CHAPTER 3
MARKETING IN THE INTERNET AGE
Looking Ahead—CHAPTER OBJECTIVES
1. Identify the major forces shaping the Internet age.
1. Explain how companies have responded to the Internet and other powerful
technologies with e-business strategies, and explain how these strategies have
resulted in benefits to both buyers and sellers.
3. Describe the four major e-commerce domains.
4. Discuss how companies conduct e-commerce to profitably deliver more
value to customers.
5. Summarize the promise and challenges that e-commerce presents for the future.
CHAPTER OVERVIEW
Recent technological advances, including the widespread use of the Internet, have created
what some called the new economy. This chapter visits the Internet age and all its
ramifications. The reader learns that to be successful in this Internet age new applications
and paradigms must be tried. The applications and paradigms must be formulated with
consideration of the major forces that are shaping the Internet age. The world economy is
shaped by technology, globalization, environmentalism, et cetera. The Internet age is
shaped by digitalization and connectivity, the explosion of the Internet, new types of
intermediaries, and customization and customerization. Each of these new forces is
explored.
Conducting business in the Internet age will call for a new model for marketing strategy
and practice. In essence, a new industrial revolution is underway. Some strategists even
envision a day when all buying and selling will involve direct electronic connections
between companies and their customers. The new model will fundamentally change
customers’ notions of convenience, speed, price, product information, and service. New
benefits to buyers and sellers will emerge and even small e-marketers will have ready
access to global markets.
To illustrate how the Internet age has developed, the chapter focuses on four major
Internet domains—B2C (business to customer), B2B (business to business), C2C
(consumers to consumers), and C2B (consumers to businesses). The reader will notice
that companies of all types are now engaged in e-commerce. Brick-and-mortar (brickonly), click-only, and click-and-mortar marketers are illustrated so various strategies and
successes can be identified. Few companies today have not considered moving to the Net
to conduct business. The methods selected to do this simply did not exist only a few years
ago. The chapter demonstrates that by creating a Web site, placing ads online, setting up
or participating in Web communities, or using online e-mail or Webcasting, a firm can
not only expand business, but reach out to the global marketplace.
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E-commerce continues to offer great promise for the future. Its most ardent apostles still
envision a time when the Internet and e-commerce will replace magazines, newspapers,
and even stores as sources for information and buying. To get to this place, however,
certain challenges must be met. Limited consumer exposure and buying, skewed user
demographics and psychographics, chaos and clutter, security, and ethical concerns are
chief among the challenges. Despite these challenges, companies large and small are
quickly integrating online marketing into their marketing strategies and mixes.
CHAPTER OUTLINE
1. Introduction
a. The chapter begins with the story of Canadian Tire.
b. The Canadian Tire Online service is one of the top three e-commerce sites in
Canada.
c. Canadian Tire is further developing the website’s capabilities by including a line of
products only available online.
d. Canadian Tire’s unique eFLYER allows subscribers to shop directly from their
eFLYER.
e. Recent technological advances, including the widespread use of the Internet, have
created what some call a new economy.
1). Old strategies (mass marketing, product standardization, media advertising,
store retailing, and others) were well suited to the old economy and can still be
used today.
2). However, new strategies are called for.
*****Use Extended PowerPoint 3-3 Here*****
2. Major Forces Shaping the Internet Age
a. Many forces are playing a major role in reshaping the world economy, including
technology, globalization, environmentalism, and others.
b. Four specific forces underlie the Internet age:
1). Digitalization and connectivity.
2). The Internet explosion.
3). New types of intermediaries.
4). Customization and customerization.
*****Use Chapter Objective #1 Here; Use Figure 3-1 Here; Use Extended PowerPoint
3-4 Here; Use Express PowerPoint 3-3 Here*****
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Digitalization and Connectivity
c. Appliances and systems of the past operated via analogue information.
1). Analogue information is continuously variable in response to physical stimuli.
d. Today, a growing number of appliances and systems operate on digital information,
which comes in streams of zeros and ones, or bits.
e. Much of the world’s business today is carried out over networks that connect
people and companies.
1). Intranets are networks that connect people within a company to each other and
to the company network.
2). Extranets connect a company with its suppliers and distributors.
3). The Internet is a vast public web of computer networks that connects users of
all types all around the world to each other and to an amazingly large
information repository.
a). The Internet is a huge “information highway.”
*****Use Key Terms Intranets, Extranets, and Internet Here; Use Chapter Objective
#1 Here; Use Extended PowerPoint 3-5 Here; Use Express PowerPoint 3-3
Here *****
The Internet Explosion
f. With the creation of the World Wide Web and Web browsers in the 1990s, the
Internet was transformed from a mere communication tool into a certifiably
revolutionary technology.
1). By the end of the twentieth century, users are approximately 400 million
worldwide.
2). Penetration in Canada in early 2001 was 69 percent of the population 18 years
of age and older.
3). Though the dot-com crash led to cutbacks in technology spending, the number
of Web surfers worldwide is expected to approach 1 billion by 2004.
4). This explosive worldwide growth in Internet usage forms the heart of the new
economy.
5). Companies must adopt Internet technology or risk being left behind.
