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1
CHAPTER NINETEEN
MARKETING AND THE INTERNET
Prepared by Jack Gifford
Miami University (Ohio)
© 2000 South-Western College Publishing
© 2000 South-Western College Publishing 2
THE INTERNET AND THE WORLD WIDE WEB
A communication conduit and a marketplace Available worldwide 24 hours a day Dynamic entrepreneurial environment Is changing the nature of marketing
© 2000 South-Western College Publishing 3
EVOLUTION AND GROWTH
Developed in the 1960s for the US military to provide uninterruptable communication in the event of sabotage or attack
Later used by colleges and universities for research
First used for commercial purposes in 1991
© 2000 South-Western College Publishing 4
EVOLUTION AND GROWTH
Between 1993 and 1998, the number of hosts grew from 1,313,000 to 36,739,000
The traffic carried on the Internet by December of 1998 was doubling every 100 days
The World Wide Web is a subset of the Internet
The Web comprises millions of virtual sites that only exist as data in computers
Each of these sites is nothing more than a collection of associated electronic documents called pages; the first page displayed as a Web site is called the home page
© 2000 South-Western College Publishing 5
WHO IS USING THE INTERNET?
In 1993, only 60 countries were linked to the Internet. By 1999, 241 countries were listed by the Internet Assigned Number Authority and more than 150 countries had direct access to the Internet.
The USA and Canada account for 87 million of the estimated 151 million people on line worldwide.
Average age of users in 1998 was 35.1% Women in 1998 represented 38.7% of users, and is
rising rapidly
© 2000 South-Western College Publishing 6
WHO IS USING THE INTERNET?
By June of 1998, 50% of the North American population between the ages of 16-34 claimed to be Internet users
As time passes, the users of the internet are becoming a representative cross section of the North American population
© 2000 South-Western College Publishing 7
THE INTERNET’S EFFECT ON MARKETING STRATEGY
By the year 2000, the Internet marketing should exceed 327 million people
Online buyers will increase from 18.6 million in 1998 to 64.6 million in 2002. Volume will increase to over 270 billion dollars by 2002
Over 50% of the people accessing the Internet are watching less television and spending more time on the Internet
© 2000 South-Western College Publishing 8
THE INTERNET’S EFFECT ON MARKETING STRATEGY
Marketers are communicating with these individuals via… E-mail News groups and
discussion lists Launching new home
pages Sponsoring established
groups, lists, sites and bulletin boards
© 2000 South-Western College Publishing 9
Electronic mail is the most widely used service of the Internet
Companies can communicate with existing or potential customers as individuals
Spamming = unwanted commercial e-mail
THE INTERNET’S EFFECT ON MARKETING STRATEGY: Electronic mail
© 2000 South-Western College Publishing 10
THE INTERNET’S EFFECT ON MARKETING STRATEGY: General newsgroups and Discussion Lists
The exchange of information among individuals with common interests Provides useful
information to marketers in terms of product usage, marketing research, pricing and promotion
May act as moderator or sponsor
What design features would you like to see in your next sports car?
© 2000 South-Western College Publishing 11
Generated in-house or through outsourcing Direct sales of products or services or as an
informational/support function Role of banners, search engines and “smart
agents” Keys to site traffic generation include…
THE INTERNET’S EFFECT ON MARKETING STRATEGY: Launching a corporate home page
© 2000 South-Western College Publishing 12
Banners Registration with online search engines Easy-to-guess addresses Include web address in print and broadcast
advertisements Advertise through off-line subscription
services Frequently changes in web site content Pay consumers to view the site Contests, entertainment, free services
THE INTERNET’S EFFECT ON MARKETING STRATEGY: Launching a corporate home page
© 2000 South-Western College Publishing 13
THE INTERNET’S EFFECT ON MARKETING STRATEGY: Tracking the traffic
Marketers need to be able to measure the effectiveness of their efforts Track frequency of
access and time spent on page
Record number of clicks or hits while within site
Use of response forms or contests
Use of cookies
Subscriptions Requests for information
using forms or e-mail Actual sales stimulated
through direct orders or 1-800 calls
© 2000 South-Western College Publishing 14
THE INTERNET’S EFFECT ON MARKETING STRATEGY: Conducting marketing Research Online
Online information search engines General use Industry specific Governmental sources Trade magazines and
journal archives Access to university
research Electronic news services
(text, audio, video clips)
Electronic surveys Ensures completion of all
items Eliminates coding error due
to database digital nature of data captured
Convenient for respondent Low cost of collection and
use Use of specially designed
software Demographic bias potential
© 2000 South-Western College Publishing 15
THE INTERNET’S EFFECT ON MARKETING STRATEGY: Industry newsgroups & discussion lists
Online venues for exchanging ideas, debating issues, providing intellectual support, and promoting new technology.
Establishes a network of colleagues with similar goals and interests
Popular discussion lists deal with... Online advertising Consumer research Database marketing Relationship marketing Internet sales
© 2000 South-Western College Publishing 16
PRIVACY AND SECURITY ISSUES FOR ONLINE COMMERCE
Privacy and security issues seem to become more complex as technology provides unscrupulous individuals with new and better tools for breaking the law, causing chaos, and intruding into personal affairs.
Traditional legal and moral issues such as copyright infringement, pornography, and fraud will continue to plague all businesses
© 2000 South-Western College Publishing 17
PRIVACY AND SECURITY ISSUES FOR ONLINE COMMERCE
New issues now facing electronic commerce involve exchanging value (electronic cash), personalized online activity (cookies), protecting sensitive data files (firewalls), and actively seeking new customers (spamming)
© 2000 South-Western College Publishing 18
PRIVACY AND SECURITY ISSUES FOR ONLINE COMMERCE: Electronic cash
Credit cards and security concerns
Encryption algorithms $50 credit card fraud limits Identification and tracing
transaction (Pentium III issues)
CyberCash electronic money
Electronic banking
© 2000 South-Western College Publishing 19
PRIVACY AND SECURITY ISSUES FOR ONLINE COMMERCE: Firewalls
Firewalls are special computer programs that check all incoming and outgoing information streams for proper identification and authorization
© 2000 South-Western College Publishing 20
PRIVACY AND SECURITY ISSUES FOR ONLINE COMMERCE: Spamming
Spamming involves the transmission of commercial messages to individuals via electronic medium
Is considered by some individual consumers as an invasion of privacy and a theft of time and money
Potential legislation?
© 2000 South-Western College Publishing 21
THE INTERNET’S IMPACT ON THE MARKETING MIX
Communications technology will allow people, for the first time in history, to easily search worldwide for and obtain the lowest price for the goods they purchase.
Intelligent agents will automatically comparison shop for goods specified by consumers.
The World Wide Web and Internet is becoming one of the dominant business-to-business methods of transaction
© 2000 South-Western College Publishing 22
THE INTERNET’S IMPACT ON THE MARKETING MIX
The World Wide Web and the Internet will have a profound impact on every dimension of the marketing mix. Its effective and efficient use by marketers in the 21st century is absolutely essential for success…and even survival. Your future success in business will be, at least partially, dependent upon YOUR understanding and creative use of this new communication medium!