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3-1Visit UMT online at www.umtweb.edu© UMT 2004 MKT100Version: 11-10-04

Visit UMT online at www.umtweb.edu

PRINCIPLES OF PRINCIPLES OF MARKETINGMARKETING

University of Management and Technology1901 N. Fort Myer Drive

Arlington, VA 22209 USAPhone: (703) 516-0035

Fax: (703) 516-0985Website: www.umtweb.edu

3-2Visit UMT online at www.umtweb.edu© UMT 2004 MKT100Version: 11-10-04


CHAPTER 3:CHAPTER 3:Marketing in the New Marketing in the New Internet EconomyInternet Economy

Armstrong, G. & Kotler, P. Marketing: An Armstrong, G. & Kotler, P. Marketing: An IntroductionIntroduction(6th ed.) Prentice Hall © 2003.(6th ed.) Prentice Hall © 2003.

3-3Visit UMT online at www.umtweb.edu© UMT 2004MKT100

Visit UMT online at www.umtweb.eduVersion: 11-10-04


Road Map: Previewing the ConceptsRoad Map: Previewing the Concepts

Identify the major forces shaping the new Internet Age.

Explain how companies have responded to the Internet and other powerful new technologies with e-business strategies, and how these strategies have resulted in benefits to both buyers and sellers.

Describe the four major e-commerce domains.

Discuss how companies go about conducting e-commerce to profitably deliver more value to customers.

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




Major Forces Shaping the Internet Age Major Forces Shaping the Internet Age (Fig. 3-1)(Fig. 3-1)




Major Forces Shaping the Internet AgeMajor Forces Shaping the Internet Age

Digitalization & ConnectivityIntranets – connect people within a company.

Extranets – connect a company with its suppliers.

Internet – connects users all around the world.

Internet ExplosionExplosive growth forms the heart of the New Economy.

Companies must adopt Internet technology or risk being left behind.




Company Customizes

the Market Offering

Customers Design the Market Offering

Old Economy Revolved Around Manufacturing Companies. New Economy Revolves Around Information Businesses.

Customization and CustomerizationCustomization and Customerization




Marketing Strategy in the New Internet Marketing Strategy in the New Internet AgeAge

Conducting business in the new Internet Age will call for a new model for marketing strategy and practice.

All buying and selling may involve direct electronic connections between companies and customers.

Marketing should play the lead role in shaping new company strategy.




e-Business, e-Commerce, and e-e-Business, e-Commerce, and e-Marketing in the Internet AgeMarketing in the Internet Age

e-Business Involves the Use of Intranets, Extranets & the Internet to Conduct a

Company’s Business

e-Commerce Involves Buying & Selling Processes

Supported by Electronic Means

E-Marketing “e-selling” side of

e-commerce




Benefits to BuyersBenefits to Buyers

Convenient Buying is Easy and Private Greater Product Access and Selection Access to Comparative Information Buying is Interactive and Immediate

e-commerce Yields the Following Benefits

to Buyers




Benefits to SellersBenefits to Sellers

Customer Relationship Building Reducing Costs & Increasing Speed and

Efficiency Offers Greater Flexibility Truly Global Medium

e-commerce Yields the Following Benefits

to Sellers




E-Commerce Domains (Fig. 3-2)E-Commerce Domains (Fig. 3-2)




B2C (Business to Consumer)B2C (Business to Consumer)

Sales expected to increase from $34 billion in 2001 to $130 billion by 2006.

Provides e-marketers with access to consumers in all age groups.

More customer-initiated and customer-controlled.




B2B (Business to Business)B2B (Business to Business)

Estimates are that B2B e-commerce will reach $3.6 trillion in 2003.

By 2005, more than 500,000 enterprises will participate as buyers, sellers, or both.

Much e-commerce takes place in open trading networks:

http://www.plasticsnet.com/

Some companies are also setting up private trading networks (PTNs)




C2C (Consumer to Consumer)C2C (Consumer to Consumer)

Occurs between people over a wide range of products and services.

