Chapter 4 Internet marketing strategy

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Chapter 4Internet marketing strategy

• Basic strategic issues

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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

• How does Internet marketing strategy relate to
  other strategy development?
• What are the key strategic options for Internet
  marketing?

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Michael Porter on the Internet

• The key question is not whether to deploy
  Internet technology companies have no choice if
  they want to stay competitive but how to deploy
  it.

Porter, M. (2001) Strategy and the Internet,
Harvard Business Review, March 2001, 6278.
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Influences on e-marketing strategy
Figure 4.1 Internal and external in?uences on
Internet marketing strategy
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Stages in Internet development
Figure 4.2 A simple framework for Internet
marketing strategy development
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Strategy development process
Figure 4.3 A ten-step strategic marketing
planning process Source McDonald, 1999
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Dynamic strategy model
Figure 4.4 Dynamic e-business strategy
model Source Adapted from description in
Kalakota and Robinson (2000)
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Stage models (Quelch and Klein (1996))
Figure 4.5 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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Types of web presence

• 1. Transactional e-commerce site.
• 2. Services-oriented relationship building web
  site.
• 3. Brand-building site.
• 4. Portal site.

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Demand analysis car market
Figure 4.6 Customer demand analysis for the car
market
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Demand analysis new vs existing
Figure 4.7 Demand analysis assessing the ratios
Access Choose Buy for (a) new customers and
(b) existing customers
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Internet SWOT
Figure 4.8 A generic SWOT analysis showing
typical opportunities and threats presented by
the Internet
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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 (Chapter 2) 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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Online revenue contribution examples
Table 4.3 Variations in online revenue
contribution
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Product suitability to e-commerce
Figure 4.9 Grid of product suitability against
market adoption for transactional e-commerce
(online purchases)
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Target marketing
Figure 4.10 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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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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Strategy options
Figure 4.14 Strategic options for a company in
relation to the importance of the Internet as a
channel
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Risk/reward analysis
Figure 4.16 Example of riskreward analysis