1. Copyright © Houghton Mifflin Company. All rights reserved. 4–1 Chapter Outline Marketing on the Internet –Basic Characteristics of Electronic Marketing –E-Marketing Strategies Customer Relationship Management –Technology Drives CRM –Customer Satisfaction Is the End Result of CRM Legal and Ethical Issues in E-Marketing

2. Copyright © Houghton Mifflin Company. All rights reserved. 4–2 Marketing on the Internet Electronic Commerce (E-Commerce) –Sharing business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks Electronic Marketing (E-Marketing) –The strategic process of creating, distributing, promoting, and pricing products for targeted customers in the virtual environment of the Internet

3. Copyright © Houghton Mifflin Company. All rights reserved. 4–3 Benefits of E-Marketing Open and Instantaneous Flows of Information –Marketers and customers share information in real-time on prices, specifications, and product availability. Enhanced Customer Service Efficiencies –Rapid response and always-on availability (e.g., 24/7 customer support) Worldwide Scope of the Electronic Market –Opens markets to firms of all sizes

4. Copyright © Houghton Mifflin Company. All rights reserved. 4–4 Basic Characteristics of Electronic Marketing: Addressability Addressability is a marketer’s ability to identify customers before they make a purchase How E-Merchants Attain Addressability –Limit access to areas of their web site to encourage customer registration –Offer contests and prizes in exchange for consumer information –Place “cookies” on visitor’s computer to track visitor usage and preferences

5. Copyright © Houghton Mifflin Company. All rights reserved. 4–5 Basic Characteristics of Electronic Marketing: Interactivity Interactivity is the ability to allow customers express their needs and wants directly to the firm in response to the firm’s marketing communications –Real-time interaction with customers –Broader market coverage at a lower cost Community refers to a sense of group membership or feeling of belonging –Virtual communities on the Web

6. Copyright © Houghton Mifflin Company. All rights reserved. 4–6 Basic Characteristics of Electronic Marketing: Memory Memory is the ability to access databases or data warehouses containing individual customer profiles and past purchase histories and to use these data in real-time to customize a marketing offer. A database is a collection of information arranged for easy access and retrieval.

7. Copyright © Houghton Mifflin Company. All rights reserved. 4–7 Basic Characteristics of Electronic Marketing: Control Control refers to customers’ ability to regulate the information they view and the rate and sequence of their exposure to that information. A portal is a multiservice web site that serves as a gateway to other web sites.

8. Copyright © Houghton Mifflin Company. All rights reserved. 4–8 Basic Characteristics of Electronic Marketing: Accessibility Accessibility is the ability to obtain information available on the Internet. –Informs and educates the inquiring consumer about competing products and prices –Creates competition for the consumer’s attention –Increases the importance of having an easily recognized uniform resource locator (URL), or web site address

9. Copyright © Houghton Mifflin Company. All rights reserved. 4–9 Basic Characteristics of Electronic Marketing: Digitalization Digitalization is the ability to represent a product, or at least some of its benefits, as digital bits of information.

10. Copyright © Houghton Mifflin Company. All rights reserved. 4–10 E-Marketing Strategies Distribution Systems Target Markets Product Marketing Promotion Mediums PricingPricing E-Marketing Strategy Considerations

11. Copyright © Houghton Mifflin Company. All rights reserved. 4–11 Types of Advertising on Web Sites

12. Copyright © Houghton Mifflin Company. All rights reserved. 4–12 Customer Relationship Management Customer relationship management (CRM) focuses on using information about customers to create marketing strategies that develop and sustain desirable long-term relationships. –A focus on CRM is possible in e-marketing because of marketers’ ability to target individual customers. –The ability to identify individual customers allows marketers to shift their focus from increase share of market to increasing share of customer. –CRM is often based on the use of information technology.

