Transcript Document

Virtual Marketing
1.
Role of the Internet : technological development,development of e-Commerce,
different commercial models, diverse roles of websites.
2.
Internet strategy : virtual value chain
dis-intermediation, cybermediaries
3.
Business to Business : Intranets and Extranets; communication , recruitment
and procurement , exchanges.
4.
Consumer behavior : flow theory; Hoffman’s Many – to- Many model; Internet
branding 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 of location , online shopping.
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.
Role Of Internet
Role of Internet
With the use of internet, 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.
•Network management/systems integration.
•Backbone access services for other ISP's.
•Managing online purchase and payment systems.
The internet is designed to be indefinitely extendible and
the reliability of internet primarily depends on the quality of the
service providers' equipments.
Benefits of Internet:
•Doing fast business.
•Trying out new ideas.
•Gathering opinions.
•Allowing the business to appear alongside other established
businesses.
•Improving the standards of customer service/support resource.
•Supporting managerial functions.
Limitations:
•Security
•Privacy
Threats: Hackers, viruses etc.
Managing in the Virtual World - Market Space
What is Market Place
Physical World of Resources to create products/ services
What is Marketspace
Virtual World of Info. that complements/ substitutes the physical
world
Business have been looking for ways to increase their profits and
market share . The search for more efficient ways of doing business
has been driving another revolution in the conduct of business .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 of future”.
Information technology has revolutionized and digitalized economic
activity , and made it a truly global phenomenon .One of the most
visible icons of the IT Revolution is the internet – the world wise
web. Which is a gigantic anarchic network of computers world wide
, which is essentially used for communicating , interaction ,
interactive long distance computing and exchange of information
giving rise to a host of applications from military and government to
business , education and entertainment.
E-commerce exists because of internet. 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 of the digital economy. It is a source of a
paradigm shift , in redefining technology, individual and global
societies , as well as national and global economies.
Electronic commerce is a symbolic integration of communications
, data management , and security capabilities to allow business
applications within different organizations to automatically
exchange information related to the sale if goods and services .
Communication services support the transfer of information from
the originator to the recipient. Data management services define
the exchange format of the information.Security mechanisms
authenticate the source of information, guarantee the integrity of
the information received , prevent disclosure of information to
inappropriate users , and document that the information was
received by the intended recipient.
Prior to the development of e-commerce, the process of marketing
and selling goods was a mass-marketing and sales-force driven
process . Customers were viewed as passive targets of advertising
“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 of this traditional business
thinking.
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 electronic
media , such as TV,fax, and online networks.Internetbased commerce makes use of any Internet facility and
service. Web-based commerce focuses on the opportunity
of the World Wide Web apparatus , in particular , its
ubiquity and its ease of use .”
Benefits/Features of E-Commerce :
Electronic commerce increases the speed,accuracy, and efficiency
of business and personal transactions. The benefits of E-commerce
include the following :
•Ubiquity : E-commerce is ubiquitous, meaning that it is available
just about everywhere , at all times.It liberates the market from
being restricted to a physical space and makes it possible to shop
from your desktop, at home, at work , or even from your car using
mobile commerce .From customer point of view , ubiquity reduces
transaction costs – the costs of participating in a market.To transact
it is no longer necessary to spend time and money traveling to
market.At a broader level, the ubiquity of e-commerce lowers the
cognitive energy required to transact in a marketplace . Cognitive
energy refers to the mental effort required to complete a task.
•Global Reach : E-commerce technology permits commercial
transactions to cross cultural and national boundaries far more
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 of the world’s online
population.The total number of users or customers an e-commerce
business can obtain is a measure of its reach.
•Universal Standards : The technical standards for conducting ecommerce , are universal standards – they are shared by all nations
around the world. The universal technical standards of e-commerce
greatly lower the market entry costs - the cost merchants must pay
just to bring their goods to market. At the same time , for consumers
, universal standards , reduce search cost – the effort required to find
a suitable products.
•Richness : Information richness refers to the complexity and
content of a message.
•Interactivity : E-commerce technologies are interactive , meaning
they allow for two-way communication between merchant and
consumer .It allows an online merchant to engage a consumer in
ways similar to a face-to face experience , but on a much more
massive , global scale.
•Information Density : the internet and the Web vastly increase
information density –the 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
of information-making information more useful and important
than ever.As a result information becomes more plentiful,cheaper
and of higher quality.
•Personalization/Customization : E-commerce technologies permit
personalization – merchants can target their marketing messages to
specific individuals by adjusting the message to a person’s
name,interests , and past purchases.The technology also permits
customization –changing the delivered product or service based on a
users preference or prior behavior.Given the interactive nature of ecommerce technology, a great deal of information about the
consumer can be gathered in the marketplace at the moment of
purchase.With the increase in information density , a great deal of
information about the consumer’s past purchases and behavior can
be stored and used by online merchants.The result is increase in the
level of personalization and customization.
Types of E-Commerce :
There are different types of e-commerce and many different ways to
characterize these types .
The five major types of e-commerce are :
1. B2C
2. B2B
3. C2C
4. P2P
5. M-Commerce
B2C : (Business-to-Consumer)
The most commonly discussed type of e-commerce is Business-toConsumer (B2C) e-commerce, in which online business attempt to
reach individual consumers is done .It has grown exponentially since
1995, and is the type of e-commerce that most consumers are likely
to encounter . Within the B2C category there are many different
types of business models: portals , online retailers , content providers
, transaction brokers , market creators , service providers , and
community providers.
B2B : (Business-to-Business)
In this type of e-commerce , one business focuses on selling to
other business .It is the largest form of e-commerce.The ultimate
size of B2B e-commerce could be huge . At first, B2B e-commerce
primarily involved inter-business exchanges , but a number of other
B2B business models have developed, including e-distribution ,
B2B service providers , matchmakers , and info-mediaries that are
widening the use of e-commerce.
C2C : Consumer-to-Consumer
C2C e-commerce provides a way for consumers to sell to each
other , with the help of an online market maker such as the auction
site .In C2C e-commerce , the consumer prepares the product for
market , places the product for auction or sale, and relies on the
market maker to provide catalog , search engine ,and transaction
clearing capabilities so that products can be easily displayed ,
discovered , and paid for.
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-peer’s purest form, no
intermediary is required . Entrepreneurs and venture capitalists
have attempted to adapt various aspects of peer-to-peer (P2P) ecommerce.
E.g. Napster.com established to aid internet users in finding and
sharing music files (mp3 files). It is partially peer-to-peer
because it relies on a central database to show which users are
sharing music files.
M-commerce :
Mobile commerce or m-commerce , refers to the use of wireless
digital devices to enable transactions on the Web . These devices
utilize wireless networks to connect cell phones and handheld
devices to the Web. Once connected , mobile consumers can
conduct many types of transactions , including stock trades,
banking, travel reservations , and more.
***B2G : Business to Government
E-Commerce Business Models :
A business model is a set of planned activities (sometimes referred
to as business process) designed to result in a profit in a
marketplace. The business model is at the center of the business
plan.
A business plan is a document that describes a firm’s business
model .
An e-commerce business model aims to use and leverage the
unique qualities of the internet and the World Wide Web.
There are Eight Key Ingredients of a Business Model :
1. Value proposition : It defines how a company’s product or
service fulfils the needs of the customers.To develop and/or
analyze a proposition, the following questions need to be
answered :
- Why will customers choose to business with your firm
instead of another company ?
- What will your firm provide that other firms do not and
cannot ?
From the consumer point of view , successful e-commerce
value propositions include : personalization and
customization of product offerings, reduction of product
search costs, reduction of price discovery costs, and
facilitation of transactions by managing product delivery.
2. Revenue model :
The firms revenue model describes how the firm will earn revenue ,
generate profits,and produce a superior return on invested
capital.The function of business organizations is both to generate
profits and to produce returns on invested capital that exceed
alternative investments.
* The advertising model :
A website that offers its users content, services , and/or products
also provides a forum for 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 charge
higher advertising rates.
* 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 or
all of its 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 commission
from buyer as well as the seller).
* Sales Revenue Model :
In the sales revenue model , a companies derive revenue by selling
goods, information , or services to customers .
E.g. amazon.com
* Affiliate Revenue model :
In the affiliate revenue model , sites that steer business to an
“affiliate” receive a referral fee or percentage of the revenue from
any resulting sales.
3.Market Opportunity :
The term market opportunity refers to the company’s intended
marketplace and the overall potential financial opportunities
available to the firm in that marketplace . The market
opportunity is usually divided into smaller market niches. The
realistic market opportunity is defined by the revenue potential in
each of the market niches .
4. Competitive Environment :
The firms competitive environment refers to the other companies
operating in the same marketplace selling similar products . The
competitive environment for a company is influenced by several
factors : how many competitors are active, how large their
operations are , what the market share of each competitor is ,
how profitable these firms are , and how they price their
products.
5.Competitive Advantage :
Firms achieve a competitive advantage when they can produce a
superior product a superior product and/or bring the product to
market at lower than most, or all, of their competitors . Firms also
compete on scope .Some firms can develop global markets while
other firms can only develop a national or regional market .Firms
that can provide superior products 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 attract
new customers.
7.Organizational Development :
Describes how the company will organize the work that needs to be
accomplished.
8. Management Team :
Employees of the company responsible for making the business
model work.
Categorizing
E-Commerce
Business Models
Major B2C business models :
There are a number of different models being used in the B2C ecommerce arena . The major models include the following :
•Portal :-Offers powerful search tools plus an integrated package of
content services ;typically utilizes a combined
subscription/advertising revenue/transaction fee model ;may be
general or specialized.
•E-tailer :- Online version of traditional 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 of direct mail catalog);
online malls (online version of mall);manufacturers selling directly
over the Web.
•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 fee
revenue model.
•Service provider :- Offers services online.
•Community provider :- Provides an online community of likeminded individuals for networking and information sharing ;
revenue is generated by referral fees , advertising , and subscription.
Major B2B business models :
The major business models used to date in B2B arena include :
•Hub, also known as marketplace/exchange – electronic market
place 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 service provider :- Sells business services to other firms.
•Matchmaker :- Link business together , changes transaction on
usage fees.
•Infomediary :- Gathers information and sells it to business .
Major C2C business models :
A variety of business models can be found in the customer-tocustomer e-commerce , peer-to-peer e-commerce, and mcommerce 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 to permit
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.
Key business concepts and strategies applicable to e-commerce :
•Industry structure : The nature of players in an industry and their
relative bargaining power – by changing the basis of competition
among rivals , the barriers to entry , the threat of new substitute
products , the strength of suppliers , and the bargaining power of
buyers.
•Industry value chains : The set of activities performed in an
industry by suppliers , manufacturers , transporters , distributors and
retailers that transforms raw inputs into final products and services –
by reducing the cost of information and other transaction costs.
•Firm value chains : The set of activities performed within an
individual firm to create final products from raw inputs – by
increasing operational efficiency .
•Business strategy : A set of plans for achieving superior long-term
returns on the capital invested in a firm – by offering unique ways
to differentiate products , obtain cost advantages , compete globally
, or compete in a narrow market or product segment.
Technology Infrastructure for
E-Commerce
The Internet and World Wide Web ECommerce Infrastructure
The Internet : Technology Background
The Internet is an interconnected network of thousands of
networks and millions of computers (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 . No one 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 internetwork or the
connecting together of two or more computer networks.The World
Wide Web is one of the internet’s most popular services, providing
access to over one billion Web pages , which are documents
created in a programming language called HTML and which can
contain text , graphics , audio, video, and other objects, as well as
“hyperlinks” that permit a user to jump from one page to another.
The Internet : Key Technology Concepts;
Based in the definition , the internet means a network that uses the
IP (Internet Protocol) addressing scheme, supports the
Transmission Control Protocol (TCP), and ,makes services
available to users much like a telephone system makes voice and
data services available to the public.
Behind this formal definition are three extremely important
concepts that are the basis for understanding the Internet : packet
switching , the TCP/IP communications protocol , and client/server
computing .Although the Internet has evolved and changed
dramatically, these three concepts are at the core of how the
Internet functions today and are the foundation for Internet.
Packet Switching : It is a method of slicing digital messages into parcels 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 of packet switching , early computer
networks used leased , dedicated telephone circuits to communicate with terminals
and other computers.
In packet-switched networks , messages are first broken down into
packets.Appended to each packet are digital codes that indicate a source
address(the origination point) and the destination address, as well as sequencing
information and error-control information for the packet.Rather than being sent
directly to the destination , in a packet network , the packets travel from computer
to computer until they reach their destination. The computers are called Routers .
Routers are special purpose computers that interconnect thousands of different
computer networks that make up the internet and route packets along to their
ultimate destination as they travel.To ensure that packets take the best available
path towards their destination, the routers use computer programs called routing
algorithms.
Packet switching makes full use of almost all available communication lines and
capacity.If some lines are disabled or too busy , the packets can be sent on any
available line that eventually leads to the destination point.
TCP/IP :
TCP refers to the Transmission Control Protocol . IP refers to the
Internet Protocol. A protocol is a set of rules for formatting ,
ordering , compressing , and error checking messages.It may also
specify the speed of transmission 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 software
called server software .It is the agreed upon protocol for
transmitting data packets over the Web.TCP establishes connections
among sending and receiving Web computers , handles the
assembly of packets at the point of transmission , and their
reassembly at the receiving end.
IP addresses :TCP handles the packetizing and routing of Internet
messages . IP provides the Internet’s addressing scheme .Every
computer connected to the Internet must be assigned an address –
otherwise it cannot send or receive TCP packets .When a user
sign’s 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 of four separate numbers marked off by periods
such as 201.61.186.227. Each of the four numbers can range from
0-255. This “dotted quad” addressing scheme contains up to 4
billion addresses of the computer ( 2 to the 32nd power).The
leftmost number typically indicates the network address of the
computer , while remaining numbers help to identify the specific
computer within the group that is sending (or receiving) messages.
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.
Uniform Resource Locators (URLs ) are addresses used by Web
browsers to identify the location of content on the web, also use
domain names as a part of the 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.
Client/Server computing :
It is a model of computing in which very powerful personal
computers called Clients are connected together in a network
together with one or more server computers.These clients are
sufficiently powerful to accomplish complex tasks such as
displaying rich graphics , storing large files, and processing
graphics and sound files , all on a local desktop or hand held
device. Servers are networked computers dedicated to common
functions that their client machines on the network need. Such as
storing files , software applications, utility programs such as Web
connections , and printers.
Other Internet Protocols :
SMTP :Simple mail transfer protocol
POP : Post Office Protocol
For Sending
Email
IMAP : Internet message access protocol
FTP : File Transfer Protocol for transferring files
SSL : Secure Socket Layers for Security
E-Commerce Security
Environment
It is difficult to estimate the actual amount of e-commerce crime
for a variety of reasons . In many instances , e-commerce crimes
are not reported because companies ear of losing the trust of
legitimate customers. And even when crimes are reported , it may
be hard to quantify the losses incurred .The most serious losses
involved theft of proprietary information and financial
fraud.Online credit card fraud is perhaps the most high profile
form of e-commerce crime. In some cases , the criminals aim to
just deface , vandalize and/or disrupt a Web site, rather than steal
goods or services . The cost of such an attack includes not only the
time and effort to make repairs to the site but also damage done to
the site’s reputation and image as well as revenues lost as a result
of the attack. Estimates of the overall cost of the various forms of
cyber vandalism range into billions.
What is Good E-Commerce Security ?
What is a secure commercial transaction ?
Anytime a user goes into a market place , he/she takes risks,
including the loss of privacy (information about what you
purchased).The prime risk as a customer is that you do not get what
you paid for.As a merchant in the market , you don’t get paid for
what you sell,.Thieves take merchandise and then either walk off
without paying anything , or pay you with a fraudulent instrument ,
stolen credit card , or forged currency.
Burglary, breaking and entering , embezzlement , trespass ,
malicious destruction, vandalism – all crimes in traditional
commercial environment – are also present in ecommerce.However , reducing risks in e-commerce is a complex
process that involves new technologies, organizational policies and
procedures, and new laws and industry standards that empower law
enforcement officials to investigate and prosecute offenders.
Security Threats in the E-Commerce Environment :
From the technology perspective , there are three key points of
vulnerability when dealing with e-commerce : the client, the server
and the communication pipeline.
•Malicious Code
It includes a variety of threats such as viruses , worms , Trojan
horses , and “bad applets” . A virus is a computer program that has
the ability to replicate or make copies of itself , and spread to other
files. In addition to the ability to replicate , most computer viruses
deliver a “payload”(destroying files,reformatting the computers
hard drive or causing programs to rum improperly.
A Trojan horse does something other than expected . The Trojan
horse is not itself a virus because it does not replicate , but is often a
way for viruses or other malicious code to be introduced into a
computer system.
Bad applets also referred to as malicious mobile code , are expected
to become an increasing problem as java and Active X controls
become more commonplace.
Malicious code is a threat to the system’s integrity and continued
operation, often changing how a system functions or altering
documents created on the system . In many cases the user is
unaware of the attack until it affects the system and the data on the
system.
•Hacking and Cyber vandalism :
A hacker is an individual who intends to gain unauthorized access
to a computer system . Within the hacking community , the term
cracker is typically used to denote a hacker with criminal intent
although in the public press , the terms hacker and cracker are
used interchangeably. Hackers and crackers get unauthorized
access by finding weaknesses in the security procedures of Web
sites and computer system , often taking advantages of various
features of internet that make it an open system that is easy to use.
Cyber vandalism is intentionally disrupting,defacing , or even
destroying the site.
Group of hackers called as “tiger teams” are used by corporate
security departments to test their own security measures.By hiring
hackers to break into the system from outside , the company can
identify weaknesses in the computer systems.
•Credit Card Frauds
The fear that the credit card information will be stolen frequently
prevents the users from making online purchases . In e-commerce
the greatest threat to the consumer is that the merchant’s server with
which the customer is transacting will “lose” the credit information
to permit it to be diverted for a criminal purpose.Credit card files
are the major targets of Web site hackers.
Dimensions of E-Commerce security :
There are six dimensions to e-commerce security :
1. Integrity
2. No repudiation
3. Authenticity
4. Confidentiality
5. Privacy
6. Availabilty
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 unauthorized person intercepts and changes the
contents of an online communication , such as by redirecting a
blank wire transfer into a different account , the integrity of the
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) their online actions.
Authenticity refers to the ability to identify the identity of a
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 and
data 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 of information a customer
provides about himself or herself to an e-commerce merchant.
Availability refers to the ability to ensure that an e-commerce site
continues to function as intended .
E-Commerce security is designed to protect these six
dimensions.When any one of them is compromised , it is a security
issue.
Security of Data During Transmission :
Business with computers containing confidential data connected
to the Internet do not want the public to have unauthorized access
to specific parts of their files; at the same time they might want
the public to have access to specific parts of their information
base.Business that offer services that require payment by methods
including credit card transactions need to be cautious .If these
transactions are not secured, hackers can access the users account
information.
Internet Strategy
What is Value Chain?
Value chain is a high-level model of how businesses
receive raw materials as input, add value to the raw
materials through various processes, and sell finished
products to customers.
Today's Challenges
Old-fashioned command-and-control companies were
merely trying to manage the "white space" in their organizational
charts. Today's companies must manage the white space in entire
value chains.
A critical pre-requisite for success in digital economy
is the implementation of an integrated value chain that
extends across - and beyond - the enterprise.
In an information society the value of information has become
significant. Every business has an information component in
its product/services and operations. For example, a firm may
have an information product (eg: newspaper) or an
information intensive operations (eg: insurance). The
proportion of information content varies from industry to
industry. In some industries information plays a core role
while in others it plays a peripheral role. Significant
transformations can be expected in industries where
information plays a core role. For example, industries such as
publishing, music,financial services, entertainment, etc.,
where information plays a core role are undergoing significant
transformation while in other industries such as manufacturing
the transformation is more limited.
New information technologies and the ubiquitous internet have
enabled cheap and easy methods for data storage, analysis, and
distribution of information. They have created new
opportunities to generate value from the organization's
information. Some firms tend to exploit the information
content more than the other. The concept of marketspace is to
examine the opportunities for extracting value from the
information assets of organization.
Traditionally there has been a trade off between reach and
richness. Reach refers to breadth of audience and richness
refers to the quality of information in terms of delivery 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 have
the possibility of providing customized information in an
interactive mode to a broad audience.
Some companies operate in marketplace, some in marketspace, and others in both. Managers have to create value in
both physical 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 from outside the industry who have expertise with
handling information. A few examples are online travel agents,
stock brokers, online auto dealers, online retailers etc.
What is physical Value chain
•
Series of value adding activities that link the supply side to
demand side
•
Supply side - inbound logistics, production, design etc
•
Demand side - outbound logistics, marketing, sales, service
etc.
