Introducing Internet Marketing Lecture 1

Objectives Subject Overview The Internet and the marketing concept Benefits of the Internet for businesses The new marketing medium Internet marketing communications Internet Marketing strategies

Subject Overview General Aim and Rationale – the utility of the Internet as a tool for business to increase efficiency, competitiveness, and effectiveness. Objectives Content Assessment criteria

The Internet and the Marketing Concept Two distinct meaning for marketing 1.The range of specialist marketing functions carried out by the firm (marketing research, public relations..) 2.An approach or concept that can be used as the guiding philosophy for all functions and activities The modern marketing concept unites these two meanings.

The Internet and the Marketing Concept The Internet can be applied by companies as an integral part of the modern marketing concept since: –It can be used to support the full range of organizational functions –It is a powerful communication medium that integrates the different parts of the organization –It facilitates information management –The future role of the Internet would form part of the vision

Internet Marketing Defined The use of the Internet and related digital technologies to achieve marketing objectives and support the modern marketing concept. Electronic commerce transactions are the trading of goods and services conducted using the Internet and other digital media

Business Benefits of the Internet Market penetration – sell more existing products into existing markets Market development – Internet is used to sell into new markets Product development – New products or services developed which can be delivered over the Internet Diversification – New products are developed which are sold into new markets

Market and Product Strategic Grid Market Development Diversification Market penetration Product development ExistingNew Product New Existing Market Conservative Approach Innovative Approach

Marketing Functions & The Internet Sales – achieve through increasing awareness of brands and products, supporting buying decisions and enabling online purchase Marketing communication – use of the web site for a range of marketing communication Customer service – supplementing phone operators with information available online Public relations – the Internet can be used as a new channel for public relations (publish latest news on products) Marketing research – techniques of finding a range of marketing information

The 6 Cs’ of the Internet Cost reduction – reducing the need for sales and marketing enquiries to be handled by telephone and producing printed marketing communication material Capability – The internet provides new opportunities for new products and services and for exploiting new markets Competitive advantage – First mover advantage Communications improvement – improved communications with customers, staff, suppliers Control – Better marketing research through tracking customer behavior Customer service improvements – Interactive queries of databases containing stock availability or customer service questions

The Internet – A New Marketing Medium The Internet refers to the physical network that links computers across the globe. It consists network servers and wide-area communication links that are used to hold and transport information. World Wide Web is a medium for publishing information on the Internet. Intranet is a password protected network within a single company which enables access to company information using the familiar tools of the Internet such as web browsers. Extranet is formed by extending the intranet beyond a company to customers, suppliers, collaborators or even competitors.

Level of managementInternetIntranet and extranet StrategicEnvironmental scanning Competitor analysis Market analysis Strategic decision making Supply chain mgt Internet data analysis Management information Marketing information Database Operations efficiency Business planning Monitoring and control Simulation Business intelligence (data warehouses) Tactical and operationalAdvertising/promotions Direct marketing Public relations Distribution/logistics Workgroups Marketing research Publishing Electronic mail Data warehousing Relationship marketing Conference marketing Conferencing Training Technology information Product/service information Customer service Internet trading Sponsorship

Internet Marketing Communications Characteristics inherent in digital medium: –The customer initiates contact –The customer is seeking information (pull) –It is a high intensity medium – the marketer will have 100 per cent of the individual’s attention when he or she is viewing a web site –A company can gather and store the response of the individual –Individual needs of the customer can be addressed and taken into account in future dialogues

Old and New Media Old mediaNew mediaComment One-to many communication model One-to-one or many-to- many communication model Hoffmann & Novak (1996)states that Internet is a many-to-many medium, but for company to customer one-to-one Mass marketingIndividualized marketing or mass customization Personalization possible because of technology to monitor preferences and tailor content (Deighton, 1996) MonologueDialogueIndicates the interactive nature of the WWW, with the facility for feedback BrandingCommunicationIncreased involvement of customer in defining brand characteristics. Opportunities for adding value to brand Supply-side thinkingDemand-side thinkingCustomer pull becomes more important Customer as targetCustomer as partnerCustomer has more input into products and services SegmentationCommunitiesAggregation of like-minded consumers rather than arbitrarily defined target segments

Internet marketing application in UK UsePercent PR/marketing information70 Product contacts40 Customer contacts27 Facilitating customer feedback20 Detailed product information18 Distribution of paid-for reports10 Online orders8 Paid-for advertisements5 Source: Business Computer World/Spikes Cavell, February 1997

Avoiding Marketing Myopia Traps that should be avoided when embarking on Internet marketing: –Wrongly defining which business they are in –Focusing on: Products rather than customer Production Technology (only an enabler, not an aim) Selling (the culture of the Internet is based on customer seeking information to make informed buying decisions) Customer needs (the need for market orientation is a critical aspect of web site design and Internet marketing strategy) Market opportunities (new opportunity for adding value rather than just another channel)

Avoiding Marketing Myopia –Unwillingness to innovate and ‘creatively destruct’ existing product/service lines –Shortsightedness in terms of strategic thinking –The lack of a strong and visionary CEO (Baker (1998) found that this was important to companies’ using the Internet effectively) –Giving marketing only ‘stepchild status’, behind finance, production and technology.