Lecture Principles of Marketing - Chapter 14: Marketing in the digital age

In this chapter, you will learn: Discuss how the digital age is affecting both consumers and the marketers who serve them; explain how companies have responded to the Internet and other powerful new technologies with e-business strategies, and how these strategies have resulted in benefits to both buyers and sellers; describe the four major e-marketing domains;...

Chapter Fourteen

Marketing in the

Digital Age

Roadmap: Previewing the Concepts

1 Discuss how the digital age is affecting both

consumers and the marketers who serve them.

2 Explain how companies have responded to the

Internet and other powerful new technologies with e-business strategies, and how these

strategies have resulted in benefits to both

buyers and sellers.

3 Describe the four major e-marketing domains.

4 Discuss how companies go about conducting

e-marketing to profitably deliver more value to customers.

 Began selling books; now

markets many other

merchandise lines

 One of the best known

names on the Web

 Sales have been strong

but firm did not turn a

 Personalized sign-on pages and recommendations,

huge selection, good value, and convenience result in strong buyer relationships.

 Will Amazon become the

Forces Shaping the Digital Age

 Digitalization andConnectivity

– Intranets

• connect people within a company

– Extranets

• connect a company with its suppliers,

distributors, and outside partners.

– Internet

• connects users around the world.

Forces Shaping the Digital Age

 Internet Explosion

– Explosive worldwide growth forms the

heart of the New Economy.

– Increasing numbers of users worldwide,

and broadband users in the U.S.

– Greater numbers of consumers are

accessing information on the Internet.

– Companies must adopt Internet

technology or risk being left behind.

Marketing Strategy in the Digital Age

 Requires a new model for marketing

strategy and practice.

 Companies need to retain old skills and practices but add new competencies.

E-Business in the Digital Age

 Involves the use of electronic platforms

to conduct company business.

– Web sites for selling and customer

E-Commerce in the Digital Age

 More specific than e-business.

 Involves buying and selling processes supported by electronic means,

primarily the Internet.

 Includes:

– e-marketing

– e-purchasing (e-procurement)

E-Marketing in the Digital Age

 The marketing side of e-commerce.

 Includes efforts to communicate about, promote, and sell products and

services over the Internet.

 E-purchasing is the buying side of

e-commerce.

– It consists of companies purchasing

goods.

Benefits to Buyers

 Convenience.

 Buying is easy and private.

 Provides greater product access and selection.

 Provides access to comparative

information.

 Buying is interactive and immediate.

Benefits to Sellers

 Powerful tool for building customer relationships.

 Can reduce costs.

 Can increase speed and efficiency.

 Offers greater flexibility in offers and programs.

 Is a truly global medium.

Business to Consumer (B2C)

 The online selling of goods and

services to final consumers.

– Expected to generate $316 billion in 2010,

or 13% of retail sales.

– There is increasing diversity in buyers.

• This provides increasing opportunities

for targeting markets.

– Is customer initiated and controlled,

Business to Business (B2B)

 B2B sales dwarf B2C sales:

– B2B e-commerce was nearly $4 trillion in 2003.

– Uses trading networks, auction & barter sites, spot exchanges, online product catalogs, and more.

 Most major B2B marketers offer online

product information, purchasing, and support.

 Open trading exchanges:

– huge specialty e-marketspaces to conduct

transactions.

Consumer to Consumer (C2C)

 Occurs on the Web and includes a wide range of products and services.

– Auction sites such as eBay offer

marketplaces to buy or exchange goods.

– Blogs and forums facilitate information

Consumer to Business (C2B)

 Consumers can search out sellers,

view offers, initiate purchases, and give feedback.

– Example: on priceline.com, one can bid for airline tickets, hotel rooms, etc., and

decide whether to accept company offers.

Click-Only Companies

 E-tailers

 Search engines and portals

 Shopping comparison sites

 Internet service providers

 Transaction sites

 Content sites

Reasons for dot.com Failures

 Poor research or planning.

 Relied on spin and hype instead of

marketing strategies.

 Spent too heavily on brand identities.

 Devoted too much effort to acquiring new customers instead of building

loyalty.

companies because of:

– Trusted brand names and more resources

– Large customer bases

– More knowledge and experience

– Good relationships with suppliers

Online Marketing

 Creating a Web site

 Placing ads and promotions online

 Setting up and participating in Web communities

 Using e-mail

Types of Web Sites

Corporate Web Site:

 Designed to build customer goodwill and supplement other sales channels.

– Offers information to customers.

– Builds closer customer relationships.

– Generates excitement about the company.

Types of Web Sites

Marketing Web Site:

 Engages consumers in an interaction that moves them closer to a direct

purchase or other marketing outcome.

– May include catalogs, shopping tips,

promotional features, and more.

Designing Attractive Web Sites

 The 7 Cs of Effective Web Site Design:

Online Ads

 Forms of online advertising:

– Banner ads:

• Tickers (move across the screen)

• Skyscrapers (tall, skinny ads at the side of a

page)

• Rectangles (boxes that are larger than a

banner)

– Interstitials (pop up OR pop under between

changes on Web site)

– Search-related ads (contextual advertising)

Online Promotion

 Forms of online promotion:

– Content sponsorships (sponsoring special

content)

– Microsites (limited areas paid for by an

external company)

– Alliances and affiliate programs (work with

firms to promote each other)

– Viral marketing (Internet version of

word-of-mouth)

The Future of Online Advertising

 May grow to 10-15% of media mix for

low-involvement product categories.

 Web communities:

– Allow members to congregate online and

exchange views on issues of interest.

 E-mail:

– Use of “enriched” e-mail messages.

– Backlash against spam can be problem.

E-Commerce Problems and Challenges

 Likely that online marketing will remain

a technique working with full IMC mix.

 Internet profitability remains

problematic for B2C firms.

 Navigation difficulties continue as the number of Web sites grows.

 Dot.com retailers are facing growing

competition.

Legal and Ethical Issues

 Online privacy

 Online security

 Internet fraud

 Segmentation and discrimination

 Access by vulnerable or unauthorized groups

Rest Stop: Reviewing the Concepts

1 Discuss how the digital age is affecting both

consumers and the marketers who serve them.

2 Explain how companies have responded to the

Internet and other powerful new technologies with e-business strategies, and how these

strategies have resulted in benefits to both

buyers and sellers.

3 Describe the four major e-marketing domains.

4 Discuss how companies go about conducting

e-marketing to profitably deliver more value to customers.

5 Overview the promise and challenges that