UNIT II
Session 11
Digital Property & Emerging Issues
Digital Property
• Patents : Invention and the right to reproduce or manufacture
• Copy rights: Right to express or publish an idea
• Trademark: Intellectual property [words or images] used to identify products/services
• Licenses: Contractual agreements between parties
• Trade secrets: Formulas, Market data, Algorithms, Programs, Codes and
Patents
• Has to be registered with an appropriate government body
• Early use was for industrial/mechanical purposes only
• In 1998 was extended to a computer program also
• Recently has been expanded to include any method of doing business
• Public access to innovation is given after expiry of a given time limit
Copyright
• Traditionally books, film and recordings were copyrighted
• Doctrine of fair use
• Doctrine of first sale
• World Intellectual Property Organization’s Copyright Treaty
• WIPO Performances and Phonograms Treaty
Trademarks
• Has to be registered with the government
• Has to be as distinctive as possible
• Dilution of trademark cannot be allowed
• Used in internet naming system
• Cybersquatting
• Metatags (html statements describing a website)
Others
• Licenses: Shrinkwrap and Clickwrap licenses
• Trade secrets: Stored online or in storage devices; Blocking access to internet; Non-competition
or Nondisclosure agreements
• Data ownership: Protective
Emerging Issues
• Online Governance & Internet Corporation for Assigned Names and Numbers (ICANN)
• Jurisdiction – Virtual Magistrate; WIPO Arbitration and Mediation Center; EU; UN
Commission of International Trade Law
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Session 12
Software Piracy
Session 13
E Marketing Strategies & Marketing Knowledge Management
Data Driven Strategy
• Data is the bedrock on which any marketing strategy is built
• Clutter of available data is confusing the strategists
• In 2006, 1.5 billion dollars was spent on tracking consumers online behavior alone
• Sources  Filtered  Stored  Marketing Knowledge
Marketing Knowledge Management
Knowledge management is the creation, use and dissemination of knowledge
Data  Information  Knowledge
Marketing knowledge is the digitalized “collective memory” of present and past stakeholders
Sources of Data
• Internal Records
– Sales data (online as well as inputted)
– Customer behavior
• Secondary Data
– Publicly generated data
– Privately generated data
– Competitive Intelligence
– Information Quality
• Primary Data
Primary Data
• Primary research
– Steps in research
• Internet based research approaches
– Creative test
– Customer satisfaction
– Product development
– Online experiments
– Focus groups
– Online observation
– Online or web surveys
Marketing Databases and Warehouse
• Product database
• Transaction database
• Customer database and
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• Data warehouse
Data Analysis and Distribution
• Data mining
• Customer profiling
• RFM Analysis (Recency, Frequency & Monetary value)
Session 14
Consumer Behavior and E Marketing
Non Users
• Net evaders
• Net dropouts
• The unconnected
• Intermittent users
Factors affecting Consumer Behavior
• Different stimuli (marketing communication messages and cultural, political, economic &
technological factors)
• Characteristics (individual buyer characteristics like income levels, personality, etc coupled
with psychological and social aspects)
• Processes (situational and product
Technological Factors
• Broadband
–Web design for the slowest users
–Web design for the fastest users
–Web design for fast & slow versions
• Availability of a variety of digital devices
Social & Cultural Factors
• Growing power and sophistication of consumers
• Consumer advisory network
• Information overload
• Multitasking reduces attention span
• Disappearing boundaries between house and office
• Anytime, anywhere convenience
• Addiction
• Self service
• Privacy, data security and online crime
Individual characteristics
• Individual differences(demographic, attitude towards tech & online skills/experience)
• Consumer resources (monetary, time and energy)
• Behavior exhibited at internet exchange
• Outcome (connect, create, enjoy, learn and trade)
Session 15
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Consumers in the 21st Century
Session 16
Market Segmentation & Targeting in the context of E Marketing
Segmentation & Targeting
Segmentation is the process of aggregating individuals or businesses along similar characteristics
that pertain to the use, consumption, or benefits of a product/service
Targeting is the process of selecting the segment that is most attractive to a firm
Types of Markets
• Business market – Marketing of products to businesses, governments and institutions
for use in business operations
• Government market – Qualification and rule oriented
• Consumer market – Most of E Marketing is dedicated to the study of this market
B2B – B2C – B2G – C2C
Segmentation bases and variables
• Demographic – Age, income, gender, etc
• Geographic - City, country, regions, etc
• Psychographic – Activities, interest, opinions, etc
• Behavior - Benefits sought, usage, etc
• Combinations (geodemographics)
Geographic segmentation
• Not important for online firms
• Heavily dependent on a firms distribution strength
• Language issues
• Local marketing
Demographic segmentation
• Millennials
• Children
• Ethnic groups
• Influentials or Opinion leaders
Psychographic segmentation
• Interest communities
• Personality, lifestyles, etc
• Attitudes and behavior
• Attitude towards technology
– Forrester’s 10 consumer technographics segments in the USA
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Behavior segmentation
• Benefits desired
• Product usage
– Light
– Medium
– Heavy
Targeting online customers
• Niche marketing
• Micro marketing / individualized targeting
Session 17
Differentiation and Positioning In E Marketing
Differentiation
It’s the process of adding a set of meaningful and valued differences to distinguish the
company’s offering from that of the competitor’s offering
Focus of differentiation is on the product or service on offer
Dimensions of Differentiation
• Product Differentiation
– Customization
– Bundling
– Packaging
• Service Differentiation
– 24 X 7
– Online convenience (tracking, banking, trading, etc)
– Delivery processes
• Personnel Differentiation
– Highly personalized
– Automated or self service
• Channel Differentiation
– Traditional firms
– Online firms (music and software)
• Image Differentiation
– Unique customer experience
– Unique customer perception
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Differentiation Strategies
• Site environment / Atmospherics
– Ambience (positive environment)
– Easy to download & navigate
– Accurate information
– Clearly shows & describes the product or service
• Build trust
– Privacy policy
– Safe & encrypted payment process
– Humanized after sales service
– Rating of buyers or sellers especially in C2C transactions
• Efficient and timely order processing
– Automated emails
– Very effective to build customer loyalty
• Pricing
– Discounts
– Low pricing
– Free content (ad support)
– Comparative formats
• Customer relationship management
– Customer driven personalization
– Repeat orders
– Future product/service reminders
• Invite user generated content
– Customer comments or recommendations
– Links to customer blogs
– Be responsive to the customer feedback
Strategies for Positioning
Positioning is the process of creating a desired image and a position is the result of customer
perspective
Firms can position a brand, a CEO, the firm itself, or individual product
Bases for Positioning
• Product or service attributes positioning
• Technology positioning
• Benefits positioning
• User category positioning
• Competitor positioning
• Integrator positioning
– Repositioning strategies
Session 18
Repositioning Strategies
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UNIT III
Session 19
E Marketing Management & Creating Customer Value Online
Session 20 & 21
Product Benefits; E Marketing enhanced product development & New product strategies
Product includes goods, services, ideas, people and places
Firms offering these products can capitalize on internet properties to enhance their sale
Some times products unique to internet are created which cannot be used without internet
What is Customer Value?
• It’s the entire product experience
• It’s the mental beliefs and attitudes held by customers
• It’s the customers expectations
• Its applicable at all price levels
Product Benefits
• Attributes (how these solve the customers problems or meet their needs)
• Branding / Brand Equity
– Branding decisions {using existing brands; creating new brands for internet
marketing; & cobranding}
• Support Services
• Labeling
E Marketing enhanced product development
• Customer co-design
– Software development
– Product design
– Literature or books
– Blogs and feeds
New Product Strategies for E Marketing
• Discontinuous innovations
• New product line (existing brand is used to create a new product)
• Additions to existing product lines
• Improvement/revision of existing products
• Repositioned products
• Me-too lower-cost products
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Session 22
Internet Pricing Strategies; Buyer & Seller Perspectives
Pricing
• Barter
• Fixed pricing
• Dynamic pricing
• Price transparency
Price is the sum of all the values (money, time, energy, etc) that buyers exchange for having or
using a product or service
Buyers Perspective
• Real Costs
– Generally the real cost is not revealed till the end
– Hidden costs
– Time consumed in searching and in waiting for delivery
• Buyer control
– Reverse auction (B2B & B2G)
– The winners curse
ADVANTAGES ???
Sellers Perspective
• Internal Factors
– Pricing objectives (profit, market, or competitor)
– Marketing mix strategy (online & offline)
– IT & Upward pressures on costs (online customer service, distribution, affiliate programs, site
maintenance, Customer Acquisition Cost)
– IT & Downward pressure on costs (self service, just in time delivery, overheads,
• External Factors
– Market structure
– Efficient markets (low prices, high price elasticity, frequent price changes, smaller price
changes, & narrow price dispersion)
– Inefficient markets (price dispersion, switching costs, etc.)
– Payment options
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Session 23
Pricing Strategies
Fixed Pricing
• Sellers set the price
• Everyone pays the same
• Discounts are the same for the same levels for all
• The 2 fixed pricing strategies used online are
– Price leadership
– Promotional pricing
Dynamic Pricing
• Different prices to different customers
• Yield management is inventory linked pricing
• This can be initiated by both seller as well as buyers
• Two strategies for dynamic pricing are
– Segmented pricing (geographic & value
Renting
Session 24
Google Vs VideoEgg
Comparative Case Study
Session 25
Types of Intermediaries; Length of Distribution Channels
Online Intermediaries
• Wholesalers
• Retailers
• Brokers
• Agents
• Content sponsorship
• Infomediary
Intermediary Models
• Brokerage model
– Transaction fee; listing fee;
– Online exchange
– Online auction
• Agent model ( Sellers & Buyers agents)
• Online retailing (Tangible or Digital)
– Direct distribution
Length of Distribution Channels
• Internet was supposed to Disintermediatize
• Intermediaries are important in most online firms
• Due to less intermediaries cost was supposed to go down
• Using intermediaries allow firms to focus on core strengths
• New online intermediaries were seen
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Functions of a distribution channel
• Transactional functions
– Contact with buyers
– Marketing communication
– Matching products to customers needs
– Price negotiation
– Process transactions
• Logistical functions
– Physical distribution
– Aggregating product
– Third party logistics
– The last mile problem
• Facilitating functions
– Market research
– Financing
– Secure electronic transaction
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Session 26 & 27
Group Presentation
Channel Management Issues & Distribution Channel Metrics
Online Distribution Channel???
“A group of independent firms that work together to transfer product and information
from the supplier and the customer.”
Channel decisions are among the most important decisions that management faces and
will directly affect every other marketing decision.
Three perspectives to distribution channels.
 By type of intermediary
 By function performed in the channel
 By flow of products, information and services
Channel Objectives
Marketing channels exist to create utility for customers
Place utility—availability of a product or service in a location that is convenient
to a potential customer
Time utility—availability of a product or service when desired by a customer
Form utility—availability of the product processed, prepared, in proper condition
and/or ready to use
Information utility—availability of answers to questions and general
communication about useful product features and benefits
Logistical Function
The physical distribution such as transportation and storing inventory, often
outsourced to third party logistics providers.
Example: UPS & FedeEx are the major distributors and even offer packaging that is specific to
products their clients sell. It is also beneficial for firms to outsource their entire order processes,
to ensure timely delivery of stock.
Physical distribution
Aggregating products (category killers)
Third-Party logistics (outsourced logistics)
Facilitating Functions
Include marketing research about buyers
 Accurate assessment of the size and characteristics of the target audience helps
manufacturers with product development and marketing communications.
Example: MEDIAMETRIX.com produces a site interaction report that details to what extent a
site shares audience with another site, showing exclusive and duplicated audience.
Financing of purchases.
 Financing purchases is an important function, intermediaries try to do everything possible
to make it easy for customers to pay in order to close the sale.
-Secure Electronic Transactions
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Supply Chain Definitions
Supply chain
Includes all the firms that perform support activities by generating raw materials,
converting them into components or finished products, and making them available
to customers
Logistics
The management process that integrates the activities of all companies to ensure
an efficient flow of goods through the supply chain
Physical Distribution, Supply Chains, and Logistics Management
Order processing
Warehousing
Inventory management
Transportation
The System Perspective
- Flow of products, information and finance
- Three ways to define the scope of a channel:
Business-to-Consumer
Business to consumer (B2C,sometimes called Business-to-customer)describes activities
of businesses serving end consumers with products and/or services
An example of a B2C transaction would be a person buying a pair of shoes from a retailer
B2C Market
•
U.S consumers spent $136 billion online during 2007
•
U.S Department of commerce also measures online retailing estimating it at 136.4
billion, 19% growth from 2006
•
Online retailing continues to grow
•
Online research about products resulted in $471 billion of off-line purchases
Global Study of online retailers
High Reach strategy for accumulating large number of customers with cost effective
conversion rates
A niche strategy with narrow focus on a particular product or service category
Performance metrics
ROI
Customer Satisfaction
Customer Acquisition Costs
Conversion Rates
Average Order Values
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Additional Measures
Which affiliations deliver the most users?
How long do users stay at a website?
How is buyer behavior different from those who do not buy?
How frequently are visitors converted to customers?
B2B E-MARKETING
 Business-to-business (B2B) e-marketing Use of the Internet for business transactions
between organizations.
 Accounts for 90 percent of all e-business activity.
 Accounts for 10 percent of all B2B transactions.
 Increases efficiency of business transactions, which typically involve more steps than
consumer transactions.
 Metrics in the B2b + in B2C markets
 B2B metrics may include:
 Time from order to delivery.
 Order fill levels
 Impossible to pinpoint an exact figure
 The Internet is more efficient for firms to order from each other
• Electronic data interchange(EDI)—computer-to-computer exchanges of price quotations,
purchase orders, invoices, and other sales information between buyers and sellers.
Extranets—secure networks used for e-marketing and accessible through the firm’s Web site by
external customers, suppliers, or other authorized users.
• Private exchanges—secure Web site at which a company and its suppliers share all types of
data related to e-marketing, from product design through delivery of orders.
• Electronic exchanges—online marketplaces that bring buyers and sellers together in one
electronic marketplace and cater to a specific industry’s needs.
Channel Management Issues
Definition: Channel management, is a process by which a company creates formalized
programs for selling and servicing customers within a specific channel.
Customizing a channel management program includes:
1.
Goals. Define the specific goals you have for each channel segment. Consider your goals
for the channel as a whole as well as individual accounts. And, remember to consider your goals
for both acquisition and retention.
2. Policies. Construct well-defined polices for administering the accounts within this
channel. Be sure to keep the unique characteristics of each segment in mind when
defining policies for account set up, order management, product fulfillment, etc.
3. Products. Identify which products in your offering are most suited for each segment and
create appropriate messaging. Also, determine where your upsell opportunities lie.
4. Sales/Marketing Programs. Design support programs for your channel that meet
THEIR needs, not what your idea of their needs are.
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To do this, you should start by asking your customers within this
segment, “how can we best support you in the selling and marketing of our products?” That
being said, the standard considerations are product training, co-op advertising, seasonal
promotions, and merchandising.
Distribution Channel Metrics:
Two Strategies are particularly effective online
1. High reach strategy of accumulating large numbers of customers with cost effective
conversion rates for high frequency purchases of low-margin products and services such
as CDs and books
(Amazon. com)
2. A niche strategy with narrows focus on a particular product or service category, such as
luxury items or apparel ( Dell. com)
Performance metrics include:
ROI
Customer Satisfaction levels
Customer Acquisition Costs
Conversion Rates
Average order values
Channel Management and Power
Once a channel structure is established , its viability requires a certain measure of coordination,
communication , and control to avoid conflict among its members.
A powerful channel member must emerge as leader and institute these required measures.
Buyer power increased significantly at the expense of supplier.
EDI is particularly effective for establishing structural relationalship between businesses.
EDI is based on three variables
1. Openness of the system
2.
The transport method
( internet or non internet)
2. The type of technology used for implementation.
Openness
Transport
Technology
Proprietary
Non Internet
Traditional EDI
Open system
Non Internet
Standards based EDI
Proprietary
Internet
Application program interface (API)
Open system
Internet
Open buying on internet (OBI)
Open system
Internet
Extensible mark up language (XML)
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Review Questions
1. What is a distribution channel?
A distribution channel is a group of interdependent firms that work together to transfer
product and information from the supplier to the consumer.
2. What are the types of intermediaries in a distribution channel?
The types of intermediaries in a distribution channel are wholesalers, retailers, brokers,
and agents.
3. What are the functions of a distribution channel?
The functions of a distribution channel are transactional, logistical, and facilitating.
4. What is the systems approach to distribution channels?
The systems approach views the channel as a unified system of interdependent
organizations. Intermediaries work together to build value as products proceed through
the channel to the consumer.
5. What is supply chain management (SCM)?
Supply chain management (SCM) refers to the coordination of flows along the value
chain from manufacturer to end-user.
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Session 28
E Marketing Communication & Integrated Marketing Communication
E Marketing Communication
• More challenging to capture & hold users attention
• Users are in control
• Creation of brand image in the hands of the customers (comments and postings)
• Focus is on providing relevant, interesting info when & where the target customer wants
Integrated Marketing Communication
• It’s a cross functional process of planning, executing, and monitoring brand communications
designed to profitably acquire, retain and grow customers
• All kinds of contact coupled with product experience, pricing levels and distribution channel
experience add to brand image
• High value customers can be
IMC
• Strategic focus (target markets, brand, competitors, and internal/external factors)
• Use more than one advertising & sales promotion by selecting relevant MarCom tools
• Include two way as well as one way communication
• Focus on results or ends
Models which guide marketers to select MarCom tools to meet IMC Goals
• AIDA Model
– Awareness
– Interest
– Desire
– Action
• Hierarchy of effects Model
– Think
– Feel
– Do
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