2. Electronic Commerce COMP3210
Session 8: Marketing a Web Site and Promoting Products and Services
Dr. Paul Walcott
Department of Computer Science, Mathematics and Physics University of the West Indies, Cave Hill Campus Barbados
© 2007 Dr. Paul Walcott
The Department of Computer Science Mathematics and Physics, University of the West Indies, Cave Hill Campus, Barbados

3. Session Objectives The objectives of this session are:
To provide a general introduction to Web marketing
To discuss product and customer-based marketing strategies
To categorise individuals into various market segments
To analyse Web customer behaviours through the use of customer relationship models
To describe methods used to promote your Web site

4. What is Marketing?
This is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to satisfy customers2.

5. What is Marketing Cont’d?
Marketing is more than sales; it is those set of activities that
Grabs a potential customer
Encourages them to buy your product
Actually gets them to purchase your product
Makes them a repeat customer

6. What is Marketing Cont’d?
Marketing theory describes the 4 P’s
Product: a company sells a physical product or offers a service
Price: the amount paid for the product or service
Promotion: the communication of the existence of the product to the market
Place (or distribution): ensuring that the right product or service is offered at the right place at the best time
Each of these “P”s contribute to your marketing mix

7. Marketing Strategies
The first stage (of a marketing strategy) is setting marketing objectives (where the organisation wants to be at the end of the strategic planning period) and goals (the objectives with specific numerical benchmarks and deadlines attached to allow management to measure achievement)3.

8. Marketing Strategies Cont’d
The second stage (of a marketing strategy) is specifying the core marketing strategy, i.e. specific target markets, competitive positioning and key elements of the marketing mix3.

9. Marketing Strategies Cont’d
The third (stage of a marketing strategy) is the implementation of tactics to achieve the core strategy3.

10. Marketing Strategies Cont’d
Marketing strategies may come in two forms
Product-based marketing strategy
Customer-based marketing strategy

11. Marketing Strategies Cont’d
Product-based Marketing Strategy
When a customer is likely to buy or think about products in categories, a product-based marketing strategy is appropriate:
An example is an office supplier store where a customer may be looking for an office desk; the customer immediately thinks about the product category “office furniture”
See

12. Marketing Strategies Cont’d
Customer-based Marketing Strategies
Due to the great flexibility of Web sites (as opposed to traditional mass media) they can offer products and services that are targeted towards specific type of customers
First the customer types must be identified
A Web site on its home page might allow the user to select the required customer type, e.g.
This approach is more common on B2B sites than on B2C sites

13. Communicating With Different Marketing Segments
Trust and Media Choice
The Web is an intermediate step between mass media and personal contact
Mass media (e.g. TV) offers the lowest level of trust yet is still widely used today
The cost of mass media can be spread over a large number of people
Personal contact offers the highest level of trust; it is also the most expensive

14. Communicating With Different Marketing Segments Cont’d
In 1996 as companies began doing business online a splintering of the mass market occurred due to rising consumer expectations and reduced product differentiation
This led to a reduction of the usefulness of mass marketing
Advertisers subsequently began to identify market segment and sell to them

15. Market Segmentation
Market segmentation is the identification and targeting of specific portions of a market
Demographic characteristics are usually used to create market segments
E.g. age, gender, martial status and income level
Ring tones on Cell phones target market might be younger people between the ages of 10-20

16. Market Segmentation Cont’d
Market segments have traditionally been identified through the following categories:
Geographic segmentation
Demographic segmentation
Psychographic segmentation

17. Market Segmentation Cont’d
Geographic Segmentation
When a company divides its customers into groups based on where they live or work this is referred to as geographic segmentation

18. Market Segmentation Cont’d
Demographic segmentation
Demographic segmentation uses characteristics of people, for example age, gender, family size, income education, religion or ethnicity to group customers

19. Market Segmentation Cont’d
Psychographic segmentation
Psychographic segmentation groups customers based on social class, personalities or approach to life
For example auto car companies may focus sports car advertising to people who have a high need for achievement

20. Market Segmentation Cont’d
Web Market Segmentation
The design of the site can immediate appeal to different market segments, for example
For the young fashion-conscious buyer you may have a site with a wide variety of typefaces, bold graphics and bright colour product photos
For the older more established buyer you may have a more muted conservative style

