Transcript Marketing on the Internet

E-Marketing, 3rd edition
Judy Strauss, Adel I. El-Ansary, and Raymond Frost
Chapter 1: The Big Picture
© Prentice Hall 2003
Overview
The Emergence of E-Marketing: The Google Story
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
The Google story shows:
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Markets always welcome an innovative new product
providing customer value.
Customers trust good brands.
Well-crafted marketing mix strategies can be effective
in helping newcomers enter crowded markets.
Key questions for
corporations:
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How to use information technology profitably ?
How to understand what technology means for their
business strategies?
How time-tested concepts by marketers can be
enhanced by the Internet, databases, wireless mobile
devices, and other technologies?
What’s next after the rapid growth of the Internet
and the dot-com bubble has marketers wondering ?
Overview
The Emergence of E-Marketing
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
What is E-Marketing?
E-Marketing is the application of a broad range of
information technologies for:
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Transforming marketing strategies to create more
customer value (more effective segmentation, targeting,
differentiation, and positioning strategies),
More efficiently planning and executing the conception,
distribution, promotion and pricing of goods, services,
and ideas,
Creating exchanges that satisfy individual consumer and
organizational customers’ objectives.
What is E-Marketing?
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Alternative definition:
E-marketing is the result of information technology
applied to traditional marketing.
E-marketing affects traditional marketing in two ways:
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
Increases efficiency in traditional marketing functions,
The technology of e-marketing transforms many marketing
strategies.
Results: new business models that add customer value
and/or increase company profitability.
Overview
The Emergence of E-Marketing
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
What Is E-Business?
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E-business “is the continuous optimization of a firm’s
business activities through digital technology”
Digital technologies = information technology
are things like computers and the Internet, that allow
the storage and transmission of data in digital formats
(1’s and 0’s)
Overview
The Emergence of E-Marketing
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
The Big Picture
-
Easy, inexpensive, and quick access to digital information
transforms:
economies,
- societies,
governments,
- businesses.
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Digital information enhances economies through:
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-
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more efficient markets,
more jobs,
information access,
communication globalization,
lower barriers to foreign trade and investment, and more.
Uneven impact of the Internet across the globe:
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530 million users connected to the Internet worldwide = 8.5%
of the global population,
Developed nations = 15% of the world’s population
= 88% of all Internet users,
U.S. Internet users = 182 million
= 64% of the population,
Indigenous peoples in remote locations gaining health, legal,
and other advice, or selling native products using the Internet.
Undesirable changes created by a networked world
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Societies change as global communities based on
interests form,
Worldwide information access slowly decreases
cultural and language differences,
Easy computer networking = work and home
boundaries are blurring = more convenient work =
encourage more workaholism and less time with
family.
Undesirable changes created by a networked world
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Class divisions will grow, preventing the upward
mobility of people on lower socioeconomic levels and
even entire developing countries,
Digital divide: Internet adoption occurs when folks
have:
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Enough money to buy a computer,
The literacy to read what is on Web pages,
The education to be motivated to do it.
The digital environment is enhancing processes
and activities across the entire organization:
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Cross-functional teams using computer networks to share and
apply knowledge for increased efficiency and profitability,
Financial experts communicate shareholder information online,
file required government statements, and invent new ways to
value risk, etc.,
Human resources personnel use the Net for electronic recruiting
and training; an increasing number are managing organizational
knowledge and workflow through corporate Web portals.
The digital environment is enhancing processes
and activities across the entire organization:
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Production and operation managers can adjust
manufacturing based on the Internet’s ability to give
immediate sales feedback resulting in truly just-intime inventory and building products to order,
Strategists are leveraging the Net to apply the firm’s
knowledge in building and maintaining a competitive
edge (easy access to data).
Important e-business benefits according
to U.S. top executives:
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Building better quality customer relationships,
Finding more business
development opportunities,
Building better brand visibility.
partners
and
other
Overview
The Emergence of E-Marketing
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
Tough Times
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The first generation of e-business was like a gold rush = creation of a
Web presence and experimentation.
