Integrated Marketing Communications

Promotion/Communication--The Fourth P Means by which firms Inform Persuade Remind consumers about the brands they sell

Means by which firms

Inform

Persuade

Remind

consumers about the brands they sell

The communication process company Idea-> symbols Why encode? Sales person, media, public relations Frame of reference: Attitudes, values, beliefs Source Channel of Message Communication Encode Receiver Decode Noise Noise Feedback loop Noise Fields of experience

Errors in communication can happen in several ways : 1. the source may not adequately transform the abstract idea into an effective set of symbols, 2. a properly encoded message may be sent through the wrong channel and never make it to the receiver, 3. the receiver may not properly transform the set of symbols into the correct abstract idea, and 4. feedback may be so delayed or distorted that it is of no use to the sender .

Errors in communication can happen in several ways :

1. the source may not adequately transform the abstract idea into an effective set of symbols,

2. a properly encoded message may be sent through the wrong channel and never make it to the receiver,

3. the receiver may not properly transform the set of symbols into the correct abstract idea, and

4. feedback may be so delayed or distorted that it is of no use to the sender .

Developing Effective Communication Identify the Target Audience Determine the Communications Objective Design the Message ‘ Select the Communications Channel Establish the Total Promotion Budget Decide on the promotion mix Measure the Promotion’s result Manage & Coordinate IMC

Identify the Target Audience

Determine the Communications Objective

Design the Message ‘

Select the Communications Channel

Establish the Total Promotion Budget

Decide on the promotion mix

Measure the Promotion’s result

Manage & Coordinate IMC

Major Decisions How much do we need to spend? Who should we talk to? What should we say? Campaign Evaluation Where, when, and how often should we say it? What do we want to happen?

Identify the Target Audience Image Analysis: Familiarity Scale Favor ability Scale

Image Analysis:

Familiarity Scale

Favor ability Scale

Developing Effective Communication Identify the Target Audience Determine the Communications Objective Design the Message ‘ Select the Communications Channel Establish the Total Promotion Budget Decide on the promotion mix Measure the Promotion’s result Manage & Coordinate IMC

Identify the Target Audience

Determine the Communications Objective

Design the Message ‘

Select the Communications Channel

Establish the Total Promotion Budget

Decide on the promotion mix

Measure the Promotion’s result

Manage & Coordinate IMC

Communications Objective : The Consumer’s Hierarchy of Effects The stages a prospective buyer goes through from initial awareness to eventual action are : 1. Awareness . The consumer’s ability to recognize and remember the product or brand name. 2. Interest . An increase in the consumer’s desire to learn about some of the features of the product or brand. 3. Evaluation. The consumer’s appraisal of the product or brand on important attributes. 4. Trial . The consumer’s actual first purchase and use of the product or brand. 5. Adoption. Through a favorable experience on the first trial, the consumer’s repeated purchase and use of the product or brand.

The stages a prospective buyer goes through from initial awareness to eventual action are :

Communication Objectives: Hierarchy of Effects Awareness Knowledge Purchase Liking Preference Conviction

Developing Effective Communication Identify the Target Audience Determine the Communications Objective Design the Message Select the Communications Channel Establish the Total Promotion Budget Decide on the promotion mix Measure the Promotion’s result Manage & Coordinate IMC

Identify the Target Audience

Determine the Communications Objective

Design the Message

Select the Communications Channel

Establish the Total Promotion Budget

Decide on the promotion mix

Measure the Promotion’s result

Manage & Coordinate IMC

Design the Message Message Content Rational Appeal Moral Appeal Emotional Appeal 2. Message Structure 3. Message Format 4. Message Source

Message Content

Rational Appeal

Moral Appeal

Emotional Appeal

2. Message Structure

3. Message Format

4. Message Source

Developing Effective Communication Identify the Target Audience Determine the Communications Objective Design the Message ‘ Select the Communications Channel Establish the Total Promotion Budget Decide on the promotion mix Measure the Promotion’s result Manage & Coordinate IMC

