Transcript T1-lecture

CSC 330 E-Commerce
Teacher
Ahmed Mumtaz Mustehsan
GM-IT CIIT Islamabad
Virtual Campus, CIIT
COMSATS Institute of Information Technology
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E Commerce Marketing
Chapter-06
Part -II
For Lecture Material/Slides Thanks to: Copyright © 2010 Pearson Education, Inc
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Objectives

Understand key business concepts and strategies
applicable to e-commerce.
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Why not buy Online?
SOURCES: Based on data from eMarketer, Inc., 2011d.
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Trust, Utility, and Opportunism in Online Markets
Two most important factors shaping decision to
purchase online:
 Utility; With reference to, the Better prices,
convenience of handling the site, The Response
/speed of interactivity of the marketplace.
 Trust:
◦ Asymmetry of information can lead to
opportunistic behavior by sellers
◦ Sellers can develop trust by building strong
reputations for honesty, fairness, delivery and
after sale service.
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Basic Marketing Concepts
Marketing:
 Means the strategies and actions firms take to
establish relationship with a consumer to encourage
purchases of its products and services.
 Addresses competitive situation of industries and firms
 Seeks to create unique, highly differentiated products
or services that are produced or supplied by one
trusted firm
◦ Avoidance of becoming commodity ( a good or
service for which there are many dealers; supplying
the product; essentially identical)
◦ Ideally having unmatchable feature set
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Feature Sets
The bundle of capabilities and services offered by the
product or services.
Three levels of product or service
Core product
 The core benefit the customer received from the
product. e.g., cell phone
Actual product
 Set of characteristics that deliver the product’s core
benefits e.g., wide screen that connects to Internet
Augmented product
 Additional benefits to customers beyond the core
benefits embedded in actual product.
 Basis for building the product’s brand e.g., product
warranty and after sale service
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Feature Set

Each element in the feature can be used to differentiate the product
from the others in the market.
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Products, Brands, and the Branding Process
Brand:
 Set of expectations consumers have when consuming,
or thinking about consuming, a specific product or
services from specific company.
 Most important expectations: Quality, reliability,
consistency, trust, affection, loyalty, reputation
Branding:
 Process of brand creation (converting product to
Brand)
Closed loop marketing
 When marketers are able to directly influence the
design of core product based on market research and
feedback.
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Products, Brands, and the Branding Process
Marketers devise and implement brand strategies.
 Brand strategy
◦ A set of plans for differentiating a product from its
competitors and communicating these differences
effectively to marketplace
A brand can represent cooperate value as an asset; it
can be customer loyalty or attachment can be seen as
set of associations that customers have:
Brand equity
 The estimated value of the premium customers are
willing to pay for using a branded product when
compared to unbranded products.
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Marketing Activities: from Products to Brands
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Figure 6.7, Page 369
Marketers aim to create a brand identity for a product based upon
consumer perceptions of trust, affection, loyalty and reputation.
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Segmenting, Targeting, and Positioning(Product)
Market comprising many different kind of customers with
different needs. Firm seek to segment market to different
group of customers in terms of product needs.
 Major ways used to segment, target customers
◦ Behavioral
◦ Demographic ( age, sex, income, occupation)
◦ Psychographic (self-image and emotional needs)
◦ Technical
◦ Contextual
◦ Search
 Target the segment; Within segment, product is
positioned and branded as a unique, high-value
product, especially suited to needs of segment
customers
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Are Brands Rational?
(Coca-Cola is one of the most enduring brand!!!!)
 For consumers, a qualified yes:
◦ Brands introduce market efficiency by reducing
search and decision-making costs
 For business firms, a definite yes:
 The Brand:
◦ A major source of revenue
◦ Lower customer acquisition cost (The overall
cost of converting a prospect into a consumer)
◦ Increased customer retention (Convincing an
existing customer to purchase again)
◦ Successful brand constitutes a long-lasting
(though not necessarily permanent) unfair
competitive advantage
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Can Brands Survive the Internet?
Brands and Price Dispersion
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Early postulation: “Law of One Price”—end of
marketing based on brands
◦ With complete price transparency in a perfect
information marketplace there will be one world
price for every product would emerge.
Instead:
◦ Consumers still pay premium prices for
differentiated products
◦ E-commerce firms rely heavily on brands to attract
customers and charge premium prices
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Can Brands Survive the Internet?
Brands and Price Dispersion
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Substantial price dispersion on internet
◦ Large differences in price sensitivity for same
product (highest and lowest price)
“Library effect” or “Catalog effect”; another tactic by
online sellers.
◦ An attempt to appeal to consumers on the basis of
total number of products offered under one
marketplace. e.g. Amazon.com.
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Impacts of E-commerce Technologies on
Marketing

Three broad impacts: (E-commerce Technology
Dimension)
◦ Scope of marketing communications broadened
(Ubiquity, Global Reach)
◦ Richness of marketing communications increased
(Information Density ; text, video and audio contents)
◦ Information intensity of marketplace expanded
◦ (Personalization/customization, Social Technology)
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The Revolution in Internet Marketing
Technologies
Internet marketing technologies:
1. Web Transaction logs
2. Tracking files
3. Databases, Data warehouses, Data mining
4. Customer Relationship Management systems (CRM)
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1. Web Transaction Logs
Built into Web server software
 Record user activity at Web site
 Webtrends: Leading log analysis tool
 Provides much marketing data, especially combined
with:
◦ Registration forms: Gather personal data on name,
address, phone, zip, e-mail, and other optional
information on interest and tastes
◦ Shopping cart database: captures all the item
selection, purchase and payment data)

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1. Web Transaction Logs
Transaction log coupled with Registration Forms and
shopping cart provides treasure of marketing information
leads to answer some interesting questions such as:
 What are major patterns of interest and purchase?
 After home page, where do users go first? Second?
 What are the interest of specific individuals?
 How can we improve the website, easier to use,
attractive design encourage visitors to purchase?
 Where are visitors coming from? What they want?
 How can we personalize our messages etc?
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2. Tracking Files
Allow users browsing activities to be tracked as they
move from site to site. Four types of tracking files
 Cookies
◦ Small text file placed by Web site (1 kB)
◦ Allows Web marketers to gather data
◦ Customers may delete cookies. Implement privacy;
Causing misleading analysis, wastage of efforts.
Way forward?
 Use Adobe Flash software; creates cookies called
Flash Cookies set to never expire (5 MB)
 Beacons (“bugs”; 1-pixel graphic files; send message
to server)
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