6. Social commerce: this is an evolution of e-commerce, using social media and consumer
interactions to facilitate online sales. Customers chat about product online while they are
shopping and post products they like on sites like Pinterest.
What is the impact of e-marketing at the individual, community, business, and societal levels?
The Internet affects the way many individuals work, communicate, and consume. Through the
internet, consumers compare product features and prices, read product reviews from other
consumers, bring music, movies, and other types of entertainment directly to their PCs, iPads, and
televisions, and, finally, communicate through e-mail, internet-based telephone services,
Strangers in countries worldwide form online communities to discuss a variety of things, facilitated
by the Internet. Companies and consultants gain exposure to customers on blogs, which are online
diaries or journals. Finally, independent, private communities have formed around peer-to-peer file
sharing. Individuals upload, share, and collaborate on documents and files at Google Docs and
Dropbox from far away geographic locations.
Employees work together in cross-functional teams worldwide using computer networks to share
and apply knowledge for increased efficiency and profitability. Human resources personnel use the
Internet for electronic recruiting and training.
Digital information enhances economies through more efficient markets, more jobs, information
access, communication globalization, lower barriers to foreign trade and investment.
The Internet is having a huge, but unequal, worldwide impact on various societies. Easy computer
networking on mobile devices from any locations means that work and home boundaries are
becoming indistinct. Although this option makes working more convenient, it may encourage more
workaholism and less time with friends and family.
Finally, the problems of spam, online fraud, and computer viruses slow down the positive impact of
the Internet and e-marketing.
Explain with examples the ways in which online engagement is becoming analogous to offline
Engagement occurs when Internet users connect or collaborate with brands, companies, or each
other. Engagement is becoming analogous to offline experience marketing because online marketers
engage users by enticing them to participate in their content or media, like offline marketers do.
One way to engage online users is through Crowdsourcing, that is the practice of outsourcing ads,
product development, and other tasks to a people outside the organization. For example, software
developers ask users to test beta versions of Web sites or next-version software and suggest
improvements. Customer engagement via crowdsourcing also involves consumers uploading videos
or photos, posting comments on a blog, becoming a fan of the brand’s Facebook page.
Inventors also ask consumers to help fund new products through sites such as Kickstarter (called
Engagement is important to companies because when buyers are engaged with a company’s content,
they feel more favourable toward the brand.
In addition to crowdsourcing, marketers use their own content to engage users online. Content
marketing is a strategy involving creating and publishing content on Web sites and in social media.
Describe the important Internet properties that affect marketing.
The Internet has properties that create opportunities beyond those possible with the telephone,
television, postal mail, or other communication media. These Internet properties allow for more
effective and efficient marketing strategy and changed the way marketing is conducted. E-business
and e-marketing opportunities given by the Internet’s properties are:
1. lower costs: reach customers at a much lower cost than with traditional marketing methods.
2 2. Trackable, measurable results: obtain detailed data about customer responses to marketing
3. Global reach: access new markets across the globe.
4. Personalization: connecting a database to a Web site allows for individually targeted offers.
5. One-to-one marketing: gain instant access to individual customers on computers and mobile
6. More interesting campaigns: use creative multimedia content to engage customers.
7. Better conversion rates (increased purchases): online customers are only a few clicks from a
purchase, whereas when offline they must make a phone call or visit a store.
8. Twenty-four-hour marketing: allows 24/7 access to the firm’s products and services, even
when the office is closed.
What is the difference between inbound and outbound marketing?
Inbound marketing strategies are about inciting consumers to find companies online. Customers no
longer appreciate marketing messages that interrupt them from what they are doing. Inbound
marketing means getting found online, as opposed to interrupting customers with outbound
marketing to get them to pay attention to the ads, Web sites, and products. So the components of
inbound marketing are content (e.g. blogs, videos, eBooks), social networks (e.g. Twitter,
Facebook), and search engine optimization techniques to help get the social media or Web site come
up on first page of results for a keyword search.
The success of inbound marketing’s social media tactics is monitored through the amount of
conversation about a topic for a specific time period, the number and growth of fans, friends, or
followers, and “likes” on a social network page, number of ratings, reviews, subscriptions.
Understand the distinction between information or entertainment as data and the
information-receiving appliance used to view or hear it.
Digital media are simply data that can be sent to viewers in different ways. These data are sent by
their creators through satellite, telephone wires or cables to the user’s receiving appliances such as
televisions, PCs, radios, smartphones and others. The receiving appliance is separate from the
media type. In other words, watching television doesn’t mean view television programs because we
can also watch YouTube videos on television via Wi-Fi connection. Computers can receive digital
radio and television transmissions, and television sets can receive the Web and satellite radio
What are the key elements of Web 2.0?
1. Internet adoption and online retail sales mature.
2. Search engines are now reputation engines: relevance is one of Google’s search algorithm
3. Decline of print media.
4. Online fund-raising increases: marketers use the Internet to raise funds for political
campaigns (nonprofits also do this). Kickstarter allows inventors to raise funds from users
for innovative new products (crowdfunding).
5. Location-based services: many companies use the smartphone’s GPS (Global Positioning
System) feature to provide local search, such as Google local search.
6. Everything is faster: users are overloaded with entertainment and information opportunities
and marketers need to be fast to gain their attention.
What are the key elements of Web 3.0?
There was a transition from Web 1.0 (content creator makes a Web page and the content consumer
views it) to Web 2.0 (every user is both content creator and consumer and they share with one
another) and Web 3.0 (individual data presented and shared as desired).
The semantic Web is an extension of the current Web, which carries text documents, photos,
graphics, and audio and video files fixed in Web pages that search engines try to index for users.
The semantic Web will make the search easier by providing a standard definition protocol so that
users can easily find information based on its type, such as a person’s name, the next available
appointment for a particular doctor (found by searching the doctor’s database), details on an
upcoming concert, the hours of the library, the menu at the local restaurant. The value of the
semantic Web is truly information on demand. Some data are available this way now, such as flight
delays, but consumers must sign up to receive these. Other data arrive automatically, such as text
messages, e-mail, and Facebook comments or friend requests. However, these data all arrive from
the source with no distinction between what the user wants or doesn’t want to receive. With the
semantic Web, consumers will define tasks for their personal digital agents, which will search for
pieces of data and return them as movies to the television set, appointments to the smartphone
calendars, contact information to the address book, and more.
The key elements of Web 3.0 are increase of wireless networking, wearable Internet devices, big
data, and cloud computing.
4 2 Strategic E-Marketing and Performance Metrics
Strategic planning is the process of developing and maintaining a strategic fit between the
organization’s goals and capabilities and its changing market opportunities. Part of this process is to
identify the company’s goals, such as growth, competitive position, geographic scope (local or
multinational), other objectives.
Is strategy concerned with how a company achieves its objectives, or with what its goals are?
Strategy is the means to achieve a goal. It is concerned with how the company will achieve its
objectives, not what its goals are. For example, the company sets its growth and other objectives
and then decides which strategies it will use to accomplish them. The tactics are detailed plans to
implement the strategies.
What are performance metrics? What components does a company emphasise prior to
designating performance metrics?
The e-marketing plan is normally a part of an organization’s overall marketing plan. It starts with
the business environment, where legal, ethical, technological, competitive, market-related and other
environmental factors external to the company create both opportunities an threats. Organizations
make SWOT analyses to discover what strengths and weaknesses they have to deploy against
threats and opportunities. Organizations select e-business models, and then marketers formulate
strategy and create marketing plans that will help the firm accomplish its overall goals. The final
step is to determine the success of the strategies and plans by measuring the results. Performance
metrics, also called key performance indicators (KPIs), are specific measures designed to evaluate
the effectiveness and efficiency of the e-business and e-marketing operations.
What is e-business strategy?
E-business strategy is the design of a business strategy to capitalize on technologies for reaching
specified objectives that improve performance and create sustainable competitive advantage. When
corporate-level (also called enterprise-level) business strategies include information technology
components (social media, digital data, databases, etc.), they become e-business strategies.
Define e-marketing strategy and explain how it is used.
E-marketing strategy is the design of marketing strategy that uses information technology to reach
Does an e-business model include only online models? No
A business model is a method by which the organization sustains itself in the long term and includes
its value proposition for partners and customers as well as its revenue streams.
What makes a business model an e-business model is the use of information technology. For
example, the Internet allows education, music, video, and software firms to deliver their products
online, thus creating a new distribution model that cuts costs and increases value.
E-business models can capitalize on digital data collection and distribution techniques without using
the Internet. For example, when retailers scan products and customer data or reward cards at the
checkout, these data can become a rich source of knowledge for inventory management and
promotional offers – e-marketing without the internet.
The value proposition involves knowing what is important to the customer or partner and delivering
it better than other organizations. Value involves the customer’s perceptions of the product’s
benefits, specifically its attributes, brand name, and support services. Subtracted from benefits are
the costs involved in acquiring the product, such as money, time, energy, and psychic costs.
5 Value = Benefits – Costs
E-business strategies help organizations to decrease internal costs and they can also increase the
enterprise revenue stream.
What components are critical to evaluating the fit of a business model for a company and its
These components are:
1. customer value: the model must create value through its product, that is differentiated from
that of its competitors;
2. scope: markets must be growing and the company must serve these markets;
3. price: the company’s products prices must achieve company share and profit objectives;
4. connected activities: the company must have the capability to create the value;
5. implementation: the company must have the ability to actually make it happen, which
involves the firm’s system, people, culture, and so on;
6. capabilities: the company must have the resources (finance, core competences, etc.) to make
the selected models work;
7. sustainability: the e-business model is particularly appropriate if it can create a competitive
advantage over time. It mustn’t be difficult to imitate, and the environment must be
attractive for maintaining the model over time.
What is the difference between the four levels of commitment to e-business?
A key element in setting strategic objectives is to decide the level of commitment to e-business in
general and e-marketing in particular. The possible levels of commitment are represented into a
pyramid because fewer businesses occupy the top position. The more strategic moves are at the top,
while the more tactical activities are at lower levels.
The lowest level of the pyramid (activity level) affects individual business activities that can save
the firm money if these activities are automated using information technology or the Internet.
Examples of activity-level e-business models are:
1. online purchasing: companies can use the Web to place orders with suppliers, thus
automating the activity;
2. order processing: online retailers automate internet transactions created by customers;
3. e-mail: when organizations send e-mail communications to stakeholders, they save printing
and mailing costs;
4. content publishing: companies create content or services on their Web sites, draw lots of
traffic, and sell advertising or generate sales leads;
5. online sales promotions: companies use the internet to send samples of digital products (e.g.
music or software);
6. social media communication: companies use Facebook pages, Twitter streams, blogs, and
more to engage and build relationships with customers and prospects;
7. business intelligence;
6 8. online advertising and public relations;
9. dynamic pricing strategies online;
10. search marketing.
The next level of the pyramid (business process level) changes business processes to increase the
company’s effectiveness. Examples of this e-business model are:
1. customer relationship management (CRM): involves retaining and growing business and
individual customers through strategies that ensure their satisfaction with the company and
its products. CRM seeks to keep customers for the long term and to increase the number and
frequency of their transactions with the company;
2. knowledge management: is a combination of a company’s database contents, the technology
used to create the system, and the transformation of data into useful information and
3. supply chain management: involves coordination of the suppliers and distribution channel to
deliver products more effectively and efficiently to customers;
4. community building: companies build social media Web pages to draw groups of special-
interest users. In this model, firms invite users to chat and post comments on their Web sites,
social media pages, or blogs with the purpose of building a buzz online and attracting
potential customers to the site;
5. crowdsourcing: is the practice of outsourcing ads, product development, and other tasks to a
people outside the organization;
6. freemium: is a combination of “free” and “premium”, where companies offer a basic
product for free and then provide upgraded versions for a fee. For example, customers can
use some basic software for free but need to upgrade and pay for more functionality;
7. database marketing;
8. enterprise resource planning (ERP);
9. mass customization.
At the enterprise level of the pyramid, the company automates many business processes in a unified
system. Examples of this e–business model are:
1. e-commerce: refers to online transactions, selling goods and services on the internet. One
type of online retailer sells physical products and uses traditional transportation methods to
deliver them. The other type sells digital products such as information, software, and music
and delivers them via the internet;
2. social commerce: is one type of e-commerce that uses social media and consumer
interactions to facilitate online sales;
3. direct distribution: refers to a type of e-commerce in which manufacturers sell directly to
consumers, eliminating intermediaries such as retailers;
4. content sponsorship online: is a form of e-commerce in which companies sell advertising on
their Web pages, YouTube videos, or other online media;
5. social network sites: bring users together to share interests and personal or professional
7. broker models;
8. agent models.
The final level of the pyramid is comprised of Internet pure plays. Pure play are businesses that
began on the internet, even if they subsequently added a brick-and-mortar presence. For example,
E*TRADE is a pure play, beginning with only online trading. Pure plays are facing significant
challenges: they must compete as new brands and take customers away from established brick-and-
mortar or online businesses.
What are the four ways of collecting Web analytics?
Web analytics is the study of user behaviour on Web pages. Companies collect consumers data in
1. web site servers logs record the user’s IP (internet protocol) address, which browser the
visitor is using, his or her location before arriving at the company site, the time of the day,
and every click-through of the user while on the site. The IP address helps companies
understand where users live;
2. cookie files are small data files written to a user’s hard drive when visiting a site. They are
necessary for using shopping carts and other operations at a site. Cookie file data are used to
understand how many visitors are returning;
3. page tags are one pixel on a page that is invisible to users. Page tags activate a special script
when users are on the page, providing information such as when items are removed from a
4. geolocation uses many different technologies to locate a device and its owner at its physical
world address: for example WiFi, GPS (global positioning satellite coordinates), or simply
IP address. Marketers can use this for market segmentation when they observe consumer
behaviour from various countries or other locations.
In today’s scenario, should an e-business operate in line with the marketing concept? Why?
The marketing concept suggests that the social and economic justification for an organization’s
existence is the satisfaction of customer wants and needs while meeting organizational objectives.
E-businesses should operate in line with the marketing concept because customers discuss brands
on social media, and if companies don’t satisfy customer needs the world will hear about it in a
second and this often hinders (impedire) the companies’ goal achievement.
List six important social media awareness/exposure metrics.
The most accurate way to measure an increase in brand awareness is to conduct survey research
using a representative sample of the company’s target market. Important social media
awareness/exposure metrics are:
1. unique visitors: measures the number of visitors, without repetition, who access a site,
application, video, or other social media content within a specific period of time;
2. page views: refers to single pages that are viewed on a social media site;
3. impressions: refers to the number of times an ad loads on a user’s screen;
4. number of searches: measures the number of times users search for the brand, company, or
associated key words selected by the organization while typing the key words in a search
5. search engine ranking: evaluates where the organization’s social media content appears in
the search engine results pages for desired key words;
6. number of followers, registrations, or subscribers to the blog, social network page, video
channel, or other content: are also used to measure earned media engagement.
List three important social media brand health metrics.
In the category of social media brand health metrics, companies want to measure the influence their
brand and communications have on consumers. They are:
1. share of voice (SOV): is the proportion of online conversations about one brand versus its
2. sentiment: refers to the proportion of online conversation about a brand that is positive,
negative, or neutral;
3. brand influence: can include a number of other metrics, including number of inbound links
to a social media property, number of Twitter links that are retweeted, number of comments
on posts, and number of times content is shared or linked.
List four important social media engagement metrics.
There are many ways to engage social media users. Engagement metrics are:
1. content viewership: refers to the number of visitors who consume content, such as by
reading a blog (page views), watching videos or listening to podcasts, and downloading
2. tagging, bookmarking, or likes for content;
3. membership/follower metrics count the number of RSS (Really Simple Syndication)
subscribers, members in a community, such as LinkedIn, or number of followers on Twitter;
4. number of shares: measures how many times viral content is shared with others;
5. content creation: counts the number of visitors who upload ads for a contest, rate or review
products, write comments on blogs or videos, or retweet.
List four important social media action metrics.
Although engagement metrics demonstrate actions taken by users, action metrics steps it up to a
higher level of action:
1. click-through to an advertiser’s site: is measured by the proportion of all people who are
exposed to a communication message and those who click to visit the site;
2. contact form completion or registration, allowing the company to add the person to their
database of names, e-mail addresses, and more;
3. event attendance online or offline, based on a social media promotion for a Webinar or other
4. purchase: is the ultimate goal for company marketers: companies measure conversion rates
(proportion of all site visitors who purchase), number of purchases, average order value, and
many other metrics that evaluate communication effectiveness toward this goal.
List two important social media innovation metrics.
In the category of innovation metrics, companies want to know if their social media
communications are driving customers to comment and review in ways that help the company
improve its products and services. Two important social media innovation metrics are:
1. number of ideas shared in a company’s social media site (e.g., My Starbucks Idea);
2. trend spotting helps companies know what is hot in their target markets. Google Trends
shows “hot” search key words and allows users to search trends.
9 3 The E-Marketing Plan
The e-marketing plan is a guiding [road map], dynamic document that links the firm’s e-business
strategy with technology-driven marketing strategies. It is usually integrated with the firm’s overall
Why do entrepreneurs seeking funding need a venture capital e-marketing plan rather than a
Small to mid-sized firms and entrepreneurs with start-up ideas often begin with a napkin plan and
do not initially go through the entire traditional marketing planning process. However,
entrepreneurs seeking funding need a venture capital e-marketing plan rather than a napkin plan
because the napkin plan doesn’t contain enough data and logic to prove that e-business idea is solid
and the entrepreneur has some idea of how to run the business.
Some of the capital the entrepreneur seeks is debt financed through bank loans, though most of it is
equity financed. Start-up companies tap private funds (friends and family), angel investors, and
VCs. In general, friends and family are the smallest sources of capital; angel investors invest
hundreds of thousands of dollars; and VCs invest millions of dollars.
The plan prepared by entrepreneurs for VCs should be about 8 to 10 pages long. In addition to
product benefits and costs, it should include information about the competition, the target market
and its potential, and the cost to acquire and retain customers.
What is a napkin plan? Give some real-life examples of such plans.
Two common types of e-marketing plans are the napkin plan and the venture capital e-marketing
plan. Napkin plans occur when entrepreneurs simply jot (annotano) their ideas on a napkin
(tovagliolo) and then run off to find financing. These ad hoc plans are not recommended when
substantial resources are involved. An example of such plans is Twitter: it is simply a sketch that
inspired this company. The founder, Dorsey, went on to create Square – the card reader that allows
smartphone users to swipe credit cards for product purchases – in a similar fashion.
The seven key planning elements are a situation analysis, an e-marketing strategic planning, the
plan objectives, an e-marketing strategy, an implementation plan, the budget, and a plan for
evaluating success. Strategies are developed to meet the objective and then tactics implement the
What is SWOT? Explain with respect to Amazon.com.
The marketing environment is ever changing, providing plenty of opportunities to develop new
products, new markets, and new media to communicate with customers, plus new channels to reach
business partners. At the same time, the environment poses competitive, economic, and other
threats. Three key environmental factors that affect e-marketing and are part of any situation
analysis are legal, technological, and market-related factors.
The SWOT analysis flows from a situation analysis that examines the company’s strengths and
weaknesses with respect to the environment and the competition and looks at external opportunities
and threats. Opportunities may help to define a target market or identify new product opportunities,
while threats are areas of exposure. For example, when Amazon seized the opportunity to sell
online, it had not significant competition. Its biggest threat was a full-scale push by one of the large
bookstore chains to claim the online market. The company’s greatest weakness was that it has no
experience boxing (imballare) books for shipment. The company’s greatest strength was a smart
and talented team that stayed focused and learned what it didn’t know. The delay by the bookstore
chains gave Amazon the opportunity to establish its brand online.
The strategic planning process involves determining the fit between the organization’s objectives,
skills, and resources and its changing market opportunities. These tasks are tier 1 strategies,
including segmentation, targeting, differentiation, and positioning. During this phase, marketers
uncover opportunities that help formulate the e-marketing objectives.
Marketers conduct a market opportunity analysis (MOA), including both demand and supply
analyses, for segmenting and targeting.
Differentiate between the descriptors used in segment analysis in a B2B vs a B2C market.
Segment analysis in the B2C market uses descriptors such as demographic characteristics,
geographic location, selected psychographic characteristics (such as attitude toward technology and
mobile communication device ownership), and past behaviour toward the product (such as
purchasing patterns online and offline). B2B descriptors include the firm’s location, size, industry,
type of need, whether it is technologically savvy (esperta). These descriptors help firms identify
potentially attractive markets.
The purpose of a supply analysis is to forecast (prevedere) segment profitability and to find
competitive advantages to exploit in the online market. The firm must also try to identify future
Explain the relationship between positioning and brand differentiation.
Another tier 1 step in e-marketing strategic planning is identifying brand differentiation variables
and positioning strategies. Marketers must decide how to differentiate their products from
competitors’ products in a way that provides benefits perceived as important by the target.
Flowing from this differentiation is the positioning statement: the desired image for the brand
relative to the competition. If this positioning strategy was already decided upon in the traditional
marketing plan, e-marketers must adjust the online image to the offline one.
In general, the objective in an e-marketing plan includes the following aspects:
• task (what is to be accomplished)
• measurable quantity (how much)
• time frame (by when).
Most e-marketing plans aim to accomplish multiple objectives, such as the following:
• increase market share;
• increase the number of comments left on a blog;
• increase the sentiment of comments;
• increase sales revenue;
• reduce costs (such as distribution or promotion costs);
• achieve branding goals (such as increasing brand awareness);
• increase database size;
• achieve CRM goals (such as increasing customer satisfaction, frequency of purchases, or
customer retention rates);
• improve supply chain management (SCM; such as by enhancing member coordination,
adding partners, or optimizing inventory levels).
Next, marketers craft (creare) strategies regarding the four Ps and relationship management to
achieve plan objectives regarding the offer (product), value (pricing), distribution/supply chain
(place), and communication (promotion). Further, marketers design CRM and partner relationship
management (PRM) strategies. These are tier 2 strategies. Tier 1 and 2 strategies are interrelated.
The Offer: Product Strategies.
The organization can sell merchandise, content, services, or advertising on its Web site. The firm
can create new brands for the online market or simply sell selected current or enhanced products in
The Value: Pricing Strategies
A company must decide how online product prices will compare with offline equivalents. To make
these decisions, firms consider the differing costs of sorting and delivering products to individuals
through the online channel as well as competitive and market concerns. Two particularly important
online pricing trends are:
• dynamic pricing: this strategy applies different price levels for different customers or
situations. For example, a first-time buyer or someone who hasn’t purchased for many
months may receive discounted prices to motivate purchase;
• online bidding (offerta): this approach presents a way to optimize inventory management.
Many organizations use the internet to distribute products or create efficiencies among supply chain
members in the distribution channel:
• direct marketing: many firms sell directly to customers, bypassing intermediaries in the
traditional channel for some sales;
• agent e-business models: firms such as eBay bring buyers and sellers together and earn a fee
for the transaction.
Marketing Communication Strategies
The internet generated a multitude of new marketing communication strategies. Firms use Web
pages, social media, and e-mail to communicate with their target markets and business partners.
Companies build brand images, create awareness of new products, and position products using
Relationship Management Strategies
Many e-marketing communication strategies also help build relationships with a firm’s partners,
supply chain members, or customers. However, many firms use CRM or PRM software to integrate
customer communication and purchase behaviour into a comprehensive database. They then use
CRM software to retain customers and increase average order values and lifetime value. Social
CRM is a recent development that uses social media conversation to engage and build relationships
with prospects and customers.
Implementation plan concerns deciding how to accomplish the objectives through creative and
effective tactics (4Ps + CRM/PRM). E-marketers pay special attention to information-gathering
tactics. Web site forms, cookies, feedback e-mail, social media comments and likes, and online
surveys are just some of the tactics firms use to collect information about customers, prospects, and
A key part of any strategic plan is to identify the expected returns from an investment. These returns
can then be matched against costs to develop a cost/benefit analysis, for return on investment (ROI)
calculation, or for calculating internal rate of return (IRR), which the management uses to determine
whether the effort is worthwhile (proficuo). Marketers today are especially concerned with adequate
return on marketing investment (ROMI).
What are the revenues and costs associated with e-marketing initiatives?
In the section concerning revenue forecast, the firm uses an established sales forecasting method for
estimating its site revenues in short, intermediate, and long terms. Revenue streams that produce
Internet profits come mainly from Web site direct sales, advertising sales, subscription fees, affiliate
referrals, sales at partner sites, commissions, and other fees.
If the producer cuts out the intermediaries and sells its product online directly to the consumer, it
can increase revenue.
E-marketing entails (comporta) many costs, including costs for employees, hardware, software,
programming, and more. In addition, some traditional marketing costs may be included into the e-
marketing budget – for example, the cost of offline advertising to draw traffic to the Web site.
