Marketing in the Digital Age - De Anza College

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C
HAPTER
14

Marketing

in the

Digital Age

Copyright 2007, Prentice
-
Hall Inc.

14
-
2


Discuss how the digital age is affecting both
consumers and the marketers who serve them.


Explain how companies have responded to the
Internet and other powerful new technologies

with e
-
business strategies, and how these
strategies have resulted in benefits to both

buyers and sellers.


Describe the four major e
-
marketing domains.


Discuss how companies go about conducting

e
-
marketing to profitably deliver more value to
customers.


Overview the promise and challenges that

e
-
commerce presents for the future.

Roadmap:

Previewing the Concepts

Copyright 2007, Prentice
-
Hall Inc.

14
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3

Background


Began selling books; now
markets many other
merchandise lines.


One of the best
-
known
names on the Web.


Sales have been strong
but firm did not turn a
profit until 2003.


Skeptics predict tougher
times in years to come.

Marketing Efforts


Customer
-
driven: strives to
design the best customer
experience on the Web.


Personalized sign
-
on pages
and recommendations,

huge selection, good value,
and convenience result in
strong buyer relationships.


Will Amazon become the
Wal
-
Mart of the Web?

AMAZON.COM



Online Pioneer

Copyright 2007, Prentice
-
Hall Inc.

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4


Digitalization and Connectivity


Intranets


connect people within a company.


Extranets


connect a company with its suppliers,
distributors, and outside partners.


Internet


connects users around the world.


Forces Shaping the Digital Age

Copyright 2007, Prentice
-
Hall Inc.

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Requires a new model for marketing strategy
and practice, as the Internet offers new
opportunities for creating value and building
relationships.


The digital age has changed consumers’
ideas of convenience, speed, price, product
information, and service.


Companies need to retain old skills and
practices but add new competencies.


Marketing Strategy in the Digital Age

Copyright 2007, Prentice
-
Hall Inc.

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6


Involves the use of electronic
platforms to conduct company
business.


Web sites for selling and customer
relations.


Intranets for within
-
company
communication.


Extranets connecting with major suppliers
and distributors.


E
-
Business in the Digital Age

Copyright 2007, Prentice
-
Hall Inc.

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-
7

E
-
Commerce in the Digital Age


More specific than e
-
business.


Involves buying and selling processes
supported by electronic means,
primarily the Internet.


Includes:


e
-
marketing


e
-
purchasing (e
-
procurement)


Copyright 2007, Prentice
-
Hall Inc.

14
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8

E
-
Commerce Network

Rusbiz.com is
a global B2B
portal offering
trade leads, a
marketplace,
e
-
catalog, and
more.

Marketing in Action

www.rusbiz.com/

Copyright 2007, Prentice
-
Hall Inc.

14
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9


The marketing side of e
-
commerce.


Includes efforts to communicate about,
promote, and sell products and
services over the Internet.


E
-
purchasing is the buying side of

e
-
commerce.


It consists of companies purchasing
goods.

E
-
Marketing in the Digital Age

Copyright 2007, Prentice
-
Hall Inc.

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10

Benefits to Buyers


Convenience.


Buying is easy and private.


Provides greater product access and
selection.


Provides access to comparative
information.


Buying is interactive and immediate.


Copyright 2007, Prentice
-
Hall Inc.

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11

Benefits to Sellers


Powerful tool for building customer
relationships.


Can reduce costs.


Can increase speed and efficiency.


Offers greater flexibility in offers and
programs.


Is a truly global medium.


Copyright 2007, Prentice
-
Hall Inc.

14
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12

Figure 14
-
1

E
-
Marketing Domains

Copyright 2007, Prentice
-
Hall Inc.

14
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13


The online selling of goods and
services to final consumers.


Expected to generate $316 billion in 2010,
or 13 percent of retail sales.


There is increasing diversity in buyers.


This provides increasing opportunities
for targeting markets.


Is customer initiated and controlled,
requiring new marketing approaches.


Business to Consumer (B2C)

Copyright 2007, Prentice
-
Hall Inc.

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B2B sales dwarf B2C sales:


B2B e
-
commerce was nearly $4 trillion in 2003.


Uses trading networks, auction & barter sites, spot
exchanges, online product catalogues, and more.