•
Information is a supporting element to control and monitor
the processes in chain
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 of thinking
•
Senior managers need to understand about virtual value chain
and how to exploit it
•
Marketing managers have to learn to market in marketspace
•
Value created by gathering, organzing, selecting,
synthesizing, and distributing info
Stages of Transformation from Marketplace to Marketspace
Firms go through various stages of transformation in the use
of IT. They start using IT as a control system to monitor
performance (visibility stage) and progress into exploiting the
information in the value chain. Finally, they tend to find new value
in the information to create new products/services or add value to
existing product.
Visibility
•Info. Systems are considered as control systems
•Improve efficiency thro' better monitoring
•Reduce cost
Mirroring Capability
•substitute virtual activities for physical activities
•create parallel value in market space
New Customer Relationships
add value to products/ services
draw on info. in virtual value chain to deliver value to
customers
Exploit the value matrix
•gather
•organize
•select
•synthesize
•Distribute
Value for a product is dependent on:
•Information Content
•Context - the way it is presented
•Infrastructure - to distribute the information.
Dis-intermediation
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, or
comparative 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.
In economics, disintermediation is the removal of
intermediaries in a supply chain: “cutting out the middlemen".
Instead of going through traditional distribution channels, which
had some type of intermediate (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 of servicing customers directly.
Disintermediation initiated by consumers is often the
result of high market transparency, in that buyers are aware of
supply prices direct from the manufacturer. Buyers bypass the
middlemen (wholesalers and retailers) in order to buy directly
from the manufacturer and thereby pay less. Buyers can
alternatively elect to purchase from wholesalers. Often, a B2C
intermediary functions as the bridge between buyer and
manufacturer.
To illustrate, a typical B2C supply chain is composed of four
or five entities (in order):
•
Supplier
•
Manufacturer
•
Wholesaler
•
Retailer
•
Buyer
In the past, traditional channels of distribution have always
had a place for the middleman. It was through these third party
channel partners that many companies could bring their products
or services to market in the most economical manner possible.
Middlemen have handled not only the sale of product, but also a
number of other functions including, lead generation, specification
of equipment, assistance with credit approval, warehousing and
aftermarket support.
A middleman can take a number of different forms. He or she
could be a wholesaler, distributor, retailer, sales agent or a
manufacturer's representative. Their sole purpose is to unite the
producer with the customer. Their value is in the ability to find
the customer, define the customer's needs, close the sale and
support the manufacturer.
However, as a result of advancing technologies and the
proper application of Internet 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 many
performing middleman functions. This threat is continuing to lend
credence to the feared concept of dis-intermediation.
New methods and new technologies are being developed
everyday 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 not party to the
profits previously generated in the transaction. The end result is
their ultimate demise.
But has the middleman been eliminated and replaced with
the World Wide Web? Or has their role been morphed into a
greater opportunity as a result of the Internet? By re-examining
their business models many of these entrepreneurs have reestablished themselves in the business cycle and elevated their
value in the eyes of both their customers and the manufacturers
they represent.
The Destruction of the Middleman
The Internet has changed all the rules and has posed a threat for
many established distribution channels. At risk are the agents and
distributors that man these channels. New business models such
as reverse auctions, industry portals and virtual buying groups
have emerged lending credence to the feared concept of disintermediation.
e-Commerce pundits have long predicted the demise of
these middlemen as a result of going direct. In some cases these
predictions have become realities. Travel agents have already
experienced the shortening of supply chains as airlines encourage
their customers to purchase tickets directly from their web site.
Many airlines have provided lucrative incentives for customers
that book on-line rather than through travel agents. The reason for
this online push is simple: Airlines save an estimated $15 - $25
per transaction when travelers use their Web sites.
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.
Aftermarket parts are especially vulnerable to this occurrence.
Most consumers refer to the nameplate on equipment they are
dealing with then contact the web site of the manufacturer when
they have a need for service or parts replacement. The middleman
is completely circumvented in this instance and that dramatically
affects his revenue.
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
existing piece of equipment. The middleman could have sold
the original equipment and be completely bypassed when the
customer refers to a manufacturer's web site.
Online Market
Research
Marketing research is often needed to ensure that
we produce what customers really want and not what we
think they want.
Research often help us reduce risks associated
with a new product, but it cannot take the risk away
entirely. It is also important to ascertain whether the
research has been complete. For example, Coca Cola did
a great deal of research prior to releasing the New Coke,
and consumers seemed to prefer the taste. However,
consumers were not prepared to have this drink replace
traditional Coke.
Several tools are available to the market
researcher—e.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 be
quite 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
surveys are relatively inexpensive, but response rates are
typically quite low—typically from 5-20%. Phone-surveys
get somewhat higher response rates, but not many
questions 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 to
bias. The wording of a question can influence the outcome
a great deal.
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 consumption
preferences 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 breadth—i.e., finding out what
kinds of issues are important for consumers in a given
product category.
Personal interviews involve in-depth questioning of an
individual 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 to
elaborate), but this method of research is costly and can be extremely
vulnerable to interviewer bias.
Projective techniques are used when a consumer may feel
embarrassed to admit to certain opinions, feelings, or preferences. For
example, many older executives may not be comfortable admitting to
being 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.
Looking at how consumers select products may yield
insights into how they make decisions and what they look
for. For example, some American manufacturers were
concerned 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 manufacturer—the product specificbrands 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 being
consulted.
Physiological measures are occasionally used to
examine consumer response. For example, advertisers may
want to measure a consumer’s 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 favorite
products). Often, a way to get your way is to demonstrate
through “objective” research that your opinions make
economic sense.
Online Market Research Techniques:
Market research involves gathering information that will help a
firm identify potential products and customers .There are two
general types of market research .
Primary research involves gathering first-hand information using
techniques such as surveys , personal interviews and focus
groups.This type of research is typically used to gain feedback on
brands, products , or new marketing campaigns where no previous
study has been done.
Secondary research relies on existing , published information as the
basis for analyzing the market .
Both primary and secondary research can be completed online
more efficiently , less expensively , and more accurately than
offline.In addition to two different approaches to market research ,
there are two types of data 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 , or factors 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 into
similar sub segments based on the answer given . One type of
analysis is content analysis , which tries to identify the major
categories of responses given.
Primary Research : Surveys and questionnaires are the most
popular and frequently used market research tools.Using a survey
instrument , which is a list of questions , researchers can approach
groups of people to ask their views on virtually any imaginable
topic.
Online surveys can be typically be administered more quickly and
less expensively than traditional mail or telephone
surveys.Companies can hire an outside market research firm to
conduct the survey or create and administer their own .
Online surveys also make it possible to track respondents and
follow up with those who haven’t yet completed survey, which
help to improve response rates , the percentage of people who
complete a survey. A low response rate can damage the validity ,
or believability , of a survey’s results.
Feedback forms, which ask users to provide input regarding a site’s
operations in a set format , are another type of inline 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 another primary research tool . The
interview is generally guided by a set of questions very similar to
survey 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 an
opportunity to gather more in-depth information on a topic.In some
cases , personal interviews are used as second phase of a research
project , following initial information gathering by survey.
Secondary Research : It involves gathering information using WEB
sites as the information source.
The Key to being efficient and effective as a researcher is
identifying the WEB sites most likely to provide answers to the
questions posed 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 will
impact other decisions also helps to further refine information
collection.
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)
Online Marketing
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
of marketing 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 specific pages visited . Cookies provide Web marketers
with a very quick means of identifying the customer and
understanding his or her prior behavior at the site.
•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 to present the
customer with exactly what they want, when they want it, for the
right price.
•Advertising networks : best known for their ability to present users
with banner advertisements based on a database of user behavioral
data . Specialized ad servers are used to store and send users the
appropriate banner ad.
CRM systems : A repository of customer information that records
all of the contacts that a customer has with a firm and generates a
customer profile available to everyone in the firm who has a need
to “know the customer”.
IT enabled marketing and branding strategies :
•Online marketing techniques to online customers include
permission marketing , affiliate marketing , viral marketing , and
brand leveraging.
•Online techniques for strengthening customer relationships include
one-to-one marketing ; customization , transactive content ; and
customer service (CRMs,FAQs,live chat , intelligent agents , and
automated response system).
•Online pricing strategies include offering products and services for
free ,versioning , bundling , and dynamic pricing.
•Strategies to handle the possibility of channel conflict.
Direct E-mail marketing :
E-mail marketing messages sent directly to interested users (direct
e-mail marketing) has proven to be one of the most effective forms
of marketing 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 of Internet users who have expressed no interest in the
product . Instead , direct e-mail marketing messages are sent to an
“opt in” audience of Internet 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 of the comparatively high response
rates and low cost, direct e-mail marketing is the fastest growing
form of online marketing.
The primary cost of e-mail marketing is for the purchase of the list
of names 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 :
Online Catalogs are the equivalent of paper-based catalog. The
basic function of a catalog is to display the merchant’s wares. The
electronic version typically contains a color image of each available
product , a description of the item , as well as size , color, material
composition , and pricing information . While simple catalogs are ,
technically , hard coded HTML pages and graphics displaying
softwares , most sites with more than 15-20 products generate
catalog pages from a product and price database that be easily
changed . Simply by clicking on an order button at the site ,
customers can make a purchase instantly.
Public Relations :
Another marketing communications tool used to increase
awareness of a site , and potentially boost traffic , is public
relations. Public Relations (PR) involves communicating with
target audiences, pr publics , using methods other than advertising .
Some of these methods include publicity (media coverage), special
events , such as a grand opening celebration or press 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 of interest to the client company , proposing articles and
TV program subjects , and generally keeping the press aware of
any 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 to other
media exposure.
Online Marketing Metrics :
1. Impression
2. Clickthrough Rate (CTR)
3. Hits
4. Page Views
5. Stickness (Duration)
6.
Unique visitors
7. Loyalty
8. Reach
Continued …
9. Recency
10. Acquisition rate
11. Conversion rate
12. Attrition rate
13. Abandonment rate
14. Retention rate
1. Impressions are the number of times an ad is served .
2. Clickthrough rate (CTR) measures the percentage of people
exposed to an online advertisement who actually click on the
advertisment.
3. Hits are the number of http requests received by a firm’s server
.Hits can be misleading as a measure of site activity because a
“hit” does not equal a page : a single page may account for
several hits if the page contains multiple images or graphics.A
single site visitor can generate hundreds of hits .
4. Page views are the number of pages requested by visitors. A
single page that has three frames will generate three page views.
5. Stickiness (Duration) is the average length of time visitors
remain at a site .The longer amount of time a visitor spends at a
site , the greater the probability of purchase.
6. Unique visitors counts the number of distinct, unique visitors to
a site , regardless of how many pages they view.
7. Loyalty measures the percentage of users who return in a year.
This can be good indicator of the trust shoppers place in site.
8. Reach is typically a percentage of the total number of
consumers in market who visit a site.
9. Recency like loyalty, measures the power of site to produce
repeat visits and is generally measured as the average number
of days elapsed between shopper or customer visits.
10.Acquisition rate measures of the percentage of visitors who
register or visit product pages (indicating interest in the
product)
11.Conversion rate measures the percentage of visitors who
actually purchase something.
12. Attrition rate measures the percentage of customers who
purchase once , but never return within a year.
13.Abandonment rate measures the percentage of shoppers who
begin a shopping cart form but then fail to complete the form
and leave the site.
14.Retention rate indicates the percentage of existing customers
who continue to buy on a regular basis.
Online Advertisement : It is the most common and familiar
marketing communications tool .The advantages of online
marketing are the ability to target ads to narrow segments and to
track performance of advertisements in almost real time. Online
advertisements also provide greater opportunities for interactivity
– two – way communication between advertiser and the potential
customer .
Different forms of online advertisements include :
•Banner and rich media ads
•Paid search engine illusion and placement
•Sponsorships , and
•Affiliate relationships
•Direct E-mail marketing
Advertising
Metrics
click-through
Definition
click-through
The process of clicking through an online advertisement to the
advertiser's destination.
Information
While the click-through is often the most immediate response to an
advertisement, it is not the only interaction. Visitors may choose to
type a company's URL directly into the browser bar, or type the
company's name into a search engine box. This assumes, of
course, that the company's name and/or URL appears in its
advertisements.
Accurate counting of click-throughs involves excluding "robot clicks"
and duplicate clicks. This takes on added importance when clickthroughs are used as the measurement on which payment is
based.
click-through rate (CTR)
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
not measure. The CTR measures what percentage of people clicked
on the ad to arrive at the destination site; it does not include the
people who failed to click, yet arrived at the site later as a result of
seeing the ad.
As such, the CTR may be seen as a measure of the immediate
response to an ad, but not the overall response to an ad. The
exception involves ads that display no identifiable information about
the destination site; in these cases the click rate equals the overall
rate.
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 tracking
tools, has resulted in less interest in click-through rates and
more 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
Definition
conversion rate
The percentage of visitors who take a desired action.
Information
The desired action can take many forms, varying from site to
site. Examples include sales of products, membership registrations,
newsletter subscriptions, software downloads, or just about any activity
beyond simple page browsing.
A high conversion rate depends on several factors, all of which
must be satisfactory to yield the desired results -- the interest level of
the visitor, the attractiveness of the offer, and the ease of the process.
The interest level of the visitor is maximized by matching the
right visitor, the right place, and the right time.
The attractiveness of the offer includes the value
proposition and how well it is presented. It is worth noting
that small, impulse items typically have a higher conversion
rate than large, shopping items.
The visitor's ease of completing the desired action is
dependent on site usability which includes intuitive
navigation and fast loading pages.
cost-per-action (CPA)
Online advertising payment model in which payment is based solely on
qualifying actions such as sales or registrations.
Information
The actions defined in a cost-per-action agreement relate
directly to some type of conversion, with sales and registrations among
the 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-perclick (CPC) model somewhere in the middle. In a CPA model, the
publisher is taking most of the advertising risk, as their commissions are
dependant on good conversion rates from the advertiser's creative units
and Web site.
Marketers looking for cost-per-action deals have
several options. Publishers with considerable excess
inventory may be willing to consider nonstandard offers.
Sites specializing in incentive programs are in a position
to offer CPA pricing on various types of leads, although
the usual caveats concerning incentivized traffic still apply.
Perhaps the most widespread use of performance-based
pricing is affiliate marketing, whereby
merchants/advertisers determine what actions they want
to reward and how much they are willing to pay.
CPM
Definition
CPM
Cost per thousand impressions.
Information
The CPM model refers to advertising bought on the basis of
impression. This is in contrast to the various types of pay-forperformance advertising, whereby payment is only triggered by a
mutually agreed upon activity (i.e. click-through, registration, sale).
The total price paid in a CPM deal is calculated by multiplying the
CPM rate by the number of CPM units. For example, one million
impressions 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
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 sometimes
used interchangeably, sometimes as distinct terms. When used as
distinct terms, PPC indicates payment based on click-throughs, while
CPC indicates measurement of cost on a per-click basis for contracts
not based on click-throughs.
For example, consider a campaign where payment is based on
impressions, not clicks. Impressions are sold for $10 CPM with a clickthrough rate (CTR) of 2%.
1000 impressions x 2% CTR = 20 click-throughs
$10 CPM / 20 click-throughs = $.50 per click
customer acquisition cost
Definition
customer acquisition cost
The cost associated with acquiring a new customer.
Information
Customer acquisition cost is calculated by dividing total
acquisition expenses by total new customers. However, there are
different opinions as to what constitutes an acquisition expense. For
example, rebates and special discounts do not represent an actual cash
outlay, yet they have an impact on cash (and, presumably, on the
customer).
Acquisition costs vary across industries and mediums. When
acquisition data is available, try to determine if you are comparing apples
to apples, so to speak. This is not always easy, as customer acquisition
data can be scarce, and the methodology is often sketchy.
Hit
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 Web
page counts as a hit, but so does a request for a graphic on a Web page.
