•Business models for selling on the Web
•Effective Web Presence
•Identifying and Reaching for Customers
•Branding
Business/revenue models for selling on the Web
•Web Catalog Revenue Model
–Based on the mail order catalog business model.
–Seller establishes a brand image and uses the strength to sell to prospective buyers.
–Buying activities:
•Customers get the product information from the Web site and place orders through the Web sites or telephone.
–Items such as apparel, computers, electronics, house wares, and gifts.
•Web Catalog Revenue Model
–Examples :
•Some companies has Web sites in addition to physical stores. Both sell same products.
•Dell (http://www.dell.com/) allows customers to specify the computer configuration they order on the Web.
•Amazon.com (http://www.amazon.com/) started with selling books because they were easy and inexpensive to ship
•For luxury goods and high-fashion clothing items, people don’t buy through the Web site. E.g. Web site of Versace provides information to shoppers who would visit the physical stores to examine items shown in Web sites.
•Clothing retailers include photos, prices, sizes, colors and tailoring details of their products. Problems for clothing retailers is that the color setting for computer monitors vary which makes it difficult for customers to get a correct color.
•Digital Content Revenue Model
–Firms that own intellectual property or rights to that property have embraced the Web as a new and highly efficient distribution mechanism.
–Items such as newspapers, journals, court cases, laws, tax regulations and other digital contents.
–Buying activities:
•Most of the time, users have to subscribe to these sites by paying certain amount as the subscription fees. However, there are certain companies who offer a credit card charge option or e-cash payment for infrequent users who do not want a subscription.
–Examples below are accessible through Unitar Virtual Library (try it out):
•ProQuest – sells digital copies of published docs
•ACM Digital Library – subscriptions to electronic versions of journals
–Electronic publishing of journals eliminates the costs of paper, printing and delivery.
•Advertising-Supported Revenue Model
–Originally used by network television that provides free programming to an audience along with advertising messages.
–Only a few general-interest Web sites have generated sufficient traffic to be profitable based on advertising revenue alone.
–Web employment advertising is one example of successful implementation of the advertising-supported business model.
–‘Stickiness’ of a Web site is its ability to keep visitors at the site and attract repeat visitors.
–2 major problems in web advertising:
•No consensus on how to measure and charge for site visitor views – e.g. number of visitors/number of click-throughs
•Very few Web sites have sufficient numbers of visitors to interest large advertisers.
•Advertising-Supported Model examples:
–About.com, HowStuffWorks
–Portals : e.g. Yahoo
•Yahoo was a Web directory which expanded into a portal - includes Web directory, search engine, e-mail, calendar etc
–Advertising on results page triggered by the terms in the search
•There are a few other portal sites which uses the advertising-supported revenue model e.g. AOL, MSN
–Newspaper publishers
–Classified advertising sites e.g. Web employment advertising – very successful
•Can add targeted banner ad in results page for which advertisers pay more
•Can add short articles of topics of interest to increase the sites stickiness and to attract people not necessarily looking for a job
•Advertising-Subscription Mixed Revenue Model
–Subscribers pay a fee and accept some level of advertising.
–In most cases, the subscribers are subjected to much less advertising than on advertising supported sites.
–Mostly used by newspapers and magazines.
–Examples:
•The New York Times
•The Wall Street Journal
•TmNet E-browse offers digital version for a few newspapers e.g. Berita Harian, New Straits Times at a fee which can be paid quarterly, half-yearly or yearly
http://ebrowse.bluehyppo.com/index_nst.asp
•Fee-for-Transaction Revenue Model
–Involves receiving a fee for facilitating a transaction. Fee is based on the number or size of transactions they process.
–For travel agency, they earn commissions from transportation and lodging providers e.g. from airplane tickets, hotel reservation.
–Travel agency also generate advertising revenue from ads placed on travel information pages.
–Examples: http://www.travelocity.com/
•Fee-for-Transaction Revenue Model (cont.)
–Some auto dealers use a Web site to buy/sell autos and remove its intermediary (salesperson) from a value chain. This is known as disintermediation.
–Some stock brokerage firms use this model by charging their customers a commission for each trade executed.
–Other possible candidates that can use fee-for-transaction model are insurance companies, real estate brokerages, event ticketing and online banking.
•Fee-for-Service Revenue Model
–Fee is charged by companies providing services based on the value of the service.
–Examples:
•online games : visitors pay to play games by downloading or entering games area e.g. Sony’s Station.com
•Streaming video e.g. RealOne SuperPass
•Financial advice and professional services e.g. accountants
Effective Web Presence
•An effective site is one that creates an attractive presence that meets the objectives of the business or other organization.
•Web presences convey the images that companies want to project e.g. favored by a younger generation, classic image
•Most Web sites for organizations contains links to a fairly standard information set e.g. history, mission statement, information about products and services and how to communicate with the organization
•The Web must be used as a two-way communication between organization and customers.
