Chapter 2

Adapting Marketing to the New Economy
PowerPoint by Karen E. James Louisiana State University - Shreveport
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 0 in Chapter 2

Objectives 
Identify the major forces driving the new economy.  Understand how business and marketing practices are changing as a result of the new economy.
©2003 Prentice Hall, Inc. To accompany A Framework for Marketing Management, 2nd Edition Slide 1 in Chapter 2

 Understand how marketers practice customer relationship management. 2nd Edition Slide 2 in Chapter 2 .Objectives  Explore how the Internet has changed the way marketers use customer databases. ©2003 Prentice Hall. To accompany A Framework for Marketing Management. Inc.

Inc. intranets & extranets are key  Disintermediation and reintermediation  Customization and customerization  Industry convergence ©2003 Prentice Hall. 2nd Edition Slide 3 in Chapter 2 . To accompany A Framework for Marketing Management.Drivers of the New Economy  Digitalization and connectivity ± The Internet.

New Economy ± Customer segment organization ± Lifetime value of customer ± Marketing scorecard ± Stakeholders ± Everyone does the marketing Slide 4 in Chapter 2 To accompany A Framework for Marketing Management. Inc. 2nd Edition .Changes in Business Practices Old Economy ± Product unit organization ± Profitable transactions ± Financial scorecard ± Stockholders ± Marketing does the marketing ©2003 Prentice Hall.

New Economy ± Build brands via performance ± Customer retention ± Measure customer satisfaction and retention rates ± Underdeliver. 2nd Edition . Inc.Changes in Business Practices Old Economy ± Build brands via advertising ± Customer acquisition ± No customer satisfaction measurement ± Overpromise. underdeliver ©2003 Prentice Hall. overpromise Slide 5 in Chapter 2 To accompany A Framework for Marketing Management.

To accompany A Framework for Marketing Management.How Marketing Practices are Changing  E-Business  Setting up web sites  Customer relationship marketing ©2003 Prentice Hall. 2nd Edition Slide 6 in Chapter 2 . Inc.

To accompany A Framework for Marketing Management. ± E-purchasing from online suppliers. ©2003 Prentice Hall. Inc. promote. and sell products and services over the Internet. 2nd Edition Slide 7 in Chapter 2 . communicate.How Marketing Practices are Changing: E-business E Business practices are changing . . ± E-commerce web sites facilitate the online sale of products and services. ± E-marketing efforts include those that inform. . ± E-business uses electronic means and platforms to conduct business.

lower cost. easier information and price gathering To accompany A Framework for Marketing Management.  B2C = Business-toConsumer  Benefits include: greater ordering convenience. 2nd Edition Slide 8 in Chapter 2 . Inc.How Marketing Practices are Changing: E-business EInternet Domains  B2C  B2B  C2C  C2B ©2003 Prentice Hall.

 Benefits include: lower costs via B2B auctions.  B2B = Business-toBusiness  Volume is 10-15% higher than B2C. greater access to information. Inc. 2nd Edition Slide 9 in Chapter 2 . buying alliances. To accompany A Framework for Marketing Management.How Marketing Practices are Changing: E-business EInternet Domains  B2C  B2B  C2C  C2B ©2003 Prentice Hall.

To accompany A Framework for Marketing Management.  Consumers are creating online product information via newsgroup and chat room dialogues. 2nd Edition Slide 10 in Chapter 2 .How Marketing Practices are Changing: E-business EInternet Domains  B2C  B2B  C2C  C2B ©2003 Prentice Hall.  C2C = Consumer-toConsumer  Transactions occur via online trading sites such as eBay. Inc.

2nd Edition Slide 11 in Chapter 2 . Inc.How Marketing Practices are Changing: E-business EInternet Domains  B2C  B2B  C2C  C2B ©2003 Prentice Hall.  C2B = Consumerto-Business  Facilitate communication between customer and businesses. To accompany A Framework for Marketing Management.

supplier relationships are superior ©2003 Prentice Hall. Inc. knowledge. 2nd Edition Slide 12 in Chapter 2 . To accompany A Framework for Marketing Management.How Marketing Practices are Changing: E-business E Brick and click firms have often faced channel conflict issues  Brick and click firms tend to be more successful than pure click e-tailer competitors because . ± Customer acquisition costs are lower ± Resources. customer base. . .

How Marketing Practices are Changing: Web Site Design The Seven ³C¶s´ of Web Site Design  Context  Content  Community  Communication  Connection  Commerce  Customization ©2003 Prentice Hall. 2nd Edition Slide 13 in Chapter 2 . Inc. To accompany A Framework for Marketing Management.

Inc.How Marketing Practices are Changing: Web Site Design  Placing Ads and Promotions Online ± Banner ads ± Sponsorships ± Microsite ± Interstitials ± Browser ads ± Alliances and affiliate programs ©2003 Prentice Hall. 2nd Edition Slide 14 in Chapter 2 . To accompany A Framework for Marketing Management.

Inc.com revenue and profit models:  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 ©2003 Prentice Hall. To accompany A Framework for Marketing Management. 2nd Edition Slide 15 in Chapter 2 .How Marketing Practices are Changing: Web Site Design Dot.

Inc. To accompany A Framework for Marketing Management.How Marketing Practices are Changing: CRM  Customer Relationship Marketing (CRM) allows companies to: ± Deliver real-time customer service ± Customize market offerings. products. and messages ©2003 Prentice Hall. 2nd Edition Slide 16 in Chapter 2 . services. media.

To accompany A Framework for Marketing Management.How Marketing Practices are Changing: CRM  Effective Customer Relationship Marketing requires: ± Reducing customer defection rates ± Extending the life of the customer relationship ± Enhancing customer sales / profit potential ± Making low-profit customers MORE profitable or terminating them ± Focusing on high value customers ©2003 Prentice Hall. Inc. 2nd Edition Slide 17 in Chapter 2 .

How Marketing Practices are Changing: CRM  CRM Leads to One-on-One Marketing ± Four Steps for One-to-One Marketing  Don¶t go after everyone.  Customize messages. Inc. aggressively pursue the most valuable customers. ©2003 Prentice Hall. carefully identify your prospects and customers. and products for each customer. To accompany A Framework for Marketing Management. 2nd Edition Slide 18 in Chapter 2 .  Group customers by their needs and their value to the company. services.  Build stronger relationships with customers via individual interaction.

To accompany A Framework for Marketing Management. 2nd Edition Slide 19 in Chapter 2 . Inc.How Marketing Practices are Changing: CRM  Customer Databases and Database Marketing are the key to Effective CRM  Database uses include: ± Best prospect identification ± Matching offers to customers ± Deepening customer loyalty ± Reactivating customer purchasing ± Avoiding serious mistakes ©2003 Prentice Hall.