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Marketing Dynamics

CANADIAN EDITION

Canadian Authors: Greg Gregoriou and Jessica Pegis

Brenda Clark • Jennie Sobel • Cynthia Gendall Basteri

(Sample Chapters 5 & 9)

OXFORDNEXT

Chapter XX Chapter TitleChapter XX Chapter Title

Contents

PART 1 MARKETING BASICS

1 Marketing is Dynamic! 4Marketing Defined 5Marketing Is Dynamic 5Marketing Is Customer-Focused 6Marketing Is Relationships 7Marketing Is International 7Marketing Is the Four Ps 8Marketing Is the Marketing Mix 12Marketing Is the Marketing Plan 13Is Marketing in Your Future? 15

2 Business Basics 18Economic Needs and Wants 19The Exchange 19Money 20What Is Business? 22Making a Profit 22Forms of Business Ownership 23The Functions of Business 25

3 The Marketing Concept 29The Marketing Concept 30The Functions of Marketing 31

The Functions and the Marketing Concept 33

Profile: TD Canada Trust 34

4 Market Forces 37Types of Economic Systems 38Market Economy Features 40Market Forces at Work 41Supply and Demand 42Profit 44Competition 46Role of the Customer 47

PART 1: Wrap-up 50

PART 2 REACHING YOUR MARKET

5 Targeting a Market 54Marketing Strategy 55Mass Marketing 57Target Marketing 58Choosing Your Target Market 60

MarketingDynamics_FM.indd 3 13-03-01 6:33 PM

iv Contents

Advantages and Disadvantages of Targeting a Market 61

Segmenting a Market 62Geographic Variables 63Demographic Variables 64Psychographic Variables 66Behavioural Variables 67Combining Variables 69Market Segment Profile 69

6 Consumers and Competition 73Psychological Influences 74Social Influences 76Situational Influences 78The Consumer Decision Process 79Competition 80Ways to Compete 81Market Share 83Why Is Market Share Important? 84Competition Research 85

7 Marketing Research 90Types of Data 92Collecting Primary Data 92Sources of Secondary Data 96Marketing Research Process 97Trend Research 97Sales Forecasting 100Is Marketing Research Always Right? 101Profile: Windigo Catering 102

8 Marketing for Not-for-Profit Organizations 106Characteristics of Not-for-Profit

Organizations 107The Importance of Marketing for NPOs 111Marketing Strategies of NPOs 112

9 Information Technology and Social Media 120E-Commerce Basics 121Marketing on the Internet 123Business-to-Business on the Internet 123Shopping on the Internet 124Future of E-tailing 130

PART 2: Wrap-up 134

PART 3 THE MARKETING MIX

10 What Is a Product? 138Types of Products 139The Service Economy 140Characteristics of Services 140Product Elements 142Product Strategy 147Product Life Cycle 147

11 Branding 156What Is a Brand? 157Branding and the Customer 159Goals of Branding 161Protecting a Brand 164You as a Brand 166

12 What Is Price? 170Types of Prices 171Factors That Affect Price 172Profile: WestJet Airlines Ltd. 180

13 Price Determination 183Pricing Objectives 184Effect of Price on Revenue 188Establishing Prices 189

14 What Is Place? 194Channels of Distribution 195Role of Intermediaries 199Physical Distribution 201Activities of Physical Distribution 201Components of Physical Distribution 202Modes of Transportation 204Distribution of Services and Ideas 206The Distribution Process 206Channel Management and Physical

Distribution 208


vContents

15 What Is Promotion? 212Promotion Is Marketing

Communication 213Personal Promotion 218Nonpersonal Promotion 218AIDA: The Basic Promotional Strategy 224Pull and Push Strategies 228The Marketing Concept and Promotion 229Integrated Marketing

Communications 229

16 The Sales Process 234What Is Personal Selling? 235Where Do Salespeople Work? 235What Do Salespeople Do? 239The Sales Process 241Is There a Career for You in Sales? 241

PART 3: Wrap-up 246

PART 4 GOVERNMENT, TRADE, and marketing

17 Role of Government 250Federal Powers 251Market Challenges 252Government Economic Activities 254

18 International Trade and Marketing 261International Trade 262Why Trade? 263Exports and Imports 265Foreign Exchange Rates 266Regulation of International Trade 267

Towards a Global Economy 269Marketing Strategies for International

Markets 270Globalization: Good or Bad? 272Profile: Swiss Water Decaffeinated Coffee

Company Inc. 274

PART 4: Wrap-up 278

PART 5 ISSUES AND TRENDS IN MARKETING

19 Social Responsibility in Marketing 282What Is Social Responsibility? 283Be Legal 284Be Ethical 287Be Philanthropic 290Benefits of Social Responsibility 290

20 Trends in Global Marketing 294Technology 295Immigration 296Multinational Corporations 296Important International Markets 299Challenges in Global Marketing 301Profile: soleRebels Footwear 303

PART 5: Wrap-up 306

Glossary 308 Index 316


54

54

5 Targeting a Market

Learning Goalsn definebusinessopportunityn explainthecomponentsofa

marketingstrategyn describethefourqualitiesofa

targetmarketn identifythefourstrategiesinthe

marketingmixn definemassmarketingandtarget

marketingandstatetheadvantagesanddisadvantagesofeach

n explainhowsegmentationhelpstodeterminewhichmarkettotarget

n explaineachofthefoursegmentationcategoriesandlistthevariablesforeach

n describehowmarketerscreateanduseamarketsegmentprofile

Why do you think marketers are interested in teens as a market?

Marketing Termsbusiness opportunitymass marketingtarget marketingmarket segmentationsegmentation variablegeographic segmentationcensusdemographic informationdemographic segmentationgenerationdisposable incomediscretionary incomepsychographic segmentationbehavioural segmentation80/20 rulemarket segment or consumer profile

ThediversityoftheCanadianmarketprovidesmanybusinessopportunities.Anopportunityisachanceforsuccess.Whatisabusinessopportunity?Abusinessopportunityoccurswhenyouseeaneedthatyourcompanycanfulfill.Abusiness opportunityisthechanceforsuccessprovidedbythecombinationofaproductideaandamarketthatiswillingandabletobuytheproduct.(Rememberthataproductcanbeagood,aservice,oranidea.)

Manygreatbusinessideasstartwithonepersonwhohasaneedorobservesaneed

MarketingDy_2-135_Ch1-9.indd 54 13-02-27 8:09 AM

Chapter 5 Targeting a Market 55

inothers.Forexample,supposeyouareahairdresser.Youobservethattherearemanypeoplewhocannotgetouttogethaircuts,suchasolderadults.Youdevelopabusinessthatgoestopeople’shomestocuttheirhair.Manyproductideascomefrompersonalhobbiesorinterests,5-1.Forexample,acollegestudentenjoyedwatchingJapaneseanimations.HedevelopedabusinesssellingJapaneseanimationvideos,andtoys.

Marketing StrategyOnceyoufindabusinessopportunity,

youneedtodevelopawaytoturntheopportunityintoasuccessfulbusiness.Oneofthefirststepsistodevelopabusinessplanandamarketingplan.

Animportantpartofthemarketingplanisthemarketingstrategy.Astrategyisaplandevelopedtoreachagoal.Forbusinessesthatfollowthemarketingconcept,theoverallgoalistomakeaprofitbysatisfyingcustomers’wants.Inordertoreachthatgoal,

marketersdevelopamarketingstrategy.AsyoulearnedinChapter1,amarketingstrategyconsistsofthetargetmarketandallthedecisionsinthemarketingmix.

TargetMarket+MarketingMix=Marketing Strategy

Marketersdevelopamarketingstrategybyselectingatargetmarketanddevelopingthemarketingmixwiththetargetmarketinmind.Supposeyouwanttopursueyourideaofprovidinghaircareservicestopeoplewhohavelimitedmobility.Yourtargetmarketwouldbeseniorcitizensandpeoplewithphysicalchallenges.Yourmarketingmixwouldbeasfollows:product—haircareservicessuchaswash,cut,colour,andstyle;price—competitivewithlocalsalonsplusaservicefee;place—customers’homesinyourregion;promotion—directmailandadsinlocalnewspaper.

Target MarketWhenyoudevelopamarketingstrategy,

youmustfirstchooseyourtargetmarket.Atargetmarketisthespecificgroupofcustomerswhosewantsandneedsyouwilltrytomeetwithaspecificmarketingmix.Atargetmarketshouldhavethefollowingfourqualities:n clearlydefinedwantsandneedsthat

yourcompanycanmeetn moneytobuyyourproductn willingnessandauthoritytobuyyour

productn enoughcustomersinthemarkettobe

profitableChoosingatargetmarketisoneofthe

mostimportantdecisionsamarketermakes,5-2.Ifthetargetmarketdoesnotwantorneedyourproduct,yourproductwillnotbesuccessful.Youmightalsomisstheopportunitytobesuccessfulwithadifferenttargetmarket.Ifthetargetmarketdoesnothavethemoneytobuyyourproduct,your

5-1

Some people develop a business based on a need they observe or a need they have themselves. Many people develop business ideas based on their hobbies or interests.


Part 2 Reaching Your Market56

productwillnotbesuccessful.Ifyourtargetmarketistoosmall,youwillnotsellenoughproductstomakeaprofit.

Think of your favourite store. Who do you think the target market is for this store? Describe the typical customer.

3 Connect...

Marketing MixThemarketingmixconsistsofthe

decisionsmadeaboutproduct,place,price,andpromotionforoneproduct.Onceyouhavedecidedonyourtargetmarket,youwillmakeyourmarketingmixdecisionswiththattargetmarketinmind.Whenyouplanyourmarketingmix,youwillthink,“Howwillmytargetmarketrespondtothis?”Whathappensifyoudonothaveatargetmarket?Imaginethatthemarketerisaquarterback.Imaginethequarterbacktryingtothrowapass,butheisblindfolded!Thatishowamarketerwithoutatargetmarketis.

