Virtual Marketing

Amity Business School
E-Commerce Business Models :

A business model is a set of planned activities (sometimes
referred to as business process) designed to result in a profit in a
marketplace. The business model is at the center of the business
plan.
A business plan is a document that describes a firms business
model .
An e-commerce business model aims to use and leverage the
unique qualities of the internet and the World Wide Web.
There are Eight Key Ingredients of a Business Model :
1. Value proposition : It defines how a companys product or
service fulfils the needs of the customers.To develop and/or
analyze a proposition, the following questions need to be
answered :
- Why will customers choose to business with your firm
instead of another company ?
- What will your firm provide that other firms do not and
cannot ?
From the consumer point of view , successful e-commerce
value propositions include : personalization and
customization of product offerings, reduction of product
search costs, reduction of price discovery costs, and
facilitation of transactions by managing product delivery.
2. Revenue model :
The firms revenue model describes how the firm will earn revenue ,
generate profits,and produce a superior return on invested
capital.The function of business organizations is both to generate
profits and to produce returns on invested capital that exceed
alternative investments.
* The advertising model :
A website that offers its users content, services , and/or products
also provides a forum for advertisements and receives fees from
advertisers. Those websites that are able to attract the greatest
viewer ship and are able to retain user attention are able to charge
higher advertising rates.
* Subscription Revenue Model :

In the subscription revenue model , a Web site that offers its users
content or services charges a subscription fee for access to some or
all of its offerings .
* Transaction fee revenue model :
In this model a company receives a fee for enabling or executing a
transaction. (e.g. Online auction websites taking some commission
from buyer as well as the seller).
* Sales Revenue Model :
In the sales revenue model , a companies derive revenue by selling
goods, information , or services to customers .
E.g. amazon.com
* Affiliate Revenue model :

In the affiliate revenue model , sites that steer business to an
affiliate receive a referral fee or percentage of the revenue from
any resulting sales.
3.Market Opportunity :
the companys intended marketplace and the overall potential
financial opportunities available to the firm in that marketplace
-divided into smaller market niches. The realistic market
opportunity is defined by the revenue potential in each of the
market niches .
4. Competitive Environment :
the other companies operating in the same marketplace selling
similar products . The competitive environment for a company is
influenced by several factors : how many competitors are active,
how large their operations are , what the market share of each
competitor is , how profitable these firms are , and how they
price their products.
5.Competitive Advantage :
Firms achieve a competitive advantage when they can produce a
superior product a superior product and/or bring the product to
market at lower than most, or all, of their competitors . Firms also
compete on scope .Some firms can develop global markets while
other firms can only develop a national or regional market .Firms
that can provide superior products at lowest cost on global basis
are truly advantaged.
6. Market strategy :
Market strategy is the plan the company put together that details
exactly how the company intend to enter the market and attract
new customers.
7.Organizational Development :
Describes how the company will organize the work that needs to be
accomplished.
8. Management Team :
Employees of the company responsible for making the business
model work.
Categorizing
E-Commerce
Business Models
Major B2C business models :

There are a number of different models being used in the B2C e-
commerce arena . The major models include the following :
Portal :-Offers powerful search tools plus an integrated package of
content services ;typically utilizes a combined
subscription/advertising revenue/transaction fee model ;may be
general or specialized.
E-tailer :- Online version of traditional retailer; includes virtual
merchants (online retail stores) , clicks and mortar e-tailers (online
distribution channel for a company that also has a physical
store);catalog merchants (online version of direct mail catalog);
online malls (online version of mall);manufacturers selling directly
over the Web.
Content Provider :- Information and entertainment companies that

provide digital content over the Web; typically utilizes an
advertising , subscription ,or affiliate referral fee revenue model.
Transaction broker :- Process online sales transactions; typically
utilizes a transaction fee revenue model.
Market creator :- Uses Internet technology to create markets that
bring buyers and sellers together ; typically utilizes a transaction fee
revenue model.
Service provider :- Offers services online.
Community provider :- Provides an online community of like-
minded individuals for networking and information sharing ;
revenue is generated by referral fees , advertising , and subscription.
Major B2B business models :

The major business models used to date in B2B arena include :
Hub, also known as marketplace/exchange electronic market
place where suppliers and commercial purchasers can conduct
transactions ; may be general (a horizontal marketplace ) or
specialized (a vertical marketplace) .
E-distributor :- Supplies products directly to individual businesses.
B2B service provider :- Sells business services to other firms.
Matchmaker :- Link business together , changes transaction on
usage fees.
Infomediary :- Gathers information and sells it to business .
Major C2C business models :

A variety of business models can be found in the customer-to-
customer e-commerce , peer-to-peer e-commerce, and m-
commerce areas :
C2C business models connect consumers with other consumers
.The most successful has been the market creator business model
used by eBay.com .
P2P business models enable consumers to share files and services
via Web without common servers. A challenge has been finding a
revenue model that works.
M-commerce business models take

traditional e-commerce models and
leverage emerging wireless technologies
to permit mobile access to the Web.
E-commerce enablers business models
focus on providing the infrastructure
necessary for e-commerce companies to
exist, grow, and prosper.
Key business concepts and strategies applicable to e-commerce :

Industry structure : The nature of players in an industry and their
relative bargaining power by changing the basis of competition
among rivals , the barriers to entry , the threat of new substitute
products , the strength of suppliers , and the bargaining power of
buyers.
Industry value chains : The set of activities performed in an
industry by suppliers , manufacturers , transporters , distributors and
retailers that transforms raw inputs into final products and services
by reducing the cost of information and other transaction costs.
Firm value chains : The set of activities performed within an
individual firm to create final products from raw inputs by
increasing operational efficiency .
Business strategy : A set of plans for achieving superior long-term

returns on the capital invested in a firm by offering unique ways
to differentiate products , obtain cost advantages , compete globally
, or compete in a narrow market or product segment.
Internet Strategy
What is Value Chain?

Value chain is a high-level model of how businesses
receive raw materials as input, add value to the raw
materials through various processes, and sell finished
products to customers.
Today's Challenges
Old-fashioned command-and-control companies were
merely trying to manage the "white space" in their organizational
charts. Today's companies must manage the white space in entire
value chains.
A critical pre-requisite for success in digital economy
is the implementation of an integrated value chain that
extends across - and beyond - the enterprise.
In an information society the value of information has become

significant. Every business has an information component in
its product/services and operations. For example, a firm may
have an information product (eg: newspaper) or an
information intensive operations (eg: insurance). The
proportion of information content varies from industry to
industry. In some industries information plays a core role
while in others it plays a peripheral role. Significant
transformations can be expected in industries where
information plays a core role. For example, industries such as
publishing, music,financial services, entertainment, etc.,
where information plays a core role are undergoing significant
transformation while in other industries such as manufacturing
the transformation is more limited.
New information technologies and the ubiquitous internet have

enabled cheap and easy methods for data storage, analysis, and
distribution of information. They have created new
opportunities to generate value from the organization's
information. Some firms tend to exploit the information
content more than the other. The concept of marketspace is to
examine the opportunities for extracting value from the
information assets of organization.
Traditionally there has been a trade off between reach and

richness. Reach refers to breadth of audience and richness
refers to the quality of information in terms of delivery mode,
media choice, information content and amount, relevance etc.
New technologies are changing the tradeoffs causing changes
in industry structure. For example, we have always used
standard information in a broadcast mode (eg: TV) for
reaching a broad audience. However, with the internet we have
the possibility of providing customized information in an
interactive mode to a broad audience.
Some companies operate in marketplace, some in market-

space, and others in both. Managers have to create value in
both physical and virtual world to sustain the competitive
advantage. Value is created by gathering, organizing,
selecting, synthesizing, and distributing information. The
ability to create value with information may bring in
competitors from outside the industry who have expertise with
handling information. A few examples are online travel
agents, stock brokers, online auto dealers, online retailers etc.
What is physical Value chain

Series of value adding activities that link the supply side to
demand side
Supply side - inbound logistics, production, design etc
Demand side - outbound logistics, marketing, sales, service
etc.
Information is a supporting element to control and monitor
the processes in chain
Virtual Value Chain

Create value with information in the Marketspace
It may mirror the physical value chain or have totally new
products
It will require a change in way of thinking
Senior managers need to understand about virtual value chain
and how to exploit it
Marketing managers have to learn to market in marketspace
Value created by gathering, organzing, selecting,
synthesizing, and distributing info
Stages of Transformation from Marketplace to Marketspace

Firms go through various stages of transformation in the use
of IT. They start using IT as a control system to monitor
performance (visibility stage) and progress into exploiting the
information in the value chain. Finally, they tend to find new value
in the information to create new products/services or add value to
existing product.
Visibility
Info. Systems are considered as control systems
Improve efficiency thro' better monitoring
Reduce cost
Mirroring Capability
substitute virtual activities for physical activities
create parallel value in market space
New Customer Relationships

add value to products/ services
draw on info. in virtual value chain to deliver value to
customers
Exploit the value matrix
gather
organize
select
synthesize
Distribute
Value for a product is dependent on:

Information Content
Context - the way it is presented
Infrastructure - to distribute the information.
Online Market
Research
Marketing research is often needed to ensure that

we produce what customers really want and not what we
think they want.
Research often help us reduce risks associated with
a new product, but it cannot take the risk away entirely.
It is also important to ascertain whether the research has
been complete. For example, Coca Cola did a great deal
of research prior to releasing the New Coke, and
consumers seemed to prefer the taste. However,
consumers were not prepared to have this drink replace
traditional Coke.
Several tools are available to the market
researchere.g., mail questionnaires, phone surveys,
observation, and focus groups.
Surveys are useful for getting a great deal of
specific information. Surveys can contain open-ended
questions (e.g., In which city and state were you born?
____________) or closed-ended, where the respondent is
asked to select answers from a brief list (e.g., __Male
___ Female. Open ended questions have the advantage
that the respondent is not limited to the options listed,
and that the respondent is not being influenced by seeing
a list of responses. However, open-ended questions are
often skipped by respondents, and coding them can be
quite a challenge. In general, for surveys to yield
meaningful responses, sample sizes of over 100 are usually
required because precision is essential.
Surveys come in several different forms. Mail

surveys are relatively inexpensive, but response rates are
typically quite lowtypically from 5-20%. Phone-surveys
get somewhat higher response rates, but not many
questions can be asked because many answer options have
to be repeated and few people are willing to stay on the
phone for more than five minutes.
Surveys, as any kind of research, are vulnerable to
bias. The wording of a question can influence the outcome
a great deal.
Focus groups are useful when the marketer wants to

launch a new product or modify an existing one. A focus
group usually involves having some 8-12 people come
together in a room to discuss their consumption
preferences and experiences. The group is usually led by
a moderator, who will start out talking broadly about
topics related broadly to the product without
mentioning the product itself.
Focus groups are well suited for some purposes, but
poorly suited for others. In general, focus groups are
very good for getting breadthi.e., finding out what
kinds of issues are important for consumers in a given
product category.
Personal interviews involve in-depth questioning of an

individual about his or her interest in or experiences with a product.
The benefit here is that we can get really into depth (when the
respondent says something interesting, we can ask him or her to
elaborate), but this method of research is costly and can be extremely
vulnerable to interviewer bias.
Projective techniques are used when a consumer may feel
embarrassed to admit to certain opinions, feelings, or preferences. For
example, many older executives may not be comfortable admitting to
being intimidated by computers. It has been found that in such cases,
people will tend to respond more openly about someone else. Thus,
we may ask them to explain reasons why a friend has not yet bought a
computer, or to tell a story about a person in a picture who is or is not
using a product. The main problem with this method is that it is
difficult to analyze responses.
Observation of consumers is often a powerful tool.
Looking at how consumers select products may yield
insights into how they make decisions and what they look
for. For example, some American manufacturers were
concerned about low sales of their products in Japan.
Observing Japanese consumers, it was found that many of
these Japanese consumers scrutinized packages looking for
a name of a major manufacturerthe product specific-
brands that are common in the U.S. (e.g., Tide) were not
impressive to the Japanese, who wanted a name of a major
firm like Mitsubishi or Proctor & Gamble. Observation may
help us determine how much time consumers spend
comparing prices, or whether nutritional labels are being
consulted.
Physiological measures are occasionally used to
examine consumer response. For example, advertisers may
want to measure a consumers level of arousal during
various parts of an advertisement.
Some cautions should be heeded in marketing
research. First, in general, research should only be
commissioned when it is worth the cost.
Secondly, marketing research can be, and often is,
abused. Managers frequently have their own agendas
(e.g., they either would like a product to be launched or
would prefer that it not be launched so that the firm will
have more resources left over to tackle their favorite
products). Often, a way to get your way is to demonstrate
through objective research that your opinions make
economic sense.
Online Market Research Techniques:

Market research involves gathering information that will help a
firm identify potential products and customers .There are two
general types of market research .
Primary research involves gathering first-hand information using

techniques such as surveys , personal interviews and focus
groups.This type of research is typically used to gain feedback on
brands, products , or new marketing campaigns where no previous
study has been done.
Secondary research relies on existing , published information asSchool
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basis for analyzing the market .
Both primary and secondary research can be completed online
more efficiently , less expensively , and more accurately than
offline.In addition to two different approaches to market research ,
there are two types of data to be studied . Quantitative data is data
that can be expressed as a number , such as percentage .
Quantitative data can be analyzed using statistical programs that
identify relationship between certain variables , or factors that
affect how someone responds. Qualitative data is data that cannot
be easily quantified , such as opinions , survey questions that yield
qualitative responses are analyzed by grouping responses into
similar sub segments based on the answer given . One type of
analysis is content analysis , which tries to identify the major
categories of responses given.
Primary Research : Surveys and questionnaires are the most
popular and frequently used market research tools.Using a survey
instrument , which is a list of questions , researchers can approach
groups of people to ask their views on virtually any imaginable
topic.
Online surveys can be typically be administered more quickly and
less expensively than traditional mail or telephone
surveys.Companies can hire an outside market research firm to
conduct the survey or create and administer their own .
Online surveys also make it possible to track respondents and
follow up with those who havent yet completed survey, which
help to improve response rates , the percentage of people who
complete a survey. A low response rate can damage the validity ,
or believability , of a surveys results.
Feedback forms, which ask users to provide input regarding a sites
operations in a set format , are another type of inline survey.
Requesting regular input from site visitors may provide more
qualitative data , which is more difficult to analyze , but the
resulting information can assist in improving and enhancing site
performance.
Personal interviews are another primary research tool . The
interview is generally guided by a set of questions very similar to
survey instrument. Although it is more difficult to incorporate
personal interviews within Web sites , it is possible to conduct
research online via live chat or e-mail , with trained researcher
interacting with the study participants .Personal interviews offer an
opportunity to gather more in-depth information on a topic.In some
cases , personal interviews are used as second phase of a research
project , following initial information gathering by survey.
Secondary Research : It involves gathering information using WEB

sites as the information source.
The Key to being efficient and effective as a researcher is
identifying the WEB sites most likely to provide answers to the
questions posed in the research .By establishing and agreeing on
the key question to be answered through market research , as well
as why that information will be useful , researchers can zero in on
their information needs. Understanding how the information will
impact other decisions also helps to further refine information
collection.
Some popular secondary research tools ( Web Sites)

1. Factiva.com
2. Businesswire.com
3. Hoovers.com
4. Localeyes.com
5. Thomasregister.com
6. Corporateinformation.com
7. sec.gov
8. Aol.com (America Online)
Online Marketing
Technologies that support Online Marketing :

Web transaction logs : Records that document user activity at the
Web site .
Transaction logs : Coupled with data from the registration
forms and shopping cart database , these represent a treasure trove
of marketing information for both individual sites and the online
industry as a whole.
Cookies : A small text file that Web sites place on
visitors /client computers every time they visit , and during the
visit , as specific pages visited . Cookies provide Web marketers
with a very quick means of identifying the customer and
understanding his or her prior behavior at the site.
Web bugs : Tiny graphic files hidden in marketing e-mail

messages and on Web sites . Web bugs are used to automatically
transmit information about the user and the page being viewed to a
monitoring server.
Databases , data warehouses, data mining , and profiling
:Technologies that allow marketers to identify exactly who the
online customer is and what they want , and then to present the
customer with exactly what they want, when they want it, for the
right price.
Advertising networks : best known for their ability to present users
with banner advertisements based on a database of user behavioral
data . Specialized ad servers are used to store and send users the
appropriate banner ad.
CRM systems : A repository of customer information that records
all of the contacts that a customer has with a firm and generates a
customer profile available to everyone in the firm who has a need
to know the customer.
IT enabled marketing and branding strategies : Amity Business School
Online marketing techniques to online customers include

permission marketing , affiliate marketing , viral marketing , and
brand leveraging.
Online techniques for strengthening customer relationships include
one-to-one marketing ; customization , transactive content ; and
customer service (CRMs,FAQs,live chat , intelligent agents , and
automated response system).
Online pricing strategies include offering products and services for
free ,versioning , bundling , and dynamic pricing.
Strategies to handle the possibility of channel conflict.
Direct E-mail marketing :
E-mail marketing messages sent directly to interested users (direct
e-mail marketing) has proven to be one of the most effective forms
of marketing communications. The key to effective direct e-mail
marketing is interested users. Direct e-mail marketing is not
spam . SPAM involves sending unsolicited e-mail to a mass
audience of Internet users who have expressed no interest in the
product . Instead , direct e-mail marketing messages are sent to an
opt in audience of Internet users who have expressed at one time
or another an interest in receiving messages from the advertiser. By
sending e-mail to an opt-in audience , advertisers are targeting
interested customers. Because of the comparatively high response
rates and low cost, direct e-mail marketing is the fastest growing
form of online marketing.
The primary cost of e-mail marketing is for the purchase of the list
of names to which the e-mail will be sent .
Due to the cost savings possible with e-mail , the short time to
market , and high response rates , companies are expected to
increasingly use e-mail to communicate directly with customers.
Online Catalogs : Amity Business School
Online Catalogs are the equivalent of paper-based catalog. The

basic function of a catalog is to display the merchants wares. The
electronic version typically contains a color image of each available
product , a description of the item , as well as size , color, material
composition , and pricing information . While simple catalogs are ,
technically , hard coded HTML pages and graphics displaying
softwares , most sites with more than 15-20 products generate
catalog pages from a product and price database that be easily
changed . Simply by clicking on an order button at the site ,
customers can make a purchase instantly.
Public Relations : Amity Business School
Another marketing communications tool used to increase

awareness of a site , and potentially boost traffic , is public
relations. Public Relations (PR) involves communicating with
target audiences, pr publics , using methods other than advertising .
Some of these methods include publicity (media coverage), special
events , such as a grand opening celebration or press conference ;
and publications , such as newsletters and customer bulletins.
Public Relations firms can also support a Web site by creating
promotional strategies , developing relationships with reporters and
producers of interest to the client company , proposing articles and
TV program subjects , and generally keeping the press aware of
any good news regarding an online company. Some firms
specialize in dot-coms or have an online media specialty .The
major advantage of public relations is the low cost relative to other
media exposure.
Online Marketing Metrics :
1. Impression
2. Clickthrough Rate (CTR)
3. Hits
4. Page Views
5. Stickness (Duration)
6. Unique visitors
7. Loyalty
8. Reach
Continued
9. Recency
10. Acquisition rate
11. Conversion rate
12. Attrition rate
13. Abandonment rate
14. Retention rate
1. Impressions are the number of times an ad is served .
2. Clickthrough rate (CTR) measures the percentage of people

exposed to an online advertisement who actually click on the
advertisment.
3. Hits are the number of http requests received by a firms
server .Hits can be misleading as a measure of site activity
because a hit does not equal a page : a single page may
account for several hits if the page contains multiple images or
graphics.A single site visitor can generate hundreds of hits .
4. Page views are the number of pages requested by visitors. A
single page that has three frames will generate three page views.
5. Stickiness (Duration) is the average length of time visitors
remain at a site .The longer amount of time a visitor spends at a
site , the greater the probability of purchase.
6. Unique visitors counts the number of distinct, unique visitors to
a site , regardless of how many pages they view.Amity Business School
7. Loyalty measures the percentage of users who return in a year.
This can be good indicator of the trust shoppers place in site.
8. Reach is typically a percentage of the total number of
consumers in market who visit a site.
9. Recency like loyalty, measures the power of site to produce
repeat visits and is generally measured as the average number
of days elapsed between shopper or customer visits.
10.Acquisition rate measures of the percentage of visitors who
register or visit product pages (indicating interest in the
product)
11.Conversion rate measures the percentage of visitors who
actually purchase something.
12. Attrition rate measures the percentage of customers who
purchase once , but never return within a year.
13.Abandonment rate measures the percentage of shoppers who
begin a shopping cart form but then fail to complete the form
and leave the site.
14.Retention rate indicates the percentage of existing customers
who continue to buy on a regular basis.
Online Advertisement : It is the most common and familiar
marketing communications tool .The advantages of online
marketing are the ability to target ads to narrow segments and to
track performance of advertisements in almost real time. Online
advertisements also provide greater opportunities for interactivity
two way communication between advertiser and the potential
customer .
Different forms of online advertisements include :
Banner and rich media ads
Paid search engine illusion and placement
Sponsorships , and
Affiliate relationships
Direct E-mail marketing
Advertising
Metrics
click-through
Definition
click-through
The process of clicking through an online advertisement to the
advertiser's destination.
Information
While the click-through is often the most immediate response to an
advertisement, it is not the only interaction. Visitors may choose to
type a company's URL directly into the browser bar, or type the
company's name into a search engine box. This assumes, of
course, that the company's name and/or URL appears in its
advertisements.
Accurate counting of click-throughs involves excluding "robot clicks"
and duplicate clicks. This takes on added importance when click-
throughs are used as the measurement on which payment is
based.
click-through rate (CTR)
Definition
click-through rate (CTR)
The average number of click-throughs per hundred ad impressions,
expressed as a percentage.
Information
It is important to distinguish what a click-through rate does and does
not measure. The CTR measures what percentage of people clicked
on the ad to arrive at the destination site; it does not include the
people who failed to click, yet arrived at the site later as a result of
seeing the ad.
As such, the CTR may be seen as a measure of the immediate
response to an ad, but not the overall response to an ad. The
exception involves ads that display no identifiable information about
the destination site; in these cases the click rate equals the overall
rate.
Merely getting visitors to a site had value when Web

