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Understanding Customer Needs and Online Behaviour


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Title: Understanding Customer Needs and Online Behaviour

Understanding Customer Needs and Online Behaviour
  • MARK 430
  • Week 2

Error in Assignment 1 instructions
  • Question 2c
  • It should read
  • Your operational margin seems a bit low. If you
    increase it to 60 from 50, what impact does
    that have on the Average Order Contribution and
    the CLTV?

During this class we will be looking at
  • How customers make buying decisions
  • Model for customer decision making
  • Market research methods to understand customer

4 steps to successful marketing strategy
Understanding customer needs and online behaviour
(market research, data mining, web analytics)
Formulate a strategy to fill needs
Implement effectively and efficiently (web
usability, stickiness, advertising, search engine
optimization, email marketing, pricing,
distribution, product development)
Build trusting relationships with customers
Customer-Centric Marketing Process 3 elements
Marketing Research Marketing Strategy and Tactics
Focus for this week
Customer Relationship Management Sales Force
Management and Customer Experience
Database Marketing Acquire/Up-Sell Cross-Sell
Benefits of Internet Marketing Research
Quickly gain crucial market intelligence
Act upon first-mover advantages
Stay afloat in a fast-paced environment
Reduce market research costs
Many more
Model for customer decision making what do we
need to know about our customers?
  • What starts the process? Source of input? Role of
    past experience? Friends make input? Advertising,
    catalogues, email?
  • Source of information friends, media, web,
    store? Active Search? How much time? Where to
    shop? Store, catalogue, web? What to learn?
    Products / technology / user experience / trends?
  • Compare products? Role of price / quality?
    Evaluation criteria? Need to touch and feel?
    Impact of brand and trust?
  • How do buyers gain confidence? Special offers?
    Security / privacy assurance needed? Guarantees /
    refund policy? Need push to action - close sale?
  • Word of mouth to friends / community? Lifetime
    service? Relationship contract? Delivers promised

Awareness / learning
Post purchase
Popular Uses of Marketing Research
How to segment the market?
Who are mycustomers?
What is the price elasticity?
Conjoint Analysis
Customer Identification
Discrete Choice Modeling
Whendo theypurchase?
What are the growth trends?
Buying-Habit Studies
Environmental Studies
Opinion Research
Competitive Analysis
Who are my competitors?
What do they like?
3 main sources of data that e-marketers use for
research purposes
  • Internal company records
  • Secondary data
  • Primary data

Source 1 Internal Company Records
  • Non-marketing Data
  • The accounting department generates data about
    sales, cash flow, marketing expenses
  • A firm introducing a new product on its Web site
    wants immediate feedback on its sales.
  • Sales Force Data
  • sales force automation software, allows
    representatives to input results of sales calls
    to both prospects and current customers
  • Customer Characteristics and Behavior
  • Web Analytics, Clickstream analysis and Data
  • complete customer profile from all touch points

Source 2 Secondary Data
  • When are they used?
  • Need specific information not available in
    company or partner databases,
  • Need information that can be collected more
    quickly and less expensively than primary data.
  • But
  • They may not meet the e-marketers information
    needs, because they were gathered for a different
  • The quality of secondary data need to be checked,
  • They are often out of date.
  • Internet provides easy access to secondary data
    about environmental factors and trends.

Source 2 Secondary Data
  • Marketing intelligence Marketers continually
    scan the firms macro-environment for threats and
  • What type of information do marketers need?
  • Demographic trends,
  • Competitors,
  • Technological forces,
  • Natural resources,
  • Social and cultural trends,
  • World and local economies,
  • Legal and political environments.

Source 2 Secondary Data Publicly Generated Data
  • Most Canadian and U.S. agencies provide online
    information in their respective areas. Stats
  • Many global organizations, such as the
    International Monetary Fund (www.imf.org) are
    also good sources of data.
  • Most universities provide extensive information
    through their libraries, and many faculty post
    their research results online.
  • Industry- or profession-specific information is
    available at the sites of professional
    associations such as the American Marketing
  • Most of this information is free and available to
    all Internet users.

Source 2 Secondary Data Privately Generated Data
  • Company Web sites provide a great overview of the
    firms mission, products, partners, and current
  • Individuals often maintain sites with useful
    information about companies as well.
  • Sites that provide statistics etc relating
    specifically to Internet markets such as the
    ClickZ Network and Jupiter Research
  • Large research firms put sample statistics and
    press releases on their sites or offer e-mail
    newsletters. (eg. Forrester)
  • Infomediaries firms that monitor a number of
    media sources, presenting selected resources to
    users either by pushing material to the users
    desktop via e-mail, or by allowing users to
    pull it from a specially tailored Web site.
  • Free source is Google Alerts

Source 2 Secondary Data Online Databases
  • Commercial online databases contain publicly
    available information that can be accessed via
    the Internet. (fee based, such as Dialog)
  • Thousands of databases are available online, some
    free, some subscription-based
  • News,
  • Industry data,
  • Encyclopedias,
  • Airline routes and fares,
  • Yellow Page directories, etc.

Source 2 Secondary Data Competitive
  • Competitive intelligence (CI) analyzing the
    industries in which a firm operates as input to
    the firms strategic positioning and to
    understand competitor vulnerabilities.
  • 40 of all firms regularly conduct CI activities
  • Some sources of CI
  • Competitor press releases,
  • New products,
  • Alliances and co-brands,
  • Trade show activity,
  • Advertising strategies.

Source 2 Secondary Data Competitive
  • The Internet simplified CI
  • Competitive marketing strategies observed on
    competitors Web sites
  • Web sites linked to competitors pages type
    linkcompanyname.com in search tools. Why are
    these sites linking to my competitor and not to
  • Third-party, industry-specific sites can also
    provide information about competitive activities.
    Company profiles for public firms are available
    in the SECs online EDGAR database investment
    firm sites.
  • User conversation e-mail lists, newsgroups,
    blogs (eg. re BMWs)

Source 3 Primary Data
  • Primary data information gathered for the first
    time to solve a particular problem.
  • When secondary data are not available managers
    may decide to collect their own information.
  • They are more expensive and time-consuming to
    gather than secondary data.
  • They are current and more relevant to the
    marketers specific problem.
  • They are proprietary, therefore unavailable to

Source 3 Primary Data Internet-Based Research
  • The Internet is increasingly being used for
    primary data collection.
  • Why? Declining cooperation from consumers using
    traditional research approaches. Telephone survey
    refusal rates 40- 60.
  • Increasing number of consumers online
  • inexpensive and quick method
  • In North America, over 70 of all research firms
    use various online methodologies.

Main Internet-Based Research Approaches
  • Online experiments
  • Online focus groups
  • Online observation
  • Usability testing
  • Online Survey Research
  • E-mail surveys
  • Web surveys

Online Experiments
  • Experimental research attempts to test
    cause-and-effect relationships
  • Marketers can easily test alternative web pages,
    banner ads, or promotional offers
  • A firm might send e-mail notification of 2
    different pricing offers (with a link to the
    website), each one to a different set of
  • By tracking the click-through rate it will be a
    simple matter to track which pricing offer has
    the better pull

Online Focus Groups
  • Focus group research
  • A qualitative methodology that attempts to
    collect in-depth information from a small number
    of participants.
  • Used to help marketers understand important
    feelings and behaviors prior to designing survey
  • 15- 30 of advertising agencies and market
    research firms use the Internet to conduct online
    focus groups.

Online Focus Groups Advantages and disadvantages
  • Advantages over traditional focus groups
  • The Internet can bring together people who do not
    live in the same geographic area.
  • Because participants type their answers at the
    same time, they are not influenced as much by
    what others say.
  • Quicker and less expensive to operate than
    offline versions.
  • Disadvantages
  • Nonverbal communication is lost online.
  • The authenticity problem Without seeing people
    in person, it is difficult to be sure they are
    who they say they are (need to verify respondent

Online Observation
  • Observation research monitors peoples behavior
    by watching them in relevant situations.
  • Online it takes the form of monitoring consumer
    chatting and e-mail posting through chat rooms,
    bulletin boards, mailing lists and blogs.
  • on the company site and on 3rd party and / or
    public sites

Usability Testing
  • Web site usability studies to watch users as they
    click through the firms Web site
  • Subject and observers sometimes in the same room,
    sometimes watch through one-way glass
  • Subjects usually given specific tasks
  • Observers can pinpoint site design and usability

Online Survey Research
  • E-marketers conduct surveys using 2 main methods
  • Sending questionnaires to individuals via e-mail,
  • Posting a survey form on the Web

E-Mail Surveys
  • To prepare an e-mail survey, an organization can
  • Draw a sample of e-mail addresses from its
  • Purchase a list,
  • Gather e-mail addresses from the Web or Usenet
  • Select a specialized representative group to
    research to control who gets the questionnaire.
  • The researcher can send e-mail reminders to
    participants who have not yet responded response
    rates are just as high for e-mail surveys as for
    traditional contact methods.

Web Surveys
  • Many companies post questionnaires on their Web
  • Purpose
  • Gather statistics about a sites visitors (e.g.
    Web site registration forms)
  • Required, or not required?
  • More formal survey research on a particular topic
  • Response rates to online surveys are as good as
    or better than surveys using traditional
    approaches, sometimes reaching as much as 40.

Web surveys - advantages
  • Fast and inexpensive
  • Instantaneously worldwide delivery of
  • No cost for postage or an interviewer,
  • No printing, collating, and mailing time,
  • Those who complete the questionnaires do so in
    the first three days,
  • Easy to send multiple reminders if using e-mail
  • Can be very low cost or no-cost eg. Zoomerang has
    a basic service for free, and a subscription
    service for 599 USD
  • Web surveys reduce errors
  • Technique reduces the complexity and time
    involved for respondents,
  • Respondents enter their answers - eliminates data
    entry errors when converting answers from paper

Web surveys - Disadvantages
  • Sample representativeness and measurement
  • No ability to draw a random sample
  • Researchers cannot generalize results to the
    entire population being studied.
  • Online research entails several measurement
  • Different browsers, computer screen sizes, and
    resolution settings researchers worry that
    colors will look different and measurement scales
    will not display properly online.
  • A comparison study between telephone and online
    surveys found that online users were less likely
    to use the two extreme scale points on a
    five-point scale.

Technology-Enabled Approaches
  • The Internet is an excellent place to observe
    user behavior
  • The technology automatically records actions in a
    format that can be easily, quickly, and
    mathematically manipulated for analysis.
  • Client-side data collection (cookies)
  • Server-side data collection
  • Log file analysis
  • Real-time profiling (tracking user Clickstream
  • Data Mining
  • These techniques did not exist prior to the
  • They allow marketers to make quick and responsive
    changes in Web pages, promotions, and pricing.
  • We will look at these techniques in detail next
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