11.1 Marketing on the Internet. The marketing mix

 

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Kunnskapskilden –  Internet Marketing Intelligence

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Internet Marketing Intelligence

 

 

Kunnskapskilden – Internet Marketing Intelligence
Internet Situational Analysis of 1to1 Marketing/CRM

 

Research Project: Internet Situational Analysis of 1to1 Marketing/CRM  from Jan Vig  at Griffith University , Australia  1999/2000

Content

 

Chapter 1 Introduction/overview

Chapter 2 Search Strategy

Chapter 3 One to One Marketing and its environment

Chapter 4 Environmental Scan

Chapter 5 Market analysis

Chapter 6 Competitors Analyses

Chapter 7 SWOT

Chapter 8 Critical Success factors

Chapter 9 Segmentation, Customer analysis and target markets

Chapter 10 Business Objectives and Strategies

Chapter 11 Marketing Mix tactics and Conclusions

 

 

 

Chapter 11

Marketing Mix tactics and Conclusions 

 

 

Chapter 11 Marketing Mix tactics and Conclusions

11.1 Marketing on the Internet. The marketing mix

11.1.1 Old 5 P’s

11.1.2 New 5 P’s

11.1.3 Issues in Web based marketing

11.2 The sales method

11.3 Internet sales method

11.4 The promotion strategy

11.5 Internet promotion strategy

11.6 Positioning and pricing policy of the services

11.7 Internet positioning and pricing

11.8 Conclusions

 

 

11.1

Marketing on the Internet. The Marketing Mix

 

Research Project: Internet Situational Analysis of 1to1 Marketing/CRM  from Jan Vig  at Griffith University , Australia  1999/2000

 

What is it that makes the Internet such a specialized forum for marketing? The key to answering this question lies in how communication is carried out using the World Wide Web. Communication is still one to one as potential customers enter a site by their own volition and usually out of personal interest.

 

Marketing products using such a one-way, browse-only shopping approach requires strategies to be modified to take into account this new communication mode for the Internet marketplace.

 

11.1.1  Old 5 P’s

 

The old 5 P’s are a version of Porter’s 5 marketing forces. The five market forces were written for the pre-Internet era but may still be applied with an Internet marketing strategy. It should be easy to see how these forces apply to shop front businesses with geographical limitations on customer base, competition, opening hours, regulation and other stable environmental considerations. Porter’s five forces also apply to a stable local economy that has a predictable and usually stable growth rate.

 

 

11.1.1.1 Product

Have a product that there is an established demand for. If it can be sold via catalog off-line it can be sold via the Internet. Brokers and service providers in areas like finance, travel, automotive sales are good choices. Intangible items like services and software are very Internet sellable.Product
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  • A bundle of benefits that satisfies the needs of organisations or consumers, for which they are willing to exchange money or other items of value.
  • Internet product: aside from the old stuff: packaging, guarantees, size, image etc,
  • Navigation, download speed, clear site organisation, site design, free content and user privacy etc.

 

Mass Customized Product:
http://www.cad.gu.edu.au/mkt/mkt3005/lecture/lecture6/home.htm

http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005 Lecture 6

  • ”Only milk should be homogenized”
  • Share of customer (not just share of market)
  • Customer management (not just product management)
  • Global segmentation
  • Mass production not necessarily cheaper
  • Mass production leads to declining competitiveness (due to price competitions)
  • Mass customization has bigger margins
  • Mass customization leads to bigger share of customer
  • g. McGraw-Hill delivering custom classroom textbooks in quantities of under 100
  • Motorola makes any one of 29 million pagers within 20 minutes of an order
  • Getaway Vacations offers custom-designed tours to individuals at price of group packages

 

Implications

http://www.cad.gu.edu.au/mkt/mkt3005/lecture/lecture6/home.htm

http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005 Lecture 6

  • Focus on one customer at a time, with assistance of electronic databases
  • Focus on long-term relationship with each customer
  • Communicate directly and personally to each customer, rather than segments
  • Focus on cultivating an ongoing business with customer rather than groups of one-time buyers

 

Branding
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  • Domain names (www.yourcompany.com)
  • Should suggest something about product
  • Differentiate product from competitors
  • Short, memorable, easy to spell, translate well in other languages

Domain names
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  • May not want to use original brand name online
  • Fear of jeopardising original brand name
  • Intent to create a “Cyberposition”
  • g. Sports illustrated- http://www.thriveonline.com
  • Fear of confusion- change slightly
  • g. Wired à Hotwired.com

Content
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http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005 Lecture 6

  • Content critical part of Internet product mix
    3Es- Enlightening Engaging         Entertaining

 

Conclusion
A  One to One company that wish to go into on-line commerce should have a product /service that consumers will require. It is obvious that the one to Marketing Industry has such products/services. As Cyber entrepreneurs the industry must look at the product/service and determine if it is user friendly, if it is likely to be wanted or if there is a new way to market the product/service. The product has to be examined in terms of its life cycle: introduction, growth, maturity and decline.

