CHAPTER 14 WITH DUANE WEAVER

Internet Marketing

Internet Uses

Most common products researched online and bought offline: Cars, computers, travel, electronics, books

appliances, music, sporting goods and clothing.

25% of all business-business purchases are done online

54% of email users have responded to e-mail advertisements (2004)

Internet retail is 2.5% of all retail sales

Impact of Internet on Marketing

The following 3 functions can cost up to 30% of COGS, expectations are that these costs can be reduced to 10-20% via e-commerce. Sales Marketing Distribution Systems

Albeit, operating costs can be substantially lowered, the business must have: Infrastructure (perhaps vested technology as a fixed cost or leased as

an added operating expense (can void net gain)) Focus and design of company (bricks and mortar vs. virtual?)

Design of Website must be conducive to the IMC plan and established to the benefits of the target audience: Excellent for psychographic segmentation Multiple portals tailored to each segment (vs. one face for all) Use flashy where needed (affective buyers) and avoid it where

frivolous (cognitive buyers) Integrate cookies and path traveled information with purchase habits Requires constant modification to be on top of consumer needs Must have multiple Trust Cues

Success with E-Commerce

E-Commerce: selling of goods or services online.

Three Incentives must exist for customers to buy online: Financial: currently first time consumers

require financial incentive (price reduction) in addition to trust cues.

Convenience: ability to order anytime from anywhere without having to visit a store. Delivered to your door.

Value Added: needed to induce long term repeat business such as: Personalization (Lands End, Amazon.com) Permission based marketing based on profiles Reduced information search (find it all in once place –

Insurance companies, E-bay)

Business-Business E-Commerce

Works well for repeat purchasing of low cost items with strong brand recognition.

Can help to speed time to market, as well as reduce inventory and transaction costs.

Increase in online brokerage services for business to business…facilitating exchange of goods. (e.g.: PaperExchange.com)

Websites can serve as alternate media to drive visits to bricks and mortar

Nature of goods needs to be conducive to world-wide shipping when considering world wide web store front for international business

Must be designed to handle such an enterprise (structure and function, marketing, aligned to meet expectations)

IMC and the Internet

In addition to using the Internet as part of the IMC plan for communications and marketing… Fundamental to integrated the entire company from IT through to

human resources, production and shipping. The ability to meet the demands of online marketing is as important

to survivability as having web presence. Technology does not solve business problems…it expedites those

that already exist! What once was broke and took attention once a week…will still be broken, however, it may take attention once an hour. Fix the business processes, align the companies resources, plan, build and then engage with a vengeance!

Brand Spiraling: using traditional media to drive customers to the online website to enhance brand recognition.

Halo Effect: offline brand recognition induces online willingness to try new products and services from the same brand on the net.

Discussion QuestionsPlease get into groups of 3-5 and discuss

the following three questions, be prepared to share some of your answers with the class: P. 459-460 (blue book) and P. 431 (white book)

Questions: 1. (Only in blue book):

What age group is most likely to use the Internet? Which is the least? Does this have implications for IMC programs (explain)?

5. (Both books):Name and describe the three main incentives used to attract shoppers to e-commerce Web sites.

6.(Both books):What is cyberbait? How must it be used over time to maintain it as an effective marketing tactic?

Thank You

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