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Principles & Practice of E-Commerce
Chapter 7
Internet Marketing Strategy
7.1 Internet Marketing Segmentation
Market segmentation refers to identifying specific portions of the markets and targeting them with
advertising messages. It divides the pool of potential customers into segments. It is one of the steps that
go into defining and targeting specific markets. It is the process of dividing a market into a distinct group
of buyers that require different products or marketing mixes.
7.1.1 General Description of the Market Segmentation
A key factor to success in today's market place is finding subtle differences to give a business the
marketing edge. Businesses that target specialty markets will promote its products and services more
effectively than a business aiming at the “average” customers.
Opportunities in marketing increase when segmented groups of clients and customers with varying
needs and wants are recognized. Markets can be segmented or targeted by using a variety of factor. The
bases for segmenting consumer markets include:
 demographical bases (age, family size, life cycle, occupation);

geographical bases (states, regions, countries);

behavior bases (product knowledge, usage, attitudes, responses);

psychographic bases (lifestyle, values, personality).
A business must analyze the needs and wants of different market segments before determining their
own niche.
To be effective in market segmentation keep the following things in mind:
 Segments or target markets should be accessible to the business;

Each segmented group must be large enough to provide a solid customer base;

Each segmented group requires a separate marketing plan.
A business can do the following to gain knowledge and information on how to segment their markets:
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Use qualitative research and resources;
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Trade and association publications and experts;
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Basic research publications;
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External measurement services.
Internet Marketing Strategy
Conduct informal factor and cluster analysis by:
 Watching key competitors marketing efforts and copying them;

Talking to key trade buyers about new product introductions;

Conducting needs analysis from qualitative research with individuals and groups.
There are many reasons for dividing marketing into smaller segments. Any time you suspect there
are significant, measurable differences in your market you should consider market segmentation. By
doing, you will make marketing easier, discover niche markets, and become more efficient with your
marketing resources.
7.1.2 The Importance of Market Segmentation on the Web
There is even greater importance in having a well-defined niche (target) market when planning your
Internet marketing strategy to achieve Internet success. The most common misconception about on-line
marketing is that as long as you build it, customers will come to have an on-line business with you and
thus will make you wealthy. Truth is you have to find your niche market to get them to come and you
must offer a product or service that they are demanding to reach a level of financial success via the
Internet.
Defining your niche market before you embark on your Internet marketing strategy is important for
the following eight reasons:
 You have the ability to maximize your marketing budget by targeting your defined niche market.

You'll know exactly where to advertise.

You'll know where to find related sites that are catering to your market. This is your starting
point.

Your site can then be optimized for search engines so that your niche market can find you easily.

You are able to cater your site to your niche market.

You can develop your site to guide your viewers and help them find solutions or products that
are specific to the problems, which your niche market encounters.

A defined niche market makes it easier to develop ideas for new products or services that
inherently appeal to your specific niche.

