Online Consumer Behavior Different Types of Buyers


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  •          Contract with an online research company or a "virtual facility" that handles recruiting and "virtual rooms"          Recruiting: can be done traditionally…lists, phone calls or web sites, e-mail invitation, online panels, on-line lists          Careful screening. Whatever considerations the study requires, plus hardware and ISP access.          Participants receive invitations with vital info, plus a 2 nd screener, more like a test. Instructed to log onto site to test out specs in advance. Then either get tech support to help or drop out of FG          Duration: 60 to 90 mins          30 - 45 questions, depending on complexity and probing          Moderator & tech person sign on 30 mins beforehand to watch respondents log on          A re-screener may be incorporated at this point          Recruit 10 - 15 respondents for 8 to show          Final respondents selected          Typically questions are pre-loaded into some kind of program. Moderator's guide is identical to traditional FG.          Conduct group Generate transcripts immediately following
  • “ They vary, but $12,000 for a couple of two-hour sessions is about average”. – Industry Standard, Group Dynamics, Danielle Svetcov, Nov 01, 1999.
  • Online Consumer Behavior Different Types of Buyers

    1. 1. Online Consumer Behavior
    2. 2. Different Types of Buyers <ul><li>B2B </li></ul><ul><ul><li>Small business 1-75 employees </li></ul></ul><ul><ul><ul><li>Over 25 million businesses </li></ul></ul></ul><ul><ul><li>66% buy online, 50% have web sites </li></ul></ul><ul><ul><li>Large business 250+ employees </li></ul></ul><ul><ul><li>90% buy online & have websites </li></ul></ul><ul><ul><ul><li>Approximately 7 million businesses </li></ul></ul></ul>
    3. 3. B2B Purchasing <ul><ul><li>40% of all B2B sales are done online </li></ul></ul><ul><ul><li>More than $4.8 trillion in sales </li></ul></ul>
    4. 4. Different Types of Buyers <ul><li>B2C </li></ul><ul><li>US population is over 286 million </li></ul><ul><ul><li>4.6% of world population </li></ul></ul><ul><ul><li>Aging </li></ul></ul><ul><ul><li>Becoming more ethnically diverse </li></ul></ul><ul><ul><li>Growth in non-traditional households (76.5%) </li></ul></ul>
    5. 5. Internet Usage <ul><li>46% of sessions are to conduct business </li></ul><ul><li>27% are recreation driven </li></ul><ul><li>70% of users connect from home </li></ul><ul><ul><li>44% online 1+ hours per day </li></ul></ul><ul><li>Consumers see web as critical for access to information </li></ul><ul><ul><li>But consumers can be misled </li></ul></ul>
    6. 6. Cyberspace Demographics <ul><li>64% of US population is online </li></ul><ul><li>32% of users have college degree </li></ul><ul><ul><li>Higher incomes </li></ul></ul><ul><li>Most users tend to be 35-54 years old </li></ul><ul><ul><li>Teens (12-17) most rapidly growing group </li></ul></ul><ul><ul><ul><li>Digital wallets </li></ul></ul></ul><ul><ul><li>100% of college students are online </li></ul></ul>
    7. 7. Cyberspace Demographics <ul><li>52% of Internet users are women </li></ul><ul><ul><li>make most retail decisions </li></ul></ul><ul><ul><ul><li>70% of online sales are by women </li></ul></ul></ul><ul><li>Minority Groups </li></ul><ul><ul><li>26% of African Americans online </li></ul></ul><ul><ul><li>49% of Hispanics </li></ul></ul><ul><ul><li>69% of Asian Americans </li></ul></ul>
    8. 8. Cyberspace Demographics <ul><li>49% of users are in a city </li></ul><ul><ul><li>70% of homes in Portland & Seattle online </li></ul></ul><ul><ul><li>Only 14% of users are rural consumers </li></ul></ul><ul><li>8% of Internet users have a disability </li></ul><ul><ul><li>4% are blind </li></ul></ul>
    9. 9. World Usage Statistics (2005) 312% 8.3% 4% Middle East 161% 36.8% 11% Europe 183% 8.9% 57% Asia 258% 1.8% 14% Africa 5 yr. Growth Rate % Internet Penetration % of World Population Region
    10. 10. What consumers do online <ul><li>Communicating </li></ul><ul><ul><li>email most used function </li></ul></ul><ul><ul><li>ICQ fastest area of growth </li></ul></ul><ul><ul><ul><li>multi-tasking & work communications </li></ul></ul></ul><ul><li>Seeking information </li></ul><ul><ul><li>Replacement of the library </li></ul></ul><ul><ul><li>Most sought information online is travel </li></ul></ul><ul><ul><ul><li>35% of buyers book flights online </li></ul></ul></ul><ul><ul><ul><li>26% of consumers track stocks online </li></ul></ul></ul>
    11. 11. What are college students doing? <ul><li>College students </li></ul><ul><ul><li>67% browse for topics of interest </li></ul></ul><ul><ul><li>62% conduct academic research </li></ul></ul><ul><ul><li>41% get news online </li></ul></ul><ul><ul><li>31% make travel plans </li></ul></ul>
    12. 12. What consumers do online <ul><li>Purchasing </li></ul><ul><ul><li>B2C sales are steadily growing </li></ul></ul><ul><ul><li>Higher income consumers more likely to buy online </li></ul></ul><ul><ul><li>Women more likely to purchase online </li></ul></ul><ul><ul><li>81% of college students have purchased online </li></ul></ul><ul><ul><li>US & European Teens spent $1.3 billion online in 2001 </li></ul></ul>
    13. 13. What consumers do online <ul><li>Gaming </li></ul><ul><ul><li>30% of all Internet users play games online </li></ul></ul><ul><ul><ul><li>62% of young adults </li></ul></ul></ul><ul><ul><ul><li>41% of those 50+ </li></ul></ul></ul><ul><ul><ul><li>Men are more loyal & largest group of gamers </li></ul></ul></ul><ul><ul><ul><li>Prefer football & outer space games </li></ul></ul></ul><ul><ul><ul><li>Women prefer business simulations & classic arcade games </li></ul></ul></ul>
    14. 14. Gaming Industry <ul><li>U.S. video game market, $6.9 billion in revenue (1999) </li></ul><ul><ul><li>PC Game market, $1.5 billion in revenue </li></ul></ul><ul><li>Online game revenue, $106 million (1999) </li></ul><ul><ul><li>From: Sony Everquest, Electronic Arts Ultima Online, and Microsoft’s Asheron’s Call </li></ul></ul><ul><ul><li>$10/month subscription fee </li></ul></ul><ul><li>Online game revenue, predicted to be over $800 million by 2005 </li></ul>
    15. 15. Gaming Industry <ul><li>Traditional video and PC games cost millions of dollars to produce </li></ul><ul><ul><li>Sell for about $30 each </li></ul></ul><ul><li>Online games are less complex and can be made for approximately $75,000 </li></ul>
    16. 16. The Groove Alliance <ul><li>Game making firm </li></ul><ul><ul><li>Started with Real Pool on CD-Rom </li></ul></ul><ul><ul><li>Trade show success </li></ul></ul><ul><ul><li>3D Groove Plug In </li></ul></ul><ul><ul><li>Ability to embed ads on pool table </li></ul></ul><ul><li>Real Pool sold out right to </li></ul>
    17. 17. The Groove Alliance <ul><li>Since that time sold many more games </li></ul><ul><ul><li>Non-exclusive licensing agreements </li></ul></ul><ul><ul><ul><li>Tank Wars </li></ul></ul></ul><ul><ul><li>Merchandising rights retained by Groove Alliance </li></ul></ul>
    18. 18. What Consumers do online <ul><li>Entertaining </li></ul><ul><ul><li>Online music most popular among those less than 20 years old </li></ul></ul><ul><ul><li>Online music sales will be over $5.4 billion (2005) </li></ul></ul><ul><ul><ul><li>Napster: Peer-to-Peer exchange phenomena </li></ul></ul></ul><ul><ul><ul><li>iPod & iTune phenomena </li></ul></ul></ul>
    19. 19. Online Dating Industry <ul><li>$516 million in revenues (2005) </li></ul><ul><li>Over 850 online dating services </li></ul><ul><ul><li>59% of daters find it “difficult” to meet someone new </li></ul></ul><ul><ul><li>Most likely place to meet people: </li></ul></ul><ul><ul><ul><li>Work (22%), Internet (18%), Bars (18%), Clubs (11%) </li></ul></ul></ul><ul><li>Downsides: stigma & anonymity (married) </li></ul>
    20. 20. Key Players <ul><li> </li></ul><ul><li>Yahoo! Personals </li></ul><ul><li>eHarmony </li></ul><ul><li>Lavalife </li></ul><ul><li>Traditional dating firms </li></ul><ul><ul><li>It’s Just Lunch </li></ul></ul><ul><li>Social networking communities </li></ul>
    21. 21. <ul><li>Conceived in 1993 </li></ul><ul><li>Owned by Interactive Corporation </li></ul><ul><ul><li>Ticketmaster </li></ul></ul><ul><li>World’s largest online dating firm </li></ul><ul><ul><li>900,000 paying subscribers </li></ul></ul><ul><ul><li>12 million profiles posted </li></ul></ul><ul><ul><li>January (2004), 29.6 million unique visitors </li></ul></ul>
    22. 22. <ul><li>Partnered with several firms </li></ul><ul><ul><li>America Online & Microsoft’s MSN </li></ul></ul><ul><li>Subscriptions as low as $12.99 per month </li></ul><ul><li>New services include: </li></ul><ul><ul><li>video, off line speed dating, friend list, travel site, MatchLive off line events </li></ul></ul>
    23. 23. What drives usage <ul><li>Growth of technology </li></ul><ul><li>Time starved lifestyle </li></ul><ul><li>Information hungry </li></ul><ul><li>Changes in marketing </li></ul><ul><ul><li>Greater focus on direct marketing initiatives </li></ul></ul>
    24. 24. Reasons Consumers Buy Online <ul><li>Convenience </li></ul><ul><ul><ul><li>repeat purchase </li></ul></ul></ul><ul><ul><ul><li>one-stop shopping </li></ul></ul></ul><ul><li>Assortment </li></ul><ul><ul><ul><li>millions of products </li></ul></ul></ul><ul><ul><ul><li>comparison shopping </li></ul></ul></ul><ul><li>Save money </li></ul><ul><ul><ul><li>bargains, taxes, free shipping </li></ul></ul></ul>
    25. 25. Yet online context is different <ul><li>Online consumer behavior differs from real life </li></ul><ul><li>Quality cues </li></ul><ul><ul><li>Stability of firm and product quality hard to judge </li></ul></ul><ul><li>Cognitive difficulty </li></ul><ul><ul><li>Consumers get frustrated when they cannot easily find information </li></ul></ul>
    26. 26. How is the Internet Unique? <ul><li>Product features </li></ul><ul><li>Search versus Experience goods </li></ul><ul><ul><li>Search: products & services that are easy for a consumer to evaluate </li></ul></ul><ul><ul><ul><li>predictable brand names, can test product features </li></ul></ul></ul><ul><ul><li>Experience: difficult to understand and evaluate </li></ul></ul><ul><ul><ul><li>complex, highly subjective </li></ul></ul></ul>
    27. 27. How is the Internet Unique? <ul><li>Flow (peak/optimal experience) </li></ul><ul><ul><li>seamless sequence of responses </li></ul></ul><ul><ul><li>loss of self-consciousness </li></ul></ul><ul><ul><li>intrinsically enjoyable & self-reinforcing </li></ul></ul><ul><li>Experienced by web users </li></ul><ul><ul><li>Balance between capability & challenge </li></ul></ul><ul><ul><li>Implies skill & learning on web </li></ul></ul>
    28. 28. How is the Internet Unique? <ul><li>Community </li></ul><ul><ul><li>Create involvement, loyalty, traffic, & profits </li></ul></ul><ul><ul><li>Changes control of marketers </li></ul></ul><ul><ul><ul><li>Requires collaboration rather than orchestration </li></ul></ul></ul><ul><li>Virtual communities rebuild declining social connections </li></ul><ul><ul><li>ICQ fastest growing part of Internet </li></ul></ul><ul><ul><li>AOL has 19,000 chat rooms accessed at once </li></ul></ul><ul><ul><li>Six of twenty most heavily trafficked web sites were community based in 1998 </li></ul></ul>
    29. 29. Community Characteristics <ul><li>Use of communication tools </li></ul><ul><li>Rules that define membership </li></ul><ul><li>A strong focus </li></ul><ul><li>Collaborative production of material by members </li></ul><ul><li>Repeat use by members </li></ul><ul><li>Social bonds </li></ul><ul><li>Growth can be problematic because focus can be lost & content breaks down </li></ul>
    30. 30. Types of communities <ul><li>Personal communities: small network of linked individuals </li></ul><ul><ul><li>mainly direct communication within a small group that is familiar with one another </li></ul></ul><ul><li>Extended communities: many small sub-groups within an overarching structure </li></ul><ul><ul><li>flexible in scale and scope </li></ul></ul><ul><ul><li>create more personalization in smaller niches </li></ul></ul>
    31. 31. Ways to Communicate <ul><li>Rings of personal, direct links </li></ul><ul><ul><li>Email networks/listservs </li></ul></ul><ul><ul><ul><li>Can use groupware for joint content creation </li></ul></ul></ul><ul><ul><ul><li>Size/growth may hurt rings </li></ul></ul></ul><ul><li>Content trees with messages going through a central point </li></ul><ul><ul><li>Bulletin boards with hierarchies by topic area </li></ul></ul><ul><ul><ul><li>Help maintain focus but allow for growth </li></ul></ul></ul>
    32. 32. Membership rules <ul><li>Strong communities seem to have strict membership rules </li></ul><ul><ul><ul><li>initiation rites & challenging tasks create ties </li></ul></ul></ul><ul><ul><ul><li>strong interests & passions </li></ul></ul></ul><ul><li>Weak communities have lenient rules </li></ul><ul><ul><ul><li>consumers tend not to commit </li></ul></ul></ul><ul><ul><ul><li>can still be used, but firms attempt to escalate membership </li></ul></ul></ul>
    33. 33. Benefits of Community <ul><li>Changes width & breadth of referrals </li></ul><ul><ul><li>most consumers rely on 3 people for WOM </li></ul></ul><ul><ul><li>easy access to experts to more precise information </li></ul></ul>
    34. 34. Benefits of Community <ul><li>Attractive content & loyalty </li></ul><ul><ul><li>builds more content </li></ul></ul><ul><ul><li>reduces member turnover </li></ul></ul><ul><ul><li>leads to more hours on a site </li></ul></ul><ul><ul><li>creates trust & collaboration with consumers </li></ul></ul><ul><li>Form of marketing research </li></ul><ul><li>Potentially sell profile information </li></ul>
    35. 35. EBay’s Community Mission <ul><li>We help people trade practically anything on earth. EBay was founded with the belief that people are honest and trustworthy. We believe that each of our customers, whether a buyer or a seller, is an individual who deserves to be treated with respect. We will continue to enhance the online trading experiences of all our constituents—collectors, hobbyists, small dealers, unique item seekers, bargain hunters, opportunistic sellers, and browsers. The growth of the EBay community comes from meeting and exceeding the expectations of these special people. </li></ul>
    36. 36. Hard to utilize <ul><li>Predicted to be a great Internet business model </li></ul><ul><li>Many firms not able to capture it for profitability </li></ul><ul><li>Those that exist have declining membership rates & are costly to maintain </li></ul>
    37. 37. Negative Consumer Behaviors <ul><li>Social isolation </li></ul><ul><ul><li>Increased usage online leads to </li></ul></ul><ul><ul><ul><li>Decline in social interaction </li></ul></ul></ul><ul><ul><ul><li>Increase in loneliness & depression </li></ul></ul></ul><ul><ul><ul><li>Less likely to shop in person, read the paper </li></ul></ul></ul><ul><li>Internet addiction </li></ul><ul><ul><li>Loss of sleep </li></ul></ul><ul><ul><li>Loss of physical relationships </li></ul></ul>
    38. 38. Negative Consumer Behaviors <ul><li>Anti-corporate activism </li></ul><ul><ul><li>Unprecedented consumer power </li></ul></ul><ul><ul><li>Complaint & hate websites </li></ul></ul><ul><ul><ul><li> </li></ul></ul></ul><ul><ul><ul><li> </li></ul></ul></ul><ul><ul><ul><li> </li></ul></ul></ul><ul><li>Corporate reactions </li></ul><ul><ul><li>Buy, Monitor, Respond, Ignore </li></ul></ul>
    39. 39. Interactivity & The Six I’s of Customer Satisfaction Using Technology to be More Customer Focused
    40. 40. OnStar <ul><li>Started in 1995 </li></ul><ul><li>Nation’s leading provider of in-vehicle safety, security, & communications services </li></ul><ul><ul><ul><li>Wirelss & Global Positioning systems </li></ul></ul></ul><ul><ul><ul><li>Telematics </li></ul></ul></ul><ul><li>4 million subscribers </li></ul><ul><li>2005, Standard on all new GM vehicles </li></ul><ul><ul><ul><li>More than 50 models </li></ul></ul></ul>
    41. 41. OnStar <ul><li>Over 10 years, serviced 53+ million subscriber interactions </li></ul><ul><li>Average month: </li></ul><ul><ul><li>383,000 routing calls </li></ul></ul><ul><ul><li>43,000 remote door unlocks </li></ul></ul><ul><ul><li>23,000 road side assistance </li></ul></ul><ul><ul><li>27,000 remote vehicle diagnostic checks </li></ul></ul><ul><ul><li>15,000 emergency service requests </li></ul></ul><ul><ul><li>400 stolen vehicle assistance </li></ul></ul>
    42. 42. OnStar <ul><li>Advanced Automatic Crash Notification System (AACN) </li></ul><ul><ul><li>Started in Malibu, 26 models by 2006 </li></ul></ul><ul><li>Hands free calling (2000) </li></ul><ul><ul><li>630 million minutes sold to subscribers </li></ul></ul><ul><li>New Command Center </li></ul><ul><ul><li>With OnStar sound studio for digital broadcasting </li></ul></ul>
    43. 43. OnStar <ul><li>Strategic Alliances </li></ul><ul><ul><li>Leading public safety & emergency medical organizations </li></ul></ul><ul><ul><ul><li>Association of Public Safety Communications Officials (APCO) </li></ul></ul></ul><ul><ul><li>Agencies supporting efforts to find missing children </li></ul></ul><ul><ul><ul><li>America’s Most Wanted </li></ul></ul></ul>
    44. 44. OnStar <ul><li>Award-winning advertising campaign </li></ul><ul><ul><li>“ Real Stories” launched in 2002 </li></ul></ul><ul><ul><ul><li>Users share life changing experiences </li></ul></ul></ul><ul><li>2005, OnStar brand reached 100% brand awareness among new vehicle buyers </li></ul><ul><ul><ul><li>80% of subscribers will only consider vehicles with OnStar for next purchase </li></ul></ul></ul>
    45. 45. Growth in Interactive media <ul><li>Marketers are: </li></ul><ul><ul><li>Searching for new segments </li></ul></ul><ul><ul><li>Wanting more efficient targeting </li></ul></ul><ul><ul><li>Demanding more relevant consumer information </li></ul></ul>
    46. 46. Growth in Interactive media <ul><li>Technology now offers more control of information marketers’ receive </li></ul><ul><li>Interactivity is one area where marketers can use technology to more effectively reach out to the consumer </li></ul>
    47. 47. Dimensions of Interactivity <ul><li>Selectivity </li></ul><ul><ul><li>extent to which users are offered content choices </li></ul></ul><ul><ul><li>such as entertainment or shopping </li></ul></ul><ul><ul><li>expands consumers’ options & content </li></ul></ul><ul><ul><li>able to deliver to more relevant & personalized information to the customer </li></ul></ul>
    48. 48. Dimensions of Interactivity <ul><li>Ease of effort </li></ul><ul><ul><li>extent to which users must exert themselves to access content </li></ul></ul><ul><ul><li>consumer confusion & frustration with systems should decrease overtime </li></ul></ul>
    49. 49. Dimensions of Interactivity <ul><li>Use monitoring </li></ul><ul><li>extent to which the system monitors use </li></ul><ul><ul><li>monitor information, choices, track behaviors </li></ul></ul><ul><ul><li>feedback to marketer, greater control with use of databases </li></ul></ul><ul><ul><ul><li>raises privacy issues </li></ul></ul></ul>
    50. 50. Dimensions of Interactivity <ul><li>Responsiveness </li></ul><ul><ul><li>degree to which a medium reacts to a user </li></ul></ul><ul><ul><li>circumvent users’ prejudgments to prevent screening out of material </li></ul></ul><ul><ul><li>allow for more focused shopping experiences </li></ul></ul><ul><ul><li>can better cross sell </li></ul></ul>
    51. 51. Dimensions of Interactivity <ul><li>Ease of Adding Content </li></ul><ul><ul><li>extent to which users may add material to the system that a mass audience can access </li></ul></ul><ul><ul><li>users become sources of information </li></ul></ul><ul><ul><li>word of mouth/brand advocates </li></ul></ul><ul><ul><ul><li>consumer complaints become more relevant </li></ul></ul></ul>
    52. 52. Dimensions of Interactivity <ul><li>Interpersonal Communication Potential </li></ul><ul><ul><li>extent to which media facilitates interpersonal communication </li></ul></ul><ul><ul><li>Person-to-person interaction </li></ul></ul><ul><ul><li>bi-directionality of communication & relationship </li></ul></ul><ul><ul><li>greater involvement with other consumers & the marketer </li></ul></ul>
    53. 53. Dimensions of Interactivity <ul><li>Asynchronicity </li></ul><ul><ul><li>extent to which messages can be preserved and shifted at convenient times </li></ul></ul><ul><ul><li>message permanence </li></ul></ul><ul><ul><li>can combine information in personally relevant ways </li></ul></ul>
    54. 54. Interactivity <ul><li>Responsiveness is the most common feature used on web sites </li></ul><ul><li>Systems are not yet meeting all consumer needs </li></ul>
    55. 55. Customer Focus <ul><li>In addition to interactivity, marketers have other tools that they use to improve customer satisfaction </li></ul><ul><ul><li> Interconnection  Interface </li></ul></ul><ul><ul><li> Interactivity  Involvement </li></ul></ul><ul><ul><li> Integrity  Individualism </li></ul></ul>
    56. 56. Interconnection <ul><li>Using networks to connect to individuals </li></ul><ul><ul><li>Internet is the world’s largest computer network </li></ul></ul><ul><ul><li>Other technological & human networks </li></ul></ul><ul><li>Requires establishing a network business strategy </li></ul>
    57. 57. Interface <ul><li>Creating digital assets that can be displayed or purchased </li></ul><ul><ul><li>Ease of use is especially important </li></ul></ul><ul><ul><li>Primarily about communication </li></ul></ul><ul><li>An Effective interface should be designed to move people through the buying process </li></ul><ul><ul><li>May require cooperation of all functions of a business </li></ul></ul>
    58. 58. Interactivity <ul><li>Facilitates relationship marketing </li></ul><ul><ul><li>Define previously </li></ul></ul><ul><ul><li>Makes it easier and less expensive to </li></ul></ul><ul><ul><ul><li>create dialogue with customers </li></ul></ul></ul><ul><ul><ul><li>gather consumer information </li></ul></ul></ul><ul><ul><ul><li>give consumers greater choice & options </li></ul></ul></ul>
    59. 59. Involvement <ul><li>Drawing customers into the marketing experience & relationship </li></ul><ul><ul><li>increasing customer commitment </li></ul></ul><ul><ul><li>truly adding value for the customer </li></ul></ul><ul><ul><ul><li>providing valuable information </li></ul></ul></ul><ul><ul><ul><li>building unique experiences </li></ul></ul></ul><ul><ul><ul><li>creating products/services that a customer relies on exclusively </li></ul></ul></ul>
    60. 60. Individualism <ul><li>Getting beyond segmentation to understanding and tracking individual </li></ul><ul><ul><li>direct marketing </li></ul></ul><ul><li>Can be a spectrum from use monitoring to interactive dialogue </li></ul><ul><li>Databases used to mass customize; communicate to individual; measure effectiveness of messages </li></ul>
    61. 61. Integrity <ul><li>Privacy, security, confidentiality crucial </li></ul><ul><li>Ethics become especially important </li></ul><ul><li>Raises issues:  unsolicited email </li></ul><ul><li>  storing sensitive information </li></ul>
    62. 62. Selling Online And Channel Issues
    63. 63. Marketing Mix Product Strategy Pricing Strategy Promotion Strategy Channel Strategy component Logistics Management component Distribution Strategy The Marketing Mix
    64. 64. Channels of Distribution <ul><li>Supply channel brings materials & supplies to manufacturer </li></ul><ul><li>Distribution channel moves product from manufacturer to consumer </li></ul><ul><ul><ul><li>thought to make the process of getting product to market more efficient </li></ul></ul></ul><ul><ul><ul><ul><li>Can carry broader product lines & categories </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Are closer to the customer & can develop knowledge/profile of target market </li></ul></ul></ul></ul>
    65. 65. Channel Functions <ul><li>Market makers </li></ul><ul><li>Buyers agents </li></ul><ul><li>Seller agents </li></ul><ul><li>Payment enablers </li></ul><ul><li>Fulfillment providers </li></ul><ul><li>Context providers </li></ul>
    66. 66. Product Flow Negotiation Flow Ownership Flow Information Flow Promotion Flow Manufacturer Transportation Company Wholesalers Retailers Consumers Manufacturer Wholesalers Retailers Consumers Manufacturer Wholesalers Retailers Consumers Manufacturer Transportation Company Wholesalers Retailers Consumers Manufacturer Transportation Company Wholesalers Retailers Consumers The Five Flows
    67. 67. Two-Level Manufacturer Consumer Three-Level Manufacturer Retailer Consumer Four-Level Manufacturer Wholesaler Retailer Consumer Five-Level Manufacturer Agent Wholesaler Retailer Consumer The Channel Structure
    68. 68. Distribution Strategies <ul><li>Direct distribution: manufacturer to buyer </li></ul><ul><ul><li>Build-to-order direct sales </li></ul></ul><ul><ul><ul><li>mass customization </li></ul></ul></ul><ul><ul><li>Dell (1999) selling $40 million worth of computers on the web daily </li></ul></ul><ul><ul><ul><li>75% of orders placed online </li></ul></ul></ul><ul><ul><ul><li>50% technical support online </li></ul></ul></ul><ul><ul><ul><li>2002 extended direct sales to kiosks in retail malls </li></ul></ul></ul><ul><ul><ul><ul><li>try product, place order on kiosk </li></ul></ul></ul></ul>
    69. 69. Distribution Strategies <ul><li>Direct digital distribution: some products will be completely digital someday </li></ul><ul><ul><ul><li>music, airline tickets, hotel reservations, video games, magazines, newspapers, movie tickets, financial services </li></ul></ul></ul><ul><li>Internet’s ease of creating direct distribution channels already impacting industries </li></ul>
    70. 70. Distribution Strategies <ul><li>Disintermediation-- dropping layers of distribution channel </li></ul><ul><ul><li>travel agents, financial services, florists </li></ul></ul><ul><ul><ul><li>Delta sold 13% of tickets online in 2000 </li></ul></ul></ul><ul><ul><ul><li>2001, travelers spent $19.4 billion purchasing tickets online </li></ul></ul></ul><ul><li>Reintermediation-- add layers </li></ul><ul><ul><li>real estate </li></ul></ul>
    71. 71. Distribution Strategies <ul><li>Some firms have created exclusive distribution agreements </li></ul><ul><ul><ul><li>Levi’s (1998 manufacturer sells online; 2000 exclusive arrangements created) </li></ul></ul></ul><ul><li>Multichannel Distribution--2 or more distribution channels to better reach customers </li></ul><ul><ul><ul><li>Gateway: web site, telephone, retail stores </li></ul></ul></ul><ul><ul><ul><li>Charles Schwab: 24/7 channel strategy </li></ul></ul></ul>
    72. 72. The Go-to-Market Strategy <ul><li>A plan for reaching & serving the right customers in the right markets through the right channels with the right products and the right value proposition </li></ul><ul><li>Total customer experience </li></ul><ul><ul><li>Attract most desirable customers </li></ul></ul><ul><ul><li>High sales </li></ul></ul><ul><ul><li>Lowest possible cost </li></ul></ul>
    73. 73. The Go-to-Market Strategy <ul><li>An integrated multi-channel model </li></ul><ul><li>Low cost, low touch channels </li></ul><ul><ul><li>Direct mail, Internet, Telephone </li></ul></ul><ul><li>High cost, high touch channels </li></ul><ul><ul><li>Volume distributors, Value-added partners, Field sales forces </li></ul></ul><ul><li>Take better advantage of low cost, low touch channels where appropriate </li></ul>
    74. 74. The Go-to-Market Strategy <ul><li>Make multiple channels work together </li></ul><ul><li>Channels take on specific roles within the sales cycle </li></ul><ul><ul><li>Move lead generation to telephone sales </li></ul></ul><ul><li>Integrate the channels through information systems </li></ul><ul><ul><li>Management Information System (CRM) </li></ul></ul><ul><li>Designed for a specific target market </li></ul><ul><ul><li>Goal: seamless customer experience </li></ul></ul>
    75. 75. Distribution Issues <ul><li>Channel Cannibalization: loss of sales in one channel when a new one is created </li></ul><ul><ul><li>sales shifting from catalog to online </li></ul></ul><ul><li>Channel conflict can exist </li></ul><ul><ul><li>Goals diverge among channel members </li></ul></ul><ul><ul><li>Disputes arise over responsibility for functions & technology </li></ul></ul>
    76. 76. Staples <ul><li>Sells office supplies, business services, furniture, and technology </li></ul><ul><li>Locations in six countries </li></ul><ul><li>$11 billion in annual sales </li></ul><ul><ul><li>$1 billion in online revenues (2001) </li></ul></ul><ul><li>1,400+ stores, catalog, kiosks </li></ul><ul><li>Website first established in 1998 </li></ul>
    77. 77. Staples <ul><li>Staples thought web would cannibalize other sales </li></ul><ul><ul><li>web actually increased sales </li></ul></ul><ul><li>Average yearly spending of small business customers increased $600  $2800 when shopped online </li></ul><ul><li>When buyers shop all 3 channels, purchases are 4.5 times greater than if shop only 1 channel </li></ul>
    78. 78. Web Channels <ul><li>Clicks only </li></ul><ul><li>1998: Venture capital firms provided $26 billion+ to Internet start-ups </li></ul><ul><ul><ul><li>Average return for venture Internet start-up funds 25% (1998) </li></ul></ul></ul><ul><ul><ul><li>Leading funds returning 100%+ </li></ul></ul></ul><ul><li>Most opportunities were cash burning companies </li></ul><ul><ul><li>just launched their services </li></ul></ul><ul><ul><li>not attracted a customer base </li></ul></ul>
    79. 79. Web Channels <ul><li>Mid-2000: IPO Internet Bubble </li></ul><ul><li>An estimated 700-1000 of these Internet start-ups went bust </li></ul><ul><ul><ul><li> </li></ul></ul></ul><ul><ul><ul><li> </li></ul></ul></ul><ul><ul><ul><li> </li></ul></ul></ul><ul><ul><ul><li> </li></ul></ul></ul>
    80. 80. The Case of <ul><li>Opened virtual doors in 1995 </li></ul><ul><li>Evloved from books to department store </li></ul><ul><li>Sells products in 220+ countries </li></ul><ul><li>Created first catalog in 2001 </li></ul>
    81. 81. The Case of <ul><li>Personalized customer interaction </li></ul><ul><li>Top etailer for brand recognition & customer satisfaction </li></ul><ul><li>2003, earned first quarterly profit not tied to the holiday shopping season </li></ul><ul><li>Exclusive partnerships with Target, Circuit City, Toys R’ Us, and Babies R’ Us </li></ul>
    82. 82. Web Channels <ul><li>Bricks & clicks </li></ul><ul><ul><li>70% of online retailers are bricks & clicks </li></ul></ul><ul><ul><ul><li>outnumber clicks only </li></ul></ul></ul><ul><ul><li>In 2000, 33% of total bricks & clicks sales were from the Internet </li></ul></ul>
    83. 83. The Case of Walmart <ul><li>Opened in 1962 </li></ul><ul><li>Largest mass merchandiser </li></ul><ul><ul><li>1.4 million employees, 4000 stores </li></ul></ul><ul><ul><li>$218 billion in annual sales </li></ul></ul><ul><ul><li>100million customers visit each week </li></ul></ul><ul><ul><li>2001-2002 sales growth was 14% </li></ul></ul><ul><li>First website in 1995 </li></ul>
    84. 84. <ul><li>Founded in January 2000, initially independent from Wal-Mart Stores, Inc. </li></ul><ul><li>Eventually integrated as separate business unit </li></ul><ul><ul><li>Return policy for online purchases in store </li></ul></ul><ul><li>Offers more than 600,000 stock keeping units </li></ul>
    85. 85. <ul><li>When independent had sales tax advantage </li></ul><ul><li>Considering rolling out in-store kiosks </li></ul><ul><li>Strategy: “Serve customers in the way they want to be served where they want to be served…” </li></ul>
    86. 86. What consumers want from online storefronts <ul><li>Convenience--75% of shoppers go online for this reason </li></ul><ul><ul><li>want it for returns too </li></ul></ul><ul><li>Information </li></ul><ul><ul><li>about store policies, product information, contact information, </li></ul></ul><ul><ul><ul><li>Sears estimates that 10% of its store appliance sales are influenced by information from </li></ul></ul></ul>
    87. 87. What consumers want from online storefronts <ul><li>Speed </li></ul><ul><ul><li>want option of same day delivery </li></ul></ul><ul><li>Privacy & Security </li></ul><ul><ul><li>want privacy policy </li></ul></ul><ul><ul><li>studies show apprehensiveness about purchasing online with credit card </li></ul></ul><ul><ul><ul><li>yet 59% of sample reported using them </li></ul></ul></ul>
    88. 88. What consumers want from online storefronts <ul><li>Service </li></ul><ul><ul><li>want timely, human feedback </li></ul></ul><ul><li>Simplicity </li></ul><ul><ul><li>want simple, easy to use site technology </li></ul></ul><ul><li>Convergence </li></ul><ul><ul><li>want sites that feel like offline stores </li></ul></ul>
    89. 89. Etailing <ul><li>Internet retailing 3rd most significant transformation of retail industry </li></ul><ul><ul><li>1950s--shopping malls arrived </li></ul></ul><ul><ul><li>1970s--large discount stores & nationwide chains arrived </li></ul></ul><ul><ul><li>1990s--Internet arrival </li></ul></ul><ul><ul><ul><li>50% of Internet users were shopping online (2001) </li></ul></ul></ul>
    90. 90. Etailing <ul><li>$3.5 billion spent on online shopping in month of March, 2001 </li></ul><ul><ul><ul><li>top categories: travel & apparel </li></ul></ul></ul><ul><ul><ul><li>Amazon sales leader: 15.1% of online purchases, EBay second: 14.5% </li></ul></ul></ul><ul><ul><li>Online customer acquisition costs are $18 per person </li></ul></ul><ul><ul><li>Online returns average 8% of online purchases </li></ul></ul><ul><ul><ul><li>higher in some categories, such as apparel </li></ul></ul></ul>
    91. 91. Etailer Decisions <ul><li>Service level </li></ul><ul><li>Products & Assortment </li></ul><ul><li>Inventory turns </li></ul><ul><li>Prices </li></ul><ul><li>Returns & After Market Service </li></ul><ul><li>Trust & Privacy </li></ul><ul><li>Payment facilitation </li></ul>
    92. 92. An Etailer Predicament <ul><li>Shopping Basket Abandonment </li></ul><ul><ul><li>65% of consumers leave their shopping basket before sale is completed </li></ul></ul><ul><ul><li>Reasons: </li></ul></ul><ul><ul><ul><li>Sticker shock at total & shipping costs </li></ul></ul></ul><ul><ul><ul><li>40% experience technical difficulties </li></ul></ul></ul><ul><ul><ul><li>Too complex order forms that take too long to download </li></ul></ul></ul><ul><ul><ul><ul><li>stock-outs, computer crash, rejected credit card, & change mind at last minute </li></ul></ul></ul></ul>
    93. 93. Customer Relationship Management (CRM) Managing the Individual Marketing Relationship Using Technology
    94. 94. Marketing to Individuals <ul><li>Segment: homogenous group similar characteristics/buying behaviors </li></ul><ul><ul><li>A one-to-many communication model </li></ul></ul><ul><li>With CRM, marketers target the individual </li></ul><ul><ul><li>Direct interaction to create customer value, benefit the marketer, & build relationship </li></ul></ul><ul><ul><li>A one-to-one interactive communication model </li></ul></ul>
    95. 95. Individual Personalization <ul><li>Beyond era of mass marketing </li></ul><ul><li>Product differentiation through personalization </li></ul><ul><ul><li>unique solution for each individual </li></ul></ul><ul><ul><li>features that benefit the individual </li></ul></ul><ul><ul><li>match customer tastes without waste </li></ul></ul><ul><li>Yet, hard for consumers to sort through so many options & hard to implement </li></ul>
    96. 96. Choice Assistance <ul><li>Online techniques & databases can assist consumers in locating the best options for themselves </li></ul><ul><ul><li>set of products </li></ul></ul><ul><ul><li>determine individual’s tastes & needs </li></ul></ul><ul><ul><li>make recommendation </li></ul></ul><ul><ul><li>simplify selection </li></ul></ul>
    97. 97. Lands End <ul><li>Opened in 1963 as the Lands’ End Yacht Stores </li></ul><ul><ul><li>Averaged 15 mail orders per day </li></ul></ul><ul><li>Bought by Sears in 2002 for $1.9 billion </li></ul><ul><li>2005, Fifteenth largest mail order firm </li></ul><ul><li>Annual sales of over $1.3 billion </li></ul><ul><li>Target quality-conscious, middle-age consumers with traditional casual apparel </li></ul>
    98. 98. Lands End <ul><li>Direct merchant that acts as its own intermediary </li></ul><ul><li>Multi-channel merchant </li></ul><ul><ul><li>Catalogs, stores, and website </li></ul></ul><ul><ul><ul><li>269 million catalogs mailed in 2001 </li></ul></ul></ul><ul><ul><ul><li>16 outlet and inlet stores in three countries </li></ul></ul></ul><ul><ul><ul><li>Website online in 1995, initially offering 100 products </li></ul></ul></ul><ul><li>Today, every product in catalog sold online </li></ul>
    99. 99. Lands End <ul><li>15 million web site visitors (1999) </li></ul><ul><ul><li>$61 million in revenue </li></ul></ul><ul><ul><li>Considered world’s largest apparel website </li></ul></ul><ul><li>Known for customer service </li></ul><ul><ul><li>First firm with 24/7 order taking & 800 number </li></ul></ul><ul><ul><li>Lands End Live (talk with personal shopper) </li></ul></ul>
    100. 100. Lands End <ul><li>Website also customer service oriented </li></ul><ul><ul><li>Lands End My Personal Shopper (live chat) </li></ul></ul><ul><ul><li>Online style advice </li></ul></ul><ul><ul><li>Swim suit fitting </li></ul></ul><ul><ul><li>Three-dimensional model </li></ul></ul><ul><ul><li>Build an oxford shirt </li></ul></ul>
    101. 101. Lands End <ul><li>Online orders filled through catalog warehouse </li></ul><ul><ul><li>Size of 16 football fields </li></ul></ul><ul><ul><li>Sort 10,000 pieces per hour </li></ul></ul><ul><ul><li>Ship 150,000 orders per day </li></ul></ul><ul><li>Example of CRM using a multi-channel model resulting in seamless customer experience </li></ul>
    102. 102. Customization <ul><li>Mass customization: combines individual level information with flexible manufacturing processes </li></ul><ul><ul><li>Web is efficient method of gathering information & inputting it into production </li></ul></ul><ul><li>Democracy of goods: technology can make available what used to be only for the very rich </li></ul>
    103. 103. Different types of customization <ul><li>Adaptive : same basic product, users filter possibilities </li></ul><ul><li>Cosmetic : standard product, presented differently </li></ul><ul><li>Transparent : unique products without alerting customers </li></ul><ul><li>Collaborative : dialogue to articulate needs, identify offerings, & customize products </li></ul>
    104. 104. Implication <ul><li>Can personalize as a point of differentiation & create competitive advantage </li></ul><ul><ul><li>products & web sites become problem solving tools </li></ul></ul><ul><ul><li>online banking industry example </li></ul></ul>
    105. 105. Relationship Building Efforts
    106. 106. Communication techniques <ul><li>Push communication techniques </li></ul><ul><ul><li>direct, forced communication </li></ul></ul><ul><ul><ul><li>email advertisements, banners/pop-ups, publicity </li></ul></ul></ul><ul><li>Pull techniques </li></ul><ul><ul><li>indirect, on-demand communication </li></ul></ul><ul><ul><li>more interactive </li></ul></ul><ul><ul><ul><li>viral marketing efforts, sign up for newsletter, links </li></ul></ul></ul><ul><li>Creates value for both parties </li></ul>
    107. 107. Communication goals <ul><li>Create specific communication goals to build relationships </li></ul><ul><ul><li>sales/transactions </li></ul></ul><ul><ul><li>dialogue/discussions </li></ul></ul><ul><ul><li>research/gathering information </li></ul></ul><ul><ul><li>service/disseminate information </li></ul></ul><ul><ul><li>support/problem solving </li></ul></ul><ul><ul><li>lead acquisition/new opportunities </li></ul></ul>
    108. 108. Strategies Underlie these Goals <ul><li>Marketers’ strategies </li></ul><ul><li>- lifetime customer value </li></ul><ul><li>- targeted messages </li></ul><ul><li>-distribution efficiency </li></ul><ul><li>- customer dialogue </li></ul><ul><li>Involving consumers is important </li></ul><ul><li>Consumers’ strategies </li></ul><ul><li>- life savings & reward </li></ul><ul><li>- fewer irrelevant ones </li></ul><ul><li>- wider availability </li></ul><ul><li>- seller responsiveness </li></ul><ul><li>Adding value is key </li></ul>
    109. 109. Different Types of Relationships <ul><li>One half of relationship involves creating value for customers by exceeding expectations </li></ul><ul><li>Can market at different individual levels, focusing on: </li></ul><ul><ul><li>acquisition, development, or retention </li></ul></ul><ul><ul><li>Can calculate potential ROI to figure out where best to focus efforts </li></ul></ul>
    110. 110. Acquisition <ul><li>Initial cost of bringing in a new customer </li></ul><ul><li>Can be reduced with online activities </li></ul><ul><li>Should answer 3 questions, which are enhanced with online activity: </li></ul><ul><ul><li>what to say to the customer </li></ul></ul><ul><ul><li>when to make contact </li></ul></ul><ul><ul><li>how much to spend on communicating with each customer </li></ul></ul>
    111. 111. Development <ul><li>Expanding on share of customer </li></ul><ul><ul><li>Additional business from current customers </li></ul></ul><ul><li>Rely on learning and personalization </li></ul><ul><li>Match or build services to tastes </li></ul><ul><li>Customize to individual </li></ul><ul><ul><li>Bundling may occur </li></ul></ul><ul><ul><li>Trust & reliability become important </li></ul></ul>
    112. 112. Retention <ul><li>Focus on keeping business and loyalty of current customers </li></ul><ul><li>Online enhancements can inexpensively support loyalty </li></ul><ul><ul><li>Include product support with original sale </li></ul></ul><ul><ul><li>May want to subsidize retention, even if it is a short-term loss </li></ul></ul>
    113. 113. Peppers & Rogers Group <ul><li>13 offices around the world </li></ul><ul><ul><li>From US to Turkey </li></ul></ul><ul><li>400 annual seminars </li></ul><ul><li>Coined term one-to-one marketing </li></ul><ul><ul><li>Turned into CRM </li></ul></ul><ul><ul><ul><li>Customer based business strategies </li></ul></ul></ul><ul><ul><ul><li>Know customer & use that information to increase ROI </li></ul></ul></ul><ul><li>Case studies </li></ul>
    114. 114. Implementation: One-to-One Marketing <ul><li>Focus on share of customer </li></ul><ul><li>Communicate to customers as individuals </li></ul><ul><ul><li>Initiate & maintain dialogues to learn </li></ul></ul><ul><ul><ul><li>but marketers must be responsive </li></ul></ul></ul><ul><li>Use the Internet & Databases to track, understand, & communicate with individuals </li></ul><ul><ul><li>Differentiate customers, spend more on those who are more valuable </li></ul></ul>
    115. 115. Implementation continued <ul><li>Customer speak->marketer listen, make together </li></ul><ul><ul><li>Customer makes offer to group of marketers, self-selection to create product </li></ul></ul><ul><li>Success is measured as lifetime value of a customer </li></ul><ul><ul><li>Single customer, more products (share of customer) </li></ul></ul>
    116. 116. Summary CRM steps <ul><li>Identify & record customers </li></ul><ul><li>Sort them by needs, ideally treat as individuals </li></ul><ul><li>Interact with them effectively </li></ul><ul><li>Record interactions </li></ul><ul><li>Customize marketing offer </li></ul><ul><li>Update information in databases </li></ul><ul><li>Sell the same customers more products in future </li></ul>
    117. 117. Organizing a Marketing Department
    118. 118. Marketing department organization <ul><li>Organized by: </li></ul><ul><ul><li>geography (region) </li></ul></ul><ul><ul><li>product (product management) </li></ul></ul><ul><ul><li>brands (brand management) </li></ul></ul><ul><ul><li>customer </li></ul></ul><ul><ul><ul><li>often used for e-commerce </li></ul></ul></ul><ul><ul><ul><li>executive view --broad understanding of full marketplace </li></ul></ul></ul>
    119. 119. Customer management <ul><li>Specialization by customer portfolio </li></ul><ul><li>Manager “owns” a group of customers and is responsible for their activity </li></ul><ul><ul><li>customers are tracked & attempt is made to get greater “share of customer” </li></ul></ul><ul><li>Weakness is the range of knowledge needed for successful management </li></ul>
