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The University of Birmingham MSc International Business (2013) International e-business Lecture 4: Marketing on the Web Customer Attraction and Retention Website Development and E-Commerce / e-Business Marketing E-business Strategy 1 Learning Objectives The University of Birmingham • Identify the key features of the Internet audience • Discuss the basic concepts of consumer behaviour and purchasing decisions • Understand how consumers behave online • Describe the basic marketing concepts needed to understand Internet marketing • Identify and describe the main technologies that support online marketing • Identify and describe basic e-commerce marketing and branding strategies • Develop an appropriate strategy process model for e-biz • Consider tools to generate and select e-business strategies • Explain how online market research is conducted 2 Learning Objectives (2) The University of Birmingham • Understand use of product-based and customer-based marketing strategies, including e-mail marketing • Appreciate communication activities with different market segments • Identify customer relationship characteristics and how to respond to them • Understand the customer relationship life cycle and Customer Relationship Management (CRM and e-CRM) • Appreciate how companies advertise and engage in marketing communications (marcomms) online • E-mail marketing strategies, brand creation and development online, including use of search engines • Use of social media in viral marketing campaigns 3 Website and Marketing: Life-Cycle Model The University of Birmingham 2 “What criteria determine who will be our most profitable customers?” 1 Customer Selection “How can we increase the loyalty and profitability of this customer?” Customer Acquisition Relationship Marketing Customer Extension “How can we acquire this customer in the most efficient / effective way? Customer Retention 3 “How can we keep this customer for as long as possible?” 4 Gartner’s Model of Customer Interaction: http://www.gartner.com See also: http://www.google.com Customer Lifecycle Marketing 4 Marketing Mix: 4Ps (Old Hat) The University of Birmingham • Product • Physical item or service sold • Brand: customers’ product perception • Price • Amount customer pays for product / service • Customer value: customer benefits minus total cost • Promotion • Means of spreading word about product / service • Place (distribution) • Need to have products or services available in many different locations • Getting right products to the right places at the best time to sell them 5 4Ps (Schematic) The University of Birmingham Key Components 6 What drives consumer behaviour? The University of Birmingham • Start by assessing how consumers make purchase decisions (offline and online) • Five stages in the consumer decision process: • • • • • • awareness of need search for more information evaluation of alternatives the actual purchase decision post-purchase contact with the firm How do we use this information? 7 Decision-Making Processes The University of Birmingham 8 How does a Website help? The University of Birmingham • Some issues in Web Design and e-business adoption STAGES OF WEBSITE DEVELOPMENT AND ITS COMPLEXITY Initial Question: What is the purpose of the Website? Communication: Advertising; marketing communication; notification of presence; description of products and services 1-way: To provide information to potential customers: Very Simple (Commonplace in early stage of e-business) Often called “Brochureware” (a term of abuse!) 2-way: Simple interactivity: Data capture - build Customer database e-commerce transactions: take orders online and fulfil these (either online or offline) e-business transformation: full integration of suppliers’ and customers databases, supply-chains and processes (the objective of much B2B) [Can be extremely complex] 9 The University of Birmingham Product-Based Marketing Strategies • Web presence must integrate with image and brand • Managers often think in terms of products and services sold • Web site design is ABSOLUTELY CRITICAL when customers use it to assess product categories • Web site examples: Home Depot Staples and Apple. Compare. • Not a useful Web site design when customers look to fulfill a specific need • Design Web site to meet individual customer needs • Offer alternative shopping paths to different groups • See http://www.webpagesthatsuck.com/ www.homedepot.com www.staples.com www.apple.com 10 The University of Birmingham Customer-based Marketing Strategies • Web sites to meet various types of customers’ specific needs • Initial step: identify customer groups sharing common characteristics • Make site more accessible and useful for each group • Companies need to take view beyond internal perspective • Example: University Web sites today focus design on needs of stakeholders (current students, prospective students, parents of students, potential donors, Academic Staff). Any others? 11 Communicating with Different Market Segments The University of Birmingham • Communications media selection to carry message • Physical world • Uses building construction and floor space design • Online firm • Communications media selection: critical • No physical presence • Customer contact made through image projected through media and Web site • Online firm challenge • Obtain customer trust with no physical presence • TRUST is essential for e-Business success – especially in B2C • New businesses need to build sound reputation (Branding) 12 The University of Birmingham Trust, Complexity and Media Choice • The Web • Broad intermediate step • Between mass media and personal contact • Web communication offers: • Advantages of personal contact selling • Cost savings of mass media • Far less costly than print advertising (“menu costs”) • Mass media advertising offers lowest trust level • Still used successfully because costs are spread over large numbers of people 13 Information Dissemination The University of Birmingham 14 The University of Birmingham Trust, Complexity, and Media Choice (2) • Complexity level inherent in product and service • Important factor in media choice • Products with few characteristics and easy to understand • Promotes well with mass media (e.g. Beer; DVDs) • Mass media: expensive to produce • Used primarily for short messages • Highly complex products and services • Promote well with personal contact • Customers may ask questions (e.g. Pharma) 15 The University of Birmingham Trust, Complexity, and Media Choice (3) • Web occupies a wide middle ground • Offers various elements • Mass media messaging • Personal contact interaction • Anything in between • People now resistant to mass media messages • Successful mass media campaigns • Rely on passive nature of media consumption • Web user likely to be in an active state • Better to use a trust-based model approach • New Internet communications modalities for individuals and companies • Web log or blog – and increasingly - SOCIAL MEDIA 16 Market Segmentation The University of Birmingham • Divides potential customer pool into segments • Defined in terms of demographic characteristics • Micromarketing • Practice of targetting very small market segments • Hampered by cost increases • Three categories to identify market segments • Geographic segmentation • Demographic segmentation • Psychographic segmentation • Television advertisers use all three categories 17 Market Segmentation on the Web The University of Birmingham • Web opportunity • Present different store environments online • H & M site targets young, fashion-conscious buyers • M & S site targets older, more established buyers • Limitations of physical retail stores • Floor and display space • Must convey one particular message • Web stores • Separate virtual spaces for different market segments 18 Offering Customers a Choice The University of Birmingham • One-to-one marketing (now possible using Big Data, data-mining and Analytics [see later]) • Offering products, services closely matched to needs of a particular customer • Example: Dell (Not as good as it used to be) • Offers several different ways to do business • Home page links for each major customer group • Specific products, product categories links available • Dell Premier accounts • High level of customer-based market segmentation http://contentmarketinginstitute.com/2012/05/serve-multipleaudiences-with-a-segmented-site-structure/ (Good reference site) 19 University of Beyond Market Segmentation: CustomerTheBirmingham Behaviour & Relationship • Reminder: Companies target similar customer groups as market segments • One-to-one marketing • Chance to create individually unique Web experiences • Next step • Use the Web to target specific customers in different ways at different times • Same person • Needs different combinations of products and services • Depending on the occasion [Christmas; Chinese New Year; Singles’ Day; Valentine’s; Summer; Winter, etc] • Occasion segmentation 20 Segmentation & Behaviour The University of Birmingham • Online world: single Web site design [e.g. IBM] • Easier to meet needs of different behavioral modes • Can include elements appealing to different behavioral segments • Usage-based market segmentation • Customizing visitor experiences to match the site usage behavior patterns of each visitor or type of visitor • Categories of online behavior patterns • Browsers, buyers, and shoppers • Browsers OK; Buyers better; Shoppers even better • LOYAL LONG-TERM Customers: Best of all! 21 Segmentation & Behaviour (2) The University of Birmingham • Browsers • Visitors just surfing or browsing • Web site must offer something to trigger visitors’ interest • Trigger words • Prompt visitor to stay and investigate products or services • Have links to site explanations, instructions • Include extra content related to product, service • Leads to favourable impression (bookmark) 22 Segmentation & Behaviour (3) The University of Birmingham • Buyers • • • • Ready to make a purchase right away Offer direct route into purchase transaction Amazon (and other sites recognize returning buyers) How? Use of “cookies” – small text file sent to browser • Shopping cart • Part of the Web site • Keeps track of selected items for purchase • Automates purchasing process • Page offers link back into shopping area • Primary goal: get buyer to shopping cart as quickly as possible 23 Segmentation & Behaviour (4) The University of Birmingham • Shoppers • Motivated to buy • Looking for more information before purchase • Offer comparison tools, product reviews, and features lists • People do not necessarily retain behavioural categories from one visit to the next • Even for the same Web site • Alternative Models: McKinsey’s 6 behavioural groups • Simplifiers (convenience) Surfers (exploring) Connectors (Communicating with others) Routiners (regularly return to same sites) Sportsters (look at sport and entertainment) • Question: Does the same strategy work for all? NO!!! • Need to identify groups and formulate different ways of generating Revenues (and Profits). 24 Customer Relationships and LifeCycle Segmentation The University of Birmingham • One-to-one marketing and usage-based segmentation value • Strengthen companies’ relationships with customers • Good customer experiences • Create intense loyalty feeling • Typical five-stage model of customer loyalty • First four stages show increase in relationship intensity • Fifth stage (separation) • Decline occurs, relationship terminates 25 Advertising on the Web The University of Birmingham • Effective advertising involves communication • Five-stage customer loyalty model helpful in creating advertising messages • Awareness stage • Advertising message should inform • Exploration stage • Message should explain how product, service works • Encourage switching brands • Familiarity stage • Message should be persuasive, convince customer to buy • Commitment stage • Customer sent reminder messages, offers, news, cases • Separation stage • Customer not targetted • Online advertising • Always coordinate with existing advertising efforts. Why? 26 5 Stages of Customer Loyalty The University of Birmingham Touchpoints: Online and offline customer contact points Touchpoint consistency: Goal of providing similar levels and quality of service at all touchpoints 27 The University of Birmingham 5 Stages & Life-Cycle Segmentation • Characteristics of the five stages • Awareness • Customers recognize company name, product • Exploration • Customers learn more about company, products • Familiarity • Customers have completed several transactions • Customers aware of returns and credits policies • Customers aware of pricing flexibility • Customers just as likely to shop at competitors’ sites • Commitment • Customer experiences highly satisfactory encounters • Customer develops fierce loyalty or strong preference • Often tells others (WOM – best marketing there is!) • Separation • Conditions that made relationship valuable change • Parties enter separation stage 28 The University of Birmingham Acquisition, Conversion & Retention • Goal • Attract new visitors to a Web site • Acquisition cost • Total amount of money site spends drawing one visitor to site • Conversion • Convert first-time visitor into a customer • Conversion cost • Total amount of money site spends to induce one visitor to make a purchase, sign up for a subscription, or register • May exceed profit earned on average sale 29 Acquisition, Conversion & Retention (2) The University of Birmingham • Retained customers • Return one or more times after making first purchases • Retention costs • Costs of inducing customers to return and buy again • Importance of measuring these costs • Indicates successful advertising, promotion strategies • More precise than classifying into five loyalty stages • What can we do with this information? • Loyalty gifts – Air Miles; Cashback; Special Offers; • Prizes – Lotteries; Gifts; Offers to friends and relatives • Other ideas? … 30 The University of Birmingham Acquisition, Conversion & Retention • Funnel model • Conceptual tool • Provides understanding of overall nature of marketing strategy • Clear structure for evaluating specific strategy elements • Very similar to customer life-cycle model • Less abstract • Better at showing effectiveness of two or more specific strategies • Provides good analogy: large number of prospects with fewer and fewer converted to loyal patrons 31 Funnel Model The University of Birmingham Note the High Attrition Rate. http://visualign.wordpress.com/2013/03/31/visualizing-conversion-rates-funnels-bullet-charts/ 32 Banner Ads The University of Birmingham • Banner ad • Small rectangular object with stationary or moving graphic • Includes hyperlink to advertiser’s Web site • Versatile: informative and persuasive functions • Attention-grabbing banner ads • Use animated GIFs and rich media objects • Created using Shockwave, Java, Flash, HTML5 • Interactive marketing unit (IMU) ad formats • Voluntary standard banner sizes • Universal ad package (UAP) – see Schneider • Banner Ad Exchanges: Brokers between advertisers and websites carrying the ads 33 New Banner Ad Moves The University of Birmingham • New strategies for banner ads • Banner ads were a novelty initially, but now ignored • Lost ability to attract attention • Solutions (suggested) • Introduce animated GIFs with moving elements • Create ads displaying