Marketing in the Digital Age: Making New Customer Connections Chapter 3

Marketing in the Marketing in the Digital Age: Making Digital Age: Making

New Customer New Customer ConnectionsConnections

Chapter 3Chapter 3

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Objectives

• Be able to identify the major Be able to identify the major forces shaping the new digital forces shaping the new digital age.age.

• Understand how companies have Understand how companies have responded to the Internet with responded to the Internet with e-business strategies.e-business strategies.

• Be able to describe the four Be able to describe the four major e-commerce domains.major e-commerce domains.

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Objectives

• Understand how companies Understand how companies use e-commerce to use e-commerce to profitably deliver greater profitably deliver greater value to customers.value to customers.

• Realize the promise and Realize the promise and challenges that e-commerce challenges that e-commerce presents for the future.presents for the future.

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• Invented discount Invented discount brokerage brokerage categorycategory

• First U.S. major First U.S. major player to go onlineplayer to go online

• Initially offered Initially offered two-tiered trading two-tiered trading system system to protect profits / to protect profits / stop stop cannibalizationcannibalization

• Later became first Later became first true click-and-true click-and-mortar full-service mortar full-service brokerage brokerage

• Now world’s largest Now world’s largest e-commerce site e-commerce site

• 85% online trades; 85% online trades; 21% of trade 21% of trade volume; Strong volume; Strong stock returnstock return

Charles SchwabCharles Schwab

Case Study

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Major Forces Shaping the Digital Age

• Digitalization and ConnectivityDigitalization and Connectivity The flow of digital information The flow of digital information

requires connectivity requires connectivity Intranets, Extranets, and the Intranets, Extranets, and the

Internet Internet

• The Internet ExplosionThe Internet Explosion Key driver of the “new economy”Key driver of the “new economy”

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• New Types of IntermediariesNew Types of Intermediaries Brick-and-mortar firms often face Brick-and-mortar firms often face

disintermediation from click-only disintermediation from click-only competitorscompetitors

The click-and-mortar business The click-and-mortar business model has been highly successfulmodel has been highly successful

• Customization and Customization and CustomerizationCustomerization

Major Forces Shaping the Digital Age

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Marketing Strategy in the Digital Age

• E-business: E-business: uses electronic means and uses electronic means and

platforms to conduct business.platforms to conduct business.

• E-commerce:E-commerce: facilitates the sale of products facilitates the sale of products

and services by electronic and services by electronic means.means.

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• E-marketing: E-marketing: Includes efforts that inform, Includes efforts that inform,

communicate, promote, and sell communicate, promote, and sell products and services over the products and services over the Internet.Internet.

• E-commerce benefits both E-commerce benefits both buyers and sellers buyers and sellers

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• Buyer Benefits of E-Commerce: Buyer Benefits of E-Commerce: ConvenienceConvenience Easy and privateEasy and private Greater product access/selectionGreater product access/selection Access to comparative Access to comparative

information information Interactive and immediateInteractive and immediate

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• Seller Benefits of E-Commerce: Seller Benefits of E-Commerce: Relationship buildingRelationship building Reduced costsReduced costs Increased speed and efficiencyIncreased speed and efficiency FlexibilityFlexibility Global access, global reachGlobal access, global reach

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E-Marketing DomainsE-Marketing Domains

E-Commerce Domains

Targeted to Targeted to consumersconsumers

Initiated by Initiated by businessesbusinesses B2CB2C

Targeted to Targeted to businessesbusinesses

Initiated by Initiated by consumersconsumers C2CC2C C2BC2B

B2BB2B

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E-Commerce Domains

• B2CB2C

• B2BB2B

• C2CC2C

• C2BC2B

• Online consumersOnline consumers Now more mainstream Now more mainstream

and diverseand diverse Has created new Has created new

targeting opportunitiestargeting opportunities Online behavior differs Online behavior differs

by ageby age Online consumers Online consumers

differ from traditional differ from traditional off-line consumersoff-line consumers

They initiate and They initiate and control the exchange control the exchange process process

Value information Value information highlyhighly

Major Major DomainsDomains

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E-Commerce Domains

• B2CB2C

• B2BB2B

• C2CC2C

• C2BC2B

• B2B sales far exceed B2B sales far exceed B2C salesB2C sales B2B sales are B2B sales are

estimated to reach estimated to reach $4.3 trillion in 2005$4.3 trillion in 2005

• Open trading networksOpen trading networks E-marketspace E-marketspace

bringing sellers and bringing sellers and buyers togetherbuyers together

• Private trading Private trading networksnetworks Links sellers with Links sellers with

their own trading their own trading partnerspartners


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E-Commerce Domains

• B2CB2C

• B2BB2B

• C2CC2C

• C2BC2B

• C2C web sites help C2C web sites help consumers exchange consumers exchange goods or informationgoods or information eBay is one exampleeBay is one example

