Internet Marketing

Introduction

Your Text ...

• Principles of Internet Marketing, 2000, South-Western College Publishing (華泰 )– Ward Hanson

Topics

• The original WWW• Commercial beginnings• A .com world• Marketing and technology• Our approach in the book

The Original WWW

• It’s 1922• Radio suddenly transitions from a

technology used primarily by the military and the shipping industry to a consumer and business phenomenon

• At the end of 1921, there are 5 radio stations

• A year later, there are 575• Starting radio stations is the height of

entrepreneurship• Listening to radio is a runaway consumer fad• “Combing the ether” is the hit of the day

The Original WWW

• Radio’s impact on 1920s society– It changes the way people think about

distance and time– Simultaneity no longer requires proximity– Global events are experienced as they

happen– Performances in different cities can be

heard in the neighbor’s living room– Fast-breaking world stories and even the

local weather are available at the flip of a switch and the turn of the dial

The Original WWW

• Radio changed business, especially marketing– It accelerated the economy’s transition to a

mass market– It facilitated the creation of national brands– Firms could launch national marketing

campaigns simultaneously– New product store introductions could be

synchronized with ad campaigns to build consumer interest

– Product positioning became more flexible

• Businesses learned to use this new, powerful method of reaching customers

The Original WWW

• As an industry, radio struggled with generating a self-sustaining revenue base– In 1926, radio stations were failing at a rate of

15% per month– Consumers still rushed to buy radios– Ultimately, national networks of stations

emerged– A combination of national and local

advertising made radio profitable

• Internet marketing shows many of these same uncertainties

The Original WWW

• The Internet changes the way companies connect to their customers

• It expands the opportunities for branding, innovation, pricing, and selling

• It leads to new ways of thinking about time and distance

• It opens up new distribution channels and markets

Virtuous Web Cycle

Huh?

• Is a business system with positive feedback

• Each element in the business system feeds off another element in the system and feeds into yet another element in the system

• If the cycle is strong enough, it can actually be a self-fulfilling expectation

Virtuous Cycle for Net Growth

Let’s look at how it works

Popular Fascinati

on

• It starts with user fascination

Web Sites and

Web Content

• Providers see the developing opportunity and rush to create new brands & services, which creates more hype

Consumer and

Business Internet Access

• The buzz feeds back into consumers’ interest and desire to experiment with the new technology

A Dot Com World

• The virtuous Web cycle leads to rapid growth of – Consumer access– Internet usage– Content online

Consumer Access

• The past five years have seen rapid growth in – Network size– Users on networks– Network activity

• Between January 1994 and January 1999, Internet hosts grew from 2.2 million to over 43 million

• A 46% growth rate in 1998

Figure 1.4

Online Access Growth in Net Hosts

Growth of World Wide Web Domains

0

10

20

30

40

50

Mill

ions

46% growth in 1998

Consumer Access• The Internet user base

has grown rapidly as well

• Worldwide, the number of users was estimated to be > 160 million in March, 1999

• Over 90% of the users on the Net have joined in the last 5 years

• More growth is possible, as < 4% of the world’s adult population is online

• 50% of users think the Net is a “necessity”

Figure 1.5

Worldwide Online Population – Continuing

Fascination

The art of estimating the number of people online throughout the world is inexact. An “educated guess” as of May 1999 is 165 million.Source: NUA

HOW MANY ONLINE?

Consumer Access• Spring 1998, the size of

the Web was estimated at 300 million pages

• Growth rates in content exceed growth rates in Web access and the number of users

• From June 1997 to March 1998, Web content grew at 120%

• More importantly, the types and creativity of Web site content have blossomed

Figure 1.6

Rapid Growth in Web Content

1

16

28

42

35

90

125

2

25

30

80

100

160

200

2

35

33

100

110

195

275

0 50 100 150 200 250 300

Pages found in all 4engines

Infoseek

Excite

HotBot

Alta Vista

Pages found in at leastone of the four engines

Size of static web

Size in millions of distinct static pages

1997

1998

1999

Innovative Applications

• Stage I: Publishing sites

• Stage II: Databases and Forms

• Stage III: Personalization

Stage I: Publishing SiteFigure 1.7

Info Links

http://www.france98.com/french/index.html

Pictures/Information

Stage I

What makes this a Stage I Website ?

BroadcastsDisseminates Information

Stage II: Databases and Forms

Figure 1.8

To find out the travel distances between the host cities:

Select your starting point

Select your destination

Bordeaux

Paris

Toulouse

Marseilles

Toulouse Marseille – 404km

Stage II

What Makes this a Stage II Website?

Ability to retrieve information to respond

to user requests

Stage III: Personalization

Figure 1.11

If you area team WC98 member and are using a computer other than the one you originally joined WC98, enter your nickname and password now.

Stage III

What Makes this a Stage III Website?

More than ask-respondAnticipatesSuggests

Consumer-to-Consumer Commerce

• Businesses deploy chat room technology – Enables consumers to interact directly

with each other– Accelerates word of mouth– Facilitates consumer-to-consumer

commerce•eBay•Yahoo! Auctions

Consumer-to-Consumer Commerce

• Consumer-to-consumer sites must build trust– Systems that rate seller credibility– Verify identities of buyers and sellers– Insurance against fraud– Escrow accounts to ensure products are shipped– Bans on sellers who bid on their own products– Bans on buyers who win, but don’t complete the

sale

• Successful auction sites blur the distinction between business and fun

Internet Fraud

Business-to-Business Commerce

• $ volume much larger than retailing, and more rapidly growing

• Intra & extranets provide a seamless link between businesses and their suppliers

• Companies create in-depth Web sites for their main customers– Special pricing– Special configurations– Dedicated support

• This builds loyalty and repeat purchases

Marketing Evolves as Technology Changes

• Technological innovation brought about the factory system & enabled mass production– Marketing emphasis was on logistics & supply

chain management

• Radio enabled national roll-out of brands– Marketing emphasis was on selling

• Television coincided with the product & brand management system of marketing

• Mainframe computers enabled new methods of segmentation & customer management

• The Internet enables mass customization

An Internet FrameworkThe Web is

fundamentally about

individuals using a

network to access digital

products

Figure 1.15

Marketing

Technology Economics

Internet Marketin

g

Digital

Networked

Individuals