4.2: One-to-One Marketing and Personalisation in EC

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4.2 One-to-One Marketing and Personalisation in
EC

• One-to-one marketing
• Marketing that treats each customer in an unique
  way, facilitated by the use of Internet
  technologies.
• Personalisation
• The matching of services, products, and
  advertising content to individual consumers.
• Several different ways to obtain information from
  consumers
• Soliciting the information from the individual
  directly, using cookies or other methods to
  observe online behavior
• Performing market research
• Extrapolating from previous purchasing patterns
• Matching an individuals preferences (via a
  software system) to available products and
  services.

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4.2 One-to-One Marketing and Personalisation in
EC

• User profile
• The requirements, preferences, behaviors, and
  demographic traits of a particular customer
• Cookie
• A data file that is placed on a users hard drive
  by a Web server, frequently without disclosure or
  the users consent, that collects information
  about the users activities at a site

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4.2 The New Marketing Model
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4.2 One-to-One Marketing and Personalisation in
EC

• Collaborative filtering
• A personalisation method that uses customer data
  to predict, based on formulas derived from
  behavioral sciences, what other products or
  services a customer may enjoy predictions can be
  extended to other customers with similar profiles
• Variations of collaborative filtering
• Rule-based filtering (prediction based on
  behavioral patterns)
• Content-based filtering (recommendation based on
  user preferences)
• Activity-based filtering (by watching users
  activities on the Web)
• Legal and ethical issues in collaborative
  filtering
• Invasion-of-privacy issues
• Permission-based personalisation tools to request
  customer permission.

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4.2 Loyalty and Trust in E-Commerce

• Customer Loyalty
• Customer loyalty is the degree to which a
  customer will stay with a specific vendor or
  brand for repeat purchase
• Customer loyalty is expected to produce more
  sales and increased profits over time
• E-Loyalty
• Customer loyalty or commitment to an online
  retailer

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4.2 Loyalty and Trust in E-Commerce

• Satisfaction in EC
• Customer satisfaction (including customer
  service) is one of the most important consumer
  reactions in the B2C online environment
• Recent statistics show
• 80 of highly satisfied online consumers would
  shop again within 2 months
• 90 would recommend the Internet retailers to
  others
• However, 87 of dissatisfied consumers would
  permanently leave their Internet retailers
  without any complaints, thereby leading to
  decreased sales.

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4.2 Loyalty and Trust in E-Commerce

• Trust
• The psychological status of involved parties who
  are willing to pursue further interaction to
  achieve a planned goal.
• Trust is very important in EC because of lack of
  direct interaction between buyer and seller.
• How to Increase Trust in EC
• Brand recognition
• EC security mechanisms can help solidify trust
• Disclose and update latest business status and
  practices to potential customers and to build
  transaction integrity into the system
• Guarantee information and protection privacy
  through various communication channels

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4.3 Market Research for EC

• The Goal of Market Research
• To find information and knowledge that describes
  the relationships among consumers, products,
  marketing methods, and marketers.
• To assist a firm in both marketing and product
  mix decision.
• The Aim of Market Research
• To discover marketing opportunities and issues,
• To establish marketing plans,
• To better understand the purchasing process,
• To evaluate marketing performance

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4.3 Market Research for EC

• Market segmentation
• The process of dividing a consumer market into
  logical groups for conducting marketing research,
  advertising, and sales.
• Makes markets more easier to managed and so
  marketing strategies can be applied to specific
  subsets of the population.
• Segmentation is done with the aid of tools
• Data modeling
• Data warehousing

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4.3 Market Research for EC

• Online market research methods
• Implementing Web-based surveys
• Online focus groups
• Hearing directly from customers
• Customer scenarios
• Tracking customer movements
• Analysis of clickstream data

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Example Internet Market Research Expedites
Time-to-Market for
Procter Gamble

