Marketing in the

Digital Age: Making New

Customer Connections

Chapter 3
 Objectives
• Be able to identify the major forces
shaping the new digital age.
• Understand how companies have
responded to the Internet with
e-business strategies.
• Be able to describe the four major e-
commerce domains.
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 Objectives
• Understand how companies use e-
commerce to profitably deliver
greater value to customers.
• Realize the promise and challenges
that e-commerce presents for the
future.

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 Case Study
Charles Schwab
• Invented discount • Later became first true
brokerage category click-and-mortar full-
• First U.S. major service brokerage
player to go online • Now world’s largest
• Initially offered two- e-commerce site
tiered trading • 85% online trades;
system 21% of trade volume;
to protect profits / Strong stock return
stop cannibalization 3-4
Major Forces Shaping the
Digital Age
• Digitalization and Connectivity
 The flow of digital information requires
connectivity
 Intranets, Extranets, and the Internet
• The Internet Explosion
 Key driver of the “new economy”
3-5
Major Forces Shaping the
Digital Age
• New Types of Intermediaries
 Brick-and-mortar firms often face
disintermediation from click-only
competitors
 The click-and-mortar business model
has been highly successful
• Customization and Customerization
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Marketing Strategy in the
Digital Age
• E-business:
 uses electronic means and platforms to
conduct business.
• E-commerce:
 facilitates the sale of products and
services by electronic means.
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Marketing Strategy in the
Digital Age
• E-marketing:
 Includes efforts that inform,
communicate, promote, and sell
products and services over the Internet.
• E-commerce benefits both buyers and
sellers

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Marketing Strategy in the
Digital Age
• Buyer Benefits of E-Commerce:
 Convenience
 Easy and private
 Greater product access/selection
 Access to comparative information
 Interactive and immediate
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Marketing Strategy in the
Digital Age
• Seller Benefits of E-Commerce:
 Relationship building
 Reduced costs
 Increased speed and efficiency
 Flexibility
 Global access, global reach
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 E-Commerce Domains
E-Marketing Domains
Targeted to Targeted to
consumers businesses

Initiated by
businesses
B2C B2B

Initiated by
consumers
C2C C2B

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 E-Commerce Domains
• Online consumers
Major Domains  Now more mainstream and
diverse
 Has created new targeting
opportunities
• B2C  Online behavior differs by
age
• B2B  Online consumers differ
from traditional off-line
• C2C consumers
 They initiate and control
the exchange process
• C2B  Value information highly

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 E-Commerce Domains
• B2B sales far exceed B2C
Major Domains sales
 B2B sales are estimated to
reach $4.3 trillion in 2005
• B2C • Open trading networks
 E-marketspace bringing
• B2B sellers and buyers together
• Private trading networks
• C2C  Links sellers with their
own trading partners
• C2B

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 E-Commerce Domains
• C2C web sites help
Major Domains consumers exchange goods
or information
 eBay is one example
• B2C • Auction sites facilitate the
exchange process
• B2B  Allow access to a much
larger audience
• C2C • Newsgroups / forums
 Help consumers to find
• C2B and share information

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 E-Commerce Domains
• Allow consumers to
Major Domains search out sellers, learn
about offers, initiate
purchase, or dictate
• B2C purchase terms
 Ex: Priceline.com
• B2B • Some sites facilitate the
feedback process between
• C2C customers and companies
 Ex: Planetfeed.com
• C2B

3 - 15
Conducting E-Commerce
• Click-Only-Competitors
 E-tailers, search engines and portals, ISPs,
transaction sites, enabler sites
• Dot.coms failed for many reasons
 Lack of planning and research
 Over emphasis on acquisition vs. retention
 Poor web site design / distribution systems
 Low margins
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Conducting E-Commerce
• Click-and-Mortar Companies
 Channel conflict was initially a concern
 E-commerce often created new customers,
rather than cannibalizing existing ones
 Many firms now enjoy greater success than
their click-only competition
 Trusted brand names, greater financial
resources, larger customer base, industry
knowledge, and strong supplier relationships
were key advantages
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 Conducting E-Commerce
E-Marketing • Corporate web sites
 Build goodwill and
relationships; generate
• Creating web sites excitement
• Placing online ads • Marketing web sites
and promotions  Engage consumers
and attempt to influence
• Creating or using purchase
web communities • Web site design
• Using E-mail and  7 Cs of effective web site
webcasting design

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Conducting E-Commerce

Seven C’s of Web Site Design

• Context • Communication
• Content • Connection
• Community • Commerce
• Customization
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 Conducting E-Commerce
E-Marketing • Online forms of ads
and promotions
• Creating web sites  Banner ads/tickers
 Skyscrapers
• Placing online ads  Interstitials
and promotions  Browser ads
• Creating or using  Content sponsorships
web communities  Microsites
 Viral marketing
• Using E-mail and
webcasting • Future of online ads
3 - 20
 Conducting E-Commerce
E-Marketing • Web communities allow
members with special
interests to exchange
• Creating web sites views
• Placing on-line ads  Social communities
and promotions  Work-related
communities
• Creating or using
• Marketers find well-
web communities defined demographics
• Using E-mail and and shared interests
webcasting useful when marketing

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 Conducting E-Commerce
E-Marketing • E-mail marketing
 Key tool for B2B and
B2C marketing
• Creating web sites  Clutter is a problem
• Placing on-line ads  Enriched forms of
and promotions e-mail attempt to break
through clutter
• Creating or using
• Webcasting
web communities
 Auto downloading of
• Using E-mail and customized content to
webcasting recipients’ PCs

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Promise and Challenges of
E-Commerce
• The Promise of E-Commerce
 The future of B2B E-commerce is bright
 A few click-only companies may
succeed
 Most companies will integrate online
marketing into the marketing mix

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Promise and Challenges of
E-Commerce
• Challenges: The Web’s Darker Side
 Few B2C companies are profitable
 Limited exposure, skewed demographics
 Navigating the web is often problematic
• Challenge: Legal and Ethical Issues
 Online privacy and security concerns
 Internet fraud, the digital divide, access by
vulnerable or unauthorized groups
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