Download Chapter Outline

Chapter 14
Marketing in the Digital Age
Previewing the Concepts: Chapter Objectives
1.
2.
3.
4.
5.
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-commerce domains.
Discuss how companies go about conducting e-marketing to profitably deliver
more value to customers.
Overview the promise and challenges that e-commerce presents for the future.
JUST THE BASICS
Chapter Overview
Some say the new digital technologies have created a new economy. Few would disagree
that the Internet and other powerful new connecting technologies are having a dramatic
impact on marketers and buyers. Companies need to retain most of the skills and
practices that have worked in the past, but they will need to add major new competencies
and practices if they hope to grow and prosper in the changing digital environment.
Much of the world’s business today is carried out over networks that connect people and
companies. Intranets, extranets, and the Internet itself have all changed the way
companies do business, and customers find the products and services they want. The
explosive worldwide growth in Internet usage forms the heart of the so-called new
economy. However, the Internet has also allowed new companies to compete, and the
formation of new types of intermediaries and new forms of channel relationships caused
existing firms to re-examine how they served their markets. E-commerce continues to
offer both great promise and many challenges for the future.
Conducting business in the new digital age will call for a new model for marketing
strategy and practice. Some strategists envision a day when all buying and selling will
involve direct electronic connections between companies and their customers. But the
fact is that today’s marketing requires a mixture of old economy and new economy
thinking and action.
E-business involves the use of electronic platforms such as intranets, extranets, and the
Internet to conduct a company’s business. E-commerce is more specific than e-business.
322
E-commerce involves buying and selling processes supported by electronic means,
primarily the Internet. E-marketing is the marketing side of e-commerce.
There are several e-marketing domains, including business-to-consumer (B2C), businessto-business (B2B), consumer-to-consumer (C2C), and consumer-to-business (C2B). Each
of these domains meets the specific needs of each of the segments addressed, and they all
continue to grow.
E-commerce is conducted in many ways. Companies can be “click-only” in that they are
located only on the Internet. They include e-tailers, search engines and portals, Internet
Service Providers (ISPs), transaction sites, content sites, and enabler sites. Many
companies today, however, are “click-and-mortar” companies, because they maintain
their traditional channels of distribution while simultaneously providing an Internet
channel.
There are various types of Web sites. Corporate Web sites typically offer a rich variety of
information and other features in an effort to answer customer questions, build closer
customer relationships, and generate excitement about the company. Marketing Web sites
engage consumers in an interaction that will move them closer to a direct purchase or
other marketing outcome. Online advertising includes things such as banner ads and
tickers; skyscrapers, which are tall, skinny ads at the side of a web page; rectangles; and
interstitials—online ads that pop up between changes on a Web site. Viral marketing
involves creating an email message or other marketing event that is so infectious that
customers will want to pass it along to their friends.
E-commerce continues to offer both great promise and many challenges for the future.
Online marketing will become a successful model for some companies. However, there is
a darker side to Internet marketing. One major concern is profitability, especially for B2C
dot-coms. Although expanding rapidly, online marketing still reaches only a limited
marketplace.
There are also broader ethical and legal questions. Online privacy is perhaps the number
one e-commerce concern. Many consumers also worry about online security, as well as
the privacy rights of children. Many companies have responded to consumer privacy and
security concerns with actions of their own. Still, examples of companies aggressively
protecting their customers’ personal information are too few and far between.
Chapter Outline
1.
Introduction
a.
Chances are, when you think of shopping on the Web, you think of
Amazon.com. Amazon.com first opened its virtual doors in mid-July
1995, selling books out of founder Jeff Bezos’s garage in suburban
Seattle.
b.
It still sells books—by the millions. But it now sells products in a dozen
other categories as well.
323
c.
d.
e.
f.
g.
2.
In perfecting the art of online selling, it has also rewritten the rules of
marketing. Its most ardent fans view Amazon.com as the model for
businesses in the new digital age.
Not everything has clicked smoothly for Amazon.com. It has more than 39
million customers in more than 220 countries, but Amazon.com didn’t
turn its first full-year profit until just last year, and those profits were
modest.
Amazon.com obsesses over making each customer’s experience uniquely
personal. Visitors to Amazon.com’s Web site receive a unique blend of
benefits: huge selection, good value, convenience, and what Amazon vice
president Jason Kilar calls “discovery.”
In fact, Amazon.com has become so good at managing online
relationships that many traditional “brick-and-mortar” retailers are turning
to Amazon for help in adding more “clicks” to their “bricks.”
Recent technological advances have created a new digital age. Widespread
use of the Internet and other powerful new technologies are having a
dramatic impact on marketers and buyers.
The Digital Age
a.
Much of the world’s business today is carried out over digital networks
that connect people and companies.
1.
Intranets are networks that connect people within a company to
each other and to the company network.
2.
Extranets connect a company with its suppliers, distributors, and
other outside partners.
3.
The Internet is a vast public web of computer networks; it connects
users of all types all around the world to each other and to an
amazingly large “information repository.”
Use Key Terms Intranet, Extranet, and Internet here.
Use Discussing the Issues 1 here.
b.
c.
d.
e.
