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Chapter 5
E-Commerce:
Electronic Marketing
and the Internet for
Dot.com and Brickand-Mortar
Marketers
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Objectives
1. Define e-commerce and give examples of
each function of the Internet.
2. Describe how marketers use the Internet to
achieve their firms’ objectives.
3. Explain how online marketing benefits
organizations, marketers, and consumers.
4. Identify the goods and services marketed
most often on the Internet.
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Objectives
5. Identify the primary online marketing
channels.
6. Explain how marketers use interactive tools
as part of their online marketing strategies.
7. Discuss how an effective Web site can
enhance customer relationships.
8. Describe how to measure the effectiveness
of online marketing efforts.
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
E-Commerce Capabilities
CAPABILITY
DESCRIPTION
EXAMPLE
Global reach
The ability to reach anyone
connected to a PC anywhere in
the world.
Major car makers, such as Ford,
Nissan, and Volvo, use the Web
to reach car buyers around the
world.
One-to-one marketing
Creating products to meet
customer specifications; also
called personalization.
Customers can order customized
clothing—from jeans to shirts to
shoes—online.
Interactive marketing
Buyer-seller communications
through such channels as the
Internet, CD-ROMS, toll-free
telephone numbers, and virtual
reality kiosks.
Intouch Group’s iStations are
interactive kiosks placed in retail
music stores that allow
customers to listen to thirtysecond music clips before they
purchase compact discs.
Right-time marketing
The ability to provide a good or
service at the exact time needed.
FedEx customers can place
service orders online and track
shipments twenty-four hours a
day.
Integrated marketing
Coordination of all promotional
activities to produce a unified,
customer-focused promotional
message.
Nike marketers use the familiar
Swoosh logo and “Just Do It”
slogan in both online and offline
promotions.
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Mondera.com is
designed as an
online retailer
targeting buyers of
fine jewelry.
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
E-Commerce
• Interactive marketing - Buyer-seller
communications in which the customer controls the
amount and type of information received.
• Internet (NET) - Worldwide network of
interconnected computers.
• Intranets - Internal corporate network.
• Extranets - Secure network accessible through a
web site by external customers or organizations for
electronic commerce.
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
A Typical Day on the Web
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Four Functions of the Internet
Communication
• E-mail
• Instant messaging
• Chat rooms
• Online communities
E-Commerce
• Electronic
exchanges
• Extranets and
private
exchanges
• Electronic
storefronts
• Online ticketing
• Auctions
Entertainment
• Games
• Radio and TV
programming
• Music
• Electronic books
• Short movies
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Information
• Search
engines
• Online
publications
• Newsgroups
• Portals
The History of The Internet
• “The history of the Internet begins at the
height of the cold war in the 1960's. People at
the Rand Corporation, America's foremost
military think tank, were trying to figure out an
important strategic problem: how could US
authorities talk to each other in the aftermath
of a nuclear attack?”
Source: the pbs home page
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Benefits of B2B Online Marketing
• New markets and
customers.
• Cost savings in every
aspect of the marketing
strategy.
• Greatly reduces the
time involved in
reaching target
markets.
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Potential for increased profits.
Benefits of Business-to-Consumer
Online Marketing
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Online Consumer Benefits
Three Categories
1. Lower Prices
• Ideal method for savvy shoppers to compare
prices from dozens—even hundreds—of sellers.
2. Convenience
• Cybershoppers can order goods and services
from around the world at any hour of the day or
night.
3. Personalization
• One way is to welcome you back.
• A second way is to send you periodic e-mails
informing you of specials or new products.
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
E-Commerce and Security
• Marketing research indicates that privacy is
the top concern.
• Consumers want assurances that any
information they provide won’t be sold to
others without their permission.
• Prominently displaying privacy policy is an
effective way to build customers’ trust.
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
The European Union
• The bigger the company that uses the internet
the more appealing the company seems to be
to hackers.
– Security is a serious issue, both personal
and in the business arena.
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Who is Online?
1. The heaviest Internet users make $75,000 or more a year.
2. Live in urban areas.
3. States with the highest percentage of Internet users
include:
• Alaska
• New Hampshire
• Washington
• Utah
• Colorado
4. Racial group most likely to use the Internet:
• Americans of Asian and Pacific Island origin.
5. 75 percent of employed people use the Internet at work.
6. 87 percent of college graduates use the Internet.
7. Over half of all people currently looking for jobs go online.
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Online Marketing Channels
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Company Web Sites
Two types of company Web sites exist.
1. Corporate Web sites to increase their visibility,
promote their goods and services.
• Often include information about company history,
products, locations, and financial information.
2. Cybermalls which can link as many as 400
participating online retailers.
• Cybermalls typically feature a popular national
retailer with high customer traffic as an anchor
tenant.
• Stores included in the mall are selected to produce a
good match of merchandise.
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Building an Effective Web Site
Three basic steps for hitting the bulls eye.
1. Establish a mission
for the company’s
site.
2. Identify the purpose of
the site.
3. Satisfy customer
needs and wants
through a clear site
design.
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Measures of Web Site Effectiveness
Profitability
Traffic
counts
Click-through
rates
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Conversion
rates
Research
studies