Chapter 9

Interactive Marketing and

Electronic Commerce

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Electronic Commerce

…any activity that uses some form of

electronic communication in the inventory,

exchange, advertisement, distribution, and

payment of goods and services.

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Marketing Opportunities in Marketspace

Products best suited for e-commerce:

product information important, but not pre-purchase trial

audio or video demonstration

digitally deliverable items

unique items

routine purchases, convenience important

highly standardized products, price information important

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E-Commerce Models: Sales Revenue

Model

• involves marketing products and services through the

Internet

• companies seek to earn a margin on actual sales or a

fee charged for rendering a service

• few companies that market consumer products actually

make an operating profit using this model exclusively

• Examples – CDNow.com and Cisco Systems

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E-Commerce Models: Advertising Support

Model

• emphasizes the selling of advertising on a company’s

Web site

• often prices are listed at or below their cost

• often used to complement the selling model, but

sometimes used alone to generate revenue

• Examples – Buy.com and Yahoo.com

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E-Commerce Models: Cost Elimination

Model

• used when delivery of the product, service,

or information through the Internet

significantly lowers costs

• Examples – banks and airlines

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E-Commerce Models: Subscription Support

Model

• generates revenue from users in the form of

monthly or annual subscriptions based on the

value of the content or service provided

• Examples – aol.com and wsj.com

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E-Commerce Models: Information Trading

Model

• company gathers information about

consumer interests or purchase intentions,

and sells the information to a retailer or

manufacturer for a fee

• Example – Popular Demand, Inc.

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E-Commerce Models: Infomediary

Model

sells information about a market and creates

a platform on which buyer and sellers can do

business in marketspace

Three Types: aggregators – e.g., chemdex.com

auctioneers – e.g., eBay.com

exchanges – e.g., nte.net

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Customer Value Proposition in Marketspace

ValueProposition

ChoiceConvenience

CoordinationCustomization

Cost

Customer Service

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Types of Marketing Web Sites

Transactional sites

e.g., L.L.Bean and gap.com

Promotional sites

e.g., saturn.com and cathay-usa.com

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Transactional Websites

are essentially electronic storefronts

focus on turning online browsers into online buyers

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Promotional Websites

promote a company’s products

provide information on how product can be used and where it

can be purchased

often engage the visitor in an interactive experience

can be effective in generating interest in and trial of a

company’s products

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Marketing Websites and IMC

Web sites complement direct selling and supplement

advertising

play a cost-effective role in the communication mix

cost-effective in providing feedback on product

performance

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Managing Product-Market Convergence

increasing number of companies maintaining presence in

both marketplace and marketspace. This necessitates:

coordinating marketing efforts

managing trade relations