Marketing in the New Internet Economy

1
Chapter 3

• Marketing in the New Internet Economy

2
Road Map Previewing the Concepts

• Identify the major forces shaping the new
  Internet Age.
• Explain how companies have responded to the
  Internet and other powerful new technologies with
  e-business strategies, and how these strategies
  have resulted in benefits to both buyers and
  sellers.
• Describe the four major e-commerce domains.
• Discuss how companies go about conducting
  e-commerce to profitably deliver more value to
  customers.
• Overview the promise and challenges that
  e-commerce presents for the future.

3
Major Forces Shaping the Internet Age (Fig. 3-1)
4
Major Forces Shaping the Internet Age

• Digitalization Connectivity
• Intranets connect people within a company.
• Extranets connect a company with its suppliers.
• Internet connects users all around the world.

• Internet Explosion
• Explosive growth forms the heart of the New
  Economy.
• Companies must adopt Internet technology or risk
  being left behind.

5
Customization and Customerization
Old Economy Revolved Around Manufacturing
Companies. New Economy Revolves Around
Information Businesses.
6
Marketing Strategy in the New Internet Age

• Conducting business in the new Internet Age will
  call for a new model for marketing strategy and
  practice.

• All buying and selling may involve direct
  electronic connections between companies and
  customers.
• Marketing should play the lead role in shaping
  new company strategy.

7
e-Business, e-Commerce, and e-Marketing in the
Internet Age
e-Business
Involves the Use of Intranets, Extranets the
Internet to Conduct a Companys Business

e-Commerce Involves
Buying Selling Processes Supported by
Electronic Means
E-Marketing e-selling side of
e-commerce
8
Benefits to Buyers
e-commerce Yields the Following Benefits to
Buyers

• Convenient
• Buying is Easy and Private
• Greater Product Access and Selection
• Access to Comparative Information
• Buying is Interactive and Immediate

9
Benefits to Sellers
e-commerce Yields the Following Benefits to
Sellers

• Customer Relationship Building
• Reducing Costs Increasing Speed and
  
• Efficiency
• Offers Greater Flexibility
• Truly Global Medium

10
Interactive Student Assignments

• Consider the following thought questions,
  formulate an answer, pair with the student on
  your right, share your thoughts with one another,
  and respond to questions from your instructor.
• What is the new Internet Age?
• What are the major forces shaping this new
  Internet Age?
• What is the difference between an intranet,
  extranet, and Internet?

11
E-Commerce Domains (Fig. 3-2)
12
B2C (Business to Consumer)

• Sales expected to increase from 34 billion in
  2001 to 130 billion by 2006.
• Provides e-marketers with access to consumers in
  all age groups.
• More customer-initiated and customer-controlled.

13
B2B (Business to Business)

• Estimates are that B2B e-commerce will reach 3.6
  trillion in 2003.
• By 2005, more than 500,000 enterprises will
  participate as buyers, sellers, or both.

• Much e-commerce takes place in open trading
  networks
• http//www.plasticsnet.com/
• Some companies are also setting up private
  trading networks (PTNs)

14
C2C (Consumer to Consumer)

• Occurs between people over a wide range of
  products and services.
• EBays C2C transacted more than 5 billion in
  trades last year.
• Involves interchanges of information through
• Forums
• Newsgroups

15
C2B (Consumer to Business)

• Todays consumers can contact and communicate
  with companies.
• Consumers can search out sellers on the Web,
  learn about their offers, and initiate purchases.
• Example Using http//www.priceline.com/,
  consumers can bid for airline tickets, hotel
  rooms, etc.
• Then, sellers decide whether to accept their
  offers.

16
Discussion Questions

• What are your biggest fears about doing business
  online?
• How could a marketer deal with these fears and
  reduce them?

17
Types of e-Marketers (Fig. 3-3)
18
Types of Click-Only Companies
Click-Only Companies
19
Reasons for Dot.com Failures

• Failure to research or plan

• Spin hype instead of marketing strategies

• Spending offline to establish brand identities

• Attention on gathering new customers instead of
  building brand loyalty

• Poorly designed Web sites

• Lack of good distribution delivery processes

• Prices and margins were often very low

20
Click-and-Mortar Companies

• Many resisted adding e-commerce because of
  potential for channel conflict and
  cannibalization.
• Many are doing better than brick or click-only
  operations i.e. http//staples.com. Why?
• Trusted brand names financial resources,
• Large customer bases,
• Knowledge experience,
• Good relationships with key suppliers,
• Ability to offer customers more options,
• Buy online return unwanted merchandise to store.

21
Setting Up for e-Marketing (Fig. 3-4)
22
Creating a Web Site
Types of Web Sites
Corporate builds customer goodwill Marketing
moves customers closer to a direct purchase
23
SonyStyle.com Marketing Web Site

• This marketing web site offers engages consumers
  in an interaction that will bring them closer to
  a direct purchase, all with a few clicks of the
  mouse button.
• http//sonystyle.com

24
Designing Attractive Web Sites

• Create value excitement to get people
• to the site,
• look around (hopefully to buy)
• and come back again.
• Value of the sites content that will do all of
  the above.

• 7 Cs of effective Web Site Design
• Context
• Content
• Community
• Customization
• Communication
• Connection
• Commerce

25
Placing Ads and Promotions Online

• Online advertising - used to build Internet
  brands or attract visitors.
• Forms of online advertising promotion
• Banner ads tickers (move across the screen)
• Skyscrapers (tall, skinny ads at the side of a
  page)
• Rectangles (boxes larger than banner)
• Interstitials (online ads that pop up between
  changes)
• Browser ads (sponsors pay viewers to watch)
• Content sponsorships (sponsoring content on
  sites)
• Microsites (limited areas managed by an external
  co.)
• Viral marketing (Internet word-of-mouth)

26
Other e-Marketing Methods

• Creating or Participating in Web Communities
• Allow members to exchange views on issues of
  common interest.
• http//iVillage.com
• Share common interests well-defined
  demographics.

• E-mail or Webcasting
• E-mail mainstay for B2C B2B
• Webcasting automatically downloads customized
  information to recipients PCs.

27
Promise and Challenge of e-Commerce

• Limited exposure and buying
• Skewed demographics and psychographics
• Chaos and clutter
• Security
• Ethical concerns

28
Road Map Reviewing the Concepts

• Identify the major forces shaping the new
  Internet Age.
• Explain how companies have responded to the
  Internet and other powerful new technologies with
  e-business strategies, and how these strategies
  have resulted in benefits to both buyers and
  sellers.
• Describe the four major e-commerce domains.
• Discuss how companies go about conducting
  e-commerce to profitably deliver more value to
  customers.
• Overview the promise and challenges that
  e-commerce presents for the future.