HONG KONG UNIVERSITY OF SCIENCE AND TECHNOLOGY
Internet and Electronic Commerce Marketing
(ISMT 534 / ECMT 541 and 542)
November-December 2002
___________________________________________________________________________
Saturdays 9:00 AM to 1:00 PM; Venue: HKUST Room 4117
Dilip Soman
Phone: 2358 7716
e-mail: mksoman@ust.hk
Ted Clark
Phone: 2358 7634
e-mail: tclark@ust.hk
Jaideep Sengupta
Phone: 2358 7718
e-mail: mkjaisen@ust.hk
___________________________________________________________________________
COURSE OBJECTIVES
The objectives of the course are to introduce you to key concepts, theories and procedural aspects
relating to the development of an Internet marketing strategy. Marketing in and on the Internet is
one of the most challenging, exciting and dynamic areas. It is challenging because the online
environment poses unique characteristics that distinguish it significantly from traditional
marketing. It is dynamic because the technology upgrades virtually daily. And it is exciting because
despite its novelty, it provides a new battleground for the application of traditional marketing and
strategy concepts.
One component of e- marketing strategy includes an understanding of the unique features of the
Internet environment and its strategic implications. A second component relates to an
understanding of the virtual company and its competition and most importantly the analysis of
consumer behavior on the web. The third component involves an understanding of the information
that needs to be collected in developing a strategy, and its effective use in developing a marketing
plan (the 4 P’s). In this course, we will cover all these components at a strategic and tactical, and to
a lesser extent at the executional level.
The specific goals of this course are for you to:
1) Learn the key concepts and theories in Internet marketing, as well as to develop an
understanding of the strategic marketing alternatives facing a firm. Our focus in this module will be
on marketing business models, retailing and marketspace.
2) Develop an ability to identify applications of these concepts and theories, and to apply them in
developing viable marketing strategies.
Effective marketing learning results not from simply internalizing facts and institutional detail, but
from systematic critical thinking and reasoned application of several general underlying principles.
"Whatever be the detail with which you cram your student, the chance of his meeting in
after-life exactly that detail is almost infinitesimal; and if he does meet it, he will probably have
forgotten what you taught him about it. The really useful training yields a comprehension of a few
general principles with a thorough grounding in the way they apply to a variety of concrete details.
In subsequent practice, the (students) will have forgotten your particular details; but they will
remember by an unconscious common sense how to apply principles to immediate circumstances."
Alfred Whitehead, The Aims of Education and Other Essays
COURSE FORMAT
The course is composed of a mixture of lectures, exercises and case discussions. The purpose of
the lectures is to present and discuss theories, concepts, analytical techniques and empirical
findings. This course is first about marketing and next about the Internet, hence the philosophy of
this course is to treat the Internet as a medium or vehicle in whose context we will study marketing
concepts. One effective way of using this vehicle is to discuss a number of comprehensive business
cases. The goal of the case discussion is to apply the concepts to the context provided by the case
and to make decisions based on both qualitative and quantitative analysis. In some classes, we will
also supplement the lectures with exercises.
Readings for each class meeting have been pre-assigned. We encourage all participants to read
the articles marked and prepare the cases prior to coming for class. Given its very nature, the
learning and quality of a marketing class are directly related to your willingness and ability to
contribute to the case discussions. Please feel free to raise an opinion or offer an analysis no matter
now different it is from the emerging theme in the classroom, or how unusual it may be. However,
focus on quality and not on quantity while contributing to the discussion. Thus, your comments
should illuminate rather than inundate the rest of us in the classroom.
PRE-CLASS PREPARATION:
In an ideal world, I would like you to have read all the articles and have prepared the case.
However, all of our worlds are far from ideal. Therefore, to help you prioritize; you should first
prepare the cases thoroughly. Then read the article – if there are more than one, start with the one
listed first and work your way down till you run out of time.
In addition to the readings and cases, I really encourage you to bring to the classroom your
experiences and ideas about marketing. We will discuss several concepts in class and I will give
you as many examples as I can. I invite you to add to them either during the class discussion or
later, either from your own work experience or from something you have heard and read about.
