Transcript ELC200DAY9and10

ELC 200
Day 9
Prentice Hall, 2003
1
Agenda
Questions from last Class?
Assignment 3 is posted in WebCt
Due Feb 23
Quiz 1 Corrected
Great results
Feedback available in WebCT
6 A’s, 6 B’s, 2 C’s, 1 D and 1 no-take
Question 1 is a “freebie”
Everyone had the same wrong answer
Today we will begin discussing Consumer Behavior,
Customer Service, and Advertising
Prentice Hall, 2003
2
Chapter 4
Consumer Behavior,
Customer Service, and
Advertising
Prentice Hall, 2003
3
Learning Objectives
Describe the factors that influence consumer
behavior online
Understand the decision-making process of
consumer purchasing online
Describe how companies are building one-toone relationships with customers
Discuss the issues of e-loyalty and e-trust in EC
Prentice Hall, 2003
4
Learning Objectives (cont.)
Explain how personalization is accomplished
online
Describe consumer market research in EC
Explain the implementation of customer
service online and describe its tools
Describe the objectives of Web advertising
and its characteristics
Prentice Hall, 2003
5
Learning Objectives (cont.)
Describe the major advertising methods used
on the Web
Describe various online promotions
Describe the issues involved in measuring the
success of Web advertisements as it relates to
different pricing methods.
Understand the role of intelligent agents in
consumer issues and advertising applications
Prentice Hall, 2003
6
Ritchey Design Learns
About Customers
The Problem
Small business designing and manufacturing
mountain bike components
1995 Web site was a status symbol rather
than a business tool
The site did not:
Offer enough customer information
Enable the company to gain insight into
their customers’ needs and wants
Prentice Hall, 2003
7
Ritchey Design Learns
About Customers (cont.)
The Solution
Customer surveys introduced the site
Web Trader automatically saves and
organizes answers in the database—this
information is used to make marketing
decisions
Created an electronic product catalog
Visitors can browse through the product
catalog with detailed descriptions and
graphics of products
Prentice Hall, 2003
8
Ritchey Design Learns
About Customers (cont.)
The Results
Ritchey does not yet sell directly to individuals
online, because the company wants to
maintain its existing distribution system
Dealers can:
Place orders on the site
Learn about new products quickly
Site is basically used for market research
and advertising
Prentice Hall, 2003
9
Exhibit 4.1
EC Consumer Behavior Model
Prentice Hall, 2003
10
Consumer Behavior Online (cont.)
Consumer types—individual consumers who
commands most of the media’s attention
Organizational buyers
Governments and public organizations
Private corporations
Resellers
Consumer behavior viewed in terms of:
Why is the consumer shopping?
How does the consumer benefit from shopping
online?
Prentice Hall, 2003
11
Variables in the
Purchasing Environment
Social variables—people are influenced by:
Family members, friends, co-workers, “what’s in
fashion this year”
Cultural/community variables—where the
consumer lives
Other environmental variables:
Available information, government regulations,
legal constraints, situational factors
Prentice Hall, 2003
12
Personal Characteristics
Personal Differences
Age and gender
Marital status
Educational level
Ethnicity
Occupation
Household income
Personality
Lifestyle characteristics
Prentice Hall, 2003
13
Exhibit 4.3
Amount of Money Spent on the Web
Prentice Hall, 2003
14
Consumer Purchasing Decision Making
Roles people play in decision-making
Initiator—suggests/thinks of buying a particular
product or service
Influencer—advice/views carry weight in making a
final buying decision
Decider—makes a buying decision or any part of it
Buyer—makes the actual purchase
User—consumes or uses a product or service
Prentice Hall, 2003
15
General Purchasing
Decision-Making Model
5 major phases of a general model
1.
2.
3.
4.
5.
Need identification
Information search
Evaluation of alternatives
Purchase and deliver
After-purchase evaluation
Prentice Hall, 2003
16
How One-to-One
Relationships Are Practiced
Relationships as a two-way street:
Customer information is collected and placed in a
database
Customer’s profile is developed
Generate “four P’s” of marketing:
Product
Price
Place
Promotion
Prentice Hall, 2003
17
How One-to-One
Relationships Are Practiced (cont.)
