electronic commerce
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Electronic CommerceeCommerce Marketing Issues
MIS 6453 – Spring 2006
Instructor: John Seydel, Ph.D.
Student ObjectivesSummarize the importance of identifying relevant market segmentsDiscuss how the stages of customer loyalty apply to ecommerceApply the 7 Cs to customer interface developmentDescribe web-based advertising conceptsDiscuss why an understanding of search engine concepts is important in ecommerce
Overview of Marketing Strategy
Strategies address the marketing mix (4 Ps), but mostly the big PGeneral options
Product-based (e.g., Home Depot) Customer-centered (pioneered on B2B sites;
universities)Trust-building is a key (on or off the Web)
The Web is an intermediate step between mass media (low trust) and personal contact (high trust)
Using the Web, firms can capture some of the benefits of personal contact yet avoid the high costs inherent with that approach
Various market segments thererfore need to be identified and targeted differently; first step in building customer-centered website
Segmentation SummaryTraditional perspective
Geographic Demographic Psychographic (personality, lifestyle, social class)
Occasion perspective (e.g., workday, vacations, holidays)Behavioral perspective
Traditional (browser, buyer, shopper) Web usage (simplifier, surfer, bargainer, connector, routiner,
sportster)Life cycle (relationship intensity varies)
Aware Explorer Familiar Committed Separated
Why does it matter?Unlike with traditional commerce, we can build multi-segment, multi-feature sites in the virtual worldWe can further customize the experience for individual usersThis is a customer interface issue
The 7 Cs of the Customer Interface
Context
Site’s layout and design
Commerce
Site’s capability to enable commercial transactions
Connection
Degree site is linked to other sites
CommunicationThe ways sites enable site-to-user communication or two-
way communication
CustomizationSite’s ability to self-tailor to different users or to allow
personalization
Community
The ways sites enable user-to-user communication
Content
Text, pictures, sound and video that webpages contain
Fit and Reinforcement of the 7Cs
Context Content Community Customization Communication Connection Commerce
Business Model
ReinforcementIs each of the 7Cs consistent with the others?
Supporting FitDo each of the 7Cs individually support the business model?
The success of a business depends on the extent that all of the Cs work together to support the value proposition and business model:
The 7 Cs – Design Context
Aesthetics (Form)
Integrated
Aesthetically Dominant
HighLow
High
Low
Function
Functionally Dominant
Frontier is gradually
moving outward as technology
advances
The age old argument of form vs. function is being changed by the Web:
Aesthetic Example — KMGI.comHigh form, low function: The KMGI approach used to make heavy use of visual elements, but lacked performance capability.
Now, KMGI has integrated more functionality into its site, while still maintaining some of the strong visual elements.
BEFORE AFTER
Functional Example — Brint.comLow form, high function: Brint.com assumes its users have little need for visual elements or themes and instead seek ease of use and plentiful information:
Notice the plethora of
links
The site is also text-
laden
The 7 Cs – ContentContent refers to all digital information included on the site. There are four key dimensions to content, each carrying choices about how to convey the site’s content::
Dimension
Choices
Offering Mix Appeal Mix Multimedia Mix Content Type
Products
Services
Information
Cognitivefunctional, low price,
availability,etc.
Emotionalhumor,warmth,stories,
etc.
Text
Audio
Video
Image
Graphics
Current
Reference
The 7 Cs – Community
Bazaar
Theme Park
Club
Shrine
Theatre
Cafe
Apparent archetypes:
Wander thru vast array of interest areas; no interactionFinite group of interest areas
Focused on particular interest area; high member interactionHigh focus with minimal member interactionParticular focus with moderate member interactionFocus on common interest area with considerable interaction
Focus versus Interactivity
Games.yahoo.com ContactConsortium.com
VoxCap.com Bolt.com
LeonardoDiCaprio.comIfilm.com
Women’s Cancer Conn.
