EBIZ501 A & YA

Introduction to Course and

Internet Marketing                 

© 2001 Ann Schlosser, University of Washington Business School

Agenda

• Introduction to course– Cover syllabus– Introduce marketing plan– Form groups

• Introduction to Internet marketing– History of the Internet– Initial Internet marketing efforts– The Internet today

Marketing Plan Outline1. Executive Summary – leave until the end2. Situation Analysis – outline due April 12

2.1 Market Summary 2.1.1 Market Demographics2.1.2 Market Needs2.1.3 Market Trends2.1.4 Market Growth

2.2 SWOT Analysis2.2.1 Strengths2.2.2 Weaknesses2.2.3 Opportunities2.2.4 Threats

2.3 Competition2.4 Services2.5 Keys to Success2.6 Critical Issues

Marketing Plan Continued

3. Marketing Strategies – outline due April 263.1 Mission3.2 Marketing Objectives3.3 Financial Objectives3.4 Target Marketing3.5 Positioning3.6 Marketing Mix3.7 Marketing Research

* Typically followed by a section on “Financials, Budgets, and Forecasts” (e.g., a break-even analysis) and a section on “Controls” (e.g., contingency planning)

Form groups

Group #

Case Presentation

Case Response

Preliminary Project Presentation Order

Final Project Presentation Order

1

BET.com Day: 4/3 Eve: 4/5

Onsale

Day: 4/19 Eve: 4/19

4

3

2 CNET 2000

Day: 4/5 Eve: 4/5

Yesmail.com

Day: 4/17 Eve: 4/19

2

5

3 Sothebys.com

Day: 4/10 Eve: 4/12

Boston.com Day: 4/26 Eve: 4/26

6

1

4 Yesmail.com

Day: 4/17 Eve: 4/19

CNET 2000

Day: 4/5 Eve: 4/5

1

6

5 Onsale

Day: 4/19 Eve: 4/19

BET.com Day: 4/3 Eve: 4/5

3

4

6 Boston.com Day: 4/26 Eve: 4/26

Sothebys.com

Day: 4/10 Eve: 4/12

5

2

History of the Internet:Identifying a Need

How could U.S. authorities keep bases, cities and states connected after a nuclear attack?

In 1962, RAND Corporation researches the answer.

"In the Beginning, ARPA created the ARPANET. And the ARPANET was without form and void.

And darkness was upon the deep….And ARPA said, 'Let there be a protocol,' and there was a protocol. And ARPA saw that it was good.

And ARPA said, 'Let there be more protocols,' and it was so. And ARPA saw that it was good.

And ARPA said, 'Let there be more networks,' and it was so."

-- Danny Cohen

How the Internet began: 1962-1969

The 1970’s

•ARPANET grows to 23 research centers

•Telnet introduced •USENET established

• First MUD

The 1980’s• 1984

– First moderated newsgroup

– DNS introduced

• 1985– First .edu registered domains:

cmu.edu, purdue.edu, rice.edu, ucla.edu

• 1986– NSF establishes 5

supercomputing centers

• 1987T1 NSFNET

• 1988– IRC developed

The early 1990’s1990 ARPANET R.I.P. and T3 NSFNET developed

1991 NSF allows commercial usage

Gopher released

Tim Berners-Lee (at CERN in Switzerland) introduces the WWW

1993 NCSA Mosaic (the first browser) is born• Result: traffic on the Internet expands at a 341,634% annual growth rate.

1994 Commercial side of Internet takes off

© NCSA/UIUC, image by Donna Cox and Robert Patterson, 1991

Usage of NSFNET backbone service in April, 1995

1994: First banner ads and first spam

Subject: Green Card Lottery- Final One?

Organization: Canter & Siegel Date: 12 Apr 1994 08:07:10 GMT

AT&T and Zima on hotwired

1995: Push advertising

% of US Households with Computer and Internet Access in 1994, 1997, 1998 and 2000

24.1

36.6

42.1

51

18.6

26.2

41.5

0

10

20

30

40

50

60

1994 1997 1998 2000

% o

f U

S H

ouse

hol

ds

Computer

Internet Access

http://www.ntia.doc.gov/ntiahome/fttn00/contents00.html

% of US Households with Internet Access in 1998 and 2000

0

10

20

30

40

50

60

70

80

90

All

Whit

e Non

-Hisp

anic

Black N

on-H

ispan

ic

Asian A

mer. &

Pac

. Isl.

