Virtual Marketing 1

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Virtual Marketing


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1. Role ofthe Internet : technological development,development ofe-Commerce,

different commercial models, diverse roles ofwebsites.

2. Internet strategy : virtual value chaindis-intermediation, cybermediaries

3. Business toBusiness : Intranets and Extranets; communication , recruitment

andprocurement , exchanges.

4. Consumer behavior : flow theory; Hoffmans Many to- Many model; Internetbranding and loyalty ; Internet communities ; how the Internet is changing

consumer behavior.

5. Internet market research : secondary research, online focus groups, MEGS ,

web surveys , Email surveys.

6. Internet retailing : reducing role oflocation , online shopping.


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7. Internet promotion : advertising : types , measurement, effectiveness ,

integration ; affiliation marketing , PR; word-on-line ; direct marketing.

8. Website design : website design guidelines , best practice , building traffic.

Convergence and future development : interactive TV , mobile internet ,

PDA , groupware , SMS , interactive appliances.


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Role OfInternet


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Role of Internet

With the use ofinternet, it is possible to transmit/receive

information containing images, graphics, sound and videos. ISP

industry can offer services as:

Linking consumers and businesses via internet.

Monitoring/maintaining customer's Web sites.Networkmanagement/systems integration.

Backbone access services forother ISP's.

Managing onlinepurchase and payment systems.The internet is designed to be indefinitely extendible and

the reliability ofinternetprimarily depends on the quality ofthe

serviceproviders' equipments.


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Benefits of Internet:

Doing fast business.

Trying out new ideas.

Gathering opinions.

Allowing the business to appear alongside other established

businesses.Improving the standards ofcustomer service/support resource.

Supporting managerial functions.

Limitations:

Security

Privacy

Threats: Hackers, viruses etc.


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Managing in the Virtual World - Market Space

What is Market Place

Physical World ofResources to createproducts/ services

What is Marketspace

Virtual World ofInfo. that complements/ substitutes the physical

world


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Business have been looking for ways to increase theirprofits and

market share . The search formore efficient ways ofdoing business

has been driving another revolution in the conduct ofbusiness .This

revolution is known as electronic commerce which is any

purchasing or selling through an electronic communications

medium.Business planners in institutions and organizations now

see technology not only as a supportive cofactor, but as a key

strategic tool. They see electronic commerce as a wave offuture.

Information technology has revolutionized and digitalized economic

activity , and made it a truly globalphenomenon .One ofthe most

visible icons ofthe IT Revolution is the internet the world wise

web. Which is a gigantic anarchic networkofcomputers world wide, which is essentially used for communicating , interaction ,

interactive long distance computing and exchange ofinformation

giving rise to a host ofapplications frommilitary and government to

business , education and entertainment.


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E-commerce exists because ofinternet. It has been born on the net

and is growing with the net . It involves carrying business on and

through the net .

E-commerce is a product ofthe digital economy. It is a source ofa

paradigm shift , in redefining technology, individual and global

societies , as well as national and global economies.

Electronic commerce is a symbolic integration ofcommunications, data management , and security capabilities to allow business

applications within different organizations to automatically

exchange information related to the sale ifgoods and services .

Communication services support the transferofinformation from

the originator to the recipient. Data management services definethe exchange format of the information.Security mechanisms

authenticate the source ofinformation, guarantee the integrity of

the information received , prevent disclosure ofinformation to

inappropriate users , and document that the information was

received by the intended recipient.


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Prior to the development ofe-commerce, the process ofmarketing

and selling goods was a mass-marketing and sales-force driven

process . Customers were viewed as passive targets ofadvertising

campaigns .Selling was conducted in well-insulated channels

.Consumers were trapped by geographical and social boundaries,

unable to search widely for the best price and quality .

E-commerce has challenged much ofthis traditional business

thinking.


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E-Commerce Defined :

The use of internet and the WEB to transact business .

More formally , digitally enabled commercial transactions

between and among organizations and individuals.

Electronic commerce is commerce via any electronicmedia , such as TV,fax, and online networks.Internet-

based commerce makes use of any Internet facility and

service. Web-based commerce focuses on the opportunity

of the World Wide Web apparatus , in particular , itsubiquity and its ease of use .


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Global Reach : E-commerce technologypermits commercial

transactions to cross cultural and national boundaries farmore

conveniently and cost effectively than is true in traditional

commerce.As a result, the potential market size for e-commerce

merchants is roughly equal to the size ofthe worlds online

population.The total numberofusers or customers an e-commerce

business can obtain is a measure ofits reach.

Universal Standards : The technical standards for conducting e-commerce , are universal standards they are shared by all nations

around the world. The universal technical standards ofe-commerce

greatly lower the market entry costs - the cost merchants must pay

just to bring their goods tomarket. At the same time , for consumers, universal standards , reducesearch cost the effort required tofind

a suitableproducts.


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Richness : Information richness refers to the complexity and

content ofa message.

Interactivity : E-commerce technologies are interactive , meaningthey allow for two-way communication between merchant and

consumer.It allows an online merchant to engage a consumer in

ways similar to a face-toface experience , but on a much more

massive , global scale.

Information Density : the internet and the Web vastly increase

information densitythe total amount and quality of information

available to all market participants , consumers, and merchants

alike.E-commerce technologies reduce information collection,

storage , processing , and communication costs .At the sale time,these technologies increase greatly, the accuracy and timeliness

ofinformation-making information more useful and important

than ever.As a result information becomes more plentiful,cheaper

and ofhigher quality.


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Personalization/Customization : E-commerce technologiespermit

personalizationmerchants can target theirmarketing messages to

specific individuals by adjusting the message to a persons

name,interests , and past purchases.The technology alsopermits

customization changing the deliveredproduct or service based on a

users preference orprior behavior.Given the interactive nature ofe-

commerce technology, a great deal ofinformation about the

consumer can be gathered in the marketplace at the moment ofpurchase.With the increase in information density , a great deal of

information about the consumerspast purchases and behavior can

be stored and used by online merchants.The result is increase in the

level ofpersonalization and customization.


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Types ofE-Commerce :

There are different types ofe-commerce and many different ways to

characterize these types .

The five major types ofe-commerce are :

1. B2C

2. B2B

3. C2C

4. P2P

5. M-Commerce


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B2C : (Business-to-Consumer)

The most commonly discussed type ofe-commerce is Business-to-Consumer (B2C) e-commerce, in which online business attempt to

reach individual consumers is done .It has grown exponentially since

1995, and is the type ofe-commerce that most consumers are likely

to encounter. Within the B2C category there are many different

types ofbusiness models: portals , online retailers , contentproviders

, transaction brokers , market creators , service providers , and

communityproviders.


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B2B : (Business-to-Business)

In this type ofe-commerce , one business focuses on selling toother business .It is the largest formofe-commerce.The ultimate

size ofB2B e-commerce could be huge . At first, B2B e-commerce

primarily involved inter-business exchanges , but a numberofother

B2B business models have developed, including e-distribution ,B2B service providers , matchmakers , and info-mediaries that are

widening the use ofe-commerce.


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C2C : Consumer-to-Consumer

C2C e-commerce provides a way for consumers to sell to eachother , with the helpofan online market maker such as the auction

site .In C2C e-commerce , the consumerprepares the product for

market , places the product for auction or sale, and relies on the

market maker toprovide catalog , search engine ,and transactionclearing capabilities so that products can be easily displayed ,

discovered , and paid for.


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P2P : (Peer-to-Peer)

Peer-to-Peer technology enables Internet users to share files and

computer resources directly without having to go through a

central Web server. In peer-to-peerspurest form, no

intermediary is required . Entrepreneurs and venture capitalists

have attempted to adapt various aspects ofpeer-to-peer (P2P) e-

commerce.

E.g. Napster.com established to aid internet users in finding and

sharing music files (mp3 files). It is partiallypeer-to-peer

because it relies on a central database to show which users are

sharing music files.


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M-commerce :

Mobile commerce orm-commerce , refers to the use ofwirelessdigital devices to enable transactions on the Web . These devices

utilize wireless networks to connect cellphones and handheld

devices to the Web. Once connected , mobile consumers can

conduct many types oftransactions , including stock trades,

banking, travel reservations , and more.

***B2G : Business to Government


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E-Commerce Business Models :

A business model is a set ofplanned activities (sometimes referred

to as business process) designed to result in a profit in amarketplace. The business model is at the centerofthe business

plan.

A business plan is a document that describes a firms business

model .

An e-commerce business model aims to use and leverage the

unique qualities ofthe internet and the World Wide Web.


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There are Eight Key Ingredients ofa Business Model :

1. Valueproposition : It defines how a companys product or

service fulfils the needs ofthe customers.To develop and/oranalyze a proposition, the following questions need to be

answered :

- Why will customers choose to business with yourfirm

instead ofanother company ?

- What will yourfirmprovide that otherfirms do not and

cannot ?

From the consumerpoint ofview , successful e-commerce

valuepropositions include : personalization and

customization ofproduct offerings, reduction ofproduct

search costs, reduction ofprice discovery costs, and

facilitation oftransactions by managingproduct delivery.


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2.Revenue model :

The firms revenue model describes how the firm will earn revenue ,

generateprofits,andproduce a superior return on investedcapital.The function ofbusiness organizations is both to generate

profits and toproduce returns on invested capital that exceed

alternative investments.

* The advertising model :

A website that offers its users content, services , and/orproducts

alsoprovides a forumfor advertisements and receives fees from

advertisers. Those websites that are able to attract the greatest

viewer ship and are able to retain user attention are able to chargehigher advertising rates.


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* Subscription Revenue Model :

In the subscription revenue model , a Web site that offers its users

content or services charges a subscription fee for access to some orall ofits offerings .

* Transaction fee revenue model :

In this model a company receives a fee for enabling or executing a

transaction. (e.g. Online auction websites taking some commissionfrom buyer as well as the seller).

* Sales Revenue Model :

In the sales revenue model , a companies derive revenue by sellinggoods, information , or services to customers .

E.g. amazon.com


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* Affiliate Revenue model :

In the affiliate revenue model , sites that steer business to anaffiliate receive a referral fee orpercentage ofthe revenue from

any resulting sales.


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3.Market Opportunity :

The termmarket opportunity refers to the companys intended

marketplace and the overallpotential financial opportunitiesavailable to the firm in that marketplace . The market

opportunity is usually divided into smallermarket niches. The

realistic market opportunity is defined by the revenuepotential in

each ofthe market niches .

4. Competitive Environment :

The firms competitive environment refers to the other companies

operating in the same marketplace selling similarproducts . The

competitive environment for a company is influenced by severalfactors : how many competitors are active, how large their

operations are , what the market share ofeach competitor is ,

howprofitable these firms are , and how they price their

products.


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5.Competitive Advantage :

Firms achieve a competitive advantage when they can produce a

superiorproduct a superiorproduct and/or bring the product tomarket at lower than most, or all, oftheir competitors . Firms also

compete on scope .Some firms can develop global markets while

otherfirms can only develop a national or regional market .Firms

that can provide superiorproducts at lowest cost on global basis

are truly advantaged.

6. Market strategy :

Market strategy is the plan the company put together that details

exactly how the company intend to enter the market and attractnew customers.


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7.Organizational Development :

Describes how the company will organize the work that needs to be

accomplished.

8. Management Team :

Employees ofthe company responsible formaking the business

model work.


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Categorizing

E-Commerce

Business Models


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MajorB2C business models :

There are a numberofdifferent models being used in the B2C e-

commerce arena . The majormodels include the following :

Portal :-Offers powerful search tools plus an integratedpackage of

content services ;typically utilizes a combined

subscription/advertising revenue/transaction fee model ;may be

general or specialized.

E-tailer :- Online version oftraditional retailer; includes virtual

merchants (online retail stores) , clicks and mortar e-tailers (online

distribution channel for a company that also has a physical

store);catalog merchants (online version ofdirect mail catalog);online malls (online version ofmall);manufacturers selling directly

over the Web.


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Content Provider :- Information and entertainment companies that

provide digital content over the Web; typically utilizes an

advertising , subscription ,or affiliate referral fee revenue model.

Transaction broker :- Process online sales transactions; typically

utilizes a transaction fee revenue model.

Market creator :- Uses Internet technology to create markets that

bring buyers and sellers together ; typically utilizes a transaction feerevenue model.

Serviceprovider :- Offers services online.

Community provider :- Provides an online community oflike-

minded individuals for networking and information sharing ;revenue is generated by referral fees , advertising , and subscription.


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MajorB2B business models :

The major business models used to date in B2B arena include :

Hub, also known as marketplace/exchange electronic marketplace where suppliers and commercial purchasers can conduct

transactions ; may be general (a horizontal marketplace ) or

specialized (a vertical marketplace) .

E-distributor :- Supplies products directly to individual businesses.

B2B serviceprovider :- Sells business services tootherfirms.

Matchmaker :- Link business together , changes transaction on

usage fees.Infomediary :- Gathers information and sells it to business .


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Major C2C business models :

A variety ofbusiness models can be found in the customer-to-

customer e-commerce , peer-to-peer e-commerce, and m-

commerce areas :

C2C business models connect consumers with other consumers

.The most successful has been the market creator business model

used by eBay.com.

P2P business models enable consumers to share files and services

via Web without common servers. A challenge has been finding a

revenue model that works.

M-commerce business models take traditional e-commerce

models and leverage emerging wireless technologies topermit

mobile access to the Web.

E-commerce enablers business models focus on providing the

infrastructure necessary for e-commerce companies to exist, grow,

and prosper.


