Chapter 5
E-BUSINESS:
MANAGING THE
CUSTOMER
EXPERIENCE
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publicly accessible website, in whole or in part.
1
Chapter 5 E-Business: Managing the Customer Experience
Objectives
1. Describe the growth of Internet use
worldwide.
2. Define e-business and e-marketing, and list
the opportunities e-marketing presents.
3. Distinguish between a corporate website
and a marketing website.
4. List the major forms of B2B e-marketing.
5. Explain business-to-consumer (B2C) emarketing.
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2
Chapter 5 E-Business: Managing the Customer Experience
Objectives
6. Identify online buyers and sellers.
7. Describe some of the challenges associated
with online marketing and e-business.
8. Discuss how marketers use the
communication function of the Web as part
of their online marketing strategies.
9. Outline the steps involved in developing
successful e-business websites and identify
methods for assessing website effectiveness.
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3
Chapter 5 E-Business: Managing the Customer Experience
New E-terms
▮
▮
▮
▮
▮
▮
▮
▮
E-business
E-marketing
E-commerce
E-tailing
E-zine
E-mail
E-space
E-procurement
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Chapter 5 E-Business: Managing the Customer Experience
The Digital World
▮ More than three-quarters of the U.S.
population access the Internet at home,
school, work, or public access sites
▮ What do people do online?
• United States – Communication, information,
and purchases
• China – Downloading, streaming music, online
gaming, videogaming, and social networking
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5
Chapter 5 E-Business: Managing the Customer Experience
The Digital World
▮ In spite of the past success and future
potential of the Internet, issues and
concerns relating to e-business remain
▮ The benefits and potential of e-business
outweigh the concerns and problems
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6
Chapter 5 E-Business: Managing the Customer Experience
1. Define Electronic Commerce (E-Commerce).
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Chapter 5 E-Business: Managing the Customer Experience
What is E-Commerce?
▮ Electronic commerce (e-commerce):
Targeting customers by collecting and
analyzing business information, conducting
customer transactions, and maintaining
online relationships with customers by
means of computer networks
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Chapter 5 E-Business: Managing the Customer Experience
E-Business
▮ Wide range of business activities that take
place via Internet applications
▮ It can be divided into five broad categories:
• E-tailing
• Business-to-business transactions
• Electronic data interchanges (EDI)
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9
Chapter 5 E-Business: Managing the Customer Experience
E-Business
• Email, instant messaging, blogs, podcasts, vlogs
(video blogs), and other Web-enabled
communication tools
• The gathering and use of demographic, product,
and other information through Web contacts
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10
Chapter 5 E-Business: Managing the Customer Experience
2. Define Electronic Marketing (E-Marketing).
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Chapter 5 E-Business: Managing the Customer Experience
E-Marketing
▮ Strategic process of creating, distributing,
promoting, and pricing goods and services
to a target market over the Internet or
through digital tools
▮ Application of electronic tools to
contemporary marketing has the potential
to:
• Greatly reduce costs
• Increase customer satisfaction
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12
Chapter 5 E-Business: Managing the Customer Experience
E-Marketing
▮ Online marketing - Activities that connect
buyers and sellers electronically through
interactive computer systems
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13
Chapter 5 E-Business: Managing the Customer Experience
3. What are the many opportunities for ECommerce?
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Chapter 5 E-Business: Managing the Customer Experience
Table 5.1 - Marketing Capabilities
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15
Chapter 5 E-Business: Managing the Customer Experience
4. Define Interactive Marketing.
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Chapter 5 E-Business: Managing the Customer Experience
Interactive Marketing
▮ Interactive Marketing
• Buyer-seller communications in which the
customer controls the amount and type of
information received from a marketer through
such channels as the Internet, and virtual reality
kiosks.
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Chapter 5 E-Business: Managing the Customer Experience
5. Define Internet.
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Chapter 5 E-Business: Managing the Customer Experience
Internet
▮ Worldwide network of interconnected
computers that lets anyone with access to a
personal computer send and receive images
and data anywhere
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The Internet
World Internet Users
1990 – Fewer than 1
Million
1995 – 50 Million
2001 – 490 Million
2005 – 766 Million
70% of Internet Users USA
2006 – 50% outside the
USA
The Birth and Rise of
Ecommerce
Chapter 5 E-Business: Managing the Customer Experience
▮ The Internet
• Over 143 million active users in the USA
• Intranets
• Internal corporate network that allows employees
within an organization to communicate with each
other and gain access to organizational information
• Extranets
• Secure network accessible through a Website by
external customers or organization for electronic
commerce. It provides more customer-specific
information than a public site.
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Chapter 5 E-Business: Managing the Customer Experience
The Internet (1 of 2)
▮ Taken from the paper “International Internet
Marketing (IIM)” by Philip, R. (2004).
• In 1990, fewer than 1 million users were connected to the Internet.
By 1995, the figure had risen to 50 million. In 2001, it grew to 490
million. In the US, where Internet usage is most advanced, 58
percent of the population had Internet access at home by July 2001
(Cantrell, 2001).
