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Part Two
Using Technology
for Customer
Relationships in a
Global Environment
Chapter 04
E-Marketing and
Customer Relationship
Management
Chapter Learning Objectives
1. To define electronic marketing and electronic commerce
and recognize their increasing importance in strategic
planning
2. To understand the characteristics of electronic
marketing—addressability, interactivity, memory, control,
accessibility, and digitalization—and how they differentiate
electronic marketing from traditional marketing activities
3. To examine how the characteristics of electronic
marketing affect marketing strategy
4. To understand how electronic marketing and information
technology can facilitate customer relationship
management
5. To identify the legal and ethical considerations in
electronic marketing
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Chapter Outline
• Marketing on the Internet
– Consumer-Generated Electronic Marketing
– Basic Characteristics of Electronic Marketing
– E-Marketing Strategies
• Customer Relationship Management
–
–
–
–
Database Marketing
Customer Lifetime Value
Technology Drives CRM
Customer Satisfaction Is the End Result of CRM
• Legal and Ethical Issues in E-Marketing
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Marketing on the Internet
• Electronic Commerce (e-commerce)
– Business exchanges conducted over the Internet
using telecommunications tools such as web pages,
e-mail, and instant or text messaging
• Electronic Marketing (e-marketing)
– The strategic process of creating, distributing,
promoting, and pricing products for targeted
customers in the virtual environment of the Internet
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Benefits of E-Marketing
• Open and Instantaneous Flows of Information
– Marketers and customers share information in realtime on prices, specifications, and product
availability.
• Enhanced Customer Service Efficiencies
– Rapid response and always-on availability
• Worldwide Scope
– Opens markets to firms of
all sizes
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Source: “Internet Activities,” Pew Internet & American Life Project, July 2006, www.pewinternet.org/trends/Internet_Activities_7.19.06.htm.
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Consumer-Generated
Electronic Marketing
•
•
•
•
•
•
•
•
Blogs
Wikis
Instant messaging/texting
Online forums
Online virtual worlds/games
Mailing lists
Podcasts
Cell phone texting
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Basic Characteristics of Electronic
Marketing: Addressability
• Addressability is a marketer’s ability to identify
customers before they make a purchase
• How E-Merchants Attain Addressability
– Limit access to areas of their website to encourage
customer registration
– Offer contests and prizes in exchange for consumer
information
– Place “cookies” on visitor’s computer to track usage
and preferences
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Basic Characteristics of Electronic
Marketing: Interactivity
• Interactivity is the ability to allow customers
express their needs and wants directly to the
firm in response to the firm’s marketing
communications
– Real-time interaction with customers
– Broader market coverage at a lower cost
• Community refers to a sense of group
membership or feeling of belonging
• Blogs are web-based journals where writers can
editorialize and interact with others
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Basic Characteristics of Electronic
Marketing: Memory
• Memory is the ability to access databases or
data warehouses containing individual customer
profiles and past purchase histories and to use
these data in real-time to customize a marketing
offer.
• A database is a collection
of information arranged
for easy access and
retrieval.
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Basic Characteristics of Electronic
Marketing: Control
• Control refers to customers’ ability to regulate
the information they view and the rate and
sequence of their exposure to that information.
– The Web is a pull medium because users control the
information they view
– Marketers have to work harder and more creatively
to retain customers at their websites
• A portal is a multiservice website that serves as
a gateway to other web sites.
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Basic Characteristics of Electronic
Marketing: Accessibility
• Accessibility is the ability to obtain information
available on the Internet.
– Informs and educates the inquiring consumer about
competing products and prices
– Creates competition for the consumer’s attention
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Basic Characteristics of Electronic
Marketing: Digitalization
• Digitalization is the ability to represent a product,
or at least some of its benefits, as digital bits of
information.
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E-Marketing Strategies
E-Marketing
Strategy Considerations
Target
Markets
Product
Marketing
Distribution
Systems
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Promotion
Mediums
Pricing
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Source: “comScore Networks Releases Top Web Properties Worldwide for December; Reviews Biggest Gainers for 2006,” comScore
Networks press release, January 31, 2007, www.comscore.com/press/release.asp?press1139.
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Customer Relationship Management
• Customer relationship management (CRM)
focuses on using information about customers to
create marketing strategies that develop and
sustain desirable long-term relationships.
– A focus on CRM is possible in e-marketing because
of marketers’ ability to target individual customers.
– The ability to identify individual customers allows
marketers to shift their focus from increase share of
market to increasing share of customer.
– CRM is often based on the use of information
technology.
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The 80/20 Rule
• 80 percent of business profits come from 20
percent of customers.
– Advances in technology allow marketers to profile
customers in real-time and thereby assess their
lifetime value (LTV) to the firm.
– Some customers may be too expensive to retain
given the low level of profits they generate.
– Firms should focus instead on developing and
managing long-term relationships with more
profitable customers.
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Figure 4.1: Why Customers Defect
Source: “CRM,” CRM Trends, http://crmtrends.com/crm.html (accessed January 4, 2007).
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Legal and Ethical Issues in E-Marketing
• Personal Privacy Issues
– Unauthorized placement of “cookies” on personal computers
– Web site information requirements for registration
– Collection of information from children
• Spam
– Unsolicited commercial e-mail (UCE)
• Phishing
– Sending fraudulent e-mails that appear to come from a trusted,
legitimate source and request personal information for the
purpose of committing identity theft
• Misappropriation of Intellectual Property
– Illegal copying of copyrighted software, movies, CDs, and other
creative materials
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Figure 4.2: The BBBOnLine Privacy
Seal and Program Explanation
Source: Reprinted with permission from BBBOnLine, Council of Better Business Bureaus, Arlington, VA.
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Figure 4.3: Types of Goods and
Services Marketed Through Spam
Source: Ferris Research, in “Spam for Everyone,” The New York Times, January 31, 2005, www.nytimes.com.
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Source: Reprinted by permission of the American Marketing Association.
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Source: Reprinted by permission of the American Marketing Association.
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Source: Reprinted by permission of the American Marketing Association.
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After reviewing this chapter you should:
1. Be able to define electronic marketing and electronic commerce and
recognize their increasing importance in strategic planning.
2. Understand the characteristics of electronic marketing—
addressability, interactivity, memory, control, accessibility, and
digitalization—and how they differentiate electronic marketing from
the traditional marketing environment.
3. Have examined how the characteristics of electronic marketing
affect marketing strategy.
4. Understand how electronic marketing and information technology
can facilitate customer relationship management.
5. Be aware of legal and ethical considerations associated with
electronic marketing.
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