With the creation of the World Wide Web and web browsers in the 1990s,
the Internet was transformed from a mere communication tool into a
certifiably revolutionary technology.
The explosive worldwide growth in Internet usage forms the heart of the
so-called new economy. The Internet has been the revolutionary
technology of the new millennium, empowering consumers and businesses
alike with blessings of connectivity.
Last year, Internet penetration in the U.S. had reached 68 percent, with
more than 202 million people not using the Internet. Some 14.6 percent of
the world population---more than 938 million worldwide—are now online.
The average U.S. Internet user spends 28 hours a month surfing the Web
at home, plus another 76 hours a month at work.
324
f.
g.
The Internet and other digital technologies have given marketers a whole
new way to reach and serve customers.
1.
The amazing success of early click-only companies such as
Amazon.com caused brick and mortar manufacturers and retailers
to reexamine how they served their markets.
2.
Now, almost all of these traditional companies have become clickand-mortar competitors.
It’s hard to find a company today that doesn’t have a substantial Web
presence.
Use Figure 14-2 here.
Use Chapter Objective 1 here.
Let’s Discuss This
How much time do you spend on the Web each day? How much money do you spend
ordering goods and services online? How does this compare to your parents’ usage and
money spent?
3.
Marketing Strategy in the Digital Age
a.
Conducting business in the new digital age will call for a new model of
marketing strategy and practice.
b.
The Internet is revolutionizing how companies create value for customers
and build customer relationships.
c.
The digital age has fundamentally changed customers’ notions of convenience, speed, price, product information, and service.
d.
The fact is that today’s marketing requires new thinking and action.
1.
Companies need to retain most of the skills and practices that have
worked in the past.
2.
But they will also need to add major new competencies and
practices if they hope to grow and prosper in the new environment.
E-Business, E-Commerce, and E-Marketing in the Digital Age
e.
E-business involves the use of electronic platforms—intranets, extranets,
and the Internet—to conduct a company’s business.
1.
Almost every company has set up a Web site to inform about and
promote their products and services.
2.
Most companies have also created intranets to help employees
communicate with each other and to access information found in
the company’s computers.
3.
Companies also set up extranets with their major suppliers and
distributors to enable information exchange, orders, transactions,
and payments.
325
Applying the Concept
How might a company use an intranet to help their sales force be more efficient? Could it
offer any help to the manufacturing plants?
f.
E-commerce is more specific than e-business.
1.
E-business includes all electronics-based information exchanges
within or between companies and customers.
2.
In contrast, e-commerce involves buying and selling processes
supported by electronic means, primarily the Internet.
3.
E-markets are “marketspaces” rather than physical marketplaces.
i.
Sellers use e-markets to offer their products and services
online.
ii.
Buyers use them to search for information, identify what
they want, and place orders using credit or other means of
electronic payment.
4.
E-commerce includes e-marketing and e-purchasing.
i.
E-marketing is the marketing side of e-commerce. It
consists of company efforts to communicate about,
promote, and sell products and services over the Internet.
ii.
E-purchasing is the flip side of e-marketing. It is the buying
side of e-commerce. It consists of companies purchasing
goods, services, and information from online suppliers.
Use Key Terms E-Business, E-Commerce, and E-Marketing here.
Benefits to Buyers
g.
Internet buying benefits both final buyers and business buyers in many
ways.
1.
It can be convenient.
2.
Buying is easy and private.
3.
The Internet often provides buyers with greater product access and
selection.
4.
E-commerce channels also give buyers access to a wealth of
comparative information about companies, products, and competitors.
5.
Online buying is interactive and immediate.
Benefits to Sellers
h.
There are also many benefits to sellers.
1.
The Internet is a powerful tool for customer relationship building.
2.
The Internet and other electronic channels can also reduce costs
and increase speed and efficiency.
326
3.
4.
E-marketing can also offer greater flexibility, allowing the
marketer to make ongoing adjustments to its offers and programs.
The Internet is a truly global medium that allows buyers and sellers
to click from one country to another in seconds.
Use Chapter Objective 2 here.
Use Discussing the Issues 2 here.
4.
E-Marketing Domains
a.
The four major e-marketing domains are shown in Figure 14-1.
Use Figure 14-1 here.
Use Chapter Objective 3 here.
B2C (Business-to-Consumer)
b.
The popular press has paid the most attention to B2C (business-toconsumer) e-commerce—the online selling of goods and services to final
consumers.
Use Key Term B2C (Business-to-Consumer) E-Commerce here.
c.
d.
e.
Online consumer buying continues to grow at a healthy rate.
Last year, U.S. consumers spent $117 billion online, and consumer
spending online is expected to exceed $316 billion by 2010, accounting
for 12 percent of total sales.
1.
As the Web has matured, Internet demographics have changed
significantly.
2.
Whereas 66 percent of adults use the Internet, 87 percent of teens
go online. Consumers aged 50 and older make up almost 20
percent of the online population. More than 22 million Americans
over 65 are expected to be online by 2009.
3.
E-marketing targets people who actively select which Web sites
they will visit and what marketing information they will receive
about which products and under what conditions.
