Part Two Using Technology for Customer Relationships in a Global Environment E-Marketing and Customer Relationship Management 4 4 Vis

4–24–2 Chapter Learning Objectives 1.To define electronic marketing and electronic commerce and recognize their increasing importance in strategic planning 2.To understand the characteristics of electronic marketing—addressability, interactivity, memory, control, accessibility, and digitalization—and how they differentiate electronic marketing from traditional marketing activities –To examine how the characteristics of electronic marketing affect marketing strategy –To understand how electronic marketing and information technology can facilitate customer relationship management –To identify the legal and ethical considerations in electronic marketing

Copyright © Houghton Mifflin Company. All rights reserved. 4–34–3 Chapter Outline Marketing on the Internet –Basic Characteristics of Electronic Marketing –E-Marketing Strategies Customer Relationship Management –Technology Drives CRM –Customer Satisfaction Is the End Result of CRM Legal and Ethical Issues in E-Marketing

Copyright © Houghton Mifflin Company. All rights reserved. 4–44–4 Marketing on the Internet Electronic Commerce (E-Commerce) –Sharing business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks Electronic Marketing (E-Marketing) –The strategic process of creating, distributing, promoting, and pricing products for targeted customers in the virtual environment of the Internet

Copyright © Houghton Mifflin Company. All rights reserved. 4–54–5 Benefits of E-Marketing Open and Instantaneous Flows of Information –Marketers and customers share information in real-time on prices, specifications, and product availability. Enhanced Customer Service Efficiencies –Rapid response and always-on availability Worldwide Scope –Opens markets to firms of all sizes

Copyright © Houghton Mifflin Company. All rights reserved. 4–64–6 Basic Characteristics of E-Marketing Addressability Interactivity Memory Control Accessibility Digitalization

Copyright © Houghton Mifflin Company. All rights reserved. 4–74–7 Basic Characteristics of Electronic Marketing: Addressability Addressability is a marketer’s ability to identify customers before they make a purchase How E-Merchants Attain Addressability –Limit access to areas of their web site to encourage customer registration –Offer contests and prizes in exchange for consumer information –Place “cookies” on visitor’s computer to track visitor usage and preferences

Copyright © Houghton Mifflin Company. All rights reserved. 4–84–8 Basic Characteristics of Electronic Marketing: Interactivity Interactivity is the ability to allow customers express their needs and wants directly to the firm in response to the firm’s marketing communications –Real-time interaction with customers –Broader market coverage at a lower cost Community refers to a sense of group membership or feeling of belonging Blogs are web-based journals where writers can editorialize and interact with others

Copyright © Houghton Mifflin Company. All rights reserved. 4–94–9 Important Terms Electronic Commerce (E-Commerce) –Sharing business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks Electronic Marketing (E-Marketing) –The strategic process of creating, distributing, promoting, and pricing products for targeted customers in the virtual environment of the Internet Addressability –A marketer’s ability to identify customers before they make a purchase Cookie –An identifying string of text store on a web site visitor’s computer

Copyright © Houghton Mifflin Company. All rights reserved. 4–10 Important Terms Interactivity –The ability to allow customers express their needs and wants directly to the firm in response to the firm’s marketing communications Community –A sense of group membership or feeling of belonging Blogs –A web-based journal where writers can editorialize and interact with other Internet users

Copyright © Houghton Mifflin Company. All rights reserved. 4–11 Basic Characteristics of Electronic Marketing: Memory Memory is the ability to access databases or data warehouses containing individual customer profiles and past purchase histories and to use these data in real-time to customize a marketing offer. A database is a collection of information arranged for easy access and retrieval.

Copyright © Houghton Mifflin Company. All rights reserved. 4–12 Basic Characteristics of Electronic Marketing: Control Control refers to customers’ ability to regulate the information they view and the rate and sequence of their exposure to that information. –The Web is a pull medium because users control the information they view –Marketers have to work harder and more creatively to retain customers at their web sites A portal is a multiservice web site that serves as a gateway to other web sites.

Copyright © Houghton Mifflin Company. All rights reserved. 4–13 Basic Characteristics of Electronic Marketing: Accessibility Accessibility is the ability to obtain information available on the Internet. –Informs and educates the inquiring consumer about competing products and prices –Creates competition for the consumer’s attention

Copyright © Houghton Mifflin Company. All rights reserved. 4–14 Accessibility © Copyright 2004 Kelley Blue Book. All rights reserved.

Copyright © Houghton Mifflin Company. All rights reserved. 4–15 Basic Characteristics of Electronic Marketing: Digitalization Digitalization is the ability to represent a product, or at least some of its benefits, as digital bits of information.

