1. 13-1 © 2006 by Nelson, a division of Thomson Canada Limited 10/6/2015 Slides developed by: Peter Yannopoulos Chapter 13 Internet Marketing

2. 13-2 © 2006 by Nelson, a division of Thomson Canada Limited The Internet is a worldwide network of computers that allow users access to information and documents made available by commercial and non- commercial organizations What is the Internet?

3. 13-3 © 2006 by Nelson, a division of Thomson Canada Limited The Strategic Advantages of the Internet Centralization of inventory More efficient distribution Low cost communication Evening the playing field StrategicAdvantages of the Internet

4. 13-4 © 2006 by Nelson, a division of Thomson Canada Limited In 2001, 60% of Canadian households were connected to the Internet, up from 51% in 2000 Canadians Connected to the Internet 77% of Canadians will have access to the Internet in 2006 Canada has the highest number of users in time spent online per capita

5. 13-5 © 2006 by Nelson, a division of Thomson Canada Limited 76% of Canadian businesses used the Internet in 2002, up from 63% in 2000 Percentage of Canadian Businesses Connected to the Internet

6. 13-6 © 2006 by Nelson, a division of Thomson Canada Limited Canadian consumers shop less online than their American counterparts - 21% of Canadians shop online versus 29% in the United States Canadian Internet Users Shop Less Online

7. 13-7 © 2006 by Nelson, a division of Thomson Canada Limited Online Consumer Segments (McKinsey Study) Connectors (36%) Routiners (15%) Sportsters (4%) Bargainers (8%) Simplifiers (29%) Surfers (8%) OnlineConsumerSegments

8. 13-8 © 2006 by Nelson, a division of Thomson Canada Limited The Impact of the Internet on Marketing Strategy Formulation It changes consumer behaviour It shifts power away from sellers to buyers It revolutionizes marketing functions Impact on MarketingStrategy

9. 13-9 © 2006 by Nelson, a division of Thomson Canada Limited Ways of Creating Online Customer Relationships Offer a positive experience Make contact personal Create an online community Offer exceptional value Keep customers informed Establish interactivity CreatingOnlineCustomerRelationships

10. 13-10 © 2006 by Nelson, a division of Thomson Canada Limited Internet Product Strategy Helps enhance the value of products Allows customers to get involved in buying process Economies of aggregation Cookies Digital goods Recommendation systems

11. 13-11 © 2006 by Nelson, a division of Thomson Canada Limited Internet Brand Strategy Branding is important in e-commerce Online customers prefer trusted e- companies Online image impacts offline business Traditional businesses have an advantage over “pure-play” companies

12. 13-12 © 2006 by Nelson, a division of Thomson Canada Limited Factors Affecting Internet Pricing Strategy Growth of online suppliers Interactive shopping agents Increased information Auction houses FactorsAffecting Internet Pricing Strategy Pricing research

13. 13-13 © 2006 by Nelson, a division of Thomson Canada Limited Are Internet Prices Lower? Prices are not lower across the board Search costs increase Online companies spend large amounts promoting their websites Many online shoppers are not price- sensitive

14. 13-14 © 2006 by Nelson, a division of Thomson Canada Limited Characteristics of Online Distribution Electronic data interchange Death of distance Time compression Different cost structure Greater convenience More time consuming OnlineDistribution

15. 13-15 © 2006 by Nelson, a division of Thomson Canada Limited Best Distribution Strategy? The best distribution strategy is often combining both offline and online approaches because it provides customers with the option of buying either offline, online, or both.

16. 13-16 © 2006 by Nelson, a division of Thomson Canada Limited Potential for conflict There is potential for conflict when a manufacturing firm sells the same product through both traditional stores and the Internet

17. 13-17 © 2006 by Nelson, a division of Thomson Canada Limited Internet Promotion Strategy Marketing communications tool Source of information To create a favourable image for company Complementary to other forms of communication Provides a new way to reach people and deliver the company’s message

18. 13-18 © 2006 by Nelson, a division of Thomson Canada Limited Internet Promotion Strategy Online messages must be consistent with all other communication efforts Must advertise website Must establish a two-way communication with online customers Make it easy for customers to communicate with the company

19. 13-19 © 2006 by Nelson, a division of Thomson Canada Limited Integrating Offline and Online Strategies Develop the right brand or set of brands Leverage the assets of the existing business Manage offline/online channel conflict Use partnerships and alliances Create the right degree of separation Create integrated information systems Create integrated supply chains and logistics Manage the path to evolution