Session 05.pdf

# Consumer behavior models in e-commerce Consumer behavior models in e-commerce aim to predict or explain a wide range of consumer decisions, drawing on demographic factors and immediate intervening variables. Consumers often shop online primarily for convenience [3](#page=3). ## 1. Consumer behavior models ### 1.1 The study of consumer behavior The study of consumer behavior is a social science discipline. It attempts to predict or explain a wide range of consumer decisions based on background demographic factors and other intervening, more immediate variables [3](#page=3). ### 1.2 The online purchasing decision process The consumer decision process for online purchasing involves five stages, which are similar to those in offline behavior [5](#page=5) [7](#page=7): 1. **Awareness of need** [5](#page=5). 2. **Search for more information** [5](#page=5). 3. **Evaluation of alternatives** [5](#page=5). 4. **Actual purchase decision** [5](#page=5). 5. **Post-purchase contact with firm** [5](#page=5). ### 1.3 General online behavior model A general model for online consumer behavior considers several factors: * **Consumer skills** [7](#page=7). * **Product characteristics** [7](#page=7). * **Attitudes toward online purchasing** [7](#page=7). * **Perceptions about control over Web environment** [7](#page=7). * **Website features**: This includes latency, usability, and security [7](#page=7). * **Clickstream behavior**: This refers to the sequence of pages a user views on a website [7](#page=7). > **Tip:** Understanding these factors helps e-commerce businesses design more effective websites and marketing strategies. #### 1.3.1 Clickstream behavior Clickstream factors provide insights into user behavior and can be used for marketing purposes. These include [9](#page=9): * Number of days since the last visit [9](#page=9). * Speed of clickstream behavior [9](#page=9). * Number of products viewed during the last visit [9](#page=9). * Number of pages viewed [9](#page=9). * Whether personal information has been supplied [9](#page=9). * Number of days since the last purchase [9](#page=9). * Number of past purchases [9](#page=9). **Clickstream marketing** is developed dynamically as customers use the Internet [9](#page=9). > **Example:** A website noticing a user spending a long time on product pages might dynamically offer a discount or related product recommendations. ### 1.4 Shoppers: browsers and buyers In the U.S., over 92.5% of Internet users are shoppers, with 83.5% being buyers. Approximately 9% are browsers, and only 7.5% do not shop online. E-commerce and traditional commerce are closely coupled, with online activities influencing offline brands and shopping, and vice versa [10](#page=10). ### 1.5 How shoppers find vendors online Shoppers are generally goal-oriented and highly intentional when looking for vendors online. The primary methods include [11](#page=11): * Using search engines (a majority) [11](#page=11). * Going directly to an online marketplace [11](#page=11). * Going directly to specific retail websites [11](#page=11). > **Tip:** Search engine optimization (SEO) and presence on popular online marketplaces are crucial for vendor visibility. ### 1.6 Trust, utility, and opportunism in online markets Several factors significantly influence whether consumers choose to shop online or not. These are [12](#page=12): * **Trust**: This is a perception of credibility, ease of use, and perceived risk. Sellers build trust through strong reputations for honesty, fairness, and reliable delivery [12](#page=12). * **Utility**: This refers to perceived benefits such as better prices, convenience, and speed [12](#page=12). * **Opportunism**: This is related to the asymmetry of information, where one party has more or better information than the other [12](#page=12). > **Example:** A consumer might be hesitant to buy from an unknown website due to a lack of trust (perceived risk), even if the prices are competitive (utility). Conversely, a well-known brand's website might enjoy high trust, leading to more purchases. --- # Digital commerce marketing and advertising features Digital commerce marketing and advertising are characterized by several distinct features that differentiate them from traditional marketing approaches. These features include personalization, participation, peer-to-peer interaction, and community building, with the most effective online marketing strategies leveraging all four aspects [13](#page=13). ### 2.1 Distinctive features of online marketing Online marketing offers a more dynamic and interactive experience compared to traditional methods. The key distinguishing features are: * **More personalized:** Online platforms allow for tailored marketing messages and offers based on individual user data, preferences, and behavior [13](#page=13). * **More participatory:** Consumers can actively engage with brands and marketing content, providing feedback, contributing to content, and co-creating experiences [13](#page=13). * **More peer-to-peer:** The online environment facilitates direct communication and recommendations between consumers, influencing purchasing decisions through social networks and reviews [13](#page=13). * **More communal:** Online channels enable the formation of communities around brands or products, fostering a sense of belonging and shared experience among customers [13](#page=13). The synergy of these four features is crucial for maximizing the impact of online marketing efforts [13](#page=13). ### 2.2 Strategic considerations for digital marketing Implementing an effective digital marketing strategy involves addressing