Transcript Market Research for EC

Consumer Behaviour,
Customer Service & Advertising
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-to-one relationships
with customers
 Discuss the issues of e-loyalty and e-trust in EC
 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
EC Consumer Behaviour Model
Consumer Behavior Online
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?
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
Personal Characteristics
Personal Differences
 Age and gender
 Marital status
 Educational level
 Ethnicity
 Occupation
 Household income
 Personality
 Lifestyle
characteristics
Consumer Purchasing
Decision Making
 Roles people play in decision-making
 Initiator
• suggests/thinks of buying a particular product/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
General Purchasing
Decision-Making Model
 Five major phases of a general model
1. Need identification
2. Information search
3. Evaluation of alternatives
4. Purchase and deliver
5. After-purchase evaluation
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
Place
 Price
Promotion
How One-to-One
Relationships Are Practiced [2]
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
The New Marketing Model
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
Personalization [2]
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
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, activitybased filtering
 Legal and ethical issues
 Privacy issues
 Permission-based personalization tools
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
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
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
Market Research for EC
 Goal–find
information and
knowledge that
describes
relationships
among
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
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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
Market Research for EC [2]
 Market research includes gathering information
about:





Economy
Industry
Firms
Products
Pricing




Distribution
Competition
Promotion
Consumer
purchasing
behavior
Market Research for EC [3]
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
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
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
What Are We Looking For in
EC Market Research?
 Major factors used
for prediction are:
 Product information
requested
 Number of related emails
 Number of orders made
 What products/services
are ordered
 Gender
 Online market
research attempts
to find:
 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
EC Market Research [2]
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
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 Web-based surveys (sample
size, partial responses)
Online
Market Research Methods [2]
Tracking customer movements
 Learn about customers by observing their
behavior rather than by asking them questions
•
•
•
•
Transaction
Clickstream behavior
Cookies
Web bugs
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
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
Data Mining [2]
Data mining tools and techniques:
 Neural computing
 Intelligent agents
 Association analysis
Sample data mining applications
 Retailing and sales distribution
 Banking
Broadcasting
 Airlines
Marketing
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
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
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
Delivering Customer Service
in Cyberspace [2]
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 (postpurchase)—maintain the customer relationship
between purchases
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
CRM [2]
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
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)
Customer Service Tools [2]
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
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
Web Advertising
Advertising
 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
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)
Internet Advertising Terminology [2]
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
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
Why Internet Advertisement? [2]
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
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
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
DoubleClick
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
DoubleClick [2]
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
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-toone ads
 Utilize “force advertising” marketing strategy
 Direct link to advertiser
 Multi media capabilities
Advertisement Methods [2]
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
Advertisement Methods [3]
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
Advertisement Methods [4]
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
Advertisement Methods [5]
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
Advertisement Methods [6]
 Skyscraper ad—
full column-deep
 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
 Classified ad—a
newspaper-like ad
 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
Advertisement Methods [7]
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
Advertisement Methods [8]
 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
Advertisement Methods [9]
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
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-of-mouth marketing by which customers
promote a product or service by telling others
about it
Customizing ads
 One-to-one advertisement (Webcasting)
Advertising Strategies
and Promotions [2]
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
Advertising Strategies
and Promotions [3]
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
Software Agents in CustomerRelated 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
Software Agents in CustomerRelated Advertising Applications [2]
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
Software Agents in CustomerRelated Advertising Applications [3]
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
Summary
 E-commerce offers companies the opportunity
to build one-to-one relationship with customers
 Companies can allow customers to selfconfigure the products or services they want
 Major online advertising methods are banners,
email, registration of URLs with search
engines, standardized ads, etc
 Intelligent agents can be used to gather and
interpret data about consumer purchasing
behavior
Exercise
Why is it important to support each stage
of the purchase decision-making process?
What are some online networking tools
and how do these assist in
marketing/sales?