21. Market Segmentation Cont’d
Companies can offer a form of one-to-one marketing by allowing customers to customise the retailer’s Web site
One example of this is Dell.com
Offers each customer its own Web site
Allows individual employees of its customers to create their own personalised pages

22. Market Segmentation Cont’d
Behavioural Segmentation
This allows companies to target specific customers in different ways at different times
A person tends to have different requirements on different occasions
E.g. a person wanting a meal might go one place for breakfast and another for lunch
As a result a different user experience must be created depending on the behaviour of the user

23. Market Segmentation Cont’d
Usage-based Market Segmentation
A person may visit the same Web site at different times for different reasons, as a result we must identify behavioural patterns
Some key behavioural patterns are:
Browser
Buyer
Shopper

24. Customer Behaviours The Behaviour of a Browser
A browser enters your Web site to browse or surf
In order to generate and maintain interest Web sites should use trigger words
These words jog the memory of visitors, reminding them to buy from the site
As a result users stay longer at the site

25. Customer Behaviours Cont’d
The Behaviour of a Browser Cont’d
A Web site should include extra content related to the product or service offered
For example a company that sells printers could provide extra information about different types of paper and its use in desktop publishing

26. Customer Behaviours Cont’d
The Behaviour of a Shopper
Shoppers arrive at a Web site wanting to buy a product or service, but require more information before purchasing, so they will get the best deal and the best-suited product

27. Customer Behaviours Cont’d
The Behaviour of a Shopper Cont’d
What is important to shoppers are:
Comparison tools
Product reviews
A list of features
User control product/service level of detail
One day a user might be a browser, the next a shopper

28. Customer Behaviours Cont’d
The Behaviour of a Buyer
Buyers arrive at your Web site ready to make a purchase
A good Web site design would prevent anything from getting in the way of the purchase
As a result a Web catalog might provide a box on the home page to enter the catalog number (e.g. and then allow the user to add the product to a shopping cart

29. Customer Behaviours Cont’d
The Behaviour of a Buyer Cont’d
The primary goal is to get the the buyer to the shopping cart as quickly as possible
The shopping cart
Allows the buyer to create an account
Allows the user to log in after placing items into the cart
Logging in should be left to the end so that barriers are not placed in the shopping process

30. Customer Behaviours Cont’d
The Behaviour of a Buyer Cont’d
Amazon.com offers a patented 1-click feature allowing:
Customers to purchase items with a single click
Any items purchased within 90 minutes of each other are aggregated into one order

31. Customer Behaviours Cont’d
Alternative Behavioural Modes
A survey of 50,000 participants identified six groups of Internet users:
Simplifiers: who like convenience and are attracted to sites that could make life easier
Surfers: searches the Web for information and shop. They spend a lot of time on the Web and like to be entertained
To attract surfers, the content must be attractive, well displayed and updated regularly

32. Customer Behaviours Cont’d
Alternative Behavioural Modes Cont’d
Bargainers: search for a good deal therefore frequent sites like eBay.com. This represents about 10% of the on-line population.
Bargainers are willing to search sites for the best terms and prices
Connectors: stay in touch with people over the Web. They use applications such as chat rooms, instant messaging services, electronic greeting cards and Web

33. Customer Behaviours Cont’d
Alternative Behavioural Modes Cont’d
Routiners: visit the same sites all of the time, e.g. to check news, or stock quotes
Sportsers: frequent sports and entertainment sites
It is important to note that these are results from only one study; however, other studies have found similar groups

34. Customer Relationship Intensity
There is a need to create a strong relationship between a company and its customers
A good relationship creates loyalty amongst customer

35. Customer Relationship Models
Two customer relationship model are:
Five stage model of customer loyalty
The stages are awareness, exploration, familiarity, commitment and separation
The Funnel Model
The stages are customer acquisition, conversion and retention

36. Customer Relationship Models Cont’d
Five Stage Model of Customer Loyalty
Researchers have identified five stages of customer loyalty
Awareness: the name of the company/or its products are recognised. No interaction with the company has been made
Exploration: in this stage the customer finds out more about the products of the company. Communication may be through a Web site, the telephone or . This stage is about information interchange

37. Customer Relationship Models Cont’d
Five Stage Model of Customer Loyalty Cont’d
Familiarity: The customer has completed several transactions with the company, although the customer is still willing to shop with competitors
Commitment: The customer is satisfied with the level of service and is therefore a repeat customer. Customers at this point are wiling to tell others about the service
Separation: This may result from disappointment in the level of service or product quality

38. Customer Relationship Models Cont’d
Five Stage Model of Customer Loyalty Cont’d
These five stages are sometimes referred to as the customer life cycle
Grouping customers based on these stages is called life-cycle segmentation

39. Customer Relationship Models Cont’d
The Funnel Model
Managers often want to identify the best way to attract and retain customers
The funnel model is a tool that managers use to analyse the effectiveness of their marketing strategy
This model is less abstract than the five stage model

40. Customer Relationship Models Cont’d
The Funnel Model Cont’d
This funnel model allows companies to determine which advertising and promotion strategies actually work
It is divided into three parts:
Customer acquisition
Customer conversion
Customer retention

41. Customer Relationship Models Cont’d
The Funnel Model Cont’d
Customer Acquisition
This is the process of attracting new visitors to your site
The total amount of money that a Web site spends to attract one visitor is called the acquisition cost

42. Customer Relationship Models Cont’d
The Funnel Model Cont’d
Customer Conversion
This is the process of converting a first time visitor of a site to a customer
For advertising-supported sites this is the point when a visitor registers, or when they return several times
For sites with other revenue models this would be when a visitor purchases a good or service or subscribes to the site’s content

43. Customer Relationship Models Cont’d
The Funnel Model Cont’d
Customer Conversion Cont’d
The total money spent (on average) to induce a visitor to make a purchase on a site is called the conversion cost (most managers also include the acquisition cost)

44. Customer Relationship Models Cont’d
The Funnel Model Cont’d
Customer Retention
In many business the conversion cost is higher than the profit made on the average sale therefore it is important to encourage customers to return to the site to make another purchase
If the customer returns to the site a number of times after the first purchase, they are considered retained customers
The cost of getting customers to return to the site and make a purchase is called the retention cost

45. Customer Relationship Models Cont’d – The Funnel Model
500,000 ads shown on Web pages
Needs identification
Searches for information about alternative product and services
10,000 ad viewers become visitors
900 visitors become shoppers
Evaluate alternatives and makes selections
500 shoppers complete their purchase
Purchase
Conversion of shoppers into loyal supporters
80 purchasers become loyal, repeat customers

46. Web Advertising Advertising is about communication
Communication may be between a company and
Its current customers
Potential customers
Or former customers that the company is trying to regain

47. Web Advertising Cont’d
Banner Advertising
Most Web advertising uses banner ads
A small rectangular object normally at the top of the Web page which displays stationary or moving graphics
These ads are created using animated GIFs, or objects created in Shockwave, Java or Flash)
These ads must be attention grabbing

48. Web Advertising Cont’d
Banner Advertising Cont’d
Web ads have been standardised by an organisation called the Interactive Advertising Bureau (IAB) which is responsible for
Creating banner size standards (e.g. 728x90, 160x600, 300x250, or 180x150)
Encourage effective Internet advertising

49. Web Advertising Cont’d
Banner Ad Placement
There are three ways that a company can have their banner ads displayed
(1) Use a banner exchange network
A banner exchange network arranges for banner ads for one company to be displayed on another company’s Web site
Each member site would accept two ads for each ad placed on someone’s site
The banner exchange network earns money by selling ad space to other businesses

50. Web Advertising Cont’d
Banner Ad Placement Cont’d
(2) Pay a site to display the banner ad
Rates can be negotiated through an advertising agency
(3) Use a banner advertising network who acts as brokers between advertisers and Web sites that carry ads
They often broker space on large Web site like Yahoo, which has high traffic volumes and are therefore expensive

51. Web Advertising Cont’d
Measuring Cost for Ads
Several measurements exist including:
Cost per thousand clicks (CPM)
The number of new visitors that arrive via a click-through that buy on the site
To measure Web audiences is complicated, however the following definitions are instructive:
A visit occurs when a Web page is requested by a visitor; further page loads from the same site within a time period is considered part of the same visit

52. Web Advertising Cont’d
Measuring Cost for Ads Cont’d
A trial visit, is the first time a visitor loads a Web site
When a visitor loads a page several time these are called repeat visits
If a visitor clicks on an ad that is displayed on a Web page this is called a click-through
Rates vary depending on how much demographic information is captured, and the kind of visitors the site attracts
The cost per one thousand clicks may range from $1 to $50.

