ims 6485: marketing on the web 1 dr. lawrence west, mis dept., university of central florida...

IMS 6485: Marketing On the Web

1Dr. Lawrence West, MIS Dept., University of Central [email protected]

Topics

• The Role of Marketing and the Marketing Mix

• Marketing & the Internet

• Who and What on the Internet

• The Buying Decision

• Market Segmentation

• Product Features

• Branding

• Internet Marketing Technologies

• Marketing Strategies & Consumer Relationships

• Pricing



Marketing in the Value Chain?

TRANS-PORTATIONCOMPANY

BROKER

INFORMATION FLOWS(SELLERS TO BUYERS)

FLOW OF GOODS

ADVERTISING .

INVOICE .

ORDER INFORMATION .

INFORMATION FLOWS(BUYERS TO SELLERS)

REQUEST INFORMATION .

PLACE ORDER .

MAKE PAYMENTS .

Animal

Vegetable

Mineral

INVENTORY

INVENTORY

INVENTORY

FACTORYWHOLE-SALER

INTERMEDIATE

GOODS

WHOLE-SALER

RETAILER

Where do these topics fall?



The Role of Marketing

• In a purely competitive industry all firms face the same market situation and have the same cost structures

• Marketing directly addresses the competitive situation of industries and firms. Marketing seeks to create unique, highly differentiated products or services that are produced or supplied by one trusted firm ("little monopolies") p. 360

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The Marketing Mix—The 4 P's

• Product: The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user's needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and support.

• Pricing: This refers to the process of setting a price for a product, including discounts. The price need not be monetary - it can simply be what is exchanged for the product or services, e.g. time, energy, psychology or attention.

Source: Wikipedia



The Marketing Mix—The 4 P's (cont.)

• Promotion: This includes advertising, sales promotion, publicity, and personal selling, branding and refers to the various methods of promoting the product, brand, or company.

• Placement: refers to how the product gets to the customer; for example, point of sale placement or retailing. This fourth P has also sometimes been called Place, referring to the channel by which a product or services is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc.

Source: Wikipedia



The Marketing Mix—3 More P's for Services Marketing

• People: Any person coming into contact with customers can have an impact on overall satisfaction. Whether as part of a supporting service to a product or involved in a total service, people are particularly important because, in the customer's eyes, they are generally inseparable from the total service . As a result of this, they must be appropriately trained, well motivated and the right type of person. Fellow customers are also sometimes referred to under 'people', as they too can affect the customer's service experience, (e.g., at a sporting event).

• Process: This is the process(es) involved in providing a service and the behavior of people, which can be crucial to customer satisfaction.

Source: Wikipedia



The Marketing Mix—Services Marketing (cont.)

• Physical evidence: Unlike a product, a service cannot be experienced before it is delivered, which makes it intangible. This, therefore, means that potential customers could perceive greater risk when deciding whether to use a service. To reduce the feeling of risk, thus improving the chance for success, it is often vital to offer potential customers the chance to see what a service would be like. This is done by providing physical evidence, such as case studies, testimonials or demonstrations.

Source: Wikipedia



The Marketing Mix—4 New P's

• Personalization: It is here referred customization of products and services through the use of the Internet. Early examples include Dell on-line and Amazon.com, but this concept is further extended with emerging social media and advanced algorithms. Emerging technologies will continue to push this idea forward.

• Participation: This is to allow customer to participate in what the brand should stand for; what should be the product directions and even which ads to run. This concept is laying the foundation for disruptive change through democratization of information.



The Marketing Mix—4 New P's (cont.)

• Peer-to-Peer: This refers to customer networks and communities where advocacy happens. The historical problem with marketing is that it is “interruptive” in nature, trying to impose a brand on the customer. This is most apparent in TV advertising. These “passive customer bases” will ultimately be replaced by the “active customer communities”. Brand engagement happens within those conversations. P2P is now being referred as Social Computing and will likely to be the most disruptive force in the future of marketing.

• Predictive modeling: This refers to algorithms that are being successfully applied in marketing problems (both a regression as well as a classification problem).



The Marketing Mix Summary Sheet

• The 4 Original P's

– Product

– Pricing

– Promotion

– Placement

• The 3 Services P's

– People

– Process

– Physical evidence

• 4 New P's

– Personalization

– Participation

– Peer-to-peer

– Predictive modeling



Marketing & The Internet

• Companies make decisions that pertain to various elements of the marketing mix

• We want to know:

– How does the Internet change the way marketing can be conducted?

• Effectiveness

• Cost

– How is marketing affected when the product or service is delivered on the Internet



Internet Usage—Who and What

• What are the implications of the demographic information and the Internet user activity information in Section 6.1 on the elements of the Marketing Mix

– Activities (Table 6.1)

– Demographics (Table 6.2)



The Buying Decision

• Consumers go through predictable stages in buying

– Needs recognition

– Search for products to satisfy the need

– Evaluation of alternatives

– Purchase

– Post purchase experience—loyalty

• How do companies attempt to affect this process?

