Chapter 5 Selling to Consumers Online Reference Book

Chapter 5 Selling to Consumers Online Reference Book By: Gary Schneider

Web Marketing Strategies A company’s marketing strategy is an important tool for conveying branding and advertising messages to current and prospective customers. A company’s Web presence is an element of that marketing strategy. The four Ps of marketing: Characteristics such as quality, features, characteristics, design, features, even packaging make up a Product. Customer’s perception of a product is called a brand, which in turn indicates the view of customer on that product. Price is the amount the customer pays for a product. Customer tries to realize the value of the product by subtracting total price from the benefit that a customer derives. Promotion means spreading the word about a product. It involves advertising, personal selling, public relations etc. Place refers to the need to have products available in different location at the right time in the right amount.

Web Marketing Strategies Product-based marketing strategies: When creating a marketing strategy, managers must think about the nature of their products and the potential/present customers. The same must be done when the managers are planning for marketing on the Web page. The company needs to arrange the products under different categories and they do this after they come to know the customer needs. They promote the products using Web based catalogs so that the customers can look at several information including images. From the catalog, they can make buying decisions and can purchase online immediately. Customer-based marketing strategies: When a company take its business to the Web, it can create a Web site that is flexible enough to meet the need of different users. Instead, of thinking of the Web sites as collections of products, companies can build their sites to meet different need of various customers. In this marketing strategy, company must identify different customer groups with similar characteristics and arrange the Web site in that way.

Communicating Market Segments The selection of communication media to carry the marketing message is equally important as selecting the groups of potential customers. For an online business with no physical presence, it is very challenging to come up with the proper media that represents the business, attracts the target customers and build trust into them. Trust, Complexity, and Media Choice: Web provides a communication mode that is an intermediate step between mass media and personal contact. Web communication with potential customers offers many advantages of personal contact selling and many of the cost-savings of mass media. However, an organization choose media depending on trust and product/service complexity.

Communicating Market Segments

Communicating Market Segments Market segmentation on the Web: Companies try to identify specific portions of the market and target them with specific advertising messages. This is called market segmentation where the pool of customers is divided into groups or segments. Segments are usually defined in terms of age, gender, income level, geographic location etc. The Web gives opportunities to present different store environments for different segments. For example, Dell’s home page includes links to separate sections of its site for home users, small and medium businesses, public sectors, and large enterprises.

Segmentation using customer behavior The creation of separate experiences for the same set of customers is called behavioral segmentation. A Web site come up with specific experiences for the customers that is required at a specific point of time. In this segmentation, company needs to understand different combination of products, services and Web site features that are affected by customers behaviors. Each time a customer can visit the same Web site with different needs. Customizing visitor experiences to match the site usage behavior pattern of each visitor or type of visitor is called usage -based market segmentation. Companies try to understand consumer behaviors and group those into categories namely: browsers, buyers, and shoppers Browsers: Some visitors to a company’s Web site are just surfing or browsing. In this mode, Web site must include key words that remind the potential customers about something they want to buy on the site.

Segmentation using customer behavior Buyers: Visitors who come in buyer mode are ready to make purchase right away. The Web site must offer direct routes into the purchase transaction. Example: Amazon’s 1 -click feature. Shoppers: Some customers arrive at a Web site knowing that it offers items they are interested in buying. These visitors are motivated to buy, but they look for more information before they complete purchase. Thus, the Web site offers comparison tools, product reviews, and list of features. An individual may start interacting with a Web site as a browser, and return as a shopper or a buyer.

Acquisition, Conversion, and Retention Acquisition: Acquiring new visitors are different for Web site with different revenue models. For example, an advertisingsupported Web site is interested in attracting visitors and keeping those visitors at the site as long as possible. Thus, the site can display more advertisements to more visitors. The total amount of money that the site spends to draw one visitor is called the acquisition cost. Conversion: For advertising-supported sites, the conversion is considered when the visitor registers at the site or when a registered visitor returns to the site for several times. For other revenue models, the conversion occurs when the visitor buys or subscribes. Retention: Customers who return to the site one or more times after first purchases are called retained customers. The cost of inducing customers to return to a Web site and buy again are called retention costs. Measuring all costs are important in fixing suitable advertising strategies.

Advertising on the Web Banner Ads: A banner ad is a small rectangular object on a Web page that displays a moving graphic and includes a hyperlink to the advertiser’s Web site. Their graphic images can help increase awareness and users can click them to open the advertiser’s Web site. Banner ads use animated GIFs and rich media objects. These are created using Shockwave or Flash. There are four standard formats to publish banner ads. These are: Medium rectangle (300 x 250 pixels) Rectangle (180 x 150 pixels) Leaderboard (728 x 90 pixels): designed to span top or bottom of a Web page Skyscraper (160 x 600 pixels): designed to be placed on the side of a Web page and remain visible as the user scrolls down.

Advertising on the Web Banner Ads placements: There are three different ways to display banner ads on other Web sites. Banner exchange network: Coordinates ad sharing so that other sites run one company’s ad while that company runs other exchange member’s ad. The exchange requires each member site to accept two ads on its site for every one of its ads that appears on another member’s site. Placement on other Web sites: Businesses can place banner ads on the Web sites that appeal to one of the company’s market segments. Advertisers must pay to those Web sites. Banner advertising network: Acts as a broker between advertisers and Web sites that carry ads. They broker advertisement space primarily on the larger Web site that have high traffic rates and are, thus, more expensive. Smaller firms sell leftover space on a discounted price.

Advertising on the Web Text Ads: A text ad is a short promotional message that does not use any graphic elements and usually place along the top or right side of a Web page. Google was the first company to use text ads. It places text ads on its search result pages. When someone visits Google and search for information, the page that provides the links relevant to search query includes short text ads for products or service related to the query. Text ads are effective because they reach people who are actually interested in learning more about something (as reflected in the search query) related to the advertiser’s products and services.

E-mail Marketing Permission marketing: A key element in any e-mail marketing strategy is to obtain customer’s approvals before sending them any e-mail that includes a marketing and promotional message. Sending one e-mail message to a customer can cost less than 1 cent if the company already has the customer’s e-mail. The conversion rate of e-mail advertising is higher than the click-through rates on the banner ads. The conversion rate of an advertising method is the percentage of recipients who responds to an ad or promotion. The practice of sending e-mail to the persons who request for information is called opt-in e-mail. Companies such as Return Path offer opt-in e-mail services. These services provide the email addresses to the advertisers at variable rates depending on the type and price of the product being promoted.

E-mail Marketing Combining content and advertising: One strategy for getting e-mail accepted by customers and prospects is to combine useful content with an advertising e-mail message. Articles and news stories that would interest specific market segments are good ways to increase acceptance of e-mail. Instead of including articles in the e-mail, advertisers include hyperlinks to those articles. This way the recipients can save mail box space. Once the customers follow the hyperlinks to the company Web site, it is easier to induce them to stay on the site and consider making purchases. If a company is using e-mail to promote its products or services, it should make sure that any other marketing efforts it is undertaking at the same time, such as press releases, print media ads, or broadcast media ads, are delivering a message that is consistent with the e-mail campaign’s message.

Technology-Enabled Customer Relationship Management The nature of Web, with its two-way communication features and traceable connection technology, allows firms to gather much more information about customer behavior and preferences. The information that a Web site can gather about its visitors is called a clickstream. The information are: Which pages were viewed? How long each page was viewed? The sequence of clickthrough. Technology-enabled relationship management occurs when a firm obtains detailed information about a customer’s behavior, preferences, needs, and buying patterns. The firm uses those information to set prices, negotiate terms, tailor promotions, add product features etc. Figure on the next page shows seven dimensions of the customer interaction experience and shows how technology-enables customer relationship management differs from traditional seller-customer interactions in each dimension.

Technology-Enabled Customer Relationship Management

Search Engine Positioning and Domain Names Search Engine: Search engines contain three major parts as follow: Spider: A program that automatically searches the Web to find Web pages that might be interesting to people. When spider finds Web pages, it collects the URL of the page and information contained on the page. Information may include the page’s title, keywords included in the page’s text, and information about other pages. Index or database: The spider returns the information to the second part of the search engine called index or database. The index checks the information if it is already stored. If it is, it compares the stored information to the new information and determines whether to update page information in the search engine results. Search utility: Visitors to the search engines provide search terms, and the search utility takes those terms and finds entries for Web pages in its index that match those terms. The search utility is a program that creates a Web page that is a list of links to URLs that the search engine has found in its index that match the site visitor’s search terms.

Search Engine Positioning and Domain Names Marketers must make sure that when a potential customer enters search terms related to their products, their company Web site URLs appear among the first 10 returned listings. The process that search engines use to decide which URLs appear first on searches for a particular search term is called a search engine ranking. For example: if a site is near the top of the list of links returned for the search term “auto”, that site is said to have a search engine ranking for “auto”. The process of having a particular URL listed near the top of search engine results is called search engine positioning, search engine optimization, or search engine placement. A number of search engine sites make it easier to obtain good ad placement on search results pages for a price. These search engine sites offer companies a paid placement, which is the option of purchasing a top listing on results pages for a particular search terms. A paid placement also called a sponsorship.

Search Engine Positioning and Domain Names Web site naming issues: Companies that have a wellestablished brand name usually want the URLs for their Web sites to reflect that name. Obtaining identifiable names to use on the Web is an important part of establishing a Web presence that is consistent with the company’s image. Companies often buy more than one domain name. Some companies buy additional domain names to ensure that potential site visitors who misspell the URL will still be redirected to the intended site. Domain names are used to identify one or more IP addresses. Domain names are used in URLs to identify particular Web pages. For example, in the URL http: //www. northsouth. edu/academic-calendar/, the domain name is northsouth. edu

Search Engine Positioning and Domain Names Every domain name has a suffix that indicates which top level domain (TLD) it belongs to. There are only a limited number of such domains. For example: gov - Government agencies edu - Educational institutions org - Organizations (nonprofit) mil - Military com - commercial business net - Network organizations ca - Canada th - Thailand Because the Internet is based on IP addresses, not domain names, every Web server requires a Domain Name System (DNS) server to translate domain names into IP addresses.