Ahmed Mumtaz Mustehsan A.M. Mustehsan CSC 330 E-Commerce Teacher Ahmed Mumtaz Mustehsan GM-IT CIIT Islamabad Virtual Campus, CIIT COMSATS Institute of Information Technology T1-Lecture-15 T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

A.M. Mustehsan T1-Lecture-15 E Commerce Marketing Chapter-06 Part -III For Lecture Material/Slides Thanks to: Copyright © 2010 Pearson Education, Inc T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

The Revolution in Internet Marketing Technologies Web Transaction logs Tracking files Databases, Data warehouses, Data mining Customer Relationship Management systems (CRM) T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

1. 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: Gather personal data on name, address, phone, zip, e-mail, and other optional information on interest and tastes Shopping cart database: captures all the item selection, purchase and payment data) T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

1. Web Transaction Logs Transaction log coupled with Registration Forms and shopping cart provides treasure of marketing information leads to answer some interesting questions such as: What are major patterns of interest and purchase? After home page, where do users go first? Second? What are the interest of specific individuals? How can we improve the website, easier to use, attractive design encourage visitors to purchase? Where are visitors coming from? What they want? How can we personalize our messages etc? T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

2. Tracking Files Under this technique user’s browsing activities are tracked as they move from site to site Different types of tracking files Cookies Small text file (1 kb) placed by Web site on visitor’s machine. Allows Web marketers to gather data stored in cookies. First-party cookies same domain name the user is visiting. Third-Part cookies serving or adware companies, marketers or spyware. Customers may delete cookies. Implement privacy; Causing misleading analysis, wastage of efforts. T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

2. Tracking Files Use Adobe Flash software; creates cookies called Flash Cookies set to never expire (5 MB). Used to recreate cookies deleted by user. Combined with web-bugs they can create cross-site web profiles. Beacons (“bugs”; 1-pixel graphic files); embedded in the e-mail messages. web-bugs send message to server that e-mail was opened by the users. i.e. the user was at least interested in subject message. 1-pixel in size that contains the URL of the server other that one served the page. T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

3. Databases Database: A software application that stores records and attributes Database management system (DBMS): Software application used by organizations to create, maintain, and access databases SQL (Structured Query Language): An 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 T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Relational Database View of E-commerce Customer In RDB the data generated from an e-commerce site is stored on the HD and presented to the managers of the site in the form of interrelated tables T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

3. Data Warehouses and Data Mining Is a database that collects firm’s transactional/operational and customer data in single location for offline analysis by marketers and site managers Data mining: A set of analytical techniques to find patterns in data, of database or in a data warehouse, or seek to model behavior of customers, to develop customer profiles. Four types of Data mining are: Query-driven data mining Model-driven data mining Rule-based data mining Collaborative filtering T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

3. Data Warehouses and Data Mining Customer Profile: A description of a typical behavior of a customer or a group of customers at a web site. Query-driven data mining: Simplest; hunch of marketers who suspect a relationship in DB. Data mining based upon specific query; e.g. what is the relationship between time of day and purchase of various products? Or rank top 10 products! Sold in ever hour. Model-driven data mining Use of model that analyze key variables of interest to decision makers. Example: Based upon financial model of profitability, remove unprofitable items from inventory to save archiving cost. T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

3. Data Warehouses and Data Mining Rule-based data mining Examines demographic and transactional data of groups and individuals at a website and attempts to derive general rules of behavior for visitors. Example: Marketers propose filters for different segments for example travelling plans during vocational periods. Female who spend on average $50 per visit at website and also viewed travel article might be shown vocational travel advertisement. T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Data Warehouses and Data Mining Collaborative filtering Site visitors classify themselves into affinity groups characterized by common interests; products are then recommended based on what other people in the group have recently purchased. Example: Marketers make filters on the basis of their own rule of thumb; example query all people of the same demographic group who purchase same products in almost the same time period. Extract lifestyle; opinion leaders or influencers. T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Data Mining and Personalization SOURCE: Adomavicius and Tuzhilin, 2001b ©2001 IEEE.

