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ACKNOWLEDGEMENT

We‘ve been exposed to words such as ―a teacher, a mentor, a friend or a guide‖.


These words have held individual meanings and been associated with different
people. But we, unanimously agree, that in our journey through this project, we‘ve
been steered by one person, who‘s fulfilled all these roles in our lives. Our deepest
regards and gratefulness is directed to Dr. Debajyoti Mukhopadhyay. Thank you
Sir.

We‘d also like to acknowledge Mr. Atanu Ganguly (Library Assistant) and the
entire student body for support. Thank you for making the compilation of this
project easier.

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ABSTRACT

Information technology has made it imperative for destination marketing


organizations to adapt their traditional business models in order to keep pace with
emerging advertising strategies, changes in the consumer market, and growing
competition. Companies have to do their best to make utmost use of latest
technologies and developments, such as the Internet, so as to maximize
organizations goals. To do this the whole organization has to be committed and the
implementation has to be a comprehensive one. Due to changes which are
occurring in the information technology sector, the way businesses are being
carried out and also the development of the Internet, we have set out in this paper
to identify the interdependence of IT and Marketing.

Primarily, we set out to give an overview of marketing issues related to promotion,


issues including the customer's perception, buying influences and the decision
process, placing a highlight on the marketing mix influences particularly on
promotion. We proceeded by giving an outline of the e- commerce and e-business,
identifying the different categories within e-commerce, the steps involved in
developing e-business within an organization.

Furthermore companies, their adjustment to Information Technology Changes have


been highlighted. Companies need to ensure that such a development should be
used not only to communicate to the customers, but with the customers, benefiting
from their feedback, and thus being able to optimally utilize the arena that IT opens
up.

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CONTENTS

Sl.No. CONTENTS PAGE


1. INTRODUCTION 5
2. OBJECTIVES 8
3. THE CUSTOMER'S PERCEPTION, BUYING 18
INFLUENCES AND THE DECISION PROCESS

4. THE PERPETUAL PROCESS 28


5. E-COMMERCE AND E-BUSINESS 31
6. PROMOTING PRODUCTS 38
7. MAIN FOCUS IN DEVELOPMENT OF WEBSITE 46
8. BUSINESS MODELS ON THE WEB 56
9. ORCALE MARKETING ANALYTICS 64
NEW E-BUSINESS MODEL FOR CASE STUDY
FLOW CHARTS

10. CUSTOMER RELATIONSHIP MANAGEMENT 72


11. ON DEMAND AND ON PREMISE CRM 95
12. CONCLUSION 116
13. BIBLIOGRAPHY 119

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CHAPTER 1
INTRODUCTION

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INTRODUCTION

In September 1997, a new gift shop opened for business on the web. There were
already many gift shops on the web at that time; however, this store named
911Gifts.com, carried items that were chosen specifically to meet the needs of last
minute gift shoppers. Using 911- the emergency telephone number used in most
parts of the United states- in the stores name was intended to convey the
impression of crisis solving urgency. The company‘s two major strengths were its
promise of next day delivery on all items and its site layout, in which gift
selections were organized by occasion rather than by product type. Thus it saved
the shopper time by clicking directly on the occasion viewing a set of gifts ready
for delivery. The site also included a reminder service, called GiftAlert, to help its
customers to avoid other emergency gift situations.
By 1999 the company had 90,000 customers signed up for GiftAlert and was doing
one million dollars in annual sales. It carried out about 500 products, and each of
the products was chosen to yield a gross margin of at least 40 percent.
911Gifts.com was a successful business but the company founders realized that
they would need to build wider awareness of their brand. They also realized that
building a brand would require a substantial amount of funds. The company hired
Hillary Billings, a retail marketing executive whose experience included building
the Pottery Barn catalog business at Williams-Sonoma to create a brand-building
strategy and obtain financing to implement that strategy. Billings undertook a
complete reevaluation of 911Gifts.com marketing plan and after revising it, took to
investors who committed more than $30 million for a rebranding and an overhaul
of the company‘s website. In October 1999, the new brand was born as
RedEnvelope. In many Asian countries gifts of money are enclosed in a simple red
envelope. The new brand was designed to create a sense of elegance and
simplicity, to replace the sense of panic and emergency situations conveyed by the
old brand name.
The product line was revamped to fit the new image as well. About 300 products
were dropped and replaced with different products that focus groups had judged to
be more appealing. The new product line had an even higher gross margin than the
old line. Then Billings launched a massive awareness campaign that included
online advertising, buses in several major cities painted red and festooned with
large red bows, and print advertising in upscale publications. The most important
change in the advertising strategy was the launch of a print catalogue.
RedEnvelope catalogues are mailed to customers to coincide with major gift giving
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occasions and serve as additional reminders. Because red envelopes sells a small
range of products that have been chosen for a visual appeal and for the status they
are intended to convey, the full colour, lushly illustrated print catalogues are a
powerful selling tool.
One year later the results of this exclusive makeover and substantial monetary
investment were clear. RedEnvelope had tripled its number of customers and
increased sales by over 400 percent. The company chose a specific part of the gifts
market and targeted its offerings to meet the needs and desires of those customers.
The company created a brand, marketing plan, set of advertising and promotional
strategies that would expose the company to the largest portion of the market it
could afford to reach. The most important point is that red envelope matched its
inventory selection, delivery methods and marketing efforts to each other and to
the needs of its customers. Today the company continues to use print catalogues
and a focus on upscale product lines to keep its sales increasing each year.
This is the power of IT that has revolutionized the way world perceived marketing.
Today, the amount of business carried out over the Internet is growing fast and has
developed to become the business arena for a number of players of all sectors, size
and nationality. Most of these companies are putting considerable effort into
conquering an anticipated market, offering appealing, attractive and often
expensive interfaced web pages over the Internet.

New technology has completely changed the business environment as we knew it.
Mushroom companies; virtual enterprises; electronic markets; blurring industry
boundaries; and ―fragvergence‖ of cultural differences have completely changed
the world business dynamics. This outlines the implications for marketing
management. For instance, it suggests that the majority of all marketing activities
will have to be at an international level, as target groups are scattered throughout
the world transcending geographical boundaries of countries. As a result, market
research on the Internet has significantly increased in importance; efficient and
quick promotion of ideas, business concepts and services is not just essential but
also a basic subsistence need for companies in today‘s competitive environment.
Enhanced customer intimacy is the call for the hour and reduction of price
flexibility is the strategy.
As Jim Taylor put it, "We have reached one of those fulcrum points in history,
where everything that was is tipping over into everything that will be."
Technology today has opened up channels of information that bring us requisite
information faster than we can possibly assimilate it. There are more books and
magazines, more mailing lists, more demographics, more databases and in turn
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more finesse to our work. Computers have revolutionized print production and the
internet has spawned an entirely new dimension of interactive communication. It
has created the next revolution in marketing. It has opened up brand new
communication channels, the Web, e-mail, and mobile devices with the promise of
even more new channels as the wireless era unfolds. It gives marketers the tools to
capture detailed information about individual customer preferences, and use that
knowledge for personalized marketing; to some extent such an approach is
recreating the intimacy of personal selling.

For marketers, this poses a curious dilemma: while it has never been easier to reach
prospects, never has it been more difficult to get their attention. Via this paper we
attempt at bringing to you the manner in which Information Technology in this
Information age has at times acted as a catalyst to implement marketing strategies
while at other times it has become an integral inseparable part of the marketing
system.

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CHAPTER 2
OBJECTIVES

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OBJECTIVES

Information technology pervades marketing. When you answer the telephone, a


computer may be calling with a sales message. If you buy shares of Intel,
Microsoft, or other company listed with SENSEX, you trade on an electronic
market. SENSEX has no physical location where traders meet. Instead, a network
of securities dealers set bid and ask prices through connections to a common
computer. Such is an example of the great transformation done by the IT sector in
the economy.

Information technology has two important effects for Marketing.

First, many firms now possess much more information about consumers' choices
and reactions to marketing campaigns than ever before. However, few firms have
the expertise to intelligently act on such information.
The second effect of information technology is that it has changed the competitive
environment for many firms: consumers have more information about competitive
offerings; the Internet has allowed many competitors to market to consumers
directly, and so on.

Technology has expanded branding opportunities and media offerings as well as


providing an entirely new way to look at existing marketing. This has resulted in
changes in how marketers push information to customers as well as how and when
customers receive the information To capitalize on this ever-changing environment
marketing and information technology functions need to work together
strategically.

Goal-oriented, open-minded collaboration that supports the organization's vision


and strategic initiatives is necessary for any of the above to occur to its capacity.
Everyone can think of nationally-reported cases where this didn't happen. IT
programs that faltered due to lack of effective communications and innovative
marketing initiatives that failed because technology did not perform as envisioned.

What's needed? Each company, in accordance with its corporate culture, needs to
establish a framework that supports these two groups of professionals working
together. At a bare minimum, a company needs:

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* A passionate leader for the two-faceted team who has vision of what integrated
marketing and IT can accomplish for the organization,

* A technology road map for the organization,

* A working environment for the team that promotes forward thinking idea
generation, open communication, commitment to timely implementation and a
focus on continuous improvement,

* A project management or traffic system that keeps projects prioritized and on


deadline,

* Team players from both disciplines, and

* A means to celebrate accomplishments

When developing the relationship between technology and marketing personnel,


make sure to:

* Determine what your franchisee system wants to achieve from the technology.
(How does it fit into the long-term plan?)

* Understand your target audience (franchisees, customers, specific segments of


either group) and how they will use it or how it will impact them e.g., online
training certification programs.

* Define how the new marketing technologies will integrate with existing
marketing activities or will replace existing tactics.

* Identify how will it work and make sure to plan a transition period.

* Identify other programs and processes that will be impacted by the technology
and how changes will be handled.

* Ensure your brand image and key messages are consistent.

* Have a communication plan so that all involved parties understand the purpose
and benefits of the program.

* Establish a process for bringing in vendors for projects.

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* Double-check that backend processes are in place to support new initiatives and
have a contingency plan.

* Make sure there is a feedback process.

Technology is great, but failure to do due diligence and thoroughly investigate


the options and their related processes is a major reason for time and cost overruns.

New media

Without a doubt, consumer-generated media is one of the fastest-growing


marketing media. This type of media takes old-fashioned word-of-mouth
marketing and casual referrals to an entirely new level. It encompasses the millions
of comments, opinions and experiences posted in publicly available online sources
such as blogs, message boards, discussion forums and online feedback sites. The
content covers a wide range of issues, topics, products and brands. Consumer-
generated media is also referred to as online consumer word-of-mouth or online
consumer "buzz."

This media is the result of the Internet, which has given consumers a voice, a
publishing platform and a forum where their voices can be heard, shared and
researched. Why is this new trend so important? Because research indicates that
consumers place far more trust in their peers than they do in traditional marketing
and advertising. Understanding and managing consumer-generated media is critical
to one's marketing plan and a source of great qualitative market research. The
overall influence of this media among consumers should not be underestimated.

Blogs, an online hybrid diary and guide site, are presently the most popular of the
consumer-generated media formats. The topic of much public press, blogs offer
marketers places to advertise. Blogs are also a source of great market research as
you can look and listen to what bloggers say and understand how your products are
perceived. Many organizations are establishing their own blogs in order to create
an informal relationship with their target audience.

Podcasts (derived from Apple's "iPod" and "broadcasting") are another emerging
media to watch. Basically, it is a non-music audio file that is published to the
Internet so users can listen to it on digital media players. Currently, it is considered
by many to be an audio blog. Content producers are increasingly turning to
"podcasting" as an inexpensive and user-friendly new distribution channel that has
the potential to reach a large audience. While bloggers and music listeners were

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among the early adopters, mainstream media organizations are venturing into
podcasting as well.

Multi-media message systems are also gaining popularity. These systems are the
service that lets you share your pictures and video messages with other wireless
phones or e-mail addresses. To be successful, this marketing must be personalized
and based on individual user preferences and behavior. Mobile users do not want
spam. The benefits of it are its color graphics, video clips and custom audio, all,
which enhance the personalized message.

Technology impacts marketing process. In addition to new advertising media,


technology continues to improve marketing capabilities.

Market analysis

The Internet has changed the face of market analysis. Gone are the days of
photocopying pages of demographics from census directories. Today's Geographic
Information System, a system of hardware and software used for storage, retrieval,
mapping, and analysis of geographic data, allows marketers to better identify and
communicate with potential and existing customers. Additionally, many of the
services are Web-based, which means the information can be used not only by the
franchisor, but the franchisee as well.

Competitor analysis

Technology and the Internet have also changed the nature of competitor analysis.
For starters, competitors' Web sites are a great foundation for the study with almost
every company including a company section and a greater number hosting a press
or media area where they are able to post corporate history, executive bios and
often the details of newly-launched programs.

When researching publicly traded companies, after studying their Web site, visit
edgar.gov where all U.S. Securities and Exchange Commission documents are
available. These documents provide enormous perspective on a company's current
activities, performance and future plans.

Search engines and news site archives now enable researchers to find articles and
information that used to be available only through expensive subscription services.
Today's knowledge management software is a great way to keep this information
organized and accessible.

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Market research

Market research capabilities have expanded significantly at the hand of technology.


Customer survey options now include affordable Web surveys and Interactive
Voice Response phone surveys.

The ability to integrate customer data with market segmentation and mapping
software gives marketers newfound insights on where customers are located,
purchase behaviors and media preferences.

Marketing communications

Technology allows many marketing communications media to be more


personalized and for marketers to respond to opportunities more quickly while
maintaining brand consistency.

For example:

* Direct mail and e-mail can be customized based on customers' preferences.

* A company's Web site provides customers access around-the-clock and can be


modified in minutes.

* News releases can be distributed with a mouse click.

* New locations can be added and updated on the Internet Yellow Pages within
days instead of the long wait for the printed edition.

* Online ad creator programs allow franchisees to customize marketing materials.

* Blogs are able to be updated instantly.

Metrics

Thanks to technology, the ability to measure the effectiveness (return on


investment) on marketing's investment is better than it has ever been. Web
analytics programs allow companies to identify enormous amounts of information
about who visits their site. Analytics to measure buying patterns can be used to
create strategies to turn browsers into buyers. Online advertisers are able to
evaluate the effectiveness of their ads to an unprecedented level. Marketing

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dashboards that provide leading and lagging indicators to performance are
becoming common.

Without a doubt, technology is bringing a new level of accountability to the


marketing function. The relationship between the two functions allows marketers
limitless opportunities for the company and its customers. Their ability to work
together strategically will determine their long-term success.

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CHAPTER 3
THE CUSTOMER'S PERCEPTION, BUYING
INFLUENCES AND THE DECISION PROCESS

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THE CUSTOMER'S PERCEPTION, BUYING
INFLUENCES AND THE DECISION PROCESS

There are a number of similarities and differences one could note with regards to
the influences and the decision making process for a customer to purchase a
service or product via an e-business channel compared to the traditional business
method. One must understand and identify what factors make a consumer take a
decision to buy a product and why this consumer decides to purchase a type of
product and not another, using one channel and not another, the processes involved
in the decision making process and the perceptual process, both of which are
affected by a number of outside influences.

1. The Buying Influences

There are many influences that may, to some degree act upon the purchasing
decision of a customer. Marketers may have influences on customers, but there
exists more powerful influence that marketers have little influences upon, such as
socio-cultural influences. The following outlines the main influences that act upon
a consumer.

Psychological Influences

Attitudes are considered an important element in the buying decision. However,


there is no empirical evidence to link a favourable attitude directly with consumer
purchases.

Learning involves changes in an individual‘s behaviour arising from experience. A


popular model for buyer behaviour which included learning was developed by J A
Howard (1963) The model divides learning into three major phases:
Initial stage: A buyer has limited experience of the product, and seeks information.
This is the situation one would expect to find for a first time purchase of a book
over the Internet. The buyer would seek advice from colleagues, magazines or
friends. A customer for a Christmas present could also fall in this stage, example, a
buyer buying without any knowledge of computers wishes to purchase a computer
for his son. In the Initial stage a consumer probably makes a rational purchase
decision.

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Intermediate stage: This stage could usually fit in the case of purchasing a book
over the net. The buyer would rely more on his/her own experience and less on
outside information to make the purchase decision. Maybe the buyer would have
already purchased over the net, but could ask some questions to make sure that the
product is suitable to his requirements.
Final stage: The buyer knows what he/she wants this is the situation one would
expect to find while buying for example, an ink cartridge for his printer, the
consumer will probably buy the same type again unless put off by a bad
experience. Once a buyer has learned enough to reach this stage, buying may even
become a perfect routine.

Loyalty: (a psychological influence) A consumer may demonstrate a loyalty


towards a particular company's goods or to a brand, or even to a particular web
site, shop or retail chain.

Personality: A consumer's buying behaviour is influenced by his or her


personality. Traits such as self confidence, dominance and autonomy may be found
more in individuals who are willing to leave their parent‘s home to purchase a new
house. An individual who has sociability as a principal personality trait would
probably want to invite many friends home, he/she would want to design and
purchase his house with this in mind. Such a person would be willing to spend
more time and money when it comes to carrying out a purchase.

Socio-Cultural Influences

Socio-cultural influences of buyers raise many purchasing issues, influencing the


way each individual lives, buys and consumes his/her goods and services. The
following are the main areas where Socio-cultural influences affect a purchase.
What is bought? Do products have to be branded? Do they have to be produced in
a specific manner such as recycled? If buying a car, is it going to be new or old,
saloon or sports car? When things are bought? Is the shopping of an individual
done on Sundays because he/she works shop hours? If so the individual will be
restricted to a limited number of shops opening on Sunday. At what age or stage of
life is a purchase being carried out? How things are bought if one is buying books
are they bought over the Internet and delivered directly or does the individual
prefer buying or ordering from a high street store, even at a higher price? If
purchasing a car, is it going to be paid for by installments or is it going to be paid
on purchase? Do consumers haggle about the price even when purchasing low cost
items? Where things are bought? Do these types of customers buy their
requirements from the shop round the corner or do they prefer a complex with a
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parking facility? Do they use the mailing catalogues or phone orders? In the case
of a high priced item would the buyer prefer to deal with a consultant or direct? Is
the customer buying from a remote area? Why things are bought .Culture would
influence one‘s needs, if it is within one‘s culture to own a laptop then probably
this individual would buy one.

Marketing Mix Influences

The Internet marketing mix consists of the same elements as elsewhere. It has to be
noted that the concept of marketing mix is evolving both in the Internet marketing
and other media. The typical marketing mix components consist of Product, Price,
Place, and Promotion.

Product: Almost any goods or services can be marketed on the Internet.


Furthermore completely new products or services have become available with the
advent of the commercialization of the Internet. From the customer's point of view,
a customer would try to identify what advantages does this product have over other
substitutes?

Price: Price is one of the most important evaluation criteria in all products in
question. One‘s choice will be heavily affected by price. The Price on the Internet
plays a more important part, as in the traditional shopping method. In the
traditional shopping method one would expect to pay a higher price when
purchasing from a luxury high street outlet, on the same basis one expects to find
low prices when purchasing from a warehouse sale. These scenarios are more
difficult to implement on the Internet, since the customer is always purchasing
from his Internet browser or other similar means. In addition a number of third
party "search agents" can collect pricing information from various sources over the
Internet, and consumers can compare prices and products. The Internet will
increase standardization of prices across borders. Another factor to consider is the
escalation of bidding "bots" is certainly influencing pricing. These software robots
do bidding on behalf of consumers and help automate bargain hunting. A number
of new web sites are now mushrooming to do various price equilibrium search
tasks between buyers and sellers. An especially important factor in the formation
of the Internet as a new market is the fact that transaction costs are small. This
escalates the adoption of Internet as a growing e-market.

Place: Where the customer is going to go to buy the desired products? Is the
customer going to a high street store, or is he or she going to purchase from the
closest store or shall the customer buy from his desk using the Internet? The
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Internet is a place in itself, a place in the context of the Internet implies creating
methods for using the Web to market and sell products. All points on the Internet
are virtually equidistant and available 24-hours a day.
This means that all the real estate of the Internet has an equal value, at least
theoretically. Small companies can look like their much bigger competitors.
On the Internet, if the product can be sent via the Net in electronic form, economic
viability can be very easily attained and the physical distance between the buyer
and seller is irrelevant. On the other hand, if the product needs to be distributed by
mail or freight, then regular limits of mail-order weight-based economic geography
and time for delivery apply.
Two determinants of virtual addressing methods on the Internet can be found. One
is the exact computer server and address, where the document is located, that is the
web site address, or Uniform Resource Locator (URL) which specifies an absolute
address. The other form of address definition is relative addressing using
hyperlinks. A document or site is defined in relation to other established
documents or homepages by means of a quantity of hyperlinks pointing to the
absolute address. In the case of such links, users usually do not see the absolute
address when clicking the hyperlinks, although if the user wishes to see this
address he or she can do so. The more links a page has pointing towards it, the
easier it is for a user to find the site. The better a site is, the higher the chances it
gets hits.
Inter-media support activities have popularised the absolute addresses among other
media. URLs in traditional media advertising began to appear in 1995 to support
the Web effort. The main forms of media such as TV, newspapers billboards and
magazines can be extremely effective at driving audiences to web sites this trend
had another implication. The print media started to offer URL lists of their
advertisers as a form of paid advertising. The more absolute URL publicity is
gained, the better the site address is established.

The four virtual spaces


Angehrn (2002) has modeled the Internet business strategies around the concept of
space. According to this model, there are four separate channel functions that the
Internet can be used for, these are the following:
• Information channel
• Communication channel
• Distribution channel
• Transaction channel.
These channels form four separate spaces within the virtual medium.

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The four virtual spaces

Virtual Information Space (VIS)

The Internet provides new channels for displaying or accessing information. It


removes obstacles to information dissemination, and therefore solves the logistic
problems of information for those who have the Internet available. To some types
of businesses VIS brings significant cost reduction. This is especially true for firms
in publishing, information services or digital product categories. With the Net,
distribution costs or costs of-sales shrink to zero. Since information can be
transmitted at a low cost, many companies have adopted a policy to publish in
quantities and let the consumer decide which information is interesting.

Virtual Communication Space (VCS)


The Internet removes many barriers to communication for customers and
employees by eliminating the obstacles created by geography, time zones, and
location. As a Virtual Communication Space, the Net provides new channels for
companies to engage in economic relationships and opinion-changing activities.

Virtual Distribution Space (VDS)


The Internet facilitates new channels for participants to distribute products and
services. This is the Virtual Distribution Space. It has been suggested that retailing
is going to be affected more than the advertising industry. VDS is bringing about
an improvement in direct marketing techniques, and a reduction or an eventual
elimination of middlemen.

Virtual Transaction Space (VTS)


Finally, the Internet is a place where companies can carry out business
transactions. This is Virtual Transaction Space, which evolved later than the
previous ones, due to problems in transaction standards, security and legal issues.
Points out that these virtual spaces can be bases for business approach, depending
on which part of the virtual space the most is profoundly used.

Promotion: Promotion is an attempt by marketers to inform people about products


and to persuade them to participate in an exchange. This is done by the seller using
a number of different techniques to motivate the customer to buy products or
services. Promotion will be discussed in further detail at a later stage.

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Situational Influences

Physical Example, the smells in a coffee shop or any other shop can influence a
buyer either negatively or positively to spend more or to leave the premises at
once. Other influences could be the sounds, light, weather etc. Social Surrounding,
the people that are around an individual, while carrying out a purchase may to
some extend affect the purchase. Time, many time factors may affect a purchase,
such as: time when the purchase is taking place, time to make the payment of
purchase or time from last purchase. Task, making a purchase for oneself or for
someone else, Antecedent states, the temporary moods or conditions that the
consumer brings to the situation, such as a customer who has received a hefty rise
and is purchasing a present for his loved one. Other factors that affect the purchase
are whether the goods are durable or not. Non-durable goods are goods which are
consumed in one or a few uses. Since non-durable goods will usually be purchased
frequently, they are made available in many locations, profit margins will be low
and producers will try to encourage brand loyalty. Durable goods are goods that
are used up very slowly and only after many times used Purchases of durable
goods are infrequent, and usually need more direct selling effort.

2. The Decision Process


The purchasing of goods or services could be divided into four types; the decision
process depends on the type of purchase.
High Involvement
Low Involvement
Depending upon:
Significant differences between brands
Complex buying behaviour
e.g. mobile phone
Variety seeking buying behaviour
e.g. gift
Few differences between brands
Dissonance reducing buying behaviour
e.g. House
Habitual buying behaviour
e.g. foodstuff
The products that would fall under low involvement would be both of Limited
Problem Solving (LPS) or habitual decision making. While in the case of high
involvement it would be classified as Extended Problem Solving (EPS).

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Limited Problem Solving

When it comes to buying items that fall under the LPS category, the consumer will
be low involved in such a decision. This is because it is usual that the amount of
dissonance after such a purchase is usually relatively little. Another point one
could note is that with such goods or services there may be little differences
between brands of such a purchase. Most customers' everyday purchases are
undertaken by habit or LPS. On the other hand the purchase of a product with low
involvement and a high difference between brands usually follows a ‗variety
seeking buying behaviour‘. For this reason we will be considering the five-stage
model of the buying process are highlighted below:

Need or Problem Recognition: One could state that this stage could be triggered
by psychological, physiological and social factors. The process centers on the
degree of discrepancy.

Information Search: At this stage the consumer would identify the sources and be
influenced by attitudes and perceptions.

Alternative Evaluation: In such a case the alternatives may be either a close


substitute or between two products produced in a different way.

Purchase Decision: At this point the purchase is made and the consumer will pay
and take the products with an intention to consume them.

Post-Purchase Evaluation: Experience 'feed back' to the beginning of the process


providing positive or negative reinforcement of the purchase decision. If the
consumer is dissatisfied, the consumer will be back at the need / problem
recognition stage again. If the consumer is satisfied, the next decision process for
the purchasing of the same items may be cut short and go straight to the decision,
on the basis of loyalty.

Special Categories of Buying Behaviour

Two types of special categories of buying behaviour are variety seeking and
impulse buying. This type of purchase for the goods in question would only
happen in the case of low involvement products but surely not in the case of, for
example, a car.

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Impulse Buying: The so-called impulse purchase is an unplanned or spur-of-the-
moment action that is triggered by product display or point-of-sale promotion. This
is the least complex form of LPS but differs in some important ways. The
following are the characteristics of impulse buying:
a) A sudden and spontaneous desire to act accompanied by urgency.
b) A state of psychological disequilibrium in which a person can feel
temporarily out of control.
c) The onset of conflict and struggle that is resolved by an immediate action.
d) Minimal objective evaluation-motional considerations are dominant.
A consumer would buy a product to take home from the supermarket because it
seems to be at a good price, making this purchase regardless of the fact that the
consumer already has a quantity of such products at home. During an impulse
purchase there may come about a lack of regard for consequences. Example;
purchasing of a product that one does not need or use.

Variety Seeking: Although consumers may be satisfied with their former


purchases, the customer, just not to do the same old thing will decide to purchase
from a different retail outlet.

Extended Problem Solving (EPS)

The first time purchase of a car is considered as a problem that requires high
involvement. This is because the person carrying out the purchase knows that this
purchase is going to affect the buyer in the long run. The buyer has to make sure
that the purchase is done at the right price and the right product for the individual
is chosen. For this reason a more complex model is used when it comes to the
decision process, although the five major activities are the same but occur over a
span of time. Another point on which a first time buyer of a car would consider to
be very different from the other products is the divestment stage. The following
will outline the major differences between the EPS and LPS. It is important to note
that most points mentioned in LPS should also be considered for EPS.

Need Recognition: The starting point of the process is the customer's perception of
a want or need for his house, this being a problem which must be satisfied. This
stimulates the start of the next stage, information search, which can be divided into
two further stages.

Search: First, the customer searches his internal memory to ascertain what is
known about potential solutions to the problem. The customer remembers how a
friend of his got to know about his purchase or he/she remembers about a store

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selling such products which may suit his/her needs. If insufficient information is
found, the customer will begin the process of external search. The likelihood of
external search is also affected by environmental factors, such as the urgency of
the need to buy the required product. Another factor that is important is the
individual characteristics of the customer. For example, individuals who are low
risk takers will tend to seek more information, visit more stores and probably see
more products; ask advice from advisors before making the decision to purchase
the required product.

Alternative Evaluation: The Engel – Blackwell - Miniard model identifies the


various ways in which the problem can be solved. Those various ways are then
evaluated. The alternative evaluation stage which involves comparing the
alternative products offers against evaluative criteria, which are 'product judging
standards that have been stored in the permanent memory'. This evaluation process
may lead to changes in beliefs regarding the purchase which, in turn, leads to
changes in attitudes and intentions to purchase. The process of alternative
evaluation leads to an intention to make a purchase of the most favourable
evaluated product. This intention will be translated into action unless unforeseen
circumstances intervene to postpone or prevent the purchase of the product.
Once the purchase occurs, the customer will use the product and will continue to
evaluate the purchase by comparing the purchased product against expectations the
buyer had of the product. If the chosen purchase does not meet expectations, the
result is dissatisfaction and this may lead to further search for information about
the alternatives to rectify the problem. This could bring about changes in beliefs of
the buyer. The overall process can, therefore, be seen as a continuous one.

Divestment: Another important stage in this model is the last stage, divestment.
This stage would be considered to a high extent in the purchase of a product that
may have a high resale value. In some instances the buyer may want to ensure that
his purchase, which may also be considered as an investment, would place the
buyer in an advantageous position when it comes to divesting (selling).

Evaluation of This Model: Evaluation of this model has found that it provides a
popular representation of the buying behaviour process. The major drawback of
this model is the vagueness regarding the role of variables such as the environment
and motive in influencing behaviour. From the above we can conclude that the
behaviour of customers is determined by economic, psychological and sociological
considerations. The reason for a purchase varies from person to person, or product
to product. The weight given to each reason in the mind of the customer also
varies. We can note that marketers have some influence, but it is not usually as
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strong as socio-cultural influences. The marketers, by use of advertising and other
marketing tools help consumers with their information and their evaluation of
alternatives. Combinations of all these factors make up the motivation mix and
perception of the customer.

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CHAPTER 4
THE PERCEPTUAL PROCESS

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THE PERCEPTUAL PROCESS

A customer perception is to build up the selection and organization of


environmental stimuli to provide meaningful experiences, for the customer
Perception involves searching obtaining, and processing information. It represents
the psychological process whereby people take information from the environment
and build up an idea of the situation. The key main processes of perception are
selection and organisation. Different people often perceive a situation differently,
both in terms of what they selectively perceive and how they organise and interpret
the things perceived. People receive stimuli from the environment through their
five senses: taste, smell, hearing, sight and touch. Everyone selectively pays
attention to some aspects of the environment and selectively ignores other aspects
at any particular time. A person's selection process involves both external and
internal factors, filtering sensory perceptions and determining which will receive
the most attention. The individual then organises the stimuli selected into
meaningful patterns.
How people interpret what they perceive also varies considerably. A wave of the
hand maybe interpreted as a friendly gesture or as a threat, depending on the
circumstances and the state of mind of those involved.
A person's interpretation of sensory stimuli will lead to a response, either overt
(actions) or covert (motivation, attitudes, and feelings)-or both. Each person selects
and organizes sensory stimuli differently and thus has different interpretations and
responses. Perceptual differences help explain why people behave differently in the
same situation. People often perceive the same things in different ways, and their
behavioural responses depend, in part, on these perceptions.