Most major B2B marketers offer online
product information, purchasing, and support.


Open trading exchanges:


huge specialty e
-
marketspaces to conduct
transactions.


More private trading exchanges are being
developed for B2B transactions.

Business to Business (B2B)

Copyright 2007, Prentice
-
Hall Inc.

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B2B Open Trading Exchange

Plasticsnet.com is
an Internet
marketplace that
connects more
than 200 suppliers
with over 90,000
buyers monthly.

Marketing in Action

www.plasticsnet.com

Copyright 2007, Prentice
-
Hall Inc.

14
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16


Occurs on the Web and includes a
wide range of products and services.


Auction sites

such as eBay offer
marketplaces to buy or exchange goods.


Blogs and forums

facilitate information
interchanges.


Blog
: online journals where people
post thoughts on a specific topic.


Forums:

discussion groups located on
commercial online services.


Consumer to Consumer (C2C)

Copyright 2007, Prentice
-
Hall Inc.

14
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17

iPoditude.com Blog

Some blogs
such as
iPoditude offer
saavy
marketers
advertising
opportunities.

Marketing in Action

www.ipoditude.com

Copyright 2007, Prentice
-
Hall Inc.

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Consumer to Business (C2B)


Consumers can
search out sellers,
view offers, initiate
purchases, and give
feedback.


At Priceline.com,
consumers can
name their own price
for a flight.


www.priceline.com

Copyright 2007, Prentice
-
Hall Inc.

14
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Movietickets.com
sells movie theatre
tickets over the
Internet.

Why do or don’t you
use this service to
buy movie tickets? If
you don’t use the
Web site, what could
it do to earn your
business?

Let’s Talk!

www.movietickets.com

Copyright 2007, Prentice
-
Hall Inc.

14
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20

Figure 14
-
2

Types of E
-
Marketers

Copyright 2007, Prentice
-
Hall Inc.

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Click
-
Only Companies


E
-
tailers


Search engines and portals


Shopping comparison sites


Internet service

providers


Transaction

sites


Content sites


What type of click
-
only


company is iWon.com?


How likely are you to


use their services in


the future? Why?

Video Snippet

Copyright 2007, Prentice
-
Hall Inc.

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Poor research or planning.


Relied on spin and hype instead of
marketing strategies.


Spent too heavily on brand identities.


Devoted too much effort to acquiring
new customers instead of building
loyalty.


Reasons for dot.com Failures

Copyright 2007, Prentice
-
Hall Inc.

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23


Established firms initially resisted adding
Web sites because of
channel conflict

and
cannibalization

concerns.


Risk of online competition forced firms to
become click
-
and
-
mortar companies. Most
are now doing better than click
-
only
companies because of:


Trusted brand names and more resources


Large customer bases


More knowledge and experience


Good relationships with suppliers


Can offer customers more options

Click
-
and
-
Mortar Companies

Copyright 2007, Prentice
-
Hall Inc.

14
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24

Figure 14
-
3

Setting Up for Online Marketing

Copyright 2007, Prentice
-
Hall Inc.

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Types of Web Sites


Corporate Web Site:

Designed to build
customer goodwill and supplement other
sales channels.


Offers information to customers.


Builds closer customer relationships.


Generates excitement about the company.


Marketing Web Site:

Engages consumers in
an interaction that moves them closer to a
direct purchase or other marketing outcome.


May include catalogues, shopping tips,
promotional features, and more.

Copyright 2007, Prentice
-
Hall Inc.

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Marketing Web Site

The MINI marketing
Web site does more
than just provide
information or sell
cars: it keeps
customers engaged,
from designing their
very own MINI to
tracking it from
factory to delivery.

Marketing in Action

http://www.miniusa.com/link/home/

Copyright 2007, Prentice
-
Hall Inc.

14
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27


The 7 Cs of Effective Web Site Design:


Context:

layout and design.


Content:

text, picture, sounds, etc.


Community:

the ways the site enables user
-
to
-
user communication.


Customization:

ability of site to personalize or
tailor itself to various users.


Communication:

how communication is enabled
between the user and the site.


Connection:

the degree to which the site is linked
to others.


Commerce:

site’s ability to conduct transactions.

