E-Commerce Marketing Concepts:

prudencecoatInternet and Web Development

Nov 18, 2013 (2 years and 11 months ago)


Chapter 6

Commerce Marketing Concepts:
Social, Mobile, Local

Learning Objectives

Identify the key features of the Internet audience

Discuss the basic concepts of consumer behavior and
purchasing decisions

Understand how consumers behave online

Identify and describe the main technologies that support
online marketing

Identify and describe basic e
commerce marketing and
branding strategies

The Internet Audience

Before firms can sell their products online, they first must
understand what kinds of people they will find online and
how those people behave in the online


Who has access to the Internet?

What do people do online?

Why do people buy online?

Why do people not buy online?

The Internet Audience

232 million people of all ages and over 86
million U.S. households (about
had access to the

By comparison, 98% of all U.S. households currently have
televisions and 94% have telephones

Internet growth has slowed to about 2
3% a year and it is
unlikely that Internet access will reach the same levels as
televisions or telephones in the near future

may these numbers never reach the penetration rate for
TV and telephones?

Intensity and Scope of Usage

The slowing growth rate in the US Internet population is
compensated for in part by an increasing intensity and scope
of use

Overall, users are going online more frequently, with 77% of
adult users in the US (145 million people) logging on in a
typical day

People are also going online to engage in a wider range of
activities than in the past (see Table 6.2)

Some of the most common online activities include e
search engines, news, or using an online social networking

Demographics and Access

The demographic profile of the Internet has changed greatly
since 1995

Up until 2000, single, white, young, college
educated males
with high incomes dominated the Internet

This inequality in access and usage led to concerns about a
possible “digital divide”

Demographic similarities and differences can be assessed by
looking at:

Gender, age, ethnicity, community type, income level, and

Demographics and Access (cont.)


Fairly equal percentage of men and women users (78%)


Teens (12
17) and young adults (18
29) form the age groups
with the highest percentage of Internet use (95%)

The percentage of very young children going online is also
growing dramatically in part due to increased access to
computers and the Internet both at school and at home

Another fast
growing group online is the 65 and over segment
which is still fairly low at 42%, but more than double the level
of 2002

Demographics and Access


Variation across ethnic groups is not as wide as across age

In 2002, there were significant differences among ethnic
groups, but this has receded


Historically, Internet access rates have been
significantly lower
in rural areas than other kinds of communities

In 2011, only about 72% of rural households have an Internet
connection, with wide variations from state to state

Demographics and Access

Income level

About 96%
of households with income levels above $75,000
have Internet access, compared with only
of households
earning less than $30,000


Of those individuals with a high school education or less,
were online in
compared to
of individuals with a
college degree or more

In summary, the “digital divide” has indeed moderated, but it
still persists along the income, education, age,
regional, and
dimensions (Table 6.3 provides a summary)

Other Internet Access Issues

In 2011, around 83 million US households had broadband service
in their homes while 3.2 million had slower dial
up access

Over 90 million Americans access the Internet from mobile

“Neighborhood effects” , either face
face or through social
networks, influences purchasing decisions

Internet use may cause a decline in traditional social activities, but
in other instances may strengthen and complement traditional
face relationships

Marketing to young people who are texting and multitasking
online requires messages that are appropriate created and shaped

Time on the Internet takes time away from traditional media

Consumer Behavior

Once firms have an understanding of who is online, they
need to focus on how consumers behave online

The study of consumer behavior is a social science discipline
that attempts to model and understand the behavior of
humans in a marketplace

Models of consumer behavior attempt to identify the factors
that influence behavior and purchase decision making

The following slides describe a general model of consumer
behavior and a more detailed model of online consumer

A General Model of Consumer
(Figure 6.1)

A Model of Online Consumer
Behavior (Figure 6.3)




behavior refers to the transaction log that
consumers establish as they move about the Web

They may move from search engine, to a variety of sites, then
to a single site, then to a single page, and then, finally, a
decision to purchase

Understanding individual user

behavior may
enable websites to be designed to better support this online
purchase decision process

Why Consumers Choose the Online
Channel (Table 6.4)


Percentage of Online

hour shopping convenience


Easier to compare



Free shipping offers


Don’t want to fight the crowds




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Better variety online


Don’t have to pay sales tax


Want gifts shipped directly to the recipient


Easier to compare prices


How Shoppers Find Vendors Online

Given the prevalence of “click here” banner ads, one might
think customers are driven to online vendors by spur
moment decisions

In fact, only a tiny percentage of shoppers click on banners to
find vendors

Once they are online, 59% of consumers use a search engine
to research or purchase a product

28% go to marketplaces such as Amazon and eBay

10% go direct to retail Web sites

Online shoppers are focused browsers looking for specific
products, companies, and services

Why Internet Users Do Not Buy Online
(Table 6.7)



of Internet Users

Want to see and touch before buying


Concerns about personal financial information


Delivery costs too high



that returns will be a hassle


Prefer to research

online, then buy in a store


No need to buy products online


Can’t speak to a sales assistant

in person


Internet Marketing Technologies

Online data sources

Web transaction logs

records user activity at a Web site

Registration forms

Shopping carts

Tracking files (cookies, etc.)

Databases, data warehouses, and data mining

Customer relationship management (CRM) systems

Advertising networks

Data Warehouse and Business
Intelligence Applications

Customer Relationship Management
(CRM) Systems

A CRM system is a repository of customer information that
records all of the contacts that a customer has with a firm and
generates a customer profile available to everyone in the firm with
a need to “know the customer”

Data is collected through customer touch points

CRM systems assist firms in categorizing customers (potential
customer, current customer, high
value customer, lost customer,
etc.) and enabling them to best serve each individual customer
based on their individual characteristics and needs

The basic idea of CRM is to treat different customers differently,
because their needs differ and the value to the company also may

A Customer Relationship Management
System (Figure 6.10)

How An Advertising Network Such As

Works (Figure 6.12)

Customer Retention: Strengthening the
Customer Relationship

The Internet offers several extraordinary marketing
techniques for building a strong relationship with customers
and for differentiating products and services

Personalization and one
one marketing

Customization and customer co

Customer service (FAQs, real
time customer service chat
systems, automated response systems)

The Internet also provides opportunities for new pricing
strategies to best serve individual customers and increase
revenues and profits

Net Pricing Strategies

In the early years of e
commerce, sellers were pricing their
products far below their marginal costs to attract new
customers and achieve short
term success

Later, once the customer was part of a large, committed,
audience then prices could be raised to the point where an
online seller could achieve a profit through some
combination of revenue models

Net pricing is particularly difficult when information
products and services have a marginal cost near zero

Several pricing strategies are used online

Net Pricing Strategies (cont.)

Free and

Users are offered a basic service for free, but must pay for premium
or add
on services


revenue subsidizes the free services


Creating multiple versions of information goods and selling
essentially the same product to different market segments at different


Offers consumers two or more goods for a reduced price

Dynamic pricing and flash marketing

Different from fixed
price strategies

Identifying different prices for different consumers, situations, and
time periods

Channel Strategies: Managing Channel

The term channel refers to different methods by which goods
can be distributed and sold

The emergence of e
commerce on the Web has created a new
channel and has led to channel conflict

Channel conflict occurs when a new venue for selling
products or services threatens to destroy existing venues for
selling goods

The impact of channel conflict varies by industry, but it is a
consideration when firms are selecting an overall e
commerce strategy