lecture 2 ref: chapter 4 consumer behavior, internet marketing, and advertising 1 copyright © 2010...

Copyright © 2010 Pearson Education

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Lecture 2ref: Chapter 4

Consumer Behavior, Internet Marketing, and Advertising


Learning Objectives

1. Describe the factors that influence consumer behavior online.

2. Understand the decision-making process of consumer purchasing online.

3. Describe segmentation and how companies are building one-to-one relationships with customers.

4. Explain how consumer behavior can be analyzed for creating personalized services.

5. Discuss the issues of e-loyalty and e-trust in electronic commerce (EC).

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Learning Objectives

6. Describe consumer market research in EC.7. Describe the objectives of Web advertising

and its characteristics.8. Describe the major advertising methods

used on the Web.9. Describe various online advertising

strategies and types of promotions.

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4.1 A model of consumer behavior online

Online consumer can be divided into two types:• Individual consumers• Organizational buyers (ex. governments,

private corporations)


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The purpose of a consumer behavior model is to help vendors understand how a consumer makes a purchasing decision by showing the factors that affect consumer behavior.

The model is composed of two major parts1. Influential factors2. The attitude behavior process


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1. Influential factorsFive dimensions are considered to affect

consumer behavior. 1. consumer characteristics2. environmental characteristics3. merchant and intermediary characteristics4. product/service characteristics5. EC system.


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2. The attitude behavior process:This process starts with a positive attitude (intention to buy ) and end with the buyers’ decisions to purchase and/or repurchase.


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4.2 The Consumer Purchasing Decision-Making Process

• A GENERIC PURCHASING-DECISION MODEL– Five major phases:

1. Need identificationConvince the consumer that the product or service the seller offers will fill the gap between the actual and desired need

2. Information search– product brokering (deciding what product to buy)– merchant brokering (Deciding from what

merchant to buy a product)

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4.2 The Consumer Purchasing Decision-Making Process

3. Alternative evaluationthe consumer will use the collected of information to develop a set of criteria to evaluate and compare alternatives

4. Purchase and deliveryafter evaluating the alternatives, consumer will make the purchasing decision, arrange payment and delivery.

5. Postpurchase behaviorCustomer services and evaluation of usefulness of the product (e.g., “this product is really great!”)

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4.3 Mass Marketing, Market Segmentation, and One-to-One Marketing

Three basic approaches are used in marketing and advertising– Mass Marketing and Advertising marketing efforts traditionally were targeted to everyone

e.g. newspaper and TV– market segmentation

The process of dividing a consumer market into logical groups for conducting marketing research and analyzing personal information. (data mining methods) Selling a single product to many customers

– one-to-one marketing (relationship marketing)Marketing that treats each customer in a unique way Selling many products to one customer

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4.4 Personalization and Behavioral Marketing

Issues related to one-to-one marketing:1. personalization

The matching of services, products, and advertising content with individual consumers and their preferences.• user profileo The requirements, preferences, behaviors, and

demographic traits of a particular customer.o Generated by getting information from the user or by

observing what people are doing online by using cookies• cookie

A data file that is placed on a user’s hard drive by a remote Web server, frequently without disclosure or the user’s permission, which collects information about the user’s activities at a site

Ex. Amazon.com

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2. behavioral targetingTargeting that uses information collected about an individual’s Web-browsing behavior, such as the pages they have visited or the searches they have made, to select an advertisement to display to that individual

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3. collaborative filteringA market research and personalization method that uses customer data to predict, based on formulas derived from behavioral sciences, what other products or services a customer may enjoy; predictions can be extended to other customers with similar profiles

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4.5 Loyalty, Satisfaction, and Trust In EC

• CUSTOMER LOYALTY– e-loyalty

Customer loyalty to an e-tailer or loyalty programs delivered online or supported electronically• Business Intelligence and Analytical Software

o These systems analyze customer data to determine satisfaction level and the potential for cross-selling products.

o It also helps to gain insights fast enough to stop unhappy customers before they leave the site.

• SATISFACTION IN EC– Satisfaction is one of the most important success

measures in the B2C online environment which lead to higher loyalty

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4.5 Loyalty, Satisfaction, and Trust In EC

• TRUST IN EC– trust

The psychological status of willingness to depend on another person or organization

Merchants are able to increase the amount of trust their customers have through brand recognition, security mechanisms and business transparency.

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4.6 Market Research for EC

OBJECTIVES AND CONCEPTS OF MARKET RESEARCH ONLINE To find information that describes the relationships between

customers, products, marketing methods and marketers. Market research assists a firm in both their marketing and

product mix decisions.