Designing Attractive Web Sites

Copyright 2007, Prentice
-
Hall Inc.

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28

Using the
criteria for
good Web site
design,
evaluate the
site shown at
right.


Let’s Talk!

www.ragu.com/

Copyright 2007, Prentice
-
Hall Inc.

14
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29

Online Ads


Forms of online advertising:


Banner ads:


Tickers (move across the screen)


Skyscrapers (tall, skinny ads at the side of a
page)


Rectangles (boxes that are larger than a
banner)


Interstitials (pop up OR pop under between
changes on Web site)


Search
-
related ads (contextual advertising)


Rich media ads (incorporate animation, video,
sound and interactivity)

Copyright 2007, Prentice
-
Hall Inc.

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Forms of Online Ads

Pennlive.com

takes the
mystery out of buying
online ads, by showing
samples of common
formats available for
purchase.

Visit the Interactive
Advertising Bureau for
additional information.

Marketing in Action

http://www.iab.net

Copyright 2007, Prentice
-
Hall Inc.

14
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31

Search Engine Marketing

For an interactive example of search engine
marketing, visit the search engine of your choice,
and enter a term such as “pet” or “computer” and
watch what pops up under the sponsored links.

Marketing in Action

Search engine
marketing is
one of the
fastest
growing
forms of
online
advertising.

Copyright 2007, Prentice
-
Hall Inc.

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Online Promotion


Forms of online promotion:


Content sponsorships (sponsoring
special content)


Microsites (limited areas paid for by an
external company)


Alliances and affiliate programs (work
with firms to promote each other)


Viral marketing (Internet version of word
-
of
-
mouth)


Copyright 2007, Prentice
-
Hall Inc.

14
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33

Viral Marketing

Marketing in Action

Got Milk?
Apparently aliens
didn’t until they
started abducting
our cows. The
cowabduction.com
Web site is an by
the California Milk
Processors Board
to promote milk in a
fun fashion, and to
stimulate viral
marketing.

http://www.cowabduction.com/

Copyright 2007, Prentice
-
Hall Inc.

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May grow to 10
-
15% of media mix for
low
-
involvement product categories.


Web communities:


Allow members to congregate online and
exchange views on issues of interest.


E
-
mail:


Use of “enriched” e
-
mail messages.


Backlash against spam can be problem.


Allow people to opt
-
out of promotions.

The Future of Online Advertising

Copyright 2007, Prentice
-
Hall Inc.

14
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35


Likely that online marketing will remain
a technique working with full IMC mix.


Internet profitability remains
problematic for B2C firms.


Navigation difficulties continue as the
number of Web sites grows.


Dot.com retailers are facing growing
competition.


Legal and ethical issues also exist.


E
-
Commerce Promises and Challenges

Copyright 2007, Prentice
-
Hall Inc.

14
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36


Online privacy is the number one

e
-
commerce concern of consumers.


Consumers are worried about how their personal
information is being used.


Online security concerns are still common
regarding credit card numbers.


Governmental responses have been limited
to date: OPPA, COPPA.


TRUSTe is a private entity devoted to online
privacy issues.

Legal and Ethical Issues

Copyright 2007, Prentice
-
Hall Inc.

14
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37


Internet fraud:


identity theft (phishing), investment fraud,
financial scams.


Segmentation and discrimination due
to the digital divide.


Access by vulnerable or unauthorized
groups


Bidding on eBay and access of adult
content by children.


Legal and Ethical Issues

Copyright 2007, Prentice
-
Hall Inc.

14
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38

Privacy Issues

Marketing in Action

The TRUSTe seal
on Avis’s Web
page and privacy


statement


verify the


company’s


privacy


practices have


been reviewed


by TRUSTe
and meet their
guidelines.

Copyright 2007, Prentice
-
Hall Inc.

14
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39


Discuss how the digital age is affecting both
consumers and the marketers who serve them.


Explain how companies have responded to the
Internet and other powerful new technologies

with e
-
business strategies, and how these
strategies have resulted in benefits to both

buyers and sellers.


Describe the four major e
-
marketing domains.


Discuss how companies go about conducting

e
-
marketing to profitably deliver more value to
customers.


Overview the promise and challenges that

e
-
commerce presents for the future.

Rest Area:

Reviewing the Concepts