Chapter Fourteen

Marketing in the Digital Age

Roadmap: Previewing the Concepts

1. 2. Discuss how the digital age is affecting both consumers and the marketers who serve them. Explain how companies have responded to the Internet and other powerful new technologies with e-business strategies, and how these strategies have resulted in benefits to both buyers and sellers. Describe the four major e-marketing domains. Discuss how companies go about conducting e-marketing to profitably deliver more value to customers. Overview the promise and challenges that e-commerce presents for the future.
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3. 4.

5.

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Case Study
Amazon.com Online Pioneer
Background
Began selling books; now markets many other merchandise lines. One of the best known names on the Web. Sales have been strong but firm did not turn a profit until 2003. Skeptics predict tougher times in years to come.
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Marketing Efforts
Customer-driven: strives to design the best customer experience on the Web. Personalized sign-on pages and recommendations, huge selection, good value, and convenience result in strong buyer relationships. Will Amazon become the Wal-Mart of the Web?
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Forces Shaping the Digital Age

Digitalization andConnectivity
Intranets connect people within a company. Extranets connect a company with its suppliers, distributors, and outside partners. Internet connects users around the world.
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Forces Shaping the Digital Age

Internet Explosion
Explosive worldwide growth forms the heart of the New Economy. Increasing numbers of users worldwide, and broadband users in the U.S. Greater numbers of consumers are accessing information on the Internet. Companies must adopt Internet technology or risk being left behind.
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Marketing Strategy in the Digital Age

Requires a new model for marketing strategy and practice. Companies need to retain old skills and practices but add new competencies.

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E-Business in the Digital Age

Involves the use of electronic platforms to conduct company business.
Web sites for selling and customer relations. Intranets for within-company communication. Extranets connecting with major suppliers and distributors.

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E-Commerce in the Digital Age

More specific than e-business. Involves buying and selling processes supported by electronic means, primarily the Internet. Includes:
e-marketing e-purchasing (e-procurement)

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E-Marketing in the Digital Age

The marketing side of e-commerce. Includes efforts to communicate about, promote, and sell products and services over the Internet. E-purchasing is the buying side of e-commerce.
It consists of companies purchasing goods.
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Benefits to Buyers
Convenience. Buying is easy and private. Provides greater product access and selection. Provides access to comparative information. Buying is interactive and immediate.
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Benefits to Sellers
Powerful tool for building customer relationships. Can reduce costs. Can increase speed and efficiency. Offers greater flexibility in offers and programs. Is a truly global medium.
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E-Marketing Domains
Business to consumer (B2C) Business to business (B2B) Consumer to consumer (C2C) Consumer to business (C2B)

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Business to Consumer (B2C)

The online selling of goods and services to final consumers.
Expected to generate $316 billion in 2010, or 13% of retail sales. There is increasing diversity in buyers. This provides increasing opportunities for targeting markets. Is customer initiated and controlled, requiring new marketing approaches.
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Business to Business (B2B)

B2B sales dwarf B2C sales:
B2B e-commerce was nearly $4 trillion in 2003. Uses trading networks, auction & barter sites, spot exchanges, online product catalogs, and more.

Most major B2B marketers offer online product information, purchasing, and support. Open trading exchanges:
huge specialty e-marketspaces to conduct transactions.

More private trading exchanges are being developed for B2B transactions.
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Consumer to Consumer (C2C)

Occurs on the Web and includes a wide range of products and services.
Auction sites such as eBay offer marketplaces to buy or exchange goods. Blogs and forums facilitate information interchanges. Blog: online journals where people post thoughts on a narrowly defined topic. Forums: discussion groups located on commercial online services.
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Consumer to Business (C2B)

Consumers can search out sellers, view offers, initiate purchases, and give feedback.
Example: on priceline.com, one can bid for airline tickets, hotel rooms, etc., and decide whether to accept company offers.

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Click-Only Companies
E-tailers Search engines and portals Shopping comparison sites Internet service providers Transaction sites Content sites

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Reasons for dot.com Failures

Poor research or planning. Relied on spin and hype instead of marketing strategies. Spent too heavily on brand identities. Devoted too much effort to acquiring new customers instead of building loyalty.

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Click-and-Mortar Companies
Established firms initially resisted adding Web sites because of channel conflict and cannibalization concerns. Risk of online competition forced firms to become click-and-mortar companies. Most are now doing better than click-only companies because of:
Trusted brand names and more resources Large customer bases More knowledge and experience Good relationships with suppliers Can offer customers more options
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Online Marketing
Creating a Web site Placing ads and promotions online Setting up and participating in Web communities Using e-mail

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Types of Web Sites

Corporate Web Site: Designed to build customer goodwill and supplement other sales channels.
Offers information to customers. Builds closer customer relationships. Generates excitement about the company.

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Types of Web Sites

Marketing Web Site: Engages consumers in an interaction that moves them closer to a direct purchase or other marketing outcome.
May include catalogs, shopping tips, promotional features, and more.

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Designing Attractive Web Sites

The 7 Cs of Effective Web Site Design:
Context Content Community Customization Communication Connection Commerce

Constant change helps encourage repeat visits.

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Online Ads
Forms of online advertising:
Banner ads: Tickers (move across the screen) Skyscrapers (tall, skinny ads at the side of a page) Rectangles (boxes that are larger than a banner) Interstitials (pop up OR pop under between changes on Web site) Search-related ads (contextual advertising) Rich media ads (incorporate animation, video, sound, and interactivity).
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Online Promotion
Forms of online promotion:
Content sponsorships (sponsoring special content) Microsites (limited areas paid for by an external company) Alliances and affiliate programs (work with firms to promote each other) Viral marketing (Internet version of wordof-mouth)
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The Future of Online Advertising

May grow to 10-15% of media mix for low-involvement product categories. Web communities:
Allow members to congregate online and exchange views on issues of interest.

E-mail:
Use of enriched e-mail messages. Backlash against spam can be problem. Allow people to opt-out of promotions.
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E-Commerce Problems and Challenges

Likely that online marketing will remain a technique working with full IMC mix. Internet profitability remains problematic for B2C firms. Navigation difficulties continue as the number of Web sites grows. Dot.com retailers are facing growing competition. Legal and ethical issues also exist.
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Legal and Ethical Issues

Online privacy Online security Internet fraud Segmentation and discrimination Access by vulnerable or unauthorized groups

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Rest Stop: Reviewing the Concepts

1. 2. Discuss how the digital age is affecting both consumers and the marketers who serve them. Explain how companies have responded to the Internet and other powerful new technologies with e-business strategies, and how these strategies have resulted in benefits to both buyers and sellers. Describe the four major e-marketing domains. Discuss how companies go about conducting e-marketing to profitably deliver more value to customers. Overview the promise and challenges that e-commerce presents for the future.
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3. 4.

5.

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