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Topic 1. Internet marketing fundamentals 1. An introduction to internet-marketing 2. The Internet micro-environment 3. The Internet macro-environment
What is Internet marketing? What, then, is Internet marketing? Internet marketing can be simply defined as: Achieving marketing objectives through applying digital technologies.
The term ‘Internet marketing’ tends to refer to an external perspective of how the Internet can be used in conjunction with traditional media to acquire and deliver services to customers. • The role of e-marketing in supporting marketing is suggested by applying the definition of marketing by the Chartered Institute of Marketing (www.cim.co.uk): Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.
IM emphasisesthe focus of marketing on the customer, while at the sametime implying a need to link to other business operations to achieve this profitability.Smith and Chaffey (2016) note that e-marketing can be used to support these aims as follows:Identifying – the Internet can be used for marketing research to find out customers’needs and wants. Anticipating– the Internet provides an additional channel by which customers canaccess information and make purchases – understanding this demand is key to governingSatisfying– a key success factor in e-marketing is achieving customer satisfactionthrough the electronic channel, which raises issues such as: is the site easy to use,does it perform adequately, what is the standard of associated customer service andhow are physical products dispatched?
A broader definition of marketing has been developed by Dibb, Simkin, Pride and Ferrell: Marketing consists of individual and organisational activities that facilitate and expedite satisfying exchange relationships in a dynamic environment through the creation, distribution, promotion and pricing of goods, services and ideas.
Digital marketing defined • Digital marketing is yet another term similar to Internet marketing. We use it here, because it is a term increasingly used by specialist e-marketing agencies and the new media trade publications such as New Media Age (www.nma.co.uk) and Revolution (www.revolutionmagazine.com). The Institute of Direct Marketing (IDM) has also adopted the term to refer to its specialist professional qualifications. • To help explain the scope and approaches used for digital marketing the IDM has developed a more detailed explanation of digital marketing: • Digital marketing involves: • Applying these technologies which form online channels to market: • – Web, e-mail, databases, plus mobile/TV. • To achieve these objectives: • – Support marketing activities aimed at achieving profitable acquisition and retention of • customers ... within a multi-channel buying process and customer lifecycle. • Through using these marketing tactics: • – Recognising the strategic importance of digital technologies and developing a planned • approach to reach and migrate customers to online services through e-communications • and traditional communications. Retention is achieved through improving our customer • knowledge (of their profiles, behaviour, value and loyalty drivers), then delivering integrated, • targeted communications and online services that match their individual needs.
Six Benefits of Internet Marketing • Convenience • Reach • Cost • Personalization • Relationships • Social
E-commerce and e-business defined The terms ‘e-commerce’ and ‘e-business’ are often used in a similar context to ‘Internet marketing’ but their scope is different. It is important for those managing digital technologies within any organisations to achieve clarity on the meaning of e-marketing, e-commerce and e-business to help define the scope of what they are trying to achieve! Electronic commerce (e-commerce) is often thought to simply refer to buying and selling using the Internet; people immediately think of consumer retail purchases from companies such as Amazon. However, e-commerce refers to both financial and informational electronically mediated transactions between an organisation and any third party it deals with (Chaffey).
E-business defined • e-business (e’ biz’ nis): The transformation of key business processes through the use of Internet technologies. • the key business processes in the IBM definition are the organisationalprocesses or units in the centre of the figure. They include research and development, marketing, manufacturing and inbound and outbound logistics. • The buyside e-commerce processes with suppliers and the sell-side e-commerce processes involving exchanges with distributors and customers can also be considered to be key business processes. So e-commerce can best be conceived of as a subset of e-business, and this is the perspective we will use in this book.