*****Use Chapter Objective #1 Here; Use Extended PowerPoint 3-6 Here; Use
Express PowerPoint 3-3 Here*****
New Types of Intermediaries
g. New companies—called dot-coms—have been created with hopes of striking gold
in the new economy marketplace.
1). With the success of the new companies, store-based retailers began to doubt
their strategies and futures.
2). They feared, and rightly so, being disintermediated by the new e-tailers—being
cut-out—by this new type of intermediary.
a). The formation of new types of intermediaries and new forms of channel
relationships caused existing firms to reexamine how they served their
markets.
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b). At first, brick-and-mortar firms such as Canadian Tire and IBM dragged
their feet, hoping that the assaulting click-only firms would falter or
disappear.
c). They then wised up and started their own online sales channels.
*****Use Chapter Objective #1 Here; Use Discussing the Issues #1 Here; Use
Extended PowerPoint 3-7 Here; Use Express PowerPoint 3-3 Here*****
Customization and Customerization
h. The old economy revolved around manufacturing companies. The new economy
revolves around information businesses.
1). Information has the advantages of being easy to differentiate, customize,
personalize, and dispatch at incredible speed over networks.
2). Customization differs from customerization.
a). Customization involves taking the initiative to customize the market
offering.
b). Customerization occurs when the company leaves it to the individual
customers to design the offering.
1]. Companies following this design have become facilitators and their
customers have moved from being customers to being prosumers.
*****Use Key Term customerization Here; Use Chapter Objective #1 Here; Use
Discussing the Issues #2 Here; Use Extended PowerPoint 3-8 Here; Use Express
PowerPoint 3-3 Here*****
3. Marketing Strategy in the Internet age
a. Conducting business in the Internet age will call for a new model for marketing
strategy and practice.
1). The new model will fundamentally change customers’ notions of convenience,
speed, price, product information, and service.
2). Today’s economy requires a mixture of old economy and new economy
thinking and action.
3). Marketing should play a lead role in shaping new company strategy.
e-Business, e-Commerce, and e-Marketing in the Internet age
b. One of the mainstays of the Internet age is e-business which involves the use of
electronic platforms—intranets, extranets, and the Internet—to conduct a
company’s business.
1). Companies such as Cisco, Microsoft, and Oracle run almost entirely
as e-businesses.
2). E-commerce involves buying and selling processes supported by electronic
means, primarily the Internet, and is more specific than e-business.
3). E-markets are “marketspaces,” rather than physical “marketplaces.”
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4). E-commerce includes e-marketing and e-purchasing (e-procurement).
a). E-marketing is the “e-selling” side of e-commerce. It consists of company
efforts to communicate about, promote, and sell products and services over
the Internet.
b). E-purchasing is the “e-buying” side of e-commerce. It consists of
companies purchasing goods, services, and information from online
suppliers.
*****Use Key Terms e-business, e-commerce, and e-marketing Here: Use Chapter
Objective #2 Here; Use Extended PowerPoint 3-9 Here; Use Express PowerPoint
3-4 Here*****
Benefits to Buyers
c. Internet buying benefits final buyers and business buyers in many ways:
1). It is convenient.
2). It is easy and private.
3). Through the Internet, often buyers are provided with greater product access
and selection.
4). Buyers have access to a wealth of comparative information.
5). Online buying is interactive and immediate.
*****Use Chapter Objective #2 Here; Use Discussing the Issues #3 Here; Use
Extended PowerPoint 3-10 Here; Use Express PowerPoint 3-5 Here*****
Benefits to Sellers
d. E-commerce yields many benefits to sellers:
1). The Internet is a powerful tool for customer relationship building.
2). Reducing costs and increasing speed and efficiency are also advantages of
using the Internet and electronic channels.
3). E-marketing offers greater flexibility, allowing the marketer to make ongoing
adjustments to its offers and programs.
4). The Internet is truly a global medium that allows buyers and sellers to click
from one country to another in seconds.
*****Use Chapter Objective #2 Here; Use Discussing the Issues #3 Here; Use
Extended Power Point 3-11 Here; Use Express PowerPoint 3-5 Here; Discuss
You Are Here Here*****
4. e-Commerce Domains
a. The four major Internet domains include B2C (business to consumer), B2B
(business to business), C2C (consumer to consumer), and C2B (consumer to
business).
*****Use Chapter Objective #3 Here; Use Figure 3-2 Here; Use Express PowerPoint
3-6 Here*****
B2C (Business to Consumer)
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b. B2C (business-to-consumer) e-commerce is the online selling of goods and
services of goods and services to final consumers.
1). Consumer buying online continues to grow at a healthy rate. Estimates indicate
that consumer buying in Canada will reach $18 billion by 2004.
2). The largest categories are travel services, clothing, computer hardware and
software to name a few.
3). The cybercustomer is no longer a pasty-faced nerd. Instead, the cyberspace
population is becoming more mainstream and diverse. Almost all
socioeconomic groups are represented.
4). The fastest growing occupational group to have home Internet access is bluecollar workers (increasing 52 percent in just one year).
5). Diversity allows for numerous e-commerce targeting opportunities. Kids are
especially attractive. 74% of Canadians between the age of 12 and 18 have
access to the Internet.
6). Although Internet users are still younger on average than the population as a
whole, 48% of consumers aged 45-54 and 34% of consumers aged 55-64 have
Internet access.
7). Internet research companies now segment the increasingly diverse Web
population by needs and interests.
8). Internet consumers differ from traditional offline consumers in their
approaches to buying and in their responses to marketing.
9). Whereas traditional marketing targets a somewhat passive audience,
e-marketing targets people who actively select which Web sites they will visit
and what marketing information they will receive about which products and
services and under what conditions.
10). A Statistics Canada survey showed that only 18.4% of Internet users had
ordered and paid for goods online. Security concerns and privacy issues were
the reasons for the low percentage.
*****Use Key Term B2C (business-to-consumer) e-commerce Here; Use Chapter
Objective #3 Here; Use Figure 3-2 Here; Use Extended PowerPoint 3-12 Here;
Use Express PowerPoint 3-6 Here*****
B2B (Business to Business)
c. Most major business-to-business marketers now offer product information,
customer purchasing, and customer support services online
1). A survey of 50 major Canadian companies found that 90% of those companies
surveyed would have some Internet-based sales in 2002, with 36% indicating
that their online sales would range between 21% and 50% of total sales.
2). Much B2B e-commerce takes place in open trading networks—huge
e-marketspaces in which buyers and sellers find each other online, share
information, and complete transactions efficiently.
3). An estimated 93 percent of all B2B e-commerce is conducted through private
sites.
4). Increasingly, online sellers are selling up their own private trading networks
(PTNs). Private trading networks link a particular seller with its own trading
partners. These networks give the seller greater control over product
presentation and allow for deeper relationships.
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*****Use Key Terms B2B (business-to-business) e-commerce, open trading
networks, and private trading networks Here; Use Chapter Objective #3 Here;
Use Figure 3-2 Here; Use Extended PowerPoint 3-13 Here; Use Express
PowerPoint 3-6 Here*****
C2C (Consumer to Consumer)
d. C2C (consumer-to-consumer) e-commerce and communication occurs on the
Web between interested parties over a wide range of products and subjects.
1). eBay’s Web site hosts more than two million auctions each month for items in
more than one thousand categories.
2). C2C involves interchanges of information through forums and Internet
newsgroups that appeal to specific special-interest groups.
a). Forums are discussion groups located on commercial online services.
b). Newsgroups are the Internet version of forums.
3). C2C means that online visitors don’t just consume product information—
increasingly, they create it.
*****Use Key Term C2C (consumer-to-consumer) e-commerce Here; Use Chapter
Objective #3 Here; Use Figure 3-2 Here; Use Extended PowerPoint 3-14 Here;
Use Express PowerPoint 3-6 Here*****
C2B (Consumer to Business)
e. C2B (consumer-to-business) e-commerce occurs when consumers search out
sellers, learn about their offers and initiate purchases, sometimes even driving
transaction terms.
1). Consumers are searching for and receiving information about companies.
2). Consumers use the Web to drive transactions with businesses.
*****Use Key Term C2B (consumer-to-business) e-commerce Here; Use Chapter
Objective #3 Here; Use Figure 3-2 Here; Use Extended PowerPoint 3-15 Here;
Use Express PowerPoint 3-6 Here*****
5. Conducting e-Commerce
a. Companies of all types are now engaged in e-commerce.
*****Use Chapter Objective #4 Here; Use Figure 3-3 Here; Use Express PowerPoint
3-7 Here*****
Click-Only versus Click-and-Mortar e-Marketers
b. Click-only .coms operate only online without any brick-and-mortar market
presence.
1). Most traditional brick-and-mortar companies have now added e-marketing
operations, transforming themselves into click-and-mortar competitors.
2). Click-only companies come in many shapes and sizes. Examples include:
a). E-tailers.
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b). Search engines and portals.
c). Internet service providers (ISPs).
d). Transaction sites.
e). Content sites.
f). Enabler sites.
*****Use Key Term click-only companies Here; Use Extended PowerPoint 3-16
Here; Use Express PowerPoint 3-7 Here*****
c. Not all dot-coms have been successful. Reasons for failure include:
1). Failure to research or plan.
2). Reliance on spin and hype instead of sound marketing strategies.
3). Lavish spending offline to establish brand identities.
4). Too much attention to gathering new customers instead of building brand
loyalty.
5). Rushing ahead with poorly designed Web sites.
6). Lack of well-designed distribution systems.
7). Due to intense competition, prices and margins were often very low.
d. Most firms still do not make money on the Net.
1). New revenue and profit models must be devised.
*****Use Chapter Objective #4 Here; Use Table 3-1 Here; Use Extended PowerPoint
3-18 Here; Use Express PowerPoint 3-8 Here*****
e. Many established companies have become click-and-mortar companies by
combining both forms of business operation.
1). Many resisted the change because of the potential for channel conflict.
2). There was always a danger of cannibalization.
3). Click-and-mortar companies have begun to be successful by combining the
best of both model forms and adapting to the new business environment.
A good example would be Staples/Business Depot office supply company.
4). Despite potential channel conflict issues, many click-and-mortar companies,
such as Canadian Tire, Wal-Mart and Staples/Business Depot are doing better
than click-only operations.
5). Advantages seem to be:
a). Trusted brand names and greater financial resources.
b). Large customer bases.
c). Industry knowledge and experience.
d). Good relationships with key suppliers.
e). Ability to offer customers more options.
f). Buy online and return unwanted merchandise to local stores.
*****Use Key Term click-and-mortar companies Here; Use Chapter Objective #4
Here; Use Extended PowerPoint 3-17 Here; Use Express PowerPoint 3-7 Here;
Discuss You Are Here Here*****
Setting Up an e-Marketing Presence
f. All companies need to consider moving into e-marketing. Four methods for doing
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so include:
1). Creating a Web site.
2). Placing ads online.
3). Setting up or participating in Web communities.
4). Using online e-mail or Webcasting.
*****Use Figure 3-4 Here; Use Discussing the Issues #4 Here *****
g. For most companies, the first step in conducting e-marketing is to create a Web
site. Types of Web sites include:
1). Corporate Web site—the most basic type. These sites are designed to build
customer goodwill and to supplement other sales channels, rather than to sell
the company’s products directly.
a). They generally provide information about the company’s history, its
mission and philosophy, and the products and services that it offers.
b). They often provide an avenue for asking questions or making comments.
2). Marketing Web site—these sites engage consumers in an interaction that will
move them closer to a direct purchase or other marketing outcome.
a). Companies often aggressively promote these sites in other media forms
such as magazines.
b). This form is also used effectively by B2B marketers.
*****Use Key Terms corporate Web site and marketing Web site Here; Use
Extended Power Point 3-19 Here; Use Express PowerPoint 3-9 Here*****
h. Creating a Web site is one thing; getting people to visit the site is another.
1). The key is to create enough value and excitement to get consumers to come to
the site, stick around, and come back again.
2). A key challenge is designing a Web site that is attractive on first view and
interesting enough to encourage repeat visits.
3). The 7Cs of effective Web site design are:
a). Context: the site’s layout and design.
b). Content: the text, pictures, sound, and video on the Web site.
c). Community: the ways that the site enables user-to-user communication.
d). Customization: the site’s ability to tailor itself to different users or to allow
the users to personalize the site.
e). Communication: the ways the site enables site-to-user, user-to-site, or
two-way communication.
f). Connection: the degree to which the site is linked to other sites.
g). Commerce: the site’s ability to enable commercial transactions.
4). Ultimately, it’s the value of the site’s content that will attract visitors, get them
to stay longer, and bring them back for more.
5). From time to time, a company needs to reassess its Web site’s attractiveness
and usefulness. Methods include:
a). Invite the opinion of site design experts.
b). Have users critique the site.
c). Track hits, time spent on the site, frequently visited pages, and the sequence
of pages the customer visits.
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d). Conduct research surveys such as telephone interviews.
*****Use Discussing the Issues #5 Here; Use Extended PowerPoint 3-20 and 3-21
Here; Use Express PowerPoint 3-10 Here*****
i. E-marketers can use online advertising to build their Internet brands or to attract
visitors to their Web sites. Forms include:
1). Banner ads and tickers (ads that move across the screen).
2). Skyscrapers (tall, skinny ads at the side of a Web page).
3). Rectangles (boxes that are much larger than a banner).
4). Interstitials (online ads that pop up between changes on a Web site).
5). Browser ads (sponsors pay viewers to watch them).
6). Content sponsorships (sponsoring special content on various Web sites).
7). Microsites (limited areas on the Web managed and paid for by an external
company).
*****Use Key Term online advertising Here; Use Extended PowerPoint 3-22
Here; Use Express PowerPoint 3-11 Here*****
j. Viral marketing is the Internet version of word-of-mouth marketing. It involves
creating an e-mail message or other marketing event that is so infectious that
customers will want to pass it along to their friends. It can be very inexpensive.
1). This form can work well with B2C or B2B customers.
2). Consumers tend to respond to and believe this form more than normal
business communications.
*****Use Key Term viral marketing Here; Use Extended PowerPoint 3-23 Here; Use
Express PowerPoint 3-11 Here*****
k. Although online advertising serves a useful purpose, the Internet will not soon rival
the major television and print media.
1). Online advertising expenditures still represent only a small fraction of overall
advertising media expenditures.
2). The drop-off in Web advertising has caused hard times for companies that rely
on it for profits.
3). Some industry insiders remain optimistic about the future of online advertising.
*****Use New Directions 3-1 Here*****
l. The popularity of forums and newsgroups has resulted in a rash of commercially
sponsored Web sites called Web communities, which take advantage of the
C2C properties of the Internet.
1). Visitors to Internet neighborhoods develop a strong sense of community.
2). Cyberhood consumers visit frequently and stay online longer, increasing the
chance of meaningful exposure to the advertiser’s message.
3). These communities can be social or work related.
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****Use Key Term Web communities Here; Use Extended PowerPoint 3-24 Here;
Use Express PowerPoint 3-11 Here****
m. E-mail has exploded onto the scene as an important e-marketing tool.
1). Companies may be spending as much as $7.3 billion annually on e-mail
marketing by 2005.
2). This form of marketing is becoming a mainstay with B2C and B2B marketers.
*****Use New Directions 3-2 Here*****
n. Companies can sign on with any number of Webcasting services which
automatically download customized information to recipients’ computers.
1). Also known as “push” programming, Webcasting affords an attractive channel
through which online marketers can deliver their Internet advertising or other
information content.
2). Marketers must be careful to not overload customers with unwanted junk
e-mail.
3). To avoid this tendency, permission-based marketing allows the customer to
opt-in or opt-out of e-mail promotions.
*****Use Key Term Webcasting Here; Use Chapter Objective #4 Here; Use
Discussing the Issues #5 Here; Use Extended PowerPoint 3-25 Here; Use
Express PowerPoint 3-11 Here*****
6. The Promise and Challenges of e-Commerce
a. E-commerce continues to offer great promise for the future.
1). However, dot-com fever has cooled.
2). For many companies, online marketing will remain just one important
approach to the marketplace that works alongside other approaches in a fully
integrated marketing mix.
3). The key question is how to deploy this emerging technology.
b. Challenges to be faced include:
1). Limited consumer exposure and buying . At present, only a limited marketspace
is being reached.
2). Skewed user demographics and psychographics . Online users tend to be
somewhat more upscale and more technology oriented than the general
population.
3). Chaos and clutter. The Internet, with its millions of options, can be a very
confusing and cluttered place.
4). Security. This is still a very large problem in the minds of many.
5). Ethical concerns. Privacy is a primary concern. Tracking of Web site visitors
leaves consumers open to information abuse.
*****Use Chapter Objective #5 Here; Use Extended PowerPoint 3-26, 3-27 Here; Use
Express PowerPoint 3-12 Here *****
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BARRIERS TO EFFECTIVE LEARNING
1. Surprisingly, this chapter will not cause many learning problems for most students
because they are from the digital generation and have grown up with the terms and
uses of marketing in this area. However, business application and strategy may be
another issue. Therefore, the first area to carefully watch is the explanation of the
four forces that underlie the Internet age (see Figure 3-1). Though most of the
terms should present no particular problem, it is recommended that the instructor
spend a little extra time with digitalization, connectivity, disintermediation, and
customerization. In class discussion time or the utilization of Discussing the Issues
#1 or #2 can give the instructor a good feel for how well the students are absorbing
this information. Remember, this information sets the stage for information that will
follow.
2. The second area of concern is in covering the benefits to buyers and sellers of
e-commerce and marketing. The concepts are not difficult, however, remember
these benefits establish value in the mind of the consumer. Therefore, acceptance
of the e-commerce model is somewhat dependent upon one’s appreciation of this
value. A good question to ask during this phase is “Do you shop online? If so, why?
If not, why not?” From here, move to a discussion of value and connections or
relationships. The first You Are Here might aid this discussion.
3. The next area for special attention is coverage of the four major Internet domains
(see Figure 3-2). Obviously, many students are familiar with at least some of these
domains; however, that will not necessarily be true of all of them. Try having small
groups of students outline summaries of the four areas on the chalk or white board
and then provide a summary to the class. Valuable time in covering this material can
then be saved for covering misunderstandings.
4. Though it is a small area in the chapter, the next area of concern is in dealing with the
revenue and profit problem faced by the dot-coms. Carefully examine Table 3-1.
Think about how some of the classic dot-com failures cited in the text violated or did
not consider the areas shown in the table.
5. Covering Figure 3-4 is essential to understanding the power of the new e-commerce
model. Again, many students will be familiar with almost all of these methods.
A good way to increase interactivity is to assign each of the 7Cs of effective web-site
design to student groups and have them show a Web site that seems to be a positive (or
negative) example of each of the 7Cs. Time for doing this can be reduced if the
assignment is made in advance or if it is done in a short paper format. Once students
learn this concept they will be prepared to meet the challenges presented by #6 below.
6. The last area of concern is what to do about the challenges faced by online marketers.
Most students have opinions about each of these. Try to allow for time of expression
and suggestions for remedy. This discussion can be tied back to how marketers
attempt to create relationships and connections with consumers.
CONCEPT CHECK ANSWERS
The following are answers to the Concept Check questions found at the end of the
chapter. These answers appear in the text for the convenience of the students.
1. Digitalization and connectivity; customization and customerization.
58
2. Extranets
3. Disintermediated
4. Customerization
5. Convenient; easy and private; product access and selection
6. Open trading
7. C2B (consumer-to-business)
8. Click-only; brick-and-mortar only; click-and-mortar
9. Context, Content, Community, Customization
10. Viral
11. Webcasting
12. Skewed user demographics and psychographics
DISCUSSING THE ISSUES
1. Discuss how a traditional retailer or wholesaler can be disintermediated by the new
e-tailer. Give an example to illustrate.
The example given in the chapter is a comment about how Compaq Computer
feared that by selling its computers only through retailers it would become vulnerable to
faster growing Dell computers, which sold online. Other brick-and-mortar operations felt
similar pressures to change their marketing model. They feared being
disintermediated—being cut out of the new type of intermediary process.
Most of the brick-and-mortar operators hoped the click-only operations would just
go away. History has shown that this did not occur. Astute firms, such as Canadian Tire
and IBM, responded to the click-only assault by establishing their own online
presence—hence, the birth of the click-and-mortar operation. Ironically, many click-andmortar competitors have become stronger than the click-only competitors that pushed
them reluctantly forward onto the Internet.
2. Explain and illustrate how customization differs from customerization.
Customization involves taking the initiative to customize the market offering. An
example would be a salesperson measuring a person to alter clothing or to design clothing
originally for the customer as a custom tailor would do. In customerization, the company
leaves it to the individual customers to design the offering. For example, young women
often use their own measurements to design their own clothing. Companies that
59
encourage consumerization have become facilitators and their customers have moved
from being consumers to being prosumers.
3. Describe and illustrate the many benefits that e-commerce and the Internet bring to
both buyers and sellers.
Benefits to buyers include the following:
a). It is convenient. Customers don’t have to battle traffic, find parking spaces, et cetera.
b). Buying is easy and private. Customers encounter fewer buying hassles and business
buyers can learn about products more efficiently.
c). The Internet provides buyers with greater product access and selection. The world is
the limit on the Web.
d). E-commerce can give buyers a wealth of comparative information, information about
companies, products, and competitors.
e). Online buying is interactive and immediate. Buyers can often interact with the seller’s
site to create exactly the configuration of information, products, or services they
desire, then order or download them on the spot.
Benefits to sellers include the following:
a). The Internet is a powerful tool for customer relationship building. Because it is
one-to-one, interactive in nature, the Internet is an especially potent marketing tool.
b). The Internet can reduce costs and increase speed and efficiency. There are no store
costs such as rent, insurance, and utilities. Waste can be wrung out of the system and
savings can be kept or passed along to consumers.
c). E-marketing offers greater flexibility, allowing the marketer to make ongoing
adjustments to its offers and programs.
d). The Internet is a truly global medium that allows buyers and sellers to click from one
country to another.
4. The statement has been made that all companies need to consider moving into
e-marketing. List and discuss the four generally accepted ways that a company can
conduct e-marketing. Pick a local retailer or service provider that has not yet moved
into e-marketing and suggest how they might do this. Be specific.
See Figure 3-4 for diagrams and specifics. Summaries of the four forms are listed
below.
1). Creating a Web site . For most companies, the first step in conducting
emarketing is to create a Web site. Marketers must design attractive sites and find ways to
get consumers to visit the site, stay around, and come back often. Sites can be corporate
(where the intent is to build goodwill and transmit information) or marketing (where the
intent is to sell through interaction).
2). Placing Ads and Promotions Online. Online advertising and promotion can take
the form of banner ads, tickers, skyscrapers, rectangles, interstitials, browser ads, content
sponsorships, microsites, or even viral marketing. Examine New Directions 3-1 for more
details.
3). Creating or Participating in Web Communities.
Web communities take
advantage of the C2C properties of the Internet. Web communities can be either social or
work related. Such sites allow members to congregate online and exchange views on
issues of common interest.
4). Using e-mail and Webcasting. E-mail has exploded into a powerful marketing
tool. It is becoming the mainstay of B2C and B2B marketers. See New Directions 3-2 for
additional details. Companies can also sign on with any number of Webcasting services,
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which automatically download customized information to recipients’ PCs. Also known as
push programming, Webcasting affords an attractive channel through which online
marketers can deliver messages and advertising.
5. Pick a favorite Web site and write a brief analysis of how the site rates on the 7Cs of
effective Web site design. What forms of online advertising and promotion does your
chosen Web site seem to be using to its advantage? How can this site be improved? Be
specific.
The 7Cs of effective Web site design are summarized below. The remainder of the
questions are directed toward student activities.
a). Context: the site’s layout and design.
b). Content: the text, pictures, sound, and video on the Web site.
c). Community: the ways that the site enables user-to-user communication.
d). Customization: the site’s ability to tailor itself to different users or to allow
users to personalize the site.
e). Communication: the ways the site enables site-to-user, user-to-site, or
two-way communication.
f). Connection: the degree to which the site is linked to other sites.
g). Commerce: the site’s ability to enable commercial transactions.
MASTERING MARKETING
Having an effective e-marketing presence is of primary importance in today’s
competitive marketplace. Explain how CanGo has or should use marketing in the wired
world. Critique the organization’s efforts by using the evaluation and analysis options
suggested in this chapter. How effective have their efforts been to date? What
suggestions would you offer at this point to the company? Explain.
Suggestion Solution
The student will notice that Chapter 3 does not really have an episode in the Mastering
Marketing series; however, the CanGo case is about online games and, therefore,
certainly explores the dimensions of this chapter. Students should cite the company’s
attempts to reach customers via the Internet and other more traditional methods. Where is
the best place to begin the process of selling online games? Students should be ready to
defend their ideas. Notice that CanGo’s effectiveness is suspect in the initial phases of the
case but improves as the case develops. Go forward to the Understanding Consumer
Behavior episode for an illustration of how CanGo uses its Web site in its marketing
efforts. Consider the material from Chapter 3 also when reviewing the last episode
(integrated marketing communications).
No specific episode with this chapter.
MAP—Marketing Applications
MAP Stop 3—Thinking Like a Marketing Manager
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1. What applications can you think of for viral or buzz marketing on the Internet?
2. List three products that you have heard about from friends. Describe what you were
told, how this matched ad claims, what action you took because of the information,
and how likely you were to buy the products.
3. Assume you are the marketing manager for a new product to be sold primarily to
consumers in your generation using the Internet. Describe how you would use viral
marketing to accomplish this. Be specific in your descriptive steps of your plan.
4. Choose an actual product and start a positive buzz about it using one of the
communication methods suggested in the chapter. Keep a record of what you
communicated and how you communicated the information. What were the results
of your communication? What could you do to increase the effectiveness of the
communication? How were “connections” made? How could an e-marketer make the
same “connections?”
5. Consider the ethics of viral marketing. What could be the potential problems
with the method? What cautions should be taken by an e-marketer wanting to use this
technique?
This MAP Stop gives students the opportunity to examine one of the hottest areas in
online communication—the community or word-of-mouth. Believe it or not, there are
many new marketing agencies/consultants that examine viral or buzz marketing on a full
time basis. A recent one-hour Frontline (a PBS series) called the “Merchants of Cool”
demonstrated how marketers go to chat rooms to examine and start rumors about what is
cool and what is not. The relationship between Sprite and Hip-Hop music (and how the
trend began) is a feature story. Have students go the Sprite Web site at www.sprite.com
as a means to starting a “buzz” or answering the MAP Stop questions. Be sure to discuss
the ethics of this form of marketing practice and how excesses might be a problem.
Notice that to really do this project right, several days might be required. Please plan
accordingly.
SUGGESTED MAP REFERENCES
The following reference will be useful for MAP Stop 3 found at the end of Chapter 3.
It is suggested that this reference be given to the student in advance of the assignment
found in MAP Stop 3.
1. Khermouch, Gerry and Jeff Green, “Buzz Marketing.” Business Week, July 30, 2001,
pp. 50-56.
STUDENT PROJECTS
1. Assume that you were called upon to make an argument to your board of directors that
a new economy exists and that the company’s policies of brick-and-mortar first are
antiquated. What major points would you make? How would you avoid skepticism
and tradition on the part of some board members?
2. Using Canadian Tire as an illustration of how to do it right on the Net, find an
example of a company that seems to be doing it wrong. Comment on the company’s
situation, what you have found, and suggest how to correct their Net policy.
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3. Take three competitors in an industry. Investigate how each has developed strategies
to meet the challenges of the new economy. Do this by examining their respective
Web pages, looking at shareholder reports, and what the business press has said about
them. Which company(ies) seems to have gotten their Net policy right? Which
company(ies) seems to have gotten it wrong? Which company is positioned for
success in the next five years? What secrets to success on the Net have you learned?
4. Explain how your college or university might use the Internet to attract prospective
students. If your university or college already has a Web site, critique it.
5. You have been given the assignment by your company to design a Web site page for
your company. This new Web page should emphasize connections and relationships.
By looking through existing Web site pages on an online service (such as Yahoo or
America Online), describe what you would put in or on your fictious Web page (you
can be creative with your choice of company and its products or services). What does
the marketer try to accomplish with a Web page?
6. As marketing director of a small urban sportswear company, you have been given the
assignment to spread the word to 18-25 year-old Internet users that your company has
some great products. One of the ways you intend to communicate this message is via
Web communities. Outline a plan for doing so. What would you say? What Web
communities might you choose? How would you avoid making your message sound
like a sales pitch? How would you use viral marketing to aid your effort? Evaluate
your chances of success using the Web community format.
INTERACTIVE ASSIGNMENTS
Small Group Assignment
1. Form groups of three to five students. Each group should read the opening vignette to
the chapter on Canadian Tire. Each group should answer the following questions:
a. What was the reason for Canadian Tire’s late entry into Internet retailing?
b. Describe some features of the Canadian Tire Web site that was created in 2001.
c. Recently, Canadian Tire completely redesigned its Web site to make shopping
faster, better and easier for consumers. Describe the major enhancements.
d. Describe how subscribers can use the eFLYER.
Each group should then share its findings with the class.
Individual Assignment
1. Read the opening vignette to the chapter. Think about the answers to the following
questions:
a. Summarize what Canadian Tire is doing with its e-commerce initiatives.
b. Visit the Canadian Tire website at www.canadiantire.ca. What recommendations
can you give to the company to improve its website?
Share your findings with the class.
Think-Pair-Share
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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 the
instructor.
1. What is the new economy?
2. What are the major forces shaping the Internet age?
3. What is the difference between an intranet, extranet, and Internet?
4. If a store-based retailer has been disintermediated, what has happened?
5. What is the difference between customization and customerization?
6. What is e-marketing?
7. What is the most important benefit to a buyer for doing business online? Why?
8. Why does the B2B e-commerce model do so much more business than the other
forms?
9. What are your biggest fears about doing business online? How could a marketer deal
with these fears and reduce them?
10. How can marketers use viral marketing to their advantage?
eLABorate (minicase)
Few marketers allow customers to participate in their business the way Canadian-based
Jones Soda Company does. Jones has a unique approach to packaging, product design,
and advertising. They allow the customer to design the package, create flavors of soft
drinks, and provide the copy and pictures for ads. How is this done? Jones openly
declares that a small marketing and advertising budget has forced them to think customer
first. The basic idea is that all people like to see their name and face in print. Therefore,
by interacting with the Jones Soda Web site, customers send the company pictures for
ads, recipes for soft drinks, and slogans for ads and packaging. All ten of the company’s
flavored soft drinks were created by customers. Each bottle of Jones Soda has a picture
created by a customer as its primary label (these pictures also appear on the cardboard
four-pack holders). Slogans and names for the soft drinks were also created by the
customers of Jones Soda. Does the technique work? Increasing sales and a new
distribution contract with Target stores in the U.S. say that it does. Jones believes that
consumers buy their soda products not just for the taste but for the involvement and
ownership encouraged by the brand. Someday maybe you will see your face on a Jones
label.
Go to the Jones Soda Company Web site at www.jonessoda.com, consider the material
from your chapter, and answer the following questions:
1. What seems to be the Jones Soda Company strategy?
2. How does this strategy differ from that of major competitors?
3. How does the company use its Web site to stimulate sales of its products?
4. What advantages and disadvantages seem to be present with the Jones strategy?
5. What target markets seem to be primary to Jones Soda? How could you tell?
6. Why would Target be interested in carrying this “off-beat” product line?
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7. What connections is Jones trying to achieve?
8. Take a picture, design a slogan, or develop a new soft drink flavor for Jones and
submit it to the company. What response did you get? How did this make you feel
about the company? Would you spread the word about the company? How have you
just participated in the Jones strategy? Has the company formed a connection with
you via the Internet? If so, how?
CLASSROOM MANAGEMENT STRATEGIES
The instructor will find that most students will be interested and excited by this chapter.
The subject matter is especially interesting and familiar to Gen Y students. The instructor
should be careful to stress the vocabulary words found in this chapter (see Key Terms)
and to resolve any differences with terms used in other courses (for example, computer
information courses). Generally, this chapter can be covered in one class period unless
extensive online assignments are given.
It is recommended that the instructor break the fifty-five (55) minute to one hour and
twenty minute (1:20) class into specific time blocks for the maximum learning and
explanation experience. For example:
1). 10 minutes—Discussion of the Internet age and the four specific forces that underlie
the Internet age (chapter objective 1). See Figure 3-1. Depending of the skill and
experience of the student group, the instructor can probe the four forces slowly or
quickly. However, be sure to save time for discussion of disintermediation and the
customization vs. consumerization issues. Discussing the Issues questions can aid in
this area. Extend time if necessary to ensure proper coverage.
2). 10 minutes—Discussion of the marketing strategies that appear to be present in the
Internet age (chapter objective 2). Compare the differences between e-commerce
and e-marketing. Summarize the differences between the benefits to buyers and
sellers. How do these benefits add value and build connections? The You Are Here
is a useful device to summarize learning concepts in the first two major sections of
the chapter.
3). 20 minutes—Discussion of the four major Internet domains (chapter objective 3).
See Figure 3-2. In discussing the four forms, the instructor is encouraged to
demonstrate the Web sites mentioned in this portion of the chapter. In addition, other
sites found in project and example areas (see eLABorate, Student Projects) are
good to add spice and visualization to the lecture. It is important that students discuss
the future of C2C and C2B sites. Small group work is encouraged.
4). 15-20 minutes—The instructor can finish the lecture by discussing the variety of types
of e-commerce possibilities open to today’s marketer (chapter objective 4). See
Figures 3-3 and 3-4. It is especially important to clearly establish the opportunities
and difficulties faced by click-only, brick-and-mortar, and click-and-mortar
companies. If students have had introductory computer or information systems
courses, the 7Cs will be an especially interesting area for comments and examples
(see Student Projects). If time runs short, be sure to cover viral marketing and Web
communities as possibilities for future success in marketing efforts and strategy. One
last recommendation—make this lecture visual. The audience is generally a visual
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generation and telling and seeing are two different methods. Seeing is preferred.
Allow preparation time for this.
*****Instructor’s Note: If time permits (which is somewhat difficult with this chapter), a
video case may be used here.*****
For those classes that go beyond the basic one hour format, the additional time can be
spent covering the discussion questions, application questions, and/or the mini-case
example provided in the Instructor’s Resource Manual. Additionally, more time will be
available for work on the Internet or student discussion.
POWERPOINT NOTES
See the Instructor’s Resource Manual for the exact positioning within the chapter of
each slide (reference Chapter Outline).
KEY TERMS AND APPLICATIONS
All of the Key Terms found in this chapter appear on the Pearson Web page at
www.pearsoned.ca/armstrong (reference this text). At the Web site, the instructor will
find all Key Terms listed, an identification of what the Key Term means, and why it’s
important. This information will be especially helpful to students who are having
difficulty with the Key Terms or if Key Terms are to be stressed on examinations.
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