CHAPTER 3 MARKETING IN THE INTERNET AGE

Transcription

1 CHAPTER 3 MARKETING IN THE INTERNET AGE Looking Ahead CHAPTER OBJECTIVES 1. Identify the major forces shaping the Internet age. 1. Explain how companies have responded to the Internet and other powerful technologies with e-business strategies, and explain how these strategies have resulted in benefits to both buyers and sellers. 3. Describe the four major e-commerce domains. 4. Discuss how companies conduct e-commerce to profitably deliver more value to customers. 5. Summarize the promise and challenges that e-commerce presents for the future. CHAPTER OVERVIEW Recent technological advances, including the widespread use of the Internet, have created what some called the new economy. This chapter visits the Internet age and all its ramifications. The reader learns that to be successful in this Internet age new applications and paradigms must be tried. The applications and paradigms must be formulated with consideration of the major forces that are shaping the Internet age. The world economy is shaped by technology, globalization, environmentalism, et cetera. The Internet age is shaped by digitalization and connectivity, the explosion of the Internet, new types of intermediaries, and customization and customerization. Each of these new forces is explored. Conducting business in the Internet age will call for a new model for marketing strategy and practice. In essence, a new industrial revolution is underway. Some strategists even envision a day when all buying and selling will involve direct electronic connections between companies and their customers. The new model will fundamentally change customers notions of convenience, speed, price, product information, and service. New benefits to buyers and sellers will emerge and even small e-marketers will have ready access to global markets. To illustrate how the Internet age has developed, the chapter focuses on four major Internet domains B2C (business to customer), B2B (business to business), C2C (consumers to consumers), and C2B (consumers to businesses). The reader will notice that companies of all types are now engaged in e-commerce. Brick-and-mortar (brickonly), click-only, and click-and-mortar marketers are illustrated so various strategies and successes can be identified. Few companies today have not considered moving to the Net to conduct business. The methods selected to do this simply did not exist only a few years ago. The chapter demonstrates that by creating a Web site, placing ads online, setting up or participating in Web communities, or using online or Webcasting, a firm can not only expand business, but reach out to the global marketplace. 47

2 E-commerce continues to offer great promise for the future. Its most ardent apostles still envision a time when the Internet and e-commerce will replace magazines, newspapers, and even stores as sources for information and buying. To get to this place, however, certain challenges must be met. Limited consumer exposure and buying, skewed user demographics and psychographics, chaos and clutter, security, and ethical concerns are chief among the challenges. Despite these challenges, companies large and small are quickly integrating online marketing into their marketing strategies and mixes. CHAPTER OUTLINE 1. Introduction a. The chapter begins with the story of Canadian Tire. b. The Canadian Tire Online service is one of the top three e-commerce sites in Canada. c. Canadian Tire is further developing the website s capabilities by including a line of products only available online. d. Canadian Tire s unique eflyer allows subscribers to shop directly from their eflyer. e. Recent technological advances, including the widespread use of the Internet, have created what some call a new economy. 1). Old strategies (mass marketing, product standardization, media advertising, store retailing, and others) were well suited to the old economy and can still be used today. 2). However, new strategies are called for. *****Use Extended PowerPoint 3-3 Here***** 2. Major Forces Shaping the Internet Age a. Many forces are playing a major role in reshaping the world economy, including technology, globalization, environmentalism, and others. b. Four specific forces underlie the Internet age: 1). Digitalization and connectivity. 2). The Internet explosion. 3). New types of intermediaries. 4). Customization and customerization. *****Use Chapter Objective #1 Here; Use Figure 3-1 Here; Use Extended PowerPoint 3-4 Here; Use Express PowerPoint 3-3 Here***** 48

3 Digitalization and Connectivity c. Appliances and systems of the past operated via analogue information. 1). Analogue information is continuously variable in response to physical stimuli. d. Today, a growing number of appliances and systems operate on digital information, which comes in streams of zeros and ones, or bits. e. Much of the world s business today is carried out over networks that connect people and companies. 1). Intranets are networks that connect people within a company to each other and to the company network. 2). Extranets connect a company with its suppliers and distributors. 3). The Internet is a vast public web of computer networks that connects users of all types all around the world to each other and to an amazingly large information repository. a). The Internet is a huge information highway. *****Use Key Terms Intranets, Extranets, and Internet Here; Use Chapter Objective #1 Here; Use Extended PowerPoint 3-5 Here; Use Express PowerPoint 3-3 Here ***** The Internet Explosion f. With the creation of the World Wide Web and Web browsers in the 1990s, the Internet was transformed from a mere communication tool into a certifiably revolutionary technology. 1). By the end of the twentieth century, users are approximately 400 million worldwide. 2). Penetration in Canada in early 2001 was 69 percent of the population 18 years of age and older. 3). Though the dot-com crash led to cutbacks in technology spending, the number of Web surfers worldwide is expected to approach 1 billion by ). This explosive worldwide growth in Internet usage forms the heart of the new economy. 5). Companies must adopt Internet technology or risk being left behind. *****Use Chapter Objective #1 Here; Use Extended PowerPoint 3-6 Here; Use Express PowerPoint 3-3 Here***** New Types of Intermediaries g. New companies called dot-coms have been created with hopes of striking gold in the new economy marketplace. 1). With the success of the new companies, store-based retailers began to doubt their strategies and futures. 2). They feared, and rightly so, being disintermediated by the new e-tailers being cut-out by this new type of intermediary. a). The formation of new types of intermediaries and new forms of channel relationships caused existing firms to reexamine how they served their markets. 49

4 b). At first, brick-and-mortar firms such as Canadian Tire and IBM dragged their feet, hoping that the assaulting click-only firms would falter or disappear. c). They then wised up and started their own online sales channels. *****Use Chapter Objective #1 Here; Use Discussing the Issues #1 Here; Use Extended PowerPoint 3-7 Here; Use Express PowerPoint 3-3 Here***** Customization and Customerization h. The old economy revolved around manufacturing companies. The new economy revolves around information businesses. 1). Information has the advantages of being easy to differentiate, customize, personalize, and dispatch at incredible speed over networks. 2). Customization differs from customerization. a). Customization involves taking the initiative to customize the market offering. b). Customerization occurs when the company leaves it to the individual customers to design the offering. 1]. Companies following this design have become facilitators and their customers have moved from being customers to being prosumers. *****Use Key Term customerization Here; Use Chapter Objective #1 Here; Use Discussing the Issues #2 Here; Use Extended PowerPoint 3-8 Here; Use Express PowerPoint 3-3 Here***** 3. Marketing Strategy in the Internet age a. Conducting business in the Internet age will call for a new model for marketing strategy and practice. 1). The new model will fundamentally change customers notions of convenience, speed, price, product information, and service. 2). Today s economy requires a mixture of old economy and new economy thinking and action. 3). Marketing should play a lead role in shaping new company strategy. e-business, e-commerce, and e-marketing in the Internet age b. One of the mainstays of the Internet age is e-business which involves the use of electronic platforms intranets, extranets, and the Internet to conduct a company s business. 1). Companies such as Cisco, Microsoft, and Oracle run almost entirely as e-businesses. 2). E-commerce involves buying and selling processes supported by electronic means, primarily the Internet, and is more specific than e-business. 3). E-markets are marketspaces, rather than physical marketplaces. 50

5 4). E-commerce includes e-marketing and e-purchasing (e-procurement). a). E-marketing is the e-selling side of e-commerce. It consists of company efforts to communicate about, promote, and sell products and services over the Internet. b). E-purchasing is the e-buying side of e-commerce. It consists of companies purchasing goods, services, and information from online suppliers. *****Use Key Terms e-business, e-commerce, and e-marketing Here: Use Chapter Objective #2 Here; Use Extended PowerPoint 3-9 Here; Use Express PowerPoint 3-4 Here***** Benefits to Buyers c. Internet buying benefits final buyers and business buyers in many ways: 1). It is convenient. 2). It is easy and private. 3). Through the Internet, often buyers are provided with greater product access and selection. 4). Buyers have access to a wealth of comparative information. 5). Online buying is interactive and immediate. *****Use Chapter Objective #2 Here; Use Discussing the Issues #3 Here; Use Extended PowerPoint 3-10 Here; Use Express PowerPoint 3-5 Here***** Benefits to Sellers d. E-commerce yields many benefits to sellers: 1). The Internet is a powerful tool for customer relationship building. 2). Reducing costs and increasing speed and efficiency are also advantages of using the Internet and electronic channels. 3). E-marketing offers greater flexibility, allowing the marketer to make ongoing adjustments to its offers and programs. 4). The Internet is truly a global medium that allows buyers and sellers to click from one country to another in seconds. *****Use Chapter Objective #2 Here; Use Discussing the Issues #3 Here; Use Extended Power Point 3-11 Here; Use Express PowerPoint 3-5 Here; Discuss You Are Here Here***** 4. e-commerce Domains a. The four major Internet domains include B2C (business to consumer), B2B (business to business), C2C (consumer to consumer), and C2B (consumer to business). *****Use Chapter Objective #3 Here; Use Figure 3-2 Here; Use Express PowerPoint 3-6 Here***** B2C (Business to Consumer) 51