Results:
 Huge sales and market share,
 BUT little was brought to the bottom line and profit was negative,
 Since January 2000, however, over 500 Internet firms have shut
down in the U.S. alone.
E.g: CDNow, Lycos, DoubleClick, E*Trade, and Amazon.com
The “trough of disillusion” is based 30% on the technology recession
and 70% on disappointment with e-business results.
Tough Times
Marketers return to their traditional roots and rely on wellgrounded strategy and sound marketing practices.
During the dot-com shakeout from 2000-2002, there was
much industry consolidation:
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Some firms, such as Levi Strauss, stopped selling online =
not efficient + created channel conflict.
Other firms merged,
E.g. e-business firm took over a traditional firm = AOL
purchased Time-Warner.
Benefit
% Mentioning
Better quality customer relationships
More business development opportunities
Better brand visibility
Drive fat from supply chain
Reduce time-to-market
Increase customer quantity
61
50
50
42
33
25
The Most Important Benefits of E-Business to U.S. Executives
Source: “Key Business and Marketing...” (2002)
What will the future be?
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Gartner Group predicts that a true e-business model will emerge,
and by 2008 the “e” will be dropped, making electronic business just
part of the way things are done.
Some say that “E-business has become just business. E-commerce
has become just commerce. The new economy has become just the
economy (Aronica and Fingar 2001).
” Others say that this is far from the truth—for them, e-business will
always have its own models, concepts, and practices.
Charles Schwab has already gone through the entire cycle allowing
e.Schwab.com to cannibalize the larger brick-and-mortar securities
firm in 1998.
Overview
The Emergence of E-Marketing
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
E-Marketing in Context: Where does e-marketing fit into this picture?
Visibility
U.S.
Recesssion
Dot-com
peak
Technology Peak of
Trigger
Inflated
Expectation
1990-1996 1999
Equity times
2000
Trough of
Disillusion
2001 2002
Debt Times
E-Business
becomes “just
business”
Slope of
Enlightnment
2003
Plateau of
Profitability
2004 2005 2006
Positive Cash Flow
There is Hope After the Trough of Disillusion
Source: Adapted from Raskino and Andren of Gartner Research (2001)
Overview
The Emergence of E-Marketing
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
Environment, Strategy, and Performance
(ESP)
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Business environment: legal, technological, competitive, marketrelated, and other environmental factors external to the firm
= Opportunities and Threats,
SWOT analyses = Strengths and Weaknesses,
E-business strategies + e-business models + e-marketing plans
= Help the firm accomplish its overall goals,
Determine the success of the strategies and plans by measuring
results.
= Performance metrics, specific measures designed to
evaluate the effectiveness and efficiency of the e-business
and e-marketing operations.
Overview
The Emergence of E-Marketing
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
Key environmental factors
affecting e-marketing
1. Legal,
2. Technological
3. Market-related factors
Overview
The Emergence of E-Marketing
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
Legal Factors
Current and pending legislation can greatly influence emarketing strategies:
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Privacy: Difficult to legislate + Critical because consumers
yield personal information over the Internet
Opt-out e-mail: when users must uncheck a Web page box to
avoid being put on a company’s e-mail list,
Difficult for governments to balance freedom of expression
against consumer needs,
New technology brings new opportunities for fraud:
enforcement is difficult in a networked world.
Overview
The Emergence of E-Marketing
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
Technology
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Technological developments influence:
The composition of Internet audiences,
The quality of material that can be delivered to them.
E-marketing is evolving through software advances:
Technologies can target consumers according to their
online behavior to give a firm a distinct competitive
advantage.
Technology
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Technology lowers costs: Many firms have saved money
on staff and paperwork via electronic order processing,
billing, and e-mail.
Technology requires costly investments:
Web page development costs millions of dollars,
E-commerce operations require expensive hardware and
software,
New technologies continue to emerge, which make
current investments obsolete,
Putting technology to use entails a steep learning curve.
What is the Internet?
The Internet is a global network of interconnected
networks:
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Millions of corporate, government, organizational,
and private networks,
The Internet consists of computers with data, users
who send and receive the data files, and a
technology infrastructure to move, create, and view
or listen to the content.
