In 1997,IBM identified e-business as the “transformation of key business processes using the Internet technologies”. Since then, e-business in general, and e-commerce in particular, being under the influence of various innovations have fundamentally changed not only the business processes but the entire economic environment in the new virtual space. Modern marketing is actively using the results of scientific discoveries in the field of information technology, mathematics, psychology, physics, chemistry, cybernetics, knowledge management. And it changes the practical marketing tools.
#1: Identifying a great Product Range
The essence of the “product” element in e-commerce corresponds partly to the essence of the traditional element concept. By creating additional opportunities for the development of electronic distribution channels, the virtual environment promotes production of commodities and consumer goods, which are to a greater or lesser extent in demand among online consumers.
Online goods and services can be divided into several types:
1. Information products, which can be demonstrated previously, such as audio and video goods.
2. Goods, the purchase of which is preceded by the gathering of a significant amount of information. These are cars, computers and household appliances. This group also includes goods with a low cost, and the customers of these goods study annotations and reviews, for example, books.
3. Goods and services delivered via the Internet channels: software, car rental services, hotel reservation services in hotels and sale of railway and air tickets, travel services.
4. Unique goods sold at electronic auctions or collectable shops.
5. Final consumption goods. When buying them the price plays a significant role (clothing, toys, household goods, etc.).
6. A separate group consists of food products.
The specifics of each product group define the complex of marketing activities. Nevertheless, it is possible to formulate the general strategies of the marketing development in e-business.
In e-commerce, the consumer behavior is changing with respect to both traditional goods, which have a physical form, and to services. In the digital environment, while remaining “one-on-one” with the software interface or
web-site, the user is isolated from direct exposure to the material environment and the direct urging emotional factors.
The characteristic feature of the range of electronic sellers is a possibility to develop the commodity groups of electronic products and services. These are special products that do not have a materialized form. The essential characteristics of such goods are to implement the “economic form” of information, i.e. the forms of its economic realization, exchange, assignment, use and consumption. Moreover, in e-commerce information services are an integral part of the trade services (e.g. consulting services), which is especially relevant in the electronic interaction environment – “seller-buyer”, where there is a high proportion of consumer self-service processes.
#2: Deciding on the Price
At first glance, the price of goods in e-commerce is formed according to the rules of classical price formation. The pricing strategy is based on three components: cost, customer value, and competitors. However, the experience of the world’s leaders in e-commerce indicates the appearance of absolutely unique methods of flexible and personal pricing.
According to Internet Retailer, price-monitoring technology vendor Ugam recorded 9715 price changes of electronics, toys and household goods on Amazon.com during the holiday season from 24 November to 14 December . According to the vice- president of marketing, the Amazon is able to change the price of the product up to 10 times per day, mainly for home appliances and to a lesser extent for clothing. Approximately the price of 20% of all online products is changing daily, and the price of the most running products is updated every few minutes, according to the vice-president of product and business development strategy in the price monitoring company Decide.com, which recently has been acquired by eBay Inc.
Thus, the price in e-business is highly dynamic and depends on market conditions and the pricing strategies can have an individual character for each user, and it is possible due to BigData technologies.
#3: Where will you sell?
The selling development strategy in e-business is influenced by the specificity of the implemented product group. So, for information products the period of time and costs to fulfill the orders are small, for the goods in the physical performance the costs will depend on the shelf life of the product, the chosen method, the volume, the speed of delivery and the client must be informed about the conditions and the cost of delivery in advance.
The place of sale in e-commerce is a site or a marketplace in the social- network. The latter, being the primary point of the contact with the target audience, also performs the promotion functions. In today’s business the place of sale may be a collective platform for a group or for many individual sellers, providing goods at fixed prices (aliexpress.com) or through an auction (ebay.com). An important feature of the place in this case is the maximum availability of sales channels for both buyers and sellers.
#4: Decide on Promotions
Promotion is distinguished by the greatest variety of tools and features in the electronic environment. The promotion activities allow consumers to be engaged in a communication process, and it can incite them to targeted actions (approval, registration, download, purchase, recommendation). In addition, if the marketing campaign is successful, the dissemination of information about the company, the product, and the service becomes viral in nature, and it provides the coverage that can be comparable to leading media figures. The increased interest of the audience also contributes to the growth of commercial indicators .
Each of the promotion tools has been developed in the Network and includes diverse means:
1) Advertising includes display advertising, contextual advertising, social networks advertising, mobile advertising, and native advertising. According to the forecast of ZenithOptimedia in the next two years, the spending on Internet advertising will grow, and by 2020 its share in the total advertising investment will come closer to the share of the costs on television advertising and will be 32.3%, and the greatest growth is expected in the mobile advertising segment. With the increasing penetration of mobile Internet and the number of mobile users, the technology, marketing and advertising opportunities using smartphones and tablets are developing a lot.