    120. 120. Databases & Data Mining
    121. 121. Operational Data Tools <ul><li>Techniques marketers use to learn more about their own operations, competitors, and customers </li></ul><ul><li>Includes: </li></ul><ul><ul><li>databases data warehouses </li></ul></ul><ul><ul><li>cookies server log files </li></ul></ul><ul><ul><li>web analytics </li></ul></ul>
    122. 122. Database <ul><li>Collection of data structured for quick retrieval of pieces for analysis & application </li></ul><ul><li>History </li></ul><ul><ul><ul><li>1960s-how much your firm spent on advertising this year </li></ul></ul></ul><ul><ul><ul><li>1980s-advertising dollars by state & year </li></ul></ul></ul><ul><ul><ul><li>1990s-drill down to city/month/zip code </li></ul></ul></ul><ul><ul><ul><li>2000s-predictive, based on past, what are we likely to spend in future? How will this affect sales? </li></ul></ul></ul>
    123. 123. Database <ul><li>Benefits of use </li></ul><ul><ul><li>Identify best/worst customers </li></ul></ul><ul><ul><li>Better target promotions to customers </li></ul></ul><ul><ul><li>Help customers find what they need </li></ul></ul><ul><ul><li>Establish two-way communication with customers </li></ul></ul><ul><ul><li>Integrate data across business divisions </li></ul></ul><ul><ul><li>Track competitors </li></ul></ul>
    124. 124. Database <ul><li>Marketing Data collected </li></ul><ul><ul><li>Markets </li></ul></ul><ul><ul><li>Segments </li></ul></ul><ul><ul><li>Competitors </li></ul></ul><ul><ul><li>Suppliers </li></ul></ul><ul><ul><li>Partners </li></ul></ul>
    125. 125. Data <ul><li>Consumer data collected </li></ul><ul><ul><li>Demographics, geodemographics </li></ul></ul><ul><ul><li>Transaction histories </li></ul></ul><ul><ul><li>Lifestyle </li></ul></ul><ul><ul><li>Behaviors </li></ul></ul><ul><ul><ul><li>clickstream, time spent on site </li></ul></ul></ul><ul><ul><li>Technical specifications </li></ul></ul><ul><ul><ul><li>browser type </li></ul></ul></ul>
    126. 126. Databases <ul><li>Marketers: suited for CRM activities </li></ul><ul><ul><li>customer contact </li></ul></ul><ul><ul><li>identify customers for special offers </li></ul></ul><ul><ul><li>cross or up-selling </li></ul></ul><ul><ul><li>tailoring advertising messages </li></ul></ul><ul><ul><li>predicting purchase rates </li></ul></ul>
    127. 127. Database Planning & Design <ul><li>Usually done by IT department </li></ul><ul><ul><li>Plan to decide what they want & where to get it from </li></ul></ul><ul><ul><li>Organized by files, records, & fields </li></ul></ul><ul><li>In-house database: build from company data </li></ul><ul><li>Compiled database: buy from others who collect data </li></ul>
    128. 128. Double Click <ul><li>Online advertising firm </li></ul><ul><ul><li>Started in 1996 </li></ul></ul><ul><li>Purchased data warehouse firm Abacus in 1999 </li></ul><ul><ul><li>Owns database with over 3.5 billion transaction from 90+ million US households </li></ul></ul><ul><ul><ul><li>Largest proprietary buyer behavior database in US </li></ul></ul></ul>
    129. 129. Double Click’s Abacus <ul><li>Abacus Database Products </li></ul><ul><ul><li>B2C Alliance: consumer focused catalog & specialty retail marketers </li></ul></ul><ul><ul><ul><li>Data from over 90 million households </li></ul></ul></ul><ul><ul><li>B2B Alliance: direct response marketers </li></ul></ul><ul><ul><ul><li>Data from over 75 million business contacts that are actively purchasing </li></ul></ul></ul>
    130. 130. Double Click’s Abacus <ul><li>Abacus Database Products </li></ul><ul><ul><li>Retail Solutions: specialty retailers who want to increase store traffic within a defined trade area </li></ul></ul><ul><ul><ul><li>Highly targeted mailings for increased store sales </li></ul></ul></ul><ul><ul><li>Data Management Solutions: customized solution for targeting “right” customers with “best” offer </li></ul></ul><ul><ul><ul><li>Multichannel databases, cross channel measurement, data processing, and strategic/analytic services to assess your customers’ behaviors </li></ul></ul></ul>
    131. 131. Data Warehousing <ul><li>Store houses for massive amounts of data </li></ul>
    132. 132. Data Mining <ul><li>Software systematically sifts through databases looking for significant patterns & correlations </li></ul><ul><li>Used to create predictive relationships </li></ul><ul><ul><li>profile credit card purchases </li></ul></ul><ul><ul><li>probability a customer will purchase $500 of goods from a catalog </li></ul></ul><ul><ul><li>more than filtering, make predictions </li></ul></ul>
    133. 133. Jiffy Lube <ul><li>Began data warehouse project (1998) </li></ul><ul><ul><li>Head of marketing, IT, Enterprise data manager </li></ul></ul><ul><li>Took 7 months to plan </li></ul><ul><ul><li>Longer to load 35 million vehicle records </li></ul></ul><ul><ul><li>When Parent, Pennzoil, bought Quaker State added another 15 million records </li></ul></ul><ul><li>Used to profile most profitable customers </li></ul><ul><ul><li>Target them with direct mail offers of services that match their interests </li></ul></ul>
    134. 134. Privacy Sensitive Tools <ul><li>Cookies: small data files automatically placed on a user’s browser by a web site’s server </li></ul><ul><ul><li>used to track & gather information </li></ul></ul><ul><li>Bugs: electronic GIF images placed by 3rd party media & research companies </li></ul><ul><ul><li>collects cookie information on more than one site </li></ul></ul>
    135. 135. Privacy Sensitive Tools <ul><li>Server Logs: plain text files that track web data </li></ul><ul><ul><li>interpreted by reporting programs </li></ul></ul><ul><ul><ul><li>user’s name, place requested, whether file was received or not, size of file, browser used, date/time of request, presence of firewall or not </li></ul></ul></ul><ul><ul><ul><li>traffic counters </li></ul></ul></ul><ul><li>Web Analytics: collecting, organizing & analyzing data for marketing applications </li></ul>
    136. 136. Marketing Research
    137. 137. Overview of Marketing Research <ul><li>Primary vs Secondary Research </li></ul><ul><li>Qualitative vs Quantitative Methods </li></ul><ul><li>Research process </li></ul><ul><ul><li>state problem/question, develop plan, collect & organize data, analyze data, report results </li></ul></ul><ul><li>Traditional research moving online </li></ul><ul><li>New methods developing for e-commerce </li></ul>
    138. 138. Methods Moving Online <ul><li>Qualitative </li></ul><ul><ul><li>Focus Groups Online Brainstorming </li></ul></ul><ul><ul><li>Interviews Chat Analysis </li></ul></ul><ul><li>Quantitative </li></ul><ul><ul><li>Surveys Panels </li></ul></ul><ul><ul><li>Reviews Conjoint analysis </li></ul></ul><ul><ul><li>Simulations </li></ul></ul>
    139. 139. Online Focus Groups <ul><li>Earliest use documented in 1994 </li></ul><ul><li>Outgrowth of chat room technology </li></ul><ul><li>Originally limited to Internet topics </li></ul><ul><li>Serious trade publication coverage began about 1998 </li></ul><ul><li>Now used for wide variety of topics </li></ul><ul><li>Researchers divided on applicability </li></ul>
