Transcript Presentations Day 2: Sessions 5-8

Internet Marketing
and Web Design
Marketing Stream
ESCEM, Poitiers – September 22-26, 2003
Guest Professors:
Marty Huisman <Markety> Tom Leuchtner <InMentors>
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
1
Session 5:
Marketing Principles and the
Internet
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
2
Marketing Principles and the Internet
Please contact Marty Huisman ([email protected]) if you
want
more information about this topic.
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
3
The 4 P’s online
• Classical marketing rule: develop your strategy for the 4 P’s.
• In the New Economy they still play a role, but we will see that
they are largely influenced by the use of marketing technology.
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
4
Place: distribution
• How does ‘online’ affect distribution models
– Existing channels
– ‘New’ channels
– What is channel conflict ?
• Role of the website/internet in the distribution mix
• What is an ‘online’ marketplace
– Invention of the ‘Internet Era’
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
5
Place: channel conflicts
Conflicts in the distribution channel…
• Traditional distribution channels are threatened by online
commerce
• Three sources of channel conflict :
– Goal divergence – objectives of manufacturer or service
provider differ
– Responsibility disputes – pertain to customer handling,
territorial assignments, functions to be served and
technology to be used
– Differing perceptions of reality – actions may be
misconstrued and lead to conflict
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
7
Place: avoiding channel conflicts
And how to avoid them
• Offer different products online and direct than offline and indirect
– Exclusivity
– New brand
– Price differentiation
– Personalisation
• Create you own intermediary
• Financial compensation
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
8
Place: sell direct online
Reasons to sell direct online
• To be able to use Real-Time Marketing
• To enable mass customisation
• To enable personalisation
• To have direct contact with customers
• To increase your customer intelligence
This leads to disintermediation
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
10
Place: consequences of
disintermediation
Disintermediation ‘collapses’ the distribution chain
Grower
Jobber
$8.00
< © Copyright 2003 The Results Network >
Wholesaler
$12.00
Internet Marketing - Poitiers 2003
Florist
$24.00
Customer
$60.00
Customer
12
$54.00
Place: re-intermediation
Reverse: Re-intermediation
• Re-intermediation —shifting or transfer of intermediary functions,
not elimination
– intermediation such as electronic shopping malls, directory &
search engine service, & comparison aids using agents
creates role of re-intermediation
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
13
Place: why intermediaries
Reasons to use online intermediaries
• They know more about customers
• They have greater knowledge of local markets
• They carry a broader product line within a category
• They carry multiple product categories
• They can build a profile of customer choices based on a much
wider array of business than a direct seller would acquire
• As a multi-product vendor they can learn much more about
customers and use this info across product categories
• Customers like intermediaries that protect their privacy while
sharing appropriate knowledge to vendors
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
15
Further Reading/Research
• Regis McKenna: Total Access, 2002
• Russell Goldsmith: Viral marketing, 2002
• McKinsey Marketing Practice: Superior marketing in the next era
of e-commerce, 2001
• http://www.ecommercetimes.com
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
16
End Session 5:
Marketing Principles and the
Internet
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
17
Session 6:
Consumer
Business to Business
eCommerce
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
18
What is B2C?
