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Marketing: An Introduction
Marketing in the Internet Age
•Chapter Three
•Lecture Slides
–Extended Version
•Course
•Professor
•Date
Marketing: An Introduction
Looking Ahead
• After studying this chapter, you should be
able to:
• Identify the major forces shaping the new Internet Age.
• Explain how companies have responded to the Internet and
other powerful new technologies with e-business strategies,
and how these strategies have resulted in benefits to both
buyers and sellers.
• Describe the four major e-commerce domains.
• Discuss how companies go about conducting e-commerce
to profitably deliver more value to customers.
• Overview the promise and challenges that e-commerce
presents for the future.
3-2
©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
Opening Vignette: Canadian Tire
• In business since 1922, now with 443 stores and 200 gas
stations across Canada
• Uses both corporate-owned stores and locally owned
dealers
• Slow to move their business online to avoid making the
mistakes of those before them
• One of the top three e-commerce sites in Canada
• 2 million visitors since its inception
• Includes products only available online
• Special promotions such as “Item or Hot Deals of the Week”
• Allows subscribers to shop directly from eFLYER and receive
weekly e-mails from the company
• Click-and-mortar retailing as a two-tiered system
3-3
©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
Forces Shaping the Internet Age
• Digitalization: today’s appliances and systems run on
digital information, consisting of streams of zeros and ones
• Embedded systems require proprietary software to run
• Provides for a refrigerator that tells you when it runs out of
beer
• Connectivity:
telecommunications
networks transport digital
information
• Provides for a refrigerator
that re-orders for you!
Digitalization
&
connectivity
The Internet
Age
Customization
&
customerization
3-4
The explosion
of the
Internet
©Copyright 2004, Pearson Education Canada Inc.
New types
of
Intermediaries
Figure 3-1
Marketing: An Introduction
Forces Shaping the Internet Age (continued)
• Intranet: a network that connects people within a company
to each other and to the company network
• Extranet: a network that connects a company with its
suppliers and distributors
• The Internet: a vast
public web of computer
networks that connects users
of all types all around the
world to each other and to an
amazingly large “information
repository.”
Digitalization
&
connectivity
The Internet
Age
Customization
&
customerization
3-5
The explosion
of the
Internet
©Copyright 2004, Pearson Education Canada Inc.
New types
of
Intermediaries
Figure 3-1
Marketing: An Introduction
Forces Shaping the Internet Age (continued)
• The Internet explosion:
• 400 million Internet users by the year 2000
• Internet penetration in Canada reached 69% of the population
18+ years old by early 2001
• Estimated number of Web
surfers worldwide by year
2004: 1 billion
• Visit the NUA website for
current Internet statistics
Digitalization
&
connectivity
The explosion
of the
Internet
The Internet
Age
Customization
&
customerization
3-6
©Copyright 2004, Pearson Education Canada Inc.
New types
of
Intermediaries
Figure 3-1
Marketing: An Introduction
Forces Shaping the Internet Age (continued)
• New types of intermediaries:
• Click-only companies operate on a virtual basis only, with no
physical presence that customers can see
• Examples:
– Amazon.com
– Ing Direct
• Click-and-mortar companies
combine an online presence
with traditional stores
• Examples:
– Mountain Equipment CoOperative (MEC)
– Canadian Tire
3-7
Digitalization
&
connectivity
The explosion
of the
Internet
The Internet
Age
Customization
&
customerization
©Copyright 2004, Pearson Education Canada Inc.
New types
of
Intermediaries
Figure 3-1
Marketing: An Introduction
Forces Shaping the Internet Age (continued)
• Customization: taking the initiative to customize the
market offering for the customer
• Customerization: leaving it to individual customers to
design the market offering
• Prosumers combine
production and consumption
in one process.
• Example:
– Reflect.com
Digitalization
&
connectivity
The explosion
of the
Internet
The Internet
Age
Customization
&
customerization
3-8
©Copyright 2004, Pearson Education Canada Inc.