6 b. B2C (business-to-consumer) e-commerce is the online selling of goods and services of goods and services to final consumers. 1). Consumer buying online continues to grow at a healthy rate. Estimates indicate that consumer buying in Canada will reach $18 billion by ). The largest categories are travel services, clothing, computer hardware and software to name a few. 3). The cybercustomer is no longer a pasty-faced nerd. Instead, the cyberspace population is becoming more mainstream and diverse. Almost all socioeconomic groups are represented. 4). The fastest growing occupational group to have home Internet access is bluecollar workers (increasing 52 percent in just one year). 5). Diversity allows for numerous e-commerce targeting opportunities. Kids are especially attractive. 74% of Canadians between the age of 12 and 18 have access to the Internet. 6). Although Internet users are still younger on average than the population as a whole, 48% of consumers aged and 34% of consumers aged have Internet access. 7). Internet research companies now segment the increasingly diverse Web population by needs and interests. 8). Internet consumers differ from traditional offline consumers in their approaches to buying and in their responses to marketing. 9). Whereas traditional marketing targets a somewhat passive audience, e-marketing targets people who actively select which Web sites they will visit and what marketing information they will receive about which products and services and under what conditions. 10). A Statistics Canada survey showed that only 18.4% of Internet users had ordered and paid for goods online. Security concerns and privacy issues were the reasons for the low percentage. *****Use Key Term B2C (business-to-consumer) e-commerce Here; Use Chapter Objective #3 Here; Use Figure 3-2 Here; Use Extended PowerPoint 3-12 Here; Use Express PowerPoint 3-6 Here***** B2B (Business to Business) c. Most major business-to-business marketers now offer product information, customer purchasing, and customer support services online 1). A survey of 50 major Canadian companies found that 90% of those companies surveyed would have some Internet-based sales in 2002, with 36% indicating that their online sales would range between 21% and 50% of total sales. 2). Much B2B e-commerce takes place in open trading networks huge e-marketspaces in which buyers and sellers find each other online, share information, and complete transactions efficiently. 3). An estimated 93 percent of all B2B e-commerce is conducted through private sites. 4). Increasingly, online sellers are selling up their own private trading networks (PTNs). Private trading networks link a particular seller with its own trading partners. These networks give the seller greater control over product presentation and allow for deeper relationships. 52

7 *****Use Key Terms B2B (business-to-business) e-commerce, open trading networks, and private trading networks Here; Use Chapter Objective #3 Here; Use Figure 3-2 Here; Use Extended PowerPoint 3-13 Here; Use Express PowerPoint 3-6 Here***** C2C (Consumer to Consumer) d. C2C (consumer-to-consumer) e-commerce and communication occurs on the Web between interested parties over a wide range of products and subjects. 1). ebay s Web site hosts more than two million auctions each month for items in more than one thousand categories. 2). C2C involves interchanges of information through forums and Internet newsgroups that appeal to specific special-interest groups. a). Forums are discussion groups located on commercial online services. b). Newsgroups are the Internet version of forums. 3). C2C means that online visitors don t just consume product information increasingly, they create it. *****Use Key Term C2C (consumer-to-consumer) e-commerce Here; Use Chapter Objective #3 Here; Use Figure 3-2 Here; Use Extended PowerPoint 3-14 Here; Use Express PowerPoint 3-6 Here***** C2B (Consumer to Business) e. C2B (consumer-to-business) e-commerce occurs when consumers search out sellers, learn about their offers and initiate purchases, sometimes even driving transaction terms. 1). Consumers are searching for and receiving information about companies. 2). Consumers use the Web to drive transactions with businesses. *****Use Key Term C2B (consumer-to-business) e-commerce Here; Use Chapter Objective #3 Here; Use Figure 3-2 Here; Use Extended PowerPoint 3-15 Here; Use Express PowerPoint 3-6 Here***** 5. Conducting e-commerce a. Companies of all types are now engaged in e-commerce. *****Use Chapter Objective #4 Here; Use Figure 3-3 Here; Use Express PowerPoint 3-7 Here***** Click-Only versus Click-and-Mortar e-marketers b. Click-only.coms operate only online without any brick-and-mortar market presence. 1). Most traditional brick-and-mortar companies have now added e-marketing operations, transforming themselves into click-and-mortar competitors. 2). Click-only companies come in many shapes and sizes. Examples include: a). E-tailers. 53

8 b). Search engines and portals. c). Internet service providers (ISPs). d). Transaction sites. e). Content sites. f). Enabler sites. *****Use Key Term click-only companies Here; Use Extended PowerPoint 3-16 Here; Use Express PowerPoint 3-7 Here***** c. Not all dot-coms have been successful. Reasons for failure include: 1). Failure to research or plan. 2). Reliance on spin and hype instead of sound marketing strategies. 3). Lavish spending offline to establish brand identities. 4). Too much attention to gathering new customers instead of building brand loyalty. 5). Rushing ahead with poorly designed Web sites. 6). Lack of well-designed distribution systems. 7). Due to intense competition, prices and margins were often very low. d. Most firms still do not make money on the Net. 1). New revenue and profit models must be devised. *****Use Chapter Objective #4 Here; Use Table 3-1 Here; Use Extended PowerPoint 3-18 Here; Use Express PowerPoint 3-8 Here***** e. Many established companies have become click-and-mortar companies by combining both forms of business operation. 1). Many resisted the change because of the potential for channel conflict. 2). There was always a danger of cannibalization. 3). Click-and-mortar companies have begun to be successful by combining the best of both model forms and adapting to the new business environment. A good example would be Staples/Business Depot office supply company. 4). Despite potential channel conflict issues, many click-and-mortar companies, such as Canadian Tire, Wal-Mart and Staples/Business Depot are doing better than click-only operations. 5). Advantages seem to be: a). Trusted brand names and greater financial resources. b). Large customer bases. c). Industry knowledge and experience. d). Good relationships with key suppliers. e). Ability to offer customers more options. f). Buy online and return unwanted merchandise to local stores. *****Use Key Term click-and-mortar companies Here; Use Chapter Objective #4 Here; Use Extended PowerPoint 3-17 Here; Use Express PowerPoint 3-7 Here; Discuss You Are Here Here***** Setting Up an e-marketing Presence f. All companies need to consider moving into e-marketing. Four methods for doing 54

