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Marketing Strategy & Planning (601) E-Commerce and Marketing Strategy – Will the Internet Change Everything? by Dr. Bert Rosenbloom Professor of Marketing and Rauth Chair in Electronic Commerce. Marketing as an organized business discipline has existed for over eight decades.
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Marketing Strategy & Planning (601)E-Commerce and Marketing Strategy – Will the Internet Change Everything?byDr. Bert RosenbloomProfessor of Marketing andRauth Chair in Electronic Commerce
Marketing as an organized business discipline has existed for over eight decades. • The core concepts of marketing strategy have emerged over the past 50 years. • The Crucial Question • Will Internet-based E-commerce require the “repeal” of these core marketing strategies in the future?
The Marketing Concept and E-CommerceSince the 1950s the “Marketing Concept” has been the philosophical underpinning for all of modern marketing strategy • Customer focus • External orientation • Profitable sales volume Does the marketing concept need to change with the emergence of of E-commerce? If so, how?
The Marketing Mix and E-Commerce • At its core, marketing strategy boils down to a blending of product, price, promotion, and placement strategies (the four Ps) so as to meet the needs of customers better than the competition • Is the marketing mix model still relevant in the world of E-commerce? • In the world of E-commerce is it the fourth P, placement strategy, that dominates the marketing mix because E-commerce is really all about the channels through which products are sold?
Target Marketing and E-CommerceDoes it still make sense for firms to identify, focus on, and develop, particular customer groups (target markets) given the vast reach provided by the Internet from mass all the way to one-to-one markets markets?Are the dimensions for analyzing target markets still: • Market size • Market location • Market density • Market heterogeneity • Market behavior • 1) when the market buys • 2) where the market buys • 3) how the market buys • 4) who does the buying
Market Segmentation and E-CommerceIs the process of taking large heterogeneous markets and breaking them into smaller more homogeneous sub-markets (market segmentation strategy) enhanced or inhibited by E-commerce technology? • Are these requirements for segmenting markets still valid? • Identity • Accessibility • Responsiveness • Significance • Are the bases for segmenting markets still the same? • Demographics • Psychographics • Benefits sought • Usage rates • Loyalty
E-Commerce and Marketing’s Quest for Sustainable Competitive Advantage Sustainable Competitive Advantage: A competitive advantage that cannot be quickly and easily copied by competitors Question Is the concept of a sustainable competitive advantage realistic for marketers to pursue in the extraordinarily fast-paced, and brutally competitive E-commerce arena?
Relationship Marketing and E-CommerceRelationship Marketing: the development and maintenance of long-term,cost-effective relationships with customers in order to retain their preference. • Standard Marketing Tools for Budding Relationships • Affinity programs • Frequent-buyer/user programs • Database mining • Partnerships (strategic alliances) • Co-marketing and co-branding • Lifetime value of customer analysis • Question • Can all of this be done at “arms length” via theInternet?
Adopter Categorization of the Basis of Relative Time of Adoption of Innovations 34% Early majority 34% Late majority 13.5% 2.5% Innovators 16% Laggards Early adopters Time of adoption of innovations
Buyer Behavior Models and E-CommerceDo conventional models of consumer and organizational buyer behavior apply to E-commerce? • B2C: Consumer Buying Process • 1. Problem Recognition • 2. Information Search • 3. Alternative Evaluation • 4. Purchase • 5. Post-purchase Experience • B2B: Organizational Buying Process • 1. Problem Recognition • 2. General Description of Need • 3. Detailed Description of Product Specification • 4. Supplier Search • 5. Acquisition and Analysis of Proposals • 6. Supplier Selection • 7. Selection of an Order Route • 8. Performance Review
Product Differentiation Strategy and E-Commerce Is the creation of distinctions among products so that customers will seek out and pay more for certain products (product differentiation strategy) still feasible in the world of E-commerce? Does the near perfect information provided by the Internet make product differentiation more difficult to achieve? Will E-commerce eventually spell the end of product differentiation as a viable marketing strategy as the Internet “commoditizes” virtually all products?
Positioning Strategy and E-Commerce “Positioning is not what you do to the product, but what you do to the mind.” from The New Positioning by Jack Trout Can a product or organization be successfully positioned in customers’ minds as being more desirable than the competition given the power of E-commerce to “level the playing field?” Coke vs. Pepsi Mercedes vs. BMW or Lexus Charles Schwab vs. E Trade vs. Merrill Lynch Amazon v.s Barnes & Noble Is the battle for the customer’s mind in positioning strategy really only about information?
Do product life cycles exist in E-commerce? Will product life cycles be shorter, longer or unchanged by the effects of E-commerce? Do product life cycles need to be managed differently because of E-commerce? Does E-commerce provide the capabilities to reinvigorate the PLC? Product Life Cycle and E-Commerce • Stage I: Introduction • Stage II: Growth • Stage III: Maturity • Stage IV: Saturation • Stage V: Decline
Product Branding Strategy and E-Commerce • Stages in brand building strategy: • 1. Brand awareness • 2. Brand acceptability • 3. Brand preference • 4. Brand loyalty • 5. Brand equity • Questions • Have these concepts changed in the world of E-commerce? • Are they any less important? • Does E-commerce make it easier to move through the stages? • Will E-commerce undermine brand building?
Price Sensitivity and E-CommercePricing strategy in marketing has traditionally focused on reducing price sensitivity by: • Distinctiveness (product differentiation and positioning) • Quality • Making comparisons difficult • Undermining the substitution effect • Exploiting the income effect • With the awesome power of the Internet to provide near perfect information are such pricing strategies still available?
Specialized Pricing Strategies and E-CommerceThe following specialized pricing strategies have become an integral part of modern marketing practice: • Price lining • Leader pricing • Psychological pricing • Price point pricing • One price pricing • Private brand pricing • Prestige pricing • Discounts and allowances • Geographical pricing • Will these pricing strategies be affected by E-Commerce?
Classic Marketing Channel Strategies and E-Commerce • Dual Distribution • Exclusive Dealing • Full-line Forcing • Price Discrimination • Price Maintenance • Refusal to Deal • Resale Restrictions • Tying Agreements • Are these conventional channel strategies applicable to E-commerce channels?
Promotional Strategy and E-Commerce SENDER Media RECEIVER Message Encoding Decoding Noise Feedback Response Does this model still apply for E-commerce?
Promotion Models and E-CommerceAre these still relevant for E-commerce? AIDA Modela Hierarchy-of- Effects Modelb Innovation- Adoption Modelc Communi- cations Modeld Stages Cognitive stage Attention Awareness Knowledge Awareness Exposure Reception Cognitive response Affective stage Interest Desire Liking Preference Conviction Interest Evaluation Attitude Intention Behavior stage Action Purchase Trial Adoption Behavior
Pull vs. Push Promotion and E-Commerce Producer Interme- diaries End users Marketing activities Demand Demand Push Strategy Marketing activities Producer Interme- diaries End users Demand Demand Pull Strategy Still a valid dichotomy?
Message Message generation Message evaluation and selection Message execution Social-responsibility review Money Factors to consider: Stage in PLC Market share and con- sumer base Competition and clutter Advertising frequency Product substituta- bility Mission Sales goals Adver- tising objectives Measure- ment Communi- cation impact Sales impact Media Reach, frequency, impact Major media types Specific media vehicles Media timing Geographical media allocation E-Commerce and the Five M’s of Advertising Still applicable for E-commerce?
E-Commerce and the Selling Process(Will this have a role?) Prospecting and qualifying Preapproach Approach Presentation and demonstration Overcoming objections Closing Follow-up and maintenance