Transcript THE INTERNET`S EFFECT ON MARKETING STRATEGY

CHAPTER NINETEEN
MARKETING AND THE
INTERNET
Prepared by Jack Gifford
Miami University (Ohio)
© 2000 South-Western
College Publishing
1
THE INTERNET AND THE WORLD
WIDE WEB
 A communication conduit and a marketplace
 Available worldwide 24 hours a day
 Dynamic entrepreneurial environment
 Is changing the nature of marketing
© 2000 South-Western
College Publishing
2
EVOLUTION AND GROWTH
 Developed in the 1960s for
the US military to provide
uninterruptable
communication in the event
of sabotage or attack
 Later used by colleges and
universities for research
 First used for commercial
purposes in 1991
© 2000 South-Western
College Publishing
3
EVOLUTION AND GROWTH
 Between 1993 and 1998,
 The Web comprises millions
the number of hosts grew
from 1,313,000 to
36,739,000
 The traffic carried on the
Internet by December of
1998 was doubling every
100 days
 The World Wide Web is a
subset of the Internet
of virtual sites that only exist
as data in computers
 Each of these sites is nothing
more than a collection of
associated electronic
documents called pages; the
first page displayed as a Web
site is called the home page
© 2000 South-Western
College Publishing
4
WHO IS USING THE INTERNET?
 In 1993, only 60 countries were linked to the
Internet. By 1999, 241 countries were listed by the
Internet Assigned Number Authority and more than
150 countries had direct access to the Internet.
 The USA and Canada account for 87 million of the
estimated 151 million people on line worldwide.
 Average age of users in 1998 was 35.1%
 Women in 1998 represented 38.7% of users, and is
rising rapidly
© 2000 South-Western
College Publishing
5
WHO IS USING THE INTERNET?
 By June of 1998, 50% of
the North American
population between the
ages of 16-34 claimed
to be Internet users
 As time passes, the
users of the internet are
becoming a
representative cross
section of the North
American population
© 2000 South-Western
College Publishing
6
THE INTERNET’S EFFECT ON
MARKETING STRATEGY
 By the year 2000, the Internet marketing
should exceed 327 million people
 Online buyers will increase from 18.6 million
in 1998 to 64.6 million in 2002. Volume will
increase to over 270 billion dollars by 2002
 Over 50% of the people accessing the
Internet are watching less television and
spending more time on the Internet
© 2000 South-Western
College Publishing
7
THE INTERNET’S EFFECT ON
MARKETING STRATEGY
 Marketers are
communicating with
these individuals via…
 E-mail
 News groups and
discussion lists
 Launching new home
pages
 Sponsoring established
groups, lists, sites and
bulletin boards
© 2000 South-Western
College Publishing
8
THE INTERNET’S EFFECT ON MARKETING
STRATEGY: Electronic mail
 Electronic mail is the
most widely used
service of the Internet
 Companies can
communicate with
existing or potential
customers as
individuals
 Spamming = unwanted
commercial e-mail
© 2000 South-Western
College Publishing
9
THE INTERNET’S EFFECT ON MARKETING
STRATEGY: General newsgroups and Discussion Lists
 The exchange of
information among
individuals with
common interests
 Provides useful
information to marketers
in terms of product
usage, marketing
research, pricing and
promotion
 May act as moderator or
sponsor
What design
features
would you
like to see in
your next
sports car?
© 2000 South-Western
College Publishing
10
THE INTERNET’S EFFECT ON MARKETING
STRATEGY: Launching a corporate home page
 Generated in-house or through outsourcing
 Direct sales of products or services or as an
informational/support function
 Role of banners, search engines and “smart
agents”
 Keys to site traffic generation include…
© 2000 South-Western
College Publishing
11
THE INTERNET’S EFFECT ON MARKETING
STRATEGY: Launching a corporate home page