Doing business over the Internet enables
companies to:
Communicate better with customers
Understand customers’ needs and buying habits
better
Improve and customize their future marketing
efforts
Prentice Hall, 2003
18
Exhibit 4.5
The New Marketing Model
Prentice Hall, 2003
19
Personalization
Personalization—the matching of services,
products, and advertising content to individual
consumer
User profile—the requirements, preferences,
behaviors, and demographic traits of a particular
customer
Cookie—a data file that is placed on a user’s
hard drive by a Web server, frequently without
disclosure or the user’s consent, that collects
information about the user’s activities at a site
Prentice Hall, 2003
20
Personalization (cont.)
Major strategies used to compile user profiles
include:
Solicit information directly from the user.
Use cookies or other methods to observe what
people are doing online
Perform marketing research
Build from previous purchase patterns
Prentice Hall, 2003
21
Collaborative Filtering
Collaborative filtering—a personalization method that
uses customer data to predict, based on formulas
derived from behavioral studies, what other products
or services a customer may enjoy; predictions can be
extended to other customers with similar profiles
Variations of collaborative filtering
Rule-based filtering, content-based filtering,
activity-based filtering
Legal and ethical issues
Privacy issues
Permission-based personalization tools
Prentice Hall, 2003
22
Customer Loyalty & E-Loyalty
Customer loyalty—degree to which customer
stays with vendor or brand
Important element in consumer purchasing
behavior
One of the most significant contributors to
profitability
E-loyalty—customer’s loyalty to an e-tailer
Learn about customers’ needs
Interact with customers
Provide customer service
Prentice Hall, 2003
23
Trust in EC
Trust—psychological status of involved parties who
are willing to pursue further interactions to achieve a
planned goal
EC vendors must establish high levels of trust with
current and potential customers
Particularly important in global EC transactions
Level of trust determined by:
Degree of initial success experienced with EC
Well-defined roles and procedures for all parties
involved
Realistic expectations as to outcomes from EC
Prentice Hall, 2003
24
How to Increase EC Trust
Trust can be decreased by:
Any user uncertainty regarding the technology
Lack of initial face-to-face interactions
Lack of enthusiasm among the parties
Brand recognition is very important in EC trust
EC security mechanisms can also help solidify
trust
Prentice Hall, 2003
25
Market Research for EC
Goal–find information
and knowledge that
describes relationships
among
Consumers
Products
Marketing
methods
Marketers
Aim—find relationship
between
Discover marketing
opportunities and issues
Establish marketing
plans
Better understand the
purchasing process
Evaluate marketing
performance
Prentice Hall, 2003
26
Market Research for EC (cont.)
Market research includes gathering information about:
Distribution
Competition
Promotion
Consumer
purchasing
behavior
Economy
Industry
Firms
Products
Pricing
Prentice Hall, 2003
27
Market Research for EC (cont.)
Various tools are used to conduct
consumer market research:
Questionnaires
Surveyors
Telephone surveys
Focus groups
Important first to understand how groups
of consumers are classified
Prentice Hall, 2003
28
Market Segmentation
Market segmentation—process of dividing
a consumer market into logical groups for
conducting marketing research,
advertising, and sales
Geography
Psychographics
Demographics
Benefits sought
Segmentation is done with the aid of
tools:
Data modeling
Data warehousing
Prentice Hall, 2003
29
Conducting Market Research Online
Powerful tool for research regarding:
Consumer behavior
Discover of new markets
Consumer interest in new products
Internet-based market research
Interactive—allowing personal contact
Gives better understanding of customer,
market, and competition
Prentice Hall, 2003
30
What Are We Looking For in
EC Market Research?
Major factors used for
prediction are:
Online market research
attempts to find:
Product information
requested
Number of related emails
Number of orders made
What products/services
are ordered
Gender
Prentice Hall, 2003
Purchase patterns for
individuals and groups
Factors that encourage
online purchasing
How to identify real
buyers and browsers
How an individual
navigates
Optimal Web page
design
31
EC Market Research (cont.)
