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ABSTRACT
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CONTENTS
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CHAPTER 1
INTRODUCTION
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INTRODUCTION
In September 1997, a new gift shop opened for business on the web. There were
already many gift shops on the web at that time; however, this store named
911Gifts.com, carried items that were chosen specifically to meet the needs of last
minute gift shoppers. Using 911- the emergency telephone number used in most
parts of the United states- in the stores name was intended to convey the
impression of crisis solving urgency. The company‘s two major strengths were its
promise of next day delivery on all items and its site layout, in which gift
selections were organized by occasion rather than by product type. Thus it saved
the shopper time by clicking directly on the occasion viewing a set of gifts ready
for delivery. The site also included a reminder service, called GiftAlert, to help its
customers to avoid other emergency gift situations.
By 1999 the company had 90,000 customers signed up for GiftAlert and was doing
one million dollars in annual sales. It carried out about 500 products, and each of
the products was chosen to yield a gross margin of at least 40 percent.
911Gifts.com was a successful business but the company founders realized that
they would need to build wider awareness of their brand. They also realized that
building a brand would require a substantial amount of funds. The company hired
Hillary Billings, a retail marketing executive whose experience included building
the Pottery Barn catalog business at Williams-Sonoma to create a brand-building
strategy and obtain financing to implement that strategy. Billings undertook a
complete reevaluation of 911Gifts.com marketing plan and after revising it, took to
investors who committed more than $30 million for a rebranding and an overhaul
of the company‘s website. In October 1999, the new brand was born as
RedEnvelope. In many Asian countries gifts of money are enclosed in a simple red
envelope. The new brand was designed to create a sense of elegance and
simplicity, to replace the sense of panic and emergency situations conveyed by the
old brand name.
The product line was revamped to fit the new image as well. About 300 products
were dropped and replaced with different products that focus groups had judged to
be more appealing. The new product line had an even higher gross margin than the
old line. Then Billings launched a massive awareness campaign that included
online advertising, buses in several major cities painted red and festooned with
large red bows, and print advertising in upscale publications. The most important
change in the advertising strategy was the launch of a print catalogue.
RedEnvelope catalogues are mailed to customers to coincide with major gift giving
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occasions and serve as additional reminders. Because red envelopes sells a small
range of products that have been chosen for a visual appeal and for the status they
are intended to convey, the full colour, lushly illustrated print catalogues are a
powerful selling tool.
One year later the results of this exclusive makeover and substantial monetary
investment were clear. RedEnvelope had tripled its number of customers and
increased sales by over 400 percent. The company chose a specific part of the gifts
market and targeted its offerings to meet the needs and desires of those customers.
The company created a brand, marketing plan, set of advertising and promotional
strategies that would expose the company to the largest portion of the market it
could afford to reach. The most important point is that red envelope matched its
inventory selection, delivery methods and marketing efforts to each other and to
the needs of its customers. Today the company continues to use print catalogues
and a focus on upscale product lines to keep its sales increasing each year.
This is the power of IT that has revolutionized the way world perceived marketing.
Today, the amount of business carried out over the Internet is growing fast and has
developed to become the business arena for a number of players of all sectors, size
and nationality. Most of these companies are putting considerable effort into
conquering an anticipated market, offering appealing, attractive and often
expensive interfaced web pages over the Internet.
New technology has completely changed the business environment as we knew it.
Mushroom companies; virtual enterprises; electronic markets; blurring industry
boundaries; and ―fragvergence‖ of cultural differences have completely changed
the world business dynamics. This outlines the implications for marketing
management. For instance, it suggests that the majority of all marketing activities
will have to be at an international level, as target groups are scattered throughout
the world transcending geographical boundaries of countries. As a result, market
research on the Internet has significantly increased in importance; efficient and
quick promotion of ideas, business concepts and services is not just essential but
also a basic subsistence need for companies in today‘s competitive environment.
Enhanced customer intimacy is the call for the hour and reduction of price
flexibility is the strategy.
As Jim Taylor put it, "We have reached one of those fulcrum points in history,
where everything that was is tipping over into everything that will be."
Technology today has opened up channels of information that bring us requisite
information faster than we can possibly assimilate it. There are more books and
magazines, more mailing lists, more demographics, more databases and in turn
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more finesse to our work. Computers have revolutionized print production and the
internet has spawned an entirely new dimension of interactive communication. It
has created the next revolution in marketing. It has opened up brand new
communication channels, the Web, e-mail, and mobile devices with the promise of
even more new channels as the wireless era unfolds. It gives marketers the tools to
capture detailed information about individual customer preferences, and use that
knowledge for personalized marketing; to some extent such an approach is
recreating the intimacy of personal selling.
For marketers, this poses a curious dilemma: while it has never been easier to reach
prospects, never has it been more difficult to get their attention. Via this paper we
attempt at bringing to you the manner in which Information Technology in this
Information age has at times acted as a catalyst to implement marketing strategies
while at other times it has become an integral inseparable part of the marketing
system.
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CHAPTER 2
OBJECTIVES
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OBJECTIVES
First, many firms now possess much more information about consumers' choices
and reactions to marketing campaigns than ever before. However, few firms have
the expertise to intelligently act on such information.
The second effect of information technology is that it has changed the competitive
environment for many firms: consumers have more information about competitive
offerings; the Internet has allowed many competitors to market to consumers
directly, and so on.
What's needed? Each company, in accordance with its corporate culture, needs to
establish a framework that supports these two groups of professionals working
together. At a bare minimum, a company needs:
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* A passionate leader for the two-faceted team who has vision of what integrated
marketing and IT can accomplish for the organization,
* A working environment for the team that promotes forward thinking idea
generation, open communication, commitment to timely implementation and a
focus on continuous improvement,
* Determine what your franchisee system wants to achieve from the technology.
(How does it fit into the long-term plan?)
* Define how the new marketing technologies will integrate with existing
marketing activities or will replace existing tactics.
* Identify how will it work and make sure to plan a transition period.
* Identify other programs and processes that will be impacted by the technology
and how changes will be handled.
* Have a communication plan so that all involved parties understand the purpose
and benefits of the program.
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* Double-check that backend processes are in place to support new initiatives and
have a contingency plan.
New media
This media is the result of the Internet, which has given consumers a voice, a
publishing platform and a forum where their voices can be heard, shared and
researched. Why is this new trend so important? Because research indicates that
consumers place far more trust in their peers than they do in traditional marketing
and advertising. Understanding and managing consumer-generated media is critical
to one's marketing plan and a source of great qualitative market research. The
overall influence of this media among consumers should not be underestimated.
Blogs, an online hybrid diary and guide site, are presently the most popular of the
consumer-generated media formats. The topic of much public press, blogs offer
marketers places to advertise. Blogs are also a source of great market research as
you can look and listen to what bloggers say and understand how your products are
perceived. Many organizations are establishing their own blogs in order to create
an informal relationship with their target audience.
Podcasts (derived from Apple's "iPod" and "broadcasting") are another emerging
media to watch. Basically, it is a non-music audio file that is published to the
Internet so users can listen to it on digital media players. Currently, it is considered
by many to be an audio blog. Content producers are increasingly turning to
"podcasting" as an inexpensive and user-friendly new distribution channel that has
the potential to reach a large audience. While bloggers and music listeners were
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among the early adopters, mainstream media organizations are venturing into
podcasting as well.
Multi-media message systems are also gaining popularity. These systems are the
service that lets you share your pictures and video messages with other wireless
phones or e-mail addresses. To be successful, this marketing must be personalized
and based on individual user preferences and behavior. Mobile users do not want
spam. The benefits of it are its color graphics, video clips and custom audio, all,
which enhance the personalized message.
Market analysis
The Internet has changed the face of market analysis. Gone are the days of
photocopying pages of demographics from census directories. Today's Geographic
Information System, a system of hardware and software used for storage, retrieval,
mapping, and analysis of geographic data, allows marketers to better identify and
communicate with potential and existing customers. Additionally, many of the
services are Web-based, which means the information can be used not only by the
franchisor, but the franchisee as well.
Competitor analysis
Technology and the Internet have also changed the nature of competitor analysis.
For starters, competitors' Web sites are a great foundation for the study with almost
every company including a company section and a greater number hosting a press
or media area where they are able to post corporate history, executive bios and
often the details of newly-launched programs.
When researching publicly traded companies, after studying their Web site, visit
edgar.gov where all U.S. Securities and Exchange Commission documents are
available. These documents provide enormous perspective on a company's current
activities, performance and future plans.
Search engines and news site archives now enable researchers to find articles and
information that used to be available only through expensive subscription services.
Today's knowledge management software is a great way to keep this information
organized and accessible.
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Market research
The ability to integrate customer data with market segmentation and mapping
software gives marketers newfound insights on where customers are located,
purchase behaviors and media preferences.
Marketing communications
For example:
* New locations can be added and updated on the Internet Yellow Pages within
days instead of the long wait for the printed edition.
Metrics
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dashboards that provide leading and lagging indicators to performance are
becoming common.
