CHAPTER 5: The e-Marketing Mix

1. CHAPTER 5: The e-Marketing Mix Creating value…

2. Learning objectives • Apply the elements of the marketing mix in an online context; • evaluate the opportunities that the Internet makes available for varying the marketing mix; • define the characteristics of an online brand.

3. Strategic questions for e-Marketers • How are the elements of the marketing mix varied online? • What are the implications of the Internet for brand development? • Can the product component of the mix be varied online? • How are companies developing online pricing strategies? • Does ‘place’ have relevance online? • How does communication online work strategically?

4. The marketing mix • In 1963 Bartels said:‘a marketer is like a chef in a kitchen … a mixer of ingredients’ • Variables used to define key elements of marketing strategy • From the 4Ps of Jerome McCarthy to the 7Ps of Booms and Bitner sometimes referred to as the services mix • 4Ps – Product, Price, Place, Promotion • 7Ps – add People, Processes and Physical Evidence

5. “The Offering” • OFFERINGProduct, packaging, service and brand • What do you have to OFFER the customer? • What does this OFFER to other stakeholders in the value chain?

6. The 4Ps and the 4Cs Cost Product Communications with company Price Place Customer needs and wants Promotion Customer convenience

7. Mixing the mix online • Which variables are important for the ideal customer? • Price and quality? • Where they buy? • You need to decide on target markets first and do the research on the mix variables • Remember the mix is not generic for all customers, but for segments

8. The elements of the marketing mix Figure: The elements of the marketing mix

9. Product introduced • ‘The element of the marketing mix that involves researching customers’ needs and developing appropriate products’ • Core product • The fundamental features of the product that meet the user’s needs. • Extended product • Additional features and benefits beyond the core product.

10. Extended product options • Examples: • Add-on services – gift wrapping @ Amazon • Endorsements • Awards • Testimonies • Customer lists • Customer comments • Warranties • Guarantees • Money back offers • Customer service (see people, process and physical evidence)‏ • Incorporating tools to help users during their use of the product • Information – extranets

11. Brands • A brand is described by Leslie de Chernatony and Malcolm McDonald in their classic book 1992 book Creating Powerful Brands as ‘an identifiable product or service augmented in such a way that the buyer or user perceives relevant unique added values which match their needs most closely. Furthermore, its success results from being able to sustain these added values in the face of competition’.

12. Branding strategy online Corporate brand…product brand…service brand… Websites as brands… All brand Alternatives Evoked Set (+)‏ Inert Set (?)‏ Inept Set (-)‏

13. Branding Strategy Identity Image vs. How we see ourselves... How others see us...

14. Web sites as BRANDS… • What is your company without it’s Website? • Amazon.com = NOTHING • Aftonbladet.se = STILL A NEWSPAPER • BRAND LADDER: Corporate brand/Product/Service/People (CEO)‏ • Brand Image vs. Brand Identity • Websites serve many segments… -Employees (Intranet)‏ -Partners/Suppliers (Extranet)‏ -Media -Students/Educators -Shareholders -Customers -Competitors

15. Building brand (Website) loyalty… • Brands are like people…each has: • A name • A look (“packaging”)‏ • A demographic description • A personality • A branding audit can provide a look at your corporate/brand/Website image

16. Brands online • Dayal et al. (2000) say, ‘on the world wide web, the brand is the experience and the experience is the brand’. • The promise of convenience – making a purchase experience more convenient than the real-world (or for rivals). • The promise of achievement – to assist consumers in achieving their goals, for example supporting online investors in their decision or supporting business people in their day-to-day work.

17. Brands -cont.- • The promise of fun and adventure – this is clearly more relevant for B2C services. • Is it??? • The promise of self-expression and recognition – provided by personalization services such as Yahoo! Geocities where consumers can build their own web site. • The promise of belonging – provided by online communities (Plus trust and reassurance).

18. Online brand options 1. Migrate traditional brand online. 2. Extend traditional brand: variant. 3. Partner with existing digital brand. 4. Create a new digital brand.