Marketingmixdecisionsareoftencalledmarketingmixstrategies.Inotherwords,foreachPintheFourPs,thereisastrategy.Thesestrategieswillbeexploredinmoredetailinotherpartsofthistext.Hereisanoverviewofmarketingmixstrategies:n Product Strategies.Thesestrategies

includeallthedecisionsmadeaboutwhatproducttooffer.Keepinmindthatthetermproductincludesgoods,services,andideas.Productstrategiesincludedecisionsaboutquality,quantity,size,colour,features,technicalsupport,packaging,warranties,brandname,andimage.

n Price Strategies.Thesestrategiesincludeallthedecisionsmadeaboutpricingaproduct.Pricestrategiesincludedecisionsmadeaboutprofit,discounts,andthesellingprices.Pricingcanalsohaveanimpactontheimageofaproduct.

n Place Strategies.Thesestrategiesincludeallthedecisionsmadeaboutwheretheproductwillbesold.Itincludesdecisionsabouthowtotransporttheproduct,warehousing,inventorycontrol,andorderprocessing,5-3.

n Promotion Strategies.Thesestrategiesincludeallthedecisionsmadeabouthowtotellcustomersaboutthecompanyandtheproduct.Itincludesdecisionsaboutadvertising,suchasthetypeofadsandwheretoplacethem.Italsoincludesdecisionsaboutpersonalselling,customerservice,publicity,promotionalevents,anddesignandlayoutofstores.Usually,marketingmixdecisionsare

interrelated,5-4.Inotherwords,adecisionmadeforoneofthePswillaffectthedecisionsmadefortheotherPs.Asaresult,decisionsfortwoormoreofthePsmaybemadeatthesametime.Forexample,ifthetargetmarketwantslowprices,thenumberofproductfeaturesmayhavetobereduced

5-2

Identifying the target market is a key decision. A marketer without a target market is working in the dark.



sothatthecompanycanselltheproductatalowerprice.Productdecisions,suchasbrandnameandpackaging,areoftenchosenbecausetheywillworkwellinpromotions.

Mass MarketingAmassmarketconsistsofallthe

customersforaspecifictypeofproduct.Forexample,everyonewhowantsacarandisableandwillingtobuyacarispartofthemassmarketforcars.Mass marketingisthedevelopmentofonlyonemarketingmixforaspecificproduct.Massmarketingassumesthateveryonehasexactlythesamewantsandneedsfortheproduct.Thistypeofmarketingpresentstwoproblems.Oneproblemisrelatedtothenatureofconsumermarkets.Theotherisrelatedtoprofitability.

Name a product for which there is a mass market.

3 Connect...

Nature of Consumer MarketsThenatureofconsumermarketsisthat

theyarediverse.Thatis,mostconsumermarketsconsistofmanygroupsofconsumerswithmanydifferentneeds.Massmarketinglooksatthemarketasamass.Itassumesthatallcustomershavethesameneedsandwantsfortheproduct.Inreality,thereareveryfewconsumermassmarketsinwhicheveryonehasthesameneedsandwantsforaspecificproduct.

Thinkofthecurrentmarketforcars.Canyouimagineacarmanufacturermakingonecarthatwouldmeettheneedsofeveryoneinthemassmarketforcars?Thinkofthedifferentneedscustomershaveforautomobiles,5-5.Herearesomeexamples.Onegroupofcarcustomerswantsanexpensiveluxurycar.Anothergroupwantsaminivantoholdateamofkidsandalltheirsoccergear.Anothergroupwantsthecheapestcarpossible.Anothergroupwants

5-3

Place strategies include the decisions about how to transport products from factory to warehouse or warehouse to retail store. 5-4

Marketing mix decisions are interrelated. A decision about one P affects decisions for the other Ps.



a pick-uptruck.Inmostconsumermarkets,themassmarketismadeofcustomerswithdifferentneedsfortheproduct.

Name a product for which different groups of consumers have different needs.

3 Connect...

ProfitabilityEverybusinesswantstomakeaprofit.

Massmarketingisoftenveryinefficientandexpensive.Forexample,advertisingtoamassmarketthroughtelevision

commercialsisveryexpensive.Asaresult,massmarketingmaynotresultinprofits.Inaddition,everybusinesshaslimitedresources.Eachbusinesshastodecidewhereitwillspenditslimitedresources.

Hereisahypotheticalexampleforthepurposeofillustratingthepoint.Supposeyoudecidetostartahouse-cleaningbusiness.Youalsodecideonamassmarketapproach.Youroneproductwillbefourhoursofcleaning.Thepricewillbe$100.YouwilladvertiseonTV.TVadvertisingisveryexpensive.Ifyouadvertiseonallshowsandatalltimes,yourcostofadvertisingwillbeveryhigh.Youwillbespendingmoneytoreachmanypeoplewhoarenotpotentialcustomers.Youwillspendmoreonadvertisingthanyouwouldeverearnfromyourbusiness.

Target MarketingAsaresultofthesetwoproblems,

marketersdevelopedanapproachcalledtargetmarketing.Inthetargetmarketingapproach,marketersanalyzethemassmarket.Theythensegment(divideup)themarketbasedonthedifferentneedsandwantsofthecustomersinthatmarket.Thecompanywillthenchooseoneofthosesegments.Itwilldevelopamarketingmix—product,place,price,andpromotion—tomeettheuniquewantsandneedsofthatmarketsegment.Thedevelopmentofauniquemarketingmixforatargetmarketiscalledtarget marketing.Somecompanieswillchoosetwoormoresegmentstotarget,butwilldevelopauniquemarketingmixforeachsegment.

Whatmakesamarketingmixunique?OneormoreoftheFourPsarechangedtomeetthetargetmarket’suniqueneedsandwants.Theproductcanbechangedbyaddingdifferentfeatures.Thepricecanbechangedtomatchthenewleveloffeatures.Theplacewhereaproductisofferedcanbechanged;forexample,anInternetwebsitecanbeaddedasawayforcustomerstoobtaintheproduct.Lastbutnotleast,the

5-5

Could one style of car meet the needs of everyone in the market for a car?



promotioncanbechangedtoappealtothetargetmarket’suniquewantsandneeds.

Themodernautomobileindustrysegmentsandtargetsspecificmarkets,5-6.Forexample,GeneralMotorshasdevelopedmanybrandsandmodelsofcarstomeettheneedsofvariousmarketsegments.Hereareafewexamples.TheChevroletSonicisasmalleconomycarwithalowprice.Itistargetedtofirst-timecarbuyersandpeoplewhodoa lotofcitydriving.TheCadillacXTSisalarger,high-performanceluxurysedanwith

ahighprice.Itstargetmarketiswealthyadultswhowantaluxurycarthatisalsoastatussymbol.TheGMCSierra1500isapick-uptruckofmoderateprice.Itistargetedatpeoplewhowantatruckwithsomeextrafeaturesandperformance.

Howwouldtargetmarketingworkforyourhouse-cleaningbusiness?First,youwouldanalyzethemarketforcleaningservices.Whatsegmentsarethere?Whataretheirneeds?Whichsegmentofthemarketwouldyouliketofocuson?Herearesome

Mass Marketing and Target Marketing

Mass Marketing

All CustomersAll are considered to havethe same wants and needsfor a car.

Segmented Market Target Marketing

Segmented CustomersThe customers are organizedinto three market segmentsbased on wants for a specifictype of car:

wants an economy car.

wants a luxury car.

wants a pick-up truck.

Target MarketOne segment of the marketwas chosen. This targetmarket consists of customerswho want luxury cars.These customers havesimilar wants in a car.

Legend: = People who want economy cars

= People who want luxury cars

= People who want pick-up trucks

5-6

The automobile industry segments the market and then targets specific segments with specific types of cars. This diagram shows a simplified version of the thought process for segmenting a market.



segments:seniorcitizenswhowantregularheavycleaningbutnolightcleaningatthelowestprice;busyadultswhowantthoroughbutreasonablypricedregularcleaning;andluxuryhomeownerswhowanttheirlargehomesthoroughlycleanedonaregularbasisandarewillingtopayhigherprices.

Youdecideonthebusyadultssegment.Youthenresearchthismarkettofindoutwhattheyneedandarewillingtopayfor,sothatyoucancustomizetheFourPstomeettheirneeds.Youfindthatmostwantfour-hourweeklycleaning.Youalsofindoutthattheyarewillingtopaybetween$60and$100,dependingonthesizeofthehome.Soyousetupapricescaledependingonthetotalareaofthehome.YoualsofindoutthatthesebusyadultslistentothelocalradiostationontheirwaytoworkandreadtheThursdaynewspaperfortheads.SoyoudecidetochangeyourpromotiontoamorningradioadplusanadintheThursdaylocalpaper,whichappearsinprintandonline.

Name another industry that segments and targets markets. Give an example of two products and their different features and target markets.

3 Connect...

Choosing Your Target Market

Therearefourgeneralapproachestochoosingatargetmarket:(1)decideonthetargetmarketfirstandthendevelopaproduct,(2)developagreatproductideaandthenlookforatargetmarketthatwouldlikeit,(3)developtheproductideaandtargetmarkettogether,and(4)takeacurrentproductwhosesalesarefallingandthenlookforanewtargetmarketfortheproduct.Hereareseveralexamples.

n Target Market First.Averypopulartargetmarketisyoungpeople!Itisalargemarketwithmoneytospend.InCanada,therearemorethan4.5millionyoungpeoplebetweentheagesof15and24,manywithpart-timeorfull-timejobs.Manycompaniesdecidefirstthattheywanttomarkettothisgroupofyoungpeople.Theythendevelopnewproductsormodifyoldonestomeetyoungpeople’swantsandneeds,5-7.

n Product Idea First.Inthe1940s,anengineerresearchingasyntheticsubstituteforrubbermixedabunchofchemicalstogether.Theresultwasasortofliquid,sortofsolidgoothatbouncedwhendropped.Everyonethoughtthestuffwascool,butnoonecouldthinkofanindustrialorpracticaluseforit.Amarketer,PaulHodgson,sawtheinventionanddecidedithadgreatpotentialasatoy.Henamedit“SillyPutty”andpackageditinaplasticegg.SillyPuttybecameoneofthemostpopularNorthAmericantoyswithhundredsofmillionsinsalessince1950.Thetargetmarketforthattoyischildren.

