B2C AND ADVERTISING IN ECOMMERCE

Unit-2
B2C

• Business to consumer (B2C) is business or transactions conducted

directly between a company and consumers who are the end-users of its
products or services. The business-to-consumer as a business model
differs significantly from the business-to-business model, which refers to
commerce between two or more businesses.
• Business-to-consumer (B2C, sometimes also called Business-to-
Customer) describes activities of businesses serving end consumers with
products and/or services.
• An example of a B2C transaction would be a person buying a pair of shoes
from a retailer. The transactions that led to the shoes being available for
purchase, that is the purchase of the leather, laces, rubber, etc. as well as the
sale of the shoe from the shoemaker to the retailer would be considered
(B2B) transactions.
 CHARACTERISTICS OF B2C EC:

1) Supply Chain
2) Entities of B2B EC
3) Electronic Marketing
4) Procurement Management
5) Electronic Intermediaries
6) Just-in-time (JIT) Delivery
7) Electronic Data Interchange
8) Intranet
9) Extranet
10) Integration with Back-end information systems
11) Online services to business
BUSINESS TO CONSUMER BUSINESS MODELS:

Portals are “gateways” to the internet Offers

powerful web searching tools. Ex: Chat, Game,
Downloads, Shopping-auction…etc.
E-tailer/storefront –Virtual Merchant,Click
mortar,Catalog, Online mall, Manufacturer direct.
Content Provider- Infomediaries
Service Provider-Ex . Window updates offered by
microsoft.
Transaction Broker-E-trade, Monster.com.
Community Provider- Ex. About.com
ELECTRONIC RETAILING

• electronic retailing (e-tailing)

Retailing conducted online, over the Internet
• e-tailers
Retailers who sell over the Internet
ELECTRONIC RETAILING

• Electronic retailing is the sale of goods and services through the internet.

Electronic retailing, or e-tailing, can include business-to-business (B2B) and
business-to-consumer (B2C) sales of products and services, through
subscriptions to website content, or through advertising. E-tailing requires
businesses to tailor traditional business models to the rapidly changing face
of the internet and its users.
 INTERNET MARKETING AND ELECTRONIC RETAILING
WHAT SELLS WELL ON THE INTERNET?

• Travel ○ Health and Beauty

• Computer Hardware and Software ○ Entertainment
• Consumer Electronics ○ Apparel and Clothing
• Office Supplies ○ Jewelry
• Sport and Fitness Goods ○ Cars
• Books and Music ○ Services
• Toys ○ Pet Supplies
INTERNET MARKETING AND ELECTRONIC
RETAILING
• Characteristics of Successful E-Tailing
•

• High brand recognition

• A guarantee provided by highly reliable or well-known vendors
• Digitized format
• Relatively inexpensive items
• Frequently purchased items
• Commodities with standard specifications
• Well-known packaged items that cannot be opened even in a traditional
store
E-TAILING BUSINESS MODELS
E-TAILING BUSINESS MODELS

• Classification By Distribution Channel

•

• Direct Marketing By Mail-order Retailers That Go Online

• Direct Marketing By Manufacturers
• Pure-play E-tailers
• Click-and-mortar Retailers
• Internet (Online) Malls
E-TAILING BUSINESS MODELS
E-TAILING BUSINESS MODELS

• direct marketing
Broadly, marketing that takes place without intermediaries
between manufacturers and buyers; in the context of this book,
marketing done online between any seller and buyer
• virtual (pure-play) e-tailers
Firms that sell directly to consumers over the Internet without
maintaining a physical sales channel
E-TAILING BUSINESS MODELS

• click-and-mortar retailers
Brick-and-mortar retailers that offer a transactional Web site from which
to conduct business
• brick-and-mortar retailers
Retailers who do business in the non-Internet, physical world in
traditional brick-and-mortar stores
E-TAILING BUSINESS MODELS

• multichannel business model

A business model where a company sells in multiple marketing channels
simultaneously (e.g., both physical and online stores)
• Retailing in Online Malls
•

• Referring directories
• Malls with shared services
E-TAILING BUSINESS MODELS

• Other B2C Models and Special Retailing

•

• Representative special B2C services

•

• Postal services
• Services and products for adults
• Wedding channels
• Gift registries
TRAVEL AND TOURISM SERVICES ONLINE

• Special Services
•

• Wireless services
• Direct marketing
• Alliances and consortia
PROBLEMS WITH E-TAILING AND LESSONS
LEARNED
• The reasons that retailers give for not going online include:
•

• Their product is not appropriate for Web sales

• Lack of significant opportunity
• High cost
• Technological immaturity
• Online sales conflict with core business
PROBLEMS WITH E-TAILING AND LESSONS
LEARNED
• Lessons Learned
•

• Don’t ignore profitability

• Manage new risk exposure
• Watch the cost of branding
• Do not start with insufficient funds
• The web site must be effective
• Keep it interesting
PROBLEMS WITH E-TAILING AND LESSONS
LEARNED
• Successful Click-and-Mortar Strategies
•

• Speak with one voice

• Leverage the multichannels
• Empower the customer
ISSUES IN E-TAILING

• disintermediation
The removal of organizations or business process layers
responsible for certain intermediary steps in a given supply chain
• reintermediation
The process whereby intermediaries (either new ones or those
that had been disintermediated) take on new intermediary roles
ISSUES IN E-TAILING
ONLINE PURCHASE DECISION AIDS
 A MODEL OF EC CONSUMER BEHAVIOR
Individual Environment
Characteristics Characteristics
Age, gender, ethnicity,
education, lift style, Social, family,
psychological, knowledge, communities
values, personality

• Purchasing Stimuli Buyers’ Decisions

decision begins
with customer’s
Decision
reaction to Marketing
Price
Others
Economical Making
Buy or not
What to buy
stimuli Promotion
Product
Technology
Political
Process Where (vendor)
When
Quality Cultural How much to spend
Vendors’ controlled System
Repeat purchases
Logistic
Technical
Support
Payments, Customer
Delivery Support service
Web design, FAQ,
Intelligent- e-mail,
agents
Call centers,
One-to-one
A MODEL OF EC CONSUMER BEHAVIOR (CONT.)

• Consumer Types
•

• Individual consumers: get much of the media attention

• Organizational buyers: do most of the shopping in cyberspace
• Purchasing Types
•

• Impulsive buyers: purchase products quickly

• Patient buyers: purchase products after making some comparisons
• Analytical buyers: do substantial research before making the decision to
purchase products or services
• Purchasing Experiences
•

• Utilitarian: shopping “to achieve a goal” or “complete a task”

• Hedonic: shopping because “it is fun and I love it”
VARIABLES INFLUENCINGDECISION MAKING
PROCESS
• Environmental Variables

Social variables
people influenced by family members, friends, co-workers, “what’s in
fashion this year”, Internet communities and discussion groups
Cultural variables
Psychology variables
Other environmental variables
available information, government regulations, legal constraints, and
situational factors
 CONSUMER PURCHASING DECISION-MAKING
• The Purchasing Decision-Making Model

Need identification
(Recognition)

Information search
(What? From whom?)

Alternative evaluation,
negotiation and selection

Purchase and delivery

After purchase service

and evaluation
WEB ADVERTISING

• Advertising is an attempt to disseminate information in order to affect a buyer-seller

transaction
• Why Internet Advertisement?
•

• Three-quarters of PC users gave up some television time

• Internet users are well educated with high-income, which makes them a
desired target for advertisers
• Ads can be updated any time with a minimal cost; therefore they are timely
and very accurate
WEB ADVERTISING (CONT.)

 Why Internet Advertisement?

•

• Ads can reach very large numbers of potential buyers all over the world
• Online ads are much cheaper in comparison to television, newspaper, or
radio ads. Such ads are expensive since they are determined by space
occupied, how many days (times) they are shown, and on how many national
and local television stations and newspapers they are posted.
• Web ads can be media rich, including voice and video
• Web ads can be interactive and targeted
• The use of the Internet is growing very rapidly
WEB ADVERTISING (CONT.)

• Internet Advertising Terminology

 

 Ad views  Effective Frequency



 Banner  Hit
Clicks (or ad clicks)


 Impressions
 Click Ratio 

 Cookie  Reach


 CPM  Visit
WEB ADVERTISING (CONT.)
• Interactive Marketing


 Consumer can click with his/her mouse on an ad for more information or send an e-mail to ask a
question
Mass Marketing Direct Marketing Interactive Marketing
Best outcome
Volume sales Customer data Customer relationships
Consumer
Passive behavior Passive Active
Food, personal-care
Leading products Credit cards, travel, Upscale apparel, travel, financial
products, beer, autos autos services, autos

High volume
Market Targeted goods Targeted individuals
Madison
Nerve center
Ave. Postal distribution centers Cyberspace

Preferred media
Television, magazines Mailing lists Online services
vehicle
Storyboards
Preferred technology Databases Servers, onscreen navigators, the
Web
Worst outcome
Channel surfing Recycling bins Logoff
WEB ADVERTISING (CONT.)

• Internet is the fastest growing medium in history

Adoption Curves for Various Media - The Web Is Ramping Fast

WEB ADVERTISING (CONT.)

• Targeted Advertisement (one-to-one)



 The Double Click (DC) Approach



 3M Corp. wants to advertise its $10,000 multimedia projectors

 DC monitored people browsing the Web sites of cooperating companies
 then matches them against a database
 then finds those people working for advertising agencies or using Unix
system (potential buyers)
 then builds a dossier on you, your spending, and your computing habits
using “a cookie”
 prepares an ad for 3M projectors
 targeted for people whose profile matches what is needed for 3M
 WEB ADVERTISING (CONT.)

• Pros of Internet Advertisement



 Internet advertisements are accessed on demand 24 hours a day, 365 days

a year, and costs are the same regardless of audience location
 Accessed primarily because of interest in the content, so market
segmentation opportunity is large
 Opportunity to create one-to-one direct marketing relationship with the
consumer
 Multimedia will increasingly make Web sites more attractive and
compelling
WEB ADVERTISING (CONT.)

 Pros of Internet Advertisement

•

• Distribution costs are low (just technology cost), so millions of consumers are reached at the
same cost as that of reaching one
• Advertising and content can be updated, supplemented, or changed at any time, and are
therefore always up-to-date
• Ease of logical navigation — you click when and where you want, and spend as much time as
you desire there
ADVERTISING METHODS

• Banners
•

• Banners are everywhere

• Keyword banners
• Random banners
• Benefits
•

• be customized to the target audience

• be customized to one-to-one targeted advertisement
• utilize “force advertising” marketing strategy
• Banner Swapping
•

• Direct link between one’s site to the other site

• Ad space bartering
 ADVERTISING METHODS (CONT.)

• Banner Exchanges
•

• Swapping is a problem : a match is frequently not possible

• Banner exchange organizations
•

• a firm submits a banner

• receives credit when shows others’ banners
• can purchase additional display credits
• specify what type of site the banner can be displayed on
• use the credit to advertise on others’ sites
• credit ratio of approximately 2:1
• Example : Link Exchange offers help in banner design, provides membership in newsgroups,
delivers HTML tutorials, and even runs contests. It acts as a banner-ad clearing house for more
than 200,000 small Web sites. It also monitors the content of the ads of all its members.
ADVERTISING METHODS (CONT.)

• Paid Advertising and Ad Agencies

•

• Advantage of using banners

•

• ability to customize them to the target audience

• ability to decide which market segments to focus on
• be customized to one-to-one targeted advertisement
• “forced advertising” marketing strategy is utilized
• Splash Screen
•

• Capture the user’s attention

• Promotion or lead-in
• Major advantage : create innovative multimedia
ADVERTISING METHODS (CONT.)

• URL (Universal Resource Locators)

•

• Advantages:
•

• minimal cost is associated with it

• submit your URL to a search engine and be listed
• keyword search is used
• Disadvantages:
•

• search engines index their listings differently

• meta tags can be complicated
ADVERTISING METHODS (CONT.)

• E-mail
•

• Several million users can be reached directly

• Purchase e-mail addresses
• Send the company information; low cost
• A wide variety of audiences; customer database
• Problem: Junk mail or spamming
• Target a group of people that you know something about
ADVERTISING METHODS (CONT.)

• Chat Rooms
•

• Virtual meeting ground

• Can be added to a business site for free
• Allows advertisers to cycle through messages and target the chatter again and
again
• Advertising can become more thematic
• More effective than banners
• Used in one-to-one connection
ADVERTISEMENT STRATEGIES

• Internet-base Ad Design
•

• Advertisements should be visually appealing

• Advertisements must be targeted to specific groups or to individual consumers
• Advertisements must emphasize brands and a firm’s image
• Advertisements must be part of an overall marketing strategy
• Advertisements should be seamlessly linked with the ordering process
• Designing Internet ads involve the following factors:
 ADVERTISEMENT STRATEGIES (CONT.)

• Internet-based Ad Design: Important Factors



 Page-Loading Speed


 Graphics and tables should be simple and meaningful. They need to match standard
monitors.
 Thumbnail (icons graphs) are useful.
 Business Content


 Clear and concise text is needed. A compelling page title and header text is useful.
 The amount of requested information for registration should be minimal.
 ADVERTISEMENT STRATEGIES (CONT.)

 Internet-base Ad Design: Important Factors

•

• Navigation Efficiency
•

• Well-labeled, accurate, meaningful links are a must.

• Site must be compatible with browsers, software, etc.
• Security and Privacy
•

• Security and privacy must be assured.

• Option for rejecting cookies is a must.
• Marketing/Customer Focus
•

• Clear terms and conditions of the purchases, including delivery information, return policy, etc. must be provided.
• Confirmation page after a purchase, is needed.
ADVERTISEMENT STRATEGIES (CONT.)

• Passive Pull Strategy



 Customer will visit a site if it provides helpful and attractive contents and
display
 Effective and economical way to advertise, unidentified potential
customers worldwide
 Advertising World is a non-commercial site that can guide the process of
finding the customer’s wish
 Yahoo is a portal search engine site which can be regarded an effective
aid for advertisement
ADVERTISEMENT STRATEGIES (CONT.)

•
Active Push Strategy


 Sending e-mails to the relevant people

 Obtaining the mailing list is the process of identifying target
customers
 Mailing list generation is done in companies by using agent
technology and cookies as well as by filling out questionnaires (by
customers)
ADVERTISEMENT STRATEGIES (CONT.)

• Ad as a Commodity


 CyberGold


 exchange of direct payment made by the advertisers for viewing ads

 consumers fill out questionnaires
 CyberGold distributes targeted banners
 the reader clicks the banner to read it and, passing some tests on its content,
is paid for the effort
ONLINE EVENTS, PROMOTIONS AND ATTRACTIONS

• How to entice Web surfers to read Internet ads

There are dozens of innovative ideas; here are some examples :

1 Yoyodyne Inc. conducts give-away games, discounts, contests & sweepstakes. Its
entrants agree to read product information of advertisers ranging from Major League
Baseball to Sprint communication.
1 Netzero and others offer free Internet access in exchange for viewing ads.
1
www.egghead.com uses real people to help you. www.lucent.com uses live people to talk
to you over the phone and then “push” material and ads to your computer.
ONLINE EVENTS, PROMOTIONS AND ATTRACTIONS
(CONT.)
•

• CyberGold (www.cybergold.com), Goldmine (www.goldmine.com) and others connect you

with advertisers who pay you real money to read ads and explore the Web.
• Netstakes runs sweepstakes that requires no skills; in contrast with contests. You
register only once and can randomly win prizes (see http://webstakes.com). Prizes are
given away in different categories. The site is divided into channels, each has several
sponsors. They pay Netstakes to send them traffic. Netstakes runs online ads both on
the Web and in several hundred thousand e-mail lists that people requested to be on.
• Free PCs will be given soon in exchange for obligation to read ads.
PUSH TECHNOLOGY

• Benefit : instead of spending hours searching the Web, people can have the
information they are interested in delivered automatically to their desktop via Web
technology and the Internet
• Pre-specification profile, selection of appropriate content, and download selection
• 4 types of push technology
•

• self-service delivery
• aggregated delivery
• mediated delivery
• direct delivery
PUSH TECHNOLOGY (CONT.)

• Pointcasting
•

• Analogous to mass customization

• Transmits the most relevant information directly to the user
• Push on the Intranet
•

• Companies use push technology to set up their own channels to pointcast important internal
information to either their own employees (on intranets) and/or their supply chain partners (on
extranets)
• The Future of Push Technology
•

• Drawback : the bandwidth requirements are large

• Experts’ prediction : the technology will never fly