The Current Situation of the Internet

Internet subscriptions sustained a growth of 56.1 per cent during the reference
twelve months (2000-2001). The growth rate had slowed down during the last two
quarters to 4.7 per cent compared to the rate of 15.7 per cent recorded during the
first two quarters of the reference period. Another interesting point is the frequency
of use of the Internet during the reference period. 22 per cent indicated that they
used the Internet everyday, whilst at the other end, 39 per cent claimed to have not
used the Internet at all. The age group of main users was registered amongst the
16-24 years bracket. The use of Internet decreased proportionally with the rise in
the age.

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Furthermore 61% of computer users surf the Internet while 61 per cent of computer
users aged over 16 years use the Internet regularly. 32.2 per cent of the target
population used a Personal Computer, less than once a week, during the reference
year. It was, also estimated that a notable fraction of 61.2 per cent of computer
users accessed also the Internet.

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CHAPTER 5
E- COMMERCE & E-BUSINESS

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E- COMMERCE & E-BUSINESS

1. What is E-Business?

E-Business embraces e-commerce but has a wider perspective since it is concerned


with redefining old business models with the aid of technology. It alters the
business foundations and it is not about automating parts of the business that was
often the case, but about rethinking and redesigning business models, which is
essential for surviving in an information era. Most organisations have found that
success in e-business is typically based on building efficient value-added
relationships with their customers. For example, the travel industry offers on-line
bookings, through which the company can gain valuable insight about the need of
its customers. This is only possible if the company makes the data customer-
friendly, so that the customer can easily make use of it and subsequently provide
feedback to the company about his needs. Only through this enhanced customer
relationship can an organisation provide better service. E-Business is concerned
with changing the business operations in order to bring competitive advantages to
the concerned company. The characteristics of e-business that distinguish it from
legacy business solutions are:
• E-business facilitates transactions with a much wider group of respondents.
• Communications and other transactions are instantaneous.
• Customers are empowered.
• Fierce competition.

2. What is E-Commerce?

The word e-commerce may be interpreted in various ways; some have a very
narrow view such as selling products and services on the Web, while others have a
much broader perspective. In my opinion e-commerce consists of the broader
perspective made up of a number of functions mentioned below. E-commerce is
any networked enabled business practice such as Electronic Data Interchange
(EDI), the World Wide Web, direct telephone connection e-mail and more

Categories of E-Commerce

One can categorise e-commerce into four functions, which are communication,
process improvement, service management, and transaction capabilities.

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Communication Function: The communication function is the delivery of
information and/or documents to facilitate business transactions. E-mail is an
excellent example, but one can also include other forms of communication such as
fax transmission as well as Electronic Data Interchange. Furthermore this function
can play a very important part with the introduction of teleworking. Today
teleworking is being implemented by a number of organisations and thanks to the
communication tele-workers are able to work from their home or from a remote
site.

The Process Improvement Function: The second function is the process


improvement function. This function includes the automation and improvement of
business processes, such as: networking two computers together so they could
share and transfer data.

Service Management: Service management is the third function of e-commerce.


This is the application of technology to improve the quality of service. A good
example of this function could be found on the Internet with various websites. One
must bear in mind that Service management e-commerce does not only exist on the
internet, but also exists using other media of communication, such as by direct
connection. Example, a service offered by Bank of Valletta‘s "visual link" where
one could carry out a number of enquiries eg, getting the balance of one's account,
or producing a statement. This "link" also offers the customers the possibility to
make transactions, although with some limitations. This service could definitely be
extended to be used over the net, and therefore would be much more accessible to
BOV customers. The Federal Express Web site is a good example of a Service
management site. This location is not there to promote its services but is there to
give a service to customers. It permits customers to track shipments and schedule
pick-ups 24 hours a day worldwide without having to talk to a customer service
representative. Making use of this site, customer service is greatly enhanced due to
the capabilities of the web page.

Transaction Capabilities: The final function of e-commerce is transaction


capabilities. This provides the ability to buy/sell on the Internet or some other on-
line service. The primary purpose of such sites is to sell the company's products
although they do combine other functions such as communication and service
management. These sites also highlight the fact that the four functions could be
combined. There is a fair bit of overlap and many websites today combine many, if
not all, of them.

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3. Developing E-Business Within an Organization

The Methods and Tools for E-Business Implementation

Implementation of e-business requires both methods and tools. Choosing the right
ones is important, wrong methods or tools can be fatal to the E-Business
implementation effort. Each organisation wishing to implement e-business will
have to choose both the tools and the methods depending on the organisation itself.
A method is a technique for doing a specific piece of work. Examples include how
the collection of data is being done, the development of the new workflow and
procedures, and testing of such methods. A tool supports a method by making it
easier and more effective to follow the method. Tools include transaction mapping,
flowchart software, programming, testing, and simulation tools. Implementing may
not require tool but the use of tools may enable the organisation to implement the
method in a faster, smoother or more economical manner. Tools, implemented
without methods, often fail, because people do not know the proper use of the tool.
Tools in implementing e-Business, as with any other use of any tools, have to be
supported by training, experts, guidelines, lessons learned, and management
expectations on both what the tools are to achieve and how to make good use of
them. For these reasons the implementers, whether they be external consultants or
internal staff need to build a very clear idea how the organisation is working.

Internal Marketing

While developing an e-business solution it is critical to have a vision for


integrating business processes to better serve the customers. Streamlining of
individual processes without regard to their overall context will result in merely a
better individual process. Integrating all the individual processes can result in
increased competitive advantages and levels of satisfaction, but implementing e-
business within an organisation is not something one can do at a touch of a button
and could bring about a number of problems. To solve such problems the company
would have to carry out internal marketing. The following are some reasons why
an organisation may find it difficult to implement e-business. There is often no
natural sponsor or specific department to champion E-Business. It is too new to the
organisation. The business activities cross multiple departments, and each
department has its own agenda. The departments may have long-standing

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hostilities toward each other. E-Business involves a large project and requires time
and effort; large projects are more difficult to market. Numerous points in the
project require successful marketing; failure with any one of these may doom the
entire project.
Improving the organization‘s and infrastructure's business activity at the same time
adds complexity. Time-honored policies and roles are difficult to change.
Resistance can be both direct and subtle. Internal marketing is the starting point for
the implementation process, failure to carry out internal marketing is one of the
leading causes of e-Business implementation failure.
People assume that just because management mandates e-Business, everyone will
get on board. Marketing includes direct and indirect sales and marketing. When
one conducts demonstrations, gathers information, reviews results and presents
documents and plans related to e-Business, one is in fact carrying out a marketing
exercise. The care and attention given to marketing, sales, overcoming resistance
and meeting challenges are critical success factors.
Presenting a new e-Business activity requires careful marketing preparation where
one must identify the company‘s capabilities and the matching process. When one
comes up with a new concept, one raises excitement and interest. If the company is
not careful, it risks raising unreasonable expectations. This may also bring about a
raise in fears of change. Internal marketing is also important cause an e-Business
projects substantial human interaction, thus bringing about a risk of
misunderstandings.

E-Business Success and Failure


Lientz stated that successful companies and managers cite a number of major
benefits as a result of E-Business projects. It was also mentioned that there are a
number of obstacles and reasons for failure. Some of the more common reasons for
success, failure and obstacles are the following:
a) Reduced the amount of routine tasks: Customers and suppliers are
performing some of the simpler tasks related to ordering, status checking,
tracking and credit checking.
b) Streamlined, simpler business activities: When implementing e-Business, the
company makes the effort to drive out the exceptions, manual steps in
transactions and to eliminate shadow systems.
c) Improved employee morale: This may occur after the routine steps have
been eliminated. Many employees often find the new work to be more
creative and challenging.
d) Improved work quality: With E-Business, since more is automated, there
should be a smaller number of errors.

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e) More information: The implementation of e-business creates a large amount
of structured information on staff, customer and supplier behaviour and
purchasing. This data can be stored in a database and queried to retrieve
further conclusive information. Better decisions. Any organisation tends to
make better decisions with more information.
f) More flexible business policies: Since the company can implement new
policies such as promotions faster, the company will be able to gain greater
flexibility in positioning its products.
g) Improved customer satisfaction: Once the company combines the
convenience of electronics with excellent customer service and competitive
pricing, customers will be more satisfied when provided with more
information on the products and services to them.
h) Ability to enter new markets and reach new customers: Through the
implementation of ebusiness, companies will be able to move into new
markets and also expend their product range.

Some common reasons for "e-failure" are outlined in the following points:
a) High expectations: Management gets towering expectations based on the hype
generated by the media for e-commerce.

b) Underestimation of effort: Management gets the wrong perception that just


implementing the e-commerce systems and software will lead to a full e-
business implementation.

c) Implementation of some outlandish techniques: The firm selects system


techniques that may not be suited to the culture of the firm or the country. The
implementation project focuses on only a few activities. Whilst implementing e-
business the company should plan beyond converting a few activities. It should
at least plan for a whole e-business implementation and put into practice, if
necessary, in stages.

d) Lack of consideration of the entire environment: Some firms that fail do not
consider the internal or external environmental structure. One major pitfall is
that of not gaining major support, especially internally.

e) Over-control by vendor or consultant: The organization turns the project over to


an outside firm. The new approach never takes hold after the consultants leave.
This can lead to high billing and high dependence on the consultant or system
vendor.
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f) Excessive upper management involvement: This is the extreme in which
management attempt to take full control of the E-Business project.

Some of the most common E-business obstacles are:-


Coping with legacy systems and old technology
Changing the internal organization culture
Building an implementation team for E-Business
Resolving conflates between channels
Upper management support
Educating managers about E-Business and overcoming resistance

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CHAPTER 6
PROMOTING PRODUCTS

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PROMOTING PRODUCTS

Promotion is an attempt by marketers to inform people about products and to


persuade them to participate in an exchange. Marketers use many different tools to
promote their products and services. The main traditional tools consist of
advertising, personal selling, public relations and sales promotion. The
combination of such tools is referred to as the promotion mix. Integrated marketing
communication combines all the promotional tools into one comprehensive and
unified promotional strategy. The idea is to use all the promotional tools and
company resources to create a positive brand image.
Over the years, companies have including a new tool to their mix, Internet
promotions. Both the Internet and the process for creating an integrated marketing
communication system have developed to be the two fastest-growing parts of
promotion
Any successful marketing campaign/strategy does not begin with someone coming
up with a bunch of wild and crazy idea's (like how the movies and novels depict
advertising agencies dreaming up new campaigns) and then magically the perfect
answers pops out. Instead, real marketing successes actually begin with serious
analysis and research about the marketplace, your competitors, existing sales
processes and similar key issues.
There are a number of key facts a company should know about their marketing
programs and marketplace, in order to truly boost their sales and cash flow.
a) Which specific marketing and sales systems that the company is currently
using is actually producing sales,
b) What's the overall competitive environment,
c) What is your average cost per sale and
d) What is your allowable sales investment to acquire a new customer.

Controls have to be implemented within the organisation, since it is vitally


important to get to the bottom of which marketing and sales components were
actually working and which weren't and why, so one could immediately stop the
unprofitable ones and start or continue using only the profitable ones.

1. How Constant Change is Affecting Promotion

The rapidly changing business environment has affected promotion as much as any
other area in business, technology has dramatically changed the role and activities
of organisations. Similar changes have occurred in all the promotional areas. Such
an example can be noted in the dramatic increase in the number of television
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channels available through both the relatively new transmitting media such as
satellite or cable and the traditional UHF or VHF transmissions. These new
channels have lessened the number of viewers for any given program. This means
that advertisers must be more creative in trying to reach large audiences, by
competing for advertising on the most popular shows.
Another very fast changing and new media is the internet, this is changing the
whole approach to working with customers. The latest challenge for marketers is to
build relationships with customers over time. That means carefully listening to
what consumers want, tracking their purchases, providing them with better service,
and giving them access to more information.
Interactive promotion changes the promotion process from a monologue, where
sellers tried to persuade buyers to buy things, to a dialogue in which buyers and
sellers can work together to create mutually beneficial exchange relationships. For
example, Garden.com is an online retailer of garden products and services.

2. Different Types of Advertising

Different kinds of advertising are used by various organisations to reach different


market targets. The major categories of forms of advertising are included in the
chart. The importance of advertising is very apparent. The total adverts volume
exceeds $215 billion yearly for India. Television, in all its forms, is the number one
medium (about 23 per-cent of the total). Newspapers are number two, with about
21 percent of the total expenditures. Closely following is direct mail, at a little over
19 percent. Note that Internet advertising, while growing by about 85 percent a
year, still only takes less than 2 percent of the total expenditure.

Advertising Expenditure

Companies must allocate the promotion budget over the main five promotional
tools advertising, sales promotion, public relations and publicity, sales force, and
direct marketing. Within the same industry, companies can differ considerably in
their allocations. Any organization is always searching for ways to gain efficiency
by substituting one promotional tool for another. Many companies have replaced
some field sales activity with adverts, direct mail, and telemarketing and
introduced the Internet as a media. Companies have also increased their sales-
promotion expenditures in relation to advertising. The substitutability among
promotional tools justify why marketing functions need to be co-ordinated.

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Promotion Tools

Choosing the correct tools for a particular promotions task is not easy. The process
is still very much an art, though it is becoming more scientific because of the
access to consumer and media databases. Matching consumer characteristics with
media databases can be carried out very rapidly by computer and promotional
budgets can be evaluated for a variety of different mixes. Using the Internet may
make this easier as all transactions are carried out through computers and
information regarding the customer may be easier to collect. The Internet still has a
number of shortcomings to be used as a sole tool.
The fundamental idea of any kind of marketing is to meet the consumer where he
or she is. And as much as online use has grown, most people still spend more time
offline. Indeed, while some of the Web's best-known brands, such as Amazon.com,
eBay and Yahoo!, got an initial foothold by marketing on the Web, all eventually
saw the need to extend their message to print, television, radio and direct mail
channels.
Still, one can identify examples of fairly new brands that have been built almost
exclusively on and through the Web. Such an example is X10.com, which sells
wireless cameras and networking products. X10 gained fame by becoming one of
the first serious users of pop-up advertising, which is now used widely on the Web.
Target audience is also a key consideration. Marketers can easily target teenagers
who spend hours online each day. Still, the value of reinforcing the message is
important, for this reason it has been recommended that multiple approaches are
necessary in almost all cases. The difficulty lies in the suitable mix for such a
market but it has been recommended that the marketing should try to meet the
audience in more than one place.
One other important aspect of online brand building is that it will be easier, if the
brand in question has an offline foundation on which to build.
ConsumerReports.com, for instance, has racked up huge success as one of a
handful of successful pay-for-content sites. Thanks largely to its deeply entrenched
offline brand image.
A study to identify if online brand advertising works has shown that this does
work, the study focused on three primary objectives:
Can Internet advertising drive offline sales of consumer packaged goods products?
Is online advertising an effective medium for branding consumer packaged goods
products?
Is online advert impact related to offline advertising sensitivity?
From the study it was concluded that online advertising positively influences
consumer perceptions of brands and increases offline sales by an average of 6.6%
for major consumer packaged goods. Furthermore it was concluded that a growth
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in brand awareness, message recall and sales that was incremental to the base
levels achieved through TV, radio and print advertising. The sales lift resulting
from online advertising ranged from flat for two brands up to 22.5% for a brand
with a new line extension. The research shows that online advertising can impact
sales. The study identified that companies should no longer doubt if online
advertising works but to recognize how one can maximize the impact and return on
investment of Internet advertising within the marketing communications mix.

Internet Advertising

Advertising on the Internet is often referred to as sponsorship. Internet advertising


is considered to be effective when it is passive, non-intrusive, graphical and
containing potentially valuable information. Internet advertising has a combination
of characteristics that combine those of the print, broadcast, outdoor, and direct
response media. Internet advertising has been identified to creating awareness,
demonstrating the product, providing information, providing help in the evaluation
and selection process, and projecting a favourable corporate image Advertisement
on the Net is any content on a web site which intends to act as a commercial device
to carry a message or attract a user. This typically takes the form of a static image
or a text message, but could easily be an MPEG clip, a Real Audio stream, an
animated image, or a Java applet.

Types of Advertising on the Internet


There are five general types of web advertising formats which are:
1. Banners -an advert appearing at the top of a web page
2. Vertical Columns - on a frame web page positioned alongside requested content
(often as form of sponsorship)
3. Pop-Up windows - Java script opens a browser window with an advert
4. Interstitials - full screen adverts that appear on a web browser while a page is
loading
5. Advertorials - content-based advertising related to an article or other site
content.

Banner adverts are the most used advertising tool on websites, followed by
sponsorships, interstitials (adverts inserted between pages) and other forms of
advertising including directory/classified/email and others.
Much of the current emphasis is on "rich media", which uses multimedia
interactive marketing tools, i.e. web pages or banner adverts that contain
multimedia components such as audio, video or special effects using Shockwave,
Flash or Java Script. These tools push the transaction as far out from the corporate
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website as possible, making purchases available directly from the banner. Other
online formats, which tend to be variants of the five mentioned above, include
hyperstitials - companion applications that run alongside a browser and let
advertisers present full-screen adverts during page load delays, and Meta Adverts -
adverts displayed on results pages keyed to online searches.
Click-to video - used by WebTV to let users click on banners and view
commercials through their TV set
Extramercials - ZDNet livens up unused space on the right of its pages with micro-
buttons that link to full-column adverts
Interactive - an advert for Amazon.com offered surfers an instant excerpt print out
of Tom Wolfe's "Man in Full" book
Telephone Call – Tele-post allows users to type in a telephone number into a Ring
Me Now advert-banner, triggering an immediate or scheduled toll-free callback
E-mails - Lycos is distributing interactive e-mail-based cartoon characters. These
advert sponsored entertainment shows offer powerful inducements to keep visitors
coming back to Lycos.
Contextual Integration - SpeedyClick is looking to incorporate a sponsor or
advertiser's name or product as part of a game or contest.
Such rich media is expected to be much more effective than traditional banners and
interstitials.

Targeting Adverts
The Internet has provided new tools for targeting by which the content or advert
can be adapted to better suit the individual user. Micro targeting will be the future
of online advertising. This is being done by breaking markets into smaller, more
differentiated pieces. Niche markets appear, followed by niche products, niche
financing, and niche players in the stock market. Niche advertising fills niche
media.
The Internet is making it possible to tailor site content to the profile of the person
visiting the website. This will result in creating a highly interactive browsing
experience. Usually, targeting has been made for reasons of cost. The Net is a
different world, where targeting is done to give as accurate and well-fitting content
to online customers as possible, while the internet users do their own targeting by
clicking hyperlinks.
The ability to target adverts is based on criteria including, but not limited to, use of
implicit data and requirements of user input. Use of implicit data might include:
page sponsoring, searchable terms or phrases, browser information, and content
stream. Requirements of user input may include demographics, geography, stated
interests, psychographics, and collaborative filtering.

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Interactive and Passive Advertising
Internet Advertising consists of a combination of both Passive and Interactive
Advertising. Internet advertising can be directly compared to traditional
advertising in that it incorporates both passive and interactive advertising. All
forms of banners and links on publisher web sites are a type of passive advertising,
whereas advertisers' web sites in their own right are the highest form of interactive
advertising.
As an Internet user visits a publisher's web site, he or she is exposed to one or more
forms of passive advertising: banners, logo icons or sponsorships on the site's
home page. This type of advertising is very similar in effect as when an individual
sees a billboard. One advantage Internet advertising has over other types of
advertising is that it allows passive advertising to become interactive. In most
traditional passive advertising today, a viewer will notice the advertising message,
or subconsciously note the logo, but will usually not immediately react by trying to
contact the company making the advert for more information, even if he does, he
or she will have to use some other form of media to contact the company.

Direct Sales

Most corporate Internet sites have - as one goal - the aim to bring about direct
sales. Order processing may be offered via the Internet or by traditional
communication means. Many companies have discovered that, while a large
number of people will access their home page; this does not result in sales or other
useful business activity.
One reason why consumers use the Internet is to seek information about products,
way in advance before possible purchase. In many instances these products may be
eventually purchased from another source.
An effective way that is used as to carry out direct sales is via classified adverts. In
most instances a number of popular sites offer this service for free. This method is
a method to get off to a fast and relatively cheap start.
The following steps should lead to an effective and low cost direct sales method.
The individual or company placing the advert must be able to write effective
classified adverts. Only well written adverts will produce the results. The next step
is to find a software program to help while posting adverts to the free classified
sites. Many of these programs are free; some will have web site address listings of
the sites that accept free classified adverts. One can also go to any search engine
and do a search for classified advert sites. One should find many sites that will
accept this type of advertising. Start posting the adverts to the free sites and post
often. Old adverts roll down as new adverts are posted. Adverts near the top of a
section will produce better results than the one in the middle. Test the classified
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adverts on the free advert sites first. Once the advert is successful then try paid
adverts in sits that charge to post adverts. Advertising on these sites will bring
better results. Always try to improve the pulling rate by testing a new advert copy.

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CHAPTER 7
MAIN FOCUS IN THE DEVELOPMENT OF A
WEBSITE

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MAIN FOCUS IN THE DEVELOPMENT OF A
WEBSITE

New technologies are emerging that will enable businesses to reach customers
whenever and wherever they are ready to buy. The focus of ecommerce will shift
from content to context, knocking many corporate web sites into irrelevance.
The dot-com businesses are in danger of seriously overestimating the
sophistication of online consumers, Dot-coms are less in touch with consumer
needs and wants than traditional companies with a Web presence. Despite the
common belief among Internet start-ups that they are champions of the consumer,
the report shows a lack of consumer-focused research in the dot-com sector.
There is clear evidence that consumers are book marking a much more limited
number of websites than one would expect. Many are just going through their ISP
and that is their only frame of reference for the Web.
Even young consumers "lack sophistication" in the number of sites they use.
The lack of sophistication of consumers online is news to all the companies
involved but it was particularly relevant to the dot-comers because they have done
relatively limited consumer research themselves. Furthermore, it has been
identified that there is a need to develop transactional, interactive sites that both
replicate the consumer thinking process and offering a good experience. All too
often, instead of looking deeper into the online consumer's needs, desires and
apprehensions, the technical aspects of website design become the main focus.
Most web sites and offline businesses suffer greatly because their marketing was
either conceived or implemented by an inexperienced, yet well meaning "advisor."
In order for a company to succeed on the Internet or offline, from a marketing
perspective, one needs all of the exact same ingredients as with all successful
marketing systems anywhere else. In other words, good successful marketing is
independent of the medium the company is using. Hence, one should only let
successful professional marketers make the companies' Internet marketing plans
and decisions. The function of marketing should always be a separate practice in
any business, regardless if it's on the Net, a local business, or a major retailer at
your mall. Successful marketing is actually much more of a "sales activity" than
any kind of artistic or creative process or programming function. Successful
companies know that this is the only way to operate, and for good reason. Because
it works best!

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1. Interactivity

Interactivity within a web page can be very important. One may judge the issue of
importance of interactivity depending on what the main objectives of the
organisation and the use of the web page. For instance in the case of a web page
where the company‘s main aim is to use the page as an introduction or promotion
to the company then interactivity may not be such an issue. On the other hand if
the organisation is going to use its page to sell it goods or service as well as a
promotional medium, interactivity will have to be implemented to a higher degree.

2. Interactive web site

The customer can click on the list and select the components he or she would like
to include into his computer system. In such a case the web page will calculate the
cost for each system the customer desires. One of the most successful first
interactive websites is that of Federal Express which lets their customers track their
packages and see online the progress of the package, seeing the date and time when
it was collected and when it is to be delivered.

3. Graphics

Just as with other media, graphics often mean the difference between a good web
site and a great one. And the quality of a site is often dependent on what viewers
remember about it which is often directly related to the graphics. A "pleasing" site
is one that provides information in a quick, yet graphically attractive manner, and
this means paying close attention to the graphics function and form, and avoiding
large graphics that take too long to load.
One other factor that must be considered is the number of browsers available and
how web graphics appear differently on each of them. The older browsers may not
support some of the features that may be present on a website, such as frames
while others may require plug-ins which the user may opt not to download and
some browsers seem to change the layout without permission. For these reasons
the developer must be careful as how to design the web page and he or she must be
able to predict what kind of browsers his audiences are using. In some instances
some web pages give the user the option to select the layout and type of graphics to
include. In other instances the developer may develop the web page to be able to
identify the type of browser the user is using. In such case different pages will have

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to be developed for different types of browsers, this would imply higher cost
during the page development and maintenance.

4. Payments Over the Net

Online fraud is one of the largest barriers for both customers and businesses
operating over the net. Businesses are continually trying to create an environment
of confidence while customers are regularly hearing, or maybe even being victims,
of online fraud. Such an issue poses a threat, especially for the new or not so well
known companies, since the customer may prefer purchasing from well-known
sites. Furthermore, one must remember that strictly speaking, the Internet is not
governed or controlled by anyone but, as will be pointed out, authorities are trying
to ensure that the internet is a safe place to carry out business from both the
customers and businesses point of view.
Over 50 percent of fraud victims are initially contacted by e-mail, with 38 percent
of contacts coming via a Web page, the report said. The leading methods of
payment in fraud cases are money order and credit card.
On the other hand 48% of all Internet users consider credit card usage over the Net
to be secure.
The rising confidence will help to accelerate the already fast growing e-commerce
sector, since fear of credit card fraud is one of the key barriers to ecommerce
participation among Internet users. But this new-found consumer confidence is
fragile and needs to be reinforced continuously by the industry.
However, security concerns persist, mainly among female Internet users and the
over 55 year-old age group. Only two-fifths of each of these groups considers
credit card usage on the Net to be safe. These attitudes are reflected in online
buying patterns. Only a third of women and over 55 Web users have purchased
goods or services online, compared with two fifths of the total Internet population.
To further build up trust in the internet several authorities are taking action to
combat cyber crime, on the other hand, the freedom of the Internet, the source of
its very success, has to be preserved. No security on the Internet would imply, no
trust and no transactions, this in return would mean that the impressive growth
forecasts for ecommerce will remain an illusion if people cannot trust electronic
transactions.
A lack of consumer confidence is the main thing holding up the development of
ecommerce here. By handing jurisdiction of such cross-border disputes to the
courts in the consumers' country, the regulation would be encouraging consumers
to purchase online. But industry representatives in this debate argue that this
approach will create legal uncertainty for small and non-international companies

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using the Internet. For large International companies the problem is not serious,
because they have offices and lawyers in all countries. The smaller companies
would be burdened with substantial legal and insurance and travel costs if they
took protection against litigation from outside their home market.

5. Customer Service on the Internet

The Internet has gathered a great deal of hype and media attention in the past few
years. The descriptions of the Internet as a whole new way to communicate and to
do business, is now a fact that cannot be contradicted.
It would be improper to ignore a new way to communicate with one‘s customers.
Today, a number of companies are building websites in order to communicate to
their customers instead of with them. Most Web sites are created to provide an
electronic brochure, essentially the Internet version of a sales pitch, a sort of on-
line television advertisement. Customers can get the specific information they're
interested in, but companies are giving little thought to two-way communication.
Companies have to identify the Internet as a communication tool rather than a
broadcast medium. Brand managers and market researchers must fully embrace the
Internet if they are to learn from their customers.
The Internet offers a whole new way to establish rapport with customers.
Answering customer questions, solving their problems, and selling them additional
products can now be computerized.
The Web offers an additional means of creating the all-important bond of trust and
loyalty between buyer and seller. The web has given customers another means of
conducting business. The rewards have been lower customer service costs and
higher customer satisfaction. These are clearly goals to be envied.
We identified eight steps to superior customer service on the Web; the steps will
not only create a better customer service but also lead to long term savings and
higher profits.
The steps are outlined in the following points:

Recognize That The World Has Changed: The Web represents a fundamental
shift in the way business communicates. Bringing customers into your company
through the Web will cause ripples of change throughout the organisation. Upper
management must embrace this new media and stand behind the idea. Those
ripples of change will include the way one runs his business internally. The
company will have to set up systems to give its employees access to enough
information that they can then service the customers.

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Post a "Frequently Asked Questions" Document: A large number of customers
call to enquire about the same questions, the company‘s telephone operators and
sales people could identify these frequently asked questions (FAQ), then post the
answers for all to see.
Eventually the FAQ can grow to include a knowledge base of answers. The
software development tools company. If a customer has a problem using the
companies products, then he or she could refer to the knowledge base. It's the place
the company stores all the problems people have had and all the answers they've
offered.
If the organisations site is large enough, implement a search engine. It should be
accessible from the home page and from any page on the site. It should be
powerful and easy to use. Placing a search icon on your home page and a search
button on the generic, site-wide button bar is straightforward and easy to do.
Providing a search tool that is both powerful and easy to use is not straightforward
and easy to do, but it's a great benefit to your customers.

Respond to your e-mail: When customers use e-mail instead of the telephone, one
needs to be ready to respond. There have to be people assigned to answering e-mail
and properly trained in its use. As a start, offer multiple e-mail addresses for your
customers. Such as accounting@company.com or sales@company.com. This will
allow customers to choose-and save the company sorting time and effort.
When an issue is critical, a customer will usually call. If it's a contractual issue,
they'll send a fax with its inherent status as a legal document. But if it's merely
important a product question, a service modification, a clarification of some kind
they'll send an e-mail. They don't need an immediate answer, but they're not doing
it for nothing. They expect an answer within 24 hours and it's up to the company to
get the answer
Organisations may implement systems that could automatically identify to whom
the message is intended and forward it directly to the correct person, the system
could be set up to send an auto-response back to the sender, all the while recording
who's working on the subject and how much time goes by between receipt and
reply. Implementing this, the customer knows the message was received and has a
tracking number. Implementing would allow management to get status reports
about customers and productivity.

Create a Bulletin Board: Take advantage of bulletin boards and e-mail lists to give
your customers a place for online discussions. They know things about using the
company‘s products that the company does not and they can help each other use
the products better. It is also a great way to learn what the customers are thinking.