What is the Internet?
Three important types of networks form part of the Internet:
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Intranet = A network running internally in a
corporation + using Internet standards (HTML and
browsers) = a mini-Internet but only for internal
corporate consumption,
Extranet = An intranet with value chain partners +
the access is normally only partial,
Web = The portion of the Internet that supports a
graphical user interface for hypertext navigation with a
browser (Netscape / Internet Explorer). The Web is
what most people think about when they think of the
Internet.
It’s Bigger Than the Internet
Electronic marketing reaches far beyond the Web:
Many e-marketing technologies exist
= Customer relationship management, supply chain
management, and electronic data interchange
arrangements predating the Web,
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Non-Web Internet services such as e-mail and
newsgroups
= Effective avenues for marketing.
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It’s Bigger Than the Internet
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The Internet holds more than one Web:
 The Web that most users access from PCs,
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Subsets of the Web with content specially
formatted for the unique display
properties:
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Web TV,
Personal digital assistants,
Cell phones,
Text-only browsers.
It’s Bigger Than the Internet
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Offline electronic data-collection devices
such as bar code scanners.
Portion of the Web containing highbandwidth content for users who have
either cable modems or digital
subscriber loop (DSL) connections.
Internet Properties and
Marketing Implications
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Marketers who grasp what Internet technologies can do will be better
poised to capitalize on information technology.
Internet properties:
- Create opportunities beyond those possible with the telephone,
television, postal mail, or other communication media,
- More effective and efficient marketing strategy + tactical
implementation + change the way marketing is conducted.
E.g. The idea of digitizing data (bits not atoms) has transformed media
and software delivery methods + created a new transaction channel.
Internet Properties and
Marketing Implications
Internet technologies have changed
marketing in a number of critical ways:
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Power shift from sellers to buyers,
Death of distance,
Time compression,
Knowledge management is key,
Interdisciplinary focus,
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Intellectual capital rules.
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traditional
Overview
The Emergence of E-Marketing
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
E-Business Markets
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Once marketers identify appropriate markets, information
technology facilitates relationships before and after the
transaction with:
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Prospects,
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Partners,
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Customers,
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Supply chain members.
There are three important markets that both sell and buy
to each other:
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Businesses,
Consumers,
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Governments.
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Initiated by
Business
Initiated by
Consumer
Initiated by
Government
To Business
Business-to-Business
(B2B)
FreeMarkets
www.freemarkets.com
To Consumer
Business-toConsumer (B2C)
CDNow
Www.cdnow.com
Consumer-to-Business
(C2B)
Better Business Bureau
site
www.bbb.org
Government-to-Business
(G2B)
Small Business
Administration site
www.sba.gov
Consumer-toConsumer
(C2C)
eBay
www.ebay.com
Government-toConsumer
(G2C)
California state site
Www.state.ca.us
Exhibit 1 - 1 E-Business Markets
Source: Marian Wood (2001) with minor adaptation (p. 2)
To Government
Business-toGovernment (B2G)
Western Australian
Government Supply
www.ssc.wa.gov.au/
Consumer-toGovernment
(C2G)
GovWorks
www.govworks.com
Government-toGovernment
(G2G)
GovOne Solutions
http://www.govonesol
utions.com/
Business Market
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It is huge: more businesses are connected to the
internet than consumers.
It is transparent to consumers: it involves proprietary
networks that allow information and database
sharing.
E.g. FedEx, the package delivery firm:
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Its customers can schedule a package pick-up using the Web
site,
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Track the package using a PC or handheld PalmPilot,
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Pay the shipping bill online.
Consumer Market
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E-marketers must understand consumers in potential
geographic segments:
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Iceland and Denmark = 2 of the most wired countries in
the world = 60% Internet penetration,
Consumers in many countries pay by the minute for local
phone access = determine the kind of casual surfing
practiced by Internet users.
Consumer Market
The consumer market is huge and quite active online:
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28% of consumers said they have shopped online or plan
to shop online in the next six months,
15% purchased offline as a direct result of online
information,
U.S. consumers are the biggest online shoppers, spending
US$53 billion in 2001, an increase of nearly 20% from
2000.
