Internet marketing

Internet Marketing

Chapter 14

Prepared by
Deborah Baker
Texas Christian University

Chapter 14 Essentials of Marketing 4e

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Learning Objectives
1. Explain how the Internet affects the
traditional marketing mix
2. Describe how marketers are leveraging the
power of online technology
3. Discuss the legal and privacy issues
affecting Internet-based companies

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Learning Objectives
4. Measure the effectiveness of an online
marketing campaign
5. Discuss the effects of the Internet on
marketing objectives and strategy

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1

Learning Objective

On
OnLine
Line
http://www.scubatoys.com/poolcam/poolcam.asp
http://www.scubatoys.com/poolcam/poolcam.asp

Explain how the
Internet affects the
traditional
marketing mix

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1

Product Strategies on the Web

Progression
Progression of
of
product
product strategies:
strategies:

Commodities
Commodities

Branding
Branding

Chapter 14 Essentials of Marketing 4e

Mass
Mass
customization
customization

5

1

On
OnLine
Line
http://www.despair.com
http://www.despair.com

Branded Commodities

Principle
Principle of
of equivalent
equivalent quality
quality is
is applied
applied to
to
branded
branded products,
products, creating
creating downward
downward
price
price pressure
pressure
Camera
Camera A
Aat
at
Retailer
Retailer A
A

Chapter 14 Essentials of Marketing 4e

Camera
Camera A
Aat
at
Retailer
Retailer B
B

6

1

Place
On
OnLine
Line
http://www.ideavirus.com
http://www.ideavirus.com

Corporate
Corporate Web
Web sites
sites
Resellers’
Resellers’Web
Web sites
sites
Affiliate
Affiliate programs
programs
Clicks
Clicks and
and mortar
mortar

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1

Affiliate Programs

Virtual Intermediaries:
 Refer customers to online retailers
 Receive a commission on resulting sales
 Benefit from the goodwill consumers feel
for the content sites they normally visit

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1

Promotion Challenges

Consumers
Consumers don’t
don’t know
know the
the site
site
Consumers
Consumers don’t
don’t know
know the
the company
company
Converting
Converting browsers
browsers to
to buyers
buyers

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1

Promotion Methods
Spam
Spam
Viral
Viral Marketing
Marketing (Buzz)
(Buzz)
Instant
Instant Messaging
Messaging

Online
Online
promotion
promotion
techniques
techniques

Interactive
Interactive Ads
Ads
Search
Search Engine
Engine Listings
Listings
Sales
Sales Promotion
Promotion

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1

Search Engine Listings

Low price
No or low fee
gets you at
the bottom of
the list

Chapter 14 Essentials of Marketing 4e

High price
Gets you to
the top of the
list

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1
On
OnLine
Line
http://www.fedex.com
http://www.fedex.com
http://www.ups.com
http://www.ups.com
http://www.usps.com
http://www.usps.com

Pricing Pressure

Extreme price pressure
on the Internet due to:

 Shopping bots and comparison sites
 Auction pricing
 Demand pricing

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1

Pricing and Consumer Loyalty
75%
75% of
of customers
customers participate
participate in
in aa loyalty
loyalty program
program
Online
Online customer
customer service
service consistently
consistently rated
rated as
as poor
poor
72%
72% say
say customer
customer service
service is
is important
important
41%
41% happy
happy with
with service
service they
they received
received
Profitability
Profitability is
is less
less algorithm
algorithm and
and more
more caring
caring
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Come
Back
Soon!

1

How Technology Changes the 4Ps
Era of:

Product

Place

Promotion

Price

Personal
Commodities
Selling
(pre-1840s)

Retail Store

Store Displays Going Rate

Advertising
(1840s to
1990s)

National
Brands

Malls &
Superstores

National
Advertising

Interactive
Commerce
(1994 and
beyond)

• Branded
Commodities
• Mass
Customization

• Worldwide • InternetMarketplace
based
Web Sites
• Affiliate
• Interactive
Programs
Ads
• Instant
Messaging

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Retail Price

Intelligent
Software
Agents

2

Learning Objective

Describe how
marketers are
leveraging the
power of online
technology

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2

Internet Demographics and Trends

60% of Men

Online:
Online:
By
By Gender
Gender
in
in the
the U.S
U.S..
56% of Women
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2

Internet Demographics and Trends

60% of Whites

Online:
Online:
By
By race
race in
in
the
the U.S.
U.S.

45% of Blacks

54% of Hispanics

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2

Internet Demographics and Trends

23% no high school

Online:
Online:
By
By
education
education
in
in the
the U.S.
U.S.