Identify the Target Audience

Determine the Communications Objective

Design the Message ‘

Select the Communications Channel

Establish the Total Promotion Budget

Decide on the promotion mix

Measure the Promotion’s result

Manage & Coordinate IMC

Select the Communications Channel Personal Communications Channel: Advocate Channels Expert Channels Social Channels Non Personal Channels : Media Atmospheres Events

Personal Communications Channel:

Advocate Channels

Expert Channels

Social Channels

Non Personal Channels :

Media

Atmospheres

Events

Developing Effective Communication Identify the Target Audience Determine the Communications Objective Design the Message ‘ Select the Communications Channel Establish the Total Promotion Budget Decide on the promotion mix Measure the Promotion’s result Manage & Coordinate IMC

Identify the Target Audience

Determine the Communications Objective

Design the Message ‘

Select the Communications Channel

Establish the Total Promotion Budget

Decide on the promotion mix

Measure the Promotion’s result

Manage & Coordinate IMC

How Much Do We Need to Spend? Percent of (Expected) Sales Competitive Parity i.e., “share of voice” Objective & Task Affordable Method

Percent of (Expected) Sales

Competitive Parity

i.e., “share of voice”

Objective & Task

Affordable Method

Developing Effective Communication Identify the Target Audience Determine the Communications Objective Design the Message ‘ Select the Communications Channel Establish the Total Promotion Budget Decide on the promotion mix Measure the Promotion’s result Manage & Coordinate IMC

Identify the Target Audience

Determine the Communications Objective

Design the Message ‘

Select the Communications Channel

Establish the Total Promotion Budget

Decide on the promotion mix

Measure the Promotion’s result

Manage & Coordinate IMC

The promotion mix Mass: Advertising, public relations, sales promotion Customized: personal selling, direct marketing

Mass: Advertising, public relations, sales promotion

Customized: personal selling, direct marketing

The Promotion Mix Promotional Mass Versus Element Customized Payment Strengths Weaknesses Advertising mass fees paid for - efficient means - high absolute space or time for reaching costs large numbers - difficult to of people receive good feedback Personal Selling customized fees paid to - immediate - extremely Face-to-face salespeople as feedback expensive per Telephone either salaries or - very persuasive exposure Electronic commissions - can select - messages may As long as person audience differ between -to-person interaction can give complex salespeople information -highly irritating - customized message - segmentation - service

Promotional Mass Versus

Element Customized Payment Strengths Weaknesses

Advertising mass fees paid for - efficient means - high absolute

space or time for reaching costs

large numbers - difficult to

of people receive good

feedback

Personal Selling customized fees paid to - immediate - extremely

Face-to-face salespeople as feedback expensive per

Telephone either salaries or - very persuasive exposure

Electronic commissions - can select - messages may

As long as person audience differ between

-to-person interaction can give complex salespeople

information -highly irritating

- customized message

- segmentation

- service

The Promotion Mix Promotional Mass Versus Element Customized Payment Strengths Weaknesses Public Relations mass no direct - often the most - difficult to get payment credible source media in consumer’s cooperation mind Sales Promotion mass wide range of - effective at - short-term Coupons, rebates, samples fees paid, changing - can lead to Sweepstakes depending on behavior promotion promotion in short run wars selected - very flexible - easily duplicated -consumer wait -consumer perception

Promotional Mass Versus

Element Customized Payment Strengths Weaknesses

Public Relations mass no direct - often the most - difficult to get

payment credible source media

in consumer’s cooperation

mind

Sales Promotion mass wide range of - effective at - short-term

Coupons, rebates, samples fees paid, changing - can lead to

Sweepstakes depending on behavior promotion

promotion in short run wars

selected - very flexible - easily

duplicated

-consumer wait

-consumer perception

The Promotion Mix Promotional Mass Versus Element Customized Payment Strengths Weaknesses Direct Marketing customized cost of - messages can be - declining Direct comm. to communication prepared customer generate response: through mail, quickly response Order, interest, visit telephone or - facilitates - database computer relationship management with customer is expensive -privacy

Promotional Mass Versus

Element Customized Payment Strengths Weaknesses

Direct Marketing customized cost of - messages can be - declining

Direct comm. to communication prepared customer

generate response: through mail, quickly response

Order, interest, visit telephone or - facilitates - database

computer relationship management

with customer is expensive

-privacy

Integrating the Promotion Mix In putting together the promotion mix, a marketer must consider : 1. The balance of elements, such as which element should be emphasized and to what extent 2. Because the various promotional elements are often the responsibilities of different departments, coordinating a consistent promotional effort is necessary.

