internet marketing the micro environment 2

Internet Marketing

The Micro Environment 2

Session 3

University of Tartu

Georg Singer, georg.singer ät ut . ee

Copyright © 2010 Pearson Education, Inc.

2Internet Marketing - UT Spring Semester

2011

Big Picture

You are the internet marketer and you want to develop a marketing strategy!

Today’s Agenda

• Online Consumer Behavior Models– Part of market place situation analysis

– Marketers need to gain insight into the online consumer behavior of their audiences

• Marketing Intermediaries– Firms that can help a company to promote, sell and

distribute its products or services

• Market Place Models– How can existing market place models be applied to

assist with developing digital strategies

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Online Consumer Behavior

Understanding what your customer does


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Consumer behaviour models

• 1. Information / experience seeking behavior models– Types of different web users

• 2. Hierarchy of response buying process models– Internet use during different stages of the buying

process• 3. Multi-channel buying models

– User journey on a website is only part of a wider customer experience

• 4. Trust-based models– Online, purchasers lack the physical reassurance we have

when purchasing from a store or talking to someone over the phone, model deals with how to build trust

© Pearson Education Limited 2009

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1. Information / experience seeking behaviour models

• Directed information-seekers. – These users will be looking for product, market or leisure information such as details of

their football club’s fixtures. They are not typically planning to buy online.

• Undirected information-seekers. – These are the users, usually referred to as ‘surfers’, who like to browse and change sites

by following hyperlinks. Members of this group tend to be novice users (but not exclusively so) and they may be more likely to click on banner advertisements.

• Directed buyers. – These buyers are online to purchase specific products online. For such users, brokers or

cybermediaries that compare product features and prices will be important locations to visit.

• Bargain hunters. – These users (sometimes known as ‘compers’) want to find the offers available from sales

promotions such as free samples or competitions. For example, the MyOffers site (www.myoffers.co.uk) is used by many brands to generate awareness and interest from consumers.

• Entertainment seekers. – These are users looking to interact with the Web for enjoyment through entering contests

such as quizzes, puzzles or interactive multi-player games.



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2. Hierarchy of response buying process models

A summary of how the Internet can impact on the buying process for a new purchaser



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Initial product search showing e-retailers available



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Comet product comparison facility (www.comet.co.uk): example page



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3. Multichannel buying models –Example Lexus Menth et al. (2005)



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User journey on a website is only part of a wider customer experience

4 Trust-based models

A model of the relationship between different aspects of trust and consumer response based on the categories of Bart et al. (2005)



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Online, purchasers lack the physical reassurance we have when purchasing from a store or talking to someone over the phone

What can be done to enhance trust?

Marketing intermediaries

you are not alone


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Definitions

• Marketing intermediaries– Firms that can help a company to promote, sell and distribute its

products or services– Examples?

• Destination sites– Sites typically owned by merchants, product manufacturers– Examples?

• Online intermediary sites– Websites that facilitate exchanges between consumer and

business suppliers• Google, MSN, Yahoo, Kelkoo.com, Bizrate.com• Trend towards more specialist intermediaries such ALL THINGS GREEN


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All Things Green (www.allthingsgreen.net)

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Marketplace Models

How can existing market place models be applied to assist with developing digital

strategies?


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Selected Marketplace Models

• Competitive Forces

• Value Chain Creation and Analysis

• New channel Structures

• Business Models

• Revenue Models


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Porter’s five forces

Power of

suppliers

Bargaining

powers of

customers

Extent of rivalry

between

competitors

Threat of

subsitutes

Threat of new

entrants

The business



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Model that describes relative strength between customers, competitors and intermediaries

Interview with Michael Porter – 5 mins28secs


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Activity – Porter’s Five Forces – Groups 15 mins

• Use Michael Porter’s 5 Forces Model• Assess the impact of the internet on a sector you select

from the options below. State which you feel are the most important impacts1. Banking2. Grocery Retail3. Book Retail4. B2B engineering Component Manufacturer5. B2B Software Services company selling customer

relationship management software6. Not-for-profit organization such as hospital, local

government or charity


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The Value Chain

Analyzes how businesses create value within their markets


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Two alternative models of the value chain: (a) traditional value chain model, (b) revised value chain model



