COMPETENCY 4 :

Electronic marketing channels

PREPARED BY , MDM PRADHA

Electronic marketing
 Auto-By-Tel.com
 Autoweb.com

 Auto dealers pay monthly fees to web sites

operators who then refer consumers to the
dealers. The dealer respond to consumers with
their best offers via e0mail and phone. The
consumer then picks out the best deal from his
computer screen and visits the dealer to take
delivery of the car.
New jargons
 Electronic marketing channel
 Doing business on the WWW
 Electronic commerce
 Internet commerce
 Internet shopping
 Shopping on-line
 Shopping in cyberspace
 Electronic distribution
What is electronic marketing
channel?
 ..the use of the Internet to make products
and services available so that the target
market with access to computers or other
enabling technologies can shop and
complete the transaction for purchase via
interactive electronic means.
 Structure of electronic marketing
channels
 Disintermediation vs reintermediation

 The information flow vs the product flow

Case study1-reintermediation
 Amazon.com versus Barns & Nobles
 예스24.com versus 교보문고.com

 Book publisher->wholesale book

distributor->virtual retailer->consumer
 Book publisher->retail superstore-
>consumer
Case study2-reintermediation
 Auto-By-Tel corp. and channel structure

 Conventional channel: manufacturer-

>dealer->consumer
 Internet channel: manufacturer->dealer-
>Internet Auto Broker->consumer
Case study3-disintermediation
 Dell computer corp.
Implication of case studies
 Both consumer and auto dealers who have used the Internet
channel like the arrangement.
 The car buyers have access to a vast array of information and
choice of dealers via the Internet and the dealers have access
to a much wide customer base and lower selling costs
because they can reduce advertising costs and sales
commissions.
 While the jury is still out, this Internet based channel, even
though it involves a lengthening of channel structure rather
than shortening, appears to be gaining acceptance as an
effective and efficient way of selling cars.
Information flow versus the product flow
 Product flow-some limitation
 Negotiation flow
 Ownership flow
 Information flow
 Promotion flow
Virtual channel structure versus
conventional channel structure
 Who is winner?
Advantages of electronic marketing
channels
 Global scope and reach- information flow
 Convenience/rapid transaction processing
 Information processing efficiency and flexibility- ex)
airline tickets
 Data-based management and relationship
capabilities->e-crm, cyber money, cookies, log-in,
e-mail marketing…
 Lower sales and distribution costs- ex) Dell
computer corp., Virtual Vineyards
Disadvantages of electronic
marketing channels
 Lack of contact with actual products and delayed
possession
 Fulfillment logistics not at Internet speed or
efficiency-> majority of products and services
still require old-fashioned nuts and bolts
logistic challenges
 Clutter, confusion, and cumbersomeness of
Internet-> Amazon pay 44milion on AOL, Search
engines
 Nonpurchase motives for shopping not addressed
 Security concerns of customers
Why do people shop?
 Personal motives- play the role of shopper,
diversion from daily life, self-gratification, learning
new trends, physical activities, sensory
stimulation
 Social motives- gaining social experience
outside the home, communication with others
having similar interests, peer group attraction,
status and authority, pleasure of bargaining
 Source by Edward M. Tauber
Profiles of online shoppers
 Age range of online shoppers
 20s, 30s, 40s
 Educational attainment
 Above college
 Geographical areas
 Suburbs of major metropolitan areas
Reasons for using the Internet for
shopping
 More convenience
 More choice/variety
 Save money
 More fun
Shopping patterns on the Internet
 Products purchased
 Compueter related goods, books, travel,
clothing, music..
 Frequency of online shopping
 2-4 times, $100-200/year
Reasons given by retailers for not
using the Internet
 Product not appropriate for Internet sales-
limitation of product flow
 Don’t see significant opportunity
 Too expensive-entry costs
 Technology not ready
 Selling online conflicts with core business
channel
Retailer’s objectives for Internet
channels
 Market expansion
 Customer retention
 Differentiation
 Cost reduction
 Competitive positioning
Implications for marketing channel
strategy
 Objectives and strategies of the firm and electronic marketing
channels-> pure channel, multi channels, supportive
channel ex) Dell computer- differential advantage based on
distribution strategy
 Role of electronic marketing channels in the marketing mix->
product, price, promotion by perfect information flow, however
place may gain a sustainable competitive advantage via
electronic marketing channels.
 Channel design and electronic marketing channels->channel
design decisions must now include consideration of the
Internet as a marketing channel.
Implications for marketing channel
strategy (continued)
 Channel member selection and electronic
marketing channels->less than 10% of
manufacturers currently use the Internet as
an electronic marketing channel-
>disintermediation versus more
intermediaries
 Channel management and electronic
marketing channels-> more challenging
 Evaluation and electronic marketing channel