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Copyright © Houghton Mifflin Company. All rights reserved. 4–1

Chapter Outline• Marketing on the Internet

–Basic Characteristics of Electronic Marketing–E-Marketing Strategies

• Customer Relationship Management–Technology Drives CRM–Customer Satisfaction Is the End Result of CRM

• Legal and Ethical Issues in E-Marketing


Marketing on the Internet

• Electronic Commerce (E-Commerce)–Sharing business information, maintaining business

relationships, and conducting business transactions by means of telecommunications networks

• Electronic Marketing (E-Marketing)–The strategic process of creating, distributing,

promoting, and pricing products for targeted customers in the virtual environment of the Internet


Benefits of E-Marketing• Open and Instantaneous Flows of Information

–Marketers and customers share information in real-time on prices, specifications, and product availability.

• Enhanced Customer Service Efficiencies–Rapid response and always-on availability (e.g., 24/7

customer support)• Worldwide Scope of the Electronic Market

–Opens markets to firms of all sizes


Basic Characteristics of Electronic Marketing: Addressability• Addressability is a marketer’s ability to identify

customers before they make a purchase• How E-Merchants Attain Addressability

–Limit access to areas of their web site to encourage customer registration

–Offer contests and prizes in exchange for consumer information

–Place “cookies” on visitor’s computer to track visitor usage and preferences


Basic Characteristics of Electronic Marketing: Interactivity• Interactivity is the ability to allow customers

express their needs and wants directly to the firm in response to the firm’s marketing communications–Real-time interaction with customers–Broader market coverage at a lower cost

• Community refers to a sense of group membership or feeling of belonging–Virtual communities on the Web


Basic Characteristics of Electronic Marketing: Memory• Memory is the ability to access databases or data

warehouses containing individual customer profiles and past purchase histories and to use these data in real-time to customize a marketing offer.

• A database is a collection of information arrangedfor easy access and retrieval.


Basic Characteristics of Electronic Marketing: Control• Control refers to customers’ ability to regulate the

information they view and the rate and sequence of their exposure to that information.

• A portal is a multiservice web site that serves as a gateway to other web sites.


Basic Characteristics of Electronic Marketing: Accessibility• Accessibility is the ability to obtain information

available on the Internet.–Informs and educates the inquiring consumer about

competing products and prices–Creates competition for the consumer’s attention–Increases the importance of having an easily

recognized uniform resource locator (URL), or web site address


Basic Characteristics of Electronic Marketing: Digitalization• Digitalization is the ability to represent a product,

or at least some of its benefits, as digital bits of information.


E-Marketing Strategies

DistributionDistributionSystemsSystems

TargetTargetMarketsMarkets

ProductProductMarketingMarketing

PromotionPromotionMediumsMediums PricingPricing

E-MarketingE-MarketingStrategy ConsiderationsStrategy Considerations


Types of Advertising on Web Sites


Customer Relationship Management• Customer relationship management (CRM)

focuses on using information about customers to create marketing strategies that develop and sustain desirable long-term relationships.–A focus on CRM is possible in e-marketing because of

marketers’ ability to target individual customers.–The ability to identify individual customers allows

marketers to shift their focus from increase share of market to increasing share of customer.

–CRM is often based on the use of information technology.


The 80/20 Rule• 80 percent of business profits come from 20

percent of customers.–Advances in technology allow marketers to profile

customers in real-time and thereby assess their lifetime value (LTV) to the firm.

–Some customers may be too expensive to retain given the low level of profits they generate.

–Firms should focus instead on developing and managing long-term relationships with more profitable customers.


Legal and Ethical Issues in E-Marketing• Personal Privacy Issues

–Unauthorized placement of “cookies” on personal computers

–Web site information requirements for registration–Collection of information from children–Use of “spyware” in software

• Spam–Unsolicited commercial e-mail (UCE)

• Misappropriation of Intellectual Property–Illegal copying of copyrighted software, movies, CDs,

and other creative materials


The BBBOnLine Privacy Seal and Program Explanation

FIGURE 4.1Source: Reprinted with permission from BBBOnLine, Council of Better Business Bureaus, Arlington, VA.

[figure 4.1 here]


Source: Reprinted by permission of the American Marketing Association.

Code of Ethics


Important Terms• Electronic Commerce (E-Commerce)

–Sharing business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks

• Electronic Marketing (E-Marketing)–The strategic process of creating, distributing, promoting,

and pricing products for targeted customers in the virtual environment of the Internet

• Addressability–A marketer’s ability to identify customers before they make

a purchase• Cookie

–An identifying string of text store on a web site visitor’s computer


Important Terms• Interactivity

–The ability to allow customers express their needs and wants directly to the firm in response to the firm’s marketing communications

• Community–A sense of group membership or feeling of belonging

• Memory–The ability to access databases or data warehouses

containing individual customer profiles and past purchase histories and to use these data in real-time to customize a marketing offer

• Database–A collection of information arranged for easy access and

retrieval


Important Terms• Control

–Customers’ ability to regulate the information they view and the rate and sequence of their exposure to that information

• Portal–A multiservice web site that serves as a gateway to

other web sites• Accessibility

–The ability to obtain information available on the Internet

• Uniform Resource Locator (URL)–A web site address


Important Terms

• Digitalization–The ability to represent a product, or at least some of its

benefits, as digital bits of information• Customer Relationship Management (CRM)

–Using customer information to build long-term relationships

• Spam–Unsolicited commercial e-mail (UCE)


The Relationship Between Web Sites and Retail Stores

Source: American Demographics, December 2000, p. 42. Adapted with permission.


Technology Drives CRM• Customer Support and Call Center Software

– Provides customer interaction and improved service– Captures information about all interactions

• Sales Automation– Links sales force to applications that facilitate selling and providing

service– Provides information to determine the best solution for customers– Determines order status, tracks deliveries, and identifies service

problems

• Technology– Should not be used just as a cost-reduction tactic– Should not be overwhelmed by gathering unnecessary data– Should be used as a tool to sustain long-term relationships


Internet Users Comfortable Giving Out Personal Information

Source: USA Today, September 28, 2001, p. A1. Used with permission.

While Internet users don’t mind giving out their e-mail addresses,they’re far less comfortable giving out more personal information. What users are most comfortable giving out:

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