CHAPTER 4:Marketing and Advertising in E-Commerce

1. The Consumer Purchasing Decision-Making Process

1.1. PLAYERS IN THE CONSUMER DECISION PROCESS: Initiator Influencer Decider Buyer User

2. Loyalty, Satisfaction, and Trust in E-Commerce

2.1. -customer loyalty A deep commitment to repurchase or repatronize a preferred product/service continually in the future, thereby causing repetitive same-brand or same brand-set purchasing, despite situational influences and marketing efforts that have the potential to cause switching behavior

2.2. -e-loyalty Customer loyalty to an e-tailer or loyalty programs delivered online or supported electronically

2.3. TRUST IN EC

2.3.1. -trust The psychological status of willingness to depend on another person or organization

2.4. EC Trust Models

2.4.1. -online trust The belief that an online website or other digital entities can deliver what they promise so that the recipient trusts them

2.5. How to Increase Trust in EC: -Improve Your Website -Affiliate with an Objective Third Party -Establish Trustworthiness Other Methods for Facilitating Trust: -reputation-based systems Systems used to establish trust among members of online communities where parties with no prior knowledge of each other use the feedback from their peers to assess the trustworthiness of the peers in the community -Online Word of Mouth

3. Mass Marketing, Market Segmentation, and Relationship Marketing

3.1. FROM MASS MARKETING TO ONE-TO-ONE MARKETING: -Mass Marketing and Advertising -market segmentation The process of dividing a consumer market into logical groups for conducting marketing research and analyzing personal information

3.2. -relationship marketing Marketing method that focuses on building a long-term relationship with customers -one-to-one marketing Marketing that treats each customer in a unique way

4. Market Research for E-Commerce

4.1. OBJECTIVES AND CONCEPTS OF MARKET RESEARCH ONLINE: What Are Marketers Looking For in EC Market Research? REPRESENTATIVE MARKET RESEARCH APPROACHES: -Market Segmentation Research -Data Collection and Analysis -Online Surveys -Hearing Directly from Customers

4.2. -Data Collection in the Web 2.0 Environment -Observing Customers’ Movements Online: -transaction log A record of user activities at a company’s website -clickstream behavior Customer movements on the Internet

4.3. -Web bugs Tiny graphics files embedded in e-mail messages and in websites that transmit information about users and their movements to a Web server -spyware Software that gathers user information over an Internet connection without the user’s knowledge -Web Analytics and Mining

4.4. -clickstream data Data that occur inside the Web environment; they provide a trail of the user’s activities (the user’s clickstream behavior) in the website -Web mining Data mining techniques for discovering and extracting information from Web documents; explores both Web content and Web usage

4.5. -LIMITATIONS OF ONLINE MARKET RESEARCH AND HOW TO OVERCOME THEM -biometrics An individual’s unique physical or behavioral characteristics that can be used to identify an individual precisely

5. Online Advertising Methods

5.1. -MAJOR CATEGORIES OF AD:S Classified Ads Display Ads Interactive Ads -banner On a Web page, a graphic advertising display linked to the advertiser’s Web page -keyword banners Banner ads that appear when a predetermined word is queried from a search engine

5.2. -random banners Banner ads that appear at random, not as the result of the user’s action -live banners A banner ad that is created dynamically (or whose content is created dynamically) at the time of display, instead of being preprogrammed with fixed content -Benefits and Limitations of Banner Ads

5.3. -pop-up ad An ad that appears in a separate window before, after, or during Internet surfing or when reading e-mail -pop-under ad An ad that appears underneath the current browser window, so when the user closes the active window the ad is still on the screen

5.4. -e-mail marketing A form of direct marketing which uses e-mail as a means of communicating commercial messages to an audience -e-mail advertising Adding advertisements to e-mail messages sent to customers -The Major Advantages and Limitations of E-Mail Advertisement -Implementing E-Mail Advertising

5.5. -search advertising A method of placing online advertisements on Web pages that show results from search engine queries -URL Listing -Keyword Advertising -search engine optimization (SEO) The craft of increasing site rank on search engines; the optimizer uses the ranking algorithm of the search engine (which may be different for different search engines) and best search phrases, and tailors the ad accordingly

5.6. -GOOGLE: THE ONLINE ADVERTISING KING Google’s Major Advertisement Methods: AdWords and AdSense -viral marketing (viral advertising) Word-of-mouth marketing by which customers promote a product or service by telling others about it

5.7. VIDEO ADS -Consumer-Generated Videos -interactive video A technique used to blend user interaction and videos -viral video A video clip that gains widespread popularity through the process of Internet sharing, typically through e-mail or IM messages, blogs, and other media-sharing websites

5.8. -advergaming The practice of using computer games to advertise a product, an organization, or a viewpoint -augmented reality (AR) A live direct or indirect view of a physical, real-world environment whose elements are augmented by computer-generated sensory input, such as sound or graphics -ADVERTISING IN CHAT ROOMS AND FORUMS

