1. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.1 Chapter 2 The Internet micro-environment Situation analysis

2. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.2 Learning objectives Identify the different elements of the Internet environment that impact on an organisation’s Internet marketing strategy Complete an online marketplace analysis to assess customer, intermediary and competitor use of the Internet as part of strategy development Evaluate the relevance of changes in trading patterns and business models enabled by digital channels

3. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.3 Questions for marketers How do I complete a situation analysis as part of planning for digital marketing? How are the competitive forces and value chain changed by the Internet? How do I assess the demand for Internet services and customer behaviour? How do I compare our online marketing with that of competitors? What is the relevance of the new intermediaries?

4. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.4 Figure 2.1 The Internet marketing environment

5. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.5 Figure 2.2 An online marketplace map

6. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.6 See http://www.davechaffey.com/seo-keyword-toolshttp://www.davechaffey.com/seo-keyword-tools Understanding customer search behaviour

7. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.7 Figure 2.3 A model of the Internet marketing conversion process

8. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.8 Figure 2.4 An example of a conversion model

9. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.9 Figure 2.5 Model showing conversion between the digital channel and traditional channels during the buying process

10. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.10 Figure 2.6 i-to-i showing prominent phone numbers (http://www.i-to-i.com)

11. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.11 Evaluating demand levels 1. Level of Internet access –Includes type of access – broadband and mobile 2. Consumers influenced by using online channel: –Includes understanding type of sites which have influence – see Fig 2.2. Marketplace analysis and Figure 2.9 Information sources 3. Transact online –Includes different types of transactions, not just sales, e.g. support, forum comments, etc.

12. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.12 Figure 2.7 Variation of broadband penetration in different countries Source: OECD (http://www.oecd.org/sti/ict/broadband)

13. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.13 Figure 2.8 Usage of mobile phones in Europe and US (data for 3-month period ending August 2006) Source: M:Metrics, 2006

14. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.14 Figure 2.9 Information sources used to select retailers Source: EIAA (2008)

15. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.15 Figure 2.10 Percentage (by category) who bought online after researching online Source: EIAA (2008)

16. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.16 2.11

17. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.17 Figure 2.12 Development of experience in Internet usage

18. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.18 Consumer characteristics Demographics: –Age, gender, social group Webographics –Access methods and times Personas: –Dulux example

19. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.19 Dulux persona example Aims: –The aim was to position Dulux.co.uk (Figure 2.13) as “the online destination for colour scheming and visualisation to help you achieve your individual style from the comfort of your home”. Specific outcomes on the site are to browse colours, add colours to a personal scrapbook, use the paint calculator and find a stockist. Further aims were to ‘win the war before the store’i.e. to provide colour help tools that can help develop a preference for Dulux before consumers are in-store and to prompt other ideas to sell more than one colour at a time. –Specific SMART objectives were to increase the number of Unique Visitors from 1M p.a. in 2003 to 3.5M p.a. in 2006 and To drive 12% of visitors to a desired outcome (e.g. ordering swatches).

20. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.20 Target audience variation Based on research, it was found that the main audience for the site was female with these typical demographics and psychographics: Would be adventurous 25-44 women, online Lack of confidence with previous site: - Gap between inspiration (TV, magazines, advertising) and lived experience (Large DIY sheds,nervous discomfort) - No guidance or reassurance previously available currently on their journey Colours and colour combining is key Online is a well-used channel for help and guidance on other topics 12 month decorating cycle Propensity to socialise Quality, technical innovation and scientific proficiency of Dulux is a given

21. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.21 Example personas First time buyer. –Penny Edwards, Age: 27, Partner: Ben, Location: North London, Occupation: Sales Assistant Part time Mum. –Jane Lawrence, Age: 37, Husband: Joe, Location: Manchester, Occupation: Part time PR consultant Single Mum. –Rachel Wilson, Age: 40, Location: Reading, Occupation: Business Analyst

22. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.22 Figure 2.13 Dulux site (www.dulux.co.uk)

23. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.23 Business consumer characteristics Variation in organisation characteristics –size of company (employees or turnover) –industry sector and products –organisation type (private, public, government, not-for-profit) –application of service (which business activities do purchased products and services support?) –country and region. Individual role –role and responsibility from job title, function or number of staff managed –role in buying decision (purchasing influence) –department –product interest –demographics: age, sex and possibly social group.

24. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.24 Figure 2.14 Internet usage by businesses in European countries Source: European Commission, 2008.

25. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.25

26. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.26 Consumer behaviour models 1. Information / experience seeking behaviour models 2. Hierarchy of response buying process models 3. Multi-channel buying models 4. Trust-based models 5. Community participation models

27. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.27 1. Information / experience seeking behaviour models Directed information-seekers. These users will be looking for product, market or leisure information such as details of their football club’s fixtures. They are not typically planning to buy online. Undirected information-seekers. These are the users, usually referred to as ‘surfers’, who like to browse and change sites by following hyperlinks. Members of this group tend to be novice users (but not exclusively so) and they may be more likely to click on banner advertisements. Directed buyers. These buyers are online to purchase specific products online. For such users, brokers or cybermediaries that compare product features and prices will be important locations to visit. Bargain hunters. These users (sometimes known as ‘compers’) want to find the offers available from sales promotions such as free samples or competitions. For example, the MyOffers site (www.myoffers.co.uk) is used by many brands to generate awareness and interest from consumers. Entertainment seekers. These are users looking to interact with the Web for enjoyment through entering contests such as quizzes, puzzles or interactive multi-player games.

28. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.28 2. Hierarchy of response buying process models Figure 2.15 A summary of how the Internet can impact on the buying process for a new purchaser

29. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.29 Figure 2.16 Initial product search showing e-retailers available

30. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.30 Figure 2.17 Comet product comparison facility (www.comet.co.uk): example page

31. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.31 3 Multichannel buying models

32. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.32 4 Trust-based models Figure 2.18 A model of the relationship between different aspects of trust and consumer response based on the categories of Bart et al. (2005)

33. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.33 Figure 2.19 Segmentation based on information need and trust Source: Adapted from Forrester (2006) Teleconference Driving Sales With Segmentation Analyst: Benjamin Ensor of Forrester Research, February 27th 2006

34. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.34 Figure 2.20 Benchmark comparison of corporate websites Source: Bowen Craggs & Co (www.bowencraggs.com)

35. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.35 Figure 2.21 Performance benchmark example for Canadian banks Source: Gomez (http://www.gomez.com/products/viewbenchmark.php?btype=9)

36. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.36 Figure 2.22 All Things Green (www.allthingsgreen.net)

37. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.37 Figure 2.23 Jack Ma, CEO of Alibaba, explains his business strategy

38. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.38 Figure 2.24 Kelkoo.com, a European price comparison site

39. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.39

40. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.40 Porter’s five forces (or use Fig 2.3)

41. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.41 Figure 2.25 Value creation model

42. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.42 Figure 2.26 Two alternative models of the value chain: (a) traditional value chain model, (b) revised value chain model

43. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.43 Figure 2.27 Lonely Planet online shop (http://shop.lonelyplanet.com)

44. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.44 Figure 2.29 Disintermediation of a consumer distribution channel showing: (a) the original situation, (b) disintermediation omitting the wholesaler, and (c) disintermediation omitting both wholesaler and retailer

45. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.45 Figure 2.30 Screentrade insurance intermediary (www.screentrade.com)

46. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.46 Figure 2.31 From (a) original situation to (b) disintermediation or (c) reintermediation or countermediation

47. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.47 Figure 2.33 Different types of online trading location

48. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.48 Figure 2.34 Alternative perspectives on business models

49. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.49 Countermediation Creation of a new intermediary Example: –B&Q www.diy.com –Opodo www.opodo.com –Boots www.wellbeing.com www.handbag.com

50. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.50 2.34

51. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.51 Publisher revenue models 1. Revenue from subscription access to content. 2. Revenue from Pay Per View access to documents. 3. Revenue from CPM display advertising on site (e.g. banners ads, skyscrapers or rich media). CPM stands for ‘cost per thousand’ where M denotes ‘Mille’. 4. Revenue from CPC advertising on site (pay per click text ads) CPC stands for ‘Cost Per Click’. Advertisers are charged not simply for the number of times their ads are displayed, but according to the number of times they are clicked. 5. Revenue from Sponsorship of site sections or content types (typically fixed fee for a period) – 6. Affiliate revenue (typically CPA, but could be CPC) Affiliate revenue is commission based, for example if you display links to Amazon books on your site, you can receive around 5% of the cover price as a fee from Amazon. Such an arrangement is sometimes known as Cost Per Acquisition (CPA). Amazon, and others offer a tiered scheme where the affiliate is incentivised to gain more revenue, the more they sell. Hence this is often called a pay-per-performance ad deal.

52. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.52 Figure 2.35 Business-to-business publisher EConsultancy (www.e-consultancy.com)

53. Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009 Slide 1.53 Figure 2.36 Peer-to-peer lending exchange, Zopa (www.zopa.com)