Download chapter6

Part Three
Using Technology and
Information to Build
Customer Relationships
6
E-Marketing and Customer
Relationship Management
Objectives
1. To define electronic marketing and
electronic commerce and recognize their
increasing importance in strategic
planning
2. To understand the characteristics of
electronic marketing—addressability,
interactivity, memory, control,
accessibility, and digitalization—and how
they differentiate electronic marketing
from traditional marketing activities
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 2
Objectives (cont’d)
3. To examine how the characteristics of
electronic marketing affect marketing
strategy
4. To understand how electronic
marketing and information technology
can facilitate customer relationship
management
5. To identify the legal and ethical
considerations in electronic marketing
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 3
Chapter Outline
• Marketing on the Internet
• Customer Relationship Management
• Legal and Ethical Issues in E-Marketing
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 4
Marketing on the Internet
• Electronic Commerce (E-Commerce)
– Sharing business information, maintaining
business relationships, and conducting
business transactions by means of
telecommunications networks
• Electronic Marketing (E-Marketing)
– The strategic process of creating,
distributing, promoting, and pricing
products for targeted customers in the
virtual environment of the Internet
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 5
Benefits of E-Marketing
• Open and instantaneous flows of
information
• Enhanced customer service efficiencies
• Worldwide scope of the electronic
market
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 6
Basic Characteristics of Electronic
Marketing: Addressability
• Addressability is a marketer’s ability to
identify customers before they make a
purchase
• How e-merchants attain addressability
– Limit access to areas of their website to
encourage customer registration
– Offer contests and prizes in exchange for
consumer information
– Place “cookies” on visitor’s computer to
track visitor usage and preferences
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 7
Basic Characteristics of Electronic
Marketing: Interactivity
• Interactivity is the ability to allow
customers express their needs and
wants directly to the firm in response to
the firm’s marketing communications
– Real-time interaction with customers
– Broader market coverage at a lower cost
• Community refers to a sense of group
membership or feeling of belonging
– Virtual communities on the Web
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 8
Basic Characteristics of Electronic
Marketing: Memory
• Memory is the ability to access
databases or data warehouses
containing individual customer profiles
and past purchase histories and to use
these data in real-time to customize a
marketing offer.
• A database is a
collection of information
arranged for easy access
and retrieval.
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 9
Basic Characteristics of Electronic
Marketing: Control
• Control refers to customers’ ability to
regulate the information they view and
the rate and sequence of their exposure
to that information.
• A portal is a multiservice website that
serves as a gateway to other websites.
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 10
Basic Characteristics of Electronic
Marketing: Accessibility
• Accessibility is the ability to obtain
information available on the Internet.
– Informs and educates the inquiring
consumer about competing products and
prices
– Creates competition for the consumer’s
attention
– Helps make information available to
employees to service customers
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 11
Basic Characteristics of Electronic
Marketing: Digitalization
• Digitalization is the ability to represent a
product, or at least some of its benefits,
as digital bits of information.
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 12
E-Marketing Strategies
E-Marketing
Strategy Considerations
Target
Markets
Product
Marketing
Copyright © Houghton Mifflin Company. All rights reserved.
Distribution
Systems
Promotion
Mediums
Pricing
6 | 13
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 14
Customer Relationship Management
• Focuses on using information about
customers to create marketing strategies that
develop and sustain desirable long-term
relationships
– A focus on CRM is possible in e-marketing
because of marketers’ ability to target individual
customers.
– The ability to identify individual customers allows
marketers to shift their focus from increasing
share of market to increasing share of customer.
– CRM is often based on the use of information
technology.
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 15
The 80/20 Rule
• 80 percent of business profits come
from 20 percent of customers.
– Technology allows marketers to profile
customers in real-time and assess their
lifetime value (LTV) to the firm.
– Some customers may be too expensive to
retain given the low level of profits they
generate.
– Firms should focus on developing and
managing long-term relationships with
more profitable customers.
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 16
Technology Drives CRM
• Customer support and call center software
– Provides customer interaction and improved
service
– Captures information about all interactions
• Sales automation
– Links sales force to applications that facilitate
selling and providing service
– Provides information to determine the best
solution for customers
– Determines order status, tracks deliveries, and
identifies service problems
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 17
Technology Drives CRM (cont’d)
• Technology
– Should not be used just as a costreduction tactic
– Should not be overwhelmed by gathering
unnecessary data
– Should be used as a tool to sustain longterm relationships
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 18
Legal and Ethical Issues in E-Marketing
• Personal privacy issues
– Unauthorized placement of cookies on personal
computers
– Website information requirements for registration
– Collection of information from children
– Use of spyware in software
• Spam
– Unsolicited commercial e-mail (UCE)
• Misappropriation of intellectual property
– Illegal copying of copyrighted software, movies,
CDs, and other creative materials
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 19
The BBBOnLine Privacy Seal and Program Explanation
Reprinted by permission of the Council of Better Business, Inc.
Copyright © Houghton Mifflin Company. All rights reserved.
FIGURE 4.1
6 | 20
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 21
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 22
After reviewing this chapter you should:
• Be able to define electronic marketing and
electronic commerce and recognize their
increasing importance in strategic planning.
• Understand the characteristics of electronic
marketing—addressability, interactivity,
memory, control, accessibility, and
digitalization—and how they differentiate
electronic marketing from the traditional
marketing environment.
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 23
After reviewing this chapter you should:
• Have examined how the characteristics
of electronic marketing affect marketing
strategy.
• Understand how electronic marketing
and information technology can facilitate
customer relationship management.
• Be aware of legal and ethical
considerations associated with
electronic marketing.
Copyright © Houghton Mifflin Company. All rights reserved.
6 | 24