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Chapter 4 Marketing on the Web. Learning Objectives Product vrs Consumer based marketing Different market segments and how to approach them Consumer relationship.

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Presentation on theme: "Chapter 4 Marketing on the Web. Learning Objectives Product vrs Consumer based marketing Different market segments and how to approach them Consumer relationship."— Presentation transcript:

1 Chapter 4 Marketing on the Web

2 Learning Objectives Product vrs Consumer based marketing Different market segments and how to approach them Consumer relationship intensity Consumer relationship life cycle Advertising on the web E-mail marketing Consumer Relationship Management Branding 2

3 Marketing Mix Elements responsible for –Selling –Promoting –Of –Products –Services Once the mix is decided, its called the marketing strategy 3

4 4

5 The Product No just physical product but also –Manufacturing –Packaging –Naming –After sales –Warranties –Servicing 5

6 The Promotion All types of communication –Retailers, distributers, communication, purchase, end user Extremely complex area –Promoters have to chose between Several TV Channels Various Radio Stations Hundreds of newspapers and magazines Millions of websites Books Cinemas Video Games Posters 6

7 The Promotion Mix Direct Marketing –Involves direct communication Eg telephone, mail, etc Sponsorships –Pay others often an NGO in return of positive PR –Helps raise awareness and position the brand Public Relations –Creates mutual understanding between organisations and its stakeholders Personal Selling –Direct face-to-face contact Eg in a shop Advertising –Used mainly to build brand and raise awareness Sales Promotions –Short-term incentives –Effective against competitors 7

8 The Price How much should we charge? Some consumers purchase only on price Others judge quality High price = High quality Price also effects demand What about commissions to intermediaries? 8

9 Price Elasticity 9

10 The Place How to move goods from the producer to the consumer Most goods are sold through intermediaries Thus the training of retail staff is very important 10

11 Adding some more Ps? People –The staff that offer the service –Everyone has to work in line to the marketing strategy Processes –Must be in place to support the marketing –Eg Recipes in a restaurant, are they always followed? What about quality of the meal? Physical Evidence –Ambience and design of surrounding 11

12 12 Exercise: Write down the 4 Ps of Vodafone UK

13 Case Study: Vodafones Marketing Mix Product A product with many different features provides customers with opportunities to chat, play games, send and receive pictures, change ring tones, receive information about travel and sporting events, obtain billing information, view video clips and send video messages. Vodafone live! provides on-the-move information services. 13

14 Case Study: Vodafones Marketing Mix Place Vodafone UK operates over 300 of its own stores. It also sells through independent retailers e.g. Carphone Warehouse. Customers are able to see and handle products they are considering buying. People are on hand to ensure customers' needs are matched with the right product and to explain the different options available. 14

15 Case Study: Vodafones Marketing Mix Price Vodafone wants to make its services accessible to as many people as possible: from the young, through apprentices and high powered business executives, to the more mature users. It offers various pricing structures to suit different customer groups. Monthly price plans are available as well as prepay options. Phone users can top up their phone on line. Vodafone UK gives reward points for every £1 spent on calls, text messages, picture messages and ring tones. 15

16 Case Study: Vodafones Marketing Mix Promotion Vodafone works with icons such as David Beckham to communicate its brand values. Advertising on TV, on billboards, in magazines and in other media outlets reaches large audiences and spreads the brand image and the message very effectively. Stores have special offers, promotions and point of sale posters to attract those inside the stores to buy. Vodafone's stores, its products and its staff all project the brand image. Vodafone actively develops good public relations by sending press releases to national newspapers and magazines to explain new products and ideas. 16

17 Different marketing strategies Media selection is especially important for online firms The web offers many advantages –Personal contact selling –Cost savings Best model –Trust-based model of personal contact when selling on the web rather than mass marketing 17

18 Changing Times Rising consumer expectations Reduced product differentiation Increasing competition Splintering of mass markets Resulting in... –Reduction in the effectiveness of mass media –Internet took over providing consumer-focused marketing strategies 18

19 Market Segmentation 19

20 Market Segmentation Identify specific portions of the market Target them with specific advertising Divides potential customers into segments such as –Age –Gender –Marital status –Income level –Geographic location 20

