Slide 4.

Chapter 4 Internet marketing strategy

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

Slide 4.2

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.

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

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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, 6278.

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

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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 development of the organisation
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

Slide 4.5

Internet -Marketing Strategy

Internet Marketing Strategy Definition of the approach by which Internet marketing will support marketing 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 marketing objectives

Involve selection of strategic options

Include strategy formulation to include typical strategy option such as target markets, positioning and specification of marketing mix

Specific how resources will be deployed and the organisation will be structured to achieve the strategy
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

Slide 4.6

Influences on e-marketing strategy

Figure 4.1

Internal and external inuences on Internet marketing strategy

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

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

Slide 4.8

Generic Strategic Approach

A generic strategic approach strategy consists of three (3) core activites

strategic analysis or situational analysis

strategic development strategy implementation which are linked together sequentially (see next slide)

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

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Stages in Internet development

A simple framework for Internet marketing strategy development Chaffey, Internet Marketing, 3 Edition Pearson Education Limited 2007
Figure 4.4
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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 environmental factors. Objectives mean where do we want to be such as projection of sales 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 assess strategic and tactical objectives are achieved and how to enhance results further.
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

Slide 4.11

Generic Strategic Approach

Kalakota & Robinson (2000) had also recommended a dynamic, emergent strategic process specific to ebusiness. The emphasis is on responsiveness with continuous review and prioritisation of investment in new Internet applications Clearly, the quality of environment scanning and information collection and analysis and the speed of response will be key for organisations following such a responsive, emergent approach (see next slide)

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

Slide 4.12

Dynamic strategy model

Figure 4.5

Dynamic e-business strategy model

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

Source: Adapted from description in Kalakota and Robinson (2000)

Slide 4.13

E-business strategy model

1. Web presence 2. E-commerce 3. Integrated e-commerce Buy and sell-side integrated with ERP or legacy systems. Personalisation of services Cross-organisational 4. E-business

Services available

Brochureware or interaction with product catalogues and customer service

Transactional ecommerce on buy-side or sell-side. Systems often not integrated Co-ordination through steering committee or e-commerce manager Technology and new responsibilities identified for e-commerce Sell-side e-commerce strategy, not well integrated with business strategy

Full integration between all internal organisational processes and elements of the value network Across the enterprise and beyond (extraprise)

Organisational scope

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

Transformation

Internal business processes and company structure E-commerce strategy integrated with business strategy using a value-chain approach

Change to e-business culture, linking of business processes with partners E-business strategy incorporated as part of business strategy eg using ERP

Strategy

Limited

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

Slide 4.14

A generic SWOT analysis showing typical opportunities and threats presented by the Internet
Figure 4.7
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

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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 of marcomms 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

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

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Product suitability to e-commerce

Grid of product suitability against market adoption for transactional e-commerce (online purchases)
Figure 4.8
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

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Achieve 10 per cent online revenue contribution within two years; Achieve online market share and can be measured through visitor rankings or better by online revenue share; Cost reduction in marketing communications within two years; 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. 1825-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.
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

Strategic Objective Settings

Slide 4.18

Balanced Score Card

Balanced Business Scorecard a framework for setting and monitoring business performance.
Performance metrics are structured according to

Customer Value,
Internal Process Efficiency, Financial measures

Innovations & Learning

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

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Example allocation of Internet marketing objectives within the balanced scorecard framework for a transactional e-commerce site
Table 4.4
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

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Strategy Formulation
Strategic formulation generation, review and selection of strategies to achieve objectives, Strategic formulation 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
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

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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

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

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Figure 4.10

Using the Internet to support different growth strategies

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Market & Product Development Strategies Internet Marketing, 3 Chaffey,

Edition Pearson Education Limited 2007

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Target marketing

Figure 4.12

Stages in target marketing strategy development

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

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Customer lifecycle segmentation by analysis of customer database, the marketer will be able to build up detailed purchased history which considers the details of recency, frequency, monetary value or RFM and category of products purchased by customers for a month
Figure 4.14
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

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Positioning Strategies
Product Performance Excellence enhanced by providing online product customisation

Price Performance Excellence AirAsia uses the Internet to offer favourable prices to loyal customers or to reduce prices when demand is low
Transactional Excellence combining pricing information with dynamic availability information on products, stock level, number on orders and when they are expected Relationship Excellence via personalisation features to enable customers to repeat orders
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

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Alternative positionings for online services

Figure 4.16

Alternative Positioning for online services

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

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Online Value Proposition - OVP

Online value proposition a statement of the benefits of online services reinforces the core proposition and differences from an organisations offline offering and those of competitors Example1 : Airlines offering lower-cost flights for online booking.
Example 2 : Mobile phone providers offering discounts for customers who manage online accounts without paper billing. (Post paid customers) Companies must communicate these benefits to all online and offline customers interfaces
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

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BA Have you clicked yet? campaign web site In 2004, BA developed a specific online advertisement campaign to create awareness and encourage usage of online services Marketing, 3 Edition Pearson Education Limited 2007 Chaffey, Internet
Figure 4.18
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Slide 4.29

Multi-Channel Distribution Strategy

Distribution channel refers to flow of products from a manufacturer or service provider to the end customers Internet distribution strategies can be as follows: Brick and Mortar Clicks and Mortar Clicks only or Internet pure play

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

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Strategic options for a company in relation to the importance of the Internet as a channel
Figure 4.19
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

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Multi-Channel Communications Strategy

The multi-channel communications strategy must review the different type of customer contacts with the company. The main type of customer contacts and corresponding strategies will be: In bound Sales Enquiries - Customer Acquisition Strategy Customer Support Enquiries Customer Service Strategy eg online help, online feedback, online service, etc Out bound Contacts such as email, forums, blogging, etc - Customer Retention Strategy

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

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Channel coverage map showing the companys preferred strategy for communications with different customer segments with different value
Figure 4.21
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

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 or new division

d) A separate operating company or autonomous company

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

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Summary of alternative organisational structures for ecommerce suggested in Parsons et al. (1996)
Figure 4.23
Chaffey, Internet Marketing, 3rd Edition Pearson Education Limited 2007

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Portfolio Analysis

1. 2. 3. 4. 5. 6.

Portfolio Analysis identification, evaluation and selection of desirable marketing applications. The marketing applications includes: Online catalogue facility or brochure ware E- CRM (customer relationship management system) Transactional e-commerce facility Auto-responder facility (Auto email) Telemarketing facility Many other applications

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

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Risk/reward analysis

Example of riskreward analysis. The options for E-CRM customer service and lead generation and partner extranet offer best mix of risk and rewards Chaffey, Internet Marketing, 3 Edition Pearson Education Limited 2007
Figure 4.26
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