Chapter Objectives

E-Business in Cont emporary Market ing

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Def ine e-businessand discuss how market ers use t he Int ernet t o achieve business success.

Dist inguish bet ween a corporat e Web sit e and a market ing Web sit e.

List t he major forms of B2B market ing.

Explain business-t o-consumer (B2C) e-market ing.

Ident ify online buyers and sellers.

Describe some of t he challenges associat ed wit h online market ing and e-business.

Discuss how market ers use t he communicat ion funct ion of t he Web as part of t heir online market ing st rat egies.

Out line t he st eps involved in developing successful e-business Web sit es and ident ify met hods for measuring Web sit e ef fect iveness.

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CHAPTER 4 E-Business in Cont emporary Market ing

• E-business Firm that targets customers by _________and __________ business information, conducting customer transactions, and maintaining online relationships with __________.

• Online retails sales in the U.S. totaled nearly ____ billion in a recent year.

• 205 million Americans access the Internet as of May 2006, according to World Internet Statistics.

• One billion people worldwide access the Internet.

• More than ___ million Americans have sold something online.

• A recent report estimates that the average Brit and average American spend more time online than watching television.

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WHAT IS E-BUSINESS?• E-tailing, virtual storefronts on Web sites.

• Business-to-business transactions.

• Electronic data interchanges, the B2B exchange of data.

• E-mail, instant messaging and other Web-enabled communication tools.

• The gathering and use of demographic, product, and other information through Web contacts.

• E-marketing Strategic process of creating, distributing, promoting, and pricing goods and services to a target market over the Internet or through digital tools. Examples:

• Researching computer printers on CNet.com and then placing an order at Newegg.com.

• Legally downloading music and videos from Apple Computer’s iTunes Web site.

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CAPABILITIES AND BENEFITS OF E-MARKETING

CHAPTER 4 E-Business in Cont emporary Market ing

TYPES OF BUSINESS WEB SITES• Corporate Web site Site designed to increase a firm’s visibility, promote its offerings, and provide information to interested parties.

• Purpose is to build customer goodwill and assistchannel members in their marketing efforts.

• Marketing Web site Site whose main purpose is to increase purchases by visitors.

• Many try to engage visitors in interactions that move them closer to a desired marketing outcome.

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B2B E-MARKETING• Business-to-business (B2B) e-marketing Use of the Internet for business transactions between organizations.

• Accounts for 90 percent of all e-business activity.

• Accounts for 10 percent of all B2B transactions.

• Increases efficiency of business transactions, which typically involve more steps than consumer transactions.

CHAPTER 4 E-Business in Cont emporary Market ing

ELECTRONIC DATA INTERCHANGE, WEB SERVICES, EXTRANETS, AND PRIVATE EXCHANGES• Electronic data interchange.

• Computer-to-computer exchanges of price quotations, purchase orders, invoices, and other sales information between buyers and sellers.

• Cuts paper flow, speeds the order cycle, and reduces errors.

• Allows companies to set production schedules to better match demand.

• Requires compatible hardware and software systems.

• Web services.

• Internet-based systems that allow parties to communicate electronically with one another regardless of the computer operating system they use.

• Rely on open source XML.

CHAPTER 4 E-Business in Cont emporary Market ing

ELECTRONIC DATA INTERCHANGE, WEB SERVICES, EXTRANETS, AND PRIVATE EXCHANGES• Extranets.

• Secure networks used for e-marketing and accessible through the firm’s Web site by external customers, suppliers, or other authorized users.

• Give selected outsiders access to internal information.

• Private exchanges.

• A secure Web site at which a company and its suppliers share all types of data related to e-marketing, from product design through delivery of orders.

• Sometimes called c-business, “c” for “collaboration.”

• Often used for collaborating on product ideas, production scheduling, distribution, order tracking, and other business functions.

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ELECTRONIC EXCHANGES AND E-PROCUREMENT• Electronic exchanges.

• Online marketplaces that bring buyers and sellers together in one electronic marketplace and cater to a specific industry’s needs.

• Use has declined because suppliers weren’t happy with process and buyers preferred to develop long-term relationships with buyers they knew.

• E-procurement.

• Web-based systems that enable all types of organizations to improve the efficiency of their bidding and purchasing processes.

• Streamlines purchasing process and reduces costs.

• Example: In North Carolina, state and local government agencies, public schools, and other public entities use e-procurement to purchase from vendors.

CHAPTER 4 E-Business in Cont emporary Market ing

ONLINE SHOPPING AND B2C E-MARKETING• Business-to-consumer (_____) e-marketing Selling directly to consumers over the Internet. Also called e-tailing.

• Growing rapidly by convenience and improved security for transferring credit card information.

• Service providers such as banks are an important __________ of e-tailing.

• Two types of B2C Web sites

• Shopping sites such as Gap.com where customers can get __________ information and make purchases online.

• Information sites such as Toyota.com where customers can get product information but __________ make purchases online.

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ELECTRONIC STOREFRONTS• Electronic storefront Company Web site that sells products to customers.

