E Commerce Marketing - Chapter 06 - Part 3

CSC 330 E-CommerceTeacher Ahmed Mumtaz Mustehsan GM-IT CIIT Islamabad Virtual Campus, CIIT COMSATS Institute of Information TechnologyT1-Lecture-15T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-1T1-Lecture-15E Commerce Marketing Chapter-06Part -IIIFor Lecture Material/Slides Thanks to: Copyright © 2010 Pearson Education, IncT1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-2The Revolution in Internet Marketing TechnologiesInternet marketing technologies:Web Transaction logsTracking filesDatabases, Data warehouses, Data miningCustomer Relationship Management systems (CRM)T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-31. 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-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-41. 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-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-52. Tracking FilesUnder this technique user’s browsing activities are tracked as they move from site to siteDifferent types of tracking filesCookies 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-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-62. Tracking FilesUse 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 e-mail messages. web-bugs send message to server that e-mail 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-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-73. DatabasesDatabase: A software application that stores records and attributesDatabase management system (DBMS): Software application used by organizations to create, maintain, and access databasesSQL (Structured Query Language): An industry-standard database query and manipulation language used in a relational databaseRelational 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 elementT1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-8Relational 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 tablesT1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-93. Data Warehouses and Data MiningData warehouse: Is a database that collects firm’s transactional/operational and customer data in single location for offline analysis by marketers and site managersData 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 miningModel-driven data miningRule-based data miningCollaborative filteringT1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-103. Data Warehouses and Data MiningCustomer 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 miningUse 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-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-113. Data Warehouses and Data MiningRule-based data miningExamines 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-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-12Data Warehouses and Data MiningCollaborative filteringSite 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-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-13Data Mining and PersonalizationSOURCE: Adomavicius and Tuzhilin, 2001b ©2001 IEEE.Customer Relationship Management (CRM) SystemsRecord 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 firmProduct and usage summary dataDemographic and psychographic dataProfitability measuresContact history Marketing and sales informationT1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-154.A Customer Relationship Management SystemAn 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-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-16Generic Market Entry StrategiesFigure 6-11, Page 391Both new and traditional firms face a basic choice of click and bricks and clicks when entering e-commerce marketplaceT1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-17Generic Market Entry StrategiesNew 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-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-18Generic Market Entry StrategiesExisting 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-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-19Establishing the Customer RelationshipFirm chooses a market entry; needs marketing strategy for establishing relationship with customers:Advertising networksAd 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 BillionAdvertising exchangesAuction ad slots over many advertising networks, by sharing the revenue with web sites usually called web publishers. (Google, yahoo, eBay)T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-20How an Advertising NetworkSuch as DoubleClick WorksT1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-21Establishing the Customer RelationshipPermission 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-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-22Establishing the Customer RelationshipViral marketingThe process of getting customers to pass along the company’s marketing messages to friends, family and colleagues.Blog marketingBlogs are based upon personal opinion therefore are ideal for viral marketing. Google AdSense is a major Blog MarketersSocial network marketingDriven by social e-commerceSocial sign-onCollaborative shoppingNetwork notificationSocial search (recommendation)T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-23Establishing the Customer RelationshipSocial marketing and wisdom of crowdsLarge aggregates produce better estimates and judgments, e.g.,“Like” buttonFolksonomiesSocial taggingMobile platform marketingLocal marketingBrand leveragingUsing the power of an existing brand to acquire new customers for a new product or service.T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-24Customer RetentionMass 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-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-25Customer RetentionPersonalized, one-to-one marketing Segmenting market on precise and timely understanding of individual’s needsTargeting specific marketing messages to these individualsPositioning product vis-à-vis competitors to be truly uniquePersonalizationCan increase consumers sense of control, freedomCan also result in unwanted offers or reduced anonymityT1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-26The Mass Market-Personalization ContinuumFigure 6.13, Page 407T1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-27Other Customer Retention Marketing TechniquesCustomizationCustomizing product to user preferencesCustomer co-productionCustomer interactively involved in product creationCustomer serviceFAQsReal-time customer service chat systemsAutomated response systemsT1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-28Chapter 12B2B E-commerce: Supply Chain Management and Collaborative CommerceT1-Lecture-15 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc1-29