Banners
Registration with online search engines
Easy-to-guess addresses
Include web address in print and broadcast
advertisements
Advertise through off-line subscription
services
Frequently changes in web site content
Pay consumers to view the site
Contests, entertainment, free services
© 2000 South-Western
College Publishing
12
THE INTERNET’S EFFECT ON MARKETING
STRATEGY: Tracking the traffic
 Marketers need to be
able to measure the
effectiveness of their
efforts
 Track frequency of
access and time spent
on page
 Record number of clicks
or hits while within site
 Use of response forms or
contests
 Use of cookies
 Subscriptions
 Requests for information
using forms or e-mail
 Actual sales stimulated
through direct orders or
1-800 calls
© 2000 South-Western
College Publishing
13
THE INTERNET’S EFFECT ON MARKETING
STRATEGY: Conducting marketing Research Online
 Online information
 Electronic surveys
 Ensures completion of all
search engines




General use
Industry specific
Governmental sources
Trade magazines and
journal archives
 Access to university
research
 Electronic news services
(text, audio, video clips)





items
Eliminates coding error due
to database digital nature of
data captured
Convenient for respondent
Low cost of collection and
use
Use of specially designed
software
Demographic bias potential
© 2000 South-Western
College Publishing
14
THE INTERNET’S EFFECT ON MARKETING STRATEGY:
Industry newsgroups & discussion lists
 Online venues for
 Popular discussion lists
exchanging ideas,
debating issues,
providing intellectual
support, and promoting
new technology.
 Establishes a network
of colleagues with
similar goals and
interests
deal with...





Online advertising
Consumer research
Database marketing
Relationship marketing
Internet sales
© 2000 South-Western
College Publishing
15
PRIVACY AND SECURITY ISSUES FOR
ONLINE COMMERCE
 Privacy and security issues seem to become
more complex as technology provides
unscrupulous individuals with new and better
tools for breaking the law, causing chaos, and
intruding into personal affairs.
 Traditional legal and moral issues such as
copyright infringement, pornography, and fraud
will continue to plague all businesses
© 2000 South-Western
College Publishing
16
PRIVACY AND SECURITY ISSUES FOR
ONLINE COMMERCE
 New issues now facing electronic commerce
involve exchanging value (electronic cash),
personalized online activity (cookies),
protecting sensitive data files (firewalls), and
actively seeking new customers (spamming)
© 2000 South-Western
College Publishing
17
PRIVACY AND SECURITY ISSUES FOR
ONLINE COMMERCE: Electronic cash
 Credit cards and security





concerns
Encryption algorithms
$50 credit card fraud limits
Identification and tracing
transaction (Pentium III
issues)
CyberCash electronic
money
Electronic banking
© 2000 South-Western
College Publishing
18
PRIVACY AND SECURITY ISSUES FOR
ONLINE COMMERCE: Firewalls
 Firewalls are special
computer programs
that check all incoming
and outgoing
information streams for
proper identification
and authorization
© 2000 South-Western
College Publishing
19
PRIVACY AND SECURITY ISSUES FOR
ONLINE COMMERCE: Spamming
 Spamming involves the
transmission of commercial
messages to individuals via
electronic medium
 Is considered by some
individual consumers as an
invasion of privacy and a
theft of time and money
 Potential legislation?
© 2000 South-Western
College Publishing
20
THE INTERNET’S IMPACT ON THE
MARKETING MIX
 Communications technology will allow people,
for the first time in history, to easily search
worldwide for and obtain the lowest price for the
goods they purchase.
 Intelligent agents will automatically comparison
shop for goods specified by consumers.
 The World Wide Web and Internet is becoming
one of the dominant business-to-business
methods of transaction
© 2000 South-Western
College Publishing
21
THE INTERNET’S IMPACT ON THE
MARKETING MIX
 The World Wide Web and the Internet will
have a profound impact on every dimension
of the marketing mix. Its effective and
efficient use by marketers in the 21st century
is absolutely essential for success…and
even survival. Your future success in
business will be, at least partially, dependent
upon YOUR understanding and creative use
of this new communication medium!
© 2000 South-Western
College Publishing
22