internet macro environment

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MMK737 Online Marketing

Workshop 2

Welcome!

Karen Lurati

1MMK737 Online Marketing

Introducing: Karen Lurati!

MMK737 Online Marketing Karen Lurati 2

Week 2 – (chapter 2&3)

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Assessment Queries????


Chapter 2

• The Internet

micro-environment

• Situation analysis


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Learning objectives

• Identify the different elements of the Internetenvironment that impact on an organisation’s Internet marketing strategy

• Complete an online marketplace analysis toassess customer, intermediary and competitoruse of the Internet as part of strategydevelopment

• Evaluate the relevance of changes in tradingpatterns and business models enabled by digitalchannels


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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?7MMK737 Online Marketing

Figure 2.1 The Internet marketing environment


Figure 2.2 An online marketplace map 9MMK737 Online MarketingKaren Lurati

See http://www.davechaffey.com/seo-keyword-tools


Understanding customer search behaviour

Figure 2.3 A model of the Internet marketing conversion process11MMK737 Online Marketing

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Figure 2.4 An example of a conversion model


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http://www.davechaffey.com/seo-keyword-tools








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Figure 2.5 Model showing conversion between the digital channel and traditional channels during the

buying process

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Figure 2.6 i-to-i showing prominent phone numbers (http://www.i-to-i.com)

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 Fig2.2. Marketplace analysis and Figure 2.9 Information sources

3. Transact onlineIncludes different types of transactions, not just sales, e.g. support,

forum comments, etc. 15MMK737 Online MarketingKaren Lurati

Figure 2.7 Variation of broadband penetration in different countries

Source: OECD (http://www.oecd.org/sti/ict/broadband) 16MMK737 Online MarketingKaren Lurati

Figure 2.8 Us age of mobile phones in Europe and US (data for 3-month period ending August 2006) Source: M:Metrics, 200617MMK737 Online Marketing

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Figure 2.9 Information sources used to select retailers

Source: EIAA (2008)


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Figure 2.10 Perc entage (by category) who bought online after researching onlineSource: EIAA (2008) 19MMK737 Online Marketing Figure 2.12 Development of experience in Internet usage 20MMK737 Online Marketing

Consumer characteristics

• Demographics:

– Age, gender, social group

• Webographics

– Access methods and times

• Personas:

– Dulux example


Dulux persona example• Aims:

– The aim was to position Dulux.co.uk (Figure 2.13) as “theonline destination for colour scheming and visualisationto help you achieve your individual style from the

comfort of your home”. Specific outcomes on the si te areto browse colours, add colours to a personal scrapbook,use the paint calculator and find a stockist. Further aimswere to ‘win the war before the store’i.e. to providecolour help tools that can help develop a preference forDulux before consumers are in-store and to promptother ideas to sell more than one colour at a time.

–

Specific SMART objectives were to increase the numberof Unique Visitors from 1M p.a. in 2003 to 3.5M p.a. in2006 and Drive 12% of visitors to desired outcome(e.g.order swatches). 22MMK737 Online Marketing

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Target audience variation

Based on research, it was found that the main audience for thesite 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) andlived experience (Large DIY sheds,nervous discomfort)

• - No guidance or reassurance previously available currently ontheir journey

• Colours and colour combining is key

• Online is a well-used channel for help and guidance on othertopics

• 12 month decorating cycle

• Propensity to socialise

• Quality, technical innovation and scientific proficiency of Duluxis a given 23MMK737 Online Marketing

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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


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Figure 2.13 Dulux site (www.dulux.co.uk) 25MMK737 Online Marketing

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.26MMK737 Online Marketing

Figure 2.14 Internet usage by businesses in European countries Source: European Commission, 2008.27MMK737 Online Marketing

Karen Lurati28MMK737 Online Marketing

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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 models29MMK737 Online Marketing

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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) andthey may be more likely to click on banner advertisements.

• Directed buyers. These buyers are online to purchase specific productsonline. For such users, brokers or cybermediaries that compare productfeatures and prices will be important locations to visit.

• Bargain hunters. These users (sometimes known as ‘compers’) want to findthe offers available from sales promotions such as free samples orcompetitions. For example, the MyOffers site (www.myoffers.co.uk ) is usedby many brands to generate awareness and interest from consumers.

