1. Day 11 ELC 310

2. Copyright 2005 Prentice HallCh 1 -2 Agenda Questions? Assignment 2 posted. – ELC 310 assignment Two.docx ELC 310 assignment Two.docx – Internal Data  J.R. Bjerklie, Associate Director for Institutional Research http://www.umfk.edu/ie/stabstract/default.cfm?ref=6# – Due Oct 18 No Class Oct 15  Fall break No class on Nov. 1 and 8  I will be traveling, alternative arrangements will be made. Connected consumers online CrowdSourcing

3. E-Marketing/7E Chapter 7 Connected Consumers Online

4. Chapter 7 Objectives After reading Chapter 7, you will be able to: – Discuss general statistics about the internet population. – Describe the internet exchange process and the technological, social/cultural and legal context in which consumers participate in this process. – Outline the broad individual characteristics, psychology, and consumer resources that consumers bring to the online exchange. – Highlight the five main categories of outcomes that consumers seek from online exchanges. 7-4 ©2014 Pearson Education, Inc. publishing as Prentice Hall

5. The Customer’s Story A typical one-hour adventure in the life of a 25- year-old professional, Justin: – Tunes his iPod to the latest Diggnation podcast while his TV is tuned to a soccer game and his smartphone and iPad tablet are within reach.Diggnation – Picks up iPad to find a blog mentioned during the podcast, sees a video on the blog, tunes it on his TV set and texts a friend about the video. – Justin searches for the video title on Google and finds a job posting on Vimeo, an online video-posting site.Vimeo 7-5 ©2014 Pearson Education, Inc. publishing as Prentice Hall

6. The Customer’s Story, cont. – He posts a link to the video and Vimeo site to his Twitter stream.Twitter Justin is the new consumer: a multitasker attending to different electronic media simultaneously. How can a marketer capture dollars from advertising online, selling music downloads, charging fees for social media subscriptions? 7-6 ©2014 Pearson Education, Inc. publishing as Prentice Hall

7. 85% of U.S. consumers used the internet in 2012. Less connected groups tend to be: – Older – Less educated – Hispanic – Lower income or disability – http://pewinternet.org/Trend-Data- %28Adults%29/Whos-Online.aspx http://pewinternet.org/Trend-Data- %28Adults%29/Whos-Online.aspx Consumers in the 21 st Century 7-7 ©2014 Pearson Education, Inc. publishing as Prentice Hall

8. Consumers in the 21 st Century, cont. Approximately 1.8 billion people have access to the internet, 32.7% of the global population. Top ten countries account for 60% of all users and adoption rates range from 10- 84%. internet usage in developed nations has reached a critical mass, leading marketers to ask more questions about consumer behavior on the internet. http://www.internetworldstats.com/stats. htm http://www.internetworldstats.com/stats. htm 7-8 ©2014 Pearson Education, Inc. publishing as Prentice Hall

9. Internet Reaches Maturity: 1995-2012 7-9 ©2014 Pearson Education, Inc. publishing as Prentice Hall

10. Consumer Behavior Online Many consumer behavior principles that describe offline buyer behavior also apply to online behavior. Exhibit 7.2 explains some consumer behavior theories for online buyer behavior. – Scarcity – Popularity – Affinity – Authority – Consistency – Reciprocity 7-10 ©2014 Pearson Education, Inc. publishing as Prentice Hall

11. Social Psychology of Social Shopping 7-11 ©2014 Pearson Education, Inc. publishing as Prentice Hall

12. Exchange is a basic marketing concept. – It refers to the act of obtaining a valued object by offering something in return. Exchange occurs within the following contexts: – Technological – Social/cultural – Legal The Internet Exchange Process 7-12 ©2014 Pearson Education, Inc. publishing as Prentice Hall

13. The Online Exchange Process Technological, Social/Cultural, Legal Contexts Marketing Stimuli Individual Characteristics Resources Internet Exchange Outcomes 1.Connect 2.Create 3.Enjoy 4.Learn 5.Trade 6.Give 7-13 ©2014 Pearson Education, Inc. publishing as Prentice Hall

14. Technological Context 66-77% of online Americans connect to the internet at home with broadband. Broadband users enjoy more multimedia games, music, and entertainment because they download quickly. The typical U.S. home has 26 different electronic devices for media and communication. Web 2.0 technologies are driving marketing strategies and tactics. 7-14 ©2014 Pearson Education, Inc. publishing as Prentice Hall

15. 2012 U.S. Daily Media Use (Minutes/day) 7-15 ©2014 Pearson Education, Inc. publishing as Prentice Hall Error on page 178 of textbook, on bottom of left hand column

