E Mktg & Customer RelationshipsPresentation Transcript
6 E-Marketing and Customer Relationship Management
To define electronic marketing & recognize it’s marketing characteristics - addressability, interactivity, memory, control, accessibility, and digitalization - and their influence on marketing strategy.
To understand how information technology can facilitate customer relationship management (CRM)
To identify the legal and ethical considerations in electronic marketing
Marketing on the Internet
Electronic Commerce (E-Commerce)
Sharing business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks
Electronic Marketing (E-Marketing)
The strategic process of creating, distributing, promoting, and pricing products for targeted customers in the virtual environment of the Internet
Basic Characteristics of Electronic Marketing: Addressability
Addressability is a marketer’s ability to identify customers before they make a purchase
How e-merchants attain addressability
Limit access to areas of their website to encourage customer registration
Offer contests and prizes in exchange for consumer information
Place “cookies” on visitor’s computer to track visitor usage and preferences
Basic Characteristics of Electronic Marketing: Interactivity
Interactivity is the ability for “Real-time” interaction with customers which allows for customizing a marketing offer & a customer’s response to the firm’s marketing communications
Interactivity allows for Community - a sense of group membership or feeling of belonging
Virtual communities on the Web
Basic Characteristics of Electronic Marketing: Memory
Memory is the ability to access databases and to use the data in real-time to customize a marketing offer.
Memory is a tool to facilitate the marketing concept
A database (or data warehouse) is a collection of information such as customer profiles and past purchase histories arranged for easy access and retrieval.
Basic Characteristics of Electronic Marketing: Control & Digitalization
Control refers to customers’ ability to regulate the information they view and the rate and sequence of their exposure to that information.
Digitalization is the ability to represent a product, or at least some of its benefits, as digital bits of information.
Search engines …
Portal … is a multi-service website that serves as a gateway to other websites. (Google, MSN.com)
Basic Characteristics of Electronic Marketing: Accessibility
Accessibility is the ability to obtain information available on the Internet.
Informs and educates the inquiring consumer about competing products and prices
Creates competition for the consumer’s attention
Helps make information available to employees to service customers
E-Marketing Strategies E-Marketing Strategy Considerations Distribution Systems Target Markets Product Marketing Promotion Mediums Pricing
Top Ten Activities for Wireless Web Device Users Source: “New Survey Indicates Wireless Web Penetration Highest Among Young Affluent Males,” TNS Intersearch, press release, Feb. 7, 2001, http://www.intersearch.tnsofres.com/.
E-tailing E-tailing is one of the most dynamic areas of retailing, accounting for 20 billion dollars in 2000 and estimated to rise to over 100 billion by 2005. Bluefly, a leading on-line retailer launched in 1997, continues to find success in the on-line format.
On Line Retail Sales Forrester Research, Cambridge, Mass., cited in Marketing News,15July2006,pg 37
Fashion Tip: Get Online WSJ, October 31, 2003
Yoox.com sells discount designer apparel
Net-A-Porter.com sells designer clothes such as Marc Jacobs and Chloea (their shoppers spend an average of $850 per visit).
Missed Sales Opportunities
Prada Gucci Why some designers do not get involved with e-commerce?
Lack the foundation to handle single-order sales
Shopping “experience” is halted
E-commerce sites are very costly
U.S. Ad Spending (in billions) Source: Veronis Suhler Stevenson Commuincation Industry Forecast, 2005,cited in Marketing News, 15July2006, pg.32 Medium 2004 2006 2005 2007 $20.0 $48.2 $26.8 $58.1 $22.1 $14.4 $13.5 $12.7 $12.1 Consumer Magazines $21.2 $20.53 $20.0 Cable & Satellite Radio $56.2 $54.0 $52.1 Newspapers $24.3 $21.7 $18.9 Cable & Satellite TV 47.2 $43.9 $43.1 Broadcast TV $16.0 $12.6 $9.6 Internet
Google Inc. ,an internet search engine, sells search related ads targeted at internet users.
Google sells ads on behalf of thousands of web sites other than its own to attract more big-name advertisers. Advertisers specify websites & can run animated display ads.
Delaney, Kevin J. “Google to Target Brands in Revenue Push.”
WSJ , 25 April 2005: B1 and B4.
Example: Applied Marketing
The new ad features “provide more control to us” are effectively cheaper with cost-per-impression pricing. (Julie Roehm, Dir. of Mktg. Communications, DaimlerChrysler).
(Less waste of ad budget)
Google will begin auctioning ad placements for its partner sites based on Cost Per Impression (based on how many people see the ad), as well as its traditional cost-per-click method.
Online Ad Monitoring
Online advertisers are monitoring web surfing to better target their advertisements towards potential buyers.
Marketers Push Online Ads Based on Your Surfing Habits, WSJ, April 6, 2005
Current: auto advertisers place ads on auto related sites.
Using behavioral targeting, advertisers are able to place more ads to target audiences (auto enthusiasts) based on their surfing behavior.
Example: Applied Marketing
“ Improved” Ad Strategy
For example, someone who reads personal finance articles on a news site could be served ads for a stock broker when he visits an automotive web site
Ad companies are trying to get website owners to form an advertising network to serve ads based on the content that the surfer reads on another company’s website.
Formed a network of websites that participate in delivering ads to viewers surfing the network
Information is collected when surfers register at websites
Website clients are provided ads on their sites based on what users are reading (surfing behavior)
Motivation: web site owners could get more advertising than normal
Hurdles : individual sites have to share data about their customers which web owners are reluctant to do
Who’s using the Ads
Starwood Hotels & Resorts utilizes behavioral targeting by delivering ads to people who might have browsed related articles on the internet, or surfed the website of any Starwood branded hotel.
