Chapter 4

Consumer Behavior, Market Research and Web Advertisement

 The purpose of a CUSTOMER BEHAVIOUR model is:

to help vendors understand how a customer make a purchasing decision. 4-2 to show factors that effects consumer behaviour

Consumer DSS supports specific decisions

Provide EC mechanisms, communication and collaborations

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product brokering Deciding what product to buy merchant brokering Deciding from whom (from what merchant) to buy a product

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Electronic Commerce Prentice Hall 2006

3 basic approaches used in Marketing and Advertising: 1. Mass Targeted to everyone 2. market segmentation The process of dividing a consumer market into logical groups for conducting marketing research and analyzing personal information 3. one-to-one marketing (relationship marketing) Marketing that treats each customer in a unique way

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The one-to-one New Marketing Model

Start at (1). Then customer decides to buy or not (2). When sales is made (3) customer information is collected (4) and place in database (5). Then, customer profile is developed (6) and the four P are generated on one-to-one basis (7). Based on this individualised profile, appropriate advertisement prepared (8) that will hopefully lead to another purchase. Then the cycle repeats. All of this can be done in Web environment.

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Personalization in EC
Personalization The matching of services, products, and advertising content with individual consumers and their preferences.
Based on what on a company knows about individual user and called user profile

User profile Defines the requirements, preferences, behaviors, and demographic traits of a particular customer. Behavioral Targeting is the method to compile user profile, that uses information collected about an individuals Web-browsing behavior, such as the pages they have visited or the searches they have made, to select an advertisement to display to that individual

Method of Behavioral targeting

Collaborative filtering
Method that uses customer data to predict, based on formulas derived from behavioral sciences, what other products or services a customer may enjoy; predictions can be extended to other customers with similar profiles. E.g those who bought these items also bought the following items ..

Rule-based filtering
Based on a series of yes/no or MCQs Range from personal to specific information custoer is looking on a speficis Web. E.g. if customer age is greater than 35, income is above $35000.00, so ads Car A, else show Car B

Content-based filtering
Identify customer preferences by attributes of products they intend to buy. E.g. recommend a electronic commerce book to customer who have shown interest in EC.

Activity-based filtering
By watching the user activities on the Web

 CUSTOMER LOYALTY

Customer Loyalty refres to adeep commitment tp rebuy a prefrred product or services continually in future. Customer acquisition and retention. e-loyalty Customer loyalty to an e-tailer or loyalty programs delivered online or supported electronically
Business Intelligence and Analytical Software Merchant rating, customer reviews.

SATISFACTION IN EC TRUST IN EC

Satisfaction is one of the most important success measures in the B2C online environment

trust The psychological status of willingness to depend on another person or organization

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Satisfaction in EC
A repeat web purchase is mainly due to customer satisfaction

Trust in EC

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Online Market Research Methods

A critical success factor to B2C is to find out what the customer want, so that the merchants can make the customer happy Cheaper, faster, geographically diverse audience (large sample)

Representative Market Research Approaches 1. Market Segmentation Research 2. Online Sampling Methods through email, questionnaire placed on Web, Voting Polls, 3. Online Surveys Web-based, online focus group, 4. Hearing Directly from Customers 5. Data Collection in the Web 2.0 Environment
polling, blogging, chatting, Tagging, Multimedia

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Online Market Research Methods

6. Observing Customer Movements online
Keep track of consumers movement (what people are doing) on the Web by observing customer behaviour rather that by asking them questions Sometimes customer are not aware; illegal and unethical Uses:
Transaction log (log file) is a record of user activities at a companys
Web site clickstream behavior , customer movements on the Internet clickstream data, data that occur inside the Web environment. they provide a trail of the users activities (the users clickstream behavior) in the Web site

Cookies, A data file that is placed on a users hard drive by a remote Web server, frequently without disclosure or the users consent, that collects information about the users activities at a site. It allow a Web site to store data on the users PC, when customer return to the site, the cookies can be used to find what the customer did in the past Web bugs, tiny graphics files embedded on e-mail messages and in Web sites that transmit information about the users and their movements to a Web server Spyware is software that gathers user information over an Internet connection without the users knowledge. Then send you e-mails or pop ups based on what they learn about customer.
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Web Advertising
Advertising is an attempt to disseminate information in order to affect buyer-seller transaction. Interactive advertising
Online marketing, enabled by the Internet, in which advertisers can interact directly with customers and consumers can interact with advertisers/vendors. A customer can click an ad on the Web to obtain more information or send an e-mail to ask a question.

Two major business models for advertising online:

Using the Web as a channel to advertise a firms own products and services Making a firms site a public portal site and using captive audiences to advertise products offered by other firms
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Web Advertising - Terminology

ad views
The number of times users call up a page that has a banner on it during a specific period; known as impressions or page views.

Button
A small banner that linked to a Web site. Can contain down loaded software.

Page
An HTML (Hypertext Markup Language) document that may contain text, images, and other online elements, such as Java applets and multimedia files; may be generated statically or dynamically .