16. ©2014 Pearson Education, Inc. publishing as Prentice Hall 16

17. Social and Cultural Contexts Three cornerstones for attracting customers online: – Reputation: Brand image and reputation are based on the market’s perception. – Relevance: Consumers don’t like being interrupted with irrelevant communication. – Engagement: Marketers must provide relevant content or entertainment. 7-17 ©2014 Pearson Education, Inc. publishing as Prentice Hall

18. Engaging Customers With Relevant Content 7-18 ©2014 Pearson Education, Inc. publishing as Prentice Hall

19. In spite of the Can-Spam act the number of unsolicited emails was 71.9% in June 2012. When the recording industry sued illegal music file downloaders, consumer behavior was affected. – In 2002, 37% of online consumers shared music files, but the percentage has dropped. – The Recording Industry Association of America still claims $12.5B in annual losses from music piracy. Legal Context 7-19 ©2014 Pearson Education, Inc. publishing as Prentice Hall

20. Individual characteristics affect internet use. – Demographics such as age, income, education, ethnicity, and gender. – Attitudes toward technology. – Online skill and experience. – Goal orientation. Individual Characteristics & Resources 7-20 ©2014 Pearson Education, Inc. publishing as Prentice Hall

21. Consumer Resources Consumers perceive value as benefits minus costs. V=B-C These costs constitute a consumer’s resources for exchange: – Money – Time – Energy – Psychic costs 7-21 ©2014 Pearson Education, Inc. publishing as Prentice Hall

22. U.S. Combined Home/Work Internet Usage 7-22 ©2014 Pearson Education, Inc. publishing as Prentice Hall

23. Exchange Outcomes There are 6 basic things that people do online: 1.Connect 2.Create 3.Enjoy 4.Learn 5.Trade 6.Give Each is ripe with marketing opportunity. 7-23 ©2014 Pearson Education, Inc. publishing as Prentice Hall

24. Connecting Online in the U.S. (connect) 7-24 ©2014 Pearson Education, Inc. publishing as Prentice Hall

25. Creating & Uploading Content in the U.S. (create) 7-25 ©2014 Pearson Education, Inc. publishing as Prentice Hall

26. Entertainment Online in the U.S. (Enjoy) 7-26 ©2014 Pearson Education, Inc. publishing as Prentice Hall

27. Top 10 Search Terms for 2011 (learn) GoogleYahoo!Bing RankTermRankTermRankTerm 1Rebecca Black1iPhone1Fauja Singh 2Google+2Casey Anthony2Katy Perry 3Ryan Dunn3Kim Kardashian3The cardinals 4Casey Anthony4Katy Perry4Harry Potter 5Battlefield 35Jennifer Lopez5Adele 6iPhone 56Lindsay Lohan6Rory Mcllroy 7Adele7American Idol7Japan Earthquake 8Tepco8Jennifer Aniston8Job crisis 9Steve Jobs9Japan Earthquake9Foreclosures 10iPad210Osama Bin Laden10Weather disasters 7-27 ©2014 Pearson Education, Inc. publishing as Prentice Hall

28. Learning and Getting Information 7-28 ©2014 Pearson Education, Inc. publishing as Prentice Hall

29. Trading Online in the U.S. (Trade) 7-29 ©2014 Pearson Education, Inc. publishing as Prentice Hall

30. Giving Online Trendwatcher.com mentions “Generation Generosity” as one of the top global consumer trends. 25% of Americans made an online donation to charity in 2011. Kickstarter.com offers a Web platform for individuals seeking funding for creative projects. http://mashable.com/2011/03/14/social-good- fundraising-tools/ http://mashable.com/2011/03/14/social-good- fundraising-tools/ 7-30 ©2014 Pearson Education, Inc. publishing as Prentice Hall

31. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2014 Pearson Education, Inc. Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall 7-31

32. Crowdsourcing

33. terms Amateur  A person without formal training or professional credentials in a specific field. Brief  A document giving essential information concerning the problem that needs solving. Creative  A term used in the advertising industry to describe people who produce creative products. For example designers or copywriters. Collaboration  An online community working together on a single project. Collective intelligence  A shared intelligence from the collaboration of many individuals. Community  A social network of individuals who interact through a specific medium. Crowd  A large undefined group of people made up of many online individuals. Crowdsourcing  Taking a job traditionally performed by a professional and distributing it to an undefined, generally large group of people in the form of an open call. Folksonomy  A form of crowdsourcing also known as collaborative tagging, social classification, social indexing or social tagging. The practice and method of collaboratively creating and managing tags to interpret and categorize content.

