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In this chapter students will be able to understand key business concepts and strategies applicable to e-commerce. In this chapter, the following content will be discussed: Why not buy online? Trust, utility, and opportunism in online markets; basic marketing concepts; products, brands, and the branding process; web transaction logs; tracking files.
CSC 330 E-Commerce Teacher Ahmed Mumtaz Mustehsan GM-IT CIIT Islamabad Virtual Campus, CIIT COMSATS Institute of Information Technology T1-Lecture-14 T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-1 T1-Lecture-14 E Commerce Marketing Chapter-06 Part -II For Lecture Material/Slides Thanks to: Copyright © 2010 Pearson Education, Inc T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-2 Objectives Understand key business concepts and strategies applicable to e-commerce T1-Lecture-12 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc Why not buy Online? SOURCES: Based on data from eMarketer, Inc., 2011d T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc Slid e 64 Trust, Utility, and Opportunism in Online Markets Two most important factors shaping decision to purchase online: Utility; With reference to, the Better prices, convenience of handling the site, The Response /speed of interactivity of the marketplace Trust: ◦Asymmetry of information can lead to opportunistic behavior by sellers ◦Sellers can develop trust by building strong reputations for honesty, fairness, delivery and after sale service T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-5 Basic Marketing Concepts Marketing: Means the strategies and actions firms take to establish relationship with a consumer to encourage purchases of its products and services Addresses competitive situation of industries and firms Seeks to create unique, highly differentiated products or services that are produced or supplied by one trusted firm ◦Avoidance of becoming commodity ( a good or service for which there are many dealers; supplying the product; essentially identical) ◦Ideally having unmatchable feature set T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-6 Feature Sets The bundle of capabilities and services offered by the product or services Three levels of product or service Core product The core benefit the customer received from the product e.g., cell phone Actual product Set of characteristics that deliver the product’s core benefits e.g., wide screen that connects to Internet Augmented product Additional benefits to customers beyond the core benefits embedded in actual product Basis for building the product’s brand e.g., product warranty and after sale service T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-7 Feature Set Each element in the feature can be used to differentiate the product from the others in the market T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-8 Products, Brands, and the Branding Process Brand: Set of expectations consumers have when consuming, or thinking about consuming, a specific product or services from specific company Most important expectations: Quality, reliability, consistency, trust, affection, loyalty, reputation Branding: Process of brand creation (converting product to Brand) Closed loop marketing When marketers are able to directly influence the design of core product based on market research and feedback T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-9 Products, Brands, and the Branding Process Marketers devise and implement brand strategies Brand strategy ◦A set of plans for differentiating a product from its competitors and communicating these differences effectively to marketplace A brand can represent cooperate value as an asset; it can be customer loyalty or attachment can be seen as set of associations that customers have: Brand equity The estimated value of the premium customers are willing to pay for using a branded product when compared to unbranded products T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 110 Marketing Activities: from Products to Brands Figure 6.7, Page 369 Marketers aim to create a brand identity for a product based upon consumer perceptions of trust, affection, loyalty and reputation T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 111 Segmenting, Targeting, and Positioning(Product) Market comprising many different kind of customers with different needs Firm seek to segment market to different group of customers in terms of product needs Major ways used to segment, target customers ◦Behavioral ◦Demographic ( age, sex, income, occupation) ◦Psychographic (self-image and emotional needs) ◦Technical ◦Contextual ◦Search Target the segment; Within segment, product is positioned and branded as a unique, high-value product, especially suited to needs of segment customers T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 112 Are Brands Rational? (Coca-Cola is one of the most enduring brand!!!!) For consumers, a qualified yes: ◦Brands introduce market efficiency by reducing search and decision-making costs For business firms, a definite yes: The Brand: ◦A major source of revenue ◦Lower customer acquisition cost (The overall cost of converting a prospect into a consumer) ◦Increased customer retention (Convincing an existing customer to purchase again) ◦Successful brand constitutes a long-lasting (though not necessarily permanent) unfair competitive advantage T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 113 Can Brands Survive the Internet? Brands and Price Dispersion Early postulation: “Law of One Price”—end of marketing based on brands ◦With complete price transparency in a perfect information marketplace there will be one world price for every product would emerge Instead: ◦Consumers still pay premium prices for differentiated products ◦E-commerce firms rely heavily on brands to attract customers and charge premium prices T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 114 Can Brands Survive the Internet? Brands and Price Dispersion Substantial price dispersion on internet ◦Large differences in price sensitivity for same product (highest and lowest price) “Library effect” or “Catalog effect”; another tactic by online sellers ◦An attempt to appeal to consumers on the basis of total number of products offered under one marketplace e.g Amazon.com T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 115 Impacts of E-commerce Technologies on Marketing Three broad impacts: (E-commerce Technology Dimension) ◦Scope of marketing communications broadened (Ubiquity, Global Reach) ◦Richness of marketing communications increased (Information Density ; text, video and audio contents) ◦Information intensity of marketplace expanded ◦(Personalization/customization, Social Technology) T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 116 The Revolution in Internet Marketing Technologies Internet marketing technologies: 1.Web Transaction logs 2.Tracking files 3.Databases, Data warehouses, Data mining 4.Customer Relationship Management systems (CRM) T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 117 Web Transaction Logs Built into Web server software Record user activity at Web site Webtrends: Leading log analysis tool Provides much marketing data, especially combined with: ◦Registration forms: Gather personal data on name, address, phone, zip, e-mail, and other optional information on interest and tastes ◦Shopping cart database: captures all the item selection, purchase and payment data) T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 118 Web Transaction Logs Transaction log coupled with Registration Forms and shopping cart provides treasure of marketing information leads to answer some interesting questions such as: What are major patterns of interest and purchase? After home page, where users go first? Second? What are the interest of specific individuals? How can we improve the website, easier to use, attractive design encourage visitors to purchase? Where are visitors coming from? What they want? How can we personalize our messages etc? T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 119 Tracking Files Allow users browsing activities to be tracked as they move from site to site Four types of tracking files Cookies ◦Small text file placed by Web site (1 kB) ◦Allows Web marketers to gather data ◦Customers may delete cookies Implement privacy; Causing misleading analysis, wastage of efforts Way forward? Use Adobe Flash software; creates cookies called Flash Cookies set to never expire (5 MB) Beacons (“bugs”; 1-pixel graphic files; send message to server) T1-Lecture-13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 120 ...T1 -Lecture- 14 E Commerce Marketing Chapter- 06 Part -II For Lecture Material/Slides Thanks to: Copyright © 2010 Pearson Education, Inc T1 -Lecture- 13 Ahmed Mumtaz Mustehsan... marketplace e.g Amazon.com T1 -Lecture- 13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 115 Impacts of E-commerce Technologies on Marketing Three broad impacts: (E-commerce Technology... fairness, delivery and after sale service T1 -Lecture- 13 Ahmed Mumtaz Mustehsan Copyright © 2010 Pearson Education, Inc 1-5 Basic Marketing Concepts Marketing: Means the strategies and actions