Chapter 4
Consumer Behavior,
Customer Service, and
Advertising
¢ The Problem
—Small business designing and manufacturing mountain bike components
—1995 Web site was a status symbol rather than a business tool
—The site did not:
¢ Offer enough customer information
¢ Enable the company to gain insight into their customers’ needs and wants
Exhibit 4.1 EC Consumer Behavior Model
Consumer Behavior Online (cont.)
¢ Consumer types—individual consumers who commands most of the media’s attention
¢ Organizational buyers
—Governments and public organizations
—Private corporations
—Resellers
¢ Consumer behavior viewed in terms of:
—Why is the consumer shopping?
—How does the consumer benefit from shopping online?
Variables in the Purchasing Environment
¢ Social variables—people are influenced by:
Family members, friends, co-workers, “what’s in fashion this year”
¢ Cultural/community variables—where the consumer lives
¢ Other environmental variables:
Available information, government regulations, legal constraints, situational factors
Personal Characteristics Personal Differences
¢ Age and gender
¢ Marital status
¢ Educational level
¢ Ethnicity
¢ Occupation
¢ Household income
¢ Personality
¢ Lifestyle characteristics
Consumer Purchasing Decision Making
¢ Roles people play in decision-making
—Initiator—suggests/thinks of buying a particular product or service
—Influencer—advice/views carry weight in making a final buying decision
—Decider—makes a buying decision or any part of it
—Buyer—makes the actual purchase
—User—consumes or uses a product or service
General Purchasing Decision-Making Model
¢ 5 major phases of a general model
1.Need identification
2.Information search
3.Evaluation of alternatives
4.Purchase and deliver
5.After-purchase evaluation
Web Advertising
¢ Advertising is an attempt to disseminate information in order to affect a buyer-seller transaction
¢ Interactive marketing—marketing that allows a consumer to interact with an online seller
—Two-way communication and e-mail capabilities
—Vendors also can target specific groups and individuals
—Enables truly one-to-one advertising
Internet Advertising Terminology
¢ Ad views—number of times users call up a page that has a banner on it during a specific time period; known as impressions or page views.
¢ Button—a small banner that is linked to a Web site
¢ Page—HTML document
¢ Click—a count made each time a visitor clicks on an advertising banner to access the advertiser ‘s Web site (ad clicks and click throughs)
¢ CPM (cost per thousand impressions)—fee an advertiser pays for each 1,000 times a page with a banner ad is viewed
¢ Hit—request for data from a Web page or file
¢ Visit—a series of requests during one navigation of a Web a site; a pause of request for a certain length of time ends a visit
Why Internet Advertisement?
¢ 3/4 of PC users gave up some television time
¢ Well educated, high-income Internet users are a desired target for advertisers
¢ Internet is by far the fastest growing communication medium
¢ Advertisers are interested in a medium with such potential reach, both locally and globally
¢ Cost
—Online ads are cheaper than those in other media
—Ads can be updated at any time with minimal cost
¢ Richness of format
—Use of text, audio, graphics, and animation
—Games, entertainment, and promotions are easily combined in online ads
¢ Personalization
—Can be interactive
—Can target specific interest groups and/or individuals
Exhibit 4.11 Adoption Curves for Various Media
Advertising Networks
¢ Advertising networks (ad server networks)—specialized firms that offer customized Web advertising, such as brokering ads and helping target ads to selected groups of consumers
¢ One-to-one targeted ads and marketing can be:
—Expensive
—Very rewarding
—Very effective
Advertisement Methods
¢ Banner--on a Web page, a graphic advertising display linked to the advertiser’s Web page
—Keyword banners
—Random banners
¢ Benefits of banner ads
—Customized to the target audience or one-to-one ads
—Utilize “force advertising” marketing strategy
—Direct link to advertiser
—Multi media capabilities
¢ Limitations of banner ads
—High cost
—Click ratio—the ratio between the number of clicks on a banner ad and the number of times it is seen by viewers; measures the success of a banner in attracting visitors to click on the ad
—Declining click ratio—viewers have become immune to banners
¢ Banner swapping—an agreement between two companies to each display the other’s banner ad on its Web site
—Direct link between one site to the other site
—Ad space bartering
¢ Banner exchanges—markets in which companies can trade or exchange placement of banner ads on each other’s Web sites (bcentral.com)
—Credit ratio of approximately 2:1
—Still the largest Internet advertising medium
¢ Pop-under ad—an ad that appears underneath the current browser window, so when the user closes the active window, they see the ad
¢ Interstitials– an initial Web page or a portion of it that is used to capture the user’s attention for a short time while other content is loading
¢ E-mail
—Several million users may be reached directly
—Problems: junk mail, spamming
¢ Standardized ads—on February 26, 2001, the Internet Advertising Bureau, an industry trade group, adopted five standard ad sizes for the Internet:
—Larger and more noticeable than banner ads
—Look like the ads in a newspaper or magazine
—Users read these ads four times more frequently than banners
—Appear on Web sites in columns or boxes
¢ Skyscraper ad—full column-deep
—Sometimes as many as four on one Web page
—Interactive—click on a link inside the ad for more information about a product or service
¢ Classified ad—a newspaper-like ad
—Special sites like classifieds2000.com
—Online newspapers, exchanges, portals ,
—Regular-size classified ads is free
—Larger size or with some noticeable features is done for a fee
¢ 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
—Optimizing Web content improves discovery by a search engine
¢ Keywordcount.com
¢ Searchenginewatch.com
—Paid search-engine inclusion
¢ Several search engines charge fees for including URLs near the top of the search results
¢ A debatable issue is the ethics of this strategy
¢ Advertising in chat rooms
—Virtual meeting ground
—Free addition to a business site
—Allows advertisers to cycle through messages and target the chatter again and again
—Advertising can become more thematic
—More effective than banners
—Used for one-to-one connections
¢ Advertorial—an advertisement “disguised” to look like an editorial or general information
Special Advertising Topics
¢ Pricing of advertising
—Justifying the cost of Internet advertisement is difficult for two reasons:
1.The difficulty in measuring the effectiveness of online advertising and
2.Disagreements on pricing methods
¢ Pricing based on ad views
¢ Pricing based on click-through
¢ Payment based on interactivity
The interactivity model bases ad pricing on how the visitor interacts with the target ad
¢ Payment based on actual purchase
Pay for ads only if an actual purchase has been made (affiliate programs)
¢ Permission advertising (permission marketing)—advertising (marketing) strategy in which customers agree to accept advertising and marketing materials
¢ Measuring, auditing, and analyzing web traffic
—Site audit validates the number of ad views and hits claimed by the site
—Rating—looks at multiple criteria including content, attractiveness, ease of navigation, and privacy protection
—Sites with higher ratings command higher prices for advertising placed on their sites
—Companies use software to assess if placing ads really increases traffic to their sites
¢ Localization—the process of converting media products developed in one country to a form culturally and linguistically acceptable in countries outside the original target market
¢ Using internet radio for localization
Internet radio—a Web site that provides music, talk, and other entertainment, both live and stored, from a variety of radio stations
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