6 E-Marketing and Customer Relationship Management

Copyright © Houghton Mifflin Company. All rights reserved.6 | 2 Agenda Marketing on the Internet Customer Relationship Management Legal and Ethical Issues in E-Marketing

Copyright © Houghton Mifflin Company. All rights reserved.6 | 3 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.6 | 4 Benefits of E-Marketing Open and instantaneous flows of information Enhanced customer service efficiencies Worldwide scope of the electronic market

Copyright © Houghton Mifflin Company. All rights reserved.6 | 5 Uses for Digital Marketing Purpose of digital marketingPercent of companies New customer lead generation85% Brand awareness and recognition71% Improved customer relationships68% Cross-sell and up-sell to existing customers61% Website traffic generation60% Customer education54% Customer support47% Event promotion45% Product sales42% Source: Robyn Greenspan, “E-Marketing Efforts Leave Room for Improvement,” ClickZ, February 6, 2004,

Copyright © Houghton Mifflin Company. All rights reserved.6 | 6 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 website 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.6 | 7 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 –Virtual communities on the Web

Copyright © Houghton Mifflin Company. All rights reserved.6 | 8 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.6 | 9 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.

Copyright © Houghton Mifflin Company. All rights reserved.6 | 10 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 –Helps make information available to employees to service customers

Copyright © Houghton Mifflin Company. All rights reserved.6 | 11 Kelley Blue Book provides accessibility to up-to-date information about buying and selling automobiles. © Copyright 2004 Kelley Blue Book. All rights reserved.

Copyright © Houghton Mifflin Company. All rights reserved.6 | 12 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.6 | 13 Exercise Identify the e-marketing characteristics (addressability, interactivity, memory, control, accessibility, digitalization) that relate to the following examples. 1.Bluefly.com asks visitors to provide their e- mail address, clothing preferences, brand preferences, and sizes so it can create a customized online catalog matching the customer’s specified preferences.

Copyright © Houghton Mifflin Company. All rights reserved.6 | 14 Exercise (cont’d) 2.FedEx’s web-based software allows customers to track their own packages from starting point to destination. 3.CDNow asks music lovers to supply information about their listening tastes so that the company can recommend new releases. 4.Visitors to Yahoo! can search the site for topics of interest and click to those sites the search service finds.

Copyright © Houghton Mifflin Company. All rights reserved.6 | 15 Exercise (cont’d) 5.Amazon.com recognizes visitors by name if they have purchased from the site before and then offers suggestions about products they might be interested in based on their previous purchases.

Copyright © Houghton Mifflin Company. All rights reserved.6 | 16 E-Marketing Strategies Distribution Systems Target Markets Product Marketing Promotion Mediums PricingPricing E-Marketing Strategy Considerations

Copyright © Houghton Mifflin Company. All rights reserved.6 | 17 Reasons Shoppers Cite for Online Buying Source: Robyn Greenspan, “E-tailers Will See Green,” ClickZ, November 6, 2003, Top Seven Reasons for Buying Online Save time by not going to store Can shop when stores are closed Avoid crowds Might be able to find better prices Can find products online more easily Find products not available in stores Easier to compare prices

Copyright © Houghton Mifflin Company. All rights reserved.6 | 18 The Relationship Between Websites and Retail Stores Source: American Demographics, December 2000, p. 42. Adapted with permission.

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Copyright © Houghton Mifflin Company. All rights reserved.6 | 20 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 increasing 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.6 | 21 The 80/20 Rule 80 percent of business profits come from 20 percent of customers. –Technology allows marketers to profile customers in real-time and 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 on developing and managing long-term relationships with more profitable customers.

Copyright © Houghton Mifflin Company. All rights reserved.6 | 22 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.6 | 23 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.6 | 24 Legal and Ethical Issues in E-Marketing Personal privacy issues –Unauthorized placement of cookies on personal computers –Website 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.6 | 25 The BBBOnLine Privacy Seal and Program Explanation FIGURE 4.1 Reprinted by permission of the Council of Better Business, Inc.

Copyright © Houghton Mifflin Company. All rights reserved.6 | 26 Financial Costs of Cyber Attacks Companies were asked how much money they had lost from computer security breaches or espionage over the past year. Source: Original data from InformationWeek 2003 Global Information Security Survey of 421 business-technology and security professionals, in “Snapshots,” USA Today, November 5, 2003.

Copyright © Houghton Mifflin Company. All rights reserved.6 | 27 eTrust software safeguards data from internal and external threats to facilitate customer relationship management. Reprinted with permission of Computer Associates, International

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