Click (click-through or ad click)

A count made each time a visitor clicks on an advertising banner to access the advertisers Web site

CPM (cost per thousand impressions)

The fee an advertiser pays for each 1,000 times a page with a banner ad is accessed by viewers.
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Web Advertising - Terminology

Conversion rate
The percentage of visitors who actually make a purchase.

Click-through rate The percentage of visitors that are exposed to a banner ad and click on it. Hit Any request for data from a Web page or file.

visit
A series of requests during one navigation of a Web site; a pause of a certain length of time ends a visit Unique visit A count of the number of visitors to a site, regardless of how many pages are viewed per visit. Stickiness Characteristic that influences the average length of time a visitor stays in a site.
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Web Advertising - Terminology

Button

Unique visit

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Web Advertising
advertising networks
Specialized firms that offer customized Web advertising, such as brokering ads and targeting ads to select groups of consumers. E.g. DoubleClick (a Google company) E.g. Bannnerserver.com

Advertising Online and Its Advantages

Cost Richness of format Personalization Timeliness Location-basis Linking Digital branding
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Online Advertising Methods Banner

Banner is a graphic advertising display linked to the advertisers Web page

major benefit is users are transferred directly to an advertisers site, often the shopping page major disadvantage of banners is their cost keyword banners
Banner ads that appear when a predetermined word is queried from a search engine, have target audiences

random banners
Banner ads that appear at random, not as the result of the users action

Static banners
Always on the Web page

banner swapping
An agreement between two companies to each display the others banner ad on its Web site

banner exchanges
Markets in which companies can trade or exchange placement of banner ads on each others Web sites Swapping is a problem : a match is frequently not possible
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Advertising Methods Banner

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Advertising Methods Pop-up

pop-up ad
An ad that appears in a separate window before, during, or after Internet surfing or when reading email It appear in front of the active window, automatically

pop-under ad
An ad that appears underneath the current browser window, so when the user closes the active window, he or she sees the ad

interstitial (splash screen)

An initial Web page or a portion of it (box) that is used to capture the users attention for a short time while other content is loading.
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Advertising Methods Pop-up

Splash screen

Pop-up ad

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Advertising Methods
E-Mail Advertising
Most companies have database of customers to send emails or can purchase them, low cost Using email without the consumers permission is called spamming and have lots of junk mail.

Advertising in chat rooms one-to-one, virtual meeting ground, more effective than banner, Advertising in newsletters/papers Advertising in social networks Online advertising that focuses on social networking sites
Types of Social Network Advertising
Direct advertising that is based on your network of friends Direct advertising placed on your social network site Indirect advertising by creating groups or pages

Sponsored Reviews by Bloggers

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Advertising Methods
Search Engine Advertisement
URL Listing: Most search engine allows the companies to submit the internet address, URL, for free so that these URLs can be search electronically Keyword Advertising: Linking an ad with the users keywords. Advertisements appears on the screen along with the search results when the chosen keywords are searched. Advertiser who pay more will appear higher on the list

Improving companys search engine optimization SEO:

To be placed at the top of results. The craft of increasing site rank on search engines; the optimizer uses the ranking algorithm of the search engine (which may be different for different search engines) and best search phrases, and tailors the ad accordingly. e.g. Google ranks Web sites by linkage their popularity and give weight to link to major companies, government organisation, site build on .edu domain.
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Advertising Methods
Associated ad display (text links)
An advertising strategy that displays a banner ad related to a term entered in a search engine E.g amazon.com. When a customer reads about a book, a list of books is displayed under the heading Customer who bought this book also bought The ads appear only as a reaction to user actions.

Affiliate marketing
A marketing arrangement by which an organization refers consumers to the selling companys Web site Amazon.com have 500,000 affiliates sites

viral marketing
Word-of-mouth marketing by which customers promote a product or service by telling others about it
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Advertising Strategies and Promotions Online

Customizing Ads
Filtering irrelevant information by providing consumers with customized ads Based on users profiles. Select from menu, say when registration only select sports, news and travel.

Webcasting
A free Internet news service that broadcasts personalized news and information, including seminars, in categories selected by the user

Comparison ads
comparestoreprices.co.uk/compare-prices/daewood
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Special Advertising Topics

Permission Advertising Spamming - Using e-mail to send unwanted ads (sometimes floods of ads) permission advertising (permission marketing) - Advertising (marketing) strategy in which customers register with advertisers and agree to accept advertising and marketing materials Localisation The process of converting media products developed in one environment (e.g., country) to a form culturally and linguistically acceptable in countries outside the original target market E.g. web translation, dates, Internet Radio Ad Content (Business Content) The content of ads is extremely important, and companies use ad agencies to help in content creation for the Web just as they do for other advertising media The right content can drive the traffic to a site, remain at the site, read its content carefully and make a purchase. Content is especially important to increase stickiness factor remain at a site read its contents make a purchase

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