Marketing%20of%20High-Technology%20Products%20and%20Innovations

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Marketing of High-Technology Products and
Innovations

• E-Business and Internet Marketing

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Internet Perspectives
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Internet Distribution Chain

• Device manufacturers the device used by
  customer to access the Net
• Computers, hand-helds, set-top boxes
• Operating systems vendors software to operate
  the device
• Can regulate software and access to programs used
  to access the Net
• Browsers software used to access information on
  the Internet

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Internet Distribution Chain (Cont.)

• Internet Service Providers control the
  infrastructure (broadband) for transmitting
  data
• Phone, cable, satellite, wireless, fiber optics,
  DSL
• Web hosting services used to host Web sites
• Search sites/portals Information content
  sites customers go to to get useful Web
  information.

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Customer Perspective

• Customer control
• Privacy concerns

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Customers Gain Control in an On-line Environment

• Customer gain information they choose
• Improved information puts downward pressure on
  prices
• Shopping bots
• Move to permission-based marketing
• Customers configure their own products, and even
  own Web-browsing experience
• Personalization
• Customer auctions pit supplier against supplier
• B-to-B reverse auctions revolutionizing
  purchasing relationships

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Customers Gain Control in an On-line Environment

• Customers break free of geographically-constrained
  purchasing
• Loyalty will have to be honestly earned
• Customers can shop anytime/anywhere
• Customers gain efficiency and convenience
• Customer word-of-mouth is more powerful.

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Privacy Concerns

• Cookies
• Software that records browsers Web habits that
  can be downloaded/uploaded by a site that a
  customer visits.
• Combination of cookies other data can build
  customer profiles
• Cookies can be sold to advertisers

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Privacy Concerns (cont.)

• In favor of cookies
• Customers will receive offers that match their
  interests
• Improved information will lead to win/win
  marketing
• Against cookies
• Abuse of customer information likely
• Unrestricted sharing of information harmful

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Fair Information Practices Act

• Companies must disclose how they collect and use
  information.
• Customers can decide whether to allow information
  about them to be collected or used
• opt-in procedures
• Customers can inspect their data/correct errors
• Government can impose penalties when companies
  violate these principles

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Do Internet Companies Adhere to these Principles?

• Most use opt-out procedure
• Customer must take an action to prevent the
  company from collecting information about him/her
• Companies share information with other companies
  without informing (let alone receiving consent)
  customers.

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How Reputable Companies Operate

• Follow opt in procedures
• Post (and follow!) privacy policies
• Receive a privacy seal
• www.truste.org

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What Surfers Can Do to Protect Privacy

• Set security preferences on their browser
  software
• Very inconvenient surfing
• Download software to surf anonymously
• Download software to accept cookies from only
  pre-specified sites
• Platform for Privacy Preferences (www.w3.org/P3P)

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Changing Rules of the Game in an On-line World

• Customer control
• Requires fewer fixed assets
• Companies less hierarchical
• Respond faster to the marketplace

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Threats to Traditional Businesses

• Extinction
• Loss of potential new revenue stream
• Cannibalization of existing revenue stream
• Alienating/confusing current customers
• Alienating existing distribution/sales channels
• Access to resources
• Attracting/retaining employees
• Downward pressure on prices

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Coping with Threats

• Creative destruction
• Willingness to re-invent business model to
  capitalize on new technologies
• Organizational Structure for On-line Unit
• Re-intermediation

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Organizational Structure Options

• Separate entity (skunkworks)
• Pros Capitalize on stock advantages free reign
  to compete without shackles
• Cons Signals lack of willingness to be
  innovative within context of parent organization
• Integrated within existing operations
• Pros Realize synergies between on- and off-line
  businesses
• Cons Conflicts of interest
• Middle-ground
• Minority stake in separate companies

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The Changing Role of the Intermediary

• Disintermediation bypassing of traditional
  intermediaries in favor of going direct on the
  Net.
• Options for intermediaries
• Do Nothing
• Re-invent sources of value
• New types of intermediaries

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Cybermediaries

• Brokers
• Electronic marketplaces
• Hubs

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Other Internet Business Functions
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Other Business Functions Performed Using the Net
(in addition to revenue generation)

• Supply Chain Management
• Extranets
• Save on Ordering Costs
• EDI ? Internet-based
• Electronic marketplaces with auctions
• Speed Product Development
• Intranets
• Get Feedback from Customers
• On-Line Recruiting

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Other Business Functions Performed Using the Net

• Reach International Markets
• Coordinate Finance
• Improve Business Relationships
• Move Customer Service On-Line
• Automate inquiries

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Content (information) sites

• Portals
• On-line communities
• Electronic marketplaces (hubs)

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On-Line Communities

• Attract visitors based on common interests
• iVillage.com parentsoup.com
• Focus on connectivity/interactivity
• Chats, etc.
• Members of on-line communities stay at the site
  longer, spend more money at the site than
  non-members

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Electronic Marketplaces

• B2B hubs/communities that connect multiple buyers
  and sellers
• Offer transaction efficiencies
• Offer price savings (i.e. through reverse
  auctions)
• Typically run by cybermediaries
• Earn revenue as percent of transactions

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B2B Electronic Marketplaces

• Vertical or Horizontal
• Vertical industry-specific
• Chemconnect.com e-Steel.com
• Horizontal cuts across industries, more likely
  to be function-specific
• Adauction.com MRO.com

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B2B Electronic Marketplaces

• Concerns
• Antitrust issues arise from market dominance and
  monopoly-like economic power
• Possible negative effects on long-term
  buyer/supplier relationships

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Keys to On-Line Success
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Web Site Design4 Cs

• Content
• Focus on right information in the right format,
  with easy navigation
• Requires customer research
• Commerce
• On-line selling must provide value beyond
  brick-and-mortar channels

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Web Site Design4 Cs

• Customization
• Use personalization to customize the browsers
  experience
• Community
• Promote interactivity and sense of community

Create stickiness visitors have reasons to
return repeatedly to the site.
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Promote the Web Site

• Traditional and on-line advertising
• List with search engines
• Traditional promotions
• Use affiliates
• Viral marketing
• Permission marketing

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Issues in On-line Advertising

• On-line advertising doubled from 1997-1998
  doubled again from 1998-1999.
• On-line advertising represents only 2.8 of
  corporate advertising budgets.
• Avoid gratuitous digitization brochure-ware
• Active model of customer information-acquisition
• (vs. passive model of broadcast media)

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Types of On-line Ads
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Banners

• Pros
• Inexpensive
• With enough creativity and repetition, can
  generate awareness
• Cons
• Easy to ignore
• Low click-through rates
• Only .36 in 1999

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Ways to Improve Click-Through Rates on Banners

• Interactive Banners
• Experiential
• Target the ad appropriately using cookie data
• Live Banners with video/sound
• Rich media
• Dont take surfer away from host site
• Can use a direct selling model from the banner
• Require computing speed and bandwidth more
  expensive to create
• Higher response rate click-on rates as high as
  10

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Interstitials--

• In your face pop-ups
• Definitely attention-getting
• Users find the annoying
• Must close pop-up window to continue surfing

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Interstitial
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Keyword Ads

• To improve targeting of banner ads

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Co-Branding/Sponsorships

• Advertiser sponsors a part of a content site
• Keep sponsor clearly identified
• Dont blur line between information credibility
  and advertising

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Example of a Sponsorship
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Pricing of On-line Advertising

• Function of
• Number of viewers
• Degree to which population is a more
  narrowly-defined target
• General portal audience vs. WSJ.com
• Two pricing formats
• CPM or cost-per-click
• Need to measure number of viewers of on-line ads

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CPM or Cost-Per-Click?