Following are just a few of the costs for site developers:
13 • technology costs: include software, hardware, internet access or hosting services,
educational materials and training, and other site operation and maintenance costs;
• site design: web sites need graphic designers to create appealing page layouts, graphics, and
• salaries: the salaries for all personnel who work on Web site development and maintenance
are included in the budget;
• other site development expenses: expenses not included in the technology or salary
categories will fall here – such as registering multiple domain names and hiring consultants
to write content or perform other development and design activities;
• marketing communication: are advertising, public relations, and promotional activities, both
online and offline, that directly relate to drawing traffic to a site and pushing visitors to
return and purchase; or search engine optimization (SEO), online directory costs, and more;
• social media communication: staff costs can really escalate when companies engage
customers on Facebook, Twitter, or other social media pages. As well, organizations spend
time monitoring their brands and other company mentions in social media so they can catch
and respond to negative posts;
• miscellaneous: other typical project costs might fall here – expenses such as travel,
telephone, stationery printing to add a new URL, and more.
Once the e-marketing plan is implemented, its success depends on continuous evaluation. In
general, today’s marketers are quite ROI driven. As a result, e-marketers must show how their
intangible goals, such as brand building or CRM, will lead to higher revenue.
14 4 Global E-Markets 3.0
Globalization has created a whole world of opportunities for e-marketers.
Successful e-marketing strategies are dependent on a solid understanding of a country context.
Social media campaigns differ significantly by country as well.
Differentiate between developed and emerging economies.
Countries vary in their level of economic development. Developed economies have high levels of
economic development and include all of Western Europe, North America, Japan, Australia, and
New Zealand. These countries are highly industrialized, use technology to increase their production
efficiency, and, as a result, have a high gross domestic product (GDP) per capita. A high GDP
means that citizens have enough discretionary income to buy items that will make their lives easier,
richer and fuller.
Emerging economies are countries with rapidly developing economies. Their most important
characteristic is that they all have a rapidly developing middle class, that means a rapidly
developing demand. Four countries, Brazil, Russia, India and China, represent the largest growth
markets in the world. Collectively, these four countries are called BRIC countries or BEMs (big
emerging markets). BRIC countries have more than 40% of the world’s population and have
received significant attention from many multinational corporations and entrepreneurs. IKEA, the
Swedish furniture retailer, has a strong Web presence in Russia and China.
Another group of emerging market economies is CIVETS (Colombia, Indonesia, Vietnam, Egypt,
Turkey, and South Africa). In CIVETS e-marketers see opportunity because of the large number of
youth in each country and global youth markets are digitally connected in ways that their parents
How can countries with emerging economies make use of information technology?
For countries with emerging economies, technology plays an especially important role. Although
technology can, in general, sustain a nation’s overall production capacity and efficiency, it is
through the application of information technology that countries with emerging economies can
really open up (aprirsi) new, exciting, global markets. India is a prime example of such efforts. The
Internet allows business in emerging economies to have a global presence.
What are born global firms? Explain with an example.
Businesses that are completely Web-based at their founding are called born global firms. For
example, Dewak is a company based in Medellin, Colombia, that offers customized helpdesk and
chat services for businesses. As a born global firm, Dewak’s Web presence focuses on business
benefits and dissociates itself completely from inaccurate perceptions that Medellin is still the
centre of Colombian drugtrafficking. Born global firms illustrate that successful marketing on the
Internet can leapfrog a company from nowhere to somewhere overnight.
Country and market opportunity analysis
An e-marketing plan guides the marketer through the process of identifying and analysing potential
markets. According to the concept of market similarity, marketers often choose foreign markets that
have characteristics similar to their home market for initial market entry. Thus, a U.S.-based
company would first target countries such as Canada, the United Kingdom, and Australia before
targeting France, Japan, or Germany. Amazon used a market similarity strategy to begin its
international expansion. After developing its domestic presence in the United States, Amazon first
entered Canada, and then the United Kingdom. It then targeted France, Germany and Japan. Three
markets (the United States, Canada, and the United Kingdom) share a common language (English),
but there are other market similarities across each foreign market: all these markets have high
literacy rates, high internet usage rates, and clearly defined market segments willing to shop for
books (and other products) online; in each country, credit cards are widely used for purchases; each
country has secure, trusted online payment mechanisms; and each country has efficient package
What is a diaspora community?
Globalization helps explain the increased migration of individuals from one country to another.
When a large number of people leave their home country and live together in a common
neighbourhood or city abroad, they become part of a diaspora community. Diaspora communities
often want to maintain a relationship with their homeland. E-businesses in countries with emerging
markets use similarity to target their own diaspora communities living abroad.
Market similarity can also be seen in the phenomenon called market convergence, in which markets
that were once very different become more similar over time.
E-marketers from countries with emerging economies must confront some unique challenges
related to the conditions of operating within a still developing nation:
1. e-commerce payment and trust issues: e-commerce in emerging markets is often difficult
because of the limited use of credit cards and the lack of trust in safely conducting online
transactions. So online purchasing is more difficult;
2. physical infrastructure: Unless the firm’s product is completely digital, online retailers of
tangible products still need to solve the logistics problems of physically moving the product
from one location (a warehouse) to another (a retail outlet, consumer’s home, or some other
collection point). Road conditions in emerging market countries vary greatly including the
roads in major cities. Transaction costs increase as the length of transportation and time
increase. Moreover, countries with emerging economies have to face frequent electricity
blackouts. Household and businesses in the major cities of emerging countries are
sometimes without electricity during the summer months and this is a problem for
businesses that are forced to close;
3. number of computer users and Wireless Internet access (mobile phones): considering that
customers need a mechanism for connecting to the Internet, for e-marketers operating in
developed countries connecting to the Internet is not a problem. E-businesses operating in
emerging, low-income countries face some problems in reaching people because only few
consumers own a computer or a smartphone and can connect to the Internet. For this reason
in many towns telecenters developed. They are small shops with three to ten computers that
offer Internet connections to the general public and are the most popular means for
accessing the Web in many countries. Peru has one of the highest usage rates of telecenters
in the world.
What is a tipping point? Explain with examples.
A tipping point is that moment when an emerging trend or phenomenon becomes irreversible; there
is no going back. Computer and mobile phone technology, along with the rapid development of
broadband, are changing the way markets access and understand information, products, and
services. The explosive growth of mobile technology has created a tipping point in Indonesia (and
many other countries).
How do computer and telephone ownership affect e-marketing in emerging economies?
Globally, smartphone use is on the rise. Smartphone adoption rates are the fastest of any technology
E-marketers must understand that consumer behaviour with the mobile Internet differs from
consumer behaviour with desktop computers or even laptop computers and consumer behaviour
differs also between countries. For example, in Brazil about three-quarters of smartphone users who
saw an offline ad did online research after seeing the ad, and in Argentina, 37% of smartphone users
make a product purchase in a brick-and-mortar store after online research with their smartphone.
Why must Web site designers consider connection speeds in emerging economies?
Broadband, or high-speed Internet access illustrates another significant tipping point.
The laws of supply and demand generally apply to broadband pricing, and it is not surprising that
global prices continue to decline as more individuals and firms subscribe to broadband.
The rapid development of broadband networks in developed and developing countries is creating
new opportunities for e-marketers.
What is the digital divide, and what does it mean for e-marketers?
Although computer and information technologies are changing how consumers access and use
information, from marketing perspective there are still significant differences between countries and
consumers in those countries. This division between those who have access to information and
those who don’t is named digital divide. Even in fast-developing China, there is a digital divide. It
is the large gap between urban and rural Internet users. The Chinese government agency reports that
this gap is caused by a combination of high Internet costs relative to rural income, less knowledge
of the Internet itself, and inadequate infrastructure.
Gender creates a digital divide relative to cell phone ownership. There are 300 million fewer
women mobile subscribers than men.
Building inclusive e-markets th
Peter Drucker, the greatest management theorist of the 20 century, said that business has only two
core activities: marketing and innovation. This is true for the poorest of global markets – at the base
of the world’s economic pyramid. That phrase, base of the pyramid, has been used to describe the 4
billion people who live on less than $2 per day. The explosive growth of mobile phones throughout
the developing world is enabling e-marketers to reach base of the pyramid consumer segments in
interesting and creative ways.
Mobile banking is one of the most successful e-marketing efforts in countries that are the least
economically developed. Low-income individuals around the world lack security for their money.
Poor individuals living in rural, remote areas face a different problem: there are simply not enough
people living in any one village to make it profitable for a bank to have offices there. Mobile
banking is the innovative, market-based solution that solves these problems.
How did Hindustan Unilever use e-marketing to target the media dark consumer segment?
Hindustan Unilever, the Indian subsidiary of Unilever, developed an innovative way to reach media
dark rural Indian consumers through its iShakti program. Media dark refers to those rural Indian
communities that have no access to radio and television. A combination of factors may make a
village media dark. A village, for example, may not have electricity; no one living in the village
may actually own a television or radio; or no one in the village can afford the monthly subscription
fee for a satellite connection.
iShakti consists of electronic kiosks set up in rural villages through which local residents can obtain
free health, hygiene, employment, agricultural, and legal information. Content is delivered through
voice and streaming video, since many rural consumers, especially women, are illiterate.
Perhaps nowhere is the convergence of new technology (the increased use of mobile and
smartphones) and access to information (mobile broadband) more evident than in the increased
importance of social media in the e-marketers integrated communications toolkit. Half of the
world’s most engaged markets for social networking are in Latin America: Argentina, Chile,
Colombia, Peru, and Venezuela.
Facebook is the social networking giant, there are Facebook users in about every country in the
world. Yet Facebook penetration varies by country, and, in fact, may not be the dominant social
networking site in certain countries, for example in Russia, South Korea, Japan, China, Brazil, and
Vietnam, where there is another market leader.
18 5 Ethical and Legal Issues
Define ethics and law and show how they are different and similar.
Ethics and law are related. Ethics concerns the values and practices of expert people who have
knowledge of a specific field. Ethics is also the concerns and values of society as a whole.
Law is similar to ethics in the sense that it too is an expression of values, but while ethics may be
directed toward individual or group endeavours, laws are directed to national, or sometimes
international, populations. Additionally, law attempts to be consistent in both time and place, so that
citizens will be familiar with their rights and obligations.
Because law results from combinations of interests, beliefs, and goals, the processes that lead up to
the making of laws are often slow and complex.
Ethics and ethical codes
A particularly important aspect of ethical inquiry involves the study of professional activities.
Traditionally, groups of individuals possessing special skills or knowledge have established codes
and systems of fair practice. A classic example is the Hippocratic Oath of physicians. Ethical
standards help to communicate consistency and trustworthiness to the community, while also
maintaining stability and integrity within the profession.
Documents such as the American Marketing Association’s (AMA) Statement of Ethics reflect the
recognition of a commitment to the exercise of honesty, responsibility, transparency, respect,
citizenship, and fairness within all professional transactions.
The concept of privacy encompasses both ethical and legal aspects. Privacy is a product of the 20
century. In 1890 Warren and Brandeis published an article that urged the recognition of a right to
privacy within American law. This protection was defined as the right to be left alone. Many
justifications for this new idea were reactions to the phenomena of a maturing industrial and
technological age, including the mass distribution of newspapers, the development of listening
devices, and the widespread use of photography.
In addition to Constitutional developments, privacy has been addressed in the common law.
Common law refers to decisions, presumptions, and practices traditionally embraced by Anglo-
American courts. The common law has established a series of privacy violations that, both
individually and together, form the basis of invasion of privacy lawsuits.
The central attributes of privacy fall into three general areas. The first is the Warren and Brandeis
concept of a right to be left alone. Privacy within this perspective is the ability to remain isolated
A second theory, known as access control, does not presume isolation as a norm but places its
emphasis upon laws and standards that enable persons to reasonably regulate the information that
they are giving up.
A third theory, known as the autonomy model, entails freedom from the coercive use of personal
information as well as the ability to be alone when reflection is necessary.
Privacy within digital contexts
Information plays an important role in the concept of privacy, as well as that of marketing and
electronic commerce. It is, therefore, not surprising that conflicts about how data should be
collected and used have developed.
A starting point for this discussion is the American Marketing Association’s Statement of Ethics. It
states that the AMA and its members will seek to protect the private information of customers,
employees and partners. This principle must be applied to the Internet’s many information-
packets of data created within a user’s hard drive in response to instructions received from a Web
page. Once stored, cookies have many purposes. For example, they may handle online information,
creating features like shopping baskets to hold purchases. They may recall stored sales information
to remind users of items already ordered or to suggest new products. Significantly, cookies may
collect other data, such as full name, e-mail and postal addresses, phone numbers, a computer’s
geographic location, and the time logged online.
User tracking occurs when cookies are analysed in the course of a user’s online travels. The result is
an ability to identify an individual’s online behaviour.
Many people value privacy as the ability to remain secluded from unwelcome intrusion as well as
the capability to control the disclosure of personal data. This position advocates policies that require
individuals to be explicitly informed of any data collection event and then to allow the individuals
the opportunity to participate (opt in) or decline (opt out).
Online advertising firms instead presume most users wish to receive targeted advertising. According
to this vision, privacy is only one of many values to be balanced. It generally supports an opt-out
policy, which presumes that data collection will take place, but still allows users to remove consent
by a variety of methods, including sending e-mail to collectors requesting removal from their
In 2012, the Obama administration released the Consumer Privacy Bill of Rights to improve
protection of Internet users’ privacy rights. This initiative brought to a new set of rules for internet
companies (codes of ethics), which will establish clear and fair standards for processing and safety
of online personal information: individual control, transparency, respect for context, security, access
and accuracy, focused collection, and accountability.
What are some of the threats to Internet user privacy?
Technology has increased the ways in which such information is collected. Adding to the problem is
the confusion over what Web sites do with the information they collect. Nearly every major Web
site collects some type of personally identifiable information. Just over half, however, specify on
the Web site exactly how the information will be used.
In addition to issues of data collection, the problem of access to data is of fundamental significance
within the context of online privacy. In this area, the status of sensitive information is not only a
matter of hardware security but also one of administrative policy.
Java is a Web-friendly programming language that allows the downloading and running of
programs or applets on individual computers. These applications are increasingly used to provide
such enhancements as dynamic animation, Web-based simulations, and other useful additions to
Intelligent agents are programs that, once released by a user, can function autonomously within the
Web to make electronic decisions. Some potential tasks include the searching of sites or the buying
of products that conform to an individual’s tastes or interests.
Cookies, Java applets, and intelligent agents are able to function in the course of nearly any online
session, without a user’s knowledge or control.
International privacy issues
On an international level, privacy issues have also received closed attention. The most
comprehensive privacy legislation so far has been developed by the European Union.
The foundation stone in creating the current personal data protection system was the Privacy
Guidelines prepared by the Organization for Economic Co-operation and Development (OECD) in
1980. These guidelines introduced basic principles for personal data protection and processing such
as collection limitation, data quality, purpose specification, use limitation, security safeguards,
openness, individual participation, and accountability. Although helpful, these guidelines were not
mandatory for the member countries of the OECD.
In order to bring more clarity and enhance enforcement of data privacy rules, the EU developed the
Data Protection Directive, which became effective in 1998. According to this act, all member states
of the EU were instructed to enact national laws to protect “fundamental rights and freedoms of
persons, and in particular their right to privacy”.
What are the EU safe harbour provisions and why are they important for U.S. companies
doing business in Europe?
The safe harbour is the agreement between U.S. and EU that allows American companies to store
European users’ personal data both in the EU and U.S. However, the U.S. must submit to a series of
safe harbour provisions for the protection of EU citizens’ data: users must be informed about the
personal data collection and use; they can decline the collection and transfer of data; data can be
transferred only to organizations that use safe protection data methods; firms must guarantee that
data won’t be lost; firms must collect only relevant data for the specific use; users must have the
right to access their personal data and correct them if erroneous or eliminate them; these rules must
be correctly implemented.
Another important EU privacy act is the Directive on Privacy and Electronic Communications of
2002. The act covers questions related to computer data privacy such as spam, cookies, and
confidentiality of online information.
In 2012 the European Commission proposed the Data Protection Regulation, which extended its
prior privacy guidelines to face the current technology challenges.
According to the FTC, what are the minimum requirements for ethical use of consumer
1. Notice: users should be aware of a site’s information policy before data are collected.
2. Consent: users should be allowed to choose participation or exclusion from the collection.
3. Access: users should have the ability to access their data and correct them if erroneous.
4. Security: policies to ensure the integrity of data and the prevention of misuse should be in
5. Enforcement: users should have effective means to hold data collectors to their policies.
Traditionally, the law protected intangible or intellectual property through three basic mechanisms:
1. patent: protects inventions and it concerns the ability to reproduce or manufacture an
2. trademark: protects brands, that are aim to identify and distinguish products and services in
3. copyright: protects expression and it concerns the right to publish, duplicate, or alter
expressions of ideas.
None of these areas of law protect ideas. Computer-based communication poses particularly
difficult problems for intellectual property. These communications may incorporate elements of
patent, copyright, and trademark or any combination thereof. A single communication may contain:
a novel way of communicating covered by a patent; text and pictures protected by copyright; and
proprietary branding covered by trademark law.
What are the doctrines of first sale and fair use? How should they be applied online?
Fair use consists of the ability to copy – without cost – reasonable portions of protected material for
purposes of such public activities as education, news reporting, and editorial comment. The doctrine
of first sale limits the ability of a copyright holder to obtain profit from the sale of his or her work
after the initial time at which the material is sold. The first sale doctrine is viewed as benefiting
such institutions as public libraries and can also increase access to intellectual material through
discounts such as those offered by used bookstores.
Under the federal Lanham Act, trademarks may be registered with the government. Registered or
not, however, they may still be protected under the Act. To prove an infringement case, claimants
must prove that the trademark is protectable. Generally, the more distinctive (unique) the mark, the
greater is the strength of this claim. The Act also prohibits dilution – the unauthorized use of famous
trademarks in association with goods or services that is likely to lead to a lessening of the
uniqueness of the trademark.
In 1995, the U.S. Congress passed the Federal Trademark Dilution Act (FTDA), which established
guidelines on how to determine whether a particular trademark has been diluted. Dilution protects
the substantial investment made by owners of famous marks – those widely recognized by the
general consuming public of the United States in those marks.
Which types of trademark dilution exist and how do they differ from each other?
There are two types of dilution: blurring and tarnishment. Blurring (offuscamento) results from
activities that reduce the “distinctiveness” (uniqueness or brand recognition) of the famous mark.
Tarnishment occurs when the famous mark is cast (gettato) in an unattractive light.
The Trademark Dilution Revision Act of 2006 (TDRA) was enacted (promulgato) to substantially
revise the FTDA. Under TDRA, if a famous brand is likely to be diluted, the brand owner can file
suit (presentare denuncia).
Trademark law has recently been applied to the internet-naming system. Domain names are unique
configurations of letters or numbers that are used to route data. In addition to designating Web sites,
domain names are used in e-mail addresses. The purpose of the Internet Corporation for Assigned
Names and Numbers (ICANN) is to govern the assignment and possession of domains and resolve
the conflicts in relation of domain names.
A type of trademark violation is known as cybersquatting. This activity involves the registration of
domain names of existing corporations or other entities. According to the Anticybersquatting
Consumer Protection Act (ACPA) a person is liable (responsabile) if, in bad faith, he or she
registers, traffics, or sells a domain bearing a name that is identical or confusingly similar to a
protected trademark, or which would dilute the worth of the trademark.
Metatags are HTML statements that describe a Web site’s contents. They allow search engines to
identify relevant sites. Accordingly, these tags can provide a valuable means of attracting users to a
In addition to word appropriation, trademark law has been implicated in matters involving use of
hyperlinks, links that take users to areas other than their introductory page. Some entities have
become concerned that hyperlinks may cause confusion or deprive the target sites of revenue
obtained through the selling of advertising.
An increasingly popular method of intellectual property protection involves the use of licenses –
contractual agreements made between consumers and software vendors, which allow the buyer to
use the product but restrict duplication or distribution.
What does it mean to clickwrap a license?
Shrinkwrap or break-the-seal licenses appear outside the software, while clickwrap licenses are the
digital development of shrinkwrap licenses and require to click a button online or within a program
to acknowledge acceptance (accettare) of terms.
A trade secret is an economically valuable business secret that is not generally known or readily
ascertainable. The federal Economic Espionage Act was enacted in part to address digital advances
and now makes it a criminal offense to divulge trade secrets. Trade secrets can include, but are not
restricted to, formulas, market data, algorithms, programs, codes, and models. They may be stored
online or in tangible formats.
Employees with access to trade secrets may be prohibited from engaging in similar businesses for a
period of time.
Another important Act in trade secrets law is the Uniform Trade Secrets Act (UTSA). The main
purpose of the UTSA is to unify the existing trade secrets legislation across all 50 states.
A complex issue involving online data is an activity known as spidering. This process involves the
use of software application called robots to enter targeted Web sites and obtain data for the use of its
Spam is unrequested e-mail. Many users are disturbed to find that information given to individuals
or entities for one purpose may be collected and sold for mass distribution. Furthermore, these
messages are sent without valid return addresses or unsubscribe links, making it nearly impossible
to stop receiving them.
The average person is not in a position to understand exactly how information is displayed,
transferred, or stored, and this lack of knowledge provides opportunities for novel deceptions.
Included within this category is the use of e-mail or Web sites to impersonate individuals or
corporations. This activity, known as spoofing, is often used to extract sensitive information by
leading a user to believe that a request is coming from a reputable source, such as an ISP or a credit
23 6 E-Marketing Research
Data drive strategy
Data without insight or application to inform marketing strategy are worthless. Data are collected
from a myriad of sources, filtered into databases, and turned into marketing knowledge that is then
used to create marketing strategy.
Big data refers to data sets that are so big that they are difficult to manage with currently available
software. For example, how can a marketer turn 15 terabytes of Tweets a day into actionable brand
This presents a problem for information technology managers, and e-marketers must determine how
to extract insights from these billions of bytes.
Businesses must manage four aspects of big data: volume (the quantity), velocity (handling time-
sensitive data quickly), variety (ranging from social media conversation to customer click patterns
and census data), and veracity (is the information reliable and trustworthy?).
How do marketers turn marketing data into marketing knowledge?
Knowledge management is the process of managing the creation, use, and dissemination of
knowledge. Thus, data, information and knowledge can be shared with internal marketing decision
makers, partners, distribution channel members, and sometimes customers.
A complete marketing knowledge database includes all the data about customers, prospects, and
competitors, the analyses and outputs based on the data, and access to marketing experts, all
available 24/7 through a number of digital receiving appliances.
What is MIS? With an example, explain how companies use MIS for effective research
A marketing information system (MIS) is the process by which marketers manage knowledge. The
MIS is a system of assessing information needs, gathering information, analysing it, and
disseminating it to marketing decision makers. The process begins when marketing managers have
a problem that requires data to solve. The next step is to gather the data from internal sources and
from secondary sources, or by conducting primary marketing research. The process is complete
when these managers receive the needed information in a usable form. For example, Web
advertisers need audience statistics prior to deciding where to purchase online display and space
(the problem). They want to know how many people in their target market view various Web or
social media sites to evaluate the value of Web ads versus TV and other media ads (information
need). One way to get this information is through secondary sources. Such companies rate Web sites
and monitor traffic statistics by researching the Internet usage habits of large panels of consumers.
Web advertisers use the data to make effective and efficient Web media buys.
How did e-marketing change the MIS landscape?
E-marketing changed the MIS landscape in several ways. First, many firms store electronic
marketing data in databases and data warehouses. These data warehouses enable marketers to obtain
valuable, appropriate, and tailored information anytime. Second, marketers can receive database
information in Web pages and e-mail on a number of appliances in addition to the desktop
computer: pagers, fax machines, smartphones, and even basic cell phones. Third, customers also
have access to portions of the database. For example, when consumers visit Amazon, they can query
the product database for book titles and also receive information about their account status and past
book purchases. Finally, most firms recognize that data and information are useless unless turned
into knowledge to increase profits.
What are the three main sources of data for solving marketing research problems?
1. Internal records, such as sales data, are one important source of marketing knowledge.
Accounting, finance, and production personnel collect and analyse data (sales and
inventory) that provide valuable information for marketing planning. The marketing
department itself collects and maintains relevant information about customer characteristics
2. When specific information is not available in company or partner databases, the e-marketer
first looks for secondary data, that are already existing data outside the company. Secondary
data help marketers understand competitors, consumers, the economic environment, political
and legal factors, technological forces, and other factors in the macroenvironment affecting
3. When secondary data are not available, marketing managers may decide to collect their own
information. Primary data are information gathered for the first time to solve a particular
problem through online e-mail and Web surveys, online experiments, focus groups, and
observation of Internet user discussions. By doing this, marketers learn about both current
and prospective customers.
