E Commerce Marketing - Chapter 06 - Part 2

CSC 330 E-CommerceTeacher Ahmed Mumtaz Mustehsan GM-IT CIIT Islamabad Virtual Campus, CIIT COMSATS Institute of Information TechnologyT1-Lecture-14T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-1T1-Lecture-14E Commerce Marketing Chapter-06Part -IIFor Lecture Material/Slides Thanks to: Copyright © 2010 Pearson Education, IncT1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-2ObjectivesUnderstand key business concepts and strategies applicable to e-commerce.T1-Lecture-12 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, IncT1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, IncSOURCES: Based on data from eMarketer, Inc., 2011d.Why not buy Online?Slide 6-4Trust, Utility, and Opportunism in Online MarketsTwo most important factors shaping decision to purchase online:Utility; With reference to, the Better prices, convenience of handling the site, The Response /speed of interactivity of the marketplace.Trust:Asymmetry of information can lead to opportunistic behavior by sellersSellers can develop trust by building strong reputations for honesty, fairness, delivery and after sale service. T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-5Basic Marketing ConceptsMarketing: Means the strategies and actions firms take to establish relationship with a consumer to encourage purchases of its products and services.Addresses competitive situation of industries and firmsSeeks to create unique, highly differentiated products or services that are produced or supplied by one trusted firmAvoidance of becoming commodity ( a good or service for which there are many dealers; supplying the product; essentially identical) Ideally having unmatchable feature setT1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-6Feature SetsThe bundle of capabilities and services offered by the product or services. Three levels of product or serviceCore productThe core benefit the customer received from the product. e.g., cell phoneActual productSet of characteristics that deliver the product’s core benefits e.g., wide screen that connects to InternetAugmented productAdditional benefits to customers beyond the core benefits embedded in actual product.Basis for building the product’s brand e.g., product warranty and after sale serviceT1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-7Feature SetEach element in the feature can be used to differentiate the product from the others in the market. T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-8Products, Brands, and the Branding ProcessBrand: Set of expectations consumers have when consuming, or thinking about consuming, a specific product or services from specific company.Most important expectations: Quality, reliability, consistency, trust, affection, loyalty, reputationBranding: Process of brand creation (converting product to Brand)Closed loop marketingWhen marketers are able to directly influence the design of core product based on market research and feedback.T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-9Products, Brands, and the Branding ProcessMarketers devise and implement brand strategies.Brand strategyA set of plans for differentiating a product from its competitors and communicating these differences effectively to marketplaceA brand can represent cooperate value as an asset; it can be customer loyalty or attachment can be seen as set of associations that customers have:Brand equityThe estimated value of the premium customers are willing to pay for using a branded product when compared to unbranded products.T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-10Marketing Activities: from Products to BrandsFigure 6.7, Page 369T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-11Marketers aim to create a brand identity for a product based upon consumer perceptions of trust, affection, loyalty and reputation.Segmenting, Targeting, and Positioning(Product)Market comprising many different kind of customers with different needs. Firm seek to segment market to different group of customers in terms of product needs.Major ways used to segment, target customersBehavioralDemographic ( age, sex, income, occupation)Psychographic (self-image and emotional needs)TechnicalContextualSearchTarget the segment; Within segment, product is positioned and branded as a unique, high-value product, especially suited to needs of segment customersT1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-12Are Brands Rational? (Coca-Cola is one of the most enduring brand!!!!)For consumers, a qualified yes:Brands introduce market efficiency by reducing search and decision-making costsFor business firms, a definite yes: The Brand:A major source of revenueLower customer acquisition cost (The overall cost of converting a prospect into a consumer)Increased customer retention (Convincing an existing customer to purchase again)Successful brand constitutes a long-lasting (though not necessarily permanent) unfair competitive advantageT1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-13Can Brands Survive the Internet?Brands and Price DispersionEarly postulation: “Law of One Price”—end of marketing based on brandsWith complete price transparency in a perfect information marketplace there will be one world price for every product would emerge.Instead:Consumers still pay premium prices for differentiated productsE-commerce firms rely heavily on brands to attract customers and charge premium pricesT1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-14Can Brands Survive the Internet?Brands and Price DispersionSubstantial price dispersion on internetLarge differences in price sensitivity for same product (highest and lowest price)“Library effect” or “Catalog effect”; another tactic by online sellers.An attempt to appeal to consumers on the basis of total number of products offered under one marketplace. e.g. Amazon.com. T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-15Impacts of E-commerce Technologies on MarketingThree broad impacts: (E-commerce Technology Dimension)Scope of marketing communications broadened (Ubiquity, Global Reach)Richness of marketing communications increased (Information Density ; text, video and audio contents)Information intensity of marketplace expanded(Personalization/customization, Social Technology)T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-16The Revolution in Internet Marketing TechnologiesInternet marketing technologies:Web Transaction logsTracking filesDatabases, Data warehouses, Data miningCustomer Relationship Management systems (CRM)T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-171. Web Transaction LogsBuilt into Web server softwareRecord user activity at Web siteWebtrends: Leading log analysis toolProvides much marketing data, especially combined with:Registration forms: Gather personal data on name, address, phone, zip, e-mail, and other optional information on interest and tastesShopping cart database: captures all the item selection, purchase and payment data)T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-181. Web Transaction LogsTransaction 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-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-192. Tracking FilesAllow users browsing activities to be tracked as they move from site to site. Four types of tracking filesCookies Small text file placed by Web site (1 kB)Allows Web marketers to gather dataCustomers may delete cookies. Implement privacy; Causing misleading analysis, wastage of efforts. Way forward?Use Adobe Flash software; creates cookies called Flash Cookies set to never expire (5 MB)Beacons (“bugs”; 1-pixel graphic files; send message to server)T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-20