Marketing on the Web

Key Features of the Internet Audience

Number of users online in the United States rate of growth has begun to slow

Intensity and scope of use Both increasing; 56% of adult users logging on in a typical day

Source: http://www.internetworldstats.com/stats.htm

Population Population Internet Usage, % Population UsageUsage Growth

( 2006 Est.) % of World Latest Data( Penetration

) % of World 2000-2005

Africa 915,210,928 14.10% 23,649,000 2.60% 2.30% 423.90%

Asia 3,667,774,066 56.40% 380,400,713 10.40% 36.50% 232.80%

Europe 807,289,020 12.40% 294,101,844 36.40% 28.20% 179.80%

Middle East 190,084,161 2.90% 18,203,500 9.60% 1.70% 454.20%

North America 331,473,276 5.10% 227,470,713 68.60% 21.80% 110.40%

Latin America/Caribbean 553,908,632 8.50% 79,962,809 14.70% 7.80% 350.50%

Oceania / Australia 33,956,977 0.50% 17,872,707 52.60% 1.70% 134.60%

WORLD TOTAL 6,499,697,060 100.00% 1,043,104,886 16.00% 100.00% 189.00%

WORLD INTERNET USAGE AND POPULATION STATISTICS

World Regions

Key Features of the Internet Audience

Demographics and access some demographic groups have

higher percentage of Internet users

different patterns of usage exist across groups

Ethnicity Variation across ethnic groups not

as wide as age groups 57% white 47% Hispanic 43% African American Hispanics and African Americans

going online at higher rates

Education 82% of individuals with a college

degree online 39% with high school education of

less online Gender

Men accounted for the majority of Internet users at first

Women now outnumber men online

Lifestyle impact Intense Internet usage may cause a

decline in traditional social activities Social development of children using

Internet intensively instead of engaging in face-to-face interactions or undirected play out of doors may also be negatively impacted

Media choices More time using the Internet Less time spent using traditional

media

Average Allocation by Media

TV33%

Newspapers10%Magazines

8%

Radio29%

Internet20%

Of all the time Europeans spend consuming media (reading newspapers and magazines, watching TV, listening to radio or surfing the Web) 20% of is allocated to the Internet

Base: Users of each medium

Source: EIAA Study (http://advertising.fr.msn.be/WWDocs/User/fr-be/research/717,12,Average Allocation by Media)

Consumer Behavior Models

Direct reference groups

include one’s family,

profession or occupation,

religion, neighborhood, and

schools

Indirect reference groups

include one’s life-cycle stage,

social class, and lifestyle

group

Opinion leaders (virtual influencers) influence the behavior of

others through their personality, skills, or other factors

Lifestyle group an integrated pattern of

activities (hobbies, sports), interests (food, fashion), and opinion (social issues)

Psychological profile is a set of needs, drives,

motivations, perceptions, and learned behaviors

Exercise

Go to the SRI site: (www.sric-bi.com/VALS/presurvey.shtml).

Take the survey to determine what lifestyle category you fit into

How do you think your lifestyle category and values impact your use of the Web for ecommerce?

How has your online consumer behavior affected your lifestyle?

Psychographic Profiles

Combines both demographic and psychological data and divides a market

into different groups based on social class, lifestyle, and/or personality

characteristics

Exercise: Visit several different sites that appeal to people of various

social classes, lifestyles, or personality characteristic types.

Note any differences and share them with the class.

The Consumer Decision Process

Online Consumer Decision Process

Adds two new factors: Web site capabilities -- the content, design, and functionality of

a site Consumer clickstream behavior -- the transaction log that

consumers establish as they move about the Web and through specific sites

How Shoppers Find Vendors and Stores Online

Web Marketing Strategies

Four Ps of marketing Product

Physical item or service that the company is selling Price

Amount a customer pays for the product Promotion

Any means of spreading the word about the product Place

Need to have products or services available in different locations

Marketing Strategies

Product Based

When creating a marketing strategy, managers must consider both the nature of their products and the nature of their potential customers

Most office supply stores on the Web believe customers organize their needs into product categories

See www.staples.com

Customer Based

Good first step in building a customer-based marketing strategy Identify groups of

customers who share common characteristics

B2B sellers are more aware of the need to customize product and service offerings to match their customers’ needs

Communicating with Different Market Segments

Identify groups of potential customers

The first step in selling to those customers

Media selection

Can be critical for an online firm

Challenge for online businesses

Convincing customers to trust them

Trust Issues The Web is an intermediate step between mass media and

personal contact Cost of mass media advertising can be spread over its audience Companies can use the Web to capture some of the benefits of

personal contact, yet avoid some of the costs inherent in that approach

Market Segmentation Market segmentation divides the pool of potential customers into

segments and targets specific portions of the market with advertising messages

Segments Usually defined in terms of demographic characteristics

Geographic segmentation

Creating different combinations of marketing efforts for each geographical group of customers

Demographic segmentation

Uses age, gender, family size, income, education, religion, or ethnicity to group customers

Psychographic segmentation

Groups customers by variables such as social class, personality, or their approach to life

Micromarketing Targeting very small market segments

Beyond Market Segmentation: Customer Behavior and Relationship Intensity

Behavioral segmentation Creation of separate experiences

for customers based on their behavior

Behavior-based categories include: Simplifiers

Like convenience Surfers

Use the Web to find information and explore new ideas

Bargainers Are in search of a good deal

Connectors Use the Web to stay in touch

with other people Routiners

Return to the same sites over and over again

Occasion segmentation

When behavioral

segmentation is based on

things that happen at a

specific time

Usage-based market

segmentation

Customizing visitor

experiences to match the

site usage behavior

patterns of each visitor

Exercise

Visit www.redenvelope.com to examine how that company implements occasion segmentation.

