Marketing Dynamics
CANADIAN EDITION
Canadian Authors: Greg Gregoriou and Jessica Pegis
Brenda Clark • Jennie Sobel • Cynthia Gendall Basteri
(Sample Chapters 5 & 9)
OXFORDNEXT
Chapter XX Chapter TitleChapter XX Chapter Title
Contents
PART 1 MARKETING BASICS
1 Marketing is Dynamic! 4Marketing Defined 5Marketing Is Dynamic 5Marketing Is Customer-Focused 6Marketing Is Relationships 7Marketing Is International 7Marketing Is the Four Ps 8Marketing Is the Marketing Mix 12Marketing Is the Marketing Plan 13Is Marketing in Your Future? 15
2 Business Basics 18Economic Needs and Wants 19The Exchange 19Money 20What Is Business? 22Making a Profit 22Forms of Business Ownership 23The Functions of Business 25
3 The Marketing Concept 29The Marketing Concept 30The Functions of Marketing 31
The Functions and the Marketing Concept 33
Profile: TD Canada Trust 34
4 Market Forces 37Types of Economic Systems 38Market Economy Features 40Market Forces at Work 41Supply and Demand 42Profit 44Competition 46Role of the Customer 47
PART 1: Wrap-up 50
PART 2 REACHING YOUR MARKET
5 Targeting a Market 54Marketing Strategy 55Mass Marketing 57Target Marketing 58Choosing Your Target Market 60
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iv Contents
Advantages and Disadvantages of Targeting a Market 61
Segmenting a Market 62Geographic Variables 63Demographic Variables 64Psychographic Variables 66Behavioural Variables 67Combining Variables 69Market Segment Profile 69
6 Consumers and Competition 73Psychological Influences 74Social Influences 76Situational Influences 78The Consumer Decision Process 79Competition 80Ways to Compete 81Market Share 83Why Is Market Share Important? 84Competition Research 85
7 Marketing Research 90Types of Data 92Collecting Primary Data 92Sources of Secondary Data 96Marketing Research Process 97Trend Research 97Sales Forecasting 100Is Marketing Research Always Right? 101Profile: Windigo Catering 102
8 Marketing for Not-for-Profit Organizations 106Characteristics of Not-for-Profit
Organizations 107The Importance of Marketing for NPOs 111Marketing Strategies of NPOs 112
9 Information Technology and Social Media 120E-Commerce Basics 121Marketing on the Internet 123Business-to-Business on the Internet 123Shopping on the Internet 124Future of E-tailing 130
PART 2: Wrap-up 134
PART 3 THE MARKETING MIX
10 What Is a Product? 138Types of Products 139The Service Economy 140Characteristics of Services 140Product Elements 142Product Strategy 147Product Life Cycle 147
11 Branding 156What Is a Brand? 157Branding and the Customer 159Goals of Branding 161Protecting a Brand 164You as a Brand 166
12 What Is Price? 170Types of Prices 171Factors That Affect Price 172Profile: WestJet Airlines Ltd. 180
13 Price Determination 183Pricing Objectives 184Effect of Price on Revenue 188Establishing Prices 189
14 What Is Place? 194Channels of Distribution 195Role of Intermediaries 199Physical Distribution 201Activities of Physical Distribution 201Components of Physical Distribution 202Modes of Transportation 204Distribution of Services and Ideas 206The Distribution Process 206Channel Management and Physical
Distribution 208
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vContents
15 What Is Promotion? 212Promotion Is Marketing
Communication 213Personal Promotion 218Nonpersonal Promotion 218AIDA: The Basic Promotional Strategy 224Pull and Push Strategies 228The Marketing Concept and Promotion 229Integrated Marketing
Communications 229
16 The Sales Process 234What Is Personal Selling? 235Where Do Salespeople Work? 235What Do Salespeople Do? 239The Sales Process 241Is There a Career for You in Sales? 241
PART 3: Wrap-up 246
PART 4 GOVERNMENT, TRADE, and marketing
17 Role of Government 250Federal Powers 251Market Challenges 252Government Economic Activities 254
18 International Trade and Marketing 261International Trade 262Why Trade? 263Exports and Imports 265Foreign Exchange Rates 266Regulation of International Trade 267
Towards a Global Economy 269Marketing Strategies for International
Markets 270Globalization: Good or Bad? 272Profile: Swiss Water Decaffeinated Coffee
Company Inc. 274
PART 4: Wrap-up 278
PART 5 ISSUES AND TRENDS IN MARKETING
19 Social Responsibility in Marketing 282What Is Social Responsibility? 283Be Legal 284Be Ethical 287Be Philanthropic 290Benefits of Social Responsibility 290
20 Trends in Global Marketing 294Technology 295Immigration 296Multinational Corporations 296Important International Markets 299Challenges in Global Marketing 301Profile: soleRebels Footwear 303
PART 5: Wrap-up 306
Glossary 308 Index 316
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54
54
5 Targeting a Market
Learning Goalsn definebusinessopportunityn explainthecomponentsofa
marketingstrategyn describethefourqualitiesofa
targetmarketn identifythefourstrategiesinthe
marketingmixn definemassmarketingandtarget
marketingandstatetheadvantagesanddisadvantagesofeach
n explainhowsegmentationhelpstodeterminewhichmarkettotarget
n explaineachofthefoursegmentationcategoriesandlistthevariablesforeach
n describehowmarketerscreateanduseamarketsegmentprofile
Why do you think marketers are interested in teens as a market?
Marketing Termsbusiness opportunitymass marketingtarget marketingmarket segmentationsegmentation variablegeographic segmentationcensusdemographic informationdemographic segmentationgenerationdisposable incomediscretionary incomepsychographic segmentationbehavioural segmentation80/20 rulemarket segment or consumer profile
ThediversityoftheCanadianmarketprovidesmanybusinessopportunities.Anopportunityisachanceforsuccess.Whatisabusinessopportunity?Abusinessopportunityoccurswhenyouseeaneedthatyourcompanycanfulfill.Abusiness opportunityisthechanceforsuccessprovidedbythecombinationofaproductideaandamarketthatiswillingandabletobuytheproduct.(Rememberthataproductcanbeagood,aservice,oranidea.)
Manygreatbusinessideasstartwithonepersonwhohasaneedorobservesaneed
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Chapter 5 Targeting a Market 55
inothers.Forexample,supposeyouareahairdresser.Youobservethattherearemanypeoplewhocannotgetouttogethaircuts,suchasolderadults.Youdevelopabusinessthatgoestopeople’shomestocuttheirhair.Manyproductideascomefrompersonalhobbiesorinterests,5-1.Forexample,acollegestudentenjoyedwatchingJapaneseanimations.HedevelopedabusinesssellingJapaneseanimationvideos,andtoys.
Marketing StrategyOnceyoufindabusinessopportunity,
youneedtodevelopawaytoturntheopportunityintoasuccessfulbusiness.Oneofthefirststepsistodevelopabusinessplanandamarketingplan.
Animportantpartofthemarketingplanisthemarketingstrategy.Astrategyisaplandevelopedtoreachagoal.Forbusinessesthatfollowthemarketingconcept,theoverallgoalistomakeaprofitbysatisfyingcustomers’wants.Inordertoreachthatgoal,
marketersdevelopamarketingstrategy.AsyoulearnedinChapter1,amarketingstrategyconsistsofthetargetmarketandallthedecisionsinthemarketingmix.
TargetMarket+MarketingMix=Marketing Strategy
Marketersdevelopamarketingstrategybyselectingatargetmarketanddevelopingthemarketingmixwiththetargetmarketinmind.Supposeyouwanttopursueyourideaofprovidinghaircareservicestopeoplewhohavelimitedmobility.Yourtargetmarketwouldbeseniorcitizensandpeoplewithphysicalchallenges.Yourmarketingmixwouldbeasfollows:product—haircareservicessuchaswash,cut,colour,andstyle;price—competitivewithlocalsalonsplusaservicefee;place—customers’homesinyourregion;promotion—directmailandadsinlocalnewspaper.
Target MarketWhenyoudevelopamarketingstrategy,
youmustfirstchooseyourtargetmarket.Atargetmarketisthespecificgroupofcustomerswhosewantsandneedsyouwilltrytomeetwithaspecificmarketingmix.Atargetmarketshouldhavethefollowingfourqualities:n clearlydefinedwantsandneedsthat
yourcompanycanmeetn moneytobuyyourproductn willingnessandauthoritytobuyyour
productn enoughcustomersinthemarkettobe
profitableChoosingatargetmarketisoneofthe
mostimportantdecisionsamarketermakes,5-2.Ifthetargetmarketdoesnotwantorneedyourproduct,yourproductwillnotbesuccessful.Youmightalsomisstheopportunitytobesuccessfulwithadifferenttargetmarket.Ifthetargetmarketdoesnothavethemoneytobuyyourproduct,your
5-1
Some people develop a business based on a need they observe or a need they have themselves. Many people develop business ideas based on their hobbies or interests.
MarketingDy_2-135_Ch1-9.indd 55 13-02-27 8:09 AM
Part 2 Reaching Your Market56
productwillnotbesuccessful.Ifyourtargetmarketistoosmall,youwillnotsellenoughproductstomakeaprofit.
Think of your favourite store. Who do you think the target market is for this store? Describe the typical customer.
3 Connect...
Marketing MixThemarketingmixconsistsofthe
decisionsmadeaboutproduct,place,price,andpromotionforoneproduct.Onceyouhavedecidedonyourtargetmarket,youwillmakeyourmarketingmixdecisionswiththattargetmarketinmind.Whenyouplanyourmarketingmix,youwillthink,“Howwillmytargetmarketrespondtothis?”Whathappensifyoudonothaveatargetmarket?Imaginethatthemarketerisaquarterback.Imaginethequarterbacktryingtothrowapass,butheisblindfolded!Thatishowamarketerwithoutatargetmarketis.
