Electronic Commerce

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Electronic Commerce
MIS 6453 -- Fall 2004

• eCommerce Marketing Issues

Instructor John Seydel, Ph.D.
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Student Objectives

• Summarize the importance of identifying relevant
  market segments
• Discuss how the stages of customer loyalty apply
  to ecommerce
• Describe web-based advertising concepts
• Discuss why CRM opportunities are enhanced with
  ecommerce
• Apply ecommerce marketing concepts to the MMB case

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What Do You Think?

• Boring material . . . ?
• What stands out as important . . . ?

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Overview of Marketing Strategy

• Strategies address the marketing mix (4 Ps)
• General options
• Product-based (e.g., Office Max)
• Customer-based (most B2B sites)
• Trust-building is a key (on or off the Web)
• The Web is an intermediate step between mass
  media (low trust) and personal contact (high
  trust)
• Using the Web, firms can capture some of the
  benefits of personal contact yet avoid the high
  costs inherent with that approach
• Various market segments need to be identified and
  targeted differently

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Segmentation Summary

• Traditional dimension
• Geographic
• Demographic
• Psychographic
• Personal dimension
• Behavior
• Occasion (e.g., vacations, holidays)
• Usage (simplifiers, surfers, bargainers,
  connectors, routiners)
• Life cycle (relationship intensity varies)
• Aware
• Explorer
• Familiar
• Committed
• Separated
• Why does it matter?
• We can build multi-segment, multi-feature sites
  in the virtual world

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Advertising on the Web

• Why?
• Stimulate demand for products/services
• Link to/from affiliate sites
• Banner ad small rectangular object on a Web page
  
• Interactive marketing unit (IMU)
• Specifies ad formats
• Standard banner sizes that most Web sites have
  voluntarily agreed to use
• Banner exchange network coordinates ad sharing
• Banner advertising network acts as a broker
  between advertisers and Web sites that carry ads

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Ad Format Guidelines
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Other Ad Formats

• Popup windows
• Or pop-under
• Use sparingly
• Popup blockers can thwart
• Interstitial ads

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Driving Traffic to a Website
E-mail
Search Engines
Domain Name
E-commerce Web site
External Links
Public Relations
Advertisements
Promotions
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Domain Name (Brand)
Web site
www.coca-cola.com
DNS
DNS
www.coke.com
DNS
www.cocqcola.com
198.4.159.10 (IP address)
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E-mail
No spamming ! Use opt-in, opt-out approach
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Search Engines Directories
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Overture is an Active Bid Search Engine
coke, coca-cola, the real thing, soft drinks,
pop, mixers, cola   Coca-cola Homepage
 
Welcome to Coca-cola Homepage!  
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Public Relations

• Gomemphis.com Full text of the Presidents
  State of the Union address
• World Chess Match moves
• Clinton cyber town hall meeting

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Promotions
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Some Comments about Advertising

• Online - is more tractable than offline
  advertising
• Offline traditional tv, radio, billboard and
  magazine can be tagged with .com

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Pool of Impressions
1,000
2
Pool of Visitors
20
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Cost per Impression 15/CPM (.015) Cost per
visitor _at_ 2 click-through (.015/.02
.75) Cost per purchase _at_ 5 conversion
(.75/.0515.00)
Buyers
1
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Profitability of Each Site Can Be Determined
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Banner Click-Through Rates
Banner Click-Through Rates (Apr 1999-Jan 2000)
Percent
Month
Source Nielsen//NetRatings
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Passive versus Active Approaches

• Passive Banner, Pop-ins
• Active Content (text) links, Affiliates

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XYZ
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Goals of CRM

• Retention rate CRM, relationship building,
  increases customer loyalty which increase revenue
  per customer and frequency of purchases.
• Referrals CRM can turn customers into advocates.
  Referrals typically have higher retention rates
  and spending rates than other newly acquired
  customers.
• Increased sales CRM leads to increased
  cross-selling, upgrades, or simply more products
  by existing customers.
• Reduced costs CRM can lead to more cost
  effective marketing avoids expenses of mass
  marketing, free-up sales professionals, reduces
  direct mailings.

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Your best customers 80 of your revenue
Spend Service Dollars Here
Gold
Spend Marketing Dollars Here
Your best hope for new gold
Move-ups
???
Long Shots
Archive
Losers
1 of your revenue
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Using the Internet to Communicate with Customers

• Far cheaper than any other medium
• Operates 24/7/365
• Know which customers have read a message and when

• Enables customers to find out information for
  themselves
• Can build a bond with customers interactive,
  addictive
• Can communicate across borders and languages