Chapter 3
Marketing in the New Internet
Economy
3-1
Road 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 ebusiness 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 ecommerce to profitably deliver more value to
customers.
Overview the promise and challenges that ecommerce presents for the future.
3-2
Major Forces Shaping the
Internet Age (Fig. 3-1)
3-3
Major Forces Shaping the
Internet Age
Digitalization &
Connectivity
Intranets – connect
people within a
company.
Extranets – connect
a company with its
suppliers.
Internet – connects
users all around the
world.
Internet Explosion
Explosive growth
forms the heart of
the New Economy.
Companies must
adopt Internet
technology or risk
being left behind.
3-4
Customization and Customerization
Old Economy Revolved Around Manufacturing
Companies. New Economy Revolves Around
Information Businesses.
Company
Customizes
the
Market Offering
Customers Design
the Market Offering
3-5
Marketing Strategy in the New
Internet Age
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.
3-6
e-Business, e-Commerce, and
e-Marketing 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
3-7
Benefits to Buyers
e-commerce Yields the Following Benefits
to Buyers





Convenient
Buying is Easy and Private
Greater Product Access and Selection
Access to Comparative Information
Buying is Interactive and Immediate
3-8
Benefits to Sellers
e-commerce Yields the Following Benefits
to Sellers
 Customer Relationship Building
 Reducing Costs & Increasing Speed and
Efficiency
 Offers Greater Flexibility
 Truly Global Medium
3-9
Consider the following thought questions,
formulate an answer, pair with the student on
your right, share your thoughts with one
another, and respond to questions from your
instructor.
What is the new Internet Age?
What are the major forces shaping this new
Internet Age?
What is the difference between an intranet,
extranet, and Internet?
3-10
E-Commerce Domains (Fig. 3-2)
3-11
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.
3-12
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.c
om/
Some companies are
also setting up private
trading networks
(PTNs)
3-13
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:
• Forums
• Newsgroups
3-14
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.
3-15
What are your biggest fears about
doing business online?
How could a marketer deal with these
fears and reduce them?
3-16
Types of e-Marketers (Fig. 3-3)
3-17
Types of Click-Only Companies
Transaction
Sites
E-tailers
Search
Engines &
Portals
Internet
Service
Providers
Click-Only
Companies
Content
Sites
Enabler
Sites
3-18
Reasons for Dot.com Failures
Failure to research or plan
Spin & hype instead of marketing strategies
Spending offline to establish brand identities
Attention on gathering new customers
instead of building brand loyalty
Poorly designed Web sites
Lack of good distribution delivery processes
Prices and margins were often very low
3-19
Click-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.
3-20
Setting Up for e-Marketing
(Fig. 3-4)
3-21
Creating a Web Site
Types of Web Sites
Corporate – builds customer goodwill
Marketing – moves customers closer
to a direct purchase
3-22
SonyStyle.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
3-23
Designing 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
3-24
Placing 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)
3-25
Other 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 & welldefined demographics.
E-mail or
Webcasting
E-mail: mainstay for
B2C & B2B
Webcasting
automatically
downloads
customized
information to
recipients’ PCs.
3-26
Promise and Challenge of eCommerce
Limited exposure and buying
Skewed demographics and
psychographics
Chaos and clutter
Security
Ethical concerns
3-27
Road 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 ebusiness 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 ecommerce to profitably deliver more value to
customers.
Overview the promise and challenges that ecommerce presents for the future.
3-28