1. Copyright © 2002 Pearson Education, Inc. Slide 7-1

2. Copyright © 2002 Pearson Education, Inc. Slide 7-2 CHAPTER 7 Created by, David Zolzer, Northwestern State University—Louisiana E-commerce Marketing Concepts

3. Copyright © 2002 Pearson Education, Inc. Slide 7-3 Learning Objectives Identify the key features of the Internet audience Discuss the basic concepts of consumer behavior and purchasing decisions Understand how consumers behave online

4. Copyright © 2002 Pearson Education, Inc. Slide 7-4 Learning Objectives Describe the basic marketing concepts needed to understand Internet marketing Identify and describe the main technologies that support online marketing Identify and describe basic e-commerce marketing and branding strategies Explain how online market research is conducted

5. Copyright © 2002 Pearson Education, Inc. Slide 7-5 Key Features of the Internet Audience Number of users online in the United States around 170 million in mid 2001 expected 215 million in 2005 rate of growth has begun to slow Intensity and scope of use Both increasing 56% of adult users logging on in a typical day

6. Copyright © 2002 Pearson Education, Inc. Slide 7-6 Key Features of the Internet Audience Demographics and access some demographic groups have much high percentage of Internet users different patterns of usage exist across groups Ethnicity Variation across ethnic groups not as wide as age groups 57% white 47% Hispanic 43% African American Hispanics and African Americans going online at higher rates

7. Copyright © 2002 Pearson Education, Inc. Slide 7-7 Key Features of the Internet Audience Education 82% of individuals with a college degree online 39% with high school education of less online Gender Men accounted for the majority of Internet users at first Women now outnumber men online

8. Copyright © 2002 Pearson Education, Inc. Slide 7-8 Key Features of the Internet Audience Lifestyle impact Intense Internet usage may cause a decline in traditional social activities Social development of children using Internet intensively instead of engaging in face-to-face interactions or undirected play out of doors may also be negatively impacted Media choices More time using the Internet Less time spent using traditional media

9. Copyright © 2002 Pearson Education, Inc. Slide 7-9 Frequency of Daily Use of Various Internet Features Page 336, Table 7.1

10. Copyright © 2002 Pearson Education, Inc. Slide 7-10 A Growing Range of Online Activity Page 377, Table 7.2

11. Copyright © 2002 Pearson Education, Inc. Slide 7-11 Changing Demographic Differences Page 338, Table 7.3

12. Copyright © 2002 Pearson Education, Inc. Slide 7-12 Consumer Behavior Models Consumer behavior is a social science discipline that attempts to model and understand the behavior of humans Culture is the broadest factor to consumer behavior Culture shapes basic human values, wants, perceptions, and behaviors Subcultures are subsets of cultures that form around major social differences

13. Copyright © 2002 Pearson Education, Inc. Slide 7-13 A General Model of Consumer Behavior Page 341, Figure 7.1

14. Copyright © 2002 Pearson Education, Inc. Slide 7-14 Consumer Behavior Models Direct reference groups include one’s family, profession or occupation, religion, neighborhood, and schools Indirect reference groups include one’s life-cycle stage, social class, and lifestyle group Opinion leaders (virtual influencers) influence the behavior of others through their personality, skills, or other factors

15. Copyright © 2002 Pearson Education, Inc. Slide 7-15 Consumer Behavior Models Lifestyle group can be defined as an integrated pattern of activities (hobbies, sports, shopping likes and dislikes, social events typically attend), interests (food, fashion, family, recreation), and opinion (social issues, business, government) Psychological profile is a set of needs, drives, motivations, perceptions, and learned behaviors

16. Copyright © 2002 Pearson Education, Inc. Slide 7-16 Psychographic Profiles Combines both demographic and psychological data and divides a market into different groups based on social class, lifestyle, and/or personality characteristics

17. Copyright © 2002 Pearson Education, Inc. Slide 7-17 Factors that Predict Online Buying Behavior Page 344, Figure 7.2

18. Copyright © 2002 Pearson Education, Inc. Slide 7-18 The Purchasing Decision Five stages in the consumer decision process: awareness of need search for more information evaluation of alternatives the actual purchase decision post-purchase contact with the firm

19. Copyright © 2002 Pearson Education, Inc. Slide 7-19 The Consumer Decision Process Page 345, Figure 7.3

20. Copyright © 2002 Pearson Education, Inc. Slide 7-20 Online Consumer Decision Process Adds two new factors: Web site capabilities -- the content, design, and functionality of a site Consumer clickstream behavior -- the transaction log that consumers establish as they move about the Web and through specific sites

