wk04 internet marketing strategy

8/3/2019 Wk04 Internet Marketing Strategy

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Chaffey, Internet Marketing , 3rd Edition © Pearson Education Limited 2007

Slide 4.1

Chapter 4Internet marketing strategy




Slide 4.2

Learning objectives

• Relate Internet marketing strategy tomarketing and business strategy.

• Identify opportunities and threats arising

from the Internet.• Evaluate alternative strategic approaches

to the Internet.




Slide 4.3

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.




Slide 4.4

What is an E-marketing strategy?

• 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 developmentof the organisation‟




Slide 4.5

Internet -Marketing Strategy

Internet Marketing Strategy –Definition of the

approach by which Internet marketing will supportmarketing and business objectives

•Provide a future direction to Internet marketing activities

•Analysis of micro- and macro- environments to inform strategy

•Articulate Internet Marketing Objectives to support marketingobjectives

•Involve selection of strategic options

•Include strategy formulation to include typical strategy option

such as target markets, positioning and specification ofmarketing mix

•Specific how resources will be deployed and the organisationwill be structured to achieve the strategy




Slide 4.6

Influences on e-marketing strategy

Figure 4.1 Internal and external influences on Internet marketing strategy


http://slidepdf.com/reader/full/wk04-internet-marketing-strategy 7/36Chaffey, Internet Marketing , 3rd Edition © Pearson Education Limited 2007

Slide 4.7

Problems if no E-marketing strategy

• Underestimated demand for online services• Market share loss• Resource duplication• Insufficient resources• Insufficient customer data• Efficiencies available through online marketing• Opportunities for applying online marketing tools

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



Slide 4.8

Generic Strategic Approach

A generic strategic approach strategy consists ofthree (3) core activites

•strategic analysis or situational analysis•strategic development

•strategy implementation which are linked togethersequentially (see next slide)



Slide 4.9

Stages in Internet development

Figure 4.4 A simple framework for Internet marketing strategydevelopment




Slide 4.10

Generic Strategic Approach• Chaffey & Smith (2008) introduced SOSTAC framework for strategic

Internet marketing. SOSTAC stands for Situation, Objectives,Strategy, Tactics, Action & Control.

• Situation analysis means “where are we now” The planning activities

include SWOT analysis, competitive analysis and environmentalfactors.

• Objectives mean “where do we want to be” – such as projection ofsales volume or cost saving.

• Strategy means “ how do we get there” –include segmentation,targeting, branding and elements of marketing mix.

• Tactics – defines the usage of tactical digital communication tools

and specific details of marketing mix• Actions – refer to action plan

• Control – looks at the use of IT including web analysis to assessstrategic and tactical objectives are achieved and how to enhanceresults further.

Slid




Slide 4.11

Generic Strategic Approach

Kalakota & Robinson (2000) had also recommended a

dynamic, emergent strategic process specific to e-business.

The emphasis is on responsiveness with continuousreview and prioritisation of investment in new Internet

applications

Clearly, the quality of environment scanning andinformation collection and analysis and the speed ofresponse will be key for organisations following such a

responsive, emergent approach (see next slide)

Slid 4 12




Slide 4.12

Dynamic strategy model

Figure 4.5 Dynamic e-business strategy modelSource : Adapted from description in Kalakota and Robinson (2000)

Slid 4 13




Slide 4.13

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

Organisational

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 eg

using ERP

Slide 4 14




Slide 4.14

Figure 4.7 A generic SWOT analysis showing typical opportunities and

threats presented by the Internet

Slide 4 15




Slide 4.15

Internet marketing benefits

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 ofmarcomms

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

Slide 4 16




Slide 4.16

Product suitability to e-commerce

Figure 4.8 Grid of product suitability against market adoption for

transactional e-commerce (online purchases)

Slide 4 17




Slide 4.17

Strategic Objective Settings• Achieve 10 per cent online revenue contribution within

two years;

• Achieve online market share and can be measuredthrough visitor rankings or better by online revenueshare;

• Cost reduction in marketing communications within twoyears;

• Increase retention of customers by 10 per cent;• Increase by 20 per cent 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 aquery within two hours, 24 hours per day, seven days aweek;

• All other objectives to be achieved profitably giving areturn on investment in a three year period.

Slide 4 18




Slide 4.18

Balanced Score Card

Balanced Business Scorecard – a framework forsetting and monitoring business performance.