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Value Chain Creation and Analysis

->Vertical (backward, forward) and horizontal integration

Digital Value-adding activities in the value chain - Examples

• Market research and new product development– Encourage customer feedback and new product development (Dell Idea storm)– Monitor marketplace trends through social networks– Use search engine key phrase analysis to understand the demand for new products or content– Use web analytics to understand the popularity of different products

• Market products– Attract new customers at lower cost through online marketing techniques (affiliate marketing,

paid search etc)– Use aggregators (price comparison sites) to make products available to a wider audience– Use customer communities (reviews and ratings) to encourage other customers to purchase– Customize product options or bundles online

• Procure materials and products– Review options for buying direct from suppliers (disintermediation)– Options for buying from online auctions and marketplaces

• Manage selling and fulfillment– Use web self-service or online chat to reduce cost-to-sale– Offer chose in delivery (for example weekend or evening deliveries or deliveries to work)

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2009

Example - Lonely Planet online shop (http://shop.lonelyplanet.com)



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•Buy individual chapters•Pick and mix chapters•Involves customers in shaping future guides

New Channel Structures

How is a product or service delivered to the customers


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Disintermediation of a consumer distribution channel



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(a) the original situation, (b) disintermediation omitting the wholesaler, and(c) disintermediation omitting both wholesaler and retailer

EXAMPLES????

Reintermediation - Screentrade insurance intermediary (www.screentrade.com)



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•Enables different insurancecompanies to sell direct over this intermediate

Figure 2.31 From (a) original situation to (b) disintermediation or (c) reintermediation or countermediation



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Examples

• Disintermediation (Cutting out the middleman)– Insurances

– Book retailing

• Reintermediation– Broker for other businesses (screentrade.co.uk)

• Countermediation (destination site sets up intermediary to compete with existing intermediaries)– www.latedeals.com against lastminute.com (Thomson

Travel Group)


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http://www.latedeals.com/

Business Models in E-Commerce


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In more detail when we talk about the marketing plan

A business model describes the rationale of how an organization creates, delivers, and captures value - economic, social, or other forms of value. The process of business model design is part of business strategy – Wikipedia+ a description of the sources of revenue

http://en.wikipedia.org/wiki/Explanation

http://en.wikipedia.org/wiki/Organization

http://en.wikipedia.org/wiki/Business_strategy

Alternative perspectives on business models



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Publisher revenue models (in addition to plain direct selling and brokering online

sales)• 1. Revenue from subscription access to content. • 2. Revenue from Pay Per View access to documents.• 3. Revenue from CPM display advertising on site (e.g. banners ads,

skyscrapers or rich media). CPM stands for ‘cost per thousand’ where M denotes ‘Mille’.

• 4. Revenue from CPC advertising on site (pay per click text ads) CPC stands for ‘Cost Per Click’. – Advertisers are charged not simply for the number of times their ads are

displayed, but according to the number of times they are clicked.

• 5. Revenue from Sponsorship of site sections or content types (typically fixed fee for a period)

• 6. Affiliate revenue (typically CPA, but could be CPC)– Affiliate revenue is commission based, for example if you display links to

Amazon books on your site, you can receive around 5% of the cover price as a fee from Amazon. Such an arrangement is sometimes known as Cost Per Acquisition (CPA). Amazon, and others offer a tiered scheme where the affiliate is incentivised to gain more revenue, the more they sell. Hence this is often called a pay-per-performance ad deal.



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ACTION – Groups- 15 mins

• 1. Visit the Yahoo web site (www.kelkoo.co.uk)

• 2. Write down the different revenue opportunities for this site (some may be evident from the site, but others may not); write down your ideas also.


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Innovations in Revenue Models - Peer-to-peer lending exchange, Zopa (www.zopa.com)



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Cu next week!


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internet marketing the micro environment 2

Documents