Strategic Internet Marketing: Deploying Resources for Competitive Advantage

1. Lecture 2Internet marketing strategy

2. ‘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.’ Michael Porter on the Internet Porter, M. (2001) Strategy and the Internet, Harvard Business Review, March 2001, 62–78.

3. Influences on e-marketing strategy Internal and external influences on Internet marketing strategy

4. Why do we need an internet marketing strategy? …it provides a consistent direction for online marketing activities …the company can achieve its hierarchy of objectives Gives a focus to choice of target markets, positioning and the use of the marketing mix …it means analysis of the external environment, internal resources and capabilities will take place A digital marketing strategy is needed because… Tells us how resources will be deployed and how the organisation will be structured to achieve the strategy. …following it will help the company achieve competitive advantage It helps us to understand which strategies and tactics should not be pursued

5. Examples of Strategic Initiatives New proposition for customers Getting more customers (acquisition) Converting customers Improving experience Improving delivery of offers Improving the infrastructure to enhance marketing capabilities

6. What are the options? • A website is likely to be central to an internet marketing strategy… • Also: • Partner with online intermediaries e.g. portals, social networks and infuencers like bloggers… • Use social media marketing on own pages with user-generated content but also using social networks like Facebook, Google+, LinkedIn, Twitter, Pinterest, etc • Use email, mobile, apps and databases as communications and relationship-building tools. • Link with offline marketing communications. • Reduce costs, generate revenue, communicate and brand.

7. Engaging Customers with Brands (RACE)Reach-Act-Convert-Engage Source: Smart Insights (2010) from REAN (Blanc & Jackson, 2009)

8. SOSTAC- a Generic framework for e marketing plan

9. Example objectives • Achieve 10 per cent online revenue contribution within two years; • Achieve first or second position in category penetration in the countries within which we operate (this is effectively online market share and can be measured through visitor rankings such as Hitwiseor better by online revenue share; • Cost reduction of 10 per cent in marketing communications within two years; • Increase retention of customers by 10 per cent; • Increase by 20 per cent within one year the number of sales arising from a certain target market, e.g. 18–25-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.

10. 5 S Model for objectives

11. Business models- Timmers (1999) • E Shop • E Procurement • E Mall • E Auctions • Virtual Communities • Collaboration Platforms • Third Party Marketplaces • Value Chain Integrators • Value Chain Service Providers • Information Broakerage • Trust and other Services

12. Revenue models • •Subscription access to content • •Pay Per View content access • •CPM Display advertising • •CPC advertising on site • •Sponsorship of sections, content or widgets • •Affiliate revenue (CPA or CPC) • •Subscriber data for e-mail marketing • •Access to customers for research purposes

13. Using the Internet to support different growth strategies

14. Target marketing Stages in target marketing strategy development

15. A range of targeting and segmentation approaches for a digital campaign

16. Customer lifecycle segmentation

17. Online value proposition • A clear differentiation of the proposition from competitors based on product features or service quality • •Target market segment(s) that the proposition will appeal to • •How the proposition will be communicated to site visitors and in all marketing communications. Developing a tag line can help this

18. The importance of VALUE • Cheaper to retain customers than recruit new ones • Lifetime value and greater ‘share of wallet’ • Customers can become advocates • Value can be a source of competitive advantage • Incentives and collectables can encourage further purchases and return visits to your site • Can help you drive thought leader strategy for B2B e.g. give white papers for free • Can lock them in to your brand and stop churn / switching • Customers consolidate number of websites they use over time so ensure your site is a favourite

19. Managing Expectations Understand expectations: customer research,, site benchmarking, customer scenarios Set and communicate the service promise: guarantees or promises Delivering the service promise: on-site support, employee support, physical fulfilment, logistics, delight the customer.

20. http://www.smartinsights.com/digital-marketing-strategy/online-value-proposition/online-value-proposition-examples/http://www.smartinsights.com/digital-marketing-strategy/online-value-proposition/online-value-proposition-examples/ Online Value Proposition http://www.impactbnd.com/blog/10-value-propositions-you-wish-you-had Source: Smart Insights 2014 Your USP online… Links to your brand positioning and tells customers who you are, what you offer, which markets you serve and what makes you different. It identifies to customers why they should click on the site, return, register, buy and share their experiences. It’s a point of difference from competitors.

21. Customer Information Processing Model5 Stages of Information Processing: Hofacker (2001) • Review effectiveness of communications and web pages. Can your customers progress through each hurdle? • Exposure – is the information there long enough for a customer? • Attention – what grabs the attention? Movement? Colour? • Comprehension & perception – how does the customer interpret the stimulus? • Yielding & acceptance – is the information accepted by the customer? • Retention – how well can the customer recall their experience?

22. Customer Decision-Making ModelsLow & High Involvement Awareness Interest Desire Action Problem Identification Information Search Evaluation of Alternatives Purchase Post-purchase Evaluation How does your decision-making differ for the following purchases: Buying some breakfast cereal Buying a car Buying a music album from a brand new band Buying your first home

23. Supporting the Buying Process with Site Content Source: Chaffey & Smith, 2013

24. The IDIC Loyalty Model (Peppers & Rogers, 1997) The IDIC approach provides a framework for using the web effectively to form and build relationships: Customer identification – identify customers on first and subsequent visits through cookies / login Customer differentiation – build a profile to segment customers Customer interaction – on-site interactions such as customer service questions or create a tailored product Customer communications – personalisation or mass-customisation of content or emails according to segmentation.

25. User Experience Design – How does a user feel when using a system? Source: Smashing Design Magazine http://www.youtube.com/watch?v=Ovj4hFxko7c

26. Starting to think about user experience… User-centred design (Bevan, 1999) starts with understanding the nature and variation between user groups: Who are the important users? What is their purpose for accessing the site? How frequently will they visit? What experience and expertise do they have? What nationality are they? Can they read your language? What type of information are they looking for? How will the use the information? Read it online, print it, download it, share it? What type of browser or platform will they use? How fast will their links be? How large a screen will they have and with how many colours?

27. Ovp examples • •‘Compare. Buy. Save’. Kelkoo (www.kelkoo.com) • •‘Earth’s biggest selection’. Amazon (www.amazon.com) • •‘Search the largest inventory of cars and trucks on the Internet. More than 1.5 million listings, updated daily’ (www.autotrader.com) • •The Citibank site design (www.citibank.com) uses a range of techniques to illustrate its core proposition and OVP. The main messages are • –Welcome to Citibank: The one-stop solution for all your financial needs • –Look for a product or service; Learn about a financial product; Find a location

28. Positioning and differentiation strategy • Deise et al (2000) and Chaston (2000) suggest four positioning options: • Product performance excellence • Price performance • Transactional Excellence • Relationship Excellence • These positioning options have much in common with Porter’s generic competitive strategies of cost leadership and differentiation

29. However unlike Porter’s belief, Kim et al (2004) concluded that for online businesses ‘integrated strategies that combine elements of cost leadership and differentiation will outperform cost leadership or differentiation strategies’

30. Autotrader site (www.autotrader.co.uk) clearly communicates its proposition

31. BA ‘Have you clicked yet?’ campaign web site

32. WEBPAGESTHATSUCK.COM