21 Micromarketing Precise Focused on niche markets Typically very small market segments 21

22 Geographic Segmentation Divides groups by location 22

23 Demographic Segmentation Make use of age, gender, family size, income, education, religion, ethnicity 23

24 Psychographic Segmentation Use social class, personality, approach to life 24

25 Market segmenta tion on the Web: Steve Madden 25

26 Market segmentation on the Web: Talbots 26

27 Steve Madden Vs. Talbots Both –Well designed –Functional Steve Madden –Young –Fashion conscious buyers –Make high fashion exciting Talbots –More conservative –Older established buyers –Emphasises stability, home life 27

28 Offering choice : Dell 28

29 Offering more choice: Dell 29

30 Segmentation using customer behaviour Create experiences based upon behaviour If it is related to an event or time it is called occasional segmentation If it is related to how they use the site, it is called usage-based segmentation 30

31 Occasional segmentation 31

32 Usage based segmentation 1 32

33 Usage based segmentation 2 33

34 Consumer relationship Strengthened through marketing Good consumer experience will result in loyalty towards the company and its products/services 34

35 5 stage model of consumer loyalty Awareness –Customers recognise name/brand/products of company Exploration –Customers learn more about the company/products Familiarity –Customers completed several transactions and are aware of policies, pricing, flexibility, etc Commitment –After a number of successful transactions, customers develop a strong preference Separation –Over time the relationship might change, customer might be disappointed 35

36 5 stage model of consumer loyalty 36

37 Acquisition, Conversion and Retention Acquisition depends on the revenue model utilised –Advertising support Aims to keep customers in the site as much as possible Show them as many adverts as possible –Catalogue model, Fee for service or Subscription based Attracting customers is just an initial step The cost to attract just one visitor is the acquisition cost Second step to convert the visitor to the customer is the conversion cost 37

38 The funnel model 38

39 Types of Web Advertisement (1) 1) Banner Ads In the early stages of Internet, "advertising" on the Internet meant "banner ads" 2) Pop-up and Pop under Ads A pop-up ad is an ad that "pops up" in its own window when you go to a page.

40 Types of Web Advertisement (2) 3) Floating Ads These are ads that appear when you first go to a Web page, and they "float" or "fly" over the page for anywhere from five to 30 seconds. 4) Unicast ads are TV commercial that runs in a pop-up window. It is animated and it has sound. The ads can last anywhere from 10 to 30 seconds.Unicast ads

41 Types of Web Advertisement (3) 5) Streaming Sidebar Ads A small video ad appears in the right sidebar on this CNN page, with sound, and plays for 30 seconds. The reader can control the ad with the three buttons (Play, Pause, Stop) underneath the ad. 6) Pull Down Banner Ads Their operation varies depending on the site. On some, when you mouse over the banner ad, it expands to fill much of the page. On others, the banner ad is expanded-size initially, then shrinks to normal size after several seconds. From:

42 Banner Ads Use banner exchange networks Find related websites Use banner advertising network Costs are normally a dollar per thousand people (Cost per mille OR CPM) Type of ads –Pop-up vs. Pop-behind or under –Interstitial ad (displayed before the content) –Rich media ads or Active ads (floating on same page) 42

43 Site sponsorship Allow advertisers to sponsor parts or all of their site in a more subtle way Sport Site? Or are they selling water? 43

44 Effectiveness of online ads Difficult to measure No standard A few rating companies are being considered –ComScore –NetRatings 44

45 E-mail and Permission marketing Companies should obtain approval before sending promotion Some of them use automated email messages –Extremely cheap (less than 1c) Purchase of target email addresses cost between 1c and 1$ Conversion rates are high –10 to 30 % Banner click through are just 0.5% 45

46 Better email Not just spam but combine something useful –Article –Coupon –News To help out, several companies offer email management –Cost between 1 and 2 c per valid email –Take care of email campaigns 46

47 Branding Your brand is a vision, brought to life in each channel and at every touch point where your organization engages its audiences Audiences can include customers, employees, prospects, vendors or any person your organization touches 47

