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Internet Marketing

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Title: Internet Marketing


1
Internet Marketing
Personalization
2
Topics
  • Personalization and marketing
  • Consumer benefits of personalization
  • Implementing personalization

3
Personalization Marketing
  • Marketing has the responsibility to reflect
    customers goals, needs and wants
  • The result is that companies create product lines
    with many product and service variations in order
    to meet the needs of various target markets
  • Personalization is a special form of product
    differentiation
  • A standard product is transformed into a
    specialized solution for an individual

4
Personalization Marketing
Choice Assistance
  • An explosion in the number of choices leads to
    customer confusion
  • The Web is rapidly developing methods to help
    consumers choose wisely from the wide array of
    available products
  • Choice assistance can help the consumer discover
    his or her own tastes

5
Personalization Marketing
Customization
  • Mass customization has emerged by combining
    individual-level information and flexible
    manufacturing
  • By incorporating individual preferences,
    marketing more closely reflects the voice of the
    customer
  • Using specialized software, it is possible to
    deliver truly unique and dynamically personalized
    Web sites in real time
  • The Web is emerging as an essential piece of the
    customization puzzle

6
Personalization Marketing
Relationship Marketing
  • Choice assistance and customization lead to more
    powerful personalization
  • Personalization becomes the basis for retaining
    loyal and committed customers
  • When successful, customers are satisfied and
    profits are high

7
Personalization Marketing
Relationship Marketing
Figure 7.4 The Personalization Continuum
  • On the left of the continuum, theres no
    personalization
  • Further to the right, products are customized for
    individual tastes
  • On the far right, consumers collaborate with
    companies to create customized products, which
    builds relationships

8
Personalization Marketing
Personalization and the DNI Framework
  • Digital technology makes it possible
  • Encyclopedic storage of information provides a
    rich base of material
  • The network makes it available
  • Internet connections can tap into databases and
    data archives, get news feeds, and provide
    time-sensitive information or accumulate
    information for later use
  • Individuals make it valuable
  • Personalization provides value by focusing on
    specific individual needs

9
Personalization Benefits
The Democracy of Goods
  • Technology has the power to make available to the
    masses what was previously available only to the
    rich
  • Democracy of goods refers to open and low-cost
    access to products and services
  • Automation and leverage of existing digital
    assets makes personalized goods and services
    cheap to provide and widely available to consumers

10
Personalization Benefits
The Internet Benefits Consumers By Turning
Experience Goods into Search Goods
  • SEARCH GOODS are products and services that are
    easy for a consumer to evaluate
  • Example well-known branded products such as
    gasoline from Texaco
  • EXPERIENCE GOODS tend to be difficult to
    understand and evaluate. They are too complex to
    judge easily. They may be highly subjective, with
    personal taste being the most important
    determinant of usefulness
  • - Example health care services

11
Personalization Benefits
The Internet Benefits Consumers By Turning
Experience Goods into Search Goods
  • Consumers benefit from reduced uncertainty about
    experience goods
  • An accurate personalization system that can match
    products to taste can eliminate unpleasant
    consumption experiences

12
Personalization Benefits
Personalization and the Total Product
  • Levitts rules for success through
    differentiation
  • Any product can be customized
  • Consumers use products to solve problems
  • Do not ignore hard-to-measure features of the
    product such as fun or friendliness
  • Make the intangible tangible. Provide signals
    that demonstrate quality and reliability

13
Personalization Benefits
Use the Wells Fargo example to illustrate
Levitts framework
Personalization is a rich area for augmenting the
product and finding ways to achieve the potential
product
14
Personalization Benefits
The Personalization Balance
  • Providing Useful Information
  • A key challenge is to determine the type and
    scope of information consumers will value and use
  • Customers judge information programs by their
    efficiency and the ratio of usage costs with
    usage benefits
  • Information programs that are linked to
    customers personal targets and objectives are
    often successful

15
Personalization Benefits
The Personalization Balance
  • Personalization Backlash
  • A natural result of personalization is treating
    customers differently
  • More valuable customers will receive
    special/preferential treatment
  • This can lead to a backlash among customers who
    dont receive special treatment
  • Preventing resentment may be easier online where
    preferred programs are less visible

16
Implementing Personalization
  • Personalization has powerful potential
    competitive advantages
  • The first company to create an effective
    personalization approach in an industry can
    capture many of the most profitable customers
  • Personalization creates the opportunity to learn
    more about
  • Customers current desires
  • Future trends
  • New opportunities for product features and
    extensions

17
Types of Customization
Dialogue with customers to help articulate needs,
then create custom product
Observe users behaviors (implicit model)
Possible to create personalization online via use
of frames cookies
Present a uniform representation let users
filter out most possibilities to create
personalized service
18
Types of Customization
Adaptive Customization
  • Offer the same basic product and representation
    to everyone
  • Let users filter out most of the possibilities
    using pop-up menus, search functions and
    preference settings
  • Example
  • At Spinner.com, users can select the music they
    want to hear using a pop-up menu

19
Types of Customization
Cosmetic Customization
  • Present a standard product differently to each
    customer
  • Use of unique packaging, presentation, etc.
  • Example
  • New York Times uses cookies to store
    registration information and show the users name
    at the top of the page
  • Essential requirement is modularization
    division of a product into components

20
Types of Customization
Transparent Customization
  • User needs and behaviors are observed
  • The product is automatically changed to reflect
    individual tastes
  • The user isnt told or made aware of changes
  • Example
  • Smart ads use observable behavior to show
    different ads

21
Types of Customization
Collaborative Customization
  • Conduct a dialogue with individual customers
  • Help them articulate their needs
  • Identify the precise offering that fulfills those
    needs
  • Make customized products
  • Example
  • Using a password protected extranet to
    communicate with customers via real-time sound
    and video sessions

22
Customization / Personalization
Q When isone-to-one marketing worthwhile?
23
11 Matrix
24
When Is Personalization Profitable?
25
Customization / Personalization
Two Necessary Ingredients
26
Determining the Correct Personalization System
Qualitative Complex
Key Product Attributes
Quantitative Few
Highly Differentiated
Uniform
Figure 7.12
Customer Needs, Product Space
27
Personalization Systems
Rule-Based System
  • Observe behavior ? predict preferences
  • Unobtrusive consumers dont have to answer
    questions or fill in extensive questionnaires
  • Best when
  • Product space isnt complicated
  • Product / service attributes can be quantified
  • Example American Airlines
  • Require effective user models that are tied to
    observable online triggers
  • A trigger is a user action that a model can use
    to decide what personalized information to send

28
Personalization Systems
Case-Based System
  • CASE (computer-assisted self-explication)
  • The system queries users about preferences ?
    matches user with the right product / service
  • Best when users only have to evaluate a small
    number of well-understood attributes and features
  • Example Chipshot.com Personalogic (Chapter 7
    Online)
  • Require user cooperation to get relevant user data

29
Personalization Systems
Endorsement System
  • Connects users with local preferred providers
  • Best when
  • Users product needs dont differ greatly
  • Its a challenge for consumers to judge quality
    and for vendors to explain the value of available
    choices
  • Examples Autobytel.com

30
Personalization Systems
Collaborative Filtering
  • Match users who share similar tastes
  • Users share recommendations and preferences
  • Best when
  • Product space is complicated
  • Preferences are subjective, qualitative and
    complex
  • Example Amazon.com instant recommendations
  • Requires user cooperation to get relevant user
    data

31
Personalization Flowchart
Q1 Do customer lifetime values vary
significantly? Q2 Do customer needs vary
significantly? Q3 Are product attributes
qualitative or complex?
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