• The internet has become more powerful with the growing use of
broadband. Broadband permits the rapid transmission of much
greater quantities of information, including moving pictures. In
2002, Korea’s 15 million households had broadband service (Moon,
2002). By 2004, more than 152 million people in the United States
were online with over one-third having broadband connections
(Fost, 2004).
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Chapter 5 E-Business: Managing the Customer Experience
The Internet (2 of 2)
▮ In 2000 there were nearly 350 million internet users worldwide and by 2005 the number of users could be more than
double to nearly 766 million (Wall street journal, 2000).
▮ Also the number of internet users is growing in other
countries; this should be of concern for firms wanting to
enter foreign markets. For example, although 70% of today’s
internet users are currently based in the United States
(Harrison-Walker, 2002), more research done by Heckman &
Schmidt (2000) and Struass and Frost (2001) predict that by
2005 more than 50% of internet users will be based outside
the US, and that the percent of users in the European Union
will exceed the percent of users in the United States.
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Chapter 5 E-Business: Managing the Customer Experience
6. What are the four web functions?
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Chapter 5 E-Business: Managing the Customer Experience
▮ Four Web Functions
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Chapter 5 E-Business: Managing the Customer Experience
▮ Four Web Functions
• Communication
• E-mail; Instant messaging; Chat rooms and bulletin
boards; Online communities
• Information
• Search engines; Online publications; Newsgroups;
Internet forums; Electronic bulletin boards; Web
communities
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 5 E-Business: Managing the Customer Experience
▮ Four Web Functions
• Entertainment
• Games; Radio and TV programming, including
music; Streaming video of live news reports,
sports, and musical performances; Electronic
books
• E-Commerce
• Online auctions
• B2B: electronic exchanges; Extranets and private
exchanges
• B2C: Electronic storefronts and cybermalls; Web
kiosks, Online ticketing; Matchmaking
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Chapter 5 E-Business: Managing the Customer Experience
7. What are the benefits of shopping online?
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Chapter 5 E-Business: Managing the Customer Experience
▮ Online Consumer Marketing
• Lower Prices
• Bots (short for robots): programs that check
hundreds of sites, gather and assemble
information, and bring it back to the sender
• Convenience
• Worldwide access, Day or night, Customized
products and information
• Personalization
• Improves the quality of the shopping experience
• Improves customer satisfaction
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 5 E-Business: Managing the Customer Experience
▮ Benefits of Online Consumer Marketing
• Relationship Building
•
•
•
•
Crucial to success
Online’s personalization helps
Easier for small businesses with small budgets
Customer service is the key
• Increased Efficiency
• Greater profit margins
• Educating customers online frees salespeople from
answering routine questions
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Chapter 5 E-Business: Managing the Customer Experience
• Cost Reductions
•
•
•
•
Reduced start-up costs
Reduced operating costs
Frees funds for new marketing efforts
www.virtualbank.com
• A More Level Playing Field
• Even small firms with small budgets can compete
in the global marketplace
• Helps eliminate discrimination and allow
minority businesses to succeed on their own
merits
– AutoNetwork.com
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Chapter 5 E-Business: Managing the Customer Experience
8. How does one build an effective web
presence?
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Chapter 5 E-Business: Managing the Customer Experience
Creating an Effective Web Presence
Creating an
Effective Web Site
Managing a
Web Site
Measuring
Effectiveness
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Chapter 5 E-Business: Managing the Customer Experience
▮ Building an Effective Web Site
• Establish a Mission for the company’s site
• Identify the purpose of the site
• Satisfy customer needs and wants through a
clear site design
▮ Managing a Web Site
•
•
•
•
•
Update the site frequently
Flag new merchandise and services
Ensure that site appears to be current
Update software as needed
Track costs and revenues
© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Chapter 5 E-Business: Managing the Customer Experience
Assessing Site Effectiveness
▮ Web-to-store shoppers - Consumers who
use the Internet as a tool to aid them at
brick-and-mortar retailers
▮ Click-through rate - Percentage of people
presented with a banner ad who click on it
▮ Conversion rate - Percentage of visitors to
a Web site who make a purchase
▮ Engagement - Amount of time users spend
on sites
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35
Chapter 5 E-Business: Managing the Customer Experience
Figure 5.4 - Measures of Website
Effectiveness
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36
MEASURING WEB SITE EFFECTIVENESS
Click-through rate Percentage of people
presented with a banner ad who click on it.
Conversion rate Percentage of visitors to a
Web site who make a purchase.
Chapter 5 E-Business: Managing the Customer Experience
Websites
▮
▮
▮
▮
▮
▮
▮
http://faculty.trevecca.edu/rphilip
www.anomalystudios.com
http://www.bptm.com/ARCHIVE/
www.ladyinthewatermovie.com
www.honda.com
www.landsend.com
http://www.notionink.com/index.php
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Chapter 5 E-Business: Managing the Customer Experience
9. What is the future of online markeing?
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Chapter 5 E-Business: Managing the Customer Experience
Future of online marketing
▮
▮
▮
▮
More information
More innovation
The rise of customer power
The rise of the trust, the fall of the
untrustworthy
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40
Chapter 5 E-Business: Managing the Customer Experience
10. What are two concerns of online
marketing?
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Chapter 5 E-Business: Managing the Customer Experience
Future of online marketing
▮ Internet profitability
▮ Legal and ethical issues
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42
Chapter 5 E-Business: Managing the Customer Experience
Challenges in E-Business and E-Marketing
▮ Safety of online payment
• Companies have developed secure payment
systems to protect customer information
• Encryption - Encoding data for security
purposes
• Secure Sockets Layer - Technology that
encrypts information and provides
authentication
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43
Chapter 5 E-Business: Managing the Customer Experience
Challenges in E-Business and E-Marketing
▮ Privacy issues
• Customers’ top security concern is protection of
their personal information
• Through electronic signatures, parties can enter
into legal contracts online
• Electronic signatures - Electronic identification
that allows legal contracts such as home mortgages
and insurance policies to be executed online
• Cookies and spyware allow online companies
can track their customers’ shopping and
viewing habits
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44
Chapter 5 E-Business: Managing the Customer Experience
Challenges in E-Business and E-Marketing
• To reassure customers, many online merchants
have signed on with online privacy
organizations such as TRUSTe
• Companies install firewalls to protect private
corporate data
• Firewall - An electronic barrier between a
company’s internal network and the Internet that
limits access into and out of the network
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45
Chapter 5 E-Business: Managing the Customer Experience
Challenges in E-Business and E-Marketing
▮ Frauds and scams
• Complaints about Internet fraud are received by
the Internet Crime Complaint Center (IC3)
• Phishing - High-tech scam that uses authenticlooking e-mail or pop-up messages to get
unsuspecting victims to reveal personal
information
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46
Chapter 5 E-Business: Managing the Customer Experience
Challenges in E-Business and E-Marketing
• Vishing - Scam that collects personal
information through voice response systems;
stands for voice phishing
• Payment fraud
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47
Chapter 5 E-Business: Managing the Customer Experience
Challenges in E-Business and E-Marketing
▮ Site design and customer service
• Not all websites are well designed and easy to
use
• Merchandise delivery and returns pose
challenges
• Companies that have traditional stores have
more success satisfying customers than
Internet-only retailers
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48
Chapter 5 E-Business: Managing the Customer Experience
Web Business Models
▮ Corporate website - Designed to increase a
firm’s visibility, promote its offerings, and
provide information to interested parties
• Build customer goodwill
• Assist channel members in their marketing
efforts
▮ Marketing website - Main purpose is to
increase purchases by visitors
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49
Chapter 5 E-Business: Managing the Customer Experience
Proprietary B2B Transactions
▮ Web services - Internet-based systems
• Allow parties to communicate electronically
with one another regardless of the computer
operating system they use
• Rely on open source XML standards
▮ Extranets - Secure networks
• Used for e-marketing and accessible through
the firm’s website by external customers,
suppliers, or other authorized users
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50
Chapter 5 E-Business: Managing the Customer Experience
Proprietary B2B Transactions
▮ Intranets
• Secure internal networks that help companies
share information among employees
▮ Private exchanges
• A secure website at which a company and its
suppliers share all types of data related to emarketing
• Sometimes called c-business
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51
Chapter 5 E-Business: Managing the Customer Experience
E-procurement on Open Exchanges
▮ E-Procurement - Use of the Internet to
solicit bids and purchase goods and services
from suppliers
• Offers benefits to the public sector
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52
Chapter 5 E-Business: Managing the Customer Experience
Electronic Storefronts
▮ Company website that sells products to
customers
▮ Items for purchase are placed in an
electronic shopping cart
• Electronic shopping cart - File that holds
items the online shopper has chosen to buy
▮ Increased capability of smartphones
influence the growth of online shopping
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53
Chapter 5 E-Business: Managing the Customer Experience
Blogs and Podcasts
▮ Blog - An online journal for an individual or
organization
▮ Some blogs incorporate wikis, a Web page
that anyone can edit
▮ Podcast - Online audio or video file that can
be downloaded to other digital devices
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54
Chapter 5 E-Business: Managing the Customer Experience
Blogs and Podcasts
▮ Many companies encourage, employees to
start their own blogs
▮ Employee blogs present ethical issues
• Companies have strict policies about the
content of employee blogs
• Employees can be disciplined over improper
blogging
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55
Chapter 5 E-Business: Managing the Customer Experience
Promotions on the Web
▮ Banner ad - Strip message placed in highvisibility areas of frequently visited
websites
▮ Pop-up ad - Separate window that pops up
with an advertising message
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56
Chapter 5 E-Business: Managing the Customer Experience
Promotions on the Web
▮ Preroll video ad - Marketing messages that
play before an online video
▮ Widget - Tiny interactive applications that
Internet users can copy and add to their
own pages to play music, video, or slide
shows
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57
Chapter 5 E-Business: Managing the Customer Experience
Promotions on the Web
▮ Search marketing - Paying search engines
a fee to make sure that the company’s listing
appears toward the top of the search results
▮ Companies use online coupons to promote
their products
• Example: Aeropostale
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58