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Ahmed Mumtaz Mustehsan

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1 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-14 T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

2 A.M. Mustehsan T1-Lecture-14 E Commerce Marketing Chapter-06 Part -II
For Lecture Material/Slides Thanks to: Copyright © 2010 Pearson Education, Inc T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

3 Objectives Understand key business concepts and strategies applicable to e-commerce. T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

4 Why not buy Online? SOURCES: Based on data from eMarketer, Inc., 2011d. T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

5 Trust, Utility, and Opportunism in Online Markets
Two most important factors shaping decision to purchase online: Utility; With reference to, the Better prices, convenience of handling the site, The Response /speed of interactivity of the marketplace. Trust: Asymmetry of information can lead to opportunistic behavior by sellers Sellers can develop trust by building strong reputations for honesty, fairness, delivery and after sale service. T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

6 Basic Marketing Concepts
Means the strategies and actions firms take to establish relationship with a consumer to encourage purchases of its products and services. Addresses competitive situation of industries and firms Seeks to create unique, highly differentiated products or services that are produced or supplied by one trusted firm Avoidance of becoming commodity ( a good or service for which there are many dealers; supplying the product; essentially identical) Ideally having unmatchable feature set T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

7 Feature Sets The bundle of capabilities and services offered by the product or services. Three levels of product or service Core product The core benefit the customer received from the product. e.g., cell phone Actual product Set of characteristics that deliver the product’s core benefits e.g., wide screen that connects to Internet Augmented product Additional benefits to customers beyond the core benefits embedded in actual product. Basis for building the product’s brand e.g., product warranty and after sale service T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

8 Feature Set Each element in the feature can be used to differentiate the product from the others in the market. T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

9 Products, Brands, and the Branding Process
Set of expectations consumers have when consuming, or thinking about consuming, a specific product or services from specific company. Most important expectations: Quality, reliability, consistency, trust, affection, loyalty, reputation Branding: Process of brand creation (converting product to Brand) Closed loop marketing When marketers are able to directly influence the design of core product based on market research and feedback. T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

10 Products, Brands, and the Branding Process
Marketers devise and implement brand strategies. Brand strategy A set of plans for differentiating a product from its competitors and communicating these differences effectively to marketplace A brand can represent cooperate value as an asset; it can be customer loyalty or attachment can be seen as set of associations that customers have: Brand equity The estimated value of the premium customers are willing to pay for using a branded product when compared to unbranded products. T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

11 Marketing Activities: from Products to Brands
Figure 6.7, Page 369 Marketers aim to create a brand identity for a product based upon consumer perceptions of trust, affection, loyalty and reputation. T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

12 Segmenting, Targeting, and Positioning(Product)
Market comprising many different kind of customers with different needs. Firm seek to segment market to different group of customers in terms of product needs. Major ways used to segment, target customers Behavioral Demographic ( age, sex, income, occupation) Psychographic (self-image and emotional needs) Technical Contextual Search Target the segment; Within segment, product is positioned and branded as a unique, high-value product, especially suited to needs of segment customers T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

13 Are Brands Rational? (Coca-Cola is one of the most enduring brand!!!!)
For consumers, a qualified yes: Brands introduce market efficiency by reducing search and decision-making costs For business firms, a definite yes: The Brand: A major source of revenue Lower customer acquisition cost (The overall cost of converting a prospect into a consumer) Increased customer retention (Convincing an existing customer to purchase again) Successful brand constitutes a long-lasting (though not necessarily permanent) unfair competitive advantage T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

14 Can Brands Survive the Internet? Brands and Price Dispersion
Early postulation: “Law of One Price”—end of marketing based on brands With complete price transparency in a perfect information marketplace there will be one world price for every product would emerge. Instead: Consumers still pay premium prices for differentiated products E-commerce firms rely heavily on brands to attract customers and charge premium prices T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

15 Can Brands Survive the Internet? Brands and Price Dispersion
Substantial price dispersion on internet Large differences in price sensitivity for same product (highest and lowest price) “Library effect” or “Catalog effect”; another tactic by online sellers. An attempt to appeal to consumers on the basis of total number of products offered under one marketplace. e.g. Amazon.com. T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

16 Impacts of E-commerce Technologies on Marketing
Three broad impacts: (E-commerce Technology Dimension) Scope of marketing communications broadened (Ubiquity, Global Reach) Richness of marketing communications increased (Information Density ; text, video and audio contents) Information intensity of marketplace expanded (Personalization/customization, Social Technology) T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

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

18 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, , and other optional information on interest and tastes Shopping cart database: captures all the item selection, purchase and payment data) T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

19 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 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

20 2. Tracking Files Allow users browsing activities to be tracked as they move from site to site. Four types of tracking files Cookies Small text file placed by Web site (1 kB) Allows Web marketers to gather data Customers may delete cookies. Implement privacy; Causing misleading analysis, wastage of efforts. Way forward? Use Adobe Flash software; creates cookies called Flash Cookies set to never expire (5 MB) Beacons (“bugs”; 1-pixel graphic files; send message to server) T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

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