CHAPTER 2: ADAPTING MARKETING IN THE NEW ECONOMY

2. ©2003 Prentice Hall, Inc.
•IDENTIFY THE MAJOR FORCES DRIVING THE NEW ECONOMY.
•UNDERSTAND HOW BUSINESS AND MARKETING PRACTICES ARE
CHANGING AS A RESULT OF THE NEW ECONOMY.
•EXPLORE HOW MARKETERS USE THE INTERNET, CUSTOMER
DATABASES, AND CUSTOMER RELATIONSHIP MANAGEMENT IN
THE NEW ECONOMY
ADAPTING MARKETING TO THE NEW ECONOMY

3. ©2003 Prentice Hall, Inc.
DRIVERS OF THE NEW ECONOMY
•DIGITALIZATION AND CONNECTIVITY
•DISINTERMEDIATION AND REINTERMEDIATION
•CUSTOMIZATION AND CUSTOMERIZATION
•INDUSTRY CONVERGENCE
ADAPTING MARKETING TO THE NEW ECONOMY

4. ©2003 Prentice Hall, Inc.
DIGITALIZATION AND CONNECTIVITY
•INTRANETS-CONNECT PEOPLE WITHIN A COMPANY TO
ONE ANOTHER AND TO THE COMPANY MAINFRAME
•EXTRANETS-CONNECT A COMPANY WITH ITS
SUPPLIERS AND DISTRIBUTORS
•INTERNET-CONNECT USERS TO A LARGE WORLD WIDE
“INFORMATION REPOSITORY”
ADAPTING MARKETING TO THE NEW ECONOMY

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DIGITALIZATION AND CONNECTIVITY
ADAPTING MARKETING TO THE NEW ECONOMY

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DIGITALIZATION AND CONNECTIVITY
ADAPTING MARKETING TO THE NEW ECONOMY

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DISINTERMEDIATION AND REINTERMEDIATION
ADAPTING MARKETING TO THE NEW ECONOMY

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DISINTERMEDIATION AND REINTERMEDIATION
ADAPTING MARKETING TO THE NEW ECONOMY

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CUSTOMIZATION AND CUSTOMERIZATION
ADAPTING MARKETING TO THE NEW ECONOMY

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INDUSTRY CONVERGENCE
ADAPTING MARKETING TO THE NEW ECONOMY

11. ©2003 Prentice Hall, Inc.
CHANGES IN BUSINESS PRACTICES
OLD ECONOMY
• Organize by product units
• Focus on profitable transactions
• Look primarily at financial
scorecard
• Focus on shareholders
• Marketing does the marketing
• Build brands through advertising
• Focus on customer acquisition
• No customer satisfaction
measurement
• Overpromise, under deliver
NEW ECONOMY
• Organize by customer segments
• Focus on customer lifetime value
• Look also at marketing scorecard
• Focus on stakeholders
• Everyone does the marketing
• Build brands through behavior
• Focus on customer retention and
growth
• Measure customer satisfaction
and retention rate
• Under promise, over deliver
ADAPTING MARKETING TO THE NEW ECONOMY
VS.

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HOW MARKETING PRACTICES ARE CHANGING:
•E-BUSINESS
•CUSTOMER RELATIONSHIP MARKETING
ADAPTING MARKETING TO THE NEW ECONOMY

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HOW MARKETING PRACTICES ARE CHANGING:
•E-BUSINESS - USES ELECTRONIC MEANS AND
PLATFORMS TO CONDUCT BUSINESS.
•E-COMMERCE - WEB SITES FACILITATE THE ONLINE SALE
OF PRODUCTS AND SERVICES.
•E-PURCHASING – PURCHASING FROM ONLINE
SUPPLIERS.
•E-MARKETING – COMPANY’S EFFORTS TO INFORM,
COMMUNICATE, PROMOTE, AND SELL PRODUCTS AND
SERVICES OVER THE INTERNET.
E-BUSINESS
ADAPTING MARKETING TO THE NEW ECONOMY

14. ©2003 Prentice Hall, Inc.
INTERNET DOMAINS
•B2C
•B2B
•C2C
•C2B
ADAPTING MARKETING TO THE NEW ECONOMY
HOW MARKETING PRACTICES ARE CHANGING:
E-BUSINESS

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INTERNET DOMAINS
•B2C
•B2B
•C2C
•C2B
• BUSINESS-TO-CONSUMER
• ACTIVITIES OF BUSINESSES
SERVING END CONSUMERS WITH
PRODUCTS AND/OR SERVICES
• BENEFITS INCLUDE: GREATER
ORDERING CONVENIENCE, LOWER
COST, EASIER INFORMATION AND
PRICE GATHERING
• LESS USEFUL FOR PRODUCTS
THAT MUST BE TOUCH AND
EXAMINE
HOW MARKETING PRACTICES ARE CHANGING:
E-BUSINESS
ADAPTING MARKETING TO THE NEW ECONOMY

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B2C: Customers can shop online at Calyx and Corolla
or ask for a catalog and shop by phone
ADAPTING MARKETING TO THE NEW ECONOMY

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ADAPTING MARKETING TO THE NEW ECONOMY
POPULAR B2C SITE IN THE PHILIPPINES

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INTERNET DOMAINS
•B2C
•B2B
•C2C
•C2B
• BUSINESS-TO-BUSINESS
• COMPANIES DOING BUSINESS
WITH EACH OTHER
• VOLUME IS 10-15% HIGHER
THAN B2C.
• BENEFITS INCLUDE: LOWER
OR BETTER PRICES VIA B2B
AUCTION SITES, BUYING
ALLIANCES, GREATER ACCESS
TO INFORMATION, PRICE
TRANSPARENCY
ADAPTING MARKETING TO THE NEW ECONOMY
HOW MARKETING PRACTICES ARE CHANGING:
E-BUSINESS

19. ©2003 Prentice Hall, Inc.
ADAPTING MARKETING TO THE NEW ECONOMY
POPULAR B2B WEBSITES

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ADAPTING MARKETING TO THE NEW ECONOMY
B2B WEBSITE IN THE PHILIPPINES

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INTERNET DOMAINS
•B2C
•B2B
•C2C
•C2B
• CONSUMER-TO-CONSUMER
• ELECTRONIC COMMERCE WHICH
INVOLVES ELECTRONICALLY
FACILITATED TRANSACTIONS
BETWEEN CONSUMERS
• TRANSACTIONS OCCUR VIA
ONLINE TRADING SITES
• CONSUMERS ARE CREATING
ONLINE PRODUCT INFORMATION
VIA NEWSGROUP AND CHAT
ROOM
ADAPTING MARKETING TO THE NEW ECONOMY
HOW MARKETING PRACTICES ARE CHANGING:
E-BUSINESS

22. ©2003 Prentice Hall, Inc.
ADAPTING MARKETING TO THE NEW ECONOMY
C2C WEBSITES

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INTERNET DOMAINS
•B2C
•B2B
•C2C
•C2B
•CONSUMER-TO-BUSINESS
•FACILITATE
COMMUNICATION
BETWEEN CUSTOMER AND
BUSINESSES.
ADAPTING MARKETING TO THE NEW ECONOMY
HOW MARKETING PRACTICES ARE CHANGING:
E-BUSINESS

24. ©2003 Prentice Hall, Inc.
PURE-CLICK BRICK-AND-CLICK
ADAPTING MARKETING TO THE NEW ECONOMY
VS.
E-BUSINESS
HOW MARKETING PRACTICES ARE CHANGING:

25. ©2003 Prentice Hall, Inc.
•LAUNCHED A WEB SITE WITHOUT ANY PREVIOUS
EXISTENCE AS A FIRM
•DOT-COMS FAILED FOR A VARIETY OF REASONS
RUSHING INTO THE MARKET WITHOUT PROPER RESEARCH
OR PLANNING
SPENDING LARGE AMOUNTS ON MASS MARKETING AND
OFFLINE ADVERTISING
FAILURE TO BUILD A SOUND BUSINESS MODEL THAT
WOULD DELIVER EVENTUAL PROFITS
ADAPTING MARKETING TO THE NEW ECONOMY
PURE-CLICK COMPANY

26. ©2003 Prentice Hall, Inc.
•EXISTING COMPANIES THAT ADDED AN ONLINE SITE FOR
INFORMATION AND/OR E-COMMERCE.
•MORE SUCCESSFUL THAN PURE CLICK COMPETITORS
BETTER KNOWN BRAND NAMES
GREATER FINANCIAL RESOURCES AND ACCESS TO FUNDS
DEEPER INDUSTRIAL KNOWLEDGE AND EXPERIENCE,
CUSTOMER BASE, AND RELATIONSHIPS WITH SUPPLIERS
CAN BE EASILY REACHED
ABILITY TO REACH AND SERVE CUSTOMERS ON FAR AWAY
LOCATION
ADAPTING MARKETING TO THE NEW ECONOMY
BRICK-AND-CLICK COMPANY

27. ©2003 Prentice Hall, Inc.
•CONTEXT
•CONTENT
•COMMUNITY
•CUSTOMIZATION
•COMMUNICATION
•CONNECTION
•COMMERCE
The Seven “C’s” of Web Site Design
ADAPTING MARKETING TO THE NEW ECONOMY
HOW MARKETING PRACTICES ARE CHANGING:
SETTING UP WEB SITES

28. ©2003 Prentice Hall, Inc.
ADAPTING MARKETING TO THE NEW ECONOMY
CONTEXT FACTORS
•WEB SITE DOWNLOADS
QUICKLY
•FIRST PAGE IS EASY TO
UNDERSTAND
•VISITORS FIND IT EASY TO
NAVIGATE TO OTHER PAGES
THAT OPEN QUICKLY
• INDIVIDUAL PAGES ARE CLEAN
LOOKING AND NOT OVERLY
CRAMMED WITH CONTENT
• TYPE FACES AND FONT SIZES
ARE VERY READABLE
• SITE MAKES GOOD USE OD
COLOR AND SOUND
EASE-OF-USE PHYSICAL ATTRACTIVENESS

29. ©2003 Prentice Hall, Inc.
ADAPTING MARKETING TO THE NEW ECONOMY
CONTENT FACTORS
•DEEP INFORMATION WITH LINKS TO RELATED SITES
•CHANGING NEWS OF INTEREST
•CHANGING FREE OFFERS TO VISITORS
•CONTESTS AND SWEEPSTAKES
•HUMOR AND JOKES
•GAMES

30. ©2003 Prentice Hall, Inc.
•BANNER ADS
•SPONSORSHIPS
•MICROSITE
•INTERSTITIALS
•BROWSER ADS
•ALLIANCES AND AFFILIATE PROGRAMS
HOW MARKETING PRACTICES ARE CHANGING:
SETTING UP WEB SITE
ADAPTING MARKETING TO THE NEW ECONOMY
PLACING ADS AND PROMOTIONS

31. ©2003 Prentice Hall, Inc.
•ADVERTISING INCOME
•SPONSORSHIP INCOME
•ALLIANCE INCOME
•MEMBERSHIP AND
SUBSCRIPTION INCOME
•PROFILE INCOME
•PRODUCT AND SERVICE
SALES INCOME
•TRANSACTION
COMMISSIONS AND FEES
•MARKET RESEARCH/
INFORMATION
•REFERRAL INCOME
ADAPTING MARKETING TO THE NEW ECONOMY
HOW MARKETING PRACTICES ARE CHANGING:
SETTING UP WEB SITE
DOT.COMS REVENUE AND PROFIT MODEL

32. ©2003 Prentice Hall, Inc.
CUSTOMER RELATIONSHIP MARKETING :
HOW MARKETING PRACTICES ARE CHANGING:
CUSTOMER RELATIONSHIP MARKETING
ADAPTING MARKETING TO THE NEW ECONOMY
• A BUSINESS PROCESS IN WHICH CLIENT
RELATIONSHIPS, CUSTOMER LOYALTY AND
BRAND VALUE ARE BUILT THROUGH MARKETING
STRATEGIES AND ACTIVITIES.

33. ©2003 Prentice Hall, Inc.
EFFECTIVE CUSTOMER RELATIONSHIP MARKETING REQUIRES:
•REDUCING CUSTOMER DEFECTION RATES
•INCREASING THE LONGEVITY OF THE CUSTOMER
RELATIONSHIP
•ENHANCING THE GROWTH POTENTIAL OF EACH CUSTOMER :
SHARE-OF-WALLET, CROSS-SELLING AND UPSELLING
•MAKING LOW-PROFIT CUSTOMERS MORE PROFITABLE OR
TERMINATING THEM
•FOCUSING DISPROPORTIONATE EFFORT ON HIGH VALUE
CUSTOMERS
HOW MARKETING PRACTICES ARE CHANGING:
ADAPTING MARKETING TO THE NEW ECONOMY
CUSTOMER RELATIONSHIP MARKETING

34. ©2003 Prentice Hall, Inc.
•IDENTIFY YOUR PROSPECTS AND CUSTOMERS. DO NOT
GO AFTER EVERY ONE.
•GROUP CUSTOMERS BY THEIR NEEDS AND THEIR VALUE
TO THE COMPANY; AGGRESSIVELY PURSUE THE MOST
VALUABLE CUSTOMERS.
•INDIVIDUALIZED INTERACTIONS WITH CUSTOMERS TO
IMPROVE YOUR LEARNING
•CUSTOMIZE PRODUCTS, SERVICES AND MESSAGES TO
EACH CUSTOMER
HOW MARKETING PRACTICES ARE CHANGING:
CUSTOMER RELATIONSHIP MARKETING
FOUR-STEP FRAMEWORK FOR ONE-TO-ONE MARKETING
ADAPTING MARKETING TO THE NEW ECONOMY

35. ©2003 Prentice Hall, Inc.
MASS MARKETING
• Average customer
• Customer anonymity
• Standard product
• Mass production
• Mass distribution
• Mass advertising
• Mass promotion
• One-way message
• Economies of scale
• Share of market
• All customers
• Customer attraction
ONE-TO-ONE MARKETING
ADAPTING MARKETING TO THE NEW ECONOMY
VS.
HOW MARKETING PRACTICES ARE CHANGING:
CUSTOMER RELATIONSHIP MARKETING
• Individual customer
• Customer profile
• Customized market offering
• Customized production
• Individualized distribution
• Individualized message
• Individualized incentives
• Two-way messages
• Economies of scope
• Share of customer
• Profitable customers
• Customer retention

36. ©2003 Prentice Hall, Inc.
ADAPTING MARKETING TO THE NEW ECONOMY
HOW MARKETING PRACTICES ARE CHANGING:
CUSTOMER RELATIONSHIP MARKETING
•CUSTOMER DATABASE-AN ORGANIZED COLLECTION OF
COMPREHENSIVE INFORMATION ABOUT INDIVIDUAL
CUSTOMERS OR PROSPECTS THAT IS CURRENT,
ACCESSIBLE, AND ACTIONABLE FOR MARKETING
PURPOSES.
•DATABASE MARKETING-THE PROCESS OF BUILDING,
MAINTAINING, AND USING CUSTOMER DATABASE AND
OTHER DATABASES TO MAKE CONTACT, FACILITATE
TRANSACTIONS AND BUILD CUSTOMER RELATIONSHIPS.

37. ©2003 Prentice Hall, Inc.
ADAPTING MARKETING TO THE NEW ECONOMY
HOW MARKETING PRACTICES ARE CHANGING:
CUSTOMER RELATIONSHIP MARKETING
•DATA WAREHOUSE-STORAGE FILES FOR DATA
COLLECTED BY THE COMPANY’S CONTACT CENTER
FROM CUSTOMER PURCHASES, CUSTOMER SERVICE
CALLS, ONLINE INQUIRIES, MAIL-IN REBATE CARDS,
ETC.
•DATA MINING-EXTRACTING USEFUL INFORMATION
ABOUT INDIVIDUALS, TRENDS, AND SEGMENTS FROM
THE DATA.

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ADAPTING MARKETING TO THE NEW ECONOMY
DATA WAREHOUSE AND DATA MINING

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USES OF DATABASE:
•BEST PROSPECT IDENTIFICATION
•MATCHING OFFERS TO CUSTOMERS
•DEEPENING CUSTOMER LOYALTY
•REACTIVATING CUSTOMER PURCHASING
•AVOIDING SERIOUS MISTAKES
ADAPTING MARKETING TO THE NEW ECONOMY
HOW MARKETING PRACTICES ARE CHANGING:
CUSTOMER RELATIONSHIP MARKETING

40. ©2003 Prentice Hall, Inc.
DOWNSIDE OF DATABASE MARKETING:
•REQUIRES LARGE INVESTMENT
•DIFFICULTY IN GETTING EVERYONE TO BE
CUSTOMER-ORIENTED
•NOT ALL CUSTOMERS WANT AN ONGOING
RELATIONSHIP WITH THE COMPANY
ADAPTING MARKETING TO THE NEW ECONOMY
HOW MARKETING PRACTICES ARE CHANGING:
CUSTOMER RELATIONSHIP MARKETING

41. ©2003 Prentice Hall, Inc.
THE END
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