Consumers can find a Web site for buying almost anything. The Internet is
most useful for products and services when the shopper seeks greater
ordering convenience or lower costs.
327
B2B (Business-to-Business)
f.
Consumer goods sales via the Web are dwarfed by B2B (business-tobusiness) e-commerce.
Use Key Term B2B (Business-to-Business) E-Commerce here.
g.
h.
Most major business-to-business marketers now offer product information,
customer purchasing, and customer support services online.
Increasingly, online sellers are setting up their own private trade
exchanges. These exchanges link a particular seller with its trading
partners.
1.
Private exchanges give sellers greater control over product
presentation and allow them to build deeper relationships with
buyers and sellers by providing value-added services.
Use Key Terms Open Trading Exchanges, Private Trading Exchanges here.
Use Discussing the Issues 4 here.
C2C (Consumer-to-Consumer)
i.
Much C2C (consumer-to-consumer) e-commerce and communication
occurs on the Web between interested parties over a wide range of
products and subjects.
Use Key Term C2C (Consumer-to-Consumer) E-Commerce here.
1.
j.
C2C involves interchanges of information through Internet forums
that appeal to specific special-interest groups.
2.
Blogs are online journals where people post their thoughts, usually
on a narrowly defined topic. Blogs can be about anything, from
politics to baseball to haiku or car repair.
3.
Many marketers are tapping into blogs as a medium for reaching
carefully targeted consumers. Blogs offer a fresh, original,
personal, and cheap way to reach today’s fragmented audiences.
C2C means that online visitors don’t just view consumer product
information. Increasingly, they create it. They join Internet interest groups
to share information, with the result that “word of web” is joining “word
of mouth” as an important buying influence.
C2B (Consumer-to-Business)
k.
C2B (consumer-to-business) e-commerce allows today’s consumers to
communicate more easily with companies.
328
l.
Most companies now invite prospects and customers to send in
suggestions and questions via company Web sites.
Use Key Term C2B (Consumer-to-Business) E-Commerce here.
5.
Marketing on the Web
a.
Companies of all types are now marketing online. The different types of emarketers are shown in Figure 14-2.
Use Figure 14-2 here.
Use Chapter Objective 4 here.
Click-Only versus Click-and-Mortar E-Marketers
b.
The Internet gave birth to a new species of e-marketers—the click-only
dot-coms—which operate only online without any brick-and-mortar
market presence.
c.
Brick-and-mortar companies have now added e-marketing operations,
transforming themselves into click-and-mortar competitors.
d.
Click-only companies come in many shapes and sizes.
1.
E-tailers are dot-coms that sell products and services directly to
final buyers via the Internet.
i.
This group includes search engines and portals.
ii.
Internet service providers (ISPs) are click-only companies
that provide Internet and email connections for a fee.
iii.
Transaction sites take commissions for transactions conducted on their sites.
iv.
Content sites provide financial, research, and other information.
2.
In the late 1990s, dot-coms reached astronomical levels but then
collapsed in the year 2000 because of lavish spending and reliance
on spin and hype.
3.
Now on firmer footing, dot-coms are surviving and even
prospering in today’s marketspace.
Use Key Term Click-Only Companies here.
Use Table 14-1 here.
Use Application Questions 2 here.
e.
Many established companies moved quickly to open Web sites providing
information about their companies and products.
329
1.
2.
3.
4.
5.
Most resisted adding e-commerce to their sites. They worried that
this would produce channel conflict—that selling their products or
services online would be competing with their offline retailers and
agents.
However, they soon realized that the risks of losing business to
online competitors were even greater than the risks of angering
channel partners.
Most established brick-and-mortar companies are now prospering
as click-and-mortar companies.
Most of these click-and-mortar companies have found ways to
resolve channel conflicts.
Established companies have known and trusted brand names and
greater financial resources. They have large customer bases, deeper
industry knowledge and experience, and good relationships with
key suppliers. By combining online marketing and established
brick-and-mortar operations, they can offer customers more options.
Use Key Term Click-and-Mortar Companies here.
Use Linking the Concepts here.
Let’s Discuss This
Would you rather buy online from a company whose name you know? Are you willing to
buy online, giving out your credit card number to someone you never heard of before?
How do you decide?
Setting Up an Online Marketing Presence
f.
Companies can conduct e-marketing in any of the four ways shown in
Figure 14-3.
Use Figure 14-3 here.
g.
The first step in conducting e-marketing is to create a Web site.
1.
The most basic type is a corporate Web site.
i.
These sites are designed to build customer goodwill and to
supplement other sales channels, rather than to sell the
company’s products directly.
ii.
Corporate Web sites typically offer a rich variety of information and other features in an effort to answer customer
questions, build closer customer relationships, and generate
excitement about the company.
330
iii.
These sites generally provide information about the company’s history, its mission and philosophy, and the products
and services it offers.
Use Key Term Corporate Web site here.
2.
Other companies create a marketing Web site.
i.
These sites engage consumers in an interaction that will
move them closer to a direct purchase or other marketing
outcome.
ii.
Such sites might include a catalog, shopping tips, and
promotional features such as coupons, sales events, or
contests.
