Chapter 4 E-business in Contemporary Marketing

1. Chapter 4 E-business in Contemporary Marketing

2. Objectives • Define e-commerce and give examples of each function of the Internet. • Describe how marketers use the Internet to achieve their firms’ objectives. • Explain how online marketing benefits organizations, marketers, and consumers. • Identify the goods and services marketed most often on the Internet. • Identify the primary online marketing channels.

3. Objectives 6. Explain how marketers use interactive tools as part of their online marketing strategies. 7. Discuss how an effective Web site can enhance customer relationships. 8. Describe how to measure the effectiveness of online marketing efforts.

4. E-Commerce Capabilities CAPABILITY DESCRIPTION EXAMPLE Global reach The ability to reach anyone connected to a PC anywhere in the world. Major car makers, such as Ford, Nissan, and Volvo, use the Web to reach car buyers around the world. One-to-one marketing Creating products to meet customer specifications; also called personalization. Customers can order customized clothing—from jeans to shirts to shoes—online. Interactive marketing Buyer-seller communications through such channels as the Internet, CD-ROMS, toll-free telephone numbers, and virtual reality kiosks. Intouch Group’s iStations are interactive kiosks placed in retail music stores that allow customers to listen to thirty-second music clips before they purchase compact discs. Right-time marketing The ability to provide a good or service at the exact time needed. FedEx customers can place service orders online and track shipments twenty-four hours a day. Integrated marketing Coordination of all promotional activities to produce a unified, customer-focused promotional message. Nike marketers use the familiar Swoosh logo and “Just Do It” slogan in both online and offline promotions.

5. Mondera.com is designed as an online retailer targeting buyers of fine jewelry.

6. E-Commerce • Electronic Marketing and the Internet for Dot.com and Brick- and-Mortar Marketers • Interactive marketing - Buyer-seller communications in which the customer controls the amount and type of information received. • Internet (NET) - Worldwide network of interconnected computers. • Intranets - Internal corporate network. • Extranets - Secure network accessible through a web site by external customers or organizations for electronic commerce.

7. Four Functions of the Internet • Communication • E-mail • Instant messaging • Chat rooms • Online communities • E-Commerce • Electronic exchanges • Extranets and private exchanges • Electronic storefronts • Online ticketing • Auctions • Information • Search engines • Online publications • Newsgroups • Portals • Entertainment • Games • Radio and TV programming • Music • Electronic books • Short movies

8. The History of The Internet • “The history of the Internet begins at the height of the cold war in the 1960's. People at the Rand Corporation, America's foremost military think tank, were trying to figure out an important strategic problem: how could US authorities talk to each other in the aftermath of a nuclear attack?” Source: the pbs home page

9. Benefits of B2B Online Marketing • New markets and customers. • Cost savings in every aspect of the marketing strategy. • Greatly reduces the time involved in reaching target markets. Potential for increased profits.

10. Benefits of Business-to-ConsumerOnline Marketing

11. Online Consumer Benefits Three Categories • Lower Prices • Ideal method for savvy shoppers to compare prices from dozens—even hundreds—of sellers. • Convenience • Cybershoppers can order goods and services from around the world at any hour of the day or night. • Personalization • One way is to welcome you back. • A second way is to send you periodic e-mails informing you of specials or new products.

12. E-Commerce and Security • Marketing research indicates that privacy is the top concern. • Consumers want assurances that any information they provide won’t be sold to others without their permission. • Prominently displaying privacy policy is an effective way to build customers’ trust.

13. Who is Online? • The heaviest Internet users make $75,000 or more a year. • Live in urban areas. • States with the highest percentage of Internet users include: • Alaska • New Hampshire • Washington • Utah • Colorado • Racial group most likely to use the Internet: • Americans of Asian and Pacific Island origin. • 75 percent of employed people use the Internet at work. • 87 percent of college graduates use the Internet. • Over half of all people currently looking for jobs go online.

14. E-tailing Successes 2005 • #1 Amazon.com, #2 Dell • #3 Office Depot • Online sales + 25% of its revenue • Greatest market: large corporate clients • Web café events including online chats

15. Building an Effective Web Site Three basic steps for hitting the bulls eye. • Establish a mission for the company’s site. • Identify the purpose of the site. • Satisfy customer needs and wants through a clear site design.

16. Measures of Web Site Effectiveness Profitability Traffic counts Click-through rates Conversion rates Research studies

17. Marketers Scan Blogs, Etc.WSJ 6-05 • Blog-analysis on unsolicited opinions & off-hand comments (15M online) • Quick trend analysis & consumer reactions • Fees: $30,000-$100,000/yr. • Intelliseek’s free site - BlogPulse • U. S. Cellular Corp: Increased “call me” minutes against teens fear of exceeding minutes • Sports: videogames, sneakers, jerseys: Lebron #1, Bryant #2 among Gen Y boys • Food maker: interest in Atkins dropping

18. Simultaneous Media Usage Threatens Effectiveness of Marketing Campaigns • When online: • 65% say they regularly or occasionally watch TV • 60% say they regularly or occasionally listen to the radio • 40% say they regularly or occasionally read the mail • When reading mail: • 75% saythey regularly or occasionally watch TV • 58% say they regularly or occasionally listen to the radio • 35% say they regularly or occasionally go online

19. No Zapping Network Offerings2005 • 25 venues to reach viewers of a specific TV show • Web programs with trivia, images & games to accompany a TV show • Alias: video clips on Internet, show memorabilia online • Email & voicemails reminding fans to tune in • Pepsi Lime on MTV’s “Laguna Beach” 9-05 text alerts, special Web site, DVD wrapping • Live web chat with TV show stars • Mobisodes, videos for cellphones

20. Interactive Buzz Marketing July 2007 • “The Seeker: The Dark is Rising” • Teenage boy travels through time • Hidden images of the 6 signs collected to save the world mirror the movie’s story • Movie trailers to billboards to cardboard cutouts in movie theaters • Microsoft’s “Halo” game • Treasure hunts with clues in flyers, online comics, retail kiosks • Discover background character stories • “The Simpsons Movie” • 12 7-Eleven stores converted to imitate the movie’s fictional convenience store

21. Company Web Sites Two types of company Web sites exist. • Corporate Web sites to increase their visibility, promote their goods and services. • Often include information about company history, products, locations, and financial information. 2. Cybermalls which can link as many as 400 participating online retailers. • Cybermalls typically feature a popular national retailer with high customer traffic as an anchor tenant. • Stores included in the mall are selected to produce a good match of merchandise.

