Chapter 6

E-commerce Marketing Concepts

Copyright © 2009
2010 Pearson
Pearson Education,
Education, Inc.
Inc. Slide 6-1
Netflix Develops and Defends Its Brand
Class Discussion

 Why is Netflix attractive to customers?

 How does Netflix distribute its videos?
 What is Netflix’s “recommender system”?
 How does Netflix use data mining?

Source: [1] Slide 6-2

 Consumer Behavior Models

 Study of consumer behavior

 Social science

 Attempts to explain what consumers purchase

and where, when, how much, and why they buy
 Consumer behavior models
 Predict wide range of consumer decisions
 Based on background demographic factors and
other intervening, more immediate variables

Source: [1] Slide 6-3

A General Model of Consumer Behavior

SOURCE: Adapted from Kotler and Armstrong, 2009.

Source: [1] Slide 6-4
 Background Demographic Factors
 Culture: broadest impact
 Subculture (ethnicity, age, lifestyle, geography)
 Social
 Reference groups
 Direct reference groups
 Indirect reference groups
 Opinion leaders (viral influencers)
 Lifestyle groups

 Psychological
 Psychological profiles

Source: [1] Slide 6-5

 The Online Purchasing Decision
 Psychographic research
 Combines demographic and psychological data
 Divides market into groups based on social class, lifestyle,
and/or personality characteristics

 Five stages in the consumer decision process:

1. Awareness of need
2. Search for more information
3. Evaluation of alternatives
4. Actual purchase decision
5. Post-purchase contact with firm
Source: [1] Slide 6-6
 The Consumer Decision Process and
Supporting Communications

Source: [1] Slide 6-7

A Model of Online Consumer Behavior

 Decision process similar for online and offline

behavior
 General online behavior model
 Consumer skills
 Product characteristics
 Attitudes toward online purchasing
 Perceptions about control over Web environment
 Web site features

 Clickstream behavior: transaction log for

consumer from search engine to purchase
Slide 6-8
A Model of Online Consumer Behavior

Source: [1] Slide 6-9

A Model of Online Consumer Behavior

 Clickstream factors include:

 Number of days since last visit
 Speed of clickstream behavior
 Number of products viewed during last visit
 Number of pages viewed
 Supplying personal information
 Number of days since last purchase
 Number of past purchases

 Clickstream marketing

Source: [1] Slide 6-10

 Shoppers: Browsers and Buyers
 Shoppers: 86% of Internet users
 70% buyers
 16% browsers (purchase offline)

 One-third offline retail purchases influenced by

online activities
 Online traffic also influenced by offline brands and
shopping
 E-commerce and traditional commerce are coupled:
part of a continuum of consuming behavior

Slide 6-11
 Online Shoppers and Buyers

SOURCE: Based on data from eMarketer, Inc., 2009b.

Source: [1] Slide 6-12
 Intentional Acts: How Shoppers Find
Vendors Online
 37% use search engines
 33% go directly to site
 17% use comparison shopping sites
 15% use product rating sites
 Online shoppers are highly intentional,
looking for specific products, companies,
services
Source: [1] Slide 6-13
Slide 6-14
 Trust, Utility, and Opportunism in
Online Markets
 Two most important factors shaping
decision to purchase online:
1. Utility:
 Better prices, convenience, speed
2. Trust:
 Asymmetry of information can lead to opportunistic
behavior by sellers
 Sellers can develop trust by building strong
reputations for honesty, fairness, delivery

Source: [1] Slide 6-15

Feature Set

Slide 6-16
 Products, Brands, and the Branding
Process
 Brand:
 Expectations consumers have when consuming, or
thinking about consuming, a specific product
 Most important expectations: quality, reliability,
consistency, trust, affection, loyalty, reputation
 Branding: process of brand creation
 Closed loop marketing
 Brand strategy
 Brand equity

Slide 6-17
 Marketing Activities: From Products
to Brands

Source: [1] Slide 6-18

Segmenting, Targeting, and Positioning
 Major ways used to segment, target customers
 Behavioral
 Demographic
 Psychographic
 Technical
 Contextual
 Search
 Within segment, product is positioned and branded as
a unique, high-value product, especially suited to
needs of segment customers

Source: [1] Slide 6-19

 The Revolution in Internet
Marketing Technologies
 Three broad impacts:
1. Scope of marketing communications broadened
2. Richness of marketing communications increased
3. Information intensity of marketplace expanded
 Internet marketing technologies:
 Web transaction logs
 Cookies and Web bugs
 Databases, data warehouses, data mining
 Advertising networks
 Customer relationship management systems

Source: [1] Slide 6-20

 Web Transaction Logs
 Built into Web server software
 Record user activity at Web site
 WebTrends: leading log analysis tool
 Provides much marketing data, especially
combined with:
 Registration forms
 Shopping cart database

 Answers questions such as:

 What are major patterns of interest and purchase?
 After home page, where do users go first? Second?