9 so include: 1). Creating a Web site. 2). Placing ads online. 3). Setting up or participating in Web communities. 4). Using online or Webcasting. *****Use Figure 3-4 Here; Use Discussing the Issues #4 Here ***** g. For most companies, the first step in conducting e-marketing is to create a Web site. Types of Web sites include: 1). Corporate Web site the most basic type. These sites are designed to build customer goodwill and to supplement other sales channels, rather than to sell the company s products directly. a). They generally provide information about the company s history, its mission and philosophy, and the products and services that it offers. b). They often provide an avenue for asking questions or making comments. 2). Marketing Web site these sites engage consumers in an interaction that will move them closer to a direct purchase or other marketing outcome. a). Companies often aggressively promote these sites in other media forms such as magazines. b). This form is also used effectively by B2B marketers. *****Use Key Terms corporate Web site and marketing Web site Here; Use Extended Power Point 3-19 Here; Use Express PowerPoint 3-9 Here***** h. Creating a Web site is one thing; getting people to visit the site is another. 1). The key is to create enough value and excitement to get consumers to come to the site, stick around, and come back again. 2). A key challenge is designing a Web site that is attractive on first view and interesting enough to encourage repeat visits. 3). The 7Cs of effective Web site design are: a). Context: the site s layout and design. b). Content: the text, pictures, sound, and video on the Web site. c). Community: the ways that the site enables user-to-user communication. d). Customization: the site s ability to tailor itself to different users or to allow the users to personalize the site. e). Communication: the ways the site enables site-to-user, user-to-site, or two-way communication. f). Connection: the degree to which the site is linked to other sites. g). Commerce: the site s ability to enable commercial transactions. 4). Ultimately, it s the value of the site s content that will attract visitors, get them to stay longer, and bring them back for more. 5). From time to time, a company needs to reassess its Web site s attractiveness and usefulness. Methods include: a). Invite the opinion of site design experts. b). Have users critique the site. c). Track hits, time spent on the site, frequently visited pages, and the sequence of pages the customer visits. 55

10 d). Conduct research surveys such as telephone interviews. *****Use Discussing the Issues #5 Here; Use Extended PowerPoint 3-20 and 3-21 Here; Use Express PowerPoint 3-10 Here***** i. E-marketers can use online advertising to build their Internet brands or to attract visitors to their Web sites. Forms include: 1). Banner ads and tickers (ads that move across the screen). 2). Skyscrapers (tall, skinny ads at the side of a Web page). 3). Rectangles (boxes that are much larger than a banner). 4). Interstitials (online ads that pop up between changes on a Web site). 5). Browser ads (sponsors pay viewers to watch them). 6). Content sponsorships (sponsoring special content on various Web sites). 7). Microsites (limited areas on the Web managed and paid for by an external company). *****Use Key Term online advertising Here; Use Extended PowerPoint 3-22 Here; Use Express PowerPoint 3-11 Here***** j. Viral marketing is the Internet version of word-of-mouth marketing. It involves creating an message or other marketing event that is so infectious that customers will want to pass it along to their friends. It can be very inexpensive. 1). This form can work well with B2C or B2B customers. 2). Consumers tend to respond to and believe this form more than normal business communications. *****Use Key Term viral marketing Here; Use Extended PowerPoint 3-23 Here; Use Express PowerPoint 3-11 Here***** k. Although online advertising serves a useful purpose, the Internet will not soon rival the major television and print media. 1). Online advertising expenditures still represent only a small fraction of overall advertising media expenditures. 2). The drop-off in Web advertising has caused hard times for companies that rely on it for profits. 3). Some industry insiders remain optimistic about the future of online advertising. *****Use New Directions 3-1 Here***** l. The popularity of forums and newsgroups has resulted in a rash of commercially sponsored Web sites called Web communities, which take advantage of the C2C properties of the Internet. 1). Visitors to Internet neighborhoods develop a strong sense of community. 2). Cyberhood consumers visit frequently and stay online longer, increasing the chance of meaningful exposure to the advertiser s message. 3). These communities can be social or work related. 56

