Transcript PPT

Marketing of High-Technology
Products and Innovations
E-Business and Internet Marketing
Internet Perspectives
Customers
-Customer Control
-Privacy
Businesses
Content Sites
-Changing Rules of the Game
-Threats to Traditional Businesses
-Coping with Threats
-Functions other than Sales
(e.g. Supply Chain Management)
-Portals
-Cybermediaries
-Online Communities
-Vertical Hubs for B2B
e-commerce
Internet “Distribution Chain”
• Device manufacturers: the device used by
customer to access the Net—
– Computers, hand-helds, set-top boxes
• Operating systems vendors: software to operate the
device
– Can regulate software and access to programs used to
access the Net
• Browsers: software used to access information on
the Internet
Internet “Distribution Chain” (Cont.)
• Internet Service Providers: control the
infrastructure (“broadband”) for transmitting data
– Phone, cable, satellite, wireless, fiber optics, DSL
• Web hosting: services used to host Web sites
• Search sites/portals: Information “content” sites
customers go to to get useful Web information.
Customer Perspective
• Customer control
• Privacy concerns
Customers Gain Control in an
On-line Environment
• Customer gain information they choose
– Improved information puts downward pressure on prices
• Shopping bots
– Move to “permission-based” marketing
• Customers configure their own products, and even own
Web-browsing experience
– “Personalization”
• Customer auctions pit supplier against supplier
– B-to-B reverse auctions revolutionizing purchasing
relationships
Customers Gain Control in an
On-line Environment
• Customers break free of geographicallyconstrained purchasing
– Loyalty will have to be honestly earned
• Customers can shop anytime/anywhere
– Customers gain efficiency and convenience
• Customer word-of-mouth is more powerful.
Privacy Concerns
• “Cookies:”
– Software that records browser’s Web habits that
can be downloaded/uploaded by a site that a
customer visits.
• Combination of cookies + other data can
build customer profiles
• Cookies can be sold to advertisers
Privacy Concerns (cont.)
• In favor of cookies:
– Customers will receive offers that match their
interests
– Improved information will lead to win/win
marketing
• Against cookies:
– Abuse of customer information likely
– Unrestricted sharing of information harmful
Fair Information Practices Act
• Companies must disclose how they collect and
use information.
• Customers can decide whether to allow
information about them to be collected or used
– “opt-in” procedures
• Customers can inspect their data/correct errors
• Government can impose penalties when
companies violate these principles
Do Internet Companies Adhere to
these Principles?
• Most use “opt-out” procedure:
– Customer must take an action to prevent the
company from collecting information about
him/her
• Companies share information with other
companies without informing (let alone
receiving consent) customers.
How Reputable Companies Operate
• Follow “opt in” procedures
• Post (and follow!) privacy policies
• Receive a “privacy seal”
– www.truste.org
What Surfers Can Do to Protect
Privacy
• Set security preferences on their browser
software
– Very inconvenient surfing
– Download software to surf anonymously
– Download software to accept cookies from only prespecified sites
• Platform for Privacy Preferences (www.w3.org/P3P)
Changing Rules of the Game in an
On-line World
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Customer control
Requires fewer fixed assets
Companies less hierarchical
Respond faster to the marketplace
Threats to Traditional Businesses
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Extinction
Loss of potential new revenue stream
Cannibalization of existing revenue stream
Alienating/confusing current customers
Alienating existing distribution/sales channels
Access to resources
Attracting/retaining employees
Downward pressure on prices
Coping with Threats
• Creative destruction:
– Willingness to re-invent business model to
capitalize on new technologies
• Organizational Structure for On-line Unit
• “Re-intermediation”
Organizational Structure Options
• Separate entity (skunkworks)
– Pros: Capitalize on stock advantages; free reign to compete
without shackles
– Cons: Signals lack of willingness to be innovative within
context of parent organization
• Integrated within existing operations
– Pros: Realize synergies between on- and off-line businesses
– Cons: Conflicts of interest
• Middle-ground
– Minority stake in separate companies
The Changing Role of the
Intermediary
• Disintermediation: bypassing of traditional
intermediaries in favor of going direct on the
Net.
• Options for intermediaries
– Do Nothing
– Re-invent sources of value
– New types of intermediaries
Cybermediaries
• Brokers
• Electronic marketplaces
– Hubs
Other Internet Business Functions
Streamline Supply
Chain Management
(Extranets/Intranets)
Save on Ordering Costs
On-line Recruiting
Speed Product
Development
Reaching International
Markets
FIRM
Get Feedback From
Customers
Coordinate Finance
Customer Service
Improve Business
Relationships
Other Business Functions
Performed Using the Net: (in
addition to revenue generation)
• Supply Chain Management
– Extranets
• Save on Ordering Costs
– EDI  Internet-based
– Electronic marketplaces with auctions
• Speed Product Development
– Intranets
• Get Feedback from Customers
• On-Line Recruiting
Other Business Functions
Performed Using the Net
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Reach International Markets
Coordinate Finance
Improve Business Relationships
Move Customer Service On-Line
– Automate inquiries
Content (information) sites
• Portals
• On-line communities
• Electronic marketplaces (“hubs”)
On-Line Communities
• Attract visitors based on common interests
– iVillage.com; parentsoup.com
• Focus on connectivity/interactivity
– Chats, etc.