5-7

Many companies target the youth market, especially teens and people in their early to mid-twenties.



segment.Aftergainingsuccesswithonemarketsegment,thebusinesscanthenexpandtoanothersegment.

Targetmarketingalsoenablessmallbusinessestocompetewithlargercompanies.Thesmallbusinesslooksforasegmentofthemarketwhoseneedsarenotbeingmet.Often,asmallsegmentofamarketcanbeveryprofitable,especiallyifyouhavealmostthatentiremarketsegment.Thissmallmarketiscalledamarketniche.

Kaepa,Inc.,forexample,isasneakermanufacturer.Inthe1980s,largercompaniessuchasNikeandReeboktookmostofitssalesaway.Kaepa’ssalesofsneakersfellandthecompanywaslosingmoney.Then,Kaepadecidedtofocusontheshoeneedsofcheerleaders.Kaepadevelopedshoesthatmeetthespecificneedsofcheerleaders.Forexample,theirshoeshavegroovesinthesolesforthecheerleaders’fingerswhentheymakehumanpyramids.Kaepaalsomakescustomshoeswithteamcoloursandlogos.Kaepa,Inc.,becameverysuccessfulbytargetingasmallsegmentoftheathleticshoemarket,andthenmeetingthatsegment’sspecificneeds,5-8.

Therearetwopotentialproblemswithtargetmarketing.First,youmaychooseamarketthatistoosmall.Asaresult,therearenotenoughcustomerstomakeyourbusinessprofitable.Thesecondproblemwithtargetmarketingisthatyoumaychoosethewrongtargetmarket.Inthiscase,youalsowillnotmakeaprofit.Youmayalsomisstheopportunitytomakeaprofitfromadifferenttargetmarketthatwouldbelargerandmoreprofitable.Thesetwoproblemscanbeavoidedbyappropriatemarketsegmentationandmarketingresearch.

Theotherpotentialproblemwithtargetmarketingoccurswhenallofthecompany’sbusinessdependsononemarketsegment.Supposethatmarketsegmentsuffersfinanciallosses.Thatsegmentwillreduceorstopbuyingproductsfromthecompany.Thecompanywillthenalsohavefinanciallosses.

n Product and Target Market Together.Productsareoftendevelopedwiththeneedsofaparticularmarketinmind.Forexample,thecosmeticscompanyM·A·CwasstartedinCanadawhenafashionphotographerandamake-upartistrealizedthatstagemake-upoftenfailedunderthebrightlightsofthestudio.TheM·A·Ccosmeticlineoriginallytargetedprofessionalmake-upartists.Onlylaterdiditbecomeafavouritewithconsumers.

n Old Product, New Target Market.Volkswagenautomobileshavebeenaroundforalongtime.However,in1997VolkswageninNorthAmericawantedtotargetamarketcalled“GenerationX,”thatis,peoplebornbetween1966and1976. VolkswagenmodifiedtheirGolfmodelbyaddingacustomroofrackandK2brandskisorsnowboard,andnamedtheneweditionGolfK2.TheyalsodesignedapromotioncampaignthatwouldappealtotheadventurousnessofmanyGenerationXers.

Advantages and Disadvantages of Targeting a Market

Forabusinesstobesuccessful,itdoesnothavetoselltoeverycustomerinthemassmarket.Businesseshavediscoveredthatwhentheytrytomeettheneedsofa massmarketwithasinglemarketingstrategy,theymaysatisfyveryfewcustomers.Suchbusinessesmaynotmakeaprofit.Manybusinesseshavediscoveredthatfocusingonaparticularmarketsegmentleadstomoresuccessandmoreprofits.Byfocusingononesegmentofthemarket,thebusinesscandevelopamarketingmixthatsatisfiestheneedsofmostofthecustomersinthatmarket



Segmenting a MarketAsyouhavediscovered,marketershave

developedwaystoanalyzealargemassmarketandbreakitupintosegments,5-9.Thisprocessofdividingalargemarketintosmallerpartsiscalledmarket segmentation.Eachmarketsegmentismadeofcustomerswithsimilarwantsandneedsforaspecificproduct.Marketersoftensegmentthemarket,studythesegments,thenchooseone(ormore)ofthesegmentsastheirtargetmarket.

Intheconsumermarket,marketersusecharacteristicsofcustomerstosegmentthemarket.Forexample,amarketermightsegmentamarketbasedontheageof

thecustomers.Acustomercharacteristicthatisusedtosegmentamarketiscalledasegmentation variable.Ageisasegmentationvariable.Someothersegmentationvariablesareincomelevel(howmuchmoneythecustomermakes)andgender(whetherthecustomerismaleorfemale).Theassumptionisthatbasedonthesevariables,thecustomersinthesegmenthavesimilarwantsandneedsforproducts.

Thereareover25differentvariablesthatmarketerscommonlyusetosegmenttheconsumermarket.Marketershaveorganizedthesevariablesintofourcategories:(1)geographic,(2)demographic,(3)psychographic,and(4)behavioural.Businessmarketersalsosegmenttheirmarkets.

5-8

Small companies can compete by finding a niche market, that is, a small segment of the larger market whose needs are not being served. Kaepa, an athletic shoe manufacturer, focuses on shoes for cheerleaders and is very successful in this market niche.



5-9

Think about the people you see in the mall. How do their wants and needs differ? Marketers have developed ways to analyze a large mass market and break it up into segments.

Imagine that $100 are available to spend. How might a teenaged male spend the money? A teenaged female? A 30-year-old parent with two children? A wealthy 40-year-old? A retired person on a very small fixed income?

3 Connect...

Geographic VariablesSegmentingamarketbasedonwhere

customersliveiscalledgeographic segmentation.Commonlyusedgeographicvariablesincludelocation,climate,andcommunitysize.

LocationCustomers’needsforproductsoftenvary

basedonwheretheylive.Customerswho

liveinthesamecountryoftenneeddifferentproductsfromthosewholiveinadifferentcountry.Forexample,Canadiancars—asopposedtoAmericancars—mustusethemetricsystemtoshowdistancetravelledandgasconsumed.Soacompanythatproducescarsfortheworldmarketwouldsegmentthemarketbycountriesthatusethemetricsystemandthosethatdonot.

ClimateClimatehasahugeimpactonwhat

customersneed.Customerswholiveinclimateswhereitnevergetscolderthan15°Cdonotneedwarmcoats.Customerswholivewheretheaveragewintertemperatureis–6˚Cneedwarmcoats.Therefore,acoatmanufacturermightsegmentthemarketbasedonaveragewintertemperatures,5-10.



Community SizeManymarketershavediscoveredthat

marketsizevarieswiththesizeofthecommunity.Somecommunitiesaretoosmalltobeprofitableforcertainbusinesses.Forexample,onerestaurantchainwilllocaterestaurantsonlyincitiesof200000ormorepeople.Smallercitiesdonotprovideenoughcustomersforthisparticularbusiness.Otherbusinessesprefertofocusontheneedsofa smallcityortown.Walmartistheclassicexample.WhenWalmartstarted,itlocateditsstoresinsmalltowns.

Choose a geographic variable. Think of a product that can be segmented based on that variable. Name the product and the geographic variable. Then describe the market segment.

3 Connect...

Demographic Variables

Mostcountrieswanttoknowbasicinformationabouttheircitizens,suchashowmanypeopleareineachagegroup.Asaresult,mostcountriescountthenumberofpeopleintheircountries.Acensusisacountofthepeopleinacountrymadebythegovernmentonaregularbasis.StatisticsCanadaconductsacensuseveryfiveyears.

Acensuscollectsdemographicinformation.Demographic informationconsistsofstatistics(numbers)thatdescribethecharacteristicsofapopulation,forexample,theageofpeople.Itwillthencompileagraphthatshowshowmanypeopleinthecountryareineachagegroup.

Thecategoriesthatthisinformationisdividedintoarecalleddemographic variables.Segmentingamarketbasedondemographicvariablesiscalleddemographic segmentation.Demographicvariablescommonlyusedbymarketersincludeage,gender,ethnicity,income,andfamilysize.

AgeAgeisacommonlyusedsegmentation

variablebecausepeopleatdifferentageshavedifferentneedsandwants.Forexample,babiesrequirespecialfood,soanumberofcompaniesspecializeinproducingbabyfood.Clothingisanotherareawhereageaffectswantsandneeds.

Animportantvariablerelatedtoageisgeneration.Agenerationisagroupofpeoplebornduringaparticularperiodofhistory.Theperiodofhistorythatagroupofpeoplegrewupinhasamajoreffectontheirattitudes,wants,andneeds.Forexample,peoplebornbetween1977and1994areknownasthe“Millennials.”Millennialswerethefirstgenerationtogrowupwithacomputerintheirhomeandusesocialnetworking.BothGenerationY(1977–1994)andGenerationZ(1995–present)areMillennials.

5-10

Marketers of certain products, such as coats, segment the market based on climate.



AboriginalpeoplesrepresentagrowingmarketinCanada.AccordingtoStatisticsCanada,thepopulationofFirstNations,Métis,andInuitpeopleincreasedby47percentbetween1996and2006—aboutsixtimestherateofincreasefortherestofthepopulation.

Withrespecttoage,48percentofAboriginalpeoplesare25yearsofageorunder,comparedto31percentinthegeneralpopulation.Aboriginalyouthhavebecomeanimportanttargetmarketforbusinessesseekingtomarketproductsorrecruitthisgroupaspartnersoremployees,5-11.

