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CHAPTER 7
E-commerce Marketing
Concepts
Created by, David Zolzer, Northwestern State University—Louisiana
Copyright © 2002 Pearson Education, Inc.
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Learning Objectives

Identify the key features of the Internet
audience
 Discuss the basic concepts of consumer
behavior and purchasing decisions
 Understand how consumers behave
online
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Learning Objectives

Describe the basic marketing concepts
needed to understand Internet marketing
 Identify and describe the main
technologies that support online
marketing
 Identify and describe basic e-commerce
marketing and branding strategies
 Explain how online market research is
conducted
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Key Features of the Internet
Audience

Number of users online in the United
States
 around 170 million in mid 2001
 expected 215 million in 2005
 rate of growth has begun to slow
 Intensity and scope of use
 Both increasing
 56% of adult users logging on in a
typical day
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Key Features of the Internet
Audience

Demographics and access
 some demographic groups have much high
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
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Key Features of the Internet
Audience

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
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Key Features of the Internet
Audience


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
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Frequency of Daily Use of
Various Internet Features
Page 336, Table 7.1
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A Growing Range of Online
Activity
Page 377, Table 7.2
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Changing Demographic
Differences
Page 338, Table 7.3
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Consumer Behavior Models

Consumer behavior is a social science
discipline that attempts to model and
understand the behavior of humans
 Culture is the broadest factor to consumer
behavior
 Culture shapes basic human values,
wants, perceptions, and behaviors
 Subcultures are subsets of cultures that
form around major social differences
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A General Model of Consumer
Behavior
Page 341, Figure 7.1
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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

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Consumer Behavior Models

Lifestyle group can be defined as an
integrated pattern of activities (hobbies,
sports, shopping likes and dislikes, social
events typically attend), interests (food,
fashion, family, recreation), and opinion
(social issues, business, government)
 Psychological profile is a set of needs,
drives, motivations, perceptions, and
learned behaviors
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Psychographic Profiles

Combines both demographic and
psychological data and divides a market
into different groups based on social
class, lifestyle, and/or personality
characteristics
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Factors that Predict Online
Buying Behavior
Page 344, Figure 7.2
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The Purchasing Decision

Five stages in the consumer decision
process:
 awareness of need
 search for more information
 evaluation of alternatives
 the actual purchase decision
 post-purchase contact with the firm
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The Consumer Decision
Process
Page 345, Figure 7.3
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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
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A Model of Online Consumer
Behavior
Page 346, Figure 7.4
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Seven Types of Online Sessions
Page 347, Table 7.4
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How Consumers Behave Online:
Clickstream Analysis

about 40% of online users purchase
something entirely online
 another 40% of online users research
products on the Web, but purchase them
offline
 Most online purchases involve small ticket
items, with the top categories being
books, music, apparel and accessories,
software, and toys
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How Consumers Behave Online:
Clickstream Analysis

More that 85% of shoppers go directly to
vendors sites by typing a product into a
search engine, going straight to the
merchant’s site, or entering a store or
brand name in a search engine
 More that 80% of shoppers are shopping
on the Web for specific products or items
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Increasing Online Purchases

There are a number of actions ecommerce could take to increase the
likelihood that shoppers and nonshoppers would purchase online more
frequently.
 better prices
 easier comparison shopping
 easier returns
 better security
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Online Shoppers
Page 349, Figure 7.5
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Impact of Online Product Research on Offline
Purchase Decisions
Page 349, Figure 7.6
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What Consumers Buy on the Web
Page 350, Figure 7.7
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How Shoppers Find Vendors
and Stores Online
Page 351, Figure 7.8
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Intended Purchases on the Web
Page 352, Figure 7.9
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Factors that Would Encourage
More Online Purchasing
Page 353, Table 7.5
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Basic Marketing Concepts


Marketing -- the strategies and actions firms take
to establish a relationship with a consumer and
encourage purchases of its products or services
Internet Marketing is using the Web -- as well as
traditional channels -- to develop a positive, longterm relationship with customers, thereby
creating a competitive advantage for the firm by
allowing the firm to charge a higher price for
products or services than it competitors can
charge
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Basic Marketing Concepts

Firms within an industry compete with one
another on four dimensions:
 differentiation
 cost
 focus
 scope
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Basic Marketing Concepts

Feature set is the bundle of capabilities
and services offered by the product or
service
 Commodity is a good or service for which
there are many dealers supplying the
same product and all products in the
segment are essentially identical
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Feature Sets

Core product is the core benefit the
customer receives from the product
 Actual product is the set characteristics
designed to deliver the product’s core
benefits
 Augmented product is a product with
additional benefits to customers beyond
the core benefits embodied in the actual
product
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Feature Set
Page 355, Figure 7.10
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Products, Brands, and the
Branding Process

Brand is 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
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Marketing Activities: From
Products to Brands
Page 356, Figure 7.11
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Products, Brands, and the
Branding Process

Closed loop marketing refers to when
marketers are able to directly influence the
design of the core product based on
market research and feedback from the
market
 Brand strategy is a set of plans
differentiating a product from it
competitors, and communicating these
differences effectively to the marketplace
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Products, Brands, and the
Branding Process

Brand equity is the estimated value of the
premium customers are willing to pay for
using a branded product when compared
to unbranded competitors
 Brands are alive and well on the Web
 Consumers are still willing to pay price
premiums for products and service they
perceive and differentiate
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Products, Brands, and the
Branding Process

Customer acquisition costs refer to the
overall costs of converting a prospect into
a consumer, and include all marketing and
advertising costs
 Consumer retention costs are those costs
incurred in convincing an existing
customer to purchase again
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Products, Brands, and the
Branding Process
“Law of One Price” -- With complete price
transparency in a perfect information
marketplace, there will be one world price
for every product
 Price dispersion refers to the difference
between the highest and lowest prices in a
market

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