Ch08-e Marketing Lecture

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Dave Chaffey, E-Business and E-Commerce Management, 3rd Edition © Marketing Insights Ltd 2007

CHAPTER 8E-MARKETING

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Learning outcomes Assess the need for separate e-business

and e-marketing strategies Create an outline e-marketing plan

intended to implement the e-marketing strategy

Distinguish between marketing communication characteristics of traditional and new media.

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Management issues How do we integrate traditional marketing

approaches with e-marketing? How can we use electronic

communications to differentiate our products and services?

How do we redefine our marketing and communications mixes to incorporate new media?

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MarketingThe definition of marketing by the Chartered Institute of Marketing (http://www.cim.co.uk/) is:

‘Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably’

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How do e-tools support marketing?

Identifying – how can the Internet be used for marketing research to find out customers’ needs and wants

Anticipating – anticipating the demand for digital services

Satisfying – how to achieve customer satisfaction through the electronic channel

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E-marketing defined

Achieving marketing objectives through use of electronic communications technology

Another similar term is digital marketing

Which e-marketing tools can assist? Web, e-mail, databases, wireless and digital

television.

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Distinguish between e-marketing, e-business, and e-commerce E-marketing is a subset of e-business E-commerce is a subset of e-business E-commerce involve both bye side and

sell side transaction E-marketing concentrate on sell side

transaction and communication

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E-marketing planning

A e-marketing plan is needed to detail the specific objectives of the e-business strategy through marketing activities

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Is a separate e-marketing plan required? Customer demand will be

underestimated Existing and start-up competitors will

gain market share Duplication of resources Insufficient customer data are collected Efficiencies available through online

marketing will be missed

Figure 8.2 SOSTAC™ – a generic framework for e-marketing planning

Situation: where are we now?

Objectives: where do we want to be?

Strategy: how do we get there?

Tactics: how exactly we get there?

Actions: what is our plan?

Control: did we get there?

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SOSTAC

Developed by Paul Smith (1999) Summarizes the different stages that

should be involved in a marketing strategy from strategy development to implementation

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SITUATION ANALYSIS

1-STAGE OF ‘SOSTAC’

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Situation Analysis

Aim is to understand the current and future environment in which the company operates.

Environment analysis and review of internal processes and resources

Figure 8.4 Inputs to the e-marketing plan from situation analysis

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Demand analysis It examines use of digital channel by current and

projected customers within different target markets.

What percentage of customer businesses have access to the Internet?

What percentage of members of the buying unit in these businesses have access to the Internet?

What percentage of customers are prepared to purchase your particular product online?

What percentage of customers with access to the Internet are not prepared to purchase online, but are influenced by web-based information to buy products offline?

What are the barriers to adoption amongst customers and how can we encourage adoption?

Figure 8.5 Customer demand analysis for the car market

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Competitor Analysis

The monitoring of competitor use of e-commerce to acquire and retain customer

Companies should review: Well-known local competitors Well-known international competitors New Internet companies locally and

worldwide

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Competitor Analysis

Equation used to appraise competitors:

Product quality * service quality

Customer value = ____________________________

Price * fulfillment time

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Intermediary analysis

To what extent competitors are using disintermediation or reintermediation

Identifying relevant intermediaries for a particular marketplace

Identify strategic partners when executing an online advertising campaigns

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Internal marketing audit

This will assess the capability of the resources of the company such as its people, processes and technology to deliver e-marketing compared with its competitors

Review the following elements of an e-com site…….

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Internal marketing audit Business effectiveness:

Contribution of site to revenue (see objective setting), profitability and any indications of the corporate mission for the site. The costs of producing and updating the site will also be reviewed, i.e. cost-benefit analysis.

Marketing effectiveness. These measures may include: leads; sales; retention; market share; brand enhancement and

loyalty; customer service.These measures will be assessed for each of the different product lines delivered through the web site. The way in which the elements of the marketing mix are utilized will also be reviewed.

Internet effectiveness: These are specific measures that are used to assess the way in which the web site is used, and the characteristics of the audience. Such measures include specialist terms such as hits and page

impressions that are collected from the log file, and also more typical techniques such as focus groups and questionnaires to existing customers. From a marketing point of view, how clear the value proposition of the site for the customer, is should be noted.

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OBJECTIVE SETTING

2-STAGE OF ‘SOSTAC’

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SMART e-marketing objectives Specific Measurable Achievable Realistic Time-constrained

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Examples of SMART e-marketing objectives

Start-ups – acquiring a specific number of new customers or to sell advertising space to generate a specified revenue that will hopefully exceed investment in site creation and promotion!

Established mobile-phone operator – increase customer retention by reducing churn from 25 per cent to 20 per cent.

Established media company – increase online revenue, target of 20 per cent online contribution to revenue by offering new online services and media sales.

Established business-to-business engineering company – increase overall revenue by 5 per cent, through targeting sales in new international markets.

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The Online Revenue Contribution A measure of extent to which a

company’s online presence directly impacts on the sales revenue of the organization

An assessment of the direct contribution of the internet or other digital media to sales

ORC objective can be specified for different type of products, customer segments, geographical markets

ORC objective can also be set for different digital channels such as web, mobile or interactive digital TV.

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STRATEGY

3- stage

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Strategy

The strategy element of an e-marketing plan defines how e-marketing objectives will be achieved.

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Target market strategies

Evaluation and selection of appropriate segments and the development of appropriate offers

5 questions when developing customer-centric strategy for e-marketing: Who are our customers? How are their needs changing? Which do we target? How can we add value? How do we become first choice?

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Characteristics of new-media marketing communications

Traditional media: TV, radioNew digital media: web sites, interactive

TV, mobile commerceSummery of difference : ‘6 I’ of e-

marketing Interactivity Intelligence Individualization Integration Industry restructuring Independence of location

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6 I’s

Interactivity Traditional media is push media where

the marketing message is broadcast from company to customer

Limited interaction with customer Internet is a pull media where customer

initiate contact and seek information on web site

Internet used to encourage two-way communication.

Figure 8.9 Summary of communication models for (a) traditional media,(b) new media

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Intelligence

Internet is Low cost method of collecting marketing research about customer perception of product and services.

It is Used to create two way feedback It is used to collect marketing research

information Company can respond in real time to

buyer behavior

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Individualization

Traditional media: same message broadcast to everyone

Internet: information is not unique to individuals, but to those with a common interest

Figure 8.10 Summary of degree of individualization for (a) traditional media (same message), (b) new media (unique messages and more information exchange between customers)

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Integration

Internet provides scope for integrated marketing communication

It is just one of many different media channels

Figure 8.11 Channels requiring integration as part of integrated e-marketing strategy

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Examples of integrated communication tools The internet can be used as a direct-

response tool enabling customers to respond to offers and promotions publicized in other media

The web site can have a direct response or callback facility built into it.

The Internet can be used to support the buying decision even if the purchase does not occur via web site called as mixed-mode buying or channel switching

Figure 8.12 Channel integration required for e-marketing and mixed-mode buying

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Industry restructuring

Disintermediation, reintermediation, countermediation concepts should be considered.

Which intermediaries should we be represented on?

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Independence of location

Electronic media gives opportunities to sell into international market.

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TACTICS

4 - stage

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Tactics

Marketing tactics to implement strategy and objective, are based on the elements of marketing mix.

marketing mix: 4 P’s ?Product, Price, Place, Promotion

+ People, processes, physical evidence

=7 P’s

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Tactic

Marketing mix provide a framework to vary different elements of the product offering to influence demand for the product within the target market

Eg. To increase sales of product , price can be decreased

Figure 8.13 The elements of the marketing mix

The Marketing Mix

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Product Core product (digital product/information

about product) Extended product

(warranties/guarantees/money back offers)

Mass customization of product

Extend range (Tesco) Narrow range (WH Smith iDTV) Online-only products (banks) Develop new brand (Egg) Migrate existing brand (HSBC)

Partner with online brand (Waterstones and Amazon).

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Product

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Price

Price element of marketing mix refers to an organizations pricing policies which are used to set price for product and services

Start-up companies use low prices to gain a customer base

Reduce online prices due to price transparency and competition

Maintain price to avoid cannibalization (negative result) of offline sales

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Implications of the internet for price

1) Increased price transparency Customers may be able to quickly find

out about price discrimination and they will object to it.

Customer knowledge of pricing is enhanced through internet

Customer can visit sites of rival suppliers or can visit sites of price comparison engines like kelko and Pricerunner

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2) Downward pressure on price Use of auction in B2B exchange can

drive down the price3) New pricing approaches Dynamic pricing: new customers will be

automatically given discounted purchases for the first three items

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4) Alternative pricing structure or policies

Basic price Discount Guarantees and warranties Order cancellation terms Refund policies

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Place

Internet has a global reach

Place = avoiding channel conflicts Disintermediation – sell direct Reintermediation – partner with new

intermediaries Countermediation

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Implications on place

Place of purchase: Manufacturers own site, intermediary

New channel structures: Changes introduced by disintermediation,

reintermediation, countermediation Channel conflicts:

Disintermediation threaten distribution arrangement with existing partners

Virtual organizations Internet provide new options for forming

partnership to mutually benefit all parties

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Promotion Part of communication strategy This include selection of target market and

integration of different communication tools Internet offers new ,additional marketing

communication channels to inform customers about benefit of product and assist in buying decision

Selective use of new online tools for different stages of the buying process and customer lifecycle

Online only campaigns Integrated campaigns – incorporating online tools

into communications mix.

Figure 8.14 Options for the online vs offline communications mix (a) online > offline, (b) similar online and offline, (c) offline > online

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People, process, physical evidence

Important for service delivery People

Automate – use web self-service, offer customer choice

Process Change process for service – contact

strategies Physical evidence

Site design – differentiate or support brand Fulfillment quality.

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BrandingMalcolm McDonald in their classic 1992

book, Creating Powerful Brands as an------“ identifiable product or service augmented in such a way that the buyer or user perceives relevant unique added values which match their needs most closely. Furthermore, its success results from being able to sustain these added values in the face of competition.”

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Options for changing brand identity online Transfer traditional brand online Extend traditional brand Partner with existing digital brand Create a new digital brand

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ACTIONS

5 - stage

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Actions

It refers to activities conducted by manager to execute plan.

Questions that need to be resolve when specifying actions include:

What level of investment in the Internet channel is sufficient to deliver services?

What training of staff is required? What new responsibilities are required for

effective Internet marketing? What activities are involved in creating and

maintaining the web site?

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CONTROL

6 - stage

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Control

Conduct marketing research Analysis of web-server log files Intranets can be used to share

information

Ch08-e Marketing Lecture

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Transcript of Ch08-e Marketing Lecture