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CHAPTER 3
THE CUSTOMER'S PERCEPTION, BUYING
INFLUENCES AND THE DECISION PROCESS
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THE CUSTOMER'S PERCEPTION, BUYING
INFLUENCES AND THE DECISION PROCESS
There are a number of similarities and differences one could note with regards to
the influences and the decision making process for a customer to purchase a
service or product via an e-business channel compared to the traditional business
method. One must understand and identify what factors make a consumer take a
decision to buy a product and why this consumer decides to purchase a type of
product and not another, using one channel and not another, the processes involved
in the decision making process and the perceptual process, both of which are
affected by a number of outside influences.
There are many influences that may, to some degree act upon the purchasing
decision of a customer. Marketers may have influences on customers, but there
exists more powerful influence that marketers have little influences upon, such as
socio-cultural influences. The following outlines the main influences that act upon
a consumer.
Psychological Influences
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Intermediate stage: This stage could usually fit in the case of purchasing a book
over the net. The buyer would rely more on his/her own experience and less on
outside information to make the purchase decision. Maybe the buyer would have
already purchased over the net, but could ask some questions to make sure that the
product is suitable to his requirements.
Final stage: The buyer knows what he/she wants this is the situation one would
expect to find while buying for example, an ink cartridge for his printer, the
consumer will probably buy the same type again unless put off by a bad
experience. Once a buyer has learned enough to reach this stage, buying may even
become a perfect routine.
Socio-Cultural Influences
The Internet marketing mix consists of the same elements as elsewhere. It has to be
noted that the concept of marketing mix is evolving both in the Internet marketing
and other media. The typical marketing mix components consist of Product, Price,
Place, and Promotion.
Price: Price is one of the most important evaluation criteria in all products in
question. One‘s choice will be heavily affected by price. The Price on the Internet
plays a more important part, as in the traditional shopping method. In the
traditional shopping method one would expect to pay a higher price when
purchasing from a luxury high street outlet, on the same basis one expects to find
low prices when purchasing from a warehouse sale. These scenarios are more
difficult to implement on the Internet, since the customer is always purchasing
from his Internet browser or other similar means. In addition a number of third
party "search agents" can collect pricing information from various sources over the
Internet, and consumers can compare prices and products. The Internet will
increase standardization of prices across borders. Another factor to consider is the
escalation of bidding "bots" is certainly influencing pricing. These software robots
do bidding on behalf of consumers and help automate bargain hunting. A number
of new web sites are now mushrooming to do various price equilibrium search
tasks between buyers and sellers. An especially important factor in the formation
of the Internet as a new market is the fact that transaction costs are small. This
escalates the adoption of Internet as a growing e-market.
Place: Where the customer is going to go to buy the desired products? Is the
customer going to a high street store, or is he or she going to purchase from the
closest store or shall the customer buy from his desk using the Internet? The
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Internet is a place in itself, a place in the context of the Internet implies creating
methods for using the Web to market and sell products. All points on the Internet
are virtually equidistant and available 24-hours a day.
This means that all the real estate of the Internet has an equal value, at least
theoretically. Small companies can look like their much bigger competitors.
On the Internet, if the product can be sent via the Net in electronic form, economic
viability can be very easily attained and the physical distance between the buyer
and seller is irrelevant. On the other hand, if the product needs to be distributed by
mail or freight, then regular limits of mail-order weight-based economic geography
and time for delivery apply.
Two determinants of virtual addressing methods on the Internet can be found. One
is the exact computer server and address, where the document is located, that is the
web site address, or Uniform Resource Locator (URL) which specifies an absolute
address. The other form of address definition is relative addressing using
hyperlinks. A document or site is defined in relation to other established
documents or homepages by means of a quantity of hyperlinks pointing to the
absolute address. In the case of such links, users usually do not see the absolute
address when clicking the hyperlinks, although if the user wishes to see this
address he or she can do so. The more links a page has pointing towards it, the
easier it is for a user to find the site. The better a site is, the higher the chances it
gets hits.
Inter-media support activities have popularised the absolute addresses among other
media. URLs in traditional media advertising began to appear in 1995 to support
the Web effort. The main forms of media such as TV, newspapers billboards and
magazines can be extremely effective at driving audiences to web sites this trend
had another implication. The print media started to offer URL lists of their
advertisers as a form of paid advertising. The more absolute URL publicity is
gained, the better the site address is established.
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The four virtual spaces
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Situational Influences
Physical Example, the smells in a coffee shop or any other shop can influence a
buyer either negatively or positively to spend more or to leave the premises at
once. Other influences could be the sounds, light, weather etc. Social Surrounding,
the people that are around an individual, while carrying out a purchase may to
some extend affect the purchase. Time, many time factors may affect a purchase,
such as: time when the purchase is taking place, time to make the payment of
purchase or time from last purchase. Task, making a purchase for oneself or for
someone else, Antecedent states, the temporary moods or conditions that the
consumer brings to the situation, such as a customer who has received a hefty rise
and is purchasing a present for his loved one. Other factors that affect the purchase
are whether the goods are durable or not. Non-durable goods are goods which are
consumed in one or a few uses. Since non-durable goods will usually be purchased
frequently, they are made available in many locations, profit margins will be low
and producers will try to encourage brand loyalty. Durable goods are goods that
are used up very slowly and only after many times used Purchases of durable
goods are infrequent, and usually need more direct selling effort.
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Limited Problem Solving
When it comes to buying items that fall under the LPS category, the consumer will
be low involved in such a decision. This is because it is usual that the amount of
dissonance after such a purchase is usually relatively little. Another point one
could note is that with such goods or services there may be little differences
between brands of such a purchase. Most customers' everyday purchases are
undertaken by habit or LPS. On the other hand the purchase of a product with low
involvement and a high difference between brands usually follows a ‗variety
seeking buying behaviour‘. For this reason we will be considering the five-stage
model of the buying process are highlighted below:
Need or Problem Recognition: One could state that this stage could be triggered
by psychological, physiological and social factors. The process centers on the
degree of discrepancy.
Information Search: At this stage the consumer would identify the sources and be
influenced by attitudes and perceptions.
Purchase Decision: At this point the purchase is made and the consumer will pay
and take the products with an intention to consume them.
Two types of special categories of buying behaviour are variety seeking and
impulse buying. This type of purchase for the goods in question would only
happen in the case of low involvement products but surely not in the case of, for
example, a car.
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Impulse Buying: The so-called impulse purchase is an unplanned or spur-of-the-
moment action that is triggered by product display or point-of-sale promotion. This
is the least complex form of LPS but differs in some important ways. The
following are the characteristics of impulse buying:
a) A sudden and spontaneous desire to act accompanied by urgency.
b) A state of psychological disequilibrium in which a person can feel
temporarily out of control.
c) The onset of conflict and struggle that is resolved by an immediate action.
d) Minimal objective evaluation-motional considerations are dominant.
A consumer would buy a product to take home from the supermarket because it
seems to be at a good price, making this purchase regardless of the fact that the
consumer already has a quantity of such products at home. During an impulse
purchase there may come about a lack of regard for consequences. Example;
purchasing of a product that one does not need or use.
The first time purchase of a car is considered as a problem that requires high
involvement. This is because the person carrying out the purchase knows that this
purchase is going to affect the buyer in the long run. The buyer has to make sure
that the purchase is done at the right price and the right product for the individual
is chosen. For this reason a more complex model is used when it comes to the
decision process, although the five major activities are the same but occur over a
span of time. Another point on which a first time buyer of a car would consider to
be very different from the other products is the divestment stage. The following
will outline the major differences between the EPS and LPS. It is important to note
that most points mentioned in LPS should also be considered for EPS.
Need Recognition: The starting point of the process is the customer's perception of
a want or need for his house, this being a problem which must be satisfied. This
stimulates the start of the next stage, information search, which can be divided into
two further stages.
Search: First, the customer searches his internal memory to ascertain what is
known about potential solutions to the problem. The customer remembers how a
friend of his got to know about his purchase or he/she remembers about a store
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selling such products which may suit his/her needs. If insufficient information is
found, the customer will begin the process of external search. The likelihood of
external search is also affected by environmental factors, such as the urgency of
the need to buy the required product. Another factor that is important is the
individual characteristics of the customer. For example, individuals who are low
risk takers will tend to seek more information, visit more stores and probably see
more products; ask advice from advisors before making the decision to purchase
the required product.
Divestment: Another important stage in this model is the last stage, divestment.
This stage would be considered to a high extent in the purchase of a product that
may have a high resale value. In some instances the buyer may want to ensure that
his purchase, which may also be considered as an investment, would place the
buyer in an advantageous position when it comes to divesting (selling).
Evaluation of This Model: Evaluation of this model has found that it provides a
popular representation of the buying behaviour process. The major drawback of
this model is the vagueness regarding the role of variables such as the environment
and motive in influencing behaviour. From the above we can conclude that the
behaviour of customers is determined by economic, psychological and sociological
considerations. The reason for a purchase varies from person to person, or product
to product. The weight given to each reason in the mind of the customer also
varies. We can note that marketers have some influence, but it is not usually as
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strong as socio-cultural influences. The marketers, by use of advertising and other
marketing tools help consumers with their information and their evaluation of
alternatives. Combinations of all these factors make up the motivation mix and
perception of the customer.