34. terms Ideation  A process during which new ideas are created. Intellectual property (IP)  Legal property rights over intangible creations of the mind, both artistic and commercial. New agency model  The incorporation and use of crowdsourcing platforms to source marketing and communications solutions. Open Call  When a request is made for anyone to submit solutions to a problem. Open Source  In the context of Crowdsourcing this is when a cooperative activity is initiated and voluntarily undertaken by members of the public, not by a client or crowdsourcer. Outsourcing  Work is conducted outside of an organisation by a specific defined individual or group of people. Spec work  Fully executed creative work requested by crowdsourcing platforms that is not paid for upfront, and is only paid for when the work is chosen or accepted. Work that is not selected is not paid for. User-generated  Various kinds of media content, publically available, that are produced by endusers. Wiki  A simple website that can be edited in real time by a number of users. Wisdom of the crowd  The collective knowledge, opinion or skills of a group of individuals rather than a single expert used to solve a problem. Usually used for consumer feedback and new product development.

35. What is it? Image credit: Alexander Kesselaar

36. “Crowdsourcing is the act of taking a task traditionally performed by an employee or contractor and outsourcing it to an undefined, generally large group of people in the form of an open call” (Wikipedia).

37. Its not a new idea… The 19th century Oxford English Dictionary was crowdsourced.

38. In 1714 the Longitude prize was awarded for the simplest solution for determining a ships longitude.

39. T hen came the Internet

40. Now the crowd: Is larger Is more connected Offers more levels of skill for contributions

41. The Internet: Provides a global distribution channel Allows for faster publishing Means ideas are now regulated by value

42. Organisations can gain insight into their customers’ needs and desires and build products and services that meet them.

43. Commercially clients can: Pay once-off (one-time) for numerous solutions Pay only for solutions they use Not limit themselves to ‘traditional’ solutions Image Credit: Creative commons, AMagill

44. Non-commercially the crowd can create a pool of info and ensure it is accurate.

45. e.g. Wikipedia: http://www.wikipedia.orghttp://www.wikipedia.org

46. Early adapters of crowdsourcing: Threadless (www.threadless.com)www.threadless.com iStockphoto (www.istockphoto.com)www.istockphoto.com InnoCentive (www.innocentive.com)www.innocentive.com

47. The “rise of the amateur”

48. An idea that took ten minutes to come up with may be as good or better than one that took ten hours to develop. Crowdsourcing is a serendipity multiplier

49. Four types of crowdsourcing: Invention Creation Organisation Prediction

50. Invention – sourcing ideas for new or existing product development. e.g. My Starbucks Idea (www.mystarbucksidea.com)www.mystarbucksidea.com

51. Creation – new content created, owned and maintained by a community on an existing platform. e.g. Idea Bounty (www.ideabounty.com).www.ideabounty.com

52. Organisation – Create new content by organising already existing content. e.g. Digg (www.digg.com)www.digg.com

53. Prediction – predict trends by asking the community to submit ideas and vote. e.g. Yahoo! Buzz (www.yahoo.com/buzz)www.yahoo.com/buzz

54. How does it work in business?

55. To develop products For new business and initiatives To communicate ideas Prediction and forecasting

56. Two approaches to managing a campaign:

57. 1.Centrally located: A guiding force is used to channel ideas and formalise the process.

58. 2.Community controlled: The community controls the process and the outcome.

59. The Community

60. The most important asset in crowdsourcing Aim to understand why they exist and what motivates people to participate

61. It is vital to understand and address community needs: How should it be managed? What rewards should be put in place?

62. Pros of crowdsourcing

63. Consumer involvement Fresh input Opportunities and connections that did not exist before Problems can be explored quickly at low cost

64. Only pay for what is used Tap into a range of talent outside internal resources Gain valuable insight into the desires of their customers

65. Cons of crowdsourcing

66. Lack of agency guidance or strategic direction Little control over production value For spec work the risk/reward ratio is high Ethics and opinions could be questionable, leading to incorrect assumptions of reliability

67. IP of work is often disregarded with no written contracts etc. Added costs may be needed to bring a project to a conclusion Lack of financial motivation or reward may lead to lower work quality Difficulties may arise in maintaining a working relationship with the community

68. The new agency model

69. Marketing and branding are no longer owned and managed by one agency.

70. Through crowdsourcing, amateurs can now communicate ideas to global brands. This generates PR and direct interaction with a consumer base. Image credit: ming888

71. But a marketing agency will still be needed for brand strategy development.

72. Remember...

73. Proper planning is essential! Remunerate communities adequately to avoid a negative PR backlash Use crowdsourcing to tap into the collective knowledge of more than one billion people

74. Further Reading? www.quirk.biz/emarketingtextbook