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Marketing: An Introduction Second Canadian Edition Armstrong, Kotler, Cunningham, Mitchell and Buchwitz Chapter Thirteen Marketing and the Internet 13-1 Copyright © 2007 Pearson Education Canada Looking Ahead • Define the three areas of e-commerce and explain the benefits of e-commerce • Describe the different ways a company can use its website to support its marketing communications program • Differentiate between Web publishers and Web advertisers and define the major forms of online advertising • Outline how email can be used for marketing and list the rules of email etiquette for online marketers • Describe the new forms of Internet marketing • Outline the legal and ethical issues involved in Internet marketing 13-2 Copyright © 2007 Pearson Education Canada E-Business Defined • E-business: the use of electronic platforms to conduct a company’s business. • E-commerce: buying and selling processes supported by electronic means. • Business-to-Consumer – retail, banking. • Business-to-Business – trading networks. • Consumer-to-Consumer – e-Bay, Napster. 13-3 Copyright © 2007 Pearson Education Canada B2C (Business to Consumer) • The online selling of goods and services to final consumers. • 25% increase in online buying since 2002. • Increasing diversity in buyers. – This provides increasing opportunities for targeting markets. • Customer initiated and controlled. 13-4 Copyright © 2007 Pearson Education Canada B2B (Business to Business) • Most major B2B marketers offer product information, purchasing and support services online. • Most business buying today takes place on the Internet. • Open trading exchanges—huge specialty e-marketspaces to conduct transactions. • Constant increases in private trading networks. 13-5 Copyright © 2007 Pearson Education Canada E-Commerce Networks • Private Internet commerce networks geared toward the business-to-business market. • Most Internet buying now occurs over the web. • Global eXchange Services (GXS) consists of more than 100,000 trading partners in 58 countries at a value of some 1 billion transactions each year, equal to $1 trillion worth of goods and services. 13-6 Copyright © 2007 Pearson Education Canada C2C (Consumer to Consumer) • Occurs on the Web and includes a wide range of products and services. • Forums: discussion groups located on commercial online services. • Newsgroups: the Internet version of forums. 13-7 Copyright © 2007 Pearson Education Canada Benefits to Buyers • • • • • • • Convenience. Ease of use. Privacy. Greater product access and selection. Information gathering. Interactive shopping. Immediate. 13-8 Copyright © 2007 Pearson Education Canada Benefits to Sellers • • • • • • • Customer relationship building. Cost savings. Increased speed. Increased efficiency. Improved cash flow. Flexibility. Global reach. 13-9 Copyright © 2007 Pearson Education Canada Marketing and the Website • Early websites were largely brochureware. • Today, every business and organization has its own website. • Performs a wide variety of marketing functions. 13-10 Copyright © 2007 Pearson Education Canada 7 Cs of Effective Design • • • • • • • Context: layout and design elements. Content: text, pictures, sound and video. Community: user-to-user communication. Customization: personalizing for each user. Communication: two-way communication. Connection: links to other relevant sites. Commerce: commercial transactions. 13-11 Copyright © 2007 Pearson Education Canada Functions of a Website • Sales channel – buying and selling online. • Marketing communications vehicle – part of the integrated communications mix. • Customer service channel – self-service, product enquiries, after market service. • Delivering content – portal sites, publishing sites. • Service provider – subscriptions, information provider, search engine. 13-12 Copyright © 2007 Pearson Education Canada Online Advertising • Worldwide spending on online advertising topped $9 billion US in 2004. • Increasingly popular form of promotion. • Highly measurable and manageable. • Can be modified quickly. • Can dynamically targeted. 13-13 Copyright © 2007 Pearson Education Canada Online Promotion Methods • Online advertising: Banners, text links, interstitials, sponsorships, micro sites. • • • • Email direct response: permission-based. Viral marketing: word-of-mouth based. Online Movies: Mini-movies as ads. Podcasting: Sending information to wireless devices. • Blogging: Two way dialogue. 13-14 Copyright © 2007 Pearson Education Canada Types of Online Advertising • Banner ads (squares or rectangles) and tickers (move across the screen). • Textlinks (hypertext that takes the user to a new webpage or website). • Content sponsorships (sponsoring special content). • Interstitials (pop ups). • Microsites (limited website with detailed information). 13-15 Copyright © 2007 Pearson Education Canada Buying Online Advertising • Three pricing models for online advertising. – CPM – rate paid per thousand impressions of an online ad. – Cost-per-click – Advertiser pays only when the advertisement is clicked on. – Sponsorships – sold in blocks of time rather than per impression basis. 13-16 Copyright © 2007 Pearson Education Canada Email Marketing • Increasingly common form of direct marketing. • Permission-based email most effective. • Non-permission-based email known as spam. • Spamming the biggest detriment to legitimizing email marketing. 13-17 Copyright © 2007 Pearson Education Canada Using Email Marketing • Well-designed email campaigns typically achieve 10%-15% response rates compared to .5% - 2% for traditional direct mail. • Uses include – – – – – 13-18 Information and education. Couponing. Special offers. Newsletters. Targeted content delivery. Copyright © 2007 Pearson Education Canada Viral Email Marketing • Internet version of word-of-mouth advertising. • Infectious, interesting email that people will pass along. • Inexpensive way to create brand “buzz.” • Encouraged by textlinks “Forward to a friend or colleague.” • Used successfully in B2B marketing. 13-19 Copyright © 2007 Pearson Education Canada Rules for Email Marketing • Send email only by permission. • Clearly identify the sender. • Remind the recipient why they’re receiving the email. • Provide an easy way to unsubscribe. • The default is always opt-in, not opt-out. 13-20 Copyright © 2007 Pearson Education Canada Online Movies • Extended advertising segments that take the form of short movies. • Generally directed and acted by main movie and TV figures. • Can be viewed on websites. • Trend started by BMW in 2001. • Growing in popularity. 13-21 Copyright © 2007 Pearson Education Canada Podcasting • Delivery of content and advertising to iPoDs and other personal wireless listening devices. • Users download shows and music at their convenience. • Similar to broadcasting. • Early stage but shows promise as an advertising and promotion medium. 13-22 Copyright © 2007 Pearson Education Canada Blogging • Website that consists of regular datestamped compositions written by an individual or group and published online for general viewing. • Tend to be topical. • Excellent tool for building thought leadership and market education. 13-23 Copyright © 2007 Pearson Education Canada Legal and Ethical Issues • Online privacy and security. – Consumer knowledge and consent. – Limitations. – Accuracy. – Right to access. – Hacking. – Internet fraud. • Segmentation and discrimination. • Digital divide. 13-24 Copyright © 2007 Pearson Education Canada Legal and Ethical Issues • • • • • Online privacy. Online security. Internet fraud. Segmentation and discrimination. Access by vulnerable or unauthorized groups. 13-25 Copyright © 2007 Pearson Education Canada Looking Back • Define the three areas of e-commerce and explain the benefits of e-commerce • Describe the different ways a company can use its website to support its marketing communications program • Differentiate between Web publishers and Web advertisers and define the major forms of online advertising • Outline how email can be used for marketing and list the rules of email etiquette for online marketers • Describe the new forms of Internet marketing • Outline the legal and ethical issues involved in Internet marketing 13-26 Copyright © 2007 Pearson Education Canada