E-commerce

Lecturer: Hamid Milton Mansaray

Phone#: +23276563575
Email: [email protected]
 Lecture 11 Week 11
E-commerce Marketing Concepts

Copyright © 2009 Pearson Education, Inc.

 Products, Brands, and the Branding
Process
■ Brand:
❖ Expectations consumers have when consuming, or
thinking about consuming, a specific product
❖ Most important expectations: quality, reliability,
consistency, trust, affection, loyalty, reputation
■ Branding: process of brand creation
■ Closed loop marketing
■ Brand strategy
■ Brand equity
Slide 6-3
 Marketing Activities: From Products
to Brands

Figure 6.8, Page 365

Slide 6-4
Segmenting, Targeting, and Positioning
■ Major ways used to segment, target customers
❖ Behavioral
❖ Demographic
❖ Psychographic
❖ Technical
❖ Contextual
❖ Search
■ Within segment, product is positioned and branded as
a unique, high-value product, especially suited to
needs of segment customers

Slide 6-5
 Are Brands Rational?
■ For consumers, a qualified yes:
▪ Brands introduce market efficiency by reducing search and
decision-making costs

■ For business firms, a definite yes:

▪ Brands a major source of revenue
▪ Lower customer acquisition cost
▪ Increased customer retention
▪ Successful brand constitutes a long-lasting (though not
necessarily permanent) unfair competitive advantage

Slide 6-6
 Can Brands Survive the Internet?
Brands and Price Dispersion
■ Early postulation: “Law of One Price”; end of brands
■ Instead:
❖ Consumers still pay premium prices for differentiated
products
❖ E-commerce firms rely heavily on brands to attract
customers and charge premium prices
❖ Substantial price dispersion
❖ Large differences in price sensitivity for same product
❖ “Library effect”
Slide 6-7
The Revolution in Internet Marketing
Technologies
■ Three broad impacts:
1. Scope of marketing communications broadened
2. Richness of marketing communications increased
3. Information intensity of marketplace expanded
■ Internet marketing technologies:
■ Web transaction logs
■ Cookies and Web bugs
■ Databases, data warehouses, data mining
■ Advertising networks
■ Customer relationship management systems

Slide 6-8
 Web Transaction Logs
■ Built into Web server software
■ Record user activity at Web site
■ WebTrends: leading log analysis tool
■ Provides much marketing data, especially
combined with:
❖ Registration forms
❖ Shopping cart database
■ Answers questions such as:
❖ What are major patterns of interest and purchase?
❖ After home page, where do users go first? Second?

Slide 6-9
 Cookies and Web Bugs

■ Cookies:
❖ Small text file Web sites place on visitor’s PC every time
they visit, as specific pages are accessed
❖ Provide Web marketers with very quick means of
identifying customer and understanding prior behavior
■ Web bugs:
❖ Tiny (one pixel) graphic files embedded in e-mail messages
and on Web sites
❖ Used to automatically transmit information about user and
page being viewed to monitoring server

Slide 6-10
 Insight on Society
Marketing with Web Bugs
Class Discussion

■ Are Web bugs innocuous? Or are they an invasion of

personal privacy?
■ Do you think your Web browsing should be known to
marketers?
■ What are the different types of Web bugs?
■ What are the Privacy Foundation guidelines for Web
bugs?
■ What protections are available?

Slide 6-11
 Databases
■ Database: stores records and attributes
■ Database Management System (DBMS):
❖ Software used to create, maintain, and access databases

■ SQL (Structured Query Language):

❖ Industry-standard database query and manipulation language used in
a relational database

■ Relational 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 element

Slide 6-12
 A Relational Database View of
E-commerce Customers

Figure 6.12, Page 381

Slide 6-13
 Data Warehouses and Data Mining
■ Data warehouse:
❖ Collects firm’s transactional and customer data in single
location for offline analysis by marketers and site
managers
■ Data mining:
❖ Analytical techniques to find patterns in data, model
behavior of customers, develop customer profiles
■ Query-driven data mining
■ Model-driven data mining
■ Rule-based data mining
■ Collaborative filtering
Slide 6-14
Data Mining
and
Personalization

Figure 6.13, Page 382 SOURCE: Adomavicius and Tuzhilin, 2001b ©2001 IEEE.
Slide 6-15
 Insight on Technology
The Long Tail: Big Hits and Big Misses
Class Discussion

■ What are “recommender systems”? Give an

example you have used.
■ What is the “Long Tail” and how do
recommender systems support sales of items
in the Long Tail?
■ How can human editors, including consumers,
make recommender systems more helpful?