Use Key Term Marketing Web site here.
Use Discussing the Issues 3 here.
h.
Creating a Web site is one thing; getting people to visit the site is another.
1.
The key is to create enough value and excitement to get consumers
to come to the site, stick around, and come back again.
2.
This means that companies must constantly update their sites to
keep them current, fresh, and exciting.
3.
A key challenge is designing a Web site that is attractive on first
view and interesting enough to encourage repeat visits.
4.
To attract new visitors and to encourage revisits, one expert
suggests playing close attention to the seven Cs of effective Web
site design.
i.
Context—the site’s layout and design.
ii.
Content—the text, pictures, sound, and video that the Web
site contains.
iii.
Community—the ways that the site enables user-to-user
communication.
iv.
Customization—the site’s ability to tailor itself to different
users or to allow users to personalize the site.
v.
Communication—the ways the site enables site-to-user,
user-to-site, or two-way communication.
vi.
Connection—the degree that the site is linked to other sites.
vii.
Commerce—the site’s capabilities to enable commercial
transactions.
5.
Ultimately, it is the value of the site’s content that will attract
visitors, get them to stay longer, and bring them back for more.
331
Use Application Questions 1 here.
i.
E-marketers can use online advertising to build their Internet brands or to
attract visitors to their Web sites.
Use Key Term Online Advertising here.
1.
2.
3.
4.
5.
6.
7.
Online ads that pop up while Internet users are surfing online
include banner ads and tickers.
Skyscrapers are tall, skinny ads at the side of a Web page, while
rectangles are boxes that are much larger than a banner.
Interstitials are online ads that pop up between changes on a Web
site.
Rich media ads incorporate animation, video, sound, and
interactivity.
Content sponsorships are another form of Internet promotion.
Many companies gain name exposure on the Internet by
sponsoring special content on various Web sites, such as news or
financial information.
Internet companies can develop alliances and affiliate programs, in
which they work with other companies online and offline to
promote each other.
Online marketers use viral marketing, the Internet version of wordof-mouth marketing. Viral marketing involves creating an email
message or other marketing event that is so infectious that
customers will want to pass it along to their friends.
Use Key Term Viral Marketing here.
Use Marketing at Work 14-1 here.
Use Discussing the Issues 5 here.
Use Under the Hood/Focus on Technology here.
8.
Online advertising serves a useful purpose, especially as a
supplement to other marketing efforts.
i.
Online advertising should be as much as 10 to 15 percent of
the overall media mix in low-involvement products such as
packaged goods.
ii.
Online advertising opens a two-way exchange to better
educate consumers about products.
332
j.
The popularity of blogs and other Web forums has resulted in a rash of
commercially sponsored Web sites called web communities, which take
advantage of the C2C properties of the Internet.
Use Key Term Web Communities here.
Use Discussing the Issues 6 here.
Use Applications Questions 3 here.
1.
k.
Such sites allow members to congregate online and exchange
views on issues of common interest.
2.
Visitors to these Internet neighborhoods develop a strong sense of
community.
i.
Such communities are attractive to advertisers because they
draw consumers with common interests and well-defined
demographics.
ii.
Cyberhood consumers visit frequently and stay online
longer, increasing the chance of meaningful exposure to the
advertiser’s message.
iii.
Web communities can be either social or work related.
Email has exploded onto the scene as an important e-marketing tool.
1.
To compete effectively in this ever-more-cluttered email environment, marketers are designing “enriched” email messages that are
animated, interactive, and personalized messages full of streaming
audio and video.
2.
The recent explosion of spam—unsolicited, unwanted commercial
email messages that clog up your email inbox—has produced
consumer frustration and anger.
Use Key Term Spam here.
Use Marketing at Work 14-2 here.
6.
The Promise and Challenges of E-Commerce
a.
E-commerce continues to offer both great promise and many challenges
for the future.
Use Chapter Objective 5 here.
The Continuing Promise of E-Commerce
b.
Its most ardent apostles still envision a time when the Internet and ecommerce will replace magazines, newspapers, and even stores as sources
of information and buying.
333
c.
d.
Online marketing will become a successful business model for some
companies. However, for most companies, online marketing will remain
just one important approach to the marketplace that works alongside other
approaches in a fully integrated marketing mix.
Eventually, as companies become more adept at integrating e-commerce
with their everyday strategy and tactics, the “e” will fall away from ebusiness or e-marketing.
The Web’s Darker Side
e.
Along with its considerable promise, there is a “darker side” to Internet
marketing.
f.
One major concern is profitability, especially for B2C dot-coms.
1.
Surprisingly few Internet companies are profitable.
2.
One problem is that, although expanding rapidly, online marketing
still reaches only a limited marketspace.
3.
The Web audience is becoming more mainstream, but online users
still tend to be somewhat more upscale and better educated than
the general population.
4.
Another problem is that the Internet offers millions of Web sites
and a staggering volume of information.
5.
A great number of click-only online retailers are small, niche
marketers, and niches can become crowded and competitive.
g.
From a broader societal viewpoint, Internet marketing practices have
raised a number of ethical and legal questions.
1.