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Key business concepts and strategies applicable to e-commerce :

Industry structure : The nature ofplayers in an industry and their

relative bargainingpower by changing the basis ofcompetitionamong rivals , the barriers to entry , the threat ofnew substitute

products , the strength ofsuppliers , and the bargainingpowerof

buyers.

Industry value chains : The set ofactivitiesperformed in anindustry by suppliers , manufacturers , transporters , distributors and

retailers that transforms raw inputs intofinal products and services

by reducing the cost ofinformation and other transaction costs.

Firm value chains : The set ofactivitiesperformed within an

individual firm to create final products from raw inputs by

increasing operational efficiency .


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Technology Infrastructure for

E-Commerce

The Internet and World Wide Web E-

Commerce Infrastructure


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The Internet : Technology Background

The Internet is an interconnected networkofthousands of

networks and millions ofcomputers (sometimes called as host

computers or just hosts) linking business , educational institutions, government agencies , and individuals together.The internet

provides services such as e-mail, news-groups, shopping, research

, instant messaging , music videos and news . Noone organization

controls the Internet or how it functions , nor it is owned by

anybody , yet it has provided the infrastructure for a

transformation in commerce, scientific research, and culture .The

word internet is derived from the word internetworkor the

connecting togetheroftwoormore computer networks.The World

Wide Web is one ofthe internets most popular services,providingaccess tooverone billion Web pages , which are documents

created in a programming language called HTML and which can

contain text , graphics , audio, video, and otherobjects, as well as

hyperlinks that permit a user to jumpfromonepage to another.


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The Internet : Key Technology Concepts;

Based in the definition , the internet means a network that uses the

IP (Internet Protocol) addressing scheme, supports theTransmission Control Protocol (TCP), and ,makes services

available to users much like a telephone systemmakes voice and

data services available to the public.

Behind this formal definition are three extremely importantconcepts that are the basis for understanding the Internet : packet

switching , the TCP/IP communicationsprotocol , and client/server

computing .Although the Internet has evolved and changed

dramatically, these three concepts are at the core ofhow the

Internet functions today and are the foundation for Internet.


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Packet Switching : It is a method ofslicing digital messages intoparcels called

packets sending the packets along different communication paths as they

become available , and then reassembling the packets once they arrive at their

destination .Prior to the development ofpacket switching , early computer

networks used leased , dedicated telephone circuits to communicate with terminalsand other computers.

Inpacket-switched networks , messages are first broken down into

packets.Appended to each packet are digital codes that indicate a source

address(the originationpoint) and the destination address, as well as sequencing

information and error-control information for thepacket.Rather than being sentdirectly to the destination , in a packet network , thepackets travel from computer

to computer until they reach their destination. The computers are called Routers .

Routers are special purpose computers that interconnect thousands ofdifferent

computer networks that make up the internet and routepackets along to their

ultimate destination as they travel.To ensure that packets take the best availablepath towards their destination, the routers use computerprograms called routing

algorithms.

Packet switching makes full use ofalmost all available communication lines and

capacity.Ifsome lines are disabled or too busy , the packets can be sent on any

available line that eventually leads to the destinationpoint.


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TCP/IP :

TCP refers to the Transmission Control Protocol . IP refers to the

Internet Protocol. Aprotocol is a set ofrules forformatting ,ordering , compressing , and error checking messages.It may also

specify the speed oftransmission and means by which devices on

the network will indicate they have stopped sending and/or

receiving messages. Protocols can be implemented in either

hardware or software .TCP/IP is implemented in Web softwarecalled server software .It is the agreed upon protocol for

transmitting datapackets over the Web.TCP establishes connections

among sending and receiving Web computers , handles the

assembly ofpackets at the point oftransmission , and their

reassembly at the receiving end.


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IP addresses :TCP handles the packetizing and routing of Internet

messages . IPprovides the Internets addressing scheme .Every

computer connected to the Internet must be assigned an address otherwise it cannot send or receive TCPpackets .When a user

signs onto the Internet using a dial-up telephone modem, the

computer is assigned a temporary address by the Internet service

provider.

Internet addresses known as IP addresses , are 32-bit numbers that

appear as a series offour separate numbers marked offby periods

such as 201.61.186.227. Each ofthe four numbers can range from

0-255. This dotted quad addressing scheme contains up to4

billion addresses ofthe computer ( 2 to the 32nd power).Theleftmost number typically indicates the network address ofthe

computer , while remaining numbers help to identify the specific

computer within the group that is sending (or receiving) messages.


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Domain Names and URLs : Most people cannot remember 32-bit

numbers .IP addresses can be represented by a natural language

convention called domain names.The domain name system (DNS)

allows expressions to stand for numeric IP addresses.

UniformResource Locators (URLs ) are addresses used by Web

browsers to identify the location ofcontent on the web, also use

domain names as a part ofthe URL.A typical URL contains the

protocol to be used when accessing the address, followed by its

location. The protocol used is HTTP (Hypertext Transfer

Protocol).A URL can have more than one paths.


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Client/Server computing :

It is a model ofcomputing in which very powerfulpersonal

computers called Clients are connected together in a networktogether with one ormore server computers.These clients are

sufficientlypowerful to accomplish complex tasks such as

displaying rich graphics , storing large files, and processing

graphics and sound files , all on a local desktopor hand held

device. Servers are networked computers dedicated to commonfunctions that their client machines on the network need. Such as

storing files , software applications, utility programs such as Web

connections , and printers.


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Other Internet Protocols :

SMTP :Simple mail transferprotocol

POP : Post Office Protocol

IMAP : Internet message accessprotocol

FTP : File Transfer Protocol for transferring files

SSL : Secure Socket Layers for Security

For Sending

Email


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E-Commerce SecurityEnvironment


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It is difficult to estimate the actual amount ofe-commerce crime

for a variety ofreasons . In many instances , e-commerce crimes

are not reported because companies earoflosing the trust of

legitimate customers. And even when crimes are reported , it maybe hard to quantify the losses incurred .The most serious losses

involved theft ofproprietary information and financial

fraud.Online credit card fraud is perhaps the most high profile

formofe-commerce crime. In some cases , the criminals aim tojust deface , vandalize and/or disrupt a Web site, rather than steal

goods or services . The cost ofsuch an attack includes not only the

time and effort tomake repairs to the site but also damage done to

the sites reputation and image as well as revenues lost as a result

of the attack. Estimates ofthe overall cost ofthe various forms ofcyber vandalism range into billions.


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Security Threats in the E-Commerce Environment :

From the technologyperspective , there are three key points ofvulnerability when dealing with e-commerce : the client, the server

and the communicationpipeline.

Malicious Code

It includes a variety ofthreats such as viruses , worms , Trojanhorses , and bad applets . A virus is a computerprogram that has

the ability to replicate ormake copies ofitself, and spread toother

files. In addition to the ability to replicate , most computer viruses

deliver a payload(destroying files,reformatting the computers

hard drive or causingprograms to rum improperly.


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A Trojan horse does something other than expected . The Trojan

horse is not itselfa virus because it does not replicate , but is often a

way for viruses orothermalicious code to be introduced into acomputer system.

Bad applets also referred to as malicious mobile code , are expected

to become an increasingproblem as java and Active X controls

become more commonplace.Malicious code is a threat to the systems integrity and continued

operation, often changing how a systemfunctions or altering

documents created on the system . In many cases the user is

unaware ofthe attack until it affects the system and the data on thesystem.


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Hacking and Cyber vandalism :

A hacker is an individual who intends to gain unauthorized access

to a computer system. Within the hacking community , the termcracker is typically used to denote a hacker with criminal intent

although in the publicpress , the terms hacker and cracker are

used interchangeably. Hackers and crackers get unauthorized

access by finding weaknesses in the security procedures ofWeb

sites and computer system , often taking advantages ofvarious

features ofinternet that make it an open system that is easy to use.

Cyber vandalism is intentionally disrupting,defacing , or even

destroying the site.

Groupofhackers called as tiger teams are used by corporate

security departments to test theirown security measures.By hiring

hackers to break into the systemfromoutside , the company can

identify weaknesses in the computer systems.


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Credit Card Frauds

The fear that the credit card information will be stolen frequently

prevents the users frommaking onlinepurchases . In e-commercethe greatest threat to the consumer is that the merchants server with

which the customer is transacting will lose the credit information

topermit it to be diverted for a criminal purpose.Credit card files

are the major targets ofWeb site hackers.


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Dimensions ofE-Commerce security :

There are six dimensions to e-commerce security :

1. Integrity

2. No repudiation

3. Authenticity

4. Confidentiality

5. Privacy

6. Availabilty


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Integrity refers to the ability to ensure that information being

displayed on a Web site , or transmitted or received over the

internet , has not been altered in any way by an unauthorized

party.e.g. an unauthorizedperson intercepts and changes the

contents ofan online communication , such as by redirecting a

blank wire transfer into a different account , the integrity ofthe

message has been compromised because the communication no

longer represents what the original sender intended .

Non repudiation refers to the ability to ensure that e-commerce

participants do not deny (I.e. repudiate) theironline actions.


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Authenticity refers to the ability to identify the identity ofa

person or entity with whom you are dealing on the internet. How

does the customer know that the Web site operator is who it

claims to be ? How can the merchant be assured that the

customer is really who he/she say he/she is ? Someone who

claims to be someone they are not is spoofing or

misinterpreting themselves.

Confidentiality refers to the ability to ensure that messages anddata are available only to those who are to view them.

Confidentiality is something confused with privacy , which refers

to the ability to control the use ofinformation a customer

provides about himselfor herselfto an e-commerce merchant.Availability refers to the ability to ensure that an e-commerce site

continues tofunction as intended .


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E-Commerce security is designed toprotect these sixdimensions.When any one ofthem is compromised , it is a security

issue.


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Security ofData During Transmission :

Business with computers containing confidential data connected

to the Internet do not want the public to have unauthorized access

to specificparts oftheirfiles; at the same time they might want

thepublic to have access to specific parts oftheir information

base.Business that offer services that require payment by methods

including credit card transactions need to be cautious .Ifthesetransactions are not secured, hackers can access the users account

information.


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Internet Strategy


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What is Value Chain?

Value chain is a high-level model of how businesses

receive raw materials as input, add value to the rawmaterials through various processes, and sell finishedproducts to customers.

Today's Challenges

Old-fashioned command-and-control companies were

merely trying tomanage the "white space" in theirorganizational

charts. Today's companies must manage the white space in entire

value chains.

A critical pre-requisite for success in digital economyis the implementation of an integrated value chain thatextends across - and beyond - the enterprise.


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In an information society the value ofinformation has become

significant. Every business has an information component in

itsproduct/services and operations. For example, a firmmay

have an information product (eg: newspaper) or an

information intensive operations (eg: insurance). The

proportion ofinformation content varies from industry to

industry. In some industries informationplays a core role

while in others it plays a peripheral role. Significanttransformations can be expected in industries where

informationplays a core role. For example, industries such as

publishing, music,financial services, entertainment, etc.,

where informationplays a core role are undergoing significant

transformation while in other industries such as manufacturingthe transformation is more limited.


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Traditionally there has been a trade offbetween reach and

richness.Reach refers to breadth ofaudience and richness

refers to the quality ofinformation in terms ofdelivery mode,

media choice, information content and amount, relevance etc.

New technologies are changing the tradeoffs causing changes

in industry structure. For example, we have always used

standard information in a broadcast mode (eg: TV) for

reaching a broad audience. However, with the internet we havethepossibility ofproviding customized information in an

interactive mode to a broad audience.


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Some companies operate in marketplace, some in market-

space, and others in both. Managers have to create value in

bothphysical and virtual world to sustain the competitive

advantage. Value is created by gathering, organizing,

selecting, synthesizing, and distributing information. The

ability to create value with information may bring in

competitors fromoutside the industry who have expertise withhandling information. A few examples are online travel agents,

stock brokers, online auto dealers, online retailers etc.


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Virtual Value Chain

Create value with information in the Marketspace

It may mirror the physical value chain or have totally new

products

It will require a change in way ofthinking

Seniormanagers need to understand about virtual value chainand how to exploit it

Marketing managers have to learn tomarket in marketspace

Value created by gathering, organzing, selecting,synthesizing, and distributing info


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Stages ofTransformation fromMarketplace toMarketspace

Firms go through various stages oftransformation in the useofIT. They start using IT as a control system tomonitor

performance (visibility stage) andprogress into exploiting the

information in the value chain. Finally, they tend tofind new value

in the information to create newproducts/services or add value toexistingproduct.


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Visibility

Info. Systems are considered as control systems

Improve efficiency thro' bettermonitoring

Reduce cost

Mirroring Capability

substitute virtual activities forphysical activities

createparallel value in market space


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New CustomerRelationships

add value toproducts/ services

draw on info. in virtual value chain to deliver value to

customers

Exploit the value matrix

gather

organize

select

synthesize

Distribute


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Value for a product is dependent on:

Information Content

Context - the way it ispresented

Infrastructure - to distribute the information.


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Dis-intermediation


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Disintermediation is giving the user or the consumer

direct access to information that otherwise would require

a mediator, such as a salesperson, a librarian, or a

lawyer. Observers of the Internet and the World Wide

Web note that these new technologies give users the

power to look up medical, legal information, travel, orcomparative product data directly, in some cases

removing the need for the mediator (doctor, lawyer,

salesperson) or at the very least changing the

relationship between the user and the product or service

provider.


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In economics, disintermediation is the removal of

intermediaries in a supply chain: cutting out the middlemen".Instead ofgoing through traditional distribution channels, which

had some type ofintermediate (such as a distributor, wholesaler,

broker, or agent), companies may now deal with every customer

directly, for example via the Internet. One important factor is a

drop in the cost ofservicing customers directly.


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Disintermediation initiated by consumers is often the

result ofhigh market transparency, in that buyers are aware of

supplyprices direct from the manufacturer.Buyers bypass the

middlemen (wholesalers and retailers) in order to buy directly

from the manufacturer and therebypay less.Buyers can

alternatively elect topurchase from wholesalers. Often, a B2Cintermediary functions as the bridge between buyer and

manufacturer.


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To illustrate, a typical B2C supply chain is composed offour

orfive entities (in order):

Supplier

Manufacturer

Wholesaler

Retailer

Buyer


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In the past, traditional channels ofdistribution have alwayshad a place for the middleman. It was through these third party

channelpartners that many companies could bring theirproducts

or services tomarket in the most economical mannerpossible.

Middlemen have handled not only the sale ofproduct, but also a

numberofotherfunctions including, lead generation, specification

ofequipment, assistance with credit approval, warehousing and

aftermarket support.


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A middleman can take a numberofdifferent forms. He or she

could be a wholesaler, distributor, retailer, sales agent or a

manufacturer's representative. Their sole purpose is to unite theproducer with the customer. Their value is in the ability tofind

the customer, define the customer's needs, close the sale and

support the manufacturer.


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However, as a result ofadvancing technologies and theproper application ofInternet strategies, it is no longer business as

usual for the middleman. The Internet changes all the rules. For

some established businesses these changes, such as reverse

auctions, marketplaces, industry portals and virtual buying groups,

represent a clear threat to the status quo enjoyed by manyperforming middleman functions. This threat is continuing to lend

credence to the feared concept ofdis-intermediation.


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New methods and new technologies are being developedeveryday that make it possible to drop the third party middlemen

and reduce transactional costs. When the middleman is deleted

from the process or dis-intermediated, he or she is notparty to the

profitspreviously generated in the transaction. The end result is

their ultimate demise.


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The Destruction of the Middleman

The Internet has changed all the rules and has posed a threat formany established distribution channels. At risk are the agents and

distributors that man these channels. New business models such

as reverse auctions, industryportals and virtual buying groups

have emerged lending credence to the feared concept ofdis-

intermediation.


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e-Commercepundits have long predicted the demise of

these middlemen as a result ofgoing direct. In some cases these

predictions have become realities. Travel agents have alreadyexperienced the shortening ofsupply chains as airlines encourage

their customers topurchase tickets directly from their web site.

Many airlines haveprovided lucrative incentives for customers

that bookon-line rather than through travel agents. The reason for

this onlinepush is simple: Airlines save an estimated $15 - $25per transaction when travelers use their Web sites.


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The manufacturers own web site can pose a threat to the

middleman as well. Leads generated here can be handled directly

by the principal and eliminate the need for the middleman.Aftermarketparts are especially vulnerable to this occurrence.

Most consumers refer to the nameplate on equipment they are

dealing with then contact the web site ofthe manufacturer when

they have a need for service orparts replacement. The middleman

is completely circumvented in this instance and that dramaticallyaffects his revenue.


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This may also be the case when a purchaser has the need for

either a replacement unit or an exact match to sit beside an

existingpiece ofequipment. The middleman could have sold

the original equipment and be completely bypassed when the

customer refers to a manufacturer's web site.


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Online Market

Research


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Several tools are available to the market


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Several tools are available to the market

researchere.g., mail questionnaires, phone surveys,

observation, and focus groups.

Surveys are useful for getting a great deal of

specific information. Surveys can contain open-ended

questions (e.g., In which city and state were you born?

____________) or closed-ended, where the respondent is

asked to select answers from a brief list (e.g., __Male___ Female. Open ended questions have the advantage

that the respondent is not limited to the options listed,

and that the respondent is not being influenced by seeing

a list of responses. However, open-ended questions are

often skipped by respondents, and coding them can bequite a challenge. In general, for surveys to yield

meaningful responses, sample sizes of over 100 are

usually required because precision is essential.

Surveys come in several different forms Mail


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Surveys come in several different forms. Mail

surveys are relatively inexpensive, but response rates are

typically quite lowtypically from 5-20%. Phone-surveys

get somewhat higher response rates, but not manyquestions can be asked because many answer options have

to be repeated and few people are willing to stay on the

phone for more than five minutes.

Surveys, as any kind of research, are vulnerable tobias. The wording of a question can influence the outcome

a great deal.

Focus groups are useful when the marketer wants to


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Focus groups are useful when the marketer wants to

launch a new product or modify an existing one. A focus

group usually involves having some 8-12 people come

together in a room to discuss their consumptionpreferences and experiences. The group is usually led by

a moderator, who will start out talking broadly about

topics related broadly to the product without

mentioning the product itself.

Focus groups are well suited for some purposes, but

poorly suited for others. In general, focus groups are

very good for getting breadthi.e., finding out what

kinds of issues are important for consumers in a given

product category.


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Personal interviews involve in-depth questioning of anindividual about his or her interest in or experiences with a product.

The benefit here is that we can get really into depth (when the

respondent says something interesting, we can ask him or her toelaborate), but this method of research is costly and can be extremely

vulnerable to interviewer bias.

Projective techniques are used when a consumer may feelembarrassed to admit to certain opinions, feelings, or preferences. For

example, many older executives may not be comfortable admitting tobeing intimidated by computers. It has been found that in such cases,

people will tend to respond more openly about someone else. Thus,

we may ask them to explain reasons why a friend has not yet bought a

computer, or to tell a story about a person in a picture who is or is not

using a product. The main problem with this method is that it is

difficult to analyze responses.

Observation of consumers is often a powerful tool


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Observationofconsumers is often a powerful tool.

Looking at how consumers select products may yield

insights into how they make decisions and what they look

for. For example, some American manufacturers wereconcerned about low sales of their products in Japan.

Observing Japanese consumers, it was found that many of

these Japanese consumers scrutinized packages looking for

a name of a major manufacturerthe product specific-

brands that are common in the U.S. (e.g., Tide) were not

impressive to the Japanese, who wanted a name of a major

firm like Mitsubishi or Proctor & Gamble. Observation may

help us determine how much time consumers spend

comparing prices, or whether nutritional labels are beingconsulted.

Physiological measures are occasionally used to


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Physiological measures are occasionally used to

examine consumer response. For example, advertisers may

want to measure a consumers level of arousal during

various parts of an advertisement.

Some cautions should be heeded in marketing

research. First, in general, research should only be

commissioned when it is worth the cost.

Secondly, marketing research can be, and often is,

abused. Managers frequently have their own agendas

(e.g., they either would like a product to be launched or

would prefer that it not be launched so that the firm will

have more resources left over to tackle their favoriteproducts). Often, a way to get your way is to demonstrate

through objective research that your opinions make

economic sense.

