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Consumer Behavior, Internet
Marketing, and Advertising
1. Describe the factors that influence consumer
behavior online.
2. Understand the decision-making process of consumer
purchasing online.
3. Describe segmentation and how companies are
building one-to-one relationships with customers.
4. Explain how consumer behavior can be analyzed for
creating personalized services.
5. Discuss the issues of e-loyalty and e-trust in electronic
commerce (EC).
6. Describe consumer market research in EC.
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7. Describe the objectives of Web advertising and its
characteristics.
8. Describe the major advertising methods used on the
Web.
9. Describe various online advertising strategies and
types of promotions.
10. Describe permission marketing, ad management,
localization, and other advertising-related issues.
11. Relate Web 2.0 and social networks to Internet
market research and advertising.
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• A GENERIC PURCHASING-DECISION MODEL
– Five major phases:
• Need identification
• Information search
– product brokering
Deciding what product to buy
– merchant brokering
Deciding from whom (from what merchant) to buy a product
• Alternative evaluation
• Purchase and delivery
• Postpurchase behavior
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• CUSTOMER DECISION SUPPORT IN WEB
PURCHASING
• PLAYERS IN THE CONSUMER DECISION
PROCESS
– Initiator
– Influencer
– Decider
– Buyer
– User
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• FROM MASS MARKETING TO ONE-TO-ONE
MARKETING
– Mass Marketing and Advertising
– market segmentation
The process of dividing a consumer market into
logical groups for conducting marketing research
and analyzing personal information
– one-to-one marketing (relationship marketing)
Marketing that treats each customer in a unique
way
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• personalization
The matching of services, products, and advertising
content with individual consumers and their
preferences
• user profile
The requirements, preferences, behaviors, and
demographic traits of a particular customer
• cookie
A data file that is placed on a user’s hard drive by a
remote Web server, frequently without disclosure or
the user’s consent, which collects information about
the user’s activities at a site
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• behavioral targeting
Targeting that uses information collected
about an individual’s Web-browsing behavior,
such as the pages they have visited or the
searches they have made, to select an
advertisement to display to that individual
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• collaborative filtering
A market research and personalization
method that uses customer data to predict,
based on formulas derived from behavioral
sciences, what other products or services a
customer may enjoy; predictions can be
extended to other customers with similar
profiles
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• CUSTOMER LOYALTY
– e-loyalty
Customer loyalty to an e-tailer or loyalty programs
delivered online or supported electronically
• Business Intelligence and Analytical Software
• SATISFACTION IN EC
– Satisfaction is one of the most important success measures
in the B2C online environment
• TRUST IN EC
– trust
The psychological status of willingness to depend on
another person or organization
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• OBJECTIVES AND CONCEPTS OF MARKET
RESEARCH ONLINE
– What Are Marketers Looking For in EC Market
Research?
• REPRESENTATIVE MARKET RESEARCH
APPROACHES
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Market Segmentation Research
Online Sampling Methods
Online Surveys
Hearing Directly from Customers
Data Collection in the Web 2.0 Environment
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– Observing Customers’ Movements Online
• transaction log
A record of user activities at a company’s Web site
• clickstream behavior
Customer movements on the Internet
• Web bugs
Tiny graphics files embedded in e-mail messages and in
Web sites that transmit information about users and
their movements to a Web server
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• spyware
Software that gathers user information over an Internet
connection without the user’s knowledge
• clickstream data
Data that occur inside the Web environment; they
provide a trail of the user’s activities (the user’s
clickstream behavior) in the Web site
• Web mining
Data mining techniques for discovering and extracting
information from Web documents; explores both Web
content and Web usage
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• LIMITATIONS OF ONLINE MARKET RESEARCH
– Accuracy of responses
– Loss of respondents because of equipment
problems
– The ethics and legality of Web tracking
– The difficulty in obtaining truly representative
samples
– The lack of understanding of the online
communication process and how online
respondents think and interact in cyberspace
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• HOW TO OVERCOME THESE LIMITATIONS
– Identify the intended target audience or demographic
so that the right kind of sampling can be performed
– Anonymity for target respondents may encourage
them to be more truthful in their opinions
– Concerns about the security of the information
transmitted should be minimized
– Companies may outsource their market research to
large and experienced companies that have
specialized market research departments and
expertise
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• BIOMETRIC MARKETING
• biometrics
An individual’s unique physical or behavioral
characteristics that can be used to identify an
individual precisely (e.g., fingerprints)
– By applying the technology to computer users, we
can improve security and learn about the user’s
profile precisely
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• Advertising is an attempt to disseminate
information in order to affect buyer–seller
transactions
– In traditional marketing, advertising was impersonal,
one-way mass communication that was paid for by
sponsors
• interactive marketing
Online marketing, facilitated by the Internet, by which
marketers and advertisers can interact directly with
customers, and consumers can interact with
advertisers/vendors
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• The Advertising Cycle
– ad views
The number of times users call up a page that has a banner
on it during a specific period; known as impressions or
page views
– button
A small banner that is linked to a Web site; may contain
downloadable software
– page
An HTML (Hypertext Markup Language) document that
may contain text, images, and other online elements, such