Performance metrics are structured according to

•Customer Value,•Internal Process Efficiency,

•Financial measures

•Innovations & Learning

Slide 4.19




Slide 4.19

Table 4.4 Example allocation of Internet marketing objectives within the

balanced scorecard framework for a transactional e-commerce site

Slide 4.20




Strategy Formulation

Strategic formulation – generation, review and

selection of strategies to achieve objectives, Strategicformulation involves the following approaches:

Decision1 : Market & Product Development strategies

Decision 2: Business models strategies

Decision 3: Target marketing strategies

Decision 4: Positioning & Differentiation strategies

Decision 5: Multi-channel Distribution strategy

Decision 6: Multi-channel Communications strategy

Decision 7: Online Communications Mix

Decision 8: Organisational Capabilities

Slide 4.21




Examples between Objective & Strategy

• Acquisition Objective – to acquire 50,000 new online

customers for this financial year.• Strategy –Start affiliate marketing and improve search

engine optimization (SEO)

• Retention Objective – to increase annual repeat

customers by 20 %• Strategy –Delivery by email of personalised product

offerings and implement 2nd purchase incentives

• Growth Objective – to increase new prospects by 10,000

per year• Strategy - Supported by direct mail and e-mail marketing

Slide 4.22




Figure 4.10 Using the Internet to support different growth strategies

Market & Product Development Strategies

Slide 4.23




Target marketing

Figure 4.12 Stages in target marketing strategy development

Slide 4.24




Figure 4.14 Customer lifecycle segmentation – by analysis of customerdatabase, the marketer will be able to build up detailed purchasedhistory which considers the details of recency, frequency, monetary valueor RFM and category of products purchased by customers for a month

Slide 4.25




Positioning Strategies

Product Performance Excellence – enhanced

by providing online product customisation

Price Performance Excellence – AirAsia usesthe Internet to offer favourable prices to loyalcustomers or to reduce prices when demand is

low

Transactional Excellence – combining pricinginformation with dynamic availability informationon products, stock level, number on orders and

when they are expected

Relationship Excellence – via personalisationfeatures to enable customers to repeat orders

Slide 4.26




Alternative positionings for online services

Figure 4.16 Alternative Positioning for online services

Slide 4.27




Online Value Proposition - OVP

Online value proposition –a statement of the benefitsof online services reinforces the core proposition anddifferences from an organisation‟s offline offering and

those of competitors

Example1 : Airlines offering lower-cost flights foronline booking.

Example 2 : Mobile phone providers offeringdiscounts for customers who manage online

accounts without paper billing. (Post paid customers)

Companies must communicate these benefits to allonline and offline customers interfaces



Slide 4.29




Multi-Channel Distribution Strategy

Distribution channel refers to flow of productsfrom a manufacturer or service provider to the endcustomers

Internet distribution strategies can be asfollows:

•Brick and Mortar

•Clicks and Mortar

•Clicks only or Internet pure play

Slide 4.30




Figure 4.19 Strategic options for a company in relation to the importance of the

Internet as a channel

Slide 4.31




Multi-Channel Communications Strategy

The multi-channel communications strategy must review thedifferent type of customer contacts with the company.

The main type of customer contacts and correspondingstrategies will be:

• In bound Sales Enquiries - Customer Acquisition Strategy

• Customer Support Enquiries – Customer Service Strategyeg online help, online feedback, online service, etc

• Out bound Contacts such as email, forums, blogging, etc- Customer Retention Strategy

Slide 4.32




Figure 4.21 Channel coverage map showing the company’s preferred

strategy for communications with different customer segments withdifferent value

Slide 4.33




Types of Organisation Structures for E-commerce

a) No formal structure or distributed

b) A separate committee or department manages and

coordinates e-commerce or matrix control

c) A separate business unit with independent budgets ornew division

d) A separate operating company or autonomouscompany

Slide 4.34




Figure 4.23 Summary of alternative organisational structures for e-commerce suggested in Parsons et al. (1996)

Slide 4.35




Portfolio Analysis

• Portfolio Analysis – identification, evaluation andselection of desirable marketing applications.

• The marketing applications includes:

1. Online catalogue facility or brochure ware

2. E- CRM (customer relationship management system)3. Transactional e-commerce facility

4. Auto-responder facility (Auto –email)

5. Telemarketing facility

6. Many other applications

Slide 4.36



Risk/reward analysis

Figure 4.26 Example of risk –reward analysis. The options for E-CRMcustomer service and lead generation and partner extranet offer

best mix of risk and rewards

wk04 internet marketing strategy

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