End of Part I: E-Marketing in Context / 1

E-Marketing

4th edition

by Strauss, El-Ansary, and Frost

Prentice Hall © 2006

End of Part I Exercise Answers

Exercise answers prepared by David Lan, University of Nevada, Reno, with assistance from the authors

Activities
  1. Visit the shopping agent MySimon at Do a search for this book (E-Marketing). What is the lowest price available for the book? The highest? Compare these prices with those found at brick-and-mortar sites Borders (partnered with Amazon) and Barnes and Noble. Check out used book store site (partnered with Ebay.) Explain in terms of value why customers might buy the book at a higher price.

Prices will vary depending on product availability, time of year, etc. Prices should be significantly lower than those found at brick-and-mortar stores. Interestingly enough some brick-and-mortar stores will offer used book prices as well to compete on the Internet. Ask students what other sites they may go to for used book prices. Issues such as shipping and handling, ease of return, customer service, etc. may all contribute to why students may buy at a higher price.

  1. Visit Write down what you think the firm’s goals are for its Web site. Then make a list recommending relevant performance metrics.

Dell was one of the first to offer fully customizable personal computers online. The company climbed to the top of PC orders online by figuring out the direct sales model early. They embraced the Internet early and entered the business market at the right time, promising good prices combined with good service. Dell’s website shows this effort by making it as easy as possible to order and customize a computer online. Metrics could include:

  • Average order value (AOV)—dollar sales divided by the number of orders for any given period. This figure may increase over time as loyal customers purchase more per order.
  • Recency, frequency, monetary analysis (RFM)—identifies high value customers.
  • Percentage of customer retention—proportion of customers who repeat purchase.
  1. Flip through a magazine, looking at the ads. Write down each mention of a Web site and in what context the mention appeared. In what percentage of the ads were Web sites mentioned?

Student answers will vary depending on what types of magazines they look at. The target audience of each magazine will largely determine the propensity of Internet references. Students may be surprised at how many companies make no mention of a web presence. Ask students to compare the promotion of Web sites in other media such as television or the radio. What target audiences may those outlets aim for?

  1. Visit and do a search for your favorite car. What banner ad appeared on the results page? Now do a search for your favorite music group. What banner ad appeared on the results page? What conclusion can you draw about targeted advertising?

Depending on student interests and search queries, different targeted advertising should appear on result pages. Google.com has made a good effort to differentiate sponsored links at the top or side of result pages to show that results are not overly biased by economics. A common misconception is that search results are composed of the best the Internet has to offer. Have students visit Overture.com for comparison. They may be surprised that search results are often purchased for higher placement in search engines. This is why many search engines have the same results when using the keywords sponsored by Overture.com. Explain that advertisers can buy banner spots based on key words and that this is more expensive than buying more general ad space. Ask them why they think this is so, and whether it is worth it from an advertiser’s perspective. It is also a chance to discuss market segmentation online, and the strength of psychographic over demographic segmentation for Web marketing.

  1. Visit the McDonald’s Web site. List each stakeholder it reaches and tell what basic content is targeted to each stakeholder.

McDonald’s is one of the most powerful brand names in the world. In addition to its product mix, wide distribution of restaurants, and value pricing, McDonald’s has extremely effective communications with important audiences. The concept of Integrated Marketing Communications recognizes that customers are only one group to whom a firm wants to disseminate persuasive information. In addition to targeting kids and their parents (games, privacy info, etc.), McDonald’s is concerned with stockholders (stock prices, company reports, etc), potential franchisees (cost, requirement, etc.), potential employees (testimonials, benefits, etc.), and the communities in which the restaurants reside (restaurant locator, directions, etc.).

  1. Consider a local business that you know about and sketch a bare bones e-marketing plan for it.

The plan should include a few sentences for each of the following items (or follow the book steps). It is best if each section is titled. Use traditional marketing as a guide to evaluate each area. For example, targets must be well defined, objectives should be measurable and have time frames, and so forth.

  • Situation analysis (environmental factors, market opportunity analysis)
  • Select target stakeholder(s)
  • Set objectives
  • Select marketing mix: (product, price, distribution promotion)
  • Action plan (tactics)
  • Budget
  • Evaluation plan
  1. Find the Web site for a firm that offers Web site building services. What steps does it recommend? What does it charge to develop a Web site?

Given the ever-increasing nature of the Internet, web site building services abound. A growing trend is for users to use automated tools to build websites by themselves. Also many Internet Service Providers (ISP) will offer combination hosting and web building services for nominal fees. Prices are largely based upon site interactivity, estimated bandwidth usage, etc. Trends are toward recurring costs for hosting rather than development costs. Given the commodification of Internet Services, web site building services have become increasingly competitive and thus prices have decreased as well. Thus, ranges can vary from free development with long term service contracts to tens of thousands of dollars for fully interactive e-commerce solutions.

  1. Go to the Web site for your university and describe how well you think the site fulfills the marketing objectives of the university. Suggest improvements.

Given the diversity of educational institutions, student answers will vary dependent on individual needs. Target audiences must be taken into account for satisfying those needs. Is there a section for students? Parents? Faculty? Issues of convenience, information, etc. will all play a role in this relationship marketing endeavor. Accordingly improvements will also revolve around needs that haven’t been met.

  1. See if you can find the portion of your university’s Web site that is for students and employees only (intranet). What information is contained on those pages? Should outsiders be excluded from accessing the pages? Why or why not?

The object of this activity is to generate a discussion about multiple stakeholders and their needs, as well as a discussion of the appropriateness of creating new and unexpected customer touch points. Enabling web technologies have transitioned an increasing number of services to the Internet aimed at reducing costs, increasing convenience, productivity, etc. Example services online include registration, courses, grades, transcripts, etc. Restriction to outsiders are warranted by the same guidelines that traditional off line services would require. (Privacy, security, etc.)

Internet Exercises

Internet Exercise: The Marketing Concept

Web sites can demonstrate the marketing concept by exhibiting a company’s special features to customers and prospects. Many sites target customer segments by language, gender, and age, providing slightly different content for each target. In general, Web users want to know about product benefits. However, sites that give visitors something of interest beyond product descriptions create additional value. The most attractive site advantages tend to be interactive in nature. For example, e-mail and surveys allow for customer feedback; intelligent agents can find the right shoe for the customer’s needs; and retail locators tell the customer where she can buy the shoe that she needs. Complete the following chart to indicate which benefits are supported on the Web sites of three athletic shoe companies. Then decide which firm is the most customer oriented.

Benefit / Nike
/ New Balance

Retail locator / X / X
Nonproduct information / X / X
Multiple languages / X / X
Multiple targets: gender / X / X
Multiple targets: age / X (kids; men/women) / X (kids; men/women)
Multiple targets: different sports / X / X
Customer feedback / Have to go 2 links in.
Not obvious. / X
Intelligent agents / X / X
Fun to surf? / X / X
For Discussion
  1. Of the foregoing benefits, which three do you think are the most important? Why?

a. Intelligent Agents - They act as a voice for the site. They are like the employee of the virtual store front for the site. They provide specialized customer service to the consumer.

b. Retail locator - This function gives the consumer access to a brick and mortar store, employees and products. It gives the consumer the confidence that the store and products actually exist.

c. Multiple Targets - By noticing different sports on the website, it appeals to a large portion of the athletic segment. This brings more traffic to the website, as well as peaks new interests amongst consumers.

  1. Over all which site better embodies the marketing concept? Why?

Both web sites embody the marketing concept to a strong a degree. The question of whether one is better than the other is largely dependent on personal preferences, tastes, and even brand loyalty. As of this writing, Nike provides more specialized categories to choose from than Newbalance. In addition, while both websites provide an abundance of information, Nike allows users to create personal profiles in choosing colors, sports preferences, etc. Newbalance offers a membership club for updating users to new offers, but lacks the degree of individualization that Nike possesses. The gold standard in terms of marketing, targeted advertising on an individual level is probably better achieved through Nike than Newbalance.

  1. Suggest one or more customer benefits not listed previously that the “better” site contains.

Once again both websites provide an abundance of information. So long as targeted market segments are satisfied, both websites should meet the demands of the market place. However, as of this writing Nike could be considered the better site because of a larger degree of segmentation and personalized services that Newbalance does not provide.

  1. Based on your analysis of Nike’s site, is it interested in relationship marketing? Support your answer.

Nike is very interested in relationship marketing, as they create, maintain, and enhance relationships that are value-laden with the customer. This is epitomized with their “Create your own NIKE” program. Furthermore, in becoming a member, the consumer has the opportunity to set up their own shopping cart that they can keep full until they decide to make a purchase.