as Java applets and multimedia files; may be generated
statically or dynamically
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– click (click-through or ad click)
A count made each time a visitor clicks on an
advertising banner to access the advertiser’s Web
site
– CPM (cost per thousand impressions)
The fee an advertiser pays for each 1,000 times a
page with a banner ad is shown
– conversion rate
The percentage of clickers who actually make a
purchase
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– click-through rate
The percentage of visitors who are exposed to a
banner ad and click on it
– click-through ratio
The ratio between the number of clicks on a
banner ad and the number of times it is seen by
viewers; measures the success of a banner in
attracting visitors to click on the ad
– hit
A request for data from a Web page or file
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– visit
A series of requests during one navigation of a
Web site; a pause of a certain length of time ends
a visit
– unique visit
A count of the number of visitors entering a site,
regardless of how many pages are viewed per visit
– stickiness
Characteristic that influences the average length
of time a visitor stays in a site
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– Advertising Online and Its Advantages
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Cost
Richness of format
Personalization
Timeliness
Location-basis
Linking
Digital branding
• advertising networks
Specialized firms that offer customized Web
advertising, such as brokering ads and targeting
ads to select groups of consumers
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• BANNERS
– banner
On a Web page, a graphic advertising display linked to
the advertiser’s Web page
– keyword banners
Banner ads that appear when a predetermined word
is queried from a search engine
– random banners
Banner ads that appear at random, not as the result of
the user’s action
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– Benefits and Limitations of Banner Ads
• major benefit is users are transferred directly to an
advertiser’s site, often the shopping page
• major disadvantage of banners is their cost
– banner swapping
An agreement between two companies to each display the
other’s banner ad on its Web site
– banner exchanges
Markets in which companies can trade or exchange
placement of banner ads on each other’s Web sites
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• POP-UP AND SIMILAR ADS
– pop-up ad
An ad that appears in a separate window before, after,
or during Internet surfing or when reading e-mail
– pop-under ad
An ad that appears underneath the current browser
window, so when the user closes the active window
the ad is still on the screen
• E-MAIL ADVERTISING
• NEWSPAPER-LIKE AND CLASSIFIED ADS
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• SEARCH ENGINE ADVERTISEMENT
– URL Listing
– Keyword Advertising
– search engine optimization (SEO)
The craft of increasing site rank on search engines;
the optimizer uses the ranking algorithm of the
search engine (which may be different for
different search engines) and best search phrases,
and tailors the ad accordingly
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• GOOGLE—THE ONLINE ADVERTISING KING
• ADVERTISING IN CHAT ROOMS
• OTHER FORMS OF ADVERTISING
– Advertising in Online Newsletters
– Posting Press Releases Online
– Video Ads
– advergaming
The practice of using computer games to advertise
a product, an organization, or a viewpoint
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• social network advertising
Online advertising that focuses on social
networking sites
– Types of Social Network Advertising
• Direct advertising that is based on your network of
friends
• Direct advertising placed on your social network site
• Indirect advertising by creating “groups” or “pages”
– Sponsored Reviews by Bloggers
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• VIDEO ADS ON THE WEB AND IN SOCIAL
NETWORKING
– Tracking the Success of an Online Video Campaign
• Web video analytics
A way of measuring what viewers do when they watch an
online video
• viral marketing
Word-of-mouth marketing by which customers
promote a product or service by telling others
about it
– Viral Marketing in Social Networks
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• OTHER ADVERTISING STRATEGIES
– affiliate marketing
A marketing arrangement by which an organization
refers consumers to the selling company’s Web site
– Ads as a Commodity (Paying People to Watch Ads)
– Selling Space by Pixels
– Personalized Ads
• Webcasting
A free Internet news service that broadcasts personalized
news and information, including seminars, in categories
selected by the user
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• ONLINE EVENTS, PROMOTIONS, AND
ATTRACTIONS
– Live Web Events
• mobile advertising
Ads sent to and presented on mobile devices
– Mobile Marketing
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• PERMISSION ADVERTISING
– spamming
Using e-mail to send unwanted ads (sometimes
floods of ads)
– permission advertising (permission marketing)
Advertising (marketing) strategy in which
customers agree to accept advertising and
marketing materials (known as opt-in)
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• SOME IMPLEMENTATION ISSUES
– admediaries
Third-party vendors that conduct promotions,
especially large-scale ones
– Ad Exchanges
– Advertisement as a Revenue Model
– Measuring Online Advertising’s Effectiveness
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• ad management
Methodology and software that enable
organizations to perform a variety of activities
involved in Web advertising (e.g., tracking
viewers, rotating ads)
• localization
The process of converting media products
developed in one environment (e.g., country) to a
form culturally and linguistically acceptable in
countries outside the original target market
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– Automatic Versus Manual Web Page Translation
– Using Internet Radio for Localization
• Internet radio
A Web site that provides music, talk, and other
entertainment, both live and stored, from a variety of
radio stations
• AD CONTENT
• INTELLIGENT AGENTS APPLICATIONS
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1. Do we focus on value-creating customers?
2. Which Internet marketing/advertising channel do we
use?
3. What metrics do we use to guide advertisers?
4. What is our commitment to Web advertising?
5. Should we integrate our Internet and non-Internet
marketing campaigns?
6. Who will conduct the market research?
7. Should we use intelligent agents?
8. What ethical issues should we consider in online
marketing?
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