6 e-marketing and customer relationship management

66E-Marketing and Customer Relationship Management

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Agenda

• Marketing on the Internet

• Customer Relationship Management

• Legal and Ethical Issues in E-Marketing


Marketing on the Internet

• Electronic Commerce (E-Commerce)– Sharing business information, maintaining

business relationships, and conducting business transactions by means of telecommunications networks

• Electronic Marketing (E-Marketing)– The strategic process of creating,

distributing, promoting, and pricing products for targeted customers in the virtual environment of the Internet


Benefits of E-Marketing

• Open and instantaneous flows of information

• Enhanced customer service efficiencies

• Worldwide scope of the electronic market


Uses for Digital MarketingPurpose of digital marketing Percent of

companies

New customer lead generation 85%

Brand awareness and recognition 71%

Improved customer relationships 68%

Cross-sell and up-sell to existing customers 61%

Website traffic generation 60%

Customer education 54%

Customer support 47%

Event promotion 45%

Product sales 42%Source: Robyn Greenspan, “E-Marketing Efforts Leave Room for Improvement,” ClickZ, February 6, 2004,

www.clickz.com/stats/markets/advertising/print.php/5941_3309721.


Basic Characteristics of Electronic Marketing: Addressability

• Addressability is a marketer’s ability to identify customers before they make a purchase

• How e-merchants attain addressability– Limit access to areas of their website to

encourage customer registration– Offer contests and prizes in exchange for

consumer information– Place “cookies” on visitor’s computer to

track visitor usage and preferences


Basic Characteristics of Electronic Marketing: Interactivity

• Interactivity is the ability to allow customers express their needs and wants directly to the firm in response to the firm’s marketing communications– Real-time interaction with customers– Broader market coverage at a lower cost

• Community refers to a sense of group membership or feeling of belonging– Virtual communities on the Web


Basic Characteristics of Electronic Marketing: Memory

• Memory is the ability to access databases or data warehouses containing individual customer profiles and past purchase histories and to use these data in real-time to customize a marketing offer.

• A database is a collection of information arranged for easy access and retrieval.


Basic Characteristics of Electronic Marketing: Control

• Control refers to customers’ ability to regulate the information they view and the rate and sequence of their exposure to that information.


Basic Characteristics of Electronic Marketing: Accessibility

• Accessibility is the ability to obtain information available on the Internet.– Informs and educates the inquiring

consumer about competing products and prices

– Creates competition for the consumer’s attention

– Helps make information available to employees to service customers


Kelley Blue Book provides accessibility to up-to-date information about buying and selling automobiles.

© Copyright 2004 Kelley Blue Book. All rights reserved.


Basic Characteristics of Electronic Marketing: Digitalization

• Digitalization is the ability to represent a product, or at least some of its benefits, as digital bits of information.


Exercise

Identify the e-marketing characteristics (addressability, interactivity, memory, control, accessibility, digitalization) that relate to the following examples.

1.Bluefly.com asks visitors to provide their e-mail address, clothing preferences, brand preferences, and sizes so it can create a customized online catalog matching the customer’s specified preferences.


Exercise (cont’d)

2.FedEx’s web-based software allows customers to track their own packages from starting point to destination.

3.CDNow asks music lovers to supply information about their listening tastes so that the company can recommend new releases.

4.Visitors to Yahoo! can search the site for topics of interest and click to those sites the search service finds.


Exercise (cont’d)

5.Amazon.com recognizes visitors by name if they have purchased from the site before and then offers suggestions about products they might be interested in based on their previous purchases.


E-Marketing Strategies

DistributionDistributionSystemsSystems

DistributionDistributionSystemsSystems

TargetTargetMarketsMarkets

TargetTargetMarketsMarkets

ProductProductMarketingMarketing

ProductProductMarketingMarketing

PromotionPromotionMediumsMediums

PromotionPromotionMediumsMediums PricingPricingPricingPricing

E-MarketingE-MarketingStrategy ConsiderationsStrategy Considerations

E-MarketingE-MarketingStrategy ConsiderationsStrategy Considerations


Reasons Shoppers Cite for Online Buying

Source: Robyn Greenspan, “E-tailers Will See Green,” ClickZ, November 6, 2003, www.clickz.com/stats/markets/retailing/article.php/6061_3105491.

Top Seven Reasons for Buying OnlineSave time by not going to store

Can shop when stores are closed

Avoid crowds

Might be able to find better prices

Can find products online more easily

Find products not available in stores

Easier to compare prices


The Relationship Between Websites and Retail Stores

Source: American Demographics, December 2000, p. 42. Adapted with permission.


Customer Relationship Management (CRM)

• Focuses on using information about customers to create marketing strategies that develop and sustain desirable long-term relationships– A focus on CRM is possible in e-marketing

because of marketers’ ability to target individual customers.

– The ability to identify individual customers allows marketers to shift their focus from increasing share of market to increasing share of customer.

– CRM is often based on the use of information technology.


The 80/20 Rule

• 80 percent of business profits come from 20 percent of customers.– Technology allows marketers to profile

customers in real-time and assess their lifetime value (LTV) to the firm.

– Some customers may be too expensive to retain given the low level of profits they generate.

– Firms should focus on developing and managing long-term relationships with more profitable customers.


Technology Drives CRM

• Customer support and call center software– Provides customer interaction and improved

service– Captures information about all interactions

• Sales automation– Links sales force to applications that facilitate

selling and providing service– Provides information to determine the best

solution for customers– Determines order status, tracks deliveries, and

identifies service problems


Technology Drives CRM (cont’d)

• Technology– Should not be used just as a cost-

reduction tactic– Should not be overwhelmed by gathering

unnecessary data– Should be used as a tool to sustain long-

term relationships


Legal and Ethical Issues in E-Marketing

• Personal privacy issues– Unauthorized placement of cookies on personal

computers– Website information requirements for registration– Collection of information from children– Use of spyware in software

• Spam– Unsolicited commercial e-mail (UCE)

• Misappropriation of intellectual property– Illegal copying of copyrighted software, movies,

CDs, and other creative materials


The BBBOnLine Privacy Seal and Program Explanation

FIGURE 4.1Reprinted by permission of the Council of Better Business, Inc.


Financial Costs of Cyber AttacksCompanies were asked how much money they had lost from computer security breaches or espionage over the past year.

Source: Original data from InformationWeek 2003 Global Information Security Survey of 421 business-technology and security professionals, in “Snapshots,” USA Today, November 5, 2003.

32%

17%

5% 5%

0%

5%

10%

15%

20%

25%

30%

35%

Up to$10,000

$10,001 to$100,000

$100,001to

$500,000

More than$500,000


eTrust software safeguards data from internal and external threats to facilitate customer relationship management.

Reprinted with permission of Computer Associates, International

6 e-marketing and customer relationship management

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