Trace.com
A number of hybrid communities can be form by combining interactivity and focus in unique ways:
Bazaar
Focu
s
ThemePark
Club
Shrine Theater Cafe
Interactivity
Broad
Narrow
Limited Extensive
Non-
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ill m
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The 7 Cs – CustomizationPERSONALIZATION
Log-in Registration The site recognizes return users and
configures itself accordinglyCookies
Temporary files that track and gather data about user’s behavior
Personalized E-Mail Accounts Provided free-of-charge to site users
Content/Layout Configuration Users select layout and content
based on their interestsStorage
Sites provide virtual hard-disk storage
Agents Programs designed to perform
simple tasks
TAILORINGBased on Past User
Behavior Many sites adjust themselves
dynamically based on a user’s past behavior and preferences
Based on Behavior of OtherUsers With Similar
Preferences Some sites make
recommendations to the user based on preferences of other users with similar profiles
The 7 Cs – CommunicationTaking advantage of the Internet Far cheaper than any other medium Operates 24/7/365 Know which customers have read a message
and when Enables customers to find out information for
themselves Can build a bond with customers – interactive,
addictive Can communicate across borders and
languagesNot as easy with traditional commerce
Communication ModesBROADCAST
Mass Mailings Broadcast transmissions of large
volumes of e-mail targeted at large audiences
FAQs Answers to frequent questions
E-Mail Newsletters Inform site subscribers of site
changes, special offers, etc.Content-Update Reminders
eMail reflecting user interest in a particular content area
Broadcast Events Events can be broadcast from a
website (webcast) that allows limited user control over such things as camera angle
INTERACTIVEE-Commerce Dialogue
Organizations and users trade email regarding order placement, tracking and fulfillment
Customer Service Organizations can provide
customer service through trading email or live online dialogue
User Input User-generated content such as
supplier ratings and user feedback to the site
Some Communications Options
1:M non-responding (RFID.com)1:M responding (BizRate.com)1:M live interaction (webinars)1:1 non-responding (Hallmark.com)1:1 responding (Amazon.com)1:1 live interaction (chat, e.g., tech support)
The 7 Cs -- ConnectionDestination
Hub
Portal
Affiliate
Meta-Software
Outsourced Content
PATHWAY-OUT
Links lead the user outside the environment of the site; links are absolute in that the user’s click causes an exit from the original website.
PATHWAY-IN
Links are hybrid; the user’s click causes the retrieval of material from the same or
other sites without exiting the current website.
Linking to Other SitesLinks leading out (not necessarily off-site)
Destination: provides site- generated content with few links to other sites (e.g., NYTimes.com)
Hub: provides combination of site-generated content and selective external links (e.g., IndustryCentral.net)
Portal: exclusively provides links to other sites (e.g., Yahoo.com)
Bringing information in Affiliates: direct users to affiliated websites (e.g.,
Amazon and Toys-R-Us) Outsourced content: content generated by third
parties (e.g., Real.com) Meta-software: utility and plug-in software for
narrowly-defined tasks (e.g., CNet’s Download.com)
The 7 Cs – CommerceTOOLS FOR ENABLING COMMERCE
Registration Allows the site to store information about users and user preferences
Shopping Cart, One-Click Shopping Facilitates online shopping by making it more user-friendly
Security, Credit-Card Approval Enables online transactions by allowing secure sharing of credit-card info
Orders Through Affiliates Sites must be able to track orders that come from and go to affiliates
Configuration Technology Users can test product compatibility, price trade-offs, product substitutions
Order Tracking, Delivery Options Once orders are placed, users can choose how they would like their
products delivered and can track those orders from the site to their front doors.
The 7Cs of Schwab.comContext
Schwab.com is largely functional; the only graphics used are those
that display market behavior.
CommerceSchwab is essentially a broker
with a transaction-based revenue model. There are also fee
services that Schwab offers.
ConnectionSchwab.com’s content and
information is largely generated in-house; there are no links to
outside sites.
CommunicationSchwab.com provides e-mail news
alerts. User response is limited. Basically, the site is a one-to-many, non-responding site.
CustomizationSchwab.com is highly
customizable. Users can personalize the site’s content,
layout, communication and access.
