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Internet Marketing

October 16, 2000

Why pursue Internet marketing/selling?

Two models of electronic commerce

Business-to-business E-Commerce

Consumer E-Marketing

Why consumers buy online

Why consumers don’t buy online

Characteristics of successful
web sites

How can you use the
Internet to your
advantage professionally?

Because you don’t want to be left out!

Who Is Online?

E-Commerce

Buy/sell/trade - goods/services/information

Brand presence in a new informational forum

After 3 short years, 84% of U.S. adults recognize AOL, 65% recognize Yahoo! – "Market share equals mind share"

New channel for relationship building

Creating new channels, in addition to building efficiencies into existing ones.

Establish direct communication with customers.

Immediate global outreach

Internet is a "Global Village"

Source of competitive intelligence

Recruiting

Two Models of Electronic Commerce

This is the model that offers companies the potential to gain significant productivity, cost savings, and enhanced services.

Each business organization has a number of suppliers, partners, financing organizations, and other business customers. Each have their own data warehouses, their own business processes, and legacy systems.

The challenge is how to enable these businesses to seamlessly share data, information, and processes.

Websites for firm employees only

Simple Communication

email and memo distribution

Employee Information and Communication

expense reports, job postings, benefits management

Internal Marketing

new product info, executive commentary, what’s new

2000 Revenue: $18.9 billion; Income: $2.7 billion

Driver and beneficiary of internet growth

Sells networking solutions and infrastructure equipment

90% of all its orders come through its website. 50% of the orders go directly to Cisco’s contract manufacturers.

Online Order Entry, Product Information, Configuration Agents, Status Agents, Pricing Agents, Technical Support, Notification Tools

Intranet system

employee benefits, global meetings, professional development and training, travel arrangements, technical documentation, consistent business systems

Saves $825 million annually in administration costs

[http://www.cisco.com/]

This is the model that receives most attention from the media.

Electronic Retailing: CDNow, Dell, Amazon, Priceline, EBay

While only 50% of Internet users actually purchased online, 80% researched online only to buy the item at a store or over the phone.

Web sites are more than sales and information vehicles, they are real-time retail labs!

How would you classify shopping over the Internet (from both the firm and consumer perspective)?

Is it a completely new and different way of shopping?

Is it a simple extension of catalog shopping?

Virtual stores / Product brokers

Amazon.com [http://www.amazon.com/]

Buy.com [http://www.buy.com/]

Portals / Agents / Information brokers

Yahoo! [http://www.yahoo.com/]

Microsoft Carpoint [http://www.carpoint.com/]

Mysimon [http://www.mysimon.com/]

Epinions [http://www.epinions.com/]

Auction sites

Ebay [http://www.ebay.com/]

Priceline [http://www.priceline.com/]

Mercata [http://www.mercata.com/]

Greater availability of information

Lower prices

Ease of Comparison

More convenient

No geographical limitations

No time limitations

More choice/variety

More fun than traditional shopping

Interaction

Contribution

No salesperson to hassle you

Uncomfortable sending credit card info across Net

Preferred to see product before purchased

Couldn’t talk to a sales representative

Couldn’t get enough product information to make decision

Couldn’t get information on products suited to needs

Product information or products were not current

Couldn’t talk to other buyers of product about their views

Process took too long or was too confusing

Had to download special software

Web site was hard to navigate through

Potential problems with returns

Putting your credit card information to a website is no riskier than giving it over the phone or handing it to the waiter in a restaurant!!

Research indicates a 66% abandonment rate!

That is equivalent to two out of three shoppers in stores (e.g. Meijer) cruising aisles, reading labels, placing choices in shopping carts, and leaving before going through checkout.

Prompt / Accurate product delivery

Money back guarantee

Secure transaction

Good privacy policy

Easy of navigating site

Offers a good price

Direct merchant of clothes, soft luggage, and products for home. Total revenues of 1.32 billion…

Primarily catalog, now Internet…

landsend.com sales went from $18 million to $61 million to $138 million during the last two years.

20% of the landsend.com customers were new to Lands' End in the same time period.

Allows the company to offer unparalleled variety: 10,000 dress shirts!

Innovative methods: Your Personal Model, Lands’ End Live, Shop with a Friend, Swim Finder.

[http://www.landsend.com/]

Content

Context

Community

Customization

Commerce

Connectivity

Customer Service

Competition

CONTENT

value-in-exchange

This is the value that the customer perceives to receive

Not only product variety and price, but also includes information, service, etc.

CONTEXT

Defines the experience of the customer.

Quality and quantity of information

Ease of navigation

Powerful search

Freshness of content

Speed

Commerce and Connectivity

Customer Service and Competition

Content – choice of books, discounts on best sellers, book reviews, etc.

Context – fast, easy to navigate, no big graphics

Community – customer reviews, chat sessions, purchase circles, "Customers who bought this book also bought…"

Customization – personal recommendations, wish list, reminders

Commerce – safe shopping guarantee, privacy policy, 1-click settings

Connectivity – associate program, refer-a-friend, search engines

Customer Service – Help desk, e-mail, and phone.

Competition – best of the bunch!

[http://www.amazon.com/]

Continuous Improvement:

http://www.salesdoctors.com/

http://www.emarketer.com/

Find a Job

http://www.myjobsearch.com/

http://www.monster.com/

Competitive and Customer Intelligence:

http://www.companysleuth.com/

http://www.epinions.com/

Bulletin boards and chat rooms

Find Prospects:

http://www.infousa.com/

Increase Productivity:

http://www.salesforce.com/

http://www.sales.com/