• In the past, developing a major new product, from
  concept to market launch, took PG over 5 years
• In September 2000, PG introduced Whitestrips on
  the Internet, offering the product for sale on
  its Web site.
• Online research was facilitated by data mining
  conducted on PGs huge historical data and the
  new Internet data
• Internet created a product awareness of 35
  percent before shipments were made to stores
• Revolutionised process of studying the product
  concept, segmenting the market, and expediting
  product development

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4.3 Market Research for EC

• Tracking Customer Movements
• Web Transaction log A record of user activities
  at a companys Web site
• Clickstream behavior Customer movements on the
  Internet and, what the customer is doing there
• Web Bugs Tiny graphics files embedded on e-mail
  messages and in Web sites that transmit
  information about the user and their movements to
  a Web server
• Cookie Frequently used with Web bugs.
• Spyware Software that gathers user information,
  through an Internet connection, without the
  users knowledge

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4.3 Market Research for EC

• Web Analytics
• Enable retailers to make site adjustments on the
  fly, manage online marketing campaigns and EC
  initiatives, and track customer satisfaction
• If a company redesigns its Web site, it can gain
  almost-instant feedback on how the new site is
  performing
• Web analytics help marketers decide which
  products to promote and merchandisers achieve a
  better understanding of the nature of demand

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4.3 Market Research for EC

• Limitations of Online Market Research
• Too much data may be available
• To use data properly, it should be organised,
  edited, condensed, and summarised
• Solution Automate the process by data
  warehousing and data mining (use of a variety of
  data sources to better understand customer
  behavior and preferences)
• Some of the limitations of online research
  methods are
• Lack of representativeness in samples of online
  users. May not typify the population at large or
  the demographics.
• Accuracy of responses
• Loss of respondents because of equipment problems
• The ethics and legality of Web tracking

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4.4 Internet Marketing in B2B

• Organisational Buyer Behavior
• Number of organisational buyers (purchasing for
  their organisations) is much smaller than the
  number of individual buyers
• Transaction volumes are far larger
• Terms of negotiations and purchasing are more
  complex
• Marketing and Advertising Processes in B2B
• Uses a variety of marketing methods online and
  off-line.
• Online they may use directory services or try to
  target specific customers.
• Off-line they may make sales calls or attend
  events.

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4.4 Internet Marketing in B2B

• Methods for B2B Online Marketing
• Targeting customers
• Electronic wholesalers
• Other B2B marketing services. Examples
• Digital Cement
• Provides corporate marketing portals that help
  companies market their products to business
  customers
• National Systems
• Tracks what is going on in an industry
• Affiliate programs
• Placing banners on another vendors Web site, for
  a commission
• Content alliance program in which content is
  exchanged so that all can obtain some free
  content
• Infomediaries and online data mining services

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4.5 Web Advertising

• Overview of Web Advertising
• Interactive marketing
• Web advertising, enabled by the Internet, allows
  advertising to groups
• Advertisers can interact directly with customers
  and consumers can interact with
  advertisers/vendors
• More complex and personalised than off-line
  advertising
• Two major business models for advertising online
  
• Using the Web as a channel to advertise a firms
  own products and services
• Making a firms site a public portal site and
  using captive audiences to advertise products
  offered by other firms

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4.5 Some Web Advertising Terminology

• Ad views The number of times users call up a
  page that has a banner on it during a specific
  time period known as page views
• Button A small banner links to a Web site
• Page An HTML document
• Click (click-through or ad click) A count made
  each time a visitor clicks on an advertising
  banner to access the advertiser s Web site
• CPM (cost per thousand impressions) The fee an
  advertiser pays for each 1,000 times a page with
  a banner ad is shown
• Conversion rate The percentage of visitors who
  actually make a purchase

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4.5 Some Web Advertising Terminology