Name a product whose market is segmented by age. Describe the different market segments and describe how the product differs for each age segment.

3 Connect...

GenderMenandwomendifferintheirwants

andneedsformanyproducts.Marketersusethesedifferencestodevelopproductsthatmeetthespecificneedsofmenorthespecific

needsofwomen.Forexample,theLadyFootLockerstoresproviderunningshoesandotherathleticequipmentthatmeetthespecificneedsofwomen.

EthnicityCanadaiscomposedofpeoplefroma

varietyofethnicbackgrounds.Theneedforjeansdoesnotvarybasedonaperson’sethnicbackground.However,needsforotherproductsmayvarywithethnicheritage.Forexample,peoplemaywantcertainproductsbecausetheycooktraditionaldisheswiththem.Orpeoplemayenjoythecuisineofanotherethnicgroup.Manymarketershavefoundsuccessbysegmentingthemarketbasedonethnicity.Theythendevelopproductstomeettheneedsofaspecificethnicgroupandthewantsofpeopleinterestedinthatethnicgroup.

IncomeIncomelevelhasamajorinfluence

onwhatpeoplebuy,somarketersoftensegmentthemarketbasedonincomelevel.Peoplewithsimilarincomelevelsoftenbuysimilartypesofproducts.Peopleinthe

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5-11

This Syncrude Canada recruitment poster targets Aboriginal youth. Aboriginal youth represent a growing target market for products and employers in Canada.



lowerincomegroupstendtospendalargerpercentageoftheirincomesonnecessities,suchasfood,clothing,andshelter.Peoplewithhigherincomestendtospendrelativelymoreonrecreation,education,andluxuries.

Therearetwocategoriesofincomethatmarketersareinterestedin:disposableanddiscretionary.Disposable incomeistheincomeapersonhasavailabletospend(disposeof)aftertaxeshavebeentakenout.Usually,thefirstthingsthatdisposableincomeisspentonarethenecessitiesoflife—food,clothing,shelter,andtransportation.Discretionary incomeistheincomeleftaftertaxesandafterthenecessitiesoflifehavebeenpaidfor.Discretionaryincomeisthemoneyapersoncanspendathisorherdiscretion,thatis,howeverheorshewants.Discretionaryincomeisoftenspentonentertainment,vacations,restaurantmeals,andsimilarproducts.

Somemarketersdecidetheywanttofocusonluxuryitems.Inordertobeabletoaffordvariousluxuryitems,onemusthaveafairlyhighincome.Marketingresearchcandeterminewhichareasofthecountryhavethehighestaverageincomes.Themarketersofluxuryitemscanthentargetadvertisingcampaignstothoseareas.

Family Make-upMarketershavediscoveredthata

householdconsistingofonepersonhasquitedifferentneedsandwantsfromahouseholdconsistingofoneortwoparentsandoneormorechildren.Inaddition,ahouseholdheadedbyanLGBT(lesbian,gay,bisexual,ortransgendered)couplemayhavedifferentneedsandwantsthanahouseholdheadedbyaheterosexualcouple.LGBTcoupleshavehigherthanaveragehouseholdincomesandratesofemployment,butonlyabout25percentofLGBTcoupleshavechildren,5-12.Asaresult,marketersoftensegmentthemarketbasedonfamilycomposition,includingsize.Forexample,manyconveniencefoodmanufacturershavedevelopedsingle-servingpackaging

tomeettheneedsofsingle-personortwo-personhouseholds.

Choose a demographic variable. Think of a product that can be segmented based on that variable. Name the product and the demographic variable. Describe each market segment.

3 Connect...

Psychographic Variables

Customershavepsychologicalandemotionalcharacteristicsthataffecttheirneedsandwantsforproducts.Segmentingamarketbasedonpsychologicalcharacteristicsofcustomersiscalledpsychographic segmentation.Aspectsthatareconsideredinpsychographicsegmentationarehobbies,socialactivities,lifestyle,interests,andattitudes.Psychographicinformationabouttargetmarketsisveryusefulwhenplanningpromotion.Ifyoushowthetargetmarketinthead,peopleseethemselvesandcanrelatebettertothepromotionalmessage.

5-12

There are an estimated 17 million LGBT persons in Canada and the United States, a sizeable market.



Hobbies and ActivitiesPeoplewhoparticipateinthesame

activitiesorhavethesamehobbiestendtohavesimilarbuyingpatterns.Examplesofhobbiesincludephotography,buildingmodelplanesorboats,andstampcollecting.Examplesofactivitiesincludealltypesofsports,playingcomputergames,visitingmuseums,andattendingconcerts.

LifestyleLifestyleandvaluesareoftendifficultto

measureanddefine.Inordertogrouppeopleinthisway,somemarketingresearchersadministersurveysthataskparticipantstoagreeordisagreewithavarietyofstatementscalledAIO statements.AIOstandsforactivities,interests,andopinions.Aconsultingcompanywell-knownforitspsychographicresearchanddataisStrategicBusinessInsights(SBI).TheirVALS™systemisbasedonpsychologicalcharacteristicsthatcorrelatewithpurchasebehaviourandfourkeydemographics.HerearesomesamplestatementsfromaVALS™Survey:n Ifollowthelatesttrendsandfashions.n Iwouldrathermakesomethingthan

buyit.n Iconsidermyselfanintellectual.

VALS™dividesadultconsumersintoeightsegments,5-13.Eachsegmenthasdistinctiveconsumerpsychologythatcorrelateswithbuyingbehaviour.ThesesegmentsareorganizedontheVALS™Framework.Thevariablefromtoptobottomislevelofresources:hightolow,andincludeseducation,income,andwillingnesstotakearisk.Thevariablefromlefttorightisprimarymotivation:ideals,achievement,andself-expression.Forexample,onegroupiscalledAchievers.Thisgroupisconcernedaboutstatusandaccomplishment,tendstobuyprestigeproducts,andwatchesanaverageamountofTVandothermedia.AnothergroupiscalledSurvivors.Thisgroupisconcernedaboutsafety,has

relativelylittleincome,tendstobeloyaltobrands,andwatchesamore-than-averageamountofTVandothermedia.Marketerswouldusetheinformationaboutthesegroupstochooseatargetmarket.Theywouldthencustomizethemarketingmixtomeettheuniqueneedsofthemarkettheytargeted.AproductfortheAchieverswouldhaveadifferentmarketingmixfromaproductforSurvivors.

Choose a psychographic variable. Think of a product that can be segmented based on that variable. Name the product and the psychographic variable. Describe each market segment.

3 Connect...

Behavioural VariablesCustomersdifferinthewaytheyuse

products.Segmentingamarketbasedonthewaycustomersuseaproductorbehavetowardaproductiscalledbehavioural segmentation.Commonbehaviouralvariablesincludefeaturesdesired,usagerate,andbrandloyalty.

Features DesiredCustomersvaryinthefeaturesthey

wantfromaproduct.Forexample,themassmarketforhomepersonalcomputersishuge.However,onetypeofcomputerwillnotmeettheneedsofallcomputerusers.Somecomputeruserswantabasiccomputerforwordprocessingande-mailonly.OthercomputeruserswantacomputerwithafewmorefeaturessothattheycanplaygamesandsurftheNet.Othercomputeruserswantadvancedfeaturessothattheycaneditvideoandhavethree-dimensionalgraphics.Asaresult,homecomputermanufacturersoftensegmenttheirmarketbasedonthefeaturesthatthecustomerwants,5-14.



Usage RateAsamazingasitmightseem,research

showsthatformanybusinesses,80percentofthesalescomefrom20percentofthecustomers.Thisobservationiscalledthe80/20 rule:themajorityofabusiness’sprofits

comefromasmallnumberofcustomers.Forthisreason,marketersoftensegmentthemarketbasedonhowoftenthecustomerusesorbuystheproduct(usage rate).Usageratecategoriesincludeheavy,moderate,light,andnonuser.

VALS™ Consumer Segments

INNOVATORS

ACHIEVERS

STRIVERS MAKERSBELIEVERS

EXPERIENCERSTHINKERS

SURVIVORS

High ResourcesHigh Innovation

Low ResourcesLow Innovation

VALS™ Framework

Primary MotivationIdeals Achievement Self-Expression

5-13

VALS™ divides adults into eight segments.



Brand LoyaltyCustomersvaryinhowloyaltheyareto

aparticularbrand.Thevalueofbrandloyaltyisrelatedtothe80/20rule.Loyalcustomersoftenarethesourceofmostofacompany’ssales.Asaresult,marketersoftensegmentthemarketbasedondegreeofloyalty.Forexample,airlineshavedevelopedfrequentflyerprogramstorewardairlinecustomerswhousetheairlinefrequently.Thefrequentflyerprogramsalsoencouragecustomerstouseoneairlineforalltheirtravelneeds.

Choose a behavioural variable. Think of a product that can be segmented based on that variable. Name the product and the behavioural variable. Describe each market segment.

3 Connect...

Combining VariablesOften,marketersfinditusefultotargeta

marketbasedontwoormoresegmentationvariables.Acommoncombinationisgeographiclocationwithademographicvariable,suchasincome.Marketersofluxuryproductscangetthepostalcodesofpeoplewiththehighestincomelevels.

Figure5-15providesanoverviewofthesegmentationcategoriesandvariables.Therearemanyothervariablesthatdonotappearinthisfigure.

Think of a product that has a large market. Think of two or more segmentation variables for that market. Name the product. Then list the segmentation variables and the market segments based on them.

3 Connect...

Market Segment ProfileOncemarketershavedividedamarket

intosegments,theymustchoosethesegmentorsegmentstotarget.Tohelpthemmakethisdecision,theyoftendevelopamarketsegmentprofileforeachsegment.Amarket segment profile,(sometimescalledaconsumer profile),isadetaileddescriptionofthetypicalconsumerinamarketsegment.Thisprofilewillincludegeographiclocation,demographics,psychographics,andbehaviourrelevanttotheproduct.

