INTRODUCTION

Internet Marketing 15.823

Professor Glen L. Urban

Spring 2001

WELCOME

• EXCITING TIME -- New Technology

• LIFE CYCLE -- State of the Art

• WHAT’S NOT WORKING -- WHAT IS

• LESSONS OF BIRTH PHASE

• EXPECTATIONS

• OUTLINE OF COURSE

Life Cycle of Technology

Birth Growth Maturity

BIRTH PHASE

• High Expectations

• Gold Rush

• Claim the High Ground -- Grow Big Fast

• Get Sales then Worry About Profit

• Ready Venture Capital

• Natural Experimentation

BIRTH PHASE (continued)

• Substitution with Technology– Information (search engines)– Catalogues– Self service

• Early Innovation– Shopping malls– Supply chain– Aggregation– Price

WHAT’S NOT WORKING

• Pure Play B2C– High acquisition cost– Low Conversion, Repeat, Repurchase, Margins

• Advertising Model– Small Audience– Click Through and cost/000 down

• Exchanges– Not Include channel Players– Little Solution/Decision Content

• Technology Play Only• Buzz

WHAT’S WORKING

• Large Volume Branded Sites– Portals– 2nd generation eTailers

• Reverse and Commodity Auctions

• Transaction Fee Models

• Clicks and Mortar

• Infrastructure -- software, computers, networks

INDUSTRIES REVOLUTIONIZED

• Stock Trading

• Autos

• Travel

• Telecom/Computers

• Games

LESSONS

• Fundamentals

– Value to customer

– Technology Link to Customer Need

– Business Model - ROI

• Operations

– Reliability/Scalability

– fulfillment/service

• Finance

– Do not Be Over Influenced by $$$

– Realism -- Contingency Plan

MORE LESSONS

• Marketing– Core Benefit Proposition– Selling is Tough Job– Allocate Resources Here

• Innovation– Internet Speed is High Risk– Adoption May be Slow– Need Structured Process

EXPECTATIONS

Birth Growth Mature

EXPECTATIONSGROWTH PER YEAR

B2B +B2C

• 0-10%

• 10-25%

• 25-50%

• 50-75%

• 75-100%

• Over 100%

VIEWS OF THE INTERNET

• Direct Mail / Catalog Substitute

• Advertising Enhancement

• Magazine/Newspaper Substitute

• New Information Source

• An Additional Store

• New Channel / Relationship

• New World

GROWTH DRIVERS

• Customer Experience -- Recommendations and Personalization

• Profit -- ROI

• Community

• Established Firms

• eMarketing -- Sales Productivity and CRM

• Technology -- wireless/broadband

• Trust

SUMMARY

• Bright Future for Growth

• Profit Opportunities

• Good Fundamental Management Required

COURSE REVIEW

• Outline

• Cases

• Projects

Understanding Customers

Consumer Behavior

B2C vs B2B

Strategy Formulation

Trust vs. Push

Product Design

Segmentation

Positioning

Customer Acquisition

Advertising / PR/Selling

Pricing & Promotion

Distribution

Channel

Logistics

Relationship Building

Fulfillment

Service

STRATEGIC QUESTIONS

• Why are people buying on the Internet/why is conversion rate so low?

• Trust Based Marketing-- When to use it?

• Are there any opportunities left? How do you find them?

• Is personalization and one to one marketing the ultimate segmentation?

• How do we compete if we are not the first entrant?

STRATEGIC QUESTIONS (CONT.)

• What are the roles of Advertising and Selling in eMarketing success?

• Is Internet Marketing going to be a price game only?

• Is a separate company the only way to solve the Internet channel conflict?

• Will single sources (portals/mega retailers) own the customer relationship?

• What is the next wave in Internet Marketing and how do you ride it?

ADMINISTRATION

• TA’s– Ben Gibbon

– Sebastian Periera

– Shyan Wen

– Srinath Narayanan

• URL

FEEDBACK

• Evaluation– project (group) -- 40%– class participation -- 20%– case discussion -- 40%

• Student Feedback– To TA’s– Mid Course Input– Final Course Evaluation