Interactive Internet-based market research
Allows personal contact with customers
Provides marketing organizations with greater
ability to understand customer, market, and
competition
Identify early shifts in product and customer
trends
Enables marketers to identify products and
marketing opportunities
Develop products that customers really want to
buy
Prentice Hall, 2003
32
Online Market Research Methods
Web-based surveys
Free software to create survey forms and
analyze results is available at
supersurvey.com
websurveyor.com
Online focus groups—help overcome some
problems that limit the effectiveness of Webbased surveys (sample size, partial
responses)
Prentice Hall, 2003
33
Online
Market Research Methods (cont.)
Tracking customer movements—learn about
customers by observing their behavior rather
than by asking them questions
Transaction
Clickstream behavior
Cookies
Web bugs
http://news.com.com/2100-1017-243077.html
Prentice Hall, 2003
34
Limitations of Online
Market Research Methods
Accuracy of responses
Loss of respondents because of equipment
problems
Ethics and legality of Web tracking
Focus group responses can lose something in
the translation from an in-person group to an
online group
Eye contact and body language are lost
Anonymity is necessary to elicit an unguarded
response
Prentice Hall, 2003
35
Data Mining
Data mining—the process of searching a
large database to discover previously
unknown patterns; automates the process of
finding predictive information
New business opportunities generated by
conducting:
Automated prediction of trends and behaviors
Automated discovery of previously unknown
patterns and relationships
Prentice Hall, 2003
36
Data Mining (cont.)
Data mining tools and techniques:
Neural computing
Intelligent agents
Association analysis
Sample data mining applications
Retailing and sales distribution
Banking
Broadcasting
Airlines
Marketing
Prentice Hall, 2003
37
Web Mining
Web mining—application of data mining
techniques to discover meaningful patterns,
profiles, and trends from both the content and
usage of Web sites
Web content mining
Web usage mining
Web mining is critical for EC due to the large
number of visitors to EC sites
Prentice Hall, 2003
38
Limitations of
Online Market Research
Lack of representativeness in samples of
online users
Online shoppers tend to be wealthy, employed,
and well educated; results may not be extendable
to other markets
The right kind of sampling is achieved
through verification of target audience or
demographic
Anonymity causes a loss of information about
demographics and characteristics of the
respondents
Prentice Hall, 2003
39
Delivering Customer Service
in Cyberspace
Customer service—a series of activities designed to
enhance customer satisfaction (the feeling that a
product or service has met the customer’s
expectations)
Traditional: do the work for the customer
EC delivered: gives tools to the customer to do the work
for him/herself
E-service—customer services supplied over the
Internet
Foundation of service
Customer-centered services
Value-added services
Prentice Hall, 2003
40
Delivering Customer Service
in Cyberspace (cont.)
Value chain for Internet service
Customer acquisition (pre-purchase support)
Customer support during purchase—provides a
shopping environment that is efficient, informative,
productive
Customer fulfillment (purchase dispatch)—timely
delivery
Customer continuance support (post- purchase)—
maintain the customer relationship between
purchases
Prentice Hall, 2003
41
Customer Relationship Management
Customer relationship management (CRM)—a
customer service approach that focuses on building
long-term and sustainable customer relationships
that add value both for the customer and the
company
Building a customer-centered EC strategy
Focus on the end customer
Systems and business processes designed for ease
of use
Foster customer loyalty
Prentice Hall, 2003
42
Customer
Relationship Management (cont.)
Actions for successful EC strategy
Deliver personalized services
Target the right customers
Help the customers do their jobs
Let customers help themselves
Streamline business processes that impact the
customers
“Own” the customer ’s total experience by providing
every possible customer contact
Provide a 360-degree view of the customer
relationship
43
Prentice Hall, 2003
Customer Service Tools
Personalized Web pages
Used to record purchases and preference
Direct customized information to customers efficiently
E-mail and automated response
Disseminate general information
Send specific product information
Conduct correspondence regarding any topic
(mostly inquiries from customers)
Prentice Hall, 2003
44
Customer Service Tools (cont.)