19. Price implications • View 1 – decreased prices inevitable • Price transparency • Customer knowledge increases • Price reduction and standardization • View 2 – decreased prices unnecessary • 89% purchase books from first site • Only 10% are aggressive bargain hunters • For corporate buyers internal changes are main benefit

20. Differential pricing • Options – reduce or transfer. Other options • Precision • Setting prices more accurately through testing (price indifference band) • Adaptability • Rapid changes (dynamic pricing). • e.g. Concert tickets • Segmentation • Different charges according to profiling

21. MANY WAYS TO PRODUCE REVENUE ONLINE • Purchase • Rental or subscription • Pay per use • Online advertising sales (banners, pop-ups)‏ • SPAM (junk e-mail)‏

22. Pricing options • Cost-plus • Add profit margin to operational costs • Target profit pricing • Based on breakeven • Competition-based pricing • Market-oriented • Premium-pricing • Penetration pricing

23. Evans and Wurster view of “place” • Reach: This is the potential audience of the e-commerce site. Reach can be increased by moving from a single site to representation with a large number of different intermediaries. Allen and Fjermestad suggest that niche suppliers can readily reach a much wider market due to search engine marketing • Richness: This is the depth or detail of information which is both collected about the customer and provided to the customer. This is related to the product element of the mix. • Affiliation: This refers to whose interest the selling organization represents – consumers or suppliers. This particularly applies to retailers. It suggests that customers will favor retailers who provide them with the richest information on comparing competitive products.

24. Place 2 – new channel structures A. Distintermediation B. Reintermediation C. Countermediation

25. Place 3 – channel conflicts Dependent on: 1. A communication channel only. 2. A distribution channel to intermediaries. 3. A direct sales channel to customers. 4. Any combination of the above.

26. Place 4 – virtual organizations – what are they? • Kraut et al. (1998) suggest the following features of a virtual organisation: • Processes transcend the boundaries of a single form and are not controlled by a single organizational hierarchy. • Production processes are flexible, with different parties involved at different times. • Parties involved in the production of a single product are often geographically dispersed. • Given this dispersion, co-ordination is heavily dependent on telecommunications and data networks.

27. Promotion • ‘Promotion unfortunately has a range of meanings. It can be used to describe the marketing communications aspect of the marketing mix or, more narrowly, as in sales promotion. In its very broad sense it includes the personal methods of communications, such as face to face or telephone selling, as well as the impersonal ones such as advertising. When we use a range of different types of promotion – direct mail, exhibitions, publicity, etc we describe it as the promotional mix.’ Wilmshurst (1993)‏

28. Promotion tools 1 Advertising (broadcast, print, outdoor)‏ 2 Sales promotion (prizes, gifts, contests)‏ 3 Personal selling (face-to-face or voice-to-voice)‏ 4 Public relations (relationship & communication with important “publics”)‏ 5 Direct marketing (SPAM, pop-ups, offers)‏

29. Options for replacing people • Autoresponders: These automatically generate a response when a company e-mails an organization, or submits an online form. • E-mail notification: Automatically generated by a company’s systems to update customers on the status of their order, for example, order received, item now in stock, order dispatched. • Call-back facility: Customers fill in their phone number on a form and specify a convenient time to be contacted. Dialing from a representative in the call centre occurs automatically at the appointed time and the company pays which is popular. • Frequently Asked Questions (FAQ): For these, the art is in compiling and categorizing the questions so customers can easily find (a) the question and (b) a helpful answer. • On-site search engines: These help customers find what they’re looking for quickly and are popular when available. Site maps are a related feature. • Virtual assistants: Come in varying degrees of sophistication and usually help to guide the customer through a maze of choices.

30. Methods of managing inbound contacts Customer defines • Make contact point clear • Use FAQ to reduce enquiries (Measure)‏ • Use drop down lists to categorize query • Use autoresponse with service promise (number of hours)‏ • Give alternative information source (phone or web page)‏ Receipt & acknowledgement • Large organizations use intelligent software to categorize and prioritize messages and forward them to relevant staff Routeing • Use templates for common responses • Answer ALL of the questions • Add question to knowledge base Response Follow-up • Offer callback or follow up for key enquiries • Use phone if e-mail is not solving problem