ELC 310 day 10

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Published on January 30, 2008

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CHAPTER 4:  CHAPTER 4 E-Marketing Strategies: Product & Pricing Agenda:  Agenda Exam # 3 Graded 1 A, 3 B’s and 1 C Case Study Document due E-mail document in WebCT by beginning of Class Everybody must read all Case study by April 7 All documents will be available on WebCT Tommorow Presentation, discussion and group grading on April 7 Left to do Marketing Plan 2 Exams Lecture/Discuss Product and Pricing The Net as a Distribution Channel Left to Do:  Left to Do Case Study Doc due E-Marketing Chaps 5 & 6 Case study Presentations and discussion E-Marking Chap 7 Exam 4 E-Marketing Chaps 8 & 9 Ethics Work Shop & Chap 10 Exam 5 Finals week Marketing Plan and Presentation due Chapter 5 :  Chapter 5 The Net As A Channel of Distribution Learning Objectives:  Learning Objectives Marketing review Describe the functions of a distribution channel Differentiate between an indirect and direct channel Describe the Internet’s strengths in bringing buyers and sellers together Explain how the Internet has both shortened and lengthened distribution channels Discuss the advantages and disadvantages of electronic retailing from the retailer’s perspective Learning Objectives:  Learning Objectives Tell how the Internet has added value to the consumer shopping experience Discuss the importance of shopping agents for the Net retailers Explain the security risks for online shopping Understand how the Internet has changed the balance of power in distribution channels The RealNetworks story:  The RealNetworks story Click here RealNetworks.com Rob Glaser, founder and CEO of Real Network, Inc. Creates software to encode and deliver audio and video content over the Internet Found a solution to the slow aspect of the Internet thanks to a 3-key concept: Compression Streaming Caching The products: Real Player G2 Real Server Slide8:  Exhibit 5 - 1 Yahoo! Broadcast Content Offerings Slide9:  Exhibit 5 - 2 RealNetworks’ Content Creation Products The Net as a Distribution Channel:  The Net as a Distribution Channel “A group of independent firms that work together to transfer product and information from the supplier and the customer.” Three perspectives to distribution channels. 1) by type of intermediary 2) by function performed in the channel 3) by flow of products, information and $$$ 1. Types of Intermediaries:  1. Types of Intermediaries Wholesalers- buy product from the manufacturer and then resell it to retailers. E-tailers- buy product from the wholesaler and then sell it directly to consumer. Brokers- facilitate transactions between buyers and sellers, called market makers. Agents- Manufacturing or Purchasing agents depending on who they are working for. 2. Functions of Distribution Channels:  2. Functions of Distribution Channels Transactional Making contact with buyers Using communication strategies to make them aware of products. An example of a communication strategy is the promotion of a web site via www.did-it.com. Matching products to buyers’ needs: Shopping agents Shopping agents such as www.comparenet.com allow the consumer to rapidly compare prices and features within product categories Collaborative filtering agents Negotiating prices Processing transactions Slide13:  Exhibit 5 - 3 Honda Dealer Locator Source: www.honda.com Slide14:  Exhibit 5 - 4 Land Rover Allows Customers to View Options Online Source: www.landrover.com Slide15:  Exhibit 5 - 5 Egghead and Onsale Combine to Form E-Tailer and Auction Site Source: www.egghead.com Functions of Distribution Channels:  Functions of Distribution Channels Logistical The physical distribution such as transportation and storing inventory, often outsourced to third party logistics providers. Physical distribution Aggregating products (category killers) Third-Party logistics (outsourced logistics) www.ups.com and www.fedex.com are the major distributors and even offer packaging that is specific to products their clients sell. It is also beneficial for firms to outsource their entire order processes, to ensure timely delivery of stock. Slide17:  Exhibit 5 - 6 CNET Download.com Carries Thousands of Software Titles Source: www.download.com Functions of Distribution Channels:  Functions of Distribution Channels Facilitating Functions Include marketing research about buyers Accurate assessment of the size and characteristics of the target audience helps manufacturers with product development and marketing communications. www.mediametrix.com produces a site interaction report that details to what extent a site shares audience with