Transcript Document
Chapter 15 Electronic Marketing Channels Electronic Channels • Any channel that involves the use of the Internet as a means of reaching the customer – B2C – B2B Market Potential for Electronic Channels • How many customers are likely to shop online? • What are the demographics of customers who like to shop online? Profile of Online Shoppers • Age range of 25 to 54 • Income level range $35,000 to about $99,999 Highest Percentages • College graduates & those with postgraduate education make up 54% • Professional/managerial occupations make up 32% 15 CONSUMER REASONS FOR/AGAINST ONLINE SHOPPING, Top reasons for not making an online purchase (among those not doing so), and service output(s) affected: Percent of respondents (multiple responses possible) Product returns might be difficult (customer service) 39% Desired product not available or in stock online (assortment/variety) 32 Worried about timely delivery of gifts for holidays (wait/delivery time) 31 Privacy concerns (customer service) 26 Don't want to pay shipping/handling costs (spatial convenience) 20 Enjoy holiday shopping at malls/stores (general; all service outputs) 17 Total cost of buying online is higher than at stores (all service outputs; signifies intensity of demand for online service outputs is too low to merit price) 16 Source: adapted from Catherine Finamore (2000), "The Connected Consumer," E-Retail Intelligence Update, PricewaterhouseCoopers, January, pp. 5-8. Advantages & Disadvantages Advantages of Electronic Marketing Channels 1. 2. 3. 4. 5. Global scope & reach Convenience/rapid transaction processing Information processing efficiency & flexibility Data-based management & relationship capabilities Lower sales & distribution costs 15 Advantages & Disadvantages Disadvantages of Electronic Marketing Channels 1. Lack of contact with actual products & delayed possession 2. Fulfillment logistics not at Internet speed or efficiency 3. Clutter, confusion, & cumbersomeness of Internet 4. Nonpurchase motives for shopping not addressed 5. Security concerns of customers 15 Structure of Electronic Marketing Channels 1. Disintermediation versus reintermediation Three Key Phenomena 2. Information flow versus product flow 3. Virtual channel structure versus physical channel structure 15 Disintermediation and Reintermediation Disintermediation Intermediaries become “unnecessary” because producers gain exposure to vast numbers of customers in cyberspace Dell Computer Corp. Reintermediation Shifting, changing, or adding middlemen to the channel Amazon.com Auto-By-Tel Corp. Peapod, Inc. 15 Channel Management Implications • Objectives & strategies of the firm & electronic marketing channels • Role of electronic marketing channels in the marketing mix • Channel design & electronic marketing channels • Channel member selection & electronic marketing channels 15 Objectives & Strategies of the Firm Role of distribution more complex because of electronic marketing channels = Channel manager must consider whether Internet-based channels fundamentally affect the firm’s decision about the priority given to distribution 15 The Marketing Mix The Internet arms large numbers of customers with more information about products & services to level the playing field The fourth P, place (distribution), may assume a larger role relative to the other three variables for more & more firms 15 Channel Design The channel manager of retailers, industrial, and B2B markets should provide “channel-surfing” consumers with whatever channels or combinations of channels they desire = A facet of the development of an effective multichannel marketing strategy 15 Channel Member Selection Complexity grows as channel member selection may include the need to avoid conflict with conventional channel members = The need to select members carefully 15 Dual Distribution with Electronic Channels • Conflicts may arise – Domain conflict • Free riding – Goal conflict – Perceptual differences