• REPRESENTATIVE MARKET RESEARCH APPROACHES– Market Segmentation Research– Online Sampling Methods– Online Surveys– Hearing Directly from Customers– Data Collection in the Web 2.0 Environment

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Observing Customers’ Movements Online• transaction log

A record of user activities at a company’s Web site

• clickstream behaviorCustomer movements on the Internet

• Web bugsTiny graphics files embedded in e-mail messages and in Web sites that transmit information about users and their movements to a Web server

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• spywareSoftware that gathers user information over an Internet connection without the user’s knowledge

• clickstream dataData that occur inside the Web environment; they provide a trail of the user’s activities (the user’s clickstream behavior) in the Web site

• Web miningData mining techniques for discovering and extracting information from Web documents; explores both Web content and Web usage

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4.7 Web Advertising

Advertising is an attempt to disseminate information in order to affect buyer–seller transactions• In traditional marketing, advertising was impersonal,

one-way mass communication that was paid for by sponsors

• interactive marketingOnline marketing, facilitated by the Internet, by which marketers and advertisers can interact directly with customers, and consumers can interact with advertisers/vendors

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• Some internet Advertising terminology– ad views

The number of times users call up a page that has a banner on it during a specific period; known as impressions or page views

– buttonA small banner that is linked to a Web site; may contain downloadable software

– pageAn HTML (Hypertext Markup Language) document that may contain text, images, and other online elements, such as Java applets and multimedia files; may be generated statically or dynamically

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4.7 Web Advertising


– click (click-through or ad click)A count made each time a visitor clicks on an advertising banner to access the advertiser’s Web site

– CPM (cost per thousand impressions)The fee an advertiser pays for each 1,000 times a page with a banner ad is shown

– conversion rateThe percentage of clickers who actually make a purchase

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4.7 Web Advertising


– click-through rateThe percentage of visitors who are exposed to a banner ad and click on it

– click-through ratioThe ratio between the number of clicks on a banner ad and the number of times it is seen by viewers; measures the success of a banner in attracting visitors to click on the ad

– hitA request for data from a Web page or file

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4.7 Web Advertising


– visit A series of requests during one navigation of a Web site; a pause of a certain length of time ends a visit

– unique visitA count of the number of visitors entering a site, regardless of how many pages are viewed per visit

– stickinessCharacteristic that influences the average length of time a visitor stays in a site

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4.7 Web Advertising


Advantages of Advertising Online• Cost• Richness of format• Personalization• Timeliness• Location-basis• Linking• Digital branding

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4.7 Web Advertising


• BANNERS– banner

On a Web page, a graphic advertising display linked to the advertiser’s Web page

– keyword bannersBanner ads that appear when a predetermined word is queried from a search engine

– random bannersBanner ads that appear at random, not as the result of the user’s action

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4.8 Online Advertising Methods


Benefits of Banner Ads• users are transferred directly to an advertiser’s

site, often the shopping page• Contains attention multimedia• Ability to customize the banners

Limitations of Banner Ads• Cost• Limited amount of information can be placed in

the banner

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banner swapping

An agreement between two companies to each display the other’s banner ad on its Web site

banner exchanges

Markets in which companies can trade or exchange placement of banner ads on each other’s Web sites

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• POP-UP AND SIMILAR ADS– pop-up ad

An ad that appears in a separate window before, after, or during Internet surfing or when reading e-mail

– pop-under adAn ad that appears underneath the current browser window, so when the user closes the active window the ad is still on the screen

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• E-MAIL ADVERTISING• send out large volumes of advertisements

contained inside e-mail messages.• This is an effective method of advertising to large

groups.• If the advertiser sends a large number of

unrequested e-mail, it is considered spamming

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• SEARCH ENGINE ADVERTISEMENT• URL Listing

Benefits: Free , anyone can submit URL to search engine , and choose between list of sitesDisadvantages: Location of URL (top of the page)

• Keyword AdvertisingLinking Ads with the user’s keywords

search engine optimization (SEO)The craft of increasing site rank on search engines; the optimizer uses the ranking algorithm of the search engine (which may be different for different search engines) and best search phrases, and tailors the ad accordingly

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• GOOGLE—THE ONLINE ADVERTISING KING• ADVERTISING IN CHAT ROOMS• Advertising in Online Newsletters

(ex.ecommercetimes.com)

• Video Ads• advergaming

The practice of using computer games to advertise a product, an organization, or a viewpoint

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4.9 Advertising Strategies and Promotions

social network advertisingOnline advertising that focuses on social networking sites

• Types of Social Network Advertising• Direct advertising that is based on your network of

friends• Direct advertising placed on your social network site• Indirect advertising by creating “groups” or “pages”

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VIDEO ADS ON THE WEB AND IN SOCIAL NETWORKING– Tracking the Success of an Online Video Campaign

• Web video analyticsA way of measuring what viewers do when they watch an online video

VIRAL MARKETINGWord-of-mouth marketing by which customers promote a product or service by telling others about it. This can be done by email, chat room, forums.

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affiliate marketingA marketing arrangement by which an organization refers consumers to the selling company’s Web site

Ads as a Commodity (Paying People to Watch Ads)People are paid for time spent viewing an ad

Selling Space by Pixels Personalized Ads

• WebcastingA free Internet news service that broadcasts personalized news and information, including seminars, in categories selected by the user

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Selling Space by Pixels


ONLINE EVENTS, PROMOTIONS, AND ATTRACTIONS• Some of the most popular Internet promotions are

give-aways , discounts and coupons• Live Web Events such as concerts, shows,

interviews, videos

mobile advertisingAds sent to and presented on mobile devices

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lecture 2 ref: chapter 4 consumer behavior, internet marketing, and advertising 1 copyright © 2010...

Documents

online consumer

consumer behavior model

consumer characteristics

pearson education slide

consumer purchasing

consumer market research

advertising mass marketing

advertising marketing