2) In the personal selling the function of a seller or a consultant is gradually replaced by smart bots. E-commerce bots enable buying of different goods. Banking bots provide financial services. Watcher bots notify consumer when specific events happen (the flight is delayed, the car needs servicing).
A bot (a common nickname for software robot) is an automated tool that carries out repetitive and mundane tasks.
3) Sales promotion includes social media call to action, e-mail marketing, web-conferences and webinars. The possibilities of social networks are widely used in order to increase the customer loyalty, to motivate them to participate in the actions of sales promotion, to disseminate the marketing information among their friends and acquaintances.
4) Public relations is carried out with the use of social media marketing, content marketing, referral marketing. The consumers acting “brand advocates” promote the formation of public relations, neutralize the negative opinion, and support the company’s image among the target audience. According to the study of Nielsen (2015), in all age groups (generation Z, millennials, generation X, boomers, silent generation) the advertising format, causing the greatest confidence, is friends’ recommendation. The electronic environment allows users to be engaged in a process of communication both with a brand, and also with all contact audiences, which attention the company is reaching.
5) The tool used to support promotion is a search engine marketing, which ensures a search engine indexing, a high position in the search results and an increase of organic traffic.
#5: People , Process , Physical Evidence
This element is represented in the basic model mainly by personnel service
organization, which operates in the contact zone. In the digital environment it is
replaced by technology, which is implemented in the company’s virtual
representation of the interface (for example, the site of the e-shop), and by
aligned service business processes. The human factor in the process of
maintenance is reduced to zero. On the one hand, it may have a positive impact
on the quality of service. The technology is based on algorithms, which are not
characterized by excessive emotionality, fatigue and negligence, etc. On the
other hand, the technology is limited in creativity; it does not have such important human qualities that form the customer loyalty, as empathy, charisma and so on. And we should note that modern interfaces are not only intuitive, but they also include elements of artificial intelligence aimed at the formation of personalized interaction with the consumer. The degree of substitutability of a man working in the contact zone, with the technology, or the robot depends on many factors, and certainly it cannot be 100%. It is important to emphasize the special importance of people’s participation as managers of business processes in e-commerce, in the “invisible” side of a virtual business.
Despite the fact that this influence seems to be indirect (because no one forces him) it often plays a decisive role. The form of such impact is information services provided directly by trade companies (ETF, e-shops), independent communities (non-profit organizations for the protection of consumer rights on the Internet, specialized portals, offering seller ratings, reports of “test purchases”, groups in the social networks and etc.)
The physical evidence in e-business is divided into two components: the traditional physical and virtual. The physical environment is represented by delivery points, off-line shops and offices of the company, but the virtual environment gains a special significance in the electronic environment due to the accessibility and convenience of a purchase. To virtual environments the scientists include: a website and community pages in social networks, mobile applications.
#6: Personalization of marketing in e-commerce
The desire to create a unique offer in terms of technological capabilities of companies and growing competition has identified a key trend in the
development of marketing in e-commerce. That trend is personalization, or proposals for specific customers in accordance with the content, generate interest, activity in social networks, shopping history
#7: Measure Consumer decisions
In the context of high level of entropy of the virtual environment the targeted structured information allows the consumer to make the right decision.
As a rule, while analyzing the rational consumer behavior, the basis is a key
constraint i.e. consumer income.
Consumer behavior refers to the selection, purchase and consumption of goods and services for the satisfaction of their wants. There are different processes involved in the consumer behavior. Initially the consumer tries to find what commodities he would like to consume, then he selects only those commodities that promise greater utility. After selecting the commodities, the consumer makes an estimate of the available money which he can spend. Lastly, the consumer analyzes the prevailing prices of commodities and takes the decision about the commodities he should consume. Meanwhile, there are various other factors influencing the purchases of consumer such as social, cultural, personal and psychological. The explanation of these factors is given below.
1. Cultural Factors
Consumer behavior is deeply influenced by cultural factors such as: buyer culture, subculture, and social class.
Basically, culture is the part of every society and is the important cause of person wants and behavior. The influence of culture on buying behavior varies from country to country therefore marketers have to be very careful in analyzing the culture of different groups, regions or even countries.
Each culture contains different subcultures such as religions, nationalities, geographic regions, racial groups etc. Marketers can use these groups by segmenting the market into various small portions. For example marketers can design products according to the needs of a particular geographic group.
• Social Class
Every society possesses some form of social class which is important to the marketers because the buying behavior of people in a given social class is similar. In this way marketing activities could be tailored according to different social classes. Here we should note that social class is not only determined by income but there are various other factors as well such as: wealth, education, occupation etc.
