chapter

Introduction to Internet Marketing

McGraw-Hill/Irwin

2004 The McGraw-Hill Companies, Inc., All Rights Reser

Introduction to Internet Marketing

Todays Objectives
Objectives

Define

will be to:

the scope of Internet marketing

Explore

the stages of Internet marketing

Discuss

the relationship stages and the Marketspace Matrix

Examine

Outline

guidelines for success

the progression of the book

Chapter 1: Introduction to Internet

Marketing
Definition

and Scope of Internet Marketing

Seven-Stage

Four

Cycle of Internet Marketing

Key Relationship Stages and the Marketspace Matrix

Guidelines

Overview

for Internet Marketing Success

of the Book

Conclusion

Chapter 1: Introduction to Internet

Marketing
Definition

and Scope of Internet Marketing

Seven-Stage

Four

Cycle of Internet Marketing

Key Relationship Stages and the Marketspace Matrix

Guidelines

Overview

for Internet Marketing Success

of the Book

Conclusion

Definition and Scope of Internet

Marketing

Exhibit 1.1: Assessing the Impact of

Internet Marketing
Online

Cell
Cell 44

Cell
Cell 22
Im
pa
ct

Offline

In
te
rn
et
M
ar
ke
ti n

Bricks-and- Mortar
Online

Location of Revenue Stream

Marketing Resource Allocation

Cell
Cell 33

Cell
Cell 11

Chapter 1: Introduction to Internet

Marketing
Definition

and Scope of Internet Marketing

Seven-Stage

Four

Cycle of Internet Marketing

Key Relationship Stages and the Marketspace Matrix

Guidelines

Overview

for Internet Marketing Success

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 1
Framing the
Market
Opportunity
Step 4
Crafting the
Customer
Interface

Step 7
Evaluating
the
Marketing
Program
Step 6
Leveraging Customer
Information Through
Technology

Step 5
Designing the
Marketing Program

Exhibit 1.3: Framework for Market

Opportunity
Seed
Seed Opportunity
Opportunityin
in Existing
ExistingNew
New Value
Value System
System

Identify
IdentifyUnmet
Unmetand
andUnderserved
Underserved Need(s)
Need(s)

Identify
IdentifyTarget
TargetSegment(s)
Segment(s)

Declare
Declare Companys
CompanysResource-Based
Resource-Based
Opportunity
for
Opportunity forAdvantage
Advantage

Assess
Assess Competitive,
Competitive, Technological,
Technological, and
and Financial
Financial
Opportunity
Attractiveness
Opportunity Attractiveness

Make
Make Go
Go // No-Go
No-GoAssessment
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

Microsofts Software and Free Placement on

All Its Websites

How Big Is the Online Car-Buying Market?

Who Are CarPoints 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 Microsofts
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
Linkages

Example

Corporate
Corporate Strategy
Strategy

Amazon
Amazon

Business
Business Unit
Unit Strategy
Strategy

Tools
Tools and
and Hardware
Hardware

Integrated
Integrated Marketing
Marketing
Strategy
Strategy for
for Unit
Unit

Integrated
Integrated Marketing
Marketing
Strategy
Strategy for
for Tools
Tools and
and
Hardware
Hardware Unit
Unit

Internet
Internet
Marketing
Marketing

Traditional
Traditional
Marketing
Marketing

Online
Online
Marketing
Marketing Mix
Mix

Offline
Offline
Marketing
Marketing Mix
Mix

Chapter 1: Introduction to Internet

Marketing
Definition

and Scope of Internet Marketing

Seven-Stage

Four

Cycle of Internet Marketing

Key Relationship Stages and the Marketspace Matrix

Guidelines

Overview

for Internet Marketing Success

of the Book

Conclusion

Exhibit 1.5: The Four Key Stages of

Customer Relationship
Four Key Stages of Customer Relationship

Awareness
Awareness

Exploration
Exploration //
Expansion
Expansion

Commitment
Commitment

Dissolution
Dissolution

Level of
Intensity

Exhibit 1.6: Four Key Stages of Customer

Relationship by Level of Intensity

Intensity

Awareness

Exploration

Commitment

Dissolution

Stages of Customer Relationships

Exhibit 1.7: Internet Marketing Mix

Branding

Product

Pricing

Communication

Community

Distribution

Exhibit 1.8: Impact of the 2Is on the

Internet Marketing Mix
Interactivity

Branding

Product

Pricing

Communication

Individual

Community

Distribution

Exhibit 1.9: The Marketspace Matrix

Relationship Stages
Awareness

Exploration

Commitment

Dissolution

Categories of Levers

Product

Price

The
The2Is
2Is should
should influence
influence
the
design
of
each
the design of eachcell
cell
in
the
matrix
in the matrix

Communication

Community

Distribution

Branding

Branding
Brandingcan
can also
also
accentuate
(or
lessen)
accentuate (or lessen)
the
the impact
impact of
of the
the levers
levers
in
each
cell
in each cell

Chapter 1: Introduction to Internet

Marketing
Definition

and Scope of Internet Marketing

Seven-Stage

Four

Cycle of Internet Marketing

Key Relationship Stages and the Marketspace Matrix

Guidelines

Overview

for Internet Marketing Success

of the Book

Conclusion

Critical Success Factors for Internet

Marketing Executives

The willingness to understand customer needs

and provide added value to each customer
interaction

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

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

Customer
Customer Advocacy
Advocacy and
and Insight
Insight

Integration
Integration

Balanced
Balanced Thinking
Thinking

Passion
Passion and
and
Entrepreneurial
Entrepreneurial Spirit
Spirit
Willingness
Willingness to
to Accept
Accept
Risk
Risk and
and Ambiguity
Ambiguity

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
New Rules
basic conceptual and process
changes occur in online marketing

Old Rules

Several

Differences

One

Segmentation

There

From

such change is the increased ability

to deliver on the promise of one-to-one
marketing
is also a fundamental shift to a
more consumer-driven and controlled
world for example, a shift towards
pull-marketing and the use of more
pull levers, such as online community

in the online marketing world

are overstated
is still at the core of
marketing clusters of consumers will
emerge that share behavior
the supply side, it is most efficient
to aggregate these consumers to reduce
costs

Successful

marketing programs include

mixing different marketing levers, both
new and old: the master-mixer concept
still remains

Chapter 1: Introduction to Internet

Marketing
Definition

and Scope of Internet Marketing

Seven-Stage

Four

Cycle of Internet Marketing

Key Relationship Stages and the Marketspace Matrix

Guidelines

Overview

for Internet Marketing Success

of the Book

Conclusion

Exhibit 1.11: Overview of the Chapters

1.
1. Framing
Framing the
the
Market
Market
Opportunity
Opportunity

4.
4. Crafting
Crafting the
the
Customer
Customer
Interface
Interface

2.
2. Formulating
Formulating
the
the Market
Market
Strategy
Strategy

5.
5. Designing
Designing the
the
Marketing
Marketing
Program
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

3.
3. Designing
Designing the
the
Customer
Customer
Experience
Experience

6.
6. Leveraging
Leveraging
Customer
Customer
Information
Information
through
through
Technology
Technology

7.
7. Evaluating
Evaluating
the
the Marketing
Marketing
Program
Program

Chapter 1: Introduction to Internet

Marketing
Definition

and Scope of Internet Marketing

Seven-Stage

Four

Cycle of Internet Marketing

Key Relationship Stages and the Marketspace Matrix

Guidelines

Overview

for Internet Marketing Success

of the Book

Conclusion

Introduction to Internet Marketing

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