lecture 2

of 42Stephen Ginns

of 42Stephen Ginns

Relate Internet marketing strategy to

marketing and business strategy

Identify opportunities and threats arising

from the Internet

Evaluate alternative strategic approaches

to the Internet.

of 42Stephen Ginns

What approaches can be used to develop

Internet marketing strategy?

How does Internet marketing strategy

relate to other strategy development?

What are the key strategic options for

Internet marketing?

of 42Stephen Ginns

What is strategy?

‘Defines how we will meet our objectives’

‘Sets allocation of resources to meet goals’

‘Selects preferred strategic options to compete

within a market’

‘Provides a long-term plan for the development of

the organisation’

of 42Stephen Ginns

Internal and external influences on Internet marketing strategy

of 42Stephen Ginns

Underestimated demand for online services

Market share loss Resource duplication Insufficient resources Insufficient customer data Reduced efficiencies available through

online marketing Fewer opportunities for applying online

marketing tools Changes required to internal IT systems Inadequate tracking Senior management support limited

of 42Stephen Ginns

of 42Stephen Ginns

Source: E-consultancy (2005)

of 42Stephen Ginns

A simple framework for Internet marketing strategy development

of 42Stephen Ginns

Dynamic e-business strategy model Source: Adapted from description in Kalakota and Robinson (2000)

of 42Stephen Ginns

Levels of web site development in: (a) the information to transaction model and (b) the transaction to information model of Quelch and Klein (1996)

of 42Stephen Ginns

1. Web presence 2. E-commerce 3. Integratede-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 ore-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

of 42Stephen Ginns

Source: E-consultancy (2005) report ‘Managing an E-commerce team’ Author: Dave Chaffey

Stage 1.

UnplannedLimited

E-commerce

maturity stage

Strategy process

and performance

improvement

process

Structure:

Location of e -

commerce

Senior

management

buy-in

Marketing

integration

Online marketing

focus

Uncontrolled

experimentationLimited Discrete

Content:

Brochureware

Stage 1.

Unplanned

Low-level

objectivesDiffuse Aware

Common

initiatives

Traffic:

visitor acquisition

Stage 2.

Diffuse

management

Stage 1.

Unplanned

Specific

organisational

objectives

Centralised InvolvedAnnual planning

collaboration

Conversion &

customer

experience

Stage 3 .Centralised management

Stage 1.

Unplanned

Refined

online channel

improvement

DecentralisedDriving

performancePartnership Retention

Stage 4.

Decentralised

operations

Stage 1.

Unplanned

Integrated

multi-channel

improvement

Integrated Integral CompleteWhole lifecycle

optimisation

Stage 5.

Integrated &

optimised

of 42Stephen Ginns

of 42Stephen Ginns

Grid of product suitability against market adoption for transactional e-commerce (online purchases)

of 42Stephen Ginns

Tangible benefits

• Increased sales from new sales leads

giving rise to increased revenue from:

• new customers, new markets

• existing customers (repeat-selling)

• existing customers (cross-selling)

• Cost reductions from:

• reduced time in customer service

• online sales

• reduced printing and distribution costs

of marcomms

Intangible benefits

• Corporate image communication

• Enhance brand

• More rapid, more responsive

marketing communications including PR

• Improved customer service

• Learning for the future

• Meeting customer expectations

• Identify new partners, support existing

partners

• Better management of marketing

information and customer information

• Feedback from customers on products

of 42Stephen Ginns

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.

of 42Stephen Ginns

of 42Stephen Ginns

Source: Friedlein (2002)

of 42Stephen Ginns

of 42Stephen Ginns

Smile (www.smile.co.uk)

of 42Stephen Ginns

of 42Stephen Ginns

Stages in target marketing strategy development

of 42Stephen Ginns

• Brand loyalists – convert online

• Not brand loyal – encourage trial

• Most profitable – deepen relationships

• Larger companies (B2B)

• Smaller companies(B2B)

• Key members of the buying unit (B2B)

• Difficult to reach using other media

of 42Stephen Ginns

of 42Stephen Ginns

Euroffice e-mail (www.euroffice.co.uk) Source: Adapted from the company web site press releases and Revolution (2005a)

of 42Stephen Ginns

Alternative positionings for online services

of 42Stephen Ginns

‘First identify customer needs and define a distinctive value proposition that will meet them, at a profit. The value proposition must then be delivered through the right product and service and the right channels and it must be communicated consistently. The ultimate aim is to build a strong, long-lasting brand that delivers value to the company marketing it.’

Varianini and Vaturi (2000)

of 42Stephen Ginns

Autotrader site (www.autotrader.co.uk) clearly communicates its proposition

of 42Stephen Ginns

BA ‘Have you clicked yet?’ campaign web site

of 42Stephen Ginns

Strategic options for a company in relation to the importance of the Internet as a channel

of 42Stephen Ginns

Flow chart for deciding on the significance of the Internet to a businessSource: After Kumar (1999)

of 42Stephen Ginns

Channel coverage map showing the company’s preferred strategy for communications with different customer segments with different value

of 42Stephen Ginns

The main challenges of e-marketing (n = 84) Source: E-consultancy (2005)

of 42Stephen Ginns

Summary of alternative organisational structures for e-commerce suggested in Parsons et al. (1996)

of 42Stephen Ginns

Options for location of control of e-commerce Source: E-consultancy (2005)

of 42Stephen Ginns

Example of risk–reward analysis

of 42Stephen Ginns

Number of Egg customers, 1998–2001Compiled from Egg Investor relations (www.egg.com and www.investis.com/eggplc)

of 42Stephen Ginns

lecture 2

Documents

integrated ecommerce

marketing department

partners strategy limited

customer service online

ebusiness culture

online marketing tools

online market share

new customers