Since the number of graphics per page can vary considerably, hits mean
very little for comparison purposes.
hybrid model
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 performancebased models. Hybrid deals are sometimes seen as a way to further split
the risk between publishers and advertisers.
Advertising campaigns sometimes bundle CPM and CPC in a
hybrid buy, and sometimes even CPA.
Affiliate programs have been known to offer a few cents per-click
in addition to paying for a sale, lead, download, or other conversion
activity.
impression
Definition
impression
A 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 to
very large discrepancies, yet people make purchases based on
impression every day.
So... what is the definition?
Currently, whatever a buyer and seller agree on.
page view
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 ad
inventory. If a site only earns revenue on sales, then page views are not
a key statistic. Page views without corresponding sales may even be
viewed as an expense.
pay per click
Definition
pay per click
Online advertising payment model in which payment is based solely on
qualifying click-throughs.
Information
In a PPC agreement, the advertiser only pays for qualifying clicks to the
destination site based on a prearranged per-click rate. Popular PPC
advertising options include per-click advertising networks, search
engines, and affiliate programs.
Paying per click is sometimes seen by some as a middle
ground between paying per impression and paying per action. When
paying per impression, the advertiser assumes the risk of low-quality
traffic generated by the publisher. When getting paid for actions, the
publisher assumes the risk of low-converting offers by the advertiser. In
the PPC model, the publisher does not have to worry about the sales
conversion rate of the target site, and the advertiser does not have to
worry about how many impressions it takes to attract the specified
number of clicks.
pay per lead
Definition
pay per lead
Online advertising payment model in which payment is based solely
based on qualifying leads.
Information
In a pay per lead agreement, the advertiser only pays for leads
generated at their destination site. No payment is made for visitors who
don't sign up.
A lead is generally a signup involving contact information and
perhaps some demographic information; it is typically a non-cash
conversion event. A lead may consist of as little as an email address, or
it may involve a detailed form covering multiple pages.
One risk to the advertiser is the potential for fraudulent activity
by incentivized 3rd-parties or marketing partners. Some false leads are
easy to spot. Nonetheless, it is advisable to make a regular audit of the
results.
pay per sale
Definition
pay per sale
Online advertising payment model in which payment is based
solely based on qualifying sales.
Information
In a pay per sale agreement, the advertiser only pays for sales
generated by the destination site based on an agreed upon commission
rate.
Paying per sale is often seen as the payment model most
favorable to advertisers and least favorable to publishers. In such an
agreement, the publisher must not only be concerned with the quality and
quantity of his or her audience, but also the quality of the advertiser's
creative units and destination site.
If possible, many publishers avoid sales-based agreements,
preferring to stick to the CPM model. However, some publishers, facing
weak ad sales, have little choice but to accept sales-based agreements
to utilize remnant space.
For advertisers, pay per sale has some unique advantages
compared to pay per click and pay per lead. There are fewer concerns
about whether conversions are legitimate, and whether traffic is
incentivized or of low quality.
stickiness
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 month
visitors spend at a site or network. Sometimes stickiness is measured in
terms of page views.
When defined as minutes per month, site stickiness is a function
of number of visits (repeat usage) and time spent per visit (session
stickiness).
unique visitors
Definition
unique visitors
Individuals who have visited a Web site (or network) at least once in a
fixed 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 information
found in the log files, and sometimes through cookies. However, many
factors 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 the
Internet population. Results fluctuate considerably for small sites due to
their small sample sizes.
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 metric
for gauging success on the Web. This assumption was due in part to
the lack of other business metrics to explain the .com phenomenon.
Now much of the focus has shifted back to profitability, and Web site
traffic is only part of the equation.
Web site traffic x conversion = results
Web site traffic is still important, as you can't have conversions
without visitors, but it is becoming less important as a standalone
metric.
Consumer Behavior
Consumer Behavior involves the psychological
processes that consumers go through in recognizing
needs, finding ways to solve these needs, making
purchase decisions (e.g., whether or not to purchase a
product and, if so, which brand and where), interpret
information, make plans, and implement these plans
(e.g., by engaging in comparison shopping or actually
purchasing a product).
Sources of influence on the consumer. The
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 found
that it is more effective to advertise their products on the
radio in the late afternoon when people are getting
hungry. A person’s self-image will also tend to influence
what he or she will buy—an upwardly mobile manager may
buy a flashy car to project an image of success.
Social factors also influence what the consumers
buy—often, consumers seek to imitate others whom they
admire, and may buy the same brands. The social
environment can include both the mainstream culture
(e.g., Americans are more likely to have corn flakes or
ham and eggs for breakfast than to have rice, which is
preferred in many Asian countries) and a subculture (e.g.,
rap music often appeals to a segment within the
population that seeks to distinguish itself from the
mainstream population). Thus, sneaker manufacturers are
eager to have their products worn by admired athletes.
Finally, consumer behavior is influenced by learning—you
try a hamburger and learn that it satisfies your hunger and
tastes good, and the next time you are hungry, you may
consider another hamburger.
Consumer choices are often influenced dramatically
by values. Some consumers, for example, seek to “fit in
with the crowd” and would like to own a car as similar as
possible 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 in
that 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 groups”—people against which one compares
oneself. Thus, a consumer may notice that all his friends
are wearing a special kind of jeans and may expect to be
ostracized if he or she chooses to wear a different brand.
Interestingly, however, one may also hold dissociative
reference groups—people that one would not want to be
compared to.
Family may influence the consumer’s 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.