EMARKETING6 E CHAPTER 7 Connected Consumers Online CHAPTER

E-MARKETING/6 E CHAPTER 7 Connected Consumers Online

CHAPTER 7 OBJECTIVES 7 -2 After reading Chapter 7, you will be able to: Discuss general statistics about the Internet population. Describe the Internet exchange process and the technological, social/cultural and legal context in which consumers participate in this process. Outline the broad individual characteristics and consumer resources that consumers bring to the online exchange. Highlight the four main categories of outcomes that consumers seek from online exchanges. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

THE CUSTOMER’S STORY 7 -3 A typical one-hour adventure in the life of a 25 -year-old professional, Justin: Tunes his i. Pod to the latest Diggnation podcast while his TV is tuned to a soccer game and his smartphone and tablet are within reach. Picks up his computer / tablet to find a blog mentioned during the podcast, sees a video on the blog , transmit it on his TV set and texts a friend about the video. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

THE CUSTOMER’S STORY, CONT. 7 -4 Justin searches for the video title on Google and finds a job posting on Vimeo, an online video-posting site. He posts a link to the video and Vimeo site to his Twitter stream. Justin is the new consumer: a multitasker attending to different media simultaneously. How can a marketer capture dollars from advertising online, selling music downloads, charging fees for social media subscriptions? © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

CONSUMERS IN THE 21 ST CENTURY 7 -5 Discuss general statistics about the Internet population. 85% of U. S. consumers used the Internet in 2012. Less connected groups tend to be: Older Less educated In ethnic minority groups Hispanic Lower income or disability © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

CONSUMERS IN THE 21 ST CENTURY, CONT. 7 -6 In 2011, 2. 3 billion people had access to the Internet, 32. 7% of the global population. Top ten countries account for 60% of all users and adoption rates range from 10% (India) - 84% (UK). Internet usage in developed nations has reached a critical mass, leading marketers to ask more questions about consumer behavior on the Internet. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -7 INTERNET REACHES MATURITY: 1995 -2012 © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -8 Source: ICT Indicators Report Q 1 - 2013 INTERNET MARKET EVOLUTION IN KSA (2001 Q 1 2013) © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -9 Source: ICT Indicators Report Q 1 - 2013 FIXED BROADBAND MARKET EVOLUTION IN KSA (2004 -Q 1 2013)

7 -10 http: //ww w. youtub e. com/wa tch? v=q. R KCOLbx. Vs Y CONSUMER SHOPPING BEHAVIOR ONLINE

CONSUMER BEHAVIOR ONLINE 7 -11 Many consumer behavior principles that describe offline buyer behavior also apply to online behavior. 1. Buying process steps: 2. 3. 4. need identification information search alternative evaluation purchase and post-purchase activities Hierarchy of Effects model AIDA model: attention, interest, desire, and action Word of mouth (WOM) © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

CONSUMER BEHAVIOR ONLINE, CONT. 7 -12 Exhibit 7. 2 explains some consumer behavior theories for online buyer behavior. Scarcity Popularity Affinity Authority Consistency Reciprocity © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -13 SOCIAL PSYCHOLOGY OF SOCIAL SHOPPING © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

THE INTERNET EXCHANGE PROCESS 7 -14 Describe the Internet exchange process and the technological, social/cultural and legal context in which consumers participate in this process. Exchange is a basic marketing concept. It refers to the act of obtaining a desired object from someone by offering something in return. Exchange occurs within the following contexts: Technological Social/cultural Legal The exchange is often motivated by marketing stimuli. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -15 THE ONLINE EXCHANGE PROCESS © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

TECHNOLOGICAL CONTEXT 7 -16 The focus is upon two important developments affecting online consumer behavior: Home connection speeds The changing landscape of digital – content receiving devices (e. g. smartphones) Web 2. 0 technologies © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

TECHNOLOGICAL CONTEXT, CONT. 7 -17 Home connection speeds 66 -77% of online Americans connect to the internet at home with broadband. Broadband users enjoy more multimedia games, music, and entertainment because they download quickly. Customers access from handheld devices (e. g. smartphones…) tend to access Facebook, news, weather, stock quotes, and other low graphic data services © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

