Chapter 4
Marketing
on the Web
Learning Objectives
• Product vrs Consumer based marketing
• Different market segments and how to
approach them
• Consumer relationship intensity
• Consumer relationship life cycle
• Advertising on the web
• E-mail marketing
• Consumer Relationship Management
• Branding
2
Marketing Mix
• Elements responsible for
– Selling
– Promoting
– Of
– Products
– Services
• Once the mix is decided, its called the marketing
strategy
3
4
The Product
• No just physical product but also
–
–
–
–
–
–
Manufacturing
Packaging
Naming
After sales
Warranties
Servicing
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The Promotion
• All types of communication
– Retailers, distributers, communication, purchase,
end user
• Extremely complex area
– Promoters have to chose between
•
•
•
•
•
•
•
•
Several TV Channels
Various Radio Stations
Hundreds of newspapers and magazines
Millions of websites
Books
Cinemas
Video Games
Posters
6
The Promotion Mix
• Direct Marketing
– Involves direct communication Eg telephone, mail, etc
• Sponsorships
– Pay others often an NGO in return of positive PR
– Helps raise awareness and position the brand
• Public Relations
– Creates mutual understanding between organisations and its
stakeholders
• Personal Selling
– Direct face-to-face contact Eg in a shop
• Advertising
– Used mainly to build brand and raise awareness
• Sales Promotions
– Short-term incentives
– Effective against competitors
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The Price
• How much should we charge?
•
•
•
•
•
Some consumers purchase only on price
Others judge quality
High price = High quality
Price also effects demand
What about commissions to intermediaries?
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Price Elasticity
9
The Place
• How to move goods from the producer to the
consumer
• Most goods are sold through intermediaries
• Thus the training of retail staff is very
important
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Adding some more Ps?
• People
– The staff that offer the service
– Everyone has to work in line to the marketing
strategy
• Processes
– Must be in place to support the marketing
– Eg Recipes in a restaurant, are they always
followed? What about quality of the meal?
• Physical Evidence
– Ambience and design of surrounding
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Exercise: Write down the 4 Ps of Vodafone UK
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Case Study:
Vodafone’s Marketing Mix
• Product
• A product with many different features provides
customers with opportunities to chat, play games,
send and receive pictures, change ring tones,
receive information about travel and sporting
events, obtain billing information, view video clips
and send video messages.
• Vodafone live! provides on-the-move
information services.
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Case Study:
Vodafone’s Marketing Mix
• Place
• Vodafone UK operates over 300 of its own stores.
• It also sells through independent retailers e.g.
Carphone Warehouse.
• Customers are able to see and handle products
they are considering buying.
• People are on hand to ensure customers' needs
are matched with the right product and to explain
the different options available.
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Case Study:
Vodafone’s Marketing Mix
• Price
• Vodafone wants to make its services accessible to as
many people as possible: from the young,
through apprentices and high powered business
executives, to the more mature users.
• It offers various pricing structures to suit different customer
groups.
• Monthly price plans are available as well as prepay
options. Phone users can top up their phone on line.
• Vodafone UK gives reward points for every £1 spent on
calls, text messages, picture messages and ring tones.
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Case Study:
Vodafone’s Marketing Mix
• Promotion
• Vodafone works with icons such as David Beckham to communicate
its brand values.
• Advertising on TV, on billboards, in magazines and in
other media outlets reaches large audiences and spreads the brand
image and the message very effectively.
• Stores have special offers, promotions and point of sale posters to
attract those inside the stores to buy.
• Vodafone's stores, its products and its staff all project the brand image.
• Vodafone actively develops good public relations by sending press
releases to national newspapers and magazines to explain new
products and ideas.
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Different marketing strategies
• Media selection is especially important for
online firms
• The web offers many advantages
– Personal contact selling
– Cost savings
• Best model
– Trust-based model of personal contact when selling
on the web rather than mass marketing
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Changing Times
•
•
•
•
Rising consumer expectations
Reduced product differentiation
Increasing competition
Splintering of mass markets
• Resulting in ...
