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