Electronic Commerce

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(No Transcript)
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Electronic Commerce COMP3210

• Dr. Paul Walcott
• 15/10/04

The Department of Computer Science Mathematics
and Physics University of the West Indies, Cave
Hill Campus, Barbados
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Contents

• Web Marketing
• Customer behaviour
• Web Advertising

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One-to-One Marketing

• Companies can offer a form of one-to-one
  marketing by allowing customers to customise the
  retailers Web site
  
• One example of this is Dell.com
• Offers each customer its own Web site
• Allows individual employees of its customers to
  create their own personalised pages

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Behavioural Segmentation

• This allows companies to target specific
  customers in different ways at different times
  
• A person tends to have different requirements on
  different occasions
  
• E.g. a person wanting a meal might go one place
  for breakfast and another for lunch
  
• As a result a different user experience must be
  created depending on the behaviour of the user

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Usage-based Market Segmentation

• A person may visit the same Web site at different
  times for different reasons, as a result we must
  identify behavioural patterns
  
• Some key behavioural patterns are
• Browser
• Buyer
• Shopper

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The Behaviour of a Browser

• Browser enter your Web site to browse or surf
• In order to generate and maintain interest Web
  sites should use trigger words
  
• These words jog the memory of visitors, reminding
  them to buy from the site
  
• As a result users stay longer at the site

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The Behaviour of a Browser (I)

• A Web site should include extra content related
  to the product or service offered
  
• For example a company that sells printers could
  provide extra information about different types
  of paper and their use in desktop publishing

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The Behaviour of a Shopper

• Shoppers arrive at a Web site wanting to buy a
  product or service, but requires more information
  before purchasing, so they will get the best deal
  and the best-suited product
• What is important to shoppers are
• Comparison tools
• Product reviews
• A list of features
• User control product/service level of detail
• One day a user may be a browser, the next a
  shopper

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The Behaviour of a Buyer

• Buyers arrive at your Web site ready to make a
  purchase
  
• A good Web site design would prevent anything
  from getting in the way of the purchase
  
• As a result a Web catalog might provide a box on
  the home page to enter the catalog number (e.g.
  www.argos.co.uk) and then allow the user to add
  it to a shopping cart

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The Behaviour of a Buyer (I)

• The primary goal is to get the the buyer to the
  shopping cart as quickly as possible
  
• The shopping cart
• Allows the buyer to create an account
• Allows the user to log in after placing items
  into the cart
  
• Logging in should be left to the end so that
  barriers are not placed in the shopping process

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The Behaviour of a Buyer (II)

• Amazon.com offers a patented 1-click feature
  allowing
  
• Customers to purchase items with a single click
• Any items purchased within 90 minutes of each
  other are aggregated into one order

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Alternative Behavioural Modes

• A survey of 50,000 participants identified six
  groups of Internet users
  
• Simplifiers who like convenience and are
  attracted to sites that could make life easier
  
• Surfers searches the Web for information and
  shop. They spend a lot of time on the Web and
  like to be entertained
  
• To attract attract surfers, the content must be
  attractive, well displayed and updated regularly

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Alternative Behavioural Modes (I)

• Bargainers search for a good deal therefore
  frequent sites like eBay.com. This represents
  about 10 of the on-line population.
  
• Bargainers are willing to search sites for the
  best terms and prices
  
• Connectors stay in touch with people over the
  Web. They use applications such as chat rooms,
  instant messaging services, electronic greeting
  cards and Web email

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Alternative Behavioural Modes (II)

• Routiners visit the same sites all of the time,
  e.g. to check news, or stock quotes
  
• Sportsers frequent sports and entertainment
  sites
  
• It is important that these are results from only
  one study other studies have found similar
  groups however

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Customer Relationship Intensity

• There is a need to create a strong relationship
  between a company and its customers
  
• A good relationship creates loyalty amongst
  customer

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Customer Relationship Models

• Two customer relationship model are
• Five stage model of customer loyalty
• The stages are awareness, exploration,
  familiarity, commitment and separation
  
• The Funnel Model
• The stages are customer acquisition, conversion
  and retention

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Five Stage Model of Customer Loyalty

• Researches have identified five stages of
  customer loyalty
  
• Awareness the name of the company/or its
  products are recognised. No interaction with the
  company has been made
  
• Exploration in the stage the customers finds out
  more about the products of the company.
  Communication may be through a Web site, the
  telephone or e-mail. This stage is about
  information interchange

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Five Stage Model of Customer Loyalty (I)

• Familiarity The customer has completed several
  transactions with the company, although the
  customer is still willing to shop with
  competitors
• Commitment The customer is satisfied with the
  level of service and is therefore a repeat
  customer. Customers at this point are wiling to
  tell others about the service
• Separation This may result from disappointment
  in the level of service or product quality

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Five Stage Model of Customer Loyalty (II)

• These five stages are sometimes referred to as
  the customer life cycle
  
• Grouping customers based on these stages is
  called life-cycle segmentation

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The Funnel Model

• Managers often want to identify the best way to
  attract and retain customers
  
• The funnel model is a tool that managers use to
  analyse the effectiveness of their marketing
  strategy
  
• This model is less abstract than the five stage
  model

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The Funnel Model (I)

