Lesson 6

E-commerce Marketing Concepts: Social,

Mobile, Local
 Class Discussion

Facebook: Does Social Marketing Work?

 Have you ever made a purchase based on
something you have read or seen on
Facebook? What was the product and what
made you interested?
 What obstacles does Facebook face in
monetizing itself as a marketing and
advertising platform?
 Are there other ways for Facebook to make a
profit from marketers and advertisers?
Slide 6-2
 Consumers Online: The Internet
Audience and Consumer Behavior
 Around 75% (89 million) U.S. households have
Internet access in 2012
 Growth rate has slowed
 Intensity and scope of use both increasing
 Some demographic groups have much higher
percentages of online usage than others
 Gender, age, ethnicity, community type, income,
education

Slide 6-3
 Consumers Online (cont.)
 Broadband vs. dial-up audiences, new mobile
audience
 Neighborhood effects
 Lifestyle and sociological impacts
 Use of Internet by children, teens
 Use of Internet as substitute for other social activities

 Media choices
 Traditional media competes with Internet for attention
 Television viewing has increased with Internet usage

Slide 6-4
 Consumer Behavior Models
 Study of consumer behavior
 Attempts to explain what consumers purchase
and where, when, how much, and why they buy
 Consumer behavior models
 Predict wide range of consumer decisions
 Based on background demographic factors and
other intervening, more immediate variables

Slide 6-5
 A General Model of Consumer Behavior

Figure 6.1, Page 348 SOURCE: Adapted from Kotler and Armstrong, 2009.

Slide 6-6
 Background Demographic Factors
 Culture: Affects entire nations
 Subculture
 Subsets formed around major social differences
(ethnicity, age, lifestyle, geography)
 Social networks and communities
 Direct reference groups
 Indirect reference groups
 Opinion leaders
 Lifestyle groups

 Psychological profile
Slide 6-7
 The Online Purchasing Decision
 Psychographic research
 Combines demographic and psychological data
 Divides market into various groups based on social
class, lifestyle, and/or personality characteristics
 Stages in consumer decision process:
 Awareness of need
 Search for more information
 Evaluation of alternatives
 Actual purchase decision
 Post-purchase contact with firm

Slide 6-8
The Consumer Decision Process and
Supporting Communications

Slide 6-9
 A Model of Online
Consumer Behavior
 Decision process similar for online and offline
behavior
 General online behavior model
 Consumer skills
 Product characteristics
 Attitudes toward online purchasing
 Perceptions about control over Web environment
 Web site features: latency, usability, security

 Clickstream behavior
Slide 6-10
A Model of Online Consumer Behavior

Slide 6-11
 A Model of Online Consumer Behavior (cont.)

 Clickstream factors include:

 Number of days since last visit
 Speed of clickstream behavior
 Number of products viewed during last visit
 Number of pages viewed
 Supplying personal information
 Number of days since last purchase
 Number of past purchases

 Clickstream marketing
 Developed dynamically as customers use Internet

Slide 6-12
 Shoppers: Browsers and Buyers
 Shoppers: 88% of Internet users
 72% buyers
 16% browsers (purchase offline)
 One-third of offline retail purchases influenced by
online activities
 Online traffic also influenced by offline brands
and shopping
 E-commerce and traditional commerce are
coupled: Part of a continuum of consuming
behavior

Slide 6-13
 What Consumers Shop for and
Buy Online
 Big ticket items
 Travel, computer hardware, electronics
 Consumers now more confident in purchasing
costlier items
 Small ticket items ($100 or less)
 Apparel, books, office supplies, software, etc.
 Sold by first movers on Web
 Physically small items
 High margin items

Slide 6-14
 How Consumers Shop
 How shoppers find online vendors
 Search engines—59%
 Marketplaces (Amazon, eBay)—28%
 Direct to retail sites—10%
 Other methods—3%

 Online shoppers are highly intentional

 StumbleUpon
 Recommender systems

Slide 6-15
 Trust, Utility, and Opportunism
in Online Markets
 Two most important factors shaping
decision to purchase online:
 Utility:
 Better prices, convenience, speed

 Trust:
 Asymmetry of information can lead to opportunistic
behavior by sellers
 Sellers can develop trust by building strong
reputations for honesty, fairness, delivery

Slide 6-16
 Basic Marketing Concepts
 Marketing
 Strategies and actions to establish relationship
with consumer and encourage purchases
 Addresses competitive situation of industries
and firms
 Seeks to create unique, highly differentiated
products or services that are produced or
supplied by one trusted firm
 Unmatchable feature set
 Avoidance of becoming commodity

Slide 6-17
 The Digital Commerce
Marketing Platform
 Multi-channel marketing plan
 Web site
 Traditional online marketing
 Search engine, display, e-mail, affiliate
 Social marketing
 Social networks, blogs, video, game
 Mobile marketing
 Mobile/tablet sites, apps
 Offline marketing
 Television, radio, newspapers

Slide 6-18
 Strategic Issues and Questions
 Which part of the marketing plan should
you focus on first?
 How do you integrate the different
platforms for a coherent message?
 How do you allocate resources?
 How do you measure and compare metrics from
different platforms?
 How do you link each to sales revenues?

