E-Marketing Fundamentals and Business-to-Business Strategies

E-Marketing Fundamentals

Marketing Segmentation

• Geographic Segmentation: Dividing a market based on location.

• Demographic Segmentation: Dividing a market based on demographic variables.

  • Uses age, gender, family size, income, education, religion, or ethnicity.

• Psychographic Segmentation: Dividing a market based on psychological attributes.

  • Various social classes, personalities, or approaches to life.
  • Includes: Segmentation using customer behavior.

Applying to Internet Commerce

Internet commerce applies segmentation by:

1. Collecting user profiles.
2. Performing automatic analysis (e.g., personalization and classification).

Data sources for user profiles and analysis include:

• User input (e.g., user profile).
• Previous transactions.
• Other sources (e.g., from partner websites).

Behavioral and Occasion Segmentation

Behavioral Segmentation

Focuses on user behavior, often for the same person across different interactions.

Occasion Segmentation

Divides the market based on occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item.

Life Cycle Segmentation

Customer life cycle stages often include:

1. Awareness
2. Exploration
3. Familiarity
4. Commitment
5. Separation

Customer Retention and Costs

Focuses on retaining existing customers and managing associated retention costs.

Affiliate Marketing Strategies

• Pay-Per-Click (PPC) Model
• Pay-Per-Conversion Model

Viral Marketing Strategies

Strategies designed to encourage users to pass on a marketing message to others, creating exponential growth in the message's exposure.

User Classification

Six Behavior-Based Categories

Users can be classified into categories based on their online behavior:

1. Simplifiers
2. Surfers
3. Bargainers
4. Connectors
5. Routiners
6. Sportsters

Business-to-Business (B2B) Operations

Core B2B Functions

Procurement

• Multiple transactions to multiple suppliers, as one of many buyers.
• Global sourcing of potential suppliers.

Logistics

• Movement of raw materials, products, and staff.
• Utilizes Enterprise Resource Planning (ERP) systems.

Supporting Functions

• Accounting
• Billing
• Personnel management
• Project management

Supporting Activities in B2B

Finance and Administration

• Payments processing
• Capital expenditures planning
• Budgeting
• Operation of computer infrastructure, etc.

Human Resources

• Employee recruitment and training
• Benefit administration
• Record keeping, etc.

Technology Development

• Networking research
• Providing external connections
• Research and Development (R&D) of new/modified products, etc.

Key Business Systems

Customer Relationship Management (CRM)

• Focuses on customers.
• Focuses on sales records.
• Provides predictions for future sales and marketing.
• Offers a 'Customer Portal' to potential buyers.
• Question: How to fulfill sales?

Enterprise Resource Planning (ERP)

• Focuses on resources within a firm.
• Focuses on how to fulfill sales.
• Previously called MRP (Material Requirements Planning), primarily focusing on materials in stock for the manufacturing industry.
• Now covers supporting functions as well.

Supply Chain Management (SCM)

• Focuses on getting the supply for raw materials (i.e., focus on suppliers).
• Focuses on availability of supply, consumption of supply within the company, and processing/movement of supply.
• In many contexts, overlaps with ERP and CRM (e.g., planning a new marketing campaign will require extra supply and logistical arrangements for processing, accounting, transport, etc.).

Strategic Goals for Business Systems

These systems are roughly grouped into three goals:

1. Manage Current Business Operations
2. Create New Customers (requires projection and forecasting, asking 'what-if' questions)
3. Create New Products (requires projection and forecasting, asking 'what-if' questions)

Electronic Data Interchange (EDI)

• EDI is a computer-to-computer transfer of business information (transaction data) between two businesses (trading partners) using a standard format.
• Transaction data in B2B transactions include traditional paper invoices, purchase orders, requests for quotations, bills of lading, and receiving reports.
• Electronic Funds Transfer (EFT) is an example application of EDI.

EDI Connection Methods

Two primary connection implementation methods between trading partners:

• Direct Connection: Uses an on-site EDI translator computer.
  • Disadvantages: Troublesome setup, expensive, and difficult to implement.
• Indirect Connection: Uses a Value-Added Network (VAN).