Online privacy is perhaps the number one e-commerce concern.
i.
Most online marketers have become skilled at collecting
and analyzing detailed consumer information.
ii.
This may leave consumers open to information abuse if
companies make unauthorized use of the information in
marketing their products or exchanging databases with
other companies.
2.
Many consumers worry about online security.
i.
Consumers fear that unscrupulous snoopers will eavesdrop
on their online transactions or intercept their credit card
numbers and make unauthorized purchases.
ii.
Companies doing business online fear that others will use
the Internet to invade their computer systems for the
purposes of commercial espionage or even sabotage.
iii.
Of special concern are the privacy rights of children.
iv.
Many companies have responded to consumer privacy and
security concerns with actions of their own.
v.
Still, examples of companies aggressively protecting their
customers’ personal information are too few and far
between.
334
Applying the Concept
What kind of privacy concerns would a company confront when setting up a Web site
that offers information? One that allows consumers to transact business? How should
they respond to consumer concerns?
3.
h.
Consumers are also concerned about Internet fraud, including
identity theft, investment fraud, and financial scams.
4.
There are concerns about segmentation and discrimination on the
Internet as well.
i.
Some social critics and policy makers worry about the socalled digital divide—the gap between those who have
access to the latest Internet and information technologies
and those who don’t.
ii.
A final Internet marketing concern is that of access by
vulnerable or unauthorized groups.
As it continues to grow, online marketing will prove to be a powerful tool
for building customer relationships, improving sales, communicating
company and product information, and delivering products and services
more efficiently and effectively.
Use Focus on Ethics here.
Travel Log
Discussing the Issues
1. Discuss the differences between intranets, extranets, and the Internet. What purpose
does each serve for businesses?
Intranets are networks that connect people within a company to each other and to the
company network. Extranets connect a company with its suppliers, distributors, and
other outside partners. And the Internet, a vast public web of computer networks,
connects users of all types all around the world to each other and to an amazingly large
information repository.
2. How does e-commerce benefit buyers? How does it benefit sellers?
Internet buying benefits both final buyers and business buyers in many ways. It can be
convenient. Buying is easy and private. In addition, the Internet often provides buyers
with greater product access and selection. E-commerce channels also give buyers access
to a wealth of comparative information about companies, products, and competitors.
Finally, online buying is interactive and immediate. E-commerce also yields many
benefits to sellers. First, the Internet is a powerful tool for customer relationship
building. The Internet and other electronic channels can also reduce costs and increase
335
speed and efficiency. Finally, communicating electronically often costs less than
communicating on paper through the mail.
3. Define the four major e-marketing domains and provide one example of each.
B2C (business-to-consumer) e-commerce is the online selling of goods and services to
final consumers. Amazon.com is a B2C marketer. B2B marketers use trading networks,
auction sites, spot exchanges, online product catalogs, barter sites, and other online
resources to reach new customers, serve current customers more effectively, and obtain
buying efficiencies and better prices. Trane is a B2B marketer. Much C2C (consumerto-consumer) e-commerce and communication occurs on the Web between interested
parties over a wide range of products and subjects. Ebay is a good example. The final ecommerce domain is C2B (consumer-to-business) e-commerce. Thanks to the
Internet, today’s consumers are finding it easier to communicate with companies.
PlanetFeedback is a C2B site.
4. What are the primary differences between open trading exchanges and private
trading exchanges in B2B e-commerce? What are the advantages of each type of
exchange?
Some B2B e-commerce takes place in open trading exchanges—huge e-marketspaces in
which buyers and sellers find each other online, share information, and complete
transactions efficiently. However, despite the use of such open e-marketspaces, a lion’s
share of all B2B e-commerce is conducted through private sites. Increasingly, online
sellers are setting up their own private trading exchanges. Open trading exchanges
facilitate transactions between a wide range of online buyers and sellers. In contrast, a
private trading exchange links a particular seller with its own trading partners. Rather
than simply completing transactions, private exchanges give sellers greater control over
product presentation and allow them to build deeper relationships with buyers and
sellers by providing value-added services.
5. Distinguish between the different forms of online advertising and promotion. What
factors should a company consider in deciding between these different forms?
The most common form of online advertising is the banner ad—banner-shaped ads found
at the top, bottom, left, right, or center of a Web page. Banners go by many names,
including tickers (banners that move across the screen), skyscrapers (tall, skinny banner
ads at the side of a Web page), and rectangles (block ads appearing in the middle of the
screen). Most banner ads contain links to the advertiser’s Web site. Interstitials are
online ads that appear between screen changes on a Web site, especially while a new
screen is loading. Pop-ups are online ads that appear suddenly in a new window in
front of the window being viewed. Such ads can multiply out of control, creating a major
annoyance. Another hot growth area for online advertising is search-related ads (or
contextual advertising), in which text-based ads and links appear alongside search
engine results on sites such as Google and Yahoo!. Finally, with the increase in
broadband Internet access in American homes, many companies are developing exciting
new rich media advertisements, which incorporate animation, video, sound, and
interactivity. Rich media ads attract and hold consumer attention better than traditional
banner ads. Firms should consider the exposure rate for targeted consumers when
336
selecting a form of advertising. In addition, firms should consider how well the form of
advertising delivers the intended message.
6. What is a Blog? How are Blogs different from Web communities?
Web logs, or blogs, are online journals where people post their thoughts, usually on a
narrowly defined topic. Blogs can be about anything, from politics or baseball to haiku
or car repair. Many marketers are now tapping into blogs as a medium for reaching
carefully targeted consumers. One way is to advertise on an existing blog or to post
content there. The popularity of blogs and other Web forums has resulted in a rash of
commercially sponsored Web sites called Web communities, which take advantage of
the C2C properties of the Internet. Such sites allow members to congregate online and
exchange views on issues of common interest. They are the cyberspace equivalent to a
Starbucks coffeehouse, a place where everybody knows your e-mail address.
Application Questions
1. Getting consumers to spend time at a company’s Web site and to come back again are
critical goals in Web site design. How can the seven Cs encourage revisits to a
company Web site? Are some of these factors more important than others? Visit a
Web site that you frequent and evaluate it using the seven Cs. How does it rate?
Student responses will vary. To attract new visitors and to encourage revisits, suggests
one expert, e-marketers should pay close attention to the seven Cs of effective Web site
design:
 Context: the site’s layout and design

Content: the text, pictures, sound, and video that the Web site
contains

Community: the ways that the site enables user-to-user
communication

Customization: the site’s ability to tailor itself to different users or to
allow users to personalize the site

Communication: the ways the site enables site-to-user, user-to-site, or
two-way communication

Connection: the degree that the site is linked to other sites

Commerce: the site’s capabilities to enable commercial transactions
And to keep customers coming back to the site, companies need to embrace yet another
“C”—constant change. At the very least, a Web site should be easy to use and physically
attractive. Ultimately, however, Web sites must also be useful.
2. Browse the products and features available at Target.com. Why might a consumer
choose to make a purchase through Target.com rather than going to the brick-andmortar retail location? What benefits does the online store offer? What are some of
its drawbacks? What benefits does Target.com offer over the Web sites of Internetonly retailers such as Amazon.com?
337
Consumers are likely to use Target.com to reap the benefits of e-commerce. Buying is
convenient, easy, and private. The site also offers products not available online.
However, consumers cannot experience the products online, and might prefer to see them
in person before making a buying decision. As a result, Target might offer consumers the
opportunity to research products online before going to the store to see them in person
and avoid shipping costs. Those benefits are not available from Amazon.com.
3. Web communities allow members to congregate online and exchange views on issues
of common interest. Do you belong to a Web community? Why or why not? Visit
iVilliage.com. What benefits does the site offer to members? What opportunities
does it offer to marketers?
Student responses will vary.
Under the Hood
Rich media is making a splash online. One recent survey found that click-through rates
for rich media ads are five times higher than for traditional online ad formats. According
to Eyeblaster, a leading provider of rich media advertising technology, “rich media ads
employ graphic movement, audio, video, innovative ad formats, and interaction to cut
through the clutter of common Web ads by engaging the viewer in a richer and
immediately compelling experience. When branding is a goal of the campaign, rich
media ads can engage consumers in an interactive brand experience by allowing them to
play games, view a video stream, or expand the ad to access more information.”*
1. Visit the Eyeblaster Web site and check out some of the ads the company has created
(www.eyeblaster.com/knowledge/vertical_categories.asp). Do you find the ads
compelling? Did you “click-through” for more information?
Student responses will vary.
2. How do the ads you viewed help marketers build brands? How do they help create
and reinforce customer relationships?
Student responses will vary. By connecting with consumers through brand experiences,
rich media ads help build relationships.
*See www.eyeblaster.com for more information.
Focus on Ethics
As technology makes it easier for companies to share information about customers,
consumer advocates are growing more concerned about protecting consumer privacy.
Although individual consumers often say they are concerned about their privacy, very
few take the time to read the privacy policies of the companies with which they build
relationships. To help consumers surf the Web with confidence, TRUSTe, a non-profit
organization, is on a mission to certify and monitor privacy protection on the Internet. As
338
a result, the company has become a leader in promoting Web site privacy policy
disclosure, informed user consent, and consumer education, with nearly 1500 Web sites
displaying its seals. What does all this mean? A company that achieves the TRUSTe
“trustmark” has agreed to adhere to the organization’s privacy principles and to comply
with TRUSTe oversight and consumer resolution. The “trustmark” assures Web users
that a site will openly disclose what personal information is being gathered, where that
information is going, how it will be used, and whether the user has the option to control
its dissemination. TRUSTe believes it has a solution to the number-one concern of most
Internet users—privacy and security.
1. Visit www.truste.com to learn more about the services TRUSTe provides. What are
the advantages for an organization agreeing to self-regulate through TRUSTe? What
are the disadvantages? Do the advantages outweigh the disadvantages?
Student responses will vary. Organizations partnering with TRUSTe may have more
credibility with consumers concerned about privacy online, which may increase sales and
help build relationships. However, earning the Trustmark requires submitting to outside
regulation and carefully reworking privacy policies and notices.
