1. Copyright © 2002 by Marketspace LLC Rayport, Jaworski e-Commerce Chapter 5 Enhanced Lecture Slides Market Communications Exhibits and Tables

2. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Market Communications — Today’s Objective To develop an understanding of a marketing communications framework that considers both online and offline media approaches to reaching individualized and broad audiences

3. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Chapter 5: Market Communications — Lecture Outline Introduction to the Buying Process Four Categories of Market Communications Case Study: Schwab.com Case Study: Palm.com Conclusion

4. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Chapter 5: Market Communications Introduction to the Buying Process Four Categories of Market Communications Case Study: Schwab.com Case Study: Palm.com Conclusion

5. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Early Web Market Communication Television ads General- interest magazines Niche magazines Collateral Point-of-sale promotions Direct marketing Product experience Buyers clubs Television ads General- interest magazines Traditional Market Communication Source: Forrester Research, Monitor Analysis Consideration Preference Purchase Loyalty Awareness Buying Process Buttons Banners Sponsorships Banners Microsites Brochureware Website Daily specials Sweepstakes First-time order incentives E-mail alerts Newsletters Firms need to consider a structured approach to leading customers through the buying process, from early brand awareness to purchase and beyond. Exhibit 5 — 1: Evolution of Customer Buying Process

6. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Chapter 5: Market Communications Introduction to the Buying Process Four Categories of Market Communications Case Study: Schwab.com Case Study: Palm.com Conclusion

7. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Direct Personalized Broad Individualized OfflineOnline Communication Media Audience Focus Traditional Mass Marketing General Approaches Market communications can be categorized in a simple two-by-two framework, based upon the audience focus and the communication media. Table 5 — 1: Framework for Market Communications

8. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Examples, by category, of the approaches that online companies use to communicate to the market: Table 5 — 2: The Four Categories of Communications Direct Traditional Mass Marketing Television ads Radio ads Print ads Billboards Superior customer service Television ads Radio ads Print ads Billboards Superior customer service Personalized Permission marketing Personalized recommendations Personalized advertisements Personalized webpages Personalized upsell Personalized e-commerce Permission marketing Personalized recommendations Personalized advertisements Personalized webpages Personalized upsell Personalized e-commerce General Approaches Banner ads E-mail Viral marketing Portal sponsorship / exclusive agreements Associate programs Online and offline partnerships Providing information to entice customer purchases Leveraging customer base Banner ads E-mail Viral marketing Portal sponsorship / exclusive agreements Associate programs Online and offline partnerships Providing information to entice customer purchases Leveraging customer base Sales force Retail sales Customer-service representatives

9. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Supporting Slide 5 — A: General Online Approaches General Online Approaches Banner ads  Boxlike ads that are displayed on web pages. The effectiveness of a banner ad can be measured in several ways:  Impressions: the total number of times an ad is seen by viewers  Leads: the number of times a viewer takes an action (i.e., an information request)  Sales: the number of times a viewer’s click on the ad leads to a sale  Click-throughs: the number of times viewers click on a banner ad (see Exhibit 5-2) E-mail  Newsletters or other communications. Attractive to e-commerce players due to its low production costs and simplicity. Viral marketing  Company-developed products, services or information that are passed from user to user. Portal sponsorship / exclusive agreements  In exchange for partnership, portals aggressively feature their partner company’s products. Affiliate programs  A particular site directs users to an e-commerce site and in turn receives a commission for sales generated by the user. These modes of communication occur online, but lack any degree of personalization.

10. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Exhibit 5 — 2: Banner Click-Through Rates Banner Click-Through Rates (Apr 1999-Jan 2000) Source:Nielsen//NetRatings There appears to be a downward trend in click-through rates for banner ads. Percent Month

11. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC General Online Approaches Online and offline partnerships  Web companies often partner with complementary sites to quickly provide a value-enhanced service to visitors. Innovative Customer Acquisition  Example: Ally with groups and provide a complementary service that benefits the group’s membership. Provide information to entice customer purchases  Websites may try to differentiate themselves by offering vast amounts of information to their customers. Leverage customer base  Once a company establishes a large, loyal customer base, the goal is to leverage these relationships by expanding the selection of products and services. Supporting Slide 5 — A: General Online Approaches (cont.)

12. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Personalized Online Approaches Permission marketing  In exchange for some benefit, customers volunteer information about themselves and, in essence, agree to be marketing targets. Personalized recommendations  A website recommends specific merchandise for each user based on past purchases, site pages viewed, and survey information from the user. Personalized advertisements  Personalized technology software determines dynamically, in real time, which Web advertisements should be shown to viewers. Personalized webpages  Users create personalized web pages that caters to their interests. Personalized upsell  Users are given the opportunity to purchase additional goods specific to their needs. Personalized e-commerce  Websites use Internet technology and their knowledge about individual consumers to tailor their products and services to each customer. These modes of communication are designed for the individual customer. Supporting Slide 5 — B: Personalized Online Approaches

13. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC In many cases, offline media is necessary to bring new customers onto the Internet or to make Internet users aware of the brand. Traditional Mass Marketing Television ads  A growing number of online companies believe that, although expensive, TV advertising will quickly transmit a marketing message to a large-scale audience. Radio ads Print ads Billboards Superior customer service Other forms of traditional mass media that, like television ads, supplement the online activities of e-commerce firms. Supporting Slide 5 — C: Traditional Mass Marketing

14. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Direct Communications Sales force  Traditional sales reps are finding increased efficiency and customer satisfaction when they are incorporated into the company’s Web environment. Retail sales  The presence of offline retail products can help build an online brand image. Customer-service representatives  Users still desire human interaction, and customer service reps can provide the personable touch that users want. Direct marketing  Firms can customize traditional mailings with new information gained online. Telemarketing  Using mass phone calls, a firm tries to entice customers to purchase the goods or services. The modes of communication prevalent before the Web existed can still be important components of market communication today. Supporting Slide 5 — D: Direct Communications

15. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Chapter 5: Market Communications Introduction to the Buying Process Four Categories of Market Communications Case Study: Schwab.com Case Study: Palm.com Conclusion

16. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Traditional Mass Marketing Television (network, cable, local) Print media National and local radio Athletic event sponsorships Broad Individualized OfflineOnline Communication Media Audience Focus Direct Targeted direct mail Calls made to investors who demonstrate difficulty (such as long periods of inactivity) “Red hot” calls for emergency investment decisions Personalized Personalized web pages (mySchwab.com) General Approaches Banner ads Affiliate sites Sponsorship of sites (e.g., Schwab.com’s sponsorship of Mini Center on BabyCenter) Leveraging customer base (e.g., investor customer base used for online banking) Free information on website Innovative approaches (e.g., online commissions donated to Breast Cancer Foundation) Schwab.com utilizes a diversified approach to market communications. Table 5 — 6: Schwab.com Market Communications

17. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Chapter 5: Market Communications Introduction to the Buying Process Four Categories of Market Communications Case Study: Schwab.com Case Study: Palm.com Conclusion

18. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Traditional Mass Marketing Print advertising Broad Individualized OfflineOnline Communication Media Audience Focus Direct Targeted direct email Customer-service representatives can be reached via telephone Personalized Personalized web pages (MyPalm.com) Palm community (chat with other users, exchange software, etc.) General Approaches Banner ads Free information on website Partnerships with Palm software providers (affiliate sites) Palm.com utilizes a diversified approach to market communications: Supporting Slide 5 — E: Palm.com Market Communications

19. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Chapter 5: Market Communications Introduction to the Buying Process Four Categories of Market Communications Case Study: Schwab.com Case Study: Palm.com Conclusion

20. Last Updated: 01/16/02 Copyright  2002 by Marketspace LLC Market Communications — Conclusion After today’s lesson, you should be able to answer the following questions: 1.Describe the consumer buying process. 2.What are the four categories of market communications?