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Conventional vs. Internet Marketing Promotions - Relevance to the Hong Kong Market
Class: MKT6215B
Professor: Alan Tse
Team: Amy Lui, Anthony Lau, Edwin Poon, Sarah Cheng, Terence Lee
ContentsGeneral Overview - From Conventional Marketing to
Internet Marketing promotion
Characteristics of Internet Marketing promotion
Internet Marketing Challenges
Internet Marketing in Hong Kong
Case Study - HSBC Marketing Campaign
Conclusion
Conventional Marketing Promotion
• Strategy: Mass Brand Marketing
• Media– Newspaper
– Outdoor Display
– Direct Mailing
– Phone Selling (with preprinted materials)
– Radio
– TV
Conventional Marketing Promotion
• Characteristics– Single promotion message
– Cost effective for large but simple society
– Mass Media Channels
– Mostly One-Way Communications
– Easy to execute and control
– Predictable based on experience
– Scalable
– “Interruption Marketing”
– Becoming less effective in the cluttered up market
Internet Marketing
• Impacts to the Marketing world– 2-way communications
– May improve marketers’ understanding of consumer needs
– Creative approaches made easier
– Measurability of Internet Ads and Tailored Pricing lead to similar expectation on Conventional Marketing
Internet Marketing Channels
• Banner Ads
• E-Newsletters
• Editorial Sections
• Email Marketing (Most Cost Effective! *)– Retention-based, Sponsored, or Acquisition-
based
Internet Marketing Challenges
• New Technologies, Old Goal
• Know how to best use the new tools
• From awareness to actual purchase
• Shift of Power to Customers
• Better Market Information
• Sophisticated Customer Management
Internet Marketing in Hong Kong
• General Trends– Increased awareness and acceptance
– click rate of online ads increased from 0.35% to 0.59%
– 60% of online users were aware of the ads
– Brand awareness of online ads was 32%
– 80% respondents found ads more interactive
– 71% respondents found ads more informative
Source: Survey by Hong Kong Productivity Council (3/2000 – 1/2001)
Internet Marketing in Hong Kong
• Characteristics of Online Advertisement
– Revenue: HK$167 million for the first nine months of 2000
– Modes:
• 51% banner ads
• 45% content sponsorship
• Only 4% emails and e-Newsletters !
Internet Marketing in Hong Kong
• Characteristics (continued)
– Most frequently advertised products
• Consumer goods (54%)
• Telecommunication services (11%)
• Computer products (12%)
• Business services (8%)
• Financial services (7%)
Internet Marketing in Hong Kong
• Characteristics (continued)– Pricing: “hybrid basis”, i.e., mix of
impression-based pricing and performance-based compensation
– Methods of Payment• 91% cash
• Exchanges of business opportunities
• Bartering”, or exchanges of advertisements
Internet Marketing in Hong Kong
• Factors hindering growth– Still in infancy stage
– Small proportion of all marketing revenue
– Concentration on technology-related goods, financial services, and small dot-com’s
– Banner ads in popular websites in Hong Kong were advertisements relating to the websites themselves
– Top 20 dot-com’s in Hong Kong relied heavily on conventional marketing
Source: AC Nielsen e-Rating research conducted in late 2000
Internet Marketing in Hong Kong
• Factors hindering growth (continued)
– Companies are reluctant to invest in online advertising until the online marketing industry becomes more mature
– Shortage of advertising revenues in turn slows down the development of Internet Marketing
Internet Marketing in Hong Kong
• Summary
– Efficient, cost effective
– 2-way, interactive communication
– New challenge on customer relationship management
– Conventional Marketing still dominates
Some background information to begin with…
• 6500 offices in 79 countries, with assets over US$673 billion at 31/12/2000
• 70% of HK bankable population have at least one account with HSBC
• First brochureware-intensive website launched in 1998
• Online@hsbc was launched 8/2000 by Project Leapfrog which started in 6/2000
Some background information to begin with…
• By 2/2001, HSBC has become the biggest online banking provider in HK, with 130,000 customers registered through online@hsbc (80% according to AC Nielsen)
• Achieved 1 million daily hit rate and 1.3 million unique visitors per month
• Online@bsbc services include applications for Credit Cards, Loan, Insurance, and security accounts
Challenges…
• No e-commerce Customer Relationship Management (CRM) system implemented nor sufficient data warehousing capability to “mine” the customer information collected online
• Need an effective email broadcasting engine
Overall objectives of the 2001 email campaigns…
• In 2/2001 HSBC budgeted HK$2M to :
– Collect 240,000 email address by end of 2001
– Run email marketing campaigns yielding a target of 20% click-through rate by end of 2001
Overall tactics of the 2001 email campaigns:
• Develop email marketing campaigns on revenue generating products – insurance, loan, credit card, and Investment products
• Test Cross-selling techniques
• Leverage viral marketing techniques
• Create synergy with offline marketing campaigns
1st email campaign:The Sony Lucky Draw• A lucky draw featuring Sony products worth HK$40,000
• Run from 1 to 25 March 2001
• Cost: HK$149,000– 28%: Design & Creative work
– 45%: Email broadcasting services
– 27%: Prizes & Incentives
• Simple 2-step online entries1. Email address
2. HKID number and 5 personal preferences
Objectives of the 1st email campaign
• Clean HSBC’s existing emails list
• Collect valid email address
• Collect HKID for future mapping purpose
• Collect customers’ lifestyle information
• Evaluate viral marketing through users’ invitation to family members and friends to participate in the lucky draw
How does it compare to conventional campaigns?
• Shorter Campaign Lead Time: 4 weeks from project proposal to campaign kick-off
• Easier content amendment during the campaign
• Lower Cost: HK$108,770 for 31,797 emails broadcasted, excluding prizes and incentives – 75% ~ 90% lower than conventional direct mailing campaigns
How does it compare to conventional campaigns?
• Higher response rate: 10.4% compared to 2% ~ 3% for conventional direct mailing campaigns. The visit rate was 772,214 hits during the campaign period of 1-25 March 2001
• Convenient to introduce “Referral Program” simply by adding a Forwarding function
• Effective viral marketing: higher response rate from potential customers (1,014 emails) if they are referred by family members and friends
How does it compare to conventional campaigns?
• Lower unit cost of acquisition: email addresses were acquired at HK$6.2 each compared to HK$20 ~ HK$100 per unit feedback from conventional direct mailing
• High click through rate on banner: 2.5% compared to industry average of 0.4%
How does it compare to conventional campaigns?
• Shorter response lead time: campaign closed immediately on 25/3/2001 without having to wait for 2 to 4 more weeks for mail-in responses
• Quicker response to customers: lucky draw results were delivered to public only 5 days after the cut-off date
Conclusion
• Higher response rate
• Lower unit cost
• Shorter campaign rollout time
• Better data utilisation through software applications
• Customers are happier with Permission Marketing instead of Interruption Marketing
• Marketers must overcome the challenges to enjoy the benefit
Cost HK$149,000
Emails Collected / Collected with HKID)
23,899 / 11,755
Lucky Draw visit rate 772,214 hits
Emails opened 5,817 (17.71%)
Emails opened AND Lucky Draw participated
3,419 (10.41%)
Responses originating from HSBC homepage
8,725
Responses from “friend-get-friend”
477 referrals and 1,014 emails collected
Responses on banner ads & messages on HSBC websites
19,054
Email acquisition cost HK$6.20/Each
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