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EBZ437: E-Business
Week 3: E-Marketing
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Value creation Value created is the difference between theproduct and the firms cost of providing thatproduct. (J. and E. pg 96)
Perceived Benefit What the customer values in a product or
service
Cost All cost incurred in the provison of the
product or service
Value Difference between benefit and costs
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Porters Value Chain
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Value chain Primary activities Inbound logistics: receiving, storing,
Operations: necessary activities forcreating the goods or service
Outbound logistics: getting the goods tothe consumer can be physical or electronic
Mar eting an sa es: enticing customersto buy your product/ service
Service: after sales service
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The 5 Ps of Marketing Product
Price
Place
Promotion & People Packaging
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Product Has it?
w v u Is it?
A service (finance, travel etc)
In demand
Does it?
en se o new mar e ng s ra eg es
eg CreateSpace:https://www.createspace.com/
(formerly CustomFlix)
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Price Is it?
Affordable
Cheaper than physical shopfront
equivalent Can we?
Have special offers, incentives Reduce advertising costs
Get the customer to do most ofthe work
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Place Physical location of site not
mpor an Market is much larger global
Global -> more competition Consider geographic, legal and
cu ura oun ar es Consider marketplace (Are we easy
to find?)
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Promotion and People Internet site provides a window into an
- How to advertise?
Billboards etc
Radio and TV
Domain name
Staff - interaction with customers
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Packaging Cyber product must appeal to
cus omer Should look professional
Offer incentives Discounts
Club memberships
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Market Segmentation Market segmentation
y u r wmarkets - segments
target segments with advertising messages
Segments Usually defined in terms of demographic
characteristics a e ender income etc
Micromarketing Targeting very small market segments
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Market Segmentation Geographic segmentation (location)
Creating different combinations of marketing
efforts for each geographical group of customers,country, city, neighbourhood, etc
Demographic segmentation
Uses age, gender, family size, income, education,religion, or ethnicity to group customers needs andpreferences
Psychographic segmentation (lifestyle) Groups customers by variables such as social class,
personality, or their approach to life
Behavioural segmentation Based on usage rates of products and services
htt : www.anz.com default.as
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The Internet Customer (Lawrence et al, 2003) Any consumer of goods, services and/or
Readers of Web pages
Recipients of email
On-line subscribers Direct/indirect purchasers
Internet Retail:http://www.internetretailer.com/er
http://www.internetretailer.com/2010/09/08/mobile-
commerce-comes-together
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Reaching Internet Customers Not face-to-face, not local
us omer no pass ve, wa ng Early attempts
Hotlists, internet malls Advertising
-
Target advertisements - invitations
Sponsorship of search engines, other
pages
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Advertising on the Web Banner ad
u r Interactive marketing unit (IMU) ad
formats
Standard banner sizes that most Web siteshave voluntarily agreed to use
Coordinates ad sharing
Banner advertising network (DoubleClick:http://www.google.com/doubleclick/)
Acts as a broker between advertisers and Websites that carry ads
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Advertising on the Web
Cost per thousand (CPM)
Pricing metric used when a companypurchases mass media advertising
Trial visit
First time a visitor loads a Web site page
Page view
Each page loaded by a visitor Click-through
no. of times an ad is clicked on :
http://www.google.com/doubleclick/advertisers/richmedia.html
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Other Web Ad Formats Pop-up ad
r w w w w u ropens or closes a Web page
Ad-blocking software
Prevents banner ads and pop-up ads fromloading
between two other things) ad When a user clicks a link to load a page, the
interstitial ad opens in its own browser window
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AdBlock Adblock - removes ads
-. .
