Mark 404 – Internet Marketing

Mark 404 – Internet Mark 404 – Internet MarketingMarketing

Chapter 3: Marketing Strategy in Internet Chapter 3: Marketing Strategy in Internet MarketingMarketing

Presented by: Holly Chen & Presented by: Holly Chen & Belinda CollinsBelinda Collins

ContentsContents

The link between Business Unit Strategy & The link between Business Unit Strategy & Marketing strategyMarketing strategy

Marketing Strategy: A Basic ReviewMarketing Strategy: A Basic Review Internet Marketing strategies – Pure play vs Internet Marketing strategies – Pure play vs

Bricks-and-mortarBricks-and-mortar

Business-level strategy vs Marketing Business-level strategy vs Marketing StrategyStrategy

KEY CONCEPT: There must be a fit between KEY CONCEPT: There must be a fit between Business-level strategy & Marketing strategyBusiness-level strategy & Marketing strategy

……the business strategy directs the choices the business strategy directs the choices made in the marketing strategy, so there must made in the marketing strategy, so there must be an ALIGNMENT between the two be an ALIGNMENT between the two strategies, e.g.strategies, e.g.

The four alignments required for a good The four alignments required for a good business & marketing strategy fitbusiness & marketing strategy fit

Goal AlignmentGoal Alignment

Activity AlignmentActivity Alignment

Implementation Alignment

Implementation Alignment Resource AlignmentResource AlignmentFitFitFitFit

Mohammed, Fisher, Jaworski & Paddison, (2004)

Question time:Question time:

1. What are the three key components of 1. What are the three key components of marketing strategy?marketing strategy?

2. What are the 4 aspects that contribute to 2. What are the 4 aspects that contribute to positioning and target-market selection…hint, positioning and target-market selection…hint, they all start with P!they all start with P!

The 3 key components of traditional The 3 key components of traditional marketing strategiesmarketing strategies

Segmentation, Targeting & PositioningSegmentation, Targeting & Positioning

Product Promotion

Price Distribution

Positioning and

Target-Market

Selection

Marketing Strategy Decisions


Segmentation prioritizationSegmentation prioritization

Firms prioritize segments based on selling Firms prioritize segments based on selling potential and/or market size. Firms must target potential and/or market size. Firms must target customers who are:customers who are: Buyer-ready (ready to buy today)Buyer-ready (ready to buy today) Receptive attitude (to the product)Receptive attitude (to the product) If a new product: target trend/market leaders firstIf a new product: target trend/market leaders first Target only those willing to pay for the Target only those willing to pay for the

product/serviceproduct/service

Example of segmentation at work…Example of segmentation at work…


Segmentation example 2…Segmentation example 2…


Internet Marketing Strategies:Internet Marketing Strategies:Pure PlayPure Play

The marketing strategies for The marketing strategies for pure play companies are pure play companies are significantly different to significantly different to traditional firms because:traditional firms because:

Pure plays do not need to Pure plays do not need to integrate their online & integrate their online & offline strategiesoffline strategies

Their segmentation is more Their segmentation is more complex because geographic complex because geographic boundaries are broken, so boundaries are broken, so there is more potential there is more potential customers in more regions of customers in more regions of the world to be targetedthe world to be targeted

Online Business-Unit

Strategy

Online Business-Unit

Strategy

Marketing Strategy for

Online Business


Online Business

Choices 1. Segmentation 2. Target market selection 3. Positioning

Pure Play


Segmentation & target market Segmentation & target market selection for Pure Playsselection for Pure Plays

Effective segmentation must be: Meaningful, Effective segmentation must be: Meaningful, Actionable and Financially AttractiveActionable and Financially Attractive

The most attractive target market is identified The most attractive target market is identified by: Segment Size & Growth, Structural by: Segment Size & Growth, Structural Attractiveness (profitable entry?), and Attractiveness (profitable entry?), and company resources (alignment of company company resources (alignment of company capabilities & resources)capabilities & resources)

Positioning for pure plays…Positioning for pure plays…

Very similar to Very similar to traditional marketing traditional marketing strategy positioning strategy positioning although must be although must be applied to the online applied to the online marketmarket

Positioning on user categoryPositioning on user category

Positioning on specific usage occasionsPositioning on specific usage occasions

Positioning on benefitsPositioning on benefits

Positioning on features/servicePositioning on features/service

Positioning against another productPositioning against another product

Product-class positioningProduct-class positioningMohammed, Fisher, Jaworski & Paddison, (2004)

Five step positioning model for pure Five step positioning model for pure plays:plays:

Identify actualproduct positioning

Determine ideal product position

Develop alternate strategies for

achieving ideal product position

Select andimplement the

most promisingalternative

Compare new actual position with

ideal position

Uses a perceptual map to identify the variables that matter to consumers when they make purchases