Source 1: internal records
For example, sales data come from accounting systems and the company Web site log. When a
customer purchases online, the transaction is recorded in a database for access. Marketing managers
review and analyse these data to determine conversion rates (proportion of visitors who purchase
online) and to see if online ads and other communication are driving sales.
Data on in-store behaviour are gathered through scanning bar codes on products. Firms use the data
in customer databases to improve sales rep effectiveness, refine the product mix, identify optimum
pricing for individual products, assess promotion effectiveness, and signal distribution
Source 2: secondary data
Secondary data can be collected more quickly and less expensively than primary data – especially
on the Internet. However, secondary data present problems: they may not meet the e-marketer’s
information needs, because they are usually gathered for a different purpose; and they can have a
low quality. Marketers have no control over data-collection procedures, so they should always
evaluate the quality of secondary data.
Marketers continually scan the company’s macroenvironment for threats and opportunities. This
procedure is commonly called business intelligence. An environmental scan seeks market
information about demographic trends, competitors, technological forces, natural resources, social
and cultural trends, world and local economies, legal and political environments.
There are public (U.S. agencies, like the U.S. Patent Office, global organizations, such as the
International Monetary Fund, universities, professional associations) and private (company Web
sites, research firms, commercial online databases) sources of data about the firm’s
What is competitive intelligence, and what are some sources of online CI data?
Competitive intelligence (CI) involves analysing the industries in which a firm operates and to
understand competitor vulnerabilities. It is a legal activity conducted by many companies. It can be
very difficult because companies know others are watching and put out information that can lead
competitors astray (fuori strada). There is an intelligence cycle:
1. planning and direction
2. published information collection
3. primary source (human intelligence) collection
25 4. analysis and production
5. report and inform
The Internet simplified CI and there are three main sources of online CI data:
1. competitors’ Web sites for observing competitive marketing strategies;
2. third-party, industry-specific sites that can also provide information about competitive
activities. An airline will monitor online travel agents to watch competitive pricing and route
changes (e.g., Expedia) and social media sites such as Tripadvisor;
3. user conversation in the social media (e.g., Facebook).
Why and how do e-marketers evaluate the quality of information on a Web site?
Secondary and primary data are subject to many limitations; thus, marketers should use all
information with caution and with a full understanding of how the data were collected. It is
advisable to be as objective as possible when reviewing data prior to using it for making marketing
decisions – especially before using information on Web pages. The reason is that anyone can easily
publish on the Web without being reviewed by a publisher or being screened for accuracy or
appropriateness. Special care is needed when dealing with secondary data from international
sources because of cultural and data-collection differences.
What are the steps that can be taken to evaluate the quality of secondary data collected
1. discover the Web site’s author: a site published by a government agency or a well-known
corporation has more credibility than one by an unknown author;
2. try to determine whether the site author is an authority on the Web site topic: for example,
an economist from Harvard University or Merrill Lynch might have more credible
information about interest rates than a politician. Furthermore, the university’s Web site may
be more objective than the financial firm’s site;
3. check to see when the site was last updated: the more current the information is, the more
useful it will be for decision making;
4. determine how comprehensive the site is: does it cover only one aspect of a topic, or does it
consider the broader context?;
5. try to validate the research data by finding similar information at other sources on the
internet or in hard copy at the library: for example, one validation of the number of people
using the Internet might be to check the number of people with computers. In general, it is
also a good idea to compare sites that cover the same topic;
6. check the site content for accuracy: for example, if a site has lots of errors, it is a sign that
the data cannot be trusted.
Source 3: primary data
Gathering primary data is usually more expensive and time consuming than it is to gather secondary
data; on the other hand, the data are current and more relevant to the marketer’s specific problem. In
addition, primary data have the benefit of being proprietary and, thus, unavailable to competitors.
Traditional approaches to primary data collection enhanced by the Internet are: experiments, focus
groups, observation, content analysis, and survey research. In-depth interviews (IDIs) are another
important form of primary data collection, but they are better done offline because the questions
tend to be less structured and more open ended. Whether collected on the Internet or offline, all
electronic data are included in a marketing database and become part of the marketing knowledge to
be used for effective planning.
Identify the steps in a primary marketing research project.
1. research problem: some typical internet marketing research problems that electronic data
can help solve are:
26 2. research plan:
a. research approach: on the basis of the information needed, researchers choose from
among experiments, focus groups, observation techniques, and survey research, or
Web conversation monitoring, real-time, and real-space techniques;
b. sample design: researchers select the sample source and the number of desired
c. contact method: ways to contact the sample include traditional methods such as the
telephone, mail, and in person, as well as the internet and other technology-enabled
d. instrument design: if a survey is planned, researchers develop a questionnaire. For
other methods, researchers develop a protocol to guide the data collection;
3. data collection: researchers gather the information according to plan;
4. data analysis: researchers analyse the results in light of the original problem. For
quantitative research, this step includes using statistical software packages for traditional
survey data analysis;
5. distribution of findings/addition to the database: research data might be placed in the
marketing knowledge database and be presented in a written or oral form to marketing
Internet-based research approaches
Experimental research tests cause-and-effect relationships. Offline, a researcher will select subjects,
randomly put them into two or more groups, and then expose each group to different stimuli. The
researcher then measures responses to the stimuli, usually in the form of a questionnaire, to
determine whether differences exist among the groups. If the experiment has been carefully
controlled (i.e., only the experimental stimuli have been varied), group differences can be attributed
to the stimuli (cause and effect).
What is A/B testing and why is this important?
Online, marketers use experiments to test alternative Web pages, display ads, and promotional
offers. This is commonly called A/B testing: one group sees a particular ad or Web page and another
group sees a different version (A page or offer and B page). Marketers use this for improving
response rates and sales online.
What are the advantages and disadvantages of online focus groups over conventional
Focus group research is a qualitative methodology to collect in-depth information from a small
number of participants. Focus groups are often used to help marketers understand important feelings
and behaviours prior to designing survey research.
Online focus groups provide some advantages over traditional focus groups, where all participants
are in one room. First, the Internet can bring together people who do not live in the same geographic
area, such as a focus group with consumers from five different countries discussing online shopping
experiences. Second, because participants type their answers at the same time, they are not
influenced as much by what others say (known as groupthink). Finally, by using the Web
researchers can show participants animated ads, demonstrate software, or use other multimedia
stimuli to prompt group discussion.
Conversely, online focus groups can accommodate only 4 to 8 participants at a time while
traditional groups generally host 10 to 12. The reason behind the small group size is the difficulty in
managing simultaneous, overlapping (sovrapposto) conversation online. Some researchers avoid
(evitano) this problem by using online bulletin boards (bacheche) and keeping focus groups going
on for weeks. Also, nonverbal communication is lost online – in offline groups, facial expressions
can be revealed in a way that typed smiley faces do not match. Another disadvantage of online
groups is the authenticity problem. Without seeing people in person, it is difficult to be sure they are
who they say they are. For example, it is quite common for children to pose as adults online. This
dilemma can be solved by verifying respondent authenticity and requiring password entry to the
group. Technical problems can also stall (bloccare) an online group. Finally, one study compared
face-to-face, telephone, and online focus groups and found that people used stronger positive and
negative words online than in other modalities.
Observation research monitors people’s behaviour by watching them in relevant situations. Some
researchers believe that actions speak louder than words, making customer observation stronger
than surveys that record people’s statements from memory about what they believe and do. Of
course, as a qualitative approach, observations of a small number of people cannot be used to
describe how all people might act.
An interesting and important form of observational research, available only on the Internet, involves
monitoring consumers’ conversation in social networks, bulletin boards, and other social media.
Really Simple Syndication (RSS) feeds are an extensible markup language (XML) format designed
for sharing headlines and other Web content. When individuals subscribe to a blog or other social
media site via RSS, the content goes to readers’ desktops as it is published. Customers can read the
RSS feeds by downloading a free reader. This is the way that most companies follow influential
bloggers in their industry and watch for posts about their company and brands so they can add
comments or react when crises hit.
Content analysis is the examination of text or images in order to evaluate the communication
content. This research method can be quantitative or qualitative.
Market researchers can learn many things about Internet users through content analysis, such as:
consumer characteristics (e.g., Facebook profiles), customer preferences (e.g., company and
competitor site traffic and Twitter streams) and brand images (e.g., product review and rating sites
and Google group discussions).
Social networks, such as Twitter, product review and ratings sites, and message boards, such as
Google Groups, are the best places to conduct market research and monitor conversation about
Online survey research
E-marketers conduct surveys online in several ways:
• intercept sampling is used when Web site users are browsing or shopping on a Web site and
get a pop-up window asking them to participate in a survey. This is parallel to offline
intercept surveys when interviewers stop potential respondents in a public place asking them
to answer survey questions;
• direct targeting occurs when organizations send invitations to individuals via e-mail with a
link to a survey form on the Web. Organizations either draw a probability sample of e-mail
28 addresses or contact specific people from their databases. They can also purchase a list of e-
mail addresses of a specific demographic, geographic, or professional group from a vendor
(and addresses based on many other segmentation variables);
• panels are opt-in communities with a large number of people who have agreed to respond to
surveys, usually for some incentive;
• bulletin board/groups are sometimes asked to complete surveys or respond to new products.
Online survey research has many advantages over traditional contact methods:
• online survey research is fast and inexpensive: questionnaires are delivered nearly
instantaneously worldwide over the Internet without paying for postage or an interviewer.
Those who complete the questionnaires generally do so in the first three days, making the
entire process very quick. It is also easy to send multiple reminders if using e-mail
• Web surveys reduce errors, the complexity and time involved for respondents. In addition,
respondents enter their answers, which eliminate data entry errors found in traditional
methods when converting answers from paper questionnaires;
• respondents answer questions more honestly and openly on a computer than when an
interviewer is present – and will answer sensitive questions about private matters over the
Internet. The reason may be that the computer is impersonal and no one is watching what
the respondent types.
Some disadvantages are:
• sample representativeness and measurement validity. Marketers cannot draw a scientific
probability sample because no list of Internet users currently exists. In contrast, researcher
employing in-person or mail contact methods have population lists and can draw probability
samples. Without the ability to draw a random sample, researchers cannot generalize results
to the entire population being studied;
• measurement issues: first, because of many different browsers, computer/tablet/mobile
screen sizes, and resolution settings, researchers worry that colours will look different and
measurement scales will not display properly online;
• decline of online research response rates and quality of online survey data: declining
response rates are due to questionnaires being too lengthy and respondents getting
invitations too frequently. The solutions are to shorten the questionnaires and make them
more engaging to respondents. It also helps when respondents have a special interest in the
topic (e.g., you would be more likely to respond to a survey about your favourite music band
than one about politics in some other country);
• the firm has no control over who responds (respondent authenticity);
• when researchers use e-mail to solicit responses to Web-based questionnaires, it may be
perceived as spam unless the sample consists of a firm’s customers.
Online panels are also called opt-in communities. Usually they are paid and often receive free
products as well. Panel participants complete extensive questionnaires after being accepted, so that
researchers have information about their characteristics and behaviour. This way, when panel
members are asked to test a product, are given questionnaires to complete, or are sent coupons and
other promotions, researchers can correlate results with already collected demographic data. In turn,
the research firms can use shorter questionnaires, thus increasing response rates (i.e., no need for
demographic questions). An advantage of large panels is that smaller groups of members can be
targeted based on their behaviour or demographics.
Panel access is often more expensive for client firms than traditional methods of sample generation.
Also, because research firms sometimes recruit panel members in non-scientific ways, the
generalizability of survey results from panels is questionable. Large numbers of respondents and
high response rates minimize this problem, however. One other problem with panels is that they are
paid for their participation and sometimes cheat (imbrogliano) to get the participation money.
Ethics of online research
Many companies conducting marketing research on the Web have considered its “gift culture” and
decided to give something (money or free products) to respondents as appreciation for participating.
Marketers face several other ethical concerns regarding survey research on the Internet.
1. Respondents are increasingly upset at getting unsolicited e-mail requesting survey
2. Some researchers collect e-mail addresses from Internet forums and groups without
3. Some companies conduct surveys for the purpose of building a database for later
4. Privacy of user data is a huge issue in this medium, because it is relatively easy and
profitable to send electronic data to others via the Internet.
Client-side and server-side data collection
Client-side data collection refers to collecting information about consumer click behaviour right at
Web analytics uses site log software to generate reports on numbers of users who view each page,
the location of the site visited prior to the firm’s site, and what users buy at a site – fundamental
elements in server-side data collection. For example, because of its online registration requirement,
Expedia can track visitors’ ticket purchases, browsing patterns, and how often they visit the site. It
uses this information to send special offers to customers as well as to offer services such as the fare
What is real-space data collection? Why is it important?
Real-space primary data collection refers to technology-enabled approaches to gather information
offline that is subsequently stored and used in marketing databases. The most important real-space
techniques are bar code scanners and credit card terminals at brick-and-mortar retail stores.
Offline data collection is important for e-marketing because these data, when combined with online
data, paint a complete picture of consumer behaviour for individual retail firms.
Product sales data gathered by scanning the UPC at retail stores are currently used primarily for
inventory management. As UPC data go from the cash register into the computer, the software
reduces accounting inventory levels automatically and sends communication to suppliers for
replenishment of physical goods. This immediate inventory is quite efficient for retailers,
wholesalers, and manufacturers.
Marketing databases and data warehouses
Regardless of whether data are collected online or offline, they are moved to various marketing
databases. Product databases hold information about product features, prices, and inventory levels;
customer databases hold information about customer characteristics and behaviour. Transaction
processing databases are periodically copied into a data warehouse. Data warehouses are
repositories for the entire organization’s historical data (not just marketing data).
Because Web sites are so complex, often including thousands of pages from or for many different
corporate departments, content management is an important area. Many software vendors, including
Microsoft, are attempting to solve the Web site maintenance problem with their software.
What is cloud computing and how does it help marketers?
The current trend in data storage is toward cloud computing: a network of online Web servers in
remote locations from the company, used to store and manage data. Authorized employees can
access or upload data from any Internet connected device. The advantages to companies include no
investment cost for server space, no software investment to manage the data, and access to free
Individuals can also access cloud computing, such as the iCloud for storing all the data on an Apple
device (photos, contacts, calendar, and so forth) and retrieving it on any Apple device.
Data analysis and distribution
Four important types of analysis for marketing decision making include data mining, customer
profiling, RFM analysis (recency, frequency, monetary value), and report generating.
Data mining is the extraction of hidden predictive information in large databases through statistical
analysis. For example, a marketer might want to know whether a product’s heaviest users tend to
purchase more during particular months, or how many people in a social network share applications
Give an example of how data mining uncovers new knowledge.
Patterns uncovered by marketers help them to refine marketing mix strategies, identify new-product
opportunities, and predict consumer behaviour. Using data mining helped Fingerhut, the $2 billion
catalogue retailer, discover that customers who move their residence triple their purchasing in the
12 weeks after the move. Data mining also revealed that movers tend to buy furniture, telephones,
and decorations but not jewellery or home electronics. Fingerhut used this information to create a
special Mover’s Catalogue, selecting appropriate products from among the 15,000 items it sells. In
addition, it stopped sending other specialty catalogues to movers during the 12-week window.
Customer profiling uses data warehouse information to help marketers understand the
characteristics and behaviour of specific target groups. Through this process, marketers can really
understand who buys particular products and how they react to promotional offers and pricing
What are three criteria that RFM analysis scans a database for?
RFM analysis scans the database for three criteria. First, when did the customer last purchase
(recency)? Second, how often has the customer purchased products (frequency)? Third, how much
has the customer spent on product purchases (monetary value)? This process allows firms to target
offers to the customers who are most responsive, saving promotional costs, and increasing sales.
Knowledge management metrics
Marketing research is not cheap. Marketers use two metrics for measure the investments:
• ROI: companies want to know why they should save all those data. For hardware storage
space (either on site or in the cloud), ROI usually means total cost savings divided by total
cost of the installation.
• Total Cost of Ownership (TCO): includes the cost of hardware, software, and labour for data
storage and other items such as cost savings by reducing Web server interruption.
31 7 Connected Consumers Online
Name several consumer behaviour theories that apply both online and offline.
Many consumer behaviour principles that describe offline buying behaviour also apply to online
marketing. For example, the following consumer behaviour models apply to all buying decisions:
1. Consumers experience all or many of the buying process steps: need identification,
information search, alternative evaluation, purchase, and post purchase activities.
2. Consumers also go through a hierarchy of effects model – from first becoming aware of the
product or brand, then developing an attitude as positive or negative, and possibly
concluding with some behaviour, such as registering online or purchasing the product.
3. Marketers often use an AIDA model to entice (attirare) buyers: attention, interest, desire,
and action. Japan’s top ad agency, Dentsu, Inc., modified this model for the social media
environment by replacing “desire” with “search” and adding “share” with others: attention,
interest, search, action, and share.
4. Word of mouth has been used forever when people share their product experiences with
friends and family; however, an online share can quickly reach the entire connected world.
Identify and describe the six consumer behaviour theories described in Dr. Marsden’s work.
Consumer online buying behaviour has many additional characteristics that differ from offline
behaviour. Dr. Marsden devised (ha ideato) an interesting explanation of social commerce buying
behaviour based on consumer psychology. Key theories follow:
1. Scarcity: when a product is scarce, it will create more demand, such as a discount offered for
a “limited time only”. Groupon uses this principle when offering the “deal of the day”.
2. Popularity: formerly called the bandwagon effect, consumers are more likely to purchase a
brand that their friends or many others like and use (the most popular brand in its category
gathers more buyers). This is why many people send requests to “Like” their Facebook
3. Affinity: consumers are persuaded by friends and family because they like and trust them.
Viral marketing is based on this principle – you are likely to watch a YouTube video when
someone you trust sends the link to you or purchase something that your social network
friends highly recommend.
4. Authority: if a celebrity or other famous figure uses and recommends a particular brand,
social network, or Web site, it will become more popular. If you like Lady Gaga and she
recommends a new artist, you are more likely to purchase a CD from that artist.
5. Consistency: when individuals hold particular beliefs and attitudes about a product, it is hard
to change them. Also called cognitive consistency, this explains habitual buying patterns or
consistently using the same online news or weather site for information. It also explains why
you take a chance on Lady Gaga’s recommendation if you like her, and don’t if you dislike
6. Reciprocity: do me a favour and I owe (essere debitore) you. This is why free product
samples in grocery stores or 30-day free software trial downloads tend to increase product
sales of that item around the sampling period.
Inside the Internet exchange process
Many additional stimuli, characteristics, and processes explain consumer buying behaviour. Stimuli
that can motivate consumers to purchase one product rather than another include marketing mix
tactics and cultural, political, economic, and technological factors. Individual buyer’s characteristics
such as income level and personality also come into play, along with other psychological, social,
and personal aspects.
To create effective marketing strategies, e-marketers need to understand what motivates people to
buy goods and services, both in the short term and in the long term (i.e., develop brand loyalty).
What is an exchange?
Exchange is a basic marketing concept that refers to the act of obtaining a valued object from
someone by offering something in return. When consumers purchase a product, they are exchanging
money for desired goods or services. However, many other types of marketing exchanges can be
made, such as when a politician asks citizens to exchange their votes for his or her services.
It is critical for e-marketers to understand the current state of ever-changing Internet technology if
they want to entice consumer exchanges. Three important developments affecting online consumer
behaviour today are: home connection speeds, the changing landscape of digital-content receiving
devices such as smartphones, televisions, and many more, and Web 2.0 technologies.
Concerning home connection speeds, consumers connecting with broadband exhibit different online
behaviour than do those accessing from a narrowband mobile handled device. Broadband users
enjoy more multimedia games, music, and entertainment because these download quickly. At the
other extreme, those accessing with handled devices such as small-screen smartphones tend to focus
on texting, Facebook, news, weather, stock quotes, and other data services that are low in graphics.
Concerning receiving devices, traditional paper newspaper and magazine readership is still on the
decline. Television appliances are no longer the killer receiving device and the number of TV
households connected to satellite services declined in 2012. Time shifting is also of interest: DVRs
(digital video recorder) offered by cable companies allow owners to record digital programs and
send to their PCs over the in-home wireless network. Finally, streaming music, television, and video
are gaining ground as people cut the cables and expand the use of cloud computing.
What are Web 2.0 technologies?
The term Web 2.0 is often used synonymously with social media and refers to second-generation
internet technologies behind blogs, wikis, social networks, product review sites, image and video
upload sites, and folksonomies (the technology behind classification techniques for online media,
such as collaborative tagging or social bookmarking).
The key is to learn which devices and technology applications an organization’s customers and
prospects own and prefer to use for connecting. Companies send data to customers’ digital-content
receiving devices such as the PC/laptop, electronic pager, fax machine, TV, game console box,
smartphone and many other devices such as the connected refrigerator.
Social and cultural contexts
The internet allows individuals and organizations to discuss products with each other online and to
help themselves to information, products, and practically everything they want when and where
they please. For example, consumers walk into brick-and-mortar car dealerships after chatting
online with strangers about options and carrying printed information sheets on automobile options
Thus, power is shifting to consumers, and marketers are not as successful with interrupt
communications (such as television commercials) as they are when they draw consumers and
engage them with relevant content. Three cornerstones for attracting today’s customers online are
reputation, relevance, and engagement.
Brand image and reputation are based on the market’s perception. Companies with good reputations
are authentic, are honest, apologize for errors, and follow through on brand promises. In reward,
they receive more recommendations from customers, enjoy longer and more profitable
relationships, and sell more products and services. One of the most important social trends is that
oftentimes consumers trust each other more than they trust advertising or companies, and when the
product conversation turns negative it can hurt a company’s reputation.
What are twinsumers and how can marketers use this concept?
Twinsumers are consumers that share similar opinions, buying patterns, entertainment, and other
behaviours. They can be people you know in the physical world or online connections. For
example, travelling consumers often check Yelp for local restaurant reviews from others before
deciding where to eat. It is not enough for marketers to just observe and listen: marketers have to
join the conversation and learn from customers.
Consumers don’t hate all advertising – they just don’t like being interrupted with irrelevant
communication. The large number of online users who opt in to receive e-mail messages from
companies they patronize enjoy and welcome relevant communication. Marketers use many
methods, such as behavioural targeting and keyword advertising, to present relevant offers to
What does customer engagement mean?
The key to drawing Internet users is to provide relevant content or entertainment. The three pillars
of customer engagement are:
1. content engagement: the more relevant, entertaining, and emotion-laden (carico di
emoxioni) the content, the more likely it will be to involve the audience;
2. media engagement: media engagement is the context for the content. Social media venues
such as Twitter, Facebook, and applications for the iPhone provide a compelling
(coinvolgente) environment for attracting and engaging customers;
3. engagement marketing activities: are simply the sequence used to draw users to the medium
and through the content. The best activities help consumers build a personal association
with the brand, such as when they can customize the products, comment on YouTube
videos, insert their friend’s images into brand-related content, and much more.
Other key trends
The following general social/cultural trends also have a huge effect on online exchanges:
1. Information overload: too much information overwhelms (sopraffare) consumers. It creates
an attention economy – the idea that information may be infinite, but the demand for it is
limited by human capacity. This serious problem is compounded (aggravato) by the Internet
and is one reason why consumers have little tolerance for spam (unsolicited e-mail) and
look to twinsumer recommendations for great content in videos and social media.
2. Multitasking: multitasking speeds up normal processes and lowers attention to each task.
By example, the Millenials, a consumer segment born between 1974 and 1994 (also called
Generation Y), are great multitaskers, likely to watch a television screen at home, text a
friend on the cell phone, and check sports scores via the internet on their iPad at the same
3. Home and work: the boundaries between home and work are dissolving. Many U.S. Internet
users have access to the Internet both at home and at work.
4. I want what I want when I want it: consumers want to view online content and do shopping
anywhere and anytime. Convenience is critical for busy people.
5. Online oxygen: this term means that an increasing number of consumers cannot do without
their Internet access.
34 6. Connectivity: being connected means everything in this social media world. Marketers who
develop applications to help customers build their connections in an entertaining way will
win positive brand recognition.
7. In the Know: people in the know have access to information that others don’t, such as the
coolest iPhone application or which band is playing at that joint near campus. These
consumers are seen as insiders (ben informati) when they can whip out (estrarre) a mobile
device, find something quickly, and show that they are experts and are at the cutting edge
8. Self-service: empowered customers want to log on, find information, make purchases, track
package shipments, check their accounts, and make inquiries anytime, 24/7. Furthermore,
they want to do these tasks on a computer via e-mail, on the Web or on a smartphone – and
they want all these methods to produce identical information.