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CHAPTER 4
THE PERCEPTUAL PROCESS
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THE PERCEPTUAL PROCESS
Internet subscriptions sustained a growth of 56.1 per cent during the reference
twelve months (2000-2001). The growth rate had slowed down during the last two
quarters to 4.7 per cent compared to the rate of 15.7 per cent recorded during the
first two quarters of the reference period. Another interesting point is the frequency
of use of the Internet during the reference period. 22 per cent indicated that they
used the Internet everyday, whilst at the other end, 39 per cent claimed to have not
used the Internet at all. The age group of main users was registered amongst the
16-24 years bracket. The use of Internet decreased proportionally with the rise in
the age.
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Furthermore 61% of computer users surf the Internet while 61 per cent of computer
users aged over 16 years use the Internet regularly. 32.2 per cent of the target
population used a Personal Computer, less than once a week, during the reference
year. It was, also estimated that a notable fraction of 61.2 per cent of computer
users accessed also the Internet.
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CHAPTER 5
E- COMMERCE & E-BUSINESS
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E- COMMERCE & E-BUSINESS
1. What is E-Business?
2. What is E-Commerce?
The word e-commerce may be interpreted in various ways; some have a very
narrow view such as selling products and services on the Web, while others have a
much broader perspective. In my opinion e-commerce consists of the broader
perspective made up of a number of functions mentioned below. E-commerce is
any networked enabled business practice such as Electronic Data Interchange
(EDI), the World Wide Web, direct telephone connection e-mail and more
Categories of E-Commerce
One can categorise e-commerce into four functions, which are communication,
process improvement, service management, and transaction capabilities.
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Communication Function: The communication function is the delivery of
information and/or documents to facilitate business transactions. E-mail is an
excellent example, but one can also include other forms of communication such as
fax transmission as well as Electronic Data Interchange. Furthermore this function
can play a very important part with the introduction of teleworking. Today
teleworking is being implemented by a number of organisations and thanks to the
communication tele-workers are able to work from their home or from a remote
site.
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3. Developing E-Business Within an Organization
Implementation of e-business requires both methods and tools. Choosing the right
ones is important, wrong methods or tools can be fatal to the E-Business
implementation effort. Each organisation wishing to implement e-business will
have to choose both the tools and the methods depending on the organisation itself.
A method is a technique for doing a specific piece of work. Examples include how
the collection of data is being done, the development of the new workflow and
procedures, and testing of such methods. A tool supports a method by making it
easier and more effective to follow the method. Tools include transaction mapping,
flowchart software, programming, testing, and simulation tools. Implementing may
not require tool but the use of tools may enable the organisation to implement the
method in a faster, smoother or more economical manner. Tools, implemented
without methods, often fail, because people do not know the proper use of the tool.
Tools in implementing e-Business, as with any other use of any tools, have to be
supported by training, experts, guidelines, lessons learned, and management
expectations on both what the tools are to achieve and how to make good use of
them. For these reasons the implementers, whether they be external consultants or
internal staff need to build a very clear idea how the organisation is working.
Internal Marketing
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hostilities toward each other. E-Business involves a large project and requires time
and effort; large projects are more difficult to market. Numerous points in the
project require successful marketing; failure with any one of these may doom the
entire project.
Improving the organization‘s and infrastructure's business activity at the same time
adds complexity. Time-honored policies and roles are difficult to change.
Resistance can be both direct and subtle. Internal marketing is the starting point for
the implementation process, failure to carry out internal marketing is one of the
leading causes of e-Business implementation failure.
People assume that just because management mandates e-Business, everyone will
get on board. Marketing includes direct and indirect sales and marketing. When
one conducts demonstrations, gathers information, reviews results and presents
documents and plans related to e-Business, one is in fact carrying out a marketing
exercise. The care and attention given to marketing, sales, overcoming resistance
and meeting challenges are critical success factors.
Presenting a new e-Business activity requires careful marketing preparation where
one must identify the company‘s capabilities and the matching process. When one
comes up with a new concept, one raises excitement and interest. If the company is
not careful, it risks raising unreasonable expectations. This may also bring about a
raise in fears of change. Internal marketing is also important cause an e-Business
projects substantial human interaction, thus bringing about a risk of
misunderstandings.
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e) More information: The implementation of e-business creates a large amount
of structured information on staff, customer and supplier behaviour and
purchasing. This data can be stored in a database and queried to retrieve
further conclusive information. Better decisions. Any organisation tends to
make better decisions with more information.
f) More flexible business policies: Since the company can implement new
policies such as promotions faster, the company will be able to gain greater
flexibility in positioning its products.
g) Improved customer satisfaction: Once the company combines the
convenience of electronics with excellent customer service and competitive
pricing, customers will be more satisfied when provided with more
information on the products and services to them.
h) Ability to enter new markets and reach new customers: Through the
implementation of ebusiness, companies will be able to move into new
markets and also expend their product range.
Some common reasons for "e-failure" are outlined in the following points:
a) High expectations: Management gets towering expectations based on the hype
generated by the media for e-commerce.
d) Lack of consideration of the entire environment: Some firms that fail do not
consider the internal or external environmental structure. One major pitfall is
that of not gaining major support, especially internally.
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CHAPTER 6
PROMOTING PRODUCTS
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PROMOTING PRODUCTS
The rapidly changing business environment has affected promotion as much as any
other area in business, technology has dramatically changed the role and activities
of organisations. Similar changes have occurred in all the promotional areas. Such
an example can be noted in the dramatic increase in the number of television
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channels available through both the relatively new transmitting media such as
satellite or cable and the traditional UHF or VHF transmissions. These new
channels have lessened the number of viewers for any given program. This means
that advertisers must be more creative in trying to reach large audiences, by
competing for advertising on the most popular shows.
Another very fast changing and new media is the internet, this is changing the
whole approach to working with customers. The latest challenge for marketers is to
build relationships with customers over time. That means carefully listening to
what consumers want, tracking their purchases, providing them with better service,
and giving them access to more information.
Interactive promotion changes the promotion process from a monologue, where
sellers tried to persuade buyers to buy things, to a dialogue in which buyers and
sellers can work together to create mutually beneficial exchange relationships. For
example, Garden.com is an online retailer of garden products and services.
Advertising Expenditure
Companies must allocate the promotion budget over the main five promotional
tools advertising, sales promotion, public relations and publicity, sales force, and
direct marketing. Within the same industry, companies can differ considerably in
their allocations. Any organization is always searching for ways to gain efficiency
by substituting one promotional tool for another. Many companies have replaced
some field sales activity with adverts, direct mail, and telemarketing and
introduced the Internet as a media. Companies have also increased their sales-
promotion expenditures in relation to advertising. The substitutability among
promotional tools justify why marketing functions need to be co-ordinated.
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Promotion Tools
Choosing the correct tools for a particular promotions task is not easy. The process
is still very much an art, though it is becoming more scientific because of the
access to consumer and media databases. Matching consumer characteristics with
media databases can be carried out very rapidly by computer and promotional
budgets can be evaluated for a variety of different mixes. Using the Internet may
make this easier as all transactions are carried out through computers and
information regarding the customer may be easier to collect. The Internet still has a
number of shortcomings to be used as a sole tool.
The fundamental idea of any kind of marketing is to meet the consumer where he
or she is. And as much as online use has grown, most people still spend more time
offline. Indeed, while some of the Web's best-known brands, such as Amazon.com,
eBay and Yahoo!, got an initial foothold by marketing on the Web, all eventually
saw the need to extend their message to print, television, radio and direct mail
channels.
Still, one can identify examples of fairly new brands that have been built almost
exclusively on and through the Web. Such an example is X10.com, which sells
wireless cameras and networking products. X10 gained fame by becoming one of
the first serious users of pop-up advertising, which is now used widely on the Web.
Target audience is also a key consideration. Marketers can easily target teenagers
who spend hours online each day. Still, the value of reinforcing the message is
important, for this reason it has been recommended that multiple approaches are
necessary in almost all cases. The difficulty lies in the suitable mix for such a
market but it has been recommended that the marketing should try to meet the
audience in more than one place.
One other important aspect of online brand building is that it will be easier, if the
brand in question has an offline foundation on which to build.
ConsumerReports.com, for instance, has racked up huge success as one of a
handful of successful pay-for-content sites. Thanks largely to its deeply entrenched
offline brand image.
A study to identify if online brand advertising works has shown that this does
work, the study focused on three primary objectives:
Can Internet advertising drive offline sales of consumer packaged goods products?
Is online advertising an effective medium for branding consumer packaged goods
products?
Is online advert impact related to offline advertising sensitivity?
From the study it was concluded that online advertising positively influences
consumer perceptions of brands and increases offline sales by an average of 6.6%
for major consumer packaged goods. Furthermore it was concluded that a growth
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in brand awareness, message recall and sales that was incremental to the base
levels achieved through TV, radio and print advertising. The sales lift resulting
from online advertising ranged from flat for two brands up to 22.5% for a brand
with a new line extension. The research shows that online advertising can impact
sales. The study identified that companies should no longer doubt if online
advertising works but to recognize how one can maximize the impact and return on
investment of Internet advertising within the marketing communications mix.
Internet Advertising
Banner adverts are the most used advertising tool on websites, followed by
sponsorships, interstitials (adverts inserted between pages) and other forms of
advertising including directory/classified/email and others.
