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-15
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

2. A.M. Mustehsan T1-Lecture-15 E Commerce Marketing Chapter-06 Part -III
For Lecture Material/Slides Thanks to: Copyright © 2010 Pearson Education, Inc
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

3. 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

4. 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

5. 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

6. 2. Tracking Files
Under this technique user’s browsing activities are tracked as they move from site to site
Different types of tracking files
Cookies
Small text file (1 kb) placed by Web site on visitor’s machine.
Allows Web marketers to gather data stored in cookies.
First-party cookies same domain name the user is visiting.
Third-Part cookies serving or adware companies, marketers or spyware.
Customers may delete cookies. Implement privacy; Causing misleading analysis, wastage of efforts.
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

7. 2. Tracking Files
Use Adobe Flash software; creates cookies called Flash Cookies set to never expire (5 MB).
Used to recreate cookies deleted by user.
Combined with web-bugs they can create cross-site web profiles.
Beacons (“bugs”; 1-pixel graphic files); embedded in the messages.
web-bugs send message to server that was opened by the users. i.e. the user was at least interested in subject message.
1-pixel in size that contains the URL of the server other that one served the page.
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

8. 3. Databases
Database:
A software application that stores records and attributes
Database management system (DBMS):
Software application used by organizations to create, maintain, and access databases
SQL (Structured Query Language):
An industry-standard database query and manipulation language used in a relational database
Relational database:
Represents data as two-dimensional tables with records organized in rows and attributes in columns; data within different tables can be flexibly related as long as the tables share a common data element
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

9. Relational Database View of E-commerce Customer
In RDB the data generated from an e-commerce site is stored on the HD and presented to the managers of the site in the form of interrelated tables
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

10. 3. Data Warehouses and Data Mining
Is a database that collects firm’s transactional/operational and customer data in single location for offline analysis by marketers and site managers
Data mining:
A set of analytical techniques to find patterns in data, of database or in a data warehouse, or seek to model behavior of customers, to develop customer profiles.
Four types of Data mining are:
Query-driven data mining
Model-driven data mining
Rule-based data mining
Collaborative filtering
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

11. 3. Data Warehouses and Data Mining
Customer Profile: A description of a typical behavior of a customer or a group of customers at a web site.
Query-driven data mining: Simplest; hunch of marketers who suspect a relationship in DB.
Data mining based upon specific query; e.g. what is the relationship between time of day and purchase of various products? Or rank top 10 products! Sold in ever hour.
Model-driven data mining
Use of model that analyze key variables of interest to decision makers.
Example: Based upon financial model of profitability, remove unprofitable items from inventory to save archiving cost.
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

12. 3. Data Warehouses and Data Mining
Rule-based data mining
Examines demographic and transactional data of groups and individuals at a website and attempts to derive general rules of behavior for visitors.
Example:
Marketers propose filters for different segments for example travelling plans during vocational periods. Female who spend on average $50 per visit at website and also viewed travel article might be shown vocational travel advertisement.
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

13. Data Warehouses and Data Mining
Collaborative filtering
Site visitors classify themselves into affinity groups characterized by common interests; products are then recommended based on what other people in the group have recently purchased.
Example:
Marketers make filters on the basis of their own rule of thumb; example query all people of the same demographic group who purchase same products in almost the same time period.
Extract lifestyle; opinion leaders or influencers.
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

14. Data Mining and Personalization
SOURCE: Adomavicius and Tuzhilin, 2001b ©2001 IEEE.

15. Customer Relationship Management (CRM) Systems
Record all contact that customer has with firm
Generate customer profile available to everyone in firm with need to “know the customer”
Customer profiles can contain:
Map of the customer’s relationship with the firm
Product and usage summary data
Demographic and psychographic data
Profitability measures
Contact history
Marketing and sales information
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

16. 4.A Customer Relationship Management System
An example of CRM system for a financial services institution. System capture customer info from all customer touch points and from other data sources merge the data into a single aggregated database system. Applying OLAP analyze the customer activities and behavior to determine profitable or non profitable customer.
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