• Example: Walmart’s electronic storefront.

• Example: Land’s End’s electronic storefront.

• Items for purchase are placed in an electronic shopping cart.

• Growth anticipated with the increase in broadband connections.

• Broadband shoppers typically spend 34 percent more online than narrowband shoppers.

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BENEFITS OF B2C E-MARKETING• In a recent survey, more than half of consumers said they prefer shopping online more than in stores.

Lower Prices• Sixty percent of online shoppers cite lower prices as the reason for shopping online.

• Internet allows easy price comparisons, including through bots such as Shopping.com.

Convenience• Allow orders from anywhere at anytime; product tracking.

Personalizat ion• Software analyzes past user purchases to customize experience.

• Goal is to create loyal customers who make repeat purchases.

CHAPTER 4 E-Business in Cont emporary Market ing

ONLINE BUYERS AND SELLERS• Demographics of customers are changing as Internet penetration grows.

CHAPTER 4 E-Business in Cont emporary Market ing

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E-BUSINESS AND E-MARKETING CHALLENGESONLINE PAYMENT SYSTEMS• Companies have developed secure payment systems to protect customer information.

• Encryption, process of encoding data for security purposes.

• Secure Sockets Layer, technology that encrypts information and provides authentication.

• Electronic wallet, a computer data file at an e-business site’s checkout counter that contains credit card information and owner identification.

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PRIVACY ISSUES• Customers’ top security concern is protection of their personal information.

• Through electronic signatures, parties can enter into legal contracts such as mortgages and insurance policies online.

• Cookies and spyware allow companies to personalize Internet experience but also invade computer users’ privacy.

• To reassure customers, many online merchants have signed on with online privacy organizations such as TRUSTe.

• Companies install firewalls to protect private corporate data.

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INTERNET FRAUD• Complaints about Internet fraud are compiled by the Internet Crime Complaint Center.

• Logged more than 231,000 complaints in a recent year.

• Sixty-five percent of complaints referred to law enforcement concern online auctions.

• Phishing High-tech scam that uses authentic-looking e-mail or pop-up messages to get unsuspecting victims to reveal personal information.

• Payment fraud is also growing.

• Cardholder fraudulently claims ordered merchandise was never delivered and asks credit issuer for a chargeback.

CHAPTER 4 E-Business in Cont emporary Market ing

WEB SITE DESIGN AND SERVICE• As many as 70 percent of Internet shopping _____ are abandoned before any purchase is made.

• __________ experiences on Web sites can hurt a company’s future online and in-store sales.

• Delivery and returns pose challenges.

• Companies that have ______-____-______ experience often have more experience satisfying customers than Internet-only retailers.

CHANNEL CONFLICTS• _________ sales to customers can compete with business partners such as retailers and distributors, disputes called channel conflicts.

• Example: Mattel sells only specialty products online.

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USING THE WEB’S COMMUNICATION FUNCTION• Web has four main functions: e-business, entertainment, information, and communication.

• Communication is Web’s most popular function.

• Firms use e-mail to communicate with customers, suppliers, and other partners.

• Spam Popular name for junk e-mail.

ONLINE COMMUNITIES• Internet forums, newsgroups, electronic bulletin boards, and Web communities that appeal to people who share common interests.

CHAPTER 4 E-Business in Cont emporary Market ing

BLOGS• Blog Short for Web log, an online journal written by a blogger.

• Some incorporate wikis, a Web page that anyone can edit.

• Some incorporate podcasts, video recordings that are posted online. According to iPodder.org, more than 3,000 podcasts operate worldwide.

• Corporate blogs can help build brand trust.

• Example: Apple’s iLounge

• Builds iPod brand.

• Gives Apple ideas for product improvement.

• Employee blogs present ethical issues.

• Negative comments can harm company.

• Form of free speech that humanizes a company.

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WEB-BASED PROMOTIONS• Companies buy banner ads and pop-up ads on Web sites customers are likely to visit.

• Search marketing Paying search engines, such as Google, a fee to make sure that the company’s listing appears toward the top of the search results.

• Companies use online coupons to promote their products.

• Example: ValPak Marketing Systems.

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MANAGING A WEB SITEDEVELOPING SUCCESSFUL WEB SITES

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Planning and Preparat ion• What is the company’s ______ for its Web site?

• Determines content and design.

• Determines _________.

• Will the site be maintained in-house or by a contractor?

• What will the site be named?

Cont ent and Connect ions• Content an important factor for whether visitors __________ to a site.

• Available resources should be _________ to viewers, easy to access and understand, updated regularly, and written or displayed in a compelling, entertaining way.

• Most small businesses are better off ____________ to meet their hosting and maintenance needs.

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Cost s and Maint enance• Variety of costs:

• Development.

• Placing the site on a Web server.

• Maintaining and updating the site.

• Promoting the site.

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MEASURING WEB SITE EFFECTIVENESSClick-through rate Percentage of people

presented with a banner ad who click on it.

Conversion rate Percentage of visitors to a Web site who make a purchase.