EC and the Virtual Corporation

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EC and theVirtual Corporation
Module 6 Marketing and the InternetPart 1
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(No Transcript)
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Session Objectives

• Identify and Discuss Traditional Marketing
  Functions
• Explore How These Functions Appear in the
  e-Business World

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What are the traditional marketing functions?
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• Price
• Product
• Promotion
• Place (Distribution)

The 4 Ps of Marketing
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Marketing for E-business
How do these functions change in the e-business
world? Do they?
Remember no media has ever replaced another
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Marketing
Guerrilla Marketing Some have used the this term
to describe Internet Marketing - What does it
mean?
Viral Marketing What kind of marketing strategy
does this represent?
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One view of the possible differences when
E-business marketing

• Addressability
• Interactivity
• Memory
• Control
• Accessibility
• Digitalization

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Addressability

• Ability to Identify the Customer Before They Make
  a Purchase
• Modify Marketing to Target Customers with Narrow
  Interests
• Facilitate Tracking of Visits and Buying Activity
• Demographic of ONE!

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Interactivity

• Allows Customers to Respond Directly to the
  Marketing Message
• Allow the Ability to Capitalize on the concept of
  Community
• Immediate feedback and response

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Memory

• We can remember everything!
• Individual Customer Profiles and Past Purchase
  Histories
• Customize Marketing Offer
• Data Mining to Detect Overall Customer Patterns

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Control

• Customers Have Ability to Regulate
• Information They View
• Rate and Sequence of Viewing
• Web is a Pull Medium
• Users Determine What They View
• Whereas TV is a Push Medium Broadcasters
  Determine

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Accessibility

• Can Obtain Vast Amounts of Information
• Customers Better Informed about Products and
  Information
• Increases Competition for Internet Users
  Attention
• Brands Become More Important as a Competitive
  Tool

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Digitalization

• Ability to Represent Product/Benefits in Digital
  Format
• Web Can Distribute, Promote/Sell Features Apart
  from the Physical Product
• Allow New Combinations of Features and Services
  to be Created Quickly and Inexpensively

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Lets Look at the 4 Psand key marketing
functions
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Product
Primary Value Proposition
B2C
B2B
C2C
Information and Content Delivery Models
Information and Content Delivery Models
Digital
Peer to Peer
Product
Transplanted Wholesale and Supply Chain Models
Transplanted Models etailing/Cataloging
Auctions Exchanges
Physical
Information Management Models
Information Management Models Portals
Digital
Service
Brokerage Models
B2B Exchange Models
Auctions Exchanges
Traditional
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Price
Why doesnt all peanut butter cost the same?
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Price
Pricing Objectives Maximize short term
profits Gain Market Share
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Price
Pricing Strategies Skimming Mark-up Penetrat
ion Cost Plus Prestige Flexible Odd-Even Ma
rket based Bundled Services Quantity
Discount Seasonal Geographic Rebates Cash
vs Credit
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Price
How is price affected by the Internet?
Whats all this about customers setting prices?
Does price drive Internet buying behavior?
What is the impact of the ease of comparison
shopping on price?
Will customers pay a premium for Internet based
products? When?
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Price
What sets price? The value a buyer places on a
product.
The amount of information a firm has
about customers usually determines optimal
pricing strategy.
Can we set different prices for different
users? Market Segmentation - can we do this on
the Internet? Harder or Easier?
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Price
What about auction models?
English bid - ascending price
Yankee auction - quantity based
Dutch - descending bid
Sealed bid - Vickrey auctions - 2nd price
Double Auctions - open/sealed
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Price
What B2C, C2C, and B2B auction sites can you
name?
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Fundamentally price is an economic issue - based
on demand elasticity An argument can be made
that we are seeing a power shift to the customer
on the issue of price. Will this last?
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Promotion
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Promotion
How does promotion differ on the web?
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Promotion
What is an online brand? Is it the domain
name? What about .arts .firm .bus that are
coming? Most are dropping the .com as part of
brand identity
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Promotion
Extending a brand online - Real Names
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Internet Customer Cycle
Site Hosted Site Found Site Bookmarked - 80/20
Rule Quid Pro Quo - Customer Registered Online
Sales - Paying Customer Site Advocate
How does a customer find a site on the Internet?
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Promotion
Search Tool Strategy
How much traffic does a search tool generate for
a site? Some say up to 70! Tendency is away
from Crawler-based results - What does that mean?
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Search Engines Categories
Directories are created manually by people who
screen and categorize each submitted site entry
into a database that is a hierarchy of topics and
sub-topics. Search Engines rely on programs to
continuously crawl web sites to collect
information and place it in a database to be
accessed later when conducting a search.
Hybrids are search engines that also maintain
an associated manually generated
directory. Multi-Search Tools are web sites that
automatically submit your search criteria to
multiple search engines and provide you the
combined results.
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Search Tool Components
Spider /Crawler or Editor
Search Program
Index or Catalog
Find locations in the database that match the
request and Rank the results
Database of Spider Findings Keywords vs Location
s
There are timing differences that can result in
a bad links or unlisted links
Visits Web pages to find descriptive keywords
Your Browser
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Search Engine Size Comparison
No search tool indexes the entire web!
http//www.searchenginewatch.com/reports/sizes.htm
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Directory Size Comparison
Remember Editors are humans who decide if and
how sites will be categorized.
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Search Tool Differences
All search Tools have these three basic
components but there are differences in how each
of the components are implemented and tuned -
this is constantly changing!
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Search Engines Relevancy

