1chapter 14 essentials of marketing 4e lamb hair mcdaniel ©2005 south-western college publishing...

1Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western College Publishing

Prepared byPrepared byDeborah BakerDeborah Baker

Texas Christian UniversityTexas Christian University

Chapter 14

Internet MarketingInternet Marketing


Learning ObjectivesLearning Objectives

1. Explain how the Internet affects the traditional marketing mix

2. Describe how marketers are leveraging the power of online technology

3. Discuss the legal and privacy issues affecting Internet-based companies


Learning ObjectivesLearning Objectives

4. Measure the effectiveness of an online marketing campaign

5. Discuss the effects of the Internet on marketing objectives and strategy


Learning Objective Learning Objective

Explain how the Internet affects the traditional marketing mix

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On Linehttp://www.scubatoys.com/poolcam/poolcam.asp

On Linehttp://www.scubatoys.com/poolcam/poolcam.asp


Product Strategies on the Product Strategies on the WebWeb

CommoditiesCommodities Mass customization

Mass customization

Progression of Progression of product strategies:product strategies:

Progression of Progression of product strategies:product strategies:

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BrandingBranding


Branded CommoditiesBranded Commodities

Camera A at Retailer A

Camera A at Retailer A

Principle of equivalent quality is applied to Principle of equivalent quality is applied to branded products, creating downward branded products, creating downward

price pressureprice pressure

Principle of equivalent quality is applied to Principle of equivalent quality is applied to branded products, creating downward branded products, creating downward

price pressureprice pressure

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Camera A at Retailer B

Camera A at Retailer B

On Linehttp://www.despair.com

On Linehttp://www.despair.com


PlacePlace

Corporate Web sitesCorporate Web sites

Resellers’ Web sitesResellers’ Web sites

Affiliate programs Affiliate programs

Clicks and mortarClicks and mortar

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On Linehttp://www.ideavirus.com

On Linehttp://www.ideavirus.com


Virtual Intermediaries:Virtual Intermediaries:

Refer customers to online retailers

Receive a commission on resulting sales

Benefit from the goodwill consumers feel for the content sites they normally visit

11 Affiliate ProgramsAffiliate Programs


Promotion ChallengesPromotion Challenges

Consumers don’t know the siteConsumers don’t know the site

Consumers don’t know the companyConsumers don’t know the company

Converting browsers to buyersConverting browsers to buyers

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Promotion MethodsPromotion Methods

SpamSpam

Viral Marketing (Buzz)Viral Marketing (Buzz)

Instant MessagingInstant Messaging

Interactive AdsInteractive Ads

Search Engine ListingsSearch Engine Listings

Sales PromotionSales Promotion

OnlineOnlinepromotion promotion techniques techniques

OnlineOnlinepromotion promotion techniques techniques

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Search Engine ListingsSearch Engine Listings

Gets you to the top of the

list

Gets you to the top of the

list

High priceHigh price Low price Low price

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No or low fee gets you at

the bottom of the list

No or low fee gets you at

the bottom of the list


Extreme price pressure Extreme price pressure on the Internet due to:on the Internet due to:

Shopping bots and comparison sites

Auction pricing

Demand pricing

11 Pricing PressurePricing PressureOn Linehttp://www.fedex.comhttp://www.ups.comhttp://www.usps.com

On Linehttp://www.fedex.comhttp://www.ups.comhttp://www.usps.com


Pricing and Consumer LoyaltyPricing and Consumer Loyalty

Come Come Back Back SoonSoon!!

75% of customers participate in a loyalty program75% of customers participate in a loyalty program

Online customer service consistently rated as poorOnline customer service consistently rated as poor

72% say customer service is important72% say customer service is important

41% happy with service they received41% happy with service they received

Profitability is less algorithm and more caringProfitability is less algorithm and more caring

11


How Technology Changes the How Technology Changes the 4Ps4Ps

11

Era of: Product Place Promotion Price

Personal Selling(pre-1840s)

Commodities Retail Store Store Displays Going Rate

Advertising(1840s to 1990s)

NationalBrands

Malls &Superstores

National Advertising

Retail Price

Interactive Commerce (1994 and beyond)

• BrandedCommodities• MassCustomization

• Worldwide Marketplace

• AffiliatePrograms

• Internet-based

Web Sites• InteractiveAds • Instant Messaging

IntelligentSoftwareAgents



Describe how marketers are leveraging the power of online technology

22


Internet Demographics and Internet Demographics and TrendsTrends

Online: Online: By Gender By Gender in the U.Sin the U.S..

Online: Online: By Gender By Gender in the U.Sin the U.S..

60% of Men

56% of Women

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Online:Online:By race in By race in the U.S.the U.S.

Online:Online:By race in By race in the U.S.the U.S.

60% of Whites

45% of Blacks

54% of Hispanics


22


Online:Online:By By

education education in the U.S.in the U.S.

Online:Online:By By

education education in the U.S.in the U.S.

