Internet Marketing

Nowadays technology has made the testing process very accessible to firms that otherwise would have never invested into testing new products.  The fact that online surveys with real-time results are cheaper and faster than ever is allowing more and more firms test their product in the market.  Many marketing research firms make this easier by compiling large databases.  Testing usually is either “this” or “that” and all the firms have to do is analyze the data.  Data obtained for these databases is usually gathered from:

• Purchase (people that bought from a firm)
• Census
• Associations
• Research firms
• Purchase data
• Surveys
• Focus groups
• Interviews
• Websites / click-screen data

Data mining is a set of statistical routines that permit pattern detection in large data sets and it is utilized by companies to check online consumer behavior.  Many times this date is difficult to dissect by firms due to compatibility among departments like: marketing, accounting, sales, finance, purchasing, etc.  Linking all the data from the departments into one holistic system that can analyze the data at once is the “Holy Grail” and as such has not been found yet.

Hierarchy of customer focused marketing strategies (in order of importance, 1 being the most)

1. Customization
2. Personalization
3. Transaction
4. Interaction
5. Information

Tasks that people do most online:

• Pay bills
• Entertainment
• Purchase
• Communication
• Research / information

Complex role of research: According to a 2004 study …

• Search played a role in 1/2 of purchases
• Early searches used generic words, not brands
• Closer to purchase used brand names
• Most concluded search well before purchase
• Fewer searched and purchased in one session
• Customer satisfaction and lifetime value: depends on product

Websites can be a great source for competitive assessment!

Quicker and cheaper = do more stuff / test it!

Website comparison:

• http://www.insightexpress.com
• www.ivillage.com
• www.starmedia.com
• www.chinasite.com
• www.baruch.cuny.edu
• www.columbia.edu
• www.harvard.edu

Seven Design Elements of Customer Interface

• Context: Site’s layout and design
• Content: Text, pictures, sound, & video that web-pages contain
• Community: The ways sites enable user-to-user communication
• Customization: Site’s ability to self-tailor to different users or to allow users to personalize the site
• Communication: The way sites enable site-to-user communication or two-way communication
• Connection: Degree site  is linked to other sites
• Commerce: Site’s capabilities to enable commercial transactions

For example, Amazon.com’s website model has no links to other sites, once you are there, they want to keep you there.

What determines the look and feel of design?

• Context: look-and-feel of a screen to face consumer interface
• Dimensions of context: function & aesthetics
• Function > Factors > Section
• Performance Site > Speed
• Aesthetics - color scheme & visual themes

What Are The Dimensions Of Content?

Content refers to any digital information included on a website, e.g. audio, video, images, etc.

Dimensions of content

• Offering mix
• Appeal mix
• Multimedia mix
• Content type

But Now, Why Community?

Sense of community can encourage customers to return to a website primarily because:

• Communities can create attractive content
• Communities can make certain activities possible or easier, thus satisfying needs not attainable individually

What are the levers used to customize a site?

• Customization: to better address individual needs a site can be altered by the user or by the organization
• Dimensions of customization: personalization & tailoring

What types of communication can a firm maintain with its customer base?

Communication: refers to the dialogue that is initiated by the firm
Dimensions of communication:

1. Broadcast: mass mailings, FAQs, email newsletters
2. Interactive: e-commerce dialogue
3. Hybrid: combination of media written, radio, TV

How does a firm connect to other businesses?

Connection is the degree to which a given site is able to link to other sites through a hypertext jump, or hyperlink

Dimension of Connection:

• Links to sites
• Homesite background
• Outsourced content
• Percentage of homesite content
• Pathway o connection

Dimensions of commerce

Commerce capabilities are those features of the customers interface that support the various aspects of trading transaction.  Those dimensions are:

• Registration
• Shopping cart
• Security
• Credit card approval
• One-click shopping
• Orders through affiliates
• Configuration technology
• Order tracking
• Delivery option

Business Models (Notes from Wednesday 09/17/2008)

Amazon’s model: traffic aggregated > e-commerce, commission, advertising

Wall Street Journal: content provider (subscriptions)

Direct response medium > TV a call for action

Best Source of Marketing: Word Of Mouth

Another great source of marketing: Testimonials

Critical Strategy Elements From Direct Response Perspective

Things to consider:

• The offer
• The service & support
• The creative execution
• The media
• The e-mail list

Landing website: usually the homepage

Drop-ship: selling product from someone else’s stock, seller does not actually stock any product.

Switching costs: the costs inferred in changing suppliers.  These costs are absolutely important when the decision involves saving additional $$.

The internet has made testing new products in the market much easier due to the quick response and inexpensive setup.

Notes from Sep. 15th ‘08

At first we covered a bit of the current events on class.  We discussed the acquisition of Napster by Best Buy.  This acquisition I think will help Best Buy in selling more copyrighted music online.  Since Napster was the pioneer on P2P sharing, they can put this technology to use in order to aim at the competition, specifically, iTunes.  Remembering Napster, its popularity declined after being the scape goat of songwriters’ lawsuits for copyright infringement after the government changed the laws in the US.  This was one of the reasons why Kazaa was able to incorporate in other countries like Australia where the laws are favorable to them and open the doors to other P2P programs to exist.