• Where can the Internet affect this process?

• What are the cost and effectiveness differences between traditional means and the web?



Market Segmentation

• Market segmentation is the process of dividing the total market into segments with identifiable characteristics

• Elements of the marketing mix are tuned to characteristics of each segment

– Examples?

• What kind of data is needed to conduct segmentation?

• How is this data gathered traditionally?



Market Segmentation vs. the Clickstream

• The clickstream is the record of activities that consumers perform at a web site

– Logs

– Cookies

• A number of researchers have argued that understanding the background demographics of Internet users is no longer necessary, and not predictive in any event… background demographics usually account for less than 5% of the observed behavior. (p. 354)



Product Features

• Core Product: The core characteristics of the product– Automobile gets you from point A to B on demand

• Actual Product: The differentiated features of a specific product that deliver the core characteristics– BMW Z4– Ford Taurus

• Augmented Product: Additional benefits beyond the core– Warranty − Reliability– Financing − Customer service

• How can the Internet affect any of these elements?



Branding

• The Brand is a set of expectations that a consumer has when consuming, or thinking about consuming a product or service from a specific company (p. 361)

• What expectations do you have for

– McDonalds − Outback Steakhouse

– UCF − Harvard

• Brand strategy is the plans for differentiating a product or company—creating the brand image



Branding (cont.)

• Brands as a customer convenience

– How do brands create convenience for the customer?

– Can this convenience translate into higher prices?

– Can brand image translate to higher prices?

– (Can higher prices translate to brand image?)

• How many of you have ever had the best restaurant meal of your life at:

– A big national chain restaurant?

– A one-of-a-kind restaurant?



Branding (cont.)

• Can brands move onto the Internet?

• Can brands be established on the Internet?

• How does the Internet affect branding?

• How has branding affected Internet sales?



Branding and Library Effects

• Brands can extend to cover more products than the company's core product

• More products create convenience for customers (the library effect)

• Both trends argue toward growing ownership concentraton among Internet merchants as they pursue scale economies and library effects that derive from size (p. 368)



Internet Marketing Technologies

• What is different now?

• Transaction logs

• Cookies

• Web bugs/images

– Tracking from site to site—how is this done?

• Spyware

• Adware



Internet Marketing Technologies (cont)

• Data warehouses and data mining

– What kind of data is out there?

– What can we do with it?

• Rule-based data mining—observed data is used to classify users into groups (segments)

• Collaborative data mining—users classify themselves into affinity groups based on behavior

– Amazon's recommendations



Customer Relationship Management (CRM)

• Can a customer be unprofitable?

• Can some customers be more profitable than others

– In the short run?

– In the long run?

– Is there a company you will never deal with again because of some problem you had?

• What is the cost to the company of their action that resulted in your attitude

• Can actions on the Internet affect customer attitudes?



CRM (cont.)

• Companies would like to identify the customers that are the most profitable

• What is a customer with high lifetime value?

• CRM also seeks to reduce marketing costs

• CRM can also help to develop new products

• What information is needed in order to implement this type of targeted marketing?

– How can the Internet change the dynamics of acquiring and managing this information?



Marketing Strategies

• Four strategies identified

– First mover

– Fast follower

– Alliances

– Brand extender

• Market entry strategy (especially for online) is a deliberate marketing strategy

• What are the advantages/disadvantages of each?



Establishing the Customer Relationship

• Advertising Networks

• Permission marketing

• Affiliate marketing

• Viral marketing

• Blog marketing

• Social network marketing

• Brand leveraging



Advertising Networks

• "Advertising networks represent the most sophisticated application of Internet database capabilities to date, and illustrate just how different Internet marketing is from traditional marketing" (p. 388)

• What do advertising networks do?

• Double-Click serves about 60 billion ads per month!!!

• Maintains over 100 million user profiles

• Are you as anonymous as you thought you were?



Customer Retention

• Personalization and One-on-One marketing

– What is it and how can the web facilitate this?

• Customization and customer co-production

• Customer service

– FAQ − Real-time-chat

– Rapid eMail − Automated response systems

– Phone support − Knowledge bases



Pricing

• The ultimate goal in pricing is complete price discrimination—charging each customer exactly what they are willing to pay

• Market segmentation helps to price discriminate

– Business travelers vs vacation travelers

– MS MIS program vs. PMIS program

• Versioning—charging different prices for different versions of a product

• Bundling—charging a bundled price to gain more revenue than from selling products separately

ims 6485: marketing on the web 1 dr. lawrence west, mis dept., university of central florida...

Documents

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university of central