0. Chapter 4 Consumer Behavior, Internet Marketing, and Advertising
E-marketing
Chapter 4
Consumer Behavior, Internet Marketing, and Advertising

1. Learning Objectives
Describe the factors that influence consumer behavior online.
Understand the decision-making process of consumer purchasing online.
Describe segmentation and how companies are building one-to-one relationships with customers.
Explain how consumer behavior can be analyzed for creating personalized services.
Discuss the issues of e-loyalty and e-trust in electronic commerce (EC).
Describe consumer market research in EC.

2. Learning Objectives
Describe the objectives of Web advertising and its characteristics.
Describe the major advertising methods used on the Web.
Describe various online advertising strategies and types of promotions.
Describe permission marketing, ad management, localization, and other advertising-related issues.
Relate Web 2.0 and social networks to Internet market research and advertising.

4. The Consumer Purchasing Decision-Making Process
A GENERIC PURCHASING-DECISION MODEL
Five major phases:
Need identification
Information search
product brokering
Deciding what product to buy
merchant brokering
Deciding from whom (from what merchant) to buy a product
Alternative evaluation
Purchase and delivery
Postpurchase behavior

5. Mass Marketing, Market Segmentation, and One-to-One Marketing
FROM MASS MARKETING TO ONE-TO-ONE MARKETING
Mass Marketing and Advertising
market segmentation
The process of dividing a consumer market into logical groups for conducting marketing research and analyzing personal information
one-to-one marketing (relationship marketing)
Marketing that treats each customer in a unique way

8. Personalization and Behavioral Marketing
The matching of services, products, and advertising content with individual consumers and their preferences
user profile
The requirements, preferences, behaviors, and demographic traits of a particular customer
cookie
A data file that is placed on a user’s hard drive by a remote Web server, frequently without disclosure or the user’s consent, which collects information about the user’s activities at a site

9. Personalization and Behavioral Marketing
behavioral targeting
Targeting that uses information collected about an individual’s Web-browsing behavior, such as the pages they have visited or the searches they have made, to select an advertisement to display to that individual
Do You Know Enough About Your Visitors?
How Different Are Your Consumers?
Do You Have a diverse Products and Services portfolio?

10. Personalization and Behavioral Marketing
collaborative filtering
A market research and personalization method that uses customer data to predict, based on formulas derived from behavioral sciences, what other products or services a customer may enjoy; predictions can be extended to other customers with similar profiles

11. Loyalty, Satisfaction, and Trust In EC
CUSTOMER LOYALTY
e-loyalty
Customer loyalty to an e-tailer or loyalty programs delivered online or supported electronically
Business Intelligence and Analytical Software
SATISFACTION IN EC
Satisfaction is one of the most important success measures in the B2C online environment
TRUST IN EC
trust
The psychological status of willingness to depend on another person or organization

14. Market Research for EC Observing Customers’ Movements Online
transaction log
A record of user activities at a company’s Web site
clickstream behavior
Customer movements on the Internet
Number of days since last visit
Speed of clickstream behavior
Number of products viewed, etc.
Web bugs
Tiny graphics files embedded in messages and in Web sites that transmit information about users and their movements to a Web server

15. Market Research for EC spyware
Software that gathers user information over an Internet connection without the user’s knowledge
clickstream data
Data that occur inside the Web environment; they provide a trail of the user’s activities (the user’s clickstream behavior) in the Web site
Web mining
Data mining techniques for discovering and extracting information from Web documents; explores both Web content and Web usage

16. Market Research for EC LIMITATIONS OF ONLINE MARKET RESEARCH
Accuracy of responses
Loss of respondents because of equipment problems
The ethics and legality of Web tracking
The difficulty in obtaining truly representative samples
The lack of understanding of the online communication process and how online respondents think and interact in cyberspace

17. Market Research for EC HOW TO OVERCOME THESE LIMITATIONS
Identify the intended target audience or demographic so that the right kind of sampling can be performed
Anonymity for target respondents may encourage them to be more truthful in their opinions
Concerns about the security of the information transmitted should be minimized
Companies may outsource their market research to large and experienced companies that have specialized market research departments and expertise

18. Web Advertising
Advertising is an attempt to disseminate information in order to affect buyer–seller transactions
In traditional marketing, advertising was impersonal, one-way mass communication that was paid for by sponsors
interactive marketing
Online marketing, facilitated by the Internet, by which marketers and advertisers can interact directly with customers, and consumers can interact with advertisers/vendors

20. Web Advertising ad views
The number of times users call up a page that has a banner on it during a specific period; known as impressions or page views
page
An HTML (Hypertext Markup Language) document that may contain text, images, and other online elements, such as Java applets and multimedia files; may be generated statically or dynamically

21. Web Advertising Terminology
click (click-through or ad click)
A count made each time a visitor clicks on an advertising banner to access the advertiser’s Web site
CPM (cost per thousand impressions)
The fee an advertiser pays for each 1,000 times a page with a banner ad is shown
conversion rate
The percentage of clickers who actually make a purchase

22. Web Advertising click-through rate
The percentage of visitors who are exposed to a banner ad and click on it
click-through ratio
The ratio between the number of clicks on a banner ad and the number of times it is seen by viewers; measures the success of a banner in attracting visitors to click on the ad
hit
A request for data from a Web page or file