5-14

Computer manufacturers may segment the market based on the features that customers want. Some customers want a basic computer. Others want advanced features.



Thesegmentprofilescanthenbeusedwhenthesegmentsarechosen.Inordertoplanamarketingmixthatmeetsthetargetmarket’sneeds,themarketerneedstoknow

asmuchaspossibleaboutthecustomersinthemarket.Themarketershouldbeableto“see”thetypicalcustomerinhisorhermind.

Some Variables Used To Segment the Consumer Market

5-15

These are some of the segmentation variables that marketers use to segment a market.

Examples• Domestic/foreign• Local/regional/national

• Warm/cold• Humid/dry

• Under 200 000 population• Over 200 000 population

• Senior/adult/teen/child/infant

• Baby Boomer/Generation X/Generation Y/Generation Z

• Male/female

• First Nations, Métis, Inuit, European, British Isles, African, Arab, Asian• Indo-Canadian, Chinese, Filipino, Vietnamese, Korean• Jamaican, Haitian, West Indian, Guyanese

• Under $100 000 annual• Over $100 000 annual

• One person/two people/three or more people• Children/no children• Same sex, heterosexual

• Photography/model-making/stamp collecting

• Basketball/bicycling/skiing/swimming

• Innovator/thinker/believer/achiever/striver/experiencer/maker/survivor

• Basic features/one or two special features/advanced features

• Heavy/moderate/light/nonuser

• Totally loyal/mostly loyal/not loyal

VariableLocation

Climate

Community Size

Age

Generation

Gender

Ethnicity

Household Income

Family Size & Composition

Hobbies

Sports

VALS™

Features Desired

Usage Rate

Brand Loyalty

CategoryGeographic

Demographic

Psychographic

Behavioural


71

Chapter 5 Review

Key Learnings

n Abusinessopportunityoccurswhenyouseeaneedthatyourcompanycanfulfill.

n Marketingstrategyistargetmarketplusmarketingmix.

n Afterchoosingatargetmarket,allmarketingdecisionsaremadewiththetargetmarketinmind.

n Inmassmarketing,onemarketingmixmaynotmeettheneedsofmanycustomers.Asaresult,thebusinessmaynotmakeaprofit.

n Targetmarketinghelpscompaniesmeettheneedsofthetargetmarket;however,problemsmayoccurifyouchoosethewrongtargetmarketorbecometoodependent onit.

n Marketsegmentationisaprocessthathelpsmarketersfindanappropriatetargetmarket.

n Consumermarketsareoftensegmentedbasedonthefollowingfourcategoriesofvariables:(1)geographic,(2)demographic,(3)psychographic,and(4)behavioural.

n Marketersoftenusemorethanonesegmentationvariabletosegmentamarket.

Knowledge & Understanding

1. Whyisthetargetmarketpartofamarketingstrategy?

2. Listthefourqualitiesthatatargetmarketshouldhave.

3. Whyisthemarketingmixpartofamarketingstrategy?

4. Whatisthedifferencebetweenmassmarketingandtargetmarketing?

5. Whatistherelationshipbetweensegmentingamarketandtargetmarketing?

6. Listthefourgeneralapproachestochoosingatargetmarket.

7. Explaintwopotentialproblemswithtargetmarketing.

8. Whatdoyoucalltheprocessofdividingalargemarketintosmallerparts?

9. Whatdoyoucallacustomercharacteristicusedtosegmentthemarket?

10. Listthreegeographicvariables.11. Listfivedemographicvariables.12. Whydomarketersusegenerationto

segmentamarket?13. Whymightamarketersegmentthe

marketbasedonfamilysize?Giveanexample.

14. Listfivepsychographicvariables.15. Whymightamarketersegmentthe

marketbasedonhobbies?Giveanexample.

16. Listthreebehaviouralvariables.17. Howmightamarketersegmentamarket

basedonfeaturesdesired?

Thinking

1. Wherecanyoufindbusinessopportuni-ties?Givereasonsforyouranswer.

2. Whyischoosingatargetmarketoneofthemostimportantmarketingdecisions?

3. Marketingmixdecisionsareinterrelated.Explainwhatthismeans.


72

Chapter 5 Review

4. Howdoestargetmarketingenableasmallbusinesstocompetewithlargerbusinesses?

5. Whydomarketerssegmentamarket?6. Namethreeproductsforwhich

geographicsegmentationwouldhelpdeterminetheappropriatetargetmarket.

7. “MarketersarestillinterestedinmarketingtoBabyBoomers—thepeoplebornbetween1946and1964.”Assesshowvalidthisstatementis.Givereasonsforyouranswer.

8. Namesixproductsthatarenotgender-specific.

9. Howmightamarketeruseincomeinformationtosegmentamarket?

10. Doyouthinkthatdeterminingatargetmarketcaneverleadtostereotypingorexcluding?Forexample,ifmarketersconcludethatable-bodiedpeopleplaysports,couldtheybeexcludingathleteswithphysicalchallengesaspartofthetargetmarket?

Application

1. Thinkofyourownpart-timejoborabusinesswithwhichyouarefamiliar.Whatisthebusiness’sproduct?Describeitstargetmarket.

2. Visitagrocerystore.Studytheshelveswherethecerealisdisplayed.Howisthecerealmarketsegmented?Writeadescriptionofatleastthreesegmentsinthecerealmarket.Describeeachmarketsegmentandthetypeofcerealthatsegmentprefers.Usethesegmentationvariablesinyourdescription.

3. Findanadinanewspaperormagazine.Basedonthead,describe

themarketsegmentthatthisadtargets.Usethesegmentationvariablesinyourdescription.

4. OldYorkFootwearhasbeensellingmen’spennyloafersforyears.Theseshoes,availableinblack,brown,andburgundy,arecomingbackinpopularityandotherstoresarebeginningtocarrythem.Lately,however,OldYork’smarketershavenoticedthatsalesaredown.Whichofthefourapproachestotargetingamarketdidthecompanyuse?Whatshouldthecompanydonow?Supportyouranswer.

5. Createabriefprofileofamarketsegmentthatwouldincludeyou.Coveratleastoneofeachofthefoursegmentationvariablesinyourprofile.

Communication

1. VisitthewebsiteofthecompanythatdevelopedtheVALS™Survey(SBI),orgototheMarketing Dynamicsstudentwebsite.Takethesurvey.WhatisyourVALS™type?Doyouseeyourselfthisway?Createa“MyVALS™”summaryofyourselfusingamediumofyourchoice—print,pictorial,audio,orvideo.

2. UsethelibraryorInternettofindthestoryofanentrepreneur.Howdidthispersonfindabusinessopportunity?Howdidheorsheturnitintoasuccessfulbusiness?Whatweretheproduct,thetargetmarket,andthemarketingmix?Whatkindsofproblemsdidthepersonencounter,andhowdidheorsheovercomethem?Createabriefreportorpresentationofyourfindings.


120120

9 Information Technology and Social Media

Learning Goalsn explainthedifferencebetweenadot-com

andabricks-and-mortarbusinessn describehowB2Bbusinessesusethe

Internetn listthecomponentsofsuccessful

e-tailingn describee-marketingandtheroleof

socialmediaine-marketingn explainthechallengestoe-tailingn outlineeightadvantagesandseven

disadvantagesofe-tailing

You have the choice to shop either online or shop in stores for the rest of your life.

You cannot do both. Which would you choose? Why?

Marketing Termse-commercesearch enginedot-combricks-and-mortar businesselectronic data interchange (EDI)information technology (IT)e-tailingsocial mediae-marketingmicrobloggingnonsecure connectionencryptionsecure connection

Imaginethatyouareateenagerlivingintheyear1990.Youwouldnote-mailyourfriends.YouwouldnotbuyanythingovertheInternet.YouwouldnotdoresearchforhomeworkassignmentsontheWorldWideWeb.Whynot?Atthattime,theWorldWideWebdidnotexist,andtheInternetwasnotavailabletothegeneralpublic.


Chapter 9 Information Technology and Social Media 121

TodaytheInternetandtheWorldWideWebareavailabletothegeneralpublicaroundtheworld.AllyouneedisanInternet-enableddevicesuchasacomputerorsmartphone,anInternetconnection,andtheappropriatesoftware.Youcane-mailyourfriends,buyproducts,anddoresearchforyourhomeworkviatheInternetandtheWorldWideWeb.

TheInternetandtheWorldWideWebarealsochanginghowcompaniesdobusiness.E-commerce(shortforelectroniccommerce)isbusinessactivitiesconductedviatheInternet.Businessactivitiesincludebuying,selling,promoting,productresearch,competitionresearch,andcustomerservice,9-1.

How do you use the Internet? How old were you when you first used the Internet?

3 Connect...

E-Commerce BasicsE-commerceispossiblebecauseofthe

InternetandtheWorldWideWeb.TheInternetisacomputer-basedcommunicationsnetwork.ThewordInternetcomesfromthewordsinterconnectednetworks.TheInternetisapowerfulmeansofcommunicationbecauseitconnectsmillionsofcomputersaroundtheworld.Computersfromindividuals,businesses,organizations,andgovernmentsareallconnected.TheInternetwasdevelopedinthe1950sasaresearchandmilitarytool.Nowitisusedbyalltypesofpeopleinallwalksoflife,almosteverywhere.

TheWorldWideWeb(Web)isthenetworkofinformationsourcesthatisavailableovertheInternet.TheWebwasdevelopedin1993.TheWebispartoftheInternet.ThesoftwarefortheWebenablesuserstoseetext,pictures,video,andanimationandhearsound.OnlineistheconditionofbeingconnectedtotheInternetorbeingavailableontheInternet.For

example,onlineshoppingisshoppingthatisdoneovertheWeb,9-2.