– Reduction in the effectiveness of mass media
– Internet took over providing consumer-focused
marketing strategies
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Market Segmentation
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Market Segmentation
• Identify specific portions of the market
• Target them with specific advertising
• Divides potential customers into segments
such as
–
–
–
–
–
Age
Gender
Marital status
Income level
Geographic location
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Micromarketing
• Precise
• Focused on niche markets
• Typically very small market segments
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Geographic Segmentation
• Divides groups by location
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Demographic Segmentation
• Make use of age, gender, family size, income,
education, religion, ethnicity
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Psychographic Segmentation
• Use social class, personality, approach to life
24
Market
segmenta
tion on
the Web:
Steve
Madden
25
Market segmentation on the Web:
Talbots
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Steve Madden Vs. Talbots
• Both
– Well designed
– Functional
• Steve Madden
– Young
– Fashion conscious buyers
– Make high fashion exciting
• Talbots
– More conservative
– Older established buyers
– Emphasises stability, home life
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Offering choice : Dell
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Offering more choice: Dell
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Segmentation using customer
behaviour
• Create experiences based upon behaviour
• If it is related to an event or time it is called
occasional segmentation
• If it is related to how they use the site, it is
called usage-based segmentation
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Occasional
segmentation
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Usage based segmentation 1
32
Usage based segmentation 2
33
Consumer relationship
• Strengthened through marketing
• Good consumer experience will result in
loyalty towards the company and its
products/services
34
5 stage model of consumer loyalty
• Awareness
– Customers recognise name/brand/products of company
• Exploration
– Customers learn more about the company/products
• Familiarity
– Customers completed several transactions and are aware of
policies, pricing, flexibility, etc
• Commitment
– After a number of successful transactions, customers develop
a strong preference
• Separation
– Over time the relationship might change, customer might be
disappointed
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5 stage model of consumer loyalty
36
Acquisition, Conversion and Retention
• Acquisition depends on the revenue model
utilised
– Advertising support
• Aims to keep customers in the site as much as possible
• Show them as many adverts as possible
– Catalogue model, Fee for service or Subscription
based
• Attracting customers is just an initial step
• The cost to attract just one visitor is the acquisition cost
• Second step to convert the visitor to the customer is the
conversion cost
37
The funnel model
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Types of Web Advertisement (1)
1) Banner Ads
In the early stages of Internet,
"advertising" on the Internet
meant "banner ads"
2) Pop-up and Pop
under Ads
A pop-up ad is an ad that "pops
up" in its own window when you
go to a page.
Types of Web Advertisement (2)
3) Floating Ads
These are ads that appear
when you first go to a Web
page, and they "float" or "fly"
over the page for anywhere
from five to 30 seconds.
4) Unicast ads are TV commercial that runs in a pop-up window.
It is animated and it has sound. The ads can last anywhere
from 10 to 30 seconds.
Types of Web Advertisement (3)
5) Streaming Sidebar Ads
A small video ad appears in the right
sidebar on this CNN page, with sound,
and plays for 30 seconds. The reader can
control the ad with the three buttons
(Play, Pause, Stop) underneath the ad.
6) Pull Down Banner Ads
Their operation varies depending on the
site. On some, when you mouse over the
banner ad, it expands to fill much of the
page. On others, the banner ad is
expanded-size initially, then shrinks to
normal size after several seconds.
From: http://www.howstuffworks.com
Banner Ads
•
•
•
•
Use banner exchange networks
Find related websites
Use banner advertising network
Costs are normally a dollar per thousand
people (Cost per mille OR CPM)
• Type of ads
– Pop-up vs. Pop-behind or under
– Interstitial ad (displayed before the content)
– Rich media ads or Active ads (floating on same
page)
42
Site sponsorship
• Allow advertisers to sponsor parts or all of their site in
a more subtle way
• Sport Site? Or are they selling water?