Generates alternatives for either repositioning to reach ideal state or the introduction of a new product

Chooses plan that is most consistent with the company’s objectives, resources and strengths

Evaluates outcome of positioning efforts

Identifies the most favorable placement on the perceptual map that the product could occupy


Bricks and Mortar Bricks and Mortar CompaniesCompanies

(BAM) Internet Strategies(BAM) Internet Strategies

……Bricks-&-MortarBricks-&-Mortar

Bricks-&-Mortar firms Bricks-&-Mortar firms on the other hand, need on the other hand, need to integrate their to integrate their Business-Unit Strategy Business-Unit Strategy with their internet with their internet strategy to align their strategy to align their offline capabilities with offline capabilities with their online potentialtheir online potential

Business-Unit Strategy

Business-Unit Strategy

Overall Online Offline

Integrated Marketing Strategy

Integrated Marketing Strategy


Offline Business


Offline Business


Online Business


Online Business

Choices 1. Same vs. different segment 2. Same vs. different target market 3. Same vs. different positioning

Bricks-and-Mortar


Bricks-&-Mortar segmentation changes Bricks-&-Mortar segmentation changes due to internet introduction:due to internet introduction:

Segmentation will either Segmentation will either result in:result in:

Reclassified expansion – Reclassified expansion – when segments change in when segments change in both size & characteristicsboth size & characteristics

Market reclassification – Market reclassification – when customer segments when customer segments are different on the are different on the internetinternet

Market Expansion – Market Expansion – characteristics are the characteristics are the same for online & offline same for online & offline segmentssegments

No changeNo change

Change in Segmentation Characteristics Due to Internet

Changes in Size of Market Segments

Market Expansion Reclassified —

Expansion

Market ReclassificationNo

No Yes

Yes

No Change


Bricks-&-Mortar targeting Bricks-&-Mortar targeting strategies onlinestrategies online

Segment characteristics stay the Segment characteristics stay the same, but size may increase. same, but size may increase. Online capabilities are a product Online capabilities are a product enhancement, appealing to all enhancement, appealing to all targeted customers. targeted customers.

Online capabilities are a product Online capabilities are a product enhancement, appealing to only enhancement, appealing to only a subset of customers. a subset of customers.

New capabilities online appeal New capabilities online appeal to new online segments as well to new online segments as well as offline ones. as offline ones.

New capabilities offer online New capabilities offer online appeal to only online customers. appeal to only online customers.

Bleed-Over TargetingBleed-Over Targeting

Blanket TargetingBlanket Targeting

Beachhead TargetingBeachhead Targeting

New Opportunity TargetingNew Opportunity Targeting


Framework to target segments…Framework to target segments…

Entire Current Segment

Portions of a Segment

Different CustomersSame Customers

Blanket Targeting New Opportunity

Beachhead Targeting Bleed-Over Targeting

Customer Similarity

Serve Same Segment Online as

Offline

Serve a Portion of

Offline Segment

Online

Serve New Segment

Online

Serve Part of Offline

Segment as Well as New

Segment Online


Positioning strategies continued…Positioning strategies continued…

Focus of Effort

Blanket Targeting New Opportunity Targeting

Bleed-Over Targeting

Portions of a Segment

Entire Segment

Beachhead Targeting

Same Customers Different Customers

Customer Similarity

Borrow heavily from existing offline positioning

Tout basic advantages of the Internet—convenience and accessibility

Reposition entirely Position differentiations

that cater to the new segment

Also borrow from offline positioning

Focus more, however, on needs of the smaller group

Stress value-add of the Internet

Use dual positioning Leverage existing

positioning Position added benefits,

such as augmented offerings via the Internet (e.g., increased product customizability)


SummarySummary Business-Unit Strategy must “fit” with Marketing Strategy to Business-Unit Strategy must “fit” with Marketing Strategy to

ensure that there is alignment between goals, resources, ensure that there is alignment between goals, resources, activities and implementation of strategies.activities and implementation of strategies.

The three key components of traditional marketing strategies The three key components of traditional marketing strategies also apply to pure play companiesalso apply to pure play companies

Internet marketing is more complex for Bricks-&-Mortar Internet marketing is more complex for Bricks-&-Mortar companies because they must integrate their traditional companies because they must integrate their traditional strategies with their internet strategiesstrategies with their internet strategies

Segmentation is more complex for Pure Play companies Segmentation is more complex for Pure Play companies because geographic boundaries are brokenbecause geographic boundaries are broken

Segmentation for BAM companies may result in new segment Segmentation for BAM companies may result in new segment characteristics and sizes, as well as the ability to meet new characteristics and sizes, as well as the ability to meet new customer’s needs from different locationscustomer’s needs from different locations

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Mark 404 – Internet Marketing