PrideFerrell Foundations of Marketing Third Edition Chapter 4

Part 2 Using Technology for Customer Relationships in a Global Environment Chapter 4 E-Marketing

Objectives 1. Define electronic marketing and electronic commerce and recognize their increasing importance in

Outline 1. Marketing on the Internet ü Basic Characteristics of E-Marketing ü E-Marketing Strategies

Key Terms accessibility cookie interactivity addressability database memory blogs digitalization portal community electronic commerce

1. MARKETING ON THE INTERNET Electronic Commerce (E-Commerce) ü Sharing business information, maintaining business

E-Marketing Through e-marketing companies can market to target audiences © Used By Permission. Copyright

Benefits of E-Marketing Open and Instantaneous Flows of Information Enhanced Customer Service Efficiencies Worldwide

Consumer-Generated Electronic Marketing Blogs Wikis Public Opinion websites Social Networks Key Outline Term Copyright

Basic Characteristics of E-Marketing Addressability Interactivity Memory Control Accessibility Digitalization Key Outline Term Copyright

Addressability A marketer’s ability to identify customers before they make a purchase How E-Merchants

Interactivity Allowing customers to express their needs and wants directly to the firm in

Memory The ability to access databases or data warehouses containing individual customer profiles and

Control Customers’ ability to regulate the information they view and the rate and sequence

Accessibility The ability to obtain information available on the Internet. ü Informs and educates

Digitalization The ability to represent a product, or at least some of its benefits,

E-Marketing Strategies Product ü ü Customized orders Services growing Distribution ü ü Order processing

2. CUSTOMER RELATIONSHIP MANAGEMENT Focuses on using information about customers to create marketing strategies

Marketing for Customer Relationship Management Key Outline Term Copyright © Houghton Mifflin Company. All

Database Marketing Database Management ü Identify/build database ü Differentiate messages to consumers ü Track

Customer Lifetime Value 80 percent of business profits come from 20 percent of customers.

Technology Drives CRM Customer Contact Points ü Customer support/callcenter software Sales automation software M-commerce

Customer Satisfaction and CRM is about relationships, not technology ü Technology can help build

3. LEGAL AND ETHICAL ISSUES IN E-MARKETING Privacy Issues Spam Misappropriation of Intellectual Property

Legal and Ethical Issues Key Outline Term © Used By Permission. Copyright © Houghton

Code of Ethics (1) Key Outline Term Copyright © Houghton Mifflin Company. All rights

Code of Ethics (2) Key Outline Term Copyright © Houghton Mifflin Company. All rights

After reviewing this chapter you should: Be able to define electronic marketing and electronic

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Pride/Ferrell Foundations of Marketing Third Edition Chapter 4: E-Marketing and Customer Relationship Management Key Outline Term 4– 1

Part 2 Using Technology for Customer Relationships in a Global Environment Chapter 4 E-Marketing and Customer Relationship Management Key Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 2

Objectives 1. Define electronic marketing and electronic commerce and recognize their increasing importance in strategic planning. 2. Understand the characteristics of electronic marketing— addressability, interactivity, memory, control, accessibility, and digitalization—and how they differentiate electronic marketing from traditional marketing activities. 3. Examine how the characteristics of electronic marketing affect marketing strategy. 4. Understand how electronic marketing and information technology can facilitate customer relationship management. 5. Identify the legal and ethical considerations in electronic marketing. Key Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 3

Outline 1. Marketing on the Internet ü Basic Characteristics of E-Marketing ü E-Marketing Strategies 2. Customer Relationship Management ü Database Marketing 3. Legal and Ethical Issues in E-Marketing Key Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 4

Key Terms accessibility cookie interactivity addressability database memory blogs digitalization portal community electronic commerce (e-commerce) spam control electronic marketing (e-marketing) wikis Key Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 5

1. MARKETING ON THE INTERNET Electronic Commerce (E-Commerce) ü Sharing business information, maintaining business relationships, and conducting business transactions by means of telecommunications networks Electronic Marketing (E-Marketing) ü The strategic process of creating, distributing, promoting, and pricing products for targeted customers in the virtual environment of the Internet Key Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 6

