product as soon as you buy it. But that doesn’t happen in online business. This lag time often discourages customers. However, e-businesses are trying to resolve such issues by promising very limited delivery times. For example, Amazon now assures one-day delivery. This is an improvement but does not resolve the issue completely Security Issues: There are a lot of people who scam through online business. Also, it is easier for hackers to get your financial details. It has a few security and integrity issues. This also causes distrust among potential customers. MARKETINGISSUESONINTERNET BUSINESS Opportunitiesandthreats Theuseofelectroniccommercebybusinessindevelopedcountrieshasgrownconsiderablyinthepast fewyears.Inthenearfuture,E-commercewillbringachangeinnot only the way in which the trade is conducted, but also a change in the volume of goods tradedbetweencountries.It isalso changing manufacturing and distribution systems, product design,and therelationshipbetween theproducerandconsumer. Thechangestothecurrenttradingvolumecouldhaveanegativeeffectonsomeinternational environmental objectives such as sustainable development. There is also a potentialfor developing countries to be further exploited by developed countries as e-commerce matures.Besides,therearequestionsastowhethertheinternetwillincreasethe\"digitaldivide\"betwe enthe\"haves and have-nots.\" While e-commerce may have negative impacts on some aspects of international trade andthe environment, there are some \"green\" companies who are looking at e-commerce as a way topositively impact trade and the environment. These companies have some innovative businessmodelsthatwilllikelybringenvironment-friendlygoodstobothconsumersandbusinesses. Therearesomeotherlikelybenefitstobegainedfromthegrowthofe- commercesuchasareductionintheneedforwarehousesandretailstores,andafurtherreductioninthe needforthe associatedfinishedmaterials,energy,andlandconsumedbythesestructures. Online Transactions and Security of E-Transactions in E-Business Online transaction is a payment method in which the transfer of fund or money happens online over electronic fund transfer. Online transaction process (OLTP) is secure and password protected. Three steps involved in the online transaction are Registration, Placing an order, and, Payment. Let us learn more about the different stages of Online Transaction in detail. Online Transactions Online transaction processing (OLTP) is information systems that facilitate and manage transaction-oriented applications, typically for data entry and 101 CU IDOL SELF LEARNING MATERIAL (SLM)
retrieval transaction processing. So online transaction is done with the help of the internet. It can’t take place without a proper internet connection. Online transactions occur when a process of buying and selling takes place through the internet. When a consumer purchases a product or a service online, he/she pays for it through online transaction. Let’s find out more about it. Stages of Online Transaction There are three stages of Online Transactions. Pre-purchase/Sale: In this stage, the product or service is advertised online with some details for the customers. Purchase/Sale: When a customer likes a particular product or service, he/she buys it and makes the payment online Delivery Stage: This is the final stage where the goods bought are delivered to the consumer. Steps Involved in Online Transaction The following are the steps involved in Online Transaction: 1] Registration The consumer has to register online on the particular website to buy a particular good or service. The customer’s email id, name, address, and other details are saved and are safe with the website. For security reasons, the buyer’s ‘Account’ and his ‘Shopping Cart’ is password protected. 2] Placing an Order The customer likes a product or a service he/she puts the product in the ‘shopping cart’. The shopping cart gives a record of all the items selected by the buyer to be purchased, then number of units or quantity desired to be bought per item selected and the price for each item. The buyer then proceeds to the payment option after selecting all the products. 3] Payment The buyer then has to select the payment option; he/she has various payment options. These payment pages are secured with very high-level encryptions so that the personal financial information that you enter (bank/card details) stay completely secure. Some ways in which you can make this payment are: Cash on Delivery: The Cash on Delivery option lets the buyer pay when he/she receives the product. Here, the payment is made at the doorstep. The customer can pay in cash, or by debit or credit card. 102 CU IDOL SELF LEARNING MATERIAL (SLM)
Cheque: In this type of payment, the buyer sends a cheque to the seller and the seller sends the product after the realization of the cheque. Net Banking Transfer: Here, the payment is transferred from the buyer’s account to the seller’s account electronically i.e. through the internet. After the payment is received by the seller, the seller dispatches the goods to the buyer. Credit or Debit Card: The buyer has to send his debit card or credit card details to the seller, and a particular amount will be deducted from his/her account. Digital Cash: Digital Cash is a form of electronic currency that exists only in cyberspace and has no real physical properties. Here the money in buyer’s bank account is converted into a code that is saved on a microchip, a smart card or on the hard drive of his computer. When he makes a purchase, he needs to mention that particular code to the website and thereafter the transaction is duly processed. 6.3 INTERNET MARKETING What is marketing? Agooddefinitionofmarketingisthat it is the full range of activities that you undertake - both on and off the web - in order to make certain that you aremeetingyourcustomers’needsandthatyouarereceivingenoughvalueinreturnfordoingso.Notet hatwesaid‘enough’value; you need to be receiving enough in return that it is worth the time and investment that you are taking to providetheserviceorproductthatyouoffer. Marketingisrelatedtoadvertising,promotion,PR,andsales,butisactuallyadistinctactivitythathelp sprepareyouandyourorganizationtoperformtherelatedactivitiesthoroughlyandwell.Youcouldact uallythinkofadvertising,promotion,PR,andsalesasbeinginfluencedbyyourInternetmarketingstra tegy,suchas Figure 6.1 Internet Marketing 103 CU IDOL SELF LEARNING MATERIAL (SLM)
Internet marketing is an all-inclusive term for marketing products and services online. This includes a variety of methods and platforms for communicating with customers, such as website, email, social media, and online advertising. Internet marketing refers to the strategies used to market products and services online and through other digital means. These can include a variety of online platforms, tools, and content delivery systems, such as: Website content and design Email marketing Social media Blogging Video/podcasting Online ads Sponsorships and paid promotions Oldvs.NewRulesofMarketing The specific steps towards Internet marketing; let’s look at how marketing has changed in regards to the“digital age.” Due to the fact that so much of a company’s presence is now dependent on multiple streams of media, thewaythatmarketingactivitiesareimplementedhaschanged.Youneedtobefamiliarwiththe“newr ules”ofmarketingifyouaregoingtodevelopaneffectivemarketingplan. The Old Rules The old paradigm of marketing was focused on delivering a one-way message from the organization to the potentialcustomer.Theideawasthatthemorecreativethemessageandmarketingcampaign,themor elikelythecustomerwouldbetorespondbypurchasingtheproductorservice.Othercharacteristicsof theoldmarketingrulesinclude: Advertising was key Advertisements were meant to appeal to the general public Advertising campaigns ran for a specific period of time Awards were pursued for advertising campaigns Audience may have felt interrupted by advertising messages PR was a separate function from advertising The New Rules The advent of the Internet, information is everywhere and available to everyone. Instead of 104 CU IDOL SELF LEARNING MATERIAL (SLM)
getting the attention ofthe press in order to be successful, marketing and public relations now require that a company get the attention of theindividuals surfing the Internet. The most successful marketing and PR campaigns are the ones that get the organization‘found’ontheInternet.Someofthenewrulesinclude: Peoplearewellinformedandexpectthetruthratherthan‘spin’ Interruptionswon’tbewelltoleratedintheageofDVRsandemailfiltersforSPAM PeopledemandvaluefortheirtimeandmoneyandwillusetheInternettogetit MarketingandPRaredesignedtoappealtonicheaudiences MarketingandPRemploymultipletechniquestoreachthoseaudiences Contentstaysonlinepermanentlysothereisnoendtoacampaign Benefits of Internet marketing A key benefit of using online channels for marketing a business or product is the ability to measure the impact of any given channel, as well as how visitors acquired through different channels interact with a website or landing page experience. Of the visitors that convert into paying customers, further analysis can be done to determine which channels are most effective at acquiring valuable customers. Analytics for web or mobile app experiences can help determine the following: Which online marketing channels are the most cost-effective at acquiring customers, based on the conversion rate of visitors to customers, and the cost of those visitors? Which channels are effective at acquiring and driving higher lifetime value for customers — such as email marketing, which drives repeat purchases to prior customers? Which cohorts of customers exhibit strong engagement behavior and high potential for upsells — such as software or mobile apps, which expect to sell more products to customers with high engagement? Internet marketing tools There are a number of tools that can be used to build and maintain a robust online marketing program: Email marketing Social media marketing Search engine optimization (SEO) Display advertising Search engine marketing (SEM) Virtual events & webinars 105 CU IDOL SELF LEARNING MATERIAL (SLM)
A/B testing & website optimization Content marketing Video marketing Marketing analytics Marketing automation Customer relationship management (CRM) Content management system (CMS) Pay-per-click (PPC) advertising LinkedIn ads Affiliate marketing 6.4 INTERNET MARKETING TECHNIQUES Internet-Marketing: Electronic marketing (e-marketing) is also known as internet marketing, web marketing and digital marketing on on-line marketing. It is the process of marketing a product or service using the internet, e-mail and wireless media. Unlike e-advertising, e- marketing is very subtle. It is not always a direct message of persuasion but rather it is something which will educate the customers and convince them to buy the product or service. Digital marketing techniques include Search Engine Optimization (SEO), Search Engine Marketing (SEM), content marketing, e-commerce marketing, social media marketing, display advertisement, marketing through SMS and on-hold mobile ring tones, etc. Types of Internet Marketing: There are several options through which the e-marketers can promote their product and services: 1. Article Marketing – Writing articles about products and services often helps in the process of educating the customers. 2. Affiliate Marketing – It is a kind of referral marketing where reference of any product will be provided on the other websites and when the customer buy’s the product based on the recommendation this website owner with gets commission. 3. Video Marketing – In this kind of e-marketing, a video will be shared describing the usage and benefits of the product or a service. It is often similar to television commercials. 4. Email Marketing – Direct emails are being sent to potential customers describing benefits of the product or service. 5. Blogging – Publishing blogs about similar products is also a very subtle way of marketing some business. 106 CU IDOL SELF LEARNING MATERIAL (SLM)
