2. The New Economy. Outline. Marketing Challenges. Connecting with Customers Directly

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1 Connecting with Customers Directly 2. The New Economy The company s official site provides customers various information Shan-Yu Chou 1 Shan-Yu Chou 2 Outline Marketing Challenges; Major forces driving the new economy; The changes in business and marketing practices. The E-Commerce Domains E-Marketing Source: Principles of Marketing by Kotler and Armstrong, the 10 th edition. Marketing Challenges Connecting via technology; Connecting with customers more directly, selectively, and in a more lasting way; Connecting with marketing partners: Inside partners, outside partners Connecting with the world. Shan-Yu Chou 3 Shan-Yu Chou 4 1

2 Connecting with Marketing Partners The Major Drivers of the New Economy Digitalization The Internet Explosion Disintermediation and Reintermediation; Customization and Cutomerization; Industry Convergence Shan-Yu Chou 5 Shan-Yu Chou 6 Buyer Benefits of E Commerce Convenience Easy and private Greater product access/selection Access to comparative information Interactive and immediate Seller Benefits of E Commerce Relationship building Reduced costs Increased speed and efficiency Flexibility Global access, global reach Shan-Yu Chou 7 Shan-Yu Chou 8 2

3 Old Economy vs. New Economy Old Economy vs. New Economy (Cont.) Product centered; Focus on profitable transactions; Marketing does the marketing. Customer segment centered; Focus on customer lifetime value; Integrated marketing. Branding through ad; Focus on customer acquisition; No customer satisfaction measurement; Overpromise, Underdeliver Rational branding; Focus on customer retention; Measurement on satisfaction and retention rate; Underpromise, overdeliver Shan-Yu Chou 9 Shan-Yu Chou 10 E-Commerce Domains The Impact of B2C Web Sites Lower consumer search costs; Manufacturers can contact consumers directly; Targeted to consumers Targeted to businesses More intensive price competition among firms? Any online loyalty from customers? Initiated by businesses B2C B2B Disintermediation? Initiated by consumers C2C C2B Shan-Yu Chou 11 Shan-Yu Chou 12 3

4 The Impacts of B2B Sites More information and lower transaction costs; Prices are transparent; Buying alliances; Differentiation or price competition? More efficient markets. C2C E Commerce Helping consumers exchange goods or information, e.g., ebay. Auction sites facilitate the exchange process; Newsgroups / forums Shan-Yu Chou 13 Shan-Yu Chou 14 C2B E Commerce Pure Click Companies Allow consumers to search out sellers, learn about offers, initiate purchase, or dictate purchase terms; Some sites facilitate the feedback process between customers and companies. Search Engines and Portals, e.g., Yahoo, Google Commerce Sites, e.g., Amazon, Expedia Transaction Sites: ebay, Etrade Content Sites, e.g., New York Times, ESPN Online Social Networks, e.g., Facebook, YouTube, Twitter Shan-Yu Chou Challenges faced by Click only companies 16 Shan-Yu Chou 15 Shan-Yu Chou 16 4

5 Brick and Click Companies Channel conflict was initially a concern ; E commerce often created new customers, rather than cannibalizing existing one; Many firms now enjoy greater success than their click only competition. Why? E Marketing Setting up web sites; Placing online ads and promotions; Creating or participating in web community; E Mail Marketing Mobile Marketing Building a revenue and profit model. Shan-Yu Chou 17 Shan-Yu Chou 18 Conducting E-Commerce Seven C s of Web Site Design Context Communication Content Connection Community Commerce Customization Online forms of ads and promotions Microsites Display ads Search-related ads Content sponsorships Viral marketing Affiliate programs 20 Shan-Yu Chou 19 Shan-Yu Chou 20 5

6 Burger King s Subservient Chicken Microsite Have it your way. Viral Marketing e Mail Campaign Guidelines Give the customer a reason to respond Personalize the content of your s Offer something the customer could not get via direct mail Make it easy for customers to unsubscribe Shan-Yu Chou 21 Shan-Yu Chou 22 Copyright 2012 Pearson Education Creating or Participating in Social Networks Platforms of Social Media Social Networks allow members to congregate online and exchange views on issues of common interest Online Communities and Forums Blogs Social Networks Shan-Yu Chou 23 Shan-Yu Chou 24 Copyright 2012 Pearson Education

7 Mobile Marketing Is uniquely tied to one user Is virtually always on Mobile apps Mobile Marketing Bite-sized software programs that can be downloaded to smart phones Allows for immediate consumption Is highly interactive Shan-Yu Chou 25 Shan-Yu Chou 26 Building a Revenue and Profit Model Sponsorship income Membership and subscriptions Profile income Product and service sales Advertising income Transaction commission and fees Referral income Shan-Yu Chou 27 7