internet marketing: a new marketing paradigm? © 2001 ann schlosser, university of washington...
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Internet Marketing: A New Marketing
Paradigm?
© 2001 Ann Schlosser, University of Washington Business School
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"Could you people please just forget about your Web sites?...After all, the Web is dead. Go beyond it." – Whit Andrews
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Agenda• Is the Web different?
– Attributes• Typologies comparing the Web to other media• Unique characteristics
– Consequences• For the customer • For the firm
• What are the implications of these differences for marketing on the Internet?– Descriptive approach– Prescriptive approach
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Characterizing the Internet vs. Other Media
• Dimensions– Dynamic vs. Static– Personal vs. Impersonal– Emotional vs. Rational– Short-term vs. Long-term objectives
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Hoffman & Novak TypologyDynamic
Static
Impersonal Personal
Radio
Broadcast TVCable TVSatellite TV500 channel TV
WWW
WWW+videoCD-Interactive
Online servicesVideotex
LocalHypermedia
BillboardsNewspapersMagazinesDirect Mail
Fax/Mail
WWW forms
TalkUsenet
IRCMUDs
Telephone
Voicemail
CU See MeVideophone
Face-to-face
Town meeting Face-to-face groups
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Leong, Huang & Stanners Typology
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Focusing Upon the Similarities Between the Internet and Other Media
#1
#4
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Early Internet Marketing Practices
Online Marketing Tactics • Spam• Banner ads• Push technologies• Cybermalls• Velveeta• Brochureware• Clickstream data• Marquees, music….
Traditional Marketing Tactics• Direct mail• Billboards/Print ads• TV/radio ads• Malls• Magazine and TV ads• Print brochures/Catalogues• Scanner data
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Commercial Web Site Content in 1996
Benefit of Web Site Rating
Rich product information **
Ease of use (navigational tools) **
Brand/company information **
Collect customer information **
Customized messages *
Ease of updating *
Facilitate purchase intentions *
Global Accessibility
Role playing
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How is the Web Different?
Distinctive and Unique Attributes of the Web have
ConsequencesFor Firms
ConsequencesFor Customers
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Attributes• Decentralized, distributed network of computers (a “network of
networks”)• Open structure
– Information can be accessed by any user.– Any user can be a provider.– Erases geographic distance between buyers and sellers.
• Mediated communication– Many-to-many communication model.– Asynchronous or synchronous communication. – Communications are persistent and enduring over time (archived).– Source of information is often unknown.
– Software agents can be developed to process content and communicate with users and other bots.
• Machine-interactivity required (consumer has primary control).– Action is required of user.
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Attributes• Content is hypermedia and digital
– Web is dynamic.– Content can be easily modified.– Information is immediately accessible.– Medium (and its contents) can be accessed anytime, anywhere.– Range of content is anything that can be digitized (audio, video, text,
etc.).– Lack of physical constraints on content.– Environment approaches full information.– No limits on how much content there can be.– Unbundles form from information.
• Nonlinear presentation and access.• Logs behavioral responses
– Behavioral responses are not necessarily linked to identity.– External memory storage
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One-to-One Communication Model
Medium
Firm
MessageMessage Customer
MessageMessage
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One-to-Many Communication Model
MediumFirmAudience of customersMessageMessage
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Many-to-Many Communication Model
Medium
Firm
MessageMessage
Firm
Firm
Customer
Customer
Customer
Customer
MessageMessage
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Customer Consequences
• Enhances customer information search– Opportunities
• Customer can more easily compare prices and product offerings.
• Lower search costs.
• Memory can be augmented.
• Search can be aided.
• Decision making can be aided.
• Can satisfy information needs.
• WOM is magnified.
– Threats• Can be hard to find information. • Source credibility cannot always be evaluated by customer.
• Requires trust.
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Customer Consequences
• Expands customer possibilities– Opportunities
• Facilitates trial.
• Convenient.
• Greater availability of hard to find products.
• Very large number of alternatives to consider.
• Lower prices (free at the limit).
• Instant gratification – digital products are immediately delivered.
– Threats• Information overload.
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Customer Consequences
• Consumer empowerment– Opportunities
• Power has shifted from firm to customer.
• Customer may seamlessly alternate between experiential and goal-directed behavior.
• Customer information has value.
– Threats• Missed opportunities
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Firm Consequences• Mediated Communication Gives Firms More Customer
Information– Opportunities
• Facilitates one-to-one and relationship marketing.• Facilitates customization of the marketing mix.• Can learn more about customers, even unobtrusively
– Build rich databases
• Can identify the origin of new customers. – Convert previously anonymous events into identified transactions.– Can determine response to advertising exposure.
• Customers can be integrated into the product development effort, reducing NPD risks.
– Threats• Because WOM is magnified online, you have to get it right the first
time.• Legal and policy consequences (privacy) become very important.• Trust becomes critical.