6. Social Media Marketing – This form of marketing means promoting company’s products and service on social media handles like Facebook, Twitter and Instagram – It is cost- effective because these platforms allow business to create profiles for free. Internet MarketingTechniques Marketing Strategies are made not only to attract customers but also to retain the existingcustomers. Online Marketing Strategies tooaremade for the same purpose. Following are someof the strategiesthatcanbeadopted inonline marketing: E-Mailmarketingstrategies Affiliatemarketingstrategies Viralmarketingstrategies Brandleveragingstrategies Searchengineoptimization(SEO) E-Mail marketing strategies Business organization s send e-mail messages to people who have requested informationaboutaspecificproduct.Thisiscalledopt-in- emailandthisstrategyiscalledPermissionMarketingStrategy.E- mailallowsmarketerstodeliverdifferentadvertisementstodifferentcustomers based on market segmentation.It allows users to see graphicimages and text thatreallyimpressesthem.Theusersalsogettransportedtotherelatedwebsitebyclickingonthelink in the message. Finally, the behavior of the customer collected from the database can beintegratedbythe marketerstosendsalespromotione-mailstothecustomers. For example, if a visitor had visited the website of UNIVERCELL to read about the latestarrivalofMobilephones,thentheinformationcanbeutilizedbyUNIVERCELLtosendacoupo norinformationthroughdirecte-mailtothecustomer.Itattractsthecustomerandmay resultinpurchaseofmobilephone.Somemarketersalsosende- mailevenwithoutreceivinganyrequestforinformationfromthecustomers.Itisknownasunsolicited commerciale-mails. Affiliate marketing strategies Lowbudgetwebsitesareusingaffiliatemarketingstrategytogeneraterevenues.Affiliate’sfirmwebs itecontainsdescription,ratingandinformationaboutaproductthatislinkedtoanotherorganization’s websitethatofferstheproductforsale.Marketerspayaffiliatestoforwardcustomerstotheirwebsites. Thepioneerofaffiliatemarketing isamazon.com. Affiliate member must feature a link to amazon’s site. When an internet user buys anyproduct on amazon’s website after having gone there through a link, the affiliate member linkwhich 107 CU IDOL SELF LEARNING MATERIAL (SLM)
hadforwardedthebuyer toamazon.comreceivesthecommission. Therearethreetypesofaffiliatemarketingprogrammes. Click through – affiliates are paid for each visitor who clicks through the banner orbutton/link and goes tothe sellers’ page. LeadGeneration–affiliatesarepaidifthemarketerisabletoregistertheuser. Revenuesharing–affiliatesarepaidwhenhecustomermakesapurchase. Getting Best Out of Affiliate Marketing Cloak links − these are the short and pretty links for long URLs of affiliates. These links look good and help in increasing the CTR. Write reviews that sell. Add unique selling points to them. Include affiliate links to your post. Use banners of all affiliate products to reach higher CTR. Offer discounts. Premium Affiliate Programs Amazon Associates Commission Junction Share a Sale Referral Marketing There is one more type of marketing called Referral Marketing. As both forms of marketing are based on business associations and employ third parties for increasing sales, they can be confusing. The main difference between affiliate marketing and referral marketing is that affiliate marketing depends purely on financial motivations to drive sales whereas referral marketing relies on personal relationships and trust among businessmen to drive sales. Viral marketing strategies Viral marketing strategy approaches individual consumers to inform other persons aboutthe products and services of a business organization. Business organizations believe that thismarketing strategy can build good business as there is no face to face contact in electronicmarketing. Forexample,BlueMountainArts,anelectronicgreetingcompanyadoptstheviralmarketing strategy. A greeting card recipient sends electronic greeting cards in turn to theirfriends. Thismethodhelpedit togrowasthemostvisited site onthe web. Brand leveraging strategies Anorganizationleveragesitsdominantpositionbyaddingmorefeaturestothewebsitethat are 108 CU IDOL SELF LEARNING MATERIAL (SLM)
usefultoexisting customers.ThisiscalledBrandleveragingstrategy. Forexample,Yahooaddedasearchenginefunctionandleverageditsdominantpositionbyacquiring other webbusinessesandwidened itsexisting offerings. Search engine optimization (SEO) Searchengineoptimization(SEO)attemptstoimproveawebsite'sorganicsearchrankings in SERPs by increasing the website content's relevance to search terms. SEO is not justsubmitting site at search engine. It helps the internet user to identify the company’s product orservice available on the site when the users are searching for a product or a service. When apotential customer checks through search engine looking out for a product or service, marketerswanttheircompany’swebsitetoappearamongthetop10returnedlistings.Themethodofh aving a particular URL listed near the top of search engine results is called SEO. Search enginesites offer companies apaid placement whichis the consideration ofpurchasinga toplisting ontheresult pages. For example,Sify.comisspecializedin SEO.Itprovidesa complete range of searchenginemarketingsolutionsworldwide. 6.5 SUMMARY Internet marketing and business is an all-inclusive term for marketing products and services online. This can include website content, email marketing, social media, online ads, sponsorships, and more. The types of internet marketing a business uses will depend on the business model, types of products, target customers, and budget. No matter the type or size of your business, you can use multiple online platforms and ways of communicating to create a broad internet marketing plan that helps potential clients and customers find your business. Producers and traditional commerce wholesalers typically operate with this type of electronic commerce. C2C type of transactions generally occurs for second-hand products. This type of e-commerce is very common in crowdsourcing based projects. Running an internet business is essentially free and depend on your expertise. You will need to develop and maintain a website, use different online tools and web platforms. The term e-business came into existence in the year 1996. E-business is an abbreviation for electronic business. This type of businesses doesn't need to have production plants, offices, stores. Some predict that it may very soon overtake brick 109 CU IDOL SELF LEARNING MATERIAL (SLM)
and mortar stores. Transactions that take place between two organizations come under Business to business. Producers and traditional commerce wholesalers typically operate with this type of electronic commerce. C2C type of transactions generally occurs for second-hand products. This type of e-commerce is very common in crowdsourcing based projects. Running an internet business is essentially free and depend on your expertise. You will need to develop and maintain a website, use different online tools and web platforms. Internet businesses also need some type of knowledge that will be connected to the type of business that you will do on the market. Lack of Personal Touch: E-business lacks the personal touch. Lack of contact with the salesperson lends it a touch of humanity and credibility. Also, it is easier for hackers to get your financial details through online business. It has a few security and integrity issues. Online transactions occur when a process of buying and selling takes place through the internet. There are three stages of Online Transactions - Registration, Placing an order, and Payment. The customer's email id, name, address, and other details are saved and are safe with the website. Marketing is related to advertising, promotion, PR, and sales, but is actually a distinct activity that helps prepare you and your organization to perform the related activities thoroughly and well. Figure 6.3 Internet Marketing is an example of what Internet marketing can do for you. Internet marketing is an all-inclusive term for marketing products and services online. This includes a variety of methods and platforms for communicating with customers, such as website, email, social media, and online advertising. The old paradigm of marketing was focused on delivering a one-way message to the potential customer. A key benefit of using online channels for marketing a business is the ability to measure the impact of any given channel. Further analysis can help determine which channels are most effective at acquiring valuable customers. There are a number of tools that can be used to build and maintain a robust online marketing program. Marketing Strategies are made not only to attract customers but also to retain the existing customers. E-mail allows marketers to deliver different advertisements to different customers based on market segmentation. Some marketers also send e-mail even without receiving any request for information from the customers. There are three types of affiliate marketing programmes. Affiliate member must feature a link to amazon's site. When an internet user buys any product on amazon.com after having gone there through a link, the affiliate member link which had forwarded the buyer to Amazon.com receives the commission. Viral marketing strategy approaches individual consumers to inform other persons about the products and services of a business. Business organizations believe that this marketing 110 CU IDOL SELF LEARNING MATERIAL (SLM)
strategy can build good business. Search engine optimization (SEO) attempts to improve a website's organic search rankings in SERPs. 6.6 KEYWORDS Internet business:Internet businesses are businesses that mainly operate on the internet. This type of businesses doesn’t need to have production plants, offices, stores Online transaction process (OLTP): It is secure and password protected. Three steps involved in the online transaction are Registration, Placing an order, and, Payment. Digital Cash: Digital Cash is a form of electronic currency that exists only in cyberspace and has no real physical properties. Business-to-Administration (B2A): This part of e-commerce encompasses all transactions conducted online by companies and public administration or the government and its various agencies. Consumer-to-Administration (C2A): The Consumer-to-Administration model encompasses all electronic transactions conducted between individuals and public administration. Univercell: To read about the latestarrivalofMobilephones,thentheinformationcanbeutilizedbyUnivercelltosendacou ponorinformationthroughdirecte-mailtothecustomer. Searchengineoptimization(SEO):It is a marketing practice focused on growing your website's visibility in organic (non-paid) search engine results, driving traffic, and ultimately increasing brand awareness. It is a free method of making your website more visible on search engine results pages (SERPs). Viralmarketing: Viralmarketing strategy approaches individual consumers to inform other persons aboutthe products and services of a business organization. 6.7 LEARNING ACTIVITY 1. Define Internet Business? ___________________________________________________________________________ ___________________________________________________________________________ 2. State the rules of marketing? 111 CU IDOL SELF LEARNING MATERIAL (SLM)
___________________________________________________________________________ ___________________________________________________________________________ 6.8 UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What you mean by internet marketing? 2. Explain the new rules of internet marketing? 3. Discuss the needs of internet business? 4. State the limitation of internet business? 5. Write a short note on tools of internet marketing? Long Questions 1. Explain the features of online business? 2. Explain the advantages of internet business? 3. Discuss the steps involved online transaction of E-Business? 4. Describe the internet marketing techniques in E-Commerce? 5. Explain the E-Business model in E-Commerce? B. Multiple Choice Questions 1. E-business can be defined as_______. a. The uninhibited flow of information and goods on the web. b. The use of the internet and the web to transact business. c. Digitally enabled transactions and processes within an organization. d. Commercial transactions involving electronic goods. 2. All of the following are major B2C business models except ______. a. Content provider. b. Industry consortium. c. Transaction broker. d. Service provider. 3. A strategy designed to compete in all markets around the globe is called a _____ strategy. a. Scope. b. Differentiation. c. Cost. 112 CU IDOL SELF LEARNING MATERIAL (SLM)
d. Focus. 4. Online journals where people post their reviews and thoughts on narrow topic are classified as a. Business domain website b. Corporate website c. Blogs d. Marketing website 5. The process of getting customers to pass along a company's marketing message to friends, family, and colleagues is known as _______. a. Affiliate marketing. b. Viral marketing. c. Permission marketing. d. Blog marketing. Answers 1-c, 2-b, 3-a, 4-c, 5-b 6.9REFERENCES Reference books • JaiswalS.,E-Commerce • MohammadMahmoudiMaymand,E-Commerce • MurthyC.S.V.,E-Commerce-Concepts,ModelsandStrategies • Schneider, E-Commerce, Cengage Learning, New Delhi. • PeeLosuin&AMurphy,ElectronicCommerceJaicoPub Textbook references • JosephP.T.,E-Commerce–AnIndianPerspective • RaviKalkotaFrontiersofE-Commerce,AddisonWesley • K.Bajaj & D.Nag E-Commerce, The Cutting Edge of Business, Tata McGraw • Green Stein ElectronicCommerceTata McGraw. Website 113 CU IDOL SELF LEARNING MATERIAL (SLM)
• https://www.cleverism.com/e-commerce-complete-guide • https://www.economicsdiscussion.net/business/e-commerce/31868 114 CU IDOL SELF LEARNING MATERIAL (SLM)
UNIT - 7: E-CYCLEOFINTERNETMARKETING STRUCTURE 7.0 Learning Objectives 7.1 Introduction 7.2 E-Cycle of internet marketing 7.3 Personalization of E-Commerce 7.4 Summary 7.5 Keywords 7.6 Learning Activity 7.7 Unit End Questions 7.8 References 7.0 LEARNING OBJECTIVES After studying this unit, you will be able to: Describe E-cycle of Internet marketing Identify Personalization of E-Commerce State the Personalized marketing in E-Commerce Role of E-Commerce Personalization List out E-Commerce Personalization strategy 7.1 INTRODUCTION Internet Marketing Internet-Marketing helps to broaden the reach and filter impressions. For instance, a lot moredemographics go to the internet for moving related topics than listen to a specific radio station.Marketingisthentargetedtothosewhohavesearchedorshowninterestinmovingrelatedcont ent. When money is paid for E-Marketing it is paid for the first call to action such as clickinganadratherthanjustimpressions.Itmeansthatmoneyisnowmorefocusedonpeoplewithso melevel ofinterest inyourservices. ExamplesofInternetMarketing:PurchasedLeads,GoogleAdwords,SEO,Yelp,GoogleLocal,Fac ebook/Twitter,ArticleMarketing,ContentMarketing,EmailMarketing. ComparisonofTraditionalMarketingvs. Internet Marketing Product promotion: E-commerce enhances promotions of products and services through direct,information-rich and interactingcontact withcustomers. Directsaving:Thecostofdeliveringinformationtocustomersovertheinternetresultsinsubstantial 115 CU IDOL SELF LEARNING MATERIAL (SLM)
savings to senders. Customer Service: Customer service can be greatly enhanced by enabling customers to finddetailed information online. Brand Image: Newcomers can establish brand or corporate images very quickly through net andat affordablecost. Advertising: Traditional advertising is oneway communication to persuade customers to buytheirproductsandservices.Intheelectronicperiod,itistwowaycommunicationaimsatcustomer stobrowse,explore,compare,questionandevencustomerdesigntheproductconfiguration. Customization:Theultimateluxurycangetisintermsofcustomdesignedproductsandservices.The netoffersatremendousopportunitytounderstandcustomers’needsoneatatimeand offercustomized productsand services. Order making process: Taking orders from customers can drastically be improved if it is doneelectronically, this saves time and reduces expenses and so sales people have more time to selltheir products orservices. Intermediaries:Intraditionalmarketingmiddlemenaresupposedtoprovidepaceandtimeutilitiest otheultimatecustomer,butadvancementofinformationtechnologyisturningintermediation in todisintermediation. CustomerValue:Traditionalmarketingtriestomaximizethevaluepertransactions;herecustomer attraction is big target. But in electronic marketing, the marketers are trying to formrelationshipwithcustomersandthey arelookingforlongtermvaluemaximization. 7.2 E-CYCLE OF INTERNET MARKETING Meaning Of E-Cycle E-cycling is the practice of reusing, or distributing for reuse, electronic equipment and components rather than discarding them at the end of their life cycle.E-cycling is the practice of reusing, or distributing for reuse, electronic equipment and components rather than discarding them at the end of their life cycle. Discarded electronics and electronic components (e-waste) are creating a serious problem because of toxic elements involved in their manufacture. In the vast majority of cases, discarded computers and other electronic devices, such as cell phones, are functional and could be passed on to another individual or organization. Often, even non-functioning devices can be refurbished and resold or donated. Organizations such as STRUT (Students Recycling Used Technology), the National Cristina Foundation, and the Resource Area for Teachers 116 CU IDOL SELF LEARNING MATERIAL (SLM)
(RAFT) collect and refurbish donated computer equipment for redistribution to schools and charities around the world. E-CycleofInternetMarketing: Ithasgot sevenstagesofmarketing.Theseare: Settingcorporateandbusiness-unitstrategy, Framingthemarketopportunity, Formulatingthemarketingstrategy, Designingthecustomerexperience, Designingthemarketingprogram, Craftingthecustomerinterface, Evaluatingtheresultsofthemarketingprogram. StageOne:SettingCorporateandBusiness-UnitStrategy: Corporate strategy addresses the inter-relationship between the various business unitsinafirm,includingdecisionsaboutwhichunitsshouldbekept,sold,oraugmented. Business- unit strategy focuses on how a particular unit in the company attacks a marketto gain competitive advantage. Consider, for example, Amazon.com. Corporate-strategyissues relate to the choice, mix, and number of business units such as kitchen, music,electronics, books, and tools/hardware. Once these business units are established andincubated in Amazon’s corporate head-quarters, the senior leadership team of each unitsetsthestrategic directionand steersthe businessunit towardits goals. StageTwo:FramingtheMarketOpportunity: It entails the analysis of market opportunities and collecting sufficient online and offlinedata to establish the burden of proof of opportunity assessment. Let’s say, for exampleof a business such as Amazon. The senior management team is continually confrontedwith go/no- go decisions about whether to add a new business unit or develop a newproductline within anexisting business unit. A simple six-step methodology helps evaluate the attractiveness of the opportunity. Thesixstepsinclude: Seedingtheopportunity, Specifyingunderservedcustomerneeds, Identifyingthetargetsegment, Declaringthecompany’sresource-basedopportunityforadvantage, Assessingopportunityattractiveness, 117 CU IDOL SELF LEARNING MATERIAL (SLM)
Makingthefinalgo/no-godecision.Thefinalgo/no-gochoiceisoftenacorporateor business-unit decision. StageThree:FormulatingtheMarketingStrategy: Internetmarketingstrategyisbaseduponcorporate,businessunitandoverallmarketingstrategiesoft hefirm.Themarketingstrategygoals,resourcesandsequencing of actions must be tightly aligned with the business unit strategy. Finally, theoverallmarketingstrategycomprisesbothoffline andonlinemarketingactivities. StageFour:DesigningtheCustomerExperience: Firms must understand the type of customer experience that needs to be delivered tomeet the market opportunity. The experience should correlate with the firm’s positioningand marketing strategy. Thus, the design of the customer experience constitutes abridgebetweenthehigh- levelmarketingstrategy(stepthree)andthemarketingprogramtactics(step five). StageFive:DesigningtheMarketingProgram: Thisstage entailsdesigningaparticularcombination ofmarketing actions(termedlevers) tomovetargetcustomers fromawareness tocommitment. The framework used to accomplish this task is the Market space Matrix. Simply put, theInternet marketer has various classes of levers (e.g., pricing, community) that can beused to create target customer awareness, exploration and commitment to the firm’soffering. StageSix:CraftingtheCustomerInterface The Internet has shifted the locus of the exchange from the marketplace (i.e., face-to- faceinteraction)tothemarketspace(i.e.,screen-to- faceinteraction).Thekeydifferenceisthatthenatureoftheexchangerelationshipisnowmediatedbya technology interface. This interface can be a desktop PC, Notebook, Personal DigitalAssistant (PDA), Mobile phone, Wireless Applications protocol (WAP) device or otherInternet enabled appliances. As this shift from people-mediated to technology - mediatedinterfacesunfolds,itisimportanttoconsiderthetypesofinterfacedesignconsiderationstha t confronttheseniormanagementteam. StageSeven:EvaluatingtheMarketingProgram: This last stage involves the evaluation of the overall Internet marketing program. Thisincludesa balanced focusonbothcustomer and financialmetrics. AdvantagesofInternetMarketing Internetmarketingcanreachawideaudienceforasmallfractionoftraditionaladvertisingbud gets. 118 CU IDOL SELF LEARNING MATERIAL (SLM)
InternetMarketingallowsconsumerstoresearchandpurchaseproductsandservicesat their own convenience. Therefore, businesses have the advantage of appealing toconsumersin amediumthat can bring resultsquickly. MostcomponentsofanInternetmarketingcampaigncanbetracked,measured,andtested and thus marketers can determine what information interests the audience most. Becauseefficiency,exposure,andresponseofinternetmediacanbetrackedmuchmoreeasily thanoff-linemedia—throughtheuseofwebanalytics. Forinstance— internetmarketingcaninstillamoreprofoundsenseofaccountabilityforadvertisers. LimitationsofInternetMarketing Internet marketing requires that customers use newer technologies instead of traditionalmedia. Low-speedinternetconnectionsareanotherlimitation. Ifcompaniesbuildcomplex or large websites, people connected to the internet via dial- up connections ormobiledevicesexperienceserious delaysin the deliveryof thecontent. From the customer’s perspective, the idea that the products or services that are beingoffered are virtual can be a limitation. However, the liberal return policies and in-storepickup optionsdoimprove thesituation for the customer. 7.3 PERSONALIZATIONE-COMMERCE What Is Ecommerce Personalization? E-Commerce Personalization is the process of delivering personal experiences on E- Commerce sites by dynamically showing content, product recommendations and specific offers based on previous actions, browsing behavior, purchase history, demographics, and other personal data. Personalization is increasingly important to merchants seeking to, not only engage shoppers, but also to increase repeat purchases, drive sales and increase conversion. It comes in many different forms—from personalized product recommendations on a retailer’s homepage or product detail page, to cart-abandonment marketing emails to onboarding quizzes that provide a personalized showroom of items to consumers, among many other applications. Designing Personalized Experiences in Ecommerce 119 CU IDOL SELF LEARNING MATERIAL (SLM)
The heart of personalization is goal attainment. Importantly, these goals should be customer- driven. It’s not about simply delivering what your business wants, but also about allowing every visitor to consume the experience how they prefer and helping they achieve their goals at each stage in their journey. Think of a business you interact with online - your favorite store, your bank, a vacation booking site - and recall the variety of goals you’ve looked to accomplish there. Your needs from a home goods store may be quite different during wedding season. You relied on your bank for a new set of information when buying a home, and your vacation preferences change depending on if you are traveling by yourself or with family. Each visitor interacts with businesses in a multitude of ways and truly powerful personalization looks beyond who you are to what you are trying to achieve right now. Site search, browsing data, product recommendations, landing pages, and all other interaction points should work cohesively to build a complete picture of each visitor across their journey ofcourse; this is easier said than done. While personalization is an increasingly hot topic, most businesses are still in the early stages of understanding how to best utilize it. Benefits of Personalization in Ecommerce Consider those ecommerce personalization stats: Monet ate: Marketers see an average increase of 20% in sales when using personalized experiences. Epsilon: 80% of shoppers are more likely to buy from a company that offers personalized experiences. Segment: 44% of consumers say that they will likely become repeat buyers after a personalized shopping experience with a particular company. Forrester:77% of consumers have chosen, recommended, or paid more for a brand that provides personalized service or experience. Forrester survey : In another 53% of digital experience delivery professionals said they lack the right technology to personalize experiences. Good E-Commerce Personalization Should: Meet users’ needs. Avoid turning visitors off with poor recommendations. Be used only where the potential return justifies your investment. PERSONALIZED MARKETING IN ECOMMERCE Personalized Marketing In Ecommerce: Deliver Weather-Sensitive Personalization Adjust Navigation to Visitors’ Interests 120 CU IDOL SELF LEARNING MATERIAL (SLM)
Recommend Product Categories Based on Browsing Behavior Personalize Search Results Send Personalized Email Based on User Behavior Use Geo-Location Targeting Show Category-Specific Discount Coupons Sort Recent Products by Interest Level Suggest Complementary Products Pitch an Upsell at and after the Purchase Remind Shoppers of Previous Engagements Use a Style Finder Show Product Recommendations Below the Product Personalize the Homepage Banner by Category Show Personalized Offers to Returning Visitors Deliver Weather-Sensitive Personalization E-Commerce personalization examples are from Shop Direct on their Very.co.uk website, and we really like it. As well as showing items to log in users based on their previous actions on the site, promotions are weather-sensitive. Adjust Navigation to Visitors’ Interests A good ecommerce personalization example is changing your homepage and navigation based on visitor interests. For example, when we typed in the URL of the ASOS home page, it automatically redirected to the women’s section because that’s what we’d looked at before. ASOS most likely is using cookie retargeting, which is also part of Opti Monster. Recommend Product Categories Based on Browsing Behavior One of the most common ecommerce personalization examples is from Amazon. When you visit their site and navigate to your personal page, you’ll see categories based on your previous onsite search and browsing behavior. Of course, it’s not perfect, as gifts you shop for will also show up here, but it’s still pretty accurate. This kind of personalization can increase sales by up to 10%, according to Business Insider. To make this happen on your site, you’ll need to use a product recommendation engine like Monet ate or Barilliance. Personalize Search Results Ever gage suggests that E-Commerce retailers can use what they know about their customers’ previous behavior to show the most relevant results when they search, as in this example from a shoe retailer. Here are some tips from Ever gage on personalizing E-Commerce search 121 CU IDOL SELF LEARNING MATERIAL (SLM)
results. Send Personalized Email Based on User Behavior One way to drive more sales with E-Commerce personalization is to continue marketing to visitors even after they leave your site. Amazon does this extremely well, sending follow up emails and personalized newsletters to alert customers to deals on items they’ve seen. Email marketing remains one of the best ways to reach your customers. When visitors opt in to an Opti Monster campaign, you can use email retargeting to send them personalized offers that they can access when they visit your site. For example, when they return to your site, you can display specific campaigns for specific product categories by using page-level targeting. To enable this, follow our instructions for creating your first campaign. Then go to Display Rules » Who should see thecampaign? Enable Visitors to a specific page, and then enter the URL of the page where you want the campaign to appear. Use Geo-Location Targeting You can also personalize E-Commerce by redirecting visitors to the right store. For example, one Amazon.com user, who also buys regularly from Amazon’s UK store, sees this banner when she visits the US store. Opti Monster’s Geo-Location targeting feature allows you to segment your visitors by location to show appropriate offers to each group. Here’s location. Opti Monster customer IMSource used geo-location to boost conversions by 6500%. And to make it easier to segment your email list by location, you can use a form builder like WPForms. Show Category-Specific Discount Coupons When you create a discount coupon, you can make it even more relevant by ensuring that it relates to the category your visitors are browsing. Here’s an example of that using OptinMonster’s Smart Tags technology. As one of our E-Commerce personalization examples, we’ve mocked up an offer that Macy’s could show to their visitors browsing the dresses category. You can also show category specific offers, as in this example from Inc Stores. After testing, Inc. Stores found that product-specific messaging appealed to some of its visitors. Sort Recent Products by Interest Level This example, from Ever gage, shows how Madison Island goes beyond sorting products by newness, rating or price, to gauge how interested shoppers are in certain products based on the time they’ve spent browsing product pages. That means each customer will see a different sort order. 122 CU IDOL SELF LEARNING MATERIAL (SLM)
Suggest Complementary Products As mentioned earlier, showing related products can be a huge sales booster, but there are alternatives to Amazon’s approach. For example, Forever 21 lets you shop for an entire outfit at once, with suggestions for the accessories that will complete it. Pitch an Upsell at and after the Purchase The know that 75% of customers are more likely to buy based on personalized recommendations? So you can get more sales by recommending products while people are at checkout. In this ecommerce personalization example, Amazon shows products related to what’s in the cart. Remind Shoppers of Previous Engagements Here’s another of our favorite E-Commerce personalization examples from Ever gage. To boost sales, remind shoppers of the products they’ve previously viewed and purchased. Obviously, this is different for each customer. Here’s one example, from Shoeline. Use a Style Finder The best way to personalize is to ask customers what they want. We’ve got a couple of E- Commerce personalization examples that show this in action. Swarovski Crystals gives you 4 options to choose from on their homepage. Show Product Recommendations below the Product It’s no accident that some of the best E-Commerce personalization examples relate to product recommendations. That’s because they’re proven to boost sales. Bunting found that when At Home in the Country showcased recommended products that other customers had bought after viewing particular items, it increased revenue by 13%. Personalize the Homepage Banner by Category Ever gage found that when Shoeline personalized their homepage banner to show different products based on visitors’ previously demonstrated interests they achieved a clickthrough rate of up to 26% and a conversion rate of 18%. Show Personalized Offers to Returning Visitors The best ecommerce personalization examples target shopping cart abandonment by enticing abandoning visitors back to your site. Since ecommerce sites have an average 69% cart abandonment rate according to Baymard Institute, targeting abandoners is an excellent way to recover revenue. One way to do that with OptinMonster is to recover the sale by sending an abandonment email, then using Smart Tags to show a personal offer to your returning visitor, as in this example from a travel site. 123 CU IDOL SELF LEARNING MATERIAL (SLM)
Key Differences between B2B and B2C Personalization Multi-Layered Persona: It’s not easy to personalize to a single individual, but it gets complex in B2B when you factor in vertical, account, department and application. Extremely Diverse Customer Base: When the customer base is diverse from the researcher, to the technician, to the customer service rep, providing the right information without having to wade through thousands of SKUs and other data that is irrelevant to their job is much more complex. Complex Product Catalog: While a knowledgeable salesperson can navigate through an unwieldy catalog, B2B buyers often require personalized & funnel-based catalog on different education levels. The Role of AI in E-Commerce Personalization Advancements in technology, especially the increasing accessibility of artificial intelligence (AI)/machine learning, have been a major driver of personalization. Machines can crunch data quickly, enabling real time optimizations and scalability. Companies can utilize the collected and processed data to recommend personalized products to every customer in real time and thus design an individual, user-oriented shopping experience. Adding intelligence to the user experience can provide real time assistance to users that simply aren’t possible manually. For instance, say a transportation service has an app offering public transportation directions. Algorithms could determine, based travel speed, if the user is walking, biking, or driving, and recalculate the journey with the appropriate timings. For organizations that rely heavily on content, intelligence can help direct the creation of that content by identifying gaps in information that visitors are searching for. Perhaps a financial company sees a rise in visitors searching for information around automating investments - information like this can help content creators prioritize the rising topics their actual customers are interested in. Through natural language processing and machine learning these trending topics can be identified quickly, without the hours of manpower that would be required to read through thousands of search terms and pull out trends. E-Commerce Personalization Strategy Know your users: This is at the very heart of e-commerce personalization. The more you know about your users, the better equipped you are to personalize content for them. 124 CU IDOL SELF LEARNING MATERIAL (SLM)
Segment your audience: Organize your audience into smaller segments. This way, you can group customers with similar needs together and provide them with the experiences they’re looking for. Provide product recommendations: Improve your e-commerce personalization strategy by displaying recommended or similar products to the one your customers are looking for. By doing so, you’re providing your customers with easy-to-access information, improving their overall e-commerce customer experience. 7.4 SUMMARY E-cycle is the practice of reusing, donating or redistributing an electronic item until the end of its life cycle and then recycling the item when it is no longer usable. It is the process of promoting a brand, products or services over the Internet. Its broad scope includes email marketing, electronic customer relationship management and any promotional activities that are done via wireless media. E-commerce enhances promotions of products and services through direct, information-rich and interacting contact with customers. E-cycling is the practice of reusing, or distributing for reuse, electronic equipment and components. Discarded electronics and electronic components (e-waste) are creating a serious problem The role of AI in e-commerce personalization is increasingly important. Machines can crunch data quickly, enabling real time optimization and scalability. Companies can use this data to recommend products in real time and thus design an individual, user- oriented shopping experience for each customer. 7.5 KEYWORD AI: Artificial Intelligence enabling real time optimizations and scalability. URL: URL stands for Uniform Resource Locator and is used to specify addresses on the World Wide Web. A URL is the fundamental network identification for any resource connected to the web. ASOS:ASOS stands for As Seen on Screen. ASOS.com. that’s because when ASOS first launched in 2000, it was a celebrity-linked clothing website. PDA: Personal Digital Assistant are small, networked computers which can fit in the palm of your hand. PDAs have evolved over the years, beginning with first-generation devices such as the Apple Newton (Apple coined the term “PDA”) and Palm Pilot. They offered features such as calendar and note-taking capability. WAP: Wireless Applications protocol is an application environment and set of 125 CU IDOL SELF LEARNING MATERIAL (SLM)
communication protocols for wireless devices designed to enable manufacturer-, vendor-, and technology-independent access to the Internet and advanced telephony services. Personal DigitalAssistant (PDA):Personal Digital Assistants (PDAs) are small, networked computers which can fit in the palm of your hand. 7.6 LEARNING ACTIVITY 1.What is E-Commerce personalization? ___________________________________________________________________________ ___________________________________________________________________________ 2.What do you mean by E-Cycle with reference to E-commerce? ___________________________________________________________________________ ___________________________________________________________________________ 7.7UNIT END QUESTIONS A. Descriptive Questions Short Questions 1. What you mean by internet marketing with examples? 2. Explain the limitation of internet marketing? 3. Explain Key Differences between B2B and B2C Personalization? 4. State the Good E-Commerce Personalization? 5. Describe ComparisonofTraditionalMarketingVs. Internet Marketing? Long Questions 1. Explain the merits of internet marketing? 2. Briefly explain the E-Cycleofinternetmarketing. 3. State the Benefits of Personalization in Ecommerce? 4. Discuss the Personalization marketing of Ecommerce? 5. Explain the E-Commerce Personalization Strategy? B. Multiple Choice Questions 1. Digital products are best suited for B2C e‐commerce because they: a. are commodity like products b. can be mass‐customized and personalized 126 CU IDOL SELF LEARNING MATERIAL (SLM)