• Click-through rate (or ratio) The percentage of
  visitors that are exposed to a banner ad and
  click on it
• Click-through ratio The ratio between the number
  of clicks on a banner ad and the number of times
  it is seen by viewers measures the success of a
  banner in attracting visitors to click on the ad.
• Hit A request for data from a Web page or file
• Visit A series of requests during one navigation
  of a Web site a pause of a certain length of
  time ends a visit.
• Stickiness Characteristic that influences the
  average length of time a visitor stays in a site

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4.5 Web Advertising

• Why Internet Advertising?
• Television viewers are migrating to the Internet
  as a viable media
• Advertisers are limited in the amount of
  information they can gather about the television
  and print ads
• Other reasons why Web advertising is growing
  rapidly
• Lower cost
• Increased Richness of format
• Ability to personalise
• Timeliness (fresh and up-to-the-minute)
• Location-basis (by the use of wireless tech and
  GPS)
• Digital branding (e.g., Amazon, British Airways)

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4.5 Advertising Networks

• Role of Ad Networks in Web Advertising
• Advertising networks are specialised firms that
  offer customised Web advertising.
• Examples
• Brokering ads
• Targeting ads to select groups of consumers.

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4.6 Web Methods

• Banners
• Banner
• On a Web page, a graphic advertising display
  linked to the advertisers Web page
• Keyword banners
• Banner ads that appear when a predetermined word
  is queried from a search engine
• Random banners
• Banner ads that appear at random, not as the
  result of the users action

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4.6 Web Methods

• Benefits of Banner Ads
• By clicking on them, users are transferred to an
  advertisers site, and frequently directly to the
  shopping page of that site
• The ability to customise them for individual
  surfers or a market segment of surfers
• Viewing of banners is fairly high because forced
  advertising is used
• Banners may include attention-grabbing multimedia

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4.6 Web Methods

• Limitations of Banner Ads
• Cost
• A limited amount of information can be placed on
  the banner
• Viewers have become somewhat immune to banners
  and simply do not notice them as they once did

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4.6 Web Methods

• Banner swapping
• An agreement between two companies to each
  display the others banner ad on its Web site
• Banner exchanges
• Markets in which companies can trade or exchange
  placement of banner ads on each others Web sites
• Pop-up ad
• An ad that appears in a separate window before,
  during, or after Internet surfing or when reading
  e-mail
• Pop-under ad
• An ad that appears underneath the current browser
  window, so when the user closes the active
  window, he or she sees the ad
• Interstitial
• An initial Web page or a portion of it that is
  used to capture the users attention for a short
  time while other content is loading

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4.6 Web Methods

• E-Mail Advertising
• Possible for advertisers to send out large
  volumes of advertisement contained inside e-mail
  messages.
• Effective method of advertising to large groups
• E-Mail Advertising ManagementFour guidelines
  that marketers should consider to leverage
  customer insights
• Thinking about customer experience
• Making privacy protection a part of their brand
  promise
• Ensuring their recipients know about their
  privacy protection and
• Measuring impact.

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4.6 Web Methods

• Search Engine Advertisement
• (The major advantage of using URLs as an
  advertising tool is that it is free and
  remembered home.
• Improving a companys search-engine ranking
  (optimisation)
• Paid search-engine inclusion
• Advertising in chat rooms
• Beneficial if merchant is sponsoring a room.
• Advertising in newsletters

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4.6 Uunsolicited Commercial E-mail (UCE)

• Spamming
• Using e-mail to send unwanted ads (sometimes
  floods of ads)
• What drives UCE?
• 80 percent of spammers are just trying to get
  peoples financial information - credit card or
  bank account numbers - to defraud them

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4.6 Uunsolicited Commercial E-mail (UCE)

• Why is it difficult to control Spamming?
• Spammers send millions of e-mails, shifting
  internet accounts to avoid detection
• Use cloaking, they strip away clues (name and
  address) about where spam originates
• Server substitutes fake addresses
• Many spam messages are sent undetected through
  unregulated asian e-mail routes
• Spamming is done from outside the U. S.

