Consumer Behavior, Internet

Marketing, and Advertising

1. Describe the factors that influence
consumer behavior online.
2. Understand the decision-making process of
consumer purchasing online.
3. Describe segmentation and how companies
are building one-to-one relationships with
customers.
4. Explain how consumer behavior can be
analyzed for creating personalized services.
5. Discuss the issues of e-loyalty and e-trust in
electronic commerce (EC).
6. Describe consumer market research in EC.
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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.
11.Relate Web 2.0 and social networks to Internet
market research and advertising.
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• A GENERIC PURCHASING-DECISION
MODEL
– Five major phases:
• Need identification
• Information search
– product brokering
Deciding what product to buy
– merchant brokering
Deciding from whom (from what
merchant) to buy a product
• Alternative evaluation
• Purchase and delivery
• Postpurchase behavior
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• CUSTOMER DECISION SUPPORT
IN WEB PURCHASING
• PLAYERS IN THE CONSUMER
DECISION PROCESS
– Initiator
– Influencer
– Decider
– Buyer
– User
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• FROM MASS MARKETING TO ONE-TO-ONE
MARKETING
– Mass Marketing and Advertising
– market segmentation
The process of dividing a consumer market
into logical groups for conducting marketing
research and analyzing personal
information
– one-to-one marketing (relationship
marketing)
Marketing that treats each customer in a
unique way
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• 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
• cookie
A data file that is placed on a user’s hard drive
by a remote Web server, frequently without
disclosure or the user’s consent, which collects
information about the user’s activities at a site

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• behavioral targeting
Targeting that uses information
collected about an individual’s Web-
browsing behavior, such as the
pages they have visited or the
searches they have made, to select
an advertisement to display to that
individual

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• 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
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• CUSTOMER LOYALTY
– e-loyalty
Customer loyalty to an e-tailer or loyalty programs
delivered online or supported electronically
• Business Intelligence and Analytical Software
• SATISFACTION IN EC
– Satisfaction is one of the most important success
measures in the B2C online environment
• TRUST IN EC
– trust
The psychological status of willingness to depend
on another person or organization

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• OBJECTIVES AND CONCEPTS OF
MARKET RESEARCH ONLINE
– What Are Marketers Looking For in EC Market
Research?
• REPRESENTATIVE MARKET RESEARCH
APPROACHES
– Market Segmentation Research
– Online Sampling Methods
– Online Surveys
– Hearing Directly from Customers
– Data Collection in the Web 2.0 Environment

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– Observing Customers’ Movements Online
• transaction log
A record of user activities at a company’s
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

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• spyware
Software that gathers user information over an
Internet connection without the user’s knowledge
• clickstream data
Data that occur inside the Web environment; they
provide a trail of the user’s activities (the user’s
clickstream behavior) in the Web site
• Web mining
Data mining techniques for discovering and
extracting information from Web documents; explores
both Web content and Web usage

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• LIMITATIONS OF ONLINE MARKET
RESEARCH
– Accuracy of responses
– Loss of respondents because of equipment
problems
– The ethics and legality of Web tracking
– The difficulty in obtaining truly representative
samples
– The lack of understanding of the online
communication process and how online
respondents think and interact in cyberspace

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• HOW TO OVERCOME THESE LIMITATIONS
– Identify the intended target audience or demographic so
that the right kind of sampling can be performed
– Anonymity for target respondents may encourage them
to be more truthful in their opinions
– Concerns about the security of the information
transmitted should be minimized
– Companies may outsource their market research to large
and experienced companies that have specialized market
research departments and expertise

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• BIOMETRIC MARKETING
• biometrics
An individual’s unique physical or
behavioral characteristics that can
be used to identify an individual
precisely (e.g., fingerprints)
– By applying the technology to computer
users, we can improve security and
learn about the user’s profile precisely
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• Advertising is an attempt to disseminate
information in order to affect buyer–seller
transactions
– In traditional marketing, advertising was
impersonal, one-way mass communication that
was paid for by sponsors
• 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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• The Advertising Cycle
– 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 small banner that is linked to a Web site; may
contain downloadable software
– page
An HTML (Hypertext Markup Language)
document that may contain text, images, and
other online elements, such as Java applets and
multimedia files; may be generated statically or
dynamically
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– click (click-through or ad click)
A count made each time a visitor clicks
on an advertising banner to access the
advertiser’s 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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– 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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– visit
A series of requests during one navigation of
a Web site; a pause of a certain length of
time ends a visit
– unique visit
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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 – Advertising Online and Its Advantages
• Cost
• Richness of format
• Personalization
• Timeliness
• Location-basis
• Linking
• Digital branding
• 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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• BANNERS
– banner
On a Web page, a graphic advertising
display linked to the advertiser’s 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 user’s action
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– Benefits and Limitations of Banner Ads
• major benefit is users are transferred directly to
an advertiser’s site, often the shopping page
• major disadvantage of banners is their cost
– banner swapping
An agreement between two companies to each
display the other’s banner ad on its Web site
– banner exchanges
Markets in which companies can trade or exchange
placement of banner ads on each other’s Web sites

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• 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
e-mail
– 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
• E-MAIL ADVERTISING
• NEWSPAPER-LIKE AND CLASSIFIED ADS

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• SEARCH ENGINE ADVERTISEMENT
– URL Listing
– Keyword Advertising
– search engine optimization (SEO)
The craft of increasing site rank on
search engines; the optimizer uses the
ranking algorithm of the search engine
(which may be different for different
search engines) and best search
phrases, and tailors the ad accordingly
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• GOOGLE—THE ONLINE ADVERTISING
KING
• ADVERTISING IN CHAT ROOMS
• OTHER FORMS OF ADVERTISING
– Advertising in Online Newsletters
– Posting Press Releases Online
– Video Ads
– advergaming
The practice of using computer games to
advertise a product, an organization, or a
viewpoint
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• social network advertising
Online advertising that focuses on social
networking sites
– Types of Social Network Advertising
• Direct advertising that is based on your network of
friends
• Direct advertising placed on your social network
site
• Indirect advertising by creating “groups” or
“pages”
– Sponsored Reviews by Bloggers
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• VIDEO ADS ON THE WEB AND IN
SOCIAL NETWORKING
– Tracking the Success of an Online Video
Campaign
• Web video analytics
A way of measuring what viewers do when they
watch an online video
• 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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• OTHER ADVERTISING STRATEGIES
– affiliate marketing
A marketing arrangement by which an
organization refers consumers to the selling
company’s Web site
– Ads as a Commodity (Paying People to Watch
Ads)
– Selling Space by Pixels
– Personalized Ads
• Webcasting
A free Internet news service that broadcasts
personalized news and information, including seminars,
in categories selected by the user
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• ONLINE EVENTS, PROMOTIONS,
AND ATTRACTIONS
– Live Web Events
• mobile advertising
Ads sent to and presented on mobile
devices
– Mobile Marketing

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• 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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• SOME IMPLEMENTATION ISSUES
– admediaries
Third-party vendors that conduct
promotions, especially large-scale
ones
– Ad Exchanges
– Advertisement as a Revenue Model
– Measuring Online Advertising’s
Effectiveness
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• ad management
Methodology and software that enable
organizations to perform a variety of
activities involved in Web advertising
(e.g., tracking viewers, rotating ads)
• localization
The process of converting media products
developed in one environment (e.g.,
country) to a form culturally and
linguistically acceptable in countries
outside the original target market
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 – Automatic Versus Manual Web Page Translation
– Using Internet Radio for Localization
• Internet radio
A Web site that provides music, talk, and
other entertainment, both live and stored,
from a variety of radio stations
• AD CONTENT
• INTELLIGENT AGENTS APPLICATIONS

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1. Do we focus on value-creating customers?
2. Which Internet marketing/advertising channel
do we use?
3. What metrics do we use to guide advertisers?
4. What is our commitment to Web advertising?
5. Should we integrate our Internet and non-
Internet marketing campaigns?
6. Who will conduct the market research?
7. Should we use intelligent agents?
8. What ethical issues should we consider in
online marketing?

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