Identify several examples of occasion segmentation at that site.

Visit www.partypop.com. Identify and evaluate how that site segments its

customers.

Customer Relationship Intensity and Life-Cycle Segmentation

One goal of marketing is to create strong relationships between a company and its customers

Good customer experiences can help create an intense feeling of loyalty

Touchpoints Online and offline customer contact points

Touchpoint consistency Goal of providing similar levels and quality of service at all

touchpoints

Acquisition, Conversion, and Retention of Customers Acquisition cost

Money a site spends to draw one visitor to the site

Funnel model Used as a conceptual tool to

understand a marketing strategy Very similar to the customer life-

cycle model

Conversion Converting a first-time

visitor into a customer Conversion cost

Cost of inducing one visitor to make a purchase, sign up for a subscription, or register

Retained customers Customers who return to

the site one or more times after making their first purchases

Exercise: Select a retail store with which You are familiar that has a Web site On which it sells products/servicesSimilar to those in its physical stores.Explore the site and examine its features that indicate the level of service it Provides. Based on this, evaluate the site’s touchpoint consistency.

Advertising on the Web

Banner ad Small rectangular object on a

Web page Pop-up ad

Appears in its own window when the user opens or closes a Web page

Ad-blocking software Prevents banner ads and pop-

up ads from loading Interstitial ad

When a user clicks a link to load a page, the interstitial ad opens in its own browser window

Cost per thousand (CPM) Pricing metric used when a

company purchases mass media advertising

Trial visit First time a visitor loads a Web

site page Page view

Each page loaded by a visitor Impression

Each time the banner ad loads

Exercise: Surf various web sites and lookFor ads in the categories mentioned in theText. Evaluate the pros/cons and yourExperiences as a customer.

Other Methods

Site Sponsorships

Give advertisers a chance to promote products, services, or brands in a more subtle way

Helps build brand images and develop reputation rather than generate immediate sales

Sending one e-mail message to a customer can cost less than one cent if the company already has the customer’s e-mail address

Conversion rate The percentage of recipients

who respond to an ad or promotion

Opt-in e-mail Practice of sending e-mail

messages to people who request information on a particular topic

E-Mail marketing

Technology-Enabled Customer Relationship Management

Clickstream Information that a Web site can gather about its

visitors

Technology-enabled relationship management Firm obtains detailed information about a customer’s

behavior, buying patterns, etc., and uses it to set prices and negotiate terms

Creating and Maintaining Brands on the Web

Elements of branding include: Differentiation

Company must clearly distinguish its product from all others

Relevance Degree to which a product

offers utility to a potential customer

Perceived value Key element in creating a

brand that has value

Emotional appeals are difficult to convey on the WebRational branding relies on the cognitive appeal of the specific help offered, not on a broad emotional appeal

Products, Brands, and the Branding Process

Brand

a set of expectations that consumers have when consuming, or thinking about consuming, a product or service from a specific company

Branding is the process of brand creation

Closed loop marketing

marketers are able to directly influence the design of the core product based on market research and feedback

Brand strategy

a set of plans differentiating a product from it competitors, and communicating these differences effectively to the marketplace

Exercise

In-class project for your group --

Visit www.eluxury.com or

www.cabelas.com and create an rough

internet marketing plan for it that

includes each of the following:

Market research

One-to-one marketing

Viral marketing

Affiliate marketing

Affiliate and Viral Marketing Strategies

Affiliate marketing One firm’s Web site

includes descriptions, reviews, ratings, or other information about a product that is linked to another firm’s site

Affiliate site Obtains the benefit of the

selling site’s brand in exchange for the referral

Cause marketing Affiliate marketing

program that benefits a charitable organization

Relies on existing customers to tell other people about products or services they have enjoyed using

Example:

Blue Mountain Arts

Electronic greeting card company

Purchases very little advertising, but grew rapidly

Search Engine Positioning

Search engine is a Web site that helps people find things on the Web

It has 3 major parts: Spider, crawler, or robot

Program that automatically searches the Web

Index or database Storage element of a

search engine Search utility

Uses terms provided to find Web pages that match

Nielsen//NetRatings

Frequently issues press releases that list the most frequently visited Web sites

Search engine ranking

Weighting factors used by search engines to decide which URLs appear first on searches

Search engine positioning or search engine optimization

Combined art and science of having a particular URL listed near the top of search engine results

Paid Search Engine Inclusion and Placement

Paid placement Option of purchasing a top listing on results pages for a

particular set of search terms

Rates vary

Search engine placement brokers Companies that aggregate inclusion and placement rights on

multiple search engines

Exercise: Visit various search engines and examine how they do paid placementsEvaluate the paid ads. What are the similarities? Differences? Which searchEngine would you advertise with? Why?

Domain Names

URL brokersSell, lease, or auction domain names

ICANNMaintains a list of accredited registrars

Domain name parkingPermits the purchaser of a domain name to maintain a simple Web site so that the domain name remains in use