13. Copyright © Houghton Mifflin Company. All rights reserved. 4–13 The 80/20 Rule 80 percent of business profits come from 20 percent of customers. –Advances in technology allow marketers to profile customers in real-time and thereby assess their lifetime value (LTV) to the firm. –Some customers may be too expensive to retain given the low level of profits they generate. –Firms should focus instead on developing and managing long-term relationships with more profitable customers.

14. Copyright © Houghton Mifflin Company. All rights reserved. 4–14 Legal and Ethical Issues in E-Marketing Personal Privacy Issues –Unauthorized placement of “cookies” on personal computers –Web site information requirements for registration –Collection of information from children –Use of “spyware” in software Spam –Unsolicited commercial e-mail (UCE) Misappropriation of Intellectual Property –Illegal copying of copyrighted software, movies, CDs, and other creative materials

15. Copyright © Houghton Mifflin Company. All rights reserved. 4–15 The BBBOnLine Privacy Seal and Program Explanation FIGURE 4.1 Source: Reprinted with permission from BBBOnLine, Council of Better Business Bureaus, Arlington, VA. [figure 4.1 here]

16. Copyright © Houghton Mifflin Company. All rights reserved. 4–16 Source: Reprinted by permission of the American Marketing Association. Code of Ethics

17. Copyright © Houghton Mifflin Company. All rights reserved. 4–17 Source: Reprinted by permission of the American Marketing Association.

18. Copyright © Houghton Mifflin Company. All rights reserved. 4–18 Source: Reprinted by permission of the American Marketing Association.

19. Copyright © Houghton Mifflin Company. All rights reserved. 4–19 Important Terms Electronic Commerce (E-Commerce) –Sharing business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks Electronic Marketing (E-Marketing) –The strategic process of creating, distributing, promoting, and pricing products for targeted customers in the virtual environment of the Internet Addressability –A marketer’s ability to identify customers before they make a purchase Cookie –An identifying string of text store on a web site visitor’s computer

20. Copyright © Houghton Mifflin Company. All rights reserved. 4–20 Important Terms Interactivity –The ability to allow customers express their needs and wants directly to the firm in response to the firm’s marketing communications Community –A sense of group membership or feeling of belonging Memory –The ability to access databases or data warehouses containing individual customer profiles and past purchase histories and to use these data in real-time to customize a marketing offer Database –A collection of information arranged for easy access and retrieval

21. Copyright © Houghton Mifflin Company. All rights reserved. 4–21 Important Terms Control –Customers’ ability to regulate the information they view and the rate and sequence of their exposure to that information Portal –A multiservice web site that serves as a gateway to other web sites Accessibility –The ability to obtain information available on the Internet Uniform Resource Locator (URL) –A web site address

22. Copyright © Houghton Mifflin Company. All rights reserved. 4–22 Important Terms Digitalization –The ability to represent a product, or at least some of its benefits, as digital bits of information Customer Relationship Management (CRM) –Using customer information to build long-term relationships Spam –Unsolicited commercial e-mail (UCE)

23. Copyright © Houghton Mifflin Company. All rights reserved. 4–23 The Relationship Between Web Sites and Retail Stores Source: American Demographics, December 2000, p. 42. Adapted with permission.

24. Copyright © Houghton Mifflin Company. All rights reserved. 4–24 Technology Drives CRM Customer Support and Call Center Software –Provides customer interaction and improved service –Captures information about all interactions Sales Automation –Links sales force to applications that facilitate selling and providing service –Provides information to determine the best solution for customers –Determines order status, tracks deliveries, and identifies service problems Technology –Should not be used just as a cost-reduction tactic –Should not be overwhelmed by gathering unnecessary data –Should be used as a tool to sustain long-term relationships

25. Copyright © Houghton Mifflin Company. All rights reserved. 4–25 Internet Users Comfortable Giving Out Personal Information Source: USA Today, September 28, 2001, p. A1. Used with permission. While Internet users don’t mind giving out their e-mail addresses, they’re far less comfortable giving out more personal information. What users are most comfortable giving out: