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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Direct and Online Marketing: Building Customer Relationship
Foreword:
Computer in the future may weigh no more than 1.5 tons.
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- Popular Mechanics, 1949-
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
OBJECTIVES
After reading this chapter, you should be able to:
• Define direct marketing and discuss its benefits to
customer sand companies.
• Identify and discuss the major forms of direct
marketing.
• Explain how companies have responded to the Internet
and other powerful new technologies with online
marketing strategies.
• Discuss how companies go about conducting online
marketing to profitably deliver more customer value.
• Understand how databases can be used to develop
direct marketing campaigns.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Direct & Online Marketing: Customer Relationships
Papua New Guinea
• Wiley Eiya, tribal chief of the Huli tribe in Papua
New Guinea (PNG), is online as he presents his Web
site on a laptop screen at the International Tourism
Fair in Berlin.
• The Internet allows places such as PNG, with a low
tourism budget, access to tourists around the world.
• While the government has not made a major effort
to promote tourism in PNG, individual tour
operators can have a presence on the Internet.
• Tourists all over the world are discovering remote
destinations through the Internet.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Direct & Online Marketing: Customer Relationships
Papua New Guinea
• Papua New Guinea is a remote island off coast of
Australia with a population of a little over 5 million.
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– most living in rural villages
• With over 860 distinct tribal languages, PNG is home
to more than a fourth of the world’s languages.
• Settled ten thousand years ago, its early residents
credited as being the first farmers on earth.
• Europeans did not come to the country until the
1930s, and tribes of the highlands had little contact
with the outside world until the mid-20th century.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Direct & Online Marketing: Customer Relationships
Papua New Guinea
• Rich culture is only one of many tourist attractions,
as PNG is rapidly becoming known for diving that
rivals the diving at the Great Barrier Reef.
• Other activities are white-water rafting in mountain
streams and coastal and river cruising offer tourists
the comfort of modern ships.
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– it also has many unique species of birds & mammals
• Though potential for tourism in PNG is great, the
government continues to focus on other industries.
• Tourism potential is largely untapped, with only
about 20,000 tourists yearly.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Direct & Online Marketing: Customer Relationships
Papua New Guinea
• While the Internet provides PNG great opportunity
to build its tourism, growth still has to be managed.
• A country such as Papua New Guinea must make
sure it has the infrastructure to support tourism.
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– and policies in place to create sustainable tourism
activities that don’t destroy its culture & natural beauty
• The Internet can be a two-edged sword, bringing
more tourists, but forcing the destination to ensure
it is able to support the tourists when they arrive.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Direct Marketing
Introduction
• Many of the marketing & promotion tools examined
in previous chapters were developed in the context
of mass marketing.
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– targeting broad markets with standardized messages
and offers distributed through intermediaries
• Many companies are adopting direct marketing
as a primary marketing approach.
• Direct marketing consists of direct connections with
carefully targeted individual consumers to obtain an
immediate response and cultivate lasting customer
relationships.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Direct Marketing
Description
• Direct marketers communicate directly with
customers, often on a one-to-one, interactive basis.
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– they tailor marketing offers & communications to
narrowly defined segments or even individual buyers
• Airlines, hotels, and others are building strong
customer relationships through award programs,
using customer database to match offers more
carefully to individual customers.
• They are approaching a stage where offers are sent
only to those customers and prospects most able,
willing, and ready to buy the product.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Direct Marketing
Growth and Benefits
• Beyond brand and relationship building, direct
marketers usually seek a direct, immediate, and
measurable consumer response.
• In 2006 US companies spent $166.5 billion on direct
marketing, for an estimated $1.94 trillion in sales,
making it the fastest growing form of marketing.
• The DMA estimates direct marketing sales will
grow 6.3% annually through 2011, compared with
a projected 4.8% annual growth for total US sales.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Direct Marketing
Growth and Benefits
• Direct marketing is becoming more web-oriented,
and Internet marketing now accounts for about 18%
of direct marketing-driven sales.
• Whether employed as a complete business model or
as a supplement to a broader integrated marketing
mix, direct marketing brings many benefits to both
buyers and sellers.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Direct Marketing
Benefits to Customers
• For customers, direct marketing is convenient, easy,
and private & direct marketers never close.
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– travelers can book airline flights & reserve hotel
rooms on web sites at any time of the day or night
– managers can learn about products & services without
tying up time with salespeople
• Unrestrained by physical boundaries, marketers can
offer an almost unlimited selection to consumers
almost anywhere in the world, and information
about companies, products & competitors.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Direct Marketing
Benefits to Customers
• Companies use direct marketing to access guests
and gain information that will develop systems &
products to better serve their guests.
• Direct marketing is interactive & immediate &
buyers interact with sellers by phone or on the web.
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– to create the configuration of information, products,
or services they desire & then order them on the spot
• Direct marketing gives consumers a great measure of
control, as they decide which catalogs they will
browse and which web sites they will visit.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Direct Marketing
Benefits to Sellers
• Direct marketing is a powerful tool for building
customer relationships.
• Using database marketing, marketers can target
small groups or individual consumers & promote
their offers through personalized communications.
• Because of the one-to-one nature, companies can
learn more about customer needs & tailor products
and services to specific tastes.
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– customers can ask questions & volunteer feedback
• Direct marketing offers sellers a low-cost, efficient,
speedy alternative for reaching their markets.
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By Philip Kotler, John Bowen and James Makens
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Direct Marketing
Benefits to Sellers
• Direct marketing has grown rapidly in business-tobusiness marketing, partly in response to everincreasing costs of marketing via the sales force.
• It permits privacy because the marketer’s offer &
strategy are not visible to competitors.
• In periods of low demand, companies can use direct
marketing to target known customers and produce
quick results.
• Another benefit of direct marketing is measurability.
– a manager can track response to a particular campaign
and usually determine the revenue that it produced
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By Philip Kotler, John Bowen and James Makens
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Direct Marketing
Benefits to Sellers
• Direct-marketing efforts are measured three ways:
– the number of inquiries generated
– ratio of conversions or purchases realized from
inquiries generated
– communication impact
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• Direct marketing can also offer greater flexibility.
– allowing marketers to make ongoing adjustments to
prices & programs, or make immediate, timely offers
• Direct marketing is compatible & often works best
when used with other elements of the promotional
mix in a multiple-stage campaign.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Direct Marketing
Benefits to Sellers
• Direct marketing gives sellers access to buyers that
they could not reach through other channels.
• Internet marketing is a truly global medium that
allows buyers & sellers to click from one country
to another in seconds.
• Online direct marketing is an equalizer that
independent restaurants, inns, and hotels have
against the brands, giving small marketers ready
access to global markets.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Customer Databases and Direct Marketing
Introduction
• Effective direct marketing begins with a good
customer database, a relationship-building tool.
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– data about individual customers or prospects, including
geographic, demographic, psychographic & behavioral
• In consumer marketing, the database might contain
demographics, psychographics & buying behavior.
• In business-to-business marketing, it might contain
products & services the customer has bought; key
contacts, past volumes & prices and much more.
– some of these databases are huge, like Harrah’s
Entertainment 30 terabytes of customer information
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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See this feature on page 473 of your textbook.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Customer Databases and Direct Marketing
Description
• Companies use their databases to locate good
potential customers & generate sales leads.
III
– they can mine their databases to learn about customers
in detail & fine-tune market offerings
– they can target communications to the special
preferences & behaviors of segments or individuals
• A database management problem in the hospitality
industry is that a company may have a number of
databases that do not talk to each other and/or are
not relational.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Customer Databases and Direct Marketing
Data Mining
• A hotel could have sales department, reservations,
accounting, and front-desk databases.
III
– if they not integrated, it is very costly to
develop a complete profile of each customer
• Consolidation in the hotel industry has created a need
for companies to build a centralized data warehouse
for all their brands, for the purpose of data mining.
– which stores data the company receives in a central
repository
– once stored, companies use the relational database
to look at relationships in the data
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By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Customer Databases and Direct Marketing
Data Mining
• Data mining is the exploration & analysis of a
database by automatic or semiautomatic means to
discover patterns or rules.
• Data mining can predict which customers are most
likely to respond to an offer, to segment a market,
and identify a company’s most loyal customers.
• It is not limited to relationships a marketing manager
may think exists; it explores all relationships with a
variety of techniques, a major benefit.
• Data mining has increased the effectiveness and
efficiency of direct marketing in the industry.
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By Philip Kotler, John Bowen and James Makens
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Customer Databases and Direct Marketing
Maintenance
• To be useful the data stored in a database must be
accurate, so it is important that everyone using the
database understand the importance of accurate data.
• A clean database starts with accurate entry, and to be
effective, duplicate files have to be combined &
addresses must be accurate.
• Employee training to ensure the database is clean is
a critical, ongoing part of an effective system.
• A well-managed database should lead to sales and
customer-relationship gains more than covering cost.
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By Philip Kotler, John Bowen and James Makens
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Customer Databases and Direct Marketing
Use
• Finally, you should answer the question:
– “If you were a customer, why would you want to
be in our database?”
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• Answering this tells you if your database has a
strategic focus or used mainly for tactical purposes.
– most marketers use their database tactically, one
of the most frequent uses being direct marketing
• Direct marketing campaigns often target recent
customers, inviting returns or offering incentives.
– as well as encouraging loyal customers to come
during soft periods
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Customer Databases and Direct Marketing
Use
• While there is nothing wrong with this use, and it
often produces worthwhile results, much of the
power of database marketing will be untapped.
• The database is also used for service recovery, and
companies who use a database to provide the guest
with a better experience are gaining a major benefit.
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– companies need to provide benefits to customers
for being in their database
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Direct Marketing Builds Relationships
Introduction
• Direct marketing is an important tool in customer
relationship management (CRM) programs.
• Airlines, hotels, travel agents, restaurants, and rental
car companies operate in very competitive markets,
and the major way to grow market share is to steal it
from the competition.
• Managers recognize that spending to develop loyalty
among current customers can be more effective than
spending to attract new guests, which costs four to
seven times as much.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Direct Marketing Builds Relationships
Description
• Relationship marketing is creating, maintaining, and
enhancing strong relationships with customers.
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– the concept has expanded to include relationships with
all stakeholders who can help the company serve its
customers
Table 16-2 Relationship Marketing compared to Traditional Marketing.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Direct Marketing Builds Relationships
Description
• Relationship marketing has a long-term orientation,
to deliver long-term value to customers, and measure
of success in long-term customer satisfaction.
• It requires that all departments work together to serve
the customer, and involves building relationships at
many levels, resulting in high customer loyalty.
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– economic, social, technical, legal
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Direct Marketing Builds Relationships
Five Levels of Customer Relationships
– Basic - selling the product with no follow-up
– Reactive - the company sells the product & encourages
the customer to call with questions or problems
– Accountable - the company’s rep phones the customer
after the booking to check-up & answer questions
– Proactive - the rep or others in the company phone
the customer from time to time with suggestions about
improvements that have been made or creative
suggestions for future events
– Partnership - the company works continuously with
the customer and others to discover ways to deliver
better value
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Direct Marketing Builds Relationships
Three Customer Value-Binding Approaches
• A company can adopt any of three customer
value-binding approaches use to develop
stronger customer bonding and satisfaction:
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– The first relies primarily on adding financial benefits
to the customer relationship
– The second approach is to add social, as well as
financial benefits
– The third is to add structural ties, as well as financial
and social benefits
• Building relationships with customers by
creating value is part of relationship marketing.
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By Philip Kotler, John Bowen and James Makens
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Traditional Forms of Direct Marketing
Direct Mail
• Traditional forms of direct marketing in hospitality
are direct-mail, telephone, and kiosk marketing.
• Direct-mail marketing - involves sending an offer,
announcement, reminder, or other item to a person
at a particular address.
• By far the largest direct marketing medium, the
DMA reports direct mail (catalog & noncatalog)
drives over a third of all US direct marketing sales.
• E-mail and other new forms deliver direct mail at
incredible speeds compared to the post office’s
“snail mail” pace.
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By Philip Kotler, John Bowen and James Makens
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Traditional Forms of Direct Marketing
Tele-Marketing
• Telephone Marketing - involves using the phone to
sell directly to consumers and business customers.
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– now accounting for 22% of direct marketing sales
• Marketers use outbound telephone marketing to
sell directly to consumers & businesses.
• Inbound toll-free numbers to receive orders from
television and print ads, direct mail, or catalogs.
• The use of toll-free numbers has taken off in recent
years, and to accommodate this growth, additional
toll-free area codes, such as 888, 877 & 866, have
been added.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Traditional Forms of Direct Marketing
Tele-Marketing
• The explosion in unsolicited outbound telephone
marketing annoyed many consumers, and in 2003,
U.S. lawmakers responded with a National Do-NotCall Registry, managed by the Federal Trade
Commission (FTC).
• Consumers responded enthusiastically & have to date,
registered more than 132 million numbers at
www.donotcall.gov or by calling 888-382-1222.
III
– businesses that break do-not-call laws can be fined
up to $11,000 per violation
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Traditional Forms of Direct Marketing
Kiosk Marketing
• Many companies are placing information and
ordering machines—called kiosks—in stores,
airports, and other locations.
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– from self-service hotel & airline check-in devices to
in-store ordering of merchandise not in sold the store
• Business marketers also use kiosks.
– Dow Plastics places kiosks at trade shows to collect
sales leads & provide information on its 700 products
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Digital Direct Marketing Technologies
E-Mail
• E-mail - customer databases contain a field for an
e-mail address. Databases can generate mailing
addresses; they can also create e-mailing lists.
• Given its targeting effectiveness and low costs, email can be an outstanding marketing investment.
• According to a recent study, return on e-mail
marketing investment is $52 for every dollar spent.
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– compared with direct mail at $15 per dollar spent
• E-mail is a quick, good way to sell excess inventory.
– Holland America Lines sent out 250,000 e-mails one
May to try to fill up its spring and summer cruises
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By Philip Kotler, John Bowen and James Makens
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Digital Direct Marketing Technologies
E-Mail - Spam
• E-mail marketers walk a fine line between adding
value for consumers & being intrusive.
• The explosion of spam—unsolicited, unwanted
commercial e-mail messages that clog our inboxes—
has produced consumer irritation and frustration.
III
– according to one research company, spam now accounts
for 88% of all e-mail sent
• A recent study found that the average consumer
received four thousand spam messages a year.
– more & more e-mail goes unopened & gaining permission
to send someone e-mail is becoming more important
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Digital Direct Marketing Technologies
E-Mail - Effectiveness Checklist
• Greeting should be personalized & other persons
being sent the same message should not be listed.
• Identify the the company sending the e-mail.
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– if an outside supplier is used, it is important that the
organization sponsoring the e-mail has its name listed
before the supplier
• Subject needs to be relevant to the reader.
• E-mails need to be short, with no more than 65
characters per line, to avoid formatting problems.
• Text format is preferred, because some browsers
cannot accept enhanced HTML messages.
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By Philip Kotler, John Bowen and James Makens
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Digital Direct Marketing Technologies
Mobile Phone Marketing
• More than 230 million Americans now subscribe to
wireless services, so many marketers view mobile
phones as the next big direct marketing medium.
• A growing number of consumers are using their cell
phones as a “third screen” for messaging, web
surfing, watching downloaded videos, and e-mail.
• Some companies are customizing 10-second video
ads that are edging their way onto mobile phones.
• Wireless gadgets are always-on, ever-present, and
users can respond instantly to offers.
– the mobile phone is very personal and always with you
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Digital Direct Marketing Technologies
Mobile Phone Marketing - Responsibility
• Companies must use mobile marketing responsibly
or risk angering already ad-weary consumers.
III
– most people are initially skeptical about cell phone ads
• They often change their minds if the ads deliver
value, useful information, entertaining content, or
discounted prices and coupons.
• A recent study found that 42% percent of cell phone
users are open to mobile advertising, if it’s relevant.
– used properly, mobile marketing can greatly enrich the
buyer’s experience
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Digital Direct Marketing Technologies
Podcasts and Vodcasts
• Podcasting and vodcasting are the latest on-the-go,
on-demand technologies.
III
– podcast derives from Apple’s now-everywhere iPod
• Consumers can download audio (podcasts) or video
files (vodcasts) to an iPod or other handheld device
& play them whenever, wherever they wish.
• They can search for podcast topics through sites
like iTunes or podcast networks such as PodTrac,
Podbridge, or PodShow.
– sitcom episodes, current sports features, National Public
Radio shows, latest music videos, or commercials & more
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Digital Direct Marketing Technologies
Interactive TV
• Interactive TV (ITV) lets viewers interact with
television programming and advertising using their
remote controls.
III
– in the past, ITV has been slow to catch on
• Satellite broadcasting systems such as DirecTV,
Echostar, and Time Warner are now offering ITV.
– it appears poised to take off as a direct marketing medium
• As with other forms, marketers must target their
direct marketing offers carefully, bringing real
value to customers rather unwanted intrusions.
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Online Marketing
The Internet
• Much of the world’s business today happens over
digital networks connecting people & companies,
with a dramatic impact on buyers and the marketers
who serve them.
• The web has fundamentally changed customer
notions of convenience, speed, price, product
information, and service.
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– it has given marketers a whole new way to create value
for customers and build relationships with them
• US 2008 Internet household penetration reached 69%
– almost 500 million worldwide now have Internet access
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Online Marketing
Domains
• Shows are the four major online marketing domains
– B2C (business to consumer); B2B (business to business)
– C2C (consumer to consumer); C2B (consumer to business)
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Figure 16-1 Online domains.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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Online Marketing
Business to Consumer (B2C)
• The popular press has paid the most attention to
business-to-consumer (B2C) online marketing—
selling goods and services online to final consumers.
• Online consumer buying continues to grow at a
healthy rate, as 65% of US online users now use
the Internet to shop.
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– consumers can buy almost anything online—clothing,
kitchen gadgets, airline tickets, computers and cars
• In 2007, U.S. consumers generated an estimated
$259 billion in online retail sales, up 18% from the
previous year.
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Online Marketing
Business to Business (B2B)
• B2B marketers use B2B Web sites, e-mail, online
product catalogs & trading networks, to reach new
business clients, serve current ones more effectively,
and obtain buying efficiencies & better prices.
• Major B2B marketers offer product information,
customer purchasing, and support services online.
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– restaurants use their sites to sell gift cards & take
reservations
• Table 16–4 on page 486 show three basic principles
of online marketing which apply to both B2C and
B2B online marketing.
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Online Marketing
Consumer to Consumer (C2C)
• The Internet provides a means by which consumers
can buy or exchange goods or information directly
with one another.
• In other cases, it interchanges of information via
forums appealing to specific special-interest groups.
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– organized for commercial or noncommercial purposes
• Currently about 15 million active Web logs, or blogs,
online journals which can be about anything, are read
by 57 million people.
– such numbers give blogs substantial influence
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Online Marketing
Consumer to Business (C2B)
• Consumers are finding it easier to communicate with
companies by Internet, and most companies now
invite prospects and customers to send in suggestions
and questions via company web sites.
• Beyond this, consumers can search out sellers, learn
about offers, make purchases & give feedback.
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– consumers can even drive transactions with business
• Using Priceline.com, would-be buyers can bid for
airline tickets, hotel rooms, rental cars, cruises, and
vacation packages, leaving the sellers to decide
whether to accept their offers.
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Online Marketing
Setting Up an Online Marketing Presence
• All companies need to consider moving online, and
can conduct online marketing in several ways:
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– creating a Web site; using e-mail
– placing ads and promotions online
– setting up or participating in online social networks
• For most companies, the first step in conducting
online marketing is to create a Web site.
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Online Marketing
Creating a Web Site
• Web sites vary greatly in purpose & content, and
Marketers must design an attractive site and find
ways to get consumers to visit the site, stay around,
and come back often.
• The most basic type is a corporate (or brand) site,
designed to build customer goodwill, collect
feedback, and supplement other sales channels.
• They typically offer a rich variety of information
& features in an effort to answer customer questions,
build closer customer relationships, and generate
excitement about the company or brand.
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Online Marketing
Creating a Web Site
• Other companies create a marketing site to engage
consumers in an interaction that will move them
closer to a purchase or other marketing outcome.
III
– Expedia, Priceline, and Sheraton are examples
• To attract visitors, companies aggressively promote
their Web sites in line print & broadcast advertising,
and through ads & links on other sites.
– users are quick to abandon a site that doesn’t measure up
• Companies must constantly update their sites to stay
current & useful, and provide enough excitement to
get consumers to stick around, and come back again.
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Online Marketing
Creating a Web Site - The Seven Cs of Design
• To attract new visitors & encourage revisits, online
marketers should pay attention to:
– Context: site layout and design
– Content: text, pictures, sound, and video on the site
– Community: ways the site enables user-to-user
communication
– Customization: the site’s ability to tailor itself to users
or to allow users to personalize the site
– Communication: ways the site enables site-to-user, userto-site, or two-way communication
– Connection: degree to which the site is links to other sites
– Commerce: capabilities to enable commercial transactions
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Online Marketing
Creating a Web Site
• To keep customers coming back to the site,
companies need to embrace yet another “C”:
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– constant change
• Ultimately, web sites must be useful, because when
surfing & shopping, most people prefer substance
over style and function over flash.
• Effective Web sites contain deep, useful information,
interactive tools to help buyers find & evaluate
products, links to other related sites, changing
promotional offers & entertaining features lending
relevant excitement.
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Online Marketing
Placing Ads and Promotions Online
• Major forms of online advertising include display ads,
search-related ads, and online classifieds.
• Online display ads might appear anywhere on a
user’s screen, with the most common form being
banners, found at the top, bottom, left, right, or
even center of a web page.
III
– interstitials are display ads appearing between screen
changes on a web site, while a new screen is loading
• Visit marketwatch.com and you’ll probably see a
ten-second ad for Visa, Verizon, Dell, or another
sponsor before the home page loads.
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Online Marketing
Placing Ads and Promotions Online
• Pop-ups are online ads that appear suddenly in a
new window in front of the window being viewed.
III
– these can multiply out of control, a major annoyance
• Internet services & web browser providers have
developed applications to block most pop-ups, so
many advertisers have now developed pop-unders.
– new windows that evade pop-up blockers by appearing
behind the page you’re viewing
• As broadband access increases, many companies
are developing rich media display ads, which use
animation, video, sound, and interactivity.
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Online Marketing
Placing Ads and Promotions Online
• Another hot growth area 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!
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– advertisers buy search terms from the search site and
pay only if consumers click through to their site
• Search-related ads account for some 42% of all
online advertising expenditures.
– more than any other category of online advertising
• Online marketers also use viral marketing, the
Internet version of word-of-mouth marketing.
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Online Marketing
Creating or Participating in Online Social Networks
• The popularity of the Internet has resulted in a rash
of online social networks or web communities.
III
– over 100 million people visit a social network daily
• These days, it seems, almost everyone is buddying
up on MySpace or Facebook, tuning into the hottest
videos at YouTube, or even living a surprisingly
real fantasy life as an avatar on Second Life.
• Participating successfully in existing online social
networks presents challenges, as online social
networks are new & results are hard to measure.
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Online Marketing
Creating or Participating in Online Social Networks
• The company’s goal is to make the brand a part of
consumers’ conversations and their lives.
III
– web communities are largely user controlled & marketers
can’t simply muscle into online interactions
• Rather than intruding, marketers must learn to
become a valued part of the online experience.
– they need to earn the right to be there
• Listening to the conversation customers are having
about your operation can provide valuable
information—and free marketing intelligence!
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Online Marketing
Promises and Challenges of Online Marketing
• Ardent apostles envision a time when Internet and
online marketing will replace magazines, news
papers, and even stores as sources for information
and buying
III
– most marketers hold a more realistic view
• Online marketing is successful for some companies,
and creates a good business model for retailers such
as Travelocity and Orbitz.
• For most companies, online marketing will remain
just one important approach that works alongside
others in a fully integrated marketing mix.
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Online Marketing
Legal and Ethical Issues
• Most e-marketers have become skilled at collecting
and analyzing detailed consumer information, and
can easily track site visitors.
• Many consumers who participate in web activities
provide extensive personal information, which may
leave them open to information abuse if companies
make unauthorized use of the information.
• Online privacy is perhaps the #1 e-commerce
concern, and many consumers and policy makers
worry that marketers have stepped over the line and
are violating consumers’ right to privacy.
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Online Marketing
Legal and Ethical Issues
• In response to such online privacy and security
concerns, the federal government is considering
legislative actions to regulate how Web operators
obtain and use consumer information.
• Many companies have responded to consumer
privacy & security concerns with actions of their own,
and have conducted voluntary audits of their privacy
and security policies.
• It is important to protect the privacy and rights of
consumers, as trust is one of the most important
assets of a manager and a company.
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KEY TERMS
• Banners. Banner-shaped ads found at the top,
bottom, left, right, or center of a Web page.
• Business to business (B2B) online marketing.
Using B2B 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 effectiveness and better prices.
• Business to consumer (B2C) online marketing.
The online selling of goods and services to final
consumers.
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KEY TERMS
• Consumer to business (C2B) online marketing.
Online and exchanges in which consumers search
out sellers, learn about offers, initiate purchases,
sometimes even driving transaction terms.
• Consumer to consumer (C2C) online marketing.
Online exchanges of goods and information between
final consumers.
• Corporate (or brand) Web site. Web sites that seek
to build customer goodwill and to supplement other
sales channels rather than to sell the company’s
product directly.
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KEY TERMS
• Customer database. An organized collection of
comprehensive data about individual customers or
prospects, including geographic, demographic,
psychographic, and behavioral data.
• Data warehouse. A central repository of an
organization’s customer information.
• Direct mail marketing. Direct marketing through
single mailings that include letters, ads, samples,
foldouts, and other“salespeople with wings” sent
to prospects on mailing lists.
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KEY TERMS
• Direct marketing. Direct communications with
carefully targeted individual consumers to obtain an
immediate response and cultivate lasting customer
relationships.
• E commerce. The general term for a buying and
selling process that is supported by electronic means,
primarily the Intranet.
• Integrated direct marketing (IDM). Direct
marketing campaigns that use many vehicles and
multiple stages to improve response rates and profits.
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KEY TERMS
• Internet. The vast and burgeoning global web of
computer networks with no central management
or ownership.
• Interstitials. Online display ads that appear between
screen changes on a Web site, especially while a new
screen is loading.
• Marketing Web site. Web sites designed to engage
consumers in an interaction that will move them
closer to a purchase or other marketing outcome.
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KEY TERMS
• Online advertising. Advertising that appears while
consumers are surfing the Web, including display
ads, search related ads, online classifieds & other
forms.
• Online marketing. Company efforts to market
products and services and build customer
relationships over the Internet.
• Pop-unders. New windows that evade popup
blockers by appearing behind the page being viewed.
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KEY TERMS
• Pop-ups. Online ads that appear suddenly in a new
window in front of the window being viewed.
• Search related ads (or contextual advertising).
Text based ads and links that appear alongside
search engine results on sites such as Google and
Yahoo!
• Telephone marketing. Using the telephone to sell
directly to customers.
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KEY TERMS
• Viral marketing. The Internet version of word
of mouth marketing—Web sites, videos, email
messages, or other marketing events that are
so infectious that customers will want to pass
them along to friends.
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EXPERIENTIAL EXERCISES
Try This !
• Sign up for a frequency club for hospitality or travel
organization. (If you cannot find one, you can go to
the book’s Internet site and sign up online.)
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– what information did they request from you?
– did the information seem useful?
• Is there information they should have asked for that
they did not? Did they ask you if it was all right if
they sent you information?
– see if you receive any response back from the
company after signing up
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INTERNET EXERCISES
Try This !
Support for this exercise can be found on the Web
site for Marketing for Hospitality and Tourism,
www.prenhall.com/kotler
• Go to two Web sites for the same type of
hospitality or tourism organization.
– go to two restaurants, two destination
marketing organizations, etc.
• Evaluate the Web sites according to the “7 Cs”
of effective Web site design.
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END
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