InformationontheWebisorganizedintowebpages.AwebpageisthesmallestunitofinformationthatcanbeaccessedontheWeb.Oneormorewebpagesfromthesamesourceandconnectedbyhyperlinksareawebsite.Individuals,companies,organizations,governments,andthemilitarycanhavewebsites.Thefirstpageofawebsiteisthehomepage.

Hyperlinksareusedtoconnectthepagesofawebsitetogether.Hyperlinksmakeiteasytonavigatethroughawebsiteandtomovefromonewebsitetootherwebsites.

AwebsiteisidentifiedandlocatedontheWebbyauniquesetofletters,numbers,andsymbols,calledawebaddress.Theformatforatypicalbusinesswebaddressiswww.companyname.ca.Theletters“www”indicatethattheaddressisontheWeb.(Somewebaddressesfunctionwithoutthe“www.”)The“companyname”isauniquesetofwords,letters,wordsandnumbers,orlettersandnumberschosenbythebusiness.The“.ca”or“.com”indicatesthatthesourceisacommercialbusiness.Ifthesourceisnotabusiness,thereareotherlettersthatappearafterthedotinsteadof“.ca”or“.com.”Figure9-3showsseveraltypesof

9-1

Consumer and business activities that take place over the Internet are called e-commerce.



9-2

This web page is from the Roots online shopping site. There are several links on the page that take you to more information about the items displayed.

webaddresses.Countrycodesarealsoavailable,forexample,UKforUnitedKingdomorJPforJapan.

Ifyoudonothavethespecificwebaddressforacompany,youcanfinditjustlikeyoudoinformationforschoolprojects—byusingasearchengine.Asearch engineissoftwarethatsearchestheWebtofindwebsitesonyourtopic.Youtypeanameorkeywordsintotheinputbox.Thesearch

enginesearchestheWorldWideWeb,andthendisplaysalistofwebaddressesforyoutovisit.

Name the search engine that you use most often. Describe a search that you have performed.

3 Connect...



Marketing on the Internet

TwotypesofbusinessesusetheInternet:dot-comsandbricks-and-mortarbusinesses.Thetermdot-comcomesfromthefactthatthewebaddressesforcommercialbusinessesintheUnitedStates(wheretheInternetwasinvented)endin“.com.”Adot-comisabusinessthatconductsallofitssalesandmostofitspromotiononlineviaawebsite.Adot-comhasnobuildingsthatcustomersphysicallyvisit.Forexample,Amazonisadot-comthatsellsbooks,music,andothergoods.Ithasnobuildingsorstoreswherecustomerscangotoseeandbuythebooksandothergoods.

Abricks-and-mortar businessisabusinessthatservescustomersfromabuildingorstore,9-4.Sometimesabricks-and-mortarbusinessisreferredtoasatraditional business.CanadianTireisabricks-and-mortarbusinessthatsellssportinggoods,householdtools,andothergoods.TherearemanyCanadianTirestoresthatyoucangoto.Manybricks-and-mortarbusinesseshaveaddedwebsitesandnowalsodosomeoftheirsalesandmarketingontheInternet.

What bricks-and-mortar business do you know that also has a website? Which do you do more often—go into the store or buy from the website? Why?

3 Connect...

Business-to-Business on the Internet

Business-to-businesscompanieswerethefirsttousetheInternetextensively.For

Code

.com

.edu

.gc

.org

Some Types of Web Addresses

Type

Commercial organization (business)

Colleges and universities

Government institutions and agencies

Organizations not included above, such as not-for-profit organizations

9-3

The format of an Internet address can give you an idea of what type of organization it is.

9-4

A bricks-and-mortar business has a location where customers can go to buy products.



9-5

The Internet is especially useful for business-to-business (B2B) sales. For example, a sales representative visiting a client can use the Internet and a computer or tablet to check on product availability and place an order.

example,manybusinessesuse electronic data interchange (EDI).EDIisabusiness-to-businessexchangeofinformationviacomputerusingstandardformats.EDImessagesusuallyconsistofinformationthatwouldotherwisehavetobesentaspaperdocuments.EDImessagesincludepurchaseorders,shippingnotices,invoices,creditmemos,andotherdocuments.

Whenbusinessesconnecttheircomputersandloadtheappropriatesoftware,theycancommunicatebyEDI—muchmoreefficientlythanfaxingormailingpaper.SomeinventorymanagementstrategiesalsorelyontheInternet.YouwillreadaboutthesestrategiesinChapter14.Whenbusinessesusecomputertechnologytostoreandtransmitinformation,theyareusingIT,whichstandsforinformation technology.

CompaniesalsousetheInternetandtheWebtoresearchandpurchaseitemsfortheirbusinesses.Websitescontainproductinformation,similartoapapercatalogue.Theadvantageofacatalogueonawebsiteisthatitcanbeupdatedquickly,moreinformationcanbeprovided,andvideosoranimationscanbepresented.Forexample,amanufacturercanfindoutthespecifications,prices,andavailabilityofmaterialsitneedsforproduction.Thatsamemanufacturercanshowitslineoffinishedgoodsonitsownwebsitetointerestedretailers.

CompaniesthathavefieldsalesrepresentativesalsousetheInternet,9-5.Salesrepresentativescanusetheircomputersortabletstocheckavailabilityofproductsbeforepromisingshipment.Orderscanalsobeplacedinstantlyfromanylocation.Thecomputerthencandeductthenewordersfrominventory,sothatthenextsalespersonwillhaveanaccuratecountofproductsavailable.SalesrepresentativesandcustomerservicerepresentativesalsousetheInternettolocateshipmentsandinformcustomerswhentoexpectshipmentarrival.

IThasrevolutionizedtheflowofinformationwithincompaniesandbetweenvendorsandcustomers.Differentdivisions

ofthesamecompanycancommunicateviatheInternet.Data,suchasnewproductdesigns,salesresults,orfinancialnumbers,canbesentinstantly.Confidentialinformationcanonlybeaccessedbypeoplewhoknowthepassword.

Shopping on the Internet

Today,consumerscanbuyalmostanythingovertheInternet.Justenterthenameoftheitemyouwouldliketobuyintoasearchengine.Thesearchenginewillgeneratealistofwebsiteswhereyoucanbuythatitem.

SellingproductstoconsumersovertheInternetiscallede-tailing,fromthewordselectronic retailing.Companiesthatselltoconsumersonlineareoftenreferredtoase-tailers.E-tailingisalsocalledonline retailing.AllaconsumerneedstoshoponlineisanInternet-enableddevice,anInternetconnectionandsoftware,andacreditcard.



Describe an experience you have had purchasing a product over the Internet.

3 Connect...

Successful E-tailingInorderfore-tailingtobesuccessful,

customershavetobeabletoeasilydothethingstheydoinabricks-and-mortarstore.Businessesthatsellproductsonlinewanttoensurethatcustomersareabletolookatandselectproducts,canreceiveproductpromotions,willreturntopurchaseotherproducts,cangethelpiftheyneedit,and

canpayfortheproductsandreturnthemiftheyneedto.

Looking at ProductsThewebsitemustprovideinformation

abouttheproductsforsale.Sincethecustomercannottouchtheproducts,othermeansmustbeused.Manywebsitespresenttheirmerchandiseinaformatsimilartoapapercatalogue.Thereisoftenalistofproducttypesfromwhichtochoose.Onceacategoryischosen,photographsoftheitemsareshown,withwrittendescriptionsandprices,9-6.Often,customerscanclickonthephotographforanenlargedphotoandmoredetailedinformation.

9-6

E-tailing sites give descriptions and prices of items, along with photos that sometimes can be enlarged or that show the item from different angles.



Evaluating ProductsAnother service that many websites

provideisreviewsorevaluationsoftheirproductsbyothercustomers.Forexample,Amazonprovidesreviewsformanyofitsbooks,plusarankingbasedonhowmanyofthattitlewerepurchasedbyAmazoncustomers.Thesereviewswereoneofthefirstexamplesofsocialmediabeingusedtomarketproducts.Social mediaareinteractiveformsofmediathatletuserscommunicatewitheachotheronline.ExamplesincludeFacebookandTwitter;onlinecommunitiessuchasAmazon,Flickr,andRottenTomatoes;andblogs,9-7.Socialmediaaredescribedinmoredetailonthenextpage.

Selecting ProductsThe website must have a way for

customerstoindicatewhichproductstheywanttobuy.Manywebsitesusethemetaphorofashoppingcartorashoppingbag.Thereisnoactualshoppingcartorbagonawebsite;however,avirtualoneisusedtokeeptrackofthecustomer’sselections.Thecustomerclicksonalinkthatsays“Addtoshoppingcart”or“Addtobag.”Thevirtualshoppingcartorbagkeepsa

listoftheitemsthecustomerhasselected.Thecustomercanalsodeleteitemsfromtheshoppingcart.

Promotions and Social MediaToday,customersexpecttobeas

engagedonawebsiteastheywouldbestrollingthroughabricks-and-mortarstore.Asaresult,businessesneedmorestrategiestoretaintheircustomersandpersuadethemtoconsidertheirproducts.Oneofthesestrategiesise-marketing.E-marketingismarketingusingcomputertechnology,includingwebsites,e-mail,andmobilephones.

Youmaywonderwhyabusinesswouldneede-marketingifitalreadyhasawebsite,butawebsiteisjustaplatformforreachingthecustomerthroughe-marketing.Onthewebsite,thebusinessmayinvitecustomerstosignupforweeklye-mailsthatpromoteproductsofinterest.Usually,customerscanselectwhichproductstheywouldliketohearaboutbycheckingabox.Thesee-mailscanalsobedirectedtoacustomer’smobilephone.Thiskindofe-marketingisknownasopt-inmarketingbecausethecustomeragreestoit,unlikepop-upadsthatsuddenlyappearonthewebsite.Marketershavelearnedthatmanycustomerspreferopt-inmarketing.

