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Lecture 2 Internet marketing strategy
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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, 62–78.
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Influences on e-marketing strategy
Internal and external influences on Internet marketing strategy
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Why do we need an internet marketing strategy?
…it provides a consistent direction for online marketing activities …the company can achieve its hierarchy of objectives Gives a focus to choice of target markets, positioning and the use of the marketing mix …it means analysis of the external environment, internal resources and capabilities will take place A digital marketing strategy is needed because… Tells us how resources will be deployed and how the organisation will be structured to achieve the strategy. …following it will help the company achieve competitive advantage It helps us to understand which strategies and tactics should not be pursued
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Examples of Strategic Initiatives
New proposition for customers Getting more customers (acquisition) Converting customers Improving experience Improving delivery of offers Improving the infrastructure to enhance marketing capabilities
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What are the options? A website is likely to be central to an internet marketing strategy… Also: Partner with online intermediaries e.g. portals, social networks and infuencers like bloggers… Use social media marketing on own pages with user- generated content but also using social networks like Facebook, Google+, LinkedIn, Twitter, Pinterest, etc Use , mobile, apps and databases as communications and relationship-building tools. Link with offline marketing communications. Reduce costs, generate revenue, communicate and brand.
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Strategic Frameworks SOSTAC Model RACE Model
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SOSTAC- a Generic framework for e marketing plan
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Engaging Customers with Brands (RACE) Reach-Act-Convert-Engage
Convert – Achieve marketing goals e.g. new fans, leads or sales Engage – Build customer relationships through time to achieve retention goals Interact – Engage audience and encourage them to act / interact with company or other customers. Reach – Build awareness & traffic Step 1 Step 2 Step 3 Step 4 Source: Smart Insights (2010) from REAN (Blanc & Jackson, 2009)
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Integrating the models
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Demand Analysis To set realistic strategic objectives such as leads or sales levels for online revenue contributions for digital channels e- marketing managers need to: assess the level of customer Internet access and activity for different markets Assess online market share that a particular organisation has achieved share of customers who are influenced by using the digital channel but purchase using another channel share of customers who purchase using the digital channel.
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5 S Model for objectives
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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 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. 18–25-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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Business models- Timmers (1999)
E Shop E Procurement E Mall E Auctions Virtual Communities Collaboration Platforms Third Party Marketplaces Value Chain Integrators Value Chain Service Providers Information Broakerage Trust and other Services
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E-business strategy model
1. Web presence 2. E-commerce 3. Integrated e-commerce 4. E-business Services available Brochureware or interaction with product catalogues and customer service Transactional e-commerce on buy-side or sell-side. Systems often not integrated Buy and sell-side integrated with ERP or legacy systems. Personalisation of services Full integration between all internal organisational processes and elements of the value network Organizational scope Departments acting independently, e.g. marketing department, IS department Co-ordination through steering committee or e-commerce manager Cross-organisational Across the enterprise and beyond (extraprise) Transformation Technological infrastructure Technology and new responsibilities identified for e-commerce Internal business processes and company structure Change to e-business culture, linking of business processes with partners Strategy Limited Sell-side e-commerce strategy, not well integrated with business strategy E-commerce strategy integrated with business strategy using a value-chain approach E-business strategy incorporated as part of business strategy
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Strategic options for a company in relation to the importance of the Internet as a channel
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Revenue models •Subscription access to content
•Pay Per View content access •CPM Display advertising •CPC advertising on site •Sponsorship of sections, content or widgets •Affiliate revenue (CPA or CPC) •Subscriber data for marketing •Access to customers for research purposes
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Using the Internet to support different growth strategies
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Target marketing Stages in target marketing strategy development
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A range of targeting and segmentation approaches for a digital campaign
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Customer lifecycle segmentation
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Online value proposition
A clear differentiation of the proposition from competitors based on product features or service quality •Target market segment(s) that the proposition will appeal to •How the proposition will be communicated to site visitors and in all marketing communications. Developing a tag line can help this
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The importance of VALUE
Cheaper to retain customers than recruit new ones Lifetime value and greater ‘share of wallet’ Customers can become advocates Value can be a source of competitive advantage Incentives and collectables can encourage further purchases and return visits to your site Can help you drive thought leader strategy for B2B e.g. give white papers for free Can lock them in to your brand and stop churn / switching Customers consolidate number of websites they use over time so ensure your site is a favourite
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Managing Expectations
Understand expectations: customer research,, site benchmarking, customer scenarios Set and communicate the service promise: guarantees or promises Delivering the service promise: on-site support, employee support, physical fulfilment, logistics, delight the customer.
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Online Value Proposition
Online Value Proposition Your USP online… Links to your brand positioning and tells customers who you are, what you offer, which markets you serve and what makes you different. It identifies to customers why they should click on the site, return, register, buy and share their experiences. It’s a point of difference from competitors. Source: Smart Insights 2014
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Customer Information Processing Model 5 Stages of Information Processing: Hofacker (2001)
Review effectiveness of communications and web pages. Can your customers progress through each hurdle? Exposure – is the information there long enough for a customer? Attention – what grabs the attention? Movement? Colour? Comprehension & perception – how does the customer interpret the stimulus? Yielding & acceptance – is the information accepted by the customer? Retention – how well can the customer recall their experience?
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Customer Decision-Making Models Low & High Involvement
Awareness Interest Desire Action Problem Identification Information Search Evaluation of Alternatives Purchase Post-purchase Evaluation How does your decision-making differ for the following purchases: Buying some breakfast cereal Buying a car Buying a music album from a brand new band Buying your first home
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Supporting the Buying Process with Site Content
Source: Chaffey & Smith, 2013
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The IDIC Loyalty Model (Peppers & Rogers, 1997)
The IDIC approach provides a framework for using the web effectively to form and build relationships: Customer identification – identify customers on first and subsequent visits through cookies / login Customer differentiation – build a profile to segment customers Customer interaction – on-site interactions such as customer service questions or create a tailored product Customer communications – personalisation or mass-customisation of content or s according to segmentation.
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User Experience Design – How does a user feel when using a system?
Source: Smashing Design Magazine
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Starting to think about user experience…
User-centred design (Bevan, 1999) starts with understanding the nature and variation between user groups: Who are the important users? What is their purpose for accessing the site? How frequently will they visit? What experience and expertise do they have? What nationality are they? Can they read your language? What type of information are they looking for? How will the use the information? Read it online, print it, download it, share it? What type of browser or platform will they use? How fast will their links be? How large a screen will they have and with how many colours?
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Ovp examples •‘Compare. Buy. Save’. Kelkoo (www.kelkoo.com)
•‘Earth’s biggest selection’. Amazon ( •‘Search the largest inventory of cars and trucks on the Internet. More than 1.5 million listings, updated daily’ ( •The Citibank site design ( uses a range of techniques to illustrate its core proposition and OVP. The main messages are –Welcome to Citibank: The one-stop solution for all your financial needs –Look for a product or service; Learn about a financial product; Find a location
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Positioning and differentiation strategy
Deise et al (2000) and Chaston (2000) suggest four positioning options: Product performance excellence Price performance Transactional Excellence Relationship Excellence These positioning options have much in common with Porter’s generic competitive strategies of cost leadership and differentiation
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However unlike Porter’s belief, Kim et al (2004) concluded that for online businesses ‘integrated strategies that combine elements of cost leadership and differentiation will outperform cost leadership or differentiation strategies’
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Autotrader site (www. autotrader. co
Autotrader site ( clearly communicates its proposition
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BA ‘Have you clicked yet?’ campaign web site
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WEBPAGESTHATSUCK.COM
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