site traffic was generally accepted as a measure of success.
The trend towards profitability, along with better tracking
tools, has resulted in less interest in click-through rates and
more interest in conversion rates.
A high click-through rate does not assure a good conversion
rate, and the two rates may even share an inverse relationship. An
advertisement geared towards curiosity clicks will result in fewer
sales, percentage-wise, than an advertisement geared towards
qualified clicks.
conversion rate
Definition
conversion rate
The percentage of visitors who take a desired action.
Information
The desired action can take many forms, varying from site to
site. Examples include sales of products, membership registrations,
newsletter subscriptions, software downloads, or just about any activity
beyond simple page browsing.
A high conversion rate depends on several factors, all of which
must be satisfactory to yield the desired results -- the interest level of
the visitor, the attractiveness of the offer, and the ease of the process.
The interest level of the visitor is maximized by matching the
right visitor, the right place, and the right time.
The attractiveness of the offer includes the value

proposition and how well it is presented. It is worth noting
that small, impulse items typically have a higher conversion
rate than large, shopping items.
The visitor's ease of completing the desired action is
dependent on site usability which includes intuitive navigation
and fast loading pages.
cost-per-action (CPA) Amity Business School
Online advertising payment model in which payment is based solely on
qualifying actions such as sales or registrations.
Information
The actions defined in a cost-per-action agreement relate
directly to some type of conversion, with sales and registrations among
the most common. This does not include deals based solely on solely
clicks, which are referred to specifically as cost-per-click or CPC.
The cost-per-action (CPA) model is at the other end of the
spectrum from the cost-per-impressions model (CPM), with the cost-
per-click (CPC) model somewhere in the middle. In a CPA model, the
publisher is taking most of the advertising risk, as their commissions are
dependant on good conversion rates from the advertiser's creative units
and Web site.
Marketers looking for cost-per-action deals
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several options. Publishers with considerable excess
inventory may be willing to consider nonstandard offers.
Sites specializing in incentive programs are in a position to
offer CPA pricing on various types of leads, although the
usual caveats concerning incentivized traffic still apply.
Perhaps the most widespread use of performance-based
pricing is affiliate marketing, whereby
merchants/advertisers determine what actions they want
to reward and how much they are willing to pay.
CPM
Definition
CPM
Cost per thousand impressions.
Information
The CPM model refers to advertising bought on the basis of
impression. This is in contrast to the various types of pay-for-
performance advertising, whereby payment is only triggered by a
mutually agreed upon activity (i.e. click-through, registration, sale).
The total price paid in a CPM deal is calculated by multiplying the