several key strategic issues and questions: * **Prioritization of marketing plan elements:** Determining which components of the marketing plan should be addressed first [14](#page=14). * **Platform integration for message coherence:** Ensuring a unified and consistent brand message across various digital platforms [14](#page=14). * **Resource allocation:** Deciding how to distribute marketing budgets and other resources effectively among different digital channels and activities [14](#page=14). * **Metrics measurement and comparison:** Establishing methods to measure and compare performance metrics from disparate platforms [14](#page=14). * **Linking digital efforts to sales revenues:** Developing a system to track and attribute sales directly to specific digital marketing initiatives [14](#page=14). --- # The digital marketing roadmap and its components The digital marketing roadmap outlines a comprehensive strategy for online and offline marketing efforts, encompassing various channels to reach and engage target audiences [15](#page=15) [20](#page=20) [44](#page=44). ### 3.1 Overview of the digital marketing roadmap The digital marketing roadmap serves as a strategic framework for businesses to navigate the complex landscape of online and offline marketing. It categorizes various marketing activities into distinct channels, providing a structured approach to campaign planning and execution [15](#page=15) [20](#page=20) [44](#page=44). ### 3.2 Key components of the digital marketing roadmap The roadmap is comprised of several core components, each representing a distinct area of digital marketing: #### 3.2.1 Website The website is the central hub of a digital marketing presence, serving as a primary platform for information, engagement, and transactions [15](#page=15) [20](#page=20) [44](#page=44). #### 3.2.2 Traditional online marketing This category includes established digital marketing tactics that have been foundational in online advertising. It encompasses [15](#page=15) [20](#page=20) [44](#page=44): * **Search engine marketing:** Strategies aimed at increasing visibility on search engine results pages (SERPs). * **Display advertising:** Visual ads, such as banner ads, placed on websites and other digital platforms. * **Email marketing:** Direct communication with prospects and customers via email to build relationships and drive sales. * **Affiliate marketing:** A performance-based marketing strategy where a business rewards affiliates for each customer brought in through the affiliate's marketing efforts. #### 3.2.3 Social marketing Social marketing leverages social media platforms and related channels to connect with audiences, build communities, and drive brand awareness and action. This includes [15](#page=15) [20](#page=20) [44](#page=44): * **Social networks:** Platforms like Facebook, Instagram, X (formerly Twitter), and LinkedIn [15](#page=15) [20](#page=20) [44](#page=44). * **Blogs:** Online journals or informational websites [15](#page=15) [20](#page=20) [44](#page=44). * **Visual content:** Marketing through images and infographics [15](#page=15) [20](#page=20) [44](#page=44). * **Video marketing:** Utilizing video content for promotion and engagement [15](#page=15) [20](#page=20) [44](#page=44). * **Gaming:** Incorporating marketing into online gaming environments [15](#page=15) [20](#page=20) [44](#page=44). * **Metaverse and NFT:** Emerging areas involving virtual worlds and non-fungible tokens [15](#page=15) [20](#page=20). #### 3.2.4 Mobile marketing Mobile marketing focuses on reaching consumers through their mobile devices. Key elements include [15](#page=15) [20](#page=20) [44](#page=44): * **Mobile sites:** Websites optimized for viewing on smartphones and tablets [15](#page=15) [20](#page=20) [44](#page=44). * **Apps:** Dedicated mobile applications designed for specific functionalities and user experiences [15](#page=15) [20](#page=20) [44](#page=44). #### 3.2.5 Offline marketing While the focus is digital, the roadmap acknowledges the continued importance of traditional, offline marketing channels for a holistic approach. These include [15](#page=15) [20](#page=20) [44](#page=44): * Television advertising [15](#page=15) [20](#page=20) [44](#page=44). * Newspaper advertisements [15](#page=15) [20](#page=20) [44](#page=44). * Magazine placements [15](#page=15) [20](#page=20) [44](#page=44). * Radio commercials [15](#page=15) [20](#page=20) [44](#page=44). > **Tip:** A successful digital marketing roadmap integrates these various components, ensuring synergy between online and offline efforts to create a cohesive brand experience. The specific mix and emphasis on each channel will depend on the target audience, business objectives, and industry. --- # Traditional online marketing and advertising tools This section provides an overview of various traditional online marketing and advertising tools, detailing their types, functionalities, and associated challenges [23](#page=23) [28](#page=28) [36](#page=36) [39](#page=39). ### 4.1 Search engine marketing and advertising Search engine marketing (SEM) focuses on using search engines for branding purposes. Search engine advertising (SEA) specifically aims to support direct sales through search engines [24](#page=24). #### 4.1.1 Types of search engine advertising * **Paid inclusion:** Websites pay to be included in search engine results pages (SERPs) [24](#page=24). * **Pay-per-click (PPC) search ads:** Advertisers pay a fee each time their ad is clicked. This category includes: * **Keyword advertising:** Ads are displayed based on specific keywords that users search for [24](#page=24). * **Context advertising:** Ads are displayed based on the content of the web page being viewed [24](#page=24). #### 4.1.2 Search engine optimization (SEO) SEO involves improving a website's ranking in search engine results by optimizing it according to search engine algorithms. This can also extend to utilizing social media platforms for increased visibility through social search [27](#page=27). #### 4.1.3 Search engine issues Several issues can arise within search engine marketing: * **Organic search:** While natural, the complexities of algorithms can be difficult to master [27](#page=27). * **Paid inclusion and placement practices:** Transparency and fairness in how websites are listed and ranked can be a concern [27](#page=27). * **Link farms and content farms:** These are often artificial methods to manipulate search engine rankings, creating low-quality content or backlink structures [27](#page=27). * **Click fraud:** This involves fraudulent clicks on pay-per-click ads, inflating advertising costs for businesses [27](#page=27). ### 4.2 Display ad marketing Display advertising encompasses a wide array of visual ad formats placed on websites and applications [29](#page=29). #### 4.2.1 Types of display ads * **Banner ads:** Static or animated graphical advertisements typically placed at the top or bottom of a webpage [29](#page=29) [30](#page=30). * **Rich media ads:** Interactive advertisements that may include video, audio, or other dynamic elements to engage users [29](#page=29) [31](#page=31). * **Interstitial ads:** Full-screen ads that appear before a user reaches their desired content or between pages [29](#page=29). * **Video ads:** Advertisements presented in video format, often before, during, or after video content [29](#page=29) [32](#page=32). * **Sponsorships:** Brands sponsor specific sections of a website, content, or event, gaining prominent visibility [29](#page=29) [33](#page=33). * **Native advertising:** Ads designed to blend seamlessly with the surrounding editorial content, mimicking the look and feel of the platform they appear on [29](#page=29) [34](#page=34). * **Content marketing:** While often a broader strategy, it can include paid promotion of content that subtly promotes a brand [29](#page=29). * **Advertising networks:** Platforms that connect advertisers with publishers to facilitate the placement of ads across multiple websites [29](#page=29). * **Ad exchanges, programmatic advertising, and real-time bidding (RTB):** Advanced systems for the automated buying and selling of ad inventory, often in real-time auctions [29](#page=29). #### 4.2.2 Display advertising issues Display advertising faces several challenges: * **Ad fraud:** Similar to click fraud, this involves deceptive practices aimed at generating fake impressions or clicks [35](#page=35). * **Viewability:** Concerns arise when ads are not actually seen by users, even if they are served [35](#page=35). * **Ad blocking:** The increasing use of ad-blocking software by consumers can prevent ads from being displayed, reducing their effectiveness [35](#page=35). ### 4.3 E-mail marketing E-mail marketing involves sending messages directly to users who have expressed interest in a product or service [37](#page=37). #### 4.3.1 Benefits of e-mail marketing * **Inexpensive:** It is a cost-effective method for reaching a large audience [37](#page=37). * **Click-through rates:** Typically averages around 3% to 4% [37](#page=37). * **Measurable responses:** Offers the ability to track and analyze user interactions [37](#page=37). * **Personalization and targeting:** Allows for tailored messages to specific audience segments [37](#page=37). #### 4.3.2 E-mail marketing challenges * **Spam:** Unsolicited commercial e-mail is a significant problem. Around 45% of all e-mail in 2022 was unsolicited, often originating from bot networks. Efforts to control spam have seen limited success [37](#page=37) [38](#page=38). * **Anti-spam software:** While designed to combat unsolicited e-mail, it can sometimes lead to legitimate messages being blocked [37](#page=37). * **Poorly targeted purchased e-mail lists:** Using lists that are not relevant to the target audience can lead to low engagement and high unsubscribe rates [37](#page=37). ### 4.4 Affiliate marketing Affiliate marketing involves paying a commission fee to other websites or individuals (affiliates) for referring customers to one's own website [40](#page=40) [41](#page=41). ### 4.5 Viral marketing Viral marketing is a strategy designed to encourage customers to spontaneously share marketing messages with others, leading to rapid and widespread dissemination, much like a virus [40](#page=40) [42](#page=42). ### 4.6 Lead generation marketing Lead generation marketing focuses on providing services and tools to effectively collect, manage, and convert potential customers (leads) into actual customers [40](#page=40) [43](#page=43). --- ## Common mistakes to avoid - Review all topics thoroughly before exams - Pay attention to formulas and key definitions - Practice with examples provided in each section - Don't memorize without understanding the underlying concepts

| Term | Definition | |------|------------| | Omnichannel | A strategy that aims to provide customers with a seamless shopping experience across multiple channels, both online and offline. | | E-commerce marketing | The practice of promoting products and services through online channels to drive sales and build customer relationships. | | Consumer behavior | The study of how individuals, groups, or organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. | | Online