Software to turn off banner ads onWWW sites
Disables push technology, blockscookies, blocks pop-ups and pop-
unders Turns off sounds and freezes
multimedia, etc
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Shopping Agents
Return detailed description of item, price,
BestBookBuys: http://www.bestwebbuys.com/books/
cnet.com.au
Problems
Blocking access
Rebundling: (Product bundling is a marketing strategythat involves offering several products for sale as onecombined produc ing of goods)
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Site Sponsorships Web sites offer advertisers an
web site
Give advertisers a chance to promote
products, services, or brands in a moresubtle way - associates the sponsor with
,
Helps build brand images and developreputation rather than generate
immediate salesEuropean mGov conference:
http://www.mgovernment.org/events/mgov2008/home.html
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E-Mail Marketing Sending one e-mail message to a
the company already has the customerse-mail address
Conversion rate percentage of recipients who respond to an ad
Opt-in e-mail sending e-mail messages to people who
request information on a particular topic
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Affiliate Marketing Strategies
Affiliate marketing
r u r ,reviews, ratings, or other information about aproduct that is linked to another firms site
Affiliate site Obtains the benefit of the selling sites brand in
exchange for the referral
Cause marketing Affiliate marketing program that benefits a
charitable organization
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Brand Image Key asset for building customer loyalty
rgan sa ons can use e we o a rmor build corporate identity or brandimage
E.g:
Nokia
Coca cola Ferrari
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BrandingElements of branding include:
eren a on Company must clearly distinguish its product
from all others
Relevance Degree to which a product is useful to a
Perceived value Key element in creating a brand that has value
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Customer Relations Commonly little consultation with
cus omers regar ng we s e es gn Can be richer than buyer-seller
Provide related informationAttract other interested parties
Encourage participation in surveysE.g.Qantas:
http://www.qantas.com.au/travel/airlines/hom
e/au/en
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Customer Relationship Management
Customer focussed business
s ra egy or e us ness Creating value by
segmenting customers tailoring offerings
Many application packages nowavailable
OnContact: http://www.oncontact.com/
Electronic Customer Relationship
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Electronic Customer Relationship
Management Is about the use of the Internet and
customers.
Aims to:
Create long-term relationship with customersto help offset costs
Increase the share of revenue through crossselling and up selling
Increase profitability of low profit customers
Focus on high value customers
Motivations (Kalakota & Robinson
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Motivations (Kalakota & Robinson,
1999) It costs 6 times more to sell to a new
A typical dissatisfied customer will tell 8- 10 people about his/her experience
Increasing annual customer retention by5% can boost profits 85%
Odds of selling a product to a newcustomer is 15%; existing customer50%
70% of dissatisfied customers willreturn if roblem fixed uickl
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Why CRM? Customers drive e-business us omers wan
Prompt excellent service
Organisations need to understand their
customers/clients from a multi-facetedpoint of view
Improving customer satis actionincreasing revenue from existingcustomers is seen as critical for survival
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Customer relationship management
Customer selection: targeting the
Customer acquisition:
get new customers and
encourage old customers to move onto theInternet
customers into repeat customers andkeep them for as long as possible.
Customer extension: involves crossselling to existing customers
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Case Study - AMEX (Kalakota & Robinson, 1999)
A history of innovation
r , y r r , r r v , rcards & travellers cheques, financial services
1990s diversification into investment
banks & brokerages failed No customer focus
New e-business design focussing on CRM
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Case Study - Amex
Traditional Amex:
ro uc ocusse Functionally-oriented systems
cost reduction is key to success
Task oriented
E-bus Amex:
Customer focussed Integrated service applications
customer relationship is key to success Solution oriented
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Personalisation & CRM Customising products & services to fit
requires analysis of customer behaviourduring previous buying and inquiry
interactions eg what products were of interest?
Personalised web pages
Proactive notification of upgrades, promotionsetc
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References Jelassi and Albrecht (2005) Strategies for E. Business Creating
Value through Electronic and Mobile Commerce Concepts andases, ren ce- a ap ,
Turban, E., Lee, J.K., King, D., McKay, J. and Marshall, P.(2008). Electronic Commerce: A Managerial Perspective (5th ed.).Prentice Hall, New Jersey, Chap 2.
Schneider, G (2007). Electronic Commerce. Thomson Learning.Chapter 3
Lawrence, E., Newton, S., Corbitt, B., Lawrence, J., Dann, S. AndThanasankit, T. (2003) lnternet Commerce: Digital Models forBusiness 3rd edition, John Wiley & Sons, Brisbane, Chapter 7
Kalakota, R. and Robinson, M. (1999) e-Business: Roadmap forSuccess Addison-Wesley Longman, Reading, MA. Chapter 5