Chapter 4 Key Concept – Marketing on the Web

This chapter discusses the various methods that companies use to market their websites. It discusses the differences in product based and customer based marketing strategies and when each strategy is appropriate. In addition, the chapter explains the benefits and opportunities on the web for advertising and segmenting visitors. Finally, the strategies for measuring the effectiveness of ads are presented.

Web marketing strategies
-creating a marketing strategy you must consider the nature of the product and the nature of the potential customer.
-some managers think of their businesses in terms of the products they sell and makes sense when customers think of their needs in terms of product categories (ex: Staples)- product based organization (organize websites from an internal viewpoint)
-for customers looking to fulfill a specific need, companies should think as if they were the customer when designing web sites
-Customer based marketing strategies-Web creates an environment that allows firms to be flexible enough to meet the needs of many different users and companies can build sites to meet the specific needs of various types of customers
-building a customer based marketing strategy-identify groups of customers who share common characteristics
-Use of customer based marketing approaches was pioneered on B2B sites- customize product/service offerings

Communicating with different market segments
-First step: identifying groups of potential customers ; second step - selection of communication media.
-Media selection is critical for online firms because they don’t have a physical presence- only contact a customer has with firm may be the image projected through website.
Trust and media choices: the web is an intermediate step between mass media and personal contact and offers many advantages of personal contact selling and many of cost savings of mass media.
-Attempts to re-create mass media advertising on the web are likely to fail because many people ignore messages that lack content of any specific personal interest to them and mass media is more successful on passive state of minds while internet users have a more receptive state of mind and are more likely to actively evaluate messages (want to focus on trust building with the personal contact model -web log/blogs)

Market Segmentation
-Advertisers online responded to decrease in effectiveness of mass marketing by identifying specific portions of their markets and target then with specific advertising messages -micromarketing.
-the same person requires different combinations of products and services depending on the occasion-behavioural segmentation
-Online it is easier to design a single web site that meets the needs of visitors who arrive in different behavioural modes.
-usage based market segmentation-customizing experiences to match site usage behavior patterns of each visitor or type of visitor -common patterns of behaviour -categories that marketers use
1. Browsers: some visitors to a company’s web site are just surfing or browsing. Web sites intended to appeal to potential customers in this mode must offer them something that pique their interest Ex: trigger words.
2. Buyers: arrive in buyer mode are ready to make a purchase right way, offer a buyer is certainly that nothing will get in the way of the purchase transaction. The primary goal is to get the buyer to the shopping cart as quickly as possible
3. Shoppers: motivated to buy, but they are looking for more info before they make a purchase decision. A site should offer comparison tools, product reviews, and lists of features.

Customer relationship intensity and life cycle segmentation
-Good customer experiences can help create an intense feeling of loyalty. A five stage model of customer loyalty:
-Awareness: recognize the name of the company/product exists but have not had interaction with it. Advertising is highly used
-Exploration: potential customers learn more about the company or its products
-Familiarity: completed several transactions and are aware of the company’s policies regarding returns, credits, and pricing flexibility are in the familiarity stage are as likely to shop and buy form competitors as they are from the company.
-Commitment: experiencing number of highly satisfactory experiences and the customer develops a loyalty and preference and are willing to tell others about how happy they are with their interactions. Companies sometimes make concessions on price or terms.
-Separation: goal to move customers into the commitment stage at rapidly as possible and keep them there as long as possible.

Acquisition, conversion, and retention of customers
-benefits of acquiring new visitors vary depending on revenue models.
-total amount of money that a site spends to draw one visitor to the site is called the acquisition cost.
- total amount of money that a site spends, on average, to induce one visitor to make a purchase – conversion cost.
-The costs of inducing customers to return to a website-retention costs.
-The cost of acquiring a new customer is between 3 and 15 times the cost of retaining an existing customer.
-Funnel model: the wider the bottom of the funnel, the better the strategy, the more prospects are converted into loyal customers.

Advertising on the web
-Banner ads: dominant advertising format in use on the web, a small rectangular object on a web page that displays a stationary or moving graphic and includes a hyperlink to the advertiser’s website. It is a versatile advertising vehicle
-Today, a variety of animated GIFs and rich media objects created using Shockwave, Java, or Flash are used to make attention grabbing banner ads. The standard banner sizes for websites -interactive marketing unit ad formats.
-Banner ad placement: three different ways to arrange for other web sites to display their banner ads. The first is to use a banner exchange network –coordinates ad sharing so that other sites run one company’s ad while the other company’s site runs other exchange members’ ads. The exchange requires each member site to accept two ads on its site for every one of its ads that appears on another members site. The exchange then makes its profit by selling the extra ad space to other businesses. The second way that businesses can place their banner advertising is to find websites that appeal to one of the company’s market segments and then pay those sites to carry the ads. A third way to place banner advertising is to use a banner advertising network (acts as a broker between advertisers and web sites that carry ads).