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Firm Consequences
• Broaden Reach– Opportunities and Threats
• Can quickly obtain a global presence.
• Can reach new markets.
• Threat for sellers who are dependent on geography or customer ignorance to insulate themselves from low cost sellers.
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Firm Consequences
• Cost savings– Opportunities
• Operational efficiencies to moving businesses online (transfer more of selling function to the customer).
• Channel efficiencies (electronic offerings can be created immediately).
• Reduction in marginal costs of producing and distributing information goods.
• Economies of scale for digital goods distributed online.
• Can send cheaper and more information to customers
– Threats• Price wars
• Difficult to charge for content.
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Firm Consequences
• More Opportunities and Threats– Brand becomes more valuable online.
– Channel management important• New forms of intermediation.
• Enables new marketing strategies (e.g. affiliate programs).
– Business models are a challenge.
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"There is nothing so practical as a good theory." – Kurt Lewin
“…without a theoretical framework to examine the issues, we are likely to make little progress in exploiting the potential of this unique medium.” – Hoffman and Novak, 1996
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A Clash of Cultures
• Internet Culture– Shareware
– Cooperation
– Decentralized
– Open access
• Marketing Culture– Proprietary
– Competition
– Centralized
– Boundaries
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The Skaggs-Robinson Surface
Positive transfer
Negative transfer
Situation (z)
Response (x)
Outcome (y)
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3. Becoming a member
2. Establishing culturalcompetence
1. Coping with the new culture
Assimilation and Accommodation
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Stage I: Coping
Sample Applications: Web publishing
Information requests (e-mail)
Internet as Information Resource is Used For: Dissemination
Relation Between Firm/Web site and User Web Site User
Technological sophistication Low
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Stage II: Establishing Competence
Sample Applications: Database development
Online transactions
Internet as Information Resource is Used For: Interaction
Relation Between Firm/Web site and User Web Site <- - -> User
Technological sophistication Moderate
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Stage III: Becoming a Member
Sample Applications: Customized (co)production
Personalized content
Internet as Information Resource is Used For: Customization
Relation Between Firm/Web site and User Web Site User
Technological sophistication High
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Consumers Can (and Should) Have Primary Control
Cova• Consumer is active participant
Hoffman & Novak• Consumers should retain ownership of their own profiles• Online, there is a greater probability of well-informed consumers • The view of broadcasting messages to a passive audience is incompatible with the medium• Firms and customers approach “symmetrical power”
Locke• Networked market is well-informed• Control is not entirely in the hands of companies online
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“The real promise of the Web is a once-and-for all transfer of power: Consumers and customers will get what they want – when and how they want it, and even at the price they want it.” – Jerry Gregoire, Chief Information Officer, Dell Computer
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Online Markets are Conversations
Cova• Relationship marketing should be about supporting
relations/linkages between customers, not between the customer and the firm
• Decentralized triabalism
Locke• Firms should let the workers/employees speak for the firm• Consumers seek product information from other consumers, not
marketers• It is a medium of community-building rather than broadcasting• It is a virtual village market
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Collaborate with Customers
Cova• Customizing consumers – they are not a target but a producer of their
own experiences• Companies should apply participatory design
Hoffman and Novak• Communication efforts should be collaborative rather than
autonomous
Locke• Companies should listen to what consumers want rather than tell
them what they should want
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Cooperate with Customers
Cova• Customers are co-creators of brand/product meaning
Locke• Companies should focus on sharing and inviting rather
than owning• It is an open exchange of information
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The Customer Experience is More than Information Acquisition
Cova• It is hyper-reality • It is experience-based marketing (interactivity, creativity,
connectivity)• Customers can wear different masks/identities in different groups
Hoffman and Novak• Firms should have seamless navigation to support the flow state• Firms should have open access – allowing for “test drives” of
products • Firms need VR and role-playing “informances” to support
telepresence
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Case Study Questions for BET.com• Is BET.com likely to be a good investment for BET holdings and its
partners?
• Assess BET.com’s positioning strategy.
– BET management believes it should offer both general and special interest content. Do you believe this is the best way to serve their target users?
– Should they rely on the BET brand to serve both the African American and urban audiences on one website, or should they create a separate website for the urban market?
• How should BET leverage synergies between its core business and its online offspring?
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Case Study Questions for CNET 2000• How would you characterize CNET’s business model?
• Do you agree with CNET’s decisions to:– Avoid entering other vertical markets?– Avoid direct participation in online retailing?– Avoid licensing CNET’s reviews and articles to portals and online retailers?– Increase ad spending to $100 million?
• Do you think the company did a good job running the CNET 200 process? Why or why not?
• If given the opportunity, should CNET acquire a “shopping bot” website such as mySimon.com given the strategy articulated by the CNET 2000 team?