11 ****Use Key Term Web communities Here; Use Extended PowerPoint 3-24 Here; Use Express PowerPoint 3-11 Here**** m. has exploded onto the scene as an important e-marketing tool. 1). Companies may be spending as much as $7.3 billion annually on marketing by ). This form of marketing is becoming a mainstay with B2C and B2B marketers. *****Use New Directions 3-2 Here***** n. Companies can sign on with any number of Webcasting services which automatically download customized information to recipients computers. 1). Also known as push programming, Webcasting affords an attractive channel through which online marketers can deliver their Internet advertising or other information content. 2). Marketers must be careful to not overload customers with unwanted junk . 3). To avoid this tendency, permission-based marketing allows the customer to opt-in or opt-out of promotions. *****Use Key Term Webcasting Here; Use Chapter Objective #4 Here; Use Discussing the Issues #5 Here; Use Extended PowerPoint 3-25 Here; Use Express PowerPoint 3-11 Here***** 6. The Promise and Challenges of e-commerce a. E-commerce continues to offer great promise for the future. 1). However, dot-com fever has cooled. 2). For many companies, online marketing will remain just one important approach to the marketplace that works alongside other approaches in a fully integrated marketing mix. 3). The key question is how to deploy this emerging technology. b. Challenges to be faced include: 1). Limited consumer exposure and buying. At present, only a limited marketspace is being reached. 2). Skewed user demographics and psychographics. Online users tend to be somewhat more upscale and more technology oriented than the general population. 3). Chaos and clutter. The Internet, with its millions of options, can be a very confusing and cluttered place. 4). Security. This is still a very large problem in the minds of many. 5). Ethical concerns. Privacy is a primary concern. Tracking of Web site visitors leaves consumers open to information abuse. *****Use Chapter Objective #5 Here; Use Extended PowerPoint 3-26, 3-27 Here; Use Express PowerPoint 3-12 Here ***** 57

12 BARRIERS TO EFFECTIVE LEARNING 1. Surprisingly, this chapter will not cause many learning problems for most students because they are from the digital generation and have grown up with the terms and uses of marketing in this area. However, business application and strategy may be another issue. Therefore, the first area to carefully watch is the explanation of the four forces that underlie the Internet age (see Figure 3-1). Though most of the terms should present no particular problem, it is recommended that the instructor spend a little extra time with digitalization, connectivity, disintermediation, and customerization. In class discussion time or the utilization of Discussing the Issues #1 or #2 can give the instructor a good feel for how well the students are absorbing this information. Remember, this information sets the stage for information that will follow. 2. The second area of concern is in covering the benefits to buyers and sellers of e-commerce and marketing. The concepts are not difficult, however, remember these benefits establish value in the mind of the consumer. Therefore, acceptance of the e-commerce model is somewhat dependent upon one s appreciation of this value. A good question to ask during this phase is Do you shop online? If so, why? If not, why not? From here, move to a discussion of value and connections or relationships. The first You Are Here might aid this discussion. 3. The next area for special attention is coverage of the four major Internet domains (see Figure 3-2). Obviously, many students are familiar with at least some of these domains; however, that will not necessarily be true of all of them. Try having small groups of students outline summaries of the four areas on the chalk or white board and then provide a summary to the class. Valuable time in covering this material can then be saved for covering misunderstandings. 4. Though it is a small area in the chapter, the next area of concern is in dealing with the revenue and profit problem faced by the dot-coms. Carefully examine Table 3-1. Think about how some of the classic dot-com failures cited in the text violated or did not consider the areas shown in the table. 5. Covering Figure 3-4 is essential to understanding the power of the new e-commerce model. Again, many students will be familiar with almost all of these methods. A good way to increase interactivity is to assign each of the 7Cs of effective web-site design to student groups and have them show a Web site that seems to be a positive (or negative) example of each of the 7Cs. Time for doing this can be reduced if the assignment is made in advance or if it is done in a short paper format. Once students learn this concept they will be prepared to meet the challenges presented by #6 below. 6. The last area of concern is what to do about the challenges faced by online marketers. Most students have opinions about each of these. Try to allow for time of expression and suggestions for remedy. This discussion can be tied back to how marketers attempt to create relationships and connections with consumers. CONCEPT CHECK ANSWERS The following are answers to the Concept Check questions found at the end of the chapter. These answers appear in the text for the convenience of the students. 1. Digitalization and connectivity; customization and customerization. 58