• CPM
• Based on more passive view of information
  acquisition
• Assumes that exposing people to banners equates
  to an impression
• May be viable for an awareness-building campaign
• Cost-per-click
• Pay only when a surfer clicks on a banner
• Consistent with the active view of information
  acquisition
• Probably makes sense for a sales-oriented campaign

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List with Search Engines
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List with Search Engines

• How Search Engines Work
• Send out spiders, or crawlers that store copies
  of Web pages and index some words from the page
• When surfer types in words, search engine looks
  up words in its index and calls up the
  appropriate Web address
• Search engines access only limited number of Web
  sites
• Therefore, important to register Web site with
  search engines

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List with Search Engines

• Can can get URL on index by
• Registering with search engines
• Circulating fresh content through the site
  regularly

See more on search engines in the appendix, and
slides at the conclusion of this file.
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Other Ways to Build Site Traffic

• Traditional Promotions
• Use sweepstakes, contests to get visitors to the
  site
• Affiliates
• Web sites that are cross-linked to another
• May earn a commission on sales generated from
  referred traffic

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Other Ways to Build Site Traffic (Cont.)

• Viral Marketing
• Relies on Web site visitors to pass
  information/offers on to friends
• Powerful in Internet environment
• Requires compelling content
• Permission-Based Marketing
• Ask customer to opt-in to receive e-mail messages
  for marketing
• Consistent with Relationship Marketing
• Dont spam!

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Evaluate Web Site Traffic

• Use log files
• Use software
• WebStat.com Hitbox.com Webtrends.com
• Track data such as
• Hourly/daily/weekly monthly hits and unique
  visitors
• Top referring URLs
• Search engine sources
• Keywords searched
• Geo. Location (state/country)

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Build Repeat Site Traffic/Manage On-line Customer
Relationships

• Personalization
• Customer Service

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Personalization

• Tailors customers browsing experience based on
  tastes and preferences
• Cookies
• Info the browser submits
• Ex Amazon.com
• Boosts new customers, revenues
• Benefits in other areas forecasting, customer
  research/feedback

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Predicting Repeat Sales
Correlations between online shoppers ratings of
a variety of factors and their likelihood to buy
again from the same site
Hanrahan, Timothy, (1999), Price Isnt
Everything, Wall Street Journal, July 12, p. R20.
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Models of On-line Customer Service

• Tiered approach
• Start with self-help
• FAQs
• E-mail inquiry
• Smart software
• Tele-Web
• Interactive chat with customer service rep
• Personal contact

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Realizing the Internets Potential

• Change is the norm
• Moving toward bricks-and-clicks model.
• Requires overturning old business models

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Net Hurdles to be Overcome

• Congestion
• Security
• Privacy
• Technical Standards
• Quality of connections and Web sites
• Cultural Questions
• Internet Taxes

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More on Search Engines

• Directories vs. search engines
• Hybrids
• Specialty search engines
• Cost-per-click search engine
• Goto.com

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What spiders look for

• HTML tags
• Title tag
• Meta tags
• Keyword tags
• Description tags
• Link Tags
• ALT Tags
• Comment Tags
• Headline Tags

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Determining Ranking

• Keyword density
• Total of words on page \ of times keyword is
  used
• Percentage of relevance
• Based on keyword density for each of the 6 HTML
  tags

Search engines give differential weights to this
information to determine the ranking of a
particular Web page.
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Implications for Web Page Design

• Know keywords on which to focus Web page
  description
• Examine competitors pages/source code
• Understand customers behavior
• Rely on search engine hints
• Dont spamdex
• Rely on software to optimize page

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Search Engine Scoring
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Submitting the Page

• Manually
• Go to search engine site
• Add URL
• Relying on automated submission process
• AddWeb Register-it
• Mass submissions eliminate ability to tailor for
  individual search engine criteria

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Check Submission Status

• Manually
• Go to each Web site to see if indexed
• Rely on third-party tools

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Caveats in Search Engine Positioning

• Works only for informed customers who know what
  theyre searching for
• May generate traffic sales requires other
  considerations
• Time consuming process
• Outsource?
• Morevisibility.com Positionsolutions.com

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Search Engine Submission Guidelines