O li M k t R h T h i


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Online Market Research Techniques:

Market research involves gathering information that will help a

firm identifypotentialproducts and customers .There are twogeneral types ofmarket research .

Primary research involves gathering first-hand information using

techniques such as surveys , personal interviews and focusgroups.This type ofresearch is typically used to gain feedbackon

brands,products , or new marketing campaigns where noprevious

study has been done.


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Secondary research relies on existing , published information as the

basis for analyzing the market .

Bothprimary and secondary research can be completed onlinemore efficiently , less expensively , and more accurately than

offline.In addition to two different approaches tomarket research ,

there are two types ofdata to be studied .Quantitative data is data

that can be expressed as a number , such as percentage .Quantitative data can be analyzed using statistical programs that

identify relationship between certain variables , orfactors that

affect how someone responds.Qualitative data is data that cannot

be easily quantified , such as opinions , survey questions that yield

qualitative responses are analyzed by grouping responses intosimilar sub segments based on the answer given . One type of

analysis is content analysis , which tries to identify the major

categories ofresponses given.


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Feedback forms which ask users to provide input regarding a sites


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Feedbackforms, which ask users toprovide input regarding a site s

operations in a set format , are another type ofinline survey.

Requesting regular input from site visitors may provide more

qualitative data , which is more difficult to analyze , but the

resulting information can assist in improving and enhancing site

performance.

Personal interviews are anotherprimary research tool . The

interview is generally guided by a set ofquestions very similar tosurvey instrument. Although it is more difficult to incorporate

personal interviews within Web sites , it is possible to conduct

research online via live chat or e-mail , with trained researcher

interacting with the study participants .Personal interviews offer anopportunity to gathermore in-depth information on a topic.In some

cases , personal interviews are used as second phase ofa research

project , following initial information gathering by survey.

Secondary Research : It involves gathering information using WEB


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Secondary Research : It involves gathering information using WEB

sites as the information source.

The Key to being efficient and effective as a researcher isidentifying the WEB sites most likely toprovide answers to the

questionsposed in the research .By establishing and agreeing on

the key question to be answered through market research , as well

as why that information will be useful , researchers can zero in on

their information needs. Understanding how the information willimpact other decisions also helps tofurther refine information

collection.

Some popular secondary research tools ( Web Sites)


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Some popular secondary research tools ( Web Sites)

1. Factiva.com

2. Businesswire.com

3. Hoovers.com

4. Localeyes.com

5. Thomasregister.com

6. Corporateinformation.com

7. sec.gov

8. Aol.com (America Online)


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Online Marketing

Technologies that support Online Marketing :


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Technologies that support Online Marketing :

Web transaction logs : Records that document user activity at the

Web site .Transaction logs : Coupled with data from the registration

forms and shopping cart database , these represent a treasure trove

ofmarketing information for both individual sites and the online

industry as a whole.Cookies : A small text file that Web sites place on

visitors /client computers every time they visit , and during the

visit , as specificpages visited . Cookiesprovide Web marketers

with a very quickmeans ofidentifying the customer andunderstanding his or herprior behavior at the site.

Web bugs : Tiny graphic files hidden in marketing e-mail


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Web bugs : Tiny graphic files hidden in marketing e-mail

messages and on Web sites . Web bugs are used to automatically

transmit information about the user and the page being viewed to a

monitoring server.

Databases , data warehouses, data mining , and profiling

:Technologies that allow marketers to identify exactly who the

online customer is and what they want , and then topresent the

customer with exactly what they want, when they want it, for therightprice.

Advertising networks : best known for their ability topresent users

with banner advertisements based on a database ofuser behavioral

data . Specialized ad servers are used to store and send users theappropriate banner ad.

CRM systems : A repository of customer information that records


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CRM systems : A repository ofcustomer information that records

all ofthe contacts that a customer has with a firm and generates a

customerprofile available to everyone in the firm who has a need

to know the customer.

IT enabled marketing and branding strategies :


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IT enabled marketing and branding strategies :

Online marketing techniques toonline customers include

permission marketing , affiliate marketing , viral marketing , andbrand leveraging.

Online techniques for strengthening customer relationships include

one-to-one marketing ; customization , transactive content ; and

customer service (CRMs,FAQs,live chat , intelligent agents , andautomated response system).

Online pricing strategies include offering products and services for

free ,versioning , bundling , and dynamic pricing.

Strategies to handle the possibility ofchannel conflict.

Direct E-mail marketing :


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g

E-mail marketing messages sent directly to interested users (direct

e-mail marketing) has proven to be one ofthe most effective forms

ofmarketing communications. The key to effective direct e-mail

marketing is interested users. Direct e-mail marketing is not

spam. SPAM involves sending unsolicited e-mail to a mass

audience ofInternet users who have expressed no interest in the

product . Instead , direct e-mail marketing messages are sent to anopt in audience ofInternet users who have expressed at one time

or another an interest in receiving messages from the advertiser.By

sending e-mail to an opt-in audience , advertisers are targeting

interested customers.Because ofthe comparatively high response

rates and low cost, direct e-mail marketing is the fastest growing

formofonline marketing.


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Theprimary cost ofe-mail marketing is for the purchase ofthe list

ofnames to which the e-mail will be sent .

Due to the cost savings possible with e-mail , the short time to

market , and high response rates , companies are expected to

increasingly use e-mail to communicate directly with customers.

Online Catalogs :


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Online Catalogs :

Online Catalogs are the equivalent ofpaper-based catalog. The

basic function ofa catalog is to display the merchants wares. Theelectronic version typically contains a color image ofeach available

product , a description ofthe item , as well as size , color, material

composition , and pricing information . While simple catalogs are ,

technically , hard coded HTMLpages and graphics displaying

softwares , most sites with more than 15-20products generate

catalogpages from a product andprice database that be easily

changed . Simply by clicking on an order button at the site ,

customers can make a purchase instantly.

Public Relations :


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Public Relations :

Anothermarketing communications tool used to increase

awareness ofa site , and potentially boost traffic , is publicrelations. Public Relations (PR) involves communicating with

target audiences,prpublics , using methods other than advertising .

Some ofthese methods includepublicity (media coverage), special

events , such as a grand opening celebration orpress conference ;

and publications , such as newsletters and customer bulletins.

Public Relations firms can also support a Web site by creating

promotional strategies , developing relationships with reporters and

producers ofinterest to the client company , proposing articles and

TVprogram subjects , and generally keeping the press aware ofany good news regarding an online company. Some firms

specialize in dot-coms or have an online media specialty .The

major advantage of public relations is the low cost relative toother

media exposure.

Online Marketing Metrics :


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1. Impression

2. Clickthrough Rate (CTR)

3. Hits

4. Page Views

5. Stickness (Duration)

6. Unique visitors

7. Loyalty

8. Reach

Continued


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1. Impressions are the numberoftimes an ad is served .


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p

2. Clickthrough rate (CTR) measures the percentage ofpeople

exposed to an online advertisement who actually clickon theadvertisment.