You have an upper-hand in establishing yourself as a leader in your industry.
7.1.3 Market Segmentation Basis and Variables
Marketers can base their segmentation of consumer markets on demographics, geographic location,
psychographics, and behavior with regard to the product. Within each base, there are many segmentation
variables. For example, McDonald's demographic segmentation uses the variables of age and family life
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cycle to target adults, children, senior citizens, and families. One way to look at this is that segmentation
bases are a few general organizing categories, and segmentation variables include numerous
subcategories.
Companies often combine bases and focus on categories such as geo-demographics (geography and
demographics). Similarly, they can build segments using any combination of variables that make sense
for their industry. The important thing to remember is that marketers create segments based on variables
that can be used to identify and reach the right people at the right time.
After using any of these four bases alone or in combination, marketers can profile segment
members by using many other variables. For example, after a Web site such as ivillage.com creates a list
of mothers who register at the site (segment basis), it can use primary and secondary research to develop
profiles that describe the mothers. These profiles might indicate that a certain percentage of the mothers
like to cook international dishes, another percentage generally prepares traditional meals, and another
percentage seldom cooks at all. Marketers need to know which variables broadly identify the target
segment and which simply describes it because marketers mean that a firm can get mailing lists of
mothers and discover which magazines reach them, but it is hard to figure out how to reach women who
cook Italian food. If Village knows that only 5% of its target (mothers) cooks Italian food, and 60% does
not cook at all, it will help them to refine the marketing mix, including Web site content and advertising.
The next sections describe geographic, demographic, psychographic, and behavior segments on the
Internet. Given the changes in Internet user profiles and the evolution of new segmentation schemes,
marketers should consult the key sources of information cited in these sections to obtain more
information when planning segmentation and targeting strategies.
1．Geographic Segments
Although the geographic location of computers in cyberspace is not important to users who have
access to Web sites, it is very important to organizations with an Internet presence. The reason is that
most firms target specific cities, regions, states, or countries with their product offerings. Even the
largest multinational firms usually develop multi-segment strategies based on geographic. For example,
McDonald's serves beer in its German restaurants and sake in its Japanese restaurants. Conversely, a
restaurant in San Francisco may use a niche strategy by targeting only local residents.
2．Demographic Segments
In the Internet's early years, the typical user was a young male, college educated, with a high
income. This picture is generally repeated in countries with low levels of Internet adoption. In developed
nations, users look more like the mainstream population, from a demographic perspective. According to
Insight Express, 76% of US users are 18 to 49 years old, and 25% are over 50, The annual average
household income of a user is about $50 000 and the population is almost equally divided by gender,
with 51% female. According to Nielsen, the Internet population among its measured countries is
predominately male, with exception of the US and Canada.
Knowing that US Internet users mirror the population, marketers need to identify attractive
demographic niches. Recently, a few market segments such as Occupation, Teens and Children, Ethnic
Groups, and Differently Able, have caught the attention of E-marketers.
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3．Psychographic Segments
User psychographics include personality, values, lifestyle, activities, interests, and opinions (AIO).
Personality characteristics are traits such as other-oriented versus self-oriented and habits such as
procrastination. Values are deeply held convictions such as religious beliefs, Lifestyles and activities as
psychographics refer to non-product-related behavior such as playing sports or eating out. For example,
users say that their Web surfing takes time away from these other activities: reading (39%), sleeping
(23%), socializing (14%), and working (12%) (www.interlliquest.com). Interests and opinions are
attitudes and beliefs people hold. As an example, some people believe that the Web surfing is a waste of
