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Five stages in the consumer decision procress
- Awareness of need
- Search for more information
- Evaluation of alternatives
- Actual purchase decision
- Post-purchase contact with firm
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Diffusion of innovations
Process by which an innovation is communicated through certain channels over time among the members of a social system.
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Characteristics of early adopters
- Have more education
- More literate
- Higher social status
- Greater upward social mobility
- Belong to larger units
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5 characteristics that determine adoption speed
- Relative advantage
- Complexity
- Compatibility
- Trial-ability
- Observability
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2 key factors of adoption according to the Technology Acceptance Model (TAM)
- Perceived usefulness
- Perceived ease-of-use
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Digital divide
Refers to the gap between those people with effective access to digital/information technology and those without.
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Types of products people buy online
- Mass merchant/Department store
- Computers/Electronics
- Office Supplies
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Internet marketing technologies
- Web transaction logs
- Cookies and web bugs
- Databases, data warehouses, data mining
- CRM systems
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Viral marketing
Get customers to pass along company's marketing message
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Recommender systems
Technique that attempts to recommend information items
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Different approaches to segmenting consumers
- Behavioral
- Demographic
- Psychographic
- Technical
- Contextual
- Search
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Channel conflict
Occurs when new venue for selling products or services threatens or destroys existing venues for selling goods.
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Advantages of online advertising
- Where audiences are moving
- Targets profitable segments
- Can be very personalized
- Ability to track performance in real time
- Provides greater opportunity for interactivity
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Disadvantages of online marketing
- Concerns about cost vs benefit
- Concerns about how to measure results
- Supply of good venues to display ads
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Successful online advertising formats
- Search
- Video ads
- Rich media
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AdWords
Google's pay-per-click advertising and site-targeted advertising for text, banner, and rich-media ads
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AdSense
Allows online publishers to earn revenue by displaying relevant ads on a wide variety of online content
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Click fraud
- click on competitor ads to drive up costs
- click on your site's ads to increase revenue
- click on your ad to improve ranking
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Web 2.0 marketing examples
- Blog marketing
- Social network ads
- Game advertising
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Online marketing metrics
- Browse-to-buy ratio
- View-to-cart ratio
- Retention rate
- Abandonment rate
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Facebook beacon
Activity on partner websites was published on the user's newsfeed without the users' consent
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"Implicit Bargain" underlying the "free" Internet:
The internet is not really free. Consumers get content because they are looking at ads.
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3 main types of intellectual property (IP)
- Copyright
- Patent
- Trademark law
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Cybersquatting
Registration of an infringing domain name, or other Internet use of an existing trademark to extort payments
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Cyberpiracy
Has the intent of diverting traffic from a legitimate site to an infringing site
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Deep linking
Bypassing target site's home page and linking directly to content page
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Metatagging
Using other's trademarks as meta-tags in misleading or confusing manner
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Keywording
Using other’s trademarks as keywords on search engines in a misleading or confusing manner
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Framing
Displaying content of another site within frame or window
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Net Neutrality
The principle that delivery of content on the Internet should be free of restrictions particularly regarding the content delivered, sites visited, or platforms used
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Early vision of online retailing
- Low search costs
- Low entry costs
- Traditional offline physical stores would be forced out of business
- Everyone would move to their beach home or mountain cabin
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Major trends in online retail
- Online retailing becomes necessity for established retailers
- Online retail increasingly profitable
- Online buying is mainstream behavior
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4 types of online retail business models:
- Virtual merchant
- Bricks-and-clicks
- Catalog merchant
- Manufacturer direct
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Virtual merchants
Single channel web firms that generate almost all revenues from online sales (i.e. Amazon)
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Bricks-and-clicks
Companies that have network of physical stores as primary retail channel, but also online offerings (i.e. Wal-Mart, Sears)
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Catalog merchants
Established companies with national offline catalog operations, but also have online capabilities (i.e. Pottery Barn, Victoria's Secret)
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Manufacturer direct
Single or multi-channel manufacturers who sell directly online to consumers without intervention of retailers (i.e. Dell)
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Shopbot
Price comparison service (i.e. Amazon)
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Illusion of knowledge
- Information overload may decrease forecasting skill
- More information reinforces prior bias
- People seek out confirmatory information
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Illusion of control
- Personal involvement leads to perception of influence of outcome
- Leads to more active, speculative trading
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3 ways online brokerage impact speculative equity bubbles:
- Increased ratio of inexperienced to experienced investors
- Investors have more cash to invest
- Greater uncertainty about the valuations
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7 relevant characteristics of information-based goods
- Importance of fixed vs marginal costs
- Dramatic reduction in search costs
- Internet alters role of intermediary
- Easy to create multiple versions
- Bundling can flatten the demand curve
- Importance of network externalities
- Standards influence drive to critical mass
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Issues related to fixed vs marginal costs for information-based goods
- On the web, marginal cost of producing duplicate copies is essentially zero
- Fixed development costs may create barriers to entry for early movers
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Basic roles of an intermediary
economic agent that purchases from suppliers for resale to buyers or that helps buyers and sellers meet and transact.
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Approaches firms might use to encourage their standard to be adopted by others:
- Penetration pricing
- Expectations
- Vaporware and pre-announcements
- Alliances
- Credible commitments for the future
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Trends in online content
- Tremendous growth of online media
- Paid and free content coexist
- Content moves to mobile devices
- Consolidation of major content providers
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What CBS learned from televising NCAA basketball tournament over the Internet?
- People were watching it at work
- $1.8 B in lost productivity
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5 types of revenue models for online media content providers:
- Marketing
- Advertising
- Pay-for-download
- Subscription
- Mixed
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Factors needed to charge for online content:
- General content
- Focused market
- Niche content
- Sole source
- High net value
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What made the world "flat"?
- Massive investment in global broadband connectivity
- Computers became cheaper and dispersed all over the world
- There was an explosion of software
- Intellectual work can be divided and sent to multiple locations
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