purchasing decision process | The series of steps a consumer takes when making a purchase decision online, typically including need awareness, information search, evaluation of alternatives, purchase decision, and post-purchase evaluation. | | Clickstream behavior | The record of a user's navigation path on a website, including pages visited, time spent on each page, and clicks made, which provides insights into user engagement and preferences. | | Search engine marketing (SEM) | A digital marketing discipline that involves promoting websites by increasing their visibility in search engine results pages (SERPs) through paid and unpaid optimization techniques. | | Search engine advertising (SEA) | A component of SEM that focuses on paid advertisements appearing on search engine results pages, often based on keyword targeting. | | Search engine optimization (SEO) | The process of optimizing a website to improve its ranking in organic (non-paid) search engine results, aiming to increase visibility and attract more relevant traffic. | | Display ad marketing | A form of online advertising that uses visual elements like banners, rich media, or video ads to reach target audiences across various websites and platforms. | | Banner ads | Rectangular graphic advertisements displayed at the top, bottom, or sides of a webpage, commonly used in display advertising to promote products or services. | | Rich media ads | Online advertisements that incorporate elements such as video, audio, or interactive features to create a more engaging user experience than static banner ads. | | Interstitial ads | Full-screen advertisements that appear between content transitions, such as before a new page loads or after a video finishes, often capturing user attention. | | Video ads | Advertisements that utilize video content to convey marketing messages, typically appearing before, during, or after online video content, or as standalone ad units. | | Sponsorships | A marketing strategy where a brand provides financial or other support to an event, content creator, or platform in exchange for advertising and brand visibility. | | Native advertising | Advertising content that matches the form and function of the platform on which it appears, designed to be less intrusive and more integrated with the surrounding editorial content. | | Content marketing | A strategic marketing approach focused on creating and distributing valuable, relevant, and consistent content to attract and retain a clearly defined audience — and, ultimately, to drive profitable customer action. | | Advertising networks | Companies that act as intermediaries, connecting advertisers with publishers to facilitate the placement of advertisements across a network of websites. | | Programmatic advertising | The automated buying and selling of digital advertising space, using technology and algorithms to target specific audiences and optimize ad placements in real-time. | | Real-time bidding (RTB) | A process within programmatic advertising where ad impressions are bought and sold on an impression-by-impression basis through an instantaneous auction. | | Ad fraud | Deceptive practices designed to generate illegitimate advertising revenue, such as click fraud, impression fraud, and bot traffic. | | Viewability | A metric in online advertising that measures whether an ad was actually seen by a user, typically defined as at least 50% of the ad being visible for at least one continuous second. | | Ad blocking | Software or browser extensions used by users to prevent advertisements from loading and displaying on web pages, impacting advertiser reach and publisher revenue. | | E-mail marketing | A digital marketing strategy that involves sending promotional messages or commercial content directly to a list of subscribers or potential customers via email. | | Spam | Unsolicited and unwanted commercial email messages, often sent in bulk, that can clog inboxes and degrade the effectiveness of legitimate email marketing efforts. | | Affiliate marketing | A performance-based marketing strategy where a business rewards one or more affiliates for each visitor or customer brought by the affiliate's own marketing efforts. | | Viral marketing | A marketing strategy that aims to encourage consumers to pass along a marketing message to others, much like a virus spreads, leading to rapid and widespread dissemination of the message. | | Lead generation marketing | Marketing activities and strategies focused on identifying and attracting potential customers (leads) and capturing their interest and contact information for future sales engagement. | | Social marketing | The use of social media platforms and their associated tools to connect with an audience, build a brand, increase sales, and drive website traffic. | | Mobile marketing | A set of practices that enables organizations to communicate and engage with their target audience in a more targeted and relevant manner through any mobile device or network. | | Offline marketing | Marketing activities that take place outside of the internet, such as traditional advertising in television, print media, radio, and direct mail. | | Brand identity | The distinctive personality and image of a company or product, communicated through visual elements, messaging, and customer experience. | | Domain name | The part of a network address that identifies a domain name, such as the name of a website (e.g., example.com). | | Brand community | A group of consumers who feel a sense of belonging and connection to a brand, often sharing common interests and engaging in discussions related to the brand or its products. |