45% of high school grads

82% of college grads and
post-graduates
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2

The Global Village

Broadens
Broadens and
and enhances
enhances access
access
in
in developing
developing nations
nations
Allows
Allows businesses
businesses to
to “leapfrog”
“leapfrog”
into
into development
development
Levels
Levels playing
playing field
field for
for
disadvantaged
disadvantaged countries
countries

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2

Wireless Access on Rise

 Wireless is growing in popularity
 Will soon represent over half of all
Internet users worldwide
 A particular advantage for developing
nations without suitable infrastructure

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2

Basic Forms of Virtual Business

Business-to-business
B2B

Forms
Forms of
of
Internet
Internet
commerce
commerce

Business-to-Consumer
B2C

Consumer-to-Consumer
C2C
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2

B2B Exchanges

On
OnLine
Line
http://www.globalwinespirits.com
http://www.globalwinespirits.com
http://www.transcore.com
http://www.transcore.com

Online
Online trading
trading floor
floor

Struggling
Struggling to
to survive
survive
Over
Over half
half out
out of
of business
business
since
since 2002
2002

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Maximizing Customer Relationship
Marketing on the Internet

2

Data
Data tracking
tracking
Needed
Needed for
for personalized
personalized
content
content
Using
Using
Cookies
Cookies

Keep
Keep ad
ad content
content fresh
fresh
Controversial
Controversial because
because of
of
privacy
privacy concerns
concerns

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2

Improving Search Engine Results
11 –– Choose
Choose the
the right
right words
words
22 –– Put
Put those
those words
words at
at top
top of
of page
page
33 –– Use
Use meta
meta tags,
tags, like
like bold
bold type
type
44 –– Increase
Increase non-reciprocal
non-reciprocal links
links
55 –– Incorporate
Incorporate graphics
graphics
66 –– Incorporate
Incorporate video/audio
video/audio
77 –– Pay
Pay for
for aa better
better link
link
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3

Learning Objective

Discuss the legal
and privacy issues
affecting Internetbased commerce

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3

Major Issues in Online Privacy
On
OnLine
Line
http://www.fbi.gov/hq/lab/carnivore/carnivore.htm
http://www.fbi.gov/hq/lab/carnivore/carnivore.htm

Cookies
Cookies
Not-so-private
Not-so-private email
email
Spam
Spam
Identity
Identity theft
theft
Conflicting
Conflicting laws
laws
Cyberstalking
Cyberstalking
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Branded
trust
Branded
trust
26

3

Cookies
Are bits of data mapped
to your hard drive

Cookies:

Enable marketers to
personalize Web sites
Can trace where you’ve
been on the Internet
Are the subject of a
controversial debate

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3

Identity Theft
Stealing
Stealing personal
personal information
information to
to
commit
commit fraud
fraud or
or other
other crimes
crimes

Sharply
Sharply increasing
increasing

In
In 2003,
2003, 27
27 million
million complaints
complaints
filed
filed with
with the
the FTC
FTC

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3

Conflicting Legislation
Not all countries have the same laws
regulating Internet commerce
Marketers (M)
responsible for
every law in every
country

Country 1

M

Country 2
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Country 3
29

3

Online Predators

 Cyberstalking is on the rise.
 Caution is declining (e.g., online dating is
increasing)
 Affects trust people have for legitimate
marketing efforts

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3

Creating Trust Online

Better Business Bureau
“Reliability Seal”
3rd-party
seals for
creating
trust

ScanAlert
“Hacker Safe”

Verisign
“Secure Seal”
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4

Learning Objective

Measure the
effectiveness of an
online marketing
campaign

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4

Metrics

The server can
tell:

The server can’t
tell:

 Who visited
 How many times
(hits)
 And where (page
views)





Chapter 14 Essentials of Marketing 4e

Recency
Frequency
Monetary value

33

4

Out-of-Date Metrics

Hits
Hits

Page
Page views
views

Click-through
Click-through counts
counts

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4

Stickiness as the New Metric

Duration
Stickiness =

Frequency

Site Reach

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5

Learning Objective

Discuss the effects
of the Internet on
marketing
objectives and
strategy

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5

Porter’s Five Industry Forces
Rivalry among existing competitors

Applying
Five
Forces in
Internet
Environment

Barriers of entry
Threat of substitutes
Bargaining power of suppliers
Bargaining power of buyers

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5

Porter’s Five Industry Forces
Online…
Rivalries
Rivalries are…
are…

…intensified
…intensified

Barriers
Barriers are…
are…

…low
…low

Threat
Threat of
of substitutes
substitutes is…
is…

…high
…high

Bargaining
Bargaining power
power suppliers
suppliers
Bargaining
Bargaining power
power buyers
buyers

…extremely
…extremely low
low
…increasing
…increasing

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Debunking Myths of Re-Formed
Market

5
Myths
Myths

Truths
Truths

1st
1st movers
movers
have
have the
the
advantage
advantage

11stst movers
movers pay
pay the
the costs
costs of
of
nd movers have the
development;
development; 22nd
movers have the
advantage.
advantage.

Behavior
Behavior
changes
changes
quickly
quickly

Old
Old habits
habits die
die hard;
hard; people
people more
more
concerned
concerned about
about getting
getting needs
needs met
met
than
than fractional
fractional costs
costs savings
savings

Non-traditional
Non-traditional
pricing
pricing will
will be
be
aa success
success

People
People perceive
perceive prices
prices posted
posted by
by
sellers
sellers to
to be
be more
more convenient
convenient and
and
fair.
Chapter 14 Essentials of
Marketing 4e
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fair.

5

Back to Basis

Distinctive
Distinctive competence
competence
Sustainable
Sustainable competitive
competitive
advantage
advantage
Attract
Attract loyal
loyal customers
customers

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