We also discussed the Windows Vista OS and the headaches it’s bringing to its users.  Vista has those problems because Microsoft wanted to mimic Apple’s user interface with large icons and widgets not taking into account that this will eat-up the system resources making the computers slow and allowing higher risks for system crashes.  We also discussed the compatibility issues between Microsoft Office versions and how they can make your life miserable, especially during presentations.  This is where Google can take a shot at Microsoft by offering an online productivity software version where no matter where you are you can open create edit and save documents without having to worry about having a compatible version, of course, granted you have an Internet connection.

Professor Wymbs also commented how UK e-commerce websites are doing better than US according to a recent survey.

The Value Proposition

Target Customer (has needs –> / <– value for) Value Proposition (matches –> / <– enable) Capabilities

The Functions Of Business Models

• Articulate Value Proposition (be clear and precise about the message)
• Identify the Target Segment (remember the better you target the higher the response)
• Define the Structure of the Value Chain (distribution channels)
• Define Cost Structure & Profit Potential (costs, expenses, revenue, profits)
• Explain Position in the Value Network (differentiation)
• Set Forth Competitive Strategy (how to create and sustain competitive advantage)

Alright, I’m finally up to date with this blog.  Today (well it’s actually yesterday because it’s almost 5am but for the sake of easiness I’ll call it today)  Professor Wymbs discussed with the class several business models.  We started the discussion about Zara’s value proposition: bring trendy merchandise in an expeditious manner.

Zara store in Barcelona Spain

Zara is a clothing company from Spain that unlike many other clothing companies manufactures its line of clothing in Europe.  Not necessarily due to protectionism but mostly for fast response to changes in taste in the market because being able to make the products locally makes production faster.  The fashion industry unlike other industries, is a “touchy” “feely” process in which everyone has a saying.  Zara has taken advantage of that by making the end users the experts in fashion.  Zara has accomplished that by systematically deploying a real time customer and supply feedback system that responds and adapts to taste changes.  From blogs posted on their consumer website to salespeople with their PDA’s in the stores surveying customers for suggestions in color changes in their production facilities in Europe, Zara has created a business model that creates customer loyalty (customers feel empowered because they are treated as fashion experts) and brand differentiation by simply giving customers what they want.

Then we went on to discuss the iPod business model and what it offers to consumers: reliable flash memory, trendy product, high value, friendly user interface, consistency, good customer service, and their valuation of customer input.  We also discussed Apple’s main target college students.

We also discussed the Dell business model and how different it is from Zara’s.  Zara internalizes the operation for speed vs Dell that has a different supply chain model; Dell uses just-in-time processes.  Dell besides customizing PCs and laptops they do not hold much inventory.  For every order they get they immediately order the parts from their supplier so that they do not overstock on one particular model.  Dell believes that cost control creates customer value.

Last but not the least Professor Wymbs discussed the potential of RFID in the market. According to Wikipedia, RFID is an automatic ID method, relying on storing and remotely retrieving data using devices called RFID tags or transponders.  This makes taking inventory very easy for large retailers and warehouses because with a simple scan you can tell how many items and what kind of items there are in a palette.  Currently Wal-mart is leading in the use of this technology among large retailers.  In fact they are forcing all their suppliers to apply it to all their products at least at the palette level for now.  This technology has another 2 to 3 years to develop before it gets to the product level in which in real-time users will be able to tell how many, and, with the combination of GPS, where it exactly is or was moved to at any point in time.

RFID tag shown

In reference to class held on Monday 09/03/08.  During this class we had the visit of Lucas Waltzer, I did not quite get what his title was but it seemed like he was a big shot in the IT Dept. of Baruch College.  Anyhow, he was kind enough to take the time to explain how to setup the blog account for this class.  Actually I am quite impressed with the easiness and versatility of this blog.  I have tried other blogs and they are usually cumbersome and not as user friendly as this one, so I must thank Prof. Wymbs, Luke, and everyone else at Baruch that made the use of this blog possible.

On another note, after Luke left, Prof. Wymbs discussed the Internet value chain.  He briefly explained terms like acquisition (obtaining new customers), conversion (making a prospect buy), retention (keeping customers from buying from someone else), and customer value (the worth of a single customer to the company).  The value chain concept was explained as follows SUPPLY CHAIN – - MANUFACTURER – - CHANNEL OF DISTRIBUTION — END USER.

The Value Chain Model

In reference to class held on Wednesday 09/03/08 (sorry for the delay but I was just finally

Larry Arias

able to activate my blog!).  Well today Professor Wymbs had a general discussion about the Internet and the direction that is taking.  How Internet access has evolved from exclusively for information to many other transactions and applications from anywhere in the world.  Also we discussed the infinite possibilities that Internet offers to marketeers.  The ability to reach individuals regardless of location and the easiness to apply the four marketing P’s through this medium has spawned thousands of job opportunities and entrepreneurs everyday.  Professor Wymbs also explained how the Internet is packet based.  In other words, one terminal sends information over the Internet, then the network transforms this info into raw data packets (for faster transportation) that are read through a standard global language TCP/IP, this data gets to the other end and it is put together again in order to be in the original state it was sent.  We briefly discussed the web 2.0 and how is helping more and more to create and sustain online communities where people not only buy/sale/trade/advertise/etc. products but also socialize and mingle with other individuals regardless of location in the world.

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