rich media effects (movie clips) • Add interactive effects (Java programs): respond to user’s click with some action • Create ads acting like mini video game • Create ads appearing to be dialogue boxes (misleading and probably unethical) 34 Text Ads The University of Birmingham • Short promotional message • No graphic elements • Usually placed along Web page top or right side • Deceptively simple but surprisingly very effective • Example: Google • Initially criticized for including unobtrusive ads on its pages • Now clearly labels ads to prevent confusion • Inline text ad • Text in stories displayed as hyperlinks 35 Other Web Ad Formats The University of Birmingham • Pop-up ad • Appears in its own window • When user opens or closes Web page • Considered to be extremely annoying • Must click close button (small) in window of ad • Pop-behind ad • Pop-up ad followed by a quick command • Returns focus to original browser window • Appears when browser is closed • Ad-blocking software • Prevents banner ads and pop-up ads from loading • You can set your browser to block pop-ups (sitespecific) 36 Even More Ad Formats The University of Birmingham • Interstitial ad • User clicks link to load page • Interstitial ad opens in its own browser window instead of page user intended to load (very annoying) • Many close automatically • Others require user to click a button • Rich media ads (active ads) • Generate graphical activity that “floats” over the Web page itself • Example: 30 second ad before television show • Very Annoying: Especially on YouTube 37 Mobile Device Advertising The University of Birmingham • Massive Growth Area, with Enormous Potential • Some mobile software applications (mobile apps) include advertising element • Messages displayed from advertisers • Part of the app screen or in a separate screen • Mobile apps’ advertising space marketed in same way as Web sites’ banner advertising • Also Site Sponsorships: • Offer opportunity to sponsor all (or parts) of their sites • Quite subtle; Ties Company or Product to an Event e.g. Olympic Games; World Cup; Cultural Events • Raises a number of Ethical Questions (advertising message closely woven into sites’ contents) 38 Cost & Effectiveness The University of Birmingham • Companies want Web sites to make favourable impression on potential customers • Raises issue of measuring Web site effectiveness • Cost per thousand (CPM) for mass media advertising • “M” Roman numeral for “thousand” • Amount paid for every thousand people in the estimated audience • Measuring Web Audiences: Complicated • Web’s Interactivity is critical (needs careful Design) • Depends on information gathered from Visitor • Visit • Trial visit • Repeat visits 39 Cost & Effectiveness (2) The University of Birmingham • Page view (Key Metric) • Each page loaded by a visitor (Key Metric) • Ad view (Key Metric) • Occurs if page contains an ad • Impression • Each time banner ad loads • Click (click-through) (Key Metric) • Action whereby a visitor clicks banner ad to open advertiser’s page • New metrics to evaluate advertising yield outcomes • Measure number of new visitors who buy first time after arriving at site (Key Metric) • By way of click-through (Key Metric) • Calculate advertising cost of acquiring one customer on the Web (Key Metric) • Compare these to how much it costs to acquire one customer through traditional channels – assess campaign 40 CPM Rates Source: Schneider, 2013 ($ US) The University of Birmingham 41 The University of Birmingham Effectiveness of Online Advertising • • • Online advertising effectiveness • Remains difficult to measure Major problem • Lack of single industry standard measuring service Solution (2004) • Set of media measurement guidelines • Used by all online advertisers • Produce comparable ad view numbers • • • • Difficulties remain • Site visitors change Web surfing behaviors, habits Online advertising only one element in marketing strategy • Use variety of media to reach potential customers Online advertising developments • AdAge.com, eMarketer, Online Publishers Association Online advertising much more effective using market segmentation 42 E-Mail Marketing The University of Birmingham • Can be a powerful element of advertising strategy • Used to announce new products or features • Used to announce sales on existing products • Unsolicited Commercial E-mail (UCE, “Spam”) • Electronic junk mail • Wastes time, disk space, and consumes large amounts of Internet capacity • Can use Spam and Junk Mail Filters, but not 100% effective • 2 Problems: False-Positives; False-Negatives (Uses Bayesian Filtering: Improves over time, as software learns) • Key element • Obtain customers’ approvals • Prior to sending marketing or promotional e-mail • Anti-Spam Laws pretty useless 43 The University of Birmingham Permission Marketing: More Ethical • Conversion rate • Percentage of recipients responding to an ad or promotion • Ranges from 10 percent to more than 30 percent on requested e-mail messages • Opt-in e-mail • Practice of sending e-mail messages to people who request information • Part of marketing strategy: permission marketing • More successful