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Keep a Customers' Log: A company should keep a log of what the customers look
at, how they navigate, and what they search for. This will give the company a lot of
clues about what interests them and how easy your site is to use. Pay attention to
the most frequently asked questions. If one knows what people are asking, one can
provide the answers up front, such as in marketing materials, instruction manuals,
on home page. Give customers the answers before they ask.
Provide access to as much information as possible.
The ideal Web site has so much information that everybody who comes there can
find something to help him or her. Every time the company comes up with more
tips, advice, or pointers, be sure to post them on the Web site. Make your site the
vault of all knowledge and your customers will get used to looking there first.
Don't publish everything on one page, instead, offer the basics up front and let
them drill down to the information they need, when they need it, and at their own
pace. The person who's happy with a terse reply can click and run. The person who
wants a more detailed explanation can get it.
Give Access to live Information: The reason the FedEx Web site is always held up
as a vanguard of business on the Web is because it allows direct access to live data.
Any company‘s customers want to know more than just the basic information.
They want to know the delivery time, if the problem they reported has been solved,
and if the new version will be out soon.

Every Customer Is An Individual: Your customers are uniquely individual. Not


just each company you sell to, but each person in each company you sell to. Track
them all as individuals. A Web site can recognize individuals and treat them as
such. This can be done by making maximum use of database technology, which
probably is already available within the organization. Once this is implemented
greet customers by name when they show up at the company‘s site. Show them
what has been added to the site since the last time they visited. This isn't a generic
"What's New" page. This is a call to the customer database to see exactly when this
person last visited, to create a "What's New to you" page. Let your customers
review their billing statements. Let them see the status of their back order. Let
them make their purchasing decisions based on your stock-on-hand.
Successful customer service always means looking at the products, the company,
and the customer service methods through the customers' eyes. Customers don't
care how the company is organized. They just want answers to their questions and
solve their problems. An important task for a customer service Web builder is to
maximize the use of the Internet as a promotional medium, promoting by giving to
the customers what the want. This is done by figuring out what the customer will
want to see, will want to ask, and will want to get out of the experience.

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Loyalty on the Internet: While one is looking to make a purchase or strike a deal
over the Internet it is usual for the customer to browse through a number of sites
before making a decision. Normally, individuals like meeting people and prefer
purchasing from a friendly sales person. Sales people are a big part of a purchasing
decision and convincing the customer that the product is suitable for him or her. In
some instances, one may remain loyal to a less efficient supplier simply because
sales persons are nice or because of a rapport that was built over time. This is very
difficult to do on the Internet, since building a rapport with a web page is not usual
for a customer to do. The removal of sales people from the process removes the
personal bias on the decisions. The practical issues get renewed precedence. For
example: is the product good? How easy is the site to use? Is the transaction safe?
One other issue is that once a client uses a web site and has built up a positive
perception of the company, maybe due to a combination of the information the site
offers, the service given to the clients and the promotion the site carries out, the
customer will prefer to use that site next time.
Such issues are the most important when setting a marketing strategy. On the
Internet, one's competitor's site is no more than a few clicks away, if the client gets
bored on a site; he will go and check another. These arguments raise the following
issues:-
The Internet will force your business to become genuinely customer-focused. If a
company is not giving the customers exactly what they want through the
company's site, then the customers are going to go elsewhere very quickly.
The sites that can build in some human element into their websites are going to do
better.
Large mail order catalogues come online with their telephone numbers proudly
displayed, this makes it very easy for a client to pick up the phone and contact a
sales person who can help the client and conclude the sale.
Without human interaction a client who may be browsing may soon decide to
move on to another site especially if the page is being downloaded may take some
extra time, even if this at the end will be more impressive.
Because websites eschew personal interaction, they need to develop new
approaches to customer loyalty. Online marketers should spend less time talking
about customer loyalty and pay more attention to customer promiscuity.

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CHAPTER 8
BUSINESS MODELS ON THE WEB

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BUSINESS MODELS ON THE WEB

Business models are perhaps the most discussed and least understood aspect of the
web. There is so much talk about how the web changes traditional business
models. But there is little clear-cut evidence of exactly what this means.

In the most basic sense, a business model is the method of doing business by which
a company can sustain itself -- that is, generate revenue. The business model
spells-out how a company makes money by specifying where it is positioned in the
value chain.

Some models are quite simple. A company produces a good or service and sells it
to customers. If all goes well, the revenues from sales exceed the cost of operation
and the company realizes a profit. Other models can be more intricately woven.
Broadcasting is a good example. Radio and later television programming has been
broadcasted over the airwaves free to anyone with a receiver for much of the past
century. The broadcaster is part of a complex network of distributors, content
creators, advertisers (and their agencies), and listeners or viewers. Who makes
money and how much is not always clear at the outset. The bottom line depends on
many competing factors.

Internet commerce will give rise to new kinds of business models. That much is
certain. But the web is also likely to reinvent tried-and-true models. Auctions are a
perfect example. One of the oldest forms of brokering, auctions have been widely
used throughout the world to set prices for such items as agricultural commodities,
financial instruments, and unique items like fine art and antiquities. The Web has
popularized the auction model and broadened its applicability to a wide array of
goods and services.

Business models have been defined and categorized in many different ways. This
is one attempt to present a comprehensive and cogent taxonomy of business
models observable on the web. The proposed taxonomy is not meant to be
exhaustive or definitive. Internet business models continue to evolve. New and
interesting variations can be expected in the future.

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The basic categories of business models discussed in the table below include:

 Brokerage
 Advertising
 Infomediary
 Merchant
 Manufacturer (Direct)
 Affiliate
 Community
 Subscription
 Utility

The models are implemented in a variety of ways, as described below with


examples. Moreover, a firm may combine several different models as part of its
overall Internet business strategy. For example, it is not uncommon for content
driven businesses to blend advertising with a subscription model.

Business models have taken on greater importance recently as a form of


intellectual property that can be protected with a patent. Indeed, business models
(or more broadly speaking, "business methods") have fallen increasingly within the
realm of patent law. A number of business method patents relevant to e-commerce
have been granted. But what is new and novel as a business model is not always
clear. Some of the more noteworthy patents may be challenged in the courts.

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ORACLE MARKETING ANALYTICS

KEY BENEFITS
Marketing executives are under constant pressure to justify their marketing
budgets. They are also responsible for ensuring optimum allocation of marketing
resources. Marketing managers need key information about the progress of their
campaigns so that they may proactively adjust their campaigns to ensure effective
execution and higher campaign ROI. Marketing analysts need access to enterprise-
wide customer information for effective segmentation. Oracle Marketing Analytics
is a comprehensive analytic solution that provides timely fact-based insight into the
marketing activities of the entire organization. It provides new levels of
information richness, usability, and reach to marketing professionals throughout
the enterprise. All users, from marketing executives to marketing analysts, get up-
to-the-moment, complete, and in-context marketing insight—insight that is
personalized, relevant, and actionable. The benefits are faster and more informed
decisions that help the marketing organization optimize its resources, reduce costs,
and improve effectiveness of marketing activities.

KEY BENEFITS:

FOR BUSINESS USERS:

Retain valuable customers


Generate quality demand at the lowest cost
Improve profits earned from customers
Reduce unnecessary expenditure
Manage marketing as a science and less as an art

FOR IT:

Reduce implementation cost and risk through integrated analytical solutions


Integrate data from multiple enterprise sources and across the company
value chain
Flexibly adapt to changing business needs by leveraging and not replacing
existing technology investments
Deliver better business results and rapid time to value
Deploy marketing analytics to both finance and marketing users

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Oracle Marketing Analytics provides unparalleled visibility
into campaign performance and ROI

The Right Information – Right Now


Enterprises depend on information to optimize performance. However, most
organizations are hampered by information that is incomplete, out of date, or
otherwise inadequate for answering critical business questions. Additionally,
organizations often struggle to deliver the right information to the right person at
the right time. Oracle Marketing Analytics, part of the Oracle BI Applications
family, is designed to help marketing organizations leverage the power of timely,
actionable information to improve the quality of decisions and ultimately improve
performance. The application is the only solution that unlocks the information
value hidden in systems across the enterprise, including financial management,
third-party demographic sources, and customer relationship management systems,
to provide marketing professionals with comprehensive insight that enables them
to take appropriate action. With Oracle Marketing Analytics, marketing
professionals can get a complete picture of customer needs and buying patterns,
understand customer value, identify customers likely to churn, monitor the
effectiveness of marketing campaigns, and understand the impact on overall
marketing plans and budgets, thus enabling users to identify cost saving and
revenue-increasing opportunities.

Retaining Valuable Customers


Picture this: A marketing manager in a division of a financial services company
arrives in the morning to find an email alert generated from Oracle Marketing
Analytics that shows that there are a sizable number of high-value customers that
are at risk of churn. The marketing manager drills into the report and looks at
deeper information about those customers, including the number of other products
they own, current and predicted lifetime value, customer satisfaction levels, and a
snapshot of recent transaction history. Based on this information, the marketing
manager uses the Segment Designer feature to create a segment of high-value and
at-risk customers, adds it to a retention program, and submits a budget request for
approval. When the marketing executive receives notification of a budget request,
he consults his Oracle Marketing Analytics dashboard that shows how much
budget is available, how much is spent, and pending requests against the available
budget. The marketing executive reviews the average effectiveness of previous
retention programs run by the marketing manager, and being satisfied with the
ROI, approves the budget request. The marketing manager then executes the call
center campaign to promote the retention offer. As the program is running, the

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marketing manager uses Oracle Marketing Analytics to track the progress of the
campaign in real time, including number of customers contacted, offer acceptance
and reject rate, and performance by call center agent. Dashboards also help the
marketing manager validate the effectiveness of various test and control offers and
refine and re-launch the best offer in real time. At the conclusion of the campaign,
the marketing executive uses Oracle Marketing Analytics to track the effectiveness
of the retention marketing plan across the division for the quarter, which shows the
actual versus budgeted expense, response rate by each retention tactic, and overall
campaign ROI based on customers that were retained.

Insight Where and When You Need It


To compete effectively in today‘s market-place, companies need to deliver the
right information to the right person at the right time. Oracle Marketing Analytics
provides timely metrics, reports, and proactive alerts, enabling marketing
professionals to take action based on facts rather than intuition. Most importantly,
Oracle Marketing Analytics integrates data from sources across the enterprise—
including external sources—to provide the marketer with a complete view of their
resources, expenses, and effectiveness. Using Oracle Marketing Analytics,
companies can achieve higher marketing effectiveness and become more efficient.

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CHAPTER 9
ORACLE MARKETING ANALYTICS

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Oracle Marketing Analytics enables advanced customer
segmentation

Generate Quality Demand at the Lowest Cost


Measuring the effectiveness of demand generation activities in real time allows
marketers to identify bottlenecks to improve the efficiency of campaigns. Oracle
Marketing Analytics has extensive pre-built capability for monitoring the success
of email campaigns, including number of emails delivered, open rate, bounce-
backs, and offer effectiveness. For customer contact center campaigns, Oracle
Marketing Analytics tracks the number of calls made, average days to follow-up,
cross-sell and up-sell effectiveness, and total order revenue. Marketers can adapt
their marketing approach in real time and swap out offers that do not elicit high
response rates. This ensures that agents have the most rewarding and productive
interactions with customers as possible.

Insights for Improving Customer Profitability


Oracle Marketing Analytics provides information on which products customers are
likely to buy and insight into which products may make effective bundles. The
nuances of customer behavior information can be gleaned from transaction history
and correlated with customer lifetime value, churn risk, and customer behavioral
attributes to gain insight into customer clusters and better inform treatment
strategies. The ability to aggregate information from various data sources also
allows marketers to calculate, monitor, and build customer investment strategies
based on critical metrics such as customer profitability.

Reduce Wasted Spend


Oracle Marketing Analytics provides information on all marketing expenditures.
Department-level budgetary information and expenses on specific marketing
programs can be tracked all the way down to the individual tactic. After campaigns
are executed, the effectiveness of each tactic is automatically aggregated to
marketing plans, thereby allowing marketing executives to monitor the
effectiveness of each plan and make resource allocations based on facts instead of
hunches.

Faster Implementation, Lower Risk, and Better Business Results


Providing actionable insight to the marketing organization requires a powerful
analytics solution. However, traditional business intelligence solutions deployed
within marketing are costly, require many months to implement, and are difficult

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to modify as business requirements change. In contrast, Oracle Marketing
Analytics is a pre-built solution designed for faster deployment at a lower cost, at a
lower risk, and with better business results. Oracle Marketing Analytics includes
pre-built data models and more than 100 metrics and best practices based on
Oracle‘s experience across hundreds of marketing automation implementations. In
addition, Oracle‘s robust enterprise analytics platform enables users to easily
customize and extend the application without the need for programming. The
intuitive, Web-based user interface requires very little training and ensures rapid
end user adoption.

Across industries, marketing organizations are being asked to do more with less,
while ensuring that they meet more aggressive goals. Marketing reporting and
analytics have traditionally focused solely on campaign results post-completion.
Oracle Marketing Analytics provides marketing professionals with a new level of
business insight by unlocking the information value hidden in systems across the
enterprise. With Oracle Marketing Analytics, marketing professionals have access
to actionable information, which drives a greater return on the marketing spend,
reduced marketing cost, and increased revenue. Additionally, Oracle Marketing
Analytics is built on a robust analytic platform that can proactively monitor and
deliver timely and actionable insight to the right person at the right time.

Will Oracle And SAP Offer Big-Business Sass?


The question has been out there for some time: Will SAP and Oracle ever deliver
software as a service to their large enterprise customers? The answer is, sort of.

Both companies would say that they already offer Sass, yet that leads to a debate
about the definition of Sass. Companies such as Salesforce.com and Workday
would argue that Sass is comprised of a new class of applications that were built to
run on the Web and are delivered in a multitenant environment (e.g., an application
is shared by potentially dozens of the vendor's customers). As a result, they say,
customers can expect better performance than they would from a traditional
application hosted via the Web and pay less to the vendor than they would in a
single-tenant deal.

SAP, Oracle, Microsoft, and other traditional software vendors would argue that
Sass doesn't need to be multitenant and applications don't need to be rewritten for
Sass. But then why call it Sass; why not just call it hosted software (or, as it was
known in the '90s, the ASP model)?

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So let us consider Sass more in the vision of Salesforce.com and Workday, and see
where both Oracle and SAP stand on their offerings for larger businesses.

The model emerging at SAP is similar to Microsoft's "software + services"


approach. It's planning a line of Sass modules or smaller applications that integrate
with a customer's big on-site SAP applications. That approach, if it works, could
let SAP protect its profitable licensed software business, get more services revenue
from those customers, and address concerns large companies have with putting
some of their most sensitive business data in the cloud. Former Oracle executive
John Wookey will head this new strategy.

Oracle does see itself playing a noticeable role in Sass for both large and small
companies. It wants to be the go-to infrastructure vendor for software companies
providing Sass to their customers. With its "Oracle Sass Platform," it offers
database, middleware, application management, and virtual server software to
build the data centers for serving up Sass. Oracle notes that many Sass vendors
already are using its platform, including Intact (human resources) and Exactly
(CRM). Those vendors, of course, have to pay Oracle traditional licensing and
maintenance fees.

Both strategies show that Oracle and SAP want to play in the Sass world, but have
no plans to mess with the cash cow: traditional software licenses and maintenance
revenue that come from large companies. And it will likely stay that way unless
Workday, Salesforce.com, or another vendor poses a real threat to their installed
customer bases.

New E-business Models Chosen for the Case Study:

Description of the Commercial Real Estate Transaction System

A new transaction system for implementing complex business transactions via the
Internet has been patented (Stavrovski, 2002). The system includes components
responsible for search, market analysis, negotiation, and legal closing, and its
implementation is able to:

• Quantitatively evaluate preferences of potential customers (tenants and


landlords), and define permissible search areas and allowable ranges for bargaining
• search all publicly available databases and generate a statistical model of the
current market situation and future tendencies as they relate to the customer‘s
preferences

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• organize interactive multi-party negotiations pertaining to the information
received, and formulate suggestions that will establish the basis for a compromise.

The system performs a recurrent sequence of the following seven steps:

1. Creating the tenant‘s profile


After establishing the initial interactive contact with the potential buyers/ tenants
through the communication means over the Internet, the system is analyzing their
actual preferences in the space of the objects‘ parameters and in the space of
contract terms parameters. The utility evaluation unit of the system is programmed
to generate approximations of multi-attitude utility and
Gottlieb & Sarvoski flexibility functions for the potential buyers/ tenants. The
admissible domain for the consecutive search of commercial real estate objects
may be defined on that basis.

2. Searching for admissible objects


The system contacts through the communication means over the Internet all
publicly available databases, which may contain information about commercial
real estate objects, and organizes the search of admissible objects inside of the
search domain defined at the previous step. The search unit of the system is
programmed to search said databases and to generate the first list of admissible
objects in accordance with the buyer‘s/tenant‘s preferences. In the case when the
first list contains no objects (no admissible objects were found) the system returns
recurrently to the first step
of the whole procedure with the suggestion to change buyer‘s/tenant‘s preferences
(to enlarge the search domain). If the buyer/tenant disagrees with the suggested
changes the system cancels all procedure.

3. Implementing market analysis


On the basis of information delivered from the publicly available databases the
system creates the statistical models of the market situation and tendencies at the
proximity of the first list of objects.
The market analysis unit of the system is programmed to analyze the models of the
marginal market evaluations and the models of the prevailing (asking and selling)
market contract terms. The system contacts the potential buyer/tenant again with
the purpose to inform about the marginal prices of the objects‘ parameters from the
first list and about marginal prices of the contract parameters for the same objects,
and it returns recurrently to the first step of the whole procedure, if the
buyer/tenant decides to change preferences. If the buyer decides not to change
preferences the system confirms the already existing first list of objects.
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4. Creating a list of negotiable objects
The system eliminates objects from the first list, which are situated in contradiction
with the statistical models of the market situation and tendencies (fair price
hypothesis), thus generating the second shorter list of negotiable objects. In the
case when the second list contains no objects, the system returns recurrently to the
first step of the whole procedure with the suggestion to change
buyer‘s/tenant‘s preferences (to enlarge the search domain). If the buyer/tenant
disagrees with the suggested changes the system cancels all procedure.

5. Creating the landlord‘s profile


After establishing the initial interactive contact with the potential sellers/landlords
of the objects
from the second list through the communication means over the Internet, the
system evaluates
their actual preferences in the space of negotiable contract parameters. The utility
evaluation unit
of the system is programmed to generate approximations of multi-attitude utility
and flexibility
functions for the potential sellers/landlords. The admissible domain for the
negotiations is define on that basis.
6. Hosting the negotiations and correcting previous steps if necessary.

The system organizes the processes of simultaneous interactive negotiations at the


admissible negotiation domains between the buyer/tenant and each of the
sellers/landlords and formulates suggestions that may constitute the basis of
compromises for the each pair buyer/seller.
The system generates the third list of the objects, for which the compromises
between the buyer and any one of the sellers are agreed upon by both of them.
After that the system designates the final object from the said third list, for which
the result of the negotiation is best for the buyer/tenant. The system obtains the
buyer‘s and seller‘s approvals for finalizing the transaction.
The negotiation unit of the system is programmed to fulfill these parts of the step

6.Common Approaches to Patenting

In the case, when the third list contains no objects, the system returns recurrently to
the first step of the whole procedure with the suggestion to change buyer‘s/tenant‘s
preferences (to enlarge the search domain). If the buyer/tenant disagrees with the
suggested changes the system cancels all procedure.
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7. Organizing the due diligences processes.
The system generates all necessary legal documents and organizes the processes of
due diligence and legal closing, thus successfully finishing the procedure. The due
diligence unit of the system is programmed to fulfill this part of the step 7.
If the due diligence process finishes unsuccessfully, the system returns recurrently
to the next object from the third list. In the case when said third list contains no
more objects, the system returns recurrently to the first step of the whole procedure
with the suggestion to change buyer‘s/tenant‘s preferences (to enlarge the search
domain). If the buyer/tenant disagrees with the suggested changes the system
cancels all procedure.

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FLOW CHART SHOWING GENERAL MARKETING
PROCEDURES

START

UNSUCCESSFUL
RESEARCH AND
DEVELOPMENT

SUCCESSFUL

PRODUCT
DEVELOPMENT

MARKETING
STRATEGIES

DISTRIBUSTION AND
SALES

FEEDBACK

STOP Page | 71
CHAPTER10
CUSTOMER RELATIIONSHIP
MANAGEMENT

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CUSTOMER RELATIONSHIP MANAGEMENT

Customer relationship management (CRM) consists of the processes a company


uses to track and organize its contacts with its current and prospective customers.
CRM software is used to support these processes; the software system can be
accessed, and information about customers and customer interactions can be
entered, stored and accessed by employees in different company departments.
Typical CRM goals are to improve services provided to customers, and to use
customer contact information for targeted marketing.

While the term CRM generally refers to a software-based approach to handling


customer relationships, most CRM software vendors stress that a successful CRM
effort requires a holistic approach. CRM initiatives often fail because
implementation was limited to software installation, without providing the context,
support and understanding for employees to learn, and take full advantage of the
information systems.

Overview
From the outside, customers interacting with a company perceive the business as a
single entity, despite often interacting with a number of employees in different
roles and departments. CRM is a combination of policies, processes, and strategies
implemented by an organization to unify its customer interactions and provide a
means to track customer information.

CRM includes many aspects which relate directly to one another:

• Front office operations — Direct interaction with customers, e.g. face to face
meetings, phone calls, e-mail, online services etc.

• Back office operations — Operations that ultimately affect the activities of


the front office (e.g., billing, maintenance, planning, marketing, advertising,
finance, manufacturing, etc.)

• Business relationships — Interaction with other companies and partners,


such as suppliers/vendors and retail outlets/distributors, industry networks

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(lobbying groups, trade associations). This external network supports front and
back office activities.

• Analysis — Key CRM data can be analyzed in order to plan target-


marketing campaigns, conceive business strategies, and judge the success of CRM
activities (e.g., market share, number and types of customers, revenue,
profitability).

Types/Variations of CRM
There are several different approaches to CRM, with different software packages
focusing on different aspects. In general, Campaign Management and Sales Force
Automation form the core of the system (with SFA being the most popular)

Operational CRM
Operational CRM provides support to "front office" business processes, e.g. to
sales, marketing and service staff. Interactions with customers are generally stored
in customers' contact histories, and staff can retrieve customer information as
necessary.

The contact history provides staff members with immediate access to important
information on the customer (products owned, prior support calls etc.), eliminating
the need to individually obtain this information directly from the customer.

Operational CRM processes customer data for a variety of purposes:

• 'Managing Campaigns'

• Enterprise Marketing Automation

• Sales Force Automation

• Sales Management System

Sales Force Automation (SFA)


Sales Force Automation automates sales force-related activities such as:

• Scheduling sales calls or mailings


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• Tracking responses

• Generating reports

Analytical CRM
Analytical CRM analyzes customer data for a variety of purposes:

• Designing and executing targeted marketing campaigns

• Designing and executing campaigns, e.g. customer acquisition, cross-selling,


up-selling

• Analysing customer behavior in order to make decisions relating to products


and services (e.g. pricing, product development)

• Management information system (e.g. financial forecasting and customer


profitability analysis)

Analytical CRM generally makes heavy use of data mining.

Sales Intelligence CRM


Sales Intelligence CRM is similar to Analytical CRM, but is intended as a more
direct sales tool. Features include alerts sent to sales staff regarding:

• Cross-selling/Up-selling/Switch-selling opportunities

• Customer drift

• Sales performance

• Customer trends

• Customer margins

Campaign Management
Campaign management combines elements of Operational and Analytical CRM.
Campaign management functions include:

• Target groups formed from the client base according to selected criteria

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• Sending campaign-related material (e.g. on special offers) to selected
recipients using various channels (e.g. e-mail, telephone, post)

• Tracking, storing, and analyzing campaign statistics, including tracking


responses and analyzing trends

Collaborative CRM
Collaborative CRM covers aspects of a company's dealings with customers that are
handled by various departments within a company, such as sales, technical support
and marketing. Staff members from different departments can share information
collected when interacting with customers. For example, feedback received by
customer support agents can provide other staff members with information on the
services and features requested by customers. Collaborative CRM's ultimate goal is
to use information collected by all departments to improve the quality of services
provided by the company.

Geographic CRM
Geographic CRM (GCRM) combines geographic information system and
traditional CRM. Geographic data can be analyzed to provide a snapshot of
potential customers in a region or to plan routes for customer visits.

Strategy
Several commercial CRM software packages are available, and they vary in their
approach to CRM. However, as mentioned above, CRM is not just a technology
but rather a comprehensive, customer-centric approach to an organization's
philosophy of dealing with its customers. This includes policies and processes,
front-of-house customer service, employee training, marketing, systems and
information management. Hence, it is important that any CRM implementation
considerations stretch beyond technology toward the broader organizational
requirements.

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The objectives of a CRM strategy must consider a company‘s specific situation
and its customers' needs and expectations. Information gained through CRM
initiatives can support the development of marketing strategy by developing the
organization's knowledge in areas such as identifying customer segments,
improving customer retention, improving product offerings (by better
understanding customer needs), and by identifying the organization's most
profitable customers.

CRM strategies can vary in size, complexity, and scope. Some companies consider
a CRM strategy only to focus on the management of a team of salespeople.
However, other CRM strategies can cover customer interaction across the entire
organization. Many commercial CRM software packages provide features that
serve the sales, marketing, event management, project management, and finance
industries.

Implementation Issues
While there are numerous reports of "failed" implementations of various types of
CRM projects, these are often the result of unrealisticly high expectations and
exaggerated claims by CRM vendors.

Many of these "failures" are also related to data quality and availability. Data
cleaning is a major issue. If a company's CRM strategy is to track life-cycle
revenues, costs, margins, and interactions between individual customers, this must
be reflected in all business processes. Data must be extracted from multiple sources
(e.g., departmental/divisional databases such as sales, manufacturing, supply chain,
logistics, finance, service etc.), which requires an integrated, comprehensive
system in place with well-defined structures and high data quality. Data from other
systems can be transferred to CRM systems using appropriate interfaces.

Because of the company-wide size and scope of many CRM implementations,


significant pre-planning is essential for smooth roll-out. This pre-planning involves
a technical evaluation of the data available and the technology employed in
existing systems. This evaluation is critical to determine the level of effort needed
to integrate this data.

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Equally critical is the human aspect of the implementation. A successful
implementation requires an understanding of the expectations and needs of the
stakeholders involved. An executive sponsor should also be obtained to provide
high-level management representation of the CRM project.

An effective tool for identifying technical and human factors before beginning a
CRM project is a pre-implementation checklist. A checklist can help ensure any
potential problems are identified early in the process.

Privacy and data security


One of the primary functions of CRM software is to collect information about
customers. When gathering data as part of a CRM solution, a company must
consider the desire for customer privacy and data security, as well as the legislative
and cultural norms. Some customers prefer assurances that their data will not be
shared with third parties without their prior consent and that safeguards are in place
to prevent illegal access by third parties.

Market structure
The following table lists the top CRM software vendors in 2006-2007 (figures in
millions of US dollars) published in a Gartner study

Vendor 2007 Revenue 2007 Share (%) 2006 Revenue 2006 Share (%) '06-'07 Growth (%)

SAP 2,050.8 25.3 1,681.7 26.6 22.0

Oracle 1,319.8 15.3 1,016.8 15.5 29.8

Salesforce.com 676.5 8.3 451.7 6.9 49.8

Amdocs 421.0 5.2 365.9 5.6 15.1

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Microsoft 332.1 4.1 176.1 2.7 88.6

Others 3,289.1 40.6 2,881.6 43.7 14.1

Total 8,089.3 100 6,573.8 100 23.1

The following table lists the top software vendors for CRM projects completed in 2006 using
external consultants and system integrators, according to a 2007 Gartner study

Vendor Percentage of implementations

Siebel (Oracle) 41%

SAP 8%

Epiphany (Infor) 3%

Oracle 3%

PeopleSoft (Oracle) 2%

salesforce.com 2%

Amdocs 1%

Chordiant 1%

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Microsoft 1%

SAS 1%

Others 15%

None 22%

A 2007 Datamonitor report lists Oracle (including Siebel) and SAP as the top
CRM vendors, with Chordiant, Infor, and SalesForce.com as significant, smaller
vendors

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CRM FROM THE INFORMATION TECHNOLOGY
PERSPECTIVE
From the technology perspective, companies often buy into software that will help
to achieve their business goals. For many, CRM is far more than a new software
package, the renaming of traditional customer services, or an IT-based customer
management system to support sales people. However, IT is vital since it underpins
CRM, and has the payoffs associated with modern technology, such as speed, ease
of use, power and memory, and so on.

AN ILLUSTRATIVE CRM MODEL

Customer Relationship Management continues to be the most vibrant, critical


and evolving technology category in today's market. CRM today is no longer just
about enterprise software. Rather, today's CRM is a flexible solution where you
can mix software, hosted services and other components to meet your specific
business needs.

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Who are your best customers? What can you do to retain them? How can you
attract others like them? How can you increase your customers‘ profits? The truth
is that most companies have difficulty understanding and managing customer life
cycles and profitability. This is due to problems designing and executing effective
marketing campaigns, and problems measuring their effectiveness.

A survey of more than 1,600 business and IT professionals conducted by The Data
Warehousing Institute found that close to 50% had CRM project budgets of less

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than $500,000. Clearly, CRM doesn't have to be a budget-buster. What‘s more,
Forester estimated that CRM revenues will grow from $42.8 billion in 2002 to
$73.8 billion in 2007, a compound annual growth rate of 11.5%.

For CRM to be truly effective an organization must decide what kind of customer
information it‘s looking for and what it intends to do with it. Look at how customer
information comes into a business, where and how it‘s stored, and how it‘s used.
Then have company analysts‘ comb through the data to get a complete view of
each customer and pinpoint areas where better services are needed. One way to
assess the need for a CRM project is to count the ways a customer can access the
company. The more there are, the greater the need for the single centralized
customer view a CRM system can provide.

Customer Relationship Management (CRM) Cycle

Customer Relationship Management enables real-time availability checks,


contract management, billing management, fulfillment visibility, and order

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tracking, giving you the features and functions necessary for marketing planning,
campaign management, telemarketing, lead generation, and customer
segmentation. In addition, CRM allows you to offer ongoing customer care across
all channels – with a customer-interaction center, Web-based customer self-service
capabilities, service and claims management, field service and dispatch, and
installed-base management.

CRM helps your business:

Provide better customer service


Make call centers more efficient
Cross-sell products more effectively
Have sales staff close deals faster
Simplify marketing and sales processes
Discover new customers
Increase customer revenues

Take a moment to count all the critical business processes associated with
ordering, fulfillment, payment, billing, employee benefits, sales, marketing and
customer service. In your opinion, what percentage of these processes is
completely and effectively digitized? Is it 10%, 30%, 50% or more? Our research
indicates that the average is between 20 and 30% – higher for Global 2000
companies, lower for small and mid-sized businesses (SMBs). CRM helps
businesses use technology and human resources to gain insight into customer
behavior – and to recognize the value of those customers.

