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Chapter 4
Online Consumer Behavior, Market Research, and Advertisement

Learning Objectives
1. Understand the decision-making process of consumer purchasing online. 2. Describe how companies are building one-toone relationships with customers. 3. Explain how personalization is accomplished online. 4. Discuss the issues of e-loyalty and e-trust in EC. 5. Describe consumer market research in EC.
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Learning Objectives
6. Describe Internet marketing in B2B, including organizational buyer behavior. 7. Describe the objectives of Web advertising and its characteristics. 8. Describe the major advertising methods used on the Web. 9. Describe various online advertising strategies and types of promotions. 10. Describe permission marketing, ad management, localization, and other advertising-related issues.
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Learning about Consumer Behavior and Purchasing Decisions Online

THE CONSUMER PURCHASE DECISION-MAKING PROCESS
A Generic Purchasing-Decision Model
product brokering Deciding what product to buy. merchant brokering Deciding from whom (from what merchant) to buy a product.

A Customer Decision Model in Web Purchasing

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Learning about Consumer Behavior and Purchasing Decisions Online

MASS MARKETING, MARKET SEGMENTATION, AND ONE-TO-ONE MARKETING
one-to-one marketing Marketing that treats each customer in a unique way.

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Personalization, Loyalty, Satisfaction, and Trust in EC

personalization The matching of services, products, and advertising content with individual consumers and their preferences. user profile The requirements, preferences, behaviors, and demographic traits of a particular customer.
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Personalization, Loyalty, Satisfaction, and Trust in EC

Major strategies used to compile user profiles:
Solicit information directly from the user Observe what people are doing online
cookie A data file that is placed on a users hard drive by a remote Web server, frequently without disclosure or the users consent, that collects information about the users activities at a site.
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Personalization, Loyalty, Satisfaction, and Trust in EC

Build from previous purchase patterns Perform marketing research Make inferences
behavioral targeting The use of information collected on an individuals Internet-browsing behavior to select which advertisements to display to that individual.

Personalized services Individual services Universal services

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Personalization, Loyalty, Satisfaction, and Trust in EC

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

TRUST IN EC
trust The psychological status of willingness to depend on another person or organization.
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Personalization, Loyalty, Satisfaction, and Trust in EC

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Personalization, Loyalty, Satisfaction, and Trust in EC

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Market Research for EC

METHODS FOR CONDUCTING MARKET RESEARCH ONLINE WHAT ARE MARKETERS LOOKING FOR IN EC MARKET RESEARCH?
Market Segmentation Research

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Market Research for EC

MARKET RESEARCH FOR ONE-TOONE
Direct Solicitation of Information
Implementing web-based surveys Online focus groups Hearing directly from customers

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Market Research for EC

Observing Customers
transaction log A record of user activities at a companys Web site. clickstream behavior Customer movements on the Internet. Web bugs Tiny graphics files embedded in e-mail messages and in Web sites that transmit information about users and their movements to a Web server. spyware Software that gathers user information over an Internet connection without the users knowledge.
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Market Research for EC

clickstream data Data that occur inside the Web environment; they provide a trail of the users activities (the users clickstream behavior) in the Web site. Web mining Web mining explores both Web content data mining techniques for discovering and extracting information from Web documents and Web usage.
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Market Research for EC

collaborative filtering A market research and personalization method that uses customer data to predict, based on formulas derived from behavioral sciences, what other products or services a customer may enjoy; predictions can be extended to other customers with similar profiles.
Rule-based filtering Content-based filtering Activity-based filtering

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Market Research for EC

LIMITATIONS OF ONLINE MARKET RESEARCH AND HOW TO OVERCOME THEM BIOMETRIC MARKETING
biometrics An individuals unique physical or behavioral characteristics that can be used to identify an individual precisely (e.g., fingerprints).
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Internet Marketing in B2B

ORGANIZATIONAL BUYER BEHAVIOR
A Behavioral Model of Organizational Buyers

THE MARKETING AND ADVERTISING PROCESSES IN B2B

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Internet Marketing in B2B

METHODS FOR B2B ONLINE MARKETING
Targeting Customers Electronic Wholesalers Other B2B Marketing Services

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Web Advertising
OVERVIEW OF WEB ADVERTISING
interactive marketing Online marketing, facilitated by the Internet, by which marketers and advertisers can interact directly with customers and consumers can interact with advertisers/ vendors.

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Web Advertising

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Web Advertising
SOME INTERNET ADVERTISING TERMINOLOGY
ad views The number of times users call up a page that has a banner on it during a specific period; known as impressions or page views. button A button is a small banner that is linked to a Web site. It can contain downloadable software. page A page is an HTML (Hypertext Markup Language) document that may contain text, images, and other online elements, such as Java applets and multimedia files. It can be generated statically or dynamically.

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Web Advertising
click (click-through or ad click) A count made each time a visitor clicks on an advertising banner to access the advertisers Web site. CPM (cost per thousand impressions) The fee an advertiser pays for each 1,000 times a page with a banner ad is shown. conversion rate The percentage of clickers who actually make a purchase.
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Web Advertising
click-through rate The percentage of visitors who are exposed to a banner ad and click on it. click-through ratio The ratio between the number of clicks on a banner ad and the number of times it is seen by viewers; measures the success of a banner in attracting visitors to click on the ad. hit A request for data from a Web page or file.
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Web Advertising
visit A series of requests during one navigation of a Web site; a pause of a certain length of time ends a visit. unique visits A count of the number of visitors entering a site, regardless of how many pages are viewed per visit. stickiness Characteristic that influences the average length of time a visitor stays in a site.

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Web Advertising
advertising networks Specialized firms that offer customized Web advertising, such as brokering ads and targeting ads to select groups of consumers.

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Online Advertising Methods

banner On a Web page, a graphic advertising display linked to the advertisers Web page. keyword banners Banner ads that appear when a predetermined word is queried from a search engine. random banners Banner ads that appear at random, not as the result of the users action.
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Online Advertising Methods

banner swapping An agreement between two companies to each display the others banner ad on its Web site. banner exchanges Markets in which companies can trade or exchange placement of banner ads on each others Web sites.

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Online Advertising Methods

POP-UP AND SIMILAR ADS
pop-up ad An ad that appears in a separate window before, after, or during Internet surfing or when reading email. pop-under ad An ad that appears underneath the current browser window, so when the user closes the active window the ad is still on the screen. interstitial An initial Web page or a portion of it that is used to capture the users attention for a short time while other content is loading.
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Online Advertising Methods

E-MAIL ADVERTISING
E-Mail Advertising Management
E-mail hoaxes Fraud

E-Mail Advertising Methods and Successes

NEWSPAPER-LIKE AND CLASSIFIED ADS

Classified Ads
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Online Advertising Methods

SEARCH ENGINE ADVERTISEMENT
Improving a Companys Search-Engine Ranking (Optimization) Paid Search-Engine Inclusion
Advertising in social networks

GoogleThe Online Advertising King

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Online Advertising Methods

ADVERTISING IN CHAT ROOMS, BLOGS, AND SOCIAL NETWORKS
Advertise in Videos

OTHER FORMS OF ADVERTISING

advertorial An advertisement disguised to look like editorial content or general information.

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Online Advertising Methods

Web 2.0 and Advertising Advertising in Newsletters Posting Press Releases Online advergaming The practice of using computer games to advertise a product, an organization, or a viewpoint.

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Advertising Strategies and Promotions Online

affiliate marketing A marketing arrangement by which an organization refers consumers to the selling companys Web site. ADS AS A COMMODITY viral marketing Word-of-mouth marketing by which customers promote a product or service by telling others about it.
Viral Marketing in Social Networks
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Advertising Strategies and Promotions Online

CUSTOMIZING ADS
Webcasting A free Internet news service that broadcasts personalized news and information, including seminars, in categories selected by the user.

ONLINE EVENTS, PROMOTIONS, AND ATTRACTIONS

Live Web Events admediaries Third-party vendors that conduct promotions, especially largescale ones. Selling Space by Pixels: The Case of Million Dollar Homepage Advertising in Second Life and Other Virtual Worlds
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Advertising Strategies and Promotions Online

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Special Advertising Topics

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

ADVERTISEMENT AS A REVENUE MODEL MEASURING ONLINE ADVERTISINGS EFFECTIVENESS WIRELESS ADVERTISING AD CONTENT SOFTWARE AGENTS IN MARKETING AND ADVERTISING APPLICATIONS
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Managerial Issues
1. 2. 3. 4. 5. 6. Do we understand our customers? Who will conduct the market research? Are customers satisfied with our Web site? How can we use social networks for advertising? How do we decide where to advertise? What is our commitment to Web advertising, and how will we coordinate Web and traditional advertising? 7. Should we integrate our Internet and non-Internet marketing campaigns? 8. What ethical issues should we consider? 9. Are any metrics available to guide advertisers? 10.Which Internet marketing/advertising channel to use?
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Summary
1. The online consumer decision-making process. 2. Building one-to-one relationships with customers. 3. Online personalization. 4. Increasing loyalty and trust. 5. EC customer market research. 6. B2B Internet marketing methods and organizational buyers. 7. Objectives and characteristics of Web advertising. 8. Major online advertising methods. 9. Various advertising strategies and types of promotions. 10.Permission marketing, ad management, and localization.
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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

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