Internet Marketing Strategy

1
Internet Marketing Strategy

• Week 5

2
Objectives

• Defining the business model
• Integrating Internet marketing strategy
• Levels of web development
• A strategic approach to Internet Marketing

3
Defining The Business Model

• the first determinant of a firms performance is
  its business model
• the method by which a firm builds and uses its
  resources to offer its customers better value
  than its competitors
• and to make money doing so

4
Determinants of Business Performance

• Business Model
• Components linkages
• Dynamics

• Change
• Properties
• Underpinnings

Performance

• Environment
• Competitive
• Macro

5
Internet Business Models

• Given such landscape-transforming properties of
  the Internet, the question is, How can a firm
  take advantage of them and make money.
• The Internet business model is the system
  components, linkages, and associated dynamics
  that takes advantage of the properties of the
  Internet to make money

6
Internet Business Models

• It takes advantages of the properties of the
  Internet in the way it builds each of the
  components value, scope, revenue sources,
  pricing, connected activities, implementation,
  capabilities, and sustainability and crafts the
  linkages among these components.
• Categorized as pure play or clicks-and-mortar
• Pure play Internet business model - if firm does
  not have a bricks-and-mortar model.
• Clicks-and-mortar is an internet business model
  conceived when a bricks-and-mortar model is in
  place

7
Properties of the Internet and the 5-Cs

• Internet Properties
• Mediating technology
• Universality
• Network externalities
• Distribution channel
• Time moderator
• Information asymmetry shrinker
• Infinite virtual capacity
• Low cost standard
• Creative destroyer
• Transaction-cost reducer

5-Cs Coordination Commerce Community Conte
nt Communication
Business Model
Performance
Environment
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Determinants of Firm Performance

• Business Model
• Customer value
• Scope
• Price
• Revenue sources
• Connected activities
• Implementation
• Capabilities
• Sustainability

Internet
Performance
Environment
9
Taxonomy of Business Models

• Brokerage model firms act as market makers who
  bring buyers and sellers together and charge a
  fee for the transaction that they enable.
• Advertising model the owner of a web site
  provides some content and services that attract
  visitors. Charge advertisers fees for banners,
  permanent buttons
• Infomediary model a firm collects valuable
  information on consumers and their buying habits
  and sells it to firms which in turn can mine it
  for important patterns and other useful
  information.

10
Taxonomy of Business Models

• Merchant model is the e-tailer model in which
  wholesalers and retailers sell goods and services
  over the Internet.
• Manufacturer model try to reach end users
  directly through the Internet instead of going
  through a wholesaler or retailer.
• Affiliate model a merchant has affiliates whose
  websites have click-through to the merchant.
• Community model rest on community loyalty
  rather than traffic. A good example is iVillage.

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Taxonomy of Business Models

• Subscription model access to a web site is not
  free. Members pay a subscription price and in
  return receive high-quality content.
• Utility model firms pay as they go. Activities
  are metered and users pay for the services that
  they consume.

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Internet Marketing Strategy

• Block Strategy firm erects barriers around its
  product market space by having inimitable
  capabilities and lowering prices.
• Run Strategy an innovator often has to run.
  Running means changing some subset of components
  or linkages or business models or reinventing the
  whole business model to offer customers better
  value.
• Team-up Strategy if a firm can not do it alone.
  Use strategic alliance, joint venture,
  acquisition, or equity position. Share in
  resources that it does not have.

13
David Teece argued that two things determine the
extent to which a firm can profit from its
invention or technology imitability and
complementary assets
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Who Profits from Innovation
I Difficult to make money II Holder of complementary assets makes money
IV Inventor makes money III Party with both technology and assets or with bargaining power makes money
High
Imitability
Low
Freely Available or Unimportant
Tightly Held and Important
Complementary Assets
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Strategies for Building Business Models
I Run II Team-up Joint venture Strategic alliance Acquisition Internal development
IV Block III Block Team-up Joint venture Strategic alliance Acquisition
High
Imitability
Low
Freely Available or Unimportant
Tightly Held and Important
Complementary Assets
16
Internet Technology Life Cycle
GROWTH or TRANSITIONAL
MATURE or STABLE
EMERGING or FLUID
Locate profit site Determine strengths and weaknesses of business model Build business model Defend competitive advantage
Decide where in the Internet value network you want to be Build capabilities Build network Invest in infrastructure Win customers Build brand name Team-up/Run
Sales
Time
Internet actions
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Levels of Web Development
1. Image/product information
1. Transactions
2. Customer support/service
2. Information collection
3. Image/product information
3. Customer support/service
Personalization
4. Information collection/market research
4. Internal support/service
5. Transactions
Multinational Companies
Internet start-ups
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Simple Framework for IMS development
Develop Internet marketing strategy
Define Internet marketing plan
Review and modify
Design site
Implement site
Monitor (metrics)
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Strategic Marketing Planning Process
Phase 1 Goal setting
1. Mission
2. Corporate objectives
3. Marketing audit
Phase 2 Situation review
Measurement and review
4. SWOT analysis
5. Assumption
Phase 3 Strategy formulation
6. Marketing objectives strategies
7. Estimate expected results
8. Identify alternative plans mixes
9. Budget
Phase 4 Resource allocation And monitoring
10. Detailed implementation program year 1