17. Generic Market Entry Strategies
Figure 6-11, Page 391
Both new and traditional firms face a basic choice of click and bricks and clicks when entering e-commerce marketplace
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

18. Generic Market Entry Strategies
New Firms ; Quardent 1 & 2;
First Movers; started with the 1st Q; enjoyed monopoly; (Amazo eBay etc.)
But for most of firms, it was short lived; due to limited resources, lack of experience;
Successful big players done two things; 1. blocked the competition 2. increased their audience.
Another possibility with new firms was to mixed play (Q2) established bricks and clicks along with clicks. most of the firms survived by establishing their joint venture and alliance with already established big traditional players offering them on-line presence.
Gained financial backing and experience.
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

19. Generic Market Entry Strategies
Existing Firms ; Quardent 3 & 4;
Fast Followers; Traditional Firms having significan cash flow and funds to support their e-commerce venture. (Barnes & Noble, Rite Aid)
Followed the suits of successful first movers by establishing their websites as independent firms making use of their existing resources and experience.
The most common strategy of existing firms were to extend their business online in addition to the traditional firms from the very beginning. (Q4) (LL Beans, Wal-Mart).
Today most firms are opening with mixed bricks-and- clicks strategy with a hope of success.
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

20. Establishing the Customer Relationship
Firm chooses a market entry; needs marketing strategy for establishing relationship with customers:
Advertising networks
Ad server selects appropriate ad based on cookies, Web bugs, backend user profile databases, user profile, user behavior. Best known advertising network is DoubleClick.com.
Big companies like Google and Microsoft are purchasing these companies for further establishing their online advertisement business. (Google purchased double click $ 3.1 Billion
Advertising exchanges
Auction ad slots over many advertising networks, by sharing the revenue with web sites usually called web publishers. (Google, yahoo, eBay)
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

21. How an Advertising Network Such as DoubleClick Works
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

22. Establishing the Customer Relationship
Permission marketing:
Market strategy in which companies obtain permission from customers before sending them information or promotional messages.
Affiliate marketing:
One website agrees to pay another website a commission for new business opportunities it refers to the site.
Amazon has more than 1 millions participants site called associates which receive around 15% on sales their referral generate.
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

23. Establishing the Customer Relationship
Viral marketing
The process of getting customers to pass along the company’s marketing messages to friends, family and colleagues.
Blog marketing
Blogs are based upon personal opinion therefore are ideal for viral marketing. Google AdSense is a major Blog Marketers
Social network marketing
Driven by social e-commerce
Social sign-on
Collaborative shopping
Network notification
Social search (recommendation)
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

24. Establishing the Customer Relationship
Social marketing and wisdom of crowds
Large aggregates produce better estimates and judgments, e.g.,
“Like” button
Folksonomies
Social tagging
Mobile platform marketing
Local marketing
Brand leveraging
Using the power of an existing brand to acquire new customers for a new product or service.
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

25. Customer Retention Mass marketing:
Based on national media messages aim at a single national audience with a single national price.
Direct marketing:
which is based on direct mail or phone messages and aimed at the segment of the market with little price variations (special offer to loyal customers)
Micromarketing :
which is aimed at geographical units (neighborhood, cities) or specialized market segment with the first form of true database marketing.
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

26. Customer Retention Personalized, one-to-one marketing
Segmenting market on precise and timely understanding of individual’s needs
Targeting specific marketing messages to these individuals
Positioning product vis-à-vis competitors to be truly unique
Personalization
Can increase consumers sense of control, freedom
Can also result in unwanted offers or reduced anonymity
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

27. The Mass Market-Personalization Continuum
Figure 6.13, Page 407
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

28. Other Customer Retention Marketing Techniques
Customization
Customizing product to user preferences
Customer co-production
Customer interactively involved in product creation
Customer service
FAQs
Real-time customer service chat systems
Automated response systems
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc

29. Chapter 12
B2B E-commerce: Supply Chain Management and Collaborative Commerce
T1-Lecture Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc