Chapter 4: Marketing on the Web Objectives In this chapter, you will learn about: • When to use product-based and customer-based marketing strategies • Communicating with different market segments • Customer relationship intensity and the customer relationship life cycle • Using advertising on the Web • E-mail marketing • Technology-enabled customer relationship management • Creating and maintaining brands on the Web • Search engine positioning and domain name selection 2 Web Marketing Strategies • Four Ps of marketing – Product • Physical item or service that the company is selling – Price • Amount a customer pays for the product – Promotion • Any means of spreading the word about the product – Place • Need to have products or services available in different locations 3 How do you reach customers? • Identify groups of potential customers • Select the appropriate media • Build the right message (write to your reader) – Content (e.g., product presentation) – Context (e.g., trust) 4 Customer-Based Marketing Strategies • How do you build a customer-based marketing strategy? – Rudimentary approaches start by identifying groups of customers who share common characteristics 5 Market Segmentation • Market segmentation is dividing the pool of potential customers into segments and targeting specific portions of the market with advertising messages – Segments are usually defined in terms of demographic characteristics – Micromarketing is a term suggesting that we can target very small market segments 6 Market Segmentation • Geographic segmentation: Where are they? • Demographic segmentation: Income, race, education, etc. • Psychographic segmentation: variables such as social class, personality, or lifestyle 7 Geographic Segmentation 8 9 Trust and Media Choice • The Web is an intermediate step between mass media and personal, FTF, contact – Companies can use the Web to capture some of the benefits of personal contact, yet avoid some of the costs inherent in FTF customer management – Trust is often related to proximity 10 Product-Based Marketing Strategies • The product-based strategy views the world from the perspective of the firm and its products – For example, stores such as Staples and Sears believe customers organize their needs into product categories and they organize their sites accordingly 11 Beyond Market Segmentation: Customer Behavior and Relationship Intensity • Behavioral segmentation: Creation of separate experiences for customers based on their behavior • Occasion segmentation: Behavioral segmentation based on things that happen at a specific time • Usage-based market segmentation: Customizing visitor experiences to match the site usage behavior patterns of each visitor 12 Beyond Market Segmentation: Customer Behavior and Relationship Intensity • Behavior-based categories include: – Simplifiers like convenience – Surfers use the Web to find information and explore new ideas – Bargainers are in search of a good deal – Connectors use the Web to stay in touch with other people – Routiners return to the same sites over and over again 13 Customer Relationship Intensity and Life-Cycle Segmentation • One goal of marketing is to create strong relationships between a company and its customers – Good customer experiences can help create an intense feeling of loyalty – Touchpoints • Online and offline customer contact points – Touchpoint consistency: provide similar levels and quality of service at all touchpoints 14 15 Acquisition, Conversion, and Retention of Customers • Acquisition cost – Money a site spends to draw one visitor to the site • Conversion – Converting a first-time visitor into a customer – Conversion cost: the cost of inducing one visitor to make a purchase, sign up for a subscription, or register • Retained customers – Customers who return to the site one or more times after making their first purchases 16 Customer Acquisition, Conversion, and Retention: The Funnel Model • Funnel model: Used as a conceptual tool to understand the overall nature of a marketing strategy that is similar to the customer life-cycle model 17 Advertising on the Web Terms and Concepts • Banner ad – Small rectangular ad • Interactive marketing unit (IMU) ad formats – Standard banner sizes • Banner exchange network – Coordinates ad sharing • Banner advertising network – Acts as a broker between advertisers and Web sites that carry ads 18 Advertising on the Web Terms and Concepts • Cost per thousand (CPM) – Pricing metric used when a company purchases mass media advertising • Trial visit – First time a visitor loads a Web site page • Page view – Each page loaded by a visitor • Impression – Each time the banner ad loads 19 20 21 Advertising on the Web Terms and Concepts • Pop-up ad – Appears in its own window when the user opens or closes a Web page • Ad-blocking software – Prevents banner ads and pop-up ads from loading • Interstitial ad – When a user clicks a link to load a page, the interstitial ad opens in its own browser window • Clickstream – Information (e.g., page visits, duration, etc.) that a Web site can gather about its visitors 22 Site Sponsorships • Advertisers are given an opportunity to sponsor all or part of a website. – Helpdesk.com 23 E-Mail Marketing • Dangerous Territory or Priceless Opportunity? – Email is cheap! But, customers hate spam • How should a firm use email? – Opt-in e-mail is should be the rule. • Conversion rates are higher and complaints are fewer – Combine email content with appropriate, targeted ads 24 Technology-Enabled Customer Relationship Management • Customer relationship management (CRM): processes and technologies used to manage relationships with clients – Relationship management: collecting, managing, and analyzing information about a customer’s behavior, buying patterns, etc., and using it to customize the interactions with the customers 25 26 Creating and Maintaining Brands on the Web • Elements of branding include: – Differentiation: How is our product unique? – Relevance: How does our product fit into our customers’ lives? – Perceived value: What is value of our product to a potential customer? 27 Emotional Branding vs. Rational Branding • Emotional branding is the norm; let’s make customers feel good about our product, themselves as users of our product, or others affective paths to persuasion – Coca Cola video game ad (1st QTR) • Rational branding relies on the cognitive appeal of the specific service offered, not purely on a broad emotional appeal – Toyota Tundra truck ad (1st QTR) • Brand Leveraging is done to extend the image or value of a successful brand to other product offerings – Sprint Broadband ad (2nd QTR) – Nationwide Insurance ad (3rd QTR) 29 Affiliate Marketing Strategies • Affiliate marketing – One firm’s Web site includes descriptions, reviews, ratings, or other information about a product that is linked to another firm’s site – Affiliates receive compensation from the selling site’s brand in exchange for the referral • Cause marketing is a type of affiliate marketing program that benefits a charitable organization 30 Viral Marketing Strategies • Relies on existing customers to tell other people about products or services they have enjoyed using • Example: – Blue Mountain Arts – Woot – gmail 31 Search Engine Positioning and Domain Names • Search engines have 3 major parts: – Spiders, crawlers, or robots • Programs that automatically searches the Web – Index or database • Storage element of a search engine – Search utility • Uses terms provided to find Web pages that match 32 Search Engine Positioning and Domain Names • Search engine positioning or search engine optimization is the process of tuning a site so that it is listed in the top 10 of results 34 Paid Search Engine Inclusion and Placement • Paid placements involve purchasing a top listing on the results pages for a particular set of search terms – e.g., Google Adwords • Search engine placement brokers are companies that aggregate inclusion and placement rights on multiple search engines 35 Web Site Naming Issues • Domain names – An important part of selling online can be the domain name for the site. • If you want a car, might you give cars.com a try? 36 37 URL Brokers and Registrars • URL brokers – Sell, lease, or auction domain names • ICANN – Maintains a list of accredited registrars • Domain name parking – Permits the purchaser of a domain name to maintain a simple Web site so that the domain name remains in use 38 Summary • Four Ps of marketing – Product, price, promotion, and place • Market segmentation – Using geographic, demographic, and psychographic information can work well on the Web • Types of online ads – Pop-ups, pop-behinds, and interstitials 39 Summary • Technology-enabled customer relationship management can provide better returns for Web businesses • Firms on the Web can use rational branding instead of emotional branding techniques • Critical for many businesses is successful search engine positioning and domain name selection 40