13 2. Extranets 3. Disintermediated 4. Customerization 5. Convenient; easy and private; product access and selection 6. Open trading 7. C2B (consumer-to-business) 8. Click-only; brick-and-mortar only; click-and-mortar 9. Context, Content, Community, Customization 10. Viral 11. Webcasting 12. Skewed user demographics and psychographics DISCUSSING THE ISSUES 1. Discuss how a traditional retailer or wholesaler can be disintermediated by the new e-tailer. Give an example to illustrate. The example given in the chapter is a comment about how Compaq Computer feared that by selling its computers only through retailers it would become vulnerable to faster growing Dell computers, which sold online. Other brick-and-mortar operations felt similar pressures to change their marketing model. They feared being disintermediated being cut out of the new type of intermediary process. Most of the brick-and-mortar operators hoped the click-only operations would just go away. History has shown that this did not occur. Astute firms, such as Canadian Tire and IBM, responded to the click-only assault by establishing their own online presence hence, the birth of the click-and-mortar operation. Ironically, many click-andmortar competitors have become stronger than the click-only competitors that pushed them reluctantly forward onto the Internet. 2. Explain and illustrate how customization differs from customerization. Customization involves taking the initiative to customize the market offering. An example would be a salesperson measuring a person to alter clothing or to design clothing originally for the customer as a custom tailor would do. In customerization, the company leaves it to the individual customers to design the offering. For example, young women often use their own measurements to design their own clothing. Companies that 59

14 encourage consumerization have become facilitators and their customers have moved from being consumers to being prosumers. 3. Describe and illustrate the many benefits that e-commerce and the Internet bring to both buyers and sellers. Benefits to buyers include the following: a). It is convenient. Customers don t have to battle traffic, find parking spaces, et cetera. b). Buying is easy and private. Customers encounter fewer buying hassles and business buyers can learn about products more efficiently. c). The Internet provides buyers with greater product access and selection. The world is the limit on the Web. d). E-commerce can give buyers a wealth of comparative information, information about companies, products, and competitors. e). Online buying is interactive and immediate. Buyers can often interact with the seller s site to create exactly the configuration of information, products, or services they desire, then order or download them on the spot. Benefits to sellers include the following: a). The Internet is a powerful tool for customer relationship building. Because it is one-to-one, interactive in nature, the Internet is an especially potent marketing tool. b). The Internet can reduce costs and increase speed and efficiency. There are no store costs such as rent, insurance, and utilities. Waste can be wrung out of the system and savings can be kept or passed along to consumers. c). E-marketing offers greater flexibility, allowing the marketer to make ongoing adjustments to its offers and programs. d). The Internet is a truly global medium that allows buyers and sellers to click from one country to another. 4. The statement has been made that all companies need to consider moving into e-marketing. List and discuss the four generally accepted ways that a company can conduct e-marketing. Pick a local retailer or service provider that has not yet moved into e-marketing and suggest how they might do this. Be specific. See Figure 3-4 for diagrams and specifics. Summaries of the four forms are listed below. 1). Creating a Web site. For most companies, the first step in conducting e- marketing is to create a Web site. Marketers must design attractive sites and find ways to get consumers to visit the site, stay around, and come back often. Sites can be corporate (where the intent is to build goodwill and transmit information) or marketing (where the intent is to sell through interaction). 2). Placing Ads and Promotions Online. Online advertising and promotion can take the form of banner ads, tickers, skyscrapers, rectangles, interstitials, browser ads, content sponsorships, microsites, or even viral marketing. Examine New Directions 3-1 for more details. 3). Creating or Participating in Web Communities. Web communities take advantage of the C2C properties of the Internet. Web communities can be either social or work related. Such sites allow members to congregate online and exchange views on issues of common interest. 4). Using and Webcasting. has exploded into a powerful marketing tool. It is becoming the mainstay of B2C and B2B marketers. See New Directions 3-2 for additional details. Companies can also sign on with any number of Webcasting services, 60

15 which automatically download customized information to recipients PCs. Also known as push programming, Webcasting affords an attractive channel through which online marketers can deliver messages and advertising. 5. Pick a favorite Web site and write a brief analysis of how the site rates on the 7Cs of effective Web site design. What forms of online advertising and promotion does your chosen Web site seem to be using to its advantage? How can this site be improved? Be specific. The 7Cs of effective Web site design are summarized below. The remainder of the questions are directed toward student activities. a). Context: the site s layout and design. b). Content: the text, pictures, sound, and video on the Web site. c). Community: the ways that the site enables user-to-user communication. d). Customization: the site s ability to tailor itself to different users or to allow users to personalize the site. e). Communication: the ways the site enables site-to-user, user-to-site, or two-way communication. f). Connection: the degree to which the site is linked to other sites. g). Commerce: the site s ability to enable commercial transactions. MASTERING MARKETING Having an effective e-marketing presence is of primary importance in today s competitive marketplace. Explain how CanGo has or should use marketing in the wired world. Critique the organization s efforts by using the evaluation and analysis options suggested in this chapter. How effective have their efforts been to date? What suggestions would you offer at this point to the company? Explain. Suggestion Solution The student will notice that Chapter 3 does not really have an episode in the Mastering Marketing series; however, the CanGo case is about online games and, therefore, certainly explores the dimensions of this chapter. Students should cite the company s attempts to reach customers via the Internet and other more traditional methods. Where is the best place to begin the process of selling online games? Students should be ready to defend their ideas. Notice that CanGo s effectiveness is suspect in the initial phases of the case but improves as the case develops. Go forward to the Understanding Consumer Behavior episode for an illustration of how CanGo uses its Web site in its marketing efforts. Consider the material from Chapter 3 also when reviewing the last episode (integrated marketing communications). No specific episode with this chapter. MAP Marketing Applications MAP Stop 3 Thinking Like a Marketing Manager 61