Ford likes the chance to reach customers who appear from their web surfing to be interested in “a certain type of vehicle, and even down to a certain model”
Customer Relationship Management (CRM)
Focuses on using information about customers to create marketing strategies that develop and sustain desirable long-term relationships
Information technology provides the ability to identify & target individual customers & allows marketers to shift their focus from increasing share of market to increasing share of customer.
Is not just a cost-reduction tactic
Is not information overload - overwhelmed by gathering unnecessary data
Information Sources & Database Marketing
1994 56% of manufacturers use or are building a customer database 2000 85% of manufacturers use database marketing to compete Database Marketing
CRM & The 80/20 Rule
80 percent of business profits come from 20 percent of customers.
Information technology can profile customers in real-time and assess their lifetime value (LTV) to the firm.
Some customers may generate a low level of profit & be too expensive to retain.
Firms can focus on developing and managing long-term relationships with more profitable customers.
Department stores such as Nordstrom & Saks can increase members spending by 25% (WSJ B1, 3August 1995)
Information Technology Supports CRM
Customer support software
Provides real time customer interaction to capture information and to improve service
Sales Support software
Links sales force to information that facilitates the selling process to determine the best solution for customers
Determines order status, tracks deliveries, and identifies service problems
CRM is based on Information Systems that provide a Decision Support System (DSS) Process Software Database
Legal and Ethical Issues in E-Marketing
Liability for lax security (identity theft & data breaches)
Personal privacy issues
Website requirements for registration
Collection of information from children
Use of spyware in software
Unsolicited commercial e-mail (UCE)
Misappropriation of intellectual property
Illegal copying of copyrighted software, movies, CDs, and other creative materials
Examples of Spam
[email_address] ... Apple Cider Weight Loss Feb 261k
ZLand Business Solut ... Convert Your Leads Into Lifetime Clients
[email_address] Live From My Bedroom
Spam are direct response/commercial e-mails
Deceptive solicitations are growing with them.
Spam Tactics Escalate
Laws do not work because they rely on district attorneys to prosecute spammers (& vagueness).
A law with an “unsubscribe” provision has not cut the volume of spam.
Controlling the Attack of Unsolicited Pornography & Spam Law
What to look for?
FTC warns consumers:
Chain letters that involve money or valuable items and promise big returns are illegal.
Some chain letters win your confidence by claiming they are legal but chances are you will receive little or no money back on your “investment.”
If targeted, contact your ISP or email the FTC at: firstname.lastname@example.org
The BBBOnLine Privacy Seal and Program Explanation Reprinted by permission of the Council of Better Business, Inc.
Buzz marketing is an attempt to create a trend or acceptance of a product through word-of-mouth Viral marketing is a strategy to get users of the Internet to pass on ads and promotions to others. Case in Point: “ Complaints About iPod Nano”
Cases in Point: Viral Marketing: Attempts by marketers to promote multiplier effect on the web
Case 1: Hotmail 's Hyper-Growth In its first 1.5 years, Hotmail acquired over 12 million subscribers. A traditional print publication would hope to reach 100,000 subscribers within a few years of launch, but Hotmail signs up more than 150,000 subscribers every day.
From company launch to 12 million users, Hotmail spent less than $0.5 million on advertising, marketing and promotion. This compares to over $20 million spent by Juno, one of Hotmail's close competitors with a fraction of membership.
Once the first member subscribed from India, 100,000 more followed within 3 weeks. Now Hotmail is the largest email provider in India, despite the fact that it has not had any marketing campaign in that country.
Online Gambling Gets Head Start From Flood Of Play-For-Fun Games WSJ, June 11,2001,By Thomas Weber
Gambling online is illegal in the U.S.
2001 -Nevada State Gaming Commission voted 17-4 to allow online gambling
Case example: Applied Marketing
“ For-Fun” sites
Play for “points” not $$$
Allows casino operators to move “gambling” on the web
Growing rapidly in popularity (Virtual reality)
“ Wager Works”--“the Microsoft of online gambling”
Social & Economic Issues
Main concern- Minors, government wants reassurance
Debate on licensing/fees: Current plan is
$250,000 fee per year for 2 yrs.
Opponents of Fee
“ makes it impossible for small entrepreneurs to participate”
Advocates of Fee
“ ensures that only reputable companies undertake Internet gambling”
Why So Important?
Online gambling is close to real thing
Minor software changes will enable transition from “points” to $$$ “real gambling”
Offshore internet gambling companies took in $1.5 bil in 2000 & could reach $5 bil by 2003 Missing out
UK-- online gambling is legal
Harrah’s website is called “Lucky Me” & hopes to operate the site legally in the USA
The site will offer games of skill, not games of chance
The internet gambling market is estimated at $5 billion in 2003.
Harrah’s Places a Wager on the Web WSJ, 12 November 2003,By: Christina Binkley
Harrah’s web site marketing strategy
Primary target audience -- women
The site will not feature slot machines, vampy girls or shots of the Las Vegas Strip
To lure in the female audience, the site offers feminine colors, and games that appeal to women
A portion of “Lucky Me” revenue will be set aside to pay out cash winnings, much like the lottery.
No “high rollers” – everyone is equal
Other Online Gambling Ventures
MGM Mirage in Las Vegas launched their gambling site in 2001 & closed in 2003 reporting a $5 million loss.
Issues: underage gamblers and customers from illegal jurisdictions .
Stations Casinos Inc. launched their internet gambling site in 2001, and shut it down shortly after, realizing that they didn’t have any customer support.
Harrah’s Competitive Analysis
Harrah’s believes that the other companies folded because of their style of gambling.
The competitors offered games that you would see in a real casino.
Harrah’s believes that the customer doesn’t want to play the more traditional games, but are looking for something new.
Harrah’s is looking to meet the needs of the customer.