Much of the current emphasis is on "rich media", which uses multimedia
interactive marketing tools, i.e. web pages or banner adverts that contain
multimedia components such as audio, video or special effects using Shockwave,
Flash or Java Script. These tools push the transaction as far out from the corporate
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website as possible, making purchases available directly from the banner. Other
online formats, which tend to be variants of the five mentioned above, include
hyperstitials - companion applications that run alongside a browser and let
advertisers present full-screen adverts during page load delays, and Meta Adverts -
adverts displayed on results pages keyed to online searches.
Click-to video - used by WebTV to let users click on banners and view
commercials through their TV set
Extramercials - ZDNet livens up unused space on the right of its pages with micro-
buttons that link to full-column adverts
Interactive - an advert for Amazon.com offered surfers an instant excerpt print out
of Tom Wolfe's "Man in Full" book
Telephone Call – Tele-post allows users to type in a telephone number into a Ring
Me Now advert-banner, triggering an immediate or scheduled toll-free callback
E-mails - Lycos is distributing interactive e-mail-based cartoon characters. These
advert sponsored entertainment shows offer powerful inducements to keep visitors
coming back to Lycos.
Contextual Integration - SpeedyClick is looking to incorporate a sponsor or
advertiser's name or product as part of a game or contest.
Such rich media is expected to be much more effective than traditional banners and
interstitials.
Targeting Adverts
The Internet has provided new tools for targeting by which the content or advert
can be adapted to better suit the individual user. Micro targeting will be the future
of online advertising. This is being done by breaking markets into smaller, more
differentiated pieces. Niche markets appear, followed by niche products, niche
financing, and niche players in the stock market. Niche advertising fills niche
media.
The Internet is making it possible to tailor site content to the profile of the person
visiting the website. This will result in creating a highly interactive browsing
experience. Usually, targeting has been made for reasons of cost. The Net is a
different world, where targeting is done to give as accurate and well-fitting content
to online customers as possible, while the internet users do their own targeting by
clicking hyperlinks.
The ability to target adverts is based on criteria including, but not limited to, use of
implicit data and requirements of user input. Use of implicit data might include:
page sponsoring, searchable terms or phrases, browser information, and content
stream. Requirements of user input may include demographics, geography, stated
interests, psychographics, and collaborative filtering.
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Interactive and Passive Advertising
Internet Advertising consists of a combination of both Passive and Interactive
Advertising. Internet advertising can be directly compared to traditional
advertising in that it incorporates both passive and interactive advertising. All
forms of banners and links on publisher web sites are a type of passive advertising,
whereas advertisers' web sites in their own right are the highest form of interactive
advertising.
As an Internet user visits a publisher's web site, he or she is exposed to one or more
forms of passive advertising: banners, logo icons or sponsorships on the site's
home page. This type of advertising is very similar in effect as when an individual
sees a billboard. One advantage Internet advertising has over other types of
advertising is that it allows passive advertising to become interactive. In most
traditional passive advertising today, a viewer will notice the advertising message,
or subconsciously note the logo, but will usually not immediately react by trying to
contact the company making the advert for more information, even if he does, he
or she will have to use some other form of media to contact the company.
Direct Sales
Most corporate Internet sites have - as one goal - the aim to bring about direct
sales. Order processing may be offered via the Internet or by traditional
communication means. Many companies have discovered that, while a large
number of people will access their home page; this does not result in sales or other
useful business activity.
One reason why consumers use the Internet is to seek information about products,
way in advance before possible purchase. In many instances these products may be
eventually purchased from another source.
An effective way that is used as to carry out direct sales is via classified adverts. In
most instances a number of popular sites offer this service for free. This method is
a method to get off to a fast and relatively cheap start.
The following steps should lead to an effective and low cost direct sales method.
The individual or company placing the advert must be able to write effective
classified adverts. Only well written adverts will produce the results. The next step
is to find a software program to help while posting adverts to the free classified
sites. Many of these programs are free; some will have web site address listings of
the sites that accept free classified adverts. One can also go to any search engine
and do a search for classified advert sites. One should find many sites that will
accept this type of advertising. Start posting the adverts to the free sites and post
often. Old adverts roll down as new adverts are posted. Adverts near the top of a
section will produce better results than the one in the middle. Test the classified
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adverts on the free advert sites first. Once the advert is successful then try paid
adverts in sits that charge to post adverts. Advertising on these sites will bring
better results. Always try to improve the pulling rate by testing a new advert copy.
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CHAPTER 7
MAIN FOCUS IN THE DEVELOPMENT OF A
WEBSITE
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MAIN FOCUS IN THE DEVELOPMENT OF A
WEBSITE
New technologies are emerging that will enable businesses to reach customers
whenever and wherever they are ready to buy. The focus of ecommerce will shift
from content to context, knocking many corporate web sites into irrelevance.
The dot-com businesses are in danger of seriously overestimating the
sophistication of online consumers, Dot-coms are less in touch with consumer
needs and wants than traditional companies with a Web presence. Despite the
common belief among Internet start-ups that they are champions of the consumer,
the report shows a lack of consumer-focused research in the dot-com sector.
There is clear evidence that consumers are book marking a much more limited
number of websites than one would expect. Many are just going through their ISP
and that is their only frame of reference for the Web.
Even young consumers "lack sophistication" in the number of sites they use.
The lack of sophistication of consumers online is news to all the companies
involved but it was particularly relevant to the dot-comers because they have done
relatively limited consumer research themselves. Furthermore, it has been
identified that there is a need to develop transactional, interactive sites that both
replicate the consumer thinking process and offering a good experience. All too
often, instead of looking deeper into the online consumer's needs, desires and
apprehensions, the technical aspects of website design become the main focus.
Most web sites and offline businesses suffer greatly because their marketing was
either conceived or implemented by an inexperienced, yet well meaning "advisor."
In order for a company to succeed on the Internet or offline, from a marketing
perspective, one needs all of the exact same ingredients as with all successful
marketing systems anywhere else. In other words, good successful marketing is
independent of the medium the company is using. Hence, one should only let
successful professional marketers make the companies' Internet marketing plans
and decisions. The function of marketing should always be a separate practice in
any business, regardless if it's on the Net, a local business, or a major retailer at
your mall. Successful marketing is actually much more of a "sales activity" than
any kind of artistic or creative process or programming function. Successful
companies know that this is the only way to operate, and for good reason. Because
it works best!
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1. Interactivity
Interactivity within a web page can be very important. One may judge the issue of
importance of interactivity depending on what the main objectives of the
organisation and the use of the web page. For instance in the case of a web page
where the company‘s main aim is to use the page as an introduction or promotion
to the company then interactivity may not be such an issue. On the other hand if
the organisation is going to use its page to sell it goods or service as well as a
promotional medium, interactivity will have to be implemented to a higher degree.
The customer can click on the list and select the components he or she would like
to include into his computer system. In such a case the web page will calculate the
cost for each system the customer desires. One of the most successful first
interactive websites is that of Federal Express which lets their customers track their
packages and see online the progress of the package, seeing the date and time when
it was collected and when it is to be delivered.
3. Graphics
Just as with other media, graphics often mean the difference between a good web
site and a great one. And the quality of a site is often dependent on what viewers
remember about it which is often directly related to the graphics. A "pleasing" site
is one that provides information in a quick, yet graphically attractive manner, and
this means paying close attention to the graphics function and form, and avoiding
large graphics that take too long to load.
One other factor that must be considered is the number of browsers available and
how web graphics appear differently on each of them. The older browsers may not
support some of the features that may be present on a website, such as frames
while others may require plug-ins which the user may opt not to download and
some browsers seem to change the layout without permission. For these reasons
the developer must be careful as how to design the web page and he or she must be
able to predict what kind of browsers his audiences are using. In some instances
some web pages give the user the option to select the layout and type of graphics to
include. In other instances the developer may develop the web page to be able to
identify the type of browser the user is using. In such case different pages will have
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to be developed for different types of browsers, this would imply higher cost
during the page development and maintenance.
Online fraud is one of the largest barriers for both customers and businesses
operating over the net. Businesses are continually trying to create an environment
of confidence while customers are regularly hearing, or maybe even being victims,
of online fraud. Such an issue poses a threat, especially for the new or not so well
known companies, since the customer may prefer purchasing from well-known
sites. Furthermore, one must remember that strictly speaking, the Internet is not
governed or controlled by anyone but, as will be pointed out, authorities are trying
to ensure that the internet is a safe place to carry out business from both the
customers and businesses point of view.
Over 50 percent of fraud victims are initially contacted by e-mail, with 38 percent
of contacts coming via a Web page, the report said. The leading methods of
payment in fraud cases are money order and credit card.
On the other hand 48% of all Internet users consider credit card usage over the Net
to be secure.
The rising confidence will help to accelerate the already fast growing e-commerce
sector, since fear of credit card fraud is one of the key barriers to ecommerce
participation among Internet users. But this new-found consumer confidence is
fragile and needs to be reinforced continuously by the industry.
However, security concerns persist, mainly among female Internet users and the
over 55 year-old age group. Only two-fifths of each of these groups considers
credit card usage on the Net to be safe. These attitudes are reflected in online
buying patterns. Only a third of women and over 55 Web users have purchased
goods or services online, compared with two fifths of the total Internet population.