Measuring Banner Ad Cost and Effectiveness
-Mass media efforts are measured by estimates of audience size, circulation, or number of addresses, Cost per thousand.
-visit occurs when a visitor requests a page form the website.
-Each page loaded by a visitor counts as a page view. If the page contains an ad, the page load is called an ad view.
-Each time the banner ad loads is an impression. If the visitor clicks the banner ad -a click or click through.
-A pop behind ad is a pop up ad that is followed very quickly of a command that returns the focus to the original browser window.
-interstitial ad- when a user clicks a link to load a page, the interstitial ad opens in its own browser window instead of the page that the user intended to load. They open in a full size browser window, offer even more space-completely cover webpage
-Rich media ads/active ads generate graphical activity over the web page itself instead of opening in a separate window and contains moving graphics, audio and video elements.
-Site Sponsorships: web sites offer advertisers the opportunity to sponsor all or part of their sites. They give advertisers a chance to promote their products, services, or brands in a more subtle way than by placing banner or pop up ads on the sites.

-Permission Marketing-conversion rates on requested email messages range from 10 percent to more than 30 percent- much higher than the click through rates on banner ads. Opt in email, permission marketing
-One strategy for getting email accepted by customers is to combine content with an advertising email message.

Technology-Enabled Customer Relationship Management
-The info that a website can gather about its visitors is called a clickstream.
-Technology enabled relationship management occurs when a firm obtains detailed info about a customer’s behaviour, preferences, needs, and buying patterns, and uses that info to set prices, negotiate terms, tailor promotions, add product features, and otherwise customize its entire relationship with that customer.

Creating and Maintaining brands on the web
-Key elements of a brand are differentiation, relevance and perceived value.
-Brand is an emotional shortcut between a company and its customers. Emotional appeals are difficult to convey on the web because it is an active medium controlled to a great extent by the customer.
Marketers are attempting to create and maintain brands on the web by using rational branding. The offer to help web users in some way in exchange for their viewing an ad-cognitive appeal of the specific help offered.
-extend their dominant positions to other products and services, a strategy called brand leveraging.
-affiliate marketing one firm’s web site –affiliate firm-includes descriptions, reviews, ratings, or other info about a product that is linked to another firm’s site that offers that item for sale. For every visitor who follows a link, the affiliate site receives a commission. The affiliate site also obtains the benefit of the selling site’s brand in exchange for the referral.
-Affiliate commissions can be based on several variables: pay per click model the affiliate earns a commission each time a site visitor clicks the link and loads the seller’s page. Pay per conversion model, the affiliate earns a commission each time a site visitor is converted from a visitor into either a qualified prospect or a customer. An affiliate program broker is a company that serves as a clearinghouse or marketplace for sites that run affiliate programs and sites that want to become affiliates-often provide software, management consulting, and brokerage services to affiliate program operators.

Search engine positioning and domain names
-A search engine is a web site that helps people find things on the web. It contains three major parts:
-spider/crawler/robot is a program that automatically searches the web to find web pages that might be interesting to people. When the spider finds web pages it collects the URL of the page and info contained on the page. The spider returns this info to the second part of the search engine to be stored - the index or database (checks to see if info about the web page is already stored). The third part of the search engine is the search utility (visitors provide search terms and the search utility takes those terms and finds entries for web pages in its index that match them).
-Search engine placement brokers-companies that aggregate placement rights on search engines and sells combination packages
Web site naming issues
-URL brokers – business of selling, leasing, or auctioning domain names that they believe others will find valuable (ICANN)
-Domain name parking (aka domain name hosting) is a service that permits the purchaser of a domain name to maintain a simple website so that the domain name remains in use. The fees charged are lower than those for hosting an active website.

Application
Facebook is a social networking system that has been growing in popularity. Recently, companies have been directing efforts towards taking advantage of the opportunities available with advertising their products and services. Facebook now offers a variety of advertising options for firms that are some-what targeted. Various ads are placed on different groups and networks on Facebook to provide a more targeted segment for advertisers. Companies also have the opportunity to create their own profile. This provides an opportunity for companies to take on customer-based (personal) strategy with potential customers.