 

 

11.1.1.2 Price

Should be affordable to the target market. Should be able to pass on infrastructure, advertising, communication savings to customers and still make a profit. Can provide incentives to customers for buying over the net. Total Value Price
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  • Mass-produced products- price is everything
  • With Internet- easy price and benefit comparison

Forces that drive prices down on the Internet

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  • Easy comparison- Shopping agents (e.g. pricescan.com)
  • Tax-free zone
  • Many online companies willing to suffer short-term losses to secure long-term equity
    – Costs are lower in this channel

Upward pressures on prices

http://www.cad.gu.edu.au/mkt/mkt3005/lecture/lecture6/home.htm

http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005 Lecture 6

  • Hefty distribution costs
  • Affiliate/syndicate selling- commission
  • Web development and maintenance
  • Net users demand free products and samples
  • Online marketing and advertising could be more costly

 

Cost savings examples:

http://www.cad.gu.edu.au/mkt/mkt3005/lecture/lecture6/home.htm

http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005 Lecture 6

  • Customer fill in their own order forms
  • (saved: entry personnel and processing manually)
  • g. Average banking transaction costs $0.15 to $0.20 vs $1.50 online
  • Firms need not hold inventory
  • No rent and staff- less overhead costs
  • Able to negotiate discounts with supplies and shipping partners
  • No distribution and print costs for product catalogs and print promotions
  • Customer service request costs $15-$20 in an offline call centre vs. $3 to $5 when customers help themselves on the net.
  • -Disintermediation

How to avoid price war

http://www.cad.gu.edu.au/mkt/mkt3005/lecture/lecture6/home.htm

http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005 Lecture 6

  • Information-rich prosumers are perceptive to distinguishing real value in products
  • Stress product benefits etc to create a “total” value
  • Change question from “How price sensitive are customers?” to
    – “How benefit sensitive are customers to extra brand performance?”

 

Implications

http://www.cad.gu.edu.au/mkt/mkt3005/lecture/lecture6/home.htm

http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005 Lecture 6

  • Eliminate discounts, incentives and other promotions
  • Compete against discounters with service, quality, convenience and customised offerings
  • “Cyberise” coupons or electrify and personalise them- use only for product introductions or to reward genuine loyalty
  • Use purchase perks or fringe benefits to enhance value perceptions
    – (e.g. Free wash, polish and wax for cars that come in for servicing)

 

Conclusion

The product/service has to be affordable to the target market. One of the great advantage of the Web is that products can be sold more cheaply because the large infrastructure of a physical shop front is not necessary. But one problem is that only bigger businesses can afford some of the personalization systems because they are too expensive. Using the Web means the cost of advertising and communication is reduced. Web ordering is efficient, quick and less prone to errors as the customer is doing the work of filling in the forms.

 

 

 

 

11.1.1.3 Place

Geography, culture, religion, legal jurisdiction and store size is no longer so important to market share as a one-person outfit in Woolongong can market on the web as effectively as a large corporation in New York.

Place: anytime and any PLACE
http://www.cad.gu.edu.au/mkt/mkt3005/lecture/lecture6/home.htm

http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005 Lecture 6

  • “Place” is no longer dependent on where the vendor is located
  • Depends on where the customer is located
  • Focuses on electronic channels- convenience for customers
  • Delivers products direct to client’s home or place of business (Internet fruit shop-Sydney)
  • Digitised information- software, video and audio (www.real.com)
  • Physical products- still need traditional mail or courier.
  • The demise of traditional “middlemen”-disintermediation
  • Reason? Supplier can supply information direct to customer on Web
  • In many cases- supplier direct to customer- shorter distribution channels
  • On the other hand: replaced by cyberintermediaries
  • Defocusing on core business-larger management costs

 

Implications for marketers
http://www.cad.gu.edu.au/mkt/mkt3005/lecture/lecture6/home.htm

http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005 Lecture 6

  • Deliver products direct to customer’s home or office, electronically where possible, person-to-person or by mail/courier.
  • Ensure that delivery of product is non-intrusive (no unsolicited advertising)
  • Allow customers to get in touch with company via other channels (mail, phone, fax etc)
  • Environmental scanning to identify new forms of intermediaries in industry
    – Environmental scanning to identify new forms of distribution in industry

 

Conclusion

This is no longer such a vital consideration as the cyber business can be on a server in a garage or in a home study. However, the business must realize that the market is now potentially a lot larger than if the business was setting up a real store. Globalization.

 

 

11.1.1.4 Promotion and people

Using all modes of marketing to promote the web side of the business, i.e., URL on a bus stop sign or TV advertisement. All people in the company from management to maintenance should be able to be involved in the web presence to add to the company image. (Harris Technology)

Personal selling:-
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  • Similarities:
  • “close to customer” approach
  • Personal knowledge of customer needs
    – Aims for share of customer

Difference:
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  • S. is high-pressured, intrusive and inconvenient (not exactly anyTime)
  • Products may not be tailored to individual needs
    – Lots of paperwork to be filled out by sales rep

Promotion: Precise 1:1 Positioning
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  • Agriculture age- Merchants never advertised and they didn’t need to
  • Vendors knew each customer on a one-to-one basis
  • Learned about customers preferences, peculiarities etc and stored in brains
  • Industrial age- Vendors did not know who customers where
  • Mass advertising to sell goods to increase economics of scale
  • Info-age- know customers on a one-to-one basis
  • Store information on computer database in order to develop lifelong relationships with each customer
  • Mass promotion and advertising on Net possibly annoy prosumers
  • Leads to devaluation of brand equity
  • Precise benefit advertising to customer on a one-to-one basis combined with gift culture

Conclusion

How to be seen on the Internet is a challenge. The businesses may decide to advertise on normal marketing channels as most people are accustomed to seeing URLs on advertisements on buses and trains. Radio and television advertisements often give the web address of businesses. The Industry must also not forget that people are a vital part of any business, including the people who run the business and the people who interact with the business.

 

 

11.1.1.5 Packaging

Making product entertaining or enriching by adding discounts for members or use of Internet facilities as packaging for the product.
Gift Culture of the Net:
http://www.cad.gu.edu.au/mkt/mkt3005/lecture/
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http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005 Lecture 6Internet started off being a network of academics helping each other’s problems at no cost

  • Free for all community mentality- everyone wanted to make the Net a better place –e.g. Mosiac
  • Mentality and culture has transferred- people expect all information to be free
  • Anything that is given out free keeps netizens happy

 

Conclusion

Shopping is considered by some as a form for entertainment or social event so the business has to package the cyber product / service as such.

 

 

11.1.2   New 5 P’s

http://www.chiatday.com/raw_materials/insights/5ps/5p_mkt.html

Tom Patty from Nissan has supplied a new set of 5 P’s that are more suitable to the relatively chaotic environment of the Internet. These 5 P’s are designed to take into account environmental changes like a slower moving ‘global’ economy and a much larger set of business competitors.

 

11.1.2.1 Paradox

Is about product differentiation or creating a product that is different to all of the other products in the same market niche. Yes, all cars are the same but sports cars are different. Yes, all sports cars are the same but our product is the fastest, reddest, handles the best, is the only car that has genuine imported Italian leather seats and a chrome plated knob on the gear lever.Product à Paradox
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  • “Same yet different” concept
  • Same product category, but each product within category is different
  • “All cars are the same; all cars are different”

Strategies:
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http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005 Lecture 6

  • -Be different “The first Internet birth”
  • -Create a unique identity “The biggest bookshop in the world”
  • -Becoming the first in something (cyberposition) “The first private cybercam-www.jennycam.org”

 

 

 

 

11.1.2.2 Perspective

Who are you trying to satisfy with a product? Ultimately it is the consumer. To successfully market a product it is necessary to look at the needs and wants of your potential clients and then to show the client that your product fits their needs the best of all. Price à Perspective
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http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005
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  • Viewing the product from the consumer’s perspective
  • What needs does the product satisfy
  • How it satisfies better than competitors
  • How much consumers are willing to pay for this satisfaction

 

 

 

11.1.2.3 Paradigm

A paradigm is a model way of doing things; a pattern or template for executing a process. Moving business to the Internet requires a paradigm shift for marketing. Businesses must take into account the increased customer base, increased communication speed,new interpersonal communication methods, global product and company visibility, global deliverability, 24 hour availability and a number of related issues that are relevant to a shift from a geographically based market to a true international marketplace. Place à Paradigm
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  • A paradigm shift in doing business
  • Old traditional forms of distributing products and setting up stores are redundant
  • New shift in thinking of how products can be most effectively distributed through medium
  • g. Internet Radio stations

 

 

 

11.1.2.4 Persuasion

In the Internet arena, where customers are removed from the physical point of sale, the three most important elements of persuasion are: 

  • Credibility – Existing businesses have reputation to aid the credibility angle. Startup businesses have to do everything right from the start and keep doing it to gain credibility in the online marketplace.
  • Content – Customers (potential) should be able to take in all of the relevant information at a glance. Too much time reading will make a viewer lose interest very quickly. Information should be fresh, relevant and visually stimulating.
  • Involvement of the listener – The Internet allows levels of interaction that other media cannot support. A listener may be involved by viewing product demonstrations, emailing criticisms or questions or orders, taking interest in items that are constantly changing or updated, contests, using associated online services.

 

Promotion and people à Persuasion
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http://www.cad.gu.edu.au/mkt/ugrad.html MKT 3005
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  • Need to establish credibility, content and involvement (interactivity)
  • Good Web design and content
  • Info-tain customers to generate flow

 

 

 

11.1.2.5 Passion

Display an excitement and verve that spills out of your web site and shows the viewer that you are passionate about your products and marketing goals.
Packaging à Passion
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  • Aim to create a passion in customers for your site
  • Use flow generating strategies:
  • Exciting, regularly updated content
  • A information centre for target market
  • A place of interaction with other enthusiast of product
  • Result: word of mouse

 

 

 

 

11.1.3  Issues in Web based marketing

 

  • One on one – Interaction between potential buyer and seller is one-to-one via the sellers web site. Despite the numbers of people online it is not considered a «mass» market. From a marketing perspective the environment is geared toward interactive «pull» marketing where unsolicited «push» advertising is not generally appreciated.
  • Horizontal and vertical market contact – The public Internet is available to anyone that has a computer and a dial-up or network connection.
  • Intranets and extranets provide more secure and limited access communication channels between and within businesses. In this manner the web supports both horizontal or vertical markets.
  • Global market view – Market scanning on the web, in order to evaluate the environment for a new product involves competitive, technological and cultural aspects.
  • Demographics – Web demographics are in infancy, highest proportions are professional male, under 40. Other segments are growing fast such as school age ‘surfers’ looking for entertainment products and the aged sector looking for products and other avenues for communication.
  • Personnel Internet education – A business’ key management personnel must be educated to the potential and use of the Internet. It is important that all managers have an understanding of the importance of the Internet as a marketing medium and be well informed as to the company’s goals in that respect.
  • Internet marketing division – While all senior personnel in a business should be behind the promotion of web based marketing, there must be specialized management that are specifically directed and committed to online marketing. If Internet marketing is added to an existing management portfolio then there is a risk that the web resources will be poorly utilized due to lack of understanding, commitment and conflicting interests.
  • Support – There should also be a general move within a company to accept and support the integration of a new Internet marketing channel. The Internet marketing channel should support and be supported by other company marketing channels.
  • New reach and speed – The strengths of the Internet as a marketing medium are that it is fast (light speed) and far reaching (global). The implications of those strengths is that marketing information must be carefully formulated and planned to avoid problems with jurisdictional differences, cultural differences and the impact of a larger market with more competitors.
  • Specific Internet marketing vehicles – Design for the medium specifically (Web), marketing vehicles used for TV and print marketing will not translate well. The Web allows for a certain level of multimedia content and levels of interaction. Not all browsers can see the same things and people access information differently (through hyperlinks) to other more traditional media.
  • Iconify – Excellent medium for brands and icons
  • Veritas – Marketing, as is the medium, must be based upon information (complete, up-to-date, correct). Information cannot be old or unreliable or the page will be avoided and badly advertised by word of mouth and other online media.
  • Use all Internet channels to your advantage – Several channels of communication that may be used as part of the marketing strategy/implementation. They should be used in concert to bring as many potential customers as possible to your web page.
    – Web (info – announcements, FAQ, company/product profiles)
    – email (use signatures with company info)
    – news (usenet, announcements)
    – chat (discussion lists)
    – FTP (use to transfer large files and organize large info/service/product lists)
    – WAIS
  • Gifts – The «gift» economy is strong. Free products and information can add value to your site for very little outlay.
  • Visibility – Register, register register! Make sure that your site is registered with other related information providers. The more places that your business’ web site is registered the more chance there is of a potential customer finding you. Some search engines and indexes may find you automatically though this is not guaranteed. The best course is to visit every web search tool page that you can think of and find their online registration area to enter your business data.
  • Communities – As with traditional businesses, buying and selling and advertising power can be increased by creating information and marketing communities for combined weight. Virtual communities can be based on trading partners, mutual interest or affinity groups, geographical location, mutual online mall provider and others. An Internet community can be built around any theme, common need or usage. Most commonly sites are grouped together based upon common business relationship, geography, Internet service provider, online mall and other factors. Sites also need to make their regular clients feel like part of a community. In this way feedback and product / service recommendations and reviews may be shared to benefit all. (Amazon, Brisbane restaurant guide). Relating experiences and product information provided by the wider community aids in the buying and deciding process for other members of the community. Anything that reduces the difficulty, risk and time involved in buying is a boon to any shopper.

 

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