Call center—a comprehensive service entity in
which EC vendors address customer service
issues communicated through various contact
channels
Telewebs—call centers that combine Web
channels with portal-like self-service; combine
Justifying CRM programs—two problems
Most of the benefits are intangible
Substantial benefits reaped only from loyal
customers, after several years
Prentice Hall, 2003
45
Metrics
Metrics—measures of performance; may be
quantitative or qualitative
Response times
Site availability
Download times
Timeliness
Security and privacy
On-time order
fulfillment
Return policy
Navigability
Prentice Hall, 2003
46
ELC 200
Day 10
Prentice Hall, 2003
47
Agenda
Questions from last Class?
Assignment 3 is posted in WebCT
Due Feb 23
Mastering Business Essentials
Understanding Consumer behavior
Today we will finish discussing Consumer Behavior,
Customer Service, and Advertising
Prentice Hall, 2003
48
AFUM Scholarship
Last year AFUM awarded 3 $500 scholarships
Criteria
UMFK student that will have completed 24 Credits by
this spring and is returning to UMFK next fall
Complete a Letter of Commitment to scholarship and
service
One Letter of recommendation from a faculty member
A resume
Copy of your transcript (get from registrar)
Turn in all materials to Prof. Stephen Hansen by
March 3, 2006
Room 232 Nadeau Hall
Prentice Hall, 2003
49
Web Advertising
Advertising is an attempt to disseminate
information in order to affect a buyer-seller
transaction
Interactive marketing—marketing that allows
a consumer to interact with an online seller
Two-way communication and e-mail capabilities
Vendors also can target specific groups and
individuals
Enables truly one-to-one advertising
Prentice Hall, 2003
50
Internet Advertising Terminology
Ad views—number of times users call up a page
that has a banner on it during a specific time
period; known as impressions or page views.
Button—a small banner that is linked to a Web
site
Page—HTML document
Click—a count made each time a visitor clicks on
an advertising banner to access the advertiser ‘s
Web site (ad clicks and click throughs)
Prentice Hall, 2003
51
Internet Advertising Terminology (cont.)
CPM (cost per thousand impressions)—fee an
advertiser pays for each 1,000 times a page
with a banner ad is viewed
Hit—request for data from a Web page or file
Visit—a series of requests during one
navigation of a Web a site; a pause of request
for a certain length of time ends a visit
Prentice Hall, 2003
52
Why Internet Advertisement?
3/4 of PC users gave up some television time
Well educated, high-income Internet users
are a desired target for advertisers
Internet is by far the fastest growing
communication medium
Advertisers are interested in a medium with
such potential reach, both locally and
globally
Prentice Hall, 2003
53
Why Internet Advertisement? (cont.)
Cost
Online ads are cheaper than those in other media
Ads can be updated at any time with minimal cost
Richness of format
Use of text, audio, graphics, and animation
Games, entertainment, and promotions are easily
combined in online ads
Personalization
Can be interactive
Can target specific interest groups and/or individuals
Prentice Hall, 2003
54
Exhibit 4.11
Adoption Curves for Various Media
Prentice Hall, 2003
55
Advertising Networks
Advertising networks (ad server networks)—
specialized firms that offer customized Web
advertising, such as brokering ads and helping
target ads to selected groups of consumers
One-to-one targeted ads and marketing can
be:
Expensive
Very rewarding
Very effective
Prentice Hall, 2003
56
Targeted Advertisements:
The DoubleClick Approach
One-to-one targeted advertisements can take
many forms
3M Corp. wants to advertise its multimedia
projectors
3M approaches DoubleClick, Inc. and asks the firm
to identify such potential customers
How does DoubleClick find them?
Using cookies, DoubleClick (doubleclick.com/us)
monitors people browsing the Web sites
Finds those people working for advertising
agencies
Prentice Hall, 2003
57
DoubleClick (cont.)
DoubleClick then prepares an ad about 3M
projectors that greets targeted people
whenever they browse participating sites
How is this financed?
DoubleClick charges 3M for the ad
Fee is then split with the participating Web sites
that carry the 3M ads
Based on how many times the ad is matched with
visitors
Prentice Hall, 2003
58
DoubleClick (cont.)
DoubleClick expanded the service—Dynamic
Advertising Reporting and Targeting (DART):
Advertising control
Ad frequency determination
Providing verifiable measures of success
DoubleClick brings:
The right advertisement to
The right person at
The right time
Prentice Hall, 2003
59
Advertisement Methods
Banner--on a Web page, a graphic advertising
display linked to the advertiser’s Web page
Keyword banners
Random banners
Benefits of banner ads
Customized to the target audience or one-to-one
ads
Utilize “force advertising” marketing strategy
Direct link to advertiser
Multi media capabilities
Prentice Hall, 2003
60
Advertisement Methods (cont.)