Source: [1] Slide 6-21

 Cookies and Web Bugs

 Cookies:
 Small text file Web sites place on visitor’s PC every time
they visit, as specific pages are accessed
 Provide Web marketers with very quick means of
identifying customer and understanding prior behavior
 Web bugs:
 Tiny (one pixel) graphic files embedded in e-mail messages
and on Web sites
 Used to automatically transmit information about user and
page being viewed to monitoring server

Source: [1] Slide 6-22

 Databases
 Database: stores records and attributes
 Database Management System (DBMS):
 Software used to create, maintain, and access databases
 SQL (Structured Query Language):
 Industry-standard database query and manipulation language used in
a relational database
 Relational database:
 Represents data as two-dimensional tables with records organized in
rows and attributes in columns; data within different tables can be
flexibly related as long as the tables share a common data element

Source: [1] Slide 6-23

 A Relational Database View of
E-commerce Customers

Source: [1] Slide 6-24

 Data Warehouses and Data Mining
 Data warehouse:
 Collects firm’s transactional and customer data in single
location for offline analysis by marketers and site
managers
 Data mining:
 Analytical techniques to find patterns in data, model
behavior of customers, develop customer profiles
 Query-driven data mining
 Model-driven data mining
 Rule-based data mining
 Collaborative filtering
Source: [1] Slide 6-25
Data Mining
and
Personalization

SOURCE: Adomavicius and Tuzhilin, 2001b ©2001 IEEE.

Source: [1] Slide 6-26
 Insight on Technology
The Long Tail: Big Hits and Big Misses
Class Discussion

 What are “recommender systems”? Give an

example you have used.
 How can human editors, including consumers,
make recommender systems more helpful?

Source: [1] Slide 6-27

 Customer Relationship Management
(CRM) Systems
 Record all contacts that customer has with firm
 Generates customer profile available to everyone in firm with
need to “know the customer”
 Customer profiles can contain:
 Map of the customer’s relationship with the firm
 Product and usage summary data
 Demographic and psychographic data
 Profitability measures
 Contact history
 Marketing and sales information

Source: [1] Slide 6-28

 A Customer Relationship Management System

Figure 6.14, Page 387 SOURCE: Compaq, 1998.

Source: [1] Slide 6-29
 Market Entry Strategies

Source: [1] Slide 6-30

Establishing the Customer Relationship

 Advertising networks

Banner advertisements

Ad server selects appropriate banner ad

based on cookies, Web bugs, backend user
profile databases
 Permission marketing

 Affiliate marketing

Source: [1] Slide 6-31

 How an Advertising Network such as
DoubleClick Works

Source: [1] Slide 6-32

 Establishing the Customer
Relationship
 Viral marketing
 Getting customers to pass along company’s marketing
message to friends, family, and colleagues
 Blog marketing
 Using blogs to market goods through commentary and
advertising
 Social network marketing
 Social shopping

Source: [1] Slide 6-33

 Insight on Business
Social Network Marketing: New Influencers
Among the Chattering Masses
Class Discussion

 Why do social networks represent such a promising

opportunity for marketers?
 What are some of the new types of marketing that
social networks have spawned?
 What are some of the risks of social network
marketing? What makes it dangerous?
 What are some of the tools companies use to keep
track of social network activity?

Source: [1] Slide 6-34

 Establishing the Customer
Relationship

 Wisdom of Crowds (Surowiecki, 2004)

 Large aggregates produce better estimates and
judgments
 Examples:
 Prediction markets
 Social tagging

Source: [1] Slide 6-35

The Mass Market-Personalization Continuum

Source: [1] Slide 6-36

 Reference

 [1] Laudon, Kenneth C., and Carol

Guercio Traver. E-commerce. Pearson,
2014.