22. Viral Online Marketing Campaign • Pass the word on to others • Gap – 9/05 www.watchmechange.com • Create a their computer likeness • Model sheds clothes & dances furiously • No advertising of site • “You think you know us. We can be pretty bold, too.” • No celebs this time: Joss Smith, Madonna, Willie Nelson, Sara Jessica Parker • Created by Crispin, Porter, Bogusky

23. Online Experience • Leading online retailers Amazon.com, Barnes & Noble, Circuit City, Ebay, Wal-mart, Costco • Direct correlation between customer experience online & conversion & purchase impact rates* *Vividence research firm (research of 2,000 consumers in 2005)

24. Sephora.com Makes Cosmetics fun • Light-hearted approach • Fragrance Finder • Beauty expects available at call centers • Gift registry • Top 10 gift requests

25. Sephora • Home page clearly articulates the brand position as a high-end beauty merchant.

26. J.C. Penney • “The JCPenney Experience • Virtual store (3-06) premiered at Academy Awards • 15,000 sq. ft. Time Squares store • Samples of merchandise highlight all that is new at the company • Shop only on web-based kiosks • Web host its commercials • Hotspotting • Click video for info on the models’ outfits

27. Store.BabyCenter.com 2007 • New site search engine • Personalization options for the home page and content navigation • Customize shopping based on the stage of their pregnancy or child’s age (preconception – preschooler) • Proprietary engine creates a customer-specific home page and site experience by integrating different content into a visitor's navigation through the site, based on initial data provided by the visitor.

28. Illuminations.com Entertainment • Consumers expect entertaining shopping experience – digital version of catalog • Flash to show variety of Halloween season products using compelling imagery (“style gallery) • Now that 60% of homes have broadband

29. NordstromSilverscreen.com • Web channel with fashion-forward content in fun & engaging forms • Re-created pop music and dance videos to interactives • Go-Go’s “Our Lips Are Sealed” remixed by Fatboy Slim (5-06) • Behind-the-scenes video with narratives • How dance moves require new type of apparel • Interview with Diane von Furstenberg about her designs • How dancing and fashions have changed since the original version

30. Ad Model on Google's YouTube - 2007 • Simple flash-based ad overlay across lower 20% of the screen shortly after video launches • Stays for 10 seconds • Closes if not clicked to enable longer video ad

31. Subaru Turns to the Web • B9 Tribeca mid-sized SUV (4-06) • “Dust in the Wind” TV spot • Track online response of thousands of anonymous online consumers across 25 car-related web sites within 2 days of product launch

32. Hybrid Pod Spots ’07 by NBC • Part show promo – part ad • Sprint on Heroes • 15 sec. comic-book like message to create their own hero online THEN Sprint ad airs

33. ’07 Fashion Designers Outsource Web • Yoox.com • www.emporioarmani.com • Outsourced skills to navigate online commerce

34. FutureTech 2007 • Mass customization of custom shirts, chinos, jeans, sneakers, candy • Tommy Hil, Target,Lands’ End, JC Penney, Zazzle (t-shirt), M&Ms, Nike • OptiTexLtd.,TC2& Lectra – step into scanner for custom clothing model • LookStailorX from digital imaging ltd. Of Osaka • Check virtual fit of a garment before making a sample($70 shirt). • Selve stores in Germany & London • 3D foot scanner used to try on sample shoes to be manufactured ($300)

35. International Web sites – Color Counts • White • China – death, mourning • Funeral clothing, packages • U.K. – Leisure, sports • Sportswear • U.S. – purity, innocence • Bedding, wedding gowns, hospital uniforms • Black • U.S. – death, sophistication, formality • Formal wear • Mexico – mourning, respect • Clerical robes • Red • U.S. – excitement, warning, sex • Stop signs, fire trucks, red light district • China – communism, celebration, luck • Wedding dresses, lucky money envelopes, obituaries (red ink)

36. International Differences • Micromarketing • Sears Lands’ End: dedicated web sites in Germany, UK, Japan • Sweden’s Ikea: localized international web sites • Nike in Middle East, ’05 • Shoe with flame design similar to Arabic script for Allah • Brief boycott of Nike

37. Web Awards • 2004 winner: http://www.behr.com/behrx/ (Arc) • http://www.arcww.com/ for Cadillac & Ariel

38. Who’s Bigger Online in ’07? • Neiman Marcus, Nordstrom or Macy’s? • Coach, eBags.com or Prada? • Ann Taylor, Liz Claiborne or Ralph Lauren? DSW, Foot Locker, Nike, Shoes.com? • Williams-Sonoma, Crate & Barrel, Bed, Bath & Beyond or Linens ‘n Things? • QVC, IAC (Home Shopping Network) or ShopNBC.com? • Baseball (MLB), Basketball (NBA), Football (NFL), Hockey (NHL), Auto Racing (NASCAR) or Golf (PGA)?