New types
of
Intermediaries
Figure 3-1
Marketing: An Introduction
“E” Terms
• E-business: the use of electronic platforms to conduct a
company’s business
• E-commerce: buying and selling processes supported by
electronic means
• E-markets are marketspaces
• E-marketing: efforts to communicate about, promote,
and sell products and services over the Internet
• E-purchasing (E-procurement): purchasing goods,
services, and information from online suppliers
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©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
Benefits to Buyers
• Convenience: no traffic, parking, or limited store hours
• Privacy: no human contact required
• Greater product access/selection: unlimited
selection is possible
• Information: a wealth of available information on
companies, products, and competitors
• Interactive shopping: consumers can tailor the
product offering to their tastes
• Immediate results: consumers can order what they
want when they want
3-10
©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
Benefits to Sellers
• Customer relationship building: interaction with
customers results in increased value and customer
satisfaction
• Cost savings: virtual space is much cheaper than
physical space
• Increased speed: communication moves at the speed
of transmission
• Increased efficiency: intermediaries are cut out
• Flexibility: ongoing adjustments to product availability
and pricing
• Global reach: local companies can become global
companies, instantly
3-11
©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
E-Commerce Domains
• Business to consumer (B2C): the online selling of
goods and services to final consumers
• Forrester Research prediction: B2C sales in Canada will
reach $18m by 2004
• Products best suited to B2C:
–
–
–
–
–
travel services
financial services
music
clothing
computer hardware
and software
– flowers
– gifts
3-12
Targeted to
consumers
Targeted to
businesses
Initiated by
business
Business
B2C
Consumer
Business
B2B
Business
Initiated by
consumer
Consumer
C2C
Consumer
Consumer
C2B
Business
©Copyright 2004, Pearson Education Canada Inc.
Figure 3-2
Marketing: An Introduction
E-Commerce Domains
• Business to business (B2B): using online resources to
reach new customers, serve current customers more
effectively, and obtain buying efficiencies and better prices
• Gartner Group estimate: B2B will reach $3.6 trillion in 2003,
compared with $107 billion in B2C
• Open trading
networks: huge emarketspaces for B2B
buyers and sellers
• Private trading
networks: B2B trading
networks that link a
particular seller with its
own trading partners
3-13
Targeted to
consumers
Targeted to
businesses
Initiated by
business
Business
B2C
Consumer
Business
B2B
Business
Initiated by
consumer
Consumer
C2C
Consumer
Consumer
C2B
Business
©Copyright 2004, Pearson Education Canada Inc.
Figure 3-2
Marketing: An Introduction
E-Commerce Domains
• Consumer to consumer (C2C): online exchanges of
goods and information between final consumers
• Example:
– eBay
– currently has 30 million registered users
– $5 billion in trades in the past year
• Types of C2C websites:
– collectible and used good
exchanges
– forums
– discussion groups
– newsgroups
– chat rooms
3-14
Targeted to
consumers
Targeted to
businesses
Initiated by
business
Business
B2C
Consumer
Business
B2B
Business
Initiated by
consumer
Consumer
C2C
Consumer
Consumer
C2B
Business
©Copyright 2004, Pearson Education Canada Inc.
Figure 3-2
Marketing: An Introduction
E-Commerce Domains
• Consumer to business (C2B): online exchanges in
which consumers search out sellers, learn about their offers,
and initiate purchases
• Examples:
– Travelocity.com
– Priceline.com
3-15
Targeted to
consumers
Targeted to
businesses
Initiated by
business
Business
B2C
Consumer
Business
B2B
Business
Initiated by
consumer
Consumer
C2C
Consumer
Consumer
C2B
Business
©Copyright 2004, Pearson Education Canada Inc.
Figure 3-2
Marketing: An Introduction
Conducting E-Commerce
• Click-only companies: e-tailers which operate only
online without any brick-and-mortar market presence
Seller
Brick & mortar
store channels
Consumers
Brick-only marketers
Seller
E-Commerce
channels
Consumers
Click-only marketers
Brick & mortar
store channels
Seller
Consumers
E-Commerce
channels
Click-and-mortar marketers
3-16
©Copyright 2004, Pearson Education Canada Inc.
