Interactive Marketing Week 2 Ethan Chazin

CHPT. 2CHPT. 2Framing the Framing the

(ONLINE) Market (ONLINE) Market in in 66 E-ZE-Z StepsSteps

SomeSome REALLYREALLYCool StuffCool Stuff

INTERNETBiz Models

KEYKEY Considerations

When technological advancement

meets globalization, old business

models disappear.

• Web-enabled business models are different than traditional business models.

• Lack the constraints of physical product manufacturing or service delivery.

• Advances in technology (Internet browsers, hand-held devices, electronics, CRM, telecommunications) force businesses to develop models/make decisions rapidly.

• TECHNOLOGY IS A DISTRUPTIVE FORCE• The “networked” Web enables partnerships for

business survival -> co-opetition (Novell founder Ray Noorda)

Key ConsiderationsKey Considerations

WEB WEB Business ModelsBusiness Models

Successful Successful Web BusinessesWeb Businesses

• Friend, or foe…or BOTH???• When competitors partner.• A business NECESSITY due to converging

technologies (Microsoft, IBM, Netscape, Sony, Apple, etc. etc. etc.)

Co-opetitionCo-opetition

• Consumer behavior is not well established in the online world YET due to constantly evolving software and hardware innovations.

• Listen to consumers to define/solve needs:– (Ex. File sharing services: Napster, Gnutella, KaZaA)

• Industry value chains are constantly being re-defined due to 24 x 7 x 365 customer feedback.

Key ConsiderationsKey Considerations

ThoseThose 6 6 steps tosteps toframe the marketframe the market

Investigating opportunities in an existing or new value system.

Identifying unmet or underserved needs.

Determining target segments.

Assessing resource requirements to deliver the offering.

Assessing the attractiveness of the opportunity.

Making an educated “Go/No-Go” decision.

The 6-Step ProcessThe 6-Step Process

1. InvestigateOpportunities

• The Value chain (playing field) contains all the key stakeholders.

• Identify where the new company will compete.• Where are the opportunities to add value:

– Where can you unlock value by creating more efficient markets (ways of doing things.)

• New to the world value means creating new benefits:– Customize offerings: allow your customers to

personalize your products/services or removed unwanted features (Yahoo! News)

– Build community: chat rooms, closed community websites (MyFamily.com)

Investigate OpportunitiesInvestigate Opportunities

The customer customizes their

experience with you ONLINE.

Online user communities

Which online Which online communities do you communities do you

spend time in?spend time in?

FOR DISCUSSIONFOR DISCUSSION

J&J J&J Baby.comBaby.com

College ConfidentialCollege Confidential

College TipsCollege Tips

…and then

there’s

The Chazin Group The Chazin Group

– Introduce new functionality/experience: communications, computing, and entertainment keep converging, to continuously offer new customer experiences.

• Customers in controlCustomers in control: they have more information than ever, thus greater negotiating power (MySimon, BizRate)

• Ease of accessEase of access: connecting communication points between partners.

• Radically extend reachRadically extend reach: extend the boundaries of a market because people are working together so efficiently.

Investigate OpportunitiesInvestigate Opportunities

• Organizations look for one of 3 things:– Trapped value to be liberated: create more efficient

markets (BizBuyer.com) or value systems.– New to the world: value that can be created.– Hybrid of BOTH: unlocking trapped talent AND

adding new benefits (Amazon)

Investigate OpportunitiesInvestigate Opportunities

2. Identify Unmet/Under-Served Markets

• Map the customer decision process (Amazon’s use of personal recommendations.)– What steps does the customer go through?– Where does the customer obtain their information?– Where does the process take place?

• What opportunities exist online for customers to enhance or entirely transform the customer’s experience.

Revealing Unmet NeedsRevealing Unmet Needs

Facebook User ExperienceFacebook User Experience

Let Customers Set Their Own Prices…

Really?

The theory of The Long TailThe Long Tail ( (Chris AndersonChris Anderson) ) is that our culture and economy is increasingly shifting

away from a focus on a relatively small # of “hits” (mainstream products and markets) at the head of the demand curve, and towards a huge # of niches

in the tail. As the costs of production and distribution fall, esp. online, there is now less need to lump products and consumers into one size fits all containers. In an era without the constraints of

physical shelf space and other bottlenecks of distribution, narrowly targeted goods and services can be as economically attractive as mainstream

fare.

David Meerman Scott. “The New Rules of Marketing & PR.” p. 17.

• A book by David Meerman Scott. His rules:– NOBODY cares about your products except you.– No coercion is required.– You should lose control.– Put down roots.– Create triggers that encourage people to share.– Point the world to your (virtual) doorstep.

The “World Wide Rave”The “World Wide Rave”

Determine yourTarget Segments –

who are you gonna sell your stuff to?

What’s A Target MarketWhat’s A Target Market

• A marketmarket is the set of all actual and potential buyers who have sufficient interest in, income for, and access to your products/services.

• Market segmentation Market segmentation divides your market into distinct groups of homogenous consumers who all have similar needs and consumer behavior, and thus require similar marketing mixes.

• Segmentation bases for B2C & B2B markets:– Behavioral– Demographic– Psychographic– Geographic– Occasion– Benefits

Target Markets

Behavioral Segmentation

Psychographic Segmentation

• Activities of the target segment• Interests…• Opinions…• Attitudes…• Values…

Psychographic Segmentation

• Segmentation bases for B2C & B2B markets:– Nature of good or service– Buying condition of the consumer– Demographic details

• DescriptiveDescriptive or consumer-basedconsumer-based are related to what kind of person or organization the customer is.

• BehavioralBehavioral or product-orientedproduct-oriented are related to how the customer thinks of or uses the brand, product, or service. Behavioral segmentation bases are often most valuable in understanding branding issues, because they have clearer strategic implications.

Target Markets

For behavioral or product-oriented

target segments think “INSURANCEINSURANCE”

Think InsuranceThink Insurance

It’s REALLY tricky.

Want to Attract MenMenAges 18-50?

FantasyFantasySportsSportsLeagueLeague

WebsitesWebsites$2-3B$2-3B

There’s even a TV series…There’s even a TV series…

• Identify who you want to sell your products to and offer your services to.

• Actionable Actionable segmentation:– The segments are easy to identify.– Segments can be easily reached.– Segments can be defined in terms of their growth,

size, profile and attractiveness.

• MeaningfulMeaningful segmentation: explains why customers act the way they do:– Customers in a segment behave in similar ways.– Sheds light into customer motivations.– Correlates to differences in profitability or cost to

serve

Find Your Target MarketsFind Your Target Markets

• Specify the benefits you will deliver to specific target segments:– Volvo (safety)– Nordstrom’s (customer care)– Southwest Airlines (convenience)

Focus on Customer BenefitsFocus on Customer Benefits

Assess Your Resource Requirements

• What capabilities do you need, to deliver a new offering.

• Company defines what experience and benefits the product will provide.

• Define the the capabilities and technology required to deliver the benefits of the offering.

• Develop a resource system, the collection of individual and organizational activities and assets.

• For online marketing, shift the focus from activities and capabilities in the “physical” world to a mix of marketplace and virtual assets.

Assess Required ResourcesAssess Required Resources

Assess the Attractiveness of the

Opportunity

• What’s the competitive landscape like?• Customer dynamics: level of unmet need,

interaction between customer segments, and likely growth rate of target segment.

• Technology vulnerability: how vulnerable is the new product/service to technology trends/advancements.

• Microeconomics: the size/volume of the market and the projected profitability.

Assess the OpportunityAssess the Opportunity

Technology Vulnerability

Make Go/No Go Decision