• We dont have time to sift through thousands of
  hits
• We want the most relevant ones to be near the top
  of the list
• The more relevant the results, the more we value
  the search engine

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Relevancy Rankings

• Search engines follow a set of rules when
  conducting a search and ranking the results
• Virtually all search engines use some variation
  of location/frequency rules
• No search engine does it exactly the same way as
  another !

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Relevancy Rankings
Location Pages with keywords in the title may
be assumed to be more relevant. Pages with
keywords that appear near the top of the page
may be assumed to be more relevant. -
Headings - First few paragraphs on the page
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Relevancy Rankings
Frequency Search engines can analyze how
frequently keywords appear in a page relative to
other words on the page. Those with higher
frequency may be assumed to be more relevant.
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Relevancy Rankings

• Some engines give pages a boost in rankings
  if they find a lot of other pages linking to that
  page
• Some hybrid engines may give a boost to pages
  that they have reviewed manually
• Some may give a boost to pages with keywords
  in meta tags.
• Most engines penalize for spamming
• (over-use of keywords)

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Some take the mystery out of the process by using
Paid listings
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Search Engine Features
Search Engines also differ in a number of other
ways
Size - The larger the index, the greater the
chance that particular pages will be
included. Pages Crawled per Day - The more pages
a spider crawls per day, the fresher the index
will be. Freshness - some engines instantly
index crawled pages. Others crawl popular pages
more regularly than others. Date - some engines
show the date when pages were added.
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Search Engine Features
Frames support - some engines cant support
frames. Image maps - most engines dont read
image maps. Link popularity - engines can
determine how many others link to your site.
This may give you a relevancy boost. Learns
frequency - some engines learn how often your
pages change and will visit your site more
often. Stop words - some engines leave out
certain words when indexing.
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So how do we make sites most visible to Search
Tools?
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• Pick and understand keywords
• Position keywords
• Provide relevant content
• Avoid stumbling blocks - all images
• Dont spam
• Use meta tags
• Submit pages to search tools
• Provide links to other sites

