chapter 1 Introduction to Internet Marketing McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.

Introduction to Internet Marketing — Today’s Objectives Objectives will be to: Define the scope of Internet marketing Explore the stages of Internet marketing Discuss the relationship stages and the Marketspace Matrix Examine guidelines for success Outline the progression of the book

Chapter 1: Introduction to Internet Marketing Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview of the Book Conclusion

Chapter 1: Introduction to Internet Marketing Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview of the Book Conclusion

Definition and Scope of Internet Marketing

Cell 4 Cell 2 Cell 3 Cell 1 Location of Revenue Stream Bricks-and- Mortar Online Marketing Resource Allocation OfflineOnline Internet Marketing Impact Exhibit 1.1: Assessing the Impact of Internet Marketing

Chapter 1: Introduction to Internet Marketing Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview of the Book Conclusion

Exhibit 1.2: The Seven-Stage Cycle of Internet Marketing Step 2 Formulating the Marketing Strategy Step 3 Designing the Customer Experience Step 4 Crafting the Customer Interface Step 5 Designing the Marketing Program Step 6 Leveraging Customer Information Through Technology Step 7 Evaluating the Marketing Program Step 1 Framing the Market Opportunity

Exhibit 1.3: Framework for Market Opportunity Seed Opportunity in Existing New Value System Identify Unmet and Underserved Need(s) Identify Target Segment(s) Declare Company’s Resource-Based Opportunity for Advantage Assess Competitive, Technological, and Financial Opportunity Attractiveness Make “Go / No-Go” Assessment

Framework for Market Opportunity Microsoft CarPoint Example Leverage the Internet to Improve the Consumer Car-Buying Process Car Buyers Are Dissatisfied With Current Retail Car-Buying Process Shoppers Who Feel Intimidated by Sales People and Look for More Efficient Way Microsoft’s Software and Free Placement on All Its Websites How Big Is the Online Car-Buying Market? Who Are CarPoint’s Main Competitors? Make “Go / No-Go” Assessment MSN CarPoint identified an opportunity to leverage the Internet to deliver customer value in the car industry The retail car-buying process was frustrating and inefficient: Little information available to the consumer Bargaining with salesperson viewed as an hassle Long process overall MSN CarPoint selected two primary target segments for its service: “The intimidated by the process” “The information seekers” MSN CarPoint could leverage Microsoft’s expertise in software development, its brand name and its multitude of online properties Competition was getting fierce with more and more online car services entering the market… But the financial opportunity was large: 66% of new car buyers were estimated to use online services in 2000 In 1996, the first version of CarPoint was shipped By 1998, CarPoint was driving $5 million in car sales a day

Exhibit 1.4: Corporate, Business-Unit and Marketing Strategy Corporate Strategy Business Unit Strategy Amazon Tools and Hardware Integrated Marketing Strategy for Tools and Hardware Unit LinkagesExample Integrated Marketing Strategy for Unit Internet Marketing Traditional Marketing Online Marketing Mix Offline Marketing Mix

Chapter 1: Introduction to Internet Marketing Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview of the Book Conclusion

Awareness Exploration / Expansion Exploration / Expansion Commitment Dissolution Four Key Stages of Customer Relationship Exhibit 1.5: The Four Key Stages of Customer Relationship

Exhibit 1.6: Four Key Stages of Customer Relationship by Level of Intensity Level of Intensity Stages of Customer Relationships AwarenessExplorationCommitmentDissolution Intensity

Exhibit 1.7: Internet Marketing Mix Branding Product Pricing Communication CommunityDistribution

Exhibit 1.8: Impact of the 2Is on the Internet Marketing Mix Branding Product Pricing Individual Communication Distribution Community Interactivity

Exhibit 1.9: The Marketspace Matrix Relationship Stages Categories of Levers Branding Branding can also accentuate (or lessen) the impact of the levers in each cell The 2Is should influence the design of each cell in the matrix

Chapter 1: Introduction to Internet Marketing Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview of the Book Conclusion

Critical Success Factors for Internet Marketing Executives Customer Advocacy and Insight Integration Balanced Thinking Passion and Entrepreneurial Spirit Willingness to Accept Risk and Ambiguity The willingness to understand customer needs and provide added value to each customer interaction The ability to manage marketing campaigns in a more uncertain, dynamic environment, with a new set of tools that often have few records of successes, failures or best-practices The ability to have a holistic view of the customer and the enterprise in order to create a uniquely advantaged strategic plan Being able to understand the dynamic tension between one-to-one marketing and mass marketing and being able to strike a strategic balance between them The willingness to change the status quo, take chances and use “bleeding edge” tools to lead teams to success

Exhibit 1.10: The New Rules of Marketing for the Global Digital World The New Rules 1.Target segments of one, and create virtual communities 2.Design for customer-led positioning 3.Expand the role of branding in the global portfolio 4.Leverage consumers as coproducers through customization 5.Use creative pricing in the Priceline.com world 6.Create anytime/anyplace distribution and integrated supply chains 7.Redesign advertising as interactive and integrated marketing, communication, education and entertainment 8.Reinvent marketing research and modeling as knowledge creation and dissemination 9.Use adaptive experimentation 10. Redesign the strategy process and supporting organizational architecture Source: Wind, Jerry and Vijay Mahajan. Digital Marketing. New York: John Wiley and Sons, p.8.

Point-Counterpoint: New Rules or Old Rules of Marketing Point-Counterpoint

Chapter 1: Introduction to Internet Marketing Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview of the Book Conclusion

4. Crafting the Customer Interface 1. Framing the Market Opportunity 2. Formulating the Market Strategy 3. Designing the Customer Experience Exhibit 1.11: Overview of the Chapters 5. Designing the Marketing Program 6. Leveraging Customer Information through Technology 7. Evaluating the Marketing Program Customer Relationships Product Pricing Communication Community Distribution Branding Designing the Marketspace Matrix Illustration: Marketing Campaign for The Lord of the Rings: The Fellowship of the Ring

Chapter 1: Introduction to Internet Marketing Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview of the Book Conclusion

Traditional marketing methods are still highly relevant in the networked economy, though firms must now consider a host of new and innovative marketing methods available online (e.g., dynamic pricing, online community) In contrast to the one-way mass promotion that characterizes modern marketing, Internet marketing enables firms to engage the individual in personalized dialogues Individualization and Interactivity are two forces that make online marketing different Marketing, and the relationships it creates, should be considered in the context of particular processes and stages Introduction to Internet Marketing — Conclusion