Download Chapter 4: Marketing on the Web

Marketing on the Web
Key Features of the Internet Audience


Number of users online in the United States
 rate of growth has begun to slow
Intensity and scope of use
 Both increasing; 56% of adult users logging on in a typical day
WORLD INTERNET USAGE AND POPULATION STATISTICS
Population
Population
Internet Usage,
% Population
Usage
Usage
Growth
( 2006 Est.)
% of World
Latest Data
( Penetration
)
% of World
2000-2005
World Regions
Africa
Asia
Europe
915,210,928
14.10%
23,649,000
2.60%
2.30%
423.90%
3,667,774,066
56.40%
380,400,713
10.40%
36.50%
232.80%
807,289,020
12.40%
294,101,844
36.40%
28.20%
179.80%
Middle East
190,084,161
2.90%
18,203,500
9.60%
1.70%
454.20%
North America
331,473,276
5.10%
227,470,713
68.60%
21.80%
110.40%
Latin
America/Caribbean
553,908,632
8.50%
79,962,809
14.70%
7.80%
350.50%
Oceania / Australia
33,956,977
0.50%
17,872,707
52.60%
1.70%
134.60%
6,499,697,060
100.00%
1,043,104,886
16.00%
100.00%
189.00%
WORLD TOTAL
Source: http://www.internetworldstats.com/stats.htm
Key Features of the Internet Audience
 Demographics and access
 some demographic groups have
higher percentage of Internet users
 different patterns of usage exist
across groups
 Ethnicity
 Variation across ethnic groups not as
wide as age groups
 57% white
 47% Hispanic
 43% African American
 Hispanics and African Americans
going online at higher rates
 Education
 82% of individuals with a college
degree online
 39% with high school education of
less online
 Gender
 Men accounted for the majority of
Internet users at first
 Women now outnumber men online
 Lifestyle impact
 Intense Internet usage may cause a
decline in traditional social activities
 Social development of children using
Internet intensively instead of
engaging in face-to-face interactions
or undirected play out of doors may
also be negatively impacted
 Media choices
 More time using the Internet
 Less time spent using traditional
media
Average Allocation by Media
Of all the time Europeans spend consuming media (reading newspapers and
magazines, watching TV, listening to radio or surfing the Web) 20% of is allocated
to the Internet
Internet
20%
TV
33%
Radio
29%
Base: Users of
each medium
Magazines
8%
Newspapers
10%
Source: EIAA Study (http://advertising.fr.msn.be/WWDocs/User/fr-be/research/717,12,Average Allocation by Media)
Consumer Behavior Models
 Direct reference groups
 include one’s family, profession
or occupation, religion,
neighborhood, and schools
 Indirect reference groups
 include one’s life-cycle stage,
social class, and lifestyle group
 Opinion leaders (virtual influencers)
 influence the behavior of others
through their personality, skills,
or other factors
 Lifestyle group
 an integrated pattern of
activities (hobbies, sports),
interests (food, fashion), and
opinion (social issues)
 Psychological profile
 is a set of needs, drives,
motivations, perceptions, and
learned behaviors
Exercise
 Go to the SRI site:
 (www.sric-bi.com/VALS/presurvey.shtml).
 Take the survey to determine what lifestyle category you fit into
 How do you think your lifestyle category and values impact your use of
the Web for ecommerce?
 How has your online consumer behavior affected your lifestyle?
Psychographic Profiles
 Combines both demographic and psychological data and divides a market into
different groups based on social class, lifestyle, and/or personality
characteristics
 Exercise: Visit several different sites that appeal to people of various social
classes, lifestyles, or personality characteristic types.
 Note any differences and share them with the class.