Marketingmixdecisionsareoftencalledmarketingmixstrategies.Inotherwords,foreachPintheFourPs,thereisastrategy.Thesestrategieswillbeexploredinmoredetailinotherpartsofthistext.Hereisanoverviewofmarketingmixstrategies:n Product Strategies.Thesestrategies
includeallthedecisionsmadeaboutwhatproducttooffer.Keepinmindthatthetermproductincludesgoods,services,andideas.Productstrategiesincludedecisionsaboutquality,quantity,size,colour,features,technicalsupport,packaging,warranties,brandname,andimage.
n Price Strategies.Thesestrategiesincludeallthedecisionsmadeaboutpricingaproduct.Pricestrategiesincludedecisionsmadeaboutprofit,discounts,andthesellingprices.Pricingcanalsohaveanimpactontheimageofaproduct.
n Place Strategies.Thesestrategiesincludeallthedecisionsmadeaboutwheretheproductwillbesold.Itincludesdecisionsabouthowtotransporttheproduct,warehousing,inventorycontrol,andorderprocessing,5-3.
n Promotion Strategies.Thesestrategiesincludeallthedecisionsmadeabouthowtotellcustomersaboutthecompanyandtheproduct.Itincludesdecisionsaboutadvertising,suchasthetypeofadsandwheretoplacethem.Italsoincludesdecisionsaboutpersonalselling,customerservice,publicity,promotionalevents,anddesignandlayoutofstores.Usually,marketingmixdecisionsare
interrelated,5-4.Inotherwords,adecisionmadeforoneofthePswillaffectthedecisionsmadefortheotherPs.Asaresult,decisionsfortwoormoreofthePsmaybemadeatthesametime.Forexample,ifthetargetmarketwantslowprices,thenumberofproductfeaturesmayhavetobereduced
5-2
Identifying the target market is a key decision. A marketer without a target market is working in the dark.
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Chapter 5 Targeting a Market 57
sothatthecompanycanselltheproductatalowerprice.Productdecisions,suchasbrandnameandpackaging,areoftenchosenbecausetheywillworkwellinpromotions.
Mass MarketingAmassmarketconsistsofallthe
customersforaspecifictypeofproduct.Forexample,everyonewhowantsacarandisableandwillingtobuyacarispartofthemassmarketforcars.Mass marketingisthedevelopmentofonlyonemarketingmixforaspecificproduct.Massmarketingassumesthateveryonehasexactlythesamewantsandneedsfortheproduct.Thistypeofmarketingpresentstwoproblems.Oneproblemisrelatedtothenatureofconsumermarkets.Theotherisrelatedtoprofitability.
Name a product for which there is a mass market.
3 Connect...
Nature of Consumer MarketsThenatureofconsumermarketsisthat
theyarediverse.Thatis,mostconsumermarketsconsistofmanygroupsofconsumerswithmanydifferentneeds.Massmarketinglooksatthemarketasamass.Itassumesthatallcustomershavethesameneedsandwantsfortheproduct.Inreality,thereareveryfewconsumermassmarketsinwhicheveryonehasthesameneedsandwantsforaspecificproduct.
Thinkofthecurrentmarketforcars.Canyouimagineacarmanufacturermakingonecarthatwouldmeettheneedsofeveryoneinthemassmarketforcars?Thinkofthedifferentneedscustomershaveforautomobiles,5-5.Herearesomeexamples.Onegroupofcarcustomerswantsanexpensiveluxurycar.Anothergroupwantsaminivantoholdateamofkidsandalltheirsoccergear.Anothergroupwantsthecheapestcarpossible.Anothergroupwants
5-3
Place strategies include the decisions about how to transport products from factory to warehouse or warehouse to retail store. 5-4
Marketing mix decisions are interrelated. A decision about one P affects decisions for the other Ps.
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Part 2 Reaching Your Market58
a pick-uptruck.Inmostconsumermarkets,themassmarketismadeofcustomerswithdifferentneedsfortheproduct.
Name a product for which different groups of consumers have different needs.
3 Connect...
ProfitabilityEverybusinesswantstomakeaprofit.
Massmarketingisoftenveryinefficientandexpensive.Forexample,advertisingtoamassmarketthroughtelevision
commercialsisveryexpensive.Asaresult,massmarketingmaynotresultinprofits.Inaddition,everybusinesshaslimitedresources.Eachbusinesshastodecidewhereitwillspenditslimitedresources.
Hereisahypotheticalexampleforthepurposeofillustratingthepoint.Supposeyoudecidetostartahouse-cleaningbusiness.Youalsodecideonamassmarketapproach.Youroneproductwillbefourhoursofcleaning.Thepricewillbe$100.YouwilladvertiseonTV.TVadvertisingisveryexpensive.Ifyouadvertiseonallshowsandatalltimes,yourcostofadvertisingwillbeveryhigh.Youwillbespendingmoneytoreachmanypeoplewhoarenotpotentialcustomers.Youwillspendmoreonadvertisingthanyouwouldeverearnfromyourbusiness.
Target MarketingAsaresultofthesetwoproblems,
marketersdevelopedanapproachcalledtargetmarketing.Inthetargetmarketingapproach,marketersanalyzethemassmarket.Theythensegment(divideup)themarketbasedonthedifferentneedsandwantsofthecustomersinthatmarket.Thecompanywillthenchooseoneofthosesegments.Itwilldevelopamarketingmix—product,place,price,andpromotion—tomeettheuniquewantsandneedsofthatmarketsegment.Thedevelopmentofauniquemarketingmixforatargetmarketiscalledtarget marketing.Somecompanieswillchoosetwoormoresegmentstotarget,butwilldevelopauniquemarketingmixforeachsegment.
Whatmakesamarketingmixunique?OneormoreoftheFourPsarechangedtomeetthetargetmarket’suniqueneedsandwants.Theproductcanbechangedbyaddingdifferentfeatures.Thepricecanbechangedtomatchthenewleveloffeatures.Theplacewhereaproductisofferedcanbechanged;forexample,anInternetwebsitecanbeaddedasawayforcustomerstoobtaintheproduct.Lastbutnotleast,the
5-5
Could one style of car meet the needs of everyone in the market for a car?
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Chapter 5 Targeting a Market 59
promotioncanbechangedtoappealtothetargetmarket’suniquewantsandneeds.
Themodernautomobileindustrysegmentsandtargetsspecificmarkets,5-6.Forexample,GeneralMotorshasdevelopedmanybrandsandmodelsofcarstomeettheneedsofvariousmarketsegments.Hereareafewexamples.TheChevroletSonicisasmalleconomycarwithalowprice.Itistargetedtofirst-timecarbuyersandpeoplewhodoa lotofcitydriving.TheCadillacXTSisalarger,high-performanceluxurysedanwith
ahighprice.Itstargetmarketiswealthyadultswhowantaluxurycarthatisalsoastatussymbol.TheGMCSierra1500isapick-uptruckofmoderateprice.Itistargetedatpeoplewhowantatruckwithsomeextrafeaturesandperformance.
Howwouldtargetmarketingworkforyourhouse-cleaningbusiness?First,youwouldanalyzethemarketforcleaningservices.Whatsegmentsarethere?Whataretheirneeds?Whichsegmentofthemarketwouldyouliketofocuson?Herearesome
Mass Marketing and Target Marketing
Mass Marketing
All CustomersAll are considered to havethe same wants and needsfor a car.
Segmented Market Target Marketing
Segmented CustomersThe customers are organizedinto three market segmentsbased on wants for a specifictype of car:
wants an economy car.
wants a luxury car.
wants a pick-up truck.
Target MarketOne segment of the marketwas chosen. This targetmarket consists of customerswho want luxury cars.These customers havesimilar wants in a car.
Legend: = People who want economy cars
= People who want luxury cars
= People who want pick-up trucks
5-6
The automobile industry segments the market and then targets specific segments with specific types of cars. This diagram shows a simplified version of the thought process for segmenting a market.
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Part 2 Reaching Your Market60
segments:seniorcitizenswhowantregularheavycleaningbutnolightcleaningatthelowestprice;busyadultswhowantthoroughbutreasonablypricedregularcleaning;andluxuryhomeownerswhowanttheirlargehomesthoroughlycleanedonaregularbasisandarewillingtopayhigherprices.
Youdecideonthebusyadultssegment.Youthenresearchthismarkettofindoutwhattheyneedandarewillingtopayfor,sothatyoucancustomizetheFourPstomeettheirneeds.Youfindthatmostwantfour-hourweeklycleaning.Youalsofindoutthattheyarewillingtopaybetween$60and$100,dependingonthesizeofthehome.Soyousetupapricescaledependingonthetotalareaofthehome.YoualsofindoutthatthesebusyadultslistentothelocalradiostationontheirwaytoworkandreadtheThursdaynewspaperfortheads.SoyoudecidetochangeyourpromotiontoamorningradioadplusanadintheThursdaylocalpaper,whichappearsinprintandonline.
Name another industry that segments and targets markets. Give an example of two products and their different features and target markets.
3 Connect...
Choosing Your Target Market
Therearefourgeneralapproachestochoosingatargetmarket:(1)decideonthetargetmarketfirstandthendevelopaproduct,(2)developagreatproductideaandthenlookforatargetmarketthatwouldlikeit,(3)developtheproductideaandtargetmarkettogether,and(4)takeacurrentproductwhosesalesarefallingandthenlookforanewtargetmarketfortheproduct.Hereareseveralexamples.
n Target Market First.Averypopulartargetmarketisyoungpeople!Itisalargemarketwithmoneytospend.InCanada,therearemorethan4.5millionyoungpeoplebetweentheagesof15and24,manywithpart-timeorfull-timejobs.Manycompaniesdecidefirstthattheywanttomarkettothisgroupofyoungpeople.Theythendevelopnewproductsormodifyoldonestomeetyoungpeople’swantsandneeds,5-7.
n Product Idea First.Inthe1940s,anengineerresearchingasyntheticsubstituteforrubbermixedabunchofchemicalstogether.Theresultwasasortofliquid,sortofsolidgoothatbouncedwhendropped.Everyonethoughtthestuffwascool,butnoonecouldthinkofanindustrialorpracticaluseforit.Amarketer,PaulHodgson,sawtheinventionanddecidedithadgreatpotentialasatoy.Henamedit“SillyPutty”andpackageditinaplasticegg.SillyPuttybecameoneofthemostpopularNorthAmericantoyswithhundredsofmillionsinsalessince1950.Thetargetmarketforthattoyischildren.