43
Effectiveness of online ads
• Difficult to measure
• No standard
• A few rating companies are being considered
– ComScore
– NetRatings
44
E-mail and Permission marketing
• Companies should obtain approval before
sending promotion
• Some of them use automated email messages
– Extremely cheap (less than 1c)
• Purchase of target email addresses cost
between 1c and 1$
• Conversion rates are high
– 10 to 30 %
• Banner click through are just 0.5%
45
Better email
• Not just spam but combine something useful
– Article
– Coupon
– News
• To help out, several companies offer email
management
– Cost between 1 and 2 c per valid email
– Take care of email campaigns
46
Branding
• Your brand is a vision, brought to life in each
channel and at every touch point where your
organization engages its audiences
• Audiences can include customers, employees,
prospects, vendors or any person your
organization touches
47
What is a brand?
“A brand is a distinguishing name or symbol
intended to identify goods or services of a
seller and to differentiate those goods or
services from competitors.”
Clyde C. Tuggle
Coca-Cola, Senior Vice President
Worldwide Public Affairs & Communications
48
Purpose
• Inspire
– Inject your organization with heart and soul
• Motivate
– Spur action
•
Connect
– Unify departments and divisions for “global” presence. Link
products and services to a “promise.”
• Simplify
– Clarify and crystallize your mission
• Inform
– Convey values, attributes, and advantages
49
Product Vs. Brand
• Diet Coke vs. Diet Pepsi in Blind Taste Test
– Prefer Pepsi Sample 51%
– Prefer Coke 47%
– No preference 2%
• Diet Coke vs. Diet Pepsi in Identified Taste
Test (brand names revealed)
– Prefer Pepsi Sample 23%
– Prefer Coke 65%
– No Preference 12%
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Elements of Branding
• Product differentiation
– How is it different from other products?
• Relevance
– How useful is the product to the customer’s need?
• Perceived value
– How valuable is it?
51
Emotional Vs. Rational Branding
• A brand is an emotional shortcut between the
company and its consumer.
– Works well on one way channels
– Problematic on the internet
• Not absorbing passively
• Busy people
• Quickly click away from emotional appeals
• Rational Branding more effective
– Goods given in exchange of viewing adverts
52
Brand leveraging strategies
• When a company extends its dominant
position to other products
• Yahoo!
–
–
–
–
Directory to Search Engine to Businesses, etc.
Acquired GeoCities
Acquired Broadcast.com
Entered into a network with Fox Entertainment
• These new features attract web users thus
increasing advertisement value
53
54
Brand Consolidation 1
• A step
further than
Brand
Leveraging
• Twins two or
more
companies
together
55
Brand Consolidation 2
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56
Cost of Branding
• Creating a new brand is hard
• Easier to
– Transfer an existing brand
– Maintain it
• In 1998
– Top 100 e-commerce sites spent $8 million to create
an online brand
– Amazon spent $133
– BarnesAndNoble spent $70
– Most of the costs went to TV, Radio, Print
57
Exercise
• Think about your local bank.
• Write 10 point on how it transferred its brand
image to the internet?
58
Affiliate marketing strategies
• Company A includes details of Company’s B
– Or its products
– Company A will receive a commission of whoever
buys from company B through its site
– Amazon.com
– Toys R US
– Research shows that click-through rates are much
higher in these alliances
59
Viral Marketing
• Uses satisfied customers to tell potential other
customers
• Similar to affiliate marketing where they use
other websites, here they use other people
• Called viral because it reaches potential
customers like a virus
60
Positioning
• Search Engines
• Directories
• Viral Marketing
• Etc
61
Search Engines
• A search engine is a special kind of Web page
software that finds other Web pages that
match a word or phrase you entered
• A Web directory is a listing of hyperlinks to
Web pages that is organized into hierarchical
categories Eg: http://directory.google.com/
• Search engines contain three major parts:
spider, index, and utility
62
Popular Search Engines
63
Spiders and Crawlers
64
Indexing
65
Paying search engines
66
Website naming issues
• URL must reflect the brand name
• Delta Air Lines
– www.delta-air.com
– www.delta.com
• Southwest Airlines
– www.iflyswa.com
– www.southwest.com
• Very common for companies to buy several URLS,
even some misspelled ones!
– Try yahow.com
67
Questions?
68