Introducing Internet Marketing

Lecture 1

Objectives

• Subject Overview

• The Internet and the marketing concept

• Benefits of the Internet for businesses

• The new marketing medium

• Internet marketing communications

• Internet Marketing strategies

Subject Overview

• General Aim and Rationale – the utility of the Internet as a tool for business to increase efficiency, competitiveness, and effectiveness.

• Objectives

• Content

• Assessment criteria

The Internet and the Marketing Concept

• Two distinct meaning for marketing1. The range of specialist marketing functions

carried out by the firm (marketing research, public relations..)

2. An approach or concept that can be used as the guiding philosophy for all functions and activities

• The modern marketing concept unites these two meanings.

The Internet and the Marketing Concept

• The Internet can be applied by companies as an integral part of the modern marketing concept since:– It can be used to support the full range of

organizational functions– It is a powerful communication medium that integrates

the different parts of the organization– It facilitates information management– The future role of the Internet would form part of the

vision

Internet Marketing Defined

The use of the Internet and related digital technologies to achieve marketing objectives and support the modern

marketing concept.

Electronic commerce transactions are the trading of goods and services conducted using the Internet and other digital media

Business Benefits of the Internet

• Market penetration – sell more existing products into existing markets

• Market development – Internet is used to sell into new markets

• Product development – New products or services developed which can be delivered over the Internet

• Diversification – New products are developed which are sold into new markets

Market and Product Strategic Grid

Market Development

Diversification

Market penetration

Product development

Existing NewProduct

New

Exi

stin

g

Market

Conservative Approach

Innovative Approach

Marketing Functions & The Internet• Sales – achieve through increasing awareness of brands

and products, supporting buying decisions and enabling online purchase

• Marketing communication – use of the web site for a range of marketing communication

• Customer service – supplementing phone operators with information available online

• Public relations – the Internet can be used as a new channel for public relations (publish latest news on products)

• Marketing research – techniques of finding a range of marketing information

The 6 Cs’ of the Internet• Cost reduction – reducing the need for sales and marketing

enquiries to be handled by telephone and producing printed marketing communication material

• Capability – The internet provides new opportunities for new products and services and for exploiting new markets

• Competitive advantage – First mover advantage• Communications improvement – improved communications with

customers, staff, suppliers• Control – Better marketing research through tracking customer

behavior• Customer service improvements – Interactive queries of databases

containing stock availability or customer service questions

The Internet – A New Marketing Medium

• The Internet refers to the physical network that links computers across the globe. It consists network servers and wide-area communication links that are used to hold and transport information.

• World Wide Web is a medium for publishing information on the Internet.

• Intranet is a password protected network within a single company which enables access to company information using the familiar tools of the Internet such as web browsers.

• Extranet is formed by extending the intranet beyond a company to customers, suppliers, collaborators or even competitors.

Level of management Internet Intranet and extranet

Strategic Environmental scanning

Competitor analysis

Market analysis

Strategic decision making

Supply chain mgt

Internet data analysis

Management information

Marketing information

Database

Operations efficiency

Business planning

Monitoring and control

Simulation

Business intelligence (data warehouses)

Tactical and operational Advertising/promotions

Direct marketing

Public relations

Distribution/logistics

Workgroups

Marketing research

Publishing

Electronic mail

Data warehousing

Relationship marketing

Conference marketing

Conferencing

Training

Technology information

Product/service information

Customer service

Internet trading

Sponsorship

Internet Marketing Communications

• Characteristics inherent in digital medium:– The customer initiates contact– The customer is seeking information (pull)– It is a high intensity medium – the marketer will have

100 per cent of the individual’s attention when he or she is viewing a web site

– A company can gather and store the response of the individual

– Individual needs of the customer can be addressed and taken into account in future dialogues

Old and New Media

Old media New media Comment

One-to many communication model

One-to-one or many-to-many communication model

Hoffmann & Novak (1996)states that Internet is a many-to-many medium, but for company to customer one-to-one

Mass marketing Individualized marketing or mass customization

Personalization possible because of technology to monitor preferences and tailor content (Deighton, 1996)

Monologue Dialogue Indicates the interactive nature of the WWW, with the facility for feedback

Branding Communication Increased involvement of customer in defining brand characteristics. Opportunities for adding value to brand

Supply-side thinking Demand-side thinking Customer pull becomes more important

Customer as target Customer as partner Customer has more input into products and services

Segmentation Communities Aggregation of like-minded consumers rather than arbitrarily defined target segments

Internet marketing application in UK

Use Percent

PR/marketing information 70

Product contacts 40

Customer contacts 27

Facilitating customer feedback 20

Detailed product information 18

Distribution of paid-for reports 10

Online orders 8

Paid-for advertisements 5Source: Business Computer World/Spikes Cavell, February 1997

Avoiding Marketing Myopia

• Traps that should be avoided when embarking on Internet marketing:– Wrongly defining which business they are in– Focusing on:

• Products rather than customer• Production• Technology (only an enabler, not an aim)• Selling (the culture of the Internet is based on customer seeking

information to make informed buying decisions)• Customer needs (the need for market orientation is a critical aspect of

web site design and Internet marketing strategy)• Market opportunities (new opportunity for adding value rather than

just another channel)

Avoiding Marketing Myopia

– Unwillingness to innovate and ‘creatively destruct’ existing product/service lines

– Shortsightedness in terms of strategic thinking

– The lack of a strong and visionary CEO (Baker (1998) found that this was important to companies’ using the Internet effectively)

– Giving marketing only ‘stepchild status’, behind finance, production and technology.