EVALUATION
There will be two take-home assignments that will be based either on a case study, or may follow
other formats. Assignment 1 will be based primarily on eAdvertising, and will carry 30% of the
weight of the course, while Assignment 2 will be based on the rest of the course and will carry 70%
of the weight. Dates, deadlines and other details on these assignments will be provided during the
course.
TENTATIVE COURSE OUTLINE
Session 1 (November 2, 2002)
Dilip Soman
Module Overview and Introduction to Strategic Marketing
Web-Based Business Models: Creating Value Online
One-to-one / Relationship Marketing
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The capabilities of the WWW are wide-ranging and powerful for consumers. To be
sustainable, these capabilities must be matched with benefits to the firm. In this module, we
look at the many business models that can be used online. The BizRate case is an example
of a web business model and the key issues in the case surround the decision of whether or
not to change the business model. We use the case to also develop the concepts of
relationship marketing
Readings:
1) Handout: Web Business Models
2) How to Acquire Customers on the Web
Case: BizRate.com
Session 2 (November 9, 2002)
Ted Clark
Virtual versus Real (Tangible) Marketplaces
Personalization
Readings:
1. "Do Electronic Marketplaces Lower the Price of Goods?" Author: Ho Geun, Lee
Title: Communications of the ACM January 1998/Vol. 41. No.1
2. Chapter 7 "Consumers' Search for Information" Author: Whinston, Andrew B Title: The
economics of electronic commerce / Andrew B. Whinston, Dale O. Stahl, Soon-Yong Choi
3. Chapter 13 "Imperfect Information in the Product Market" (optional) Author: Joseph E.
Stiglitz; Title: Handbook of Industrial Organization, Volume I, Edited by R. Schmalensee
and R. D. Willig
Session 3 (November 16, 2002)
Jaideep Sengupta
A General Model of Advertising
Introduction to Online Advertising (Banner Ads)
Reading:
1) Advertising on the Internet (Darden Technical Note)
Session 4 (November 23, 2002)
Jaideep Sengupta
E-mail Advertising
The Website as a Communications Tool
Reading:
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1) Permission Marketing by Seth Godin (Chapters 1 and 2).
Session 5 (November 30, 2002)
Dilip Soman
More on one to one Marketing and Customization
The Marketing of Services
Customer Valuation
One to one marketing is a philosophy that recognizes each customer and a separate and
unique source of demand. Consequently, marketers needs to better understand and predict
the behavior of each customer, measure their value, and also to be able to customize
marketing variables. This module will present some of the basic issues in 1-to-1 marketing.
In addition, we will also discuss the basics of services marketing.
Readings:
1) Riding the Marketing Information Wave
2) Realize your Customers’ Full Profit Potential
3) Data Mining: What General Managers Need to Know
Case: eBay: The Customer Marketplace (A) and (B)
Session 6 (December 7, 2002):
Dilip Soman
From Bricks to Clicks: The Retailing Revolution
Distribution Channels: Marketplace and Marketspace
The Internet has had – and will continue to have a large impact on retailing. This module
will discuss issues in channel management and talk about the relationships between
traditional and Internet channels.
Readings:
1) Changing Channels: The Impact of the Internet on Distribution Strategy
2) Retailing: Confronting the Challenges That Face Bricks-and-Mortar Stores
Cases: Alloy.com – Marketing to Generation Y
Leadership Online (A): Barnes and Noble vs. Amazon.com
Session 7 (December 14, 2002)
Dilip Soman
Market Making and Pricing on the Internet
Wrap-up and Summary
In the brick world, the posted price model of the market works best because of high costs
associated with other models. The Internet reduces some of these costs. In this session, we
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will look at other market mechanisms that are facilitated online. We will also study pricing
theory in some detail. In addition to conventional forces of pricing theory, one additional
factor that plays a role in the online world is consumers’ ability to track prices and
comparison shop. Another fundamental shift is the ability of firms to use real-time pricing.
This module will discuss such innovations. We will also discuss the Priceline case which
presents several interesting insights in the domain of Internet pricing and strategy in
general.
Readings:
1) Pricing and Market Making on the Internet
Case: Priceline.com and Priceline WebHouse Club
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