than mass media general promotional message • Makes better use of customer’s time • Return Path offers opt-in e-mail services • Provides e-mail addresses to advertisers • Rates vary depending on type and price of the product • Minimum of about $1 to a maximum of 25–30 percent of the selling price of the product 44 What IS Strategy? The University of Birmingham • What is strategy? • ‘Defines how we will meet our objectives’ • ‘Sets allocation of resources to meet goals’ • ‘Selects preferred strategic option to compete within a market’ • ‘Provides a long-term plan for the development of the organization’ 45 Management Issues The University of Birmingham • How does e-business strategy differ from traditional business strategy? • How should we integrate e-business strategy with existing business and IS strategy? • How should we evaluate our investment priorities and returns from e-business? • How do we need to alter our marketing strategies as we develop web presence and capabilities? • What Marketing Mix should we adopt? • Combination of 4Ps (or 7Ps) to achieve goals 46 The University of Birmingham Traditional vs. e-business Strategy 47 University of Integration of e-business Strategy TheBirmingham with Existing Business and IS Strategy? Alternative forms of Organizational Strategy INTEGRATION is CRITICAL Chaffey (2011) Chapter 5 48 Evaluation of ROI: DIFFICULT The University of Birmingham http://www.ginaabudi.com/articles/using-return-on-investment-to-evaluate-project-management-training/ 49 Relationships between e-business and Other Strategies Chaffey: Chapter numbers refer The University of Birmingham 50 Sell-side e-strategy (e-marketing / e-CRM strategy) The University of Birmingham • Sell-side e-commerce is a channel strategy • Objectives for online contribution percentage should drive our strategy • Our e-commerce strategy defines how we should • Hit our channel leads and sales targets • Acquisition, Conversion, Retention, Service, Profitability (Customer LifeCycle Model) • Communicate benefits of using this channel • Prioritize products available through channel • Prioritize audiences targeted through channel • Select partners for this channel • Channel strategy thrives on differentials • BUT, need to manage channel integration Source: Chaffey 51 The University of Buy-side e-business Strategy Birmingham (e-supply-chain Management Strategy) • Buy-side e-commerce strategy is about maximizing operational efficiencies while improving customer service quality • Operational efficiency KPIs should drive our strategy • Our buy-side e-commerce strategy defines how we should • Automate internal processes • Link internal resource management systems with external purchasing systems • Prioritize suppliers / partners collaborating using this channel • Prioritize applications for E-SCM – create a roadmap • Involves selection of appropriate strategic partners 52 Marketing Strategy Focus: Product? The University of Birmingham • Web presence must integrate with image and brand • Managers often think in terms of products and services sold • Useful Web site design when customers use product categories • Web site examples: B & Q, IKEA, TPS (Trade Plumbing Supplies), Staples (Office Supplies), many other examples • Not a useful Web site design when customers are looking to fulfill a specific need • Design Web site to meet individual customer needs • Offer alternative shopping paths • Display the complete range of products available • Provide a search option (amazing how few sites do!) 53 Marketing Strategy Focus: Customer? The University of Birmingham • Web sites to meet various types of customers’ specific needs • Initial step: identify customer groups sharing common characteristics • Make site more accessible and useful for each group • Companies need to take view beyond internal perspective • Example: university Web sites today focus design on needs of stakeholders (current students, prospective students, parents of students, potential donors, funders, academic and ancillary staff) • Example: Apple: Functional design, visual appeal, ease of use, capability, fun to use, powerful and innovative, etc. 54 The University of Birmingham Communication: Different Segments • Communications media selection to carry message • Physical world • Uses building construction and floor space design • Online firm • Communications media selection: critical • No physical presence • Customer contact made through image projected through media and Web site • Online firm challenge: • Obtain Customer trust with no physical presence • Communicate Organization’s ethics and image • Engage visitors and grow their interest in products and services – turn into Customers 55 TV Advertising Tailoring The University of Birmingham • Companies try to: • Match advertising messages to market segments • Build sales environment for a product or service • Correspond to market segments trying to reach 56 Management Issues The University of Birmingham • How do we integrate traditional marketing approaches with e-marketing? • How can we use electronic communications to differentiate our products and services? • How do we redefine our marketing and communications mixes to incorporate new media? 57 e-Marketing The University of Birmingham • The definition of marketing by the Chartered Institute of Marketing (http://www.cim.co.uk/) is: ‘Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably’ • Which e-marketing tools can assist? • Web, e-mail, databases, wireless and digital television, mobiles, Tablets, PDAs, etc. • Streaming video; Webinars; Demonstrations online; FAQs; Online Chat; Use of Social Networking (JetBlue, use of Facebook; Integrated Offline and Online Marketing Communications (Marcomms), etc. 58 The University of Birmingham E-Marketing and Other Business Plans These need close alignment 59 SOSTAC: Generic Framework The University of Birmingham http://www.businessballs.com/pr_smiths_sostac_planning_method.htm 60 Inputs from Situational Analysis The University of Birmingham 61 The University of Birmingham Competitive Analysis: Benchmarking • • • • • • • Marketplace performance – market share and sales trends and much more significantly, the proportion of sales achieved through the Internet. Business and revenue models – do these differ from other market players’ approaches? Marketing communications techniques – is the customer value proposition of the site clear? Does the site support all stages of the buying decision from customers who are unfamiliar with the company through to existing customers, are special promotions used on a monthly or periodic basic? Beyond the competitor’s site, how do they make use of intermediary sites to promote and deliver their services? Services offered – what is offered beyond brochureware? Is online purchase possible, what is the level of online customer support and how much technical information is available? Implementation of services – the practical features of site design such as aesthetics, ease of use, personalization, navigation and speed. The 7Ps. [www.cim.co.uk/files/7ps.pdf ] Use FiMO and RECOIL Analysis (Online at Canvas) 62 Assessment of Effectiveness • • • • The University of Birmingham Business effectiveness. Contribution of site to revenue (see objective setting), profitability and any indications of the corporate mission for the site. The costs of producing and updating the site will also be reviewed, i.e. cost-benefit analysis. Marketing effectiveness. Measures may include: • leads; sales; retention rate; market share; brand enhancement and loyalty; Customer service: Critical KPI for assessing effectivenes • These measures must be assessed for each of the different product lines delivered through the web site. The way in which the elements of the marketing mix are utilized should also be reviewed. Internet effectiveness. These are specific measures used to assess the way in which the web site is navigated and searched, and the characteristics of the visiting audience. • Such measures include specialist terms such as hits and page impressions that are collected from the log file, and also more typical techniques such as focus groups and questionnaires to existing customers. From a marketing point of view, how clear is the value proposition of the site for the customer; this should be noted – and acted upon. 63 SMART e-Marketing Objectives The University of Birmingham • http://www.learnmarketing.net/smart.htm • Start-ups – acquiring a specific number of new customers or to sell advertising space to generate a specified revenue that will hopefully exceed investment in site creation and promotion! • Established mobile-phone operator – increased customer retention by reducing churn from 25 per cent p.a. to 20 per cent. • Established media company – increased online revenue, target of 20 per cent online contribution to revenue by offering new online services and media sales. • Established business-to-business engineering company – increased overall revenue by 5 per cent, through targeting sales in new international markets. • Reduced costs of routine customer service by 10 per cent to enable focus on delivery of specialized customer service. 64 Developing Marketing Strategy The University of Birmingham 65 De Kare Silvers ES Test The University of Birmingham 1. Product characteristics. Does the product need to be physically tried or touched before it is bought? 2. Familiarity and confidence. Considers the degree the consumer recognizes and trusts the product and brand. 3. Consumer attributes. These shape the buyer’s behaviour – are they amenable to online purchases in terms of access to the technology skills available and do they no longer wish to shop for a product in a traditional retail environment? •http://abopress.blogspot.com/2011/05/de-kare-silvers-electronic-shopping.html 66 Online and Offline Communication The University of Birmingham 67 Individualization of Message The University of Birmingham 68 Customers’ Characteristics The University of Birmingham How can you segment them? 69 How do they behave online? The University of Birmingham 70 Integrated Marketing Strategy The University of Birmingham 71 Channel Integration E-Marketing and Mixed Mode Purchasing The University of Birmingham 72 Online Marketing Mix: Issues • • • • • The University of Birmingham Do we vary the mix online or replicate offline? Is the offer clear – brand proposition, online offer Is online differentiation defined? Is online differentiation communicated? Key online mix variables • Product • Price • Place • Promotion • Service: People, Process, Physical evidence 73 Elements of Marketing Mix The University of Birmingham 74 Online Mix Examples The University of Birmingham • Product • • • • • • Extend range (Tesco) Narrow range (WH Smith iDTV) Online-only products (banks) Develop new brand (Egg) – FAILED! Migrate existing brand (HSBC) Partner with online brand (Waterstone's and Amazon). 75 Online Mix (2) The University of Birmingham • Price • Differential pricing: • Change online prices due to price transparency and competition (EasyJet) • Maintain price to avoid cannibalisation of offline sales (Dixon) • New pricing options (software, music): • • • • Rental (“cloud computing”) – see later Pay per use (“cloud computing”) Reverse auctions (B2B) Dynamic pricing (Concert tickets). 76 Online Mix (3) The University of Birmingham • Place = avoiding channel conflicts (Channel Strategy = sell – side activity) • Disintermediation – sell direct • Reintermediation – partner with new intermediaries • Countermediation: • Form new intermediaries • Partner with existing intermediaries • Distance from intermediaries. (Abbey National) 77 Online Mix (4) The University of Birmingham • Promotion • Selective use of new online tools for different stages of the buying process and customer lifecycle • Online only campaigns • Integrated campaigns – incorporating online tools into communications mix. 78 Online Mix (5) The University of Birmingham • Service • People • Automate – use web self-service, offer customer choice • Process • Change process for service – contact strategies • Physical evidence • Site design – differentiate or support brand • Fulfillment quality. 79 The University of Birmingham Activity: Varying Mix (Supermarkets) Mix Tactics applied online Product Price Place Promotion Service www.tesco.com, www.sainsburystoyou.co.uk, www.waitrose.com 80 Varying Mix: Airlines Mix The University of Birmingham Tactics applied online Product Price Place Promotion Service www.ryanair.com, www.easyjet.com, www.ba.com 81 Branding The University of Birmingham Malcolm McDonald 1992:, Creating Powerful Brands Defines Brand as “an identifiable product or service augmented in such a way that the buyer or user perceives relevant unique added values which match their needs most closely. Furthermore, its success results from being able to sustain these added values in the face of competition.” 82 The University of Birmingham Aaker & Joachimsthaler: Brand Equity • • • • • Key Components: Brand awareness Perceived quality Brand associations Brand loyalty. Question: How does one value a brand? Answer: With extreme difficulty 83 2004 Cranfield Study The University of Birmingham 84 How do Customers find you? source: Laudon &Traver, 2011 The University of Birmingham 85 What Entices Them to Buy? Source: Laudon & Traver, 2011 The University of Birmingham 86 What do we need to offer? The University of Birmingham 87 What do we need to offer? The University of Birmingham In my opinion: Customer Service 88 Not Products, but BRANDS The University of Birmingham 89 Marketing Communications The University of Birmingham • What is marketing communications? • Two aspects: • Branding (statements of “quality, reliability, non-price factors”) • Sales (promotion) • Promotional aspect : “buy NOW!” • Branding aspect: Focus on differentiated benefits of product • Online Brand Development and brand reinforcement • CRITICAL to business success • Develop and sustain competitive advantage • Create a climate of TRUST (building guanxi) • Create corporate “image” in mind of online visitor • Online Advertising • A mixed blessing - permission marketing: OK; spam: BAD • Try http://www.emarketer.com 90 e-Commerce Adoption The University of Birmingham • “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.” Porter, M. (2001) Strategy and the Internet, Harvard Business Review, March 2001, 62–78. 91 Online marketing jargon • • • • • • • • • • • • • • • • Banner ad Pop-up Pop-under Button Rich media ad Interstitial ad Superstitial ad Banner swapping Banner exchanges Cross-linking Search engine marketing Placement Paid listing Sponsorship Affiliate marketing Direct e-mail marketing The University of Birmingham Please do some online searches for these terms and concepts and build a database (on cards, or whatever), to ensure that you understand the concepts and their importance to e-enabled business operation 92 Reading etc The University of Birmingham • Chaffey: Chapters 4 8 and 2 • Schneider: Chapter 3 and 4 • Dahlen, Lange & Smith (2010): Marketing Communications, Chichester, John Wiley & Sons Ltd. • Chen: Chapters 3 & 4 • Laudon & Traver: Chapters 2, 4, 7& 8 • Jelassi & Enders: Chapters 4, 5 and 6 • http://www.davechaffey.com/E-marketing-Insights/ • http://www.clickz.com/experts/brand/emkt_strat • http://www.emarketingandcommerce.com/ • http://www.google.co.uk/intl/en/adwords/ • http://www.marketingtoday.com/emarketing/index.ht m 93