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Promotion
Does Advertising Differ on the Internet? Is the
Internet just like other media outlets?
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Banner Ads
There is considerable debate on the relative
merits of banner ads and has been since 1994
Click-through is low but not the only measurement
of effectiveness
Studies now showing that banners can effectively
build brand awareness - www.iab.net/advertise/con
tent/adcontent.html
Double Click was the industry pioneer
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Promotion
Sponsorship Programs
Growing component of web promotion
Aggressively promote sponsorship for revenue and
image
Sponsored by link or banner added to a site
Rates - vary widely depending on the
program 100 per thumbnail link 500 per banner
link -http//207.86.247.109/Articl
es/html/sponsorship.html 10K to 100k per month
with Doubleclick
Need something like 10,000 hits/day to attract
sponsors
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Promotion
Press Releases
For Immediate Release For Further
Information Contact
Audri or Jim Lanford -
704-262-5885 New Web Site Teaches AnyoneHow to
Become a Celebrity Visitors to the new NETrageous
Publicity Resource Center Web site at
http//www.netrageous.com/pr/ will learn Note
partial print of PR PR template
http//www2.netrageous.com/PR/samplerelease.html
Online Resources
www.newsbureau.com www.businesswire.com www.urlwir
e.com
At one time most were free!
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Promotion

• Fee based
• 225 single release
• 2025 for 12 releases
• Targeting ability
• A-List 1,300 subscribers
• Target Modules
• Release writing services
• Fast

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Promotion

• Highly selective
• Claims to reject 95
• 795 avg fee
• Claims 3,000
• Personal - no
• automation
• Targeting capability
• Email delivery web

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Promotion
On-site Events
IBM just announced a series of online events
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Promotion
Permission Marketing
Key feature is selling more to existing customers
Frequent Free permission-based messages build
loyalty
It is more expensive to get than to retain a
customer
Technology makes frequent delivery free, give
us perfect memory of our customer supplied
information, and allows us to deliver messages
that we customize on the fly!
Source www.emarketer.com/enews/enews_godin.html
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Promotion
Yesmail as an example of a permission based model
Consumers give permission to receive targeted
messages
Claim 10-15 times response rate of banner ads or
direct marketing
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Linking Drives Traffic Home

• Ask for reciprocal arrangements
• complementary sites loan brokers real estate
  sites
• associations, chambers of commerce, ISPs
• ask sites that link to your competitors to link
  to you
• Look for Creative Linking Opportunities
• linking cooperative www.linkexchange.com
• related interests organized into easy-to-travel
  rings www.webrings.com

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Establishing An Affiliate Program

• Collaboration Strategic Alliances
• Affiliate programs are revenue sharing
  arrangements
• Organized by companies selling products and
  services
• Partners are rewarded for sending customers to
  the affiliates business.
• Amazon.com - 60,000 affiliates (8/98)
• Resources
• www.clicktrade.com
• www.befree.com
• www.becrc.org/Affiliation.htm

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Advertising
Offline Advertising
BizRate.com studies revealed that 33 of online
buyers were referred from an off line source
An average of 14.6 more per transaction spent
when referred from offline source
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Promoting Trust

• Site privacy policy
• post your policy on your site
• include info on use of all collected data
• information on site security
• 3rd party certification
• report card for each merchant
• includes security and privacy policies
• business practices based on customer surveys

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Payment
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Payment Strategies

• Cash / Fax / Mail
• Smart Cards
• www.mondex.com
• Digital Cash
• www.millicent.com
• Cybercoin
• www.cybercash.com

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Payment Strategies

• Online Checking
• www.cybercash.com
• www.checkfree.com
• www.authorizenet.com
• www.infodial.net
• www.tekchek.com
• Other Systems
• store owners do not need a merchant account - use
  iBills merchant account
• www.ibill.com
• charge phone bill
• www.echarge.com

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Credit Cards

• Payment method of choice for most customers
• CyberCash
• An integrated electronic-payment system used by
  commerce servers to verify credit cards and
  process payments
• Others
• www.authorizenet.com
• www.creditnet.com
• www.icverify.com

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Place - Distribution