Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.1 Chapter 4 Internet marketing strategy

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.2 Learning objectives Relate Internet marketing strategy to marketing and business strategy; identify opportunities and threats arising from the Internet; evaluate alternative strategic approaches to the Internet.

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.3 Questions for marketers How does Internet marketing strategy relate to other strategy development? What are the key strategic options for Internet marketing?

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.4 Michael Porter on the Internet ‘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.

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.5 Influences on e-marketing strategy Figure 4.1 Internal and external influences on Internet marketing strategy

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.6 Stages in Internet development Figure: A simple framework for Internet marketing strategy development

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.7 Strategy development process Figure: A ten-step strategic marketing planning process Source: McDonald, 1999

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.8 E-business strategy model E-business strategy incorporated as part of business strategy E-commerce strategy integrated with business strategy using a value-chain approach Sell-side e- commerce strategy, not well integrated with business strategy LimitedStrategy Change to e- business culture, linking of business processes with partners Internal business processes and company structure Technology and new responsibilities identified for e- commerce Technological infrastructure Transformation Across the enterprise and beyond (extraprise)‏ Cross-organisationalCo-ordination through steering committee or e- commerce manager Departments acting independently, e.g. marketing department, IS department Organisational scope Full integration between all internal organisational processes and elements of the value network Buy and sell-side integrated with ERP or legacy systems. Personalisation of services Transactional e- commerce on buy- side or sell-side. Systems often not integrated Brochureware or interaction with product catalogues and customer service Services available 4. E-business3. Integrated e-commerce 2. E-commerce1. Web presence

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.9 Types of web presence 1. Transactional e-commerce site. 2. Services-oriented relationship building web site. 3. Brand-building site. 4. Portal site.

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.10 Demand analysis – car market Figure 4.6 Customer demand analysis for the car market

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.11 Demand analysis – new vs existing Figure 4.7 Demand analysis assessing the ratios Access : Choose : Buy for (a) new customers and (b) existing customers

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.12 Internet SWOT Figure 4.8 A generic SWOT analysis showing typical opportunities and threats presented by the Internet

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.13 Internet marketing benefits Tangible benefits: Increased sales from new sales leads giving rise to increased revenue from: new customers, new markets existing customers (repeat-selling existing customers (cross-selling) Cost reductions from: reduced time in customer service online sales reduced printing and distribution costs of marketing communication tools Intangible benefits: Corporate image communication Enhance brand More rapid, more responsive marketing communications including PR Improved customer service Learning for the future Meeting customer expectations Identify new partners, support existing partners Better management of marketing information and customer information Feedback from customers on products

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.14 Sample objectives Achieve 10 per cent online revenue contribution within two years; achieve first or second position in category penetration in the countries within which we operate (this is effectively online market share and can be measured through visitor rankings such as Hitwise (Chapter 2) or better by online revenue share; cost reduction of 10 per cent in marketing communications within two years; increase retention of customers by 10 per cent; increase by 20 per cent within one year the number of sales arising from a certain target market, e.g. 18–25-year-olds; create value-added customer services not available currently; improve customer service by providing a response to a query within two hours, 24 hours per day, seven days a week; all other objectives to be achieved profitably giving a return on investment in a three year period.

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.15 Online revenue contribution examples Table: Variations in online revenue contribution

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.16 Product suitability to e-commerce Figure: Grid of product suitability against market adoption for transactional e-commerce (online purchases)‏

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.17 The value proposition ‘First identify customer needs and define a distinctive value proposition that will meet them, at a profit. The value proposition must then be delivered through the right product and service and the right channels and it must be communicated consistently. The ultimate aim is to build a strong, long- lasting brand that delivers value to the company marketing it.’ Varianini and Vaturi (2000)

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.18 Strategy options Figure: Strategic options for a company in relation to the importance of the Internet as a channel

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003OH 4.19 Risk/reward analysis Figure: Example of risk–reward analysis