c. can be delivered at the time of purchase d. Is commodity like products, mass‐customized and personalized, delivered at the time of purchase. 2. Amazon.com is well‐known for which e‐commerce marketing technique? a. banner ads b. pop‐up ads c. affiliate programs d. viral marketing 3. Which of the following is not a widely used midrange or high-end e-commerce suite? a. Microsoft commerce server b. web trends marketing lab2 c. ibm web sphere commerce d. broad vision commerce 4. The ability to change the product to better fit the needs of the customer is called ________. a. Customization. b. Personalization. c. Privacy. d. Accessibility. 5. Whatisthenamegiventoaninteractivebusinessprovidingacentralizedmarketwheremanyb uyersandsuppliers cancometogetherfore‐commerceor commerce‐relatedactivities? a. Directmarketplace b. B2B c. B2C d. Electronicmarketplace Answers 1-d, 2-c, 3-a. 4-a, 5-d 127 CU IDOL SELF LEARNING MATERIAL (SLM)
7.8 REFERENCES Reference books • JaiswalS.,E-Commerce • MohammadMahmoudiMaymand,E-Commerce • MurthyC.S.V.,E-Commerce-Concepts,ModelsandStrategies • Schneider, E-Commerce, Cengage Learning, New Delhi. • PeeLosuin&AMurphy,ElectronicCommerceJaicoPub Textbook references • JosephP.T.,E-Commerce–AnIndianPerspective • RaviKalkotaFrontiersofE-Commerce,AddisonWesley • K.Bajaj & D.Nag E-Commerce, The Cutting Edge of Business, Tata McGraw • Green Stein ElectronicCommerceTata McGraw. Website • https://www.cleverism.com/e-commerce-complete-guide • https://www.economicsdiscussion.net/business/e-commerce/31868 128 CU IDOL SELF LEARNING MATERIAL (SLM)
UNIT - 8: E-BUSINESSPLAN STRUCTURE 8.0 Learning Objectives 8.1 Introduction 8.2 Planning of E-Business 8.3 Implementing and Controlling of E-Business 8.4 Creating a E-Marketing Mix 8.5 Summary 8.6 Keywords 8.7 Learning Activity 8.8 Unit End Questions 8.9 References 8.0 LEARNING OBJECTIVES After studying this unit, you will be able to: Describe Components of E-Business Know the Feature& Functions of E-Business State the Planning of E-Commerce Business Strategy Point out implementation E-Commerce Business Create a marketing mix 8.1 INTRODUCTION E-Business E-business is short for “electronic business.” As an overarching term, it refers to any method of utilizing digital information and communication technologies to support or streamline business processes – from preparation to implementation. However, it can also refer more specifically to the business processes of online stores or other internet-based companies.E- Commercerefers to trading products and services online, and so is strictly only speaking of one aspect of e-business. Definition E-business is a general term that encompasses all forms of using digital information and communication technologies to support and optimize business processes. In contrast, e- commerce describes only the online trading of products and services, and is therefore only a subsection of e-business. 129 CU IDOL SELF LEARNING MATERIAL (SLM)
Components of Electronic Business The core components of e-business are information, communication, and transaction. Business partners use digital networks (i.e. public or private communication networks) to conduct business processes using innovative technologies to improve efficiency. Three key areas are particularly important for e-business E-procurement: the electronic sourcing of products and services by companies, focused on reducing costs and effort. Online stores: the electronic sale of products and services via appropriate platforms, such as online stores. Online marketplaces: electronic commerce via digital networks, connecting the buyers and suppliers of products and services. There are also two further areas of e-business: Online communities: electronic communication network between individuals and organizations, which supports data and knowledge sharing as well as the preparation of transaction decisions. Online companies: electronic business cooperation for connecting individual company services, resulting in a virtual business with a common transaction offer. Features of E-Business To fully understand the concept of e-business, you must first grasp the link between e- business and the net economy and know who the typical market participants are in the industry. Net Economy and E-Business The range of e-business is determined by the net economy. This refers to the commercial use of digital data networks for handling information, communication, and transaction processes via various platforms. Since the late 90s, or even earlier, the development of digitalization not only led to a major structural change in society, but also in the economy. Since then, the focus has shifted to the information sector. The systematic use of technology to collect and utilize information laid the foundations of a so-called “information economy,” in which competitiveness is achieved through knowledge superiority. This section of the economy, known as the “net economy,” now exists in parallel with the traditional, “real economy.” Market participants in e-business E-business can take place between a large numbers of market participants: between 130 CU IDOL SELF LEARNING MATERIAL (SLM)
businesses and consumers, various private individuals, public administrations, and other organizations such as NGOs.Generally speaking, these various market participants can be divided into three distinct categories: Business (B) Consumer/citizen (C) Administration (A) All three categories can play the role of either buyer or service provider within the market, meaning there are nine possible combinations for e-business relationships. Within this context, B2C and B2B belong to e-commerce, while A2B (administration-to-business) and A2A (administration-to-administration) are a part of the so-called e-government sector (also a part of e-business). Function of Electronic Business The most important role of electronic business is “electronic value creation” – the generation of electronic added value. The forms of electronic added value are usually distinguished in the following way: Structuring value: an online offer achieves an overview of a large quantity of information Selection value: an online offer provides specific database information upon request Matching value: an online offer makes it possible to merge inquiries from supplier and buyers more efficiently Transaction value: an online offer makes a business more efficient Coordination value: an online offer allows different providers to better combine their services Communication value: an online offer improves communication between different consumers. Depending on which type of value a company decides to pursue, they can choose one or more value activities – for example the collection, structuring, pre-selection, summary, or distribution of information. A so-called “digital information product” can also be created, offering added values which the customer is prepared to pay for. This information product may be a website, blog comparison portal, e-book, or a software application. The electronic value creation process involves the following steps: Collecting large quantities of information to identify data relevant to the product Processing the information and transforming it into a product 131 CU IDOL SELF LEARNING MATERIAL (SLM)
Transferring the final information product to the customer Repeat this process whenever new information becomes available – information products are not static and must be kept up to date. Besides the generation of electronic added value, the various long-term goals of the e- business must be determined, such as how best to automate commercial processes, or establishing new business models (such as cutting out middlemen). 8.2 PLANNING OF E- BUSINESS Meaning of Business Plan The business plans help companies maintain focus on a predefined set of goals. They also help company owners present their businesses to lenders and investors. If your business is an online vehicle, your ecommerce business plan is a roadmap. First, define your business. Your vehicle and then describe where you want to take your business and how you’ll get there. The best business plans read like travel journeys. They include blueprints for growth, projected timelines, and financial goals. Like real-world route planners, they identify potential roadblocks and outline contingency strategies. They clarify topics like cash flow, expenses, marketing tools, and distribution channels in detail. Basically, your business plan is the framework for your enterprise. Strategy and planning play a fundamental role in business, not least online, and even more so in a complex world that now operates across multiple sales channels and devices. The success of a strategy in ecommerce should be measured by the sales that are generated and ultimately profits made. The most important thing is to have a strategy and to define this by setting and measuring ongoing targets and goals against your plan. Numbers and metrics should play a key role in defining your success. These should be measured and reviewed on a periodic basis, and actions taken based on the outcomes. Almost all of the successful online businesses who have experienced compound growth year on year display common beliefs, characteristics and ambitions. 1. Clearly defined vision & goals You know exactly want you want to achieve, and when and where you want to achieve it. A laser-like focus helps form an unshakable conviction and dedication to building a successful online business. i.e. “I want to target the UK in year one, I have X amount of stock, I want to push X brands at different times of the year”, “I am going to look into and implement X, Y and Z opportunities to contribute towards 132 CU IDOL SELF LEARNING MATERIAL (SLM)
traffic and sales, and want to achieve X sales during this time”. Carry out regular competitor and SWOT analyses (Strengths, Weaknesses, Opportunities, and Threats) and act on the outcomes. 2. Speculate to accumulate Successful ecommerce businesses invest money in activities that generate growth or make them more efficient, ideally both at the same time. Winners pay for the best SOFTWARE, the best TECHNOLOGY, the best MARKETING, the best PEOPLE and the best ADVICE when it comes to strategy, tactics and growing the business. Accepting that customer acquisition is an investment, and focusing on this during the initial years, is crucial. In regards to profitability, customer retention and returning customers should be your number one focus. 3. Know your numbers Constantly measure. Be aware of and understand your site and customer analytics. Know which metrics are important and continue to focus on understanding and improving on all the numbers. Number of visitors, conversion rate, and average order value, bounce rates, returning customers, overall cost per acquisition. Every day, week, month and year provides you with feedback that can be measured against targets and streamline your business. 4. Know your costs Costs will fall into four main areas: Technology (ecommerce platform, website, stock control, warehouse systems, tills and epos), Products (buying or manufacturing products, shipping, and packaging), Marketing (online advertising, offline advertising, and agency fees) and Business (employees, office / warehouse rental, operating costs and payment processing). Some costs are fixed, others will be variable. Cost Per Acquisition (CPA) is one measure you can use to analyses individual marketing activities on their own or your advertising vs. sales overall. It is cost divided by sales (a £10 spends for £100 sales would represent a 10% CPA). 5. Build & invest in your team Successful online businesses are not a solo operation – it’s a team game. There are mission- critical functions that will require attention and people. This requirement will grow exponentially with sales growth with a few primary and secondary hires critical in the beginning. Incentives are the lifeblood of ecommerce teams as is the case with any sales- focused organization. 6. The customer is King Changes and improvements should benefit visitors and consumers and in doing so convert more browsers into customers and existing customers into bigger and more frequent spenders. Elegant design might be satisfying to the eye and is important, but frequent and 133 CU IDOL SELF LEARNING MATERIAL (SLM)