TECHNOLOGICAL CONTEXT, CONT. 7 -18 Receiving devices The typical U. S. home has 26 different electronic devices for media and communication. Streaming music, TV and video growing Web 2. 0 Technologies Also referred to as social media (secondgeneration internet technologies) The key is to learn which devices an organization’s customers and prospects own and prefer to use for connecting Telematics uses GPS technology in automobiles © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -19 A communication System in an automobile that uses a global positioning system (GPS) for interactive communication • Allows drivers to receive directions and internet content or send for emergency help • It allows marketers to send information & entertainment to automobiles • TELEMATICS

7 -20 2012 U. S. DAILY MEDIA USE (MINUTES/DAY) Newspapers**Magazines** Facebook*** 26 18 14 Radio** 94 TV/Video* 279 Internet** 167 Traditional TV**** 100 © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

SOCIAL AND CULTURAL CONTEXTS 7 -21 Three cornerstones for attracting customers online: Reputation Relevance Engagement Brand image and reputation are based on the market’s perception. Consumers trust each other more than advertising Consumers utilize social media channels for advice Marketers must join the conversation, learn from customers © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

SOCIAL AND CULTURAL CONTEXTS, CONT. 7 -22 Three cornerstones for attracting customers online: Reputation Relevance Engagement Consumers don’t like being interrupted with irrelevant communication. Consumers enjoy relevant communication Marketers use behavioral targeting and keyword advertising © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

SOCIAL AND CULTURAL CONTEXTS, CONT. 7 -23 Three cornerstones for attracting customers online: Reputation Relevance Engagement Marketers must provide relevant content or entertainment. Three pillars of customer engagement: © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL content engagement media engagement marketing activities

SOCIAL AND CULTURAL CONTEXTS, CONT. 7 -24 The following are general social/cultural trends having a huge affect on exchanges Information overload Multitasking Home & work I want what I want when I want it Online oxygen Connectivity “In the know” Self-service Privacy & data security © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

LEGAL CONTEXT 7 -25 In spite of the Can-Spam law, the number of unsolicited emails has increased. Despite piracy laws, illegally used software abounds. When The Recording Industry Association of America (RIAA) sued illegal music file downloaders, consumer behavior changed. In 2002, 37% of online consumers shared music files, but the percentage has dropped. RIAA still claims $12. 5 B in annual losses from music piracy. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -26 INDIVIDUAL CHARACTERISTICS & RESOURCES Outline the Individual Differences: Individual broad characteristics affect Internet use. individual 1. Demographics such as age, income, characteristics education, ethnicity, and gender. and consumer resources that 2. Attitudes toward technology. consumers 3. Online skill and experience. bring to the 4. Social media experts online exchange. 5. Goal orientation Vs. experience orientation, Online shoppers tend to be more goaloriented. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

CONSUMER RESOURCES 7 -27 Consumers perceive value as Value = Benefits - Costs These costs constitute a consumer’s resources for exchange: Monetary cost Time cost Energy and psychic costs © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

CONSUMER RESOURCES, CONT. MONETARY COST 7 -28 Enough income is needed to exchange for goods and services, and to afford a computer, smartphone, tablet & ISP for Internet access. Credit cards (but some people don’t want them or can’t get them) Debit cards Electronic checks (digital money) Smart cards (Splash plastic) Pay. Pal (50 million customers) Innovative forms of digital money South Korea: electronic chips included in some mobiles Japan: Casio watch Spain with RFID chips implanted in the arm. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

CONSUMER RESOURCES, CONT. TIME COST 7 -29 Poverty of time is a major concern for today’s consumers. Consumers want to receive appropriate benefits for the time they spend online. Users want ease of use and efficiency The Internet helps people manage scarce time consumers are 100% involved when online © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