• Auction sites facilitate Auction sites facilitate the exchange processthe exchange process Allow access to a Allow access to a

much larger audiencemuch larger audience

• Newsgroups / forumsNewsgroups / forums Help consumers to Help consumers to

find and share find and share informationinformation


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E-Commerce Domains

• B2CB2C

• B2BB2B

• C2CC2C

• C2BC2B

• Allow consumers to Allow consumers to search out sellers, search out sellers, learn about offers, learn about offers, initiate purchase, or initiate purchase, or dictate purchase dictate purchase termsterms Ex: Priceline.comEx: Priceline.com

• Some sites facilitate Some sites facilitate the feedback process the feedback process between customers between customers and companiesand companies Ex: Planetfeed.comEx: Planetfeed.com


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Conducting E-Commerce

• Click-Only-CompetitorsClick-Only-Competitors E-tailers, search engines and portals, E-tailers, search engines and portals,

ISPs, transaction sites, enabler sitesISPs, transaction sites, enabler sites

• Dot.coms failed for many reasonsDot.coms failed for many reasons Lack of planning and researchLack of planning and research Over emphasis on acquisition vs. Over emphasis on acquisition vs.

retentionretention Poor web site design / distribution Poor web site design / distribution

systemssystems Low marginsLow margins

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• Click-and-Mortar CompaniesClick-and-Mortar Companies Channel conflict was initially a Channel conflict was initially a

concern concern E-commerce often created new E-commerce often created new

customers, rather than cannibalizing customers, rather than cannibalizing existing onesexisting ones

Many firms now enjoy greater success Many firms now enjoy greater success than their click-only competitionthan their click-only competitionTrusted brand names, greater financial Trusted brand names, greater financial

resources, larger customer base, industry resources, larger customer base, industry knowledge, and strong supplier knowledge, and strong supplier relationships were key advantagesrelationships were key advantages

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• Corporate web sitesCorporate web sites Build goodwill and Build goodwill and

relationships; relationships; generate excitementgenerate excitement

• Marketing web sitesMarketing web sites Engage consumers Engage consumers

and attempt to and attempt to influence purchaseinfluence purchase

• Web site designWeb site design 7 Cs of effective 7 Cs of effective

web site designweb site design

E-MarketingE-Marketing

• Creating web sitesCreating web sites• Placing online ads Placing online ads

and promotionsand promotions• Creating or using Creating or using

web communitiesweb communities• Using E-mail and Using E-mail and

webcastingwebcasting

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Seven C’s of Web Site DesignSeven C’s of Web Site Design


•ContextContext

•ContentContent

•CommunityCommunity

•CommunicatioCommunicationn

•ConnectionConnection

•CommerceCommerce•CustomizationCustomization

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• Online forms of ads Online forms of ads and promotionsand promotions Banner ads/tickersBanner ads/tickers SkyscrapersSkyscrapers InterstitialsInterstitials Browser adsBrowser ads Content Content

sponsorshipssponsorships MicrositesMicrosites Viral marketingViral marketing

• Future of online adsFuture of online ads


• Creating web sitesCreating web sites• Placing online ads Placing online ads




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• Web communities Web communities allow members with allow members with special interests to special interests to exchange viewsexchange views Social communitiesSocial communities Work-related Work-related

communitiescommunities

• Marketers find well-Marketers find well-defined demographics defined demographics and shared interests and shared interests useful when useful when marketingmarketing


• Creating web sitesCreating web sites• Placing on-line ads Placing on-line ads




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• E-mail marketingE-mail marketing Key tool for B2B and Key tool for B2B and

B2C marketingB2C marketing Clutter is a problemClutter is a problem Enriched forms ofEnriched forms of

e-mail attempt to e-mail attempt to break through break through clutterclutter

• WebcastingWebcasting Auto downloading of Auto downloading of

customized content customized content to recipients’ PCsto recipients’ PCs


• Creating web sitesCreating web sites• Placing on-line ads Placing on-line ads




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Promise and Challenges of E-

Commerce• The Promise of E-CommerceThe Promise of E-Commerce

The future of B2B E-commerce is The future of B2B E-commerce is brightbright

A few click-only companies may A few click-only companies may succeedsucceed

Most companies will integrate Most companies will integrate online marketing into the online marketing into the marketing mixmarketing mix

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Promise and Challenges of E-

Commerce• Challenges: The Web’s Darker SideChallenges: The Web’s Darker Side

Few B2C companies are profitableFew B2C companies are profitable Limited exposure, skewed demographicsLimited exposure, skewed demographics Navigating the web is often problematicNavigating the web is often problematic

• Challenge: Legal and Ethical IssuesChallenge: Legal and Ethical Issues Online privacy and security concernsOnline privacy and security concerns Internet fraud, the digital divide, Internet fraud, the digital divide,

access by vulnerable or unauthorized access by vulnerable or unauthorized groupsgroups

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Marketing in the Digital Age: Making New Customer Connections Chapter 3