1. Electronic marketing channels
Week 13
Instructor: Jungwan Lee

2. Electronic marketing Auto-By-Tel.com Autoweb.com
Auto dealers pay monthly fees to web sites operators who then refer consumers to the dealers. The dealer respond to consumers with their best offers via e0mail and phone. The consumer then picks out the best deal from his computer screen and visits the dealer to take delivery of the car.

3. New jargons Electronic marketing channel Doing business on the WWW
Electronic commerce
Internet commerce
Internet shopping
Shopping on-line
Shopping in cyberspace
Electronic distribution

4. What is electronic marketing channel?
..the use of the Internet to make products and services available so that the target market with access to computers or other enabling technologies can shop and complete the transaction for purchase via interactive electronic means.

5. Structure of electronic marketing channels
Disintermediation versus re-intermediation
The information flow versus the product flow
Virtual channel structure versus physical channel structure

6. Case study1-reintermediation
Amazon.com versus Barns & Nobles
예스24.com versus 교보문고.com
Book publisher->wholesale book distributor->virtual retailer->consumer
Book publisher->retail superstore->consumer

7. Case study2-reintermediation
Auto-By-Tel corp. and channel structure
Conventional channel: manufacturer->dealer->consumer
Internet channel: manufacturer->dealer->Internet Auto Broker->consumer

8. Case study3-disintermediation
Dell computer corp.

9. Implication of case studies
Both consumer and auto dealers who have used the Internet channel like the arrangement.
The car buyers have access to a vast array of information and choice of dealers via the Internet and the dealers have access to a much wide customer base and lower selling costs because they can reduce advertising costs and sales commissions.
While the jury is still out, this Internet based channel, even though it involves a lengthening of channel structure rather than shortening, appears to be gaining acceptance as an effective and efficient way of selling cars.

10. Information flow versus the product flow
Product flow-some limitation
Negotiation flow
Ownership flow
Information flow
Promotion flow

11. Virtual channel structure versus conventional channel structure
Who is winner?

12. Advantages of electronic marketing channels
Global scope and reach- information flow
Convenience/rapid transaction processing
Information processing efficiency and flexibility- ex) airline tickets
Data-based management and relationship capabilities->e-crm, cyber money, cookies, log-in, marketing…
Lower sales and distribution costs- ex) Dell computer corp., Virtual Vineyards

13. Disadvantages of electronic marketing channels
Lack of contact with actual products and delayed possession
Fulfillment logistics not at Internet speed or efficiency-> majority of products and services still require old-fashioned nuts and bolts logistic challenges
Clutter, confusion, and cumbersomeness of Internet-> Amazon pay 44milion on AOL, Search engines
Nonpurchase motives for shopping not addressed
Security concerns of customers

14. Why do people shop?
Personal motives- play the role of shopper, diversion from daily life, self-gratification, learning new trends, physical activities, sensory stimulation
Social motives- gaining social experience outside the home, communication with others having similar interests, peer group attraction, status and authority, pleasure of bargaining
Source by Edward M. Tauber

15. Profiles of online shoppers
Age range of online shoppers
20s, 30s, 40s
Educational attainment
Above college
Geographical areas
Suburbs of major metropolitan areas

16. Reasons for using the Internet for shopping
More convenience
More choice/variety
Save money
More fun

17. Shopping patterns on the Internet
Products purchased
Compueter related goods, books, travel, clothing, music..
Frequency of online shopping
2-4 times, $ /year

18. Reasons given by retailers for not using the Internet
Product not appropriate for Internet sales- limitation of product flow
Don’t see significant opportunity
Too expensive-entry costs
Technology not ready
Selling online conflicts with core business channel

19. Retailer’s objectives for Internet channels
Market expansion
Customer retention
Differentiation
Cost reduction
Competitive positioning

20. Implications for marketing channel strategy
Objectives and strategies of the firm and electronic marketing channels-> pure channel, multi channels, supportive channel ex) Dell computer- differential advantage based on distribution strategy
Role of electronic marketing channels in the marketing mix-> product, price, promotion by perfect information flow, however place may gain a sustainable competitive advantage via electronic marketing channels.
Channel design and electronic marketing channels->channel design decisions must now include consideration of the Internet as a marketing channel.

21. Implications for marketing channel strategy (continued)
Channel member selection and electronic marketing channels->less than 10% of manufacturers currently use the Internet as an electronic marketing channel->disintermediation versus more intermediaries
Channel management and electronic marketing channels-> more challenging
Evaluation and electronic marketing channel