• Entertainment seekers. These are users looking to interact with the Web forenjoyment through entering contests such as quizzes, puzzles or interactivemulti-player games. 30MMK737 Online Marketing

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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

purchaser31MMK737 Online Marketing Figure 2.16 Initial product search showing e-retailers available 32MMK737 Online Marketing

Figure 2.17 Comet product comparison facility (www.comet.co.uk): example page 33MMK737 Online MarketingKaren Lurati

3. Multichannel buying models


4 Trust-based models

Figure 2.18 A model of the relationship between different aspects of trustand consumer response based on the categories of Bart et al . (2005)


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Figure 2.19 Segme ntation based on information need and trustSource: Adapted from Forrester (2006) Teleconference Driving Sales With Segmentation Analyst: Benjamin Ensor of Forrester Research,

February 27th 2006 36MMK737 Online Marketing

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Figure 2.21 Performanc e benchmark example for Canadian banksSource: Gomez (http://www.gomez.com/products/viewbenchmark.php?btype=9) 37MMK737 Online Marketing Figure 2.22 All Things Green (www.allthingsgreen.net) 38MMK737 Online Marketing

Figure 2.24 Kelkoo.com, a European price comparison site 39MMK737 Online MarketingKaren Lurati


Porter’s five forces

Power of

suppliers

Bargaining

powers of

customers

Extent of rivalry

between

competitors

Threat of

subsitutes

Threat of new

entrants

The business


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Figure 2.25 Value creation model 42MMK737 Online Marketing

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Figure 2.26 Two alternative models of the value chain:

(a) traditional value chain model, (b) revised value chain model43MMK737 Online Marketing Figure 2.27 Lonely Planet online shop (http://shop.lonelyplanet.com) 44MMK737 Online Marketing

Disintermediation of a consumer distribution channel showing :

(a) the original situation,

(b) disintermediation omitting the wholesaler, and

(c) disintermediation omitting both wholesaler and retailer


Figure 2.30 Screentrade insurance intermediary (www.screentrade.com) 46MMK737 Online MarketingKaren Lurati

From (a) original situation to

(b) disintermediation or

(c) reintermediation or countermediation


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Different types of online trading location


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Alternative perspectives on business models


Countermediation

• Creation of a new intermediary

• Example: – B&Q www.diy.com

– Opodo www.opodo.com

– Boots www.wellbeing.com www.handbag.com


Publisher revenue models1. 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’ whereM 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. This is often called a pay-per-performance ad deal .51MMK737 Online MarketingKaren Lurati

Business-to-business publisher

EConsultancy (www.e-consultancy.com)


Peer-to-peer lending exchange, Zopa (www.zopa.com)


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Tutorial

activities

Tutorial 2

Case Study 2, Text pp. 118-20, Discussion

question.



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Chapter 3

• The Internet

macro-environment


Learning objectives• Identify the different elements of the Internet

macro-environment that impact on anorganisation’s Internet marketing strategy andexecution;

• assess the impact of legal, moral and ethicalconstraints and opportunities on anorganisation and devise solutions to

accommodate them;

• evaluate the significance of other macro-economic factors such as economics, taxationand legal constraints.


Questions for marketers

• How do I complete a situation analysis as part ofplanning for digital marketing?

• Which factors affect the environment for online tradingin a country?

• How do I make sure my online marketing is consistentwith evolving online culture and ethics?

• How do I assess new technological innovations?

• Which laws am I subject to when trading online?


Figure 3.1 ‘Waves of change’ – different timescales for

change in the environment


HSBC Virtual Forest (www.hsbc.co.uk)


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MMK737 Online Marketing Karen Lurati 61MMK737 Online Marketing Karen Lurati 62


Ethical issues

• Ethical issues concerned with personalinformation ownership have been usefullysummarised by Mason (1986) into four areas:

• Privacy – what information is held about theindividual?

• Accuracy – is it correct?

• Property – who owns it and how can ownershipbe transferred?

• Accessibility – who is allowed to access thisinformation, and under which conditions?


Legislation Summary

1 Applies to consumer marketing using e-mail or SMSmessages

2 Is an opt-in regime (consent required)

3 Requires an opt-out option for all communications

4 Does not apply to existing customers whenmarketing similar products

5 Requires that contact details must be provided

6 Requires clear From

7 Applies to direct marketing communications

8 Restricts the use of cookies65MMK737 Online Marketing

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Information flows that need to be understood for

compliance with data protection legislation


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Figure 3.6 Cruises.co.uk


Comparison of number of blog postings for three

consumer brandsSource: Nielsen BuzzMetrics’ BlogPulse (www.blogpulse.com)


Information exchange between a web browser

and a web server


Basic home page index.html for The B2B Company in a web

browser showing the HTML source in a text editor


The relationship between access to intranets, extranets and the

Internet


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Public-key or asymmetric encryption


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Using a proximity device, such as a Hypertag, to

download music tracks


Diffusion –adoption curve


Gartner hype cycleSource: Gartner (2005) Gartner’s Hype Cycle Special Report for 2005


Alternative responses to changes in technology


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Tutorial

activities

Tutorial 2

Ch.3, pg.192

- Self Assessment questions -1-6



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