Customer Relationship Management (CRM) Systems Record all contact that customer has with firm Generate customer profile available to everyone in firm with need to “know the customer” Customer profiles can contain: Map of the customer’s relationship with the firm Product and usage summary data Demographic and psychographic data Profitability measures Contact history Marketing and sales information T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

4.A Customer Relationship Management System An example of CRM system for a financial services institution. System capture customer info from all customer touch points and from other data sources merge the data into a single aggregated database system. Applying OLAP analyze the customer activities and behavior to determine profitable or non profitable customer. T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Generic Market Entry Strategies Figure 6-11, Page 391 Both new and traditional firms face a basic choice of click and bricks and clicks when entering e-commerce marketplace T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Generic Market Entry Strategies New Firms ; Quardent 1 & 2; First Movers; started with the 1st Q; enjoyed monopoly; (Amazo eBay etc.) But for most of firms, it was short lived; due to limited resources, lack of experience; Successful big players done two things; 1. blocked the competition 2. increased their audience. Another possibility with new firms was to mixed play (Q2) established bricks and clicks along with clicks. most of the firms survived by establishing their joint venture and alliance with already established big traditional players offering them on-line presence. Gained financial backing and experience. T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Generic Market Entry Strategies Existing Firms ; Quardent 3 & 4; Fast Followers; Traditional Firms having significan cash flow and funds to support their e-commerce venture. (Barnes & Noble, Rite Aid) Followed the suits of successful first movers by establishing their websites as independent firms making use of their existing resources and experience. The most common strategy of existing firms were to extend their business online in addition to the traditional firms from the very beginning. (Q4) (LL Beans, Wal-Mart). Today most firms are opening with mixed bricks-and- clicks strategy with a hope of success. T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Establishing the Customer Relationship Firm chooses a market entry; needs marketing strategy for establishing relationship with customers: Advertising networks Ad server selects appropriate ad based on cookies, Web bugs, backend user profile databases, user profile, user behavior. Best known advertising network is DoubleClick.com. Big companies like Google and Microsoft are purchasing these companies for further establishing their online advertisement business. (Google purchased double click $ 3.1 Billion Advertising exchanges Auction ad slots over many advertising networks, by sharing the revenue with web sites usually called web publishers. (Google, yahoo, eBay) T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

How an Advertising Network Such as DoubleClick Works T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Establishing the Customer Relationship Permission marketing: Market strategy in which companies obtain permission from customers before sending them information or promotional messages. Affiliate marketing: One website agrees to pay another website a commission for new business opportunities it refers to the site. Amazon has more than 1 millions participants site called associates which receive around 15% on sales their referral generate. T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Establishing the Customer Relationship Viral marketing The process of getting customers to pass along the company’s marketing messages to friends, family and colleagues. Blog marketing Blogs are based upon personal opinion therefore are ideal for viral marketing. Google AdSense is a major Blog Marketers Social network marketing Driven by social e-commerce Social sign-on Collaborative shopping Network notification Social search (recommendation) T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Establishing the Customer Relationship Social marketing and wisdom of crowds Large aggregates produce better estimates and judgments, e.g., “Like” button Folksonomies Social tagging Mobile platform marketing Local marketing Brand leveraging Using the power of an existing brand to acquire new customers for a new product or service. T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Customer Retention Mass marketing: Based on national media messages aim at a single national audience with a single national price. Direct marketing: which is based on direct mail or phone messages and aimed at the segment of the market with little price variations (special offer to loyal customers) Micromarketing : which is aimed at geographical units (neighborhood, cities) or specialized market segment with the first form of true database marketing. T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Customer Retention Personalized, one-to-one marketing Segmenting market on precise and timely understanding of individual’s needs Targeting specific marketing messages to these individuals Positioning product vis-à-vis competitors to be truly unique Personalization Can increase consumers sense of control, freedom Can also result in unwanted offers or reduced anonymity T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

The Mass Market-Personalization Continuum Figure 6.13, Page 407 T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Other Customer Retention Marketing Techniques Customization Customizing product to user preferences Customer co-production Customer interactively involved in product creation Customer service FAQs Real-time customer service chat systems Automated response systems T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

Chapter 12 B2B E-commerce: Supply Chain Management and Collaborative Commerce T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc