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1. Introduction to internet marketing

Introduction

“Marketing is the management process, which identifies, anticipates and supplies customer requirements profitably”(Chartered Institute of Marketing)

Marketing vs. technology

Challenges for established firms as well as for “internet only” players

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To reach 50,000,000 users– Radio took 38 years– Computers took over 16 years– TV took 13 years– The Internet took 4 years!

The impacts of the Internet

The Internet has produced new market rules:greater transparency, cost efficiencies, more consumer power and choice, ..

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What impacts have Internet technologies had on pricing levels and strategies both on and offline?What role can the Internet play in new product development?Has the internet eliminated intermediaries?How has the Internet affected purchasing behavior?How much money should be devoted to online communication?……

Internet and the digital age

Information based economy FlexibilityProductivityCost and SpeedExternalityConvergence

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Flexibility

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Curve A

Curve B

Reach

Richness

Number of transistors per squared inch

1.000.000.000

100.000.000

10.000.000

1.000.000

100.000

1.000

Years1970 1980 1990 2000 2010

Moore’s Law

Productivity

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Average Cost per Unit

Volume

Cost and speed

Costs to produce vs costs to reproduce information

Average Cost per Unit

Volume

Volume

Volume

Total Costs

Total Costs

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Usefulness for the user

Number of users

Metcalfe’s Law

Externality

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Internet diffusion

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Internet diffusion

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Internet diffusion

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Internet diffusion

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Internet diffusion

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Broadband: definition

A type of digital data transmission in which each medium (wire) carries multiple signals, or channels, simultaneously [..] The term has become synonymous with “fast” internet(Gay, Charlesworth and Esen, 2006)

OECD: Broadband as a connection to the telephone network that permits a downstream access at 256 Kb/s and an upstream at 128 Kb/s

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Broadband diffusion

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TOP COUNTRIES WITH THE HIGHEST NUMBER OFWORLD INTERNET BROADBAND SUBSCRIBERS IN 2007

# Country or Region BroadbandSubscribers

BroadbandPenetration (%)

Population( 2007 Est. )

1 United States 66,213,257 21.9 % 301,967,6812 China 48,500,000 3.7 % 1,317,431,4953 Japan 27,152,349 21.1 % 128,646,3454 Germany 17,472,000 21.2 % 82,509,3675 Korea, South 14,042,728 27.4 % 51,300,9896 United Kingdom 13,957,111 23.1 % 60,363,6027 France 13,677,000 22.3 % 61,350,0098 Italy 9,427,300 15.8 % 59,546,6969 Canada 7,675,533 23.7 % 32,440,970

TOP 20 Countries 268,150,077 6.9 % 3,890,377,607Rest of the World 36,321,302 1.4 % 2,684,288,810Total World Subscribers 304,471,379 4.6 % 6,574,666,417

Source: http://www.internetworldstats.com/dsl.htm

Broadband and internet usage

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Time per person

Pages per person

Sessions per person

Time per session

Pages per session

Consumption in Europe

Broadband and internet usage

When broadband is available internet users:

Spend much more time online, and visit much more web

sites

Use more multimedia contents, for instance video, music,

animation and games

Broad Band = More experience online = New Opportunities

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The Blogosphere

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The Blogosphere

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The Blogosphere

About 120,000 new weblogs each day, or... 1.4 new blogs every second 1.5 million posts per day, or... 17 posts per second Growing from 35 to 75 million blogs took 320 days Japanese the #1 blogging language at 37% English second at 33% Chinese third at 8% Italian fourth at 3%

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Source: Technorati

E-readiness

“E-readiness, as the Economist Intelligence Unit defines it, is the measure of a country’s ability to leverage digital channels for communication, commerce and government in order to further economic and social development. Implied in this measure is the extent to which the usage of communications devices and Internet services creates efficiencies for business and citizens”

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E-readiness

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E-readiness

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Some definitions

Internet – Intranet - Extranet

Internet

Intranet: a private network inside a company or an organisation that uses the same kinds of software that you would find on the public Internet, but that is only for internal use

Extranet: an Intranet that is partially accessible to authorised outsiders (suppliers, partners, customers, etc.) who can only access it with a valid username and password

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Some definitions

E-Commerce (Rayport and Jaworski, 2001): “technology mediated exchanges between parties (individuals or organisations) as well as the electronically based intra-or interorganisational activities that facilitate such exchanges’”

E-Business (Philips et al., 2003): “the application of IT for internal business processes as well as activities in which a company engages during commercial activity. These activities can include functional activities such as finance, marketing, HR management, operations”

E-Marketing (Institute of Direct Marketing): “the use of the Internet and related digital information and communication technologies to achieve marketing objectives”

M-Commerce

M-Marketing

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Sales Product./purch.Marketing/adv. Finance Administration

ORGANIZATION

e-Commercee-MarketplacesPriv. Exchanges

e-Procuremente-Marketplace

Communication onlineBranding onlinee-CRMe-pricingPositioning online

e-BankingERPEDIe-Marketpl.

e-BUSINESSPhilips et al. (2003) define e-business as: “the application of IT for internal business processes as well as activities in which a company engages during commercial activity. These activities can include functional activities such as finance, marketing, HR management, operations”

E-business

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E-business

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Business that sells products or provides services to end-user consumers.

Business that sells products or provides services to other businesses

Person-to-person transactions

Business-to-consumer (B2C)

Business-to-business (B2B)

Consumer-to-consumer (C2C)

E-business

Intermediaries

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From e-business to e-marketing

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From e-business to e-marketing

Internet Marketing: effective two-way communications (one-to-one; one-to-many; many-to-many)

- build relationships - customer retention - customisation - loyalty- knowledge of customers’ needs and customer satisfaction

E-Marketing• E-Marketing is more prominent to customer than other technical mass

media, thanks to effective two-way communications.

• The two-way communication can build relantionships, customer retention, customisation and loyalty.

• More prominence, means more knowledge of customers’ needs, and customer satisfaction

• According to Philip Kotler (cited in Web Metrics paper, ‘Winning on the Web’ (2002) more customer satisfaction and value improve company revenues. ‘Intelligent management of information and the use of technology-supported customer interactions are among the e-marketing rules for the new economy.

E- Marketing

E-Marketing

E- Marketing

Case Studies: One-to-many Communication

OFFLINE COMMERCIALhttp://www.youtube.com/watch?v=y4WrUuyx1Ds

ONLINE COMMERCIALhttp://www.youtube.com/

ONLINE+OFFLINE COMMERCIALhttp://www.youtube.com/watch?v=k0_0Yd4HF4E

E-Marketing

E-Marketing

TESCOhttp://www.tesco.com/help/contact/contactus4.asp

“Electronic commerce is about doing business electronically. It is based on the electronic processing and transmission of data, including text, sound and video. It encompasses many diverse activities including electronic trading of goods and services, online delivery of digital content, electronic fund transfers, electronic share trading, electronic bills of lading, commercial auctions, collaborative design and engineering, on-line sourcing, public procurement, direct consumer marketing, and after-sales service. It involves both products (e.g. consumer goods, specialized medical equipment) and services (e.g. information services, financial and legal services); traditional activities (e.g. healthcare, education) and new activities (e.g. virtual malls).”

European Commission, 1997

E-commerce

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Direct E-commerce

Firm Intermediary Broker

Consumer

Intermediary E-commerce

E-commerce

“Why do intermediaries exist?”- Efficiency

- Transaction costs reduction

Infocommerce: research information online and then buy

offline 42

Firm End-user

Intermediary functions:

• Distribution;

• Information;

• Logistic;

• Promotion;

• Matching;

• Payment and financing;;

•…

E-commerce: intermediaries

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Intermediation /Disintermediation

For digital products (software), the whole distribution channel may be Internet based = the supplier can deliver it over the Internet.

Non-digital products (flowers/wine) may be purchased online but must be physically delivered. You can track the shipment using a Web-based interface.

E-commerce: digital and non-digital products

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