multiple site enhancements that enhance the bottom line are the ones that matter. 7. Embrace change & continuous improvement Developments online, within the world of ecommerce, what is going on in relation to technology, online marketing, the latest news, shifts in online culture and understanding how to read basic web analytics. React to as many opportunities and enhancements that are made as you can. These may be new features on site, new areas for exposure, a change in how you work or continued improvements in product information and pricing. You must become an ecommerce expert within your industry, knowing as much as possible about your competitors. Being clueless to these things may leave you running behind. An excellent first step would be to subscribe to the mailing lists of your competitors and a range of online ecommerce expert and advice sites. 8. Be fair & honest with customers & suppliers Building an admired and respected business is important. The real money is made over the long term through repeat sales and referrals. With great customer service and being fair in all business dealings, long-term relationships can flourish with both customers and suppliers. Customers may take a long time to get but can be lost in an instant through poor customer service. 9. Seek advice from the experts No one can be an expert at everything and having consultants, advisors, training providers and service partners you can trust and follow (and measure results from) is essential. Ecommerce does not get simpler over time. Winners pay for the best advice when it comes to strategy, tactics and growing the business. IRP World is where you find help with all of these elements. IRP World is where you link up with IRP partners and create your own digital village. 10. There is no such thing as easy money There is an army of companies and potential start-ups online wanting to make a million for little or no work and hoping that it is possible to make money for doing next to nothing. Successful retail website owners know that this is a myth and the internet is like any other business. It requires focus, hard work, and constant improvement and if you’re targeting and measuring right, you will enjoy the rewards. 8.3 IMPLEMENTING AND CONTROLLING OF E-BUSINESS E-Commerce – Impact of E-Commerce: 134 CU IDOL SELF LEARNING MATERIAL (SLM)
E-commerce has made a profound impact on society. People can now shop online in the privacy of their own homes without ever having to leave. This can force larger brick and mortar retailers to open an online division. In some cases, it can also force smaller businesses to shut their doors or change to being completely online. It also changes the way people look at making purchases and spending money. E-commerce has changed the face of retail, services, and other things that make our economy work. Undoubtedly, it will continue to influence how companies sell and market their products, as well as how people choose to make purchases for many years to come. The following are the impacts of e-commerce on the global economy: 1. Impacts on Direct Marketing: i. Product Promotion – E-commerce enhances promotion of products and services through direct, information-rich, and interactive contact with customers. ii. New Sales Channel – E-commerce creates a new distribution channel for existing products. It facilitates direct reach of customers and the bi-directional nature of communication. iii. Direct Savings – The cost of delivering information to customers over the internet results in substantial savings to senders when compared with non-electronic delivery. Major savings are also realized in delivering digitized products versus physical delivery. iv. Reduced Cycle Time – The delivery of digitized products and services can be reduced to seconds. Also, the administrative work related to physical delivery, especially across international borders, can be reduced significantly, cutting the cycle time by more than 100 percent. v. Customer Service – Customer service can be greatly enhanced by enabling customers to find detailed information online. Also, intelligent agents can answer standard e-mail questions in seconds and human experts’ services can be expedited using help-desk software. vi. Corporate Image – On the web, newcomers can establish corporate images very quickly. Corporate image means trust, which is necessary for direct sales. Traditional companies such as Intel, Disney, Dell, and Cisco use their web activities to affirm their corporate identity and brand image. vii. Customization – E-commerce provides for customization of products and services, in contrast to buying in a store or ordering from a television, which is usually limited to standard products. Dell Computers Inc. is a success story of customization. Today, we can configure not only computers but also cars, jewellery, gifts, and hundreds of other products and services. If properly done, one can achieve mass customization. It provides a competitive advantage as well as increases the overall demand for certain products and services. 135 CU IDOL SELF LEARNING MATERIAL (SLM)
viii. Advertisements- With direct marketing and customization comes as one-to-one or direct advertisement, which is much more effective than mass advertisement. This creates a fundamental change in the manner in which advertisement is conducted not only for online trades but also for products and services that are ordered in traditional ways. ix. Ordering Systems- Taking orders from customers can drastically be improved if it is done online. When taken electronically, orders can be quickly routed to the appropriate order- processing site. This saves time and reduces expenses, so salespeople have more time to sell. Also, customers can compute the cost of their orders, saving time for all parties involved. x. Markets- The physical market disappears as does the need to deliver the goods to the marketplace. In a market space, which is an electronic market, goods are delivered directly to buyers when purchasing is completed making markets much more efficient. Already, small but powerful software packages are delivered over the internet. This fundamentally affects packaging and greatly reduces the need for historical distribution. New selling models such as shareware, freeware are emerging to maximize the potential of the internet. New forms of marketing will also emerge, such as web-based advertising, linked advertising, direct e-mail, and an increased emphasis on relationship marketing. Customer’s convenience is greatly enhanced, availability of products and services is much greater, and cheaper products are offered. 2. Impacts on Organization: i. Technology and Organizational Learning: Rapid progress in e-commerce will force companies to adapt quickly to the new technology and offer them an opportunity to experiment with new products, services, and processes. New technologies require new organizational approaches. For instance, the structure of the organizational unit dealing with E- commerce might have to be different from the conventional sales and marketing departments. To be more flexible and responsive to the market, new processes must be put in place. This type of corporate change must be planned and managed. ii. Changing Nature of Work: The nature of work and employment will be transformed in the digital age; it is already happening before our eyes. Driven by increased competition in the global marketplace, firms are reducing the number of employees down to a core of essential staff and outsourcing whatever work they can to countries where wages are significantly less expensive. The upheaval brought on by these changes is creating new opportunities and new risks and forcing us into new ways of thinking about jobs, careers, and salaries. 136 CU IDOL SELF LEARNING MATERIAL (SLM)
The digital age workers will have to become very flexible. Few of them will have truly secure jobs in the traditional sense, and all of them will have to be willing and able to constantly learn, adapt, make decisions, and stand by them. iii. New Product Capabilities: E-commerce allows for new products to be created and existing products to be customized in innovative ways. Such changes may redefine organizations’ missions and the manner in which they operate. E-Commerce also allows suppliers to gather personalized data on customers. Building customer profiles as well as collecting data on certain groups of customers, can be used as a source of information for improving products or designing new ones. Mass customization enables manufacturers to create specific products for each customer, based on his or her exact needs. For example, Motorola gathers customer needs for a pager or a cellular phone, transmits them electronically to the manufacturing plant where they are manufactured, along with the customer’s specifications and then sends the product to the customer within a day. 3. Impacts on Manufacturing: The production systems are integrated with finance, marketing, and other functional systems, as well as with business partners and customers. Using web-based ERP systems, orders that are taken from customers can be directed to designers and to the production floor, within seconds. Production cycle time is cut by 50 percent or more in many cases, especially when production is done in a different country from where the designers and engineers are located. 4. Impacts on Finance: E-commerce requires special finance and accounting systems. Traditional payment systems are ineffective or inefficient for electronic trade. The use of the new payment systems such as electronic cash is complicated because it involves legal issues and agreements on international standards. Nevertheless, electronic cash is certain to come soon and it will change the manner in which payments are being made. In many ways, electronic cash, which can be backed by currency or other assets, represents the biggest revolution in currency since gold replaced cowry shells. Its diversity and pluralism is perfectly suited to the internet. It could change consumers’ financial lives and shake the foundations of financial systems and even governments. 5. Impact on Supply Chain Management: Electronic commerce and the internet are fundamentally changing the nature of supply chains, and redefining how consumers learn about, select, purchase, and use products and services. 137 CU IDOL SELF LEARNING MATERIAL (SLM)
The result has been the emergence of new business-to business supply chains that are consumer- focused rather than product-focused. They also provide customized products and services. E-commerce impacts supply chain management in a variety of keyways. These include: i. Cost Efficiency: E-commerce allows transportation companies of all sizes to exchange cargo documents electronically over the internet. E-commerce enables shippers, freight forwarders and trucking firms to streamline document handling without the monetary and time investment required by the traditional document delivery systems. By using e-commerce, companies can reduce costs, improve data accuracy, streamline business processes, accelerate business cycles, and enhance customer service. Ocean carriers and their trading partners can exchange bill of lading instructions, freight invoices, container status messages, motor carrier shipment instructions, and other documents with increased accuracy and efficiency by eliminating the need to re-key or reformat documents. The only tools needed to take advantage of this solution are a personal computer and an internet browser. ii. Changes in Distribution System: E-commerce will give businesses more flexibility in managing the increasingly complex movement of products and information between businesses, their suppliers and customers. E- commerce will close the link between customers and distribution centres. Customers can manage the increasingly Complex movement of products and information through the supply chain. iii. Customer Orientation: E-commerce is a vital link in the support of logistics and transportation services for both internal and external customers. E-commerce will help companies deliver better services to their customers, accelerate the growth of the e-commerce initiatives that are critical to their business, and lower their operating costs. Using the Internet for e-commerce will allow customers to access rate information, place delivery orders, track shipments and pay freight bills. E-commerce makes it easier for customers to do business with companies: Anything that simplifies the process of arranging transportation services will help build companies’ business and enhance shareholder value. By making more information available about the commercial side of companies, businesses will make their web site a place where customers will not only get detailed information about the services the company offers, but also where they can actually conduct business with the company. 138 CU IDOL SELF LEARNING MATERIAL (SLM)
