
managers also include the acquisition cost)
Customer Relationship Models
Cont’d
The Funnel Model Cont’d
Customer Retention
 In many business the conversion cost is higher
than the profit made on the average sale therefore
it is important to encourage customers to return to
the site to make another purchase
 If the customer returns to the site a number of
times after the first purchase, they are considered
retained customers
 The cost of getting customers to return to the site
and make a purchase is called the retention cost
Customer Relationship Models
Cont’d – The Funnel Model
500,000 ads shown
on Web pages
10,000 ad viewers
become visitors
900 visitors become
shoppers
Needs identification
Searches for information
about alternative product
and services
Evaluate alternatives and
makes selections
500 shoppers complete
their purchase
Purchase
80 purchasers become
loyal, repeat customers
Conversion of shoppers
into loyal supporters
Web Advertising
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Advertising is about communication
Communication may be between a
company and
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Its current customers
Potential customers
Or former customers that the company is
trying to regain
Web Advertising Cont’d
Banner Advertising
 Most Web advertising uses banner ads
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A small rectangular object normally at the top
of the Web page which displays stationary or
moving graphics
These ads are created using animated GIFs,
or objects created in Shockwave, Java or
Flash)
These ads must be attention grabbing
Web Advertising Cont’d
Banner Advertising Cont’d
 Web ads have been standardised by an
organisation called the Interactive
Advertising Bureau (IAB) which is
responsible for
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Creating banner size standards (e.g. 728x90,
160x600, 300x250, or 180x150)
Encourage effective Internet advertising
Web Advertising Cont’d
Banner Ad Placement
 There are three ways that a company can have
their banner ads displayed
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(1) Use a banner exchange network
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A banner exchange network arranges for banner ads for one
company to be displayed on another company’s Web site
Each member site would accept two ads for each ad placed
on someone’s site
The banner exchange network earns money by selling ad
space to other businesses
Web Advertising Cont’d
Banner Ad Placement Cont’d
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(2) Pay a site to display the banner ad
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Rates can be negotiated through an advertising
agency
(3) Use a banner advertising network who
acts as brokers between advertisers and Web
sites that carry ads
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They often broker space on large Web site like
Yahoo, which has high traffic volumes and are
therefore expensive
Web Advertising Cont’d
Measuring Cost for Ads
 Several measurements exist including:
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Cost per thousand clicks (CPM)
The number of new visitors that arrive via a clickthrough that buy on the site
To measure Web audiences is complicated,
however the following definitions are instructive:
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A visit occurs when a Web page is requested by a
visitor; further page loads from the same site within a
time period is considered part of the same visit
Web Advertising Cont’d
Measuring Cost for Ads Cont’d
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A trial visit, is the first time a visitor loads a Web site
When a visitor loads a page several time these are
called repeat visits
If a visitor clicks on an ad that is displayed on a Web
page this is called a click-through
Rates vary depending on how much demographic
information is captured, and the kind of visitors
the site attracts
The cost per one thousand clicks may range from
$1 to $50.
Web Advertising Cont’d
Other Web Ad Formats
 The pop-up ad is an ad that appears in its own
window when the user opens or closes a page
 The pop-behind ad is a pop-up ad that is behind
the existing browser window
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Ad-blocking software prevents these ads from
displaying
Rich media ads (active ads) generate graphics that
float over the Web page
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These ads are attention grabbing, but intrusive
Marketing Methods
E-Mail Marketing
 E-mail may well be one of the greatest tools
created for communication in the 20th century
 Some of the ways that email has been used for
marketing are:
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Permission marketing is the sending of emails to
people who request further information on a product
or service (for example)
Combining content (e.g. articles or news stories that
are of interest to the target market) with advertising
messages
Marketing Methods Cont’d
Affiliate Marketing
 In affiliate marketing a Company’s Web
site includes products or services offered
for sale by another company in exchange
for a commission
 The affiliate’s site benefits from the selling
site’s brand in exchange for the referral
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Amazon.com has over 800,000 affiliate sites
Marketing Methods Cont’d
Viral Marketing
 Viral Marketers rely on non-customers being told
about products or services by existing customers
 The number of customers increase the way a
virus increases
 An example of a viral marketing campaign is
Blue Mountain Arts
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When an electronic greeting card is sent to a person,
a link to Blue Mountain is included which they click
on to read the card; they are now more likely to send
a card themselves
Web Site Naming
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People with established brands want to name their
Web site after their brand
Companies other buy more than one domain
name, just in case the person misspells it (e.g.
Yahoo.com owns Yahow.com)
In some cases the Web site domain is owned by
some one else (e.g. virginatlantic.com ->
viginatlantic.com)
Domain names can be expensive, e.g.
Altavista.com cost $3.3 million
Promoting Your Web Site4,5
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Internet marketing is about capturing the
attention of potential customers through
promotion
The guidelines used for direct mail
marketing are also used for Internet
marketing
These guidelines are summarised by the
acronym AIDA
Promoting Your Web Site Cont’d
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A – Attention
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The goal is to get the attention of the visitor
which may be achieved through:
The quality of the Web site
 The ease of navigation
 Personalisation
 Good graphics
 Attractive Banners
 Colour
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Promoting Your Web Site Cont’d
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I – Interest
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Once the visitor’s attention has been
captured, an interest in the product must be
sparked.
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Quick response times and ease of navigation are
vital at this point
D – Desire
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A desire must be created for action
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Interactivity through navigation provides this
Promoting Your Web Site Cont’d
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A - Action
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The desired action is the customer placing an
order, or the actual sale.
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At this point the information is sent off to the
company to process and deliver (i.e. the fulfilment
phase)
Promoting Your Web Site Cont’d
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Several methods of promotion are in use
today:
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The combination of online and off-line
marketing (these must work together)
Banner ads (very popular, however only
about 0.5% of visitors click through)
Email marketing (very cost effective and with
good results, i.e. 5-15% response rate,
however may clutter customer’s in boxes)
Promoting Your Web Site Cont’d
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Traditional media: local newspapers, radio
programmes and mass mailing campaigns
It is important to promote your Web site on your Web
site. This can be achieved through:
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The domain name; use the company’s name
Negotiate reciprocal links, i.e. other Web sites linking to
your site
Search engines and directories
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Search engines locate sites based on keywords
Directories are organised listing of Web sites
Promoting Your Web Site Cont’d
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Newsgroups and mailing list
Promotion agreements5
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One company promotes another (e.g. 1-800flowers.com customers can earn frequent-flyer
miles with American Airlines
References
[1] Schneider, Gary, P., “Electronic Commerce: The second wave”, Thomson Course
Technology, Fifth Annual Edition, 2004
[2] CFDC, “Glossary of Business Terms” Online document available at
www.cfdccariboo.com/glossary.htm
[3] James, Judith, “General Glossary of Terms”, 2001. Online document available at
www.fuel4arts.com/sauce/10_glossary/glossary.htm
[4] Awad, Elias, M., “Electronic Commerce: From Vision to Fulfillment”, Pearson Prentice
Hall, Second Edition, 2004
[5] Rayport, Jeffrey, F., Jaworski, Bernard, J., “Introduction to E-Commerce”, McGraw-Hill,
Second Edition, 2004