Chapter 2 adapting marketing in the new economy

CHAPTER 2

ADAPTING

TO THE NEW ECONOMY

REPORTED BY:

GRACE R. ASI

© 2003 Prentice Hall, Inc.

OBJECTIVES:

• 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


DRIVERS OF THE NEW ECONOMY

•DIGITALIZATION AND CONNECTIVITY

•DISINTERMEDIATION AND REINTERMEDIATION

•CUSTOMIZATION AND CUSTOMERIZATION

•INDUSTRY CONVERGENCEADAPTING MARKETING TO THE NEW ECONOMY


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”









DISINTERMEDIATION AND REINTERMEDIATION



DISINTERMEDIATION AND REINTERMEDIATION



CUSTOMIZATION AND CUSTOMERIZATION



INDUSTRY CONVERGENCE



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


VS.


HOW MARKETING PRACTICES ARE CHANGING:

•E-BUSINESS

•CUSTOMER RELATIONSHIP MARKETING




•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



INTERNET DOMAINS

•B2C•B2B•C2C•C2B


HOW MARKETING PRACTICES ARE CHANGING: E-BUSINESS


INTERNET DOMAINS


• 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




B2C: Customers can shop online at Calyx and Corolla or ask for a catalog

and shop by phone




POPULAR B2C SITE IN THE PHILIPPINES


INTERNET DOMAINS


• 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





POPULAR B2B WEBSITES



B2B WEBSITE IN THE PHILIPPINES


INTERNET DOMAINS


• 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





C2C WEBSITES


INTERNET DOMAINS


•CONSUMER-TO-BUSINESS

•FACILITATE COMMUNICATION BETWEEN CUSTOMER AND BUSINESSES.




PURE-CLICKBRICK-AND-

CLICK


VS.

E-BUSINESS



•LAUNCHED A WEB SITE WITHOUT ANY PREVIOUS EXISTENCE AS A FIRM

•DOT-COMS FAILED FOR A VARIETY OF REASONSRUSHING INTO THE MARKET WITHOUT

PROPER RESEARCH OR PLANNINGSPENDING LARGE AMOUNTS ON MASS

MARKETING AND OFFLINE ADVERTISINGFAILURE TO BUILD A SOUND BUSINESS

MODEL THAT WOULD DELIVER EVENTUAL PROFITSADAPTING MARKETING TO THE NEW ECONOMY

PURE-CLICK COMPANY


•EXISTING COMPANIES THAT ADDED AN ONLINE SITE FOR INFORMATION AND/OR E-COMMERCE.

•MORE SUCCESSFUL THAN PURE CLICK COMPETITORSBETTER KNOWN BRAND NAMESGREATER FINANCIAL RESOURCES AND ACCESS

TO FUNDSDEEPER INDUSTRIAL KNOWLEDGE AND

EXPERIENCE, CUSTOMER BASE, AND RELATIONSHIPS WITH SUPPLIERSCAN BE EASILY REACHED ABILITY TO REACH AND SERVE CUSTOMERS ON

FAR AWAY LOCATION


BRICK-AND-CLICK COMPANY


•CONTEXT

•CONTENT

•COMMUNITY

•CUSTOMIZATION

•COMMUNICATION

•CONNECTION

•COMMERCE

The Seven “C’s” of Web Site Design



SETTING UP WEB SITES



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



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


•BANNER ADS

•SPONSORSHIPS

•MICROSITE

• INTERSTITIALS

•BROWSER ADS

•ALLIANCES AND AFFILIATE PROGRAMS


SETTING UP WEB SITE


PLACING ADS AND PROMOTIONS


•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



SETTING UP WEB SITE

DOT.COMS REVENUE AND PROFIT MODEL


CUSTOMER RELATIONSHIP MARKETING :

HOW MARKETING PRACTICES ARE CHANGING: CUSTOMER RELATIONSHIP MARKETING


• A BUSINESS PROCESS IN WHICH CLIENT RELATIONSHIPS, CUSTOMER LOYALTY AND BRAND VALUE ARE BUILT THROUGH MARKETING STRATEGIES AND ACTIVITIES.


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



CUSTOMER RELATIONSHIP MARKETING


• 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


FOUR-STEP FRAMEWORK FOR ONE-TO-ONE MARKETING



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


VS.


• 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




•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.




•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.



DATA WAREHOUSE AND DATA MINING


USES OF DATABASE:

•BEST PROSPECT IDENTIFICATION•MATCHING OFFERS TO CUSTOMERS•DEEPENING CUSTOMER LOYALTY•REACTIVATING CUSTOMER PURCHASING•AVOIDING SERIOUS MISTAKES




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




THE END

THANK YOU!