53. Web Advertising Cont’d
Other Web Ad Formats
The pop-up ad is an ad that appears in its own window when the user opens or closes a page
The pop-behind ad is a pop-up ad that is behind the existing browser window
Ad-blocking software prevents these ads from displaying
Rich media ads (active ads) generate graphics that float over the Web page
These ads are attention grabbing, but intrusive

54. Marketing Methods E-Mail Marketing
may well be one of the greatest tools created for communication in the 20th century
Some of the ways that has been used for marketing are:
Permission marketing is the sending of s to people who request further information on a product or service (for example)
Combining content (e.g. articles or news stories that are of interest to the target market) with advertising messages

55. Marketing Methods Cont’d
Affiliate Marketing
In affiliate marketing a Company’s Web site includes products or services offered for sale by another company in exchange for a commission
The affiliate’s site benefits from the selling site’s brand in exchange for the referral
Amazon.com has over 800,000 affiliate sites

56. Marketing Methods Cont’d
Viral Marketing
Viral Marketers rely on non-customers being told about products or services by existing customers
The number of customers increase the way a virus increases
An example of a viral marketing campaign is Blue Mountain Arts
When an electronic greeting card is sent to a person, a link to Blue Mountain is included which they click on to read the card; they are now more likely to send a card themselves

57. Web Site Naming
People with established brands want to name their Web site after their brand
Companies often buy more than one domain name, just in case the person misspells it (e.g. Yahoo.com owns Yahow.com)
In some cases the Web site domain is owned by some one else (e.g. virginatlantic.com -> viginatlantic.com)
Domain names can be expensive, e.g. Altavista.com cost $3.3 million

58. Promoting Your Web Site4,5
Internet marketing is about capturing the attention of potential customers through promotion
The guidelines used for direct mail marketing are also used for Internet marketing
These guidelines are summarised by the acronym AIDA

59. Promoting Your Web Site Cont’d
A – Attention
The goal is to get the attention of the visitor which may be achieved through:
The quality of the Web site
The ease of navigation
Personalisation
Good graphics
Attractive Banners
Colour

60. Promoting Your Web Site Cont’d
I – Interest
Once the visitor’s attention has been captured, an interest in the product must be sparked.
Quick response times and ease of navigation are vital at this point
D – Desire
A desire must be created for action
Interactivity through navigation provides this

61. Promoting Your Web Site Cont’d
A - Action
The desired action is the customer placing an order, or the actual sale.
At this point the information is sent off to the company to process and deliver (i.e. the fulfilment phase)

62. Promoting Your Web Site Cont’d
Several methods of promotion are in use today:
The combination of online and off-line marketing (these must work together)
Banner ads (very popular, however only about 0.5% of visitors click through)
marketing (very cost effective and with good results, i.e. 5-15% response rate, however may clutter customer’s in boxes)

63. Promoting Your Web Site Cont’d
Traditional media: local newspapers, radio programmes and mass mailing campaigns
It is important to promote your Web site on your Web site. This can be achieved through:
The domain name; use the company’s name
Negotiate reciprocal links, i.e. other Web sites linking to your site
Search engines and directories
Search engines locate sites based on keywords
Directories are organised listing of Web sites

64. Promoting Your Web Site Cont’d
Newsgroups and mailing list
Promotion agreements5
One company promotes another (e.g flowers.com customers can earn frequent-flyer miles with American Airlines)

65. References
[1] Schneider, Gary, P., “Electronic Commerce: The second wave”, Thomson Course Technology, Fifth Annual Edition, 2004
[2] CFDC, “Glossary of Business Terms” Online document available at
[3] James, Judith, “General Glossary of Terms”, Online document available at
[4] Awad, Elias, M., “Electronic Commerce: From Vision to Fulfillment”, Pearson Prentice Hall, Second Edition, 2004
[5] Rayport, Jeffrey, F., Jaworski, Bernard, J., “Introduction to E-Commerce”, McGraw-Hill, Second Edition, 2004