Lecture 2 Internet marketing strategy

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Lecture 2Internet marketing strategy
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Learning objectives

• Relate Internet marketing strategy to marketing
  and business strategy
• Identify opportunities and threats arising from
  the Internet
• Evaluate alternative strategic approaches to the
  Internet.

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Questions for marketers

• What approaches can be used to develop Internet
  marketing strategy?
• How does Internet marketing strategy relate to
  other strategy development?
• What are the key strategic options for Internet
  marketing?

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What is an E-marketing strategy?

• What is strategy?
• Defines how we will meet our objectives
• Sets allocation of resources to meet goals
• Selects preferred strategic options to compete
  within a market
• Provides a long-term plan for the development of
  the organisation

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Influences on e-marketing strategy
Internal and external in?uences on Internet
marketing strategy
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Problems if no E-marketing strategy

• Underestimated demand for online services
• Market share loss
• Resource duplication
• Insufficient resources
• Insufficient customer data
• Reduced efficiencies available through online
  marketing
• Fewer opportunities for applying online marketing
  tools
• Changes required to internal IT systems
• Inadequate tracking
• Senior management support limited

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Hierarchy of organisation plans including
e-marketing plans
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Usage of detailed e-marketing plans in UK
e-commerce organisations
Source E-consultancy (2005)
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Stages in Internet development
A simple framework for Internet marketing
strategy development
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Dynamic strategy model
Dynamic e-business strategy model Source
Adapted from description in Kalakota and Robinson
(2000)
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Stage models (Quelch and Klein (1996))
Levels of web site development in (a) the
information to transaction model and (b) the
transaction to information model of Quelch and
Klein (1996)
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E-business strategy model
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Corporate stage model
Source E-consultancy (2005) report Managing an
E-commerce team Author Dave Chaffey
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A generic SWOT analysis showing typical
opportunities and threats presented by the
Internet
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Product suitability to e-commerce
Grid of product suitability against market
adoption for transactional e-commerce (online
purchases)
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Internet marketing benefits

• Intangible benefits
• Corporate image communication
• Enhance brand
• More rapid, more responsive marketing
  communications including PR
• Improved customer service
• Learning for the future
• Meeting customer expectations
• Identify new partners, support existing partners
• Better management of marketing information and
  customer information
• Feedback from customers on products

• Tangible benefits
• Increased sales from new sales leads giving rise
  to increased revenue from
• new customers, new markets
• existing customers (repeat-selling)
• existing customers (cross-selling)
• Cost reductions from
• reduced time in customer service
• online sales
• reduced printing and distribution costs of
  marcomms

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Example objectives

• Achieve 10 per cent online revenue contribution
  within two years
• Achieve first or second position in category
  penetration in the countries within which we
  operate (this is effectively online market share
  and can be measured through visitor rankings such
  as Hitwise or better by online revenue share
• Cost reduction of 10 per cent in marketing
  communications within two years
• Increase retention of customers by 10 per cent
• Increase by 20 per cent within one year the
  number of sales arising from a certain target
  market, e.g. 1825-year-olds
• Create value-added customer services not
  available currently
• Improve customer service by providing a response
  to a query within two hours, 24 hours per day,
  seven days a week
• All other objectives to be achieved profitably
  giving a return on investment in a three year
  period.

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Example allocation of Internet marketing
objectives within the balanced scorecard
framework for a transactional e-commerce site
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An example of a performance measurement system
for an e-commerce electrical goods retailer
Source Friedlein (2002)
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(No Transcript)
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Smile (www.smile.co.uk)
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Using the Internet to support different growth
strategies
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Target marketing
Stages in target marketing strategy development
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Common online targeting options

• Brand loyalists convert online
• Not brand loyal encourage trial
• Most profitable deepen relationships
• Larger companies (B2B)
• Smaller companies(B2B)
• Key members of the buying unit (B2B)
• Difficult to reach using other media

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Customer lifecycle segmentation
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Euroffice e-mail (www.euroffice.co.uk) Source
Adapted from the company web site press releases
and Revolution (2005a)
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Alternative positionings for online services
Alternative positionings for online services
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The value proposition

• First identify customer needs and define a
  distinctive value proposition that will meet
  them, at a profit. The value proposition must
  then be delivered through the right product and
  service and the right channels and it must be
  communicated consistently. The ultimate aim is to
  build a strong, long-lasting brand that delivers
  value to the company marketing it.

Varianini and Vaturi (2000)
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Autotrader site (www.autotrader.co.uk) clearly
communicates its proposition
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BA Have you clicked yet? campaign web site
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Strategic options for a company in relation to
the importance of the Internet as a channel
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Flow chart
Flow chart for deciding on the signi?cance of the
Internet to a business Source After Kumar (1999)
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Channel coverage map showing the companys
preferred strategy for communications with
different customer segments with different value
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The main challenges of e-marketing (n 84)
Source E-consultancy (2005)
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Summary of alternative organisational structures
for e-commerce suggested in Parsons et al. (1996)
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Options for location of control of e-commerce
Source E-consultancy (2005)
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Risk/reward analysis
Example of riskreward analysis
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Example growth in Egg customers
Number of Egg customers, 19982001 Compiled from
Egg Investor relations (www.egg.com and
www.investis.com/eggplc)
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FUNCTIONAL Example dabs.com
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DESIGN Example ASTON MARTIN
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InFORMATION EXAMPLE BBC
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WEBPAGESTHATSUCK.COM