Marketing in the Digital AgeMarketing in the Digital Age

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ROAD MAP: Previewing the Concepts

• Identify the major forces shaping the new Identify the major forces shaping the new Digital Age.Digital Age.

• Explain how companies have responded to Explain how companies have responded to the Internet and other powerful new the Internet and other powerful new technologies with e-business strategies, technologies with e-business strategies, and how these strategies have resulted in and how these strategies have resulted in benefits to both buyers and sellers.benefits to both buyers and sellers.

• Describe the four major e-commerce Describe the four major e-commerce domains.domains.

• Discuss how companies go about Discuss how companies go about conducting e-commerce to profitably conducting e-commerce to profitably deliver more value to customers.deliver more value to customers.

• Overview the promise and challenges that Overview the promise and challenges that e-commerce presents for the future.e-commerce presents for the future.

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Forces Shaping the Digital Age

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Forces Shaping the Digital Age

• Digitalization & Digitalization & ConnectivityConnectivity– Intranets – connect Intranets – connect

people within a people within a company. company.

– Extranets – connect a Extranets – connect a company with its company with its suppliers, distributors, suppliers, distributors, and outside partners.and outside partners.

– Internet – connects Internet – connects users around the users around the world.world.

• Internet ExplosionInternet Explosion– Explosive worldwide Explosive worldwide

growth forms the growth forms the heart of the New heart of the New Economy.Economy.

– Increasing numbers of Increasing numbers of users each month.users each month.

– Companies must Companies must adopt Internet adopt Internet technology or risk technology or risk being left behind.being left behind.

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Forces Shaping the Digital Age

• New Types of Intermediaries:New Types of Intermediaries:– Direct selling via the Internet bypassed Direct selling via the Internet bypassed

existing intermediaries existing intermediaries (disintermediation).(disintermediation).

– ““Brick-and-mortar” firms became “click-Brick-and-mortar” firms became “click-and-mortar” companies.and-mortar” companies.

– As a result, some “click-only” companies As a result, some “click-only” companies have failed.have failed.

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Forces Shaping the Digital Age

• Customization and Customerization:Customization and Customerization:– With customization, the company With customization, the company

custom designs the market offering for custom designs the market offering for the customer.the customer.

– With customerization, the customer With customerization, the customer designs the market offering and the designs the market offering and the company makes it. company makes it.

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Marketing Strategy in the Digital Age

Requires a new model for marketing strategy and practice

Some suggest that all buying and selling will eventually be done electronically

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

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E-Business in the Digital Age

• Involves the use of electronic Involves the use of electronic platforms to conduct company platforms to conduct company business.business.– Web sites for selling and customer Web sites for selling and customer

relationsrelations– Intranets for within-company Intranets for within-company

communicationcommunication– Extranets connecting with major suppliers Extranets connecting with major suppliers

and distributorsand distributors

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E-Commerce in the Digital Age

• More specific than e-business.More specific than e-business.

• Involves buying and selling processes Involves buying and selling processes supported by electronic means, supported by electronic means, primarily the Internet.primarily the Internet.

• Includes:Includes:– e-marketinge-marketing– e-purchasing (e-procurement)e-purchasing (e-procurement)

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E-Commerce Networks

Global eXchange Services (GXS) consists of more than 100,000 trading partners in 58 countries. GXS completes some 1 billion transactions each year, accounting for $1 trillion worth of goods and services.

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E-Marketing in the Digital Age

• The marketing side of e-commerce.The marketing side of e-commerce.• Includes efforts to communicate Includes efforts to communicate

about, promote, and sell products about, promote, and sell products and services over the Internet.and services over the Internet.

• E-purchasing is the buying side of e-E-purchasing is the buying side of e-commerce.commerce.– It consists of companies purchasing It consists of companies purchasing

goods, services, and information from goods, services, and information from online suppliers.online suppliers.

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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

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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

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E-Marketing Domains

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B2C (Business to Consumer)

• The online selling of goods and The online selling of goods and services to final consumers.services to final consumers.

• Expected to generate $428 billion in Expected to generate $428 billion in 2004.2004.

• There is increasing diversity in buyers.There is increasing diversity in buyers.– This provides increasing opportunities for This provides increasing opportunities for

targeting markets.targeting markets.

• Is customer initiated and controlled.Is customer initiated and controlled.

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B2B (Business to Business)

• By 2005, more than 500,000 enterprises By 2005, more than 500,000 enterprises will participate as buyers, sellers, or will participate as buyers, sellers, or both.both.

• Most major B2B marketers offer product Most major B2B marketers offer product information, purchasing, and support information, purchasing, and support services online.services online.

• Open trading exchanges—huge specialty Open trading exchanges—huge specialty e-marketspaces to conduct transactions.e-marketspaces to conduct transactions.– Click Here to Visit Click Here to Visit Covisint'sCovisint's Web Site Web Site

• More private trading networks being More private trading networks being developed.developed.

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C2C (Consumer to Consumer)

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

• Forums:Forums: discussion groups located on discussion groups located on commercial online services.commercial online services.

