Download Consumer Behavior, Marekt Research, and advertisement

5/24/2017
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Describe the factors that influence consumer
behavior online
Understand the decision-making process of
consumer purchasing online
Describe how companies are building one-toone relationships with customers
Discuss the issues of e-loyalty and e-trust in
EC
Describe consumer market research in EC
Describe Internet marketing in B2B,
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Describe the objectives of web advertising and its
characteristics
Describe the major advertising methods used on the
Web
Describe various online advertising strategies and
types of promotions
Describe permission marketing, ad management,
localization, and other advertising-related issues
Understand the role of intelligent agents in consumer
issues and advertising applications advertising
applications
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The Problem
 Small business designing and manufacturing
mountain bike components
 1995 Web site was a status symbol rather than a
business tool
 The site did not:
 Offer enough customer information
 Enable the company to gain insight into their
customers’ needs and wants
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The Solution
 Customer surveys introduced the site
 Web Trader automatically saves and
organizes answers in the database—this
information is used to make marketing
decisions
 Created an electronic product catalog
 Visitors can browse through the product
catalog with detailed descriptions and
graphics of products
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The Results
 Consumers can purchase bikes, parts,
accessories, bags, water bottles and
 Dealers can:
 Place orders on the site
 Learn about new products quickly
 Site used for market research,
communicating with customers and
advertising
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What we learn
 Change from a passive Web site (just
having a presence online) to one with
interactivity can bring tremendous
benefits to a company in terms of
finding out customer wants and needs
and how to market products
effectively to them
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Business today very competitive
 Companies treat customers as royalty
 Finding and retaining customers key
 Need to understand consumer behavior
 Done through various models
 A consumer model—an understanding of
how a consumer makes a purchase
decision
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EC consumers composed of
 Individual consumers
 Organizational consumers
 Most bulk purchase happens in this
group
 Governments
 Private corporations
 Resellers
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Two types of variables
 Personal characteristics (demographic)
 Environmental variables
 Social
 Cultural/community
 Other (legal, political, technological,
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government regulations, etc)
Consumer behavior viewed in terms of:
 Why is the consumer shopping?
 How does the consumer benefit from
shopping online?
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Social variables—people influenced by:
Family members, friends, co-workers,
“what’s in fashion this year”; chat rooms
Cultural/community variables—where
the consumer lives
 Other environmental variables:
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Available information, government
regulations, legal constraints, etc
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Age and gender
Marital status
Educational level
Ethnicity
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Occupation
Household income
Personality
Lifestyle characteristics
This is a simplified version of what consumers
do but the process of purchasing a product
can be more complex especially if the product
is new
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Roles people play in decision-making
 Initiator—suggests/thinks of buying a
particular product or service
 Influencer—advice/views carry weight in
making a final buying decision
 Decider—makes a buying decision
 Buyer—makes the actual purchase
 User—consumes, uses a product or service
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One or more individuals may play these
roles; advertisers and marketers need to
target them
 Knowing the decision making process,
marketers can
 Predict
 Improve
 Influence consumer decision to buy
 Two models are discussed here
 Generic and CDSS (consumer decision
support system)
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6 major phases of a general model
1. Need identification
2. Information search
3. Evaluation of alternatives
4. Purchase and deliver
5. After-purchase evaluation
6. Repeat purchase
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DECISION PROCESS
CDSS SUPPORT
INTERNET & WEB SUPPORT
Need recognition
Agents and event notices
Banner ads, newsgroups
Information search
Virtual catalogues
Evaluation, selection
Web directories, internal
search and external search
engines, information brokers
FAQs/summaries, samples
Discussion in newsgroups,
and trials; testimonies
cross site comparisons
Purchase, payment,
delivery
Ordering of product,
arranging delivery
Electronic cash and virtual
banking
Logistics providers and
package tracking
After purchase
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Customer support (email,
newsgroup)
Discussions in newsgroups
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A more effective model is described as one-on-one
marketing,
 Each customer treated in a unique way
 Marketing and advertising fit customer profile and
needs
 Achieved through personalization and
customization
Relationships seen as a two-way street:
 Customer information is collected and placed in a
database
 Customer’s profile is developed
Generate “four P’s” of marketing:
 Product
Place
 Price
Promotion
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One-on-one marketing possible through
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Personalization—the matching of services, products, and
advertising content to individual consumer
User profile—the requirements, preferences,
behaviors, and demographic traits of a particular
customer.