9. Privacy and data security: these are paramount (importantissimi), especially in Europe.
Customers want marketers to keep their data confidential and to ask permission before
sending commercial e-mail messages. Conversely, consumers are putting personal data in
social network profiles all over the Internet, perhaps without realizing or caring about the
public nature of this information.
Individual characteristics and resources
Individuals vary in their online behaviour. Some of this variance is based on differences in
characteristics, such as demographics and attitudes, and some is based on the resources consumers
bring to the exchange process.
What individual characteristics influence online behaviour?
Internet users have several characteristics that differentiate them from nonusers, and similarly, users
differ in their needs and desires. The first variable involves demographics (age, income, education,
ethnicity, and gender) that affect Internet use.
Second is a positive attitude toward technology. Internet users who purchase products online tend to
hold the attitude that technology helps make their lives richer and easier.
Third, online skill and experience play an important role in the exchange process. Consumers who
have been online for more than three years or have broadband connections tend to be more adept
than new users at finding information and product quickly, resulting in less frustration and less
shopping cart abandonment. Finally, social media veterans tend to use Twitter, while beginners start
Next, online shoppers tend to be more goal oriented than experience oriented while shopping. Goal-
oriented behaviour often includes going to a specific Web site with a purpose mind, or searching for
the lowest price for a particular product. Experience orientation relates to having fun, bargain
hunting, or just surfing to find something new. Goal-oriented individuals appreciate the online
product selection, convenience and information availability. When consumers are looking for
experiential shopping, it makes sense that they would find this element more often in brick-and-
mortar stores than online. However, social shopping and sharing sites may increase the experience
orientation for many online shoppers.
What are the three costs that constitute a consumer’s resources for exchange?
Consumers perceive value as benefits minus costs. These costs constitute a consumer’s resources
for exchange: money, time, energy, and psychic costs.
1. Monetary costs: consumers need enough discretionary income to exchange for the goods
and services they want. What makes the Internet exchange different, however, is that
consumers usually can’t pay cash or don’t write paper checks for online transactions.
Instead, consumers pay by credit card, debit card, electronic check, or smart card. However,
not everyone is able to acquire or wants a credit card. This problem is big for e-marketers
35 targeting the huge teen market online and for those targeting consumers in countries with
low credit card availability.
Consumers with bank accounts can use debit cards or pay by electronic check. Electronic
check (also called digital money) work this way: the consumer sets up an account and
authorizes a third party’s Web site (such as PayPal) to pay a specified amount and withdraw
(prelevare) funds from the user’s checking account. Finally, smart cards are used in many
countries and are becoming popular in the United Kingdom. Also called splash plastic, smart
cards have an electronic chip that can be coded to hold a certain amount of funds, payable by
the bank of by a depository company.
2. Time costs: time poverty is a problem for today’s consumers, so they want to receive
appropriate benefits for the time they spend online. Time resource is a critical topic because
online attention from consumers is a desirable and scarce commodity. Some believe that
consumers pay more focused attention to Web sites than to the content in any other medium,
except perhaps e-mail and text messages. When in front of a television, consumers are easily
distracted by other people or activities in the environment. The same holds true for the
passivity of radio listening. Consumers seem to pay more attention to print media but may
still flip pages quickly.
Whether consumers are in a goal-oriented or experiential shopping trip online, they are
3. Energy and psychic costs: are closely related to time resources. Sometimes it is just too
much trouble to turn on the computer, log on to the Internet, and check e-mail, especially for
dial-up users. This factor accounts (giustifica) for the rising popularity of short text
messaging (SMS) via cell phones and other mobile devices. Smartphones allow users to
browse the Web or e-mail anywhere, anytime.
Consumers apply psychic resources when Web pages are hard to figure out or when facing
technological glitches (problemi tecnici). At one time or another, all users abandon carts due
to technical problems and other issues. However, much of the hassle (scocciatura) for
today’s online shopper involves unexpectedly high shipping or other transaction costs. Other
reasons for shopping cart abandonment are reluctance to input credit card and other personal
information and unanswered questions about the product or return policies.
How can e-marketers facilitate Internet exchange?
Browser favourites and social bookmarks (segnalibri) help consumers quickly jump to their
favourite online retailer when looking for a product or making a purchase. In addition, e-mail
messages or social network widgets often contain hyperlinks to bring consumers directly to specific
information, news reports, or advertised specials. Automated e-mails facilitate the exchange
process, like that of Amazon which sends consumers a link to a new book by a previously
People do only six basic things online:
1. Connect: unlike any other medium, the Internet allows consumers to interact with
individuals and organizations using multimedia in two-way communication. Nearly all
Internet users send e-mail. E-mail is still the Internet’s killer app worldwide, in spite of spam
and social media. Consumers communicate online with e-mail, text messages, Tweets, and
Facebook wall posts because it is an inexpensive and convenient way to keep in touch, and
because it is usually text based so it can be easily accomplished with a slow modem or over
a wireless handheld device. In addition, consumers make new connections with people and
36 business partners they meet online that sometimes carry over to (continuano) the physical
Consumers also spend time instant messaging, use the Internet to make phone calls (Skype),
and find people to date online. Consumers exchange time and energy to build relationships
with friends and family, and even to work out (risolvere) problems with companies.
In what ways do consumers create content for the Web?
2. Create: this need to connect was one springboard (trampolino di lancio) for the Web’s social
networking sites, where users can create profiles and connect with friends, business, and
colleagues. Content creation occurs when these users upload pictures and other content on
these sites. It is the highest form of user engagement because users are participating by
adding to the Web’s offerings.
3. Enjoy: many consumers use the Internet to enjoy entertainment. One of the Internet’s big
promises is audio and visual entertainment. The numbers of users who watch video online
and download music will continue to increase in the future for the following reasons: first,
all television content is now transmitted digitally. Second, devices such as the DVR allow
TV programs to be delivered on demand. In addition, services such as Netflix store
programming for Internet delivery to either television or PC anytime. Third, consumers are
cutting the cable and using Wi-Fi for their TV service.
4. Learn: consumers access information to learn things online such as news, driving directions,
travel information, jobs, weather, sports scores, and radio broadcasts over the internet. The
majority of Internet users use search engines and 53% use Wikipedia.
5. Trade: most consumers shop, buy, or conduct other transaction-oriented activities online.
The majority of Internet users seek information online prior to buying products. Sometimes
they use this information to purchase online, and sometimes they purchase at a local brick-
and-mortar store – many consumers purchase outside of the Internet based on information
they get online.
6. Give: many people create art, text, and other things purely for the benefit of others.
“Generation Generosity” is one of the top global consumer trends. This includes financial
donations as well as conversation gifts of care and sympathy online. At least a quarter of
American consumers donates to causes via the Internet or helps others in need online.
8 Segmentation, Targeting, Differentiations, and Positioning Strategies
Define the terms market segmentation, targeting, and positioning.
Marketing segmentation is the process of aggregating individuals or businesses along similar
characteristics that concern the use, consumption, or benefits of a product or service. The result of
market segmentation is groups of customers called market segments. Segments are worth targeting
separately only when they have bigger differences between them than within them. For example, if
Internet users behave differently at work than at home, marketers can capitalize on these differences
by targeting each as a separate segment.
Market targeting is the process of selecting the market segments that are most attractive to the
company. Some criteria companies use to select segments for targeting include accessibility,
profitability, and growth potential.
Positioning is a strategy to create a desired image for a company and its products in the minds of a
chosen user segment (consumers, business or government buyers).
Three important markets that both sell to and buy from each other are: businesses, consumers, and
governments. After business-to-consumer (B2C) and business-to-business (B2B) markets, the
business-to-government (B2G) and consumer-to-consumer (C2C) markets are where most e-
business activity occurs.
The business market involves the marketing of products to businesses, governments, and
institutions for use in the business operation, as components in the business products, or for resale.
The online B2B marketing is huge because a higher proportion of companies are connected to the
Internet than consumers, especially in developing countries.
The U.S. Federal government is the world’s largest buyer. Businesses wishing to sell to
governments face challenges unique to this market. Government agencies have many rules for
suppliers to follow regarding qualifications, paperwork, and so on. Additionally, companies often
must compete to be on the government list of approved suppliers, and then compete yet again for
specific work contracts through a bidding process.
The consumer market involves marketing goods and services to the end consumer.
Define the four main segmentation bases and list at least two segmentation variables for each.
Marketers can base their segmentation of consumer markets on demographics, geographic location,
psychographics, behaviour, and many combinations of these.
Companies often combine bases and focus on categories such as geodemographics (geography and
demographics). Marketers can build segments using any combination of variables that make sense
for their industry.
In any geographic market, what factors must be noted prior to planning Internet strategies
Product distribution strategy is a driving force behind geographic segmentation. A consumer goods
online retailer will want to reach only customers in countries where it distributes its products.
Similarly, companies offering services online will only sell to geographic areas where they can
provide this service and follow-up customer assistance in the appropriate language. Before an
organization decides to use the Internet channel, it must examine the proportion of Internet users in
its selected geographic targets. For example, would it make sense to build a Web site that serves
citizens of Samoa, where the Internet adoptions rate is only 6.6%?
Why are millennials and kids important market segments for e-marketers? Describe the traits
of the millennial market segment.
Two market segments that have recently caught the attention of e-marketers are millennials and
kids. These are important because they represent the Internet’s future. Millennials are confident,
connected, and open to change. They are the hyper connected generation. Millennials are able to
handle multitasking and information overload better than older intent users because they grew up
with the Internet. They are heavy social networking users, sleep with their cell phones, and live on
Millennials are an important market segment because they are the first generation able to control
information quickly, use many technology gadgets at once, and totally ignore marketers. More than
half of the Millennials watch television and use the Internet at the same time. They use many media
channels, such as instant messaging, e-mail, Facebook chat, iPods or other MP3 players, online
virtual games, and virtual worlds.
Also kids are an important market segment. The biggest activity for the under 11-year-old segment
is online video watching. They also play games online. These kids often know their way around the
computer, cell phone, or other internet-connected device before they learn to read or ride a bike.
Many parents worry about the security and privacy of their kids online but they can’t stop marketers
from targeting this huge potential new market. Instead, many parents censor Web content for
children. Kids are responsive to marketing messages; however, e-marketers must be careful not to
irritate their parents who might perceive promotional messages as manipulation.
User psychographics include personality, values, lifestyle, activities, interests, and opinions (AIO).
Personality is individual characteristics and habits. Values are deep convictions such as religious
and green environment beliefs. Lifestyles and activities refer to nonproduct-specific behaviour such
as playing sports, writing product reviews online, or eating out. Interests and opinions are attitudes
and beliefs people hold. As an example, some people believe that Facebook is a waste of time, and
others think they could not exist without e-mail.
Give examples of some online communities formed around social media and Web sites.
The Internet is ideal for gathering people from all corners of the globe into communities with
similar interests and tasks. Social media and other online communities attract users, who then post
their comments and profiles and upload content for other to see. There are 10 types of online
communities ripe with marketing opportunity.
Perhaps the most important type is social networking – the practice of expanding the number of
one’s business and social contacts by making connections through individuals online. LinkedIn is a
great example of a professional network. People trust other like them more than many company
professionals, so social networking and other communities will continue to grow in importance.
Three ways can be used to target online communities:
1. a company can build a community at its own Web site through online discussion groups,
bulletin boards, and online events or through company-owned social network pages;
2. companies can advertise on another company’s community site or via blog comments and
e-mails to community members;
3. many companies actually join the communities and listen and learn from others who are
talking about their industry.
Why would an e-marketer want to create a Web site for building a community?
Several advantages and disadvantages characterize community targeting online. When an
organization builds and maintains the community, it can present products and controlled messages
customized to the group’s interests. Communities are good places for companies to learn about
customer problems and suggestions. Conversely, online community conversation will often gather
negative product postings and offensive language. When companies sponsor a community, they
must watch the content; however, if they edit it too heavily they will discourage future postings.
Finally, it takes a lot of time to participate in and monitor social media and other online
Attitudes and behaviours
Attitudes are internal evaluations about people, products, and other objects. They can be either
positive or negative, but the evaluation process occurs inside a person’s head. Behaviour refers to
what a person physically does, such as talking, eating, registering at a Web site, posting a comment
on a blog, “Liking” a Facebook page, or visiting a Web site to shop or purchase a product. However,
marketers do not include product-related behaviours in psychographic segmentation, but product
behaviours are such a vital segment descriptor that they form an entirely separate category.
What is technographics? Which three variables are combined to make technographics work?
Forrester Research measures consumer and business attitudes toward technology with a system
called Technographics. Consumer Technographics discovers how consumers think about, buy, and
use technology in many categories of devices and media in health care, financial services, retail, and
travel industries, among others.
Technographics work combining three specific variables. First, researchers ask questions to
determine whether a person is optimistic or pessimistic toward technology. Next, they measure a
user’s income level because it is an important determinant of online shopping behaviour. Finally,
they query users about their primary motivation for going online.
Technology optimism declines with age. Older users tend to have a more negative attitude toward
technology. Men tend to be more optimistic about technology, and peer pressure can increase
optimism in all demographic groups. That is, when friends discuss social media, texting, and Web
sites, pessimists often rethink their positions. With regard to income, certain low-income groups
such as college students and young families are also optimistic about technology.
How do these findings translate to online purchasing? First, low-income pessimists are not a good
target for e-commerce companies. Second, early adopters are high-income technology optimists,
thus identifying the first consumers to shop online. Conversely, laggards are low-income pessimists
who will be last to shop online.
List some of the influencers in today’s market scenario.
Many online marketers target influential people who are opinion leaders online. The field of
influencers include the following:
40 • online journalists: traditional journalists operating online can also influence readers with
• industry opinion leaders: these vary by industry, but commonly include industry analysts,
traditional journalists, prominent bloggers, and CEOs of leading firms;
• influential social network authors: when a famous person tweets about a restaurant or hotel
he likes, readers pay attention.
Individuals often post videos or images of product malfunctions online. Of course, they also post
positive product comments but those don’t tend to get the same high readership.
It is important for marketers to determine who the influential are in their industry. They must also
decide how to entice them to write about the company/products and to monitor for product and
company mentions online.
Two commonly used behavioural segmentation variables are benefits sought (desiderati) and
product usage. Marketers using benefit segmentation often form groups of consumers based on the
benefits they desire from the product.
Product usage is applied to segmentation in many ways. Marketers often segment by light, medium,
and heavy product usage. Another approach is to categorize consumers as brand loyal, switchers
(who don’t care which site they use), and nonusers of the product.
If marketers can form segments based on the benefits sought by users, they can design products and
services to meet those needs. To determine benefits sought marketers can evaluate online activities.
Marketers also check which Web sites are the most popular.
Marketers also segment Internet users according to many technology-use characteristics such as
smartphone, tablet, or PC access and which browser they use. Two important Internet usage
• mobile access: the type of internet connection and the information-receiving appliance affect
usage behaviour. The main two reasons cell owners use the Internet are because it is
convenient and the cell is always with them.
Wireless users do a lot more than just talk on their cell phones and receive e-mail. They send
and receive all kind of voice, text, video, music, and graphic data – anyplace, anytime.
Wireless users also track information on package shipment, stock quotes, airline schedules
and changes, and news;
• online engagement level: many users actively participate by adding content for others to
view. There are several forms of content creation: uploading photos, rating products, tagging
online content, posting comments to a blog, creating a blog, and creating an avatar for a
virtual world. Forrester Research categorized social media users according to usage
segments such as creators, conversationalists, and critics – the three most highly engaged
segments online. Curators are one important segment not in this typology. Curators
traditionally are people who handle the art and other collections in museums and galleries.
Online, curators gather other people’s content and upload or share it on their social media
sites. Pinterest is one image-sharing site that is completely populated by curators.
Industry-specific usage segments
Segmenting by usage varies widely from one industry or business type to the other. For example,
research indicates that visitors to car sites behave differently from visitors to other e-commerce
sites. Forrester identified three visitor segments for car Web sites:
• explorers are the smallest group, but almost half buy their new vehicle within two months of
visiting a car site. They want a convenient, explicit buying process;
• off-roaders tend to do a lot of research online and, subsequently, are likely to purchase in an
• cruisers visit car sites frequently, but only 15% buy a car in the short term. Still, they have a
strong interest in cars and heavily influence the car purchases of others, making them
Targeting online customers
After reviewing many potential segments, marketers must select the best for targeting. For this
selection, they review the market opportunity analysis, consider findings from the SWOT analysis,
and generally look for the best fit between the market environment and the firm’s expertise and
Next, e-marketers select a targeting strategy. This might include deciding which targets to serve
online, which in the brick-and-mortar location, and which via catalogue mailing. The Internet is
especially well suited (si adatta) for two targeting strategies:
1. niche marketing occurs when a company select one segment and develops one or more
marketing mixes to meet the needs of that segment;
2. micromarketing, also know as individualized targeting, occurs when a company tailors all or
part of its marketing mix to a small number of people. Taken to its extreme, it can be a target
market of one person.
The Internet’s big promise is individualized targeting: giving individual consumers exactly what
they want at the right time and right place.
Prior to designing any marketing mix strategies, the company makes differentiation and positioning
decisions based on target market needs and competitive offerings. The goal is to obtain a differential
advantage: 1) a property of any product that is able to claim a uniqueness over other products in its
category. To be a differential advantage, the uniqueness must be communicable to customers and
have value for them. The differential advantage of a firm is often called its distinctive competencies,
and 2) advantage unique to an organization; an advantage extremely difficult to match by a
competitor. In short, differentiation is what a company does to the product, as opposed to
positioning, which is what it does to the mind by convincing the market that the product has a
Using examples, specify some dimensions by which companies can differentiate their offerings
on the Internet.
A company can differentiate its offering along many dimensions, for example:
• product innovation: Pinterest was a brand new concept online: saving images online and
creating an online bulletin boards, called a pinboard;
• mass customization: Blue Nile has very different features compared to other similar
jewellery sites because visitors can customize diamond rings and other jewellery online;
• service differentiation: Amazon excels in customer service;
• customer relationship management (CRM): CRM is closely related to service differentiation
and involves gaining a 360-degree view of the customer through many different touch
• personnel differentiation;
42 • channel differentiation: Netflix differentiates by offering streaming television programming
and movies to internet-connected devices, such as televisions, tablets, computers, and
• image differentiation;
• site atmospherics; this involves a Web or social media page that is user-friendly, provides
appropriate content, and has a great visual design. Companies can differentiate their sites
through graphic design, typography, scaling for smartphone/small-screen viewing, social
media integration (e.g., log in with Facebook), and advanced technology behind the sites;
• user-generated content (UGC): a company can differentiate by using effective
crowdsourcing to generate content or simply by providing an active online space for users to
post comments and ideas. Starbucks did an excellent job with My Starbucks Idea, inviting
customers to propose new products, experience, and service or store improvements and vote
for the best ideas on a dedicated Web page;
• efficient and timely order processing: when you order something online, sometimes it
arrives in a very short time and the company sends several confirmation e-mails to update
the delivery status.
Online positioning bases
The first step in positioning is to determine the product category in which the brand competes. For
example, when tablets were first introduced, it was unclear whether they were competing with
laptops or smartphones. Once the company decides who the direct competition is, then it determines
whether or not the brand is differentiated in that product category and thus has a competitive
advantage to form the basis for competitive positioning.
E-marketers often position based on technology (the new iPad tablet or the smartphone with the
most apps), benefits (fastest product delivery from a Web site order), user category (Nick is one of
the most popular sites for kids), or competitive position (the Android is less expensive than an
43 9 Product: The Online Offer
Many products capitalize on Internet properties
A product is a bundle of benefits that satisfies the needs of organizations or consumers and for
which they are willing to exchange money or other items of value. The term product includes items
such as tangible goods, services, ideas, people, and places. All of these can be marketed on the
Some new products such as search engines, smartphone apps, and social networks are unique to the
Internet, others such as music simply use the Internet as a distribution channel.
To create new products, organizations begin with research to determine what is important to
customers and proceed by designing strategies to deliver more value than do competitors.
Creating customer value online
Companies must employ strategies that result in customer value. Value = Benefits – Costs. First,
value is the entire product experience. It starts with a customer’s first awareness of a product,
continues at all customer touch points (including things such as the Web site experience and e-mail
from a firm), and ends with the actual product usage and postpurchase customer service. It even
includes the compliments a consumer gets from friends while whipping out (tirare fuori) that iPad,
or the fun he or she has when messaging friends on Skype or Facebook. Second, value is defined by
the mental beliefs and attitudes held by customers. Third, value involves customer expectations; if
the actual product experience is worst than their expectations, customers will be disappointed.
Fourth, value is applied at all price levels.
The Internet can increase benefits and lower costs, but it can also work in reverse.
As Internet technology evolves, user needs change, and the opportunities continue to expand. To
capitalize on these opportunities, marketers must make five general product decisions that comprise
its bundle of benefits to meet customer needs: attributes, branding, support services, labelling, and
Product attributes include overall quality and specific features (colour, taste, style, size, and online
speed of service, or the ability to connect and personalize). Benefits, on the other hand, are the same
features from a user perspective.
Mass customization is a very important benefit that occurs online. The Internet offers users the
unique opportunity to customize products automatically without leaving their keyboards. For
example, Blue Nile, an online jewellery retailer, allows Web users to select from among many
gemstone features and pick a ring setting to match.
User personalization is another form of customization. Through Web site registration and other
techniques, Web sites greet users by name and suggest product offerings of interest based on
previous purchases. For instance, a returning customer to Amazon gets an item with his name on it:
“Hello Sam. We have recommendations for you”. Clicking on the link reveals a list of items that
Sam might be interested in examining, based on his previous purchases from Amazon or those of
similar buyers. Amazon allows individuals to create wish lists, thus shifting this data storage
function from the customer to the retailer: more benefits. Another form of personalization occurs
when sites allow registration via a visitor’s Facebook or other social network membership. One big
benefit is about making it convenient for the customer.
A brand includes a name (McDonald’s), a symbol (golden arches), or other identifying information.
When a firm registers that information with the U.S. Patent Office, it becomes a trademark and is
legally protected from imitation.
A brand is much more than its graphic and verbal representation in marketing materials. It is:
• a promise to customers;
• beliefs in the market’s mind about what the brand delivers;
• innovation to the product that continues to improve on the brand promise;
• generates trust in customers that the brand will deliver on the promise;
• the sum of all customer touch point experiences;
• a relationship between buyer and brand.
Delivering on this promise builds trust, lowers risk, and helps customers by reducing the stress of
making product switching decisions. Reducing stress is especially important online because of
concern over security and privacy issues and because firms and customers are often separated by
large distances. Brand names such as Amazon and Apple generate consumer trust, add to customer-
perceived benefits, and thus can command higher prices from consumers.
Customers and prospects become aware of brands and develop beliefs and attitudes based on every
brand contact, also called touch points.
Brand equity is the intangible value of a brand, measured in dollars.
What is a sweet spot? Explain with examples.
A great brand enters the popular culture and touches consumers. Popular culture trends in music,
entertainment, sports, and more help the brand touch consumers and remain current. For this reason,
many firms use celebrities as spokespeople and sponsor sporting events that interest their target
markets. For example, the iPad found the branding sweet spot when it gave customers the ability to
flip magazine pages and enjoy many other forms of entertainment and personal connection while on
the move. Skype found the sweet spot when it brought Internet telephony to the global masses, and
LinkedIn hit the spot for business networking.
Brand relationships and social media
Every brand marketer’s dream are customers who live, breathe, wear, and talk about their brand.
Such is the case for Harley-Davidson motorcycle owners, Apple computer and iPod fans, Google
List the five levels of brand relationship intensity as devised by Duncan.
Duncan discusses five possible levels of brand relationship intensity:
• advocacy: customers tell others about their favourite brands, both online and offline;
• community: customers in communities, such as Facebook, communicate about brands with
• connection: customers communicate with the company between purchase events;
• identity: customers proudly display the brand name of products they use;
• awareness: consumers include the brand in their list of possible purchases.
The fewest customers are at the highest level, where they have become advocates who tell everyone
how great their brand is.
What are the three roles for social media in branding?
1. Build trust through social media relationships with consumers;
2. differentiate the brand in social media to enhance the emotional connections;
3. build brand loyalty in social media by taking care of consumers.
+1 anno fa
I contenuti di questa pagina costituiscono rielaborazioni personali del Publisher Ladyfranky di informazioni apprese con la frequenza delle lezioni di Digital marketing and e-commerce advanced e studio autonomo di eventuali libri di riferimento in preparazione dell'esame finale o della tesi. Non devono intendersi come materiale ufficiale dell'università Bocconi - Unibocconi o del prof Raccagni Deborah.
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