Internet Marketing
Chapter 14
Prepared by
Deborah Baker
Texas Christian University
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
1
Learning Objectives
1. Explain how the Internet affects the
traditional marketing mix
2. Describe how marketers are leveraging the
power of online technology
3. Discuss the legal and privacy issues
affecting Internet-based companies
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
2
Learning Objectives
4. Measure the effectiveness of an online
marketing campaign
5. Discuss the effects of the Internet on
marketing objectives and strategy
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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1
Learning Objective
On Line
http://www.scubatoys.com/poolcam/poolcam.asp
Explain how the
Internet affects the
traditional
marketing mix
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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1
Product Strategies on the Web
Progression of
product strategies:
Commodities
Branding
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
Mass
customization
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On Line
http://www.despair.com
Branded Commodities
Principle of equivalent quality is applied
to branded products, creating downward
price pressure
Camera A at
Retailer A
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
Camera A at
Retailer B
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1
Place
On Line
http://www.ideavirus.com
Corporate Web sites
Resellers’ Web sites
Affiliate programs
Clicks and mortar
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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Affiliate Programs
Virtual Intermediaries:
 Refer customers to online retailers
 Receive a commission on resulting
sales
 Benefit from the goodwill consumers
feel for the content sites they normally
visit
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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Promotion Challenges
Consumers don’t know the site
Consumers don’t know the company
Converting browsers to buyers
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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Promotion Methods
Spam
Viral Marketing (Buzz)
Instant Messaging
Online
promotion
techniques
Interactive Ads
Search Engine Listings
Sales Promotion
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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1
Search Engine Listings
Low price
No or low fee
gets you at
the bottom of
the list
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
High price
Gets you to
the top of the
list
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Pricing Pressure
On Line
http://www.fedex.com
http://www.ups.com
http://www.usps.com
Extreme price pressure
on the Internet due to:
 Shopping bots and comparison sites
 Auction pricing
 Demand pricing
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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Pricing and Consumer Loyalty
75% of customers participate in a loyalty program
Online customer service consistently rated as poor
72% say customer service is important
Come
Back
Soon!
41% happy with service they received
Profitability is less algorithm and more caring
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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1
How Technology Changes the 4Ps
Era of:
Product
Place
Promotion
Price
Personal
Commodities
Selling
(pre-1840s)
Retail Store
Store Displays Going Rate
Advertising
(1840s to
1990s)
National
Brands
Malls &
Superstores
National
Advertising
Interactive
Commerce
(1994 and
beyond)
• Branded
Commodities
• Mass
Customization
• Worldwide • InternetMarketplace
based
Web Sites
• Affiliate
• Interactive
Programs
Ads
• Instant
Messaging
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
Retail Price
Intelligent
Software
Agents
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2
Learning Objective
Describe how
marketers are
leveraging the
power of online
technology
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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2
Internet Demographics and Trends
60% of Men
Online:
By Gender
in the U.S.
56% of Women
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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2
Internet Demographics and Trends
60% of Whites
Online:
By race in
the U.S.
45% of Blacks
54% of Hispanics
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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2
Internet Demographics and Trends
23% no high school
Online:
By
education
in the U.S.
45% of high school grads
82% of college grads and
post-graduates
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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The Global Village
Broadens and enhances access
in developing nations
Allows businesses to “leapfrog”
into development
Levels playing field for
disadvantaged countries
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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Wireless Access on Rise
 Wireless is growing in popularity
 Will soon represent over half of all
Internet users worldwide
 A particular advantage for developing
nations without suitable infrastructure
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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2
Basic Forms of Virtual Business
Business-to-business
B2B
Forms of
Internet
commerce
Business-to-Consumer
B2C
Consumer-to-Consumer
C2C
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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2
B2B Exchanges
On Line
http://www.globalwinespirits.com
http://www.transcore.com
Online trading floor
Struggling to survive
Over half out of business
since 2002
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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Maximizing Customer Relationship
Marketing on the Internet
2
Data tracking
Needed for personalized
content
Using
Cookies
Keep ad content fresh
Controversial because of
privacy concerns
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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2
Improving Search Engine Results
1 – Choose the right words
2 – Put those words at top of page
3 – Use meta tags, like bold type
4 – Increase non-reciprocal links
5 – Incorporate graphics
6 – Incorporate video/audio
7 – Pay for a better link
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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3
Learning Objective
Discuss the legal
and privacy issues
affecting Internetbased commerce
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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3
Major Issues in Online Privacy
On Line
http://www.fbi.gov/hq/lab/carnivore/carnivore.htm
Cookies
Not-so-private email
Spam
Identity theft
Conflicting laws
Cyberstalking
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
Branded trust 26
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Cookies
Are bits of data mapped
to your hard drive
Cookies:
Enable marketers to
personalize Web sites
Can trace where you’ve
been on the Internet
Are the subject of a
controversial debate
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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Identity Theft
Stealing personal information to
commit fraud or other crimes
Sharply increasing
In 2003, 27 million complaints
filed with the FTC
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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Conflicting Legislation
Not all countries have the same laws
regulating Internet commerce
Marketers (M)
responsible for
every law in every
country
Country 1
M
Country 2
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
Country 3
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Online Predators
 Cyberstalking is on the rise.
 Caution is declining (e.g., online dating is
increasing)
 Affects trust people have for legitimate
marketing efforts
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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Creating Trust Online
Better Business Bureau
“Reliability Seal”
3rd-party
seals for
creating
trust
ScanAlert
“Hacker Safe”
Verisign
“Secure Seal”
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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4
Learning Objective
Measure the
effectiveness of an
online marketing
campaign
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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4
Metrics
The server can
tell:
The server can’t
tell:
 Who visited
 How many times
(hits)
 And where (page
views)



Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
Recency
Frequency
Monetary value
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Out-of-Date Metrics
Hits
Page views
Click-through counts
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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Stickiness as the New Metric
Duration
Stickiness =
Frequency
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
Site Reach
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5
Learning Objective
Discuss the effects
of the Internet on
marketing
objectives and
strategy
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
36
5
Porter’s Five Industry Forces
Rivalry among existing competitors
Applying
Five
Forces in
Internet
Environment
Barriers of entry
Threat of substitutes
Bargaining power of suppliers
Bargaining power of buyers
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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5
Porter’s Five Industry Forces
Online…
Rivalries are…
…intensified
Barriers are…
…low
Threat of substitutes is…
…high
Bargaining power suppliers
Bargaining power buyers
…extremely low
…increasing
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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Debunking Myths of Re-Formed
Market
5
Myths
Truths
1st movers
have the
advantage
1st movers pay the costs of
development; 2nd movers have the
advantage.
Behavior
changes
quickly
Old habits die hard; people more
concerned about getting needs met
than fractional costs savings
People perceive prices posted by
Non-traditional
pricing will be
sellers to be more convenient and
a success
fair.
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
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©2005 South-Western College Publishing
5
Back to Basis
Distinctive competence
Sustainable competitive
advantage
Attract loyal customers
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western College Publishing
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