Cookie/web bug—a data file that is placed on a user’s
hard drive by a Web server, frequently without the
user’s consent, that collects info on the user’s activities
at a site
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Major strategies used to compile user profiles
include:
 Solicit information directly from the user.
 Observe what people are doing online
 Perform marketing research
 Build from previous purchase patterns
 Make inferences (from information provided
by customers on other issues)
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Customer loyalty—degree to which the customer stays with
vendor or brand
 Major objective of one-to-one B2C and B2B marketing
 A significant contributor to profitability
 More costly to acquire a customer than keep one
 Strengthens a company’s market position since loyal
customers are shielded from competition
Two broad types of customers:
 Loyalists who
 Are emotionally attached to the company
 Rationally chose the company as the best
 Find it bothersome to shift
 Migratory customers
 Change lifestyle
 Angered by poor service
 Find more option through EC
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 E-loyalty—customer’s
loyalty to an e-tailer
 Learn about customers’
needs
 Interact with customers
 Provide customer service
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Factors that affect satisfaction
 Information quality
 Accuracy
 Richness of content
 Format of content (multimedia)
 Timeliness—updated constantly
 System quality
 Ease of navigation
 Ease of use
 Response time
 Security settings and privacy assurance
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Factors that affect satisfaction
 Service quality
 Responsiveness
 Assurance/warranty
 Empathy –understanding, sympathy,
compassion, kindness etc
 Other solutions
 Fast and time-saving service
 24/7 operations
 Better prices
 Free promotions, gift ideas and sales
 Cut down shipping costs and delivery times
 Ask for less information about customers and
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provide more information on the product
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Key in creating loyalty and retention of
customers
Ability to create satisfaction is a
competitive advantage and
differentiating factor
80% of satisfied online customers shop
again and recommend the site
About 90% dissatisfied ones never come
back
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Trust—psychological status of involved parties who
are willing to pursue further interactions to achieve a
planned goal
 EC vendors must establish high levels of trust with
current and potential customers
 Will the parties keep their promise to deliver
 Pictures not the same as the actual product
 Particularly important in global EC since:
 Legal action is hard to undertake
 Differences in culture, business environments
 Security concerns deter revelation of credit card
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 Level
of trust determined by:
 Degree of initial success
experienced with EC
 Well-defined roles and
procedures for all parties
involved
 Realistic expectations as to
outcomes from EC
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Trust can be decreased by:
 Any user uncertainty regarding the
technology
 Lack of initial face-to-face interactions
 Lack of enthusiasm among the parties
Solutions:
 Brand recognition and co-branding
Improve security mechanisms through
 Trust certification and seals,
 Third party evaluation of vendors
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Trust certificates and seals
Evaluate vendors using 3rd parties
Let users and buyers evaluate products
Have a return policy, warranties & insurance
Free samples
Have privacy statements and guarantees
Co-branding with big companies and
vendors
Good Web design
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The goal is
 Find information and knowledge that
describes relationships among consumers
and products
 Establish marketing plan and better
understand the purchasing process
 Evaluate market performance
 On the Web, the goal is to turn a browser
into a buyer
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Market research includes gathering information
about:
Economy
 Industry
 Firms
 Products
 Pricing
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Distribution
 Competition
 Promotion
 Consumer
purchasing
behavior
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Can be both online and offline
Common tools include:
 Questionnaires
 Surveys (through emails and
telephone)
 Focus groups
 Observation
 Interviews
Important first to understand how
groups of consumers are classified
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Market segmentation—process of
dividing a consumer market into
logical groups for conducting
marketing research, advertising, and
sales
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Main ways of segmenting the market
 Geographic
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Region
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Size of city, county or district
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Population density
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Climate
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Language
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Demographic
 Age
 Occupation
 Gender
 Education
 Family size
 Religion
 Race,
 Income
 Nationality
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Cognitive, affective
 Attitude, benefits sought, loyalty, usage
rate, perceived risk, internet shopping
experience, etc
Psychographic
 Social class
 Lifestyle
 Personality
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Conventional methods of research earlier
mentioned are expensive
 Internet Research is
 Faster and more interactive
 Can cover a large geographical area
 Cheaper and yet sophisticated since its
reach and richness is extensive
 Larger sample which improves the
reliability of results
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Online market research aims to:
 Find, explain & predict online buying behavior
 Find out why some customers buy online and
others do not
 Establish purchase patterns for individuals and
groups
 Find the factors that encourage online buying
 Identify real buyers from mere browsers
 Understand how individuals navigate Web
 Get optimal Web design that engages clients
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Knowing these answers helps a
vendor to properly
 Price
 Advertise
 Design the Web site and
 Provide appropriate customer
service
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The main ones are:
 One-on-one by e-mail
 Focus groups in chat-rooms
 Questionnaires placed on Web sites for
tracking customers’ movements on the Web
through
 Transaction logs (record of user activities
on a company’s web site)
 Click-stream behavior (or movt on
Internet)
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Cookies
Web bugs
Spy-ware
Web analytics (data and web mining)
Voting polls
Web-based surveys
Hearing directly from customers creating
customer scenarios
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Tracking customer movements—learn
about customers by observing their
behavior rather than by asking them
questions
 Transaction
 Clickstream behavior
 Cookies
 Web bugs
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 How
to get respondents
 Incentives such as
Games
Prizes
Free software
Discounts
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Accuracy of responses
Loss of respondents because of
equipment problems
Ethics and legality of Web tracking
Focus group responses can lose
something in the translation from an inperson group to an online group
Eye contact and body language are lost
 Anonymity is necessary to elicit an
unguarded response
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 Lack
of representativeness in
samples
 Online shoppers tend to be
wealthy, employed, and well
educated; results may not be
extendable to other markets
 Lengthy analysis arising from
huge volumes of data
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Solutions to some of the problems:
 Automate process of data analysis
 Outsource the research to third parties
The right kind of sampling is achieved
through verification of target audience or
demographic
 Anonymity causes a loss of information
about demographics and characteristics of
the respondents
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 Data mining—the process of searching a large
database to discover previously unknown patterns;
automates the process of finding predictive
information
 New business opportunities generated by
conducting:
 Automated prediction of trends and behaviors
 Automated discovery of previously unknown
patterns and relationships
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Web mining—application of data
mining techniques to discover
meaningful patterns, profiles, and
trends from both the content and
usage of Web sites
 Web content mining
 Web usage mining
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Advertising is an attempt to
disseminate information in order to
affect a buyer-seller transaction
 Interactive marketing—marketing
that allows a consumer to interact
with an online seller
 2-way communication & e-mail
capabilities
 Vendors also can target specific
groups and individuals
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Ad views—number of times users call up
a page that has a banner on it during a
specific time period; known as
impressions or page views.
Button—a small banner that is linked to a
Web site
Page—HTML document
Click—a count made each time a visitor
clicks on an advertising banner to access
the advertiser ‘s Web site
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CPM (cost per thousand impressions)—
fee an advertiser pays for each 1,000
times a page with a banner ad is viewed
Hit—request for data from a Web page
Visit—a series of requests during one
navigation of a Web site; a pause of
request for a certain length of time ends a
visit
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3/4 of PC users gave up some
television time
 Well educated, high-income Internet
users a desired target for advertisers
 Internet is by far the fastest growing
communication medium
 Advertisers want a medium with
such potential reach, locally &
globally
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Cost
 Cheaper, updated any time with little cost
Richness of format
 Use of text, audio, graphics, and animation
 Games, entertainment & promotions
combined
Personalization
 Can be interactive
 Targets specific interest groups/individuals
Banner—on a Web page, a graphic advertising
display linked to the advertiser’s Web page
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Banner swapping—an agreement
between two companies to each display
the other’s banner ad on its Web site
 Direct link between sites
 Ad space bartering
Banner exchanges—markets in which
companies can trade or exchange
placement of banner ads on each other’s
Web sites (bcentral.com)
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Pop-under ad—an ad that appears
underneath the current browser window, so
when the user closes the active window, they
see the ad
Interstitials– an initial Web page or a portion
of it that is used to capture the user’s attention
for a short time while other content is loading
E-mail
 Several million users may be reached
directly
 Problems: junk mail, spamming
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URL (Universal Resource Locators)
 Advantages:
 Minimal cost is associated with it
 Submit your URL to a search
engine and be listed
 Keyword search is used
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Advertising in chat rooms
Virtual meeting ground
 Free addition to a business site
 Allows advertisers to cycle through
messages and target the chatter again
 More effective than banners
 Used for one-to-one connections
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Advertorial—an advertisement
“disguised” to look like an editorial or
general info
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