Electronic marketing channels
Week 13
Instructor: Jungwan Lee
Electronic marketing
 Auto-By-Tel.com
 Autoweb.com
 Auto dealers pay monthly fees to web sites
operators who then refer consumers to the
dealers. The dealer respond to consumers with
their best offers via e0mail and phone. The
consumer then picks out the best deal from his
computer screen and visits the dealer to take
delivery of the car.
New jargons
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Electronic marketing channel
Doing business on the WWW
Electronic commerce
Internet commerce
Internet shopping
Shopping on-line
Shopping in cyberspace
Electronic distribution
What is electronic marketing
channel?
 ..the use of the Internet to make
products and services available so that
the target market with access to
computers or other enabling
technologies can shop and complete the
transaction for purchase via interactive
electronic means.
Structure of electronic marketing
channels
 Disintermediation versus reintermediation
 The information flow versus the product
flow
 Virtual channel structure versus physical
channel structure
Case study1-reintermediation
 Amazon.com versus Barns & Nobles
 예스24.com versus 교보문고.com
 Book publisher->wholesale book
distributor->virtual retailer->consumer
 Book publisher->retail superstore>consumer
Case study2-reintermediation
 Auto-By-Tel corp. and channel structure
 Conventional channel: manufacturer>dealer->consumer
 Internet channel: manufacturer->dealer>Internet Auto Broker->consumer
Case study3-disintermediation
 Dell computer corp.
Implication of case studies
 Both consumer and auto dealers who have used the
Internet channel like the arrangement.
 The car buyers have access to a vast array of information
and choice of dealers via the Internet and the dealers
have access to a much wide customer base and lower
selling costs because they can reduce advertising costs
and sales commissions.
 While the jury is still out, this Internet based channel, even
though it involves a lengthening of channel structure
rather than shortening, appears to be gaining acceptance
as an effective and efficient way of selling cars.
Information flow versus the product
flow
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Product flow-some limitation
Negotiation flow
Ownership flow
Information flow
Promotion flow
Virtual channel structure versus
conventional channel structure
 Who is winner?
Advantages of electronic
marketing channels
 Global scope and reach- information flow
 Convenience/rapid transaction processing
 Information processing efficiency and
flexibility- ex) airline tickets
 Data-based management and relationship
capabilities->e-crm, cyber money, cookies,
log-in, e-mail marketing…
 Lower sales and distribution costs- ex) Dell
computer corp., Virtual Vineyards
Disadvantages of electronic
marketing channels
 Lack of contact with actual products and
delayed possession
 Fulfillment logistics not at Internet speed or
efficiency-> majority of products and services
still require old-fashioned nuts and bolts
logistic challenges
 Clutter, confusion, and cumbersomeness of
Internet-> Amazon pay 44milion on AOL,
Search engines
 Nonpurchase motives for shopping not
addressed
 Security concerns of customers
Why do people shop?
 Personal motives- play the role of shopper,
diversion from daily life, self-gratification,
learning new trends, physical activities, sensory
stimulation
 Social motives- gaining social experience
outside the home, communication with others
having similar interests, peer group attraction,
status and authority, pleasure of bargaining
 Source by Edward M. Tauber
Profiles of online shoppers
 Age range of online shoppers
 20s, 30s, 40s
 Educational attainment
 Above college
 Geographical areas
 Suburbs of major metropolitan areas
Reasons for using the Internet for
shopping
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More convenience
More choice/variety
Save money
More fun
Shopping patterns on the Internet
 Products purchased
 Compueter related goods, books, travel,
clothing, music..
 Frequency of online shopping
 2-4 times, $100-200/year
Reasons given by retailers for not
using the Internet
 Product not appropriate for Internet
sales- limitation of product flow
 Don’t see significant opportunity
 Too expensive-entry costs
 Technology not ready
 Selling online conflicts with core
business channel
Retailer’s objectives for Internet
channels
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Market expansion
Customer retention
Differentiation
Cost reduction
Competitive positioning
Implications for marketing channel
strategy
 Objectives and strategies of the firm and electronic
marketing channels-> pure channel, multi channels,
supportive channel ex) Dell computer- differential
advantage based on distribution strategy
 Role of electronic marketing channels in the marketing
mix-> product, price, promotion by perfect information
flow, however place may gain a sustainable competitive
advantage via electronic marketing channels.
 Channel design and electronic marketing channels>channel design decisions must now include
consideration of the Internet as a marketing channel.
Implications for marketing channel
strategy (continued)
 Channel member selection and electronic
marketing channels->less than 10% of
manufacturers currently use the Internet
as an electronic marketing channel>disintermediation versus more
intermediaries
 Channel management and electronic
marketing channels-> more challenging
 Evaluation and electronic marketing
channel