48 What is a brand? A brand is a distinguishing name or symbol intended to identify goods or services of a seller and to differentiate those goods or services from competitors. Clyde C. Tuggle Coca-Cola, Senior Vice President Worldwide Public Affairs & Communications 48

49 Purpose Inspire –Inject your organization with heart and soul Motivate –Spur action Connect –Unify departments and divisions for global presence. Link products and services to a promise. Simplify –Clarify and crystallize your mission Inform –Convey values, attributes, and advantages 49

50 Product Vs. Brand Diet Coke vs. Diet Pepsi in Blind Taste Test –Prefer Pepsi Sample 51% –Prefer Coke 47% –No preference 2% Diet Coke vs. Diet Pepsi in Identified Taste Test (brand names revealed) –Prefer Pepsi Sample 23% –Prefer Coke 65% –No Preference 12% 50

51 Elements of Branding Product differentiation –How is it different from other products? Relevance –How useful is the product to the customers need? Perceived value –How valuable is it? 51

52 Emotional Vs. Rational Branding A brand is an emotional shortcut between the company and its consumer. –Works well on one way channels –Problematic on the internet Not absorbing passively Busy people Quickly click away from emotional appeals Rational Branding more effective –Goods given in exchange of viewing adverts 52

53 Brand leveraging strategies When a company extends its dominant position to other products Yahoo! –Directory to Search Engine to Businesses, etc. –Acquired GeoCities –Acquired –Entered into a network with Fox Entertainment These new features attract web users thus increasing advertisement value 53

54 54

55 Brand Consolidation 1 A step further than Brand Leveraging Twins two or more companies together 55

56 Brand Consolidation 2 HomeHome | Planning Tools | Ideas & Advice | Wedding Gowns | Local Wedding Vendors | Wedding Registry Center | Wedding Gift Store | Community | Wedding Websites I Privacy PolicyTerms of Use | Newsletters | Advertise With Us | Company Info | Survey | Guest Home | Order Status | | MyDIYWeddingDa || ShopforWeddings.c om | | | LilaGuide.c om | | Weddingbook | Mommyhood | Bre || © 1997-2009 | HELP | Couples Directory | Site MapPlanning ToolsIdeas & AdviceWedding GownsLocal Wedding VendorsWedding Registry CenterWedding Gift StoreCommunityWedding WebsitesPrivacy PolicyTerms of UseNewslettersAdvertise With UsCompany InfoSurveyGuest HomeOrder StatusCelebrityWeddingBuzz.comMyDIYWeddingDa y.comTheKnot.comTheNest.comShopforWeddings.c omWeddingTracker.comTheBump.comLilaGuide.c omWeddings.comWeddingbookMommyhoodBre astFeeding.comLilaGuide.comPartySpot.comHELPCouples DirectorySite Map 56

57 Cost of Branding Creating a new brand is hard Easier to –Transfer an existing brand –Maintain it In 1998 –Top 100 e-commerce sites spent $8 million to create an online brand –Amazon spent $133 –BarnesAndNoble spent $70 –Most of the costs went to TV, Radio, Print 57

58 Exercise Think about your local bank. Write 10 point on how it transferred its brand image to the internet? 58

59 Affiliate marketing strategies Company A includes details of Companys B –Or its products –Company A will receive a commission of whoever buys from company B through its site – –Toys R US –Research shows that click-through rates are much higher in these alliances 59

60 Viral Marketing Uses satisfied customers to tell potential other customers Similar to affiliate marketing where they use other websites, here they use other people Called viral because it reaches potential customers like a virus 60

61 Positioning Search Engines Directories Viral Marketing Etc 61

62 62 Search Engines A search engine is a special kind of Web page software that finds other Web pages that match a word or phrase you entered A Web directory is a listing of hyperlinks to Web pages that is organized into hierarchical categories Eg: Search engines contain three major parts: spider, index, and utility

63 63 Popular Search Engines

64 64 Spiders and Crawlers

65 65 Indexing

66 Paying search engines 66

67 Website naming issues URL must reflect the brand name Delta Air Lines – – Southwest Airlines – – Very common for companies to buy several URLS, even some misspelled ones! –Try 67

68 Questions? 68

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