Marketing in the Digital AgeMarketing in the Digital Age

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Forces Shaping the Digital Age

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Forces Shaping the Digital Age

• Digitalization & Digitalization & ConnectivityConnectivity– Intranets – connect Intranets – connect

people within a people within a company. company.

– Extranets – connect a Extranets – connect a company with its company with its suppliers, distributors, suppliers, distributors, and outside partners.and outside partners.

– Internet – connects Internet – connects users around the users around the world.world.

• Internet ExplosionInternet Explosion– Explosive worldwide Explosive worldwide

growth forms the growth forms the heart of the New heart of the New Economy.Economy.

– Increasing numbers of Increasing numbers of users each month.users each month.

– Companies must Companies must adopt Internet adopt Internet technology or risk technology or risk being left behind.being left behind.

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Forces Shaping the Digital Age

• New Types of Intermediaries:New Types of Intermediaries:– Direct selling via the Internet bypassed Direct selling via the Internet bypassed

existing intermediariesexisting intermediaries– ““Brick-and-mortar” firms became “click-Brick-and-mortar” firms became “click-

and-mortar” companies.and-mortar” companies.– As a result, some “click-only” companies As a result, some “click-only” companies

have failed.have failed.

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Forces Shaping the Digital Age

• Customization and Customerization:Customization and Customerization:– With ___________, the company custom With ___________, the company custom

designs the market offering for the designs the market offering for the customer. Levi’s creating jeans for each customer. Levi’s creating jeans for each individualindividual

– With customerization, the customer With customerization, the customer designs the market offering and the designs the market offering and the company makes it. You creating a pair of company makes it. You creating a pair of Levis’ jeans for yourselfLevis’ jeans for yourself

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Marketing Strategy in the Digital Age

Requires a new model for marketing strategy and practice

Some suggest that all buying and selling will eventually be done electronically

Companies need to retain old skills and practices but add new competencies

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e-Business, e-Commerce, and e-Marketing in the Internet Age

e-Business Involves the Use of Intranets, Extranets & the Internet to Conduct a

Company’s Business

Involves Buying & Selling Processes Supported by Electronic Means

E-Marketing “e-selling” side of

e-commerce

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E-Business in the Digital Age

• Involves the use of electronic Involves the use of electronic platforms to conduct company platforms to conduct company business.business.– Web sites for selling and customer Web sites for selling and customer

relationsrelations

– Extranets connecting with major Extranets connecting with major suppliers and distributorssuppliers and distributors

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E-Commerce in the Digital Age

• More specific than e-business.More specific than e-business.

• Involves buying and selling processes Involves buying and selling processes supported by electronic means, supported by electronic means, primarily the Internet.primarily the Internet.

• Includes:Includes:– e-marketinge-marketing– e-purchasing (e-procurement)e-purchasing (e-procurement)

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E-Marketing in the Digital Age

• The marketing side of e-commerce.The marketing side of e-commerce.• Includes efforts to communicate Includes efforts to communicate

about, promote, and sell products about, promote, and sell products and services over the Internet.and services over the Internet.

• E-purchasing is the buying side of e-E-purchasing is the buying side of e-commerce.commerce.– It consists of companies purchasing It consists of companies purchasing

goods, services, and information from goods, services, and information from online suppliers.online suppliers.

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Benefits to Buyers

Provides greater product access and selection

Provides access to comparative information

Buying is interactive and immediate

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Benefits to Sellers

Powerful tool for building customer relationships

Can increase speed and efficiency

Offers greater flexibility in offers and programs

Is a truly global medium

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E-Marketing Domains

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B2C (Business to Consumer)

• The online selling of goods and The online selling of goods and services to final consumers.services to final consumers.

• Expected to generate $428 billion in Expected to generate $428 billion in 20042004. .

• There is increasing diversity in There is increasing diversity in buyers.buyers.– This provides increasing opportunities This provides increasing opportunities

for targeting markets.for targeting markets.

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Who is the Online Customer?• They used to be younger, more They used to be younger, more

affluent, better educated, and more affluent, better educated, and more male than the general population; male than the general population; BUT has shifted towards becoming BUT has shifted towards becoming more mainstream.more mainstream.

• Other characteristic of net users:Other characteristic of net users:– Differ psychographically, in approaches Differ psychographically, in approaches

to buying and responses to marketing.to buying and responses to marketing.– ““Word of Web”Word of Web”

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B2B (Business to Business)

• By 2005, more than 500,000 enterprises By 2005, more than 500,000 enterprises will participate as buyers, sellers, or will participate as buyers, sellers, or both.both.

• Most major B2B marketers offer product Most major B2B marketers offer product information, purchasing, and support information, purchasing, and support services online.services online.

• Open trading exchanges—huge Open trading exchanges—huge specialty e-marketspaces to conduct specialty e-marketspaces to conduct transactions.transactions.

• More private trading networks being More private trading networks being developed.developed.

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C2C (Consumer to Consumer)

• Occurs on the Web and includes a wide Occurs on the Web and includes a wide range of products and services.range of products and services.

• Forums:Forums: discussion groups located on discussion groups located on commercial online services.commercial online services.

•Newsgroups:Newsgroups: the Internet version of the Internet version of forums.forums.

• Word of Web: advantages & Word of Web: advantages & disadvantagesdisadvantages

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C2B (Consumer to Business)

• Consumers can search out sellers, Consumers can search out sellers, view offers, initiate purchases, and view offers, initiate purchases, and give feedback.give feedback.

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Types of e-Marketers

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Click-Only Companies

E-tailers Search Engines

and Portals

Internet Service

ProvidersTransactio

n Sites

Content Sites

Enabler Sites

Types of Sites

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There is Hope After the Trough of DisillusionSource: Adapted from Raskino and Andren of Gartner Research (2001)

Technology Peak of Trough of Slope of Plateau of Trigger Inflated Disillusion Enlightnment Profitability Expectation 1990-1996 1999 2000 2001 2002 2003 2004 2005 2006 Equity times Debt Times Positive Cash Flow

Visibility

Dot-com peak

U.S. Recesssion E-Business

becomes “just business”

E-Marketing in Context: Where does e-marketing fit into this picture?

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Reasons for Dot.com Failures

Prices and margins were often very lowPrices and margins were often very low

Lack of good distribution delivery processesLack of good distribution delivery processes

Attention on gathering new customers Attention on gathering new customers instead of building brand loyaltyinstead of building brand loyalty

Spending offline to establish brand identitiesSpending offline to establish brand identities

Spin & hype instead of marketing strategiesSpin & hype instead of marketing strategies

Failure to research or planFailure to research or plan

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Click-and-Mortar Companies• Many resisted adding e-commerce because of Many resisted adding e-commerce because of

potential for potential for channel conflict channel conflict andand cannibalizationcannibalization..

• Many are doing better than brick or click-only Many are doing better than brick or click-only operationsoperations– Trusted brand names & financial resources,Trusted brand names & financial resources,– Large customer bases,Large customer bases,– Knowledge & experience,Knowledge & experience,– Good relationships with key suppliers,Good relationships with key suppliers,– Ability to offer customers more options,Ability to offer customers more options,– Buy online & return unwanted merchandise to Buy online & return unwanted merchandise to

store.store.

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Setting Up for E-Marketing

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Types of Web Sites

Corporate Web Site:Designed to build customer goodwill and supplement other sales channels.Offers information to customers.Builds closer customer relationships.Generates excitement about the company.Marketing Web Site:Engages consumers in an interaction that moves them closer to a direct purchase.Provides information about the products.

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Designing Attractive Web Sites

• The 7 Cs of Effective The 7 Cs of Effective Web Site DesignWeb Site Design

Create value and excitementCreate value and excitement

Context

Content

Community

CustomizationCommunication

Connection

Commerce

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Online Ads and Promotion

• Forms of online advertising & promotion:Forms of online advertising & promotion:– Banner ads & tickers (move across the screen)Banner ads & tickers (move across the screen)– Skyscrapers (tall, skinny ads at the side of a page)Skyscrapers (tall, skinny ads at the side of a page)– Rectangles (boxes that are larger than a banner)Rectangles (boxes that are larger than a banner)– Interstitials (pop up between changes on Web site)Interstitials (pop up between changes on Web site)– Content sponsorships (sponsoring special content)Content sponsorships (sponsoring special content)– Microsites (limited areas paid for by an external Microsites (limited areas paid for by an external

company)company)– Viral marketing (Internet version of word-of-mouth)Viral marketing (Internet version of word-of-mouth)

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The Future of Online Advertising

• Web communities:Web communities:– Allows members to congregate online Allows members to congregate online

and exchange views on issues of and exchange views on issues of common interestcommon interest

• E-mail:E-mail:– Use of “enriched” e-mail messagesUse of “enriched” e-mail messages– Backlash against spam can be problemBacklash against spam can be problem

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Promise and Challenge of e-Commerce

• Limited exposure and buyingLimited exposure and buying

• Skewed demographics and Skewed demographics and psychographicspsychographics

• Chaos and clutterChaos and clutter

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Legal and Ethical Issues

• Online privacyOnline privacy

• Online securityOnline security

• Internet fraudInternet fraud

• Segmentation and discriminationSegmentation and discrimination

• Access by vulnerable or unauthorized Access by vulnerable or unauthorized groupsgroups