Study: E-tailers Flunk Marketing 101

Although many Internet firms are slashing advertising budgets in favor of direct marketing campaigns, a new study released Wednesday by Andersen Consulting and Online Insight warns that e-tailers often miss the mark when it comes to marketing initiatives.

"Companies are ignoring the basic marketing principles traditional business use -- first, choose your target more deliberately, and then focus marketing efforts to reach them," said Andersen Consulting e-branding partner Stephen Dull.

Dull added, "Instead, many companies are spending a lot of money on sweeping Internet marketing initiatives and huge advertising buys that are not targeted."

Heavy Spenders

The report, "Beyond the Blur: Correcting the Vision of Internet Brands," surveyed the Internet marketing spending landscape and found that online business-to-commerce (B2C) ventures should forgo flashy attempts to pull in young and trendy customers, and instead focus their attention on consumers over the age of 35.

According to researchers, the over-35 demographic includes "heavyweight spenders" who account for 70 percent of all online spending and represent the most profitable consumer sector. Internet companies that redirect their energies toward attracting them could realize "dramatic returns," the study said.

"Success is not achieved by throwing around as much money as possible," Dull added, "but by inspiring customers to buy more."

Motivators

While many e-tailers strive to undercut competitors by offering the lowest prices on goods, the report found that cost is not necessarily a critical factor in motivating customers to purchase from a particular site.

In fact, pricing contributes no more than 10 percent to e-brand value, it said. Instead, online customers are more interested in Web site speed, ease of use, security and overall selection of products. Researchers advised online vendors to concentrate on bettering the consumer experience in order to boost the bottom line.

"The secret to building brand equity is not so much in huge advertising buys, fancy logos or constant price-slashing," said Dull. "It's in fully understanding customers' needs and providing them with an exceptional experience tailored to those needs."

Sticky Notes

The study also noted that improving a customer's online shopping experience is the best method to build a sticky and known brand name.

Although company logos, product packaging and images are usually thought of as representative of a brand, researchers said they only incrementally increase an online company's success on the Internet.

"A brand should be defined as the sum total of a customer's experience with, and perceptions of, a product or service," said Online Insight president Ken Forster.

About the Study

As part of the study, researchers surveyed more than 2,000 online consumers who purchased from B2C sites across 17 different industries.

Respondents were also questioned on a variety of issues regarding Internet usage, brand awareness, knowledge of pricing and product information, and customer service.