1chapter 14 essentials of marketing 4e lamb hair mcdaniel ©2005 south-western college publishing...
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1Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Prepared byPrepared byDeborah BakerDeborah Baker
Texas Christian UniversityTexas Christian University
Chapter 14
Internet MarketingInternet Marketing
2Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Learning ObjectivesLearning Objectives
1. Explain how the Internet affects the traditional marketing mix
2. Describe how marketers are leveraging the power of online technology
3. Discuss the legal and privacy issues affecting Internet-based companies
3Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Learning ObjectivesLearning Objectives
4. Measure the effectiveness of an online marketing campaign
5. Discuss the effects of the Internet on marketing objectives and strategy
4Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Learning Objective Learning Objective
Explain how the Internet affects the traditional marketing mix
11
On Linehttp://www.scubatoys.com/poolcam/poolcam.asp
On Linehttp://www.scubatoys.com/poolcam/poolcam.asp
5Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Product Strategies on the Product Strategies on the WebWeb
CommoditiesCommodities Mass customization
Mass customization
Progression of Progression of product strategies:product strategies:
Progression of Progression of product strategies:product strategies:
11
BrandingBranding
6Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Branded CommoditiesBranded Commodities
Camera A at Retailer A
Camera A at Retailer A
Principle of equivalent quality is applied to Principle of equivalent quality is applied to branded products, creating downward branded products, creating downward
price pressureprice pressure
Principle of equivalent quality is applied to Principle of equivalent quality is applied to branded products, creating downward branded products, creating downward
price pressureprice pressure
11
Camera A at Retailer B
Camera A at Retailer B
On Linehttp://www.despair.com
On Linehttp://www.despair.com
7Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
PlacePlace
Corporate Web sitesCorporate Web sites
Resellers’ Web sitesResellers’ Web sites
Affiliate programs Affiliate programs
Clicks and mortarClicks and mortar
11
On Linehttp://www.ideavirus.com
On Linehttp://www.ideavirus.com
8Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Virtual Intermediaries:Virtual Intermediaries:
Refer customers to online retailers
Receive a commission on resulting sales
Benefit from the goodwill consumers feel for the content sites they normally visit
11 Affiliate ProgramsAffiliate Programs
9Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Promotion ChallengesPromotion Challenges
Consumers don’t know the siteConsumers don’t know the site
Consumers don’t know the companyConsumers don’t know the company
Converting browsers to buyersConverting browsers to buyers
11
10Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Promotion MethodsPromotion Methods
SpamSpam
Viral Marketing (Buzz)Viral Marketing (Buzz)
Instant MessagingInstant Messaging
Interactive AdsInteractive Ads
Search Engine ListingsSearch Engine Listings
Sales PromotionSales Promotion
OnlineOnlinepromotion promotion techniques techniques
OnlineOnlinepromotion promotion techniques techniques
11
11Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Search Engine ListingsSearch Engine Listings
Gets you to the top of the
list
Gets you to the top of the
list
High priceHigh price Low price Low price
11
No or low fee gets you at
the bottom of the list
No or low fee gets you at
the bottom of the list
12Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Extreme price pressure Extreme price pressure on the Internet due to:on the Internet due to:
Shopping bots and comparison sites
Auction pricing
Demand pricing
11 Pricing PressurePricing PressureOn Linehttp://www.fedex.comhttp://www.ups.comhttp://www.usps.com
On Linehttp://www.fedex.comhttp://www.ups.comhttp://www.usps.com
13Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Pricing and Consumer LoyaltyPricing and Consumer Loyalty
Come Come Back Back SoonSoon!!
75% of customers participate in a loyalty program75% of customers participate in a loyalty program
Online customer service consistently rated as poorOnline customer service consistently rated as poor
72% say customer service is important72% say customer service is important
41% happy with service they received41% happy with service they received
Profitability is less algorithm and more caringProfitability is less algorithm and more caring
11
14Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
How Technology Changes the How Technology Changes the 4Ps4Ps
11
Era of: Product Place Promotion Price
Personal Selling(pre-1840s)
Commodities Retail Store Store Displays Going Rate
Advertising(1840s to 1990s)
NationalBrands
Malls &Superstores
National Advertising
Retail Price
Interactive Commerce (1994 and beyond)
• BrandedCommodities• MassCustomization
• Worldwide Marketplace
• AffiliatePrograms
• Internet-based
Web Sites• InteractiveAds • Instant Messaging
IntelligentSoftwareAgents
15Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Learning Objective Learning Objective
Describe how marketers are leveraging the power of online technology
22
16Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Internet Demographics and Internet Demographics and TrendsTrends
Online: Online: By Gender By Gender in the U.Sin the U.S..
Online: Online: By Gender By Gender in the U.Sin the U.S..
60% of Men
56% of Women
22
17Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Online:Online:By race in By race in the U.S.the U.S.
Online:Online:By race in By race in the U.S.the U.S.
60% of Whites
45% of Blacks
54% of Hispanics
Internet Demographics and Internet Demographics and TrendsTrends
22
18Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Online:Online:By By
education education in the U.S.in the U.S.
Online:Online:By By
education education in the U.S.in the U.S.
