October 6th

Internet Marketing 4555 – Blogs

Chapter 7:

Critical Email Principles are: RELEVANCE, RESPECT, RECIPIENT CONTENT.

Relevance: all content should be applicable to the recipient’s needs and lifestyle.

Respect: Relevant content cannot be generated without in-depth information about the recipient.

Recipient Content: Go beyond simply obtaining the permission to communicate with the recipient.

Content that is not relevant to the recipient will not motivate them to open the email, sender must guard emails from unauthorized use, and give the recipient more control over the content they want to receive.

Advantages of Email Marketing:

• Can be developed quickly
• Content is flexible, including HTML, Rich Media, and Video
• Distribution is controllable by Marketer
• Can be tested and Revised for effectiveness
• Measurable
• Inexpensive

Start up companies have a value proposition that helps them target the segment, from there they can aquire lists of people or email.  To get better results, you refine the list by the people who have responded to the email, or took action.  People who don’t take any action is removed from the list.  To attract the people you can provide more information on the email.

Levels of Permission Marketing:

• OPT-OUT: communication as been passively requested by the internet user. The point is to make consumers take explicit action in order not to receive further communications.
• OPT-IN: Communication that has been actively requested by the internet user.
• Double Opt-In: Follow up email is sent by marketer to get users confirmation of request.
• Confirmed Opt-in: User is sent a confirmation but a reply is not required. User passively complies.

Developing an Email Marketing Campaign

• Gather customer data (internal & external)
• Derive Customer Insights
• Suggest Proactive Action
• Evaluate Response

Other Techniques are EVENTS, PUBLICITY, AFFILIATES, PORTAL RELATIONSHIP, VIRAL.

Movies are the biggest event that is heavily promoted using all of the above.

Chapter 1:

Information Product is a commercial product that consists solely of data. Ex: The Sabre System

Information Rich Products are physical products in which the customers have more control. Ex: Tide website

Four Drivers of change in the Internet Economy:

1. Information produces the greatest value: either as added value for existing products or services or in the form of information products.  Added value can be convenience, wider selections, more information, easier shopping experience, and confidentiality.
2. Distance does not matter in many types of communications and transactions. There are almost no limitation of distance, or very less.  In the case of music, you can download whatever music you want straight from your computer without going to the retail store, ie: Napster & Apple Itunes.
3. Speed is of the Essence.  Google provides information fast as possible for your search, Itunes allows you to receive your song/album in seconds, EBay’s “Buy it Now” feature allows you to buy a product without waiting for the auction. Real-time customer service, and faster feedback.
4. People are the key assets in internet enterprises.  Knowledge workers are people who use their brain to work, people who use the internet fall into this.

Four ways the Internet Affects business processes:

1. Cost: Online transactions in banks are cheaper than transaction costs at branches.
2. Quality: Less errors
3. Customer Access: More visitors
4. Choice: wider assortments of products

Chapter 2:

Integrative elements that DELL has employed on a) the supply side by managing its supply chain as single organization,  being able to control costs which creates customer value, running extensive metrics in real-time, and targeting global growth. B) The Customer side by keeping close customer relationships, and Speed allowing fast customization and delivery.

The stages an enterprise is likely to go through en route to a virtual value chain are:

1. Visibility: their information system allows them SEE the supply chain processes more clearly.
2. Mirroring: creates a parallel system in which information MIRRORS the physical activities of the supply chain.
3. More Value to the customers: use information to deliver value to customers in different ways and to create new value.

The business practices used by Zara to be more responsive to customer needs and successful financially are by allowing customers to make inputs about fashion trends, and if a trend is discovered they implement it. This process lets customers feel valuable in the research process.  They implement their trends in about two weeks to its stores.  Also they own their own production facilities so they make all the clothes and raw materials instead of being outsourced.

Chapter 4:

Customer Lifetime Value (CLV) is the net present value of the future stream of net revenue from an identified customer. This can be attained with retention by offering superior customer services or adding value to customer purchases.

Uses:

How much should I spend to acquire customers who fit a certain profile? E.g. rich bank customers are less likely to deposit more likewise, many enterprises find that lowest value customers are usually less likely to upgrade.

The acquisition problem is commonly stated as, “Who are my best customers, and how can I acquire more like them?” To that we should add, “And how much should I spend on the acquisition?” Identifying best customers is another time-honored direct marketing technique based on a simple RFM (Recency × Frequency × Monetary value) model.

Another application can be to create customized offers. It is said that at least one online financial services site is able to combine information from a customer credit card application with data and models in its supporting database and present that customer with a personalized credit card offer within less than a minute.

CLV analysis will show some customers to be unprofitable. That presents two basic options. If additional analysis indicates that one or more subsegments have potential to become profitable, marketing programs should be developed with this objective. If, as is often the case, other subsegments appear to have little probability of becoming profitable, one of two actions must be taken. The first is to cut costs—either of acquiring customers in this segment or by reducing costs to serve them. For example, these customers may be offered only self-service options via telephone or Web, with personal service options reserved for profitable customer segments.

Testing: tells you what people do.

Market Research: aims to tell you why people do things; what they are thinking.

Why and how does testing offer opportunities to internet marketers?

The Hormel example, however, is a good illustration of the useful information that a test can produce. The marketing research was a particularly useful supplement in this instance. However, it is important to remember that testing and marketing research are two different things. Testing involved creating a marketing program, delivering it to people who meet the profile of the target market, and tracking the actions consumers take as a result. Put another way, testing furnishes behavioral data—what customers did or did not do. This is different from using marketing research to ask people what they would do in a particular situation. Both have their uses, as the Hormel example illustrates. However, testing on the Internet provides an unparalleled opportunity to measure actual marketing-related behavior in a realistic context.

A data warehouse is a repository of an organization’s electronically stored data. Data warehouses are designed to facilitate reporting and analysis^[1].

Data mining is a set of statistical routines that permit pattern detection in large data sets.

Chapter 5

Stages of consumer behavior: Awareness|Search Behavior – Goal-oriented & Experiential |Task completion – content/information acquisition, purchase, abandonement|Repeat visit – occasional, frequent|Use/consumption behavior|Loyalty.

Stages after purchase decide customer retention, satisfaction and loyalty; all of which determine the likelihood of repeat purchase.

tbc*

Chapter 4

business model is the method of doing business by which a company can sustain itself—that is, generate revenue. The business model spells out how a company makes money by specifying where it is positioned in the value chain. | define a business model as “a unique configuration of elements comprising the organization’s goals, strategies, processes, technologies, and structure, conceived to create value for the customers and thus compete successfully in a particular market.” They go on to say that a business model describes the core value proposition, sources and methods of revenue generation, the costs involved in generating the revenue, and the plan and trajectory of growth.

Henry Chesbrough and Richard Rosenbloom go on to explain that the functions of a business model are to: 

• articulate the value proposition that is, the value created for users by the offering based on the technology;
• identify a market segment that is, the users to whom the technology is useful and for what purpose;
• define the structure of the value chain within the firm required to create and distribute the offering;
• estimate the cost structure and profit potential of producing the offering, given the value proposition and the value chain structure chosen;
• describe the position of the firm with the value network linking suppliers and customers, including identification of potential partners and competitors; and
• formulate the competitive strategy by which the innovating firm will gain and hold competitive advantage over rivals.

Important Internet revenue models include the following: 

• Access to the Internet. All users must have an on-ramp to the Internet. They can access the Internet either through a dial-up connection or, increasingly, through a broadband connection.
• Advertising revenue. In Chapter 1 we discussed the explosive growth of advertising on the Internet. Nevertheless, few sites can sustain themselves on advertising revenue alone.

