1. An Embedded Internet Strategy – By Small Business Resource

2. The Internet will dramatically impact channel management
The Web as a…
Marketing channel Sales channel Service channel
On-line adverstising
On-line retail sales
On-line traders
Source: Forrester Research; Jupiter Communications

3. Nearly all companies will make use of the Internet
% of companies expected to conduct on-line business in 2002

4. But Internet strategies will vary
Pure Internet strategies receive the most press
While “embedded” Internet strategies are more prevalent

5. In a pure Internet strategy all customer-related activities are driven to the Web

6. In embedded strategy Web and traditional channels perform complementary functions

7. Most internet “success” stories use embedded strategy

8. The logic of the embedded strategy is simple
Traditional channels are used to support strategic differentiation
high-touch service
product advising and customer trust
customized solutions
The Internet is used to reduce the costs of customer relationships

9. The logic of the embedded strategy holds for Agency Distribution Systems
Carlson Wagonlit Travel uses agents to provide value-added services; the Internet to offer product information
Cisco Systems uses VAR’s to customize products sold on-line

10. Operationalizing an embedded Internet strategy involves five steps
Clarify a positioning strategy
Identify the Internet’s “value proposition”
Redefine marketing and sales processes
Manage customers toward the Internet channel
Align channel incentives to smooth channel transitions

11. Clarify whether the Internet is lead or support channel
Positioning Strategy
Product-based
Service-based
Trust-based
Solution-based
Basis of Differentiation
competitive prices
high-touch service
“one-stop” convenience
product advising
customer confidence
unique business solutions
Role of Internet
lead channel
support to person-
to-person channel
support to face-
to-face channel
support to
dedicated channel
Embedded
Strategies

12. Identify opportunities to enhance customer value by shifting activities to the Internet
Identify activities that can be “done better” on the Web
1. Access to Product Information
Multimedia demos (e.g Vantive Corporation)
Searchable databases (e.g. Cisco Systems)
2. Convenient Servicing
Checking account information (e.g. on-line banking)
Repeat purchasing (e.g. Dell Computer)
Access to network information (e.g. AT&T)
Access to financial information (e.g. Citigroup)
3. Value Added Information Services

13. Refocus existing sales and marketing resources on higher value-added activities
H-P’s sales force spends more time selling
account loads increase
revenue expectations increase
Dell’s account managers take on a more strategic role
focus on migrating customers to new products
focus on identifying trends that impact demand
Carlson Wagonlit’s marketing becomes “one-to-one”
product preferences actively tracked
customer’s proactively contacted with
improved offers

14. Provide incentives and support for customers to use the Web channel

15. Align incentives of agents in traditional sales channels with goal of customer migration
Hewlett-Packard gives sales force and resellers revenue credit every time a registered customer purchases over the Web
Carlson Wagonlit Travel customizes the Web to each agencies own selling strategy

16. Summary of discussion
The Internet creates a powerful new channel to reach customers and manage customer relationships
Most companies will use the Internet in combination with other channels (“an embedded strategy”) rather than alone
Operationalizing an embedded strategy requires changes to channel functionality, communications, and incentives

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