Chapter 1 Marketing in the Digital Age 14 Marketing in the Digital Age

Forces Shaping the Digital Age

Forces Shaping the Digital Age Digitalization & Connectivity Intranets – connect people within a company. Extranets – connect a company with its suppliers, distributors, and outside partners. Internet – connects users around the world. Internet Explosion Explosive worldwide growth forms the heart of the New Economy. Increasing numbers of users each month. Companies must adopt Internet technology or risk being left behind.

Forces Shaping the Digital Age New Types of Intermediaries: Direct selling via the Internet bypassed existing intermediaries “Brick-and-mortar” firms became “click-and-mortar” companies. As a result, some “click-only” companies have failed.

Forces Shaping the Digital Age Customization and Customerization: With ___________, the company custom designs the market offering for the customer. Levi’s creating jeans for each individual With customerization, the customer designs the market offering and the company makes it. You creating a pair of Levis’ jeans for yourself

Marketing Strategy in the Digital Age Requires a new model for marketing strategy and practice Some suggest that all buying and selling will eventually be done electronically Companies need to retain old skills and practices but add new competencies

e-Business, e-Commerce, and e-Marketing in the Internet Age e-Business Involves the Use of Intranets, Extranets & the Internet to Conduct a Company’s Business Involves Buying & Selling Processes Supported by Electronic Means E-Marketing “e-selling” side of e-commerce

E-Business in the Digital Age Involves the use of electronic platforms to conduct company business. Web sites for selling and customer relations Extranets connecting with major suppliers and distributors

E-Commerce in the Digital Age More specific than e-business. Involves buying and selling processes supported by electronic means, primarily the Internet. Includes: e-marketing e-purchasing (e-procurement)

E-Marketing in the Digital Age The marketing side of e-commerce. Includes efforts to communicate about, promote, and sell products and services over the Internet. E-purchasing is the buying side of e-commerce. It consists of companies purchasing goods, services, and information from online suppliers.

Benefits to Buyers Provides greater product access and selection Provides access to comparative information Buying is interactive and immediate

Benefits to Sellers Powerful tool for building customer relationships Can increase speed and efficiency Offers greater flexibility in offers and programs Is a truly global medium

E-Marketing Domains

B2C (Business to Consumer) The online selling of goods and services to final consumers. Expected to generate $428 billion in 2004. There is increasing diversity in buyers. This provides increasing opportunities for targeting markets.

Who is the Online Customer? Chapter 1 Who is the Online Customer? They used to be younger, more affluent, better educated, and more male than the general population; BUT has shifted towards becoming more mainstream. Other characteristic of net users: Differ psychographically, in approaches to buying and responses to marketing. “Word of Web”

B2B (Business to Business) By 2005, more than 500,000 enterprises will participate as buyers, sellers, or both. Most major B2B marketers offer product information, purchasing, and support services online. Open trading exchanges—huge specialty e-marketspaces to conduct transactions. More private trading networks being developed.

C2C (Consumer to Consumer) Occurs on the Web and includes a wide range of products and services. Forums: discussion groups located on commercial online services. Newsgroups: the Internet version of forums. Word of Web: advantages & disadvantages

C2B (Consumer to Business) Consumers can search out sellers, view offers, initiate purchases, and give feedback.

Types of e-Marketers

Click-Only Companies Types of Sites E-tailers Chapter 1 Click-Only Companies E-tailers Enabler Sites Search Engines and Portals Types of Sites Content Sites E-tailers: Amazon.com, CDNow Search Engines & Portals: Yahoo, Excite, Google ISPs: Juno, AOL Transactions Sites: auction sites Content Sites: Newspapers, other databases Enabler Sites: Provide hardware and software the enable internet communication. Internet Service Providers Transaction Sites

E-Marketing in Context: Where does e-marketing fit into this picture? There is Hope After the Trough of Disillusion Source: Adapted from Raskino and Andren of Gartner Research (2001)

Reasons for Dot.com Failures Failure to research or plan Spin & hype instead of marketing strategies Spending offline to establish brand identities Attention on gathering new customers instead of building brand loyalty Lack of good distribution delivery processes Prices and margins were often very low

Click-and-Mortar Companies Many resisted adding e-commerce because of potential for channel conflict and cannibalization. Many are doing better than brick or click-only operations Trusted brand names & financial resources, Large customer bases, Knowledge & experience, Good relationships with key suppliers, Ability to offer customers more options, Buy online & return unwanted merchandise to store.

Setting Up for E-Marketing

Types of Web Sites Corporate Web Site: Designed to build customer goodwill and supplement other sales channels. Offers information to customers. Builds closer customer relationships. Generates excitement about the company. Marketing Web Site: Engages consumers in an interaction that moves them closer to a direct purchase. Provides information about the products.

Designing Attractive Web Sites Chapter 1 Designing Attractive Web Sites Context Content Community Customization Communication Connection Commerce The 7 Cs of Effective Web Site Design Create value and excitement Context: site’s layout and design Content: text, pictures, sound, and video that the website contains. Community: the ways that the site enables user-to-user communications Customization: site’s ability to tailor itself to different users or to allow users to personalize the site. Communication: The ways the site enables site-to-user, user-to-site, or two-way communication. Connection: degree that the site is linked to other sites Commerce: site’s capabilities to enable commercial transaction

Online Ads and Promotion Forms of online advertising & promotion: Banner ads & tickers (move across the screen) Skyscrapers (tall, skinny ads at the side of a page) Rectangles (boxes that are larger than a banner) Interstitials (pop up between changes on Web site) Content sponsorships (sponsoring special content) Microsites (limited areas paid for by an external company) Viral marketing (Internet version of word-of-mouth)

The Future of Online Advertising Web communities: Allows members to congregate online and exchange views on issues of common interest E-mail: Use of “enriched” e-mail messages Backlash against spam can be problem

Promise and Challenge of e-Commerce Limited exposure and buying Skewed demographics and psychographics Chaos and clutter

Legal and Ethical Issues Online privacy Online security Internet fraud Segmentation and discrimination Access by vulnerable or unauthorized groups