16 1. What applications can you think of for viral or buzz marketing on the Internet? 2. List three products that you have heard about from friends. Describe what you were told, how this matched ad claims, what action you took because of the information, and how likely you were to buy the products. 3. Assume you are the marketing manager for a new product to be sold primarily to consumers in your generation using the Internet. Describe how you would use viral marketing to accomplish this. Be specific in your descriptive steps of your plan. 4. Choose an actual product and start a positive buzz about it using one of the communication methods suggested in the chapter. Keep a record of what you communicated and how you communicated the information. What were the results of your communication? What could you do to increase the effectiveness of the communication? How were connections made? How could an e-marketer make the same connections? 5. Consider the ethics of viral marketing. What could be the potential problems with the method? What cautions should be taken by an e-marketer wanting to use this technique? This MAP Stop gives students the opportunity to examine one of the hottest areas in online communication the community or word-of-mouth. Believe it or not, there are many new marketing agencies/consultants that examine viral or buzz marketing on a full time basis. A recent one-hour Frontline (a PBS series) called the Merchants of Cool demonstrated how marketers go to chat rooms to examine and start rumors about what is cool and what is not. The relationship between Sprite and Hip-Hop music (and how the trend began) is a feature story. Have students go the Sprite Web site at as a means to starting a buzz or answering the MAP Stop questions. Be sure to discuss the ethics of this form of marketing practice and how excesses might be a problem. Notice that to really do this project right, several days might be required. Please plan accordingly. SUGGESTED MAP REFERENCES The following reference will be useful for MAP Stop 3 found at the end of Chapter 3. It is suggested that this reference be given to the student in advance of the assignment found in MAP Stop Khermouch, Gerry and Jeff Green, Buzz Marketing. Business Week, July 30, 2001, pp STUDENT PROJECTS 1. Assume that you were called upon to make an argument to your board of directors that a new economy exists and that the company s policies of brick-and-mortar first are antiquated. What major points would you make? How would you avoid skepticism and tradition on the part of some board members? 2. Using Canadian Tire as an illustration of how to do it right on the Net, find an example of a company that seems to be doing it wrong. Comment on the company s situation, what you have found, and suggest how to correct their Net policy. 62

17 3. Take three competitors in an industry. Investigate how each has developed strategies to meet the challenges of the new economy. Do this by examining their respective Web pages, looking at shareholder reports, and what the business press has said about them. Which company(ies) seems to have gotten their Net policy right? Which company(ies) seems to have gotten it wrong? Which company is positioned for success in the next five years? What secrets to success on the Net have you learned? 4. Explain how your college or university might use the Internet to attract prospective students. If your university or college already has a Web site, critique it. 5. You have been given the assignment by your company to design a Web site page for your company. This new Web page should emphasize connections and relationships. By looking through existing Web site pages on an online service (such as Yahoo or America Online), describe what you would put in or on your fictious Web page (you can be creative with your choice of company and its products or services). What does the marketer try to accomplish with a Web page? 6. As marketing director of a small urban sportswear company, you have been given the assignment to spread the word to year-old Internet users that your company has some great products. One of the ways you intend to communicate this message is via Web communities. Outline a plan for doing so. What would you say? What Web communities might you choose? How would you avoid making your message sound like a sales pitch? How would you use viral marketing to aid your effort? Evaluate your chances of success using the Web community format. INTERACTIVE ASSIGNMENTS Small Group Assignment 1. Form groups of three to five students. Each group should read the opening vignette to the chapter on Canadian Tire. Each group should answer the following questions: a. What was the reason for Canadian Tire s late entry into Internet retailing? b. Describe some features of the Canadian Tire Web site that was created in c. Recently, Canadian Tire completely redesigned its Web site to make shopping faster, better and easier for consumers. Describe the major enhancements. d. Describe how subscribers can use the eflyer. Each group should then share its findings with the class. Individual Assignment 1. Read the opening vignette to the chapter. Think about the answers to the following questions: a. Summarize what Canadian Tire is doing with its e-commerce initiatives. b. Visit the Canadian Tire website at What recommendations can you give to the company to improve its website? Share your findings with the class. Think-Pair-Share 63

