"E-MARKETING Customer Relationship Management"
CHAPTER 4 E-MARKETING & Customer Relationship Management Marketing on the Internet •Electronic Commerce (e-commerce) –Business exchanges conducted over the Internet using telecommunications tools such as web pages, e-mail, and instant or text messaging •Electronic Marketing (e-marketing) –The strategic process of creating, distributing, promoting, and pricing products for targeted customers in the virtual environment of the Internet Benefits of E-Marketing •Open and Instantaneous Flows of Information –Marketers and customers share information in real-time on prices, specifications, and product availability. •Enhanced Customer Service Efficiencies –Rapid response and always-on availability •Worldwide Scope –Opens markets to firms of all sizes Basic Characteristics of Electronic Marketing: Addressability • Addressability is a marketer’s ability to identify customers before they make a purchase • How E-Merchants Attain Addressability – Limit access to areas of their website to encourage customer registration – Offer contests and prizes in exchange for consumer information – Place “cookies” on visitor’s computer to track usage and preferences Basic Characteristics of Electronic Marketing: Interactivity • Interactivity is the ability to allow customers express their needs and wants directly to the firm in response to the firm’s marketing communications – Real-time interaction with customers – Broader market coverage at a lower cost • Community refers to a sense of group membership or feeling of belonging • Blogs are web-based journals where writers can editorialize and interact with others Basic Characteristics of Electronic Marketing: Memory • Memory is the ability to access databases or data warehouses containing individual customer profiles and past purchase histories and to use these data in real-time to customize a marketing offer. • A database is a collection of information arranged for easy access and retrieval. Basic Characteristics of Electronic Marketing: Control • Control refers to customers’ ability to regulate the information they view and the rate and sequence of their exposure to that information. – The Web is a pull medium because users control the information they view – Marketers have to work harder and more creatively to retain customers at their websites • A portal is a multiservice website that serves as a gateway to other web sites. E-Marketing Strategies E-Marketing Strategy Considerations Target Product Distribution Promotion Markets Marketing Systems Mediums Pricing Customer Relationship Managment • Customer relationship management (CRM) focuses on using information about customers to create marketing strategies that develop and sustain desirable long-term relationships. Customer Relationship Management • – A focus on CRM is possible in e-marketing because of marketers’ ability to target individual customers. – The ability to identify individual customers allows marketers to shift their focus from – increasing share of market to increasing share of customer. Customer Lifetime Value Strategy ● ● Managing customer relationships requires – Allocate resources selectively – Different customers have different kinds of economic value to the company – CLV takes sum of customer's present-value contributions to profit margins over a specific time frame The 80/20 Rule • 80 percent of business profits come from 20 percent of customers. – Advances in technology allow marketers to profile customers in real-time and thereby assess their lifetime value (LTV) to the firm. – Some customers may be too expensive to retain given the low level of profits they generate. – Firms should focus instead on developing and managing long-term relationships with more profitable customers. Customer Lifetime Value Summary ● Enable firms to focus on share of customer ● ● 80/20 Rule is background concept ● ● Allocation of firm's marketing resources selectively to different customers using economic value as basis for targeting CLV Strategy con't ● Adopt strategies today to increase future profits ● Take sum of present-value, subtract expected costs of – Acquiring, serving, and keeping that customer – Its a traditional strategy of keeping repeat buyers – With e-marketing question is how to learn who will continue to be a good repeat customer CRM TOOLS ● Companies that use CRM tools – Precisely target their desired share of customer – Gain advantages by serving their all customers well and especially their best customers – Companies offer better service – Have higher retention rates – Increased profitability American Marketing Association ● Table 4.4. (:95) Source: Reprinted by permission of the American Marketing Association. Source: Reprinted by permission of the American Marketing Association.