Revenge of the Consumer
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The rebellion started with television channel surfing using the
remote control. Consumers did not seem to appreciate that
commercials pay for broadcast TV programs.
At the start of the 21st century, consumers have control via the
mouse. When television, radio, print media, entertainment, and
shopping all converge seamlessly on a computer-like device,
consumers will truly have information on demand.
Consumers are more demanding and more sophisticated, and
marketers will have to become better at delivering customer
value.
Consumer Needs
What do customers want in the information economy?
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Privacy: Customers want marketers to keep their data confidential +
don’t want to be bothered by sales calls at home during dinner,
To safeguard children from objectionable sites,
Want marketers to ask permission before sending commercial e-mail
messages,
Want e-commerce to provide convenience, self-service, speed, good
customer service, personal attention, and value.
Consumer Needs
Fortunately, e-marketing can meet all these needs:
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With mass customization individuals can contact firms over the
Internet and receive responses tailored to their needs,
Business can also customize and personalize products and
communications to strengthen long-term relationships with
customers.
E.g. Amazon.com presents personalized Web pages to users
Exhibit 1 - 1 Amazon.com Uses Mass Customization to Personalize Web Pages
Source: www.amazon.com Amazon.com is a registered trademark or trademark of Amazon.com, Inc. in the United
States and/or other countries. © 2000 by Amazon.com. All rights reserved.
Government Market
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The U. S. government is the world’s largest buyer, purchasing
over $200 billion in goods and services every year (see
www.isbdcorp.org/gmag).
Add to this the purchasing power of U.S. states, counties, cities,
and other municipal agencies, and this makes for a huge
market.
Small and large businesses usually have an equal chance of
selling to governments + government Web sites announce their
buying needs in advance of the bidding process.
Government Market
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Businesses wishing to sell to governments face challenges
unique to this market:
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Follow rules regarding qualifications, paperwork, etc.,
Must compete to be on the government list of approved
suppliers + compete for specific contracts through a
bidding process,
Have to conform to very particular timely delivery of
quality products at reasonable prices.
Overview
The Emergence of E-Marketing
What is E-Marketing?
What Is E-Business?
The Big Picture
Tough Times
E-Marketing in Context
Environment, Strategy, and Performance (ESP)
E-Marketing Environment
Legal Factors
Technology
E-Business Markets
What’s Next?
What’s Next?
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Regardless of the current disillusion with e-business, many
solid successes exist today and exciting new growth areas
will soon emerge.
Seven trends that will help businesses move forward into
e-marketing :
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Integrating IT software,
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Boom in Web services,
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Collaboration software,
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Dealing with too much data,
Data security,
 Wireless is here to stay,
 Growth in portable
computing.
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Key Terms
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Information technology
Business-to-Business (B2B)
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(B2G)
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Mass customization
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Performance metrics
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Web
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Web services
Business-to-Consumer (B2C)  Internet
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Intranet
Business-to-Government
Consumer-to-Consumer
(C2C)
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Digital technology
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E-business
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E-commerce
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E-marketing Extranet
Review Questions
1.Define e-business and e-marketing.
2.What are performance metrics and why are they important?
3.What are some of the key legal issues that affect emarketing?
4.How does technology both raise and lower costs for
companies?
5.As a technology, how does the Internet compare with the
telephone?
6.What are some of the marketing implications of Internet
technologies?
7.What are the three main markets of e-business, and how do
they differ?
8.In the context of e-marketing, what does “revenge of the
consumer” mean?
Discussion Questions
1. As a marketer, do you agree with the U.S. executives who say
“better quality customer relationships” is one of the most
important e-business benefits? Why?
2. As a consumer, are you likely to benefit when e-business becomes
“just business” in the near future? Explain your answer.
3. Some economists suggest that the increase in e-commerce within
the B2B market will lead to greater competition and more goods
and services becoming commoditiesthat is, solely competing on
price. How do you think this is likely to affect buyers within the
B2B market? How would it affect sellers?
4. What concerns about consumer privacy are raised by the
increased use of wireless computing and handheld devices outside
the home or workplace?