EBay’s C2C transacted more than $5 billion in trades last year.Involves interchanges of information through:

ForumsNewsgroups




C2B (Consumer to Business)C2B (Consumer to Business)

Today’s consumers can contact and communicate with companies.

Consumers can search out sellers on the Web, learn about their offers, and initiate purchases.

Example: Using http://www.priceline.com/, consumers can bid for airline tickets, hotel rooms, etc.

Then, sellers decide whether to accept their offers.




Types of e-Marketers (Fig. 3-3)Types of e-Marketers (Fig. 3-3)




Click-OnlyCompaniesClick-OnlyCompanies

Enabler Sites

Enabler Sites

Content Sites

Content Sites

Transaction Sites

Transaction Sites

Types of Click-Only CompaniesTypes of Click-Only Companies

E-tailersE-tailers

Search Engines &

Portals

Search Engines &

Portals

Internet Service

Providers

Internet Service

Providers




Reasons for Dot.com FailuresReasons for Dot.com Failures

Prices and margins were often very low

Lack of good distribution delivery processes

Poorly designed Web sites

Attention on gathering new customers instead of building brand loyalty

Spending offline to establish brand identities

Spin & hype instead of marketing strategies

Failure to research or plan




Click-and-Mortar CompaniesClick-and-Mortar Companies

Many resisted adding e-commerce because of potential for channel conflict and cannibalization.

Many are doing better than brick or click-only operations i.e. http://staples.com. Why?

Trusted brand names & financial resources,

Large customer bases,

Knowledge & experience,

Good relationships with key suppliers,

Ability to offer customers more options,

Buy online & return unwanted merchandise to store.




Setting Up for e-Marketing Setting Up for e-Marketing (Fig. 3-4)(Fig. 3-4)




Creating a Web SiteCreating a Web Site

Types of Web Sites Corporate – builds customer goodwill Marketing – moves customers closer to a direct purchase




SonyStyle.com Marketing Web SiteSonyStyle.com Marketing Web Site

This marketing web site offers engages consumers in an interaction that will bring them closer to a direct purchase, all with a few clicks of the mouse button.

http://sonystyle.com




Designing Attractive Web SitesDesigning Attractive Web Sites

Create value & excitement to get people:

to the site,

look around (hopefully to buy)

and come back again.

Value of the site’s content that will do all of the above.

7 C’s of effective Web Site Design

Context

Content

Community

Customization

Communication

Connection

Commerce




Placing Ads and Promotions OnlinePlacing Ads and Promotions Online

Online advertising - used to build Internet brands or attract visitors.

Forms of online advertising & promotion:Banner ads & tickers (move across the screen)

Skyscrapers (tall, skinny ads at the side of a page)

Rectangles (boxes larger than banner)

Interstitials (online ads that pop up between changes)

Browser ads (sponsors pay viewers to watch)

Content sponsorships (sponsoring content on sites)

Microsites (limited areas managed by an external co.)

Viral marketing (Internet word-of-mouth)




Other e-Marketing MethodsOther e-Marketing Methods

Creating or Participating in Web Communities

Allow members to exchange views on issues of common interest.

http://iVillage.com

Share common interests & well-defined demographics.

E-mail or WebcastingE-mail: mainstay for B2C & B2B

Webcasting automatically downloads customized information to recipients’ PCs.




Promise and Challenge of e-CommercePromise and Challenge of e-Commerce

Limited exposure and buying

Skewed demographics and psychographics

Chaos and clutter

Security

Ethical concerns




Road Map: Reviewing the ConceptsRoad Map: Reviewing the Concepts

Identify the major forces shaping the new Internet Age.

Explain how companies have responded to the Internet and other powerful new technologies with e-business strategies, and how these strategies have resulted in benefits to both buyers and sellers.

Describe the four major e-commerce domains.

Discuss how companies go about conducting e-commerce to profitably deliver more value to customers.

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

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