Slide 6-19
 Can Brands Survive the Internet?
Brands and Price Dispersion
 Vision: “Law of One Price, ”end of brands
 Instead:
 Consumers still pay premium prices for differentiated
products
 E-commerce firms rely heavily on brands to attract
customers and charge premium prices
 Price dispersion
 Large differences in price sensitivity for same product
 “Library effect”

Slide 6-20
 Online Segmenting, Targeting, and
Positioning
 Segmenting: Allows firms to differentiate products
to fit consumer needs and charge different prices
 Types of segmentation
 Behavioral
 Demographic
 Psychographic
 Technical
 Contextual
 Search

Slide 6-21
 The Digital Commerce Marketing
Platform: Strategies and Tools
 Internet marketing (vs. traditional)
 More personalized
 More participatory
 More peer-to-peer
 More communal

 The most effective Internet marketing

has all four features

Slide 6-22
 Customer Engagement
 Customer conversations about:
 Products and services
 Customer experience with products
 Customer likes and dislikes

 Conversations conducted through:

 Web site feedback
 Blogs
 Facebook
 Twitter

Slide 6-23
Generic Market Entry Strategies

Slide 6-24
 Establishing the Customer
Relationship
 Web site functions to:
 Establish brand identity and customer
expectations
 Differentiating product
 Inform and educate customer
 Shape customer experience
 Anchor the brand online
 Central point for all marketing messages

Slide 6-25
 Traditional Online Marketing Tools
 Search engine marketing (SEM)
 Sponsored links
 Search result display ads
 Keywords
 Search engine optimization (SEO)

 Display ad marketing
 Advertising networks
 Ad exchanges, real-time bidding

Slide 6-26
Traditional Online Marketing Tools (cont.)
 E-mail marketing
 Very inexpensive
 3% click-throughs in targeted campaigns
 Permission marketing

 Affiliate marketing
 Lead-generation marketing
 Sponsorship marketing

Slide 6-27
 Social Marketing
 Fastest growing type of online
marketing
 Long-term prospects unknown
 Four features driving growth
 Social sign-on
 Collaborative shopping
 Network notification
 Social search (recommendation)

Slide 6-28
 Twitter Marketing
 Real-time interaction with consumers
 50% companies with 100+ employees
using Twitter
 Twitter marketing products
 Promoted Tweets
 Promoted Trends
 Promoted Accounts

Slide 6-29
 Blog Marketing
 43% of all U.S. companies use blogs for
marketing
 Ideal for starting viral campaigns
 Can use blogs for both branding
messages and advertisements
 Blog advertising networks
 Brand advocacy blogs

Slide 6-30
 Viral Marketing
 Form of social marketing
 Customers pass along marketing
message to friends, family, coworkers
 Referred customers cost less to acquire
and keep
 Venues are e-mail, social networks,
video and game sites

Slide 6-31
 Mobile Marketing
 7% of online marketing, growing rapidly
 Major formats:
 Messaging (SMS)
 Display
 Search
 Video

 Other formats:
 Quick Response (QR) codes
 Couponing

Slide 6-32
 Insight on Business: Class Discussion

Mobile Marketing: Land Rover Seeks

Engagement on the Small Screen
 Why do mobile devices represent such a
promising opportunity for marketers?
 Have you ever responded to mobile marketing
messages?
 What are some of the new types of marketing
that mobile devices have spawned?
 What the disadvantages of social network
marketing?
Slide 6-33
 App Marketing
 Revenue sources
 Pay-per-app
 In-app purchase
 Subscriptions
 Advertising

 Most popular types of apps

 Social network, banking, search, news

 Retailer’s apps
 Browsing and purchasing

Slide 6-34
 Local Marketing
 Marketing geared to user’s geographic
location
 Local searches:
 20% of all searches
 40% of mobile searches

 Most common local marketing tools

 Geotargeting with Google Maps
 Display ads in hyperlocal publications

Slide 6-35
 Multi-Channel Marketing
 Average American spends 24% of media
time on Internet, rest on other channels
 Television, radio, newspapers, and
magazines
 Consumers also multitask, using several
media
 Internet campaigns strengthened by
using other channels
Slide 6-36
 Other Online Marketing Strategies
 Brand leveraging
 Customer retention strategies
 Personalization and one-to-one marketing
 Customization and customer co-production
 Customer service
 FAQs
 Real-time customer chat systems
 Automated response systems

Slide 6-37
The Mass Market-Personalization
Continuum

Slide 6-38
 Net Pricing Strategies
 Pricing
 Integral part of marketing strategy
 Traditionally based on:
 Fixed cost
 Variable costs
 Demand curve

 Price discrimination
 Selling products to different people and groups
based on willingness to pay

Slide 6-39
 Net Pricing Strategies (cont.)
 Free and freemium
 Can be used to build market awareness

 Versioning
 Creating multiple versions of product and selling essentially same
product to different market segments at different prices

 Bundling
 Offers consumers two or more goods for one price

 Dynamic pricing:
 Auctions
 Yield management
 Flash marketing

Slide 6-40
 Channel Management Strategies
 Channels:
 Different methods by which goods can be distributed
and sold
 Channel conflict:
 When new venue for selling products or services
threatens or destroys existing sales venues
 e.g., online airline/travel services and traditional offline
travel agencies
 Some manufacturers are using partnership
model to avoid channel conflict

Slide 6-41
 The Revolution in
Internet Marketing Technologies
 Internet’s main impacts on marketing:
 Scope of marketing communications broadened
 Richness of marketing communications increased
 Information intensity of marketplace expanded
 Always-on mobile environment expands marketing opportunities
 Internet marketing technologies:
 Web transaction logs
 Tracking files
 Databases, data warehouses, data mining
 Hadoop and Big Data
 Customer relationship management systems

Slide 6-42