Chapter One

A MARKETING PERSPECTIVE IN THE INTERNET AGE

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Learning Objectives

To develop a conceptual foundation for comparing (Similarities and differences) between traditional and Internet marketing

To examine how human advances in communication, numeracy and computing contributed to the creation of the internet (Important links to the Internet’s past)

To identify the immediate precursors to today’s commercial Internet

To consider the state of the Internet economy and theorize about its future

Internet

The internet is a global network of interconnected computer networks, built on common standards

E-mail and data files move over phone lines, cables, and satellites from sender to receiver.

There are two special uses of the internet:Intranet: network that runs internally in an organization.

(china) China's Great Firewall impedes foreign trade

Extranet: two joined networks that share information.1-3

Origins of the Internet

The Internet started in 1969 as the ARPANET, a network for academic and military use. (Initial ARPA and DARPA research)

Two key early adopters: Rogers model for the adoption and diffusion of innovations

University instructors and researchers

The United States military

Origins of the Internet

Researchers began work in 1960s

Four peer computer nodes connected in 1969

Development of TCP/IP protocols

Origins of the Internet

Governed initially by the National Science Foundation, which prohibited all commercial transactions

Services include the Web, e-mail, file transfers, etc.

Email propelled the Internet off campus and outside the military

The World Wide Web

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The Web is the portion of the internet that supports a graphical user interface for hypertext navigation with a browser.

The Web is what most people think about when they think of the Internet.

The Internet Goes Mainstream

E-Marketing’s Past: Web 1.0

Government regulation dissolved in early 1990s

By 1994, the Internet had gone commercial

Tim Berners-Lee

Talks: Tim Berners-Lee on the next WebWeb 1.0 connected people to networks.

The WebMost popular service on the Internet, the release of the World Wide Web

Developed in early 1990s

Provides access to Web pages (HTML documents)

Can include text, graphics, animations, music, videos

Web content has grown exponentially, from around 2 billion Web pages in 2000 to around 40 - 50 billion today

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Booms and Busts

Fascination with the web also led to an infusion of investment capital

The first generation of e-business was like a gold rush

Aggressive, expensive battle for customers doomed many start-ups

Greater discipline and more cost-effective marketing plans allowed the dot-com era to take root

Between 2000 and 2002, more than 500 internet firms shut down in the U.S. (dot-com bubble)

Web 2.0The “new” Web

Web 2.0 connected people with machines and each other

Web 2.0 is the second generation of internet technology and includes:

Applications and technologies that allow users to: create, edit, and distribute content share preferences, bookmarks, and online personasparticipate in virtual livesBuild online communitiesSlide

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Web 2.0The “new” Web

Blogs

Social networking

Photo, video, and bookmark sharing

ExamplesYouTube, Photobucket, FlickrMySpace, Facebook, LinkedInSecond LifeWikipedia

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The Future: Web 3.0

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The newest technologies allow marketers to focus on user:

Engagement

Participation

Co-creation

Online gaming represented over $1 billion in revenue and 15 million players in 2006.

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Defining Marketing in the Internet Age

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Defining Marketing in the Internet Age

Marketing Is a collection of activitiesBrings buyers and sellers together Facilitates satisfying exchangesAdds valueOccurs online, offline, and collaboratively in both environments

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Defining Marketing in the Internet Age

Internet marketing or Emarketing is marketing in electronic environments, primarily on the Internet

Like, traditional marketing, the goal of Internet marketing is to facilitate exchange, build long-term customer relationship and create value, which is the benefits received from marketing exchange

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Defining Marketing in the Internet Age

Customer satisfaction is at the heart of marketing

The Internet adds to the customer satisfaction by delivering time, place and form utility

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Defining Marketing in the Internet Age

Time utility happens because web storefronts never close

Information is available nonstop and searches can be conducted and purchases made whenever the visitor is connected

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Defining Marketing in the Internet Age

The Internet is an always on 24/7/365 environment

24 hours a day

7 days a week

365 days a year

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Defining Marketing in the Internet Age

Place utility is provided by entertainment, news, weather, software and other virtual products that can be delivered directly from the Internet to the visitor’s computer screen or wireless device

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Defining Marketing in the Internet Age

Form utility when products are customized or made available in the desired assortment or quantities

The Internet facilitates product customization on a scale that cannot be achieved offline

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Dot-com

Originally, the term dot-com referred to businesses that were solely online without an offline store, production facility, or office

Today the term more broadly means the online operation of a clicks-only or brick-and-clicks enterprise

Why Study E-marketing?

Technology is different and more powerful than other technologies

Has challenged much traditional marketing thinking

Has a number of unique features that help explain why we have so much interest in e-marketing

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Unique Features of E-marketing Technology

Ubiquity

Global reach

Universal standards

Information richness

Interactivity

Information density

Personalization/customization

Social technologySlide 1-24

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Links to the Internet’s Past

It’s wise to look to the future and learn from the past

Connections to past events, discoveries, innovations paved the way for the Internet

Why is it so important that Ancient people developed written languageLiteracy spreadIndustrialization occurred Production became mobileComputers were created Computing power increased; prices fell

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Table 1-4

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Table 1-4

What Lies Ahead

Just 15 percent of the world’s 6.3 billion population is online

And the dominance of American users is steadily shrinking

New Technologies, New Opportunity

Advanced Connection Devices – from cell phones to home wireless systems – increase the potential online consumer audience

Faster Internet Connections bring marketing messages to the audience more swiftly

A Shift for Marketing

From “Selling the Brand” – The old model emphasized on mass production and a promoting a distinct brand

To “Managing the Consumer” – Online marketing puts focus on the customer’s individualized interests and demands

Static websites provide basic information and game broadcasts

Dynamic websites allow greater fan interaction and facilitate ecommerce

Personalized websites respond to individualized fan interaction

Keyword Advertising links fans to potential travel and tourism sites

Rethinking Marketing Strategy

Three General Purposes Technologies form the foundation of Internet

marketing and pave the way for greater

innovation: The Digital Revolution

Networking

Individualization

E-marketing Trends: 2010New marketing models based on social technologies and user-generated content

Search engine marketing challenges traditional marketing

More and more people/businesses use Internet to conduct marketing

Broadband and wireless Internet access growing

Continued conflict over copyrights, content regulation, taxation, privacy, Internet fraud and abuse. Slide

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Potential Limitations on the Growth of E-marketing

Expensive technology

Sophisticated skill set

Persistent cultural attraction of physical markets and traditional shopping experiences

Persistent global inequality limiting access to telephones and computers

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Consumers Have More Control

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The internet provides a communication platform for individual comments, both positive and negative.

Comments can spread quickly and rapidly.

New technologies such as digital video recorders (DVRs) will increase consumer control.

New service Akimbo maintains a library of over 10,000 programs with access via the internet, television, or other appliance.

Power Shift from Companies to Individuals

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Exhibit 1.7

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TEXT-READING in Class

p.7, Links to the Internet's Past

Interview YouTUBE

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/The End/