Singh_Econ139A_S2011_Lec11 - business. technology. society....

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1 business. technology. society. More Marketing The Economics of Electronic Commerce (Economics 139A) UCSC Spring 2011 Professor Nirvikar Singh April 20, 2011
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Products, Brands and the Branding Process Brand: Expectations consumers have when consuming, or thinking about consuming, a specific product Most important expectations: Quality, reliability, consistency, trust, affection, loyalty, reputation Branding: Process of brand creation Closed loop marketing Brand strategy Brand equity Slide 6-2
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Marketing Activities: From Products to Brands Figure 6.8, Page 366 Slide 6-3
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Segmenting, Targeting, and Positioning Major ways used to segment, target customers 1. Behavioral 2. Demographic 3. Psychographic 4. Technical 5. Contextual 6. Search Within segment, product is positioned and branded as a unique, high-value product, especially suited to needs of segment customers Slide 6-4
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Are Brands Rational? For consumers, a qualified yes: Brands introduce market efficiency by reducing search and decision-making costs For business firms, a definite yes: A major source of revenue Lower customer acquisition cost Increased customer retention Successful brand constitutes a long-lasting (though not necessarily permanent) competitive advantage Slide 6-5
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Netflix Strengthens and Defends Its Brand Class Discussion What was Netflix’s first business model? Why did this model not work and what new model did it develop? Why is Netflix attractive to customers? How does Netflix distribute its videos? What is Netflix’s “recommender system?” How does Netflix use data mining? Is video on demand a threat to Netflix? Slide 6-6
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Can Brands Survive the Internet? Brands and Price Dispersion Early postulation: “Law of One Price”; end of brands Instead : Consumers still pay premium prices for differentiated products E-commerce firms rely heavily on brands to attract customers and charge premium prices Substantial price dispersion Large differences in price sensitivity for same product “Library effect” and “Long tail” Slide 6-7
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Insight on Technology The Long Tail: Big Hits and Big Misses Class Discussion What are “recommender systems”? Give
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This note was uploaded on 09/09/2011 for the course ECON 139a taught by Professor Turnbull,s during the Spring '08 term at University of California, Santa Cruz.

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Singh_Econ139A_S2011_Lec11 - business. technology. society....

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