To further build up trust in the internet several authorities are taking action to
combat cyber crime, on the other hand, the freedom of the Internet, the source of
its very success, has to be preserved. No security on the Internet would imply, no
trust and no transactions, this in return would mean that the impressive growth
forecasts for ecommerce will remain an illusion if people cannot trust electronic
transactions.
A lack of consumer confidence is the main thing holding up the development of
ecommerce here. By handing jurisdiction of such cross-border disputes to the
courts in the consumers' country, the regulation would be encouraging consumers
to purchase online. But industry representatives in this debate argue that this
approach will create legal uncertainty for small and non-international companies
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using the Internet. For large International companies the problem is not serious,
because they have offices and lawyers in all countries. The smaller companies
would be burdened with substantial legal and insurance and travel costs if they
took protection against litigation from outside their home market.
The Internet has gathered a great deal of hype and media attention in the past few
years. The descriptions of the Internet as a whole new way to communicate and to
do business, is now a fact that cannot be contradicted.
It would be improper to ignore a new way to communicate with one‘s customers.
Today, a number of companies are building websites in order to communicate to
their customers instead of with them. Most Web sites are created to provide an
electronic brochure, essentially the Internet version of a sales pitch, a sort of on-
line television advertisement. Customers can get the specific information they're
interested in, but companies are giving little thought to two-way communication.
Companies have to identify the Internet as a communication tool rather than a
broadcast medium. Brand managers and market researchers must fully embrace the
Internet if they are to learn from their customers.
The Internet offers a whole new way to establish rapport with customers.
Answering customer questions, solving their problems, and selling them additional
products can now be computerized.
The Web offers an additional means of creating the all-important bond of trust and
loyalty between buyer and seller. The web has given customers another means of
conducting business. The rewards have been lower customer service costs and
higher customer satisfaction. These are clearly goals to be envied.
We identified eight steps to superior customer service on the Web; the steps will
not only create a better customer service but also lead to long term savings and
higher profits.
The steps are outlined in the following points:
Recognize That The World Has Changed: The Web represents a fundamental
shift in the way business communicates. Bringing customers into your company
through the Web will cause ripples of change throughout the organisation. Upper
management must embrace this new media and stand behind the idea. Those
ripples of change will include the way one runs his business internally. The
company will have to set up systems to give its employees access to enough
information that they can then service the customers.
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Post a "Frequently Asked Questions" Document: A large number of customers
call to enquire about the same questions, the company‘s telephone operators and
sales people could identify these frequently asked questions (FAQ), then post the
answers for all to see.
Eventually the FAQ can grow to include a knowledge base of answers. The
software development tools company. If a customer has a problem using the
companies products, then he or she could refer to the knowledge base. It's the place
the company stores all the problems people have had and all the answers they've
offered.
If the organisations site is large enough, implement a search engine. It should be
accessible from the home page and from any page on the site. It should be
powerful and easy to use. Placing a search icon on your home page and a search
button on the generic, site-wide button bar is straightforward and easy to do.
Providing a search tool that is both powerful and easy to use is not straightforward
and easy to do, but it's a great benefit to your customers.
Respond to your e-mail: When customers use e-mail instead of the telephone, one
needs to be ready to respond. There have to be people assigned to answering e-mail
and properly trained in its use. As a start, offer multiple e-mail addresses for your
customers. Such as accounting@company.com or sales@company.com. This will
allow customers to choose-and save the company sorting time and effort.
When an issue is critical, a customer will usually call. If it's a contractual issue,
they'll send a fax with its inherent status as a legal document. But if it's merely
important a product question, a service modification, a clarification of some kind
they'll send an e-mail. They don't need an immediate answer, but they're not doing
it for nothing. They expect an answer within 24 hours and it's up to the company to
get the answer
Organisations may implement systems that could automatically identify to whom
the message is intended and forward it directly to the correct person, the system
could be set up to send an auto-response back to the sender, all the while recording
who's working on the subject and how much time goes by between receipt and
reply. Implementing this, the customer knows the message was received and has a
tracking number. Implementing would allow management to get status reports
about customers and productivity.
Create a Bulletin Board: Take advantage of bulletin boards and e-mail lists to give
your customers a place for online discussions. They know things about using the
company‘s products that the company does not and they can help each other use
the products better. It is also a great way to learn what the customers are thinking.
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Keep a Customers' Log: A company should keep a log of what the customers look
at, how they navigate, and what they search for. This will give the company a lot of
clues about what interests them and how easy your site is to use. Pay attention to
the most frequently asked questions. If one knows what people are asking, one can
provide the answers up front, such as in marketing materials, instruction manuals,
on home page. Give customers the answers before they ask.
Provide access to as much information as possible.
The ideal Web site has so much information that everybody who comes there can
find something to help him or her. Every time the company comes up with more
tips, advice, or pointers, be sure to post them on the Web site. Make your site the
vault of all knowledge and your customers will get used to looking there first.
Don't publish everything on one page, instead, offer the basics up front and let
them drill down to the information they need, when they need it, and at their own
pace. The person who's happy with a terse reply can click and run. The person who
wants a more detailed explanation can get it.
Give Access to live Information: The reason the FedEx Web site is always held up
as a vanguard of business on the Web is because it allows direct access to live data.
Any company‘s customers want to know more than just the basic information.
They want to know the delivery time, if the problem they reported has been solved,
and if the new version will be out soon.
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Loyalty on the Internet: While one is looking to make a purchase or strike a deal
over the Internet it is usual for the customer to browse through a number of sites
before making a decision. Normally, individuals like meeting people and prefer
purchasing from a friendly sales person. Sales people are a big part of a purchasing
decision and convincing the customer that the product is suitable for him or her. In
some instances, one may remain loyal to a less efficient supplier simply because
sales persons are nice or because of a rapport that was built over time. This is very
difficult to do on the Internet, since building a rapport with a web page is not usual
for a customer to do. The removal of sales people from the process removes the
personal bias on the decisions. The practical issues get renewed precedence. For
example: is the product good? How easy is the site to use? Is the transaction safe?
One other issue is that once a client uses a web site and has built up a positive
perception of the company, maybe due to a combination of the information the site
offers, the service given to the clients and the promotion the site carries out, the
customer will prefer to use that site next time.
Such issues are the most important when setting a marketing strategy. On the
Internet, one's competitor's site is no more than a few clicks away, if the client gets
bored on a site; he will go and check another. These arguments raise the following
issues:-
The Internet will force your business to become genuinely customer-focused. If a
company is not giving the customers exactly what they want through the
company's site, then the customers are going to go elsewhere very quickly.
The sites that can build in some human element into their websites are going to do
better.
Large mail order catalogues come online with their telephone numbers proudly
displayed, this makes it very easy for a client to pick up the phone and contact a
sales person who can help the client and conclude the sale.
Without human interaction a client who may be browsing may soon decide to
move on to another site especially if the page is being downloaded may take some
extra time, even if this at the end will be more impressive.
Because websites eschew personal interaction, they need to develop new
approaches to customer loyalty. Online marketers should spend less time talking
about customer loyalty and pay more attention to customer promiscuity.
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CHAPTER 8
BUSINESS MODELS ON THE WEB
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BUSINESS MODELS ON THE WEB
Business models are perhaps the most discussed and least understood aspect of the
web. There is so much talk about how the web changes traditional business
models. But there is little clear-cut evidence of exactly what this means.
In the most basic sense, a business model is the method of doing business by which
a company can sustain itself -- that is, generate revenue. The business model
spells-out how a company makes money by specifying where it is positioned in the
value chain.
Some models are quite simple. A company produces a good or service and sells it
to customers. If all goes well, the revenues from sales exceed the cost of operation
and the company realizes a profit. Other models can be more intricately woven.
Broadcasting is a good example. Radio and later television programming has been
broadcasted over the airwaves free to anyone with a receiver for much of the past
century. The broadcaster is part of a complex network of distributors, content
creators, advertisers (and their agencies), and listeners or viewers. Who makes
money and how much is not always clear at the outset. The bottom line depends on
many competing factors.
Internet commerce will give rise to new kinds of business models. That much is
certain. But the web is also likely to reinvent tried-and-true models. Auctions are a
perfect example. One of the oldest forms of brokering, auctions have been widely
used throughout the world to set prices for such items as agricultural commodities,
financial instruments, and unique items like fine art and antiquities. The Web has
popularized the auction model and broadened its applicability to a wide array of
goods and services.
Business models have been defined and categorized in many different ways. This
is one attempt to present a comprehensive and cogent taxonomy of business
models observable on the web. The proposed taxonomy is not meant to be
exhaustive or definitive. Internet business models continue to evolve. New and
interesting variations can be expected in the future.
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The basic categories of business models discussed in the table below include:
Brokerage
Advertising
Infomediary
Merchant
Manufacturer (Direct)
Affiliate
Community
Subscription
Utility
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ORACLE MARKETING ANALYTICS
KEY BENEFITS
Marketing executives are under constant pressure to justify their marketing
budgets. They are also responsible for ensuring optimum allocation of marketing
resources. Marketing managers need key information about the progress of their
campaigns so that they may proactively adjust their campaigns to ensure effective
execution and higher campaign ROI. Marketing analysts need access to enterprise-
wide customer information for effective segmentation. Oracle Marketing Analytics
is a comprehensive analytic solution that provides timely fact-based insight into the
marketing activities of the entire organization. It provides new levels of
information richness, usability, and reach to marketing professionals throughout
the enterprise. All users, from marketing executives to marketing analysts, get up-
to-the-moment, complete, and in-context marketing insight—insight that is
personalized, relevant, and actionable. The benefits are faster and more informed
decisions that help the marketing organization optimize its resources, reduce costs,
and improve effectiveness of marketing activities.
KEY BENEFITS:
FOR IT:
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Oracle Marketing Analytics provides unparalleled visibility
into campaign performance and ROI
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marketing manager uses Oracle Marketing Analytics to track the progress of the
campaign in real time, including number of customers contacted, offer acceptance
and reject rate, and performance by call center agent. Dashboards also help the
marketing manager validate the effectiveness of various test and control offers and
refine and re-launch the best offer in real time. At the conclusion of the campaign,
the marketing executive uses Oracle Marketing Analytics to track the effectiveness
of the retention marketing plan across the division for the quarter, which shows the
actual versus budgeted expense, response rate by each retention tactic, and overall
campaign ROI based on customers that were retained.
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CHAPTER 9
ORACLE MARKETING ANALYTICS
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Oracle Marketing Analytics enables advanced customer
segmentation
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to modify as business requirements change. In contrast, Oracle Marketing
Analytics is a pre-built solution designed for faster deployment at a lower cost, at a
lower risk, and with better business results. Oracle Marketing Analytics includes
pre-built data models and more than 100 metrics and best practices based on
Oracle‘s experience across hundreds of marketing automation implementations. In
addition, Oracle‘s robust enterprise analytics platform enables users to easily
customize and extend the application without the need for programming. The
intuitive, Web-based user interface requires very little training and ensures rapid
end user adoption.
Across industries, marketing organizations are being asked to do more with less,
while ensuring that they meet more aggressive goals. Marketing reporting and
analytics have traditionally focused solely on campaign results post-completion.
Oracle Marketing Analytics provides marketing professionals with a new level of
business insight by unlocking the information value hidden in systems across the
enterprise. With Oracle Marketing Analytics, marketing professionals have access
to actionable information, which drives a greater return on the marketing spend,
reduced marketing cost, and increased revenue. Additionally, Oracle Marketing
Analytics is built on a robust analytic platform that can proactively monitor and
deliver timely and actionable insight to the right person at the right time.
Both companies would say that they already offer Sass, yet that leads to a debate
about the definition of Sass. Companies such as Salesforce.com and Workday
would argue that Sass is comprised of a new class of applications that were built to
run on the Web and are delivered in a multitenant environment (e.g., an application
is shared by potentially dozens of the vendor's customers). As a result, they say,
customers can expect better performance than they would from a traditional
application hosted via the Web and pay less to the vendor than they would in a
single-tenant deal.
SAP, Oracle, Microsoft, and other traditional software vendors would argue that
Sass doesn't need to be multitenant and applications don't need to be rewritten for
Sass. But then why call it Sass; why not just call it hosted software (or, as it was
known in the '90s, the ASP model)?
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So let us consider Sass more in the vision of Salesforce.com and Workday, and see
where both Oracle and SAP stand on their offerings for larger businesses.
Oracle does see itself playing a noticeable role in Sass for both large and small
companies. It wants to be the go-to infrastructure vendor for software companies
providing Sass to their customers. With its "Oracle Sass Platform," it offers
database, middleware, application management, and virtual server software to
build the data centers for serving up Sass. Oracle notes that many Sass vendors
already are using its platform, including Intact (human resources) and Exactly
(CRM). Those vendors, of course, have to pay Oracle traditional licensing and
maintenance fees.
Both strategies show that Oracle and SAP want to play in the Sass world, but have
no plans to mess with the cash cow: traditional software licenses and maintenance
revenue that come from large companies. And it will likely stay that way unless
Workday, Salesforce.com, or another vendor poses a real threat to their installed
customer bases.
A new transaction system for implementing complex business transactions via the
Internet has been patented (Stavrovski, 2002). The system includes components
responsible for search, market analysis, negotiation, and legal closing, and its
implementation is able to:
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• organize interactive multi-party negotiations pertaining to the information
received, and formulate suggestions that will establish the basis for a compromise.
In the case, when the third list contains no objects, the system returns recurrently to
the first step of the whole procedure with the suggestion to change buyer‘s/tenant‘s
preferences (to enlarge the search domain). If the buyer/tenant disagrees with the
suggested changes the system cancels all procedure.
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7. Organizing the due diligences processes.
The system generates all necessary legal documents and organizes the processes of
due diligence and legal closing, thus successfully finishing the procedure. The due
diligence unit of the system is programmed to fulfill this part of the step 7.
If the due diligence process finishes unsuccessfully, the system returns recurrently
to the next object from the third list. In the case when said third list contains no
more objects, the system returns recurrently to the first step of the whole procedure
with the suggestion to change buyer‘s/tenant‘s preferences (to enlarge the search
domain). If the buyer/tenant disagrees with the suggested changes the system
cancels all procedure.
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FLOW CHART SHOWING GENERAL MARKETING
PROCEDURES
START
UNSUCCESSFUL
RESEARCH AND
DEVELOPMENT
SUCCESSFUL
PRODUCT
DEVELOPMENT
MARKETING
STRATEGIES
DISTRIBUSTION AND
SALES
FEEDBACK
STOP Page | 71
CHAPTER10
CUSTOMER RELATIIONSHIP
MANAGEMENT
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CUSTOMER RELATIONSHIP MANAGEMENT
Overview
From the outside, customers interacting with a company perceive the business as a
single entity, despite often interacting with a number of employees in different
roles and departments. CRM is a combination of policies, processes, and strategies
implemented by an organization to unify its customer interactions and provide a
means to track customer information.
• Front office operations — Direct interaction with customers, e.g. face to face
meetings, phone calls, e-mail, online services etc.
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(lobbying groups, trade associations). This external network supports front and
back office activities.
Types/Variations of CRM
There are several different approaches to CRM, with different software packages
focusing on different aspects. In general, Campaign Management and Sales Force
Automation form the core of the system (with SFA being the most popular)
Operational CRM
Operational CRM provides support to "front office" business processes, e.g. to
sales, marketing and service staff. Interactions with customers are generally stored
in customers' contact histories, and staff can retrieve customer information as
necessary.
The contact history provides staff members with immediate access to important
information on the customer (products owned, prior support calls etc.), eliminating
the need to individually obtain this information directly from the customer.
• 'Managing Campaigns'
• Generating reports
Analytical CRM
Analytical CRM analyzes customer data for a variety of purposes:
• Cross-selling/Up-selling/Switch-selling opportunities
• Customer drift
• Sales performance
• Customer trends
• Customer margins
Campaign Management
Campaign management combines elements of Operational and Analytical CRM.
Campaign management functions include:
• Target groups formed from the client base according to selected criteria
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• Sending campaign-related material (e.g. on special offers) to selected
recipients using various channels (e.g. e-mail, telephone, post)
Collaborative CRM
Collaborative CRM covers aspects of a company's dealings with customers that are
handled by various departments within a company, such as sales, technical support
and marketing. Staff members from different departments can share information
collected when interacting with customers. For example, feedback received by
customer support agents can provide other staff members with information on the
services and features requested by customers. Collaborative CRM's ultimate goal is
to use information collected by all departments to improve the quality of services
provided by the company.
Geographic CRM
Geographic CRM (GCRM) combines geographic information system and
traditional CRM. Geographic data can be analyzed to provide a snapshot of
potential customers in a region or to plan routes for customer visits.
Strategy
Several commercial CRM software packages are available, and they vary in their
approach to CRM. However, as mentioned above, CRM is not just a technology
but rather a comprehensive, customer-centric approach to an organization's
philosophy of dealing with its customers. This includes policies and processes,
front-of-house customer service, employee training, marketing, systems and
information management. Hence, it is important that any CRM implementation
considerations stretch beyond technology toward the broader organizational
requirements.
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The objectives of a CRM strategy must consider a company‘s specific situation
and its customers' needs and expectations. Information gained through CRM
initiatives can support the development of marketing strategy by developing the
organization's knowledge in areas such as identifying customer segments,
improving customer retention, improving product offerings (by better
understanding customer needs), and by identifying the organization's most
profitable customers.
CRM strategies can vary in size, complexity, and scope. Some companies consider
a CRM strategy only to focus on the management of a team of salespeople.
However, other CRM strategies can cover customer interaction across the entire
organization. Many commercial CRM software packages provide features that
serve the sales, marketing, event management, project management, and finance
industries.
Implementation Issues
While there are numerous reports of "failed" implementations of various types of
CRM projects, these are often the result of unrealisticly high expectations and
exaggerated claims by CRM vendors.
Many of these "failures" are also related to data quality and availability. Data
cleaning is a major issue. If a company's CRM strategy is to track life-cycle
revenues, costs, margins, and interactions between individual customers, this must
be reflected in all business processes. Data must be extracted from multiple sources
(e.g., departmental/divisional databases such as sales, manufacturing, supply chain,
logistics, finance, service etc.), which requires an integrated, comprehensive
system in place with well-defined structures and high data quality. Data from other
systems can be transferred to CRM systems using appropriate interfaces.