The Consumer Decision Process
Online Consumer Decision Process
 Adds two new factors:
 Web site capabilities -- the content, design, and functionality of a
site
 Consumer clickstream behavior -- the transaction log that consumers
establish as they move about the Web and through specific sites
How Shoppers Find Vendors and Stores
Online
Web Marketing Strategies
 Four Ps of marketing
 Product
 Physical item or service that the company is selling
 Price
 Amount a customer pays for the product
 Promotion
 Any means of spreading the word about the product
 Place
 Need to have products or services available in different
locations
Marketing Strategies
Product Based
Customer Based
 When creating a marketing
strategy, managers must
consider both the nature
of their products and the
nature of their potential
customers
 Good first step in building a
customer-based marketing
strategy
 Identify groups of
customers who share
common characteristics
 B2B sellers are more aware of
the need to customize product
and service offerings to match
their customers’ needs
 Most office supply stores
on the Web believe
customers organize their
needs into product
categories
 See www.staples.com
Communicating with Different Market
Segments
 Identify groups of potential customers
 The first step in selling to those customers
 Media selection
 Can be critical for an online firm
 Challenge for online businesses
 Convincing customers to trust them
 Trust Issues
 The Web is an intermediate step between mass media and personal
contact
 Cost of mass media advertising can be spread over its audience
 Companies can use the Web to capture some of the benefits of
personal contact, yet avoid some of the costs inherent in that
approach
Market Segmentation
 Market segmentation divides the pool of potential customers into segments
and targets specific portions of the market with advertising messages
 Segments
 Usually defined in terms of demographic characteristics
 Geographic segmentation
 Creating different combinations of marketing efforts for each
geographical group of customers
 Demographic segmentation
 Uses age, gender, family size, income, education, religion, or ethnicity to
group customers
 Psychographic segmentation
 Groups customers by variables such as social class, personality, or
their approach to life
 Micromarketing
 Targeting very small market segments
Beyond Market Segmentation: Customer
Behavior and Relationship Intensity
 Behavioral segmentation
 Creation of separate experiences  Occasion segmentation
for customers based on their
 When behavioral
behavior
 Behavior-based categories include:
segmentation is based on
 Simplifiers
things that happen at a
 Like convenience
specific time
 Surfers
 Use the Web to find
 Usage-based market
information and explore new
segmentation
ideas
 Bargainers
 Customizing visitor
 Are in search of a good deal
experiences to match the
 Connectors
 Use the Web to stay in touch
site usage behavior
with other people
patterns of each visitor
 Routiners
 Return to the same sites
over and over again
Exercise
 Visit www.redenvelope.com to examine how that company
implements occasion segmentation.
 Identify several examples of occasion segmentation at that
site.
 Visit www.partypop.com.
 Identify and evaluate how that site segments its customers.
Customer Relationship Intensity and LifeCycle Segmentation
 One goal of marketing is to create strong relationships between a
company and its customers
 Good customer experiences can help create an intense feeling of
loyalty
 Touchpoints
 Online and offline customer contact points
 Touchpoint consistency
 Goal of providing similar levels and quality of service at all
touchpoints
Acquisition, Conversion, and Retention of Customers
 Acquisition cost
 Money a site spends to draw one
visitor to the site
 Funnel model
 Used as a conceptual tool to
understand a marketing strategy
 Very similar to the customer lifecycle model
 Conversion
 Converting a first-time
visitor into a customer
 Conversion cost
 Cost of inducing one visitor
to make a purchase, sign up
for a subscription, or
register
 Retained customers
 Customers who return to the
site one or more times after
making their first purchases
Exercise: Select a retail store with
which You are familiar that has a Web
site On which it sells products/services
Similar to those in its physical stores.
Explore the site and examine its
features that indicate the level of
service it Provides. Based on this,
evaluate the site’s touchpoint
consistency.