CommunityThere is very little interaction
among Schwab.com users. The site focuses primarily on the
financial needs of the individual.
ContentSchwab.com is an information-
dominant site that generates all of its own material.
Managing Customer Relationships
Reconsider the customer life-cycle and how it’s managed
Acquisition costs: money a site spends to draw one visitor to the site
Conversion: Converting a first-time visitor into a customer Conversion cost – cost of inducing one visitor to make a
purchase, sign up for a subscription, register, etc. Retained customers: customers who return to the site
one or more times after making their first purchasesIt’s important, therefore, to build and maintain good relationshipsThis is CRM
Adding Value: Supporting the Customer Decision ProcessAny online offering must map the products and services onto the customer decision process:
Customer Decision Process
Needs Recognition
Search for Ideas and Offerings
Purchase
Decision
Post-Sale Support and
Perks
Evaluation of Alternatives
What occasions trigger the need for my product? What tactics can be used to stimulate demand?
What information would the consumer need to make a selection?
What are the key evaluation criteria that the consumer will use to evaluate my product/service? What information should the website offer to make the consumer comfortable with his or her choice?What functionality should the site
present to communicate privacy, trust and security?
What post-sale services can the website offer to create loyalty?
Advertising on the WebWhy?
Stimulate demand for products/services Link to/from affiliate sites
Banner ad: small rectangular object on a Web page Interactive marketing unit (IMU)
Specifies ad formats Standard banner sizes that most Web sites have
voluntarily agreed to useBanner exchange network: coordinates ad sharing Banner advertising network: acts as a broker between advertisers and Web sites that carry adsNote
Online advertising - is more tractable than offline advertising
Offline advertising – traditional TV, radio, billboard and magazine can be tagged with .com
A Challenge: Measuring Ad Effectiveness
Some things to measure Cost per thousand (CPM): pricing metric
used when a company purchases mass media advertising
Trial visit: first time a visitor loads a Web site page
Page view: each page loaded by a visitor Impression: each time the banner ad loads
Where do we get the data?
Some tools Server logs Analysis software
Other Ad FormatsPopup windows Or pop-under Use sparingly Popup blockers can thwartInterstitial ads: when a user clicks a link to load a page, the interstitial ad opens in its own browser window
It’s All About Driving Traffic to a Website
eCommerceWebsite
Domain Name Search Engines
PublicRelations
PromotionsAdvertisements
External Links
No spamming!Opt-in/opt-out
Best publicity is free!
Contests, free samples, . . .
Via reciprocityAffiliates
Search EnginesWebsites that help people find things on the Web
Search engines Web directories (hierarchical listing by category)
Three components: Spider, crawler, &/or robot: programs that automatically
search the Web Index or database: storage element of a search engine Search utility: uses terms provided to find web pages that
matchSite ranking: weighting factors are used by search engines to decide where URLs appear on search result listsPositioning and optimization: combined art and science of having a particular URL listed near the top of search engine results
Paid Search Engine Inclusion and Placement
Paid placement (aka sponsorship) Option of purchasing a high listing on results
pages for a particular set of search terms Rates vary Constitutes around 40% of Internet advertising
(compare to banner ads at 20%) Try: Google search for “snow skis”
Search engine placement brokers Companies that aggregate inclusion and
placement rights on multiple search engines Example: LookSmart (search “Sports” for skis)
<html><head>
<meta name = “keywords” content = “coke, coca-cola, the real thing,
soft drinks, pop, mixers, cola”/><title>Coca-Cola Homepage</title>
</head><body>
<h1 align = “center”>Welcome to the Coca-Cola Homepage! </h1>
. . .
