Internet Marketing

Chapter 14

Prepared by
Deborah Baker
Texas Christian University
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
2005 South-Western College Publishing

Learning Objectives
1. Explain how the Internet affects the
traditional marketing mix
2. Describe how marketers are leveraging the
power of online technology
3. Discuss the legal and privacy issues
affecting Internet-based companies

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

Learning Objectives

4. Measure the effectiveness of an online

marketing campaign
5. Discuss the effects of the Internet on
marketing objectives and strategy

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

Learning Objective

On Line
http://www.scubatoys.com/poolcam/poolcam.asp

Explain how the

Internet affects the
traditional
marketing mix

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

Product Strategies on the Web

Progression of
product strategies:

Commodities

Branding

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

Mass
customization

On Line
http://www.despair.com

Branded Commodities

Principle of equivalent quality is applied

to branded products, creating downward
price pressure
Camera A at
Retailer A

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

Camera A at
Retailer B

Place
On Line
http://www.ideavirus.com

Corporate Web sites

Resellers Web sites
Affiliate programs

Clicks and mortar

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

Affiliate Programs

Virtual Intermediaries:

Refer customers to online retailers

Receive a commission on resulting
sales
Benefit from the goodwill consumers
feel for the content sites they normally
visit
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
2005 South-Western College Publishing

Promotion Challenges

Consumers dont know the site

Consumers dont know the company
Converting browsers to buyers

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

Promotion Methods
Spam
Viral Marketing (Buzz)
Instant Messaging

Online
promotion
techniques

Interactive Ads

Search Engine Listings

Sales Promotion

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

10

Search Engine Listings

Low price

No or low fee
gets you at
the bottom of
the list

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

High price

Gets you to
the top of the
list

11

Pricing Pressure

On Line
http://www.fedex.com
http://www.ups.com
http://www.usps.com

Extreme price pressure

on the Internet due to:

Shopping bots and comparison sites

Auction pricing
Demand pricing

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

12

Pricing and Consumer Loyalty

75% of customers participate in a loyalty program
Online customer service consistently rated as poor

72% say customer service is important

Come
Back
Soon!

41% happy with service they received

Profitability is less algorithm and more caring
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
2005 South-Western College Publishing

13

How Technology Changes the 4Ps

Era of:

Product

Place

Promotion

Price

Personal
Commodities
Selling
(pre-1840s)

Retail Store

Store Displays Going Rate

Advertising
(1840s to
1990s)

National
Brands

Malls &
Superstores

National
Advertising

Retail Price

Interactive
Commerce
(1994 and
beyond)

Branded
Worldwide
Commodities
Marketplace
Mass
Customization Affiliate
Programs

Intelligent
Software
Agents

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

Internetbased
Web Sites
Interactive
Ads
Instant
Messaging

14

Learning Objective

Describe how
marketers are
leveraging the
power of online
technology

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

15

Internet Demographics and Trends

60% of Men

Online:
By Gender
in the U.S.
56% of Women

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

16

Internet Demographics and Trends

60% of Whites

Online:
By race in
the U.S.

45% of Blacks

54% of Hispanics

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

17

Internet Demographics and Trends

23% no high school

Online:
By
education
in the U.S.

45% of high school grads

82% of college grads and

post-graduates
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
2005 South-Western College Publishing

18

The Global Village

Broadens and enhances access

in developing nations

Allows businesses to leapfrog

into development
Levels playing field for
disadvantaged countries

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

19

Wireless Access on Rise

Wireless is growing in popularity

Will soon represent over half of all
Internet users worldwide
A particular advantage for developing
nations without suitable infrastructure

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

20

Basic Forms of Virtual Business

Business-to-business
B2B

Forms of
Internet
commerce

Business-to-Consumer
B2C

Consumer-to-Consumer
C2C
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
2005 South-Western College Publishing

21

B2B Exchanges

On Line
http://www.globalwinespirits.com
http://www.transcore.com

Online trading floor

Struggling to survive

Over half out of business

since 2002

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

22

Maximizing Customer Relationship

Marketing on the Internet

Data tracking
Needed for personalized
content
Using
Cookies

Keep ad content fresh

Controversial because of
privacy concerns

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

23

Improving Search Engine Results

1 Choose the right words
2 Put those words at top of page
3 Use meta tags, like bold type
4 Increase non-reciprocal links
5 Incorporate graphics

6 Incorporate video/audio
7 Pay for a better link
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
2005 South-Western College Publishing

24

Learning Objective

Discuss the legal

and privacy issues
affecting Internetbased commerce

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

25

Major Issues in Online Privacy

On Line
http://www.fbi.gov/hq/lab/carnivore/carnivore.htm

Cookies
Not-so-private email
Spam

Identity theft
Conflicting laws

Cyberstalking
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
2005 South-Western College Publishing

Branded trust 26

Cookies
Are bits of data mapped
to your hard drive

Cookies:

Enable marketers to
personalize Web sites
Can trace where youve
been on the Internet
Are the subject of a
controversial debate

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

27

Identity Theft
Stealing personal information to
commit fraud or other crimes

Sharply increasing

In 2003, 27 million complaints

filed with the FTC

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

28

Conflicting Legislation
Not all countries have the same laws
regulating Internet commerce
Marketers (M)
responsible for
every law in every
country

Country 1

Country 2
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
2005 South-Western College Publishing

Country 3
29

Online Predators

Cyberstalking is on the rise.

Caution is declining (e.g., online dating is
increasing)

Affects trust people have for legitimate

marketing efforts

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

30

Creating Trust Online

Better Business Bureau

Reliability Seal
3rd-party
seals for
creating
trust

ScanAlert
Hacker Safe

Verisign
Secure Seal
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
2005 South-Western College Publishing

31

Learning Objective

Measure the
effectiveness of an
online marketing
campaign

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

32

Metrics

The server can

tell:

The server cant

tell:

Who visited
How many times
(hits)
And where (page
views)

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

Recency
Frequency
Monetary value

33

Out-of-Date Metrics

Hits

Page views

Click-through counts

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

34

Stickiness as the New Metric

Duration
Stickiness =

Frequency

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

Site Reach

35

Learning Objective

Discuss the effects

of the Internet on
marketing
objectives and
strategy

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

36

Porters Five Industry Forces

Rivalry among existing competitors

Applying
Five
Forces in
Internet
Environment

Barriers of entry
Threat of substitutes
Bargaining power of suppliers

Bargaining power of buyers

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
2005 South-Western College Publishing

37

Porters Five Industry Forces

Online
Rivalries are

intensified

Barriers are

low

Threat of substitutes is

high

Bargaining power suppliers

Bargaining power buyers

extremely low
increasing

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

38

Debunking Myths of Re-Formed

Market

5
Myths

Truths

1st movers
have the
advantage

1st movers pay the costs of

development; 2nd movers have the
advantage.

Behavior
changes
quickly

Old habits die hard; people more

concerned about getting needs met
than fractional costs savings

People perceive prices posted by

Non-traditional
pricing will be
sellers to be more convenient and
a success
fair.
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
39
2005 South-Western College Publishing

Back to Basis

Distinctive competence
Sustainable competitive
advantage
Attract loyal customers

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel

2005 South-Western College Publishing

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