Ultimately, web sites can provide a universal, self-service system for customers. Shippers can order any service and access the information they need to conduct business with transportation companies exclusively online. E-commerce functions are taking companies a substantial step forward by providing customers with a faster and easier way to do business with them. iv. Shipment Tracking: E-commerce will allow users to establish an account and obtain real-time information about cargo shipments. They may also create and submit bills of lading, place a cargo order, analyse charges, submit a freight claim, and carry out many other functions. In addition, e-commerce allows customers to track shipments down to the individual product and perform other supply chain management and decision support functions. The application uses encryption technology to secure business transactions. v. Shipping Notice: E-commerce can help automate the receiving process by electronically transmitting a packing list ahead of the shipment. It also allows companies to record the relevant details of each pallet, parcel, and item being shipped. vi. Freight Auditing: This will ensure that each freight bill is efficiently reviewed for accuracy. The result is a greatly reduced risk of overpayment, and the elimination of countless hours of paperwork, or the need for a third-party auditing firm. By intercepting duplicate billings and incorrect charges, a significant percent of shipping costs will be recovered. In addition, carrier comparison and assignment allows for instant access to a database containing the latest rates, discounts, and allowances for most of major carriers, thus eliminating the need for unwieldy charts and tables. vii. Shipping Documentation and Labelling: There will be less need for manual intervention because standard bills of lading, shipping labels, and carrier manifests will be automatically produced; this includes even the specialized export documentation required for overseas shipments. Paperwork is significantly reduced and the shipping department will therefore be more efficient. viii. Online Shipping Enquiry: This gives instant shipping information access to anyone in the company, from any location. Parcel shipments can be tracked and proof of delivery quickly confirmed. A customer’s transportation costs and performance can be analysed, thus helping the customer negotiate rates and improve service. Successful implementation of E-Commerce business 139 CU IDOL SELF LEARNING MATERIAL (SLM)
Planning for E-Commerce Business Technology Selection/Website Audit & Analysis Customer Acquisition Customer Engagement Customer Retention Optimizing Key Metrics, and Business Analysis & Customer Insights 1. Strategic Business Planning and Roadmaps – Strategy is about making the right choices that will help reach the stated business objectives. There should be a clear cut vision, mission and objective about what will be achieved, in how much time, within what budget, identification of the right resources for and constraints in the face of execution of the strategy mentioned in the business plan, and what elements will be considered for roadmap. Knowledge and deep understanding of the digital marketing tools and techniques that will help in reaching and acquiring customers is required. Your business must reach out to customers who are online across multiple dimensions and devices. So, the assumptions considered in preparing the strategic business plan should be in alignment with the ecommerce industry’s norms and trends. 2. Technology Selection/ Website Audit and Analysis – In order to provide the maximum benefit to the end customer, your chosen ecommerce technology should be fully capable of being customizable, and be able to complement the business model, and adhere to the existing best practices in offline retail. If you’re a retailer taking the first-time plunge into ecommerce, various functionalities on the e-commerce website should be carefully thought over based on the industry, audience being targeted, various customer segments who may be buying the offered products and services. With respect to retailers who have implemented an ecommerce strategy and have not yet received the rewards of the complete capability of the ecommerce technologies, there needs be a complete assessment of how the website can perform better by examining the store front and customer flow, analysis of competing websites, identification and implementation of solutions based on the gap analysis carried out (‘as-is’ and ‘to-be’). It is equally important to measure and monitor the process that was made because of the implementation of the suggested changes. 3. Customer Acquisition – Online or popular digital marketing encompasses multiple tools for reaching out to the new generation of customers, who are actively engaged in using multiple devices, through search engine optimization, search engine marketing (paid advertisement that includes both cost per click and cost per thousand impressions), social media marketing (that includes both cost per click and cost per thousand impressions), email 140 CU IDOL SELF LEARNING MATERIAL (SLM)
campaigns, display advertisements using various ad networks, referral programs and re- targeting campaigns. Going by the sales principles of AIDA (awareness, interest, desire and action), it’s important to note that the cost of customer acquisition will be very high for brands and retailers that are newly establishing their product offerings exclusively online. However, for brands that are well established offline and are pursuing ecommerce strategy, the cost of customer acquisition is lesser compared to the new entrants. 4. Customer Engagement – Customers these days are actively seeking to engage with brands to understand the core benefits and unique value proposition that the brand offers, discount and offers during special seasons, a robust support mechanism for queries/clarifications regarding the products displayed and interaction with customer support executives to know more about policies on returns and exchange, etc. Engaging customers through various social media channels also instills superior trust in the minds of customers. 5. Customer Retention –With the advent of sophisticated e-commerce technologies, new age retailers will be able to leverage an almost one-to-one customer experience and that’s the best a customer can really expect. However, it should be noted that to fully leverage best-in-class technology, there needs to be a constant effort to look out for features and functionalities that will enhance the customer experience. 6. Optimization Based on Key Metrics – Some of the key metrics to measure the health of an ecommerce venture are the total revenue generated, cost of customer acquisition, % of customers converted, and % of customers entering the website through various channels. However, these metrics may vary significantly based on the business objectives and so every business needs a fully customized approach for defining the key metrics and further analysis. Once these are defined and there are a substantial number of customers visiting the website, a deeper level of optimization is needed at 2 levels – on the technology and the business front. 7. Technology – This generally includes optimizing the page load speed, shopping cart, check-out and other web pages, a/b and multivariate testing, etc. Creating unique and well- researched blog content, refining the titles & headings in the content, and using engaging Meta descriptions are other ways to attract organic traffic to your website. Learn more about Search Engine Optimization. 8.Business – Optimization here includes analysis of the total revenues generated, total spends for running the e-commerce operations, optimizing the gross net margins, conversion rates from each of the various channels, customer loyalty and retention rates, rate of repeat purchase, frequency of repeat customers (across multiple dimensions), % of carts abandoned, etc. There are a lot of features and functionalities to helping online retailers improve these numbers. There is a lot of research evidence supporting the incorporation of features like reviews and ratings and display of the right products either through up-selling or cross- selling. Based on the statistics, 47% of shoppers read product reviews prior to their online 141 CU IDOL SELF LEARNING MATERIAL (SLM)
purchases and 63% are more likely to buy from websites with online reviews or ratings. Similarly, online companies that leverage a recommendation system can increase sales by 8- 10%. 9. Business Analysis And Customer Insights – The final step in the entire process is about fine-tuning and understanding the product categories that have performed well compared to other products displayed in the web store. Assessing this is crucial since each of these categories and products within those categories occupy the prime real estate in the online world – the web store. It also should consist of understanding the customer segments, demographics, profitable customers, source of channels through which the profitable customers came to the web store, % of revenue each profitable customer contributes to and the marketing spends that has gone into acquiring these customers. These metrics are only a small representation of a larger list that can be optimized further. These metrics vary based on the business needs and require a customized approach for defining, monitoring and optimization. 8.4 E-MARKETING MIX E-MarketingDefinition: E-Marketing is the process of considering marketing activities and achieving marketingobjectives throughelectronic medium.It may bedefined as aneconomicprocess that involvesthe use of computer, internet and other electronic systems and network, whereby the goods orservices areexchangedandtheir valuesintermsofpriceare determined. CISCO specialists define E-Marketing as the sum of all activities a business conductsthroughtheinternetwiththepurpose of,attracting,winningandretainingcustomers. E-Marketing involves the use of online networks, computer communication and digitalinteractive media to the marketing objectives of the organization. It enhances the functions oftraditional form of marketing. Business organizations adopt marketing tactics like e-mail, bannerads, referrals, and video ads to attract and retain customers. For example, naukri.com helps jobaspirants to geta suitableplacement at aneconomiccost. E- marketingmeansusingdigitaltechnologiestohelpsellgoodsorservices.Thesetechnologiesareaval uablecomplementtotraditionalmarketingmethods.Thoughbusinesseswill continue to make use of traditional marketing methods, such as advertising, direct mail andPR,E- Marketingaddsawholenewelementtothemarketingmix.Manybusinessesareproducing great results with E-Marketing. Its flexible and cost-effective nature makes it suitablefor small firms too. ObjectivesofE-Marketing 142 CU IDOL SELF LEARNING MATERIAL (SLM)
Different businesses may develop different E-Marketing objectives depending on theirindividual circumstances. A useful framework for developing effective E-Marketing objectives isthefive S’s framework,which includes: Sell–usingtheinternettosellproductsandservices Serve–usingtheinternettoservecustomers Speak–usingtheinternettocommunicatewithcustomers Save–usingtheinternettosave/reducecost Sizzle–usingtheinternettobuildbrandidentity WhensettingE-Marketingobjectives,makesurethattheyare: Specific–specifywhatistobeachieved Measureable– expressedinmeasurabletermssuchaskeyperformanceindicators,outcomes,numbers, percentage, dollars, etc. Action-oriented–statewhichactionsneedtobetakenandwhowilltakethem.Realistic– achievablewiththeresources available TimeBound–establishspecifiedtimeframes. Examplesofsometypicale-marketingobjectivescouldbe: Toachieve20%onlinesaleswithinthefirstyearoflaunchingonlinemarketingcampaigns Toincreaseonlinesalesforallproductsby15%in2016 Togrowemailcoverageto50%ofthecurrentcustomerbasebytheendofnextyear Toreducetheannualcostofdirectmarketingby 20%throughE-Marketing ImportanceofE-Marketing E-MarketinggivesaccesstothemassmarketatanaffordablepriceandunlikeTVorprint advertising, itallows trulypersonalized marketing. SpecificbenefitsofE-Marketinginclude: Global reach – A website can reach anyone in the world who has internet access. This helps tofind newmarketsand compete globallywithasmallinvestment. Lowercost–Aproperlyplanned,andeffectivelytargetedcampaigncanreachtherightcustomers atamuch lower cost thantraditional marketingmethods. E-Marketing Mix E-marketing is that the Internet makes it possible to provide services at every stage of selling the product: before selling the product, during the sales and after the sales transaction. 143 CU IDOL SELF LEARNING MATERIAL (SLM)
To achieve marketing objectives, after the target group i.e. customers have been identified, the next step is to foresee marketing measures and actions and their application. Following traditional marketing strategy model a company develops integrated marketing tools and set of actions which are called marketing mix. In the traditional marketing case it includes product, price, promotion and distribution. However, transferring this set into the Internet, the power of decision-making moves from seller to buyer. The main focus is on the communication with the customer, who has the power of decision-making. That is why the manufacturer has to figure out the needs of the customer even before the production stage. Traditional marketing mix does not possess elements of interactivity, consequently e- marketing, unlike traditional, is characterised by a wider scope. Figure 8.1 E-marketing mix Various authors treat e-marketing and its elements differently. What is more, some treat it at different levels and to different degrees. Figure 8.2 E-marketing mix elements 144 In e-marketing it is advisable to stick to the 4C model: CU IDOL SELF LEARNING MATERIAL (SLM)