5-7
Many companies target the youth market, especially teens and people in their early to mid-twenties.
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Chapter 5 Targeting a Market 61
segment.Aftergainingsuccesswithonemarketsegment,thebusinesscanthenexpandtoanothersegment.
Targetmarketingalsoenablessmallbusinessestocompetewithlargercompanies.Thesmallbusinesslooksforasegmentofthemarketwhoseneedsarenotbeingmet.Often,asmallsegmentofamarketcanbeveryprofitable,especiallyifyouhavealmostthatentiremarketsegment.Thissmallmarketiscalledamarketniche.
Kaepa,Inc.,forexample,isasneakermanufacturer.Inthe1980s,largercompaniessuchasNikeandReeboktookmostofitssalesaway.Kaepa’ssalesofsneakersfellandthecompanywaslosingmoney.Then,Kaepadecidedtofocusontheshoeneedsofcheerleaders.Kaepadevelopedshoesthatmeetthespecificneedsofcheerleaders.Forexample,theirshoeshavegroovesinthesolesforthecheerleaders’fingerswhentheymakehumanpyramids.Kaepaalsomakescustomshoeswithteamcoloursandlogos.Kaepa,Inc.,becameverysuccessfulbytargetingasmallsegmentoftheathleticshoemarket,andthenmeetingthatsegment’sspecificneeds,5-8.
Therearetwopotentialproblemswithtargetmarketing.First,youmaychooseamarketthatistoosmall.Asaresult,therearenotenoughcustomerstomakeyourbusinessprofitable.Thesecondproblemwithtargetmarketingisthatyoumaychoosethewrongtargetmarket.Inthiscase,youalsowillnotmakeaprofit.Youmayalsomisstheopportunitytomakeaprofitfromadifferenttargetmarketthatwouldbelargerandmoreprofitable.Thesetwoproblemscanbeavoidedbyappropriatemarketsegmentationandmarketingresearch.
Theotherpotentialproblemwithtargetmarketingoccurswhenallofthecompany’sbusinessdependsononemarketsegment.Supposethatmarketsegmentsuffersfinanciallosses.Thatsegmentwillreduceorstopbuyingproductsfromthecompany.Thecompanywillthenalsohavefinanciallosses.
n Product and Target Market Together.Productsareoftendevelopedwiththeneedsofaparticularmarketinmind.Forexample,thecosmeticscompanyM·A·CwasstartedinCanadawhenafashionphotographerandamake-upartistrealizedthatstagemake-upoftenfailedunderthebrightlightsofthestudio.TheM·A·Ccosmeticlineoriginallytargetedprofessionalmake-upartists.Onlylaterdiditbecomeafavouritewithconsumers.
n Old Product, New Target Market.Volkswagenautomobileshavebeenaroundforalongtime.However,in1997VolkswageninNorthAmericawantedtotargetamarketcalled“GenerationX,”thatis,peoplebornbetween1966and1976. VolkswagenmodifiedtheirGolfmodelbyaddingacustomroofrackandK2brandskisorsnowboard,andnamedtheneweditionGolfK2.TheyalsodesignedapromotioncampaignthatwouldappealtotheadventurousnessofmanyGenerationXers.
Advantages and Disadvantages of Targeting a Market
Forabusinesstobesuccessful,itdoesnothavetoselltoeverycustomerinthemassmarket.Businesseshavediscoveredthatwhentheytrytomeettheneedsofa massmarketwithasinglemarketingstrategy,theymaysatisfyveryfewcustomers.Suchbusinessesmaynotmakeaprofit.Manybusinesseshavediscoveredthatfocusingonaparticularmarketsegmentleadstomoresuccessandmoreprofits.Byfocusingononesegmentofthemarket,thebusinesscandevelopamarketingmixthatsatisfiestheneedsofmostofthecustomersinthatmarket
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Part 2 Reaching Your Market62
Segmenting a MarketAsyouhavediscovered,marketershave
developedwaystoanalyzealargemassmarketandbreakitupintosegments,5-9.Thisprocessofdividingalargemarketintosmallerpartsiscalledmarket segmentation.Eachmarketsegmentismadeofcustomerswithsimilarwantsandneedsforaspecificproduct.Marketersoftensegmentthemarket,studythesegments,thenchooseone(ormore)ofthesegmentsastheirtargetmarket.
Intheconsumermarket,marketersusecharacteristicsofcustomerstosegmentthemarket.Forexample,amarketermightsegmentamarketbasedontheageof
thecustomers.Acustomercharacteristicthatisusedtosegmentamarketiscalledasegmentation variable.Ageisasegmentationvariable.Someothersegmentationvariablesareincomelevel(howmuchmoneythecustomermakes)andgender(whetherthecustomerismaleorfemale).Theassumptionisthatbasedonthesevariables,thecustomersinthesegmenthavesimilarwantsandneedsforproducts.
Thereareover25differentvariablesthatmarketerscommonlyusetosegmenttheconsumermarket.Marketershaveorganizedthesevariablesintofourcategories:(1)geographic,(2)demographic,(3)psychographic,and(4)behavioural.Businessmarketersalsosegmenttheirmarkets.
5-8
Small companies can compete by finding a niche market, that is, a small segment of the larger market whose needs are not being served. Kaepa, an athletic shoe manufacturer, focuses on shoes for cheerleaders and is very successful in this market niche.
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Chapter 5 Targeting a Market 63
5-9
Think about the people you see in the mall. How do their wants and needs differ? Marketers have developed ways to analyze a large mass market and break it up into segments.
Imagine that $100 are available to spend. How might a teenaged male spend the money? A teenaged female? A 30-year-old parent with two children? A wealthy 40-year-old? A retired person on a very small fixed income?
3 Connect...
Geographic VariablesSegmentingamarketbasedonwhere
customersliveiscalledgeographic segmentation.Commonlyusedgeographicvariablesincludelocation,climate,andcommunitysize.
LocationCustomers’needsforproductsoftenvary
basedonwheretheylive.Customerswho
liveinthesamecountryoftenneeddifferentproductsfromthosewholiveinadifferentcountry.Forexample,Canadiancars—asopposedtoAmericancars—mustusethemetricsystemtoshowdistancetravelledandgasconsumed.Soacompanythatproducescarsfortheworldmarketwouldsegmentthemarketbycountriesthatusethemetricsystemandthosethatdonot.
ClimateClimatehasahugeimpactonwhat
customersneed.Customerswholiveinclimateswhereitnevergetscolderthan15°Cdonotneedwarmcoats.Customerswholivewheretheaveragewintertemperatureis–6˚Cneedwarmcoats.Therefore,acoatmanufacturermightsegmentthemarketbasedonaveragewintertemperatures,5-10.
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Part 2 Reaching Your Market64
Community SizeManymarketershavediscoveredthat
marketsizevarieswiththesizeofthecommunity.Somecommunitiesaretoosmalltobeprofitableforcertainbusinesses.Forexample,onerestaurantchainwilllocaterestaurantsonlyincitiesof200000ormorepeople.Smallercitiesdonotprovideenoughcustomersforthisparticularbusiness.Otherbusinessesprefertofocusontheneedsofa smallcityortown.Walmartistheclassicexample.WhenWalmartstarted,itlocateditsstoresinsmalltowns.
Choose a geographic variable. Think of a product that can be segmented based on that variable. Name the product and the geographic variable. Then describe the market segment.
3 Connect...
Demographic Variables
Mostcountrieswanttoknowbasicinformationabouttheircitizens,suchashowmanypeopleareineachagegroup.Asaresult,mostcountriescountthenumberofpeopleintheircountries.Acensusisacountofthepeopleinacountrymadebythegovernmentonaregularbasis.StatisticsCanadaconductsacensuseveryfiveyears.
Acensuscollectsdemographicinformation.Demographic informationconsistsofstatistics(numbers)thatdescribethecharacteristicsofapopulation,forexample,theageofpeople.Itwillthencompileagraphthatshowshowmanypeopleinthecountryareineachagegroup.
Thecategoriesthatthisinformationisdividedintoarecalleddemographic variables.Segmentingamarketbasedondemographicvariablesiscalleddemographic segmentation.Demographicvariablescommonlyusedbymarketersincludeage,gender,ethnicity,income,andfamilysize.
AgeAgeisacommonlyusedsegmentation
variablebecausepeopleatdifferentageshavedifferentneedsandwants.Forexample,babiesrequirespecialfood,soanumberofcompaniesspecializeinproducingbabyfood.Clothingisanotherareawhereageaffectswantsandneeds.
Animportantvariablerelatedtoageisgeneration.Agenerationisagroupofpeoplebornduringaparticularperiodofhistory.Theperiodofhistorythatagroupofpeoplegrewupinhasamajoreffectontheirattitudes,wants,andneeds.Forexample,peoplebornbetween1977and1994areknownasthe“Millennials.”Millennialswerethefirstgenerationtogrowupwithacomputerintheirhomeandusesocialnetworking.BothGenerationY(1977–1994)andGenerationZ(1995–present)areMillennials.
5-10
Marketers of certain products, such as coats, segment the market based on climate.
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Chapter 5 Targeting a Market 65
AboriginalpeoplesrepresentagrowingmarketinCanada.AccordingtoStatisticsCanada,thepopulationofFirstNations,Métis,andInuitpeopleincreasedby47percentbetween1996and2006—aboutsixtimestherateofincreasefortherestofthepopulation.
Withrespecttoage,48percentofAboriginalpeoplesare25yearsofageorunder,comparedto31percentinthegeneralpopulation.Aboriginalyouthhavebecomeanimportanttargetmarketforbusinessesseekingtomarketproductsorrecruitthisgroupaspartnersoremployees,5-11.
Name a product whose market is segmented by age. Describe the different market segments and describe how the product differs for each age segment.