• This funnel model allows companies to determine
  which advertising and promotion strategies
  actually work
  
• It is divided into three parts
• Customer acquisition
• Customer conversion
• Customer retention

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Customer Acquisition

• This is the process of attracting new visitors to
  your site
  
• The total amount of money that a Web site spends
  to attract one visitor is called the acquisition
  cost

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Conversion Conversion

• This is the process of converting a first time
  visitor of a site to a customer
  
• For advertising-supported sites this is the point
  when a visitor registers, or when they return
  several times
  
• For sites with other revenue models this would be
  when a visitor purchases a good or service or
  subscribes to the sites content
  
• The total money spent (on average) to induce a
  visitor to make a purchase on a site is called
  the conversion cost (most managers also include
  the acquisition cost)

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Customer Retention

• In many business the conversion cost is higher
  than the profit made on the average sale
  therefore it is important to encourage customers
  to return to the site to make another purchase
• If the customer returns to the site a number of
  times after the first purchase, they are
  considered retained customers
  
• The cost of getting customers to return to the
  site and make a purchase is called the retention
  cost

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The Funnel Model
500,000 ads shown on Web pages
Needs identification
Searches for information about alternative
product and services
10,000 ad viewers become visitors
900 visitors become shoppers
Evaluate alternatives and makes selections
500 shoppers complete their purchase
Purchase
Conversion of shoppers into loyal supporters
80 purchasers become loyal, repeat customers
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Web Advertising

• Advertising is about communication
• Communication may be between a company and
• Its current customers
• Potential customers
• Or former customers that the company is trying to
  regain
  

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Banner Advertising

• Most Web advertising uses banner ads
• A small rectangular object normally at the top of
  the Web page which displays stationary or moving
  graphics
  
• These ads are created using animated GIFs, or
  objects created in Shockwave, Java or Flash)
  
• These ads must be attention grabbing

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Banner Advertising

• Web ads have been standardised by an organisation
  called the Interactive Advertising Bureau (IAB)
  which is responsible for
  
• Creating banner size standards (e.g. 728x90,
  160x600, 300x250, or 180x150)
  
• Encourage effective Internet advertising

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Banner Ad Placement

• There are three ways that a company can have
  their banner ads displayed
  
• (1) Use a banner exchange network
• A banner exchange network arranges for banner ads
  for one company to be displayed on another
  companys Web site
  
• Each member site would accept two ads for each ad
  placed on someones site
  
• The banner exchange network earns money by
  selling ad space to other businesses

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Banner Ad Placement (I)

• (2) Pay a site to display the banner ad
• Rates can be negotiated through an advertising
  agency
  
• (3) Use a banner advertising network who acts as
  brokers between advertisers and Web sites that
  carry ads
  
• They often broker space on large Web site like
  Yahoo, which has high traffic volumes and are
  therefore expensive

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Measuring Cost for Ads

• Several measurements exist including
• Cost per thousand clicks (CPM)
• The number of new visitors that arrive via a
  click-through that buy on the site
  
• To measure Web audiences is complicated, however
  the following definitions are instructive
  
• A visit occurs when a Web page is requested by a
  visitor further page loads from the same site
  within a time period is considered part of the
  same visit

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Measuring Cost for Ads (I)

• A trial visit, which is the first time a visitor
  loads a Web site
  
• When a visitor loads a page several time these
  are called repeat visits
  
• If a visitor clicks on an ad that is displayed on
  a Web page this is called a click-through
  
• Rates vary depending on how much demographic
  information is captured, and the kind of visitors
  the site attracts
  
• The cost per one thousand clicks may range from
  1 to 50.

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Other Web Ad Formats

• The pop-up ad is an ad that appears in its own
  window when the user opens or closes a page
  
• The pop-behind ad is a pop-up ad that is behind
  the existing browser window
  
• Ad-blocking software prevents these ads from
  displaying
  
• Rich media ads (active ads) generate graphics
  that float over the Web page
  
• These ads are attention grabbing, but intrusive

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E-Mail Marketing

• E-mail may well be one of the greatest tools
  created for communication in the 20th century
  
• Some of the ways that email has been used for
  marketing are
  
• Permission marketing is the sending of emails to
  people who request further information on a
  product or service (for example)
  
• Combining content (e.g. articles or news stories
  that are of interest to the target market) with
  advertising messages
  

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Affiliate Marketing

• In affiliate marketing a Companys Web site
  includes product or services offered for sale by
  another company in exchange for a commission
  
• The affiliates site benefits from the selling
  sites brand in exchange for the referral
  
• Amazon.com has over 800,000 affiliate sites

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Viral Marketing

• Viral Marketers rely on non-customers being told
  about products or services by existing customers
  
• The number of customers increase the way a virus
  increases
  
• An example of a viral marketing campaign is Blue
  Mountain Arts
  
• When an electronic greeting card is sent to a
  person, a link to Blue Mountain is included. The
  person receiving the card would then click on the
  link to read the card, and is likely to search
  for and send a card themselves

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Web Site Naming

• People with established brands want to name their
  Web site after their brand
  
• Companies other buy more than one domain name,
  just in case the person misspells the domain name
  (e.g. Yahoo.com owns Yahow.com)
  
• Domain names can be expensive, e.g. Altavista.com
  cost 3.3 million