UNIT IV MARKETING STRATEGIES IN THE WEB

4.1 Significance of marketing applied in the e-commerce

International Business have changed

The internet has changed the nature of the industry and how business prospers, and one of the most affected areas has undoubtedly been the marketing

The advantages that this brings is that the internet offers new ways (often instantaneous and spontaneous) to collect customer information, adjust product offerings and increase customer value.

Traditional businesses are in need of new methods to identify and communicate with customers, including marketing search engines, data mining, systems recommendations and email targeted

In recent years, the ads are following the huge changes in hearing, which moves away from traditional media and approaches to social networks

Consumer Online: The Internet Audience and Consumer Behavior

The internet audience

know your customer

Who use the web?

Who shop on the web?

What do they buy? & Why?

Consumer profile: internet traffic patterns

Around 73% (86 million) U.S. households have Internet access in 2011

Internet growth has slowed to about 2-3% a year and it is unlikely that Internet access will reach the same levels as televisions or telephones in the near future

Intensity and Scope of Usage

The slowing growth rate in the US Internet population is compensated for in part by an increasing intensity and scope of use

People are also going online to engage in a wider range of activities than in the past

most common online activities include e-mail, search engines, news, or using an online social networking site

Demographics and Access

Up until 2000, single, white, young, college-educated males with high incomes dominated the Internet

Demographic similarities and differences can be assessed by looking at:

Gender Age Ethnicity community type income level education

GenderFairly equal percentage of men and women users (70%)

AgeTeens (12-17) and young adults (18-29) form the age groups with the highest percentage of Internet use (95%)The percentage of very young children going online is also growing dramatically in part due to increased access to computers and the Internet both at school and at homeAnother fast-growing group online is the 65 and over segment which is still fairly low at 42%, but more than double the level of 2002

Ethnicity• Variation across ethnic groups is not as wide as across age groups• In 2002, there were significant differences among ethnic groups, but this has

receded

Community type• Historically, Internet access rates have been significantly lower in rural

areas than other kinds of communities• In 2011, only about 72% of rural households have an Internet

connection, with wide variations from state to state

Income levelAbout 96% of households with income levels above $75,000 have Internet access, compared with only 63% of households earning less than $30,000

EducationOf those individuals with a high school education or less, 42% were online in 2011, compared to 94% of individuals with a college degree or more

In summary, the “digital divide” has indeed moderated, but it still persists along the income, education, age, regional, and ethnic dimensions (Table 6.3 provides a summary)

Other Internet Access Issues

• In 2011, around 83 million US households had broadband service in their homes while 3.2 million had slower dial-up access

• Over 90 million Americans access the Internet from mobile devices

• Internet use may cause a decline in traditional social activities, but in other instances may strengthen and complement traditional face-to-face relationships

• Marketing to young people who are texting and multitasking online requires messages that are appropriate created and shaped

• Time on the Internet takes time away from traditional media

Consumer Behavior

• Once firms have an understanding of who is online, they need to focus on how consumers behave online

• The study of consumer behavior is a social science discipline that attempts to model and understand the behavior of humans in a marketplace

• Models of consumer behavior attempt to identify the factors that influence behavior and purchase decision making

• The following slides describe a general model of consumer behavior and a more detailed model of online consumer behavior

A General Model of Consumer Behavior

Background Demographic Factors

• Culture: Affects entire nations

• Subculture• Subsets formed around major social

differences (ethnicity, age, lifestyle, geography)

• Social networks and communities• Direct reference groups• Indirect reference groups• Opinion leaders• Lifestyle groups

• Psychological profile

The Online Purchasing Decision

• Psychographic researchCombines demographic and psychological dataDivides market into various groups based on social class, lifestyle, and/or personality characteristics

• Stages in consumer decision process:Awareness of needSearch for more informationEvaluation of alternativesActual purchase decisionPost-purchase contact with firm

The Consumer Decision Process andSupporting Communications

A Model of Online Consumer Behavior

• Decision process similar for online and offline behavior

• General online behavior model• Consumer skills• Product characteristics• Attitudes toward online purchasing• Perceptions about control over Web

environment• Web site features: latency, usability, security

• Clickstream behavior

A Model of Online Consumer Behavior

Clickstream Behavior

• Clickstream behavior refers to the transaction log that consumers establish as they move about the Web

• They may move from search engine, to a variety of sites, then to a single site, then to a single page, and then, finally, a decision to purchase

• Understanding individual user clickstream behavior may enable websites to be designed to better support this online purchase decision process

• Clickstream factors include:• Number of days since last visit• Speed of clickstream behavior• Number of products viewed during last visit• Number of pages viewed• Supplying personal information• Number of days since last purchase• Number of past purchases

• Clickstream marketing• Developed dynamically as customers use Internet

Shoppers: Browsers and Buyers

• Shoppers: 87% of Internet users

• E-commerce and traditional commerce are coupled: Part of a continuum of consuming behavior

Online Shoppers and Buyers

What Consumers Shop for and Buy Online

• Big ticket items

Travel, computer hardware, electronics Consumers now more confident in purchasing costlier items

• Small ticket items ($100 or less)

Apparel, books, office supplies, software, etc. Sold by first movers on Web

Physically small itemsHigh margin items

How Shoppers Find Vendors Online

• Given the prevalence of “click here” banner ads, one might think customers are driven to online vendors by spur-of-the-moment decisions

• In fact, only a tiny percentage of shoppers click on banners to find vendors

• Once they are online, 59% of consumers use a search engine to research or purchase a product

• 28% go to marketplaces such as Amazon and eBay• 10% go direct to retail Web sites• Online shoppers are focused browsers looking for specific

products, companies, and services

What Consumers Buy Online

Why Consumers Choose the Online Channel

Why Internet Users Do Not Buy Online

Trust, Utility, and Opportunism in Online Markets

Two most important factors shaping decision to purchase online:

• Utility: Better prices, convenience, speed

• Trust:Asymmetry of information can lead to opportunistic behavior by sellersSellers can develop trust by building strong reputations for honesty, fairness, delivery

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