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4.6 Uunsolicited Commercial E-mail (UCE)

• Solutions to Spamming
• Antispam legislation is underway in many
  countries
• ISPs and e-mail providers (yahoo, MSN, AOL)
• Junk-mail filters
• Automatic junk-mail deleters
• Blockers of certain URLs and e-mail addresses
• Spam-filtering site for a country

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4.7 Advertising Strategies and Promotions Online

• Associated ad strategy
• An advertising strategy that displays a banner ad
  related to a term entered into a search engine
• Affiliate marketing
• Marketing arrangement by which an organisation
  refers consumers to the selling companys Website
  for a commission
• Most effective in generating a user base for a
  new site.
• Viral marketing
• Word-of-mouth marketing by which customers
  promote a product or service by telling others
  about it
• Ads-as-a-commodity trategy
• Customers are paid to read ads by advertisers
• Webcasting
• Free Internet news service that broadcasts
  personalised news and information, in categories
  selected by the user

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4.7 Advertising Strategies and Promotions Online

• Customising Ads
• Advertisements are customised by comparing users
  preferences to available products or services.
  Products or services that fit a users preference
  are then used as the ad is displayed/sent.
• Online Events, Promotions, and Attractions
• Major consideration when implementing an online
  ad campaign
• Target audience of online surfers clearly
  understood
• A powerful enough server used to handle the
  expected traffic volume
• Assessment of results is needed to evaluate the
  budget and promotion strategy (such give-aways
  and discounts)
• Consider co-branding
• Admediation
• Third-party vendors that conduct (usually
  large-scale) promotion.

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4.7 Framework for Admediation
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4.8 Special Advertising Topics

• Permission Marketing
• Advertising (marketing) strategy in which
  customers agree to accept advertising and
  marketing materials
• Ad Management
• Methodology and software that enable
  organisations to perform a variety of activities
  involved in Web advertising (e.g., tracking
  viewers, rotating ads)
• Localisation
• The process of converting media products
  developed in one environment (e.g., country) to a
  form culturally and linguistically acceptable in
  countries outside the original target market.
• The major issue with localisation is the ability
  to perform it correctly.

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4.8 Special Advertising Topics

• Internet radio
• A Web site that provides music, talk, and other
  entertainment, both live and stored, from a
  variety of radio stations.
• Wireless advertising
• Wireless advertising uses m-commerce and
  l-commerce technologies to advertise to people
  using mobile devices.
• Ad Content
• The content of ads is extremely important, and
  companies use ad agencies to help in content
  creation for the Web just as they do for other
  advertising media
• Content is especially important to increase
  stickiness

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4.9 S/W Agents in Marketing Advertising
Applications

• Major Issues of EC Agents Agents that Support
• Need identification (what to buy)
• Product brokering (from whom to buy)
• Merchant brokering and comparisons
• Buyer-seller negotiation
• Purchase and delivery
• After-sale service and evaluation
• Software agents can be used to help customers
  recognise their need for a product by providing
  product stimuli and information. For example,
  agents can be used to identify different
  merchants that can supply specific products.

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4.9 S/W Agents in Marketing Advertising
Applications

• Character-Based Animated Interactive Agents
• Avatars
• Animated computer characters that exhibit
  human-like movements and behaviors
• Social Computing
• An approach aimed at making the human-computer
  interface more natural.
• Chatterbots
• Animation characters that can talk (chat).
• These agents are used to provide a friendly
  interface and communication method with the
  merchant.

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Managerial Issues

• 1. Do we understand our customers?
• 2. Should we use intelligent agents?
• 3. Who will conduct the market research?
• 4. Are customers satisfied with our Web site?
• 5. Can we use B2C marketing methods and
  research in B2B?
• 6. How do we decide where to advertise?
• 7. What is our commitment to Web advertising,
  and how will we coordinate Web and traditional
  advertising?
• 8. Should we integrate our Internet and
  non-Internet marketing campaigns?
• 9. What ethical issues should we consider?
• 10. Are any metrics available to guide
  advertisers?