Adapting Marketing to

the New Economy

2003 Prentice Hall, Inc.

Objectives
Identify the major forces driving the new
economy.
Understand how business and marketing
practices are changing as a result of the new
economy.

2003 Prentice Hall, Inc.

Objectives
Explore how the Internet has changed the way
marketers use customer databases.
Understand how marketers practice customer
relationship management.

2003 Prentice Hall, Inc.

Drivers of the New Economy

Digitalization and connectivity
The Internet, intranets & extranets are key

Disintermediation and reintermediation

Customization and customerization
Industry convergence

2003 Prentice Hall, Inc.

Changes in Business Practices

Old Economy
Product unit
organization
Profitable transactions
Financial scorecard
Stockholders
Marketing does the
marketing

2003 Prentice Hall, Inc.

New Economy
Customer segment
organization
Lifetime value of
customer
Marketing scorecard
Stakeholders
Everyone does the
marketing

Changes in Business Practices

Old Economy
Build brands via
advertising
Customer acquisition
No customer satisfaction
measurement
Overpromise,
underdeliver

2003 Prentice Hall, Inc.

New Economy
Build brands via
performance
Customer retention
Measure customer
satisfaction and
retention rates
Underdeliver,
overpromise

How Marketing Practices

are Changing

E-Business
Setting up web sites
Customer relationship marketing

2003 Prentice Hall, Inc.

How Marketing Practices are Changing: Ebusiness

Business practices are changing . . .
E-business uses electronic means and platforms
to conduct business.
E-commerce web sites facilitate the online sale
of products and services.
E-purchasing from online suppliers.
E-marketing efforts include those that inform,
communicate, promote, and sell products and
services over the Internet.
2003 Prentice Hall, Inc.

How Marketing Practices are Changing: Ebusiness

Internet Domains

B2C
B2B
C2C
C2B

2003 Prentice Hall, Inc.

B2C = Business-toConsumer
Benefits include:
greater ordering
convenience, lower
cost, easier information
and price gathering

How Marketing Practices are Changing: Ebusiness

Internet Domains

B2C
B2B
C2C
C2B

2003 Prentice Hall, Inc.

B2B = Business-toBusiness
Volume is 10-15%
higher than B2C.
Benefits include: lower
costs via B2B auctions,
buying alliances, greater
access to information.

How Marketing Practices are Changing: Ebusiness

Internet Domains

B2C
B2B
C2C
C2B

2003 Prentice Hall, Inc.

C2C = Consumer-toConsumer
Transactions occur via
online trading sites such
as eBay.
Consumers are creating
online product
information via
newsgroup and chat
room dialogues.

How Marketing Practices are Changing: Ebusiness

Internet Domains

B2C
B2B
C2C
C2B

2003 Prentice Hall, Inc.

C2B = Consumer-toBusiness
Facilitate
communication
between customer
and businesses.

How Marketing Practices are Changing: Ebusiness

Brick and click firms have often faced
channel conflict issues
Brick and click firms tend to be more
successful than pure click e-tailer
competitors because . . .
Customer acquisition costs are lower
Resources, knowledge, customer base, supplier
relationships are superior
2003 Prentice Hall, Inc.

How Marketing Practices are Changing: Web Site

Design

The Seven Cs of Web Site Design

Context
Content
Community

Communication
Connection
Commerce

Customization
2003 Prentice Hall, Inc.

How Marketing Practices are Changing: Web Site

Design

Placing Ads and Promotions Online

Banner ads
Sponsorships
Microsite
Interstitials
Browser ads
Alliances and affiliate programs

2003 Prentice Hall, Inc.

How Marketing Practices are Changing: Web Site

Design
Dot.com revenue and profit models:

Advertising income
Sponsorship income
Alliance income
Membership and
subscription income
Profile income

2003 Prentice Hall, Inc.

Product and service sales

income
Transaction commissions
and fees
Market research/
information
Referral income

How Marketing Practices are Changing: CRM

Customer Relationship Marketing (CRM)
allows companies to:
Deliver real-time customer service
Customize market offerings, products, services,
media, and messages

2003 Prentice Hall, Inc.

How Marketing Practices are Changing: CRM

Effective Customer Relationship Marketing
requires:
Reducing customer defection rates
Extending the life of the customer relationship
Enhancing customer sales / profit potential
Making low-profit customers MORE profitable or
terminating them
Focusing on high value customers
2003 Prentice Hall, Inc.

How Marketing Practices are Changing: CRM

CRM Leads to One-on-One Marketing
Four Steps for One-to-One Marketing
Dont go after everyone, carefully identify your
prospects and customers.
Group customers by their needs and their value to
the company; aggressively pursue the most
valuable customers.
Build stronger relationships with customers via
individual interaction.
Customize messages, services, and products for
each customer.
2003 Prentice Hall, Inc.

How Marketing Practices are Changing: CRM

Customer Databases and Database Marketing
are the key to Effective CRM
Database uses include:
Best prospect identification
Matching offers to customers
Deepening customer loyalty
Reactivating customer purchasing
Avoiding serious mistakes
2003 Prentice Hall, Inc.

Activity time!!!
Choose 3 daily use products/services
Identify how their marketing has changed post
digital revolution
Establish relations and give solid examples
Choose 3 products that you believe wouldnt
have been sold if digital revolution didnt
happen and why?
Identify and give your views on 3
companies/brands having a strong CRM.
2003 Prentice Hall, Inc.