21. Copyright © 2002 Pearson Education, Inc. Slide 7-21 A Model of Online Consumer Behavior Page 346, Figure 7.4

22. Copyright © 2002 Pearson Education, Inc. Slide 7-22 Seven Types of Online Sessions Page 347, Table 7.4

23. Copyright © 2002 Pearson Education, Inc. Slide 7-23 How Consumers Behave Online: Clickstream Analysis about 40% of online users purchase something entirely online another 40% of online users research products on the Web, but purchase them offline Most online purchases involve small ticket items, with the top categories being books, music, apparel and accessories, software, and toys

24. Copyright © 2002 Pearson Education, Inc. Slide 7-24 How Consumers Behave Online: Clickstream Analysis More that 85% of shoppers go directly to vendors sites by typing a product into a search engine, going straight to the merchant’s site, or entering a store or brand name in a search engine More that 80% of shoppers are shopping on the Web for specific products or items

25. Copyright © 2002 Pearson Education, Inc. Slide 7-25 Increasing Online Purchases There are a number of actions e- commerce could take to increase the likelihood that shoppers and non- shoppers would purchase online more frequently. better prices easier comparison shopping easier returns better security

26. Copyright © 2002 Pearson Education, Inc. Slide 7-26 Online Shoppers Page 349, Figure 7.5

27. Copyright © 2002 Pearson Education, Inc. Slide 7-27 Impact of Online Product Research on Offline Purchase Decisions Page 349, Figure 7.6

28. Copyright © 2002 Pearson Education, Inc. Slide 7-28 What Consumers Buy on the Web Page 350, Figure 7.7

29. Copyright © 2002 Pearson Education, Inc. Slide 7-29 How Shoppers Find Vendors and Stores Online Page 351, Figure 7.8

30. Copyright © 2002 Pearson Education, Inc. Slide 7-30 Intended Purchases on the Web Page 352, Figure 7.9

31. Copyright © 2002 Pearson Education, Inc. Slide 7-31 Factors that Would Encourage More Online Purchasing Page 353, Table 7.5

32. Copyright © 2002 Pearson Education, Inc. Slide 7-32 Basic Marketing Concepts Marketing -- the strategies and actions firms take to establish a relationship with a consumer and encourage purchases of its products or services Internet Marketing is using the Web -- as well as traditional channels -- to develop a positive, long- term relationship with customers, thereby creating a competitive advantage for the firm by allowing the firm to charge a higher price for products or services than it competitors can charge

33. Copyright © 2002 Pearson Education, Inc. Slide 7-33 Basic Marketing Concepts Firms within an industry compete with one another on four dimensions: differentiation cost focus scope

34. Copyright © 2002 Pearson Education, Inc. Slide 7-34 Basic Marketing Concepts Feature set is the bundle of capabilities and services offered by the product or service Commodity is a good or service for which there are many dealers supplying the same product and all products in the segment are essentially identical

35. Copyright © 2002 Pearson Education, Inc. Slide 7-35 Feature Sets Core product is the core benefit the customer receives from the product Actual product is the set characteristics designed to deliver the product’s core benefits Augmented product is a product with additional benefits to customers beyond the core benefits embodied in the actual product

36. Copyright © 2002 Pearson Education, Inc. Slide 7-36 Feature Set Page 355, Figure 7.10

37. Copyright © 2002 Pearson Education, Inc. Slide 7-37 Products, Brands, and the Branding Process Brand is a set of expectations that consumers have when consuming, or thinking about consuming, a product or service from a specific company Branding is the process of brand creation

38. Copyright © 2002 Pearson Education, Inc. Slide 7-38 Marketing Activities: From Products to Brands Page 356, Figure 7.11

39. Copyright © 2002 Pearson Education, Inc. Slide 7-39 Products, Brands, and the Branding Process Closed loop marketing refers to when marketers are able to directly influence the design of the core product based on market research and feedback from the market Brand strategy is a set of plans differentiating a product from it competitors, and communicating these differences effectively to the marketplace

40. Copyright © 2002 Pearson Education, Inc. Slide 7-40 Products, Brands, and the Branding Process Brand equity is the estimated value of the premium customers are willing to pay for using a branded product when compared to unbranded competitors Brands are alive and well on the Web Consumers are still willing to pay price premiums for products and service they perceive and differentiate

41. Copyright © 2002 Pearson Education, Inc. Slide 7-41 Products, Brands, and the Branding Process Customer acquisition costs refer to the overall costs of converting a prospect into a consumer, and include all marketing and advertising costs Consumer retention costs are those costs incurred in convincing an existing customer to purchase again

42. Copyright © 2002 Pearson Education, Inc. Slide 7-42 Products, Brands, and the Branding Process “Law of One Price” -- With complete price transparency in a perfect information marketplace, there will be one world price for every product Price dispersion refers to the difference between the highest and lowest prices in a market

43. Copyright © 2002 Pearson Education, Inc. Slide 7-43 Please open file ch07b.ppt to continue viewing chapter 7.