Marketing for E-commerce Lecture 6,7&8 E-commerce

Internet Marketing Means “marketing on the internet”. Also called e-marketing. It provides several advantages  Search engine marketing  Easily track advertising, promotion, and sales  Offering bonus offers for purchases made online  E-newsletters to get new customers and to keep old customers informed and updated on new products It provides challenges as well  Ensuring that the customer is always satisfied

Internet Marketing Strategies

Product-Based Marketing Strategies

Customer-Based Marketing Strategies

Communicating with Different Market Segments

Trust and Media Choice

Trust in Three Information Dissemination Models

Market Segmentation

One-to-One Marketing Companies can offer a form of one-to-one marketing by allowing customers to customize the product they want. One example of this is Dell.com Market Segmentation (cont.)

Television Advertising Messages Tailored to Program Audience

Beyond Market Segmentation: Customer Behavior and Relationship Intensity

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

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

Behavior-Based Categories

The Behaviour of a Browser Browser enter 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

The Behaviour of a Browser (I) 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 their use in desktop publishing

The Behaviour of a Shopper Shoppers arrive at a Web site wanting to buy a product or service, but requires more information before purchasing, so they will get the best deal and the best-suited product 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 may be a browser, the next a shopper

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 it to a shopping cartwww.argos.co.uk

The Behaviour of a Buyer (I) 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

The Behaviour of a Buyer (II) 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

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 attract surfers, the content must be attractive, well displayed and updated regularly

Alternative Behavioural Modes (I)  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

Alternative Behavioural Modes (II)  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 that these are results from only one study; other studies have found similar groups however

Customer Relationship Intensity and Life-Cycle Segmentation

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

Five Stage Model of Customer Loyalty (I)  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

Five Stage Model of Customer Loyalty (II) These five stages are sometimes referred to as the customer life cycle Grouping customers based on these stages is called life-cycle segmentation

Five Stages of Customer Loyalty

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

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 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)

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

Acquisition, Conversion, and Retention of Customers

Customer Acquisition, Conversion, and Retention: The Funnel Model

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

The Funnel Model (I) 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

Funnel Model of Customer Acquisition, Conversion, and Retention

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 Advertising on the Web

Advertising on the Web (cont.)

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

Banner Advertising 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

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

Banner Ad Placement (I)  (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

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

Measuring Cost for Ads (I)  A trial visit, which 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.

Measuring Cost for Ads (II)

Disguised Banner Ads

Other Web Ad Formats

Other Web Ad Formats (cont.) 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

Site Sponsorships

Marketing

Marketing (cont.) may well be one of the greatest tools created for communication in the 20 th 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

Technology-Enabled Customer Relationship Management

Technology-Enabled Relationship Management and Traditional Customer Relationships

Creating and Maintaining Brands on the Web

Elements of a Brand

Emotional Branding vs. Rational Branding

Affiliate Marketing Strategies

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. The person receiving the card would then click on the link to read the card, and is likely to search for and send a card themselves

Search Engine Positioning and Domain Names

Search Engine Positioning and Domain Names (cont.)

Paid Search Engine Inclusion and Placement

Web Site Naming Issues

Domain Names that Sold for More than $1 Million

URL Brokers and Registrars