another site, showing exclusive and duplicated audience. Financing of purchases. Financing purchases is an important function, intermediaries try to do everything possible to make it easy for customers to pay in order to close the sale. Secure Electronic Transactions Slide19:  Exhibit 5 - 7 Traditional Definition and Redefinition of the Supply Chain 3. The system Perspective: Flow of products, information and finance Three ways to define the scope of a channel: Supply Chain Management:  Supply Chain Management The coordination of flows of material, information, and finances. Enterprise Resource Planning facilitates the interoperability of the SCM system because ERP systems seamlessly share information, which greatly coordinates the chain functions in real time. Supply Chain Management System Supplier ERP Manufacturer ERP Buyer ERP Slide21:  Exhibit 5 - 8 SCM System Interfaces with Multiple ERP Systems Length Of Distribution Channel:  Length Of Distribution Channel Disintermediation: process of eliminating traditional intermediaries Internet expected to eliminate intermediaries Intermediaries specialize therefore provide better service than the manufacturer. Internet disintermediation failed: Why??? Length Of Distribution Channel:  Length Of Distribution Channel 1. U.S. has the most efficient distribution system in the world 2.Intermediaries allow corporation to maintain focus on their core business 3. Traditional intermediary simply replaced with their internet equivalent Online intermediaries are more efficient than their brick+mortar counterpart. (Cost savings). Creation of new intermediary (e.g. yahoo broadcast): Shopping agents: www.shopper.com Buyer cooperatives Metamediaries Slide24:  Exhibit 5 - 9 CNET Shopper Helps Users Find Computer-Related Products Source: www.shopper.com Power Relationship Among Channel Players:  Power Relationship Among Channel Players Introduction of new technology can alter relationships between existing channel players: Increased power of supply: Importance of the location neutralized by the Internet Buyers have access to more information (suppliers and pricing information) Increased power of suppliers: Suppliers taking the lead online will receive business from consumers and firms willing to shop in this channel Suppliers can establish Structural Relationship with buyers EDI Electronic Data Interchange:  EDI Electronic Data Interchange E.D.I. is defined as the transfer of structured data by agreed message standards from computer to computer by electronic means. In an increasingly global market, companies are seeking methods to communicate, streamline and automate common business transactions. Electronic Data Interchange or EDI was designed to create a common language for the direct application-to-application transmission of business documents between computers. EDI improves the speed, economy and accuracy of transmitting documents. Key Considerations For EDI to be Implemented:  Key Considerations For EDI to be Implemented The openness of the system. The transport method (Internet of Non-Internet). The type of technology used for implementation. These Variables yield in combination five flavors of EDI that are used in industry today. The Goal of EDI:  The Goal of EDI The goal is to create a standards-based open system that runs over the Internet so that all suppliers and buyers can seamlessly integrate their systems. The Key: Extensible Markup Language (XML) XML effectively takes html to the next level adding functionality that HTML does not possess. XML is the glue that connects SCM, ERP, and other systems together into seamless networks The Benefits of EDI:  The Benefits of EDI The New EDI era brings many advantages: Reduces the delays caused by postal paper chains. Avoids the need to re-key data and therefore saves time and reduces errors. Avoids the cost of the creation, recording and storage of paper documents and records. Facilitates shorter lead times and reduced stock holdings which allow reductions in working capital requirements (i.e. just-in-time policies). Provides the opportunity to improve customer service. Provides the opportunity to reduce administrative costs. E-Business Models:  E-Business Models Business Model-Definition It defines a revenue stream to the provider. It provides benefits to the consumer. It provides architecture to deliver those benefits. Simply put, it is how an organization makes money. E-business Models:  E-business Models Online intermediaries are classified by the way they make money: Content sponsorship Direct selling Infomediary Intermediary model Slide32:  Exhibit 5 - 11 E-Business Models Content Sponsorship E-Business Model:  Content Sponsorship E-Business Model Firms create web sites, attract a lot of traffic, and sell advertising. Involves using a niche strategy to draw special interest audiences (e.g. www.homearts.com, travel, gardening, dance, transport, food and drink.) The product sold is a space on the Web. Similar to traditional media, where television, magazines, and other media sell space and air time. Major portals such as AOL, Yahoo, MSN, Lycos, Excite use this models. Sometimes used with other models to generate a revenue stream e.g., an online e-tailer, sells ads on its site to generate additional revenue, which helps them to lower prices. Direct Selling E-Business Model:  Direct Selling E-Business Model Manufactures sell directly to customers instead of using intermediaries. Wholesalers and retailers are not needed causing disintermediation. The Internet makes it easier to bypass intermediaries. Used in business to business markets-saves millions of dollars at times in sales related expenses such as personnel, product configuration, and order processing costs. Also used in business to consumer markets with sales of digital, software, and music, that require no inventory, pick-up, pack and ship. Direct Selling Considerations:  Direct Selling Considerations Perishable products, such as fresh foods and flowers are sold using this method. (e.g. pro-flowers delivers flowers fresh from the grower. Benefits include cost savings and rapid delivery for the consumer. Benefits to the manufacturer include an ability to claim a piece of the middleman’s margin. Infomediary E-Business Model:  Infomediary E-Business Model Refers to an online organization that gathers and distributes information (e.g. Market Research Firms). Usually compensates the consumer for sharing information. Others like DoubleClick use cookies to track users as they surf the web without compensation. Consumers are paid to buy space on the permission marketers website, thereby generating attention-the scarcest commodity cyberspace.(e.g. www.alladvantage.com and www.sharkhunt.com Infomediary Considerations:  Infomediary Considerations The space is resold to other advertisers. Consumers have the benefit of receiving ads targeted to their interests, thereby providing them with control concerning the ads they receive Benefit to the infomediary is that consumer information increases the value of its ad inventory. Benefit to advertisers is that they can reach a highly targeted audience even while the consumer is on a competitor’s site. E-business Models:  E-business Models Intermediary Models: Brokerage Models: Online Exchange Online Auction Agent Models: Brokerage Model Considerations:  Brokerage Model Considerations Benefits to the Buyer: Convenience Speed of order execution Transaction processing Cost savings through Lower prices Decreased search time Savings of energy and frustration in locating appropriate sellers. Brokerage Models:  Brokerage Models The broker creates a market in which buyers and sellers negotiate and complete transactions. They typically charge a fee. Example:NYSE www.TradeCast.com www.Ameritrade.com Brokerage Model Continued:  Brokerage Model Continued Benefits to the Seller Creation of a pool interested buyers. Cost savings in the form of lowered customer acquisition costs and transaction costs. Agent E-Business Models:  Agent E-Business Models Agents do represent either the buyer or seller depending on who pays their fees. Selling Agents: Represent a single firm to help it move product and normally work for a commission. Other Types of Agent E-Business Models:  Other Types of Agent E-Business Models Manufacturer’s Agent: Represent more than one seller. www.travelcity.com www.expedia.com Metamediary An agent that represents a cluster of manufactures, e-tailers and content providers organized around a life event or major asset purchase. www.peoplefirst.com Benefits of Metamediaries:  Benefits of Metamediaries They solve four major consumer problems: Reduce search times Provide quality assurance about vendors Facilitate transactions for a group of related purchases. Provide relevant and unbiased content information about the purchase. They benefit business partners by : Having traffic directed to their sites Co-branding with the metamediary Virtual Malls :  Virtual Malls Host multiple online merchants in a model similar to a shopping mall. Hosted merchants gain exposure from traffic coming to the mall. www.yahoo.com www.women.com Six benefits: Branding Digital wallets Frequent shopper programs Gift registry Search facility Recommendation service Agent Models Representing Buyers:  Agent Models Representing Buyers Shopping Agent Second –generation shopping agents www.evenbetter.com www.bizrate.com Reverse Auction www.nextag.com Agent Models Representing Buyer Examples:  Agent Models Representing Buyer Examples Buyer Cooperative E-Tailing Use of bit vendors Slide48:  Exhibit 5 - 13 Consumer Online Retail Expenditures January 2000 Source: Adapted from CyberAtlas, www.cyberatlas.com Chapter 6:  Chapter 6 E-Marketing Communication Learning Objectives:  Learning Objectives Marketing review Define five promotion mix tools Discuss the hierarchy of effects Explain the strengths and the weaknesses of traditional media Differentiate brand and direct-response advertising online Compare and contrast banners, sponsorships, and interstitials Define spam, viral marketing, and permission marketing Identify public relations stakeholders and common Net content directed to them Learning Objectives:  Learning Objectives Discuss the power of online sales promotions to capture user attention Differentiate among broadcast, narrowcast, and pointcast electronic media Identify the strengths and weaknesses of the Web as an advertising medium Identify several ways to measure the Web as an advertising medium Identify several ways to measure the Web audience, giving the strengths of each Describe several metrics for evaluating among advertising vehicles (e.g., CPM) The PrivNet Story:  The PrivNet Story In 1995, James Howard: was a senior at the University of North Carolina, Chaptel Hill, got the idea for a product to eliminate ads from Web pages. PrivNet was born. The main product: Internet Fast Forward (IFF), Inspired from the VCR, Able to filter banner ads from Web pages. The motivation: save time 30% of the market is interested in saving time => Media sensation The PrivNet Story:  The PrivNet Story The end of the story: Lawsuits Pretty Good Privacy (PGP) bought PrivNet but had no interest in IFF and it died on the vine The idea lives on: Companies released products for ads filtering These products did not attract much media attention Integrated Marketing Communication (IMC):  Integrated Marketing Communication (IMC) Definition: “Comprehensive plan of communication that includes advertising, sales promotion, public relations, direct marketing, personal selling, and the rest of the marketing mix to provide maximum communication impact with stakeholders” Hierarchy of Effects Model:  Hierarchy of Effects Model The “think, feel, do” model: First, consumers become aware of and learn about a product (think), Then develop a positive or negative attitude about it (feel), Ultimately move to purchasing it (do) Thinking steps: awareness, knowledge Feeling steps: liking, preference Doing steps: conviction, purchase Hierarchy of Effects Model:  Hierarchy of Effects Model The “think, feel, do” model concern high-involvement product decision Importance of the model: Helps marketers to understand where consumers stand in relation to the purchase cycle Set communication objectives Select strategies that will move them closer to purchase and loyalty Slide57:  Exhibit 6 - 1 Traditional Media Hierarchy of Effects for High- and Low-Involvement Product Decisions Marketing Communication Strategies:  Marketing Communication Strategies Consists of: planned and unplanned messages between firms and customers and from customer to customer. Planned messages: A firm that is attempting to inform or persuade its target stakeholders Unplanned messages: Things such as word of mouth among customers and publicity in media. Key Promotion Mix Elements:  Key Promotion Mix Elements Advertising: Nonpersonal communication of information usually paid for and persuasive in nature about products or ideas by an identified sponsor through various media Ex: banner ads and buttons Sales promotions: Short term incentives of gifts or money that facilitate the movement of products from producer to end user Ex: E-mail coupons Key Promotion Mix Elements:  Key Promotion Mix Elements Public Relations: Consists of activities that influence public opinion and create goodwill for the organization Ex: http://www.rollerblade.com/ Personal Selling: A direct face-to-face to potential buyers Direct Marketing: Direct communication through non-personal media with carefully targeted individuals to obtain an immediate response Ex: telemarketing, outgoing E-mail, and postal mail Internet Advertising:  Internet Advertising Advertising: Used to create awareness, provide information, create positive attitudes about products (image), and remind users about products Internet Advertising Expenditures: Consumer related 31% Financial services 17% Computing 16% New media 12% Business Services 7% Slide62:  Exhibit 6 - 2 Marketing Communication E-Business Models Slide63:  Exhibit 6 - 3 Actual and Projected U.S. Internet Advertising Expenditures Source: Compiled from data in Li 1999 (The Forrester Report) Slide64:  Exhibit 6 - 4 Internet Advertising Expenditures by Region: 1999 Source: Compiled from data in Li 1999 (The Forrester Report) Brand VS. Direct Response Advertising:  Brand VS. Direct Response Advertising Brand Advertising (or CPM, Cost Per Thousand): Goal: put the brand name and product benefits in front of users Best medium: television Direct Response Advertising: seeks to create action such as inquiry or purchase from consumers as a result of seeing the ad Internets big strength: due to banner ads Internet Advertising Methods:  Internet Advertising Methods E-mail Advertising: Least expensive type of on-line advertising Text based, usually tagging along on a consumers incoming messages Not SPAM! Web site Advertising: Text-from a sentence to pages of story, graphics, sound, animation, and hyperlinks Slide67:  Exhibit 6 - 5 Proportion of Advertising Dollars by Type in 1999 Source: Compiled from data at www.iab.net Slide68:  Exhibit 6 - 6 Embedded Text Advertisement in E-mail Message Banners and Buttons:  Banners and Buttons Occupy designated space for rent on Web pages Similar to the print advertising model used by magazine and newspapers Advantage: video and audio capabilities Slide70:  Exhibit 6 - 7 Three Most Common Banner Sizes Slide71:  Exhibit 6 - 8 Yahoo! Messenger Banner Source: www.yahoo.com. Reproduced with permission of Yahoo! Inc. © 2000 by Yahoo! Inc. YAHOO! and the YAHOO! logo are trademarks of Yahoo! Inc. The Evolution of Banners :  The Evolution of Banners Banners help build brand awareness and build brand images. The more relevant the ad, the better the chance that it will grab the viewer’s attention and create attitudinal and behavioral changes. Banners: The First Stage:  Banners: The First Stage Banners that called out “click here,” “free,” and “download”: In bright colors to train users that banners were interactive. Click-through: Users began to learn that by clicking on banners, they would be transferred to another web site. Most banners are hyper-linked to the advertisers’ site. Banners must appeal to the users’ needs to distract them from the site they are currently visiting. Banners: The Second Stage:  Banners: The Second Stage Banners began to feature animation (common with today’s banners). This movement captures the users’ attention on an otherwise static page. Animated GIF: Files that consist of a series of frames each containing a separate picture. This animation results from rotating the frames with very short time delays between each one. Animation is used to stimulate movement or expose the user to a sequence of messages. Banners: The Third Stage:  Banners: The Third Stage Interactive Banners: The most advanced stage of a banner. Some banners sense the position of the mouse on the Web page and begin to animate faster as the user approaches. Banners that have built-in games. Banners with drop-down menus, check boxes, and search boxes to engage and empower the user. Slide76:  Exhibit 6 - 9 BuyComp Interactive Banner Source: www.buycomp.com Sponsorships :  Sponsorships Sponsorships: It integrates editorial content and advertising on a Web site. The sponsor pays for space and creates content that appeals to the publisher’s audience. Now comprise 27% of all Web advertising expenditures. While at a quick glance, it is easy to assume that the Web site authors the contents on a page, a closer evaluation will show that often the sponsors author most of the material. Yahoo! Shopping - shopping.yahoo.com Slide78:  Exhibit 6 - 10 Life Savers Sponsorship at Candystand Source: www.candystand.com. Used with permission of Nabisco, Inc. Slide79:  Exhibit 6 - 11 Sponsorships or Content? Source: www.yahoo.com. Reproduced with permission of Yahoo! Inc. © 2000 by Yahoo! Inc. YAHOO! and the YAHOO! logo are trademarks of Yahoo! Inc. Interstitials :  Interstitials Interstitials: They are Java-based ads that appear while the publisher’s content is loading. Represent only 4% of all Web advertising expenditures. While these types of ads held great promise when they were introduced, their number has not increased due to two main factors: They are difficult to execute properly. They give the impression of lengthening user-waiting time. Types of Interstitials :  Types of Interstitials Superstitials: Video-like ads timed to appear when a user moves her mouse from one part of a Web site to another. They look like mini videos and are entertaining and fast. Advantages: Superstitials load behind the scenes and do not appear until fully loaded on the user’s computer. It doesn’t slow page download time, nor does the user have the impression that it does. Types of Interstitials:  Types of Interstitials Daughter windows Separate window that overlays the current browser window and contains content or advertisements. Also called pop-up windows. 2. Public Relations Activities of the Net :  2. Public Relations Activities of the Net Appropriate for a diverse group of stakeholders + used to create goodwill among a number of different publics including: Company shareholders and employees; The media; Suppliers; Local community; Consumers; Business buyers. Public Relations content attempts to create a positive feeling about the company or its brands among various publics. Johnson & Johnson - www.jnj.com Slide84:  Exhibit 6 - 12 Online Public Relations Content for Selected Stakeholders Content Sponsorship:  Content Sponsorship Web content that is not advertising, sales promotion, or transactional is public relations = most Web content. Free online content published by corporations to inform, persuade, or entertain is public relations (P.R.) PR = content that attempts to create a positive feeling about the company or its brands. Brochureware :  Brochureware A site that provides: Information about the company’s products and services without providing interactive features. An excellent opportunity to brand as well as to develop a relationship with the consumer and other stakeholders. Press releases for the news media Corporate reports for investors Employment information for potential employees Employee benefit information for current employees Interactive Web sites for Public Relations :  Interactive Web sites for Public Relations Inform and empower users. Entertain users (games and electronic postcards) Build community (online events, chat rooms, and discussion groups) Provide a communication channel with the customer (customer feedback & customer service) Assist in site navigation (search buttons, drop-down menus & check boxes) Slide88:  Exhibit 6 - 13 Microsoft Provides Multiple Ways to Search for Products Source: www.microsoft.com. Copyright © 2000 Microsoft Corporation, One Microsoft Way, Redmond, Washington 98052-6399 U.S.A. All rights reserved. Slide89:  Exhibit 6 - 14 Yahoo! Games: Chess Source: www.yahoo.com. Reproduced with permission of Yahoo! Inc. © 2000 by Yahoo! Inc. YAHOO! and the YAHOO! logo are trademarks of Yahoo! Inc. Community Building :  Community Building Sites build community through online chat rooms, discussion groups and online events. Users can post their own book reviews and read the reviews of others. Users rate items purchased for other consumers to view before making a purchase. Users continue returning to see what their cyber friends are discussing and doing online. Morningstar - www.morningstar.com Online Events :  Online Events Generate user interest and draw them to the site. Companies and organizations hold seminars, workshops, and discussions online. Forthcoming events are used as legitimate reasons to email potential and existing clients. Online Customer Service :  Online Customer Service A communication channel for customers Many companies and organizations offer customer feedback features on web sites that allow customers the opportunity to voice concerns. Automated customer service programs acknowledge the message via e-mail, indicating that a customer service representative will be responding shortly. Feedback options should only be included on the Web site if the company has the staff to respond. 3. Sales Promotions on the Internet :  3. Sales Promotions on the Internet Coupons, rebates, product sampling, contests, sweepstakes, and premiums. Marketers report three to five times higher response rates with online promotions than with direct mail. Online promotions also give the firm the opportunity to gather names for the firm’s email database. Send subsequent promotions while building relationships with current and potential customers E-Coupons :  E-Coupons E-coupons are similar to traditional coupons, but Internet users can “point and clip” these electronic coupons. Customers also have the option in some sites to simply give the coupon code when placing an order and the discount will be applied. Slide95:  Exhibit 6 - 15 H.O.T! Coupons Distributes Coupons in Most Local Areas Source: www.hotcoupons.com Sampling:  Sampling Some sites allow users to sample digital product prior to purchase: Free download of fully functional demo version of software that expires in 30 to 60 days 30-second clips of music before ordering the CD Contest and Sweepstakes:  Contest and Sweepstakes Goal: drive traffic and keep users returning Contests require skill (e.g. trivia answer) and Sweepstakes involve pure chance Create excitement about brands and entice customers to stop by Move customers to the place where they can purchase product. Slide98:  Exhibit 6 - 16 Freestuff2000.com Consolidates Sales Promotions from Many Web Sites Source: www.freestuff2000.com 4. Personal Selling on an Impersonal Medium:  4. Personal Selling on an Impersonal Medium The Net is not appropriate for personal selling except in an ancillary role. The Web is very good for generating leads for the sales force. e.g.: Online form for those wanting a salesperson to contact them 5. Direct Marketing :  5. Direct Marketing “Direct communication through nonpersonal media with carefully targeted individuals to obtain an immediate response” Telemarketing, Outgoing email, Snail mail 1999: more than 569 million e-mail boxes worldwide (the larger part is Web based) 2004: marketers will send over 200 billion e-mail messages => 9 marketing e-mails a day for each household Direct Marketing :  Direct Marketing E-mail advantage over direct-mail: No postal charges Convenient avenue for direct response E-mail can be automatically individualized to meet the needs of specific users E-mail disadvantage over direct-mail: Difficulty in finding appropriate e-mail list Consumers are more upset about Spam (unsolicited e-mail) than they are about unsolicited snail mail Direct Marketing :  Direct Marketing E-mail give the marketers : The chance for a real dialogue with individual customers A way to develop broad and deep customer relationships The opportunity to use technology advances by displaying graphic contents, links Advantages of periodic e-mail newsletters: Regularly and legitimately promote the company name Personalize the communication with tailored content Positioning the company as an expert in a subject Pointing recipient back to the company Web site Being easy for clients to pass along to others Paying for themselves by carrying small advertisements Slide103:  Exhibit 6 - 17 Individualized E-Mail to Account Holder Opt-In, Opt-Out :  Opt-In, Opt-Out Lists can be purchased from list brokers Will send your message to massive distribution lists e.g.: PostMaster Direct Response (www.postmasterdirect.com) Over 6 million Opt-In names and email addresses in 3000 categories Builds list through Opt-In at over 200 partner sites such as www.altavista.com Opt-In, Opt-Out :  Opt-In, Opt-Out Marketers search opt-in lists (users have voluntarily agreed to receive commercial e-mail about topics that might interest them) because they have higher response. Opt-out: users have to uncheck the box on a Web page to prevent being put on the e-mail list. Permission Marketing :  Permission Marketing Opt-In techniques are part of a bigger strategy called Permission Marketing. Provides incentives to accept advertising and email voluntarily Basis of many Internet MarCom strategies E.g.: www.Amazon.com - collects purchase info and serves it collectively to others Viral marketing :  Viral marketing “A bad name for a great technique.” Internet equivalent to word of mouth – a user gets an email and forwards the message on to their friends and co-workers Less expensive than offline promotion Other E-Mail Techniques :  Other E-Mail Techniques Bulletin Boards / News Groups – users can post a message on a selected topic for others to read Largest public newsgroup forum is Usenet, with 35,000 groups www.deja.com LISTSERV – email discussion group with regular subscribers Spam :  Spam Unsolicited Email Can generate negative publicity for the organization Nike Corp. published an anti-spam policy Spam lists can be generated from public directories Spammers can hide return addresses Filters spam 6. Important Trends:  6. Important Trends It’s about profiling, penetration, privacy and profitability: Finding more effective ways to build databases of Net users who want to receive relevant messages from firms Firms refine metrics to measure the effectiveness of e-mail and other promotional campaigns Privacy is key: consumers give personal information to marketers who use it to provide value and who do not share it with others unless given permission Important Trends: Losing Control of Customer Perceptions:  Important Trends: Losing Control of Customer Perceptions The Net is: A vehicle for widely disseminating timely, inexpensive, and important marketing communication A marketspace for customer feedback and user discussion Customers sometimes discuss product experiences: It’s a good thing is the customers are satisfied If not, the customers can kill a product The Net as a Medium:  