Lecture 1

The New E-Marketing Dynamism and

E-Marketing in Context
CORE CONCEPTS

 Emergence of E-Marketing

 Definition of E-Marketing

 The Rise of Information Democracy

 Customer Empowerment
Rethinking Marketing in a Connected World

 The Rise of Information Democracy

From Information Asymmetry…

 Information was scarce

 Customers were ill-informed

 Exchanges were monologues

 Marketing was “Command-and-Control”

Rethinking Marketing in a Connected World

 The Rise of Information Democracy

To Information Democracy…
 Information is all over

 Customers are well-informed

 Exchanges are conversations

 Marketing is “Connect and Collaborate”

Marketing: The New Definition

 Marketing is the adaptive process by which firms collaborate

with customers and partners to jointly create, deliver and
sustain value for all stakeholders.

 Key Aspects:
 Adaptive

 Collaboration, not transaction based

 Ecosystem, not the firm alone

 All stakeholders, not just customers

Marketing in a Connected World

Traditional Marketing
 “Command & Control”
 Profiting from transactions
 Delivering value to customers
 Pushing products to partners
 Delivering innovative products
 Functional Silos (4Ps)
Marketing in a Connected World

Connected Marketing
 “Connected and Collaborate”
 Profiting from relationships
 Co-creating value with customers
 Delivering solutions with partners
 Designing superior experiences
 Connected processes
The Google story shows:

 Markets always welcome an innovative new product

providing customer value.

 Customers trust good brands.

 Well-crafted marketing mix strategies can be effective in

helping newcomers enter crowded markets.
What is E-Marketing?

E-Marketing is the application of a broad range of

information technologies for:
 Transforming marketing strategies to create more customer
value (more effective segmentation, targeting, differentiation,
and positioning strategies),
 More efficiently planning and executing the conception,
distribution, promotion and pricing of goods, services, and
ideas,
 Creating exchanges that satisfy individual consumer and
organizational customers’ objectives.
 What is E-Marketing? (2)
 Alternative definition:
E-marketing is the result of information technology
applied to traditional marketing.

 E-marketing affects traditional marketing in two ways:

 Increases efficiency in traditional marketing functions,
 The technology of e-marketing transforms many
marketing strategies.

 Results:new business models that add customer value and/or

increase company profitability.
Features of Internet and Web as
commercial medium

 Ubiquity
 Global reach

 Universal standards

 Richness

 Interactivity

 Information density

 Personalization/customization

 Social technology
 Ubiquity

 Ubiquitous
 adjective
1. “present, appearing, or found everywhere”
 Internet/Web technology available everywhere: work, home, and
so on, anytime.
 Effect:
 Marketplace removed from temporal, geographic locations to become
“marketspace”
 Enhanced customer convenience and reduced shopping costs
 Reduces transaction costs
 Costs of participating in market
Global reach (like ubiquitous!)
• The technology reaches across national boundaries, around
Earth
• Effect:
 Commerce enabled across cultural and national boundaries
seamlessly and without modification.
 Marketspace includes, potentially, billions of consumers and
millions of businesses worldwide.
Universal standards
 One set of technology standards: Internet standards
 Effect:
 Disparate computer systems easily communicate with one another
 Lower market entry costs—costs merchants must pay to bring
goods to market
 Lower consumers’ search costs—effort required to find suitable
products
Richness
 Supports video, audio, and text messages
 Effect:
 Possible to deliver rich messages with text, audio, and video
simultaneously to large numbers of people.
 Video, audio, and text marketing messages can be integrated into
single marketing message and consumer experience.
Interactivity
 The technology works through interaction with the user.
 Effect:
 Consumers engaged in dialog that dynamically adjusts experience
to the individual.
 Consumer becomes co-participant in process of delivering goods
to market.
 E.g. chat window for tech support at merchant’s website or for
booking a holiday
Information density (ie lots of
information)
 Large increases in information density—the total amount and
quality of information available to all market participants
 Effect:
 Greater price transparency (consumers aware of competitive
prices)
 Greater cost transparency (consumers can get information on
merchant costs)
 Enables merchants to engage in price discrimination (benefit to
merchants – they can value price e.g. airline tickets over holiday
season)
Personalization/Customization
 Technology permits modification of messages, goods
 Effect:
 Personalized messages can be sent to individuals as well as
groups.
 Products and services can be customized to individual preferences
e.g. Nike training shoes, birthday mug with picture, Google online
allows you to choose the articles that you want to read and set
alerts/news feeds to suit personal taste- previously you got what
they printed
Effect of the Internet on the
marketplace:
 Reduces information asymmetry (what does this mean?) e.g.
greater ability to compare prices from diff merchants
 Offers greater flexibility and efficiency because of:
 Reduced search costs and transaction costs
 Lower menu costs (cost for a merchant to change prices) e.g.?
 Greater price discrimination (ability to value price)
 Dynamic pricing (e.g.?) (airline tickets, concert tickets)
 May reduce or increase switching costs (easier; more setup)
 May delay gratification: effects dependent on product
 Increased market segmentation
 Stronger network effects
 More disintermediation (what is this ?) – removal of
steps/organisations in a business process e.g. direct selling
Social technology
 The technology promotes user content generation and social
networking
 Effect:
 New Internet social and business models enable user content
creation and distribution, support social networks
 Old model was one to many (journalistic control)
 Cameras on phones etc
Internet Marketing Technologies

 Web transaction logs

 Cookies

 Databases, data warehouses, and data mining

 Advertising networks – Banner Ads

 Customer relationship management (CRM) systems

The Revolution in Internet Marketing
Technologies

 Three broad impacts:

 Internet has broadened the scope of marketing

communications
 Internet has increased the richness of marketing

communications
 Internet has greatly expanded the information

intensity of the marketplace

Web Transaction Logs

 Built into Web server software

 Records user activity at a Web site

 WebTrends a leading log analysis tool

 Can provide treasure trove of marketing information,

particularly when combined with:

1. Registration forms
2. Shopping cart database
Cookies

 Small text file that Web sites place on a visitor’s client

computer every time they visit, and during the visit as
specific pages are accessed
 Cookies provide Web marketers with a very quick

means of identifying the customer and understanding

his or her prior behavior
 Location of cookie files on computer depends on

browser version
Data Mining and Personalization