18 Consider the following thought questions, formulate an answer, pair with the student on your right, share your thoughts with one another, and respond to questions from the instructor. 1. What is the new economy? 2. What are the major forces shaping the Internet age? 3. What is the difference between an intranet, extranet, and Internet? 4. If a store-based retailer has been disintermediated, what has happened? 5. What is the difference between customization and customerization? 6. What is e-marketing? 7. What is the most important benefit to a buyer for doing business online? Why? 8. Why does the B2B e-commerce model do so much more business than the other forms? 9. What are your biggest fears about doing business online? How could a marketer deal with these fears and reduce them? 10. How can marketers use viral marketing to their advantage? elaborate (minicase) Few marketers allow customers to participate in their business the way Canadian-based Jones Soda Company does. Jones has a unique approach to packaging, product design, and advertising. They allow the customer to design the package, create flavors of soft drinks, and provide the copy and pictures for ads. How is this done? Jones openly declares that a small marketing and advertising budget has forced them to think customer first. The basic idea is that all people like to see their name and face in print. Therefore, by interacting with the Jones Soda Web site, customers send the company pictures for ads, recipes for soft drinks, and slogans for ads and packaging. All ten of the company s flavored soft drinks were created by customers. Each bottle of Jones Soda has a picture created by a customer as its primary label (these pictures also appear on the cardboard four-pack holders). Slogans and names for the soft drinks were also created by the customers of Jones Soda. Does the technique work? Increasing sales and a new distribution contract with Target stores in the U.S. say that it does. Jones believes that consumers buy their soda products not just for the taste but for the involvement and ownership encouraged by the brand. Someday maybe you will see your face on a Jones label. Go to the Jones Soda Company Web site at consider the material from your chapter, and answer the following questions: 1. What seems to be the Jones Soda Company strategy? 2. How does this strategy differ from that of major competitors? 3. How does the company use its Web site to stimulate sales of its products? 4. What advantages and disadvantages seem to be present with the Jones strategy? 5. What target markets seem to be primary to Jones Soda? How could you tell? 6. Why would Target be interested in carrying this off-beat product line? 64

19 7. What connections is Jones trying to achieve? 8. Take a picture, design a slogan, or develop a new soft drink flavor for Jones and submit it to the company. What response did you get? How did this make you feel about the company? Would you spread the word about the company? How have you just participated in the Jones strategy? Has the company formed a connection with you via the Internet? If so, how? CLASSROOM MANAGEMENT STRATEGIES The instructor will find that most students will be interested and excited by this chapter. The subject matter is especially interesting and familiar to Gen Y students. The instructor should be careful to stress the vocabulary words found in this chapter (see Key Terms) and to resolve any differences with terms used in other courses (for example, computer information courses). Generally, this chapter can be covered in one class period unless extensive online assignments are given. It is recommended that the instructor break the fifty-five (55) minute to one hour and twenty minute (1:20) class into specific time blocks for the maximum learning and explanation experience. For example: 1). 10 minutes Discussion of the Internet age and the four specific forces that underlie the Internet age (chapter objective 1). See Figure 3-1. Depending of the skill and experience of the student group, the instructor can probe the four forces slowly or quickly. However, be sure to save time for discussion of disintermediation and the customization vs. consumerization issues. Discussing the Issues questions can aid in this area. Extend time if necessary to ensure proper coverage. 2). 10 minutes Discussion of the marketing strategies that appear to be present in the Internet age (chapter objective 2). Compare the differences between e-commerce and e-marketing. Summarize the differences between the benefits to buyers and sellers. How do these benefits add value and build connections? The You Are Here is a useful device to summarize learning concepts in the first two major sections of the chapter. 3). 20 minutes Discussion of the four major Internet domains (chapter objective 3). See Figure 3-2. In discussing the four forms, the instructor is encouraged to demonstrate the Web sites mentioned in this portion of the chapter. In addition, other sites found in project and example areas (see elaborate, Student Projects) are good to add spice and visualization to the lecture. It is important that students discuss the future of C2C and C2B sites. Small group work is encouraged. 4) minutes The instructor can finish the lecture by discussing the variety of types of e-commerce possibilities open to today s marketer (chapter objective 4). See Figures 3-3 and 3-4. It is especially important to clearly establish the opportunities and difficulties faced by click-only, brick-and-mortar, and click-and-mortar companies. If students have had introductory computer or information systems courses, the 7Cs will be an especially interesting area for comments and examples (see Student Projects). If time runs short, be sure to cover viral marketing and Web communities as possibilities for future success in marketing efforts and strategy. One last recommendation make this lecture visual. The audience is generally a visual 65

20 generation and telling and seeing are two different methods. Seeing is preferred. Allow preparation time for this. *****Instructor s Note: If time permits (which is somewhat difficult with this chapter), a video case may be used here.***** For those classes that go beyond the basic one hour format, the additional time can be spent covering the discussion questions, application questions, and/or the mini-case example provided in the Instructor s Resource Manual. Additionally, more time will be available for work on the Internet or student discussion. POWERPOINT NOTES See the Instructor s Resource Manual for the exact positioning within the chapter of each slide (reference Chapter Outline). KEY TERMS AND APPLICATIONS All of the Key Terms found in this chapter appear on the Pearson Web page at (reference this text). At the Web site, the instructor will find all Key Terms listed, an identification of what the Key Term means, and why it s important. This information will be especially helpful to students who are having difficulty with the Key Terms or if Key Terms are to be stressed on examinations. 66