In putting together the promotion mix, a marketer must consider :

1. The balance of elements, such as which element should be emphasized and to what extent

2. Because the various promotional elements are often the responsibilities of different departments, coordinating a consistent promotional effort is necessary.

Factors that influence the use of promotional tools The promotional mix Advertising Personal selling Public Relations Sales promotion Balance considerations Target audience Product life cycle Product characteristics Stages of the buying decision Channel strategies Integrated Marketing Communications Program Direct Marketing

Balance considerations

Target audience

Product life cycle

Product characteristics

Stages of the buying decision

Channel strategies

The Target Audience Promotional programs may be directed at the ultimate consumer or an intermediary (retailer, wholesaler, distributor) or both. Intermediaries – Personal selling Consumer products – mass media if large segments First, Repeat purchases – Direct marketing

Promotional programs may be directed at the ultimate consumer or an intermediary

(retailer, wholesaler, distributor) or both.

Intermediaries – Personal selling

Consumer products – mass media if large segments

First, Repeat purchases – Direct marketing

Product Life Cycle Introduction Growth Maturity Decline To inform To persuade To remind Stage of product life cycle Promotional objective Promotional activity Publicity Advertising Salesforce calling on intermediaries Sales promotion in form of free samples Personal selling to intermediaries Advertising to differentiate attributes from those of competing brands Reminder advertising Sales promotion in form of discounts and coupons Limited personal selling Direct mail reminders Little money spent on promotion

Publicity

Advertising

Salesforce calling

on intermediaries

Sales promotion in form of free samples

Personal selling to intermediaries

Advertising to differentiate attributes from those of competing brands

Reminder advertising

Sales promotion in form of discounts and coupons

Limited personal selling

Direct mail reminders

Little money spent on promotion

Stages of the Buying Decision The importance of the promotional elements varies with the three stages in a consumer’s purchase decision: 1. Prepurchase stage – Advertising, sales promotion 2. Purchase stage – personal selling, sales promotion 3. Postpurchase stage– reassurance: personal selling, advertising

The importance of the promotional elements varies with the three stages in a consumer’s purchase decision:

1. Prepurchase stage – Advertising, sales promotion

2. Purchase stage – personal selling, sales promotion

3. Postpurchase stage– reassurance: personal selling, advertising

How the Importance of promotional elements varies during the consumer’s purchase decision Prepurchase Purchase Postpurchase Personal selling Sales promotion Advertising Importance of promotional tool High Low Stage of consumer’s purchase decision Direct Marketing Public Relations

A comparison of push and pull promotional strategies Manufacturer Wholesaler Retailer Consumer Flow of promotion; mainly personal selling directed to intermediaries Flow of demand stimulation Manufacturer Wholesaler Retailer Consumer Flow of promotion; mainly advertising directed to consumers Flow of demand stimulation A. Push strategy B. Pull strategy

The Promotion Decision Process Corrective actions Corrective actions Planning Developing the Promotion Program - identify the target audience - specify the objectives - set the budget - select the right promotional elements - design the promotion - schedule the promotion Implementation Executing the promotion program - pretest the promotion - carry out the promotion Control Evaluating the promotion program - posttest the promotion - make needed changes

Developing Effective Communication Identify the Target Audience Determine the Communications Objective Design the Message ‘ Select the Communications Channel Establish the Total Promotion Budget Decide on the promotion mix Measure the Promotion’s result Manage & Coordinate IMC

Identify the Target Audience

Determine the Communications Objective

Design the Message ‘

Select the Communications Channel

Establish the Total Promotion Budget

Decide on the promotion mix

Measure the Promotion’s result

Manage & Coordinate IMC

Measure the Promotion Result Impact on Target Audience : Sales Impact Communications Impact

Impact on Target Audience :

Sales Impact

Communications Impact

Developing Effective Communication Identify the Target Audience Determine the Communications Objective Design the Message ‘ Select the Communications Channel Establish the Total Promotion Budget Decide on the promotion mix Measure the Promotion’s result Manage & Coordinate IMC

Identify the Target Audience

Determine the Communications Objective

Design the Message ‘

Select the Communications Channel

Establish the Total Promotion Budget

Decide on the promotion mix

Measure the Promotion’s result

Manage & Coordinate IMC

Traditional versus IMC Perspective Traditional Separate functions handled by experts in separate departments Begin with organization’s goals and products/services IMC Integrate all aspects of the promotional mix under one strategic umbrella Look at all elements of the promotional mix from consumer’s perspective

Traditional

Separate functions handled by experts in separate departments

Begin with organization’s goals and products/services

IMC

Integrate all aspects of the promotional mix under one strategic umbrella

Look at all elements of the promotional mix from consumer’s perspective

Broader Perspective of the Promotion P Conceptualize IMC in terms of “contacts” between customer and brand Not just advertising or traditional promotions

Conceptualize IMC in terms of “contacts” between customer and brand

Not just advertising or traditional promotions

Integrated Marketing Communications Mix and match communication options to build brand equity Determine the optimal mix of options based on: Economic considerations Target market considerations Effectiveness of brand building considerations

Mix and match communication options to build brand equity

Determine the optimal mix of options based on:

Economic considerations

Target market considerations

Effectiveness of brand building considerations

IMC Strategy Focus on the management of two dimensions Consistency Complementarity Ideal Communications program Large number of communication options Sharing same core meaning Complementary advantages & disadvantages

Focus on the management of two dimensions

Consistency

Complementarity

Ideal Communications program

Large number of communication options

Sharing same core meaning

Complementary advantages & disadvantages

Consistency Promotions coordinated to create consistent and cohesive brand image Brand associations share content and meaning Impacts how easily associations can be recalled How easily new associations can be accommodated

Promotions coordinated to create consistent and cohesive brand image

Brand associations share content and meaning

Impacts how easily associations can be recalled

How easily new associations can be accommodated

Advantages of Variation Encoding Variability Principle Presenting information in varied contexts causes information to be encoded in slightly different ways Results in more retrieval routes Improves likelihood of recall

Encoding Variability Principle

Presenting information in varied contexts causes information to be encoded in slightly different ways

Results in more retrieval routes

Improves likelihood of recall

Complementarity Strengths inherent in one negate the disadvantages of another For example, TV advertising Competitive clutter Ad content and structure Consumer involvement

Strengths inherent in one negate the disadvantages of another

For example, TV advertising

Competitive clutter

Ad content and structure

Consumer involvement

ADVERTISING MANAGEMENT

Advertising : 5 M’s Mission: Objectives Money: Money to be spend Message Media Measurement

Mission: Objectives

Money: Money to be spend

Message

Media

Measurement

Mission – Objectives Informative Advertising Persuasive Advertising Reminder Advertising Reinforcement Advertising

Informative Advertising

Persuasive Advertising

Reminder Advertising

Reinforcement Advertising

Communication Objectives: Hierarchy of Effects Awareness Knowledge Purchase Liking Preference Conviction

Developing an Advertising Strategy Message strategy What the ad conveys about the brand Positioning Creative strategy How the ad informs and persuades “Art” Media strategy Where & when the ad is placed “Science”

Message strategy

What the ad conveys about the brand

Positioning

Creative strategy

How the ad informs and persuades

“Art”

Media strategy

Where & when the ad is placed

“Science”

Message Strategy Identify the target audience Determine the communication objectives Reinforce positioning for target segment

Identify the target audience

Determine the communication objectives

Reinforce positioning for target segment

Creative Strategy:Types of Appeals Rational Problem-solution Demonstration Product comparison Testimonial Slice of life Emotional Humor Warmth Fantasy Lifestyle Mood or image Personality symbol Fear

Rational

Problem-solution

Demonstration

Product comparison

Testimonial

Slice of life

Emotional

Humor

Warmth

Fantasy

Lifestyle

Mood or image

Personality symbol

Fear

Jingles vs. Music

Media Strategy Medium Efficiency Contextual fit Scheduling

Medium

Efficiency

Contextual fit

Scheduling

Television Advertising: Advantages and Disadvantages High reach Some targeting Low cost per exposure Auditory & visual Strong visual impact Repetition possible High prestige Limited targeting High total cost Hard to convey complex info Short exposure time Easy to avoid seeing Perishable message Some distrust Clutter

High reach

Some targeting

Low cost per exposure

Auditory & visual

Strong visual impact

Repetition possible

High prestige

Limited targeting

High total cost

Hard to convey complex info

Short exposure time

Easy to avoid seeing

Perishable message

Some distrust

Clutter

Radio Advertising: Advantages and Disadvantages Local coverage Some targeting (geog./station/program) Low cost Quick High frequency Sound, humor, imagery Low production costs Limited targeting Local coverage Auditory only Clutter Low attention Short exposure time Perishable message Hard convey complex info Little research info available

Local coverage

Some targeting (geog./station/program)

Low cost

Quick

High frequency

Sound, humor, imagery

Low production costs

Limited targeting

Local coverage

Auditory only

Clutter

Low attention

Short exposure time

Perishable message

Hard convey complex info

Little research info available

Magazine Advertising: Advantages and Disadvantages Good targeting Quality of color High information content Can convey complex info Longevity of ad Can be saved Pass-along readership Long lead time for placement Limited control of placement Visual only Visual clutter

Good targeting

Quality of color

High information content

Can convey complex info

Longevity of ad

Can be saved

Pass-along readership

Long lead time for placement

Limited control of placement

Visual only

Visual clutter

Newspapers: Advantages and Disadvantages High local coverage Low cost Short lead time Placement in interest sections Quick placement & changes Reader controls exposure Can be saved Can be used for coupons Limited targeting Short life Low attention-getting Short attention span No page position control Poor reproduction Clutter Selective reader exposure Poor pass-along

High local coverage

Low cost

Short lead time

Placement in interest sections

Quick placement & changes

Reader controls exposure

Can be saved

Can be used for coupons

Limited targeting

Short life

Low attention-getting

Short attention span

No page position control

Poor reproduction

Clutter

Selective reader exposure

Poor pass-along

Outdoor Advertising: Advantages and Disadvantages Low cost Location specific High visibility Low message competition Repetition opportunity Low targeting Short exposure time Limited content Poor image Local restrictions

Low cost

Location specific

High visibility

Low message competition

Repetition opportunity

Low targeting

Short exposure time

Limited content

Poor image

Local restrictions

Direct Mail Advertising: Advantages and Disadvantages Good targeting Can be personalized Intense coverage Speed Flexible format High information content Can be saved No ad competition High cost per contact Poor image Clutter May not read

Good targeting

Can be personalized

Intense coverage

Speed

Flexible format

High information content

Can be saved

No ad competition

High cost per contact

Poor image

Clutter

May not read

How Much Do We Need to Spend? Percent of (Expected) Sales Competitive Parity i.e., “share of voice” Objective & Task "Sophisticated" Modeling

Percent of (Expected) Sales

Competitive Parity

i.e., “share of voice”

Objective & Task

"Sophisticated" Modeling

Budget Setting: Do you always get more bang for the buck? Sales Advertising Expenditures Advertising Effectiveness Curve Threshold effect Saturation Effect The Advertising Response Function

Campaign Evaluation Communication Effects Is the Ad Communicating Well? Advertising Program Evaluation Sales Effects Is the Ad Increasing Sales?

The Language of the Media Buyer Term What It Means Reach The number of different people or households exposed to an advertisement. Rating The percentage of households in a market that are tuned to a particular TV show or radio station. Frequency The average number of times an individual is exposed to an advertisement. Gross rating points Reach (expressed as a percentage of the total market) multiplied by frequency. Cost per thousands The cost of advertising divided by the number of thousands of individuals or households who are exposed.

Term What It Means

Reach The number of different people or households exposed to an advertisement.

Rating The percentage of households in a market that are tuned to a particular TV show or radio station.

Frequency The average number of times an individual is exposed to an advertisement.

Gross rating points Reach (expressed as a percentage of the total market) multiplied by frequency.

Cost per thousands The cost of advertising divided by the number of thousands of individuals or households who are exposed.

Frequency Duplication Wear-in, wear-out Advertising Scheduling Timing Some media timing patterns: Continuous (steady) schedule Flighting (intermittent) schedule Pulse (burst) schedule

Frequency

Duplication

Wear-in, wear-out

Timing

Some media timing patterns:

Continuous (steady) schedule

Flighting (intermittent) schedule

Pulse (burst) schedule

Evaluating the Effectiveness of the Ad Pretesting (copy testing) Portfolio tests Jury tests Theater tests Posttesting Aided recall (recognition) Unaided (free) recall Attitude tests Sales tests

Pretesting (copy testing)

Portfolio tests

Jury tests

Theater tests

Posttesting

Aided recall (recognition)

Unaided (free) recall

Attitude tests

Sales tests

Sales Promotions Short term incentives to encourage purchase or sales of a product or service Consumer promotions Trade promotions

Short term incentives

to encourage purchase or sales

of a product or service

Sales Promotion Strategies Cooperative advertising Promotional allowances Contests Incentive programs Management assistance Sampling Price incentives Contests Premiums POP promotion Trading stamps Demonstrations Pull Techniques: Consumer promotions Push Techniques: Trade promotions channel member end consumer

Cooperative advertising

Promotional allowances

Contests

Incentive programs

Management assistance

Sampling

Price incentives

Contests

Premiums

POP promotion

Trading stamps

Demonstrations

Publicity and Public Relations Publicity Negative vs. Positive Control Believability Public relations Integrated with other mark-com Active, not just reactive Crisis and Rumor Management

Publicity

Negative vs. Positive

Control

Believability

Public relations

Integrated with other mark-com

Active, not just reactive

Crisis and Rumor Management

Public Relations and Publicity PR: involves a variety of programs designed to promote and/or protect an organization’s image or its individual products. Always positive. Controlled by the company. Publicity: Attention from media, or other publics. Can be negative. Not controlled by company. High believability.

PR: involves a variety of programs designed to promote and/or protect an organization’s image or its individual products. Always positive. Controlled by the company.

Publicity: Attention from media, or other publics. Can be negative. Not controlled by company. High believability.

PR Tools Publications Events News Speeches Public Service Announcements (PSA’s)

Publications

Events

News

Speeches

Public Service Announcements (PSA’s)

PR: Crisis Management E.g. Exxon Valdez E.g. Tylenol Be ready for crises Take responsibility

E.g. Exxon Valdez

E.g. Tylenol

Be ready for crises

Take responsibility

Salesforce Management: Structures Territory-based Product-based Market-based

Territory-based

Product-based

Market-based

Salesforce Management: Compensation Fixed (salary) Variable (e.g. commission) Allowances Benefits

Fixed (salary)

Variable (e.g. commission)

Allowances

Benefits

Salesforce Management: Evaluation Compare salesperson to expectations Compare salesperson to others Compare salesperson to past performance

Compare salesperson to expectations

Compare salesperson to others

Compare salesperson to past performance

Persuasive Tactics Social Power Internal: Information External Monitoring not required Expert Referent Dependent Monitoring required Reward Coercive

Social Power

Internal: Information

External

Monitoring not required

Expert

Referent

Dependent

Monitoring required

Reward

Coercive

Influence Tactics* “ Click-Whirr” Langer’s photocopy study Social Norms Scarcity “The rule of the few” Foot in the door Door in the face Liking *from “Influence: Science and Practice” by Cialdini

“ Click-Whirr”

Langer’s photocopy study

Social Norms

Scarcity “The rule of the few”

Foot in the door

Door in the face

Liking

*from “Influence: Science and Practice” by Cialdini

Personal Selling How to sell How to manage salesforce

How to sell

How to manage salesforce

Direct Marketing Database Finding prospects Choosing customers to target for special offer Deepening customer loyalty Reactivating customers

Database

Finding prospects

Choosing customers to target for special offer

Deepening customer loyalty

Reactivating customers

Direct Marketing: Channels Face to Face Direct Mail (includes fax, email, voice mail) Catalogs Telemarketing TV and Direct Response Online marketing