• • Sponsorship revenue. Content on a Web site or in an e-mail can be sponsored, providing another type of advertising opportunity.
• Donations. Not-for-profit marketers raise substantial sums of money through their Web sites. In addition, a number of large sites exist on services donated by the Internet community.
• Membership or subscription revenue. In the early days of the Internet, most content was free. Much of it still is, but increasingly content-oriented sites are charging for the content they provide.
• Sale or licensing of software or systems. Proprietary systems may become an important source of competitive advantage, and some firms will guard them closely. Others, however, will find additional revenue opportunities in sale or licensing of specialized software. It is important to remember, though, the example from Chapter 2 of Amazon’s free provision of Web services to other software developers.
• Software-based services. In Chapter 2 we discussed the fact that many firms are using hosted software solutions to avoid owning and maintaining their own software.
• Syndication or licensing of content. Physical-world publishers have content they can migrate onto the Web, and many of them are creating additional Web-only content to add to the attractiveness of their site. They are actively marketing this content to other sites through RSS feeds. Software firms may choose to license their product to users instead of selling it outright. They may collect revenue based on the number of users, as the creators of most business-to-business (B2B) software products typically do, or they may charge on a usage basis as search engines often do.
• Transactions revenue. Sites of all kinds, whether it is their major objective or not, are realizing revenue from transactions. They may be selling products ranging from clothing to computers or services that vary from employment listings to credit cards. They may be selling their own products or services; they may be affiliates of large sites like Amazon, or they may operate from a larger site like eBay. There are three identifiable types of transactions:

• • Auction/reverse auction. The traditional auction, in which many buyers compete for the product of a single seller, is commonly seen in the physical world for products as diverse as fine art and agricultural commodities. The reverse auction, in which many sellers compete for the business of one seller, is an important facet of B2B activities on the Internet.
  • Barter. Barter does not produce revenue directly, but it is a common practice in B2B markets and is found in business-to-customer (B2C) markets. It simply describes the direct exchange of goods or services without money changing hands.
  • E-commerce. E-commerce describes the most common type of economic exchange, the one in which a purchaser pays the seller for the goods or services. E-commerce is ubiquitous in B2C, B2B, and governmental and nonprofit markets.
• Value-added services revenue. The Internet provides an opportunity for firms to charge for services that complement their primary offering. For example, a B2B auction site may offer credit verification services to support transactions that take place on its site.

which offers best long run profitability? why?

No because it can work either way. some companies may better secure competitive advantage by being pure play while other will through multichannel various factors such as type of business should be considered. as the book shows schwab was initially successful with pure then multi then challenges arose and it is hard to return to distinctive pure play and mortar that did not connect both companies directly once they had switched to multichannel. hence, it is not a one way anwaser as circumstances vary.

Ivillage.com was community based site for women. It had polls, news, message boards, and many other links. It is sponsored and has several ads all over the site. Starmedia.com is portal for Hispanics. The difference between Baruch, Harvard, and Columbia websites were its colors. Some had readable colors such as Columbia, which had white background and dark letters. The worst was Harvard’s websites color, the crimson header was ok, but the golden background and colors weren’t really flowing. Baruch’s site had too much dark colors, dark blue background, and light blue navigation. It is hard to read the body.

The seven design elements of the customer interface:

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

The look and feel of a website is determined by it’s Context, Dimensions of Context. Functionally-oriented site focuses largely on the core offering. Product/Service/Info. Aesthetics of the site is focused on the design of the site, color scheme and visual themes.

The dimensions of content are the offering mix which is what the site is offering. Appeal mix refers to the promotional and communication messaging projected by the company. The Multimedia mix refers simply to the mix of media.  Content Type is information presented on a website with a high degree of time.

We are concerned about Community because it provides incentives to individuals to come to the site. Reviews, Forums, chatrooms are community feature.

Levers used to customize a site are Personalization(user) or Tailoring(organization).

Firms can maintain several types of communication with its customer base such as Broadcast, Interactive, and Hybrid.

A firm communicates with other business through creating links on there site, homesite background which shows the other site with the main site in the background, outsourcing content to sites, having a percentage of homesite content, and pathway connections.

The Main features of commerce that support the various aspects of trading transactions are registration, shopping cart, security, cc approval, one-click shopping, orders through affiliates, configuration tech, order tracking, delivery options.