Chapter 4: Key Concept

Chapter 4: Marketing on the Web

Key Concept:
This chapter focuses on companies can market their goods and services online. These companies can use either a product-based strategy or a customer-based strategy or even both.

Supporting Points
Web Marketing Strategies
Product-Based Marketing Strategies
- organize website from internal viewpoint (way that they arrange product design and manufacturing processes (Staples, Sears) – Product categories
Customer-Based Marketing Strategies
- site is flexible to meet needs of many different users – identify groups of customers who chare common characteristics (Dell)
Communicating with Different Market Segments
Trust and Media Choice
- mass media (lowest level of trust); personal selling (highest level); blogs allow companies can use the web to communicate like the high-trust personal contact
Market Segmentation
- dividing pool of potential customers into segments (demographic and geographic)
- micromarketing: targeting very small market segements
Market Segmentation on the Web
- web can present different environments online; retailers can provide separate virtual spaces for different market segments
Offering Customers a Choice on the Web
- Dell – one-to-one marketing; internet gives marketers best opportunity for highly customized interactions with customers
Beyond Market Segmentation: Customer Behavior and Relationship Intensity
Segmentation Using Customer Behaviour
- browsers: surfing, trigger words prompt visitor to stay and investigate the products offered
- buyers: ready to make purchase right away; easy transaction
- shoppers: motivated to buy, but look for more info before they make a purchase decision
o simplifiers: like convenience
o surfers: use web to find info, explore new ideas, shop
o bargainers: in search of good deal
o connectors: use web to stay in touch with other people
o routiners: return to same sites over and over again
o sportsters: spend more time on sports and entertainment sites rather then news and financial info
Customer Relationship Intensity and Life-Cycle Segmentation
- awareness: recognize name, but no interaction yet; advertise brand
- exploration: potential customers learn more, might visit site, communication via telephone or email
- familiarity: customers have completed several transactions and are aware of company’s policies, likely to shop and buy from competitors too
- commitment: many successful encounters, customers develop fierce loyalty with brand (commitment stage)
- separation: disappointment, intensity of relationship fades
Acquisition, Conversion, and Retention of Customers
- acquisition cost: total amount of money that a site spends to draw one visitor to the site
- conversion: convert first-time visitor into a customer, visitor usually registers
- retention: costs of inducing customers to return and buy again
Advertising on the Web
Banner Ads
- displays stationary or moving graphic, hyperlink
o banner exchange network: coordinates ad sharing so other sites run one company’s ad while that company’s site runs other members ads
o find site that appeals to market segment and pay those sites to carry the ads
o use network: acts as broker between advertisers and sites that carry ads
- CPM: cost per thousand
- Visit: visitor requests page from web site (trial visit, repeat visit, page view, ad view)
- Impression: each time banner ad lads
- Click-through: visitor clisk banner ad
Other Web Ad Formats
- pop-up ad: appears in its own window when user opens or closes a page
- pop-behind: pop-up that is followed quickly be command that returns the focus to original browser window
- ad-blocking software: prevents banner ads and popup ads from loading
- interstitial ad: user slicks link to load a page, interstitial ad opens in own browser window
- rich media ads: generate graphical actibity that floats ovefr the page itself instead of opening in separate window
Site Sponsorships
- give advertisers chance to promote in more subtle way
Effectiveness of Online Advertising
- difficult to measure; problem is lack of single industry standard measuring service, ways in which site visitors change their web surfing behaviour and habits
E-Mail Marketing
Permission Marketing
- sending email to ppl who request info on particular topic (opt-in email)
Combining Content and Advertising
- get ppl to accept emails more easily
Technology-Enabled Customer Relationship Management
- firm obtains detailed info about customers behavior, preferences, needs, buying patterns and uses that info to set prices, negotiate terms, tailor promotions, add product features, customize entire relationship with that customer
Creating and Maintaining Brands on the Web
Elements of Branding
- differentiation: distinguish product form all others in the market: branding is then difficult for commodity products
- relevance: degree to which product offers utility to potential customer
- perceived value: is the product good?
Emotional Branding vs. Rational Branding
- emotional appeals difficult to convey on the web
- rational brand: offer to help web users in some way in exchange for their viewing an ad (hotmail)
Brand Leverage Strategies
- extend dominant positions to other products and services (yahoo)
Brand Consolidation Strategies
- have everything accessible from one location on the web
Costs of Branding
- transferring existing brands onto the web is easier and less expensive than creating new brand
Affiliate Marketing Strategies
- one firms site (affiliate firm) includes descriptions, reiews, ratings, about a product linked to another firm’s site that offers it for sale
- save expense of inventory, advertising and promoting product, processing transaction
- pay per click / par-per conversion model
Viral Marketing Strategies
- relies on existing customers to tell other people about product
Search Engine Positioning and Domain Names
Search Engine and Web Directories
- spider, robot, crawler: automatically searches the web to find web pages and then info is stored in database
- search utility: takes terms and finds entries for web pages in index that match
- search engine positioning: have particular URL listed near the top os search engine results
Paid Search Engine Inclusion and Placement
- google adwords
- contextual advertising: ads are placed in proximity to related content
- localized advertising: places ads related to location on search results page
Web Site Naming Issues
- buying, selling, and leasing domain names: some companies purchase desirable domain names, lease rights to domain names (sometimes through URL brokers)

Application
Dell uses a customer-based strategy by having different sections on their website specified for customers differing needs. Customers can customize products to their needs online. These customers may be surfers or even commitment customers. If customers have dealt with Dell before and enjoy the experience of customizing their own product, they create a relationship with the company and return when they need a new computer.