Chapter 5 : Selling to Consumers Online
Dr. Samim Al Azad (SAA2)
Assistant Professor, SB&E, NSU
Chapter Opening Case
InMobi’s Global Mobile Ad Network
§ A global mobile advertising network (2007, BLR, India)
§ Act as an intermediary between companies that want to advertise
and content owners/ publishers that offer mobile content.
– Example: Apps based advertisement (mobile game)
§ On InMobi network: 30000 apps and mobile sites
– Monthly adds: 200 billion mobile adds to over 1.64 billion consumers
§ How it works?
– Process data signals, draw insights about users, segments audiences
– Provide creative Ads solutions on a variety of format
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InMobi’s Network: How it works?
Advertising Companies Publishers
$10-CPM $3 $7
Add Campaign: Adidas
Add request for
Objective: generate awareness adidas’s campaign
Target audience: BD/ 18-32 years
Duration: July 05-10
Message: Run-free
Budget: $10000 ($10 for each CPM)
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Learning Objectives
In this chapter, you will learn about:
§ Web Marketing Strategies
§ product-based marketing strategies, and
§ customer-based marketing strategies
§ Customer relationship intensity model (life cycle)
§ Acquisition, Conversion, and Retention Cost: Funnel Model
§ Advertising on the web
– Banner, Pop-up ad, Pop-behind, text-ad, and E-mail Marketing
§ Technology enabled Customer Relationship Management (CRM)
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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)
Product-Based Marketing Strategies
§ Managers often think of their businesses in terms of products and
services they sell-
– Useful Web site design when customers use product categories ([Link])
§ This approach works well
– when a customer arrive at a website and look for a specific type of product
– but not useful, when customers look to fulfill a specific need
§ BD Examples: [Link], [Link]
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Customer-Based Marketing Strategies
§ Design Web sites to meet various types of customers’ specific
needs.
§ How do you build a customer-based marketing strategy?
– First step: identify customer groups sharing common characteristics
– Second step: creating website that acknowledges each group and treat each
differently.
§ Strategy pioneered on B2B sites
– B2C sites now adding customer-based marketing elements
§ Example: [Link], [Link], pathao platform
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Class Discussion-1
§ Many organizations find it difficult to incorporate a customer-
based marketing strategy into their Web site designs.
Ø Explain why this is a challenge and outline things an organization can
do to overcome these difficulties.
Class Discussion-2
§ Some online stores use a product-based strategy as the basis for
their web site design. Others use a customer-based strategy.
Ø Now, find out any two Bangladeshi websites, where one website uses product-
based marketing and another one that has incorporated customer-based
marketing strategy.
Ø Evaluate whether the strategy each has chosen is effective for the particular
product or service they are selling.
Selection of Communication Channel:
Trust, Complexity, and Media Choice
1. Complexity level inherent in product
and service is an important factor in
media choice.
§ Products with few characteristics and easy to
understand promotes well with mass media
§ Highly complex products and services
promotes well with personal contact
2. Trust level also influences media
choice
– High level of trust (Personal Contact) Figure: Trust in three information dissemination models
– Low level of trust (Mass Media)
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Selection of Communication Channel:
Trust, Complexity, and Media Choice
§ The Web
– A communication mode that is an intermediate step between mass media and
personal contact
§ Web communication offers advantages of personal contact
selling and cost savings of mass media
Ø Personalized service: Web technology helps us to serve or treat each of the
customer individually
§ One-to-one service
Ø Cost savings: Mass media spreads costs over many people (fb advertisement)
§ Web does the same thing
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Market Segmentation
§ Divides potential customer pool into segments
– Segments are defined in terms of demographic characteristics: age,
gender, income level, geographic information and so on.
– Segmentation helps in Micromarketing
§ Practice of targeting very small market segments
§ Hampered by cost increases (for mass media)
§ Three categories to identify market segments
§ Geographic, Demographic, and Psychographic segmentation
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Online Market Segmentation:
Customer Behavior
§ Same person needs different combinations of products and
services depending on the occasions
– Behave differently
§ Behavioral segmentation
– Creation of separate customer experiences based on their behavior (ex. meals)
– also called, occasion segmentation
§ Categories of common patterns of online behavior
– Browsers, shoppers, and buyers
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Segmentation Using Customer Behavior
(cont’d.)