Customer Relationship Management goes beyond sales, marketing and customer-


service applications into business intelligence, analytics, hosted applications,
mobile capabilities and much more! By thinking more insightfully about what your
customers are worth, you can focus your resources on attracting and keeping the
right type of customers. This focus, in turn, will make your CRM efforts more
productive and position you better for innovation and growth.

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Information Drives Successful Customer Relationships
Oracle's integrated Customer Relationship Management (CRM) solution is a set of
applications that give you information-driven sales, service, and marketing. Oracle
CRM is built on an open, standards-based architecture that streamlines business
processes, improves data quality, and allows all your key divisions to draw from
the same source of data.

(Customer Relationship Management)


Create growth and loyalty through continuous customer dialogue.

Leading customer-focused companies view every customer interaction as an


opportunity to make a new offer, improve retention, increase revenue, build
loyalty, or strengthen their brand. Infor CRM (Customer Relationship
Management) helps companies optimize customer relationships by integrating
marketing, sales, and service. By providing a full 360-degree view of
customers, the system enables a consistent and continuous customer dialogue
based on real-time information. With this advanced CRM solution set, you
can make the most of every interaction with every customer across every
channel or touch point. As a result, you gain true customer insight, along with
the ability to act on that insight.

Infor's CRM software system helps companies :

Run campaigns that align with your customers' preferences


Tightly integrate marketing across all inbound and outbound channels
Increase sales productivity by providing customer insight
Manage marketing and sales resources more efficiently
Turn contact centers into profit centers
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Infor's CRM solution provides the tools your company needs to engage
customers in a multi-channel, closed-loop dialogue that nurtures their loyalty
to your products and services and improves your bottom-line results. Infor
CRM is comprised of the following key components:
Marketing —delivers inbound and outbound marketing capabilities that
streamline the campaign process and create real-time customer profiles which
can be analyzed to identify high-impact offers at the moment of customer
interaction.
Sales — provide sales force automation and opportunity management
capabilities that facilitate customer conversations by driving intelligence into
every customer interaction.

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SOME CRM SCREEN SHOTS

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CHAPTER11
ON DEMAND AND ON PREMISE
CRM

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ON DEMAND AND ON PREMISE CRM

Customer Relationship Management (CRM) Software has been implemented by


many large organizations at a huge cost and has achieved significant benefits. But
it had almost been out of reach of small and medium sized businesses (SMBs). On-
Demand CRM software has come as an opportunity for SMB‘s who could not
afford huge investments. In this case we discuss the pros and cons of On demand
and On Premise CRM, its advantages and disadvantages, which type of companies
and which type of software would be suitable.

Customer Relationship Management (CRM) over the years gained popularity by


showing success and many organizations have implemented it. Initially 70% of
CRM implementations would fail and investments worth billions of dollars were
washed away. They were very costly so only large organizations could use them.
Over the years there has been a change. As networking technology has improved a
possibility has arisen using ―Software as a Service‖ (Saas). The dot com revolution
has left few lasting impressions as significant as the hosted software phenomena,
so the evolution of CRM software as a service.

On Demand CRM is a web-based, hosted and licensed as a service over time.


Rather than incurring high upfront costs, it is a natural progression of CRM that
used the web as a delivery medium. Here you pay per user per month. Thus the
software that in the late 90s, which was not affordable to the small medium sized
businesses (SMBs) has become affordable, making it possible for SMBs to
compete with larger competitors running monolithic systems. It was initially
referred to as Application Service provider (APS) based CRM; small firms thus did
not need to deal with a host of technology issued nor worry about maintaining
systems in-house. On demand CRM accelerate in popularity beginning in 2004-
2005. Any technology which improves the financial health of a business generates
heated debate and CRM is no exception. There is a major debate as to which CRM
implementation gives better performance On-demand or On-Premise?

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WHAT IS ON-DEMAND CRM

It can be defined as a ―software as a service‖ (Saas) model which is akin to paying


for a sofa overtime rather than buying it outright, except the sofa gets replaced
every few months with a newer model for life. On-Demand is fundamentally a
delivery model- a particular way to consume and use a solution. Following are the
advantages and disadvantages:

ADVANTAGES OF ON-DEMAND CRM

1. Faster deployment
2. Lower upfront costs
3. Reduced in-house support and maintenance requirements. No need to
dedicate in-house IT staff to implement the solution or require to hire a
system integrator to install or update the product, periodic upgrades are
also done by the vendor.
4. It is designed to make it web accessible and easy for a layman or
knowledge worker to understand and use.

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5. The hosted model is actually built with distributed with distributed
employees in mind if th offices are in New York, India and Sidney etc.
The management functions and analytics are created to make it easier for
a CIO to work withoffices all over the world. It also provides a platform
for mobile CRM, sales personnel can log on to important CRM data from
any place that has internet connectivity.
6. The modifications made in On-Demand applications are done through
very intuitive point and click configuration screens. It does not require an
IT expert to change the application. It also does not require two separate
environments of development and test. For On-Premise, these
environments are necessary and expensive.
7. In the On-Premise environment it would require a lot of programming to
develop or add functionality to an application while in On-Demand the
lunch as well as adding any functionality would happen in 30, 60, of 90
days that is why they are called sprints. In larger organizations all
functionality may not be implemented immediately. It may be
implemented over a longer period of time.
8. While On-demand approach is more iterative, everything need not be
perfectly documented up front. It creates a working model and keeps on
revising it. It therefore breaks down the wall between CEO‘s IT dept .and
the business.
9. According to a Gartner Study, eight out of ten IT dollars are considered
―dead money‖ which means that the money is not utilized to some
benefit. No significant business improvement happens to gain
competitive advantage. While On-Demand focus on improving the
business processes without the burden of infrastructure which is a very
crucial thing.
10. Hosted CRM also helps in broader integration opportunities afforded by
evolving web-services. Quite a lot of literature is available and the results
of a survey sometimes give such one sided results that wonders whether
there is a bias because of some ulterior motive. May be, they have
connections with On-Demand CRM vendors or services. Below are
mentioned four graphs which outstandingly show how On-Demand is
better than On-Premise on the following aspects.

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11. Not only do potential customers usually get a free trial, frequent upgrades
are included free during the lifetime of the contract.

Results Generated by CRM System Usage: This shows that significant


improvements were seen by 39.8%. On Demand CRM while only 20.8%
On-Premise CRM showed significant improvements.

CRM Systems Implementation Time Comparison: 59.2 per cent On-Demand


CRM applications were implemented in <3 months while only 15.6 per cent
On Premise CRM applications were implemented in that time. Only 9.3
percent On Demand CRM applications took 7 months to implement.

CRM Project Actual to Budget Comparison: 70.8% On-demand applications


were on budget while only 39.4% On-Premise were on budget. 25.5% On-
Premise were significantly over budget while only 1.9% On-demand were
not over budget.

WHAT IS ON-PREMISE CRM

On Premise CRM applications are those which are implemented in house, that is
within the organization on the hardware and software belonging to the
organization, implemented and maintained by the IT staff may be sometimes with
the help of the third party software service providers to help with the
implementations.

ADVANTAGES OF ON-PREMISE CRM APPLICATIONS

1. In the case of On Premise CRM applications, there is a multitude of


solutions for integration directly with the database (ODBC, OLE, DB),
through middleware are (Biztalk), or through application services (COM,
Web services) layer. Some advances On-Premise applications services
(COM, Web services) layer. Some advanced On Premise applications also
offer advanced business process workflow tools.

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2. The control of the data remains with the organization, and does not go to
the vendor.
3. The organization can have their own integrated highly customizable
applications which allow them to better differentiate themselves from their
competitors. If they need to make any changes in the software with the
change in the dynamic market conditions, to get competitive advantage,
they can do it with their I house application. So if any organization has
complex integration and customization needs and has sufficient time to
deploy an in-house suite or even incrementally deploy the modules that will
eventually constitute an integrated suite, for those companies in-house is a
better option.
4. Stability is completely possible with an On-Premise application. But the
scalability. Of On-demand applications is frequently questioned. Saas
solutions ideally serve 10, 25, 50 or may be 100 user organizations. As the
organizations get larger it would be better to go in for an On-Premise
solution. Beyond 100 users, businesses typically invest in a directory
service like Microsoft or LDAP and hire one IT person to manage it.
5. Also the cost advantage of an On-Demand solution diminishes with more
users.
6. Since the software is designed for ease of use and mass market
consumption some On-Demand software packages aren‘t as feature rich as
their-in-house counterparts. As a result a Saas solution may be ill equipped
to handle more sophisticated Enterprise Content management (ECM)
applications.
7. In some sectors like financial services, it is dictated that all works be done
in-house so such organizations tend to have a team of experts, so they
should be close to the processes and software.
8. The most important point is of total cost of ownership (TCO). Once the
budget is calculated beyond three years, the cost of an On-Demand solution
may be greater than an On-Premise solution, especially for a complex sales
organization.

While cost of an in-house licensed model drops over time and eventually
comes down primarily to maintenance fees, customers continue to pay the
same monthly fee for hosted offerings. Nonetheless hosted vendors
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maintain that such companies can be misleading because they are based on
the assumption that business won‘t need to make changes in their On-
Premise implementations beyond the standard upgrades they receive.

DISADVANTAGES OF ON DEMAND CRM:

1. Even if a company sees compelling reason to outsource, security


standards may prevent it from doing so. So hosted CRM providers do
have security in place, but it is often generic security, which is meant
to lock down client data in a uniform way. A more elaborate and
customized security setup is better implemented within a company for
itself than at vendor‘s place.
2. It is in the best interest of mid-market companies with 50-600
employees to go for On Demand. The main benefit to them I
incorporation of proven best practices. This would not be appropriate
for large complex organizations because as the organizations mature
they themselves develop their own best practices, which make them
successful and unique. Thus one size fits all approach for customer
and financial management solutions have not often worked for mid to
upper mid-market customers.
3. On demand applications generally are implemented in 90 days ―quick
start‖- but this leaves less room for real configuration of system and
may even exclude common difficult tasks, such as converting the
companies data into existing system.
4. The quick implementation also does not give time to organizations to
learn about applications, because the technology evolves faster than
humans. Employees need time to work through complex business
processes. Thus many important things will be left out.
5. The most worrisome point is this. What happen at the end of the
contract? There is an option to take the back up of the data and give it
to the customer. But without other applications whether hosted or On-
Premise it is not accessible. So many customers with complex
integration opt for On-Premise.
6. Customization is generally not possible on On-Demand applications
as compared to On-Premise.
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7. Customers are tempted by low initial price tag without considering the
necessary ongoing costs. Setup costs, license conversions, fees for
customers and business partners, cost of reducing users, selecting the
appropriate pricing metrics, arranging residual rights, training fees,
data ownership issues, integration and customization and termination
of fees are often overlooked by he users of hosted CRM. And these
can over a peritend to increase the ultimate cost of hosted CRM. Some
vendors don‘t agree that any of these expenses is a surprise. They say
―All the costs are visible.‖

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Disadvantages of On-Premise CRM
1. High Costs: Most small- medium sized business can‘t afford the enormous
software acquisition fees, let alone the cost of purchasing or upgrading
existing IT infrastructure, hiring and training new IT staff to maintain this
infrastructure, training all existing staff to use the software efficiently etc.,
there are many such costs, and except for the up-front acquisition fees, other
costs are hard to predict and run over budget. This cost is also compounded
by the extensive time it takes to implement an On-Premise enterprise CRM
solution. Implenentation can take upto 8-12 months to get a fully functional
solution in place. Frequently more than half of this time is billable to
consultants before employees actually get to use the CRM. So the time frame
to begin seeing the ROI is long when IT consultants and system analysts are
charging you by the hour to discuss, how to implement the software based
system, it all adds up quite quickly. On-Premise CRM inplementations has
been notorious for failing, often the quickest solution being to upgrade to the
latest version of the software.
2. Lack of Flexibility: When dynamic market requires changes in the system, it
would take time to make the changes and there would be a cost to it also,
because it could be a huge complex enterprise system.
3. Extremely Limited Choice in Vendors: For enterprise On Premise CRM
there are not very many reputed vendors of software thus the choice is
limited.
4. Leaving the customer to manage software updates: In case of on demand,
the updates are handled by the vendor, but in case of On-Premise, the
customer will have to do it with his own IT-team.
5. Difficulty to Access Critical Company Data: Most of the On-Demand
applications have been developed with fewer features and is meant to be web
accessed and mostly used for distributed employees, but that was not the case
with On-Premise software. Thus it may be difficult to access company data
from anywhere and everywhere. Though over a period of time web access is
provided on many such software, so this trouble has reduced lately.

For all the disadvantages which have been shown against the On-Demand option,
the On-Demand brigade has also given the answers.

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After discussing the advantages and disadvantages of both On-Demand and ON-
Premise CRM systems now that the paper focuses on when and which kind of
companies generally go for one or other type of system.

When a Company goes for On-Demand CRM


a) When it does not have a good IT staff to look after their application, or they
are too busy or they have not been reliable on delivering results on time and
on budget so the company does not want to be held hostage by them.
b) Or such companies who have burnt their fingers with an On-Premise CRM
application which has failed in the past because of many reasons.
c) When a company goes for On-Demand solution it should ensure that it is
built on open standards. This will allow the software to be easily integrated
with other applications and will enable you to migrate your contest to an
On-Premise solution if or when the company decides to.
d) They will have to sacrifice some of the things that ownership can bring –
absolute control, and sophisticated customization.

Even after discussing the pros and cons, it is not so easy to say that the On-
Demand option is the best option or the on-Premise option is the best option. The
answer would be – ―it depends‖. Choosing an option is not so simple. It would be
more suitable for a type of company to go for the On-Premise option and another
type of company to go for the On-Demand option.

Characteristics of Companies and the Appropriate Choice


1. Scope: When it is the sales department of a small organization and it is
relatively independent from the rest of the organization, and it wants to track
leads and manage the pipeline for such an organization. On-Demand can be
a good fit. If it is a larger company which wants to take a broader approach
and it manages customer interactions across several departments, e.g.
coordinating marketing programs with telesales or a contact centre identify
new sales opportunities during a conversation with a customer. Companies

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that fit this multi-function utilization rofile are better candidates for an On-
remise system, primarily because of more complex integration challenges.
Those companies with a view ability to manage customer interactions with
advanced processes and work flow as strategic to creating competitive
advantage and growth (such as cross/up sell opportunities, customized
service offerings, efficient lead management or a tight quote to cash
process). Those companies which believe the customer data is proprietary,
with strong emphasis on internal security infrastructure and procedures, as
well as ability to perform advanced analytics to indentify key customer
trends are also appropriate candidates for ON-Premise applications.
2. Integration: If your customer data and processes need to be linked to other
systems and departments and integration is often vital to the success of any
CRM solutions. A company may need to integrate legacy systems, with
other key infrastructure systems which are highly customized for a specific
purpose for these systems the ability to directly access and update data is
vital, than On-Premise application is more suitable for such a company. If a
company does not need to integrate real-time, customer information with
other major systems then On-Demand option may be right.
3. Customer Processes: If a company is in a highly competitive environment
and it must be able to dynamically adjust their business processes to respond
to market shifts and changing customer needs, they need an advanced
customer process solution with the level of customization and process depth
necessary to compete, then On-Premise solution is likely the best choice.
4. Is there work force distributed or mobile?
5. What are their security restrictions? Security and regulatory restrictions in
some vertical industries are other factors that drive the deployment of On-
Premise applications.
6. It depends on where your company is in the CRM ―life cycle‖ and growth
process. If your company is stable, with little growth or change, then a
hosted CRM solution may be good. If on the other hand your company has
rapid changes with high growth, then the premise solution would be the best
choice.
7. Seasoned ECM users are more interested in On-Premise and other than those
users; the business community is gaining a fair share of interest in On-
Demand.
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8. SMBs who cannot afford On-Premise could go to On-Demand
9. Companies interested in a long term approach, a slow build out or extensive
customizations were advised to invest in an in-house system.