Business-to-Consumer electronic commerce
• eCommerce Buying = combines ordering and paying
online
Example – A consumer orders an item of clothing
on a web site and completes the entire
transaction online
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
19
B2C eCommerce Takes Off
1997 (Billions) 1998 (Billions)
Paid for online
Ordered
online, paid
for offline
Offline orders
influenced by
the Net
Total
< © Copyright 2003 The Results Network >
Growth
$5.1
$11.0
54%
$10.2
$15.5
34%
$44.8
$50.8
12%
$60.1
$77.3
32%
Internet Marketing - Poitiers 2003
20
Breakdown of Online Consumer
Spending (US)
$13.5 - Researched
online, ordered and
paid for offline
$4.7 – Ordered online,
paid for offline
$11.0 – Paid for online
$10.8 – Ordered
online, paid for
offline
$16.3 - Researched
online, ordered and
paid for offline
BIG TICKET ITEMS
SMALL TICKET ITEMS
(Cars, Refrigerators, etc)
< © Copyright 2003 The Results Network >
(Clothing, Electronics, etc)
Internet Marketing - Poitiers 2003
21
eCommerce Impact on Web Sites
4%
100%
20%
80%
37%
38%
9%
5%
14%
23%
5%
9%
30%
60%
10%
4%
4%
10%
32%
9%
20%
40%
20%
5%
e-mail address not
available
No response
•
3+ days
50%
54%
40%
1 day
25%
Adding eCommerce raises the
stakes
eCommerce creates incentives
to improve performance and
customer responsiveness
– E-mail response time is critical
– Web-server performance is
important
2 days
20%
23%
•
•
eCommerce sites are most
responsive
0%
Brand
Content Financial
Travel
Shopping
Majority of eCommerce Sites with One-Day Response
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
22
Consumer-to-Consumer Commerce
• Consumer-to-consumer sites must build trust
– Systems that rate seller credibility
– Verify identities of buyers and sellers
– Insurance against fraud
– Escrow accounts to ensure products are shipped
– Bans on sellers who bid on their own products
– Bans on buyers who win, but don’t complete the sale
• Successful auction sites blur the distinction between
business and fun
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
23
Consumer-to-Consumer Commerce
Building Community
Businesses deploy chat room technology
– Enables consumers to interact directly with each
other
– Accelerates word of mouth
– Customer Support
– Community building
– Facilitates consumer-to-consumer commerce
• eBay
• Yahoo! Auctions
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
24
eCommerce Impact on Web Sites
• eCommerce creates strong incentives for
companies to enhance their online use of
personalization
– Raises the value of users’ online experience
– Improves customer loyalty
– Allows for detailed information gathering
• The personalization/eCommerce link is
especially strong for business-to-business
marketing
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
25
The Key to Success in eCommerce
Control of the two power axes:
about building set of
unique competencies &
controlling bargaining
power
battle for providing
greatest value & best
features, from customer
perspective
Competitor
power axis
Power of
Suppliers
< © Copyright 2003 The Results Network >
Threat of
New Entrants
Existing
Competitors
Threat of
Substitute
Products
Internet Marketing
- Poitiers 2003
Power of
Customers
Creation of Value
chain power axis
26
Levels of eCommerce
National
Electronic
distribution
Company
promotion
Pre/post sales
support
Electronic
presence
International
Electronic
distribution
National
payment
Sales/
Simple
transactions
International
payment
Shared business
processes
‘Standard’, simple,
Many instances
< © Copyright 2003 The Results Network >
‘Custom’, complex,
Few instances
Internet Marketing - Poitiers 2003
27
The Pace of eCommerce
Saving Money: The Simplest Reason to Buy Online
•
Regular lower prices
– An online site can dramatically
reduce selling costs for retailers
– Competitive pressures keep
prices low
$35
Figure 12.9 – Comparison of
Bestseller Prices
$30
$25
$20
$15
$10
$5
$0
< © Copyright 2003 The Results Network >
A Man in Full
Sugar Busters
Into Thin Air
Memoirs of a
Wolfe
Steward
Krakauer
Geisha Golden
List 2003
Internet Marketing - Poitiers
Bestsellers For Less
Amazon.com
Wal-mart.com
Barnes&Noble.com
28
Shopping.com
The Pace of eCommerce
Saving Money: The Simplest Reason to Buy Online
•
•
Sales tax is seldom charged on online purchases
– Products delivered electronically - software downloads
– When the merchant doesn’t have a physical presence in the state where the
product is delivered
Shipping costs vary
– Consumers notice and react to the cost of shipping
– Shipping to home addresses is expensive
• Package delivery companies are optimized for delivery to commercial
addresses
• One large delivery to a retailer is replaced by many small deliveries
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
29
The Pace of eCommerce
E-tailers Offer Assortment & Convenience
•
•
•
•
•