How Search Engines Search
Summary of ObjectivesSummarize the importance of identifying relevant market segmentsDiscuss how the stages of customer loyalty apply to ecommerceApply the 7 Cs to customer interface developmentDescribe web-based advertising conceptsDiscuss why an understanding of search engine concepts is important in ecommerce
Now, Some More Work with Web Pages
We’ll continue with the example we started a while backLet’s do a little (very little) reviewing firstThen we’ll add a few featuresIf time permits, this exercise will be the start of a real website
Review: Standard XHTML Document
<html><head><title> . . . title goes here . . . </title>. . . scripts, style rules, meta elements, etc. . . . </head><body>. . . this is where content and markup goes . . . </body>
</html>
An Overview of XHTML Elements
A web document is a collection of XHTML elementsNote that XHTML is essentially HTML
XML compliant Reformulation of HTML, but with stricter rules
Two types of elements Standard Empty
Each element Has
Opening tag and closing tag is standard Self closing tag if otherwise
May have attributes specifiedAlso: XHTML entities (like )
XML Syntax for Standard Elements
Either<tag attr1=“xxx” attr2=“yyy” attr3=“zzz” . . . >
. . . content . . . </tag>
Or<tag
attr1=“xxx” attr2=“yyy” attr3=“zzz” . . .
>. . . content . . .
</tag>Why the difference?More readable code (for us, not the computer)
Examples of Standard Elements
Paragraphs, headings, divisionsHyperlinksListsTablesFormsObjectsDisplay markup
Syntax for Empty ElementsEither<tag attr1=“xxx” attr2=“yyy”
attr3=“zzz” . . . />Or<tag
attr1=“xxx” attr2=“yyy” attr3=“zzz” . . .
/>Notice: no content; attributes provide full specification
Examples of Empty ElementsImages and embedded objectsForm input controls (e.g., text boxes)Breaks, horizontal rules, etc.Meta tags
Some Important XHTML Body Elements
Hyperlinks: <a>Objects:
<img /> <object>, or <embed>
Lists: <ul>, <li>Tables: <table>, <tr>, <td>Text blocks: <p>, <div>Display: <font>, <i> or <em>, <b> or <strong>, <center>Forms: <form>, <input>, <select>, <option />Style rules: <style>Miscellaneous: <br />, <hr />
Referencing Other FilesWhere?
Hyperlinks Images (inline or background) Objects (e.g., Flash movies) And other places also, but beyond our scope
Absolute referencing: resources on another serverRelative referencing
Preferred Need to specify relative to calling document
In same folder In higher level folder In lower level folder In sibling folder
Appendix
Trust in Three Information Dissemination Models
Five Stages of Customer Loyalty
Funnel Model of CRM
Ad Format Guidelines
45
Banner Click-Through Rates
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Apr May Jun Jul Aug Sept Oct Nov Dec Jan
Banner Click-Through Rates (Apr 2005-Jan 2006)
Source: Nielsen//NetRatings
Percent
Month
Pool of Impressions
Pool ofVisitors
Buyers
2%
5%
1,000
20
1
Cost per Impression: $15/CPM ($.015)
Cost per visitor @ 2% click-through ($.015/.02= $.75)
Cost per purchase @ 5% conversion ($.75/.05=$15.00)
Ad Cost Model
Potential Profitability of Each Potential Site Can Be Determined
Ad Site Site TypeCost per Clickthru
Visits / Month
Convrt Rate
Units Sold Sales
Revenue per visit Profitable?
Excite Search $0.30 3,986 0.48% 19 $800 $0.20 NoYahoo Directory $0.30 4,594 0.46% 21 $1,480 $0.32 No
IPF Wt. Lifting $0.50 78 12.82% 10 $450 $5.77 Yes
Affiliate Marketing StrategiesAffiliate marketing: one firm’s website includes descriptions, reviews, ratings, or other information about a product that is linked to another firm’s site Affiliate site: obtains the benefit of the selling site’s brand in exchange for the referralCause marketing: affiliate marketing program that benefits a charitable organization
URL Brokers and RegistrarsURL brokers: sell or lease domain names Registrars: arrange for initial assignments of domain namesICANN Internet Corporation for Assigned Names &
Numbers Maintains a list of accredited registrars Operates InterNIC.com
Domain name parking: Permits purchaser of domain name to maintain a
simple website so that domain name remains in use Example: DirectNIC.com
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