23. Web Advertising
visit
A series of requests during one navigation of a Web site; a pause of a certain length of time ends a visit
unique visit
A count of the number of visitors entering a site, regardless of how many pages are viewed per visit
stickiness
Characteristic that influences the average length of time a visitor stays in a site

24. Web Advertising advertising networks
Advertising Online and Its Advantages
Cost
Richness of format
Personalization
Timeliness
Location-basis
Linking
Digital branding
advertising networks
Specialized firms that offer customized Web advertising, such as brokering ads and targeting ads to select groups of consumers

25. Online Advertising Methods
BANNERS
banner
On a Web page, a graphic advertising display linked to the advertiser’s Web page
keyword banners
Banner ads that appear when a predetermined word is queried from a search engine e.g Google Adwords
random banners
Banner ads that appear at random, not as the result of the user’s action

26. Online Advertising Methods
Benefits and Limitations of Banner Ads
major benefit is users are transferred directly to an advertiser’s site, often the shopping page
major disadvantage of banners is their cost
banner swapping
An agreement between two companies to each display the other’s banner ad on its Web site
banner exchanges
Markets in which companies can trade or exchange placement of banner ads on each other’s Web sites

27. Online Advertising Methods
POP-UP AND SIMILAR ADS
pop-up ad
An ad that appears in a separate window before, after, or during Internet surfing or when reading
pop-under ad
An ad that appears underneath the current browser window, so when the user closes the active window the ad is still on the screen
ADVERTISING
NEWSPAPER-LIKE AND CLASSIFIED ADS

28. Online Advertising Methods
SEARCH ENGINE ADVERTISEMENT
URL Listing
Keyword Advertising
search engine optimization (SEO)
The craft of increasing site rank on search engines; the optimizer uses the ranking algorithm of the search engine (which may be different for different search engines) and best search phrases, and tailors the ad accordingly

29. Basic SEO Best Practices
Optimal Page Title Structure
Inclusion of Meta Descriptions
Include targeted content on the page
Verify no broken links
Include Sitemap
SEO-Friendly URL Structure
Inclusion of Alternate Image Tags
Do Cross browser testing
Check site speed

30. Search Engine Advertising
Almost 50% of online ad spending in 2010
Types:
Paid inclusion or rank
Inclusion in search results
Sponsored link areas
Keyword advertising
e.g. Google AdWords
Network keyword advertising (context advertising)
e.g. Google AdSense

31. Search Engine Advertising (cont’d)
Nearly ideal targeted marketing
Issues:
Disclosure of paid inclusion and placement practices
Click fraud
Ad nonsense

32. Online Advertising Methods
GOOGLE—THE ONLINE ADVERTISING KING
ADVERTISING IN CHAT ROOMS
OTHER FORMS OF ADVERTISING
Advertising in Online Newsletters
Posting Press Releases Online
Video Ads
advergaming
The practice of using computer games to advertise a product, an organization, or a viewpoint

33. Advertising Strategies and Promotions
social network advertising
Online advertising that focuses on social networking sites
Types of Social Network Advertising
Direct advertising that is based on your network of friends
Direct advertising placed on social network site e.g facebook, youtube, etc
Indirect advertising by creating “groups” or “pages”
Sponsored Reviews by Bloggers

34. Advertising Strategies and Promotions
VIDEO ADS ON THE WEB AND IN SOCIAL NETWORKING
Tracking the Success of an Online Video Campaign
Web video analytics
A way of measuring what viewers do when they watch an online video
viral marketing
Word-of-mouth marketing by which customers promote a product or service by telling others about it
Viral Marketing in Social Networks

35. Advertising Strategies and Promotions
OTHER ADVERTISING STRATEGIES
affiliate marketing
A marketing arrangement by which an organization refers consumers to the selling company’s Web site
Ads as a Commodity (Paying People to Watch Ads)
Selling Space by Pixels
Personalized Ads
Webcasting
A free Internet news service that broadcasts personalized news and information, including seminars, in categories selected by the user

36. Advertising Strategies and Promotions
ONLINE EVENTS, PROMOTIONS, AND ATTRACTIONS
Live Web Events
mobile advertising
Ads sent to and presented on mobile devices
Mobile Marketing e.g Admob

37. Special Advertising and Implementation Topics
PERMISSION ADVERTISING
spamming
Using to send unwanted ads (sometimes floods of ads)
permission advertising (permission marketing)
Advertising (marketing) strategy in which customers agree to accept advertising and marketing materials (known as opt-in)

38. Special Advertising and Implementation Topics
SOME IMPLEMENTATION ISSUES
admediaries
Third-party vendors that conduct promotions, especially large-scale ones
Ad Exchanges
Advertisement as a Revenue Model
Measuring Online Advertising’s Effectiveness

40. Special Advertising and Implementation Topics
ad management
Methodology and software that enable organizations to perform a variety of activities involved in Web advertising (e.g., tracking viewers, rotating ads)
localization
The process of converting media products developed in one environment (e.g., country) to a form culturally and linguistically acceptable in countries outside the original target market

41. Special Advertising and Implementation Topics
Automatic Versus Manual Web Page Translation
Using Internet Radio for Localization
Internet radio
A Web site that provides music, talk, and other entertainment, both live and stored, from a variety of radio stations
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