Internet Marketing Mix

1. Internet Marketing Mix Chapter 05 of Chaffey, D., Ellis-Chadwick, F., Mayer, R., & Johnston, K. (2009). Internet Marketing: Strategy, Implementation and Practice: Financial Times/Prentice Hall. • Tuesday, 06-July-2010 • Kilen 2.75, CBS, Frederiksberg, Denmark • DØK HU2D - Internet Marketing: Lecture 08 • Course Webpage: http://www.itu.dk/people/rkva/2010-Summer-IM/ • Facebook Group: http://www.facebook.com/group.php?gid=133258548012 • Etherpad: http://ietherpad.com/d5mBZdMDe6

2. The Marketing Mix-1 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 8th P – online Partnerships

3. The Marketing Mix-2 Which variables are important for the ideal customer? Price and quality? Where they buy? Need to decide on target markets first and do the research on the mix variables The marketing mix is not generic for all customers, but for segments.

4. Marketing Mix: The 7Ps Figure 5.1 The elements of the marketing mix

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

6. Online Market Research Online focus group Online survey Customer feedback or forums, possibly on independent sites Social Media

7. 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

8. Core Product Options Ghosh (1998) Digital value Rayport and Sviokla (1994) describe transactions where the actual product has been replaced by information about the product Mass customisation– Extent of product Subset Bundling Product info more readily available (Allen and Fjermestad, 2001)

9. 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

10. Price Implications View 1 – decreased prices inevitable Price transparency Customer knowledge increases Price reduction and standardisation 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

11. Online Consumer Psychology and Behaviour Figure 5.8 Changes to brand perception and behaviour as a result of using the Internet for research Source: Brand New World (2004)

12. Power Law http://jcmc.indiana.edu/vol12/issue1/tremayne.image001.gif “A power law is a special kind of mathematical relationship between two quantities. When the number or frequency of an object or event varies as a power of some attribute of that object (e.g., its size), the number or frequency is said to follow a power law.” Under Zipf’s law, “the most frequent word will occur approximately twice as often as the second most frequent word.”

13. Price Elasticity of Demand: Elastic Product Figure 5.12 Price elasticity of demand for a relatively elastic product

14. Price Elasticity of Demand: Inelastic Product Figure 5.13 Price elasticity of demand for a relatively inelastic product

15. Price Elasticity of Demand Figure 5.12 Price elasticity of demand for a relatively elastic product

16. Differential Pricing Reduce or Transfer 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

17. 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

18. Purchase Method: Digital Products Purchase Rental or subscription Pay per use

19. Place of Purchase-1 A. Seller-controlled sites are those that are the main site of the supplier company which are e-commerce enabled. B. Seller-oriented sites are controlled by third parties, but are representing the seller rather than providing a full range of options C. Neutral sites are independent evaluator intermediaries that enable price and product comparison and will result in the purchase being fulfilled on the target site D. Buyer-oriented sites are controlled by third parties on behalf of the buyer E. Buyer-controlled sites usually involve either procurement posting on buyer-company sites or those of intermediaries that have been set up in such a way that it is the buyer who initiates the market making

20. Place of Purchase-2 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. 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 organisation represents – consumers or suppliers. This particularly applies to retailers. It suggests that customers will favour retailers who provide them with the richest information on comparing competitive products.

21. Place of Purchase-3 Distintermediation Reintermediation Countermediation

22. Place of Purchase-4 1. Co-alliance model. Effort and risk is shared equally by partners 2. Star-alliance model. Here the effort and risk is centred on one organisation that subcontracts other virtual partners as required 3. Value alliance model. This is a partnership where elements are contributed across a supply chain for a particular industry. This is effectively the value network of Chapter 2 4. Market alliance model. This is similar to the value alliance, but is more likely to serve several different marketplaces

23. Promotion-1 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)

24. Promotion-2 Advertising Sales promotion Personal selling Public relations Direct marketing

25. Promotion-3 Reviewing new ways of applying each of the elements of the communications mix such as advertising, sales promotions, PR and direct marketing Assessing how the Internet can be used at different stages of the buying process. Using promotional tools to assist in different stages of customer relationship management from customer acquisition to retention. In a web context this includes gaining initial visitors to the site and gaining repeat visits through these types of communications techniques: reminders in traditional media campaigns why a site is worth visiting, such as online offers and competitions; direct e-mail reminders of site proposition – new offers; frequently updated content including promotional offers or information that helps your customer do their job or reminds them to visit

26. Discussion