3 Connect...
GenderMenandwomendifferintheirwants
andneedsformanyproducts.Marketersusethesedifferencestodevelopproductsthatmeetthespecificneedsofmenorthespecific
needsofwomen.Forexample,theLadyFootLockerstoresproviderunningshoesandotherathleticequipmentthatmeetthespecificneedsofwomen.
EthnicityCanadaiscomposedofpeoplefroma
varietyofethnicbackgrounds.Theneedforjeansdoesnotvarybasedonaperson’sethnicbackground.However,needsforotherproductsmayvarywithethnicheritage.Forexample,peoplemaywantcertainproductsbecausetheycooktraditionaldisheswiththem.Orpeoplemayenjoythecuisineofanotherethnicgroup.Manymarketershavefoundsuccessbysegmentingthemarketbasedonethnicity.Theythendevelopproductstomeettheneedsofaspecificethnicgroupandthewantsofpeopleinterestedinthatethnicgroup.
IncomeIncomelevelhasamajorinfluence
onwhatpeoplebuy,somarketersoftensegmentthemarketbasedonincomelevel.Peoplewithsimilarincomelevelsoftenbuysimilartypesofproducts.Peopleinthe
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variety of trades and professional positions. From heavy equipment operators and
mechanics to engineers, process operators and technologists, just to name a few.
We are recognized as a top employer and pride ourselves on offering a dynamic,
team-oriented environment where you can share your ideas and grow your career.
The road is clear. Visit www.syncrude.com for additional information.
5-11
This Syncrude Canada recruitment poster targets Aboriginal youth. Aboriginal youth represent a growing target market for products and employers in Canada.
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Part 2 Reaching Your Market66
lowerincomegroupstendtospendalargerpercentageoftheirincomesonnecessities,suchasfood,clothing,andshelter.Peoplewithhigherincomestendtospendrelativelymoreonrecreation,education,andluxuries.
Therearetwocategoriesofincomethatmarketersareinterestedin:disposableanddiscretionary.Disposable incomeistheincomeapersonhasavailabletospend(disposeof)aftertaxeshavebeentakenout.Usually,thefirstthingsthatdisposableincomeisspentonarethenecessitiesoflife—food,clothing,shelter,andtransportation.Discretionary incomeistheincomeleftaftertaxesandafterthenecessitiesoflifehavebeenpaidfor.Discretionaryincomeisthemoneyapersoncanspendathisorherdiscretion,thatis,howeverheorshewants.Discretionaryincomeisoftenspentonentertainment,vacations,restaurantmeals,andsimilarproducts.
Somemarketersdecidetheywanttofocusonluxuryitems.Inordertobeabletoaffordvariousluxuryitems,onemusthaveafairlyhighincome.Marketingresearchcandeterminewhichareasofthecountryhavethehighestaverageincomes.Themarketersofluxuryitemscanthentargetadvertisingcampaignstothoseareas.
Family Make-upMarketershavediscoveredthata
householdconsistingofonepersonhasquitedifferentneedsandwantsfromahouseholdconsistingofoneortwoparentsandoneormorechildren.Inaddition,ahouseholdheadedbyanLGBT(lesbian,gay,bisexual,ortransgendered)couplemayhavedifferentneedsandwantsthanahouseholdheadedbyaheterosexualcouple.LGBTcoupleshavehigherthanaveragehouseholdincomesandratesofemployment,butonlyabout25percentofLGBTcoupleshavechildren,5-12.Asaresult,marketersoftensegmentthemarketbasedonfamilycomposition,includingsize.Forexample,manyconveniencefoodmanufacturershavedevelopedsingle-servingpackaging
tomeettheneedsofsingle-personortwo-personhouseholds.
Choose a demographic variable. Think of a product that can be segmented based on that variable. Name the product and the demographic variable. Describe each market segment.
3 Connect...
Psychographic Variables
Customershavepsychologicalandemotionalcharacteristicsthataffecttheirneedsandwantsforproducts.Segmentingamarketbasedonpsychologicalcharacteristicsofcustomersiscalledpsychographic segmentation.Aspectsthatareconsideredinpsychographicsegmentationarehobbies,socialactivities,lifestyle,interests,andattitudes.Psychographicinformationabouttargetmarketsisveryusefulwhenplanningpromotion.Ifyoushowthetargetmarketinthead,peopleseethemselvesandcanrelatebettertothepromotionalmessage.
5-12
There are an estimated 17 million LGBT persons in Canada and the United States, a sizeable market.
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Chapter 5 Targeting a Market 67
Hobbies and ActivitiesPeoplewhoparticipateinthesame
activitiesorhavethesamehobbiestendtohavesimilarbuyingpatterns.Examplesofhobbiesincludephotography,buildingmodelplanesorboats,andstampcollecting.Examplesofactivitiesincludealltypesofsports,playingcomputergames,visitingmuseums,andattendingconcerts.
LifestyleLifestyleandvaluesareoftendifficultto
measureanddefine.Inordertogrouppeopleinthisway,somemarketingresearchersadministersurveysthataskparticipantstoagreeordisagreewithavarietyofstatementscalledAIO statements.AIOstandsforactivities,interests,andopinions.Aconsultingcompanywell-knownforitspsychographicresearchanddataisStrategicBusinessInsights(SBI).TheirVALS™systemisbasedonpsychologicalcharacteristicsthatcorrelatewithpurchasebehaviourandfourkeydemographics.HerearesomesamplestatementsfromaVALS™Survey:n Ifollowthelatesttrendsandfashions.n Iwouldrathermakesomethingthan
buyit.n Iconsidermyselfanintellectual.
VALS™dividesadultconsumersintoeightsegments,5-13.Eachsegmenthasdistinctiveconsumerpsychologythatcorrelateswithbuyingbehaviour.ThesesegmentsareorganizedontheVALS™Framework.Thevariablefromtoptobottomislevelofresources:hightolow,andincludeseducation,income,andwillingnesstotakearisk.Thevariablefromlefttorightisprimarymotivation:ideals,achievement,andself-expression.Forexample,onegroupiscalledAchievers.Thisgroupisconcernedaboutstatusandaccomplishment,tendstobuyprestigeproducts,andwatchesanaverageamountofTVandothermedia.AnothergroupiscalledSurvivors.Thisgroupisconcernedaboutsafety,has
relativelylittleincome,tendstobeloyaltobrands,andwatchesamore-than-averageamountofTVandothermedia.Marketerswouldusetheinformationaboutthesegroupstochooseatargetmarket.Theywouldthencustomizethemarketingmixtomeettheuniqueneedsofthemarkettheytargeted.AproductfortheAchieverswouldhaveadifferentmarketingmixfromaproductforSurvivors.
Choose a psychographic variable. Think of a product that can be segmented based on that variable. Name the product and the psychographic variable. Describe each market segment.
3 Connect...
Behavioural VariablesCustomersdifferinthewaytheyuse
products.Segmentingamarketbasedonthewaycustomersuseaproductorbehavetowardaproductiscalledbehavioural segmentation.Commonbehaviouralvariablesincludefeaturesdesired,usagerate,andbrandloyalty.
Features DesiredCustomersvaryinthefeaturesthey
wantfromaproduct.Forexample,themassmarketforhomepersonalcomputersishuge.However,onetypeofcomputerwillnotmeettheneedsofallcomputerusers.Somecomputeruserswantabasiccomputerforwordprocessingande-mailonly.OthercomputeruserswantacomputerwithafewmorefeaturessothattheycanplaygamesandsurftheNet.Othercomputeruserswantadvancedfeaturessothattheycaneditvideoandhavethree-dimensionalgraphics.Asaresult,homecomputermanufacturersoftensegmenttheirmarketbasedonthefeaturesthatthecustomerwants,5-14.
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Usage RateAsamazingasitmightseem,research
showsthatformanybusinesses,80percentofthesalescomefrom20percentofthecustomers.Thisobservationiscalledthe80/20 rule:themajorityofabusiness’sprofits
comefromasmallnumberofcustomers.Forthisreason,marketersoftensegmentthemarketbasedonhowoftenthecustomerusesorbuystheproduct(usage rate).Usageratecategoriesincludeheavy,moderate,light,andnonuser.
VALS™ Consumer Segments
INNOVATORS
ACHIEVERS
STRIVERS MAKERSBELIEVERS
EXPERIENCERSTHINKERS
SURVIVORS
High ResourcesHigh Innovation
Low ResourcesLow Innovation
VALS™ Framework
Primary MotivationIdeals Achievement Self-Expression
5-13
VALS™ divides adults into eight segments.
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Chapter 5 Targeting a Market 69
Brand LoyaltyCustomersvaryinhowloyaltheyareto
aparticularbrand.Thevalueofbrandloyaltyisrelatedtothe80/20rule.Loyalcustomersoftenarethesourceofmostofacompany’ssales.Asaresult,marketersoftensegmentthemarketbasedondegreeofloyalty.Forexample,airlineshavedevelopedfrequentflyerprogramstorewardairlinecustomerswhousetheairlinefrequently.Thefrequentflyerprogramsalsoencouragecustomerstouseoneairlineforalltheirtravelneeds.
Choose a behavioural variable. Think of a product that can be segmented based on that variable. Name the product and the behavioural variable. Describe each market segment.
3 Connect...
Combining VariablesOften,marketersfinditusefultotargeta
marketbasedontwoormoresegmentationvariables.Acommoncombinationisgeographiclocationwithademographicvariable,suchasincome.Marketersofluxuryproductscangetthepostalcodesofpeoplewiththehighestincomelevels.
Figure5-15providesanoverviewofthesegmentationcategoriesandvariables.Therearemanyothervariablesthatdonotappearinthisfigure.
Think of a product that has a large market. Think of two or more segmentation variables for that market. Name the product. Then list the segmentation variables and the market segments based on them.
3 Connect...
Market Segment ProfileOncemarketershavedividedamarket
intosegments,theymustchoosethesegmentorsegmentstotarget.Tohelpthemmakethisdecision,theyoftendevelopamarketsegmentprofileforeachsegment.Amarket segment profile,(sometimescalledaconsumer profile),isadetaileddescriptionofthetypicalconsumerinamarketsegment.Thisprofilewillincludegeographiclocation,demographics,psychographics,andbehaviourrelevanttotheproduct.
5-14
Computer manufacturers may segment the market based on the features that customers want. Some customers want a basic computer. Others want advanced features.
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Thesegmentprofilescanthenbeusedwhenthesegmentsarechosen.Inordertoplanamarketingmixthatmeetsthetargetmarket’sneeds,themarketerneedstoknow
asmuchaspossibleaboutthecustomersinthemarket.Themarketershouldbeableto“see”thetypicalcustomerinhisorhermind.
Some Variables Used To Segment the Consumer Market
5-15
These are some of the segmentation variables that marketers use to segment a market.
Examples• Domestic/foreign• Local/regional/national
• Warm/cold• Humid/dry
• Under 200 000 population• Over 200 000 population
• Senior/adult/teen/child/infant
• Baby Boomer/Generation X/Generation Y/Generation Z
• Male/female
• First Nations, Métis, Inuit, European, British Isles, African, Arab, Asian• Indo-Canadian, Chinese, Filipino, Vietnamese, Korean• Jamaican, Haitian, West Indian, Guyanese
• Under $100 000 annual• Over $100 000 annual
• One person/two people/three or more people• Children/no children• Same sex, heterosexual
• Photography/model-making/stamp collecting
• Basketball/bicycling/skiing/swimming
• Innovator/thinker/believer/achiever/striver/experiencer/maker/survivor
• Basic features/one or two special features/advanced features
• Heavy/moderate/light/nonuser
• Totally loyal/mostly loyal/not loyal
VariableLocation
Climate
Community Size
Age
Generation
Gender
Ethnicity
Household Income
Family Size & Composition
Hobbies
Sports
VALS™
Features Desired
Usage Rate
Brand Loyalty
CategoryGeographic
Demographic
Psychographic
Behavioural
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71
Chapter 5 Review
Key Learnings
n Abusinessopportunityoccurswhenyouseeaneedthatyourcompanycanfulfill.
n Marketingstrategyistargetmarketplusmarketingmix.
n Afterchoosingatargetmarket,allmarketingdecisionsaremadewiththetargetmarketinmind.
n Inmassmarketing,onemarketingmixmaynotmeettheneedsofmanycustomers.Asaresult,thebusinessmaynotmakeaprofit.
n Targetmarketinghelpscompaniesmeettheneedsofthetargetmarket;however,problemsmayoccurifyouchoosethewrongtargetmarketorbecometoodependent onit.
n Marketsegmentationisaprocessthathelpsmarketersfindanappropriatetargetmarket.
n Consumermarketsareoftensegmentedbasedonthefollowingfourcategoriesofvariables:(1)geographic,(2)demographic,(3)psychographic,and(4)behavioural.
n Marketersoftenusemorethanonesegmentationvariabletosegmentamarket.
Knowledge & Understanding
1. Whyisthetargetmarketpartofamarketingstrategy?
2. Listthefourqualitiesthatatargetmarketshouldhave.
3. Whyisthemarketingmixpartofamarketingstrategy?
4. Whatisthedifferencebetweenmassmarketingandtargetmarketing?
5. Whatistherelationshipbetweensegmentingamarketandtargetmarketing?
6. Listthefourgeneralapproachestochoosingatargetmarket.
7. Explaintwopotentialproblemswithtargetmarketing.
8. Whatdoyoucalltheprocessofdividingalargemarketintosmallerparts?
9. Whatdoyoucallacustomercharacteristicusedtosegmentthemarket?
10. Listthreegeographicvariables.11. Listfivedemographicvariables.12. Whydomarketersusegenerationto
segmentamarket?13. Whymightamarketersegmentthe
marketbasedonfamilysize?Giveanexample.
14. Listfivepsychographicvariables.15. Whymightamarketersegmentthe
marketbasedonhobbies?Giveanexample.
16. Listthreebehaviouralvariables.17. Howmightamarketersegmentamarket
basedonfeaturesdesired?
Thinking
1. Wherecanyoufindbusinessopportuni-ties?Givereasonsforyouranswer.
2. Whyischoosingatargetmarketoneofthemostimportantmarketingdecisions?
3. Marketingmixdecisionsareinterrelated.Explainwhatthismeans.
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Chapter 5 Review
4. Howdoestargetmarketingenableasmallbusinesstocompetewithlargerbusinesses?
5. Whydomarketerssegmentamarket?6. Namethreeproductsforwhich
geographicsegmentationwouldhelpdeterminetheappropriatetargetmarket.
7. “MarketersarestillinterestedinmarketingtoBabyBoomers—thepeoplebornbetween1946and1964.”Assesshowvalidthisstatementis.Givereasonsforyouranswer.
8. Namesixproductsthatarenotgender-specific.
9. Howmightamarketeruseincomeinformationtosegmentamarket?
10. Doyouthinkthatdeterminingatargetmarketcaneverleadtostereotypingorexcluding?Forexample,ifmarketersconcludethatable-bodiedpeopleplaysports,couldtheybeexcludingathleteswithphysicalchallengesaspartofthetargetmarket?
Application
1. Thinkofyourownpart-timejoborabusinesswithwhichyouarefamiliar.Whatisthebusiness’sproduct?Describeitstargetmarket.
2. Visitagrocerystore.Studytheshelveswherethecerealisdisplayed.Howisthecerealmarketsegmented?Writeadescriptionofatleastthreesegmentsinthecerealmarket.Describeeachmarketsegmentandthetypeofcerealthatsegmentprefers.Usethesegmentationvariablesinyourdescription.
3. Findanadinanewspaperormagazine.Basedonthead,describe
themarketsegmentthatthisadtargets.Usethesegmentationvariablesinyourdescription.
4. OldYorkFootwearhasbeensellingmen’spennyloafersforyears.Theseshoes,availableinblack,brown,andburgundy,arecomingbackinpopularityandotherstoresarebeginningtocarrythem.Lately,however,OldYork’smarketershavenoticedthatsalesaredown.Whichofthefourapproachestotargetingamarketdidthecompanyuse?Whatshouldthecompanydonow?Supportyouranswer.
5. Createabriefprofileofamarketsegmentthatwouldincludeyou.Coveratleastoneofeachofthefoursegmentationvariablesinyourprofile.
Communication
1. VisitthewebsiteofthecompanythatdevelopedtheVALS™Survey(SBI),orgototheMarketing Dynamicsstudentwebsite.Takethesurvey.WhatisyourVALS™type?Doyouseeyourselfthisway?Createa“MyVALS™”summaryofyourselfusingamediumofyourchoice—print,pictorial,audio,orvideo.
2. UsethelibraryorInternettofindthestoryofanentrepreneur.Howdidthispersonfindabusinessopportunity?Howdidheorsheturnitintoasuccessfulbusiness?Whatweretheproduct,thetargetmarket,andthemarketingmix?Whatkindsofproblemsdidthepersonencounter,andhowdidheorsheovercomethem?Createabriefreportorpresentationofyourfindings.
MarketingDy_2-135_Ch1-9.indd 72 13-02-27 8:09 AM
120120
9 Information Technology and Social Media
Learning Goalsn explainthedifferencebetweenadot-com
andabricks-and-mortarbusinessn describehowB2Bbusinessesusethe
Internetn listthecomponentsofsuccessful
e-tailingn describee-marketingandtheroleof
socialmediaine-marketingn explainthechallengestoe-tailingn outlineeightadvantagesandseven
disadvantagesofe-tailing
You have the choice to shop either online or shop in stores for the rest of your life.
You cannot do both. Which would you choose? Why?
Marketing Termse-commercesearch enginedot-combricks-and-mortar businesselectronic data interchange (EDI)information technology (IT)e-tailingsocial mediae-marketingmicrobloggingnonsecure connectionencryptionsecure connection
Imaginethatyouareateenagerlivingintheyear1990.Youwouldnote-mailyourfriends.YouwouldnotbuyanythingovertheInternet.YouwouldnotdoresearchforhomeworkassignmentsontheWorldWideWeb.Whynot?Atthattime,theWorldWideWebdidnotexist,andtheInternetwasnotavailabletothegeneralpublic.
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Chapter 9 Information Technology and Social Media 121
TodaytheInternetandtheWorldWideWebareavailabletothegeneralpublicaroundtheworld.AllyouneedisanInternet-enableddevicesuchasacomputerorsmartphone,anInternetconnection,andtheappropriatesoftware.Youcane-mailyourfriends,buyproducts,anddoresearchforyourhomeworkviatheInternetandtheWorldWideWeb.
TheInternetandtheWorldWideWebarealsochanginghowcompaniesdobusiness.E-commerce(shortforelectroniccommerce)isbusinessactivitiesconductedviatheInternet.Businessactivitiesincludebuying,selling,promoting,productresearch,competitionresearch,andcustomerservice,9-1.
How do you use the Internet? How old were you when you first used the Internet?
3 Connect...
E-Commerce BasicsE-commerceispossiblebecauseofthe
InternetandtheWorldWideWeb.TheInternetisacomputer-basedcommunicationsnetwork.ThewordInternetcomesfromthewordsinterconnectednetworks.TheInternetisapowerfulmeansofcommunicationbecauseitconnectsmillionsofcomputersaroundtheworld.Computersfromindividuals,businesses,organizations,andgovernmentsareallconnected.TheInternetwasdevelopedinthe1950sasaresearchandmilitarytool.Nowitisusedbyalltypesofpeopleinallwalksoflife,almosteverywhere.
TheWorldWideWeb(Web)isthenetworkofinformationsourcesthatisavailableovertheInternet.TheWebwasdevelopedin1993.TheWebispartoftheInternet.ThesoftwarefortheWebenablesuserstoseetext,pictures,video,andanimationandhearsound.OnlineistheconditionofbeingconnectedtotheInternetorbeingavailableontheInternet.For
example,onlineshoppingisshoppingthatisdoneovertheWeb,9-2.
InformationontheWebisorganizedintowebpages.AwebpageisthesmallestunitofinformationthatcanbeaccessedontheWeb.Oneormorewebpagesfromthesamesourceandconnectedbyhyperlinksareawebsite.Individuals,companies,organizations,governments,andthemilitarycanhavewebsites.Thefirstpageofawebsiteisthehomepage.
Hyperlinksareusedtoconnectthepagesofawebsitetogether.Hyperlinksmakeiteasytonavigatethroughawebsiteandtomovefromonewebsitetootherwebsites.
AwebsiteisidentifiedandlocatedontheWebbyauniquesetofletters,numbers,andsymbols,calledawebaddress.Theformatforatypicalbusinesswebaddressiswww.companyname.ca.Theletters“www”indicatethattheaddressisontheWeb.(Somewebaddressesfunctionwithoutthe“www.”)The“companyname”isauniquesetofwords,letters,wordsandnumbers,orlettersandnumberschosenbythebusiness.The“.ca”or“.com”indicatesthatthesourceisacommercialbusiness.Ifthesourceisnotabusiness,thereareotherlettersthatappearafterthedotinsteadof“.ca”or“.com.”Figure9-3showsseveraltypesof
9-1
Consumer and business activities that take place over the Internet are called e-commerce.
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9-2
This web page is from the Roots online shopping site. There are several links on the page that take you to more information about the items displayed.
webaddresses.Countrycodesarealsoavailable,forexample,UKforUnitedKingdomorJPforJapan.
Ifyoudonothavethespecificwebaddressforacompany,youcanfinditjustlikeyoudoinformationforschoolprojects—byusingasearchengine.Asearch engineissoftwarethatsearchestheWebtofindwebsitesonyourtopic.Youtypeanameorkeywordsintotheinputbox.Thesearch
enginesearchestheWorldWideWeb,andthendisplaysalistofwebaddressesforyoutovisit.
Name the search engine that you use most often. Describe a search that you have performed.
3 Connect...
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Chapter 9 Information Technology and Social Media 123
Marketing on the Internet
TwotypesofbusinessesusetheInternet:dot-comsandbricks-and-mortarbusinesses.Thetermdot-comcomesfromthefactthatthewebaddressesforcommercialbusinessesintheUnitedStates(wheretheInternetwasinvented)endin“.com.”Adot-comisabusinessthatconductsallofitssalesandmostofitspromotiononlineviaawebsite.Adot-comhasnobuildingsthatcustomersphysicallyvisit.Forexample,Amazonisadot-comthatsellsbooks,music,andothergoods.Ithasnobuildingsorstoreswherecustomerscangotoseeandbuythebooksandothergoods.
Abricks-and-mortar businessisabusinessthatservescustomersfromabuildingorstore,9-4.Sometimesabricks-and-mortarbusinessisreferredtoasatraditional business.CanadianTireisabricks-and-mortarbusinessthatsellssportinggoods,householdtools,andothergoods.TherearemanyCanadianTirestoresthatyoucangoto.Manybricks-and-mortarbusinesseshaveaddedwebsitesandnowalsodosomeoftheirsalesandmarketingontheInternet.
What bricks-and-mortar business do you know that also has a website? Which do you do more often—go into the store or buy from the website? Why?
3 Connect...
Business-to-Business on the Internet
Business-to-businesscompanieswerethefirsttousetheInternetextensively.For
Code
.com
.edu
.gc
.org
Some Types of Web Addresses
Type
Commercial organization (business)
Colleges and universities
Government institutions and agencies
Organizations not included above, such as not-for-profit organizations
9-3
The format of an Internet address can give you an idea of what type of organization it is.
9-4
A bricks-and-mortar business has a location where customers can go to buy products.
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9-5
The Internet is especially useful for business-to-business (B2B) sales. For example, a sales representative visiting a client can use the Internet and a computer or tablet to check on product availability and place an order.
example,manybusinessesuse electronic data interchange (EDI).EDIisabusiness-to-businessexchangeofinformationviacomputerusingstandardformats.EDImessagesusuallyconsistofinformationthatwouldotherwisehavetobesentaspaperdocuments.EDImessagesincludepurchaseorders,shippingnotices,invoices,creditmemos,andotherdocuments.
Whenbusinessesconnecttheircomputersandloadtheappropriatesoftware,theycancommunicatebyEDI—muchmoreefficientlythanfaxingormailingpaper.SomeinventorymanagementstrategiesalsorelyontheInternet.YouwillreadaboutthesestrategiesinChapter14.Whenbusinessesusecomputertechnologytostoreandtransmitinformation,theyareusingIT,whichstandsforinformation technology.
CompaniesalsousetheInternetandtheWebtoresearchandpurchaseitemsfortheirbusinesses.Websitescontainproductinformation,similartoapapercatalogue.Theadvantageofacatalogueonawebsiteisthatitcanbeupdatedquickly,moreinformationcanbeprovided,andvideosoranimationscanbepresented.Forexample,amanufacturercanfindoutthespecifications,prices,andavailabilityofmaterialsitneedsforproduction.Thatsamemanufacturercanshowitslineoffinishedgoodsonitsownwebsitetointerestedretailers.
CompaniesthathavefieldsalesrepresentativesalsousetheInternet,9-5.Salesrepresentativescanusetheircomputersortabletstocheckavailabilityofproductsbeforepromisingshipment.Orderscanalsobeplacedinstantlyfromanylocation.Thecomputerthencandeductthenewordersfrominventory,sothatthenextsalespersonwillhaveanaccuratecountofproductsavailable.SalesrepresentativesandcustomerservicerepresentativesalsousetheInternettolocateshipmentsandinformcustomerswhentoexpectshipmentarrival.
IThasrevolutionizedtheflowofinformationwithincompaniesandbetweenvendorsandcustomers.Differentdivisions
ofthesamecompanycancommunicateviatheInternet.Data,suchasnewproductdesigns,salesresults,orfinancialnumbers,canbesentinstantly.Confidentialinformationcanonlybeaccessedbypeoplewhoknowthepassword.
Shopping on the Internet
Today,consumerscanbuyalmostanythingovertheInternet.Justenterthenameoftheitemyouwouldliketobuyintoasearchengine.Thesearchenginewillgeneratealistofwebsiteswhereyoucanbuythatitem.
SellingproductstoconsumersovertheInternetiscallede-tailing,fromthewordselectronic retailing.Companiesthatselltoconsumersonlineareoftenreferredtoase-tailers.E-tailingisalsocalledonline retailing.AllaconsumerneedstoshoponlineisanInternet-enableddevice,anInternetconnectionandsoftware,andacreditcard.
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Chapter 9 Information Technology and Social Media 125
Describe an experience you have had purchasing a product over the Internet.
3 Connect...
Successful E-tailingInorderfore-tailingtobesuccessful,
customershavetobeabletoeasilydothethingstheydoinabricks-and-mortarstore.Businessesthatsellproductsonlinewanttoensurethatcustomersareabletolookatandselectproducts,canreceiveproductpromotions,willreturntopurchaseotherproducts,cangethelpiftheyneedit,and
canpayfortheproductsandreturnthemiftheyneedto.
Looking at ProductsThewebsitemustprovideinformation
abouttheproductsforsale.Sincethecustomercannottouchtheproducts,othermeansmustbeused.Manywebsitespresenttheirmerchandiseinaformatsimilartoapapercatalogue.Thereisoftenalistofproducttypesfromwhichtochoose.Onceacategoryischosen,photographsoftheitemsareshown,withwrittendescriptionsandprices,9-6.Often,customerscanclickonthephotographforanenlargedphotoandmoredetailedinformation.
9-6
E-tailing sites give descriptions and prices of items, along with photos that sometimes can be enlarged or that show the item from different angles.
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Evaluating ProductsAnother service that many websites
provideisreviewsorevaluationsoftheirproductsbyothercustomers.Forexample,Amazonprovidesreviewsformanyofitsbooks,plusarankingbasedonhowmanyofthattitlewerepurchasedbyAmazoncustomers.Thesereviewswereoneofthefirstexamplesofsocialmediabeingusedtomarketproducts.Social mediaareinteractiveformsofmediathatletuserscommunicatewitheachotheronline.ExamplesincludeFacebookandTwitter;onlinecommunitiessuchasAmazon,Flickr,andRottenTomatoes;andblogs,9-7.Socialmediaaredescribedinmoredetailonthenextpage.
Selecting ProductsThe website must have a way for
customerstoindicatewhichproductstheywanttobuy.Manywebsitesusethemetaphorofashoppingcartorashoppingbag.Thereisnoactualshoppingcartorbagonawebsite;however,avirtualoneisusedtokeeptrackofthecustomer’sselections.Thecustomerclicksonalinkthatsays“Addtoshoppingcart”or“Addtobag.”Thevirtualshoppingcartorbagkeepsa
listoftheitemsthecustomerhasselected.Thecustomercanalsodeleteitemsfromtheshoppingcart.
Promotions and Social MediaToday,customersexpecttobeas
engagedonawebsiteastheywouldbestrollingthroughabricks-and-mortarstore.Asaresult,businessesneedmorestrategiestoretaintheircustomersandpersuadethemtoconsidertheirproducts.Oneofthesestrategiesise-marketing.E-marketingismarketingusingcomputertechnology,includingwebsites,e-mail,andmobilephones.
Youmaywonderwhyabusinesswouldneede-marketingifitalreadyhasawebsite,butawebsiteisjustaplatformforreachingthecustomerthroughe-marketing.Onthewebsite,thebusinessmayinvitecustomerstosignupforweeklye-mailsthatpromoteproductsofinterest.Usually,customerscanselectwhichproductstheywouldliketohearaboutbycheckingabox.Thesee-mailscanalsobedirectedtoacustomer’smobilephone.Thiskindofe-marketingisknownasopt-inmarketingbecausethecustomeragreestoit,unlikepop-upadsthatsuddenlyappearonthewebsite.Marketershavelearnedthatmanycustomerspreferopt-inmarketing.
Oncecustomershaveshopped,thewebsitemaypromptthemtocontinueshoppingbysuggestingotherproductsofinterest.Theseproductsarechosenaccordingtothecharacteristicsoftheproductsthecustomerhasalreadyboughtorviewed.Althoughitispossibletorecommendproductsinperson,theInternetallowsbusinessestosuggestmoreproductsmorequickly,basedonmoreshoppingpreferencesthanonesalespersoncouldeversuggestinperson.
ManybusinesseswithwebsitesalsohaveanaccompanyingFacebookpageandTwitteraccount.Socialmediahelpbusinessesreachouttocustomersinapersonalwayandcreateasenseofcommunityarounda
9-7
A wide variety of social media are being used by marketers to reach customers and create buzz about products.
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Chapter 9 Information Technology and Social Media 127
brand.Withinthesecommunities,customerscansharetheirexperiencesusingdifferentproductsandconnectwithotherswhohavehadsimilarexperiences.
Socialmediaarealsoanexcellentwayforbusinessestogatheradditionalresearchaboutcustomerneedsandwants.OnaFacebookpage,forexample,abusinesscanposeaquestiontocustomersorconductasurvey.ManybusinessesrunregularonlineconteststhattheyannounceonFacebookorTwitterkeepingcustomersengagedwiththebusinessbrandanditsproducts.
Sometimesbusinessespaybloggerstowriteabouttheirproducts.Theymaysendfreesamplesinreturnforapositivereview,hopingthatmanypotentialcustomerswillreadtheblogpostandtrytheirproduct.ThemicrobloggingsiteTwitter
isusefulforupdatingcustomersaboutproductdevelopmentsandevents,suchascontests,giftideas,andstoreopenings.Microbloggingisashort,immediateformofblogging—usuallyabout20to25words.Sometimesbusinesseshireasocialmediaexperttomicroblogandsometimestheycontracttheworkouttoavarietyofloyalcustomers,9-8.
Getting HelpWhencustomersareshopping,they
mayhavequestionsabouttheproductsandquestionsaboutusingthewebsite.MostwebsiteshaveapageofFAQs,whichstandsforfrequently asked questions.Thepageprovidesanswerstothemostcommonquestionscustomershaveasked.
9-8
This is the Twitter feed of Chapters/Indigo. The bookstore chain tweets about new products, promotions, and contests.
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Mostwebsitesprovideane-mailaddressfore-mailingquestionstothecompany.Manywebsitesprovideatoll-freenumberthatcustomerscancalltospeakwithacustomerrepresentative.
Somewebsitesprovidereal-timeonlinehelp.Specialsoftwareenablesthecustomertocommunicatewithalivecustomerservicerepresentative,whileonline.OnetypeofsoftwarethatenablesthistypeofinteractionisInstantMessaging.Thecustomertypesaquestioninaninputboxonthewebsite.Thequestionappearsonthecomputerscreenofthecustomerservicerepresentative.Thecustomerservicerepresentativethentypesananswer,andsendsittothecustomertoseeonhisorherscreen.
Paying for ProductsInabricks-and-mortarstore,the
customergoestothecheckoutcounterandhandsthecashiertheproductsselected.Thecashiertotalstheprices,addsinanytaxesorothercharges,andthentellsthecustomerthetotalowed.Thecustomerthenhandsthecashiercashoracreditordebitcard.Thecashierhandsbackareceipt.MailordercataloguesandTVshoppingchannelsusepaperchequesoracredit/debitcardnumber,providedeitherthroughthemailoroverthephone.
Howdoesanonlineshopper,sittinginhisorherhome,providepaymenttotheonlineretailer?Manywebsiteshavea virtualcheckout.Whenthecustomerisdoneshopping,heorshecanclickonalinkthatsays“Proceedtocheckout”orjust“Checkout.”Thecheckoutscreenprovidesthelistofitemspurchased,theprices,andanyadditionalcharges.Themostcommonwaytopayisthroughacreditcardnumber.Someshoppersuseonlinepaymentservices,suchasPayPal.Digitalcashsystemsanddigitalwalletsarealsoavailable.Aftertheorderisconfirmedandpaymentisreceived,areceiptisusuallysenttothecustomer’se-mailaddress.Thecustomercanthenprintareceipt.
Returning MerchandiseAs with products ordered through the
mailorfromaTVshoppingchannel,thegoodsmightbedefectiveordamagedintransit.Thegoodsmayalsonotbewhatthecustomerexpectedorwanted.Abusinesswithawebsitemustprovideareasonablyeasywayforgoodstobereturnedandtoensurethatthemoneyisrefundedtothecustomer.
Name an e-tailer with which you are familiar. How does that e-tailer’s website accomplish the above components?
3 Connect...
Receiving Purchases PromptlyMoste-commercecustomersexpecttheir
onlineorderstobefilledimmediately.Forexample,supposeyouordersomethinginthemiddleofthenight,buttheitemdoesnotarrivefortwomonths.Inthissituation,theInternetisnotmakingshoppingfasterandmoreconvenientforyou.Asaresult,youmightdecidenottousethate-tailerortheInternetforshopping.
Finding the WebsiteCustomersalsohavetoknowthatthe
businesswebsiteexistsandwheretofindit.Manycompaniesadvertisetheirwebsitesthroughtraditionalprint,radio,andtelevisionadvertising.Manypeople’sbusinesscardsincludethewebaddressofthecompany.E-tailersalsoadvertiseonotherwebsites.
Challenges to E-tailingWhenretailersbeganusingtheInternet
inthemid-1990s,retailersusedtheirwebsitesmoreforpromotionthanselling.AnumberofconcernsdiscouragedconsumersfromactuallybuyingproductsovertheInternet.Manyoftheseconcernshavebeenresolved
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tothesatisfactionofsomecustomers.OthercustomersarestillreluctanttoactuallypurchaseovertheWeb.Thesechallengesincludethefollowing:
SecuritySecurityofpersonalfinancialandother
informationcontinuestobeaconcernformanyInternetshoppers.Typically,whena personlogsontotheInternetandvisitsa website,anyinformationexchangedcanbeseenbyanyoneontheInternet.AnInternetconnectionoverwhichanyonecanseeanyoftheinformationiscalledanonsecure connection.
Inorderforane-tailertoreceivepayment,thecustomermustsendacreditcardnumberovertheInternet.Mailingaddress,phonenumber,andotherpersonalinformationareoftenrequested.Internetcustomersdonotwanttheircreditcardnumbersorotherpersonalinformationtobegenerallyavailable.Toaddressthisconcern,Internetprovidersandretailersdevelopedaprocesscalledencryption.Encryptionisaprocessthatconvertsdataintoaformthatcanbereadonlybyapersonwithanauthorizedcode.AnInternetconnectionthatusesencryptioniscalledasecure connection.Nooneelsecanseeyourinformationwhenyouuseasecureconnection.Whenyouareusingasecureconnection,asmalliconofaclosedlockappearsonthewebpage.SecureInternetconnectionsguaranteecustomersthattheirpersonalfinancialinformationissafe.
Othersecuritytechnologiesarebeingdeveloped.Forexample,Visahasdeveloped“VerifiedbyVisa.”ThistechnologyverifiesthattheVisacardnumberisauthenticandonlytheauthorizedcardholderisplacingtheorder.
PrivacyArelatedbutseparateconcernfrom
securityisprivacy.Whenapersonvisitsawebsite,thetechnologycankeeprecordsofeverypurchaseandeveryclick.Many
customersareuneasyaboutacompanyhavingthistypeofinformationaboutthem.Manye-tailersdevelopapolicythatprotectstheprivacyofcustomers.
Moste-tailershavealinkontheirhomepagescalled“Security”or“Security&Privacy.”Clickingonthislinkwilltakethecustomertoawebpagethatdescribeshowthatwebsiteensuressecurityandprivacy.
TheBetterBusinessBureauhasdevelopedaprogramtopromotetrustandconfidenceine-tailing.Theprogramhaspublishedacodeofonlinebusinesspractices,andalsoprovidesreliabilityandprivacysealstobusinessesthatmeetitscriteria.
ComplaintsWhencustomersvisitane-tailing
websitethatmisrepresentsproductsorcollectstoomuchpersonalinformation,theyshouldbeabletolodgeacomplaint.Moste-tailersdisplaya“ContactUs”buttonontheirwebsitethatletscustomersconnectwithaCustomerServicedepartmentbye-mailorphone.Whencustomersdonotreceiveasatisfactoryresponsefromane-taileraboutunacceptableproductsormarketingactivities—whetheronlineorin-store—theycantaketheircomplainttotheConsumers’AssociationofCanada.
Website EffectivenessTherearemanycomponentstowebsite
effectiveness.Onetechnologicalrequirementisthatthewebsiteloadquickly.
Thefirstpageofaretailwebsiteisoftencalledthestorefront.Thisfirstpagemustbedesignedtoattractcustomers.Thewebsitemustalsobeeasytouse.Itmustbeeasytoviewtheproducts,selectthem,andpurchasethem.Morethanhalfofonlineshoppersleaveawebsitewithoutmakinganintendedpurchase.Thereasonsareusuallyvariationsof“Ididnotunderstandwhattodo.”
Websitesshouldalsostrivetomaketheonlineshoppingexperiencepleasant
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andunique,9-9.Theonlineexperienceshouldprovidebenefitsnotavailablefrombricks-and-mortarshopping.Possiblebenefitsincludespeedandeaseofpurchase,customizednoticesofproductsonsale,specialpricesoritemsavailableonlythroughthewebsite,andnewslettersandotherinformationrelatedtotheproduct.
Slow ConnectionsSlowandinconsistentconnections
interferewiththeonlineshoppingexperience.Whenstorefrontstakealongtimetoload,customersgetimpatient.IfanInternetconnectionbreakswhilemakingacomplexpurchase,suchasanairlineticket,thecustomergetsfrustrated.Inordertobuytheticketonline,thecustomerwillhavetoreconnectandgothroughtheselectionandpurchasingprocedureagain.Theavailabilityofhigh-speedInternetconnectionshasreducedtheseproblems.
Preference for Traditional StoresSome customers just prefer to go to a
traditionalbricks-and-mortarstoreorastorewithwhichtheyarefamiliar.ManycustomersresearchtheirpurchasesontheInternet,andthenmaketheactualpurchaseinabricks-and-mortarstore.Asbrandsofe-tailersestablishgoodreputations,morecustomerswillbewillingtoshopandpurchaseonline.
Describe at least one problem you have had when buying something over the Internet.
3 Connect...
Future of E-tailingThevolumeofpurchasesbyconsumers
hasgrownagreatdealsinceInternetshoppingfirststartedinthemid-1990sandcontinuestogrowataveryfastpace.E-commercehasalsocreatedjobsandloweredexpensesforbusinessesandconsumers.Websitesenablebusinessestoofferbettercustomerserviceandinformation,eveniftheydonotsellproductsonline.Todayconsumersexpectthateveryrespectablebusinesswillhaveawebsitethatatleastprovidesinformation.
AdvantagesE-commerceprovidesmanyadvan-
tages.Moreadvantageswilldevelopase-commercespecialistsimprovetechnologyanddevelopinnovations.n Low Initial Investment.Ane-business
doesnothavetobuy,rent,orbuildabuildingtogetstarted.Asaresult,itisofteneasierandlessexpensivetostartane-business.
n Worldwide Exposure.TheInternetprovidesaccesstoprospectivecustomersanywhereintheworld.
n Constant Availability.TheInternetcanbeaccessedatanytimeoftheday
9-9
Websites need to make the online shopping experience as enjoyable as the real-life one. Customers are looking for efficient service, but the whole experience must be pleasant and memorable.
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ornight.Informationcanbeaddedorchangedatanytime.CustomerscanaccesstheInternetwheneveritisconvenientforthem.Internationaltimezonedifferencesdonotmatter.
n Instant Updating.Informationcanbeupdatedinstantly.Forexample,newpricescanbeadded.Oldinformationcanbedeletedinstantly.Thee-tailerdoesnothavetoworrythatthecustomerisusinganold,out-of-datecatalogue.
n Equalized Market Access.Smallcompanies havethesameaccesstopotentialcustomersaslargecompanies.
n Easy Information Access.Freeinformationisavailableonwebsitessponsoredbybusinesses,governmentagencies,universities,andtradeassociations.Businessescangatherinformationaboutcompetitorsandcustomers.Customerscangatherinformationaboutproductsandthecompanies thatofferthem.
n Ability to Collect Customer Information.Everytimeacustomervisitsawebsite,informationaboutthatcustomercanbegatheredintoadatabase.Informationisoftengatheredthroughsiteregistration,questionnaires,andasapartoftakinganorder.
n Ability to Target Marketing Messages.Theinformationgatheredaboutcustomerscanbeusedtotailorspecificmessagestospecifictypesofcustomers.Forexample,somewebsitesgreetyoubynamewhenyouopenthehomepage,andlistpersonalizedproductsuggestions,basedonyourpreviouspurchases.
DisadvantagesTherearesomedisadvantagesto
e-commerce,butthedevelopmentsintechnologyaredecreasingthedisadvantages.n Security.Despitethedevelopmentof
encryptionandothersecuritytechnologies,
manyconsumersarestillreluctanttoprovidecreditcardnumbersandotherpersonalinformationovertheInternet.
n Privacy.Despiteprivacypolicies,manyconsumersdonottruste-tailerstomaintaincustomerprivacy.
n Cost of Website Setup and Maintenance.Manybusinessesdonothavetheexpertisetosetuptheirownwebsites.Thesebusinessesoftenhireoutsidecontractorstodevelopandmaintaintheirwebsites.Thecostsofsettingupandmaintainingawebsitemustbefiguredintothecompany’sbudgetandprofitcalculations.However,manysmallbusinessesdosetupandmaintaintheirownwebsitesatrelativelylittleexpense.
n DistributionProblems.Manye-businessesstillhavenotdevelopedgoodphysicaldistributionsystems.Whencustomersdonotreceiveproductsinatimelyfashion,theyarediscouragedfromusingthate-business.YouwillreadaboutdistributioninChapter14.
n Product Quality Problems.Customerscanbedisappointedatthequalityoftheproductsreceivedfromane-business.However,theseproblemsseemtobeaboutequaltotheproblemsofdirect-mailmarketersandTVmarketers.Simplifiedmethodsforreturnsalsohelpreducethisproblem.
n Consumer Reluctance.ManyconsumersarestillreluctanttopurchaseovertheInternet,forsomeofthereasonsdescribedinthispassage.Inaddition,someconsumersprefertogotoabricks-and-mortarstorewheretheycanhandleortryoutthegoodstheyplantobuy.Otherssimplyprefertousebricks-and-mortarbusinessesthattheyarefamiliarwithandtrust.
Despitethesedisadvantages,e-tailingremainsaviablemeansofsellinggoods.
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Key Learnings
n Adot-comisabusinessthatdoesallofitssellingontheInternet;itdoesnothaveanactualstore.Abricks-and-mortarbusinessservescustomersatastore;itmayalsohaveawebsite.
n B2BbusinessesusetheInternettoexchangeinformationandtomanageinformationinsystemssuchasinventory.
n Successfule-tailinghelpscustomerslookatandselectproducts;encouragesthemtocontinueshoppingorlearnaboutotherproducts;offershelp;providesawaytopayforproductsandgetareceipt;andprovidesawaytoreturnmerchandise.
n Tobesuccessful,ane-tailermustalsofulfillandshiporderspromptlyandattractcustomerstothewebsite.
n Fivechallengestoe-tailingare:(1)security,(2)privacy,(3)websiteeffectiveness,(4)slowconnections,and(5)customerpreferencefortraditionalstores.
n E-marketingismarketingusingcomputertechnology,includingwebsites,e-mail,andmobilephones.
n Socialmediahelpbusinessesreachouttocustomersinapersonalwayandcreateasenseofcommunityaroundabrand.Withinsocialmediacommunities,customerscansharetheirexperiencesusingdifferentproducts.
n Socialmediaarealsoanexcellentwayforbusinessestogatheradditionalresearchaboutcustomerneedsandwants.
n Thereareadvantagesanddisadvantagestoe-tailingande-marketing.However,mostcustomersexpectbusinessestohaveawebsite.
Knowledge & Understanding
1. Whatbusinessactivities cantakeplaceontheWeb?
2. Whatisthedifferencebetweenadot-comandabricks-and-mortarbusiness?
3. HowdoB2BbusinessesusetheInternet?4. Whatcancustomersdoonawebsitefor
e-tailing?Listsixactions.5. Whatdoesavirtualshoppingcartdo
forthecustomerwhoisshoppingonawebsite?
6. Whatisthemostcommonwayforanonlineshoppertopayforproducts?
7. Howdoesanonlineshoppergetareceiptforproductspurchasedonline?
8. Whydoonlineshopperswanttousesecureconnectionsfortheirtransactions?
9. ListfiveproductsthatcanbedeliveredovertheInternet.
10. Definee-marketingandprovideexamples.11. Describehowbusinessescanusesocial
mediatotheiradvantage.12. Explaintwoadvantagesandtwo
disadvantagesofe-tailing.
Thinking
1. Imaginethatyouaretheownerofacompanythatissettingupawebsite.Whatwouldyouwantyourwebaddresstobe?
2. Giveanexampleofhowyoumightuseasearchengine.
3. Compareandcontrastthehomepageofane-tailer’swebsitewiththestorefrontofabricks-and-mortarretailstore.
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4. Whywouldabricks-and-mortarbusinesswantawebsite?
5. “Thesedays,businessesmustusesocialmediatoreachcustomers.”Agreeordisagreewiththisstatement.Givereasonsforyouropinion.
6. Whydoconsumersworryaboutsecurityandprivacywhenvisitingawebsite?
Application
1. Talkwiththemanagerorownerofalocalbusinessorstoredepartment.Findoutifithasawebsite.Howlonghasithadthewebsite?Doessomeoneinthecompanyrunthewebsite,orhasithiredanoutsidefirmtodothis?Whatpercentageoftotalsalescomesfromthewebsite?
2. Imaginethatyouareawebmarketingspecialist.Youhavebeenhiredbyabusiness—abricks-and-mortarstore—toimproveitse-marketingactivitiesonitswebsite.n Namethetypeofstorethathashired
you.Possibilitiesincludehairsalon;book/musicstore;cardealership;clothingstore;print/copyshop;orrestaurant.
n Describetheproductsoffered.n Howcouldyougetcustomers’e-mail
addresses?n Describehowyouwouldusee-mailto
getcustomersintothestoreandbuildtheirloyalty.Stateatleasttwothingsthatyouwoulddo.
3. Youproposeaweeklye-mailpromotiontocustomerswhooptin.n Whatkindofinformationdoesthis
e-mailprovide?n Howwouldyoumakeyourweekly
e-mailappealingsothatpeoplewillbehappytogetitandeagertoopenit?
4. YouproposeaFacebookpagetothebusiness.TheFacebooklinkwillappearonthewebsiteandinthee-mail.n HowwillyouusetheFacebookpageto
attractcustomers?n Howwilltheinformationonthe
Facebookpagebedifferentfromtheinformationsentintheweeklye-mails?Describeatleasttwodifferences.
Communication
1. Visitthewebsiteofalocalbusinessandidentifythewaysinwhichthebusinessprovidessuccessfule-tailing.Prepareavisualdisplaytoshowyourfindings.
2. Fifteenyearsago,thecareerofwebsitedeveloperdidnotexist.Whatnewcareerswillbeavailableinthefuture?UselibraryandInternetresourcestofindout.Usekeywords“cybercareers”and“careersofthefuture.”Presentyourinformationinatwo-minuteoralreporttotheclass.
3. Holdaclassdiscussionordebateonwhethertheinstantaneousnatureofe-tailingande-marketingresultsintoomuchconsumerismandtoomanyfads.
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