Online Marketing Strategy (McGill)

Where are we going?

Friday, November 20, 2009

Nothing sells like


Text

Strategy without tactics is the slowest route to victory.

Tactics without strategy is the noise before defeat.


A strategy is a long term

plan of action

in order to achieve

a particular outcome.


A tactic is a specific method or action that


Children as a business model?Ben Stein


8 Keys to a business

modelFriday, November 20, 2009

1. Value Proposition

The Why?


Fresh food from the

growers to the people


Fresh food from the

growers to the people


•Webvan lost over 1 billion


Fresh Direct founded in 2002

270 million in sales40k orders a week$145 avg. OrderDelivery $6.49


Focus

Fresh

NO free shipping

Technology Success


2. Revenue Model


• Ad Revenue / AOL

• Subscription / Netflix

• Sales- Retail / AMAZON

• Transaction Fee / Etrade

• Affiliate / Linkshare




US$160 Million


3. Market Opportunity


HSN

20%

22%

16%

43%

TV OFFLINECATALOG ONLINE


Market opportunity analysis!

Look at Value System to

Discover New Business

Opportunities !

Liberate Trapped

Value!

Introduce New-to-

the-World Value!

Create More Efficient Markets, e.g., eBay!

Enable Ease of Access, e.g., Gap!

Customize Offerings, e.g. MyYahoo!

Extend Reach and Access, e.g., keen.com!

Create More Efficient Systems, e.g., FedEx!

Disrupt Current Pricing Power, e.g., Priceline!

Build Community, e.g., MyFamily.com!

Enable Collaboration, e.g., ProjectPoint!

Introduce New Functionality/Expertise, e.g., C-Mode!


Market opportunity analysis!

Customer!

Technology!

Competition!

Company!


Identify customer needs P

ostp

urc

hase

Search for Availability Read Reviews Review Contents

Evaluation

!Problem Recognition

Information Gathering

!Purchase Decision

!Satisfaction

Pre

pu

rch

ase

Pu

rch

ase

Need for Activity/Class Gift Interested in Author/

Subject Matter

Good Quality of Contents Arrived on Time

!Loyalty

Quality Price Availability Fits Needs

Purchase Online Purchase Offline

Easy Buying Experience

Repeat Purchases High Percentage of

Consumers’ Book

Purchases

The “Customer Decision Process” framework: analyze and discover customer needs


4. Competitive Environment


What do they have in common


Strategic analysis

When it comes to competitors, remember the Information Economy.

Who is competing with you on CUSTOMER ATTENTION.

It might not be the obvious candidate.



Assess competitive advantages

Direct competitors

–! Firms offering products or services that are “close

substitute”

–! Rivals in the same industry

Indirect competitors

–! Substitute Producers

•! Firms that, though they reside in different industries, offer

products and services that perform the same function

–! Adjacent Competitors

•! Firms that have the potential to provide products or services

that are substitutes


5. Competitive Advantage


First Mover




Background

• Founded in 1998 by now CEO Mark Vadon

• Based in Seattle

• Went public in May 2004

• Largest online retailer of diamonds and other jewelry

• 159 employees


Firm Statistics

• Profits have risen 24% since 2005

• Current market value of $1 B

• Online market share 50%

• Stock valued at around $56 a share


Technology• Offers unique programs through website

– Ex. “Build Your Own Ring”

• Point of sale system

– Knowing their customer

• Personal website

– My Blue Nile


Competitive Advantage

• Exclusive contracts & distribution rights with diamond suppliers

• Low acquisition costs

– Creates barriers to entry for competitors

• Purchases diamonds after customers pay

– Allows for a negative working-capital cycle


Competitive Advantage

• Doesn’t keep inventory

• Price transparency

– Compare prices, can choose cheaper diamonds

• Large selection

– Over 60,000 diamonds to choose from


Rival Firms

• Traditional brick and mortar jewelers

– Zale

– Tiffany’s

– Ice.com

• eBay and Amazon

• Department / Super stores

– Macy’s

– Wal-MartFriday, November 20, 2009

Opportunities/Threats

• Rising costs

– online marketing, diamond prices

• Diamonds as a commodity

• Complexity of predicting future sale growth

• Trying to expand in European market

• Customers want to feel diamonds


7. Market Strategy

Search SEO/SEM Email Comparison

Viral Marketing

Social Media Affiliates


Customers Spread the word


7. Org. Development


8. Management team


Internet business models


B2C B2B

C2C C2B




P

PEOPLE


Products

• Products can be digital (e.g. software)

• Technology aids with developing new products, whether digital or not


Price

• Easier access to comparative websites allows consumers to find lowest price

• Organisations need to differentiate themselves, but should not rely on price


Placement

• Digital products can be digitally distributed (e.g. download MP3)

• Stores can be online (e.g. Amazon)


Promotion

• The Internet provides a wealth of promotional tools

• Advertising, personal sales, promotions, public relations and more can be conducted online

• Importantly: customers as promoters


What about “new” Ps?


What about “new” Ps?


Idris Mootee’s 4 New Ps



1. Personalization

• Internet allows for Mass Customization

• Marketing

• Products

• Experience


Converse allows customers to create their own shoes.

Text

1. Personalization



2. Participation

• Social media

• Consumers collaborate with companies to create products

• Rapid feedback loop


2. Participation


3. Predictive modeling


Peer-to-Peer

• Most trusted is “someone like me”

• Social networks encourage interactions

• Word of mouth can be more easily tracked

• Equip engaged users with tools to promote


What are their needs? What problems do they have that you can solve?


Make the customer the

centre

of your marketingFriday, November 20, 2009

What is a cynic? A man who knows the price of everything and the value of nothing.

Price


Product

• Does your product fulfill customer needs?


Product

• Does your product fulfill customer needs?


Making money is a hobby that will complement any other hobbies you have


Placement


Promotion

• The Internet was created to share information, not to market products

• How can you harness customer needs online?


Developing a marketing plan


1. Know yourself and your market

• Internal audit and market review

• Who are we?

• Who are our customers and what are their needs?

• What is the social context?



2. Strategic analysis

• Thorough market analysis

• Strength’s, Weaknesses, Opportunities, Threat



3. Set objectives

• What are the desired outcomes?

• What are the specific goals?

• How will success be measured?


4. Generate strategies and tactics

• The nitty gritty: what are you actually going to do?


5. Evaluate strategies

• Budget and resources

• Prioritize

• SWOT


helpful harmful

strengths weaknesses

opportunities threats

exte

rnal

inte

rnal


6. Implement

Just do it


7. Track, Analyze, Optimize

• Online, be flexible

• Track, and adapt as required.


What does what?


Tactic OutcomeEmail Marketing Customer Retention

Online Advertising Acquisition Branding

Affiliate Marketing Acquisition Branding

SEO /SEM Acquisition Branding

Social Media Branding Participation

Viral marketing Branding Participation


Education

Online Marketing Strategy (McGill)