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Equally critical is the human aspect of the implementation. A successful
implementation requires an understanding of the expectations and needs of the
stakeholders involved. An executive sponsor should also be obtained to provide
high-level management representation of the CRM project.
An effective tool for identifying technical and human factors before beginning a
CRM project is a pre-implementation checklist. A checklist can help ensure any
potential problems are identified early in the process.
Market structure
The following table lists the top CRM software vendors in 2006-2007 (figures in
millions of US dollars) published in a Gartner study
Vendor 2007 Revenue 2007 Share (%) 2006 Revenue 2006 Share (%) '06-'07 Growth (%)
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Microsoft 332.1 4.1 176.1 2.7 88.6
The following table lists the top software vendors for CRM projects completed in 2006 using
external consultants and system integrators, according to a 2007 Gartner study
SAP 8%
Epiphany (Infor) 3%
Oracle 3%
PeopleSoft (Oracle) 2%
salesforce.com 2%
Amdocs 1%
Chordiant 1%
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Microsoft 1%
SAS 1%
Others 15%
None 22%
A 2007 Datamonitor report lists Oracle (including Siebel) and SAP as the top
CRM vendors, with Chordiant, Infor, and SalesForce.com as significant, smaller
vendors
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CRM FROM THE INFORMATION TECHNOLOGY
PERSPECTIVE
From the technology perspective, companies often buy into software that will help
to achieve their business goals. For many, CRM is far more than a new software
package, the renaming of traditional customer services, or an IT-based customer
management system to support sales people. However, IT is vital since it underpins
CRM, and has the payoffs associated with modern technology, such as speed, ease
of use, power and memory, and so on.
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Who are your best customers? What can you do to retain them? How can you
attract others like them? How can you increase your customers‘ profits? The truth
is that most companies have difficulty understanding and managing customer life
cycles and profitability. This is due to problems designing and executing effective
marketing campaigns, and problems measuring their effectiveness.
A survey of more than 1,600 business and IT professionals conducted by The Data
Warehousing Institute found that close to 50% had CRM project budgets of less
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than $500,000. Clearly, CRM doesn't have to be a budget-buster. What‘s more,
Forester estimated that CRM revenues will grow from $42.8 billion in 2002 to
$73.8 billion in 2007, a compound annual growth rate of 11.5%.
For CRM to be truly effective an organization must decide what kind of customer
information it‘s looking for and what it intends to do with it. Look at how customer
information comes into a business, where and how it‘s stored, and how it‘s used.
Then have company analysts‘ comb through the data to get a complete view of
each customer and pinpoint areas where better services are needed. One way to
assess the need for a CRM project is to count the ways a customer can access the
company. The more there are, the greater the need for the single centralized
customer view a CRM system can provide.
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tracking, giving you the features and functions necessary for marketing planning,
campaign management, telemarketing, lead generation, and customer
segmentation. In addition, CRM allows you to offer ongoing customer care across
all channels – with a customer-interaction center, Web-based customer self-service
capabilities, service and claims management, field service and dispatch, and
installed-base management.
Take a moment to count all the critical business processes associated with
ordering, fulfillment, payment, billing, employee benefits, sales, marketing and
customer service. In your opinion, what percentage of these processes is
completely and effectively digitized? Is it 10%, 30%, 50% or more? Our research
indicates that the average is between 20 and 30% – higher for Global 2000
companies, lower for small and mid-sized businesses (SMBs). CRM helps
businesses use technology and human resources to gain insight into customer
behavior – and to recognize the value of those customers.
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Information Drives Successful Customer Relationships
Oracle's integrated Customer Relationship Management (CRM) solution is a set of
applications that give you information-driven sales, service, and marketing. Oracle
CRM is built on an open, standards-based architecture that streamlines business
processes, improves data quality, and allows all your key divisions to draw from
the same source of data.
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SOME CRM SCREEN SHOTS
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CHAPTER11
ON DEMAND AND ON PREMISE
CRM
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ON DEMAND AND ON PREMISE CRM
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WHAT IS ON-DEMAND CRM
1. Faster deployment
2. Lower upfront costs
3. Reduced in-house support and maintenance requirements. No need to
dedicate in-house IT staff to implement the solution or require to hire a
system integrator to install or update the product, periodic upgrades are
also done by the vendor.
4. It is designed to make it web accessible and easy for a layman or
knowledge worker to understand and use.
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5. The hosted model is actually built with distributed with distributed
employees in mind if th offices are in New York, India and Sidney etc.
The management functions and analytics are created to make it easier for
a CIO to work withoffices all over the world. It also provides a platform
for mobile CRM, sales personnel can log on to important CRM data from
any place that has internet connectivity.
6. The modifications made in On-Demand applications are done through
very intuitive point and click configuration screens. It does not require an
IT expert to change the application. It also does not require two separate
environments of development and test. For On-Premise, these
environments are necessary and expensive.
7. In the On-Premise environment it would require a lot of programming to
develop or add functionality to an application while in On-Demand the
lunch as well as adding any functionality would happen in 30, 60, of 90
days that is why they are called sprints. In larger organizations all
functionality may not be implemented immediately. It may be
implemented over a longer period of time.
8. While On-demand approach is more iterative, everything need not be
perfectly documented up front. It creates a working model and keeps on
revising it. It therefore breaks down the wall between CEO‘s IT dept .and
the business.
9. According to a Gartner Study, eight out of ten IT dollars are considered
―dead money‖ which means that the money is not utilized to some
benefit. No significant business improvement happens to gain
competitive advantage. While On-Demand focus on improving the
business processes without the burden of infrastructure which is a very
crucial thing.
10. Hosted CRM also helps in broader integration opportunities afforded by
evolving web-services. Quite a lot of literature is available and the results
of a survey sometimes give such one sided results that wonders whether
there is a bias because of some ulterior motive. May be, they have
connections with On-Demand CRM vendors or services. Below are
mentioned four graphs which outstandingly show how On-Demand is
better than On-Premise on the following aspects.
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11. Not only do potential customers usually get a free trial, frequent upgrades
are included free during the lifetime of the contract.
On Premise CRM applications are those which are implemented in house, that is
within the organization on the hardware and software belonging to the
organization, implemented and maintained by the IT staff may be sometimes with
the help of the third party software service providers to help with the
implementations.
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2. The control of the data remains with the organization, and does not go to
the vendor.
3. The organization can have their own integrated highly customizable
applications which allow them to better differentiate themselves from their
competitors. If they need to make any changes in the software with the
change in the dynamic market conditions, to get competitive advantage,
they can do it with their I house application. So if any organization has
complex integration and customization needs and has sufficient time to
deploy an in-house suite or even incrementally deploy the modules that will
eventually constitute an integrated suite, for those companies in-house is a
better option.
4. Stability is completely possible with an On-Premise application. But the
scalability. Of On-demand applications is frequently questioned. Saas
solutions ideally serve 10, 25, 50 or may be 100 user organizations. As the
organizations get larger it would be better to go in for an On-Premise
solution. Beyond 100 users, businesses typically invest in a directory
service like Microsoft or LDAP and hire one IT person to manage it.
5. Also the cost advantage of an On-Demand solution diminishes with more
users.
6. Since the software is designed for ease of use and mass market
consumption some On-Demand software packages aren‘t as feature rich as
their-in-house counterparts. As a result a Saas solution may be ill equipped
to handle more sophisticated Enterprise Content management (ECM)
applications.
7. In some sectors like financial services, it is dictated that all works be done
in-house so such organizations tend to have a team of experts, so they
should be close to the processes and software.
8. The most important point is of total cost of ownership (TCO). Once the
budget is calculated beyond three years, the cost of an On-Demand solution
may be greater than an On-Premise solution, especially for a complex sales
organization.
While cost of an in-house licensed model drops over time and eventually
comes down primarily to maintenance fees, customers continue to pay the
same monthly fee for hosted offerings. Nonetheless hosted vendors
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maintain that such companies can be misleading because they are based on
the assumption that business won‘t need to make changes in their On-
Premise implementations beyond the standard upgrades they receive.
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Disadvantages of On-Premise CRM
1. High Costs: Most small- medium sized business can‘t afford the enormous
software acquisition fees, let alone the cost of purchasing or upgrading
existing IT infrastructure, hiring and training new IT staff to maintain this
infrastructure, training all existing staff to use the software efficiently etc.,
there are many such costs, and except for the up-front acquisition fees, other
costs are hard to predict and run over budget. This cost is also compounded
by the extensive time it takes to implement an On-Premise enterprise CRM
solution. Implenentation can take upto 8-12 months to get a fully functional
solution in place. Frequently more than half of this time is billable to
consultants before employees actually get to use the CRM. So the time frame
to begin seeing the ROI is long when IT consultants and system analysts are
charging you by the hour to discuss, how to implement the software based
system, it all adds up quite quickly. On-Premise CRM inplementations has
been notorious for failing, often the quickest solution being to upgrade to the
latest version of the software.
2. Lack of Flexibility: When dynamic market requires changes in the system, it
would take time to make the changes and there would be a cost to it also,
because it could be a huge complex enterprise system.