Hispan

ic

Less t

han $

15,00

0

$15,0

00 -

24,99

9

$25,0

00 -

34.99

9

$35,0

00 -

49,99

9

$50,0

00 -

74,99

9

$75,0

00 an

d abo

ve

Less t

han H

igh S

choo

l

High S

choo

l Grad

uate

Some C

olleg

e

Colleg

e Grad

uate

Post G

radua

teRura

l

Urban

Centra

l City

Dec-98

Aug-00

= above the overall average 58.4% expansion rate

% of US Individuals using the Internet in 1998 and 2000

= above the overall average 36% growth rate

0

10

20

30

40

50

60

Dec-98Aug-00

.com accounts for greatest % of growth

                                                                             

% of U.S. Persons Using the Internet at Home by Race/Ethnicity and Type of Use

2000

0102030405060708090

Percent of Internet Users

White Black AsianAmerican

Hispanic

E-mailInfo. SearchTake coursesJob related tasksJob search

Similar Purchases Across Racial/Ethnic Groups2000

The Internet Today: The DownsideThe Agony and the Ecstacy

Negative Internet Economy Trends 2000 1999 2000 % Change

Total amount raised by Net IPOs1 1Q99: $50.3 billion 3Q00: $5.9 billion -88%

Value of Net mergers-and-acquisitions2 1Q00: $51.7 billion* 3Q00: $9.3 billion -87%

Median prevaluation of e-commerce startups3 4Q99: $80 million 2Q00: $20 million -75%

The Standard 1001 Dec 31, 2000: 2595 Dec 6, 2000: 695 -73%

Average first-day gain of Internet IPOs1 1Q99: 113 percent 3Q:00: 51 percent -55%

Dot-com's marketing-expenditure/revenue ratio4 3Q99: 79 percent 3Q00: 47 percent -33%

Nasdaq1 Dec 31, 1999: 4069 Dec 6, 2000: 2876 -31%

Net venture capital funding5 1Q00: $16 billion 3Q00: $13 billion -19%

Net venture capital rounds raised5 4Q99: 798 3Q00: 664 -17%

Internet-related IPOs1 1Q99-3Q99: 168 1Q00-3Q00: 161 -4%

U.S. interactive TVs6 1999: 1,118,100 2000: 1,143,400 -2%

The Internet Today: The UpsidePositive Internet Economy Trends 2000

1999 2000 Percent Change

U.S. retail e-commerce15 $15 billion $45 billion +200%

Worldwide wireless Internet users14 6.3 million 18.1 million +187%

U.S. business-to-business e-commerce13 $97 billion $213 billion +119%

U.S. DSL or cable-modem connections6 2.5 million 4.7 million +88%

Number of web pages12 1.5 billion 2.7 billion +80%

U.S. online advertising spending11 $4.6 billion $8 billion +74%

E-mail messages sent daily worldwide10 5.9 billion 9.7 billion +64%

Worldwide online population9 245 million 338 million +38%

U.S. average monthly time spent online at home8

8.2 hours 10.0 hours +23%

U.S. ISP subscribers6 47 million 57 million +21%

U.S. online population7 104 million 122 million +17%

Is The Web Different?“The Web is considered both a promotion channel, therefore suitable for advertising, and a distribution channel, therefore suitable for sales” (Angelides, 1997).

“…a new and revolutionary distribution channel” (Alba et. al 1997).

“…an important yet uncertain medium for advertisers to consider in their marketing communication mix” (Bush, Bush & Harris 1998).

“…another tool in the company’s marketing arsenal” (Clark, 1997)

“While differences between virtual and traditional retail are important, in certain ways customer behavior is largely the same across the two environments.” (Fader 2000)

Is The Web Different?

“…the Internet is just another format of retailing…[a]nd the same rules will apply.” (Mark Vadon, CEO, Blue Nile, May 15, 2000)“

“…the Internet may prove to be just a new form of the telephone surrounded by hype and broken promises” (Nicovich and Cornwell 1998)

“It probably is as foolish to talk about ‘electronic commerce’ (meaning ‘Internet commerce’) as it is to talk about ‘telephone commerce’ or ‘fax machine commerce’.” (Rust 1999)

Is the Web Different?

• What are some specific ways that the Web is different from traditional physical world marketing environments?

• What are the implications of these differences for marketing? Is a new business paradigm required? Answer these questions in light of:– Hoffman and Novak’s (1997) paper (Groups 1 & 2)

– Postmodernism (Groups 3 & 4)

– Locke’s Cluetrain Manifesto (Groups 5 & 6)