Lesson 7 - Questions Flashcards
(10 cards)
Question 1: What are the advantages of direct email marketing? What are the disadvantages?
Direct email marketing messages are sent to interested users who have elected to opt-in, namely consumers who have at one time or another expressed interest in receiving messages from advertisers. As a result, direct email is one of the most effective forms of marketing communication, with response rates much greater than other forms of online marketing communications. Another advantage is that the cost is negligible. The primary cost is for the purchase of a list of names, which can be from $0.15 to $0.50 per name, depending on how targeted the list is. It is essentially free to send the email. Furthermore, marketers can rapidly get a targeted direct email advertising campaign off the ground whereas a banner ad or search engine campaign takes more time.
Disadvantages include issues related to spam, poor response rate and difficulty of customer acquisition, risk of click fraud, and challenges such as users’ engagement. Spam refers to unsolicited emails sent to users without their permission. To protect their users from spam, most Internet service providers offer filtering systems to block such email. Poor response rate is related to individuals’ tendency to delete email from unknown contacts. Avoiding click fraud calls for firms to be vigilant and to ensure effective monitoring is in place.
Question 2: Explain why offline marketing and advertising are still important.
Offline advertising is still important because so far, the marketing communication campaigns most successful in driving traffic to a website have combined both offline and online tactics. Research has shown that the most effective online advertisements incorporate consistent imagery with ads running simultaneously in print media and on television. Furthermore, since offline media such as television and radio have nearly 100% market penetration and millions of adults read a newspaper every day, it would be foolish to ignore these more popular media devices for driving traffic to a website. Drawing the attention of people who are already online and attracting the attention of those who will be going online in the near future can best be accomplished with a combined offline/online strategy.
Question 3: Define CTR, CPM, CPC, CPA, and VTR.
CTR refers to click-through rate or the percentage of people exposed to an online advertisement who actually click it to visit the site. CPM refers to cost per 1,000 impressions, since advertisers originally purchased online ads in lots of 1,000 units. CPC is a later pricing model in which the advertiser pays a pre-negotiated fee for each click an ad receives. CPA refers to a cost structure where advertisers pay a pre-negotiated amount only when a user performs a specific action such as site registration or a purchase. VTR, or view-through rate, provides information measured by the 30-day response rate to an advertisement.
Question 4: What is the difference between hits and page views? Which one is the best metric for measuring Web traffic counts?
Hits are the number of http requests received by a server, while page views are the number of pages requested by visitors. Hits can be a misleading measure of site activity because one page view can include many hits if the page contains multiple images or graphics. Page views are also an inaccurate measure of site activity. The use of frames to divide web pages into separate sections will cause one page to generate multiple hits—one for each frame on the page. The preferred metric for traffic counts is unique visitors, which counts the number of new visitors to a site, regardless of how many pages they view.
Question 5: Describe the major online advertising technologies.
The following are the major online advertising technologies.
Banners ads are graphical images on websites that may include interactive applications, used mainly to attract users to click-through to other websites or to sections of the present website.
Interstitials are web-based windows that pop up, in order to catch a website user’s attention.
Superstitials are Internet advertising spots that load into a user’s browser while the Internet connection is idle, and then launch as daughter windows showing a short, TV-like advertisement.
Interactive technologies are animation tools that improve the appearance and interactivity of a website by using animation technologies such Flash or Java.
Social media sites such as Google AdWords, Facebook, and Twitter.
The use of email communication to advertise a company’s products or services.
Viral advertising uses word-of-mouth to promote a company’s products or service through positive messages from satisfied customers.
Mobile advertising uses mobile devices to transmit advertising messages and campaigns.
Question 6: Define affiliate program, explain how it works, and describe its advantages for advertisers.
Affiliate programs are agreements between website operators, whereby delivery of customers or prospective customers to another company’s website results in financial compensation. The referring company offers their website to promote the affiliated company’s products by including links from their website, and customers are invited to click the link, connect to the affiliated company’s website, and make purchases. Once the transaction is completed, the referring company receives a commission or a fee. The major advantage of affiliate programs is that they entail little risk for the affiliate and calls for little from the referring company beyond just giving up some space for the links to the associated company.
Question 7: Compare databases, data warehouses, and data mining.
A database stores records and attributes organized into tables. Databases are maintained for e-commerce Web transactions, shopping carts, point-of-sale terminals, warehouse inventory levels, field sales reports, and many other types of records.
A data warehouse gathers the information from customer and transaction databases and stores it in one logical repository where it can be analyzed and modeled by managers without disrupting or taxing the systems of a firm’s primary transactional systems and databases. Using the data warehouse, managers can query multiple databases to answer many marketing and financial questions, thereby enhancing their strategic decision-making capabilities.
Data mining is a different set of analytical techniques that look for patterns in database information or seek to model the behaviour of visitors and customers. Website data can be mined to develop customer profiles that identify patterns in group or individual behaviours on the site. Data mining can be either query driven, model driven, or rule-based. Query-driven data mining is the simplest type; both databases and data warehouses can be queried. Marketers can answer specific questions such as “What products sell better at different hours of the day?” and adjust website content accordingly. In model-driven data mining, a model analyzes the key variables in a strategic decision so that informed decisions can be made. In rule-based data mining, demographic and transactional data is examined, and general rules of behaviour are derived for specific, well-defined market segments.
Question 8: Explain how price versioning is different from dynamic pricing.
Versioning involves selling slightly different versions of the same product to different market segments. Low-priced or free versions can be less convenient, less comprehensive, slower, less powerful, and offer less support than higher-priced models. Versioning differs from dynamic pricing because each version is sold at a fixed, predetermined price, with slight differences in functionality between versions.
In dynamic pricing, auctions can be used to establish an instant market price based on the price the market will bear. Yield management systems can be used to set prices for different markets and appeal to different segments in order to sell excess capacity. Auctions work for pricing unusual as well as commonplace goods; the differing price an article will bring in the marketplace is not based upon the version of the good or service, but rather upon the market dynamics at that particular time. Yield management systems are generally profitable for perishable goods or where there are seasonal variations in demand or rapidly changing market conditions. Again, the product itself is no more or less functional than its higher or lower yielding counterparts despite the varying prices preset by managers.
Question 9: What is customer loyalty?
Loyalty, the result of customer satisfaction, refers to customers’ commitment to the company and its brand. Customer loyalty is very important for a company’s success and wealth. Satisfied (loyal) customers ensure repeated sales and help the company acquire new customers. In the online environment, e-loyalty is a major challenge for most companies because of intense competition and availability of comparable products. To foster e-loyalty, sellers should learn about customers’ needs, interact with customers, and provide excellent customer service.
Question 10: Why is a one-to-one marketing strategy important?
One-to-one marketing enables a business to treat each customer as unique. This marketing strategy helps a company understand customers’ preferences and needs and, therefore, offer customized and personalized messages, advertising, and products. One-to-one marketing is very important in e-commerce because it helps the company strengthen relationships with customers, serve them better, tailor advertising to the right person, and ultimately retain customers.