3. Hits are the numberofhttp requests received by a firms server

.Hits can be misleading as a measure ofsite activity because a

hit does not equal a page : a single page may account forseveral hits ifthe page contains multiple images or graphics.A

single site visitor can generate hundreds ofhits .

4. Page views are the numberofpages requested by visitors. A

singlepage that has three frames will generate three page views.

5. Stickiness (Duration) is the average length oftime visitors

remain at a site .The longer amount oftime a visitor spends at a

site , the greater the probability ofpurchase.

6. Unique visitors counts the numberofdistinct, unique visitors to

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a site , regardless ofhow many pages they view.

7. Loyalty measures the percentage ofusers who return in a year.

This can be good indicatorofthe trust shoppersplace in site.

8.Reach is typically a percentage ofthe total numberof

consumers in market who visit a site.

9.Recency like loyalty, measures the powerofsite toproducerepeat visits and is generally measured as the average number

ofdays elapsed between shopperor customer visits.

10.Acquisition rate measures ofthe percentage ofvisitors who

registeror visit productpages (indicating interest in theproduct)

11.Conversion rate measures the percentage ofvisitors who

actuallypurchase something.

12. Attrition rate measures the percentage ofcustomers who


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purchase once , but never return within a year.

13.Abandonment rate measures the percentage ofshoppers who

begin a shopping cart form but then fail to complete the form

and leave the site.

14.Retention rate indicates the percentage ofexisting customers

who continue to buy on a regular basis.

Online Advertisement : It is the most common and familiar


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Online Advertisement : It is the most common and familiar

marketing communications tool .The advantages ofonline

marketing are the ability to target ads to narrow segments and to

trackperformance ofadvertisements in almost real time. Online

advertisements alsoprovide greateropportunities for interactivity

two way communication between advertiser and the potential

customer.

Different forms ofonline advertisements include :

Banner and rich media ads

Paid search engine illusion and placement

Sponsorships , and

Affiliate relationships

Direct E-mail marketing


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Advertising

Metrics

click-through


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Definition

click-through

The process of clicking through an online advertisement to theadvertiser's destination.

Information

While the click-through is often the most immediate response to anadvertisement, it is not the only interaction. Visitors may choose totype a company's URL directly into the browser bar, or type thecompany's name into a search engine box. This assumes, ofcourse, that the company's name and/or URL appears in itsadvertisements.

Accurate counting of click-throughs involves excluding "robot clicks"and duplicate clicks. This takes on added importance when click-throughs are used as the measurement on which payment isbased.

click-through rate (CTR)


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Definition

click-through rate (CTR)

The average number of click-throughs per hundred ad impressions,expressed as a percentage.

Information

It is important to distinguish what a click-through rate does and does

notmeasure. The CTR measures what percentage of people clickedon the adto arrive at the destination site; it does not include thepeople who failed to click, yet arrived at the site later as a result ofseeing the ad.

As such, the CTR may be seen as a measure of the immediate

response to an ad, but not the overallresponse to an ad. Theexception involves ads that display no identifiable information aboutthe destination site; in these cases the click rate equals the overallrate.


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Merely getting visitors to a site had value when Web

site traffic was generally accepted as a measure of success.The trend towards profitability, along with better trackingtools, has resulted in less interest in click-through rates andmore interest in conversion rates.

A high click-through rate does not assure a good conversion

rate, and the two rates may even share an inverse relationship. An

advertisement geared towards curiosity clicks will result in fewer

sales,percentage-wise, than an advertisement geared towards

qualified clicks.

conversion rate


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Definition

conversion rate

The percentage of visitors who take a desired action.

Information

The desired action can take many forms, varying from site tosite. Examples include sales of products, membership registrations,newsletter subscriptions, software downloads, or just about any activitybeyond simple page browsing.

A high conversion rate depends on several factors, all of whichmust be satisfactory to yield the desired results -- the interest level ofthe visitor, the attractiveness of the offer, and the ease of the process.

The interest level of the visitor is maximized by matching theright visitor, the right place, and the right time.


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The attractiveness of the offer includes the value

proposition and how well it is presented. It is worth notingthat small, impulse items typically have a higher conversionrate than large, shopping items.

The visitor's ease of completing the desired action is

dependent on site usability which includes intuitivenavigation and fast loading pages.

cost-per-action (CPA)


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Online advertising payment model in which payment is based solely onqualifying actions such as sales or registrations.

Information

The actions defined in a cost-per-action agreement relatedirectly to some type of conversion, with sales and registrations amongthe most common. This does not include deals based solely on solely

clicks, which are referred to specifically as cost-per-click or CPC.The cost-per-action (CPA) model is at the other end of the

spectrum from the cost-per-impressions model (CPM), with the cost-per-click (CPC) model somewhere in the middle. In a CPAmodel, thepublisher is taking most of the advertising risk, as their commissions are

dependant on good conversion rates from the advertiser's creative unitsand Web site.

Marketers looking for cost-per-action deals have


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Marketers looking for cost per action deals haveseveral options. Publishers with considerable excess

inventory may be willing to consider nonstandard offers.Sites specializing in incentive programs are in a positionto offer CPA pricing on various types of leads, althoughthe usual caveats concerning incentivized traffic still apply.Perhaps the most widespread use of performance-based

pricing is affiliate marketing, wherebymerchants/advertisers determine what actions they wantto reward and how much they are willing to pay.


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The total price paid in a CPM deal is calculated by multiplying the

CPM rate by the number of CPM units. For example, one millionimpressions at $10 CPM equals a $10,000 total price.

1,000,000 /1,000 = 1,000 units

1,000 units X$10 CPM = $10,000 total price

The amount paid per impression is calculated by dividing the

CPM by 1000. For example, a $10 CPM equals $.01 per impression.

$10 CPM /1000 impressions = $.01 per impression

cost-per-click (CPC)

Definition


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Definition

cost-per-click (CPC)

The cost or cost-equivalent paid per click-through.

Information

The terms pay-per-click (PPC) and cost-per-click (CPC) are sometimesused interchangeably, sometimes as distinct terms. When used as

distinct terms, PPC indicatespaymentbased on click-throughs, whileCPC indicates measurementof cost on a per-click basis for contractsnot based on click-throughs.

For example, consider a campaign where payment is based onimpressions, not clicks. Impressions are sold for $10 CPM with a click-

through rate (CTR) of 2%.

1000 impressions x 2% CTR = 20 click-throughs

$10 CPM / 20 click-throughs = $.50 per click

customer acquisition cost


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Definition

customer acquisition cost

The cost associated with acquiring a new customer.

Information

Customer acquisition cost is calculated by dividing totalacquisition expenses by total new customers. However, there are

different opinions as to what constitutes an acquisition expense. Forexample, rebates and special discounts do not represent an actual cashoutlay, yet they have an impact on cash (and, presumably, on thecustomer).

Acquisition costs vary across industries and mediums. When

acquisition data is available, try to determine if you are comparing applesto apples, so to speak. This is not always easy, as customer acquisitiondata can be scarce, and the methodology is often sketchy.

Hit

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Definition

Hit

Request of a file from a Web server.

Information

The term "hit" is perhaps the most misused term in online marketing,mistakenly used to mean unique visitors, visits, page views, or all of the

above.

A hit is merely a request for a file from a Web server.A request for a Webpage counts as a hit, but so does a request for a graphicon a Web page.Since the number of graphics per page can vary considerably, hits meanvery little for comparison purposes.

hybrid model


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Definition

hybrid model

A combination of two or more online marketing payment models.

Information

A hybrid campaign might be a mix of impression-based (CPM)and performance-based (CPC or CPA), or a mix of two performance-based models. Hybrid deals are sometimes seen as a way to further splitthe risk between publishers and advertisers.

Advertising campaigns sometimes bundle CPM and CPC in ahybrid buy, and sometimes even CPA.

Affiliate programs have been known to offer a few cents per-clickin addition to paying for a sale, lead, download, or other conversionactivity.

impression


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Definition

impressionA single instance of an online advertisement being displayed.*

Information

* This definition may be an over-simplification, as there is no

standard way to count impressions.All of the differences can add up tovery large discrepancies, yet people make purchases based onimpression every day.

So... what is the definition?

Currently, whatever a buyer and seller agree on.

page view


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p g

Definition

page view

Request to load a single HTML page.

Information

Page views are only important to the degree they play a part in a site's

revenue model. If a site earns much of its revenue from advertising,then page views are important because of their contribution to adinventory. If a site only earns revenue on sales, then page views are nota key statistic. Page views without corresponding sales may even beviewed as an expense.

pay perclick


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Definition

pay per click

Online advertising payment model in which payment is based solely onqualifying click-throughs.

Information

In a PPC agreement, the advertiser only pays for qualifying clicks to thedestination site based on a prearranged per-click rate. Popular PPCadvertising options include per-click advertising networks, searchengines, and affiliate programs.


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Paying per click is sometimes seen by some as a middle

ground between paying per impression and paying per action. Whenpaying per impression, the advertiser assumes the risk of low-qualitytraffic generated by the publisher. When getting paid for actions, thepublisher assumes the risk of low-converting offers by the advertiser. Inthe PPC model, the publisher does not have to worry about the sales

conversion rate of the target site, and the advertiser does not have toworry about how many impressions it takes to attract the specifiednumber of clicks.

pay per lead


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pay per lead

Definition

pay per lead

Online advertising payment model in which payment is based solelybased on qualifying leads.

Information

In a pay per lead agreement, the advertiseronlypays for leadsgenerated at their destination site. No payment is made for visitors whodon't sign up.

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A lead is generally a signup involving contact information andperhaps some demographic information; it is typically a non-cash

conversion event.A lead may consist of as little as an email address, orit may involve a detailed form covering multiple pages.

One risk to the advertiser is the potential for fraudulent activityby incentivized 3rd-parties or marketing partners. Some false leads areeasy to spot. Nonetheless, it is advisable to make a regular audit of the

results.

pay per sale


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Definition

pay per saleOnline advertising payment model in which payment is based

solely based on qualifying sales.

Information

In a pay per sale agreement, the advertiseronlypays for salesgenerated by the destination site based on an agreed upon commissionrate.

Paying per sale is often seen as the payment model mostfavorable to advertisers and least favorable to publishers. In such an

agreement, the publisher must not only be concerned with the quality andquantity of his or her audience, but also the quality of the advertiser'screative units and destination site.


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If possible, many publishers avoid sales-based agreements,

preferring to stick to the CPM model. However, some publishers, facingweak ad sales, have little choice but to accept sales-based agreementsto utilize remnant space.

For advertisers, pay per sale has some unique advantagescompared to pay per click and pay per lead. There are fewer concerns

about whether conversions are legitimate, and whether traffic isincentivized or of low quality.

stickiness

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Definition

stickiness

The amount of time spent at a site over a given time period.

Information

Stickiness is often measured in the average minutes per monthvisitors spend at a site or network. Sometimes stickiness is measured interms of page views.

When defined as minutes per month, site stickiness is a functionof number of visits (repeat usage) and time spent per visit (sessionstickiness).

unique visitors

Definition


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Definition

unique visitors

Individuals who have visited a Web site (or network) at least once in afixed time frame, typically a 30 day period.

Information

Most measurements of unique visitors are estimates.

Sites often calculate unique visitors based on the IP address informationfound in the log files, and sometimes through cookies. However, manyfactors may skew the results.

Traffic rating companies typically calculate unique visitors by monitoring

actual usage of a group of volunteers, then applying the results to to theInternet population. Results fluctuate considerably for small sites due totheir small sample sizes.

Web site traffic


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Web site traffic

Definition

Web site traffic

The amount of visitors and visits a Web site receives.

Information

Web site traffic was initially viewed as an all-important metricfor gauging success on the Web. This assumption was due in part tothe lack of other business metrics to explain the .com phenomenon.Now much of the focus has shifted back to profitability, and Web sitetraffic is only part of the equation.

Web site traffic x conversion = resultsWeb site traffic is still important, as you can't have conversions

without visitors, but it is becoming less important as a standalonemetric.


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ConsumerBehavior


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Sources of influence onthe consumer. The

f f fl Of


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consumer faces numerous sources of influence. Often, we

take cultural influences for granted, but they are

significant. An American will usually not bargain with a

store owner. This, however, is a common practice in much

of the World. Physical factors also influence our behavior.

We are more likely to buy a soft drink when we are

thirsty, for example, and food manufacturers have foundthat it is more effective to advertise their products on the

radio in the late afternoon when people are getting

hungry. A persons self-image will also tend to influence

what he or she will buyan upwardly mobile manager may

buy a flashy car to project an image of success.


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Consumer choices are often influenced dramatically


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y

by values. Some consumers, for example, seek to fit in

with the crowd and would like to own a car as similar aspossible to that of the neighbor. Others, on the other

hand, want to stand out. In the consumption context,

then, a consumer may choose to spend a great deal of

money on buying and maintaining neat and professional

attire, not because he or she is particularly interested inthat appearance for its own sake, but rather because this

will help the consumer be successful in his or her career.

One way to look at social influence is though

reference groupspeople against which one compares


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oneself. Thus, a consumer may notice that all his friends

are wearing a special kind of jeans and may expect to beostracized if he or she chooses to wear a different brand.

Interestingly, however, one may also hold dissociative

reference groupspeople that one would not want to be

compared to.

Family may influence the consumers choices a great

deal. Research has shown, for example, that there is a

tendency for adult children to use the same brands that

their parents used over time. In many cases, these brand

choices are made without much conscious thought.

Documents

Virtual Marketing 1