Limitations of banner ads
High cost
Click ratio—the ratio between the number of
clicks on a banner ad and the number of times
it is seen by viewers; measures the success of
a banner in attracting visitors to click on the
ad
Declining click ratio—viewers have become
immune to banners
Prentice Hall, 2003
61
Advertisement Methods (cont.)
Banner swapping—an agreement between two
companies to each display the other’s banner
ad on its Web site
Direct link between one site to the other site
Ad space bartering
Banner exchanges—markets in which companies
can trade or exchange placement of banner ads
on each other’s Web sites (bcentral.com)
Credit ratio of approximately 2:1
Still the largest Internet advertising medium
Prentice Hall, 2003
62
Advertisement Methods (cont.)
Pop-under ad—an ad that appears underneath
the current browser window, so when the user
closes the active window, they see the ad
Interstitials– an initial Web page or a portion of it
that is used to capture the user’s attention for a
short time while other content is loading
E-mail
Several million users may be reached directly
Problems: junk mail, spamming
Prentice Hall, 2003
63
Advertisement Methods (cont.)
Standardized ads—on February 26, 2001, the
Internet Advertising Bureau, an industry trade
group, adopted five standard ad sizes for the
Internet:
Larger and more noticeable than banner ads
Look like the ads in a newspaper or magazine
Users read these ads four times more
frequently than banners
Appear on Web sites in columns or boxes
Prentice Hall, 2003
64
Advertisement Methods (cont.)
Skyscraper ad—full
column-deep
Classified ad—a
newspaper-like ad
Sometimes as
many as four on
one Web page
Interactive—click
on a link inside
the ad for more
information about
a product or
service
Prentice Hall, 2003
Special sites like
classifieds2000.com
Online newspapers,
exchanges, portals ,
Regular-size classified
ads is free
Larger size or with
some noticeable
features is done for a
fee
65
Advertisement Methods (cont.)
URL (Universal Resource Locators)
Advantages:
Minimal cost is associated with it
Submit your URL to a search engine and be
listed
Keyword search is used
Disadvantages:
Search engines index their listings differently
Meta tags can be complicated
Prentice Hall, 2003
66
Advertisement Methods (cont.)
Optimizing Web content improves discovery by
a search engine
Keywordcount.com
Searchenginewatch.com
Paid search-engine inclusion
Several search engines charge fees for
including URLs near the top of the search
results
A debatable issue is the ethics of this
strategy
Prentice Hall, 2003
67
Advertisement Methods (cont.)
Advertising in chat rooms
Virtual meeting ground
Free addition to a business site
Allows advertisers to cycle through messages and
target the chatter again and again
Advertising can become more thematic
More effective than banners
Used for one-to-one connections
Advertorial—an advertisement “disguised” to look
like an editorial or general information
68
Prentice Hall, 2003
Advertising Strategies
and Promotions
Associated ad display (text links)—an advertising
strategy that displays a banner ad related to a
term entered in a search engine
Ads as a commodity—direct payment made by the
advertisers for ads viewed
Viral marketing (advocacy marketing)—word-ofmouth marketing by which customers promote a
product or service by telling others about it
Customizing ads—one-to-one advertisement
(Webcasting)
Prentice Hall, 2003
69
Advertising Strategies
and Promotions (cont.)
Online events, promotions, and
attractions
Promotions designed to attract visitors are
regular events on thousands of Web sites
Contests
Quizzes
Coupons
Giveaways
Bargains on the Internet
Lottery
Free samples,give-aways, and sweepstakes
Prentice Hall, 2003
70
Advertising Strategies
and Promotions (cont.)
Major considerations when implementing an
online ad campaign:
Clearly understood online surfers as target
audience
Powerful enough server prepared to handle the
expected volume of traffic
Assuming the promotion is successful, what will
the result be?
Evaluate the budget
Promotion strategy
Consider co-branding—bring together two or
more powerful partners
Prentice Hall, 2003
71
Special Advertising Topics
Pricing of advertising
Justifying the cost of Internet advertisement
is difficult for two reasons:
1. The difficulty in measuring the
effectiveness of online advertising and
2. Disagreements on pricing methods
Pricing based on ad views
Pricing based on click-through
Prentice Hall, 2003
72
Special Advertising Topics (cont.)
Payment based on interactivity
The interactivity model bases ad pricing on how the
visitor interacts with the target ad
Payment based on actual purchase
Pay for ads only if an actual purchase has been
made (affiliate programs)
Permission advertising (permission marketing)—
advertising (marketing) strategy in which
customers agree to accept advertising and
marketing materials
Prentice Hall, 2003
73
Special Advertising Topics (cont.)
Measuring, auditing, and analyzing web traffic
Site audit validates the number of ad views and hits
claimed by the site
Rating—looks at multiple criteria including content,
attractiveness, ease of navigation, and privacy
protection
Sites with higher ratings command higher prices for
advertising placed on their sites
Companies use software to assess if placing ads
really increases traffic to their sites
Prentice Hall, 2003
74
Special Advertising Topics (cont.)
Localization—the process of converting media
products developed in one country to a form
culturally and linguistically acceptable in countries
outside the original target market
Using internet radio for localization
Internet radio—a Web site that provides music,
talk, and other entertainment, both live and stored,
from a variety of radio stations
Prentice Hall, 2003
75
Software Agents in Customer-Related
Advertising Applications
EC agents support
Need identification
Product brokering
Merchant brokering and comparison
Buyer-seller negotiation
Agents that support purchase and delivery
Agents that support after-sale service and
evaluation
Prentice Hall, 2003
76
Fujitsu Uses Agents for Targeted
Advertising in Japan
Fujitsu (fujitsu.com) is a Japanese-based
global provider of Internet-focused
information technology solutions
Has been using an agent-based technology
called Interactive Marketing Interface (iMi)
since 1996
Advertisers interact directly with consumers
while ensuring that consumers remain
anonymous
Prentice Hall, 2003
77
Fujitsu (cont.)
Consumers submit a personal profile to iMi
Customers receive by e-mail :
Product announcements
Advertisements
Marketing surveys
Answer marketing surveys or acknowledging
receipt of ads
They earn iMi points redeemable for:
Gift certificates
Phone cards
Prentice Hall, 2003
78
Software Agents in Customer-Related
Advertising Applications (cont.)
Character-Based Interactive Agents
Avatars—animated computer characters that
exhibit human-like movements and behaviors
Social computing—an approach aimed at
making the human– computer interface more
natural
Chatterbots—animation characters that can
talk (chat)
Mr. Clean at mrclean.com
"Katie“ at dove.com
Prentice Hall, 2003
79
Software Agents in Customer-Related
Advertising Applications (cont.)
Agents that support auctions
Agents often act as auction aggregators, some
provide real-time access to auctions
Agents support consumer behavior, customer
service, and advertising activities
EC agents found at:
Botspot.com
Agentland.com
Agents.umbc.edu
Prentice Hall, 2003
80
Managerial Issues
Do we understand our customers?
What do customers want from technology?
How is our response time?
How do we improve and measure customer service?
Should we use intelligent agents?
Is our market research leading to customer
acquisition?
Are customers satisfied with our Web site?
Should we advertise anywhere but our own site?
Prentice Hall, 2003
81
Managerial Issues (cont.)
What is our commitment to Web advertising, and
how will we coordinate Web and traditional
advertising?
Should we integrate our Internet and non-Internet
marketing campaigns?
What ethical issues should we consider?
Have we integrated advertising with ordering and
other business processes?
How important is branding?
Prentice Hall, 2003
82
Summary
Essentials of consumer behavior
The online consumer decision-making process
Building one-to-one relationships with customers
Increasing loyalty and trust
Online personalization
EC customer market research
Implementing customer service
Prentice Hall, 2003
83
Summary (cont.)
Objectives and characteristics of Web advertising
Major online advertising methods
Various advertising strategies
Types of promotions on the Web
Measuring the advertising success and pricing
ads
Intelligent agents
Prentice Hall, 2003
84