23% no high school
45% of high school grads
82% of college grads and post-graduates
Internet Demographics and Internet Demographics and TrendsTrends
22
19Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
The Global VillageThe Global Village
Broadens and enhances accessin developing nations
Broadens and enhances accessin developing nations
Allows businesses to “leapfrog” into development
Allows businesses to “leapfrog” into development
Levels playing field fordisadvantaged countriesLevels playing field for
disadvantaged countries
22
20Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Wireless Access on RiseWireless Access on Rise
Wireless is growing in popularity
Will soon represent over half of all Internet users worldwide
A particular advantage for developing nations without suitable infrastructure
22
21Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Basic Forms of Virtual Basic Forms of Virtual BusinessBusiness
22
Forms of Forms of Internet Internet
commercecommerce
Forms of Forms of Internet Internet
commercecommerce
Business-to-businessB2B
Business-to-ConsumerB2C
Consumer-to-ConsumerC2C
22Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
B2B ExchangesB2B Exchanges
Online trading floorOnline trading floor
Struggling to surviveStruggling to survive
Over half out of business since 2002
Over half out of business since 2002
22On Linehttp://www.globalwinespirits.comhttp://www.transcore.com
On Linehttp://www.globalwinespirits.comhttp://www.transcore.com
23Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Maximizing Customer Relationship Maximizing Customer Relationship Marketing on the InternetMarketing on the Internet
UsingUsingCookiesCookiesUsingUsing
CookiesCookies
Data trackingData tracking
Needed for personalized content
Needed for personalized content
Keep ad content freshKeep ad content fresh
Controversial because ofprivacy concerns
Controversial because ofprivacy concerns
22
24Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Improving Search Engine Improving Search Engine ResultsResults
1 – Choose the right words1 – Choose the right words
2 – Put those words at top of page2 – Put those words at top of page
3 – Use meta tags, like bold type3 – Use meta tags, like bold type
4 – Increase non-reciprocal links4 – Increase non-reciprocal links
5 – Incorporate graphics5 – Incorporate graphics
6 – Incorporate video/audio 6 – Incorporate video/audio
7 – Pay for a better link7 – Pay for a better link
22
25Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Learning Objective Learning Objective
Discuss the legal and privacy issues affecting Internet-based commerce
33
26Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Major Issues in Online PrivacyMajor Issues in Online Privacy
CookiesCookies
Not-so-private emailNot-so-private email
SpamSpam
Identity theftIdentity theft
Conflicting lawsConflicting laws
CyberstalkingCyberstalking
Branded trustBranded trust
33
On Linehttp://www.fbi.gov/hq/lab/carnivore/carnivore.htm
On Linehttp://www.fbi.gov/hq/lab/carnivore/carnivore.htm
27Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Cookies Cookies
Cookies: Cookies:
Enable marketers to personalize Web sites
Are bits of data mapped to your hard drive
33
Can trace where you’ve been on the Internet
Are the subject of a controversial debate
28Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Identity TheftIdentity Theft
Stealing personal information tocommit fraud or other crimes
Stealing personal information tocommit fraud or other crimes
Sharply increasing Sharply increasing
In 2003, 27 million complaintsfiled with the FTC
In 2003, 27 million complaintsfiled with the FTC
33
29Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Conflicting LegislationConflicting Legislation
Not all countries have the same laws regulating
Internet commerce
33
Country 1
Country 3Country 2
M
Marketers (M) responsible for every law in every country
30Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Online PredatorsOnline Predators
Cyberstalking is on the rise.
Caution is declining (e.g., online dating is increasing)
Affects trust people have for legitimate marketing efforts
33
31Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Creating Trust OnlineCreating Trust Online33
Better Business Bureau “Reliability Seal”
ScanAlert “Hacker Safe”
Verisign “Secure Seal”
3rd-party seals for creating trust
32Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Learning Objective Learning Objective
Measure the effectiveness of an online marketing campaign
44
33Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
MetricsMetrics
The server can The server can tell:tell:
Who visited How many times
(hits) And where (page
views)
The server can’t The server can’t tell:tell:
Recency Frequency Monetary value
44
34Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Out-of-Date MetricsOut-of-Date Metrics
HitsHits
Page viewsPage views
Click-through countsClick-through counts
44
35Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Stickiness as the New MetricStickiness as the New Metric
Stickiness =
Frequency
Duration
Site Reach
44
36Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Learning Objective Learning Objective
Discuss the effects of the Internet on marketing objectives and strategy
55
37Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Porter’s Five Industry ForcesPorter’s Five Industry Forces
Applying Applying Five Five
Forces in Forces in Internet Internet Environ-Environ-
mentment
Applying Applying Five Five
Forces in Forces in Internet Internet Environ-Environ-
mentment
Barriers of entry
Threat of substitutes
Bargaining power of buyers
Bargaining power of suppliers
Rivalry among existing competitors
55
38Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Porter’s Five Industry ForcesPorter’s Five Industry Forces
Barriers are…Barriers are…
Threat of substitutes is…Threat of substitutes is…
Bargaining power suppliersBargaining power suppliers
Bargaining power buyersBargaining power buyers
55
…low…low
…high…high
…extremely low…extremely low
…increasing…increasing
Rivalries are…Rivalries are… …intensified…intensified
Online…
39Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing
Debunking Myths of Re-Debunking Myths of Re-Formed MarketFormed Market
55
Myths Myths Truths Truths
1st movershave the advantage
1st movershave the advantage
1st movers pay the costs of development; 2nd movers have the advantage.
1st movers pay the costs of development; 2nd movers have the advantage.
Behavior changesquickly
Behavior changesquickly
Old habits die hard; people more concerned about getting needs met than fractional costs savings
Old habits die hard; people more concerned about getting needs met than fractional costs savings
Non-traditional pricing will bea success
Non-traditional pricing will bea success
People perceive prices posted by sellers to be more convenient and fair.
People perceive prices posted by sellers to be more convenient and fair.