What is Internet Marketing? The previous definition can be divided into five components: • A Process; • Building and Maintaining Customer Relationships; • Online; • Exchange; and • Satisfaction of Goals of Both Parties.
Seven Stages of Internet Marketing 1. Setting Corporate and Business-Unit Strategy 2. Framing the Market Opportunity 3. Formulating the Market Strategy 4. Designing the Customer Experience 5. Designing the Marketing Program 6. Crafting the Customer Interface 7. Evaluating the Results of the Marketing Program
What is Marketing Strategy? • Marketing strategy has three components: • Segmentation, or identifying relevant market segments with specific needs • Targeting, or choosing an attractive segment consistent with a firm’s resources and goals; and • Positioning, or strategically communicating the product’s benefits to the target segment.
Egghead.com Example • Initially an offline software retailer, it changed its business strategy completely in 1998 by moving its entire business online. • Unique assets include: • Currently being the largest retail auction site on the Internet • A strong brand name • Strong wholesale relationship with United Stationers • Business center that provides specialty services • How does Egghead.com compete? • Targets small and medium businesses, and government and education segments. • Positions itself on three variables: value, selection and customer service.
Pure-Play Scenario Firms such as Yahoo!, eBay and Egghead.com Highly likely that both online and offline marketing levers (e.g. customer e-mails and print ads) are going to be used to build a customer relationship. Processes of segmentation, targeting and positioning remain largely the same as for offline business. Brick-and-Mortar Scenario Firms such as The Gap with both offline retail stores and an online store Since offline stores preceded online store, Gap online must optimize its online marketing strategy within the context of Gap’s broader strategy – i.e. its offline positioning, image, and asset base. Internet Marketing Scenarios
Internet Marketing Strategy: Pure Play Firms • Bases for Segmentation • Demographic, geographic, psychographic, cognitive and behavioral. • Effective segmentation is meaningful, actionable and financially attractive. • Target Market • Segment size and growth • Segment structural attractiveness • Company objectives and resources
Internet Marketing Strategy: Pure Play Firms • Positioning • Features/ services • Benefits • Specific usage occasions • User category • Against another product • Product-class • Hybrid • Positioning Plan • Identify actual product positioning. • Determine ideal product positioning. • Develop alternative strategies for achieving ideal. • Select and implement the most promising alternative. • Compare new actual position with ideal.
Internet Marketing Strategy: Brick-and-Mortar Firms • Segmentation for BAMs moving online • No change • Market expansion • Market reclassification • Reclassified expansion • Targeting for BAMs moving online • Blanket targeting • Beachhead targeting • Bleed-over targeting • “Be different” targeting
Internet Marketing Strategy: Brick-and-Mortar Firms • Positioning for BAMs moving online • Blanket positioning • Beachhead positioning • Bleed-over positioning • “Be different” positioning
Marketing Strategy in the New Economy Firm • The Internet has and will continue to affect marketing strategy in four broad ways: • Finer gradations of segmentation • Faster cycle time of marketing strategy decisions • Increased accountability of marketing efforts • Increased integration of marketing strategy with business strategy and operations
Stage Four: Designing the Customer Experience • Customer experience should correlate with the firm’s positioning and marketing strategy. • Customer experience constitutes a bridge between high-level marketing (step three) and marketing program tactics (step five).