The Net as a Medium How marketers view the Internet as just one of many media to carry marketing communication messages among TV, radio, newspapers, magazines, outdoor, and direct mail. 1. The medium is not the appliance:  1. The medium is not the appliance Marketers and lawmakers are trying to search for the proper analogy with which to understand the Net. Trying to separate the medium from the appliance opens the door to new types of receiving appliances. Types of appliances (also called receivers): television, a computer, a radio, a cell phone, etc. 2. Electronic Media:  2. Electronic Media Electronic media includes network television, radio, cable television, the Internet, FAX machines, cellular phones, and pagers. Three types of media are: Broadcast media Narrowcast medium Pointcast media Broadcast Media:  Broadcast Media TV and radio Both only allow for passive attention TV penetration reaches over 98% of U.S. households Radio penetration is also ubiquitous, almost every car and household has one. The Internet is nipping at their heels Narrowcast Medium:  Narrowcast Medium This is cable TV (CATV) It is called narrowcast because the cable channels contain very focused electronic content appealing to special-interest markets. Examples are CNN and ESPN CATV and the Internet share a common problem, the number of small audience channels precludes a cost-effective comprehensive measurement system. Pointcast Media:  Pointcast Media Pointcast media include all electronic media with the capability of transmitting to an audience of just one person. Promotes interactivity The Internet is the biggest pointcast medium. The Internet is the first electronic medium to allow active, self-paced viewing. There is difficultly in defining Web audience member characteristics on an individual level. Must be solved to so the Net can reach full capability as a pointcast medium. 3. Print Media:  3. Print Media Newspapers and magazines Local Newspapers: Good audience measurement (ABC) Low cost per thousand (CPM) Poor reproduction quality Hasty reading Magazines: Good psychographic targeting High reproduction quality High CPM Low flexibility 4. Direct Mail:  4. Direct Mail Strengths: More selective targeting than other mass media Good message and timing flexibility Can easily carry sales promotions Response tracking capability Weaknesses: Low Image – junk mail High costs of production Postage costs 5. Media Consumption:  5. Media Consumption Some consumption statistics: We each watched 1,591 hours of TV in 2000 Listened to 1024 hours of radio 152 hours reading newspapers 80 hours reading magazines 122 hours on the Internet Slide121:  Exhibit 6 - 18 Forecasted Proportion of Time with Various Media in 2000 Source: Compiled from data in “Internet in Media…” 2000 Slide122:  Exhibit 6 - 19 U.S. Per Capita Advertising Expenditures by Advertisers (in Dollars) Source: Compiled from data in Li 1999: The Forrester Report 6. Audience Measurement:  6. Audience Measurement Hits: number of file requests for a Web site Page Views: single access to a unique URL Visitors: number of people viewing the site Unique Visitors: doesn’t count repeat visits 6. Audience Measurement:  6. Audience Measurement Site Stickiness: length of stay at Web site Impressions: number of times ad was served Keywords: search terms on search engines Click-Throughs: % of banner ads clicked How to measure: Consumer – Centric Measurement:  How to measure: Consumer – Centric Measurement Panel of demographically selected internet users Strengths: Records clickstream data at user’s PC Statistically reliable sample Demographically targeted Weaknesses: Reliable only for large web sites Does not measure business traffic as well Panel composition may be unreliable Slide126:  Exhibit 6 - 20 Top 10 Web Site Properties and Reach for March 2000 Source: compiled from data at www.Nielsen//NetRatings.com How to measure: Site – Centric Measurement:  How to measure: Site – Centric Measurement Analysis of Web server log files Hitlist - www.accrue.com WebTrends – www.webtrends.com Strengths: Less expensive Measures ad impressions without 3rd party data Better measure for smaller sites Weaknesses: Proxy server caching – stored copies of web sites Cannot distinguish unique visits Cannot produce demographic information Media Metrics:  Media Metrics CPM Cost per thousand Cost / Audience x 1000 Click through percentage Conversion Rate Orders / Visitors Cost Per Click Total cost / Number of clicks Average order value Dollar sales / Number of orders Slide129:  Exhibit 6 - 21 Strengths and Weaknesses of Major Media The End:  The End

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