CPM rate by the number of CPM units. For example, one million
impressions at $10 CPM equals a $10,000 total price.
1,000,000 / 1,000 = 1,000 units
1,000 units X $10 CPM = $10,000 total price
The amount paid per impression is calculated by dividing the
CPM by 1000. For example, a $10 CPM equals $.01 per impression.
$10 CPM / 1000 impressions = $.01 per impression
cost-per-click (CPC)
Definition
cost-per-click (CPC)
The cost or cost-equivalent paid per click-through.
Information
The terms pay-per-click (PPC) and cost-per-click (CPC) are sometimes
used interchangeably, sometimes as distinct terms. When used as
distinct terms, PPC indicates payment based on click-throughs, while
CPC indicates measurement of cost on a per-click basis for contracts
not based on click-throughs.
For example, consider a campaign where payment is based on
impressions, not clicks. Impressions are sold for $10 CPM with a click-
through rate (CTR) of 2%.
1000 impressions x 2% CTR = 20 click-throughs
$10 CPM / 20 click-throughs = $.50 per click
customer acquisition cost
Definition
customer acquisition cost
The cost associated with acquiring a new customer.
Information
Customer acquisition cost is calculated by dividing total
acquisition expenses by total new customers. However, there are
different opinions as to what constitutes an acquisition expense. For
example, rebates and special discounts do not represent an actual cash
outlay, yet they have an impact on cash (and, presumably, on the
customer).
Acquisition costs vary across industries and mediums. When
acquisition data is available, try to determine if you are comparing apples
to apples, so to speak. This is not always easy, as customer acquisition
data can be scarce, and the methodology is often sketchy.
Hit
Definition
Hit
Request of a file from a Web server.
Information
The term "hit" is perhaps the most misused term in online marketing,
mistakenly used to mean unique visitors, visits, page views, or all of the
above.
A hit is merely a request for a file from a Web server. A request for a Web
page counts as a hit, but so does a request for a graphic on a Web page.
Since the number of graphics per page can vary considerably, hits mean
very little for comparison purposes.
hybrid model
Definition
hybrid model
A combination of two or more online marketing payment models.
Information
A hybrid campaign might be a mix of impression-based (CPM)
and performance-based (CPC or CPA), or a mix of two performance-
based models. Hybrid deals are sometimes seen as a way to further split
the risk between publishers and advertisers.
Advertising campaigns sometimes bundle CPM and CPC in a
hybrid buy, and sometimes even CPA.
Affiliate programs have been known to offer a few cents per-click
in addition to paying for a sale, lead, download, or other conversion
activity.
impression Amity Business School
Definition
impression
A single instance of an online advertisement being displayed.*
Information
* This definition may be an over-simplification, as there is no
standard way to count impressions. All of the differences can add up to
very large discrepancies, yet people make purchases based on
impression every day.
So... what is the definition?
Currently, whatever a buyer and seller agree on.
page view Amity Business School
Definition
page view
Request to load a single HTML page.
Information
Page views are only important to the degree they play a part in a site's
revenue model. If a site earns much of its revenue from advertising,
then page views are important because of their contribution to ad
inventory. If a site only earns revenue on sales, then page views are not
a key statistic. Page views without corresponding sales may even be
viewed as an expense.
pay per click
Definition
pay per click
Online advertising payment model in which payment is based solely on
qualifying click-throughs.
Information
In a PPC agreement, the advertiser only pays for qualifying clicks to the
destination site based on a prearranged per-click rate. Popular PPC
advertising options include per-click advertising networks, search
engines, and affiliate programs.
Paying per click is sometimes seen by some as a middle

ground between paying per impression and paying per action. When
paying per impression, the advertiser assumes the risk of low-quality
traffic generated by the publisher. When getting paid for actions, the
publisher assumes the risk of low-converting offers by the advertiser. In
the PPC model, the publisher does not have to worry about the sales
conversion rate of the target site, and the advertiser does not have to
worry about how many impressions it takes to attract the specified
number of clicks.
pay per lead
Definition
pay per lead
Online advertising payment model in which payment is based solely
based on qualifying leads.
Information
In a pay per lead agreement, the advertiser only pays for leads
generated at their destination site. No payment is made for visitors who
don't sign up.
A lead is generally a signup involving contact information and
perhaps some demographic information; it is typically a non-cash
conversion event. A lead may consist of as little as an email address, or
it may involve a detailed form covering multiple pages.
One risk to the advertiser is the potential for fraudulent activity
by incentivized 3rd-parties or marketing partners. Some false leads are
easy to spot. Nonetheless, it is advisable to make a regular audit of the
results.
pay per sale Amity Business School
Definition
pay per sale
Online advertising payment model in which payment is based
solely based on qualifying sales.
Information
In a pay per sale agreement, the advertiser only pays for sales
generated by the destination site based on an agreed upon commission
rate.
Paying per sale is often seen as the payment model most
favorable to advertisers and least favorable to publishers. In such an
agreement, the publisher must not only be concerned with the quality and
quantity of his or her audience, but also the quality of the advertiser's
creative units and destination site.
If possible, many publishers avoid sales-based agreements,

preferring to stick to the CPM model. However, some publishers, facing
weak ad sales, have little choice but to accept sales-based agreements
to utilize remnant space.
For advertisers, pay per sale has some unique advantages
compared to pay per click and pay per lead. There are fewer concerns
about whether conversions are legitimate, and whether traffic is
incentivized or of low quality.
stickiness
Definition
stickiness
The amount of time spent at a site over a given time period.
Information
Stickiness is often measured in the average minutes per month
visitors spend at a site or network. Sometimes stickiness is measured in
terms of page views.
When defined as minutes per month, site stickiness is a
function of number of visits (repeat usage) and time spent per visit
(session stickiness).
unique visitors
Definition
unique visitors
Individuals who have visited a Web site (or network) at least once in a
fixed time frame, typically a 30 day period.
Information
Most measurements of unique visitors are estimates.
Sites often calculate unique visitors based on the IP address information
found in the log files, and sometimes through cookies. However, many
factors may skew the results.
Traffic rating companies typically calculate unique visitors by monitoring
actual usage of a group of volunteers, then applying the results to to the
Internet population. Results fluctuate considerably for small sites due to
their small sample sizes.
Web site traffic
Definition
Web site traffic
The amount of visitors and visits a Web site receives.
Information
Web site traffic was initially viewed as an all-important metric
for gauging success on the Web. This assumption was due in part to
the lack of other business metrics to explain the .com phenomenon.
Now much of the focus has shifted back to profitability, and Web site
traffic is only part of the equation.
Web site traffic x conversion = results
Web site traffic is still important, as you can't have conversions
without visitors, but it is becoming less important as a standalone
metric.
Consumer Behavior
Consumer Behavior involves the psychological

processes that consumers go through in recognizing
needs, finding ways to solve these needs, making
purchase decisions (e.g., whether or not to purchase a
product and, if so, which brand and where), interpret
information, make plans, and implement these plans
(e.g., by engaging in comparison shopping or actually
purchasing a product).
Sources of influence on the consumer. TheBusiness School
Amity
consumer faces numerous sources of influence. Often, we
take cultural influences for granted, but they are
significant. An American will usually not bargain with a
store owner. This, however, is a common practice in much
of the World. Physical factors also influence our behavior.
We are more likely to buy a soft drink when we are
thirsty, for example, and food manufacturers have found
that it is more effective to advertise their products on the
radio in the late afternoon when people are getting
hungry. A persons self-image will also tend to influence
what he or she will buyan upwardly mobile manager may
buy a flashy car to project an image of success.
Social factors also influence what the consumers
buyoften, consumers seek to imitate others whom they
admire, and may buy the same brands. The social
environment can include both the mainstream culture
(e.g., Americans are more likely to have corn flakes or
ham and eggs for breakfast than to have rice, which is
preferred in many Asian countries) and a subculture (e.g.,
rap music often appeals to a segment within the
population that seeks to distinguish itself from the
mainstream population). Thus, sneaker manufacturers are
eager to have their products worn by admired athletes.
Finally, consumer behavior is influenced by learningyou
try a hamburger and learn that it satisfies your hunger and
tastes good, and the next time you are hungry, you may
consider another hamburger.
Consumer choices are often influenced dramatically
by values. Some consumers, for example, seek to fit in
with the crowd and would like to own a car as similar as
possible to that of the neighbor. Others, on the other
hand, want to stand out. In the consumption context,
then, a consumer may choose to spend a great deal of
money on buying and maintaining neat and professional
attire, not because he or she is particularly interested in
that appearance for its own sake, but rather because this
will help the consumer be successful in his or her career.
One way to look at social influence is though
reference groupspeople against which one Amity
compares
Business School
oneself. Thus, a consumer may notice that all his friends

are wearing a special kind of jeans and may expect to be
ostracized if he or she chooses to wear a different brand.
Interestingly, however, one may also hold dissociative
reference groupspeople that one would not want to be
compared to.
Family may influence the consumers choices a great
deal. Research has shown, for example, that there is a
tendency for adult children to use the same brands that
their parents used over time. In many cases, these brand
choices are made without much conscious thought.

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Amity Business School

E-Commerce Business Models :

* Subscription Revenue Model :

* Affiliate Revenue model :

Major B2C business models :

Content Provider :- Information and entertainment companies that

Major B2B business models :

Major C2C business models :

M-commerce business models take

Key business concepts and strategies applicable to e-commerce :

Business strategy : A set of plans for achieving superior long-term

What is Value Chain?

In an information society the value of information has become

New information technologies and the ubiquitous internet have

Traditionally there has been a trade off between reach and

Some companies operate in marketplace, some in market-

What is physical Value chain

Virtual Value Chain

Stages of Transformation from Marketplace to Marketspace

New Customer Relationships

Value for a product is dependent on:

Marketing research is often needed to ensure that

Surveys come in several different forms. Mail

Focus groups are useful when the marketer wants to

Personal interviews involve in-depth questioning of an

Online Market Research Techniques:

Primary research involves gathering first-hand information using

Secondary Research : It involves gathering information using WEB

Some popular secondary research tools ( Web Sites)

Technologies that support Online Marketing :

Web bugs : Tiny graphic files hidden in marketing e-mail

Online marketing techniques to online customers include

Online Catalogs are the equivalent of paper-based catalog. The

Another marketing communications tool used to increase

2. Clickthrough rate (CTR) measures the percentage of people

Merely getting visitors to a site had value when Web

The attractiveness of the offer includes the value

The total price paid in a CPM deal is calculated by multiplying the

Paying per click is sometimes seen by some as a middle

If possible, many publishers avoid sales-based agreements,

Consumer Behavior involves the psychological

oneself. Thus, a consumer may notice that all his friends

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