1. E-, M- AND INTERNET MARKETING Marketing Practice

2. Lecture Objectives By the end of this lecture, you should be able to:  Distinguish between “e”, “m” and “internet” marketing  Identify a range of factors driving businesses and consumers to utilise new media  Identify ways in which businesses have changed their marketing and general business operations due to the use of new media

3. Pros and Cons of Using Technology New Entrants Substitutes Buyers Suppliers Entry & Substitution Barriers Reduced: Less need for physical assets More difficult to protect adv. New entrants in many industries Easier substitution Rivalry Increased: Reduced differentiation Increased price competition Wider geographic market Lower variable costs hence more discounting Supplier Power Reduced: Raises bargaining power over suppliers Wider information available Internet procurement gives equal market access Buyer Power Increased: Wider information available Reduces switching costs Bargaining power shifts to end users Powerful channels eliminated Industry Rivalry Porter (2001)

4. Definition of Internet Marketing Internet marketing  “Use of the internet and related digital technologies to achieve marketing objectives” (Chaffey, Mayer, Johnston & Ellis-Chadwick, 2003, p.7)  Acquiring and delivering services to customers  External perspective

5. Virtually Enhanced Industries Auction – eBay, Bidup, Froogle, Amazon, Yahoo!, Banking - direct debit/ EBPP, online accounts, First Direct, IF Gambling – 888, Betfair Gaming – Xboxlive, PSP, MMORPG, MMORTS Travel & Tourism – lastminute, opodo Recruitment – fish4, Monster, StepStone Insurance – Direct Line, MoneySupermarket Local Economies (LETS) – Ripple, Peanuts- Japan, Green Dollars=NZ #10. Internet as a Distribution Channel

6. Definition of E-Marketing E(lectronic) marketing  Use of technology in all its forms  Internet, databases, call centres, CRM etc.  Internal and external focus  Includes all aspects of the marketing process  Sometimes definitions focus on internet aspects of e-marketing

7. Definition of M-Marketing M-Marketing  “Is the process of planning and execution conception, pricing, promotion, and distribution of products and services through the mobile channel” (Innovative Interactive…, cited by Leppäniemi and Karjaluoto (2005, P.198)  Useful for collecting data  Allows delivery of personalised messages  Can be used as a distribution channel similar to internet

8. M-Marketing Examples McDonalds linking with Japanese mobile phone company to allow customers to pay via mobile Orange Wednesdays involved the distribution of “m-vouchers” to consumers for redemption at box office

9. Technology and Marketing Technology has affected marketing in a number of ways. For example; Products  Increasing speed, acceptance and expectation(?) of innovation Promotion  Increasing media fragmentation  Increased opportunities for information capture and manipulation

10. Technology and Marketing Place  New distribution channels Price  New technology becomes cheaper and more accessible, both B2C and B2B  Use of technology allows prices of various offerings to be decreased Will concentrate on promotion and place

11. Internet as a Distribution Channel Both goods and services distributed via the internet  Absence of channel members means that prices are reduced Intangible nature of services means internet is perfect for their distribution  E.g., list on slide 4, entirely made up of services #4. Virtually Enhanced Industries #4. Virtually Enhanced Industries Increasingly goods are being distributed via the net  Relies on postal services for delivery  Ease and convenience are attractive to many consumers

12. Types of Distributors in Internet Age Click only companies, including  E-tailers, selling direct to end user via net, e.g., Amazon  Transaction sites, allow different users to conduct business, e.g., eBay, Betfair  Search engines and portals, allow search and include other services such as news, etc….,  Content sites, e.g., BBC.co.uk Click-and-mortar  Brick and mortar retailers who have added an internet marketing aspect, e.g., Tesco

13. Role of Intermediaries New types of intermediaries Brick-and-mortar firms often face disintermediation from click-only competitors The click-and-mortar business model has been highly successful

14. Disintermediation Disintermediation of a consumer distribution channel showing: (a) the original situation, (b) disintermediation omitting the wholesaler, and (c) disintermediation omitting both wholesaler and retailer

15. Reintermediation “Disintermediation is the elimination of traditional links in the distribution chain between seller and ultimate buyer Reintermediation is the creation of new intermediaries or market markers.” (Berthon, Ewing, Pitt and Naude, 2003, P.555) E.g.,Tesco Direct or Confused.com Partly driven by the success of click only companies, Also affected by information overload of consumers

16. One Advantage of Online Retailing Bricks and mortar shops have limited physical space Therefore will stock only those items likely to sell most Less popular, niche or older items will loose out on shelf space Online is different

17. The Long Tail Increased ability to hold stock, especially if stored electronically Larger potential customer base Combined together, result in potential profit from “The Long Tail” Anderson (2004)

18. Marketing Communications and Technology Technology has affected marketing communications in a number of ways Increasing numbers of media channels (e.g., internet, digital TV) has lead to audience fragmentation Allows more interaction, both business to consumer and consumer to consumer Allows for improved market segmentation and targeting

19. Interaction Two way nature of communications technology means interaction is more possible Organisations gather data and try to create dialogue with consumers Some consumers happy to interact with some organisations, more prefer to interact with each other  Remember “Trialogue”? (Walmsley, 2007) Blogs, forums etc…,  Viral marketing seeks to take advantage of this Charmin viral Charmin viral

20. Segmentation and Targeting Improvements in technology allow for organisations to collect better customer data  E.g., organisations that previously sold through intermediaries can now collect information directly from consumers Also increasingly sophisticated and lower cost databases allow more to be done with the data

21. Segmentation and Targeting Who is the most likely person to shop online, defined by:  Age  Gender  Occupation  Socio-Economic status  Location  Behaviour / Preferences  Goods / Services sought Brengman et al, (2003) Online shopper typologies: Tentative shoppersTentative shoppers Suspicious learnersSuspicious learners Shopping loversShopping lovers Business usersBusiness users Online Non-shopper typologies: Fearful browsersFearful browsers Positive technology muddlersPositive technology muddlers Negative technology meddlersNegative technology meddlers Adventurous browsersAdventurous browsers

22. Metrics on the Internet Other information sources also available to organisations Some are new, others are taking advantage of new ways of communicating IDC Home IDC Home Blogs, forums, etc…, used by practitioners and by subject specialists,  Usually to support their other commercial activities Drayton Bird Drayton Bird

23. References Anderson, C., (2004), The Long Tail [Electronic version], Wired Magazine, 10, 170-177. Berthon, P., Ewing, M., Pitt, L. & Naude, P. (2003) Understanding B2B and the Web: the acceleration of coordination and motivation [Electronic version], Industrial Marketing Management, 32, 553-561 Brassington, F. and Petit, S., (2006), Principles of Marketing, 4 th ed, Harlow, FT Prentice Hall Chaffey, D., Mayer, R., Johnston, K. & Ellis-Chadwick, F., (2003) Internet Marketing: Strategy, Implementation and Practice, Second Edition, Harlow, Prentice- Hall Leppäniemi, M., & Karjaluoto, H., (2005), Factors influencing consumers’ willingness to accept mobile advertising: a conceptual model [Electronic version], International Journal of Mobile Communications, 3 (3), 197-213 Porter, M.,(2001), Strategy and the Internet [Electronic version] Harvard Business Review, (3) 62-78. Walmsley, A., (2007, June 13 th ), Democracy overpowers deific brands, Marketing, 17.