Lecture E-commerce (7/e): Chapter 6 - Kenneth C. Laudon, Carol Guercio Traver

E­commerce   

business. technology. society.

seventh edition

Kenneth C.
Laudon
Carol Guercio
Traver
 Copyright © 2011 
Pearson Education, Inc.
Copyright © 2011 Pearson Education, Inc.


Chapter 6
E-commerce Marketing Concepts

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Pearson Education, Inc.
Copyright © 2011 Pearson Education, Inc.
Copyright © 2010 Pearson Education, Inc.

Slide 6­2


Netflix 

Strengthens and Defends Its Brand
Class Discussion



What was Netflix’s first business model? Why
did this model not work and what new model did
it develop?



Why is Netflix attractive to customers?



How does Netflix distribute its videos?



What is Netflix’s “recommender system?”



How does Netflix use data mining?



Is video on demand a threat to Netflix?

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Slide 6­3

Consumers Online: The Internet 
Audience and Consumer Behavior
 Around

70% (82 million) U.S. households
have Internet access in 2010

 Growth

rate has slowed

 Intensity

and scope of use both increasing

 Some

demographic groups have much
higher percentages of online usage than
others

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 Gender, age, ethnicity, community type, income, education
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Slide 6­4


The Internet Audience and Consumer 

Behavior (cont’d)
 Broadband

audience vs. dial-up audience
 Purchasing behavior affected by
neighborhood
 Lifestyle and sociological impacts
 Use

of Internet by children, teens
 Use of Internet as substitute for other social activities

 Media

choices

 Traditional

media competes with Internet for attention
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Slide 6­5


Consumer Behavior Models
 Study

of consumer behavior

 Social

science

 Attempts

to explain what consumers purchase
and where, when, how much and why they
buy

 Consumer
 Predict
 Based

behavior models

wide range of consumer decisions

on background demographic factors
and other intervening, more immediate
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variables
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Slide 6­6


A General Model of Consumer Behavior

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Figure 6.1, Page 352
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SOURCE: Adapted from Kotler and Armstrong,
2009.

Slide 6­7


Background Demographic Factors
 Culture:

Broadest impact

 Subculture

(ethnicity, age, lifestyle,
geography)

 Social
 Reference

groups

Direct reference groups
 Indirect reference groups
 Opinion leaders (viral influencers)
 Lifestyle groups


 Psychological

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 Psychological profiles
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Slide 6­8


The Online Purchasing Decision
 Psychographic
 Combines

research

demographic and psychological data

 Divides

market into groups based on social class,
lifestyle, and/or personality characteristics

 Five

stages in the consumer decision
process:
1.

Awareness of need

2.

Search for more information

3.

Evaluation of alternatives

4. Actual purchase decision
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5. Post-purchase contact with firm

Slide 6­9


The Consumer Decision Process and 
Supporting Communications

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Figure 6.3, Page 356
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Slide 6­10


A Model of Online Consumer Behavior
 Decision

process similar for online and
offline behavior
 General online behavior model

 Consumer

skills
 Product characteristics
 Attitudes toward online purchasing
 Perceptions about control over Web environment
 Web site features

 Clickstream

behavior: Transaction log for
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consumer from search engine to purchase
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Slide 6­11


A Model of Online Consumer Behavior

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Figure 6.4, Page 357
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Slide 6­12


A Model of Online Consumer Behavior
 Clickstream

factors include:



Number of days since last visit



Speed of clickstream behavior



Number of products viewed during last visit



Number of pages viewed



Supplying personal information



Number of days since last purchase



Number of past purchases

 Clickstream

marketing

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Slide 6­13


Shoppers: Browsers and Buyers


Shoppers: 87% of Internet users
 72%

buyers
 16% browsers (purchase offline)


One-third offline retail purchases influenced by
online activities



Online traffic also influenced by offline brands
and shopping

E-commerce and traditional commerce are
coupled: part of a continuum of consuming

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behavior


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Slide 6­14


Online Shoppers and Buyers

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Figure 6.5, Page 359
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SOURCE: Based on data from eMarketer, Inc.,
2010b
Slide 6­15


What Consumers Shop for and 
Buy Online


Big ticket items ($500 plus)
 Travel,

computer hardware, consumer electronics
 Expanding
 Consumers more confident in purchasing costlier

items


Small ticket items ($100 or less)
 Apparel,

books, office supplies, software, etc.
 Sold by first movers on Web
Physically small items
 High margin items
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 Broad selection of products available
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

Slide 6­16


What Consumers Buy Online

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Figure 6.6, Page 361
SOURCES: Based on data from eMarketer, Inc., 2010b; Internet Retailer, 2010.
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Slide 6­17


Intentional Acts: How Shoppers Find 
Vendors Online
 Search

engines (59%)

 Coupon

Web sites (29%)

 Comparison
 E-mail

shopping sites (27%)

newsletters (25%)

 Online

shoppers are highly intentional,
looking for specific products, companies,
services

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Slide 6­18


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Table 6.6, Page 362
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SOURCES: Based on data from eMarketer, Inc., 2010c
Slide 6­19


Trust, Utility, and Opportunism in Online 
Markets
 Two

most important factors shaping
decision to purchase online:
 Utility:
 Better

prices, convenience, speed

 Trust:
 Asymmetry

of information can lead to opportunistic
behavior by sellers
 Sellers can develop trust by building strong
reputations for honesty, fairness, delivery
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Slide 6­20


Basic Marketing Concepts
 Marketing
 Strategies

and actions to establish
relationship with consumer and encourage
purchases of products and services
 Addresses competitive situation of industries
and firms
 Seeks to create unique, highly differentiated
products or services that are produced or
supplied by one trusted firm
 Unmatchable

feature set
 Avoidance of becoming commodity
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Slide 6­21


Feature Sets
 Three
1.

Core product


1.

levels of product or service

e.g. cell phone

Actual product
Characteristics that deliver core benefits
 e.g. wide screen that connects to Internet


1.

Augmented product

Additional benefits
 Basis for building the product’s brand
 e.g. product warranty
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

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Slide 6­22


Feature Set

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Figure 6.7, Page 364
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Slide 6­23

Products, Brands and 
the Branding Process
 Brand:

 Expectations

consumers have when consuming, or
thinking about consuming, a specific product
 Most important expectations: Quality, reliability,
consistency, trust, affection, loyalty, reputation

 Branding:

Process of brand creation
 Closed loop marketing
 Brand strategy
 Brand equity

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Slide 6­24


Marketing Activities: 
From Products to Brands

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Figure 6.8, Page 366

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Slide 6­25