E-Commerce: Kenneth C. Laudon Carol Guercio Traver

e-commerce
business. technology. society.
eighth edition
Kenneth C. Laudon
Carol Guercio Traver
Copyright © 2012 Pearson Education, Inc.

Chapter 6
E-commerce Marketing Concepts:
Social, Mobile, Local
Netflix: The Next Blockbuster?
Class Discussion
 What was Netflix’s first business model? Why

did this model not work and what new model
did it develop?
 Why is Netflix attractive to customers?
 What is Netflix’s “recommender system”?
 How does Netflix use data mining?
 Has Netflix’s changes in business model
damaged its brand permanently?
Copyright © 2012 Pearson Education, Inc. Slide 6-3
Consumers Online: The Internet
Audience and Consumer Behavior
 Around 73% (86 million) U.S. households
have Internet access in 2011
 Growth rate has slowed
 Intensity and scope of use both increasing
 Some demographic groups have much higher
percentages of online usage than others
 Gender, age, ethnicity, community type, income,
education

The Internet Audience and
Consumer Behavior (cont.)
 Broadband vs. dial-up audiences, new mobile
audience
 Internet purchasing affected by neighborhood
 Lifestyle and sociological impacts
 Use of Internet by children, teens
 Use of Internet as substitute for other social activities
 Media choices
 Traditional media competes with Internet for attention
 Television viewing has increased with Internet usage
Consumer Behavior Models
 Study of consumer behavior
 Attempts to explain what consumers purchase
and where, when, how much and why they buy
 Consumer behavior models
 Predict wide range of consumer decisions
 Based on background demographic factors and
other intervening, more immediate variables

A General Model of Consumer Behavior
Figure 6.1, Page 355 SOURCE: Adapted from Kotler and Armstrong, 2009.
Background Demographic Factors
 Culture: Affects entire nations
 Subculture
 Subsets formed around major social differences
(ethnicity, age, lifestyle, geography)
 Social networks and communities
 Direct reference groups
 Indirect reference groups
 Opinion leaders
 Lifestyle groups
 Psychological profile
The Online Purchasing Decision
 Psychographic research
 Combines demographic and psychological data
 Divides market into various groups based on social
class, lifestyle, and/or personality characteristics
 Stages in consumer decision process:
 Awareness of need
 Search for more information
 Evaluation of alternatives
 Actual purchase decision
 Post-purchase contact with firm

The Consumer Decision Process and
Supporting Communications
Figure 6.2, Page 359

A Model of Online Consumer Behavior
 Decision process similar for online and
offline behavior
 General online behavior model
 Consumer skills
 Product characteristics
 Attitudes toward online purchasing
 Perceptions about control over Web environment
 Web site features: latency, usability, security
 Clickstream behavior
A Model of Online Consumer Behavior

A Model of Online Consumer Behavior (cont.)
 Clickstream factors include:
 Number of days since last visit
 Speed of clickstream behavior
 Number of products viewed during last visit
 Number of pages viewed
 Supplying personal information
 Number of days since last purchase
 Number of past purchases
 Clickstream marketing
 Developed dynamically as customers use Internet

Shoppers: Browsers and Buyers
 Shoppers: 87% of Internet users
 73% buyers
 15% browsers (purchase offline)
 One-third of offline retail purchases

influenced by online activities
 Online traffic also influenced by offline
brands and shopping
 E-commerce and traditional commerce are
coupled: Part of a continuum of consuming
behavior
Online Shoppers and Buyers
Figure 6.4, Page 363 SOURCE: Based on data from eMarketer, Inc., 2011d.
What Consumers Shop for and
Buy Online
 Big ticket items
 Travel, computer hardware, electronics
 Consumers now more confident in purchasing
costlier items
 Small ticket items ($100 or less)
 Apparel, books, office supplies, software, etc.
 Sold by first movers on Web
 Physically small items
 High margin items
What Consumers Buy Online
Figure 6.5, Page 365 SOURCES: Based on data from Internet Retailer, 2011.
How Consumers Shop
 How shoppers find online vendors
 Search engines—59%
 Marketplaces (Amazon, eBay)—28%
 Direct to retail sites—10%
 Other methods—3%
 Online shoppers are highly intentional

 Look for specific products, companies, services
 StumbleUpon
 Recommender systems
Table 6.7, Page 366 SOURCES: Based on data from eMarketer, Inc., 2011d.
Trust, Utility, and Opportunism
in Online Markets
 Two most important factors shaping
decision to purchase online:
 Utility:
 Better prices, convenience, speed
 Trust:
 Asymmetry of information can lead to opportunistic
behavior by sellers
 Sellers can develop trust by building strong
reputations for honesty, fairness, delivery

Basic Marketing Concepts
 Marketing
 Strategies and actions to establish relationship
with consumer and encourage purchases
 Addresses competitive situation of industries
and firms
 Seeks to create unique, highly differentiated
products or services that are produced or
supplied by one trusted firm
 Unmatchable feature set
 Avoidance of becoming commodity

Feature Sets
 Three levels of product or service
 Core product
 e.g., cell phone
 Actual product
 Characteristics that deliver core benefits
 e.g., wide screen that connects to Internet
 Augmented product
 Additional benefits
 Basis for building the product’s brand
 e.g., product warranty

Feature Set

Products, Brands, and
the Branding Process
 Brand:
 Expectations consumers have when consuming, or
thinking about consuming, a specific product
 Most important expectations: Quality, reliability,
consistency, trust, affection, loyalty, reputation
 Branding: Process of brand creation
 Closed loop marketing
 Brand strategy
 Brand equity
Marketing Activities:
from Products to Brands

Segmenting, Targeting, and Positioning
 Major ways used to segment, target
customers
 Behavioral
 Demographic
 Psychographic
 Technical
 Contextual
 Search
 Within segment, product is positioned and
branded as a unique, high-value product,
especially suited to needs of segment
customers
Are Brands Rational?
 For consumers, a qualified yes:
 Brands introduce market efficiency by reducing
search and decision-making costs
 For business firms, a definite yes:
 A major source of revenue
 Lower customer acquisition cost
 Increased customer retention
 Successful brand constitutes a long-lasting
(though not necessarily permanent) unfair
competitive advantage
Can Brands Survive the Internet?
Brands and Price Dispersion
 Early postulation: “Law of One Price”—end of
brands
 Instead:
 Consumers still pay premium prices for differentiated
products
 E-commerce firms rely heavily on brands to attract
customers and charge premium prices
 Substantial price dispersion
 Large differences in price sensitivity for same product
 “Library effect”

The Revolution in
Internet Marketing Technologies
 Three broad impacts:
 Scope of marketing communications broadened
 Richness of marketing communications increased
 Information intensity of marketplace expanded
 Internet marketing technologies:

 Web transaction logs
 Tracking files
 Databases, data warehouses, data mining
 Advertising networks
 Customer relationship management systems
Web Transaction Logs
 Built into Web server software
 Record user activity at Web site
 Webtrends: Leading log analysis tool
 Provides much marketing data, especially
combined with:
 Registration forms
 Shopping cart database
 Answers questions such as:

 What are major patterns of interest and purchase?
 After home page, where do users go first? Second?
Tracking Files
 Allow users browsing activities to be
tracked as they move from site to site
 Four types of tracking files
 Cookies
 Small text file placed by Web site
 Allows Web marketers to gather data
 Flash cookies
 Beacons (“bugs”)
 Apps

Insight on Society: Class Discussion
Every Move You Make, Every Click You Make,

We’ll Be Tracking You
 Are beacons innocuous? Or are they an
invasion of personal privacy?
 Do you think your Web browsing should be
known to marketers?
 What are the Privacy Foundation guidelines
for Web beacons?
 Should online shopping be allowed to be a
private activity?
Databases
 Database: Stores records and attributes
 Database management system (DBMS):
 Software used to create, maintain, and access databases
 SQL (Structured Query Language):
 Industry-standard database query and manipulation
language used in a relational database
 Relational database:
 Represents data as two-dimensional tables with
records organized in rows and attributes in columns;
data within different tables can be flexibly related as
long as the tables share a common data element

A Relational Database View of
E-commerce Customers

Data Warehouses and Data Mining
 Data warehouse:
 Collects firm’s transactional and customer data in single
location for offline analysis by marketers and site
managers
 Data mining:
 Analytical techniques to find patterns in data, model
behavior of customers, develop customer profiles
 Query-driven data mining
 Model-driven data mining
 Rule-based data mining
 Collaborative filtering

Insight on Technology: Class Discussion
The Long Tail: Big Hits and Big Misses

 What are “recommender systems”? Give an
example you have used.
 What is the “Long Tail” and how do
recommender systems support sales of items
in the Long Tail?
 How can human editors, including
consumers, make recommender systems
more helpful?

Customer Relationship
Management (CRM) Systems
 Record all contact that customer has with firm
 Generate customer profile available to everyone in
firm with need to “know the customer”
 Customer profiles can contain:
 Map of the customer’s relationship with the firm
 Product and usage summary data
 Demographic and psychographic data
 Profitability measures
 Contact history
 Marketing and sales information

A Customer Relationship Management System

Generic Market Entry Strategies
Figure 6-11, Page 391

Establishing the Customer Relationship
 Advertising networks
 Ad server selects appropriate ad based on
cookies, Web bugs, backend user profile
databases
 Advertising exchanges
 Auction ad slots over many advertising networks
 Permission marketing
 Affiliate marketing

How an Advertising Network
Such as DoubleClick Works

 Viral marketing
 Blog marketing
 Social network marketing
 Driven by social e-commerce
 Social sign-on
 Collaborative shopping
 Network notification
 Social search (recommendation)
 Mobile marketing
Insight on Business: Class Discussion
Social Network Marketing: Let’s Buy Together

 Why do social networks represent such a
promising opportunity for marketers?
 What are some of the new types of marketing
that social networks have spawned?
 What are some of the risks of social network
marketing? What makes it dangerous?
 Have you ever responded to marketing
messages on Facebook or another network?

 Social marketing and wisdom of crowds
 Large aggregates produce better estimates and
judgments, e.g.,
 “Like” button
 Folksonomies
 Social tagging
 Mobile platform marketing

 Local marketing
 Brand leveraging
Customer Retention
 Mass marketing
 Direct marketing
 Micromarketing
 Personalized, one-to-one marketing
 Segmenting market on precise and timely understanding of individual’s
needs
 Targeting specific marketing messages to these individuals
 Positioning product vis-à-vis competitors to be truly unique
 Personalization
 Can increase consumers sense of control, freedom
 Can also result in unwanted offers or reduced anonymity

The Mass Market-Personalization Continuum

Other Customer Retention
Marketing Techniques
 Customization
 Customizing product to user preferences
 Customer co-production
 Customer interactively involved in product creation
 Customer service
 FAQs
 Real-time customer service chat systems
 Automated response systems

Net Pricing Strategies
 Pricing
 Integral part of marketing strategy
 Traditionally based on:
 Fixed cost
 Variable costs
 Demand curve
 Price discrimination
 Selling products to different people and groups
based on willingness to pay

Net Pricing Strategies (cont.)
 Free and freemium
 Can be used to build market awareness
 Versioning
 Creating multiple versions of product and selling essentially same
product to different market segments at different prices
 Bundling
 Offers consumers two or more goods for one price
 Dynamic pricing:
 Auctions
 Yield management
 Flash marketing
Channel Management Strategies
 Channels:
 Different methods by which goods can be distributed
and sold
 Channel conflict:
 When new venue for selling products or services
threatens or destroys existing sales venues
 e.g., online airline/travel services and traditional offline
travel agencies
 Some manufacturers are using partnership
model to avoid channel conflict

E-Commerce: Kenneth C. Laudon Carol Guercio Traver

Uploaded by

Copyright:

Available Formats

E-Commerce: Kenneth C. Laudon Carol Guercio Traver

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

E-Commerce: Kenneth C. Laudon Carol Guercio Traver

Uploaded by

Copyright:

Available Formats

e-commerce

business. technology. society.

Copyright © 2012 Pearson Education, Inc.

 What was Netflix’s first business model? Why

Copyright © 2012 Pearson Education, Inc. Slide 6-4

Copyright © 2012 Pearson Education, Inc. Slide 6-6

Copyright © 2012 Pearson Education, Inc. Slide 6-9

Figure 6.2, Page 359

Figure 6.3, Page 360

Copyright © 2012 Pearson Education, Inc. Slide 6-13

 One-third of offline retail purchases

 Online shoppers are highly intentional

Copyright © 2012 Pearson Education, Inc. Slide 6-20

Copyright © 2012 Pearson Education, Inc. Slide 6-21

Copyright © 2012 Pearson Education, Inc. Slide 6-22

Figure 6.6, Page 368

Figure 6.7, Page 369

Copyright © 2012 Pearson Education, Inc. Slide 6-28

 Internet marketing technologies:

 Answers questions such as:

Copyright © 2012 Pearson Education, Inc. Slide 6-31

Every Move You Make, Every Click You Make,

Copyright © 2012 Pearson Education, Inc. Slide 6-33

Figure 6.9, Page 383

Copyright © 2012 Pearson Education, Inc. Slide 6-35

The Long Tail: Big Hits and Big Misses

Copyright © 2012 Pearson Education, Inc. Slide 6-36

Copyright © 2012 Pearson Education, Inc. Slide 6-37

Figure 6.10, Page 389

Figure 6-11, Page 391

Copyright © 2012 Pearson Education, Inc. Slide 6-40

Figure 6.12, Page 394

Social Network Marketing: Let’s Buy Together

Copyright © 2012 Pearson Education, Inc. Slide 6-43

 Mobile platform marketing

Copyright © 2012 Pearson Education, Inc. Slide 6-45

Figure 6.13, Page 407

Copyright © 2012 Pearson Education, Inc. Slide 6-47

Copyright © 2012 Pearson Education, Inc. Slide 6-48

You might also like