Visit these examples: Yahoo! (www.yahoo.com) (B2C) and Silicon (www.silicon.com) (B2B). Each of these different types of sites tend to increase in sophistication as organisations develop their Internet marketing. Many organisations began the process of Internet marketing with the development of web sites in the form of brochureware sites or electronic brochures introducing their products and services, but are now enhancing them to add value to the full range of marketing functions. In Chapters 2 and 4 we look at stage models of the development of Internet marketing services, from static brochureware sites to dynamic transactional sites that support interactions with customers. A powerful method of evaluating the strategic marketing opportunities of using the Internet is to apply the strategic marketing grid of Ansoff (1957) as discussed in the strategy formulation section of Chapter 4 (Figure 4.10). This shows how the Internet can potentially be used to achieve four strategic directions: 1 Market penetration. The Internet can be used to sell more existing products into existing markets. 2 Market development. Here the Internet is used to sell into new geographical markets, taking advantage of the low cost of advertising internationally without the necessity for a supporting sales infrastructure in the customers’ countries. 3 Product development. New products or services are developed which can be delivered by the Internet. These are typically digital products. 4 Diversification. In this sector, the Internet supports selling new products which are developed and sold into new markets. As well as assisting large corporate organisations develop their markets, perhaps the most exciting potential of the Internet is to help small and medium enterprises (SMEs) expand. Read Mini Case Study 1.1 ‘North West Supplies extends its reach online’ which also illustrates some of the challenges of managing an online business and highlights the need for continual investment
A strategic approachto Internet marketing • Unclear responsibilities for the many different Internet marketing activities. • No specific objectives are set for Internet marketing; • Insufficient budget is allocated for Internet marketing as customer demand for online services is underestimated and competitors potentially gain market share through superior online activities; • Budget is wasted as different parts of an organisation experiment with using different • tools or suppliers without achieving economies of scale; • New online value propositions for customers are not developed since the Internet is • treated as ‘just another channel to market’ without review of opportunities to offer • improved, differentiated online services; • Results from digital marketing are not measured or reviewed adequately, so actions cannot be taken to improve effectiveness; • An experimental rather than planned approach is taken to using e-communications with poor integration between online and offline marketing communications.
2. The Internetmicro-environment • The Internet introduces new facets to the environment that must be considered by marketers since strategy development is strongly influenced by considering the environment the business operates illustrates the key elements of a business’s environment that will influence the organisation. Many authors such as Porter on corporate strategy or Kotler et al. on marketing strategy make the distinction between micro-environment and macro-environment.
The micro-environment, sometimes known as ‘the operating environment’ is the immediate marketplace of an organization. For development of Internet marketing strategy, the most significant influences are arguablythose of the micro-environment. This is shaped by the needs of customers and how services are provided to them through the competitors, intermediaries and upstream suppliers within the marketplace.
Micro-environment • Understanding the business environment is important before developing any marketing strategy. Specific forces such as a market place, customers, organization, etc. which directly affects organization are referred to as micro-environment.
1)Market Place Bargaining Power of Customers: with the advent of the internet, customers have wider choices of products than before. The increase in competition has reduced the price level as customer demand more transparency in operations. Thus the bargaining power of customers has increased.
Bargaining Power of Suppliers: again with wider choice due to the internet. The bargaining power of the supplier has gone down • Threats of substitute: the internet has enabled quicker introduction of products and services. The organization must carefully observe the introduction of substitute in the market as to avoid losing market share.
Competition: the internet has started the trend of faster commoditization of products. Thus companies need to find new ways through which it can differentiate itself from competition.
2) Customers • Customer needs and requirements require a better understanding from the organization. A qualitative and quantitative analysis needs to be developed by the company to track consumer behavior and create more consumer insights. These consumer insights can be used by marketing groups to develop specific strategies.
The benefits of quantitative feedback 1. See if it’s a failure or success: Quantitative feedback gives you a better indication of whether, for example, customers value certain parts of your website
2. Easy to spot trends and patterns You can analyse the scores you’ve collected and identify trends using distribution over X period of time.
Qualitative Feedback • This type of data helps you gain an understanding into the reasoning and motivation behind why your customer has provided negative or positive (quantitative) feedback.
The benefits of qualitative feedback 1. Learn why your customers are abandoning their shopping carts The rate of abandonment ranges anywhere between 60% and 80%.
2. Find out what users really think about your product or service • Qualitative feedback enables you to find the online voice of the customer and gives you more insight into what your customers think of your website, products and services.
3. Gauge human emotion • You can learn a lot about your customers by paying attention to their sensitivities. When you shift your focus towards understanding the extent of customer dissatisfaction or satisfaction, you essentially provide yourself with the proper means to analyse your feedback under the right context.
So how can you collect qualitative feedback? • Qualitative feedback can be collected using open fields in your feedback forms. In these open fields, customers can provide their own explanations as to why they have given a high or low score. Once this data is collected, it can be analysed using text analytics. https://www.coursera.org/lecture/uva-darden-market-analytics/using-text-analytics-W9EWy
Companies are using demand analysis to understand and determine the potential of the new business proposition among customers. Companies also deploy qualitative analysis to understand perception of a consumer towards new products and services.
Online Buying Behavior • Companies have started creating personas which summarize the customer needs, requirements and environment based on their internet usage. Based on this persona, companies develop a customer scenario. This customer scenario is series of task or path taken to come at a desired buying decision. https://www.youtube.com/watch?v=qRKCOLbxVsY
