Marketing Dynamics CANADIAN EDITION Canadian Authors: Greg Gregoriou and Jessica Pegis Brenda Clark • Jennie Sobel • Cynthia Gendall Basteri (Sample Chapters 5 & 9) OXFORD NEXT Chapter XX Chapter Title Contents PART 1 MARKETING BASICS The Functions and the Marketing Concept 33 Profile: TD Canada Trust 34 4 Market Forces 37 Types of Economic Systems 38 Market Economy Features 40 Market Forces at Work 41 Supply and Demand 42 Profit 44 Competition 46 Role of the Customer 47 1 Marketing is Dynamic! 4 Marketing Defined 5 Marketing Is Dynamic 5 Marketing Is Customer-Focused 6 Marketing Is Relationships 7 Marketing Is International 7 Marketing Is the Four Ps 8 Marketing Is the Marketing Mix 12 Marketing Is the Marketing Plan 13 Is Marketing in Your Future? 15 2 Business Basics The Marketing Concept The Marketing Concept 30 The Functions of Marketing 31 MarketingDynamics_FM.indd 3 50 PART 2 REACHING YOUR MARKET 18 Economic Needs and Wants 19 The Exchange 19 Money 20 What Is Business? 22 Making a Profit 22 Forms of Business Ownership 23 The Functions of Business 25 3 PART 1: Wrap-up 5 29 Targeting a Market Marketing Strategy 55 Mass Marketing 57 Target Marketing 58 Choosing Your Target Market 54 60 13-03-01 6:33 PM Contents iv PART 3 THE MARKETING MIX Advantages and Disadvantages of Targeting a Market 61 Segmenting a Market 62 Geographic Variables 63 Demographic Variables 64 Psychographic Variables 66 Behavioural Variables 67 Combining Variables 69 Market Segment Profile 69 6 Consumers and Competition 73 Psychological Influences 74 Social Influences 76 Situational Influences 78 The Consumer Decision Process 79 Competition 80 Ways to Compete 81 Market Share 83 Why Is Market Share Important? 84 Competition Research 85 7 Marketing Research 11 101 Marketing for Not-for-Profit Organizations 106 Information Technology and Social Media 120 E-Commerce Basics 121 Marketing on the Internet 123 Business-to-Business on the Internet 123 Shopping on the Internet 124 Future of E-tailing 130 PART 2: Wrap-up MarketingDynamics_FM.indd 4 134 138 Branding 156 What Is a Brand? 157 Branding and the Customer Goals of Branding 161 Protecting a Brand 164 You as a Brand 166 Characteristics of Not-for-Profit Organizations 107 The Importance of Marketing for NPOs 111 Marketing Strategies of NPOs 112 9 What Is a Product? Types of Products 139 The Service Economy 140 Characteristics of Services 140 Product Elements 142 Product Strategy 147 Product Life Cycle 147 90 Types of Data 92 Collecting Primary Data 92 Sources of Secondary Data 96 Marketing Research Process 97 Trend Research 97 Sales Forecasting 100 Is Marketing Research Always Right? Profile: Windigo Catering 102 8 10 12 What Is Price? 159 170 Types of Prices 171 Factors That Affect Price 172 Profile: WestJet Airlines Ltd. 180 13 Price Determination Pricing Objectives 184 Effect of Price on Revenue Establishing Prices 189 14 What Is Place? 183 188 194 Channels of Distribution 195 Role of Intermediaries 199 Physical Distribution 201 Activities of Physical Distribution 201 Components of Physical Distribution 202 Modes of Transportation 204 Distribution of Services and Ideas 206 The Distribution Process 206 Channel Management and Physical Distribution 208 13-03-01 6:33 PM v Contents 15 What Is Promotion? Promotion Is Marketing Communication 213 Personal Promotion 218 Nonpersonal Promotion 218 AIDA: The Basic Promotional Strategy 224 Pull and Push Strategies 228 The Marketing Concept and Promotion 229 Integrated Marketing Communications 229 16 The Sales Process 234 What Is Personal Selling? 235 Where Do Salespeople Work? 235 What Do Salespeople Do? 239 The Sales Process 241 Is There a Career for You in Sales? 241 PART 3: Wrap-up Towards a Global Economy 269 Marketing Strategies for International Markets 270 Globalization: Good or Bad? 272 Profile: Swiss Water Decaffeinated Coffee Company Inc. 274 212 PART 4: Wrap-up 278 PART 5 ISSUES AND TRENDS IN MARKETING 246 PART 4 GOVERNMENT, TRADE, and marketing 19 Social Responsibility in Marketing 282 What Is Social Responsibility? 283 Be Legal 284 Be Ethical 287 Be Philanthropic 290 Benefits of Social Responsibility 290 20 17 Role of Government 250 Federal Powers 251 Market Challenges 252 Government Economic Activities 18 254 International Trade and Marketing 261 International Trade 262 Why Trade? 263 Exports and Imports 265 Foreign Exchange Rates 266 Regulation of International Trade MarketingDynamics_FM.indd 5 Trends in Global Marketing 294 Technology 295 Immigration 296 Multinational Corporations 296 Important International Markets 299 Challenges in Global Marketing 301 Profile: soleRebels Footwear 303 PART 5: Wrap-up 306 Glossary 308 Index 316 267 13-03-01 6:33 PM 54 5 Targeting a Market Why do you think marketers are interested in teens as a market? Marketing Terms Learning Goals n definebusinessopportunity n explainthecomponentsofa marketingstrategy n describethefourqualitiesofa targetmarket n identifythefourstrategiesinthe marketingmix n definemassmarketingandtarget marketingandstatetheadvantages anddisadvantagesofeach n explainhowsegmentationhelpsto determinewhichmarkettotarget n explaineachofthefoursegmentation categoriesandlistthevariables foreach n describehowmarketerscreateand useamarketsegmentprofile MarketingDy_2-135_Ch1-9.indd 54 business opportunity mass marketing target marketing market segmentation segmentation variable geographic segmentation census demographic information demographic segmentation generation disposable income discretionary income psychographic segmentation behavioural segmentation 80/20 rule market segment or consumer profile ThediversityoftheCanadianmarket providesmanybusinessopportunities.An opportunityisachanceforsuccess.What isabusinessopportunity?Abusiness opportunityoccurswhenyouseeaneed thatyourcompanycanfulfill.Abusiness opportunityisthechanceforsuccess providedbythecombinationofaproduct ideaandamarketthatiswillingandableto buytheproduct.(Rememberthataproduct canbeagood,aservice,oranidea.) Manygreatbusinessideasstartwithone personwhohasaneedorobservesaneed 13-02-27 8:09 AM 55 Chapter 5 Targeting a Market marketersdevelopamarketingstrategy.As youlearnedinChapter1,amarketingstrategy consistsofthetargetmarketandallthe decisionsinthemarketingmix. TargetMarket+MarketingMix=Marketing Strategy 5-1 Some people develop a business based on a need they observe or a need they have themselves. Many people develop business ideas based on their hobbies or interests. inothers.Forexample,supposeyouarea hairdresser.Youobservethattherearemany peoplewhocannotgetouttogethaircuts, suchasolderadults.Youdevelopabusiness thatgoestopeople’shomestocuttheirhair. Manyproductideascomefrompersonal hobbiesorinterests,5-1.Forexample,a collegestudentenjoyedwatchingJapanese animations.Hedevelopedabusinessselling Japaneseanimationvideos,andtoys. Marketing Strategy Onceyoufindabusinessopportunity, youneedtodevelopawaytoturnthe opportunityintoasuccessfulbusiness.One ofthefirststepsistodevelopabusinessplan andamarketingplan. Animportantpartofthemarketingplan isthemarketingstrategy.Astrategyisaplan developedtoreachagoal.Forbusinesses thatfollowthemarketingconcept,the overallgoalistomakeaprofitbysatisfying customers’wants.Inordertoreachthatgoal, MarketingDy_2-135_Ch1-9.indd 55 Marketersdevelopamarketingstrategy byselectingatargetmarketanddeveloping themarketingmixwiththetargetmarket inmind.Supposeyouwanttopursueyour ideaofprovidinghaircareservicestopeople whohavelimitedmobility.Yourtarget marketwouldbeseniorcitizensandpeople withphysicalchallenges.Yourmarketing mixwouldbeasfollows:product—haircare servicessuchaswash,cut,colour,andstyle; price—competitivewithlocalsalonsplusa servicefee;place—customers’homesinyour region;promotion—directmailandadsin localnewspaper. Target Market Whenyoudevelopamarketingstrategy, youmustfirstchooseyourtargetmarket. Atargetmarketisthespecificgroupof customerswhosewantsandneedsyou willtrytomeetwithaspecificmarketing mix.Atargetmarketshouldhavethe followingfourqualities: n clearlydefinedwantsandneedsthat yourcompanycanmeet n moneytobuyyourproduct n willingnessandauthoritytobuyyour product n enoughcustomersinthemarkettobe profitable Choosingatargetmarketisoneofthe mostimportantdecisionsamarketermakes, 5-2.Ifthetargetmarketdoesnotwant orneedyourproduct,yourproductwill notbesuccessful.Youmightalsomissthe opportunitytobesuccessfulwithadifferent targetmarket.Ifthetargetmarketdoesnot havethemoneytobuyyourproduct,your 13-02-27 8:09 AM 56 Part 2 Reaching Your Market Marketingmixdecisionsareoftencalled marketingmixstrategies.Inotherwords, foreachPintheFourPs,thereisastrategy. Thesestrategieswillbeexploredinmore detailinotherpartsofthistext.Hereisan overviewofmarketingmixstrategies: 5-2 Identifying the target market is a key decision. A marketer without a target market is working in the dark. productwillnotbesuccessful.Ifyourtarget marketistoosmall,youwillnotsellenough productstomakeaprofit. 3 Connect... Think of your favourite store. Who do you think the target market is for this store? Describe the typical customer. Marketing Mix Themarketingmixconsistsofthe decisionsmadeaboutproduct,place,price, andpromotionforoneproduct.Onceyou havedecidedonyourtargetmarket,youwill makeyourmarketingmixdecisionswith thattargetmarketinmind.Whenyouplan yourmarketingmix,youwillthink,“How willmytargetmarketrespondtothis?”What happensifyoudonothaveatargetmarket? Imaginethatthemarketerisaquarterback. Imaginethequarterbacktryingtothrowa pass,butheisblindfolded!Thatishowa marketerwithoutatargetmarketis. MarketingDy_2-135_Ch1-9.indd 56 n Product Strategies.Thesestrategies includeallthedecisionsmadeabout whatproducttooffer.Keepinmind thatthetermproductincludesgoods, services,andideas.Productstrategies includedecisionsaboutquality,quantity, size,colour,features,technicalsupport, packaging,warranties,brandname, andimage. n Price Strategies.Thesestrategiesinclude allthedecisionsmadeaboutpricing aproduct.Pricestrategiesinclude decisionsmadeaboutprofit,discounts, andthesellingprices.Pricingcanalso haveanimpactontheimageofaproduct. n Place Strategies.Thesestrategiesinclude allthedecisionsmadeaboutwherethe productwillbesold.Itincludesdecisions abouthowtotransporttheproduct, warehousing,inventorycontrol,and orderprocessing,5-3. n Promotion Strategies.Thesestrategies includeallthedecisionsmadeabout howtotellcustomersaboutthe companyandtheproduct.Itincludes decisionsaboutadvertising,suchasthe typeofadsandwheretoplacethem.It alsoincludesdecisionsaboutpersonal selling,customerservice,publicity, promotionalevents,anddesignand layoutofstores. Usually,marketingmixdecisionsare interrelated,5-4.Inotherwords,adecision madeforoneofthePswillaffectthe decisionsmadefortheotherPs.Asaresult, decisionsfortwoormoreofthePsmaybe madeatthesametime.Forexample,ifthe targetmarketwantslowprices,thenumber ofproductfeaturesmayhavetobereduced 13-02-27 8:09 AM 57 Chapter 5 Targeting a Market 5-3 Place strategies include the decisions about how to transport products from factory to warehouse or warehouse to retail store. sothatthecompanycanselltheproduct atalowerprice.Productdecisions,suchas brandnameandpackaging,areoftenchosen becausetheywillworkwellinpromotions. Mass Marketing Amassmarketconsistsofallthe customersforaspecifictypeofproduct.For example,everyonewhowantsacarand isableandwillingtobuyacarispartof themassmarketforcars.Mass marketing isthedevelopmentofonlyonemarketing mixforaspecificproduct.Massmarketing assumesthateveryonehasexactlythesame wantsandneedsfortheproduct.Thistype ofmarketingpresentstwoproblems.One problemisrelatedtothenatureofconsumer markets.Theotherisrelatedtoprofitability. 3 Connect... Name a product for which there is a mass market. MarketingDy_2-135_Ch1-9.indd 57 5-4 Marketing mix decisions are interrelated. A decision about one P affects decisions for the other Ps. Nature of Consumer Markets Thenatureofconsumermarketsisthat theyarediverse.Thatis,mostconsumer marketsconsistofmanygroupsof consumerswithmanydifferentneeds.Mass marketinglooksatthemarketasamass.It assumesthatallcustomershavethesame needsandwantsfortheproduct.Inreality, thereareveryfewconsumermassmarkets inwhicheveryonehasthesameneedsand wantsforaspecificproduct. Thinkofthecurrentmarketforcars. Canyouimagineacarmanufacturermaking onecarthatwouldmeettheneedsof everyoneinthemassmarketforcars?Think ofthedifferentneedscustomershavefor automobiles,5-5.Herearesomeexamples. Onegroupofcarcustomerswantsan expensiveluxurycar.Anothergroupwants aminivantoholdateamofkidsandall theirsoccergear.Anothergroupwantsthe cheapestcarpossible.Anothergroupwants 13-02-27 8:09 AM 58 a pick-uptruck.Inmostconsumermarkets, themassmarketismadeofcustomerswith differentneedsfortheproduct. 3 Connect... Name a product for which different groups of consumers have different needs. Profitability Everybusinesswantstomakeaprofit. Massmarketingisoftenveryinefficient andexpensive.Forexample,advertising toamassmarketthroughtelevision Part 2 Reaching Your Market commercialsisveryexpensive.Asaresult, massmarketingmaynotresultinprofits. Inaddition,everybusinesshaslimited resources.Eachbusinesshastodecidewhere itwillspenditslimitedresources. Hereisahypotheticalexampleforthe purposeofillustratingthepoint.Supposeyou decidetostartahouse-cleaningbusiness.You alsodecideonamassmarketapproach.Your oneproductwillbefourhoursofcleaning. Thepricewillbe$100.Youwilladvertiseon TV.TVadvertisingisveryexpensive.Ifyou advertiseonallshowsandatalltimes,your costofadvertisingwillbeveryhigh.Youwill bespendingmoneytoreachmanypeople whoarenotpotentialcustomers.Youwill spendmoreonadvertisingthanyouwould everearnfromyourbusiness. Target Marketing 5-5 Could one style of car meet the needs of everyone in the market for a car? MarketingDy_2-135_Ch1-9.indd 58 Asaresultofthesetwoproblems, marketersdevelopedanapproachcalled targetmarketing.Inthetargetmarketing approach,marketersanalyzethemass market.Theythensegment(divideup)the marketbasedonthedifferentneedsand wantsofthecustomersinthatmarket.The companywillthenchooseoneofthose segments.Itwilldevelopamarketingmix— product,place,price,andpromotion—to meettheuniquewantsandneedsofthat marketsegment.Thedevelopmentofa uniquemarketingmixforatargetmarketis calledtarget marketing.Somecompanies willchoosetwoormoresegmentstotarget, butwilldevelopauniquemarketingmixfor eachsegment. Whatmakesamarketingmixunique? OneormoreoftheFourPsarechanged tomeetthetargetmarket’suniqueneeds andwants.Theproductcanbechangedby addingdifferentfeatures.Thepricecanbe changedtomatchthenewleveloffeatures. Theplacewhereaproductisofferedcanbe changed;forexample,anInternetwebsite canbeaddedasawayforcustomersto obtaintheproduct.Lastbutnotleast,the 13-02-27 8:09 AM 59 Chapter 5 Targeting a Market promotioncanbechangedtoappealtothe targetmarket’suniquewantsandneeds. Themodernautomobileindustry segmentsandtargetsspecificmarkets,5-6. Forexample,GeneralMotorshasdeveloped manybrandsandmodelsofcarstomeetthe needsofvariousmarketsegments.Herearea fewexamples.TheChevroletSonicisasmall economycarwithalowprice.Itistargeted tofirst-timecarbuyersandpeoplewhodo a lotofcitydriving.TheCadillacXTSisa larger,high-performanceluxurysedanwith ahighprice.Itstargetmarketiswealthy adultswhowantaluxurycarthatisalso astatussymbol.TheGMCSierra1500isa pick-uptruckofmoderateprice.Itistargeted atpeoplewhowantatruckwithsomeextra featuresandperformance. Howwouldtargetmarketingworkfor yourhouse-cleaningbusiness?First,you wouldanalyzethemarketforcleaning services.Whatsegmentsarethere?Whatare theirneeds?Whichsegmentofthemarket wouldyouliketofocuson?Herearesome Mass Marketing and Target Marketing Mass Marketing All Customers All are considered to have the same wants and needs for a car. Segmented Market Segmented Customers The customers are organized into three market segments based on wants for a specific type of car: Target Marketing Target Market One segment of the market was chosen. This target market consists of customers who want luxury cars. These customers have similar wants in a car. wants an economy car. wants a luxury car. wants a pick-up truck. Legend: = People who want economy cars = People who want luxury cars = People who want pick-up trucks 5-6 The automobile industry segments the market and then targets specific segments with specific types of cars. This diagram shows a simplified version of the thought process for segmenting a market. MarketingDy_2-135_Ch1-9.indd 59 13-02-27 8:09 AM Part 2 Reaching Your Market 60 segments:seniorcitizenswhowantregular heavycleaningbutnolightcleaningatthe lowestprice;busyadultswhowantthorough butreasonablypricedregularcleaning;and luxuryhomeownerswhowanttheirlarge homesthoroughlycleanedonaregularbasis andarewillingtopayhigherprices. Youdecideonthebusyadultssegment. Youthenresearchthismarkettofindout whattheyneedandarewillingtopayfor,so thatyoucancustomizetheFourPstomeet theirneeds.Youfindthatmostwantfourhourweeklycleaning.Youalsofindoutthat theyarewillingtopaybetween$60and$100, dependingonthesizeofthehome.Soyou setupapricescaledependingonthetotal areaofthehome.Youalsofindoutthatthese busyadultslistentothelocalradiostation ontheirwaytoworkandreadtheThursday newspaperfortheads.Soyoudecideto changeyourpromotiontoamorningradio adplusanadintheThursdaylocalpaper, whichappearsinprintandonline. 3 Connect... Name another industry that segments and targets markets. Give an example of two products and their different features and target markets. n Target Market First.Averypopular targetmarketisyoungpeople!Itisa largemarketwithmoneytospend.In Canada,therearemorethan4.5million youngpeoplebetweentheagesof15and 24,manywithpart-timeorfull-timejobs. Manycompaniesdecidefirstthatthey wanttomarkettothisgroupofyoung people.Theythendevelopnewproducts ormodifyoldonestomeetyoung people’swantsandneeds,5-7. n Product Idea First.Inthe1940s,an engineerresearchingasynthetic substituteforrubbermixedabunch ofchemicalstogether.Theresultwas asortofliquid,sortofsolidgoothat bouncedwhendropped.Everyone thoughtthestuffwascool,butnoone couldthinkofanindustrialorpractical useforit.Amarketer,PaulHodgson, sawtheinventionanddecidedithad greatpotentialasatoy.Henamedit “SillyPutty”andpackageditinaplastic egg.SillyPuttybecameoneofthemost popularNorthAmericantoyswith hundredsofmillionsinsalessince1950. Thetargetmarketforthattoyischildren. Choosing Your Target Market Therearefourgeneralapproachesto choosingatargetmarket:(1)decideon thetargetmarketfirstandthendevelopa product,(2)developagreatproductidea andthenlookforatargetmarketthatwould likeit,(3)developtheproductideaand targetmarkettogether,and(4)takeacurrent productwhosesalesarefallingandthenlook foranewtargetmarketfortheproduct.Here areseveralexamples. MarketingDy_2-135_Ch1-9.indd 60 5-7 Many companies target the youth market, especially teens and people in their early to mid-twenties. 13-02-27 8:09 AM Chapter 5 Targeting a Market n Product and Target Market Together. Productsareoftendevelopedwiththe needsofaparticularmarketinmind.For example,thecosmeticscompanyM·A·C wasstartedinCanadawhenafashion photographerandamake-upartist realizedthatstagemake-upoftenfailed underthebrightlightsofthestudio. TheM·A·Ccosmeticlineoriginally targetedprofessionalmake-upartists. Onlylaterdiditbecomeafavourite withconsumers. n Old Product, New Target Market. Volkswagenautomobileshavebeen aroundforalongtime.However,in1997 VolkswageninNorthAmericawanted totargetamarketcalled“GenerationX,” thatis,peoplebornbetween1966and 1976. VolkswagenmodifiedtheirGolf modelbyaddingacustomroofrack andK2brandskisorsnowboard,and namedtheneweditionGolfK2.They alsodesignedapromotioncampaignthat wouldappealtotheadventurousnessof manyGenerationXers. Advantages and Disadvantages of Targeting a Market Forabusinesstobesuccessful,itdoes nothavetoselltoeverycustomerinthe massmarket.Businesseshavediscovered thatwhentheytrytomeettheneedsof a massmarketwithasinglemarketing strategy,theymaysatisfyveryfew customers.Suchbusinessesmaynotmake aprofit.Manybusinesseshavediscovered thatfocusingonaparticularmarket segmentleadstomoresuccessandmore profits.Byfocusingononesegmentof themarket,thebusinesscandevelopa marketingmixthatsatisfiestheneeds ofmostofthecustomersinthatmarket MarketingDy_2-135_Ch1-9.indd 61 61 segment.Aftergainingsuccesswithone marketsegment,thebusinesscanthen expandtoanothersegment. Targetmarketingalsoenablessmall businessestocompetewithlarger companies.Thesmallbusinesslooksfor asegmentofthemarketwhoseneedsare notbeingmet.Often,asmallsegmentofa marketcanbeveryprofitable,especiallyif youhavealmostthatentiremarketsegment. Thissmallmarketiscalledamarketniche. Kaepa,Inc.,forexample,isasneaker manufacturer.Inthe1980s,largercompanies suchasNikeandReeboktookmostofits salesaway.Kaepa’ssalesofsneakersfell andthecompanywaslosingmoney.Then, Kaepadecidedtofocusontheshoeneeds ofcheerleaders.Kaepadevelopedshoes thatmeetthespecificneedsofcheerleaders. Forexample,theirshoeshavegroovesin thesolesforthecheerleaders’fingerswhen theymakehumanpyramids.Kaepaalso makescustomshoeswithteamcoloursand logos.Kaepa,Inc.,becameverysuccessfulby targetingasmallsegmentoftheathleticshoe market,andthenmeetingthatsegment’s specificneeds,5-8. Therearetwopotentialproblemswith targetmarketing.First,youmaychoosea marketthatistoosmall.Asaresult,there arenotenoughcustomerstomakeyour businessprofitable.Thesecondproblemwith targetmarketingisthatyoumaychoosethe wrongtargetmarket.Inthiscase,youalso willnotmakeaprofit.Youmayalsomissthe opportunitytomakeaprofitfromadifferent targetmarketthatwouldbelargerand moreprofitable.Thesetwoproblemscanbe avoidedbyappropriatemarketsegmentation andmarketingresearch. Theotherpotentialproblemwithtarget marketingoccurswhenallofthecompany’s businessdependsononemarketsegment. Supposethatmarketsegmentsuffers financiallosses.Thatsegmentwillreduceor stopbuyingproductsfromthecompany.The companywillthenalsohavefinanciallosses. 13-02-27 8:09 AM 62 Part 2 Reaching Your Market 5-8 Small companies can compete by finding a niche market, that is, a small segment of the larger market whose needs are not being served. Kaepa, an athletic shoe manufacturer, focuses on shoes for cheerleaders and is very successful in this market niche. Segmenting a Market Asyouhavediscovered,marketershave developedwaystoanalyzealargemass marketandbreakitupintosegments,5-9. Thisprocessofdividingalargemarketinto smallerpartsiscalledmarket segmentation. Eachmarketsegmentismadeofcustomers withsimilarwantsandneedsforaspecific product.Marketersoftensegmentthe market,studythesegments,thenchoose one(ormore)ofthesegmentsastheir targetmarket. Intheconsumermarket,marketersuse characteristicsofcustomerstosegmentthe market.Forexample,amarketermight segmentamarketbasedontheageof MarketingDy_2-135_Ch1-9.indd 62 thecustomers.Acustomercharacteristic thatisusedtosegmentamarketis calledasegmentation variable.Ageis asegmentationvariable.Someother segmentationvariablesareincomelevel (howmuchmoneythecustomermakes) andgender(whetherthecustomerismale orfemale).Theassumptionisthatbasedon thesevariables,thecustomersinthesegment havesimilarwantsandneedsforproducts. Thereareover25differentvariables thatmarketerscommonlyusetosegment theconsumermarket.Marketershave organizedthesevariablesintofour categories:(1)geographic,(2)demographic, (3)psychographic,and(4)behavioural. Businessmarketersalsosegmenttheirmarkets. 13-02-27 8:09 AM 63 Chapter 5 Targeting a Market 3 Connect... Imagine that $100 are available to spend. How might a teenaged male spend the money? A teenaged female? A 30-year-old parent with two children? A wealthy 40-year-old? A retired person on a very small fixed income? Geographic Variables Segmentingamarketbasedonwhere customersliveiscalledgeographic segmentation.Commonlyusedgeographic variablesincludelocation,climate,and communitysize. Location Customers’needsforproductsoftenvary basedonwheretheylive.Customerswho liveinthesamecountryoftenneeddifferent productsfromthosewholiveinadifferent country.Forexample,Canadiancars—as opposedtoAmericancars—mustusethe metricsystemtoshowdistancetravelledand gasconsumed.Soacompanythatproduces carsfortheworldmarketwouldsegment themarketbycountriesthatusethemetric systemandthosethatdonot. Climate Climatehasahugeimpactonwhat customersneed.Customerswholivein climateswhereitnevergetscolderthan 15°Cdonotneedwarmcoats.Customers wholivewheretheaveragewinter temperatureis–6˚Cneedwarmcoats. Therefore,acoatmanufacturermight segmentthemarketbasedonaverage wintertemperatures,5-10. 5-9 Think about the people you see in the mall. How do their wants and needs differ? Marketers have developed ways to analyze a large mass market and break it up into segments. MarketingDy_2-135_Ch1-9.indd 63 13-02-27 8:09 AM Part 2 Reaching Your Market 64 Demographic Variables 5-10 Marketers of certain products, such as coats, segment the market based on climate. Community Size Manymarketershavediscoveredthat marketsizevarieswiththesizeofthe community.Somecommunitiesaretoosmall tobeprofitableforcertainbusinesses.For example,onerestaurantchainwilllocate restaurantsonlyincitiesof200000ormore people.Smallercitiesdonotprovideenough customersforthisparticularbusiness.Other businessesprefertofocusontheneedsof a smallcityortown.Walmartistheclassic example.WhenWalmartstarted,itlocatedits storesinsmalltowns. 3 Connect... Choose a geographic variable. Think of a product that can be segmented based on that variable. Name the product and the geographic variable. Then describe the market segment. MarketingDy_2-135_Ch1-9.indd 64 Mostcountrieswanttoknowbasic informationabouttheircitizens,suchas howmanypeopleareineachagegroup.As aresult,mostcountriescountthenumber ofpeopleintheircountries.Acensusisa countofthepeopleinacountrymadeby thegovernmentonaregularbasis.Statistics Canadaconductsacensuseveryfiveyears. Acensuscollectsdemographic information.Demographic information consistsofstatistics(numbers)thatdescribe thecharacteristicsofapopulation,for example,theageofpeople.Itwillthen compileagraphthatshowshowmany peopleinthecountryareineachagegroup. Thecategoriesthatthisinformationis dividedintoarecalleddemographic variables. Segmentingamarketbasedondemographic variablesiscalleddemographic segmentation.Demographicvariables commonlyusedbymarketersincludeage, gender,ethnicity,income,andfamilysize. Age Ageisacommonlyusedsegmentation variablebecausepeopleatdifferentages havedifferentneedsandwants.For example,babiesrequirespecialfood, soanumberofcompaniesspecializein producingbabyfood.Clothingisanother areawhereageaffectswantsandneeds. Animportantvariablerelatedtoageis generation.Agenerationisagroupofpeople bornduringaparticularperiodofhistory. Theperiodofhistorythatagroupofpeople grewupinhasamajoreffectontheir attitudes,wants,andneeds.Forexample, peoplebornbetween1977and1994are knownasthe“Millennials.”Millennialswere thefirstgenerationtogrowupwitha computerintheirhomeandusesocial networking.BothGenerationY(1977–1994) andGenerationZ(1995–present) areMillennials. 13-02-27 8:09 AM 65 Chapter 5 Targeting a Market Go Far. Join the most modern oil sands operation in North America and watch your career take off. Syncrude's Campus Recruitment Program for post-secondary Aboriginal students is the perfect opportunity for you to gain valuable experience. You'll be part of a team of employees and contractors working to secure Canada's energy future. Currently in the midst of a major expansion, our operation requires individuals in a variety of trades and professional positions. From heavy equipment operators and mechanics to engineers, process operators and technologists, just to name a few. We are recognized as a top employer and pride ourselves on offering a dynamic, team-oriented environment where you can share your ideas and grow your career. The road is clear. Visit www.syncrude.com for additional information. The Syncrude Project is a joint venture undertaking among Canadian Oil Sands Partnership #1, Imperial Oil Resources, Mocal Energy Limited, Murphy Oil Company Ltd., Nexen Oil Sands Partnership, Sinopec Oil Sands Partnership, and Suncor Energy Ventures Partnership. 5-11 This Syncrude Canada recruitment poster targets Aboriginal youth. Aboriginal youth represent a growing target market for products and employers in Canada. Aboriginalpeoplesrepresentagrowing marketinCanada.AccordingtoStatistics Canada,thepopulationofFirstNations,Métis, andInuitpeopleincreasedby47percent between1996and2006—aboutsixtimesthe rateofincreasefortherestofthepopulation. Withrespecttoage,48percentof Aboriginalpeoplesare25yearsofageor under,comparedto31percentinthegeneral population.Aboriginalyouthhavebecomean importanttargetmarketforbusinesses seekingtomarketproductsorrecruitthis groupaspartnersoremployees,5-11. 3 Connect... Name a product whose market is segmented by age. Describe the different market segments and describe how the product differs for each age segment. Gender Menandwomendifferintheirwants andneedsformanyproducts.Marketersuse thesedifferencestodevelopproductsthat meetthespecificneedsofmenorthespecific MarketingDy_2-135_Ch1-9.indd 65 needsofwomen.Forexample,theLady FootLockerstoresproviderunningshoes andotherathleticequipmentthatmeetthe specificneedsofwomen. Ethnicity Canadaiscomposedofpeoplefroma varietyofethnicbackgrounds.Theneed forjeansdoesnotvarybasedonaperson’s ethnicbackground.However,needsforother productsmayvarywithethnicheritage.For example,peoplemaywantcertainproducts becausetheycooktraditionaldisheswiththem. Orpeoplemayenjoythecuisineofanother ethnicgroup.Manymarketershavefound successbysegmentingthemarketbasedon ethnicity.Theythendevelopproductstomeet theneedsofaspecificethnicgroupandthe wantsofpeopleinterestedinthatethnicgroup. Income Incomelevelhasamajorinfluence onwhatpeoplebuy,somarketersoften segmentthemarketbasedonincomelevel. Peoplewithsimilarincomelevelsoften buysimilartypesofproducts.Peopleinthe 13-02-27 8:09 AM Part 2 Reaching Your Market 66 lowerincomegroupstendtospendalarger percentageoftheirincomesonnecessities, suchasfood,clothing,andshelter.People withhigherincomestendtospendrelatively moreonrecreation,education,andluxuries. Therearetwocategoriesofincome thatmarketersareinterestedin:disposable anddiscretionary.Disposable incomeis theincomeapersonhasavailabletospend (disposeof)aftertaxeshavebeentaken out.Usually,thefirstthingsthatdisposable incomeisspentonarethenecessitiesoflife— food,clothing,shelter,andtransportation. Discretionary incomeistheincomeleft aftertaxesandafterthenecessitiesoflife havebeenpaidfor.Discretionaryincomeis themoneyapersoncanspendathisorher discretion,thatis,howeverheorshewants. Discretionaryincomeisoftenspenton entertainment,vacations,restaurantmeals, andsimilarproducts. Somemarketersdecidetheywantto focusonluxuryitems.Inordertobeableto affordvariousluxuryitems,onemusthave afairlyhighincome.Marketingresearchcan determinewhichareasofthecountryhave thehighestaverageincomes.Themarketers ofluxuryitemscanthentargetadvertising campaignstothoseareas. Family Make-up Marketershavediscoveredthata householdconsistingofonepersonhas quitedifferentneedsandwantsfroma householdconsistingofoneortwoparents andoneormorechildren.Inaddition,a householdheadedbyanLGBT(lesbian, gay,bisexual,ortransgendered)couple mayhavedifferentneedsandwantsthana householdheadedbyaheterosexualcouple. LGBTcoupleshavehigherthanaverage householdincomesandratesofemployment, butonlyabout25percentofLGBTcouples havechildren,5-12.Asaresult,marketers oftensegmentthemarketbasedonfamily composition,includingsize.Forexample, manyconveniencefoodmanufacturers havedevelopedsingle-servingpackaging MarketingDy_2-135_Ch1-9.indd 66 tomeettheneedsofsingle-personortwopersonhouseholds. 3 Connect... Choose a demographic variable. Think of a product that can be segmented based on that variable. Name the product and the demographic variable. Describe each market segment. Psychographic Variables Customershavepsychologicaland emotionalcharacteristicsthataffecttheir needsandwantsforproducts.Segmentinga marketbasedonpsychologicalcharacteristics ofcustomersiscalledpsychographic segmentation.Aspectsthatareconsidered inpsychographicsegmentationarehobbies, socialactivities,lifestyle,interests,and attitudes.Psychographicinformationabout targetmarketsisveryusefulwhenplanning promotion.Ifyoushowthetargetmarketin thead,peopleseethemselvesandcanrelate bettertothepromotionalmessage. 5-12 There are an estimated 17 million LGBT persons in Canada and the United States, a sizeable market. 13-02-27 8:09 AM 67 Chapter 5 Targeting a Market Hobbies and Activities Peoplewhoparticipateinthesame activitiesorhavethesamehobbiestend tohavesimilarbuyingpatterns.Examples ofhobbiesincludephotography,building modelplanesorboats,andstampcollecting. Examplesofactivitiesincludealltypesof sports,playingcomputergames,visiting museums,andattendingconcerts. Lifestyle Lifestyleandvaluesareoftendifficultto measureanddefine.Inordertogrouppeople inthisway,somemarketingresearchers administersurveysthataskparticipants toagreeordisagreewithavarietyof statementscalledAIO statements.AIO standsforactivities,interests,andopinions. Aconsultingcompanywell-knownforits psychographicresearchanddataisStrategic BusinessInsights(SBI).TheirVALS™system isbasedonpsychologicalcharacteristicsthat correlatewithpurchasebehaviourandfour keydemographics.Herearesomesample statementsfromaVALS™Survey: n Ifollowthelatesttrendsandfashions. n Iwouldrathermakesomethingthan buyit. n Iconsidermyselfanintellectual. VALS™dividesadultconsumersinto eightsegments,5-13.Eachsegmenthas distinctiveconsumerpsychologythat correlateswithbuyingbehaviour.These segmentsareorganizedontheVALS™ Framework.Thevariablefromtopto bottomislevelofresources:hightolow,and includeseducation,income,andwillingness totakearisk.Thevariablefromlefttoright isprimarymotivation:ideals,achievement, andself-expression.Forexample,onegroup iscalledAchievers.Thisgroupisconcerned aboutstatusandaccomplishment,tends tobuyprestigeproducts,andwatchesan averageamountofTVandothermedia. AnothergroupiscalledSurvivors.This groupisconcernedaboutsafety,has MarketingDy_2-135_Ch1-9.indd 67 relativelylittleincome,tendstobeloyalto brands,andwatchesamore-than-average amountofTVandothermedia.Marketers wouldusetheinformationaboutthese groupstochooseatargetmarket.They wouldthencustomizethemarketingmix tomeettheuniqueneedsofthemarket theytargeted.AproductfortheAchievers wouldhaveadifferentmarketingmixfrom aproductforSurvivors. 3 Connect... Choose a psychographic variable. Think of a product that can be segmented based on that variable. Name the product and the psychographic variable. Describe each market segment. Behavioural Variables Customersdifferinthewaytheyuse products.Segmentingamarketbasedon thewaycustomersuseaproductorbehave towardaproductiscalledbehavioural segmentation.Commonbehavioural variablesincludefeaturesdesired,usagerate, andbrandloyalty. Features Desired Customersvaryinthefeaturesthey wantfromaproduct.Forexample,the massmarketforhomepersonalcomputers ishuge.However,onetypeofcomputer willnotmeettheneedsofallcomputer users.Somecomputeruserswanta basiccomputerforwordprocessingand e-mailonly.Othercomputeruserswant acomputerwithafewmorefeaturesso thattheycanplaygamesandsurftheNet. Othercomputeruserswantadvanced featuressothattheycaneditvideoand havethree-dimensionalgraphics.Asa result,homecomputermanufacturersoften segmenttheirmarketbasedonthefeatures thatthecustomerwants,5-14. 13-02-27 8:09 AM Part 2 Reaching Your Market 68 VALS™ Consumer Segments VALS™ Framework INNOVATORS High Resources High Innovation Primary Motivation Ideals Achievement Self-Expression THINKERS ACHIEVERS EXPERIENCERS BELIEVERS STRIVERS MAKERS Low Resources Low Innovation SURVIVORS 5-13 VALS™ divides adults into eight segments. Usage Rate Asamazingasitmightseem,research showsthatformanybusinesses,80percent ofthesalescomefrom20percentofthe customers.Thisobservationiscalledthe 80/20 rule:themajorityofabusiness’sprofits MarketingDy_2-135_Ch1-9.indd 68 comefromasmallnumberofcustomers. Forthisreason,marketersoftensegmentthe marketbasedonhowoftenthecustomer usesorbuystheproduct(usage rate).Usage ratecategoriesincludeheavy,moderate, light,andnonuser. 13-02-27 8:09 AM 69 Chapter 5 Targeting a Market Brand Loyalty Customersvaryinhowloyaltheyareto aparticularbrand.Thevalueofbrandloyalty isrelatedtothe80/20rule.Loyalcustomers oftenarethesourceofmostofacompany’s sales.Asaresult,marketersoftensegment themarketbasedondegreeofloyalty.For example,airlineshavedevelopedfrequent flyerprogramstorewardairlinecustomers whousetheairlinefrequently.Thefrequent flyerprogramsalsoencouragecustomersto useoneairlineforalltheirtravelneeds. 3 Connect... Choose a behavioural variable. Think of a product that can be segmented based on that variable. Name the product and the behavioural variable. Describe each market segment. Combining Variables Often,marketersfinditusefultotargeta marketbasedontwoormoresegmentation variables.Acommoncombinationis geographiclocationwithademographic variable,suchasincome.Marketersofluxury productscangetthepostalcodesofpeople withthehighestincomelevels. Figure5-15providesanoverviewofthe segmentationcategoriesandvariables.There aremanyothervariablesthatdonotappear inthisfigure. 3 Connect... Think of a product that has a large market. Think of two or more segmentation variables for that market. Name the product. Then list the segmentation variables and the market segments based on them. Market Segment Profile 5-14 Computer manufacturers may segment the market based on the features that customers want. Some customers want a basic computer. Others want advanced features. MarketingDy_2-135_Ch1-9.indd 69 Oncemarketershavedividedamarket intosegments,theymustchoosethe segmentorsegmentstotarget.Tohelpthem makethisdecision,theyoftendevelopa marketsegmentprofileforeachsegment. Amarket segment profile,(sometimes calledaconsumer profile),isadetailed descriptionofthetypicalconsumerina marketsegment.Thisprofilewillinclude geographiclocation,demographics, psychographics,andbehaviourrelevantto theproduct. 13-02-27 8:09 AM Part 2 Reaching Your Market 70 Thesegmentprofilescanthenbeused whenthesegmentsarechosen.Inorderto planamarketingmixthatmeetsthetarget market’sneeds,themarketerneedstoknow asmuchaspossibleaboutthecustomers inthemarket.Themarketershouldbe ableto“see”thetypicalcustomerinhisor hermind. Some Variables Used To Segment the Consumer Market Category Variable Examples Geographic Location • • Domestic/foreign Local/regional/national Climate • • Warm/cold Humid/dry Community Size • • Under 200 000 population Over 200 000 population Age • Senior/adult/teen/child/infant Generation • Baby Boomer/Generation X/Generation Y/Generation Z Gender • Male/female Ethnicity • • • First Nations, Métis, Inuit, European, British Isles, African, Arab, Asian Indo-Canadian, Chinese, Filipino, Vietnamese, Korean Jamaican, Haitian, West Indian, Guyanese Household Income • • Under $100 000 annual Over $100 000 annual Family Size & Composition • • • One person/two people/three or more people Children/no children Same sex, heterosexual Hobbies • Photography/model-making/stamp collecting Sports • Basketball/bicycling/skiing/swimming VALS™ • Innovator/thinker/believer/achiever/striver/experiencer/maker/survivor Features Desired • Basic features/one or two special features/advanced features Usage Rate • Heavy/moderate/light/nonuser Brand Loyalty • Totally loyal/mostly loyal/not loyal Demographic Psychographic Behavioural 5-15 These are some of the segmentation variables that marketers use to segment a market. MarketingDy_2-135_Ch1-9.indd 70 13-02-27 8:09 AM 71 Chapter 5 Review n Marketersoftenusemorethanone segmentationvariabletosegmenta market. 4. Whatisthedifferencebetweenmass marketingandtargetmarketing? 5. Whatistherelationshipbetween segmentingamarketandtarget marketing? 6. Listthefourgeneralapproachesto choosingatargetmarket. 7. Explaintwopotentialproblemswith targetmarketing. 8. Whatdoyoucalltheprocessofdividing alargemarketintosmallerparts? 9. Whatdoyoucallacustomercharacteristic usedtosegmentthemarket? 10. Listthreegeographicvariables. 11. Listfivedemographicvariables. 12. Whydomarketersusegenerationto segmentamarket? 13. Whymightamarketersegmentthe marketbasedonfamilysize?Givean example. 14. Listfivepsychographicvariables. 15. Whymightamarketersegmentthe marketbasedonhobbies?Givean example. 16. Listthreebehaviouralvariables. 17. Howmightamarketersegmentamarket basedonfeaturesdesired? Knowledge & Understanding Thinking Key Learnings n Abusinessopportunityoccurswhenyou seeaneedthatyourcompanycanfulfill. n Marketingstrategyistargetmarketplus marketingmix. n Afterchoosingatargetmarket,all marketingdecisionsaremadewiththe targetmarketinmind. n Inmassmarketing,onemarketing mixmaynotmeettheneedsofmany customers.Asaresult,thebusinessmay notmakeaprofit. n Targetmarketinghelpscompaniesmeet theneedsofthetargetmarket;however, problemsmayoccurifyouchoosethe wrongtargetmarketorbecometoo dependent onit. n Marketsegmentationisaprocessthat helpsmarketersfindanappropriate targetmarket. n Consumermarketsareoftensegmented basedonthefollowingfourcategoriesof variables:(1)geographic,(2)demographic, (3)psychographic,and(4)behavioural. 1. Whyisthetargetmarketpartofa marketingstrategy? 2. Listthefourqualitiesthatatargetmarket shouldhave. 3. Whyisthemarketingmixpartofa marketingstrategy? MarketingDy_2-135_Ch1-9.indd 71 1. Wherecanyoufindbusinessopportunities?Givereasonsforyouranswer. 2. Whyischoosingatargetmarketoneof themostimportantmarketingdecisions? 3. Marketingmixdecisionsareinterrelated. Explainwhatthismeans. 13-02-27 8:09 AM 72 Chapter 5 Review 4. Howdoestargetmarketingenablea smallbusinesstocompetewithlarger businesses? 5. Whydomarketerssegmentamarket? 6. Namethreeproductsforwhich geographicsegmentationwouldhelp determinetheappropriatetargetmarket. 7. “Marketersarestillinterestedin marketingtoBabyBoomers—thepeople bornbetween1946and1964.”Assess howvalidthisstatementis.Givereasons foryouranswer. 8. Namesixproductsthatarenotgenderspecific. 9. Howmightamarketeruseincome informationtosegmentamarket? 10. Doyouthinkthatdeterminingatarget marketcaneverleadtostereotypingor excluding?Forexample,ifmarketers concludethatable-bodiedpeopleplay sports,couldtheybeexcludingathletes withphysicalchallengesaspartofthe targetmarket? Application 1. Thinkofyourownpart-timejobora businesswithwhichyouarefamiliar. Whatisthebusiness’sproduct?Describe itstargetmarket. 2. Visitagrocerystore.Studytheshelves wherethecerealisdisplayed.Howis thecerealmarketsegmented?Writea descriptionofatleastthreesegments inthecerealmarket.Describeeach marketsegmentandthetypeofcerealthat segmentprefers.Usethesegmentation variablesinyourdescription. 3. Findanadinanewspaperor magazine.Basedonthead,describe MarketingDy_2-135_Ch1-9.indd 72 themarketsegmentthatthisadtargets. Usethesegmentationvariablesin yourdescription. 4. OldYorkFootwearhasbeenselling men’spennyloafersforyears.These shoes,availableinblack,brown,and burgundy,arecomingbackinpopularity andotherstoresarebeginningtocarry them.Lately,however,OldYork’s marketershavenoticedthatsalesare down.Whichofthefourapproaches totargetingamarketdidthecompany use?Whatshouldthecompanydonow? Supportyouranswer. 5. Createabriefprofileofamarketsegment thatwouldincludeyou.Coveratleast oneofeachofthefoursegmentation variablesinyourprofile. Communication 1. Visitthewebsiteofthecompanythat developedtheVALS™Survey(SBI),or gototheMarketing Dynamicsstudent website.Takethesurvey.Whatisyour VALS™type?Doyouseeyourselfthis way?Createa“MyVALS™”summary ofyourselfusingamediumofyour choice—print,pictorial,audio, orvideo. 2. UsethelibraryorInternettofindthe storyofanentrepreneur.Howdidthis personfindabusinessopportunity?How didheorsheturnitintoasuccessful business?Whatweretheproduct,the targetmarket,andthemarketingmix? Whatkindsofproblemsdidtheperson encounter,andhowdidheorshe overcomethem?Createabriefreportor presentationofyourfindings. 13-02-27 8:09 AM 120 9 Information Technology and Social Media You have the choice to shop either online or shop in stores for the rest of your life. You cannot do both. Which would you choose? Why? Learning Goals n explainthedifferencebetweenadot-com andabricks-and-mortarbusiness n describehowB2Bbusinessesusethe Internet n listthecomponentsofsuccessful e-tailing n describee-marketingandtheroleof socialmediaine-marketing n explainthechallengestoe-tailing n outlineeightadvantagesandseven disadvantagesofe-tailing Marketing Terms e-commerce search engine dot-com bricks-and-mortar business electronic data interchange (EDI) information technology (IT) e-tailing social media e-marketing microblogging nonsecure connection encryption secure connection Imaginethatyouareateenagerliving intheyear1990.Youwouldnote-mailyour friends.Youwouldnotbuyanythingover theInternet.Youwouldnotdoresearchfor homeworkassignmentsontheWorldWide Web.Whynot?Atthattime,theWorldWide Webdidnotexist,andtheInternetwasnot availabletothegeneralpublic. MarketingDy_2-135_Ch1-9.indd 120 13-02-27 8:09 AM 121 Chapter 9 Information Technology and Social Media TodaytheInternetandtheWorldWide Webareavailabletothegeneralpublic aroundtheworld.Allyouneedisan Internet-enableddevicesuchasacomputer orsmartphone,anInternetconnection,and theappropriatesoftware.Youcane-mail yourfriends,buyproducts,anddoresearch foryourhomeworkviatheInternetandthe WorldWideWeb. TheInternetandtheWorldWideWebare alsochanginghowcompaniesdobusiness. E-commerce(shortforelectroniccommerce)is businessactivitiesconductedviatheInternet. Businessactivitiesincludebuying,selling, promoting,productresearch,competition research,andcustomerservice,9-1. 3 Connect... How do you use the Internet? How old were you when you first used the Internet? E-Commerce Basics E-commerceispossiblebecauseofthe InternetandtheWorldWideWeb.The Internetisacomputer-basedcommunications network.ThewordInternetcomesfromthe wordsinterconnectednetworks.TheInternetisa powerfulmeansofcommunicationbecauseit connectsmillionsofcomputersaroundthe world.Computersfromindividuals, businesses,organizations,andgovernments areallconnected.TheInternetwasdeveloped inthe1950sasaresearchandmilitarytool. Nowitisusedbyalltypesofpeopleinall walksoflife,almosteverywhere. TheWorldWideWeb(Web)isthe networkofinformationsourcesthatis availableovertheInternet.TheWebwas developedin1993.TheWebispartofthe Internet.ThesoftwarefortheWebenables userstoseetext,pictures,video,and animationandhearsound.Onlineisthe conditionofbeingconnectedtotheInternet orbeingavailableontheInternet.For MarketingDy_2-135_Ch1-9.indd 121 9-1 Consumer and business activities that take place over the Internet are called e-commerce. example,onlineshoppingisshoppingthatis doneovertheWeb,9-2. InformationontheWebisorganized intowebpages.Awebpageisthesmallest unitofinformationthatcanbeaccessedon theWeb.Oneormorewebpagesfromthe samesourceandconnectedbyhyperlinks areawebsite.Individuals,companies, organizations,governments,andthemilitary canhavewebsites.Thefirstpageofawebsite isthehomepage. Hyperlinksareusedtoconnectthepages ofawebsitetogether.Hyperlinksmakeit easytonavigatethroughawebsiteandto movefromonewebsitetootherwebsites. Awebsiteisidentifiedandlocatedon theWebbyauniquesetofletters,numbers, andsymbols,calledawebaddress.The formatforatypicalbusinesswebaddressis www.companyname.ca.Theletters“www” indicatethattheaddressisontheWeb. (Somewebaddressesfunctionwithoutthe “www.”)The“companyname”isaunique setofwords,letters,wordsandnumbers,or lettersandnumberschosenbythebusiness. The“.ca”or“.com”indicatesthatthesource isacommercialbusiness.Ifthesourceis notabusiness,thereareotherlettersthat appearafterthedotinsteadof“.ca”or “.com.”Figure9-3showsseveraltypesof 13-02-27 8:09 AM 122 Part 2 Reaching Your Market 9-2 This web page is from the Roots online shopping site. There are several links on the page that take you to more information about the items displayed. webaddresses.Countrycodesarealso available,forexample,UKforUnited KingdomorJPforJapan. Ifyoudonothavethespecificweb addressforacompany,youcanfinditjust likeyoudoinformationforschoolprojects— byusingasearchengine.Asearch engine issoftwarethatsearchestheWebtofind websitesonyourtopic.Youtypeaname orkeywordsintotheinputbox.Thesearch MarketingDy_2-135_Ch1-9.indd 122 enginesearchestheWorldWideWeb,and thendisplaysalistofwebaddressesforyou tovisit. 3 Connect... Name the search engine that you use most often. Describe a search that you have performed. 13-02-27 8:09 AM 123 Chapter 9 Information Technology and Social Media Some Types of Web Addresses Type Code Commercial organization (business) .com Colleges and universities .edu Government institutions and agencies .gc Organizations not included above, such as not-for-profit organizations .org 9-3 The format of an Internet address can give you an idea of what type of organization it is. Marketing on the Internet Twotypesofbusinessesusethe Internet:dot-comsandbricks-and-mortar businesses.Thetermdot-comcomesfrom thefactthatthewebaddressesfor commercialbusinessesintheUnitedStates (wheretheInternetwasinvented)end in“.com.”Adot-comisabusinessthat conductsallofitssalesandmostofits promotiononlineviaawebsite.Adot-com hasnobuildingsthatcustomersphysically visit.Forexample,Amazonisadot-com thatsellsbooks,music,andothergoods.It hasnobuildingsorstoreswherecustomers cangotoseeandbuythebooksand othergoods. Abricks-and-mortar businessisa businessthatservescustomersfroma buildingorstore,9-4.Sometimesabricksand-mortarbusinessisreferredtoasa traditional business.CanadianTireisa bricks-and-mortarbusinessthatsells sportinggoods,householdtools,andother goods.TherearemanyCanadianTirestores thatyoucangoto.Manybricks-and-mortar businesseshaveaddedwebsitesandnow alsodosomeoftheirsalesandmarketing ontheInternet. MarketingDy_2-135_Ch1-9.indd 123 9-4 A bricks-and-mortar business has a location where customers can go to buy products. 3 Connect... What bricks-and-mortar business do you know that also has a website? Which do you do more often—go into the store or buy from the website? Why? Business-to-Business on the Internet Business-to-businesscompanieswere thefirsttousetheInternetextensively.For 13-02-27 8:09 AM Part 2 Reaching Your Market 124 example,manybusinessesuse electronic data interchange (EDI).EDIisabusinessto-businessexchangeofinformationvia computerusingstandardformats.EDI messagesusuallyconsistofinformationthat wouldotherwisehavetobesentaspaper documents.EDImessagesincludepurchase orders,shippingnotices,invoices,credit memos,andotherdocuments. Whenbusinessesconnecttheircomputers andloadtheappropriatesoftware,they cancommunicatebyEDI—muchmore efficientlythanfaxingormailingpaper.Some inventorymanagementstrategiesalsorely ontheInternet.Youwillreadaboutthese strategiesinChapter14.Whenbusinessesuse computertechnologytostoreandtransmit information,theyareusingIT,whichstands forinformation technology. CompaniesalsousetheInternetand theWebtoresearchandpurchaseitemsfor theirbusinesses.Websitescontainproduct information,similartoapapercatalogue. Theadvantageofacatalogueonawebsite isthatitcanbeupdatedquickly,more informationcanbeprovided,andvideosor animationscanbepresented.Forexample,a manufacturercanfindoutthespecifications, prices,andavailabilityofmaterialsitneeds forproduction.Thatsamemanufacturercan showitslineoffinishedgoodsonitsown websitetointerestedretailers. Companiesthathavefieldsales representativesalsousetheInternet,9-5. Salesrepresentativescanusetheircomputers ortabletstocheckavailabilityofproducts beforepromisingshipment.Orderscanalso beplacedinstantlyfromanylocation.The computerthencandeducttheneworders frominventory,sothatthenextsalesperson willhaveanaccuratecountofproducts available.Salesrepresentativesandcustomer servicerepresentativesalsousetheInternet tolocateshipmentsandinformcustomers whentoexpectshipmentarrival. IThasrevolutionizedtheflowof informationwithincompaniesandbetween vendorsandcustomers.Differentdivisions MarketingDy_2-135_Ch1-9.indd 124 9-5 The Internet is especially useful for businessto-business (B2B) sales. For example, a sales representative visiting a client can use the Internet and a computer or tablet to check on product availability and place an order. ofthesamecompanycancommunicate viatheInternet.Data,suchasnew productdesigns,salesresults,orfinancial numbers,canbesentinstantly.Confidential informationcanonlybeaccessedbypeople whoknowthepassword. Shopping on the Internet Today,consumerscanbuyalmost anythingovertheInternet.Justenterthe nameoftheitemyouwouldliketobuy intoasearchengine.Thesearchenginewill generatealistofwebsiteswhereyoucanbuy thatitem. Sellingproductstoconsumersover theInternetiscallede-tailing,fromthe wordselectronic retailing.Companiesthat selltoconsumersonlineareoftenreferred toase-tailers.E-tailingisalsocalledonline retailing.Allaconsumerneedstoshoponline isanInternet-enableddevice,anInternet connectionandsoftware,andacreditcard. 13-02-27 8:09 AM 125 Chapter 9 Information Technology and Social Media 3 Connect... Describe an experience you have had purchasing a product over the Internet. Successful E-tailing Inorderfore-tailingtobesuccessful, customershavetobeabletoeasilydothe thingstheydoinabricks-and-mortarstore. Businessesthatsellproductsonlinewant toensurethatcustomersareabletolook atandselectproducts,canreceiveproduct promotions,willreturntopurchaseother products,cangethelpiftheyneedit,and canpayfortheproductsandreturnthemif theyneedto. Looking at Products Thewebsitemustprovideinformation abouttheproductsforsale.Sincethe customercannottouchtheproducts,other meansmustbeused.Manywebsitespresent theirmerchandiseinaformatsimilarto apapercatalogue.Thereisoftenalistof producttypesfromwhichtochoose.Oncea categoryischosen,photographsoftheitems areshown,withwrittendescriptionsand prices,9-6.Often,customerscanclickonthe photographforanenlargedphotoandmore detailedinformation. 9-6 E-tailing sites give descriptions and prices of items, along with photos that sometimes can be enlarged or that show the item from different angles. MarketingDy_2-135_Ch1-9.indd 125 13-02-27 8:09 AM 126 Evaluating Products Another service that many websites provideisreviewsorevaluationsoftheir productsbyothercustomers.Forexample, Amazonprovidesreviewsformanyofits books,plusarankingbasedonhowmany ofthattitlewerepurchasedbyAmazon customers.Thesereviewswereoneofthe firstexamplesofsocialmediabeingusedto marketproducts.Social mediaareinteractive formsofmediathatletuserscommunicate witheachotheronline.Examplesinclude FacebookandTwitter;onlinecommunities suchasAmazon,Flickr,andRottenTomatoes; andblogs,9-7.Socialmediaaredescribedin moredetailonthenextpage. Selecting Products The website must have a way for customerstoindicatewhichproducts theywanttobuy.Manywebsitesusethe metaphorofashoppingcartorashopping bag.Thereisnoactualshoppingcartorbag onawebsite;however,avirtualoneisused tokeeptrackofthecustomer’sselections. Thecustomerclicksonalinkthatsays “Addtoshoppingcart”or“Addtobag.” Thevirtualshoppingcartorbagkeepsa 9-7 A wide variety of social media are being used by marketers to reach customers and create buzz about products. MarketingDy_2-135_Ch1-9.indd 126 Part 2 Reaching Your Market listoftheitemsthecustomerhasselected. Thecustomercanalsodeleteitemsfromthe shoppingcart. Promotions and Social Media Today,customersexpecttobeas engagedonawebsiteastheywouldbe strollingthroughabricks-and-mortar store.Asaresult,businessesneedmore strategiestoretaintheircustomersand persuadethemtoconsidertheirproducts. Oneofthesestrategiesise-marketing. E-marketingismarketingusingcomputer technology,includingwebsites,e-mail,and mobilephones. Youmaywonderwhyabusinesswould neede-marketingifitalreadyhasawebsite, butawebsiteisjustaplatformforreaching thecustomerthroughe-marketing.Onthe website,thebusinessmayinvitecustomers tosignupforweeklye-mailsthatpromote productsofinterest.Usually,customerscan selectwhichproductstheywouldliketo hearaboutbycheckingabox.Thesee-mails canalsobedirectedtoacustomer’smobile phone.Thiskindofe-marketingisknownas opt-inmarketingbecausethecustomeragrees toit,unlikepop-upadsthatsuddenlyappear onthewebsite.Marketershavelearnedthat manycustomerspreferopt-inmarketing. Oncecustomershaveshopped,the websitemaypromptthemtocontinue shoppingbysuggestingotherproductsof interest.Theseproductsarechosenaccording tothecharacteristicsoftheproductsthe customerhasalreadyboughtorviewed. Althoughitispossibletorecommend productsinperson,theInternetallows businessestosuggestmoreproductsmore quickly,basedonmoreshoppingpreferences thanonesalespersoncouldeversuggest inperson. Manybusinesseswithwebsitesalso haveanaccompanyingFacebookpageand Twitteraccount.Socialmediahelpbusinesses reachouttocustomersinapersonalway andcreateasenseofcommunityarounda 13-02-27 8:09 AM 127 Chapter 9 Information Technology and Social Media brand.Withinthesecommunities,customers cansharetheirexperiencesusingdifferent productsandconnectwithotherswhohave hadsimilarexperiences. Socialmediaarealsoanexcellentway forbusinessestogatheradditionalresearch aboutcustomerneedsandwants.Ona Facebookpage,forexample,abusinesscan poseaquestiontocustomersorconducta survey.Manybusinessesrunregularonline conteststhattheyannounceonFacebookor Twitterkeepingcustomersengagedwiththe businessbrandanditsproducts. Sometimesbusinessespaybloggersto writeabouttheirproducts.Theymaysend freesamplesinreturnforapositivereview, hopingthatmanypotentialcustomers willreadtheblogpostandtrytheir product.ThemicrobloggingsiteTwitter isusefulforupdatingcustomersabout productdevelopmentsandevents,such ascontests,giftideas,andstoreopenings. Microbloggingisashort,immediate formofblogging—usuallyabout20to25 words.Sometimesbusinesseshireasocial mediaexperttomicroblogandsometimes theycontracttheworkouttoavarietyof loyalcustomers,9-8. Getting Help Whencustomersareshopping,they mayhavequestionsabouttheproducts andquestionsaboutusingthewebsite. MostwebsiteshaveapageofFAQs, whichstandsforfrequently asked questions. Thepageprovidesanswerstothemost commonquestionscustomershaveasked. 9-8 This is the Twitter feed of Chapters/Indigo. The bookstore chain tweets about new products, promotions, and contests. MarketingDy_2-135_Ch1-9.indd 127 13-02-27 8:09 AM 128 Mostwebsitesprovideane-mailaddress fore-mailingquestionstothecompany. Manywebsitesprovideatoll-freenumber thatcustomerscancalltospeakwitha customerrepresentative. Somewebsitesprovidereal-timeonline help.Specialsoftwareenablesthecustomer tocommunicatewithalivecustomerservice representative,whileonline.Onetypeof softwarethatenablesthistypeofinteraction isInstantMessaging.Thecustomertypesa questioninaninputboxonthewebsite.The questionappearsonthecomputerscreen ofthecustomerservicerepresentative.The customerservicerepresentativethentypes ananswer,andsendsittothecustomerto seeonhisorherscreen. Paying for Products Inabricks-and-mortarstore,the customergoestothecheckoutcounterand handsthecashiertheproductsselected.The cashiertotalstheprices,addsinanytaxes orothercharges,andthentellsthecustomer thetotalowed.Thecustomerthenhands thecashiercashoracreditordebitcard. Thecashierhandsbackareceipt.Mailorder cataloguesandTVshoppingchannelsuse paperchequesoracredit/debitcardnumber, providedeitherthroughthemailorover thephone. Howdoesanonlineshopper,sitting inhisorherhome,providepaymentto theonlineretailer?Manywebsiteshave a virtualcheckout.Whenthecustomeris doneshopping,heorshecanclickona linkthatsays“Proceedtocheckout”orjust “Checkout.”Thecheckoutscreenprovides thelistofitemspurchased,theprices,and anyadditionalcharges.Themostcommon waytopayisthroughacreditcardnumber. Someshoppersuseonlinepaymentservices, suchasPayPal.Digitalcashsystemsand digitalwalletsarealsoavailable.Afterthe orderisconfirmedandpaymentisreceived,a receiptisusuallysenttothecustomer’se-mail address.Thecustomercanthenprintareceipt. MarketingDy_2-135_Ch1-9.indd 128 Part 2 Reaching Your Market Returning Merchandise As with products ordered through the mailorfromaTVshoppingchannel,the goodsmightbedefectiveordamagedin transit.Thegoodsmayalsonotbewhatthe customerexpectedorwanted.Abusinesswith awebsitemustprovideareasonablyeasyway forgoodstobereturnedandtoensurethatthe moneyisrefundedtothecustomer. 3 Connect... Name an e-tailer with which you are familiar. How does that e-tailer’s website accomplish the above components? Receiving Purchases Promptly Moste-commercecustomersexpecttheir onlineorderstobefilledimmediately.For example,supposeyouordersomethingin themiddleofthenight,buttheitemdoesnot arrivefortwomonths.Inthissituation,the Internetisnotmakingshoppingfasterand moreconvenientforyou.Asaresult,you mightdecidenottousethate-tailerorthe Internetforshopping. Finding the Website Customersalsohavetoknowthatthe businesswebsiteexistsandwheretofindit. Manycompaniesadvertisetheirwebsites throughtraditionalprint,radio,andtelevision advertising.Manypeople’sbusinesscards includethewebaddressofthecompany. E-tailersalsoadvertiseonotherwebsites. Challenges to E-tailing WhenretailersbeganusingtheInternet inthemid-1990s,retailersusedtheirwebsites moreforpromotionthanselling.Anumber ofconcernsdiscouragedconsumersfrom actuallybuyingproductsovertheInternet. Manyoftheseconcernshavebeenresolved 13-02-27 8:09 AM Chapter 9 Information Technology and Social Media 129 tothesatisfactionofsomecustomers.Other customersarestillreluctanttoactually purchaseovertheWeb.Thesechallenges includethefollowing: customersareuneasyaboutacompany havingthistypeofinformationaboutthem. Manye-tailersdevelopapolicythatprotects theprivacyofcustomers. Moste-tailershavealinkontheirhome pagescalled“Security”or“Security& Privacy.”Clickingonthislinkwilltakethe customertoawebpagethatdescribeshow thatwebsiteensuressecurityandprivacy. TheBetterBusinessBureauhas developedaprogramtopromotetrustand confidenceine-tailing.Theprogramhas publishedacodeofonlinebusinesspractices, andalsoprovidesreliabilityandprivacy sealstobusinessesthatmeetitscriteria. Security Securityofpersonalfinancialandother informationcontinuestobeaconcernfor manyInternetshoppers.Typically,when a personlogsontotheInternetandvisits a website,anyinformationexchanged canbeseenbyanyoneontheInternet.An Internetconnectionoverwhichanyone canseeanyoftheinformationiscalleda nonsecure connection. Inorderforane-tailertoreceivepayment, thecustomermustsendacreditcardnumber overtheInternet.Mailingaddress,phone number,andotherpersonalinformation areoftenrequested.Internetcustomers donotwanttheircreditcardnumbersor otherpersonalinformationtobegenerally available.Toaddressthisconcern,Internet providersandretailersdevelopedaprocess calledencryption.Encryptionisaprocess thatconvertsdataintoaformthatcanberead onlybyapersonwithanauthorizedcode. AnInternetconnectionthatusesencryption iscalledasecure connection.Nooneelse canseeyourinformationwhenyouusea secureconnection.Whenyouareusinga secureconnection,asmalliconofaclosed lockappearsonthewebpage.SecureInternet connectionsguaranteecustomersthattheir personalfinancialinformationissafe. Othersecuritytechnologiesarebeing developed.Forexample,Visahasdeveloped “VerifiedbyVisa.”Thistechnologyverifiesthat theVisacardnumberisauthenticandonly theauthorizedcardholderisplacingtheorder. Privacy Arelatedbutseparateconcernfrom securityisprivacy.Whenapersonvisitsa website,thetechnologycankeeprecords ofeverypurchaseandeveryclick.Many MarketingDy_2-135_Ch1-9.indd 129 Complaints Whencustomersvisitane-tailing websitethatmisrepresentsproductsor collectstoomuchpersonalinformation,they shouldbeabletolodgeacomplaint.Most e-tailersdisplaya“ContactUs”buttonon theirwebsitethatletscustomersconnect withaCustomerServicedepartmentby e-mailorphone.Whencustomersdonot receiveasatisfactoryresponsefroman e-taileraboutunacceptableproductsor marketingactivities—whetheronlineorinstore—theycantaketheircomplainttothe Consumers’AssociationofCanada. Website Effectiveness Therearemanycomponentstowebsite effectiveness.Onetechnologicalrequirement isthatthewebsiteloadquickly. Thefirstpageofaretailwebsiteisoften calledthestorefront.Thisfirstpagemustbe designedtoattractcustomers.Thewebsite mustalsobeeasytouse.Itmustbeeasyto viewtheproducts,selectthem,andpurchase them.Morethanhalfofonlineshoppers leaveawebsitewithoutmakinganintended purchase.Thereasonsareusuallyvariations of“Ididnotunderstandwhattodo.” Websitesshouldalsostrivetomake theonlineshoppingexperiencepleasant 13-02-27 8:09 AM Part 2 Reaching Your Market 130 andunique,9-9.Theonlineexperience shouldprovidebenefitsnotavailablefrom bricks-and-mortarshopping.Possible benefitsincludespeedandeaseofpurchase, customizednoticesofproductsonsale, specialpricesoritemsavailableonlythrough thewebsite,andnewslettersandother informationrelatedtotheproduct. Slow Connections Slowandinconsistentconnections interferewiththeonlineshopping experience.Whenstorefrontstakealong timetoload,customersgetimpatient.Ifan Internetconnectionbreakswhilemakinga complexpurchase,suchasanairlineticket, thecustomergetsfrustrated.Inordertobuy theticketonline,thecustomerwillhaveto reconnectandgothroughtheselectionand purchasingprocedureagain.Theavailability ofhigh-speedInternetconnectionshas reducedtheseproblems. Preference for Traditional Stores Some customers just prefer to go to a traditionalbricks-and-mortarstoreorastore withwhichtheyarefamiliar.Manycustomers researchtheirpurchasesontheInternet,and thenmaketheactualpurchaseinabricks-andmortarstore.Asbrandsofe-tailersestablish goodreputations,morecustomerswillbe willingtoshopandpurchaseonline. 