Face to Face

Direct Mail (includes fax, email, voice mail)

Catalogs

Telemarketing

TV and Direct Response

Online marketing

Marketing and the Internet Web is primarily used as Promotional Medium Distribution Channel It is also used for Market research New product ideas

Web is primarily used as

Promotional Medium

Distribution Channel

It is also used for

Market research

New product ideas

Primary Uses of Web

Nature of Medium Broadcast Media TV, Print, Radio Reaches broad audience at low cost Impact not measurable Addressable Media Direct Mail and Telemarketing Selective audience but more expensive Impact easily measurable Interactive Media Addressable Measurable Impact Interactive

Broadcast Media

TV, Print, Radio

Reaches broad audience at low cost

Impact not measurable

Addressable Media

Direct Mail and Telemarketing

Selective audience but more expensive

Impact easily measurable

Interactive Media

Addressable

Measurable Impact

Interactive

Disadvantage of Internet as Mass Medium Eyeballs are everywhere Share of mind is poor

Eyeballs are everywhere

Share of mind is poor

Advertising on the Web Banner Ads Target Ads Sponsorships Promotion On-line Direct Mail

Banner Ads

Target Ads

Sponsorships

Promotion

On-line Direct Mail

Banner Advertising Can build brand awareness But, often low click-through

Can build brand awareness

But, often low click-through

Pricing Internet Ads Number of Exposures CPM varies from $10 (general rotation) to $65 (keyword) Also on quality of user and level of customization Click-through For action Per lead, per transaction, per dollar spent

Number of Exposures

CPM varies from $10 (general rotation) to $65 (keyword)

Also on quality of user and level of customization

Click-through

For action

Per lead, per transaction, per dollar spent

The Internet as a Distribution Channel Business to Consumer Business to Business Consumer to Consumer

Business to Consumer

Business to Business

Consumer to Consumer

What can be sold over the Internet?

US Consumer Spending Online

How Internet Marketers Learn about YOU! Cookies Clustering eToys, Petopia, Williams-Sonoma, Drugstore.com Collaborative Filtering Amazon, Bluefly Profiling Systems Lycos, Cnet, Sony, Beyond.com Artificial Intelligence eBay, ETrade

Cookies

Clustering

eToys, Petopia, Williams-Sonoma, Drugstore.com

Collaborative Filtering

Amazon, Bluefly

Profiling Systems

Lycos, Cnet, Sony, Beyond.com

Artificial Intelligence

eBay, ETrade

Managing Customer Privacy Is accepting free products in return for personal information a violation of your privacy? Is this trade-off acceptable if you are told how the information will be used? BizRate, TRUSTe, ePinions to report invasive behavior

Is accepting free products in return for personal information a violation of your privacy?

Is this trade-off acceptable if you are told how the information will be used?

BizRate, TRUSTe, ePinions to report invasive behavior

Business-to-Business Biggest driver of Internet commerce From about $17 billion in 1998 to $700 billion in 2003 Example: Weyerhauser’s Door Plant

Biggest driver of Internet commerce

From about $17 billion in 1998 to $700 billion in 2003

Example: Weyerhauser’s Door Plant

Consumer to Consumer Auction based mechanism Ebay $120 million in sales during first quarter of 1998 $ 6 million in commissions

Auction based mechanism

Ebay

$120 million in sales during first quarter of 1998

$ 6 million in commissions

Pricing and the Internet Open-ness driving prices downward Auction-based business models

Open-ness driving prices downward

Auction-based business models

A Typology of Web Sites Two Classifications By Corporate Purpose By Source of Income

Two Classifications

By Corporate Purpose

By Source of Income

By Corporate Purpose Corporate Presence Promotional Presence Transactional Presence Conversational Presence Community Creation

Corporate Presence

Promotional Presence

Transactional Presence

Conversational Presence

Community Creation

By Source of Income Advertising Support Model Subscription Support Model Cost Elimination Model (Improve efficiency) Sales Revenue Model Information Trading Model

Advertising Support Model

Subscription Support Model

Cost Elimination Model (Improve efficiency)

Sales Revenue Model

Information Trading Model