Copyright © Houghton Mifflin Company. All rights reserved. 4–16 Important Terms Memory –The ability to access databases or data warehouses containing individual customer profiles and past purchase histories and to use these data in real-time to customize a marketing offer Database –A collection of information arranged for easy access and retrieval Control –Customers’ ability to regulate the information they view and the rate and sequence of their exposure to that information

Copyright © Houghton Mifflin Company. All rights reserved. 4–17 Important Terms Portal –A multiservice web site that serves as a gateway to other web sites Accessibility –The ability to obtain information available on the Internet Digitalization –The ability to represent a product, or at least some of its benefits, as digital bits of information

Copyright © Houghton Mifflin Company. All rights reserved. 4–18 E-Marketing Strategies Distribution Systems Target Markets Product Marketing Promotion Mediums PricingPricing E-Marketing Strategy Considerations

Copyright © Houghton Mifflin Company. All rights reserved. 4–19 Types of Advertising on Web Sites

Copyright © Houghton Mifflin Company. All rights reserved. 4–20 Most Popular Daily Internet Activities Source: “Daily Internet Activities,” Pew Internet & American Life Project, March 2, 2005,

Copyright © Houghton Mifflin Company. All rights reserved. 4–21 E-Commerce by Ethnicity Source: Robyn Greenspan, “Online Asians Lead in Income, E-Commerce,” ClickZ, March 15, 2004,

Copyright © Houghton Mifflin Company. All rights reserved. 4–22 Product Considerations Courtesy of Monster.com

Copyright © Houghton Mifflin Company. All rights reserved. 4–23 Distribution Considerations 2002 © Lands’ End, Inc. Used with permission.

Copyright © Houghton Mifflin Company. All rights reserved. 4–24 The Relationship Between Web Sites and Retail Stores Source: USA Today, September 28, 2001, p. A1.

Copyright © Houghton Mifflin Company. All rights reserved. 4–25 Customer Relationship Management Customer relationship management (CRM) focuses on using information about customers to create marketing strategies that develop and sustain desirable long-term relationships. –A focus on CRM is possible in e-marketing because of marketers’ ability to target individual customers. –The ability to identify individual customers allows marketers to shift their focus from increase share of market to increasing share of customer. –CRM is often based on the use of information technology.

Copyright © Houghton Mifflin Company. All rights reserved. 4–26 The 80/20 Rule 80 percent of business profits come from 20 percent of customers. –Advances in technology allow marketers to profile customers in real-time and thereby assess their lifetime value (LTV) to the firm. –Some customers may be too expensive to retain given the low level of profits they generate. –Firms should focus instead on developing and managing long-term relationships with more profitable customers.

Copyright © Houghton Mifflin Company. All rights reserved. 4–27 Technology Drives CRM Customer Support and Call Center Software –Provides customer interaction and improved service –Captures information about all interactions Sales Automation –Links sales force to applications that facilitate selling and providing service –Provides information to determine the best solution for customers –Determines order status, tracks deliveries, and identifies service problems

Copyright © Houghton Mifflin Company. All rights reserved. 4–28 Technology Drives CRM (cont’d) Technology –Should not be used just as a cost-reduction tactic –Should not be overwhelmed by gathering unnecessary data –Should be used as a tool to sustain long-term relationships

Copyright © Houghton Mifflin Company. All rights reserved. 4–29 Legal and Ethical Issues in E-Marketing Personal Privacy Issues –Unauthorized placement of “cookies” on personal computers –Web site information requirements for registration –Collection of information from children –Use of “spyware” in software Spam –Unsolicited commercial (UCE) Misappropriation of Intellectual Property –Illegal copying of copyrighted software, movies, CDs, and other creative materials

Copyright © Houghton Mifflin Company. All rights reserved. 4–30 Legal and Ethical Issues Reprinted with permission of Computer Associates, International

Copyright © Houghton Mifflin Company. All rights reserved. 4–31 The BBBOnLine Privacy Seal and Program Explanation FIGURE 4.1 Source: Reprinted with permission from BBBOnLine, Council of Better Business Bureaus, Arlington, VA.

Copyright © Houghton Mifflin Company. All rights reserved. 4–32 Important Terms Customer Relationship Management (CRM) –Using customer information to build long- term relationships Spam –Unsolicited commercial (UCE)

Copyright © Houghton Mifflin Company. All rights reserved. 4–33 Code of Ethics Source: Reprinted by permission of the American Marketing Association.

Copyright © Houghton Mifflin Company. All rights reserved. 4–34 Code of Ethics (cont’d) Source: Reprinted by permission of the American Marketing Association.

Copyright © Houghton Mifflin Company. All rights reserved. 4–35 Code of Ethics (cont’d) Source: Reprinted by permission of the American Marketing Association.

4–36 After reviewing this chapter you should: 1.Be able to define electronic marketing and electronic commerce and recognize their increasing importance in strategic planning. 2.Understand the characteristics of electronic marketing—addressability, interactivity, memory, control, accessibility, and digitalization—and how they differentiate electronic marketing from the traditional marketing environment. 3.Have examined how the characteristics of electronic marketing affect marketing strategy. 4.Understand how electronic marketing and information technology can facilitate customer relationship management. 5.Be aware of legal and ethical considerations associated with electronic marketing.