Benefits of E-Marketing Open and Instantaneous Flows of Information Enhanced Customer Service Efficiencies Worldwide Scope ü Opens markets to firms of all sizes © Used By Permission. Copyright © Houghton Mifflin Company. All rights reserved. 4– 8 Key Outline Term

Addressability A marketer’s ability to identify customers before they make a purchase How E-Merchants Attain Addressability ü Limit access to areas of their web site to encourage customer registration ü Offer contests and prizes in exchange for consumer information ü “Cookies” Key Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 11

Interactivity Allowing customers to express their needs and wants directly to the firm in response to the firm’s marketing communications ü Real-time interaction with customers ü Broader market coverage at a lower cost Community Key Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 12

Memory The ability to access databases or data warehouses containing individual customer profiles and past purchase histories and to use these data in real-time to customize a marketing offer. ü Database ü Data Mining © Used By Permission. Copyright © Houghton Mifflin Company. All rights reserved. 4– 13 Key Outline Term

Control Customers’ ability to regulate the information they view and the rate and sequence of their exposure to that information. ü Portal Security plays a large role in control. © Used By Permission. Copyright © Houghton Mifflin Company. All rights reserved. 4– 14 Key Outline Term

Accessibility The ability to obtain information available on the Internet. ü Informs and educates the inquiring consumer about competing products and prices ü Creates competition for the consumer’s attention Key Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 15

Digitalization The ability to represent a product, or at least some of its benefits, as digital bits of information. Digitalization has helped traditional businesses migrate to online services © Used By Permission. Copyright © Houghton Mifflin Company. All rights reserved. 4– 16 Key Outline Term

E-Marketing Strategies Product ü ü Customized orders Services growing Distribution ü ü Order processing Synchronization Promotion ü ü Consumer in control Augments traditional forms Pricing ü More consumer information © Used By Permission. Copyright © Houghton Mifflin Company. All rights reserved. 4– 17 Key Outline Term

2. CUSTOMER RELATIONSHIP MANAGEMENT Focuses on using information about customers to create marketing strategies that develop and sustain desirable long-term relationships. ü Database Marketing ü Customer Lifetime Value ü Technology Driven § Customer support § Call-center software ü Customer Satisfaction Key Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 18

Database Marketing Database Management ü Identify/build database ü Differentiate messages to consumers ü Track relationships Figure 4. 1 Why Customers Defect Key Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 20

Customer Lifetime Value 80 percent of business profits come from 20 percent of customers. ü Advances in technology allow marketers to profile customers in real-time and thereby assess their lifetime value (LTV) to the firm. ü Some customers may be too expensive to retain given the low level of profits they generate. ü Focus on developing and managing long-term relationships with more profitable customers. Key Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 21

Technology Drives CRM Customer Contact Points ü Customer support/callcenter software Sales automation software M-commerce Data Analysis © Used By Permission. Key Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 22

Customer Satisfaction and CRM is about relationships, not technology ü Technology can help build long-term relationships Key Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 23

3. LEGAL AND ETHICAL ISSUES IN E-MARKETING Privacy Issues Spam Misappropriation of Intellectual Property Surf. Control stops unwanted e-mails, block inappropriate content, and secures confidential data. © Used By Permission. Copyright © Houghton Mifflin Company. All rights reserved. 4– 24 Key Outline Term

After reviewing this chapter you should: Be able to define electronic marketing and electronic commerce and recognize their increasing importance in strategic planning. Understand the characteristics of electronic marketing— addressability, interactivity, memory, control, accessibility, and digitalization—and how they differentiate electronic marketing from the traditional marketing environment. Have examined how the characteristics of electronic marketing affect marketing strategy. Understand how electronic marketing and information technology can facilitate customer relationship management. Be aware of legal and ethical considerations associated Key with electronic marketing. Outline Term Copyright © Houghton Mifflin Company. All rights reserved. 4– 28