CONSUMER RESOURCES, CONT. ENERGY AND PSYCHIC COSTS 7 -30 Sometimes consumers feel it is Energy Costs Too much trouble to turn on the computer, log on to the Internet, and check e-mail, especially for dial-up users. Psychic Costs Web pages are too complicated Orders are dropped in the “shopping cart” Shipping prices are high Checkout process is too long or confusing Checkout requires too much personal information Site requires registration before purchase Site is unstable © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

INTERNET EXCHANGE 7 -31 Highlight the four main categories of outcomes that consumers seek from online exchanges. The actual moment comes when exchange occurs over the Internet. Browser favorites and social bookmarks help consumers quickly jump to their favorite online retailer Bookmarks and hyperlinks in emails assist consumers in finding specific sites, information, or specials. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

EXCHANGE OUTCOMES 7 -32 There are 6 basic things that people do online: Connect Create Enjoy Learn Trade Give Each is suitable for marketing opportunity. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

EXCHANGE OUTCOMES, CONT. 7 -33 Connect Create Enjoy Learn Trade The Internet allows consumers to interact with individuals and organizations using two -way communication. E-mail, Text messages Tweets Facebook wall posts Phone calls; Skype © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

EXCHANGE OUTCOMES, CONT. 7 -34 Connect Create Enjoy Learn Trade The Internet has created an ability to connect. Creation of multimedia to connect with friends, businesses and colleagues. Facebook Twitter Linked. In Flickr © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

EXCHANGE OUTCOMES, CONT. 7 -35 Connect Create Enjoy Learn Trade Give Many people use the Internet to enjoy entertainment. Audio and visual entertainment Music Movies Celebrity news Sports © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

EXCHANGE OUTCOMES, CONT. 7 -36 Connect Create Enjoy Learn Trade Give Consumers can access information to learn things online News, Driving directions, Travel information, Jobs, Weather, Sports, Radio broadcasts. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

EXCHANGE OUTCOMES, CONT. 7 -37 Connect Create Enjoy Learn Trade Give Transaction-oriented activities 71% of Internet users have purchased products online Users seek information before they buy Statistics for the average Internet consumer © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL Shops online for 1 hour per day Makes 21 purchases a year 57% say the Internet has made them better consumers

EXCHANGE OUTCOMES, CONT. 7 -38 Connect Create Enjoy Learn Trade Give Creation of multimedia content to benefit others 86% of consumers worldwide want business to focus on society’s interests 25% made an online donation to charity in 2011 © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -39 PORTABLE SMARTPHONE OWNERSHIP AND PURCHASE INTENTIONS

7 -40 TABLET GROWTH IS POISED FOR CONTINUED GROWTH

7 -41 CAPABILITY TO USE MOBILE PHONES TO MAKE PAYMENTS

7 -42 CONNECTING ONLINE IN THE U. S. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -43 CREATING & UPLOADING CONTENT IN THE U. S. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -44 ENTERTAINMENT ONLINE IN THE U. S. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -45 TOP 10 SEARCH TERMS FOR 2009 © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

TOP 10 SEARCH TERMS FOR 2011 7 -46 Google Yahoo! Bing Rank Term 1 Rebecca Black 1 i. Phone 1 Fauja Singh 2 Google+ 2 Casey Anthony 2 Katy Perry 3 Ryan Dunn 3 3 The cardinals 4 Casey Anthony 4 Kim Kardashian Katy Perry 4 Harry Potter 5 Battlefield 3 5 Jennifer Lopez 5 Adele 6 i. Phone 5 6 Lindsay Lohan 6 Rory Mcllroy 7 Adele 7 American Idol 7 Japan Earthquake 8 Tepco 8 8 Job crisis 9 Steve Jobs 9 9 Foreclosures 10 i. Pad 2 10 Jennifer Aniston Japan Earthquake Osama Bin Laden 10 Weather disasters © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -47 LEARNING AND GETTING INFORMATION © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -48 TRADING ONLINE IN THE U. S. © 2014 PEARSON EDUCATION, INC. PUBLISHING AS PRENTICE HALL

7 -49 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall