E-marketing is a process of planning and executing the conception, distribution, promotion, and pricing of products and services in a computerized, networked environment, such as the Internet and the World Wide Web, to facilitate exchanges and satisfy customer demands. It has two distinct advantages over traditional marketing. E-marketing provides customers with more convenience and more competitive prices, and it enables businesses to reduce operational costs.
As businesses offer e-marketing and online shopping, customers can get market information from their computers or cell phones and buy goods or find services without leaving home twenty-four hours a day and seven days a week (24/7). They can read ads on the Web or from e-mail, get e-coupons, view pictures of goods, compare prices, and make purchases with a few clicks of their mouse, saving the time and money it would take to shop in person at a brick-and-mortar store. At the same time, ebusinesses can reduce costs in distribution channels and physical store space and thus pass the savings on to customers.
To make e-marketing effective and efficient, managers of e-businesses need to know online customer behavior, e-marketing techniques, costs and benefits of emarketing over traditional marketing, and pitfalls and legal issues of e-marketing. A discussion of each of these aspects follows.
ONLINE CUSTOMER BEHAVIOR
In the late 1990s online shoppers were mainly well-educated, high-earning, twenty- to forty-year-olds. By 2003 online shoppers represented a broader demographic, with an average age of forty-four years and an average annual household income of $65,000. Of these shoppers, 50 percent were female and 50 percent were college graduates. According to a 2004 report from the U.S. Department of Commerce, in 2003 searching for product/service information was the second most popular online activity after e-mailing or instant messaging and 77 percent of U.S. Internet users age fifteen and older shopped online. E-customers researched products and services that they were considering for purchase online. Their final purchases, however, may not have been made online.
Several reasons are behind the reluctance to purchase online. Studies published in 2003 and 2004 reported that 25 percent of e-commerce sites do not display a phone number clearly on the customer service page; 49 percent of online shoppers could not readily find the answers to a question; and 88 percent of shoppers abandoned their online shopping carts before reaching the checkout. The Yankee Group, a Boston-based research firm, indicated that up to the first quarter of 2003, the average conversion rate from shopping in brick-and-mortar stores to buying on e-commerce sites was just 10 percent.
E-customers' most serious concern is security and privacy, followed by price, delivery cost, return policy, customer service, site design, navigation, one-click shopping, and personalization. E-marketers must assure customers that their sites use cybercrime-proof systems to protect ecustomer information and clearly display the security/privacy statement on their sites. Competitive prices, discounts, e-coupons, free delivery, and standard return policies motivate initial online purchases and repeat purchases. Nevertheless, requiring too many mouse clicks for navigating on a site, a lack of easily accessible help, technical difficulties, and requesting too much customer information for purchasing goods often causes shoppers to abandon their online shopping carts before reaching the checkout.
E-marketing techniques can be broken down to pull and push marketing. Pull marketing is a passive technique by which online shoppers take the initiative requesting specific information on the Web. Search engines, product/service advertising, e-coupons, and e-samples are part of pull marketing. For example, e-marketers can register their e-commerce sites, products, and services with search engines such as Google and or Yahoo, thereby enabling online shoppers to search for product/service information using Google or Yahoo and link to their sites. Similarly, e-marketers can also register their e-coupons and e-samples with e-coupon sites such as ecoupons.com and e-sample sites such as yes-its-free.com.
Push marketing is a proactive technique that enables e-marketers to "push" their product/service information to Web visitors or shoppers without their requesting it. Banner advertising, pop-up advertising, e-mail promotion, and spamming belong to push marketing. For instance, e-marketers can rent designated space from Internet service providers such as America Online or MSN for their banner or pop-up ads. Using animated graphics, appealing messages, and links, e-marketers try to lure visitors to their sites to buy their products or services. Many Internet users, however, find such ads annoying and employ software that blocks pop-ups and banner ads.
E-mail promotion is widely used by e-marketers to send new product/service information to their registered customers. For example, airline companies periodically e-mail their registered customers about their e-fares and promotional vacation packages. Spamming refers to sending millions of e-mail promotions to recipients who have never asked for the information. These recipients' e-mail addresses are often purchased or swapped with other businesses. Spamming is at best unethical and at worst illegal.
COSTS AND BENEFITS OF E-MARKETING
E-marketing can offer more competitive prices than traditional marketing because e-marketing reduces costs by not having to maintain physical store space and by strategically placing distribution centers throughout the country. Second, because the Internet is available 24/7, e-marketing enables shoppers to search for product/service information and buy goods at their convenience, not just when the store is open. Third, research indicates that the cost of Internet-based promotion is one-fourth of traditional promotion, because it does not incur the costs of paper, printing, handling, and mailing. Fourth, e-marketing enables buyers to custom-build products such as shoes, clothes, computers, and automobiles on the Web, options often not available in stores.
PITFALLS AND LEGAL ISSUES
Failures and successes in e-marketing have shown that when marketing goods online results in distribution, storing, or shipping and handling costs higher than the value of the goods, an exclusively online enterprise may be headed for a short life. In addition, e-marketers need to be aware of cultural pitfalls when designing e-commerce sites for foreign markets.
E-marketers must operate their businesses in compliance with numerous laws. For example, e-marketers are responsible for protecting customers' privacy; without customers' permission, they are not legally allowed to share or sell customers' information to a third party. Copying other businesses' Web information for commercial use is also in violation of copyright law.
see also Cyber Crime; Electronic Commerce
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Zhao, Jensen J., Whitesel, Joel A., Alexander, Melody W., et al. (2004). The quality of Fortune 500 B2C e-commerce Web sites: An experiential assessment by online shoppers. Issues in information systems, 5 (1), 359–365.
Jensen J. Zhao