1 The Internet and Interactive Media Adding Two-Way to One-Way Media A majority of most companies’ sales and profits come from current customers. To motivate repeat purchases, companies need to continually connect and reconnect with customers. The media most suited for doing this are addressable, interactive media.

2 The Internet Picture SendersInternetReceivers Internet Advertisers Sponsors e-Commerce Merchants Users Shoppers Customers

3 Communication and Technology The information age is shifting people from manufacturing to service industries. More complex communication requires more bandwidth. The Internet has become the fastest-growing communication technology in history. However, it still accounts for only a small portion of all business activities.

4 Q.: Why Market in the Online Environment? A1: Because it’s where consumers are. (Somebody has to provide the goods and services) A2: Because it’s where the money is? (Perhaps, for some things…) A3: Because nobody likes to be left out. (The bandwagon moves quickly) A4: Because nobody else is there. (An empty niche is hard to find.) A5: Because it’s not too hard to get in. (Low correlation with success !)

5 Why use the Internet? Three strikes and you’re out! Demand risk Innovation risk Inefficiency risk

6 Reducing demand risk—fewer customers want to buy a firm’s products/services Market penetration Increase market share Develop markets Existing products into new markets Product development Create new products for existing customers Diversify New products into new markets

7 Reducing innovation risk There is an oversupply of products in most mature markets Customers expect something new and different Increase access to: Ideas for improving present products and services Ideas for new products and services Ideas for redesigning the delivery of products and services Use the Internet to open communication links with customers and other stakeholders

8 Reducing inefficiency risk Lower the cost of the customer information exchange cycle Reduce order handling costs Reduce inventory Reduce service delivery costs

9 Transaction costs

10 Disintermediation The elimination of intermediaries such as brokers and dealers O 1 O 2 O n-1 O n Physical flow Information flow

11 E-market possibilities Corcoran, E On-line: Amazoned. Forbes, Mar 22, 55

12 The Internet The Internet’s greatest function is as a communication link. As a medium, it combines the characteristics of many other media such as newspapers, magazines, catalogs, TV, and directories.

13 Internet Communications Objectives To Disseminate Information To Create Awareness To Gather Research Information To Create an Image To Stimulate Trial To Improve Customer Service To Increase Distribution

14 The Internet The Internet’s most important characteristics include: 1)Shifts power from companies to customers. 2)Is accessible to the majority of the population. 3)Provides an extensive range of information. 4)Allows for unsurpassed speed and coverage. 5)Reduces the cost of selling and acquisition.

15 Personal Selling on the Internet May replace personal selling Reduces high cost of personal calls Vastly increases potential reach May enhance personal selling efforts Provides quick, easy, information to prospects May be a source of leads May help to enhance customer data bases May stimulate trial of the goods or service May improve one-on-one communications May serve as a sales conference medium

16 Internet Advertising Sponsorship Ownership of an entire site or page Banner Ads A portion of another owner’s page Pop-Ups Small windows that appear automatically Interstitial Ads appearing while waiting for a page to load Push Technologies or Webcasting Automatic or unsolicited message delivery Links Hypertext links to other sites, pages or locations

17 Communication Networks Network technology has helped companies improve communication both internally and externally. Intranets and extranets are internet-based networks and proprietary communication systems for corporate communication.

18 Measures of Effectiveness KEY TERMS Hits Number of requests for a site component Viewers Number of visits to a site Unique visitors Number of different visitors per period Clicks (Click-throughs) Number of visitors clicking on a banner ad Click-through rate Ratio of click-throughs from an ad to a page at the advertiser's website Impressions per page views Number of times viewers view a page

19 Measures of Effectiveness Online Measuring Data on demographics, psychographics, location of access, media used, buying habits, and more. Recall and Retention Daily user interviews to measure recall and retention of web content viewed Nonresponse Measures of destination after failure to click-through Surveys On- and off-line surveys to determine usage factors Panels Usage and attitude data obtained from a specific group Sales Sales volume keyed to specific times and sites Tracking Accumulation of site performance data

20 Internet Advantages Target Marketing Message Tailoring Interactive Capabilities Information Access Sales Potential Creativity Exposure Speed

21 Internet Disadvantages Measurement problems Audience characteristics Websnarl Clutter Potential for deception Costs Limited production quality Poor reach

22 Mail Formats and Features Mail is the third largest medium. It accounts for approximately 20% of all media spending.

23 Mail Strengths: Addressable Measurable results Highly selective Demands attention

24 Mail Limitations: High cost per message Long lead time Clutter, junk mail perception

25 Phone Formats and Features In 2000, U.S. companies spent $44.7 billion in telemarketing. Outbound calls are those initiated by an organization. Inbound calls are those initiated by prospects or customers.

26 Technical Sophistication of Automated Answering Systems

27 Telemarketing Strengths: Personalized Real-time interaction Attention-getting Measurable results

28 Telemarketing Limitations: Costly Ugly image Intrusive

29 Formats and Features is the fastest growing interactive medium. It can be an effective way to reach customers because it is simple to use and inexpensive. Customer permission is an important consideration in campaigns.

30 Strengths: Addressable Can be personalized Extremely low cost Can be interactive

31 Limitations: Clutter (spam) Limited creative options

32 E-Commerce To marketers, the Internet is not only a medium but also a business platform. Product categories with the highest volume of online sales are books, CDs, computer software, and toys and games.

33 E-Commerce E-commerce is used for more than making a transaction. Reach broad worldwide audiences Cost-effectively communicate with customers and prospects Cost-effectively distribute brand information Provide alternative channels of distribution Provide frequently updated prices and information Improve customer service by offering access Collect instant feedback and conduct market research

34 Offline Advertising Companies realize that they need to drive more traffic to their sites than can not be done with online advertising alone.

35 Online Advertising There are two aspects to online advertising: Advertising offline in other media to bring customers to a site Advertising online on websites

36 Online Advertising Advertising online offers a number of advantages: Interactivity—engage in dialogue Flexibility—change information rapidly Precise targeting—interested consumers

37 Online Public Relations Websites can be designed to be useful to all of a company’s stakeholders. For media relations, a site can contain:  Description of a company’s business operations  Listing of all its brands and products  Listing of all executives  Company contact information

38 Internet Privacy Internet privacy has become an increasing concern. The FTC recommends practices for industry self-regulation: Notice. Give clear and conspicuous notice of what information is collected and how it will be used. Choice. Let consumers choose whether their information can be used for any purposes besides fulfilling the transaction. Reasonable access. Consumers should be able to access the information collected on them and have a reasonable opportunity to correct any errors or delete the data. Adequate security. Companies should ensure proper handling of information to prevent unauthorized access.

39 Promotions.com

40 Hypercharged Cybermarketing Several challenges for the 21 st century organization:  The speed with which changes are introduced  The speed with which business is not being conducted To meet these challenges, companies are outsourcing more of their customer management functions. The concept of a virtual corporation has increased the need for communication.