2. Use the TRUSTe Search for Sealholders feature to select three of the participants and
visit their Web sites. Examine the sites’ privacy statements. What do the statements
have in common? How do the policies help build relationships with consumers?
Student responses will vary.
3. How much responsibility do marketers have in protecting the privacy of the
consumers with whom they do business? How much responsibility do consumers,
themselves, hold?
Student responses will vary.
GREAT IDEAS
Barriers to Effective Learning
1.
2.
The students will have grown up with the Internet, so there are few concepts in
this chapter that will be totally new to them. However, the vocabulary and
terminology could be new to them, so you will want to go through all the Key
Terms carefully.
Students will largely not have thought of e-commerce as having spawned new
intermediaries, largely because they will not have even heard of that term prior to
this class. Therefore, spend some time talking about the differences between
click-only and click-and-mortar companies. Also, explain the problems brick-andmortar companies faced when the dot-com explosion first hit—should they
develop their own Web sites and e-commerce facilities? If they did, should they
separate them or keep them integrated into the rest of the business? This was a
339
3.
4.
true period of disruptive technology, and many firms simply did not know how to
respond.
Most students will know the terms and concepts B2B and B2C, but C2C and C2B
may be new to them, at least in terminology. Applying the C2C concept to the rise
(and fall) of Napster will drive the point home, as will the various chat rooms and
other cyber-communities. For C2B, ask if anyone has ever contacted a company
via email to ask a question, lodge a complaint, or send a compliment. If not, have
them send email to Snapple, a company that is known for responding to
customers.
Many students will have their own Web sites, either for personal use or through
their college activities. They will understand the nuances of web design, but may
not understand some of the key concepts of attracting and retaining customers
through effective design decisions. Discussing Web sites that they enjoy using, as
well as those they think are poorly designed, will help with these concepts.
Student Projects
1.
2.
3.
4.
5.
6.
7.
Find five Web sites that are transaction-oriented (i.e., you can order products or
services) and five Web sites that just give information. What are the differences?
What are the similarities?
Send an information request to a chosen company via its Web site. Did the
company respond in a reasonable amount of time? If it did, did a human respond,
or did you get an automated response? If you received an automated response,
how does that make you feel about your relationship to the company?
Discuss the types of online ads you pay attention to. What gets your attention?
How often to you “click through” when an ad has gained your attention?
Discuss the types of online ads you ignore or that annoy you. What is it about
them that you dislike? How are they different from the ones you do like? What
makes an online ad effective or ineffective?
Assume that you were called upon to make an argument to your board of directors
that a New Economy exists and that the company’s policies of brick-and-mortar
first are antiquated. What major points would you make? How would you avoid
skepticism and tradition on the part of some board members?
Using Amazon.com as an illustration of how to do it right on the Net, find an
example of a company that seems to be doing it wrong. Comment on the
company’s situation, what you have found, and suggest how to correct their Net
policy.
Take three competitors in an industry. Investigate how each has developed
strategies to meet the challenges of the New Economy. Do this by examining their
respective Web pages, looking at shareholder reports, and what the business press
has said about them. Which company(ies) seems to have gotten their Net policy
right? Which company(ies) seems to have gotten it wrong? Which company(ies)
is(are) positioned for success in the next five years? What secrets to success on
the Net have you learned?
340
8.
9.
10.
Explain how your college or university might use the Internet to attract
prospective students. If your university or college already has a Web site, critique
it.
You have been given the assignment by your company to design a company Web
site. This new Web page should emphasize connections and relationships. By
looking through existing Web sites on an online service (such as Yahoo! or
America Online), describe what you would put in or on your fictitious Web page
(you can be creative with your choice of company and its products or services).
What does the e-marketer try to accomplish with a Web site?
As marketing director of a small urban sportswear company, you have been given
the assignment to spread the word to 18–25 year old Internet users that your
company has some great products. One of the ways you intend to communicate
this message is via Web communities. Outline a plan for doing so. What would
you say? What Web communities might you choose? How would you avoid
making your message sound like a sales pitch? How would you use viral
marketing to aid your effort? Evaluate your chances of success using the Web
community format.
Interactive Assignments
Small Group Assignments
1. Form students into groups of three to five. Each group should read the opening
vignette to the chapter on Amazon.com. Each group should answer the following
questions:
a. How does Amazon.com connect with its customers?
b. What are the advantages of this new type of intermediary? Are there any
disadvantages? If so, what are they?
c. Does Amazon.com have a role to play in the B2B domain? If so, what is
it? If not, why not?
d. Do you think click-only companies have a future? Explain your answer.
Each group should share its findings with the class.
Individual Assignments
1. Read the opening vignette to the chapter. Think about the answers to the following questions:
a. How does Amazon.com connect with its customers?
b. What are the advantages of this new type of intermediary? Are there any
disadvantages? If so, what are they?
c. Does Amazon.com have a role to play in the B2B domain? If so, what is
it? If not, why not?
d. Do you think click-only companies have a future? Explain your answer.
Share your findings with the class.
341
Think-Pair-Share
1. Consider the following questions, formulate an answer, pair with the student on
your right, share your thoughts with one another, and respond to questions from
the instructor.
a. What is the New Economy (new digital age)?
b. What are the major forces shaping this New Economy?
c. What is the difference between an intranet, an extranet, and the Internet?
d. What is e-marketing?
e. What is the most important benefit to a buyer for doing business online?
Explain.
f. Why does the B2B e-commerce model do so much more business than the
other forms?
g. What are your biggest fears about doing business online? How could a
marketer deal with these fears and reduce them?
h. How can marketers use viral marketing to their advantage?
Outside Example
The University of Phoenix was founded in 1976, well before there was at least one PC in
every home. But its founding did happen to coincide with the debut of the first personal
computer, the Apple 1. From its beginning, the University of Phoenix has focused on the
educational needs of working adults—a constituency that was largely ignored prior to
this. For several years, the University operated “on the ground”; that is, students had to
go to class one or more nights a week, just like everywhere else.
But the University’s “online campus” was established in 1989, well before the advent of
and widespread use of the World Wide Web. And since then, the University of Phoenix
has exploded, and more and more adults are earning their Bachelor’s, Master’s and even
Doctoral degrees online.
Because this model has been so successful, many traditional universities have added
online options to their degree programs. Sometimes courses are only “Web enhanced,”
meaning that the students still gather in a traditional classroom, but some work takes
place on the Internet. Many colleges and universities, however, are moving at least some
of their courses completely online. This allows them to reach many non-traditional
students, and students who simply cannot relocate to the city in which their campus is
located.
1. How has the University of Phoenix Online affected the college experience? Be
specific.
2. What are the benefits of obtaining a degree online? What are the disadvantages, if
any? How do both the advantages and disadvantages affect how the University of
Phoenix reaches out to prospective students?
342
3. Analyze where the University of Phoenix Online advertises. Are they reaching
their target audience?
4. Visit their Web site at www.phoenix.edu. Is it an effective Web site? Defend your
answer.
5. Although many clicks-only companies struggle to become profitable, University
of Phoenix’s parent, Apollo Group, is highly profitable. Comment on your
feelings regarding a for-profit University.
Classroom Exercise/Homework Assignment
Online communities are becoming more and more important. Chat rooms are
proliferating, but community-building on the Web is going far beyond that. New sites
such as Friendster.com and LinkedIn.com are becoming the hot new way to make new
friends, find old associates, and establish new business contacts. Visit www.linkedin.com
to see a site that is dedicated to helping people increase their business through effective
use of online networking.
1.
LinkedIn.com, like most other social networking sites, is still in the beta stage of
development. That means that their service is currently free. Would you be
willing to pay for a service such as this? Or would you use it only if it continued
to be free?
Student responses will vary. Some may be willing to pay for a business networking site,
but not for a purely social networking site. Some may not be willing to pay for either kind
of site, because so much of the Internet is still currently free. Others will see business
benefits, and will note that many in-person networking events have to be paid for, and
will likely yield fewer results.
2.
As a businessperson, how would you feel about providing your list of contacts to
a site such as this?
Again, student responses will vary. Because LinkedIn.com, in particular, makes sure that
you get an opportunity to vet a networker before passing him or her along to one of your
contacts, many students might be willing to share their contacts. Others might want to
jealously guard them, as is frequently done in business today. Privacy concerns are
paramount here, and it is up to the individual user to decide how much of his privacy and
contacts he is willing to give up.
3.
Plaxo.com is a form of rival to LinkedIn.com, although this site currently only
allows you to keep your contacts up to date. Plaxo.com uses a viral marketing
campaign to get new members, because when you send emails to all your contacts
to allow them to update their information, Plaxo.com invites them to join as well.
The company claims on its Web site to have more than one million members
currently. Have you ever received an email from Plaxo.com? Have you updated
your contact information? Did you join?
Student responses will vary.
343
4.
How easy would it be for Plaxo.com to become a full-fledged competitor of
LinkedIn.com?
Student responses will vary, but the fact that Plaxo.com already has one million
members, and the contact information is already being exchanged—when a contact also
joins Plaxo.com, as his or her information changes, Plaxo.com automatically updates
everyone’s address book in which the person’s name appears—means that the logical
next step will be to act as a business networking tool.
Classroom Management Strategies
As was noted previously, students today have grown up with the Internet and ecommerce. This chapter should not be difficult for them, although stressing the Key
Terms will be important for them to be able to have intelligent business discussions about
the uses of the Internet.
1.
2.
3.
Spend 10 minutes each on the first two sections regarding the forces shaping the
digital age and the strategies for responding. Figure 14-1, showing the forces that
underlie the digital age, will be of great assistance in getting this topic across.
E-Marketing Domains and Conducting E-Commerce should each receive 15
minutes. Again, although this material may well be familiar to students, they have
not considered it from a business-building perspective and may not know all of
the Key Terms. The figures, tables, and Linking the Concepts will help here, as
will the Marketing at Work.
The final section, on the promise and challenges of e-commerce, can be covered
in 15 minutes. Continue the discussion from Chapter 13 on the Do Not Call laws
being passed at the Federal level, and the effect they will have on email
marketers.
344