Virtually unlimited shelf space
24/7 service
Convenient for repeat purchases
One-stop shopping
Ability to comparison shop
Top Reason Cited for Retail Store Dissatisfaction, Christmas
1998
1. Can’t find a salesperson
26%
2. Unknowledgeable staff
18%
3. Parking problems
17%
4. Waiting in lines
14%
5. Insufficient selection
13%
6. Crowded merchandise
7%
7. Unfriendly staff
7%
8. Difficulty finding things
9. Inconvenient
location
< © Copyright
2003 The Results
Network >
10. Hours not convenient
Table 12.6
Physical
Retail
Problems
7%
Internet Marketing - Poitiers 2003
5%
2%
30
The Pace of eCommerce
Entertainment
• Less developed due to technical issues such
as slow consumer access speeds
• Exception is adult entertainment, which
earned nearly $1 billion in 1998
• Other entertainment forums include
–
–
–
–
auction sites
chat rooms
instant messaging
discussion groups
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
31
Selecting Specific EC
Opportunities & Application
• Understand:
– The possibilities of Ecommerce
• Map opportunities that match current competencies
and markets
– Many opportunities to create new products and
services
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
32
You Decide:
‘Pure Play’ vs. Bricks and Mortar
•
•
•
•
Three dimensions
– the product (service) sold [physical / digital];
– the process [physical / digital]
– the delivery agent (or intermediary) [physical / digital]
Traditional commerce
– all dimensions are physical
Pure EC
– all dimensions are digital
Partial EC
– all other possibilities include a mix of digital and
physical dimensions
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
33
eCommerce Case Study:
The Automobile Industry
New intermediaries complicate the split of profits between
elements of the profit pool
Example: Online car
sales
The battle for customers takes
place during:
1. Researching and selecting the
vehicle
2. Finding a dealer and price
3. Choosing financing, insurance,
warranty
4. Closing the deal
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
34
eCommerce Case Study
This
suggests
that auto
insurance,
loans and
leasing plans
are highly
desirable
partners for
both new
and used
car dealers
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
35
eCommerce Case Study
Table 12.3: Steps for Online Auto Buying
Stage
Service Providers
Growth Drivers
Consumer
Participation
(millions of
households)
1998
2003
1. Research and
select vehicle
AutoSite
Car and Driver
CarPrices.com
Consumer Reports
Edmund’s
IntelliChoice
J.D. Power
Kelley Blue Book
Manufacturers
Yahoo! Autos
 Increase in online
households
 Easy access to deep
product information
from trusted brands
 Powerful word of mouth
2.0
7.9
2. Find a dealer
and price
Auto-By-Tel.com
 No-haggle pricing
AutoConnect
 Dealers hire InternetAutoVantage
focused salespeople
Autoweb.com
 Dealers establish and
CarPoint
improve web sites
Cars.com
 Dealers set up two-way
Dealers
e-mail
Manufacturers
Priceline.com
Stoneage
Internet Marketing - Poitiers 2003
0.8
5.2
< © Copyright 2003 The Results Network >
36
eCommerce Case Study
Table 12.3 continued
Stage
Service Providers
3. Choose
financing,
insurance and
warranty
Financing
CarFinance.com
Ford Credit
GMAC
Lending Tree
Insurance
GEICO Direct
InsWeb
Progressive
Warranty
Warranty Dir.
Warranty Gold
4. Close the
deal
Saturn/Daewoo
Dealer networks
Luxury brands
Online buying
services
< © Copyright 2003 The Results Network >
Growth Drivers
 Increased comfort with
internet transaction
security
 Technology cooperation
between banks and
dealers
 Dealers accept thirdparty financing
 Banks and insurers offer
incentives to go online
 Higher quality vehicles
easy to buy without a test
drive
 Money-back guarantees
and extended warranties
 Fixed pricing allows
Internet Marketing
- Poitiers
2003 sales
dealers
to close
online
Consumer
Participation
(millions of
households)
1998
2003
0.0
1.2
0.0
0.5*
Number
rounded
up
37
End Session 6:
Consumer
Business to Business
eCommerce
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
38
Session 7:
Business Plan Workshop
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
39
End Session 7:
Business Planning Workshop
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
40
Session 8:
What kind of site is it going to be?
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
41
Website Types
• Intranet
• Extranet
• Internet
– Corporate site
– E-commerce site
– Customer service site
– Portal
– Community
– Auction
– E-tailer
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
42
Homework
• Business plan draft by 22h tonite
• Presentations to all in groups tomorrow
• Tomorrow we start in the lab (211)
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
43
End Session 8:
What kind of site is it going to be?
< © Copyright 2003 The Results Network >
Internet Marketing - Poitiers 2003
44