Chapter 2
Adapting Marketing to
the New Economy
PowerPoint by Karen E. James
Louisiana State University - Shreveport
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 0 in Chapter 2
Objectives
 Identify the major forces driving
the new economy.
 Understand how business and
marketing practices are
changing as a result of the new
economy.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 1 in Chapter 2
Objectives
 Explore how the Internet has
changed the way marketers use
customer databases.
 Understand how marketers
practice customer relationship
management.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 2 in Chapter 2
Drivers of the New Economy
 Digitalization and connectivity
– The Internet, intranets & extranets are key
 Disintermediation and reintermediation
 Customization and customerization
 Industry convergence
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 3 in Chapter 2
Changes in Business Practices
Old Economy
– Product unit
organization
– Profitable
transactions
– Financial scorecard
– Stockholders
– Marketing does the
marketing
©2003 Prentice Hall, Inc.
New Economy
– Customer segment
organization
– Lifetime value of
customer
– Marketing scorecard
– Stakeholders
– Everyone does the
marketing
To accompany A Framework for Marketing Management, 2nd Edition
Slide 4 in Chapter 2
Changes in Business Practices
Old Economy
– Build brands via
advertising
– Customer acquisition
– No customer
satisfaction
measurement
– Overpromise,
underdeliver
©2003 Prentice Hall, Inc.
New Economy
– Build brands via
performance
– Customer retention
– Measure customer
satisfaction and
retention rates
– Underdeliver,
overpromise
To accompany A Framework for Marketing Management, 2nd Edition
Slide 5 in Chapter 2
How Marketing Practices
are Changing
 E-Business
 Setting up web sites
 Customer relationship marketing
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 6 in Chapter 2
How Marketing Practices are
Changing: E-business
 Business practices are changing . . .
– E-business uses electronic means and
platforms to conduct business.
– E-commerce web sites facilitate the
online sale of products and services.
– E-purchasing from online suppliers.
– E-marketing efforts include those that
inform, communicate, promote, and sell
products and services over the Internet.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 7 in Chapter 2
How Marketing Practices are
Changing: E-business
Internet Domains
 B2C
 B2B
 C2C
 C2B
©2003 Prentice Hall, Inc.
 B2C = Business-toConsumer
 Benefits include:
greater ordering
convenience,
lower cost, easier
information and
price gathering
To accompany A Framework for Marketing Management, 2nd Edition
Slide 8 in Chapter 2
How Marketing Practices are
Changing: E-business
Internet Domains
 B2C
 B2B
 C2C
 C2B
©2003 Prentice Hall, Inc.
 B2B = Business-toBusiness
 Volume is 10-15%
higher than B2C.
 Benefits include:
lower costs via
B2B auctions,
buying alliances,
greater access to
information.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 9 in Chapter 2
How Marketing Practices are
Changing: E-business
Internet Domains
 B2C
 B2B
 C2C
 C2B
©2003 Prentice Hall, Inc.
 C2C = Consumer-toConsumer
 Transactions occur
via online trading
sites such as eBay.
 Consumers are
creating online
product information
via newsgroup and
chat room dialogues.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 10 in Chapter 2
How Marketing Practices are
Changing: E-business
Internet Domains
 B2C
 B2B
 C2C
 C2B
©2003 Prentice Hall, Inc.
 C2B = Consumerto-Business
 Facilitate
communication
between
customer and
businesses.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 11 in Chapter 2
How Marketing Practices are
Changing: E-business
 Brick and click firms have often faced
channel conflict issues
 Brick and click firms tend to be more
successful than pure click e-tailer
competitors because . . .
– Customer acquisition costs are lower
– Resources, knowledge, customer base,
supplier relationships are superior
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 12 in Chapter 2
How Marketing Practices are
Changing: Web Site Design
The Seven “C’s” of Web Site Design
 Context
 Communication
 Content
 Connection
 Community
 Commerce
 Customization
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 13 in Chapter 2
How Marketing Practices are
Changing: Web Site Design
 Placing Ads and Promotions Online
– Banner ads
– Sponsorships
– Microsite
– Interstitials
– Browser ads
– Alliances and affiliate programs
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 14 in Chapter 2
How Marketing Practices are
Changing: Web Site Design
Dot.com revenue and profit models:
 Advertising income
 Sponsorship income
 Product and service
sales income
 Alliance income
 Transaction
commissions and fees
 Membership and
subscription income
 Market research/
information
 Profile income
 Referral income
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 15 in Chapter 2
How Marketing Practices are
Changing: CRM
 Customer Relationship Marketing
(CRM) allows companies to:
– Deliver real-time customer service
– Customize market offerings,
products, services, media, and
messages
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 16 in Chapter 2
How Marketing Practices are
Changing: CRM
 Effective Customer Relationship
Marketing requires:
– Reducing customer defection rates
– Extending the life of the customer
relationship
– Enhancing customer sales / profit potential
– Making low-profit customers MORE
profitable or terminating them
– Focusing on high value customers
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 17 in Chapter 2
How Marketing Practices are
Changing: CRM
 CRM Leads to One-on-One Marketing
– Four Steps for One-to-One Marketing
 Don’t
go after everyone, carefully identify
your prospects and customers.
 Group customers by their needs and their
value to the company; aggressively
pursue the most valuable customers.
 Build stronger relationships with
customers via individual interaction.
 Customize messages, services, and
products for each customer.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 18 in Chapter 2
How Marketing Practices are
Changing: CRM
 Customer Databases and Database
Marketing are the key to Effective CRM
 Database uses include:
– Best prospect identification
– Matching offers to customers
– Deepening customer loyalty
– Reactivating customer purchasing
– Avoiding serious mistakes
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 19 in Chapter 2