1. E-commerce business. technology. society. Kenneth C. Laudon
Sixth Edition
Kenneth C. Laudon
Carol Guercio Traver
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2. Chapter 6 E-commerce Marketing Concepts
Copyright © 2009 Pearson Education, Inc.
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3. The Internet Audience and Consumer Behavior
Broadband audience vs. dial-up audience
Purchasing behavior 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
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4. A General Model of Consumer Behavior
Figure 6.1, Page 351
SOURCE: Adapted from Kotler and Armstrong, 2009.
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5. Background Demographic Factors
Culture: broadest impact
Subculture (ethnicity, age, lifestyle, geography)
Social
Reference groups
Direct reference groups
Indirect reference groups
Opinion leaders (viral influencers)
Lifestyle groups
Psychological
Psychological profiles
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6. The Online Purchasing Decision
Psychographic research
Combines demographic and psychological data
Divides market into groups based on social class, lifestyle, and/or personality characteristics
Five stages in the consumer decision process:
Awareness of need
Search for more information
Evaluation of alternatives
Actual purchase decision
Post-purchase contact with firm
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7. The Consumer Decision Process and Supporting Communications
Figure 6.3, Page 355
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8. 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
Clickstream behavior: transaction log for consumer from search engine to purchase
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9. A Model of Online Consumer Behavior
Figure 6.4, Page 356
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10. Shoppers: Browsers and Buyers
Shoppers: 86% of Internet users
70% buyers
16% browsers (purchase offline)
One-third 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
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11. Online Shoppers and Buyers
Figure 6.5, Page 358
SOURCE: Based on data from eMarketer, Inc., 2009b.
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12. What Consumers Buy Online
Figure 6.6, Page 361
SOURCES: Internet Retailer, 2009a; eMarketer, Inc., 2009b; authors’ estimates.
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13. Intentional Acts: How Shoppers Find Vendors Online
37% use search engines
33% go directly to site
17% use comparison shopping sites
15% use product rating sites
Online shoppers are highly intentional, looking for specific products, companies, services
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14. SOURCES: eMarketer, Inc., 2007b; Internet Retailer, 2006.
Table 6.6, Page 362
SOURCES: eMarketer, Inc., 2007b; Internet Retailer, 2006.
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15. 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
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16. 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
Cookies and Web bugs
Databases, data warehouses, data mining
Advertising networks
Customer relationship management systems
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17. 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?
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18. Cookies and Web Bugs Cookies: Web bugs:
Small text file Web sites place on visitor’s PC every time they visit, as specific pages are accessed
Provide Web marketers with very quick means of identifying customer and understanding prior behavior
Web bugs:
Tiny (one pixel) graphic files embedded in messages and on Web sites
Used to automatically transmit information about user and page being viewed to monitoring server
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19. 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
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20. A Relational Database View of E-commerce Customers
Figure 6.12, Page 381
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21. Data Warehouses and Data Mining
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
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22. Data Mining and Personalization
Figure 6.13, Page 382
SOURCE: Adomavicius and Tuzhilin, 2001b ©2001 IEEE.
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23. Market Entry Strategies
Figure 6.15, Page 389
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24. Net Pricing Strategies
Integral part of marketing strategy
Traditionally, prices based on:
Fixed cost
Variable costs
Market’s demand curve
Price discrimination
Selling products to different people and groups based on willingness to pay
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25. Net Pricing Strategies
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
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26. 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
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27. Family Lifestyle Advert
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28. Car Advertisement
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29. Marketing Communications
Online marketing communications:
Methods used by online firms to communicate with consumer and create strong brand expectations
Promotional sales communications:
Suggest consumer “buy now” and make offers to encourage immediate purchase
Branding communications:
Focus on extolling differentiable benefits of consuming product or service
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30. Forms of Online Advertisements
Display ads
Rich media
Video ads
Search engine advertising
In-game ads
Social network, blog, and game advertising
Sponsorships
Referrals (affiliate relationship marketing)
marketing
Online catalogs
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31. Behavioral Targeting Web as “Database of Intentions”
Combines real-time information on visitors online behavior with offline identity, consumptive information
Data analyzed to develop profiles
Ads delivered based on profile
Hundreds of versions of ad for different profile groups
One of fastest growing online marketing techniques
Raises privacy concerns
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32. Mixing Offline and Online Marketing Communications
Most successful marketing campaigns incorporate both online and offline tactics
Offline marketing
Drive traffic to Web sites
Increase awareness and build brand equity
Consumer behavior increasingly multi-channel
60% of consumers research online before buying offline
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33. How Well Does Online Advertising Work?
Ultimately measured by ROI on ad campaign
Highest click-through rates: search engine ads, permission campaigns
Rich media, video interaction rates high
Online channels compare favorably with traditional channels
Most powerful marketing campaigns use multiple channels, including online, catalog, TV, radio, newspapers, stores
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34. Comparative Returns on Investment
Figure 7.10, Page 467
SOURCE: Industry sources; author estimates.
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35. The Costs of Online Advertising
Pricing models
Barter
Cost per thousand (CPM)
Cost per click (CPC)
Cost per action (CPA)
Online revenues only
Sales can be directly correlated
Both online/offline revenues
Offline purchases cannot always be directly related to online campaign
In general, online marketing more expensive on CPM basis, but more effective
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36. Web Site Functionality
Main factors in effectiveness of interface
Utility
Ease of use
Top factors in credibility of Web sites
Design look
Information design/structure
Information focus
Organization is important for first-time users, but declines in importance
Information content becomes major factor attracting further visits
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37. Factors in the Credibility of Web Sites
Figure 7.12, Page 477
SOURCE: Based on data from Fogg, et al, 2003.
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38. Table 7.9, Page 478
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39. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall
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Publishing as Prentice Hall
Copyright © 2010 Pearson Education, Inc.