5.9. -mobile marketing Conducting marketing on or with a mobile device -mobile advertising (m-advertising) Ads sent to and presented on mobile devices Mobile Interactive Advertising Types of Mobile Ads Viral Mobile Marketing Mobile Marketing and Advertising Campaigns Representative Examples of Mobile Advertising

5.10. -MOBILE MARKETING IMPLEMENTATION GUIDELINES Notice Choice and consent Customization and constraint Security Enforcement and accountability -TOOLS TO SUPPORT MOBILE ADVERTISEMENT -MOBILE AD TRENDS

6. A MODEL OF CONSUMER BEHAVIOR ONLINE: -The Major Influential Factors: -Personal Characteristics -Product/Service Factors -Merchant and Intermediary Factors -EC Systems Motivational Factors Hygiene Factors -Environmental Factors Social Variables Cultural/Community Variables Other Environmental Variables

7. The Consumer Purchasing Decision-Making Process

7.1. A GENERIC PURCHASING-DECISION MODEL: -Need identification -Information search product brokering Deciding what product to buy merchant brokering -Evaluation of alternatives -Purchase and delivery -Postpurchase activities

8. Personalization and Behavioral Marketing

8.1. -personalization The matching of services, products, and advertising content with individual consumers and their preferences -user profile The requirements, preferences, behaviors, and demographic traits of a particular customer

8.2. -Cookies in E-Commerce -cookie A data file that is placed on a user’s hard drive by a remote Web server, frequently without disclosure or the user’s consent, which collects information about the user’s activities at a site -Using Personalized Techniques to Increase Sales

8.3. -behavioral targeting Targeting that uses information collected about an individual’s Web-browsing behavior, such as the pages they have visited or the searches they have made, to select an advertisement to display to that individual -collaborative filtering A market research and personalization method that uses customer data to predict, based on formulas derived from behavioral sciences, what other products or services a customer may enjoy; predictions can be extended to other customers with similar profiles

8.4. -Other Methods: Rule-Based Filtering Content-Based Filtering Activity-Based Filtering -Legal and Ethical Issues in Collaborative Filtering -Social Psychology and Morphing in Behavioral Marketing -Use of Customer Database Marketing

9. Web Advertising

9.1. -interactive marketing Online marketing, facilitated by the Internet, by which marketers and advertisers can interact directly with customers, and consumers can interact with advertisers/vendors

9.2. SOME BASIC INTERNET ADVERTISING TERMINOLOGY -ad views The number of times users call up a page that has a banner on it during a specific period; known as impressions or page views -button A small banner that is linked to a website; may contain downloadable software

9.3. -page An HTML (Hypertext Markup Language) document that may contain text, images, and other online elements, such as Java applets and multimedia files; may be generated statically or dynamically -click (ad click) A count made each time a visitor clicks on an advertising banner to access the advertiser’s website -CPM (cost per mille, i.e., thousand impressions) The fee an advertiser pays for each 1,000 times a page with a banner ad is shown

9.4. -conversion rate The percentage of clickers who actually make a purchase -click-through rate/ratio (CTR) The percentage of visitors who are exposed to a banner ad and click on it -hit A request for data from a Web page or file

9.5. -visit A series of requests during one navigation of a website; a pause of a certain length of time ends a visit -unique visit A count of the number of visitors entering a site, regardless of how many pages are viewed per visit -stickiness Characteristic that influences the average length of time a visitor stays in a site

9.6. -Advertising Online and Its Advantages: Cost Richness of format Personalization Timeliness Location-based Linking Digital branding -Traditional Versus Online Advertisement

10. Advertising Strategies and Promotions

10.1. -spamming Using e-mail to send unwanted ads (sometimes floods of ads) -permission advertising Advertising (marketing) strategy in which customers agree to accept advertising and marketing materials (known as opt-in)

10.2. OTHER ADVERTISING STRATEGIES -affiliate marketing A marketing arrangement by which an organization refers consumers to the selling company’s website -affiliate network A network that acts as an intermediary between publishers (affiliates) and merchant affiliate programs -Ads as a Commodity (Paying People to Watch Ads) -Selling Space by Pixels

10.3. -Personalized Ads -Webcasting A free Internet news service that broadcasts personalized news and information, including seminars, in categories selected by the user -Ad Exchanges -Advertisement as a Revenue Model pay per click (PPC) A popular Internet advertising payment model where advertisers pay their host only when the ad is clicked on -Choose-Your-Own-Ad Format

10.4. -ONLINE EVENTS, PROMOTIONS, AND ATTRACTIONS Live Web Events for Advertising -localization The process of converting media products developed in one environment (e.g., country) to a form culturally and linguistically acceptable in countries outside the original target market -INTELLIGENT AGENTS APPLICATIONS -DEVELOPING AN ONLINE ADVERTISING PLAN