Internet Marketing - DOC

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					                                                               Chapter        14
Internet Marketing

LEARNING OBJECTIVES
       1. Understand who uses the Internet and how it is used.
       2. Adapt all of the marketing communications functions to Internet programs.
       3. Develop a strong e-commerce program to complement and supplement other
          selling and promotional activities.
       4. Make sure every component of an e-commerce approach is carefully integrated
          and designed to attract customers to a Web site and to eventually make purchases.
       5. Be aware of the ramifications of Internet programs for business-to-business
          customers and for international marketing efforts.
       6. Finalize an IMC program in such a way that it meshes smoothly with all Internet
          marketing efforts.


CHAPTER OVERVIEW
This chapter explores e-commerce and the Internet in greater detail. The specific topics to be
addressed begin with an examination of the nature of Internet users as well as marketing
functions on the Internet. Next, a description of e-commerce and the elements necessary to
build a successful e-business, including the types of incentives required to build a base of
customers, is provided. Then, an analysis of various IMC topics, such as brand development,
brand loyalty, sales support, service efforts, and promotional programs is presented. In each of
these areas, implications for business-to-business marketing programs as well as international
concerns are presented.


LEAD-IN VIGNETTE
eBay Soars as Dot.coms Drop

One of the more profitable e-commerce programs is eBay, led by CEO Meg Whitman.
Overcoming obstacles such as September 11 and competition from other auction sites, the
company continues to prosper.




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Questions for Students:

        1. Who are eBay’s biggest competitors?
        2. From a marketing perspective, what is the image eBay projects? Does the
           company posses a strong brand? Why or why not?


IMC PLAN PRO
There are two sides to an Internet marketing program. One is the part devoted to individual
customers. The other is the business-to-business component. E-commerce programs as well as
advertising, sales support, customer service, and public relations are all elements of an Internet
marketing program. These items must remain consistent with the IMC approach used
throughout the company.

Kaolin Calefactors is a company that sells dishware in several markets and is used in the last
section of this textbook. Have students read the Executive Summary, Promotions Opportunity
Analysis, and the Competitive Analysis for this company. After gaining a sense of the nature
of the business and the key players, have them examine the Internet marketing plan being
utilized by the marketing team. Notice that Kaolin’s approach is designed to match the
Internet program with the various types of customers the firm intends to reach. Both
specialized and standardized designs are offered through the firm’s Web site. In order to
successfully compete in the market, Kaolin must rely heavily on the Internet to reach as many
new and ongoing customers as possible.


CHAPTER OUTLINE

Who Uses the Internet?

Some key facts about the Internet include:
       The most common products consumers research on-line and purchase off-line (at
          the store or outlet) are: automobiles, computer hardware, travel, electronics, books,
          appliances, music, sporting goods, and clothing.
       Over 25% of all business-to-business purchases are placed through some type of
          Internet connection.
       The five top business-to-business e-commerce products are computers and
          electronics, motor vehicles, petrochemicals, utilities, paper and office products.
       By 2004, 10% of business-to-business advertising dollars will be spent on the
          Internet. The total amount will be $8.7 billion.
       About 54% of e-mail users have responded to an e-mail advertisement. Almost
          half purchased a product.
       Internet retail sales account for almost 2.5% of all retail sales.


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Business-to-business marketers were among the first companies to actually make profits using
the Internet. The Web is a major communication tool for many business-to-business
operations.

The Internet provides opportunities for:
         Communication
         Customer service
         Sales support
         Collaboration
         E-commerce


Marketing Functions on the Internet

The greatest impact of the Internet is on:
        Sales
        Marketing
        Distribution systems

These three activities typically account for 20% to 30% of the final cost of a good or service.
The potential of the Internet is that companies can save 10% to 20% of these costs.

Specific functions that can be accomplished via the Internet include:
         Advertising: Many firms use Web sites to promote individual products as well as
            the overall company.
         Sales support: Information about the products should be accessible through either
            a salesperson or a direct link from the Web page. These types of Web sites are
            used more routinely for the business-to-business customers rather than retail
            consumers.
         Customer service: Where the goal is to support the customer after the sale by
            providing documentation and operating information. Customers who have
            questions can use the e-mail function to obtain information or scroll through the
            FAQs, or Frequently Asked Questions people have about various items or
            services.
         Public Relations: Some companies place information about non-profit and
            philanthropic causes they support on their Web sites. Individuals not only see what
            the company is doing but also may be able to volunteer for or donate money to a
            cause.


E-Commerce

E-commerce can take on many different forms:
       A retail store can vend items to consumers through the Internet.
       It can be a retail operation that sells entirely on the Internet without any physical
         store or even inventory.

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           Services are offered, deals are mediated, and products are shipped.
           To the established retail operation, e-commerce offers customers an alternative
            mode for making purchases.
           Many times consumers make purchases at a retail store after first using the Internet
            to gather information.


E-Commerce Components

All e-commerce sites have three components:
        1. Some type of catalog.
        2. A shopping cart to assist consumers as they select products.
        3. A way for customers to make payments.

Many consumers are still wary of purchasing products over the Internet for two reasons:
      1. Security issues.
      2. Purchase behavior habits. Many consumers are more comfortable when they buy
          merchandise at retail stores or using catalogs.


E-Commerce Incentives

Three incentives consumers consider when making a purchase on-line are:
        1. Financial
        2. Convenience
        3. Value-added


Financial Incentives

When consumers or businesses buy over the Internet, the company is often able to save both
time and money. The e-company is then able to pass along savings. Customers placing orders
via the Internet save the firm money in several ways. These include:
          Lower long-distance telephone bills
          Reduced shipping costs, because they are passed along to the buyer
          Decreased labor costs associated with stocking shelves
          Smaller personnel costs (sales force) paid for waiting on in-store customers

In business-to-business settings, purchases via e-commerce also make it possible to offer
financial incentives, because the company may be saving the cost of a sales call.

Cyberbait is a lure or attraction that brings people to the Web site.




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Convenience Incentives

In the fast-paced world of business, convenience is a highly attractive incentive for many
consumers and businesses, because:

          Instead of making a trip to a retail store, a consumer can place the order while
           remaining at home
          The order can be placed at any time
          Seeking information about various products can be quicker and easier on the
           Internet

To get consumers to return, a Web site must be updated and changed regularly. It is important
to keep the site current.

Communication Action Box: Soap and Sauce

Offers ideas about how to provide additional information for low-involvement purchase items,
such as laundry detergent.

Questions for students:
   1. Are your parents brand loyal when it comes to laundry detergent? Spaghetti Sauce?
       Are you?
   2. What factors are most decisive in making small involvement purchases? Can the
       Internet become an influence in this area? Why or why not?


Value-Added Incentives

To get customers to completely change their purchasing habits in the long term is going to
require some kind of value-added incentive such as personalization, where the firm becomes
acquainted with the customer and his or her purchasing behaviors.

Further, specialized software can be used to inform customers about special deals.


Business-to-Business E-Commerce

For routine rebuy situations, purchasing agents can go to the Internet and compare prices and
product information. To compete in e-commerce, business-to-business firms must not only
provide strong e-commerce sites but also must develop strong brand names.

Just as with consumers, to encourage businesses to use the Internet for e-commerce involves
offering financial, convenience, or value-added incentives.

A growing field of e-commerce in the business-to-business sector is on-line exchanges and
auctions for both non-production goods such as office supplies and production-related

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supplies, raw materials, and equipment.

There are also sites where companies can purchase oil, natural gas, electricity, coal, chemicals,
steel, coal, and other raw materials.

Many of the on-line markets are neutral companies that simply match buyers and sellers.

Another advantage to e-commerce operations is that they can help buyers find actual stores. A
similar process takes place in the business-to-business marketplace. Many businesses want
merchandise to be shipped quickly when they use the Internet to obtain information and
choose products.

A new form of software makes it possible for firms to track shoppers on the Internet as they
move to retail stores.


International E-Commerce

The major advantage of e-commerce over the brick and mortar of a retail store is the ability to
reach consumers everywhere, even in other countries.

There are obstacles to selling across national boundaries, including:
        Communication barriers
        Cultural differences
        Global shipping problems due to a lack of sufficient infrastructure
        Varying degrees of Internet capability in countries

Making shipping arrangements is one important task. Internet companies must examine both
export and import laws in the countries involved.

Another challenge in the international arena is developing Web sites that appeal to the
audiences of each country. The company must have someone who understands both the
language and culture of the target area in order to ensure no one is offended by a company’s
marketing efforts.

The most difficult challenge companies face in the international market is the technical side of
the e-commerce site, especially software compatibility.

A major key to successful global e-commerce is a coherent IMC strategy utilizing local input
from the various countries involved.




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IMC and the Internet

The most critical decision facing businesses is what function the Web site should serve.

In addition to incorporating the Internet into the IMC plan, it is vital that the IT, human
resource, production, and shipping departments are included as the marketing team develops
the program. Coordination between the IT Department and other areas involves a variety of
activities, including:
          Thinking about how each change may impact other activities in the company
          Coordinating each advertising campaign with the IT department
          Being certain that software capabilities are addressed to ensure smooth operations
          Making sure members of the call center know when additional telephone calls and
              e-mail inquiries may result from a special Internet offer

Many experts believe that the traditional banner ad has little influence on people. Interstitial or
popup ads were created that forced Web browsers to react. These ads have become highly
controversial and are viewed as offensive by many.

In business-to-business markets, the number of hits at a B-to-B Web site is directly related to
the amount of off-line advertising and sales promotions.

The Internet affects a firm’s IMC program in numerous ways, including the impact on:
         Branding
         Brand loyalty
         Sales support
         Customer service
         Consumer promotions

Ethics Communication Box: Spamming, Cookies, and Ethics

This ethics insert reviews the ethical issues of collecting information about Web users,
especially seeing what sites a person has visited as a form of spying.

Questions for students:
   1. Is technology too invasive into individual private lives?
   2. What kinds of information should be free to collect? What kinds should be
       prohibited?


Branding

Cyberbranding involves integrating on-line and off-line branding tactics that reinforce each
other and that speak with one voice.

Brand spiraling is the practice of using traditional media to promote and attract consumers to
an on-line Web site.

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Companies with strong off-line brands benefit from a kind of halo effect in which a well-
received brand leads more customers to try new goods and services that are being offered by
the company on the Internet.


Brand Loyalty and IMC Internet Programs

The Internet makes it easier for firms to communicate with loyal consumers. Brand loyal
consumers make purchases for reasons beyond the price, convenience, or the product itself. In
nearly every instance of brand loyalty, consumers believe the brand is superior in quality.

The Internet provides two opportunities that are not possible with advertising.
        1. The Internet can be designed to make shopping and other contacts more
           pleasurable experiences so that buyers return to the Web site.
        2. The Internet provides the ability to establish one-to-one communications between
           the consumer and the firm.

In communicating with consumers, it is important to provide rewards for loyalty that are actual
rewards, not promotions.


Sales Support on the Internet

The Internet can be used in various ways to help with sales support.
         To prevent damaging relationship with retailers, manufacturers should offer
             product information, but actual orders for merchandise should go through the
             retailer or wholesale vendor.
         A manufacturer can maintain positive relationships with its retail or wholesale
             vendors by offering a locator on the manufacturer’s Web site that shows
             customers the nearest vendor.
         The most important use of the Internet in the area of sales support is providing
             information about clients and products to the sales staff.
         Data can be collected regarding which products are being examined by individual
             customers on a Web site, giving the salesperson insight regarding what product to
             pitch and how to make the sales approach.
         The Internet can be used by an inexperienced salesperson to provide the
             information a client is requesting.
         Customers can go on-line and receive another kind of sales support by accessing
             a Web site to obtain product information at the time that best suits them.
         Both prospecting for and qualifying prospects can be facilitated through the
             effective use of the Internet.
         The Internet provides valuable information for preparing a sales call.




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Customer Service and the Internet

The Internet is a very efficient and cost effective way for companies to provide customer
service. The key to effectively using the web to enhance customer service is found in the
design of the Web site, which must be easy for the consumer to use and provide some benefit
over using the telephone. A major part of customer service is answering questions, meaning a
Web site can be a valuable resource

An option that should always be available to customers is e-mail.

Another approach some companies are using to enhance customer service on the Internet is to
put together discussion groups or chat rooms.

For business-to-business marketing, granting access to information within the seller’s database
can be especially beneficial.

Many retailers now give entrance to their databases to manufacturers using the Internet.


Consumer Promotions and the Internet

One form of cyberbait used in attracting consumers to a site is some type of consumer
promotion. It is important to change promotions on a regular basis.


Direct Marketing on the Internet

The Internet is an ideal medium for direct marketing.

Spamming, or sending out mass unwanted e-mails, is not a good approach.

The most recent trend in direct marketing via the Internet is interactive marketing, which is
individualizing and personalizing everything from the Internet Web content to the products
being promoted to e-mail messages.


Viral Marketing on the Internet

Viral marketing is preparing an advertisement that is tied to an e-mail. It is also a form of
advocacy or word-of-mouth endorsement marketing. Viral marketing messages include ads
for goods and services, hyperlinked promotions that take someone immediately to a Web site,
on-line newsletters, and various games. Viral marketing is a tactic that allows a firm to gain
rapid product awareness at a low cost.

The term “viral” may connate the negative image of a computer “virus,” so care should be
given when offering to create such a program for a firm.

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Internet Design Issues

The primary issue in the design of Web site is to make sure it functions properly. In addition,
the site should then be designed to support the function, but from the user’s point of view.

If the function is to support e-commerce, then the site should be easy for customers to
navigate, select products, and order them. If the key function is to support selling, then the
person designing the Web site needs to talk with salespeople and determine their needs. A
Web site should match the constituency it will serve.

Poor Web site design issues include:
       Clueless Banners. Tricking people to come to a site through clever banners can
          frustrate consumers and often has a negative impact on the brand’s image.
       Slow Loading Front Page. Most consumers are not patient enough to wait a long
          time for a front page to load.
       Numerous Screens. Being forced to go through numerous screens is frustrating.
          Instead, indexes should be developed that help consumers to quickly locate parts
          of the Web site.
       Too Much Verbal Information. An excess of verbal information on a page is
          cumbersome for viewers.
       Too Many Technical Terms. Technical terms are more useful when the site is
          designed for internal purposes, but not for customers or the general public.
       Sites That Are Hard to Navigate: Any Web site that is hard to navigate creates a
          negative image of the firm and its products.


IMPLICATIONS FOR WEB MASTERS
Consider yourself to be a major player on the company’s marketing team.

Ask to be included in marketing meetings involving the sales staff, promotions, advertising
programs, and any other item which might touch a company’s Web site.

Keep up with the technology. Techniques for developing greater Internet sophistication
routinely appear, and your company should try to stay on the cutting edge.

Avoid the pitfalls of bad Web sites.

Carefully study the marketplace to know where to advertise on the Internet and who can offer
your company quality link options. The marketing team may be less informed about Web
information and know more about traditional advertising venues. It’s your job to educate
everyone about how to effectively use the Internet. Take this responsibility seriously.

Build a strong relationship with the database manager. The two of you can combine to provide
extremely valuable information to the company and the marketing department.


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Be willing to show the company how to expand sales through direct marketing programs,
combination approaches with retail operations, and business-to-business selling plans. Build
Web sites that accommodate business needs for information with efficiency and ease of
selling.

Investigate every opportunity to move into international e-commerce. Build toward a future in
which national boundaries do not inhibit the growth and expansion of your firm’s business.


REVIEW QUESTIONS
1.     Which age group is most likely to use the Internet? Which is the least? Does this
       have implications for IMC programs?

       College age and Generation X are the groups that are most likely to use the Internet.
       The least likely are baby boomers and seniors. IMC managers should to be aware
       when selecting e-commerce programs targeting these groups of people.

2.     Name the five marketing functions that can be provided on the Internet that
       were described in this chapter.

       The five marketing functions that can be provided are:
       1. Advertising
       2. Sales support
       3. Customer service
       4. Public relations
       5. E-commerce (retail store)

3.     Define e-commerce. What are the three common components of e-commerce
       programs?

       E-commerce can take on many different forms:
        A retail store can vend items to consumers through the Internet.
        It can be a retail operation that sells entirely on the Internet without any physical
          store or even inventory.
        Services are offered, deals are mediated, and products are shipped.
        To the established retail operation, e-commerce offers customers an alternative
          mode for making purchases.
        Many times consumers make purchases at a retail store after first using the Internet
          to gather information.

       All e-commerce sites have three components:
       1. Some type of catalog.
       2. A shopping cart to assist consumers as they select products.
       3. A way for customers to make payments.


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4.   What two issues must e-commerce providers overcome in order to build
     successful businesses?

     Many consumers are still wary of purchasing products over the Internet for two
     reasons: (1) security issues, and (2) purchase behavior habits. Many consumers are
     most comfortable when they buy merchandise at retail stores or using catalogs.

5.   Name and describe the three main incentives used to attract shoppers to e-
     commerce Web sites.

     Three incentives must be present for consumers to consider making a purchase on-
     line: (1) financially-based, (2) convenience-based, and (3) value-based.

6.   What is cyberbait? How must it be used over time to maintain it as an effective
     marketing tactic?

     Cyberbait is some type of lure or attraction that brings people to a company’s Web
     site. Additional cyberbait must be used to entice customers to return to the site and it
     must be changed from time-to-time to encourage customers to continue returning.

7.   In business-to-business e-commerce operations, what obstacles occur? How can
     they be overcome?

      Some of the issues involved in retail e-commerce operations are also factors in
      business-to-business e-commerce. Security and fraud concerns are important to
      businesses and individual consumers. They can be overcome by developing a strong
      brand name. Also, just as with consumers, encouraging businesses to use the Internet
      for e-commerce involves offering financial, convenience, or value-added incentives.

8.   What problems exist for international e-commerce operations? What can
     companies do to resolve them?

     The most difficult challenge companies face in the international market is the technical
     side of the e-commerce site, especially software compatibility. There are many other
     obstacles to selling across national boundaries, including:
          Communications barriers
          Cultural differences
          Global shipping problems due to a lack of sufficient infrastructure
          Varying degrees of Internet capability in countries

      To resolve these problems, making shipping arrangements is one important task to
      tackle. Also, Internet companies must examine both export and import laws in the
      countries involved. Another challenge in the international arena is developing Web
      sites that appeal to the audiences of each country. The company must have someone
      who understands both the language and culture of the target area in order to ensure no
      one is offended by a company’s marketing efforts. A major key to successful global

                                           280
       e-commerce is a coherent IMC strategy utilizing local input from the various
       countries involved.

9.    How can the Internet affect a brand? Brand loyalty?

      The Internet can affect a brand by complementing it or by contrasting it. A good IMC
      program would incorporate e-commerce efforts with other promotional efforts. The
      Internet provides the following two opportunities that are not possible with
      advertising:
      1. The Internet can be designed to make shopping and other contacts more
          pleasurable experiences so that buyers return to the Web site.
      2. The Internet can provide the ability to establish one-to-one communications
          between the consumer and the firm.

      The Internet can increase brand loyalty by allowing consumers an easier method to
      communicate with the company.

10.   What is brand spiraling? What is the primary goal of brand spiraling
      programs?

      Brand spiraling is the practice of using traditional media to promote and attract
      consumers to an on-line Web site. The primary goal is to build an on-line brand
      presence through an off-line technique.

11.   How can the Internet be used to provide sales support?

      The Internet can be used to provide sales support by providing information about
      clients and products to the sales staff. This includes a database for the sales staff
      regarding how often different customers visit the site and what they view. The Internet
      also allows for 24-hour assistance. Another approach some companies are using to
      enhance customer service on the Internet is to put together discussion groups or chat
      rooms. For business-to-business marketing, granting access to information within the
      seller’s database can be especially beneficial. Many retailers now give entrance to their
      databases to manufacturers using the Internet.

12.   How can the Internet be used to provide customer service?

      The Internet can be used to provide customer service by allowing customers to track
      purchases over the Internet. This reduces costs, because the vendor does not need as
      many telephone operators. Companies can also communicate with their customers via
      e-mail, which allows for instant feedback.




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13.   How can consumer promotions be offered over the Internet? What is the goal of
      a major prize giveaway as opposed to smaller prizes given to larger numbers of
      consumers?

      Consumer promotions can be offered over the Internet by offering a cyberbait that
      attracts consumers and then gathering information from those customers when they
      take advantage of the promotion. The goal of a major giveaway is to attract those
      consumers who enter a lottery or contest with the hope of winning the big prize.

      Smaller promotions often draw individuals who are more interested in the company’s
      merchandise.

14.   How can direct marketing be used most effectively to reach customers?

      Directing marketing can be used most effectively through a permissions program. By
      gaining the permission of customers, companies can build a database of e-mail
      addresses and then send out mass e-mails to them.

15.   What is interactive marketing?

      A recent trend in direct marketing via the Internet is interactive marketing, which is
      individualizing and personalizing everything from the Internet Web content to the
      products being promoted to e-mail messages.

16.   What is viral marketing? What is the goal of a viral marketing program?

      Viral marketing is preparing an advertisement that is tied to an e-mail. The goal of a
      viral marketing program is to have customers send the message on to other customers,
      in this way the message is similar to a virus, “infecting” several different people.

17.   What tactics should companies avoid in designing Web sites? What should they
      do to make effective Web pages?

      Poor Web site design issues include:
          Clueless Banners: Tricking people to come to a site through clever banners
            can frustrate consumers and often has a negative impact on the brand’s image.
          Slow Loading Front Pages: Most consumers are not patient enough to wait a
            long time for a front page to load.
          Numerous Screens: Being forced to go through numerous screens is
            frustrating. Instead, indexes should be developed that help consumers to
            quickly locate parts of the Web site.
          Too Much Verbal Information: An excess of verbal information on a page is
            cumbersome for viewers.




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            Too Many Technical Terms: Technical terms are more useful when the site is
             designed for internal purposes, but not for customers or the general public.
            Sites That Are Hard to Navigate: Any Web site that is hard to navigate creates
             a negative image of the firm and its products.

     The primary issue in the design of a Web site is to make sure it functions properly. In
     addition, the site should then be designed to support the function, but from the user’s
     point of view. If the function is to support e-commerce, then the site should be easy for
     customers to navigate, select products from, and order them. If the key function is to
     support selling, then the person designing the Web site needs to talk with salespeople
     and determine their needs. A Web site should match the constituency it will serve.

     Here are some additional tips for effective Web pages:
         The Web site should follow a strategic purpose such as to acquire new
            customers, serve existing customers, cross-sell, or build brand loyalty.
         Make the Web site easy to access and quick to load.
         Written content should be precise with short words, sentences, and paragraphs.
         The content is the key, more than fancy graphics and design.
         Graphics should support the content, not detract from it.
         The site should make some type of marketing offer to encourage a response.
         The company should ask for a site evaluation by customers.
         The site should provide easy-to-use navigation links on every page.
         Only use gimmicks such as moving icons or flashing banners to gain attention
            at the beginning but not deeper into the Web site.
         Change the Web site on a regular basis to keep individuals coming back.
         Measure results continually, especially designs and offers


DISCUSSION AND CRITICAL THINKING EXERCISES
1.   What types of goods or services have you purchased over the Internet during the
     last year? Have your parents purchased anything using the Internet? If so,
     compare your purchases and attitudes toward buying over the Internet to theirs.
     If you or your parents, or both, have not used the Internet to make purchases,
     why not?

     Student answers will vary.

2.   Access four different Web sites for one of the following products. Locate the
     FAQ section. Was the FAQ section difficult to find? How is the FAQ section
     organized? Do they provide effective answers for questions? Do the four sites
     have similar questions listed?
     a.     Anti-virus software
     b.     Cosmetic surgery
     c.     Automobile parts

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      d.     Cameras
      e.     Financial services

      Student answers will vary based on the sites chosen.

 3.   Best Buy Co. was a late e-commerce entry, but has developed a strong e-
      commerce retail business. The key to Best Buy’s success, according to Barry
      Judge, VP of Marketing, is, “We do a lot of one-to-one marketing. We’re not
      overly focused on where the consumers buy.” The Web site carries every product
      that Best Buy stocks. It uses personalized services, along with convenient pickup
      and solid return policies to entice consumers to shop. The consumer can
      purchase items on the Internet and either have them shipped or pick them up at
      the closest store. Shoppers can use the Internet to see if Best Buy stocks a
      particular item, what the item costs, and to gather product information. What is
      the advantage to this philosophy? Access the Web site at http://www.bestbuy. -
      com. Evaluate it in terms of ease of use, product information, and locate the Best
      Buy closest to you. Next, access Circuit City’s Web site at
      http://www.circuitcity.com. Compare it to Best Buy’s site. Select one product
      such as a camcorder to compare the two Web sites.

      Student answers will vary.

4.    IronOx at http://www.ironox.com is a business-to-business Internet auction
      service. Access the Web site to see what types of products are being sold.
      Examine the buyer’s corner. What tips are given for buyers? What services does
      IronOx offer to buyers? What tips and services are listed on the Web site for
      sellers? What are the advantages and disadvantages of using IronOx for buyers?
      For sellers? Which members of the buying center would be the most likely to use
      IronOx?

      IronOx is an on-line auction service for used industrial equipment, machinery, parts,
      and service. There are several buyers’ and sellers’ tips offered. IronOx provides the
      following services for buyers and sellers: inspection, financing, transportation, parts
      locator, equipment alert, and escrow. The advantages of using IronOx are that
      information about the products and where to find them is given. It allows those that are
      in the market to buy or sell to meet with others who have similar needs and wants. The
      members of the buying center that would most likely use IronOx would be those
      people that make the final decision.




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5.   First Energy Corporation, the nation’s 12th largest utility, purchases about 30%
     of its coal over the Internet. The purchasing process that normally took 60 days
     to complete has been compressed to just two weeks. Bidding takes place in one
     day and suppliers know within 2–3 days whether or not they have won the order.
     What risks does First Energy take in purchasing coal over the Internet? How
     can those risks be minimized? Why would a supplier want to sell coal over the
     Internet instead of developing a strong personal relationship with First Energy
     Corporation?

     When purchasing on the Internet, several risks are involved. First Energy risks the
     chance of fraud on the part of the supplier. The supplier could take the order and
     purchase order, but never ship the merchandise. This could be minimized by using
     only reputable companies that have customer service departments. The supplier may
     want to sell over the Internet to improve the speed of shipment.

6.    Credit card security is an issue with many people. Interview ten people you know
      of various ages and genders. Does age or gender make any difference in the
      person’s feelings, especially about the fear of using a credit card over the
      Internet? Are there specific products or Web sites that people do not trust? More
     importantly, how do you judge whether or not a Web site provides the necessary
      credit security?

     Student answers will vary based on whom they interview and the responses they
     receive.

7.   Pick one of the following product categories. What types of financial incentives
     are offered on the Company’s Web site to encourage you to purchase? What
     about the other two types of incentives: greater convenience and added value?
     What evidence do you see for them?
     a.     Contacts or eyeglasses
     b.     Water skis
     c.     Jeans
     d.     Computers
     e.     Camping supplies

     Student answers will vary based on the product category and sites are chosen.




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8.       The primary companies businesses use to ship small packages either overnight or
         two-day delivery are Federal Express, UPS, and the U.S. Postal Service. Access
         each of these Web sites. (Federal Express: http://www.fedex.com; UPS at
         http://www.ups.com; the U.S. Postal Service: http://www.usps.com) What
         guarantees do they make about delivery? Which site is the most user friendly?
         Which site appears to offer the best customer service? In looking at the different
         functions of a Web site discussed in this chapter, indicate the function for which
         each Web site was designed.

         FedEx:
          Guarantees money-back if time quote is missed
          The site is easy to navigate
          The site provides customer service number
          The functions include a FAQ section, e-commerce, customer service

         UPS:
          Guarantees money-back if time quote is missed
          The site is not as easy to navigate as FedEx
          The site provides a customer service number
          The functions include a FAQ section and customer service

         USPS:
          Guarantees overnight on air delivery
          The site makes it difficult to find pertinent information
          The customer service number is not easily available
          The major function is public relations


CASES

Case 1          The Circulation Game

(1)      How can William’s company cater to various minorities in its Internet division of
         the newspaper? Or, should he avoid this type of tactic?

         William’s company should cater to various minorities through the Internet. The paper
         can offer a special sweepstakes advertised on BET and other minority media.
         Individual market segments would build overall circulation and be attractive to various
         advertisers. (Some students may think just the opposite, however.)

(2)      What special marketing and IMC challenges affect newspapers, in both
         circulation (retail) and business-to-business (advertising) areas?

         Newspapers are faced with many marketing and IMC challenges in both the retail and
         advertising arenas. In the retail circulation area, consumers have more media choices
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         for news (the Internet, CNN, MSNBC) than they did 50 years ago, when the demand
         for newspapers was higher. In the advertising area, newspaper companies must have to
         find creative ways to attract businesses to advertise in the newspaper as well as on the
         paper’s Internet site. Color reproduction has improved, which helps. Advertisers know
         who is more likely to read the paper (affluent, older) versus use the Web site
         (younger).

(3)      Look up your local city’s newspaper on the Internet. How is it different from a
         traditional “paper” newspaper? How is it similar?

         Student answers will vary based on the city.

(4)      Design an advertising program for a local newspaper’s Internet edition.

         Student designs will vary.


Case 2          Contract Haulers

(1)      What should be the primary purpose of Contract Hauler’s Web site?

         Student answers will vary. The primary purpose should be a mix of what the directors
         believe is most important. Building brand image and customer support are likely
         answers as well as being able to track shipments.

(2)      Does the VP of Marketing have a valid point? Are logistics issues better handled
         in person? What are the advantages and disadvantages of doing all scheduling
         over the telephone or in person at the office?

         The VP of Marketing does have a valid point, however, customer service could be
         expanded to include Internet access. This would allow the customer to choose whether
         to call or go on-line. The tracking would be an advantage over the telephone or in
         person. The advantage of scheduling in person is that customer service is better and
         individualized help can be given. The disadvantage of in-person service is that it is
         costs more.

(3)      Using a search engine, access at least four Web sites of shipping companies that
         Mike could take to the next meeting to show what other companies were doing.
         Make sure Mike is prepared to justify the selection of Web sites as comparable
         companies.

         Student answers will vary based on sites chosen.




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(4)   Outline the functions of the Contract Hauler Web site and how it should be
      designed.

      Student answers will vary. The outline should include a proper mix of the following
      elements: advertising, sales support, customer service, public relations, and e-
      commerce. Contract Hauler’s Web site should be attractive enough to gain attention
      from consumers, as well as advertise company serves. Sales support can be given by
      showing information about Contract Hauler and what they do. A FAQ section of the
      Web site should be developed to answer possible questions about the company along
      with a “contact us” portion. The public relations aspect of the firm should utilized to
      provide a positive image about the company (e.g., who was a “safe driver” award
      winner). Contract Hauler could develop the site to include e-commerce where
      customers could purchase services on-line.




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