• Members of on-line communities stay at the
site longer, spend more money at the site than
non-members
Electronic Marketplaces
• B2B hubs/communities that connect
multiple buyers and sellers
– Offer transaction efficiencies
– Offer price savings (i.e. through reverse
auctions)
• Typically run by cybermediaries
– Earn revenue as percent of transactions
B2B Electronic Marketplaces
• Vertical or Horizontal
– Vertical: industry-specific
• Chemconnect.com; e-Steel.com
– Horizontal: cuts across industries, more likely to be
function-specific
• Adauction.com; MRO.com
B2B Electronic Marketplaces
• Concerns:
– Antitrust issues arise from market dominance and
monopoly-like economic power
– Possible negative effects on long-term
buyer/supplier relationships
Keys to On-Line Success
Build Repeat Site Traffic and Manage
On-Line Customer Relationships
Evaluate Traffic at the Site
Promote the Web Site to Build Traffic
Create Effective Web Site Design
Web Site Design—4 Cs
• Content
– Focus on right information in the right format,
with easy navigation
– Requires customer research
• Commerce
– On-line selling must provide value beyond brickand-mortar channels
Web Site Design—4 Cs
• Customization
– Use personalization to customize the browser’s
experience
• Community
– Promote interactivity and sense of community
Create “stickiness:” visitors have reasons
to return repeatedly to the site.
Promote the Web Site
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Traditional and on-line advertising
List with search engines
Traditional promotions
Use affiliates
Viral marketing
Permission marketing
Issues in On-line Advertising
• On-line advertising doubled from 1997-1998;
doubled again from 1998-1999.
• On-line advertising represents only 2.8% of
corporate advertising budgets.
• Avoid gratuitous digitization; “brochure-ware”
• Active model of customer informationacquisition
– (vs. passive model of broadcast media)
Types of On-line Ads
Other
(rich media,
keyword
searches)
11%
Email ads
2%
Sponsorship
27%
Interstitials
4%
Banner Ads
56%
Banners
• Pros:
– Inexpensive
– With enough creativity and repetition, can
generate awareness
• Cons:
– Easy to ignore
– Low click-through rates
• Only .36% in 1999
Ways to Improve Click-Through
Rates on Banners
• Interactive Banners
– Experiential
• Target the ad appropriately using cookie data
• Live Banners with video/sound
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“Rich media”
Don’t take surfer away from host site
Can use a direct selling model from the banner
Require computing speed and bandwidth; more expensive
to create
– Higher response rate: click-on rates as high as 10%
Interstitials-• “In your face;” “pop-ups”
• Definitely attention-getting
• Users find the annoying—
– Must close pop-up window to continue surfing
Interstitial
Keyword Ads
• To improve targeting of banner ads
Co-Branding/Sponsorships
• Advertiser sponsors a part of a content site
• Keep sponsor clearly identified
– Don’t blur line between information credibility
and advertising
Example of a Sponsorship
Pricing of On-line Advertising
• Function of:
– Number of viewers
– Degree to which population is a more narrowly-defined
target
• General portal audience vs. WSJ.com
• Two pricing formats
– CPM or “cost-per-click”
• Need to measure number of viewers of on-line
ads
CPM or Cost-Per-Click?
• CPM:
– Based on more passive view of information acquisition
– Assumes that exposing people to banners equates to an
impression
– May be viable for an awareness-building campaign
• Cost-per-click:
– Pay only when a surfer clicks on a banner
– Consistent with the active view of information acquisition
– Probably makes sense for a sales-oriented campaign
Directories
Search
Engines
List with Search Engines
List with Search Engines
• How Search Engines Work:
– Send out spiders, or crawlers that store copies of
Web pages and index some words from the page
– When surfer types in words, search engine looks up
words in its index and calls up the appropriate Web
address
– Search engines access only limited number of Web
sites;
• Therefore, important to register Web site with search
engines
List with Search Engines
• Can can get URL on index by:
– Registering with search engines
– Circulating fresh content through the site regularly
See more on search engines in the appendix, and
slides at the conclusion of this file.
Other Ways to Build Site Traffic
• Traditional Promotions
– Use sweepstakes, contests to get visitors to the site
• Affiliates
– Web sites that are cross-linked to another
– May earn a commission on sales generated from
referred traffic
Other Ways to Build Site Traffic
(Cont.)
• Viral Marketing
– Relies on Web site visitors to pass information/offers on to
friends
– Powerful in Internet environment
– Requires compelling content
• Permission-Based Marketing
– Ask customer to opt-in to receive e-mail messages for
marketing
– Consistent with Relationship Marketing
– Don’t spam!
Evaluate Web Site Traffic
• Use log files
• Use software:
– WebStat.com; Hitbox.com; Webtrends.com
• Track data such as:
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Hourly/daily/weekly monthly hits and unique visitors
Top referring URLs
Search engine sources
Keywords searched
Geo. Location (state/country)
Build Repeat Site Traffic/Manage Online Customer Relationships
• Personalization
• Customer Service
Personalization
• Tailors customer’s browsing experience based
on tastes and preferences
– Cookies
– Info the browser submits
• Ex: Amazon.com
• Boosts new customers, revenues
• Benefits in other areas: forecasting, customer
research/feedback
Predicting Repeat Sales
Correlations between online shoppers’ ratings of a variety of
factors and their likelihood to buy again from the same site:
LEVEL AND QUALITY OF CUSTOMER SERVICE:
65%
ON-TIME DELIVERY:
55%
PRODUCT REPRESENTATION:
47%
PRODUCT SHIPPING AND HANDLING:
47%
PRIVACY POLICIES:
41%
EASE OF ORDERING:
22%
PRODUCT SELECTION:
22%
PRODUCT INFORMATION:
22%
WEB SITE NAVIGATION AND LOOKS:
PRODUCT PRICE:
21%
20%
Hanrahan, Timothy, (1999), “Price Isn’t Everything,” Wall Street Journal, July 12, p. R20.
Models of On-line Customer Service
• Tiered approach
– Start with self-help
• FAQs
– E-mail inquiry
• Smart software
– Tele-Web
• Interactive chat with customer service rep
– Personal contact
Realizing the Internet’s Potential
• Change is the norm
• Moving toward “bricks-and-clicks” model.
• Requires overturning old business models
Net Hurdles to be Overcome
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Congestion
Security
Privacy
Technical Standards
Quality of connections and Web sites
Cultural Questions
Internet Taxes
More on Search Engines
• Directories vs. search engines
– Hybrids
– Specialty search engines
– Cost-per-click search engine:
• Goto.com
What “spiders” look for
• HTML tags
– Title tag
– Meta tags
• Keyword tags
• Description tags
– Link Tags
– ALT Tags
– Comment Tags
– Headline Tags
Determining Ranking
• Keyword density
– Total # of words on page \ # of times keyword is
used
• Percentage of relevance
– Based on keyword density for each of the 6 HTML
tags
Search engines give differential weights to this
information to determine the ranking of a particular
Web page.
Implications for Web Page Design
• Know keywords on which to focus Web page
description
– Examine competitors’ pages/source code
– Understand customer’s behavior
– Rely on search engine “hints”
• Don’t “spamdex”
• Rely on software to optimize page
Search Engine Scoring
www.SearchEngineWatch.com
Indexing
Yes
No
Full Body Text
All
None
Meta Description
All but...
FAST, Google, Lycos,
NLight
Meta Keywords
All but...
Excite, FAST, Google,
Lycos, NLight
ALT text
AltaVista, Go, Lycos
Excite, FAST, Google,
Inktomi, NLight
Comments
Inktomi
ALL Others
Ranking
Yes
No
Meta Tags Boost Ranking
Go, Inktomi
AltaVista, Excite, FAST,
Google, Lycos, NLight
Link Popularity Boosts
Ranking
AltaVista, Excite, FAST,
Google, Go, Inktomi,
NLight
Lycos
Submitting the Page
• Manually
– Go to search engine site
– Add URL
• Relying on automated submission process
– AddWeb; Register-it
– Mass submissions eliminate ability to tailor for
individual search engine criteria
Check Submission Status
• Manually
– Go to each Web site to see if indexed
• Rely on third-party tools
Caveats in Search Engine
Positioning
• Works only for “informed” customers who
know what they’re searching for
• May generate traffic; sales requires other
considerations
• Time consuming process
– Outsource?
• Morevisibility.com; Positionsolutions.com
Search Engine Submission
Guidelines
Search Engine
Submit more
than Home Page
Submit Limit
Submitted Pages
Appear In
Non- Submitted
Pages Appear in
Overall
Freshness
AltaVista
Yes
About 5 pages per day
1 to 2 days
About 1 month
1 day to
1 month
Excite
No
25 pages per week
Within 2 weeks
Up to 6 weeks
1 day to
3 weeks
Google
No
No limit, but only sub a
few pages per site
4 to 6 weeks
4 to 6 weeks
1 day to
6 weeks
HotBot
Yes
50 pages per day
Within 2 months
Within 2 months
1 day to
2 month
Go (Infoseek)
No
1 page per day
Within 6 weeks
Within6 weeks
1 day to
6 weeks
Lycos (web index)
Yes
No limit, but stay below
50/day to be safe
3 to 6 weeks
3 to 6 weeks
1 day to
6 weeks
Northern Light
No
No limit, but only sub a
few pages per site
2 to 4 weeks
2 to 4weeks
1 day to
1 month