Oncecustomershaveshopped,thewebsitemaypromptthemtocontinueshoppingbysuggestingotherproductsofinterest.Theseproductsarechosenaccordingtothecharacteristicsoftheproductsthecustomerhasalreadyboughtorviewed.Althoughitispossibletorecommendproductsinperson,theInternetallowsbusinessestosuggestmoreproductsmorequickly,basedonmoreshoppingpreferencesthanonesalespersoncouldeversuggestinperson.

ManybusinesseswithwebsitesalsohaveanaccompanyingFacebookpageandTwitteraccount.Socialmediahelpbusinessesreachouttocustomersinapersonalwayandcreateasenseofcommunityarounda

9-7

A wide variety of social media are being used by marketers to reach customers and create buzz about products.



brand.Withinthesecommunities,customerscansharetheirexperiencesusingdifferentproductsandconnectwithotherswhohavehadsimilarexperiences.

Socialmediaarealsoanexcellentwayforbusinessestogatheradditionalresearchaboutcustomerneedsandwants.OnaFacebookpage,forexample,abusinesscanposeaquestiontocustomersorconductasurvey.ManybusinessesrunregularonlineconteststhattheyannounceonFacebookorTwitterkeepingcustomersengagedwiththebusinessbrandanditsproducts.

Sometimesbusinessespaybloggerstowriteabouttheirproducts.Theymaysendfreesamplesinreturnforapositivereview,hopingthatmanypotentialcustomerswillreadtheblogpostandtrytheirproduct.ThemicrobloggingsiteTwitter

isusefulforupdatingcustomersaboutproductdevelopmentsandevents,suchascontests,giftideas,andstoreopenings.Microbloggingisashort,immediateformofblogging—usuallyabout20to25words.Sometimesbusinesseshireasocialmediaexperttomicroblogandsometimestheycontracttheworkouttoavarietyofloyalcustomers,9-8.

Getting HelpWhencustomersareshopping,they

mayhavequestionsabouttheproductsandquestionsaboutusingthewebsite.MostwebsiteshaveapageofFAQs,whichstandsforfrequently asked questions.Thepageprovidesanswerstothemostcommonquestionscustomershaveasked.

9-8

This is the Twitter feed of Chapters/Indigo. The bookstore chain tweets about new products, promotions, and contests.



Mostwebsitesprovideane-mailaddressfore-mailingquestionstothecompany.Manywebsitesprovideatoll-freenumberthatcustomerscancalltospeakwithacustomerrepresentative.

Somewebsitesprovidereal-timeonlinehelp.Specialsoftwareenablesthecustomertocommunicatewithalivecustomerservicerepresentative,whileonline.OnetypeofsoftwarethatenablesthistypeofinteractionisInstantMessaging.Thecustomertypesaquestioninaninputboxonthewebsite.Thequestionappearsonthecomputerscreenofthecustomerservicerepresentative.Thecustomerservicerepresentativethentypesananswer,andsendsittothecustomertoseeonhisorherscreen.

Paying for ProductsInabricks-and-mortarstore,the

customergoestothecheckoutcounterandhandsthecashiertheproductsselected.Thecashiertotalstheprices,addsinanytaxesorothercharges,andthentellsthecustomerthetotalowed.Thecustomerthenhandsthecashiercashoracreditordebitcard.Thecashierhandsbackareceipt.MailordercataloguesandTVshoppingchannelsusepaperchequesoracredit/debitcardnumber,providedeitherthroughthemailoroverthephone.

Howdoesanonlineshopper,sittinginhisorherhome,providepaymenttotheonlineretailer?Manywebsiteshavea virtualcheckout.Whenthecustomerisdoneshopping,heorshecanclickonalinkthatsays“Proceedtocheckout”orjust“Checkout.”Thecheckoutscreenprovidesthelistofitemspurchased,theprices,andanyadditionalcharges.Themostcommonwaytopayisthroughacreditcardnumber.Someshoppersuseonlinepaymentservices,suchasPayPal.Digitalcashsystemsanddigitalwalletsarealsoavailable.Aftertheorderisconfirmedandpaymentisreceived,areceiptisusuallysenttothecustomer’se-mailaddress.Thecustomercanthenprintareceipt.

Returning MerchandiseAs with products ordered through the

mailorfromaTVshoppingchannel,thegoodsmightbedefectiveordamagedintransit.Thegoodsmayalsonotbewhatthecustomerexpectedorwanted.Abusinesswithawebsitemustprovideareasonablyeasywayforgoodstobereturnedandtoensurethatthemoneyisrefundedtothecustomer.

Name an e-tailer with which you are familiar. How does that e-tailer’s website accomplish the above components?

3 Connect...

Receiving Purchases PromptlyMoste-commercecustomersexpecttheir

onlineorderstobefilledimmediately.Forexample,supposeyouordersomethinginthemiddleofthenight,buttheitemdoesnotarrivefortwomonths.Inthissituation,theInternetisnotmakingshoppingfasterandmoreconvenientforyou.Asaresult,youmightdecidenottousethate-tailerortheInternetforshopping.

Finding the WebsiteCustomersalsohavetoknowthatthe

businesswebsiteexistsandwheretofindit.Manycompaniesadvertisetheirwebsitesthroughtraditionalprint,radio,andtelevisionadvertising.Manypeople’sbusinesscardsincludethewebaddressofthecompany.E-tailersalsoadvertiseonotherwebsites.

Challenges to E-tailingWhenretailersbeganusingtheInternet

inthemid-1990s,retailersusedtheirwebsitesmoreforpromotionthanselling.AnumberofconcernsdiscouragedconsumersfromactuallybuyingproductsovertheInternet.Manyoftheseconcernshavebeenresolved



tothesatisfactionofsomecustomers.OthercustomersarestillreluctanttoactuallypurchaseovertheWeb.Thesechallengesincludethefollowing:

SecuritySecurityofpersonalfinancialandother

informationcontinuestobeaconcernformanyInternetshoppers.Typically,whena personlogsontotheInternetandvisitsa website,anyinformationexchangedcanbeseenbyanyoneontheInternet.AnInternetconnectionoverwhichanyonecanseeanyoftheinformationiscalledanonsecure connection.

Inorderforane-tailertoreceivepayment,thecustomermustsendacreditcardnumberovertheInternet.Mailingaddress,phonenumber,andotherpersonalinformationareoftenrequested.Internetcustomersdonotwanttheircreditcardnumbersorotherpersonalinformationtobegenerallyavailable.Toaddressthisconcern,Internetprovidersandretailersdevelopedaprocesscalledencryption.Encryptionisaprocessthatconvertsdataintoaformthatcanbereadonlybyapersonwithanauthorizedcode.AnInternetconnectionthatusesencryptioniscalledasecure connection.Nooneelsecanseeyourinformationwhenyouuseasecureconnection.Whenyouareusingasecureconnection,asmalliconofaclosedlockappearsonthewebpage.SecureInternetconnectionsguaranteecustomersthattheirpersonalfinancialinformationissafe.

Othersecuritytechnologiesarebeingdeveloped.Forexample,Visahasdeveloped“VerifiedbyVisa.”ThistechnologyverifiesthattheVisacardnumberisauthenticandonlytheauthorizedcardholderisplacingtheorder.

PrivacyArelatedbutseparateconcernfrom

securityisprivacy.Whenapersonvisitsawebsite,thetechnologycankeeprecordsofeverypurchaseandeveryclick.Many

customersareuneasyaboutacompanyhavingthistypeofinformationaboutthem.Manye-tailersdevelopapolicythatprotectstheprivacyofcustomers.

Moste-tailershavealinkontheirhomepagescalled“Security”or“Security&Privacy.”Clickingonthislinkwilltakethecustomertoawebpagethatdescribeshowthatwebsiteensuressecurityandprivacy.

TheBetterBusinessBureauhasdevelopedaprogramtopromotetrustandconfidenceine-tailing.Theprogramhaspublishedacodeofonlinebusinesspractices,andalsoprovidesreliabilityandprivacysealstobusinessesthatmeetitscriteria.

ComplaintsWhencustomersvisitane-tailing

websitethatmisrepresentsproductsorcollectstoomuchpersonalinformation,theyshouldbeabletolodgeacomplaint.Moste-tailersdisplaya“ContactUs”buttonontheirwebsitethatletscustomersconnectwithaCustomerServicedepartmentbye-mailorphone.Whencustomersdonotreceiveasatisfactoryresponsefromane-taileraboutunacceptableproductsormarketingactivities—whetheronlineorin-store—theycantaketheircomplainttotheConsumers’AssociationofCanada.

Website EffectivenessTherearemanycomponentstowebsite

effectiveness.Onetechnologicalrequirementisthatthewebsiteloadquickly.

Thefirstpageofaretailwebsiteisoftencalledthestorefront.Thisfirstpagemustbedesignedtoattractcustomers.Thewebsitemustalsobeeasytouse.Itmustbeeasytoviewtheproducts,selectthem,andpurchasethem.Morethanhalfofonlineshoppersleaveawebsitewithoutmakinganintendedpurchase.Thereasonsareusuallyvariationsof“Ididnotunderstandwhattodo.”

Websitesshouldalsostrivetomaketheonlineshoppingexperiencepleasant



andunique,9-9.Theonlineexperienceshouldprovidebenefitsnotavailablefrombricks-and-mortarshopping.Possiblebenefitsincludespeedandeaseofpurchase,customizednoticesofproductsonsale,specialpricesoritemsavailableonlythroughthewebsite,andnewslettersandotherinformationrelatedtotheproduct.

Slow ConnectionsSlowandinconsistentconnections

interferewiththeonlineshoppingexperience.Whenstorefrontstakealongtimetoload,customersgetimpatient.IfanInternetconnectionbreakswhilemakingacomplexpurchase,suchasanairlineticket,thecustomergetsfrustrated.Inordertobuytheticketonline,thecustomerwillhavetoreconnectandgothroughtheselectionandpurchasingprocedureagain.Theavailabilityofhigh-speedInternetconnectionshasreducedtheseproblems.