Figure 3-3
Marketing: An Introduction
Conducting E-Commerce (continued)
• Click-and-mortar companies: traditional brick-andmortar companies that have added e-marketing to their
operations.
Seller
Brick & mortar
store channels
Consumers
Brick-only marketers
Seller
E-Commerce
channels
Consumers
Click-only marketers
Brick & mortar
store channels
Seller
Consumers
E-Commerce
channels
Click-and-mortar marketers
3-17
©Copyright 2004, Pearson Education Canada Inc.
Figure 3-3
Marketing: An Introduction
Reasons for dot.com Failures
• Lack of research and planning
• Over-reliance on spin and hype rather than
sound marketing strategy
• Over-spending on building
brand identity and attracting
customers
• Non-sensical business models
• Poor expense control
• Notable examples:
– eToys.com
– Pets.com
– Garden.com
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©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
Sources of E-Commerce Revenue
• Product and service sales income
• Advertising income
• Sponsorship income
•
•
•
•
•
•
3-19
Alliance income
Membership and subscription income
Profile income
Transaction commissions and fees
Market research and information fees
Referral income
©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
Types of Web Sites
• Corporate web site: builds customer goodwill and
supplements other sales channels, rather than selling the
company’s products directly
• Example:
– McDonalds
• Marketing web site: engages consumers in
interactions that will move them closer to a direct purchase
or other marketing outcome
• Examples:
– Toyota
– Kraft Canada
3-20
©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
7 C’s of Effective Web Site Design
• Context: layout and design elements
• Content: text, pictures, sound and video
• Community: enabling user-to-user communication
• Customization: tailoring the site to different users or
allowing users to personalize the site
• Communication: enabling site-to-user, user-to-site,
or two-way communication
• Connection: linking to other sites of interest to the
user
• Commerce: enabling commercial transactions
3-21
©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
Online Advertising
• Online advertising: advertising that appears while
consumers are surfing the Web
• Types of online advertising:
– Banner ads and tickers
– Skyscrapers
– Rectangles
– Interstitials
– Browser ads
– Content sponsorship
– Microsites
3-22
©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
Online Advertising (continued)
• Viral marketing: e-mail messages or other marketing
events that are so infectious that customers will want to
pass them along to friends
•
•
•
•
3-23
Also known as “buzz”
Created by public relations
Can be very inexpensive and very effective
Examples:
– MyPoints.com
– Hotmail.com
©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
Web Communities
• Web communities: web sites where members can
congregate online and exchange opinions
• Effective use of C2C properties of the Internet
• Can become a home base for all of a user’s Web activities
• Examples:
– iVillage.com
– MyFamily.com
– @griculture Online
3-24
©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
Webcasting and E-mail
• Webcasting: the automatic downloading of
customized information of interest to recipients’ PCs
– an attractive channel for delivering Internet advertising
or other information content.
– also known as “push” programming
• Example
– Infogate.com
• In order to be effective, e-mail campaigns must be:
– enriched
– targeted to those who want them
3-25
©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
Challenges of E-Commerce
• Limited consumer exposure and buying: users
do more information gathering than actual buying
• Skewed user demographics: users tend to be
somewhat more upscale and technology oriented
• Chaos and clutter: with millions of sites on the Web,
it’s difficult to attract and hold attention
• Security: the typical user does not trust that the Internet
is a secure place to do business
• Ethical concerns: tracking of usage and unauthorized
use of private information remains a major concern
3-26
©Copyright 2004, Pearson Education Canada Inc.
Marketing: An Introduction
Looking Back
• Major changes in the
marketing landscape
are having an impact on
marketing practices
• Recent technological
advances have created
a new Internet age.
• Marketers will have to
add some Internet
thinking to their
strategies and tactics
3-27
©Copyright 2004, Pearson Education Canada Inc.