3. Extremely Limited Choice in Vendors: For enterprise On Premise CRM
there are not very many reputed vendors of software thus the choice is
limited.
4. Leaving the customer to manage software updates: In case of on demand,
the updates are handled by the vendor, but in case of On-Premise, the
customer will have to do it with his own IT-team.
5. Difficulty to Access Critical Company Data: Most of the On-Demand
applications have been developed with fewer features and is meant to be web
accessed and mostly used for distributed employees, but that was not the case
with On-Premise software. Thus it may be difficult to access company data
from anywhere and everywhere. Though over a period of time web access is
provided on many such software, so this trouble has reduced lately.
For all the disadvantages which have been shown against the On-Demand option,
the On-Demand brigade has also given the answers.
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After discussing the advantages and disadvantages of both On-Demand and ON-
Premise CRM systems now that the paper focuses on when and which kind of
companies generally go for one or other type of system.
Even after discussing the pros and cons, it is not so easy to say that the On-
Demand option is the best option or the on-Premise option is the best option. The
answer would be – ―it depends‖. Choosing an option is not so simple. It would be
more suitable for a type of company to go for the On-Premise option and another
type of company to go for the On-Demand option.
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that fit this multi-function utilization rofile are better candidates for an On-
remise system, primarily because of more complex integration challenges.
Those companies with a view ability to manage customer interactions with
advanced processes and work flow as strategic to creating competitive
advantage and growth (such as cross/up sell opportunities, customized
service offerings, efficient lead management or a tight quote to cash
process). Those companies which believe the customer data is proprietary,
with strong emphasis on internal security infrastructure and procedures, as
well as ability to perform advanced analytics to indentify key customer
trends are also appropriate candidates for ON-Premise applications.
2. Integration: If your customer data and processes need to be linked to other
systems and departments and integration is often vital to the success of any
CRM solutions. A company may need to integrate legacy systems, with
other key infrastructure systems which are highly customized for a specific
purpose for these systems the ability to directly access and update data is
vital, than On-Premise application is more suitable for such a company. If a
company does not need to integrate real-time, customer information with
other major systems then On-Demand option may be right.
3. Customer Processes: If a company is in a highly competitive environment
and it must be able to dynamically adjust their business processes to respond
to market shifts and changing customer needs, they need an advanced
customer process solution with the level of customization and process depth
necessary to compete, then On-Premise solution is likely the best choice.
4. Is there work force distributed or mobile?
5. What are their security restrictions? Security and regulatory restrictions in
some vertical industries are other factors that drive the deployment of On-
Premise applications.
6. It depends on where your company is in the CRM ―life cycle‖ and growth
process. If your company is stable, with little growth or change, then a
hosted CRM solution may be good. If on the other hand your company has
rapid changes with high growth, then the premise solution would be the best
choice.
7. Seasoned ECM users are more interested in On-Premise and other than those
users; the business community is gaining a fair share of interest in On-
Demand.
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8. SMBs who cannot afford On-Premise could go to On-Demand
9. Companies interested in a long term approach, a slow build out or extensive
customizations were advised to invest in an in-house system.
Justification to Go to On-Demand
It advises companies to use their valuable Intellectual capital for those functions
and systems that provide them with competitive advantage and leave simple things
to the On-Demand vendor.
Cost
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size of the organization Saas or On-Demand alternative can allow you to get
the benefits for as little $25 to $50 per user per month. These fees are
generally based on usage or storage capacity and can be deemed operational
business expenditure which is attractive to many SMBS given their limited
capital budgets. And for a 30 day time period most On-Demand providers
may allow a free download to test the software.
3. When a company is doing a cost analysis of whether to choose a hosted or in
house CRM system – it should jot down how much each vendor says and
find out the real cost.
Many vendors charge additional fees after the initial purchase. Vendors have a
way of throwing software or training into the deal, if you already have those,
they throw in marketing.
While dealing with in-house CRM vendors, a company should software add-ons
or training time for staff members that may not have anticipated. Whit hosted
CRM vendors companies should be aware of potential hidden costs in
infrastructure and resources estimates. They may convey that a certain server
capacity may be required and you might think you can get by on less.
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ORACLE ON DEMAND CRM:
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Better Marketing Programs, Through Better Integration With
Critical On-Demand CRM Features, With CRM-FM
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On-Demand CRM and B2B Marketing Programs: The major activities executed
in business-to-business marketing programs for lead generation and lead
development, integrated with features of major on-demand CRM systems
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The CRM-FM system provides comprehensive coverage of the techniques
required to implement these specialized lead development programs in your
company, using on-demand CRM:
• Editorial content development for lead development programs: Discovering
and developing the unique strategic knowledge and product attributes possessed by
your company, which can be utilized for deliverables (below) and programs in lead
development to uniquely position your company with prospects during the sales
cycle;
• Effective execution of information deliverables for lead development:
Development of specialized editorial information deliverables—white papers, case
studies, applications briefs, etc.—used in e-mail messaging for lead development
in on-demand CRM, both in ongoing marketing programs, and for on-demand use
by your company‘s sales team in CRM document storage;
• Execution, measurement, and ongoing adaptation of specialized marketing
activities in lead development: E-mail messaging, autoresponders, and highly
targeted marketing efforts to support ―triggering event‖ selling opportunities
occurring on a one-to-one basis with individual prospects
The CRM-FM system provides complete coverage of these critical skill areas
in lead development for marketing professionals, addressing the major marketing
activities required to plan, develop, execute, and measure lead development
programs in your company.
To view lead development topics covered in the CRM-FM system, click here . . .
Attraction to On-Demand
On demand has been particularly attractive to mid-market and smaller firms
who might not have the IT expertise. The advantage of hosting model is that
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one can start with 5 or 10 users as a pilot and if the company is successful, it
can expand it further in the enterprise. An analyst at Forrester Liz Herbert has
said, ―The advantage with hosted is, it doesn‘t cost you a lot and if you have to
throw it away, you do not have to sink a million dollars into a large scale CRM
implementation.
Future Ahead
Gartner Inc. has estimated that by 2009, business will be spending $1 billion in
CRM as a service and that 33% of all SMBs will have chosen model.
Meanwhile, Forrester Research and had predicted that the percentage of overall
CRM revenue coming from hosted applications will stand at 13% by 2005, up
from 7% in 2002. Also, there is a trend which is noticed that the ratio of
companies going for On-demand to On-Premise is 2:1. Thus we see that slowly
there are companies which are going for On-demand applications for various
reasons as we have seen earlier.
Possible Strategy
Companies may start with On-Demand and as they grow and their usage
increases they may switch to On-Premise. On-Demand may be treated as a pilot
project to see what benefits are arising out if CRM give the confidence to
management and therefore develop the sponsorship required to invest a huge
amount in ON-Premise. On-Demand may be used from department to
department to get a stronger buy-in from individual departments, so the
awareness of advantages of CRM develops and so an On-Premise solution
would succeed. This avoids the huge investment in On-Premise and a possible
failure and a major loss in millions of dollars.
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All the pros and cons of each of them have been discussed. Sometimes looking
at so many advantages one may have felt much more inclined towards at type of
application. But it is seen, that there is no right answer as to which type of
application is better. It depends on the companies environment, its capability
and needs. But one very own good opinion has emerged lately. Companies need
to choose only one, they can go for both! They are saved from making a very
useful decision. Today, infact the two models coexist in many large companies
answering differing enterprise and divisional needs. Further some traditional
suite providers, witnessing the populatity of hosted offerings and recognizing
the benefits for customers, are now providing their own outsourced models.
Thus, they are choosing blended solutions that utilize both approaches. This
approach is accepted because it does not involve radical switch in strategies for
most companies. For e.g, a corporation might decide to install in-house CRM
software but outsource call centre functions. Similarly, a company may roll out
a component of CRM in-house that requires complex customizing while
outsourcing more straight straightforward components to a hosted vendor. So,
one can need not think of On-Demand and On-Premise as mutually exclusive. It
would be interesting to see this market five years from now and see how it has
developed.
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CHAPTER12
CONCLUSION
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CONCLUSION
One has to understand that business models are perhaps the most discussed and
least understood aspect of the web. Some models are quite simple. A company
produces a good or service and sells it to customers. If all goes well, the revenues
from sales exceed the cost of operation and the company realizes a profit. Internet
commerce will give rise to new kinds of business models. The web is also likely to
reinvent tried-and-tested models. Auctions are a perfect example. Business model
is one attempt to present a comprehensive and cogent taxonomy of business
models observable on the web.
In this cut throat competitive world, the only way to keep the competition at bay is
by building a strong customer relationship. In order to maintain the relationship in
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an effective manner one has to imperatively turn to the wonder child – IT. With the
help of CRM software information about customers and customer interactions can
be entered, stored and accessed by employees in different company departments.
Typical CRM goals are to improve services provided to customers, and to use
customer contact information for targeted marketing. In the course of the paper, we
have also expanded on CRM software and illustrated it with the help of suitable
screen shots in order to explain better.
In a nutshell, we have attempted at covering all the major aspects that entwine
Marketing with Information Technology. We have ceased to live in a world of
absolutes and this is an effort to bring that to the surface.
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CHAPTER13
BIBLIOGRAPHY
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BIBLIOGRAPHY
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