Customers’ needs and wants Cost to the customer Convenience Communication The marketing mix refers to usage of the four Ps of marketing which are Product, Price, Place and Promotion. All the marketing strategies are developed around the framework of fours Ps. With the advent and progress of service industry elements like People, Process and Physical evidence were added to the traditional marketing mi.-commerce is a great avenue for organizations to use the above marketing mix to their advantage. Online marketing that completely models and expects every aspect of a marketing mix to be online and to apply digital technologies to create a marketing mix for modern business. A benefit of an online marketing mix in your business model is that understanding every element of your marketing process enables us to create better, highly functioning, and profitable businesses online. To create and execute a proper digital marketing strategy, understanding how different elements of an online marketing mix connect to your business is essential. Product In an online marketing mix, the product has to be 100% online, meaning the product has no physical features. For example, selling traditional products on an online store won’t be good enough. We have to look at the online product as something scalable in nature, which processes all revolve around being online such as: The creation and management of the product The pricing of the product Distribution of the product If every step is online, you have achieved a genuinely scalable online product. When creating an online product in an online marketing mix, we need to think about all the aspects that surround the product itself. Let’s think about the subject through questions that potentially helps us deliver a better online product. 1. What is the online brand of the created product? 2. Does the online product have a product line or a set of products in a range? 3. What are the extra services around the product? 4. How would the end cycle of the online product look? Is it upgradeable, or is it update- based, for example? 5. What are the guarantees of the said online product? 6. How to design your online delivery? 145 CU IDOL SELF LEARNING MATERIAL (SLM)
7. How to design an online product? 8. What features to include? 9. The quality of the online product? Online product Ideas Online product ideas, we could include in the product section of our marketing mix. There are a couple of choices we can explore. A prominent place to start is producing software with online distribution. Then there are product ideas that revolve around content: such as building downloadable (eBook, online courses) or creating high-quality content that functions as the product itself like a set of articles and blogs. Digitalization of services also enables them to some extent being an entirely online experience for your customers, for example, online consulting services. At the same time, while distribution is online, it still would require the physical presence of the personnel as of now, making scale harder to achieve. One way of innovating new online products and business models is by redefining existing physical products into a digital space. For instance, music and video streaming changed from a physical experience into a completely digital product. When transforming into new online products, the combination of the decisions in the online marketing mix helps you develop for better outcomes. A critical defining factor of your online products would be its place of distribution or a pricing strategy. Price Price in an online marketing mix refers to the cost of a product your customer will pay. In the price, we need to include secondary factors, for example, what is the customer’s perceived value of an online product and consider how much time it takes for a customer to acquire a product. Including customers, time spent on acquiring your products in the pricing strategy helps you develop more accurate pricing for your products. We associate online products with being instant in the acquisition, but in most cases, there are multiple steps involved for the customer. For example: 1. Pre-registration and registration 2. On boarding 3. Checkout and purchase process length 4. Download times A long acquisition time increases the cost for the customers, which leads to a loss of sales. Pricing online products the right way is the method of increasing revenues with scale. 146 CU IDOL SELF LEARNING MATERIAL (SLM)
Inefficient pricing strategies will, in the end, become the end of the product. As with more scale, the smaller issues scale too. An excellent pricing strategy includes the use of discounts, payment terms, and has opportunities for allowances. Pricing Strategies of Online Marketing The price with three typical pricing strategies like: The SaaS (Software as a Service, model, where a subscription gives access to an online product) Single purchase model (One price for one product for a one-time purchase) The free model (The product itself is free, and the monetization is through other means) both have their pros and cons to consider in your pricing strategy. A subscription model for an online product is beneficial if the product itself is not static, meaning it has updates, levels of complexity of using it, or its upgradeability. A one-time purchase is beneficial for finished products. When using a one-time purchase pricing strategy, you will have to include that even a finished product requires levels of customer support and onboarding. A free model is beneficial when the product offers a precise problem-solving capability as free products that don’t have real purposes won’t work. The most common way of monetizing free products is through advertising. Prices increase determinants on the internet: Figure 8.3 Prices increase determinants on the internet Distribution – retail trade participants on the Internet are exposed to significant product distribution expenses since the goods are transported to various places. Very often customers themselves cover delivering costs to the indicated address. In this case the cost of the product online increases. Partnership programmes - the vast majority of websites selling their products online carry out partnership programmes, so they pay from 7% to 15 % interest rate for each transaction. These costs contribute to the price rise of the product and reduce company’s profit. Website design and maintenance – requires considerable financial resources. Maintenance includes such expenses as hardware, software, the Internet, etc. 147 CU IDOL SELF LEARNING MATERIAL (SLM)
E-marketing and e-advertising – the Internet is dominated by harsh competition thus it requires heavy fixed costs on advertising to attract and retain customers online. According to world studies up to 40 % of the Internet revenue is allocated to e-marketing. Price types on the Internet: Figure 8.4 Price types on the Internet Tangible price – it is physical, i.e. price shown in figures next to the product on a website. According to this type of price, the Internet user knows the value of the product. Intangible price – it is a price that is usually attributed to cyber products. The Internet user has an impression that the information online is free, but in reality the company providing the product receives in return user’s attention and consumers traffic. Thus it is possible to direct user’s attention to the online advertisement, which is paid by a company which ordered to put it on a website offering free information for a user. The core point of this price type strategy is to attract as many users as possible and make them spend a lot of time on the website. United price – it is use of both tangible and intangible price strategy. On informative websites a part of information is free, the other – not. (e.g. www.vz.lt). Internet pricing strategy: Figure 8.5 Internet pricing strategy Penetration price – to enter easier and occupy the biggest part of a market a lower price for a new product is set. Market skimming – to attract consumers who like Internet innovations a high price is set. Subsequently, the price is gradually lowered. Estimated profit and cost recovery – pricing is based on a simple methodology – mark-up is added to the price of a product. Achievement of projected earnings growth – pricing is based on product cost. Project profit achievement is possible by reducing costs, increasing sales and price. 148 CU IDOL SELF LEARNING MATERIAL (SLM)
Figure 8.6 Internet pricing strategy Price as a quality indicator – an appropriate pricing strategy when the customer is not well acquainted with product features. In this case, high price sends a signal to the customer that a product or service is good and of high quality. Promotional price – this pricing method is used to stimulate sales and thus to lure and attract customers. This method is usually used for a short time in order to achieve sales growth effect. Leadership price – according to this method the lowest price is set for a particular product or service category. In this case it is necessary to cut the costs to the minimum. Segmented price – pricing approach, focusing on a specific, target group of customers in order to better meet their needs. Prestigious price – some consumers feel comfortable paying high price. By doing this they seek to obtain a valuable product or service. Place Place in the online marketing mix means the place where and how you provide your customers access to your products. In online marketing, there are many options for you to sell on a wide range of platforms and methods. The best place for your customer comes down to what is the best place to reach and is convenient for your target audience. If we look strictly at online products, what solutions for selling you have? Many such as: Social media platforms (Either by selling directly (Facebook Shop) or by referring traffic to another owned channel) Dedicated online store (Shopify, WooCommerce), landing pages with purchase features. Online marketplaces (Amazon, eBay, Etsy, other niche marketplaces) The goal of a place in the online marketing mix is to consider the convenience factors for your customers. Enabling the most convenient places for your customers to access your online products is crucial for the overall experience. Your target audience should guide your decisions on your places, and the product’s online distribution comes down to what is the best distribution model within your chosen place. When deciding place opportunities in your online marketing mix, the need for figuring out how much market coverage you’re able to reach within that place. 149 CU IDOL SELF LEARNING MATERIAL (SLM)
For example, marketplaces (like Amazon or eBay) have more initial coverage due to organic views, although lacking control otherwise. An online store can potentially have broader coverage if there’s a budget available for reaching your audience. All in all, an owned channel (website, online store) will come necessary for every online business, and the need to expand for other platforms increases the more global your reach and how targeted audiences. Promotion Promotion in the online marketing mix is the use of online marketing communication tools to reach your target audiences. Promotion includes the use of online advertising, public relations, direct communication, and sales promotions to reach and influence audience. Online marketing offers many effective strategies to choose from to include in your marketing mix. Every business and its online products require different approaches when reaching their customers. Some methods revolve around directly advertising on a variety of platforms, while other strategies revolve around building authority with the content or gaining a following on media. You can’t invest in every channel out there, just because it exists, the need to understand your audience first is crucial for producing and executing an effective marketing strategy online. Are you restricted by budget, time, locations, technology, or something else, every business can find and utilize effective methods of online marketing to boost their results. Your initial marketing strategy will have to include your restrictions to avoid plans that you can’t implement properly. For example, investing in website content to boost your search engine positions takes time, when your business requires revenue today, the strategy won’t help you keep on the lights. An excellent online marketing strategy includes your business goals with practical methods of gaining them. Innovation in your marketing decisions is essential for keeping achievable. Methods of Online Marketing Promotion for Consideration: Search Engine Marketing (Google, Bing) Search Engine Optimization (SEO) Content Marketing Online PR Social Media Advertising YouTube Pinterest LinkedIn 150 CU IDOL SELF LEARNING MATERIAL (SLM)
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