Internet Marketing
19
Canadian Adaptation prepared by
Don Hill, Langara College
Chapter 19
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1
Learning Objectives
1. Describe the impact of the Internet on
Business
2. Discuss the effects of the Internet on
marketing objectives and strategy
3. Describe Buyer behaviour on the Internet
4. Explain how the Internet affects the
traditional marketing mix
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Copyright © 2009 by Nelson Education, Ltd. All rights reserved.
2
Learning Objectives
5. Describe how marketers are leveraging the
power of online technology
6. Name the critical factors marketers face when
measuring online success
7. Discuss the privacy issues surrounding
Internet-based commerce
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3
Learning Objective
1
Describe the impact of the
Internet on Business
On Line
www.youtube.com
www.google.com
www.bitetv.com
1
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Impact of the Internet
A Convergent Medium
Electronic Marketing Channel
Financial Implications
On Line
www.expedia.com
1
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Learning Objective
2
2
Discuss the effects of the
Internet on marketing
objectives and strategy
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6
Porter’s Five Industry Forces
Rivalry among existing competitors
Barriers of entry
Applying
Five Forces
in Internet
Environment
Threat of substitutes
Bargaining power of suppliers
Bargaining power of buyers
2
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Porter’s Five Industry Forces
Online…
Rivalries are…
…intensified
Barriers are…
…low
Threat of substitutes is…
…high
Bargaining power-suppliers
…extremely low
Bargaining power-buyers
…increasing
On Line
www.quickmba.com/strategy/porter.shtml
2
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8
Debunking Myths of Re-Formed Market
Myths
2
Truths
1st movers
have the
advantage
1st movers pay the costs of
development; 2nd movers have the
advantage.
Behaviour changes
quickly
Old habits die hard; people more
concerned about getting needs met
than fractional costs savings
Non-traditional
pricing will be
a success
People perceive prices posted by
sellers to be more convenient and fair.
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Back to Basics
Distinctive competence
Sustainable competitive
advantage
Attract loyal customers
2
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Learning Objective
3
3
Describe buyer behaviour on
the Internet
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Basic Forms of Virtual Business
Business-to-Business
B2B
Business-to-Consumer
B2C
Consumer-to-Consumer
C2C
2
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B2C
B2C
Using the Internet to conduct
business between an organization
and individual consumers.
3
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B2B
B2B
Using the Internet to conduct
business between two or more
organizations.
3
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B2B Exchanges
Online trading floor
Struggling to survive
Over half out of business
since 2002
On Line
http://www.globalwinespirits.com
http://www.transcore.com
3
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C2C
C2C
Using the Internet to conduct
business with another consumer
or consumers.
3
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16
Online Shopping Behaviour
 Two Perspectives:
1.
Technological

2.
Perceptual

3
How access is provided
What buyers believe
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Uses of the Internet
Searching for Information
News
Connecting and Socializing
Playing games
Listening to music
3
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Learning Objective
4
4
Explain how the Internet
affects the traditional
marketing mix
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Product Strategies on the Web
Mass Customization
Branded Commodities
4
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20
Branded Commodities
Principle of equivalent quality is
applied to branded products, creating
downward price pressure
Camera A at Retailer A
Camera A at Retailer B
On Line
http://www.despair.com
4
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Place
Click
Corporate Web sites
Resellers’ Web sites
Affiliate programs
Clicks and mortar
On Line
http://www.ideavirus.com
4
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Affiliate Programs
Function of 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
4
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Promotion Challenges
Consumers don’t know the site
Consumers don’t know the company
Converting browsers to buyers
4
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Promotion Methods
Spam
Viral marketing (Buzz)
Instant messaging
Interactive ads
Search engine listings
Sales promotion
Online Public Relations
4
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Search Engine Listings
4
Low price
High price
No or low fee
gets you at the
bottom of the list
Gets you to the
top of the list
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Causes of Pricing Pressure
 Shopping bots and comparison sites
 Auction pricing
 Demand pricing
On Line
www.canadapost.ca
www.ups.com
www.fedex.ca
4
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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
41% happy with service they received
Come
Back
Soon!
Profitability is less algorithm and more caring
4
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Integrating Marketing Strategies
Conventional
4
Internet
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Learning Objective
5
5
Describe how marketers
are leveraging the power
of online technology
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How Technology Changes the 4Ps
Product
Place
Promotion
Personal
Selling
(pre-1840s)
Commodities
Retail Store
Store Displays
Going Rate
Advertising
(1840s to
1990s)
National
Brands
Malls &
Superstores
National
Advertising
Retail Price
Interactive
Commerce
(1994 and
beyond)
Branded
Commodities
Worldwide
Marketplace
Internet-based
Web Sites
Intelligent
Software
Agents
Mass
Customization
Affiliate
Programs
Interactive
Ads
Era of:
Price
Instant
Messaging
5
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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
5
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Maximizing Customer Relationship
Marketing on the Internet
Data storage
Tracking information
Needed for personalized
content
Controversial because of
privacy concerns
5
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Cookies
Are bits of data mapped to your
hard drive
Enable marketers to personalize
Web sites
Can trace where you’ve been on
the Internet
Are the subject of a
controversial debate
5
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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 Flash
7 – Pay for a better link
5
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Learning Objective
6
6
Name the critical factors
marketers face when
measuring online success
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Metrics
6
The server can tell:
The server can’t tell:
 Who visited
 How many times
(hits)
 And where (page
views)



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Recency
Frequency
Monetary value
37
Out-of-Date Metrics
Hits
Page views
Click-through counts
6
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Stickiness as the New Metric
Stickiness =
Frequency
6
X
Duration
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X
Site Reach
39
Learning Objective
7
7
Discuss the privacy issues
surrounding Internet based
commerce
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Major Issues in Online Privacy
Not-so-private email
Identity Theft
Hackers
Predators
Cyberstalking
Branded Trusts
Regulation
7
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On Line
www.privcom.gc.ca
www.r-s-g.org/carnivore
41
Identity Theft
Stealing personal information to
commit fraud or other crimes
Sharply increasing
In 2003, 9% of Canadians
where victims of identity theft
7
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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
7
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Creating Trust Online
Better Business Bureau
“Reliability Seal”
Third-Party
Seals
ScanAlert
“Hacker Safe”
Verisign
“Secure Seal”
7
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