3 Connect... Describe at least one problem you have had when buying something over the Internet. Future of E-tailing Thevolumeofpurchasesbyconsumers hasgrownagreatdealsinceInternetshopping firststartedinthemid-1990sandcontinues togrowataveryfastpace.E-commerce hasalsocreatedjobsandloweredexpenses forbusinessesandconsumers.Websites enablebusinessestoofferbettercustomer serviceandinformation,eveniftheydonot sellproductsonline.Todayconsumersexpect thateveryrespectablebusinesswillhavea websitethatatleastprovidesinformation. Advantages 9-9 Websites need to make the online shopping experience as enjoyable as the real-life one. Customers are looking for efficient service, but the whole experience must be pleasant and memorable. MarketingDy_2-135_Ch1-9.indd 130 E-commerceprovidesmanyadvan- tages.Moreadvantageswilldevelopas e-commercespecialistsimprovetechnology anddevelopinnovations. n Low Initial Investment.Ane-business doesnothavetobuy,rent,orbuilda buildingtogetstarted.Asaresult,itis ofteneasierandlessexpensivetostart ane-business. n Worldwide Exposure.TheInternet providesaccesstoprospectivecustomers anywhereintheworld. n Constant Availability.TheInternet canbeaccessedatanytimeoftheday 13-02-27 8:09 AM Chapter 9 Information Technology and Social Media n n n n n ornight.Informationcanbeadded orchangedatanytime.Customers canaccesstheInternetwheneveritis convenientforthem.Internationaltime zonedifferencesdonotmatter. Instant Updating.Informationcanbe updatedinstantly.Forexample,new pricescanbeadded.Oldinformationcan bedeletedinstantly.Thee-tailerdoesnot havetoworrythatthecustomerisusing anold,out-of-datecatalogue. Equalized Market Access.Small companies havethesameaccessto potentialcustomersaslargecompanies. Easy Information Access.Free informationisavailableonwebsites sponsoredbybusinesses,government agencies,universities,andtrade associations.Businessescangather informationaboutcompetitorsand customers.Customerscangather informationaboutproductsandthe companies thatofferthem. Ability to Collect Customer Information.Everytimeacustomer visitsawebsite,informationabout thatcustomercanbegatheredintoa database.Informationisoftengathered throughsiteregistration,questionnaires, andasapartoftakinganorder. Ability to Target Marketing Messages. Theinformationgatheredabout customerscanbeusedtotailorspecific messagestospecifictypesofcustomers. Forexample,somewebsitesgreetyou bynamewhenyouopenthehomepage, andlistpersonalizedproductsuggestions, basedonyourpreviouspurchases. Disadvantages Therearesomedisadvantagesto e-commerce,butthedevelopmentsin technologyaredecreasingthedisadvantages. n Security.Despitethedevelopmentof encryptionandothersecuritytechnologies, MarketingDy_2-135_Ch1-9.indd 131 131 manyconsumersarestillreluctantto providecreditcardnumbersandother personalinformationovertheInternet. n Privacy.Despiteprivacypolicies,many consumersdonottruste-tailersto maintaincustomerprivacy. n Cost of Website Setup and Maintenance.Manybusinessesdonot havetheexpertisetosetuptheirown websites.Thesebusinessesoftenhire outsidecontractorstodevelopand maintaintheirwebsites.Thecostsof settingupandmaintainingawebsite mustbefiguredintothecompany’s budgetandprofitcalculations.However, manysmallbusinessesdosetupand maintaintheirownwebsitesatrelatively littleexpense. n DistributionProblems.Manye-businesses stillhavenotdevelopedgoodphysical distributionsystems.Whencustomers donotreceiveproductsinatimely fashion,theyarediscouragedfromusing thate-business.Youwillreadabout distributioninChapter14. n Product Quality Problems.Customers canbedisappointedatthequalityofthe productsreceivedfromane-business. However,theseproblemsseemtobe aboutequaltotheproblemsofdirectmailmarketersandTVmarketers. Simplifiedmethodsforreturnsalsohelp reducethisproblem. n Consumer Reluctance.Manyconsumers arestillreluctanttopurchaseover theInternet,forsomeofthereasons describedinthispassage.Inaddition, someconsumersprefertogotoabricksand-mortarstorewheretheycanhandle ortryoutthegoodstheyplantobuy. Otherssimplyprefertousebricks-andmortarbusinessesthattheyarefamiliar withandtrust. Despitethesedisadvantages,e-tailing remainsaviablemeansofsellinggoods. 13-02-27 8:09 AM 132 Chapter 9 Review Key Learnings Knowledge & Understanding n Adot-comisabusinessthatdoesallof itssellingontheInternet;itdoesnot haveanactualstore.Abricks-and-mortar businessservescustomersatastore;it mayalsohaveawebsite. n B2BbusinessesusetheInternetto exchangeinformationandtomanage informationinsystemssuchasinventory. n Successfule-tailinghelpscustomerslook atandselectproducts;encouragesthem tocontinueshoppingorlearnaboutother products;offershelp;providesawayto payforproductsandgetareceipt;and providesawaytoreturnmerchandise. n Tobesuccessful,ane-tailermustalso fulfillandshiporderspromptlyand attractcustomerstothewebsite. n Fivechallengestoe-tailingare:(1)security, (2)privacy,(3)websiteeffectiveness, (4)slowconnections,and(5)customer preferencefortraditionalstores. n E-marketingismarketingusing computertechnology,includingwebsites, e-mail,andmobilephones. n Socialmediahelpbusinessesreachout tocustomersinapersonalwayand createasenseofcommunityarounda brand.Withinsocialmediacommunities, customerscansharetheirexperiences usingdifferentproducts. n Socialmediaarealsoanexcellentwayfor businessestogatheradditionalresearch aboutcustomerneedsandwants. n Thereareadvantagesanddisadvantages toe-tailingande-marketing.However, mostcustomersexpectbusinessesto haveawebsite. 1. Whatbusinessactivities cantakeplace ontheWeb? 2. Whatisthedifferencebetweenadot-com andabricks-and-mortarbusiness? 3. HowdoB2BbusinessesusetheInternet? 4. Whatcancustomersdoonawebsitefor e-tailing?Listsixactions. 5. Whatdoesavirtualshoppingcartdo forthecustomerwhoisshoppingona website? 6. Whatisthemostcommonwayforan onlineshoppertopayforproducts? 7. Howdoesanonlineshoppergetareceipt forproductspurchasedonline? 8. Whydoonlineshopperswanttouse secureconnectionsfortheirtransactions? 9. Listfiveproductsthatcanbedelivered overtheInternet. 10. Definee-marketingandprovideexamples. 11. Describehowbusinessescanusesocial mediatotheiradvantage. 12. Explaintwoadvantagesandtwo disadvantagesofe-tailing. MarketingDy_2-135_Ch1-9.indd 132 Thinking 1. Imaginethatyouaretheownerofa companythatissettingupawebsite. Whatwouldyouwantyourwebaddress tobe? 2. Giveanexampleofhowyoumightusea searchengine. 3. Compareandcontrastthehomepageof ane-tailer’swebsitewiththestorefront ofabricks-and-mortarretailstore. 13-02-27 8:09 AM 133 4. Whywouldabricks-and-mortarbusiness wantawebsite? 5. “Thesedays,businessesmustusesocial mediatoreachcustomers.”Agreeor disagreewiththisstatement.Give reasonsforyouropinion. 6. Whydoconsumersworryaboutsecurity andprivacywhenvisitingawebsite? Application 1. Talkwiththemanagerorownerofalocal businessorstoredepartment.Findoutif ithasawebsite.Howlonghasithadthe website?Doessomeoneinthecompany runthewebsite,orhasithiredanoutside firmtodothis?Whatpercentageoftotal salescomesfromthewebsite? 2. Imaginethatyouareawebmarketing specialist.Youhavebeenhiredbya business—abricks-and-mortarstore—to improveitse-marketingactivitieson itswebsite. n Namethetypeofstorethathashired you.Possibilitiesincludehairsalon; book/musicstore;cardealership; clothingstore;print/copyshop;or restaurant. n Describetheproductsoffered. n Howcouldyougetcustomers’e-mail addresses? n Describehowyouwouldusee-mailto getcustomersintothestoreandbuild theirloyalty.Stateatleasttwothings thatyouwoulddo. MarketingDy_2-135_Ch1-9.indd 133 3. Youproposeaweeklye-mailpromotion tocustomerswhooptin. n Whatkindofinformationdoesthis e-mailprovide? n Howwouldyoumakeyourweekly e-mailappealingsothatpeoplewillbe happytogetitandeagertoopenit? 4. YouproposeaFacebookpagetothe business.TheFacebooklinkwillappear onthewebsiteandinthee-mail. n HowwillyouusetheFacebookpageto attractcustomers? n Howwilltheinformationonthe Facebookpagebedifferentfromthe informationsentintheweeklye-mails? Describeatleasttwodifferences. Communication 1. Visitthewebsiteofalocalbusinessand identifythewaysinwhichthebusiness providessuccessfule-tailing.Preparea visualdisplaytoshowyourfindings. 2. Fifteenyearsago,thecareerofwebsite developerdidnotexist.Whatnewcareers willbeavailableinthefuture?Uselibrary andInternetresourcestofindout.Use keywords“cybercareers”and“careersof thefuture.”Presentyourinformationina two-minuteoralreporttotheclass. 3. Holdaclassdiscussionordebateon whethertheinstantaneousnatureof e-tailingande-marketingresultsintoo muchconsumerismandtoomanyfads. 13-02-27 8:09 AM
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