Internet Exercise: Strategic Planning for Online Marketing

Online book selling is big business. The first successful online bookseller was Amazon.com, an exclusively online retailer. The company quickly established itself as the market leader. Attracted by the profit potential, Barnes & Noble, Borders, and others have followed suit. More recently Amazon has diversified into many other lines of business: music, video, electronics, toys, and online auctions. Is this a good strategy for Amazon? To partially answer this question, conduct an analysis of the online music industry. Complete the table by first visiting and identifying two of Amazon’s toughest online music store competitors in addition to Tower Records.. Then review the BizRate comments and visit each competitor’s site to finish the table. If BizRate isn’t currently rating two other music stores, do a search at Google.com and find two competitors to rate yourself.

Amazon
/ Tower Records
/ Other Competitor / Other Competitor
Who rated site for BizRate?
BizRate overall customer rating
Products sold in addition to CDs
Market positioning *
Competitive advantage *
Competitive weakness *

*Infer from viewing site and ratings.

For Discussion

Analyze Amazon’s strategy by answering the following questions.

1. How does Amazon compare to its competition in the music industry?

Given the prevalence of file sharing within the realms of digital music, online retailers without a Bricks-and-Mortar presence are severely hampered. This is because music is often sold by the download for pennies to the dollar when compared to traditional product offerings that are still on physical media such as CD’s or DVD’s. Thus, Amazon offers a wide selection of music like many of their mainstream competitors; however, switching costs are low for digital media especially when available for free. In addition, Amazon doesn’t specialize in any particular segment of the industry. The main advantage over competitors is that they offer a wide variety of other items making shopping more convenient when shopping for more than just music.

2. What is Amazon’s mission statement? You can guess at this by reading about

the company at .

For a major online retailer, it is interesting to note the difficulty in finding Amazon’s mission statement. Frequent updates to its site can make the search for a mission statement perplexing. Amazon is committed to customer satisfaction and the delivery of an educational and inspiring shopping experience.

3. Does the music business fit with Amazon’s mission? Why or why not?

Amazon’s goal of customer satisfaction relies greatly upon offering a wide selection of products in music as well as other industries. The music business is but one asset Amazon relies upon in its one-stop shopping methodology for the web. This fits within Amazon’s goals of providing an inspiring shopping experience because users can stay within one website whether buying music, books, or toys.

4. Should Amazon be in the music business? Justify your response.

Amazon has become a superstore, offering a wide variety of goods to the consumer. Buying an item, such as a CD, over the Internet should be an enjoyable and easy experience for consumers. Amazon’s integration of one-click purchasing technology as well as individualized customization tools all aim at improving that experience. Consumers should feel confident in their music purchases since products should be identical to those they would get in bricks-and-mortar stores. People typically feel confident in online purchases that don’t require a large amount of in-store assistance in the purchase decision. For example, people typically feel confident in purchasing CD’s, airline tickets, and office supplies over the Internet. Whereas, consumers looking to purchase homes, automobiles, and large home appliances are more likely to use traditional means of purchase, since the advice of a salesperson is typically needed when making a purchase decision.

5. Is there any synergy between Amazon’s many product areas? If so, what is it?

There is definitely synergy between the many product categories that Amazon is involved in. Much like a bricks-and-mortar superstore, Amazon’s many product categories provide the opportunity for additional sales. Furthermore, most products that Amazon sells can be shipped through the same distribution channels. This allows the company to sell goods at a reduced rate, as they receive shipping discounts as well as saving on retailing costs.

6. Years ago Sears used to advertise that “Sears has everything!” Is Amazon

becoming the Sears of the Internet? If so, is it a good strategy?

A “have everything” strategy is the way to go if you can be the price leader. For instance, Walmart has a product offering comparable to Amazon. They offer “Everyday Low Prices,” which makes them the price leader. Sears may have been able to offer everything, but they were unable to do so at the lowest possible price. Amazon is becoming the Sears of the Internet, in the sense that they offer nearly everything to a large number of consumers and are able to do so by reducing costs in shipping, retailing, and wharehousing. Notice that Amazon offers a large number of products in many categories and partners with other retailers to provide the ultimate one-stop shopping experience.

7. Does Amazon pursue different product strategies in its U.K. and German

operations?

Amazon’s operations in the UK and Germany are very similar to those of its US counterpart; however, the product offering is not as broad. As distribution channels and overseas partnerships improve, operations abroad are likely to improve as well. In addition, popular products that are unique to specific geographic regions will influence product strategies as well.