Advertising on the Web
 Banner ad
 Small rectangular object on a
Web page
 Pop-up ad
 Appears in its own window when
the user opens or closes a Web
page
 Ad-blocking software
 Prevents banner ads and pop-up
ads from loading
 Interstitial ad
 When a user clicks a link to load
a page, the interstitial ad opens
in its own browser window
 Cost per thousand (CPM)
 Pricing metric used when a
company purchases mass media
advertising
 Trial visit
 First time a visitor loads a Web
site page
 Page view
 Each page loaded by a visitor
 Impression
 Each time the banner ad loads
Exercise: Surf various web sites and look
For ads in the categories mentioned in the
Text. Evaluate the pros/cons and your
Experiences as a customer.
Other Methods
Site Sponsorships
 Give advertisers a chance to
promote products, services, or
brands in a more subtle way
 Helps build brand images and
develop reputation rather than
generate immediate sales
 Sending one e-mail message to a
customer can cost less than one
cent if the company already has
the customer’s e-mail address
 Conversion rate
 The percentage of recipients
who respond to an ad or
promotion
 Opt-in e-mail
 Practice of sending e-mail
messages to people who request
information on a particular topic
 E-Mail marketing
Technology-Enabled Customer Relationship
Management
 Clickstream
 Information that a Web site can gather about its visitors
 Technology-enabled relationship management
 Firm obtains detailed information about a customer’s
behavior, buying patterns, etc., and uses it to set prices
and negotiate terms
Creating and Maintaining Brands on the Web
 Elements of branding include:
 Differentiation
 Company must clearly
distinguish its product from
all others
 Relevance
 Degree to which a product
offers utility to a potential
customer
 Perceived value
 Key element in creating a
brand that has value
Emotional appeals are difficult to
convey on the Web
Rational branding relies on the
cognitive appeal of the specific help
offered, not on a broad emotional appeal
Products, Brands, and the Branding Process
 Brand
 a set of expectations that consumers
have when consuming, or thinking
about consuming, a product or service
from a specific company
 Branding is the process of brand creation
 Closed loop marketing
 marketers are able to directly
influence the design of the core
product based on market research
and feedback
 Brand strategy
 a set of plans differentiating a
product from it competitors, and
communicating these differences
effectively to the marketplace
Exercise
 In-class project for your group --
 Visit www.eluxury.com or
www.cabelas.com and create an rough
internet marketing plan for it that
includes each of the following:
 Market research
 One-to-one marketing
 Viral marketing
 Affiliate marketing
Affiliate and Viral Marketing Strategies
 Affiliate marketing
 One firm’s Web site includes
descriptions, reviews,
ratings, or other information
about a product that is
linked to another firm’s site
 Affiliate site
 Obtains the benefit of the
selling site’s brand in
exchange for the referral
 Cause marketing
 Affiliate marketing program
that benefits a charitable
organization
 Relies on existing customers
to tell other people about
products or services they
have enjoyed using
 Example:
 Blue Mountain Arts
 Electronic greeting card
company
 Purchases very little
advertising, but grew
rapidly
Search Engine Positioning
 Search engine is a Web
site that helps people find
things on the Web
 It has 3 major parts:
 Spider, crawler, or robot
 Program that
automatically searches
the Web
 Index or database
 Storage element of a
search engine
 Search utility
 Uses terms provided
to find Web pages
that match
 Nielsen//NetRatings
 Frequently issues press releases
that list the most frequently
visited Web sites
 Search engine ranking
 Weighting factors used by
search engines to decide which
URLs appear first on searches
 Search engine positioning or
search engine optimization
 Combined art and science of
having a particular URL listed
near the top of search engine
results
Paid Search Engine Inclusion and Placement
 Paid placement
 Option of purchasing a top listing on results pages for a particular
set of search terms
 Rates vary
 Search engine placement brokers
 Companies that aggregate inclusion and placement rights on multiple
search engines
Exercise: Visit various search engines and examine how they do paid placements
Evaluate the paid ads. What are the similarities? Differences? Which search
Engine would you advertise with? Why?
Domain Names
URL brokers
Sell, lease, or auction domain names
ICANN
Maintains a list of accredited registrars
Domain name parking
Permits the purchaser of a domain name to maintain a
simple Web site so that the domain name remains in use