•Objectives of effective site:
•Attracting visitors to the web site
•Making the site interesting enough that visitors stay and explore
•Convincing visitors to follow the web site’s links to obtain information
•Creating an impression consistent with the organization’s desired image
•Building a trusting relationship with visitors
•Reinforcing positive images that the visitor might already have about the organization
•Encouraging visitors to return to the site
•Visitors visit Web sites with reasons such as :
•Learning about products/services
•Buying products/services
•Obtain information about warranty, service or repair policies
•Obtain general information about the organization
•Obtain financial information for making an investment
•Identifying the people managing the organization
•Obtaining contact information in the organization
•Goals that should be met for a Web site:
–Offer easily accessible facts about the organization
–Allow visitors to experience the site in different ways and at different levels e.g. same information but in different file format
–Provide visitors with a two-way communication link with the organization
–Sustain visitor attention and encourage return visits
–Offer easily accessible information about products/services and how to use them
Appealing Web Site Design
•Page organization
•Online news readers views headlines and news briefs first
•Color – must appeal either to general public or to the demographic group that the site tries to attract
•Bright colors attract visitors
•Coolers colors make visitors comfortable
•Pizzazz
•Are small interactive programs such as crossword puzzles, trivia, eye-popping animations, prize-bearing competitions.
•To gain repeated visits, offer ‘a little something’ for free e.g. free downloads
•Menus – vertical, horizontal, layered
–Order of the items : items that are important to less important
–Use of color
–Use of interesting bullets
•Links to other pages
•Others:
–Offer more information
–change appearance every few months
Marketing
•Marketing mix = combination of elements that companies use to achieve their goals for selling and promoting their products and services.
•Marketing strategy = a particular marketing mix which consists of particular elements that the company decided to use.
•Essential issue of marketing = 4Ps of marketing
–Product
–Price
–Promotion – spreading the word about the product
–Place – distribution of product
•Marketing strategies:
–Product-based – products are displayed in categories e.g. Staples
–Customer-based
•products are shown based on groups of customers e.g. Sabre
•More common on B2B sites
Customers
•3 ways to reach customers
–Personal contact (one-to-one)
–Mass media (one-to-many)
–The Web (many-to-one, many-to-many)
Marketing Approaches
•Market segmentation = divides the pool of potential customers into segments (have common characteristics).
•Segments normally defined in terms of demographic characteristics e.g. age, gender, marital status, income level, geographic location.
•Micromarketing which is the practice of targeting very small and well-defined market segments.
•Uses specific advertising and promotion efforts
•Geographic segmentation – based on geographic group of customers
•Demographic segmentation – based on age, gender, family size, income, education, religion or ethnicity of customers
•Psychographic segmentation – based on social class, personality, approach to life
–E.g. sports car for customers with high need for achievement
How consumers reach product information
•Search by product type
•Search by brand name
•Click on advertisements
•Shopping channels
•Yellow pages
Advertising on the Web
•Formats:
–Banner ads
–Pop-up ad
–Interstitial ad – the ad appears in its own browser window
–Rich media ad (active ad) – appears/floats over the web page itself, contains moving graphics and sometimes audio/video
–Site sponsorship
–Email marketing
Creating and Maintaining Brands on the Web
•What is a brand?
–Brands are the sum total of all the images that people have in their heads about a particular company and a particular mark.
•Elements of Branding
–Differentiation
•In what significant ways is this product or service unlike its competitors?
–Relevance
•How does this product or service fit into my life?
–Perceived Value
•Is this product or service good?
Types of branding
•Emotional branding
•Use emotional appeal to maintain branding.
•Suitable when ad targets are in a passive mode of information acceptance such as TV and radio.
•Not suitable for web ad because web is an active medium controlled by the users/customers.
•Rational branding
•Offers to help web users in some way in exchange for their viewing an ad.
•Emotional appeal is replaced by cognitive appeal of providing functional assistance.
•Involves interactive marketing - advertisers can interact with consumers and customers and vice versa.
Branding Strategies
•Use Dominant Position and leverage approach
•Only works for firms that already have Web sites that dominate a particular market such as Yahoo!
•Online registry/Brand Consolidation Strategies
•Della & James (online bridal registry) offers a single registry that connects to several local and national department and gift stores.
•Act as a market intermediary as well as selling their own products.
•Affiliate marketing
•Is an arrangement whereby a marketing partner refers consumers to the selling company’s (the merchant’s) website
•This is done by placing an ad or logo or link of the selling company on the affiliated company’s Website
•When a customer that was referred to the selling company’s Website makes a purchase there, the affiliated partner receive commissions.
•For example, Amazon.com has almost 500,000 affiliates.
•Viral marketing
•Depends on existing customers to tell other people
Affiliate Marketing Models
•Pay-per-sale model
•Pay-per-click model
•Pay-per-lead model
–E.g. if consumer fill in and submit registration form
•Hybrid programs
–E.g. Merchant pay affiliates for amount of sale and number of new customers
•Multitiered programs
–Similar to multilevel marketing
–Affiliates at all level receive a portion of the commission paid by the merchant
•Cross-linking
–Two firms agree to place each other’s clickable icon on banner with no charges.
Branding Issues
•Costs
•It is less expensive to transfer and maintain existing products on the web than creating an entirely new brand on the web.
•Firms have to constantly promote their URL through product packaging, mass media advertising, search engine database and other information distributed mechanisms.
•Naming a web site – domain name recognition
•Company’s URL is as important as company’s legal trademark in order to identify their products.
•Thus, some companies are willing to buy/invest a lot of money for the URL that can represent their products.
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