Suitable for On-Demand


1. Company looking for a quick out of the box solution.
2. Relatively little need for integrated analytics to develop deeper
understanding of customer buyer behavior.
3. Comfortable with customer data being stored off-site, under the control of
the On-Demand provider.
4. Low need for international, multi-language support on the same solution.
5. If companies are looking for more tactical, point applications, such as
campaign management, pipeline management and E-mail management.
6. Companies with low customization needs, they can work with a mere
―vanilla‖ product.
7. On-Demand customers know they have to give some long held processes in
order to confirm to the On-Demand product.

Justification to Go to On-Demand
It advises companies to use their valuable Intellectual capital for those functions
and systems that provide them with competitive advantage and leave simple things
to the On-Demand vendor.

Cost

1. Cost for On-Demand CRM is usually through a per user monthly


subscription fee. There are also associated with start up of the application or
customization required, but the maintenance costs are built into the
subscription fee.
2. One of the reasons On-Demand services are so attractive to the SMB
community is the cost factor. For a 25 to 50 user SMB the average cost of an
in house solution would be between $50,000 and $75,000 where you factor
in software licenses integration services and hardware. Depending on the

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size of the organization Saas or On-Demand alternative can allow you to get
the benefits for as little $25 to $50 per user per month. These fees are
generally based on usage or storage capacity and can be deemed operational
business expenditure which is attractive to many SMBS given their limited
capital budgets. And for a 30 day time period most On-Demand providers
may allow a free download to test the software.
3. When a company is doing a cost analysis of whether to choose a hosted or in
house CRM system – it should jot down how much each vendor says and
find out the real cost.

Many vendors charge additional fees after the initial purchase. Vendors have a
way of throwing software or training into the deal, if you already have those,
they throw in marketing.

While dealing with in-house CRM vendors, a company should software add-ons
or training time for staff members that may not have anticipated. Whit hosted
CRM vendors companies should be aware of potential hidden costs in
infrastructure and resources estimates. They may convey that a certain server
capacity may be required and you might think you can get by on less.

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ORACLE ON DEMAND CRM:

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Better Marketing Programs, Through Better Integration With
Critical On-Demand CRM Features, With CRM-FM

On-demand CRM is a revolutionary tool for improving the productivity and


efficiency of your company’s sales process, but sales teams using on-demand
CRM require an increased level of effort, support, and measurable new
performance from their company‘s marketing programs to maximize these
benefits.

Lead Generation: Generating Measurable Sales Response is the Marketing


Professional’s First Step to Achieving Success, Utilizing On-Demand CRM
Leads are the basis for utilizing on-demand CRM in company sales teams, but
smart marketing and sales support professionals in companies using on-demand
CRM know that leads don‘t materialize inside of on-demand CRM: Lead
generation is the first and most important step in the process of using on-demand
CRM to increase top-line sales revenue, and effective lead generation begins with
developing marketing programs designed from the ground up to generate
measurable sales response—inquiries, contacts, and interest from potential
prospects that is the essential foundation successfully integrating on-demand CRM
into business-to-business marketing programs.

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On-Demand CRM and B2B Marketing Programs: The major activities executed
in business-to-business marketing programs for lead generation and lead
development, integrated with features of major on-demand CRM systems

The CRM Field Marketing (CRM-FM) system provides extensive coverage of


the hands-on skills required to develop, produce, and execute front-end lead
generation marketing programs, integrated with on-demand CRM, optimized to
generate solid, measurable sales response. Using proven techniques of clear
presentation, the CRM-FM system is the most effective way for you and your
marketing team to learn the skills required to develop marketing programs that get
results in on-demand CRM, across the broad range of marketing programs and
activities required in your marketing plan.
Courseware content in the CRM-FM system addresses the important major
areas where on-demand CRM integrates with your company‘s marketing program
to meet your sales team‘s critical lead generation requirements:
• Lead generation: Tracking and measuring sales response (leads) from marketing
programs (on-demand CRM campaigns);
• Lead tracking and capture: Manual and online lead capture, tracking, and
measurement;
• Online lead generation: Development, execution, and management of Google
AdWords programs, integrated with on-demand CRM;
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• on-demand CRM Document Library: Developing effective field marketing
deliverables for use by company sales teams;
• Marketing measurement: Key marketing measurements used for campaigns in
on-demand CRM
With the CRM-FM system, you gain the essential skills you need to optimize
every aspect of every part of your marketing program to generate solid, measurable
sales response in on-demand CRM, and the practical knowledge required to
integrate your marketing plan with the key features in on-demand CRM, to
increase the return and measurability of your company‘s marketing program.
To view content topic areas covered in the CRM-FM system.

Lead Development: Effective Marketing Programs, Utilizing On-Demand


CRM to Increase Conversions and Improve Sales Efficiency
The lead tracking and measurement features of on-demand CRM are its most
powerful capabilities for sales teams using on-demand CRM. Here, after leads are
generated, marketing plays a critical role by developing programs to support the
ongoing effort by your sales team as they work with their prospects to make the
case for your company and its products, during the long time periods which are
typical in most B2B sales cycles.
This post-lead generation marketing effort, called lead development, consists
of specialized marketing and sales support activities utilizing on-demand CRM
communications, tracking, and measurement features.
Smart marketing and sales professionals in companies using on-demand CRM
realize their job doesn‘t end with lead generation alone: Leads must be developed,
with the application of ongoing lead development programs to help each of their
company‘s sales reps as they work with the prospect to answer key product
questions and issues, to help the prospect develop their buying requirements, and
work to achieve ―buy in‖ from other influencers at the prospect‘s company. This is
accomplished by lead development—―the marketing program after the marketing
program‖—a long-term series of communications by e-mail, direct mail, and other
conventional marketing methods to establish your sales rep as a ―trusted advisor,‖
and position your product as the best solution to the prospect‘s problem.
Lead development is a critical part of every business-to-business marketing
program, but marketing programs in many companies—even those already using
on-demand CRM—do not have lead development programs in place to support
their company‘s sales teams during the months (or years) of the typical B2B sales
cycle.

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The CRM-FM system provides comprehensive coverage of the techniques
required to implement these specialized lead development programs in your
company, using on-demand CRM:
• Editorial content development for lead development programs: Discovering
and developing the unique strategic knowledge and product attributes possessed by
your company, which can be utilized for deliverables (below) and programs in lead
development to uniquely position your company with prospects during the sales
cycle;
• Effective execution of information deliverables for lead development:
Development of specialized editorial information deliverables—white papers, case
studies, applications briefs, etc.—used in e-mail messaging for lead development
in on-demand CRM, both in ongoing marketing programs, and for on-demand use
by your company‘s sales team in CRM document storage;
• Execution, measurement, and ongoing adaptation of specialized marketing
activities in lead development: E-mail messaging, autoresponders, and highly
targeted marketing efforts to support ―triggering event‖ selling opportunities
occurring on a one-to-one basis with individual prospects
The CRM-FM system provides complete coverage of these critical skill areas
in lead development for marketing professionals, addressing the major marketing
activities required to plan, develop, execute, and measure lead development
programs in your company.
To view lead development topics covered in the CRM-FM system, click here . . .

Sales Support, Product Launches, and New Business Development


In addition to lead generation and lead development, sales support is a critical job
responsibility for most B2B marketing professionals. Sales support includes all of
the lead development activities required to help your company‘s sales team in their
efforts to close sales with prospects, as well as coordination with senior sales and
business development staffs to close major sales accounts and develop new
business opportunities for the company, such as joint ventures, co-marketing/co-
distribution deals, new product launches, and other major business initiatives.
Companies using on-demand CRM for communication, tracking, coordination and
management of sales support and business development opportunities require
active support from their marketing teams in the following areas which are
addressed in depth by content and training provided by the CRM-FM system:
• Competent, rapid execution of specialized marketing projects required to support
major new business initiatives, such as joint ventures, co-marketing, product
launches, and distribution deals;
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• Close coordination with company sales teams for all activities in company
marketing programs, tied to the goals of generating sales response and increased
prospect-to-customer conversion rates, through solid, timely execution of on-
demand CRM campaigns;
• Development of expedient ―field marketing deliverables‖ to support company
sales teams and major high-level selling opportunities
There is no greater responsibility for any marketing professional than sales
support. Competent, effective demonstration and practice of the knowledge and
skills required to help your company‘s sales team close more sales and win more
major new business deals is the single most important contribution of any
marketing professional to their company. For companies using on-demand CRM,
CRM-FM training and certification provides you and your marketing staff with the
background knowledge you need to utilize on-demand CRM in your sales support
activities

No Single Right Answer


So it is important that a company does not get carried away by the marketing
buzz. As seen earlier, there is no single right answer that ON-Demand is always
the best, or On-Premise. Although there are many choices, knowing what you
need and where you are going is the best way to guide your decision process.
So, there is no single right answer. As customer management technologies
mature and deployment models prove themselves under real world conditions,
the two functions are becoming less polarized. No one size fits all. Looking at
On-Demand customer satisfaction ratings or their doing better on budget or had
dramatically shorter times, it may seem that On-Demand is better. But it may
not be so, one cannot actually compare them. There is no clear cut decision. It
will depend on security considerations, employee distribution, hidden costs, etc.

Attraction to On-Demand
On demand has been particularly attractive to mid-market and smaller firms
who might not have the IT expertise. The advantage of hosting model is that

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one can start with 5 or 10 users as a pilot and if the company is successful, it
can expand it further in the enterprise. An analyst at Forrester Liz Herbert has
said, ―The advantage with hosted is, it doesn‘t cost you a lot and if you have to
throw it away, you do not have to sink a million dollars into a large scale CRM
implementation.

In many companies individual departments are looking at hosted offerings as a


way. Its use can spread from department to department within the enterprise and
help convince upper management of the value of an On-Premise infrastructure.

Future Ahead
Gartner Inc. has estimated that by 2009, business will be spending $1 billion in
CRM as a service and that 33% of all SMBs will have chosen model.
Meanwhile, Forrester Research and had predicted that the percentage of overall
CRM revenue coming from hosted applications will stand at 13% by 2005, up
from 7% in 2002. Also, there is a trend which is noticed that the ratio of
companies going for On-demand to On-Premise is 2:1. Thus we see that slowly
there are companies which are going for On-demand applications for various
reasons as we have seen earlier.

Possible Strategy
Companies may start with On-Demand and as they grow and their usage
increases they may switch to On-Premise. On-Demand may be treated as a pilot
project to see what benefits are arising out if CRM give the confidence to
management and therefore develop the sponsorship required to invest a huge
amount in ON-Premise. On-Demand may be used from department to
department to get a stronger buy-in from individual departments, so the
awareness of advantages of CRM develops and so an On-Premise solution
would succeed. This avoids the huge investment in On-Premise and a possible
failure and a major loss in millions of dollars.

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All the pros and cons of each of them have been discussed. Sometimes looking
at so many advantages one may have felt much more inclined towards at type of
application. But it is seen, that there is no right answer as to which type of
application is better. It depends on the companies environment, its capability
and needs. But one very own good opinion has emerged lately. Companies need
to choose only one, they can go for both! They are saved from making a very
useful decision. Today, infact the two models coexist in many large companies
answering differing enterprise and divisional needs. Further some traditional
suite providers, witnessing the populatity of hosted offerings and recognizing
the benefits for customers, are now providing their own outsourced models.

This is also called hybrid deployment. In simple terms, means a combination of


both On-Premise and hosted CRM implementations, where you have some field
offices and/or headquarter campuses on the hosted version or enterprise version.
This option is becoming more popular, but it may not be for everyone. If you
have several small field offices, it may be suitable to go for hosted option and
for the large headquarters go for the enterprise model. The advantages and
disadvantages really depend on the organizational structure and the internal IT
department‘s ability to maintain the enterprise CRM. With both models
however, communication between the vendor and organization is critical.

Thus, they are choosing blended solutions that utilize both approaches. This
approach is accepted because it does not involve radical switch in strategies for
most companies. For e.g, a corporation might decide to install in-house CRM
software but outsource call centre functions. Similarly, a company may roll out
a component of CRM in-house that requires complex customizing while
outsourcing more straight straightforward components to a hosted vendor. So,
one can need not think of On-Demand and On-Premise as mutually exclusive. It
would be interesting to see this market five years from now and see how it has
developed.

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CHAPTER12
CONCLUSION

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CONCLUSION

Marketing is primarily influenced by the customer‘s perception, buying influences


and decision process. To fully comprehend, the mammoth possibilities that lie in
the intertwining of Information Technology and Marketing, this paper has explored
the essential components of marketing in the light of Information Technology; its
influence and its opportunities.

We have further expanded on E-commerce and E-Business as marketing tools in


technocratic world. So also the quintessential marketing function of promotion is
seen in a new light in the IT savvy world. We have additionally taken you through
the development of a website from the marketing perspective and thus given a
whole picture of Information Technology as a marketing tool.

One has to understand that business models are perhaps the most discussed and
least understood aspect of the web. Some models are quite simple. A company
produces a good or service and sells it to customers. If all goes well, the revenues
from sales exceed the cost of operation and the company realizes a profit. Internet
commerce will give rise to new kinds of business models. The web is also likely to
reinvent tried-and-tested models. Auctions are a perfect example. Business model
is one attempt to present a comprehensive and cogent taxonomy of business
models observable on the web.

Marketing executives are under constant pressure to justify their marketing


budgets. Marketing analysts need access to enterprise-wide customer information
for effective segmentation. Keeping this important and essential aspect in mind we
have endeavored to explain the Oracle Marketing Analytics.

Oracle Marketing Analytics is a comprehensive analytic solution that provides


timely fact-based insight into the marketing activities of the entire organization. It
provides new levels of information richness, usability, and reach to marketing
professionals throughout the enterprise thus enriching art and science of Marketing
as a whole.

In this cut throat competitive world, the only way to keep the competition at bay is
by building a strong customer relationship. In order to maintain the relationship in

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an effective manner one has to imperatively turn to the wonder child – IT. With the
help of CRM software information about customers and customer interactions can
be entered, stored and accessed by employees in different company departments.
Typical CRM goals are to improve services provided to customers, and to use
customer contact information for targeted marketing. In the course of the paper, we
have also expanded on CRM software and illustrated it with the help of suitable
screen shots in order to explain better.

In a nutshell, we have attempted at covering all the major aspects that entwine
Marketing with Information Technology. We have ceased to live in a world of
absolutes and this is an effort to bring that to the surface.

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CHAPTER13
BIBLIOGRAPHY

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BIBLIOGRAPHY

Business to Business Internet Marketing by Barry Silverstein

Organizational Transformation through Information Technology-issues and


challenges (chap 9 by Sanskritirani Desai)

The Marketing Information Revolution by Robert C. Blattberg

Marketing Information Technology by Shahar Banun Jaafar

Information and Technology based Marketing by Florian Zettelmeyer

Information Technology as a Marketing tool by Edward Pullicino

Information Technology in Marketing by John D.C. Little, Sloan School of


Management, M.I.T.

Information Systems for Modern Management by Murdick, Ross, Claggett.

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