•Newsgroups:Newsgroups: the Internet version of the Internet version of forums.forums.

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C2B (Consumer to Business)

• Consumers can search out sellers, Consumers can search out sellers, view offers, initiate purchases, and view offers, initiate purchases, and give feedback.give feedback.– Example: on priceline.com, one can bid Example: on priceline.com, one can bid

for airline tickets, hotel rooms, etc. and for airline tickets, hotel rooms, etc. and decide whether to accept company decide whether to accept company offers.offers.

• Click Here to Visit Click Here to Visit pricelinepriceline.com.com

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•Choose a partner and talk about the types Choose a partner and talk about the types of online purchases you have made. of online purchases you have made. – What are your major concerns about making What are your major concerns about making

online purchases? online purchases? – What types of things can an online retailer What types of things can an online retailer

do to create a more secure buying do to create a more secure buying environment? environment?

Interactive Student Assignment

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Types of e-Marketers

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Click-Only Companies

E-tailers Search Engines

and Portals

Internet Service

ProvidersTransactio

n Sites

Content Sites

Enabler Sites

Types of Sites

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Reasons for dot.com Failures

• Poor research or planning.Poor research or planning.

• Relied on spin and hype instead of Relied on spin and hype instead of marketing strategies.marketing strategies.

• Spent too heavily on brand identities.Spent too heavily on brand identities.

• Devoted too much effort to acquiring Devoted too much effort to acquiring new customers instead of building new customers instead of building loyalty.loyalty.

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Click-and-Mortar Companies

• Most established companies resisted Most established companies resisted adding Web sites because of the potential adding Web sites because of the potential for channel conflict and cannibalization.for channel conflict and cannibalization.

• Many are now doing better than click-only Many are now doing better than click-only companies.companies.

• Reasons:Reasons:– Trusted brand names and more resourcesTrusted brand names and more resources– Large customer basesLarge customer bases– More knowledge and experienceMore knowledge and experience– Good relationships with suppliersGood relationships with suppliers– Can offer customers more optionsCan offer customers more options

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Setting Up for E-Marketing

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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.Marketing Web Site:Engages consumers in an interaction that moves them closer to a direct purchase.Provides information about the products.

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Designing Attractive Web Sites

• The 7 Cs of Effective The 7 Cs of Effective Web Site DesignWeb Site Design

Context

Content

Community

CustomizationCommunication

Connection

Commerce

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•What features do you look for on What features do you look for on a Web site that you feel make a Web site that you feel make the site appealing?the site appealing?

Discussion Question

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Online Ads and Promotion

• Forms of online advertising & promotion:Forms of online advertising & promotion:– Banner ads & tickers (move across the screen)Banner ads & tickers (move across the screen)– Skyscrapers (tall, skinny ads at the side of a page)Skyscrapers (tall, skinny ads at the side of a page)– Rectangles (boxes that are larger than a banner)Rectangles (boxes that are larger than a banner)– Interstitials (pop up between changes on Web site)Interstitials (pop up between changes on Web site)– Content sponsorships (sponsoring special content)Content sponsorships (sponsoring special content)– Microsites (limited areas paid for by an external Microsites (limited areas paid for by an external

company)company)– Viral marketing (Internet version of word-of-mouth)Viral marketing (Internet version of word-of-mouth)

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Viral Marketing

Gillette used viral marketing to introduce the 3-bladed Venus razor for women, greatly expanding the audience reached by its “Reveal the Goddess in You” truck tour and beach-site promotions.

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The Future of Online Advertising

• Web communities:Web communities:– Allows members to congregate online Allows members to congregate online

and exchange views on issues of and exchange views on issues of common interestcommon interest

• E-mail:E-mail:– Use of “enriched” e-mail messagesUse of “enriched” e-mail messages– Backlash against spam can be problemBacklash against spam can be problem– Allow people to opt-out of promotionsAllow people to opt-out of promotions

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Legal and Ethical Issues

• Online privacyOnline privacy

• Online securityOnline security

• Internet fraudInternet fraud

• Segmentation and discriminationSegmentation and discrimination

• Access by vulnerable or unauthorized Access by vulnerable or unauthorized groupsgroups

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Rest Stop: Reviewing the Concepts

1.1. Identify the major forces shaping the Digital Age.Identify the major forces shaping the Digital Age.2.2. Explain how companies have responded to the Explain how companies have responded to the

Internet and other powerful new technologies with Internet and other powerful new technologies with e-business strategies, and how these strategies e-business strategies, and how these strategies have resulted in benefits to both buyers and have resulted in benefits to both buyers and sellers.sellers.

3.3. Describe the four major e-commerce domains.Describe the four major e-commerce domains.4.4. Discuss how companies go about conducting e-Discuss how companies go about conducting e-

commerce to profitably deliver more value to commerce to profitably deliver more value to customers.customers.

5.5. Overview the promise and challenges that e-Overview the promise and challenges that e-commerce presents for the future.commerce presents for the future.