Chapter 5 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated,...

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Chapter 5

© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

E-BUSINESS:MANAGING THECUSTOMER EXPERIENCE

2© 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 5 E-Business: Managing the Customer Experience

Objectives

1. Describe the growth of Internet use worldwide.

2. Define e-business and e-marketing, and list the opportunities e-marketing presents.

3. Distinguish between a corporate website and a marketing website.

4. List the major forms of B2B e-marketing.

5. Explain business-to-consumer (B2C) e-marketing.



Objectives

6. Identify online buyers and sellers.

7. Describe some of the challenges associated with online marketing and e-business.

8. Discuss how marketers use the communication function of the Web as part of their online marketing strategies.

9. Outline the steps involved in developing successful e-business websites and identify methods for assessing website effectiveness.



The Digital World

▮ More than three-quarters of the U.S. population access the Internet at home, school, work, or public access sites

▮ What do people do online?• United States – Communication, information,

and purchases• China – Downloading, streaming music, online

gaming, videogaming, and social networking



The Digital World

▮ In spite of the past success and future potential of the Internet, issues and concerns relating to e-business remain

▮ The benefits and potential of e-business outweigh the concerns and problems



E-Business

▮ Wide range of business activities that take place via Internet applications

▮ It can be divided into five broad categories:

• E-tailing

• Business-to-business transactions

• Electronic data interchanges (EDI)



E-Business

• Email, instant messaging, blogs, podcasts, vlogs (video blogs), and other Web-enabled communication tools

• The gathering and use of demographic, product, and other information through Web contacts



E-Marketing

▮ Strategic process of creating, distributing, promoting, and pricing goods and services to a target market over the Internet or through digital tools

▮ Application of electronic tools to contemporary marketing has the potential to:• Greatly reduce costs • Increase customer satisfaction



E-Marketing

▮ Online marketing - Activities that connect buyers and sellers electronically through interactive computer systems



Table 5.1 - Marketing Capabilities



Web Business Models

▮ Corporate website - Designed to increase a firm’s visibility, promote its offerings, and provide information to interested parties• Build customer goodwill• Assist channel members in their marketing

efforts

▮ Marketing website - Main purpose is to increase purchases by visitors



B2B E-Marketing

▮ Use of the Internet for business transactions between organizations• Generates sales revenue• Provides detailed product description when

required• Increases efficiency of business-to-business

transactions



B2B E-Marketing

▮ Tools used:• EDI• Web services• Extranets• Private exchanges• Electronic exchanges• E-procurement



Proprietary B2B Transactions

▮ Electronic data interchange• Exchange of sales information between buyers

and sellers• Requires compatible hardware and software

systems• Cuts paper flow, speeds the order cycle, and

reduces errors• Allows companies to set production schedules

to better match demand




▮ Web services - Internet-based systems• Allow parties to communicate electronically

with one another regardless of the computer operating system they use

• Rely on open source XML standards

▮ Extranets - Secure networks • Used for e-marketing and accessible through

the firm’s website by external customers, suppliers, or other authorized users




▮ Intranets• Secure internal networks that help companies

share information among employees

▮ Private exchanges• A secure website at which a company and its

suppliers share all types of data related to e-marketing

• Sometimes called c-business



E-procurement on Open Exchanges▮ E-Procurement - Use of the Internet to

solicit bids and purchase goods and services from suppliers• Offers benefits to the public sector



B2C E-Marketing

▮ Selling directly to consumers over the Internet

▮ Also called e-tailing

▮ Driven by convenience and improved security for transmitting financial information

▮ Service providers are important participants in e-tailing



Electronic Storefronts

▮ Company website that sells products to customers

▮ Items for purchase are placed in an electronic shopping cart• Electronic shopping cart - File that holds

items the online shopper has chosen to buy

▮ Increased capability of smartphones influence the growth of online shopping



Benefits of B2C E-Marketing

▮ Competitive pricing• An ideal method for savvy shoppers to compare

prices from dozens of sellers• Easy price comparisons with the aid of bots • For example: pricegrabber.com

▮ Access and convenience - Allows customers to • Place orders from anywhere at anytime• Track products

http://www.pricegrabber.com/



Benefits of B2C E-Marketing

▮ Personalized service• Software analyzes past user purchases to

customize experience• Goal is to create loyal customers who make

repeat purchases



Online Buyers and Sellers

▮ More than half of all users make at least one purchase online each month

▮ Half of all shoppers spend three quarters of total shopping time doing product research

▮ Many online shoppers are loyal and buy mostly from a single site

▮ Consumers’ online shopping experiences have been steadily improving in quality and convenience



Figure 5.2 - Characteristics of U.S. Internet Users – need new figure



Challenges in E-Business and E-Marketing▮ Safety of online payment• Companies have developed secure payment

systems to protect customer information• Encryption - Encoding data for security

purposes• Secure Sockets Layer - Technology that

encrypts information and provides authentication



Challenges in E-Business and E-Marketing▮ Privacy issues • Customers’ top security concern is protection of

their personal information• Through electronic signatures, parties can enter

into legal contracts online• Electronic signatures - Electronic identification that

allows legal contracts such as home mortgages and insurance policies to be executed online

• Cookies and spyware allow online companies can track their customers’ shopping and viewing habits



Challenges in E-Business and E-Marketing• To reassure customers, many online merchants

have signed on with online privacy organizations such as TRUSTe

• Companies install firewalls to protect private corporate data• Firewall - An electronic barrier between a

company’s internal network and the Internet that limits access into and out of the network



Challenges in E-Business and E-Marketing▮ Frauds and scams• Complaints about Internet fraud are received by

the Internet Crime Complaint Center (IC3)• Phishing - High-tech scam that uses authentic-

looking e-mail or pop-up messages to get unsuspecting victims to reveal personal information



Challenges in E-Business and E-Marketing• Vishing - Scam that collects personal

information through voice response systems; stands for voice phishing

• Payment fraud



Challenges in E-Business and E-Marketing▮ Site design and customer service• Not all websites are well designed and easy to

use• Merchandise delivery and returns pose

challenges• Companies that have traditional stores have

more success satisfying customers than Internet-only retailers



Challenges in E-Business and E-Marketing▮ Channel conflicts and copyright disputes• Channel conflicts - Conflicts among

manufacturers, wholesalers, and retailers• Conflicts in the area of copyright law• When a site hosts content to which someone else

holds the rights



Marketing and Web Communication▮ The Internet has four main functions: • E-business• Entertainment• Information• Communication – Most popular function



Online Communities and Social Networks

▮ Firms use Internet forums, newsgroups, electronic bulletin boards, and social networks that appeal to people who share common interests

▮ Electronic bulletin board - Internet forum that allows users to post and read messages on a specific topic



Online Communities and Social Networks

▮ Social networking sites have grown dramatically• Example: Facebook, Twitter

http://www.facebook.com/

https://twitter.com/



Blogs and Podcasts

▮ Blog - An online journal for an individual or organization

▮ Some blogs incorporate wikis, a Web page that anyone can edit

▮ Podcast - Online audio or video file that can be downloaded to other digital devices



Blogs and Podcasts

▮ Many companies encourage, employees to start their own blogs

▮ Employee blogs present ethical issues• Companies have strict policies about the

content of employee blogs• Employees can be disciplined over improper

blogging



Promotions on the Web

▮ Banner ad - Strip message placed in high-visibility areas of frequently visited websites

▮ Pop-up ad - Separate window that pops up with an advertising message




▮ Preroll video ad - Marketing messages that play before an online video

▮ Widget - Tiny interactive applications that Internet users can copy and add to their own pages to play music, video, or slide shows




▮ Search marketing - Paying search engines a fee to make sure that the company’s listing appears toward the top of the search results

▮ Companies use online coupons to promote their products• Example: Aeropostale

http://www.aeropostale.com/shop/index.jsp?categoryId=3534619



Building an Effective Web Presence▮ An e-business website can:• Broaden customer bases• Provide immediate access to current catalogs• Accept and process orders• Offer personalized customer service



Successful Site Development

▮ Internet merchants need to attract customers who conduct business on the spot

▮ Entrepreneurs define business goals by creating a community of enthusiasts to:• Build up sales in advance • Pay due attention to tried-and-true marketing

tools that can complement Internet efforts



Establishing Goals

▮ What is the company’s goal for its website?▮ Objectives for the website determine the

scope of the project▮ Key decisions include: • Whether to create and maintain a site in-house • Whether to contract with outside designers



Implementation and Interest

▮ Content - Determines whether visitors return to a site

▮ Available resources should be:• Relevant to viewers• Easy to access and understand• Updated regularly• Written or displayed in a compelling,

entertaining way



Pricing and Maintenance

▮ Variety of costs:• Development• Placing the site on a Web server• Maintaining and updating the site• Promoting the site

▮ Important for a website to stay current



Assessing Site Effectiveness

▮ Web-to-store shoppers - Consumers who use the Internet as a tool to aid them at brick-and-mortar retailers

▮ Click-through rate - Percentage of people presented with a banner ad who click on it

▮ Conversion rate - Percentage of visitors to a Web site who make a purchase

▮ Engagement - Amount of time users spend on sites



Figure 5.4 - Measures of Website Effectiveness



Strategic Implications of Marketing in the 21st Century▮ Bright future for marketers who continue to

take advantage of the tremendous potential of e-business and e-marketing

▮ Cutting edge technology of today will be eclipsed within the next decade by newer technologies

▮ A marketing evolution for organizations has occurred• It embraces Internet technologies as essential parts

of their marketing strategies



Scripps Networks Interactive & Food Network Video

Hubway Video

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Chapter 5 © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated,...

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