Preference for Traditional StoresSome customers just prefer to go to a

traditionalbricks-and-mortarstoreorastorewithwhichtheyarefamiliar.ManycustomersresearchtheirpurchasesontheInternet,andthenmaketheactualpurchaseinabricks-and-mortarstore.Asbrandsofe-tailersestablishgoodreputations,morecustomerswillbewillingtoshopandpurchaseonline.

Describe at least one problem you have had when buying something over the Internet.

3 Connect...

Future of E-tailingThevolumeofpurchasesbyconsumers

hasgrownagreatdealsinceInternetshoppingfirststartedinthemid-1990sandcontinuestogrowataveryfastpace.E-commercehasalsocreatedjobsandloweredexpensesforbusinessesandconsumers.Websitesenablebusinessestoofferbettercustomerserviceandinformation,eveniftheydonotsellproductsonline.Todayconsumersexpectthateveryrespectablebusinesswillhaveawebsitethatatleastprovidesinformation.

AdvantagesE-commerceprovidesmanyadvan-

tages.Moreadvantageswilldevelopase-commercespecialistsimprovetechnologyanddevelopinnovations.n Low Initial Investment.Ane-business

doesnothavetobuy,rent,orbuildabuildingtogetstarted.Asaresult,itisofteneasierandlessexpensivetostartane-business.

n Worldwide Exposure.TheInternetprovidesaccesstoprospectivecustomersanywhereintheworld.

n Constant Availability.TheInternetcanbeaccessedatanytimeoftheday

9-9

Websites need to make the online shopping experience as enjoyable as the real-life one. Customers are looking for efficient service, but the whole experience must be pleasant and memorable.



ornight.Informationcanbeaddedorchangedatanytime.CustomerscanaccesstheInternetwheneveritisconvenientforthem.Internationaltimezonedifferencesdonotmatter.

n Instant Updating.Informationcanbeupdatedinstantly.Forexample,newpricescanbeadded.Oldinformationcanbedeletedinstantly.Thee-tailerdoesnothavetoworrythatthecustomerisusinganold,out-of-datecatalogue.

n Equalized Market Access.Smallcompanies havethesameaccesstopotentialcustomersaslargecompanies.

n Easy Information Access.Freeinformationisavailableonwebsitessponsoredbybusinesses,governmentagencies,universities,andtradeassociations.Businessescangatherinformationaboutcompetitorsandcustomers.Customerscangatherinformationaboutproductsandthecompanies thatofferthem.

n Ability to Collect Customer Information.Everytimeacustomervisitsawebsite,informationaboutthatcustomercanbegatheredintoadatabase.Informationisoftengatheredthroughsiteregistration,questionnaires,andasapartoftakinganorder.

n Ability to Target Marketing Messages.Theinformationgatheredaboutcustomerscanbeusedtotailorspecificmessagestospecifictypesofcustomers.Forexample,somewebsitesgreetyoubynamewhenyouopenthehomepage,andlistpersonalizedproductsuggestions,basedonyourpreviouspurchases.

DisadvantagesTherearesomedisadvantagesto

e-commerce,butthedevelopmentsintechnologyaredecreasingthedisadvantages.n Security.Despitethedevelopmentof

encryptionandothersecuritytechnologies,

manyconsumersarestillreluctanttoprovidecreditcardnumbersandotherpersonalinformationovertheInternet.

n Privacy.Despiteprivacypolicies,manyconsumersdonottruste-tailerstomaintaincustomerprivacy.

n Cost of Website Setup and Maintenance.Manybusinessesdonothavetheexpertisetosetuptheirownwebsites.Thesebusinessesoftenhireoutsidecontractorstodevelopandmaintaintheirwebsites.Thecostsofsettingupandmaintainingawebsitemustbefiguredintothecompany’sbudgetandprofitcalculations.However,manysmallbusinessesdosetupandmaintaintheirownwebsitesatrelativelylittleexpense.

n DistributionProblems.Manye-businessesstillhavenotdevelopedgoodphysicaldistributionsystems.Whencustomersdonotreceiveproductsinatimelyfashion,theyarediscouragedfromusingthate-business.YouwillreadaboutdistributioninChapter14.

n Product Quality Problems.Customerscanbedisappointedatthequalityoftheproductsreceivedfromane-business.However,theseproblemsseemtobeaboutequaltotheproblemsofdirect-mailmarketersandTVmarketers.Simplifiedmethodsforreturnsalsohelpreducethisproblem.

n Consumer Reluctance.ManyconsumersarestillreluctanttopurchaseovertheInternet,forsomeofthereasonsdescribedinthispassage.Inaddition,someconsumersprefertogotoabricks-and-mortarstorewheretheycanhandleortryoutthegoodstheyplantobuy.Otherssimplyprefertousebricks-and-mortarbusinessesthattheyarefamiliarwithandtrust.

Despitethesedisadvantages,e-tailingremainsaviablemeansofsellinggoods.


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Key Learnings

n Adot-comisabusinessthatdoesallofitssellingontheInternet;itdoesnothaveanactualstore.Abricks-and-mortarbusinessservescustomersatastore;itmayalsohaveawebsite.

n B2BbusinessesusetheInternettoexchangeinformationandtomanageinformationinsystemssuchasinventory.

n Successfule-tailinghelpscustomerslookatandselectproducts;encouragesthemtocontinueshoppingorlearnaboutotherproducts;offershelp;providesawaytopayforproductsandgetareceipt;andprovidesawaytoreturnmerchandise.

n Tobesuccessful,ane-tailermustalsofulfillandshiporderspromptlyandattractcustomerstothewebsite.

n Fivechallengestoe-tailingare:(1)security,(2)privacy,(3)websiteeffectiveness,(4)slowconnections,and(5)customerpreferencefortraditionalstores.

n E-marketingismarketingusingcomputertechnology,includingwebsites,e-mail,andmobilephones.

n Socialmediahelpbusinessesreachouttocustomersinapersonalwayandcreateasenseofcommunityaroundabrand.Withinsocialmediacommunities,customerscansharetheirexperiencesusingdifferentproducts.

n Socialmediaarealsoanexcellentwayforbusinessestogatheradditionalresearchaboutcustomerneedsandwants.

n Thereareadvantagesanddisadvantagestoe-tailingande-marketing.However,mostcustomersexpectbusinessestohaveawebsite.

Knowledge & Understanding

1. Whatbusinessactivities cantakeplaceontheWeb?

2. Whatisthedifferencebetweenadot-comandabricks-and-mortarbusiness?

3. HowdoB2BbusinessesusetheInternet?4. Whatcancustomersdoonawebsitefor

e-tailing?Listsixactions.5. Whatdoesavirtualshoppingcartdo

forthecustomerwhoisshoppingonawebsite?

6. Whatisthemostcommonwayforanonlineshoppertopayforproducts?

7. Howdoesanonlineshoppergetareceiptforproductspurchasedonline?

8. Whydoonlineshopperswanttousesecureconnectionsfortheirtransactions?

9. ListfiveproductsthatcanbedeliveredovertheInternet.

10. Definee-marketingandprovideexamples.11. Describehowbusinessescanusesocial

mediatotheiradvantage.12. Explaintwoadvantagesandtwo

disadvantagesofe-tailing.

Thinking

1. Imaginethatyouaretheownerofacompanythatissettingupawebsite.Whatwouldyouwantyourwebaddresstobe?

2. Giveanexampleofhowyoumightuseasearchengine.

3. Compareandcontrastthehomepageofane-tailer’swebsitewiththestorefrontofabricks-and-mortarretailstore.


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4. Whywouldabricks-and-mortarbusinesswantawebsite?

5. “Thesedays,businessesmustusesocialmediatoreachcustomers.”Agreeordisagreewiththisstatement.Givereasonsforyouropinion.

6. Whydoconsumersworryaboutsecurityandprivacywhenvisitingawebsite?

Application

1. Talkwiththemanagerorownerofalocalbusinessorstoredepartment.Findoutifithasawebsite.Howlonghasithadthewebsite?Doessomeoneinthecompanyrunthewebsite,orhasithiredanoutsidefirmtodothis?Whatpercentageoftotalsalescomesfromthewebsite?

2. Imaginethatyouareawebmarketingspecialist.Youhavebeenhiredbyabusiness—abricks-and-mortarstore—toimproveitse-marketingactivitiesonitswebsite.n Namethetypeofstorethathashired

you.Possibilitiesincludehairsalon;book/musicstore;cardealership;clothingstore;print/copyshop;orrestaurant.

n Describetheproductsoffered.n Howcouldyougetcustomers’e-mail

addresses?n Describehowyouwouldusee-mailto

getcustomersintothestoreandbuildtheirloyalty.Stateatleasttwothingsthatyouwoulddo.

3. Youproposeaweeklye-mailpromotiontocustomerswhooptin.n Whatkindofinformationdoesthis

e-mailprovide?n Howwouldyoumakeyourweekly

e-mailappealingsothatpeoplewillbehappytogetitandeagertoopenit?

4. YouproposeaFacebookpagetothebusiness.TheFacebooklinkwillappearonthewebsiteandinthee-mail.n HowwillyouusetheFacebookpageto

attractcustomers?n Howwilltheinformationonthe

Facebookpagebedifferentfromtheinformationsentintheweeklye-mails?Describeatleasttwodifferences.

Communication

1. Visitthewebsiteofalocalbusinessandidentifythewaysinwhichthebusinessprovidessuccessfule-tailing.Prepareavisualdisplaytoshowyourfindings.

2. Fifteenyearsago,thecareerofwebsitedeveloperdidnotexist.Whatnewcareerswillbeavailableinthefuture?UselibraryandInternetresourcestofindout.Usekeywords“cybercareers”and“careersofthefuture.”Presentyourinformationinatwo-minuteoralreporttotheclass.

3. Holdaclassdiscussionordebateonwhethertheinstantaneousnatureofe-tailingande-marketingresultsintoomuchconsumerismandtoomanyfads.


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