Deborah Baker Texas Christian University Ch14

Internet Marketing
Chapter 14
Prepared by
Deborah Baker
Texas Christian University
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 1

©2005 South-Western College Publishing
Learning Objectives
1. Explain how the Internet affects the

traditional marketing mix
2. Describe how marketers are leveraging the

power of online technology
3. Discuss the legal and privacy issues

affecting Internet-based companies

Learning Objectives
4. Measure the effectiveness of an online

marketing campaign
5. Discuss the effects of the Internet on

marketing objectives and strategy

1 Learning Objective
On Line
http://www.scubatoys.com/poolcam/poolcam.asp
Explain how the

Internet affects the
traditional
marketing mix

1 Product Strategies on the Web
Progression of
product strategies:
Mass
Commodities Branding
customization

On Line
1 http://www.despair.com Branded Commodities
Principle of equivalent quality is applied

to branded products, creating downward
price pressure
Camera A at Camera A at
Retailer A Retailer B

1 Place
On Line
http://www.ideavirus.com
Corporate Web sites
Resellers’ Web sites
Affiliate programs
Clicks and mortar

1 Affiliate Programs
Virtual Intermediaries:
 Refer customers to online retailers

 Receive a commission on resulting
sales
 Benefit from the goodwill consumers
feel for the content sites they normally
visit
1 Promotion Challenges
Consumers don’t know the site
Consumers don’t know the company
Converting browsers to buyers

1 Promotion Methods
Spam
Viral Marketing (Buzz)
Instant Messaging
Online Interactive Ads

promotion
techniques Search Engine Listings
Sales Promotion

1 Search Engine Listings
Low price High price
No or low fee Gets you to

gets you at the top of the
the bottom of list
the list

1 Pricing Pressure
On Line
http://www.fedex.com
http://www.ups.com
http://www.usps.com
Extreme price pressure
on the Internet due to:
 Shopping bots and comparison sites

 Auction pricing
 Demand pricing

1 Pricing and Consumer Loyalty
75% of customers participate in a loyalty program
Online customer service consistently rated as poor
Come
72% say customer service is important Back
Soon!
41% happy with service they received
Profitability is less algorithm and more caring

1 How Technology Changes the 4Ps
Era of: Product Place Promotion Price

Personal Commodities Retail Store Store Displays Going Rate
Selling
(pre-1840s)
Advertising National Malls & National Retail Price
(1840s to Brands Superstores Advertising
1990s)
Interactive • Branded • Worldwide • Internet- Intelligent
Commerce Commodities Marketplace based Software
(1994 and • Mass Web Sites Agents
beyond) Customization • Affiliate • Interactive
Programs Ads
• Instant
Messaging

Describe how
marketers are
leveraging the
power of online
technology

2 Internet Demographics and Trends
60% of Men
Online:
By Gender
in the U.S.
56% of Women

60% of Whites
Online:
By race in 45% of Blacks
the U.S.
54% of Hispanics

23% no high school
Online:
By 45% of high school grads
education
in the U.S.
82% of college grads and

post-graduates

2 The Global Village
Broadens and enhances access

in developing nations
Allows businesses to “leapfrog”

into development
Levels playing field for

disadvantaged countries

2 Wireless Access on Rise
 Wireless is growing in popularity

 Will soon represent over half of all
Internet users worldwide
 A particular advantage for developing
nations without suitable infrastructure

2 Basic Forms of Virtual Business
Business-to-business
B2B
Forms of
Internet Business-to-Consumer
B2C
commerce
Consumer-to-Consumer
C2C

2 B2B Exchanges
On Line
http://www.globalwinespirits.com
http://www.transcore.com
Online trading floor
Struggling to survive
Over half out of business

since 2002

Maximizing Customer Relationship
2
Marketing on the Internet
Data tracking
Needed for personalized

content
Using Keep ad content fresh

Cookies
Controversial because of
privacy concerns

2 Improving Search Engine Results
1 – Choose the right words
2 – Put those words at top of page
3 – Use meta tags, like bold type
4 – Increase non-reciprocal links
5 – Incorporate graphics
6 – Incorporate video/audio
7 – Pay for a better link

