Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.1 Chapter 4 Internet marketing strategy

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.1

Chapter 4Internet marketing strategy


Learning objectives

• Relate Internet marketing strategy to marketing and business strategy;

• identify opportunities and threats arising from the Internet;

• evaluate alternative strategic approaches to the Internet.


Questions for marketers

• How does Internet marketing strategy relate to other strategy development?

• What are the key strategic options for Internet marketing?


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.


Influences on e-marketing strategy

Figure 4.1 Internal and external influences on Internet marketing strategy


Stages in Internet development

Figure: A simple framework for Internet marketing strategy development


Strategy development process

Figure: A ten-step strategic marketing planning processSource: McDonald, 1999


E-business strategy model

E-business strategy incorporated as part of business strategy

E-commerce strategy integrated with business strategy using a value-chain approach

Sell-side e-commerce strategy, not well integrated with business strategy

LimitedStrategy

Change to e-business culture, linking of business processes with partners

Internal business processes and company structure

Technology and new responsibilities identified for e-commerce

Technological infrastructure

Transformation

Across the enterprise and beyond (extraprise)

Cross-organisationalCo-ordination through steering committee or e-commerce manager

Departments acting independently, e.g. marketing department, IS department

Organisational scope

Full integration between all internal organisational processes and elements of the value network

Buy and sell-side integrated with ERP or legacy systems. Personalisation of services

Transactional e-commerce on buy-side or sell-side. Systems often not integrated

Brochureware or interaction with product catalogues and customer service

Services available

4. E-business3. Integratede-commerce

2. E-commerce1. Web presence


Types of web presence

1. Transactional e-commerce site. 2. Services-oriented relationship

building web site. 3. Brand-building site. 4. Portal site.


Demand analysis – car market

Figure 4.6 Customer demand analysis for the car market


Demand analysis – new vs existing

Figure 4.7 Demand analysis assessing the ratios Access : Choose : Buy for (a) new customers and (b) existing customers


Internet SWOT

Figure 4.8 A generic SWOT analysis showing typical opportunities and threats presented by the Internet


Internet marketing benefitsTangible 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 marketing communication tools

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


Sample 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 (Chapter 2) 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.


Online revenue contribution examples

Table: Variations in online revenue contribution


Product suitability to e-commerce

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


The value proposition

‘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)


Strategy options

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


Risk/reward analysis

Figure: Example of risk–reward analysis

Documents

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.1 Chapter 4 Internet marketing strategy