23% no high school

45% of high school grads

82% of college grads and post-graduates


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The Global VillageThe Global Village

Broadens and enhances accessin developing nations

Broadens and enhances accessin developing nations

Allows businesses to “leapfrog” into development

Allows businesses to “leapfrog” into development

Levels playing field fordisadvantaged countriesLevels playing field for

disadvantaged countries

22


Wireless Access on RiseWireless Access on Rise

Wireless is growing in popularity

Will soon represent over half of all Internet users worldwide

A particular advantage for developing nations without suitable infrastructure

22


Basic Forms of Virtual Basic Forms of Virtual BusinessBusiness

22

Forms of Forms of Internet Internet

commercecommerce

Forms of Forms of Internet Internet

commercecommerce

Business-to-businessB2B

Business-to-ConsumerB2C

Consumer-to-ConsumerC2C


B2B ExchangesB2B Exchanges

Online trading floorOnline trading floor

Struggling to surviveStruggling to survive

Over half out of business since 2002

Over half out of business since 2002

22On Linehttp://www.globalwinespirits.comhttp://www.transcore.com

On Linehttp://www.globalwinespirits.comhttp://www.transcore.com


Maximizing Customer Relationship Maximizing Customer Relationship Marketing on the InternetMarketing on the Internet

UsingUsingCookiesCookiesUsingUsing

CookiesCookies

Data trackingData tracking

Needed for personalized content

Needed for personalized content

Keep ad content freshKeep ad content fresh

Controversial because ofprivacy concerns

Controversial because ofprivacy concerns

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Improving Search Engine Improving Search Engine ResultsResults

1 – Choose the right words1 – Choose the right words

2 – Put those words at top of page2 – Put those words at top of page

3 – Use meta tags, like bold type3 – Use meta tags, like bold type

4 – Increase non-reciprocal links4 – Increase non-reciprocal links

5 – Incorporate graphics5 – Incorporate graphics

6 – Incorporate video/audio 6 – Incorporate video/audio

7 – Pay for a better link7 – Pay for a better link

22



Discuss the legal and privacy issues affecting Internet-based commerce

33


Major Issues in Online PrivacyMajor Issues in Online Privacy

CookiesCookies

Not-so-private emailNot-so-private email

SpamSpam

Identity theftIdentity theft

Conflicting lawsConflicting laws

CyberstalkingCyberstalking

Branded trustBranded trust

33

On Linehttp://www.fbi.gov/hq/lab/carnivore/carnivore.htm

On Linehttp://www.fbi.gov/hq/lab/carnivore/carnivore.htm


Cookies Cookies

Cookies: Cookies:

Enable marketers to personalize Web sites

Are bits of data mapped to your hard drive

33

Can trace where you’ve been on the Internet

Are the subject of a controversial debate


Identity TheftIdentity Theft

Stealing personal information tocommit fraud or other crimes

Stealing personal information tocommit fraud or other crimes

Sharply increasing Sharply increasing

In 2003, 27 million complaintsfiled with the FTC

In 2003, 27 million complaintsfiled with the FTC

33


Conflicting LegislationConflicting Legislation

Not all countries have the same laws regulating

Internet commerce

33

Country 1

Country 3Country 2

M

Marketers (M) responsible for every law in every country


Online PredatorsOnline Predators

Cyberstalking is on the rise.

Caution is declining (e.g., online dating is increasing)

Affects trust people have for legitimate marketing efforts

33


Creating Trust OnlineCreating Trust Online33

Better Business Bureau “Reliability Seal”

ScanAlert “Hacker Safe”

Verisign “Secure Seal”

3rd-party seals for creating trust



Measure the effectiveness of an online marketing campaign

44


MetricsMetrics

The server can The server can tell:tell:

Who visited How many times

(hits) And where (page

views)

The server can’t The server can’t tell:tell:

Recency Frequency Monetary value

44


Out-of-Date MetricsOut-of-Date Metrics

HitsHits

Page viewsPage views

Click-through countsClick-through counts

44


Stickiness as the New MetricStickiness as the New Metric

Stickiness =

Frequency

Duration

Site Reach

44



Discuss the effects of the Internet on marketing objectives and strategy

55


Porter’s Five Industry ForcesPorter’s Five Industry Forces

Applying Applying Five Five

Forces in Forces in Internet Internet Environ-Environ-

mentment

Applying Applying Five Five

Forces in Forces in Internet Internet Environ-Environ-

mentment

Barriers of entry

Threat of substitutes

Bargaining power of buyers

Bargaining power of suppliers

Rivalry among existing competitors

55


Porter’s Five Industry ForcesPorter’s Five Industry Forces

Barriers are…Barriers are…

Threat of substitutes is…Threat of substitutes is…

Bargaining power suppliersBargaining power suppliers

Bargaining power buyersBargaining power buyers

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…low…low

…high…high

…extremely low…extremely low

…increasing…increasing

Rivalries are…Rivalries are… …intensified…intensified

Online…


Debunking Myths of Re-Debunking Myths of Re-Formed MarketFormed Market

55

Myths Myths Truths Truths

1st movershave the advantage

1st movershave the advantage

1st movers pay the costs of development; 2nd movers have the advantage.

1st movers pay the costs of development; 2nd movers have the advantage.

Behavior changesquickly

Behavior changesquickly

Old habits die hard; people more concerned about getting needs met than fractional costs savings

Old habits die hard; people more concerned about getting needs met than fractional costs savings

Non-traditional pricing will bea success

Non-traditional pricing will bea success

People perceive prices posted by sellers to be more convenient and fair.

People perceive prices posted by sellers to be more convenient and fair.


Distinctive competenceDistinctive competence

Sustainable competitive advantage

Sustainable competitive advantage

Attract loyal customersAttract loyal customers

Back to BasisBack to Basis55

1chapter 14 essentials of marketing 4e lamb hair mcdaniel ©2005 south-western college publishing...

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essentials of marketing

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marketing objectives

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