Discuss the legal

and privacy issues
affecting Internet-
based commerce

3 Major Issues in Online Privacy
On Line
http://www.fbi.gov/hq/lab/carnivore/carnivore.htm
Cookies
Not-so-private email
Spam
Identity theft
Conflicting laws
Cyberstalking
Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel Branded trust 26
3 Cookies
Are bits of data mapped

to your hard drive
Enable marketers to
personalize Web sites
Cookies:
Can trace where you’ve
been on the Internet
Are the subject of a

controversial debate
3 Identity Theft
Stealing personal information to

commit fraud or other crimes
Sharply increasing
In 2003, 27 million complaints

filed with the FTC

3 Conflicting Legislation
Not all countries have the same laws

regulating Internet commerce
Marketers (M) Country 1
responsible for
every law in every
country
Country 2 Country 3
3 Online Predators
 Cyberstalking is on the rise.

 Caution is declining (e.g., online dating is
increasing)
 Affects trust people have for legitimate
marketing efforts

3 Creating Trust Online
Better Business Bureau

“Reliability Seal”
3rd-party
seals for ScanAlert
“Hacker Safe”
creating
trust
Verisign
“Secure Seal”

Measure the
effectiveness of an
online marketing
campaign

4 Metrics
The server can The server can’t

tell: tell:
 Who visited  Recency
 How many times  Frequency
(hits)  Monetary value
 And where (page
views)

4 Out-of-Date Metrics
Hits
Page views
Click-through counts

4 Stickiness as the New Metric
Duration
Stickiness =
Frequency Site Reach

Discuss the effects

of the Internet on
marketing
objectives and
strategy

5 Porter’s Five Industry Forces
Rivalry among existing competitors
Applying Barriers of entry

Five
Forces in Threat of substitutes
Internet
Environ-
Bargaining power of suppliers
ment
Bargaining power of buyers

5 Porter’s Five Industry Forces
Online…
Rivalries are… …intensified
Barriers are… …low
Threat of substitutes is… …high
Bargaining power suppliers …extremely low
Bargaining power buyers …increasing

Debunking Myths of Re-Formed
5
Market
Myths Truths
1st movers 1st movers pay the costs of

have the development; 2nd movers have the
advantage advantage.
Behavior Old habits die hard; people more

changes concerned about getting needs met
quickly than fractional costs savings
Non-traditional People perceive prices posted by

pricing will be sellers to be more convenient and
a success fair.
5 Back to Basis
Distinctive competence
Sustainable competitive
advantage
Attract loyal customers


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Internet Marketing

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 1

1. Explain how the Internet affects the

2. Describe how marketers are leveraging the

3. Discuss the legal and privacy issues

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 2

4. Measure the effectiveness of an online

5. Discuss the effects of the Internet on

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 3

Explain how the

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 4

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 5

Principle of equivalent quality is applied

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 6

Corporate Web sites

Resellers’ Web sites

Clicks and mortar

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 7

 Refer customers to online retailers

Consumers don’t know the site

Consumers don’t know the company

Converting browsers to buyers

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 9

Viral Marketing (Buzz)

Online Interactive Ads

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 10

Low price High price

No or low fee Gets you to

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 11

 Shopping bots and comparison sites

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 12

75% of customers participate in a loyalty program

Online customer service consistently rated as poor

Profitability is less algorithm and more caring

Era of: Product Place Promotion Price

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 14

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 15

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 16

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 17

23% no high school

82% of college grads and

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 18

Broadens and enhances access

Allows businesses to “leapfrog”

Levels playing field for

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 19

 Wireless is growing in popularity

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 20

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 21

Online trading floor

Over half out of business

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 22

Needed for personalized

Using Keep ad content fresh

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 23

1 – Choose the right words

2 – Put those words at top of page

3 – Use meta tags, like bold type

4 – Increase non-reciprocal links

7 – Pay for a better link

Discuss the legal

Chapter 14 Essentials of Marketing 4e Lamb Hair McDaniel 25

Are bits of data mapped

Are the subject of a