One Year Ago: Study: E-tailers Flunk Marketing 101


Originally published on November 29, 2000 and brought to you today as a time capsule.


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

“Companies are ignoring the basic marketing principles traditional business use — first, choose yourtarget 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 marketinginitiatives and huge advertising buys that are not targeted.”

The report, “Beyond the Blur: Correcting the Vision of InternetBrands,” surveyed the Internet marketing spending landscape and found thatonline business-to-commerce (B2C) ventures should forgo flashy attempts topull in young and trendy customers, and instead focus their attention onconsumers over the age of 35.

According to researchers, the over-35 demographic includes “heavyweight spenders” who account for 70 percent of all online spending andrepresent the most profitable consumer sector. Internet companies thatredirect their energies toward attracting them could realize “dramaticreturns,” the study said.

“Success is not achieved by throwing around as much money as possible,” Dulladded, “but by inspiring customers to buy more.”

Purchase Motivators

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

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

“The secret to building brand equity is not so much in huge advertisingbuys, fancy logos or constant price-slashing,” said Dull. “It’s in fullyunderstanding customers’ needs and providing them with an exceptionalexperience tailored to those needs.”

Sticky Notes

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

Although company logos, product packaging and images are usually thought ofas representative of a brand, researchers said they only incrementallyincrease 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 KenForster.

Survey Says

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

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

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