2. Social Factors
Social factors also impact the buying behavior of consumers. The important social factors are: reference groups, family, role and status.
• Reference Groups
Reference groups have potential in forming a person attitude or behavior. The impact of reference groups varies across products and brands. For example if the product is visible such as dress, shoes, car etc then the influence of reference groups will be high. Reference groups also include opinion leader (a person who influences other because of his special skill, knowledge or other characteristics).
Buyer behavior is strongly influenced by the member of a family. Therefore marketers are trying to find the roles and influence of the husband, wife and children. If the buying decision of a particular product is influenced by wife then the marketers will try to target the women in their advertisement. Here we should note that buying roles change with change in consumer lifestyles.
• Roles and Status
Each person possesses different roles and status in the society depending upon the groups, clubs, family, organization etc. to which he belongs. For example a woman is working in an organization as finance manager. Now she is playing two roles, one of finance manager and other of mother. Therefore her buying decisions will be influenced by her role and status.
3. Personal Factors
Personal factors can also affect the consumer behavior. Some of the important personal factors that influence the buying behavior are: lifestyle, economic situation, occupation, age, personality and self concept.
Age and life-cycle have potential impact on the consumer buying behavior. It is obvious that the consumers change the purchase of goods and services with the passage of time. Family life-cycle consists of different stages such young singles, married couples, unmarried couples etc which help marketers to develop appropriate products for each stage.
The occupation of a person has significant impact on his buying behavior. For example a marketing manager of an organization will try to purchase business suits, whereas a low level worker in the same organization will purchase rugged work clothes.
• Economic Situation
Consumer economic situation has great influence on his buying behavior. If the income and savings of a customer is high then he will purchase more expensive products. On the other hand, a person with low income and savings will purchase inexpensive products.
Lifestyle of customers is another import factor affecting the consumer buying behavior. Lifestyle refers to the way a person lives in a society and is expressed by the things in his/her surroundings. It is determined by customer interests, opinions, activities etc and shapes his whole pattern of acting and interacting in the world.
Personality changes from person to person, time to time and place to place. Therefore it can greatly influence the buying behavior of customers. Actually, Personality is not what one wears; rather it is the totality of behavior of a man in different circumstances. It has different characteristics such as: dominance, aggressiveness, self-confidence etc which can be useful to determine the consumer behavior for particular product or service.
4. Psychological Factors
There are four important psychological factors affecting the consumer buying behavior. These are: perception, motivation, learning, beliefs and attitudes.
The level of motivation also affects the buying behavior of customers. Every person has different needs such as physiological needs, biological needs, social needs etc. The nature of the needs is that, some of them are most pressing while others are least pressing. Therefore a need becomes a motive when it is more pressing to direct the person to seek satisfaction.
Selecting, organizing and interpreting information in a way to produce a meaningful experience of the world is called perception. There are three different perceptual processes which are selective attention, selective distortion and selective retention. In case of selective attention, marketers try to attract the customer attention. Whereas, in case of selective distortion, customers try to interpret the information in a way that will support what the customers already believe. Similarly, in case of selective retention, marketers try to retain information that supports their beliefs.
• Beliefs and Attitudes
Customer possesses specific belief and attitude towards various products. Since such beliefs and attitudes make up brand image and affect consumer buying behavior therefore marketers are interested in them. Marketers can change the beliefs and attitudes of customers by launching special campaigns in this regard.
Steps at a glance
— Include production and end-used goods, delivered through traditional logistics channels; information products and information services delivered through Internet channels; trade and information services provided by
— Use a dynamic pricing policy.Distinguish Price by a high degree of personalization, flexibility, and dependent on market conditions.
— Identify multiple revenue streams using a set of interconnected virtual sales channels, including a website, a trading platform in the social network, a mobile application;
— Promote with a system of tools, including display and paid search advertising, mobile advertising, social media marketing. The use of these tools aims to involve consumers in the process of communication and promotion to broadcast messages of the brand.
— Unify production and delivery of complex commercial and information services on the basis of 100% automated business processes.
— Involve people movement from the contact zone into the invisible part of the business.
— Transform your physical evidence into a virtual environment: a corporate website, a site or a group in a social network, a mobile application.
— Implement a marketing mix with an intelligent mechanism of personal recommendations of products, which has a direct impact on the increase in the productive performance of the commercial organization: the growth in sales and profits, consumer’s encouraging commitment to a trading company. This is due to the fact that in applying the trading service recommendation, the buyer realizes that the company reacts to this request, and the response is individual (effect of personalization) and precise (quality of service).
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