Online Marketing Ace Hardware Is a Brick-And-Mortar

Online Marketing

Ace Hardware is a brick-and-mortar and online business-to-consumer (B2C) company selling a diversified set of products that meet the needs of specific genders, age groups, ethnic categories and income levels. Traditional marketing tools such as commercial advertising on radio, television and newspapers and distribution of catalogs and flyers are useful for reaching many consumers and for building brand awareness. However, mass marketing is not good at appealing to consumers that have very different needs and backgrounds. Online direct marketing, on the other hand, is aimed at targeted specific audiences. In the past, mass marketing has been more affordable than direct marketing, but the Internet has dramatically altered these cost dynamics. The Internet and database marketing now make it possible to affordably create customer profiles, segment customers into profitability or preference groups, and develop a different strategy for each group as this paper will discuss.

The Web site itself creates a 24x7 presence in a world-wide environment of more than 750 million people. When a potential customer enters a physical store, they interact with a sales person, but virtual storefronts provide only machine-based transactions.. The key to success on the Web is overcoming the challenge of moving the customer through a successful sales process without human interaction (Hughes). In this endeavor, the Internet is a powerful tool for one-to-one marketing because the customer's interactions on the Web site can be tracked using cookies. A cookie is information that a Web site puts on a user's hard disk so that it can remember something about the user at a later time. Plus, customers can enter their data directly into Web site forms that can be directly connected to a customer database to provide even more information. Using knowledge from cookies and the customer database, personalized interactions can be triggered to increase the chances of purchase. For example, the customer can be presented with personalized greetings and shown items that are likely to be of interest based on his or her previous purchase history.

Ace Hardware will have to focus heavily on segmenting markets by gender, age, ethnicity and income, targeting these specific markets, and positioning products to meet the needs of these markets in order to drive consumers to both its retail stores and Web site. Targeted e-mail campaigns can be heavily used to solicit online and offline business. E-mail campaigns replace expensive offline promotions by eliminating variable costs, most notably postage and distribution, the cost of direct marketing materials such as catalogs and flyers and assembly of materials (Geld). Thus, e-mail distribution costs are the same whether Ace Hardware reaches one person or one million people. Further, Ace Hardware's content can be as detailed as it needs to be and can change more frequently (note: this comment applies to Ace's Web site content as well). This is important because Ace's inventory, prices, and promotions are subject to numerous updates.

On the Web, most users find what they are looking for by visiting search engines such as Google, Yahoo, and AOL Search. They are the online equivalent of Yellow Page telephone directories. It is important to place enough information on a Web site so that it will appear in the search results and to register the site with search engines so that traffic is optimized (Internet marketing). Unlike Yellow Pages that cater to local consumers, search engines interact with prospects from around the world.

Affiliate marketing provides the opportunity to advertise products and services across a large number of web sites - and only paying them when they make a sale (Watt, 2004). And, affiliate networks of value-added intermediaries can facilitate hundreds or even thousands of sites presenting Ace Hardware's products. These networks take the leg work out of pursuing individual sites by recruiting and managing the affiliate sites, providing an administration platform to monitor results, providing the tracking code required to make the entire process work, serving advertisements on behalf of the merchant and acting as a central affiliate payment center.

The Web version of print advertising includes banners, towers and pop-ups placed on appropriate Web sites. Just like print advertisements, these online techniques are designed to generate traffic, increase brand awareness and generate leads and sales (Background: History of Internet advertising, 2003). Cost per thousand pages viewed is only about $5 on the Internet. This may appear to be a good deal in contrast to print advertising, but closer examination of click-through-rates, how many times the advertisements are clicked on, and conversion rates, the number of completed sales that occur as a direct consequence of advertisement referrals, reveal that online advertising isn't as effective as print advertising.

Unfortunately, Internet advertisements have proven to be far more disappointing than their print counterparts for a variety of reasons, with two of the more important ones being too much consumer exposure combined with the large amount of distraction on the Internet. As a result, average click-through rates for Internet advertisements have plummeted to only approximately 0.5%, and this optimistic rate is only true provided that the advertisement meets the following optimal conditions (Background: History of Internet advertising, 2003):

The advertisement is well targeted.

The advertisement has unusually good content and design.