adapting marketing to the new economy

©2003 Prentice Hall, Inc.

Adapting Marketing to

the New Economy


Objectives

• Identify the major forces driving the new economy.

• Understand how business and marketing practices are changing as a result of the new economy.


Objectives

• Explore how the Internet has changed the way marketers use customer databases.

• Understand how marketers practice customer relationship management.


Drivers of the New Economy

• Digitalization and connectivity

– The Internet, intranets & extranets are key

• Disintermediation and reintermediation

• Customization and customerization

• Industry convergence


Changes in Business Practices

Old Economy– Product unit

organization

– Profitable transactions

– Financial scorecard

– Stockholders

– Marketing does the marketing

New Economy– Customer segment

organization

– Lifetime value of customer

– Marketing scorecard

– Stakeholders

– Everyone does the marketing


Changes in Business Practices

Old Economy– Build brands via

advertising

– Customer acquisition

– No customer satisfaction measurement

– Overpromise, underdeliver

New Economy– Build brands via

performance

– Customer retention

– Measure customer satisfaction and retention rates

– Underdeliver, overpromise


How Marketing Practices are Changing

• E-Business

• Setting up web sites

• Customer relationship marketing


How Marketing Practices are Changing: E-business

• Business practices are changing . . .– E-business uses electronic means and platforms

to conduct business.

– E-commerce web sites facilitate the online sale of products and services.

– E-purchasing from online suppliers.

– E-marketing efforts include those that inform, communicate, promote, and sell products and services over the Internet.



Internet Domains

• B2C

• B2B

• C2C

• C2B

• B2C = Business-to-Consumer

• Benefits include: greater ordering convenience, lower cost, easier information and price gathering



Internet Domains

• B2C

• B2B

• C2C

• C2B

• B2B = Business-to-Business

• Volume is 10-15% higher than B2C.

• Benefits include: lower costs via B2B auctions, buying alliances, greater access to information.



Internet Domains

• B2C

• B2B

• C2C

• C2B

• C2C = Consumer-to-Consumer

• Transactions occur via online trading sites such as eBay.

• Consumers are creating online product information via newsgroup and chat room dialogues.



Internet Domains

• B2C

• B2B

• C2C

• C2B

• C2B = Consumer-to-Business

• Facilitate communication between customer and businesses.



• Brick and click firms have often faced channel conflict issues

• Brick and click firms tend to be more successful than pure click e-tailer competitors because . . .– Customer acquisition costs are lower

– Resources, knowledge, customer base, supplier relationships are superior


How Marketing Practices are Changing: Web Site Design

• Context

• Content

• Community

• Communication

• Connection

• Commerce

Customization

The Seven “C’s” of Web Site Design



• Placing Ads and Promotions Online

– Banner ads

– Sponsorships

– Microsite

– Interstitials

– Browser ads

– Alliances and affiliate programs



• Advertising income

• Sponsorship income

• Alliance income

• Membership and subscription income

• Profile income

• Product and service sales income

• Transaction commissions and fees

• Market research/ information

• Referral income

Dot.com revenue and profit models:


How Marketing Practices are Changing: CRM

• Customer Relationship Marketing (CRM) allows companies to:

– Deliver real-time customer service

– Customize market offerings, products, services, media, and messages



• Effective Customer Relationship Marketing requires:– Reducing customer defection rates

– Extending the life of the customer relationship

– Enhancing customer sales / profit potential

– Making low-profit customers MORE profitable or terminating them

– Focusing on high value customers



• CRM Leads to One-on-One Marketing– Four Steps for One-to-One Marketing

• Don’t go after everyone, carefully identify your prospects and customers.

• Group customers by their needs and their value to the company; aggressively pursue the most valuable customers.

• Build stronger relationships with customers via individual interaction.

• Customize messages, services, and products for each customer.



• Customer Databases and Database Marketing are the key to Effective CRM

• Database uses include:– Best prospect identification

– Matching offers to customers

– Deepening customer loyalty

– Reactivating customer purchasing

– Avoiding serious mistakes


Activity time!!!

• Choose 3 daily use products/services

• Identify how their marketing has changed post digital revolution

• Establish relations and give solid examples

• Choose 3 products that you believe wouldn’t have been sold if digital revolution didn’t happen and why?

• Identify and give your views on 3 companies/brands having a strong CRM.

adapting marketing to the new economy

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