§ Browsers
– Visitors just surfing or browsing
§ Web sites must offer something to stimulate visitors’ interest
– Trigger words (remembering something)
§ Prompt visitor to stay and investigate products or services
– Include extra content related to product, service
§ Camping gear website (may include camping destinations with photos and
maps)
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Segmentation Using Customer Behavior
(cont’d.)
§ Shoppers
– Motivated to buy, but
– Looking for more information before purchase
§ Websites may offer
– Offer comparison tools, product reviews, and features lists
§ People do not retain behavioral categories from one visit to the
next
– Todays visitors/ shoppers are the future buyers
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Segmentation Using Customer Behavior
(cont’d.)
§ Buyers
– Ready to make a purchase right away
§ Websites may offer direct route into purchase transaction
§ Shopping cart: part of the Web site
– Keeps track of selected items for purchase
– Automates purchasing process
§ Page offers link back into shopping area
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Class Discussion-4
§ Many businesses offer free samples of their products or
services to potential customers to induce them to become
customers.
Ø Describe how this strategy can be implemented online.
– Be sure to note how the amount of sampling that is likely to be beneficial
differs in the online environment and the physical world.
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Class Discussion-5
§ Manufacturers of golf equipment often advertise on television
broadcasts of golf tournaments; however, manufacturers of
football equipment rarely advertise on television broadcasts
of football games.
Ø Explain why the advertising strategies of these two businesses differ.
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Customer Relationship Intensity Model
§ Goal of Marketing
– Strengthen companies’ relationships with customers
§ Good customer experiences can create intense feeling of loyalty as
relationship develop over time
§ Typical five-stage model of customer loyalty
– First four stages show increase in relationship intensity
– Fifth stage (separation)
§ Decline occurs, relationship terminates
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Customer Relationship Intensity
§ Characteristics of the five stages
– Awareness
§ Customers recognize company name, product
§ They know company exists but have not had any interaction
– Exploration
§ Customers learn more about company, products
§ They might visit company website and communicate via telephone or email
– Familiarity
§ Customers have completed several transactions
§ Customers aware of returns, credits, and pricing policies
§ They are likely to shop and buy from competitors (still)
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Customer Relationship Intensity
§ Characteristics of the five stages (cont’d.)
– Commitment
§ Customer experiences highly satisfactory encounters
§ Customer develops fierce loyalty or strong preference
– Separation
§ Conditions that made relationship valuable change
§ Parties enter separation stage
FIGURE Five stages of customer loyalty 21
Advertising on the Web
§ CRI model: helpful in creating advertising messages
– Awareness stage
§ Inform customer about the company or product
– Exploration stage
§ Message should explain how product/ service works
§ Encourage switching brands
– Familiarity stage
§ Message should be persuasive, convince customer to buy
– Commitment stage
§ Customer sent reminder messages
§ Reinforce customers’ good feeling about the brand
– Separation stage
§ Customer not targeted
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Class Discussion-6
§ Mr. David is a loyal customer of Apex, but occasional customer for
Aarong. As we know, to be effective, firms should send different
message to each of the audiences.
– As an e-business expert, what kind of specific advertisement message would you
suggest for both companies to attract Mr. David?
The Funnel Model
FIGURE Funnel model of customer acquisition, conversion, and retention
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Customer Acquisition, Conversion, and Retention:
The Funnel Model
Funnel model
§ Conceptual tool that provides understanding of overall nature of
marketing strategy
– Clear structure for evaluating specific strategy elements
§ Very similar to customer life-cycle model
– Better at showing effectiveness of two or more specific strategies
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Advertisement Costs:
Acquisition, Conversion, and Retention of Customers
§ Online advertising always coordinate with existing advertising
efforts
§ Goal: Attract new visitors to a Web site
1. Acquisition cost
– Total amount of money a site spends, on average, to draw one visitor to a site
2. Conversion cost
– Convert first-time visitor into a customer to convince one visitor to make a
purchase, or sign up for a subscription
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Advertisement Costs:
Acquisition, Conversion, and Retention of Customers
3. Retention Cost
– Costs of convincing customers to return and buy again
– Return one or more times after making first purchases
§ Importance of measuring these costs indicates successful
advertising and promotion strategies
§ Which advertising and promotional strategies are more successful
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Advertising on the web: Display Ads
§ Banner Ads
– A banner ad is a small rectangular object on a
Web page that displays a moving graphic and
includes a hyperlink to the advertiser’s Web site.