time and others think they could not exist without E-mail.
4．Behavior Segments
Two commonly used behavioral segmentation variables are benefits sought and product usage.
Marketers using benefit segmentation often form groups of consumers based on the benefits they desire
from the product. For example, a Harris Survey reports that “70% of on-line shoppers can be segmented
into two groups: bargain hunters and convenience shoppers.” Bargain hunters consist of smaller
segments: Hooked, Online & Single, Hunter-Gatherers. Convenience shoppers include Time-Sensitive
Materialists, Brand Loyalists, E-Bivalent Newbie, and Clicks & Mortars (Whelan 2001).
Product usage is applied to segmentation in many ways. Marketers often segment by light, medium,
and heavy product usage. As a hypothetical example, heavy Internet users might be those who go on-line
daily, medium users those who go on once every few days, and light users those who connect only once
every week or two. Companies must research to determine actual usage and decide how to split surfers
into appropriate user categories. Another approach is to categorize consumers as brand loyal, loyal to the
competitive product, switchers who don't care which brand they use, and nonusers of the product.
7.2 Internet Marketing Target Market Positioning
Many entrepreneurs think that selling to the widest possible market is the likeliest path to success.
They are afraid to pursue a market niche because they fear they'll lose business by turning away
customers. But this “take all comers” approach is not very effective. It's hard to stand out when you
market your business without a distinctive set of prospects in mind.
Occupying a niche means you won't be competing with a lot of similar businesses solely on price.
Because you will be selling products and services that are customized to the specific needs and
predispositions of a specific group of people, you can often charge more. Your products and services
serve a market that can't easily find alternatives.
7.2.1 Internet Marketing Target Market Positioning Strategies
Positioning strategies help to create a desired image for a company and its products in the minds of
a chosen user segment. Positioning is the process of creating this image, and a position is the resulting
vie of the firm or brand from the consumer perspective (often two very different things ). The concept is
simple: To be successful, a company must differentiate itself and its products from all others and
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position itself among its competitors in the public's mind to carve out its own market niche. Firms can
position brands, the company itself, or individual products. The positioning rule of thumb: “Mediocrity
deserves no praise.”
When firms don't include positioning strategies in their internet marketing plans, they have very
little control over brand images. Ultimately a product position is in the eye of customers, and marketing
communication can help consumers see the brand in the way management wants it to be viewed.
Without a company's positioning cues, customers may perform a competitive comparison using
incomplete or even inaccurate information. Web sites such as www.compare.com, www.procescan.com,
and www.bizrate.com allow customer rate and chat about products; firms do not want complaints at
these sites to be the only input to customers' perceptions of brand image.
The E-marketer's goal is to build a strong and defensible position on one or more bases that are
relevant and important to consumers—and do it better than competitors.
7.2.2 Internet Marketing Object Positioning
After reviewing many potential segments, marketers must select the best for targeting. To do this,
they review the market opportunity analysis, consider findings from the SWOT analysis, and generally
look for the best fit between the market environment and the firm's expertise and resources. Sometimes
this is as easy as discovering a new segment that visited the company's Web site and then experimenting
with offers that might appeal to this group. Other times it is a lengthy and thorough process. To be
attractive, an on-line segment must be accessible through the Internet, be sizable and growing if possible,
and hold great potential for profit.
Next, E-marketers select a targeting strategy. E-marketers may select from among four different
approaches for segment coverage:
 Mass marketing, also called undifferentiated targeting, occurs when the firm offers one
marketing mix for the entire market. Wrigley's gum uses this strategy. On the Internet, many
firms use an undifferentiated strategy. For example, banner ads that appear on portal site home
pages (e.g. Yahoo!) tend to appeal to the entire market.

Multi-segment marketing occurs when a firm selects two or more segments and designs
marketing mix strategies specifically for each. Most firms use a multi-segment strategy.

Niche marketing occurs when a firm selects one segment and develops one or more marketing
mixes to meet the needs of that segment. Amazon adopted this strategy when it targeted Web
users exclusively. Fulcrum calls the Internet “a niche in time,” indicating its ripeness for niche
marketing. This strategy has real benefits but can be risky because competitors are often drawn
into lucrative markets and because markets can suddenly decline, leaving the firm with all its
eggs in one falling basket.

Micromarketing, also known as individualized targeting, occurs when a firm tailors all or part of
the marketing mix to a very small number of people. Taken to its extreme, this can be a target
market of one person.
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The Internet's big promise, one that is currently being realized by many firms, is individualized
targeting. Amazon.com builds a profile of each user who browses or buys books at its site. It tracks the
books that its customers read and makes recommendations based on their past purchases. Amazon also
sends E-mail notifications about product that might interest particular individuals. This is the marketing
concept at its finest: giving individual consumers exactly what they want at the right time and place. The
Internet technology makes this mass customization possible in ways that were unimaginable 10 years
ago.
7.2.3 Internet Marketing Product Positioning
The success of Classmates.com demonstrates how a new and purely on-line product can use the
Internet's properties to build a successful brand. A product is a bundle of benefits that satisfies the needs
of organizations or consumers and for which they are willing to exchange money or other items of value.
The term product includes items such as tangible goods, services, ideas, people, and places. All of these
can be marketed on the Internet, as the Classmates.com example shows. Products may also be classified
by the purpose for which they are purchased. Consumer products are those purchased by an individual
for personal consumption. Businesses sell products to consumers in the business-to-consumer (B2C)
market, and consumers sell products to one another in the consumer-to-consumer (C2C) market.
Industrial products are used in the operation of an organization, as components for manufacture into
final product, or for resale (B2B market).
1．New-Product Strategies for Internet Marketing
Some new products such as search engines are unique to the Internet while other products such as
books simply use the Internet as a new distribution channel. With the Internet's properties of market
deconstruction, customer control, and other e-marketing trends, product developers face many
challenges and enjoy a plethora of new opportunities while trying to create customer value using
electronic marketing tools.
To create new products, organizations begin with research to determine what is important to
customers and proceed by designing strategies to deliver more value than competitors do. In line with
the Sources, Databases, and Strategy model discussed, tier two strategies involve the marketing mix 4P's
and customer relationship management. There are six categories of new-product strategies:
（1）Discontinuous innovations;
（2）New-product line;
（3）Additions to existing product lines;
（4）Improvements/revisions of existing products;
（5）Product repositioning;
（6）Me-too lower-cost products.
2．Product Differentiation and Strategies
Product differentiation includes customization and bundling—offering a combination of products or
services that the individual consumer needs at attractive prices. Such differentiation supports one-to-one
relationship building with each customer—critical for a company's long-term success on the Internet.
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Internet marketing is likely to have a major effect on product packaging. At present, marketers
design most product packaging to appeal to consumers. As more commerce is conducted on-line rather
than in retail stores, consumers might need products with more practical packaging. Products purchased
on-line will be shipped from the distributor directly to the consumer and, thus, without appearing on the
retailers' shelves. As a result, these products will not need expensive, colorful packaging that is
necessary today for store display; nor will they need multiple layers of packaging. Instead, they'll only
need a size and shape that is functional and useful.
In addition to the previously mentioned differentiations, The following is a concise list of specific
differentiation strategies, many of which are particularly important in internet marketing initiatives
(Wilson, 2000):
（1）Being the first to enter the market;
（2）Owning a product attribute or quality in the consumer's mind;
（3）Demonstrating product leadership;
（4）Utilizing an impressive company history or heritage;
（5）Supporting and demonstrating the differentiating idea;
（6）Communicating the difference.
These strategies are of particular importance on the Internet because the marketing strategy often
revolves around the image and product information available on the Web. As the first Internet book
retailer—and one of the pioneer on-line retailers in any category—Amazon.com captured an early lead
in on-line book sales. The company has grown substantially since its inception in 1995; today Amazon is
recognized as a leader on the Web. If a firm is first to provide the product or services, the “brand” can
potentially become synonymous with the product as the best on-line provider. The Amazon.com brand is
known around the world and has become associated with a variety of other products in addition to
books.
This asset of a strong brand image can also help a company attain “ownership” of a product.
Companies with a well-known brand still have an advantage despite the low entry barriers on the
Internet. Customers are drawn to brands they trust, and this attraction is enhanced by a positive
company history. Monster.com has essentially gained ownership of on-line job searches. The
company offers a wide range of job-related information including job searches and resume posting; it
also includes special pages for high-level executives as well as graduating students. Monster.com
early enters into the market and its strong brand image has allowed the firm to become synonymous
with the “product” of jobs.
7.3 Internet Marketing's Brand Strategy
Traditional marketing involves finding a media outlet (print, radio, TV, etc.) whose demographics
(age, gender, median household income, etc.) best mimics one's existing or desired customer base. Once
this demographic match is determined, the content, brand, item, etc. is placed within view of the
designated potential consumers with the hope of attracting their attention.
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Now for the epoch of Internet marketing, it is the opposite, demographics are not necessary now,
because it is the target viewer (consumer) searching for very specific content. Thus, the strategy of
Internet marketing is much different.
7.3.1 Internet Brand Development
There are no signs that the rush to establish successful Internet businesses (both B2B and B2C) will
slow down. Therefore, the rush to create Internet brands will continue as well. Some comfort can be
gained by identifying what has and has not worked in the limited past and learning from the mistakes of
others. For successful brands (ones that exist today and the new ones) the future is likely to include
revisiting elements of the good old days...knowing your customer, developing balanced brand strategies
and aligning communication and experience in innovative ways.
However, time will not stand still for brand building, and companies will need to become more
proficient at parallel tracking, business design, brand building, website design and infrastructure
development. Some of the traditional approaches to brand building can be condensed and re-sequenced
to better accommodate aggressive schedules. Companies will also learn to address branding issues at the
very beginning rather than three weeks after launch. Money spent on page after page of print advertising
will be reallocated to more diverse and effective “experiential” methods of connecting with and
influencing audiences. Web design efforts will continue to move from electronic reproductions of the
company brochure to streaming video, enhanced audio, motion graphics and other exciting possibilities
that the Internet provides.
As the technology and its acceptance evolve, digital business designs will become more assured and
effective. The Internet does not have endless opportunity. Eventually the marketplace will allow only a
certain (small) number of companies per business category to survive. There is no doubt that many of
them will prove to be the most heralded brands of the digital economy.
7.3.2 Internet Brand Management
To adapt to the revolution of brand management of “C” marketing epoch, the enterprise have to
change their traditional brand managing strategies. Here I summarize the management conception of
Internet Brand Management into the following “Four Steps Methods”.
1．Starting from Analyzing Brand Consumer Group
The Internet has changed market competition modes. The enterprise should pay more attention to
customers' demand, instead of trying to defeat their competitors. Brands entering the virtual space should
understand better of brand consumers' features and their changing demands to make it a basis for finding
out and approaching customers, and finally giving them the optimal brand experience.
Besides, due to the complete brand displaying space provided by Internet, the contact between
brand and consumer has become more frequent and closer, which is also a new challenge for brand
managers. They have to focus on contact details between brand and consumer, and always give
consumer pleasant experience. It is these dribs and drabs that gradually form into the brand profile in
consumers' mind.
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2．Keeping on Innovating Technique Application and Marketing Strategies
An enterprise should focus on innovating technique application and marketing strategies, to
innovate and strengthen its brand profile continuously and also leave an up-dated profile in consumers`
mind. We can get much inspiration by analyzing samples of Coca Cola.
At present, Coca Cola and Online declared to build a strategically cooperating partnership. With the
help of the 3D QQ show internet virtual profile, Coca Cola would upgrade its Coke interacting
community and make it possible to be the first on-line community in China who applied 3D statues. This
has provided revolutionary interacting experience for young consumers.
Internet is a brand new space with infinite potential, so the enterprise should practice more and try
more, besides monitoring and summarizing the effect when they are employing Internet, and finally
establish its suitable technique application and marketing mode gradually.
3．Trying to Create the Most Perfect Brand Experience for Consumers
Internet makes the contact between consumer and brand closer, but meanwhile, it makes it more
challenging for building Internet brand, because the brand have to leave consumer a pleasant experience
during every contact with consumer.
It is only the first step for creating a pleasant experience to improve the behaviors offending the
consumer brand. The brand has to take care of consumer's new demand change and create more value
for consumers.
For Internet brand, no matter how the technique advances, the basic principle which targeting
different consumer's proper, effective and pleasant consumption demand will never change.
4．Paying Attention to Strengthening Brand Management through Internet
The strengthening of brand management through Internet methods includes two sides:
First, it is the brand survey. The enterprise should manipulate traditional and Internet channels to
execute the survey aiming at internet brand position and brand strategy establishment, and get to know
the consumer feedback positively in the process of brand popularizing.
Second, it is the brand monitoring and valuating. We can monitor the internet behavior of brand
through Internet means. The environment of internet market is always changing, so some internet
companies re-evaluate their business mode and brand building strategies even every week to guarantee
their brand's preponderant position in market competition. The enterprise should find a professional
Internet marketing service institution to tailor brand-evaluating modes which suite their features and
demands in practice, so that they can evaluate and adjust their brand positioning and strategy executing.
7.3.3 Internet Brand Protection
Within the framework of brand infringements, the company is investing in brand surveillance
services. An audit regular on-line monitoring are provided by searching all the domain names registered
identically or phonetically similar to the original domain name. If the ill intention of a registrant is
proved, it will be possible to recover the domain name by taking legal actions, such as the WIPO's
UDRP procedure. The brand abuse averted translates into a real bottom-line value, as follows:
[annual brand abuse cost] × [%tracked incident] × [success rate] = [brand abuse averted]
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Case 1: The Company “XYZ” allows only 20% of resources to resolve the abuses, and treats only
the first 20% of all abuses per month. The lack of organization, communication and structure leads to a
low success rate of 50%. The brand abuse averted provides a return on investment as follows:
€810 000 × 20% × 50% = €81 000
Case 2: The company “XYZ” has a new approach for managing its brand protection. Instead of
treating brand abuses in arrival order, the company manages the brand infringements by organizing the
abuses into a hierarchy and by taking action against the 20% of the abuses causing 80% of the damages.
This brand protection strategy translates into a success rate of 90%, which provides by far better results
than the first case. Now:
€810 000 × 20% × 90% = €583 200
7.4 Pricing Strategy of Internet Marketing
When you go down to your local grocery store, you'll probably find Jif® peanut butter, and maybe
Planter's®, and then perhaps a store brand, and possibly a generic brand (though generics are pretty well
gone). For some product categories the store brand products are actually manufactured by the name
brand companies. Yet each has a different price, and each product has a different price strategy. These
are marketing decisions, pure and simple. The 4 Ps of Marketing are elements of the marketing mix that
you can control. Price is one of the key elements in a winning marketing mix.
You can't do business on the Internet without having a pricing strategy. And though it may seem
pretty simple on the surface, your company's pricing strategy can easily mean the difference between
thriving and going bankrupt. A lot of factors are involved.
7.4.1 Determine Pricing Objectives
Two main pricing objectives stand out:
（1）To maximize short-term profits. Here you try to squeeze as much money out of sales of the
product as possible, even though fewer customers may make a purchase. Your strategy may be
to charge premium prices for website design services. You end up with fewer customers, but
then dealing with a lot of customers multiplies your problems. And you can make more profit
off each customer. Or you may need to maximize profits in order to satisfy an impatient boss
or investor.
（2）To gain market share. The other main strategy is to price your service lower to gain market
share. You may want to maximize the number of subscribers to your on-line Internet access
business, even though you don't make as much on each customer. But you know that later
you'll be able to sell these subscribers other services such as web hosting, E-commerce,
website design, DSL, and a host of others once they get comfortable with you. You don't make
as much early, but you plan to make money later with “back end” sales.
These two objectives are the key ones to understand, though two others may also be included:
（1）To survive. Survival is a worthy goal. Sometimes companies lower prices so they can generate
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enough revenue to survive for a short term. But this isn't a very good long-term strategy.
There's an old joke about the businessman who said he was losing money on every sale, but he
expected to make it up in volume. Good luck, sometimes it's better to call it quits before you
lose even more.
（2）To help society. You might keep the price lower than “what the market will bear” in order to
make essential products available to the consumers who would otherwise be priced out of the
market. Altruism has its place. You don't have to make as much money as possible, unless
making money is your only goal. For example, I really want to keep my consulting services
priced within reach of small businesses. I long to see small businesses thrive, that's part of
what makes me tick. But I also want to charge better-funded companies a more appropriate fee
for the more extensive services I render them. The way I do this is to offer a standard product
or service, and an economy service at a lower price, but with clear limitations.
7.4.2 Internet Marketing Pricing Strategies
There are a variety of pricing strategies in existence. Each strategy is used in different
circumstances. Some of the things to consider when choosing the best strategy for your situation are
your costs, both short term and long term sales and profit goals, competitors' activities, and customer
lifetime value. While there are others, a few of the more popular pricing strategies to consider are:
（1）Cost plus mark-up. Here, you decide the profit you need to make before setting the price.
Figure out your costs and your selling price is simply your costs plus your pre-determined
profit number. This approach helps keep your profitability top-of-mind, but may also result in
prices that are out-of-line with customer expectations and worthy of your product or service.
（2）Competitive pricing. When competitive pricing, you look at the prices different competitors are
charging and use those prices as a benchmark when pricing your own products. You and your
competitors' positioning strategies will determine whether you price at par, slightly below, or
slightly above the competition.
（3）Price skimming. This technique is used when you offer a unique or scarce product with few or
no substitutes. The price is set high, resulting in high margins for the seller. Buyers are those
who are willing to pay the price because of the product's prestige and/or uniqueness. In the
case of a scarce but necessary product, customers pay the price because they have no choice.
Often, price skimming is a short-term strategy as competitors enter with their own products,
bringing prices down. In the case of scarce products, either the need passes (salt during an ice
storm, for example) or the shortage is temporary. Before considering this technique, be aware
that if your customers feel you have taken advantage of them, you will be building “bad will”
for your business and undermining the trust customers have in your products or services.
（4）Penetration pricing. This is the opposite of price skimming. Prices are set low in an effort to
gain large market share. Because the penetration price does not cover costs, this is also a
temporary strategy. For this strategy to be profitable, customers must be willing to pay you
higher price later on.
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（5）Loss leader. Here, you price one or more products below cost to attract customers. You hope
that those customers will purchase other profitable products from you. This strategy is often
implemented as part of a short-term promotion.
（6）Close out. This is a tactical move to clear slow-moving or excess products out of inventory.
You sell the inventory at a steep discount to avoid storing or discarding the product.
（7）Membership or trade discounting. Here, some customers (those that you know are heavy or
frequent purchasers) are given an elite status, which gives them the privilege of a price
discount on their purchases. This elite status can be based on occupation, membership in an
organization, subscription status, or some other criteria.
（8）Variable pricing. With a variable pricing strategy, different customers pay different prices.
Often, this strategy is used for project work. Each project has unique characteristics so is
priced by the job.
（9）Versioning. This is offering similar products with different levels of functionality. Each level is
priced differently and includes a different bundle of attributes. Software and Web hosting
companies often use this pricing strategy. A trial or very basic version may be offered at low or
no cost. Upgraded versions are available at higher costs.
（10）Bundling. Here, several items are sold together at a price less than if they were purchased alone.
By bundling a popular item with less-known products, can increase the sales. Additionally, in
the case of inventoried items, may be able to avoid a close out.
7.5 Channel of Internet Marketing
Having an Internet marketing strategy gives you a measurable and definitive way to target your
market and position your business so that those who are looking for what you have to offer can find you
easily. You can have the best product but if you can't get the word out, you simply don't stand a chance.
Effective Internet Marketing is about maximizing your “Payoff” or Return On Investment (ROI) by
targeting only those who are your potential customers, and/or those who will honestly hear what you
have to say.
7.5.1 The Difference between Traditional Marketing Channel and Internet
Marketing Channel
Internet marketing differs from conventional marketing communications because of the digital
medium used for communications. The Internet and other digital media such as digital television, satellite
and mobile phones create new forms and models for information exchange. A useful summary of the
differences between these new media and traditional media has been developed by McDonald and Wilson
(1999) which they describe as the “6Is of the e-marketing mix”. Note that these can be used as a strategic
analysis tool, but they are not used in this context here. The 6Is are useful since they highlight factors that
apply to practical aspects of Internet marketing such as personalization, direct response and marketing
research, and also strategic issues of industry restructuring and integrated channel communications. By
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considering each of these facets of the new media, marketing managers can develop marketing plans that
accommodate the characteristics of the new media. This presentation of the “6Is” is an interpretation of
these factors using new examples and diagrams to illustrate these concepts.
7.5.2 Direct Internet Marketing
Nowadays the market competition is more drastic than before. The effective tools — direct
marketing that is common in western country have entered into Chinese market. Direct marketing means
to approach the target customer group based on effective cost and transfer the sales promotion
information in first time. On the other hand, direct marketing is very useful for expanding marketing
share with high customer loyalty by continuous contact with new and existing customers. Obviously,
direct marketing is the optimal tools for corporate business development.
Direct marketing solution:

database management;

customer relationship management;

catalogue sales;

tel-marketing;

E-business solution.
7.5.3 Indirect Internet Marketing
There are lots of traditional approaches to marketing, whether in post-production, film distribution,
or the proverbial widget industry. Most in our audience will be aware of the textbook methods, but I
think they ought to know more about the indirect ways a company markets itself.
Indirect approaches are a bit more nebulous, since impression of a well-run company depends on
many factors. Companies that understand that everyone in the organization is involved in marketing
stand a better chance for success.
Indirect marketing includes such factors as the responsiveness of the production team, the way the
receptionist greets visitors, and the way phone calls are handled. It also includes behind-the-scenes areas,
such as the way the business affairs or accounting departments perform their functions.
7.5.4 Chooses Pair—the Best Enterprise Internet Marketing
Why do companies spend so much on direct mail? Here are just a few of the advantages of direct
marketing:

It is quicker to produce.

Response is quicker and easier.

It can be cheaper, especially for smaller tests.

It does not require as much design time.

It can be highly targeted.

It allows you to target hard-to-reach consumers.

It is more flexible.
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
It can offer more details.

There is less competition.

Direct mail can be more personal.

It is easier to keep.

It can be used to test.

It can build a list of loyal customers.

Direct mail helps bookstore sales.
Internet Marketing Strategy
E-commerce means an expanded role for intermediaries in economizing on search, as they can
provide price and other comparisons and aggregate information for all kinds of goods and services.
Economies of specialization, scale and scope are “technological” determinants of specialized
intermediation.
Five principles of choosing the E-commerce intermediary agent, they van be defined as 5C factors:
 cost;

credit;

coverage;

character;

continuity.
7.6 Introduction of Mobile E-Commerce
7.6.1 Introduction
The rapid growth of mobile computing, especially through WAP technology makes mobile
E-commerce possible.
GSM and other wireless networks and especially Wireless Application Protocol technology
designed for GSM and subsequent mobile networks have now opened access to Internet for hand-held
mobile terminals. Bluetooth technology will further enhance the sphere of mobility. And also both will
facilitate mobile E-commerce. Using these technologies, both customer and merchant can now be
mobile, although it is probable that a customer is more mobile than a merchant.
M-commerce offers users the possibility of accessing the Internet via a rapidly expanding array of
mobile devices like smart mobile handsets. As new functions and applications (data, video) are added,
mobile communications are radically extending the scope of E-commerce beyond its current boundaries.
By the end of June, 2005, mobiles are expected to provide the most common access to high speed Internet,
thus enabling transactions and specialized information services on the move for the mass-market.
7.6.2 Main Business Field of Mobile E-Commerce
What is the difference between a mobile environment and a more traditional network environment?
Mobility can be understood in several ways. One can think that a person moves from one physical place
to another, but does not carry any mobile equipment with him or her. In this case he or she uses the
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locally available (fixed) network infrastructure to take actions in the network, including issuing
E-Commerce transactions. Assuming that the above mobile person does carry with him or her a piece of
personal equipment that facilitates the access to the network resources we come closer to the concept of
mobile E-commerce. The most general idea is that a customer can conduct E-commerce at any time, at
any place using the miniature devices. Overall, our view is that mobile hand-held devices and the
supporting net-works are a special access technology to Internet or another backbone network
facilitating many services, including E-commerce.
7.6.3 Marketing Strategy of Mobile E-Commerce
There are two different but related concepts of mobility:

people move physically and change the access point to a network or change the network; they do
not need to carry any access devices with them.

people move and carry physical access devices, typically mobile phones, and possibly portable
computers with them.
The big promise of wireless networks is the mobility that is offered to users. Apart from
C-autonomy, mobility is the other main factor that determines the network architecture. GSM
infrastructure allows roaming all over the world, i.e. the user can get access to voice and data services
basically in any other GSM network (in practice of course the operators must have roaming contract).
Further, GSM technology guarantees that voice calls and data services are available while moving,
irrespective of the cell borders. That is, user can drive through several cells and be able to continue a
phone call or data connection without interruption, even if the base station servicing the device is
changed maybe several times. This is facilitated by the so-called hand-over mechanism. Similar
mechanisms exist for WANs. The network infrastructure keeps track of the location of the devices
automatically. They need only to register at one base station.
Mobile E-commerce has the following advantages:
（1）MEC applications take advantage of mobile communications to offer to consumers and
businesses.
（2）Additional benefits as opposed to traditional E-commerce applications.
（3）Mobile phones users can be reached at anytime, regardless of their location. Make it possible
that users are immediately notified about particular events. It also enables the delivery of
time-sensitive information whose value depends on its timely use.
（4）Personalization: The information, services and applications available in the Internet today are
enormous. It is thus important for users to receive relevant information. Furthermore, custom
is a key issue in using mobile devices because of the limitations of the user interface in terms
of size and resolution.
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