Slide 6-16
 Customer Relationship Management
(CRM) Systems
■ Record all contacts that customer has with firm
■ Generates 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 firm
❖ Product and usage summary data
❖ Demographic and psychographic data
❖ Profitability measures
❖ Contact history
❖ Marketing and sales information

Slide 6-17
 A Customer Relationship Management System

Figure 6.14, Page 387 SOURCE: Compaq, 1998.

Slide 6-18
 Market Entry Strategies

Figure 6.15, Page 389

Slide 6-19
Establishing the Customer Relationship

■ Advertising networks
❖ Banner advertisements
❖ Ad server selects appropriate banner ad
based on cookies, Web bugs, backend user
profile databases
■ Permission marketing
■ Affiliate marketing
Slide 6-20
 How an Advertising Network such as
DoubleClick Works

Figure 6.16, Page 392

Slide 6-21
 Establishing the Customer
Relationship
■ Viral marketing
❖ Getting customers to pass along company’s marketing
message to friends, family, and colleagues
■ Blog marketing
❖ Using blogs to market goods through commentary and
advertising
■ Social network marketing
❖ Social shopping

Slide 6-22
 Insight on Business
Social Network Marketing: New Influencers
Among the Chattering Masses
Class Discussion

■ Why do social networks represent such a promising

opportunity for marketers?
■ What are some of the new types of marketing that
social networks have spawned?
■ What are some of the risks of social network
marketing? What makes it dangerous?
■ What are some of the tools companies use to keep
track of social network activity?

Slide 6-23
 Establishing the Customer
Relationship

■ Wisdom of Crowds (Surowiecki, 2004)

❖ Large aggregates produce better estimates and
judgments
■ Examples:
❖ Prediction markets
❖ Folksonomies
❖ Social tagging

Slide 6-24
 Customer Retention: Strengthening
the Customer Relationship
■ Mass marketing
■ Direct marketing
■ Micromarketing
■ Personalized, one-to-one marketing
❖ Segmenting market on precise and timely understanding of
individual’s needs
❖ Targeting specific marketing messages to these individuals
❖ Positioning product vis-à-vis competitors to be truly unique
■ Personalization
❖ Can increase consumers sense of control, freedom
❖ Can also result in unwanted offers or reduced anonymity
Slide 6-25
The Mass Market-Personalization Continuum

Figure 6.17, Page 402

Slide 6-26
Other Customer Retention Marketing
Techniques
■ Customization
■ Customer co-production
■ Transactive content:
❖ Combine traditional content with dynamic information
tailored to each user’s profile
■ Customer service
❖ FAQs
❖ Real-time customer service chat systems
❖ Automated response systems

Slide 6-27
 Net Pricing Strategies
■ Pricing
❖ Integral part of marketing strategy
■ Traditionally, prices based on:
❖ Fixed cost
❖ Variable costs
❖ Market’s demand curve
■ Price discrimination
❖ Selling products to different people and groups
based on willingness to pay
Slide 6-28
 Net Pricing Strategies
■ Free and freemium
❖ Can be used to build market awareness
■ Versioning
❖ Creating multiple versions of product and selling
essentially same product to different market segments
at different prices
■ Bundling
❖ Offers consumers two or more goods for one price
■ Dynamic pricing
❖ Auctions
❖ Yield management
Slide 6-29
 Channel Management Strategies
■ Channels
❖ Different methods by which goods can be distributed and
sold
■ Channel conflict
❖ When new venue for selling products or services threatens
or destroys existing sales venues
❖ E.g., online airline/travel services and traditional offline
travel agencies
■ Some manufacturers are using partnership
model to avoid channel conflict
Slide 6-30