    140. 140. Process <ul><li>Determine target population </li></ul><ul><li>Arrange technical resources & logistics </li></ul><ul><li>Recruit sample </li></ul><ul><li>Re-screen sample </li></ul><ul><ul><li>Identity & Internet, computing ability & resources </li></ul></ul><ul><li>Conduct focus group(s) </li></ul><ul><li>Prepare transcripts </li></ul><ul><li>Generate analysis and reports </li></ul>
    141. 141. Demonstration
    142. 142. Advantages <ul><li>Speed </li></ul><ul><ul><li>Avg. turnaround time 5 business days </li></ul></ul><ul><ul><ul><li>Transcripts available immediately </li></ul></ul></ul><ul><ul><ul><li>Analysis and reports generated sooner </li></ul></ul></ul><ul><li>Cost savings </li></ul><ul><ul><li>Travel </li></ul></ul><ul><ul><li>Focus group facility rental/catering </li></ul></ul><ul><ul><li>Transcription </li></ul></ul><ul><li>Access difficult-to-reach populations </li></ul><ul><ul><li>Specific user groups </li></ul></ul>
    143. 143. Advantages <ul><li>Quality of Response </li></ul><ul><ul><li>Less opportunity for only a few participants to dominate (potentially) </li></ul></ul><ul><ul><li>Inclusive: most respondents answer every question </li></ul></ul><ul><ul><li>Anonymity increases participants' candor and interaction with moderator </li></ul></ul><ul><ul><li>Private treatment of &quot;sensitive&quot; topics </li></ul></ul>
    144. 144. Disadvantages <ul><li>Online populations not representative </li></ul><ul><li>No auditory and visual cues </li></ul><ul><ul><li>Tone of voice, Facial expressions, Body language, Gestures, Group interactions </li></ul></ul><ul><li>Reliance on &quot;emoticons” </li></ul><ul><ul><li> , “JK” & “LOL” </li></ul></ul><ul><li>Participant Resources </li></ul><ul><ul><li>Level of Internet experience, Typing/Writing skills, Quality of computer and software </li></ul></ul>
    145. 145. Other Issues <ul><li>Other Issues </li></ul><ul><ul><li>Site security </li></ul></ul><ul><ul><li>False identities </li></ul></ul><ul><ul><li>Attention to topic vs. external stimuli </li></ul></ul><ul><ul><li>Maximum of 6 respondents suggested </li></ul></ul><ul><ul><li>Labor Intensive </li></ul></ul><ul><li>Still Experimental... </li></ul>
    146. 146. Measuring Effectiveness of Interactive Media Began with Web Advertising
    147. 147. Measurement <ul><li>Most Measures tell cost effectiveness </li></ul><ul><ul><li>not tell if achieved desired effect </li></ul></ul><ul><li>Can refine media & creative choice in real time </li></ul><ul><li>Hit & Stickiness were first widely accepted standards </li></ul><ul><ul><li>Found to be weak, but still used widely today </li></ul></ul><ul><ul><li>Potential Industry Standard? </li></ul></ul>
    148. 148. Hits <ul><li>The number of files served from a page </li></ul><ul><li>When a visitor requests a page & it is served, hits are the number of ads in the page </li></ul><ul><ul><li>3 banner ads, 1 graphic, 1 sponsorship--5 hits </li></ul></ul><ul><ul><li>Fails to identify contact between ad & visitor </li></ul></ul><ul><ul><li>Does not track what happens after page opens </li></ul></ul>
    149. 149. Clicks <ul><li>Click Through: when a visitor clicks on a banner ad, activates link, & goes to site </li></ul><ul><ul><ul><li>does not capture purchase information </li></ul></ul></ul><ul><li>Click Rate: Percentage of times ad is clicked divided by number of times served </li></ul><ul><ul><ul><li>ad on Yahoo comes in front of a visitor 500 times, it is clicked 10 times, =2% click rate </li></ul></ul></ul><ul><li>Conversion Rate: rate of those who click & buy (=buyers/viewers) </li></ul>
    150. 150. Impressions <ul><li>Opportunity to see an ad/number of times available for viewing </li></ul><ul><li>CPM--cost per thousand--pricing mechanism for ads </li></ul><ul><ul><li>vary for value of host site </li></ul></ul><ul><ul><li>2001 average CPM was $33/1,000 impressions </li></ul></ul><ul><li>Pages: Number of pages downloaded from a site (but visitor may not view each page) </li></ul>
    151. 151. Visitors <ul><li>The total number of people who visit a web site in a period of time </li></ul><ul><ul><li>If someone visits multiple times, each time is counted (duplication) </li></ul></ul><ul><li>Unique visitor: unduplicated number of people visiting in period of time </li></ul><ul><ul><li>identified by cookies or IP </li></ul></ul><ul><li>Eyeballs: number of site visitors that see an ad </li></ul>
    152. 152. Stickiness <ul><li>Stickiness: total impressions/month divided by unique visitors/month </li></ul><ul><ul><li>captures attractiveness </li></ul></ul><ul><li>Other relevant terms: </li></ul><ul><ul><li>Rate -- cost of placing ad </li></ul></ul><ul><ul><ul><li>2000, CPM for health & fitness $42.50 average </li></ul></ul></ul><ul><ul><ul><li>2000, CPM for general news $37.47 average </li></ul></ul></ul>
    153. 153. Other relevant terms <ul><li>Reach--Percentage of users visiting site and exposed at least once in campaign </li></ul><ul><li>Frequency--number of times visitor is exposed in campaign </li></ul><ul><li>Run--specified length of time an ad will run on a site </li></ul><ul><ul><li>There are firms that specialize in these metrics </li></ul></ul>
    154. 154. Usability Studies An Emerging Technique
    155. 155. Usability <ul><li>The measure of the quality of a user's experience when interacting with a product/system </li></ul><ul><ul><li>Applies to a Web site, software application, mobile technology, or any user-operated device </li></ul></ul>
    156. 156. Oops I shook the whole cabinet
    157. 157. My comp has gone Nuts!
    158. 158. Hey I am really confused
    159. 159. Its so clear!!!!
    160. 160. Importance <ul><li>No manual for a Web site </li></ul><ul><li>Large number of options </li></ul><ul><li>Loss of sales - 50% of the potential sales from sites are lost because consumers cannot find what they want </li></ul><ul><li>Loss of repeat visits - 40% of visitors do not return to a site when their first visit results in a negative experience </li></ul>
    161. 161. Goals for usability testing <ul><li>Diagnosing problems </li></ul><ul><li>Comparing alternatives </li></ul><ul><li>Verifying that you have met goals </li></ul><ul><ul><li>Elements: e ase of learning, ease of use, m emorability, error frequency/severity, s ubjective satisfaction </li></ul></ul>
    162. 162. Steps in Usability Testing <ul><li>Plan scope, issues, participants, location, budget </li></ul><ul><li>Develop scenarios </li></ul><ul><li>Recruit test participants </li></ul><ul><li>Conduct usability testing </li></ul><ul><li>Draw conclusions from results </li></ul>
    163. 163. Sample Test Contents <ul><li>Do users complete a task successfully? </li></ul><ul><li>If so, how fast do they do each task? </li></ul><ul><li>Is that fast enough to satisfy them? </li></ul><ul><li>What paths do they take in trying? </li></ul><ul><li>Do those paths seem efficient enough to them? </li></ul><ul><li>Where do they stumble?— What problems do they have?— Where do they get confused? </li></ul><ul><li>What words or paths are they looking for that are not now on the site? </li></ul>
    164. 164. Use of the test results <ul><li>Compile the data from all participants </li></ul><ul><li>List the problems </li></ul><ul><li>Sort the problems by priority and frequency </li></ul><ul><li>Develop solutions </li></ul><ul><ul><li>Get expert advice if the solutions are not obvious </li></ul></ul><ul><li>Fix the problems </li></ul><ul><li>Test the revised version to ensure you made the right design decisions </li></ul>