– Their graphic images can help increase
awareness and users can click them to open the
advertiser’s Web site.
§ Text-ad
– A text ad is a short promotional message that does
not use any graphic elements and usually place
along the top or right side of a Web page.
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Advertising on the web: Display Ads
§ Pop-up ad
– A pop-up is a graphical user interface display area,
usually a small window, that suddenly appears in the
foreground of the visual interface
§ Pop-behind
– The pop-under ad is the sneakier relative of the pop-up ad.
– Open under the current screen
§ E-mail Marketing (different types)
– Email marketing is the act of sending a commercial
message, typically to a group of people, using email.
– is cheap! but, customers hate spam
– Opt-in is should be the rule.
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Advertising on the web: Display Ads
§ Display ads placement
– Ad exchange network (Inmobi, DoubleClick-google mkt platform)
§ New strategy for display ads
– Intrusive Ad formats
– Rich media and video ad formats
– Mobile devise advertising
– Site sponsorships
Figure: Disguised banner ads
Add blocking software
Adblocker Ultimate, Poper Blocker, AdBlocker Genesis Plus, NoScript, AdGuard, Total Adblock.
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Class Discussion-3
Facebook:
Does Social Marketing Work?
§ Have you ever made a purchase based on something you have read
or seen on Facebook?
§ What was the product and what made you interested?
§ What obstacles does Facebook face in monetizing itself as a
marketing and advertising platform?
§ Are there other ways for Facebook to make a profit from marketers
and advertisers?
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Technology-Enabled
Customer Relationship Management (CRM)
§ Firms obtain customers’ behaviors, preferences, needs and buying
pattern to set prices, negotiate terms, tailor promotions, add
product features, customize customer relationship
– Here, CRM allows firms to gather much more information about customer
behavior and preference
§ Current CRM efforts more successful
– Information gathered from customer interactions on the company’s Web site
§ Combine with other information gathered
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Customer Relationship Management Systems
(CRM)
1. Customer touchpoints
– Any occurrence of contact between customer and company
2. Data warehouse (large database)
– Contains multiple information about customers, their preferences and needs.
3. Data mining (analytical processing)
§ Examines stored information and looks for unknown patterns in the data
4. Statistical modeling
§ Technique that tests CRM analysts’ theories about relationships among customer
and sales data elements
5. CRM Analyst / AI
§ Formulate and revise strategies that meet needs of customer (recommendations)
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Customer Relationship Management Systems (CRM)
FIGURE Elements of a typical CRM system
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Class Discussion-7
§ Assume you are a consultant to TopSpin, a tennis equipment
manufacturer that sells its products directly to customers on the Web.
TopSpin is considering the use of YouTube videos to promote its products.
– Some of the salespeople have suggested that the videos include
detailed reviews of the company’s products and endorsements by top
tennis players.
– Other marketing staff have suggested including instructional tips and
videos of the equipment being used at famous resorts.
Ø How will you evaluate these two alternatives proposed by the salespeople
and the marketing staff?.
Ø Which method will you choose for the company?
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Homework
Facebook and Youtube advertisement !!!
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Chapter Review (True/False)
Product based marketing strategy works well when customers
False §
arrive at a website that focuses on customer needs in terms of
product.
§ The web gives companies additional segmentation capabilities
True that lead to one-to-one online marketing efforts that result in
greater relationship intensity than most non-online approaches.
False § Buyers are the motivated customers but they still need more
information for their final purchasing decision.
True § At exploration stage, advertising message should explain how
product/ service works.
§ For many Web businesses, the conversion cost can be greater
True than the profit they earned on the average sale.
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