Strategy

Internet Marketing Strategy

ƒ Learning objectives
ƒ Relate Internet marketing strategy to
marketing and business strategy.
ƒ Identify opportunities and threats arising
from the Internet.
ƒ Evaluate alternative strategic approaches to
the Internet.
ƒ ‘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.

Tangible benefits
Increased sales from new sales leads giving rise to
increased revenue from:
ƒ new customers, new markets
ƒ existing customers (repeat-selling)
ƒ existing customers (cross-selling)
Cost reductions from:
ƒ reduced time in customer service
ƒ Online sales
ƒ Reduced printing and distribution costs of marketing
communications
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

ƒ What is strategy?
ƒ Defines how we will meet our objectives
ƒ Sets allocation of resources to meet goals
ƒ Selects preferred strategic options to
compete within a market
ƒ Provides a long-term plan for the
development of the organisation
Questions for marketers
ƒ What approaches can be used to develop
Internet marketing strategy?
ƒ How does Internet marketing strategy
relate to other strategy development?
ƒ What are the key strategic options for
Internet marketing?

ƒ E-marketing strategy is a channel strategy.

ƒ Objectives for online contribution % vs. overall
strategy
ƒ E-marketing strategy defines how we should:
1. Communicate benefits of using this channel
2. Prioritize audiences targeted through channel
3. Prioritize products available through channel
4. Hit our channel leads & sales targets
▪ Acquisition, Conversion, Retention.
ƒ Channel strategies thrive on differentials
ƒ Need to manage channel integration
Figure 4.1 Internal and external influences on Internet marketing strategy

ƒ Underestimated demand for online services

ƒ Market share loss
ƒ Resource duplication
ƒ Insufficient resource
ƒ Insufficient customer data
ƒ Efficiencies available through online marketing
ƒ Opportunities for applying online marketing
tools
ƒ Changes required to internal IT systems
ƒ Inadequate tracking
ƒ Senior management support limited
ƒ Long-term marketing strategy
ƒ Tactical/short-term strategies
ƒ Web site design and build
ƒ Specialized online marketing
▪ Search marketing; affiliate marketing
▪ E-mail strategies
▪ CRM strategies

ƒ Internal Audit
ƒ Business effectiveness of current strategy
ƒ Marketing effectiveness
ƒ Internet effectiveness
ƒ Resource Analysis
ƒ Finance, technology, HR, structure
ƒ SWOT Analysis
 A simple
Figure 4.4
framework for Internet
marketing strategy
development

Figure 4.5 Dynamic e-business strategy model

Source: Adapted from description in Kalakota and Robinson (2000)
 Strategy process
Structure: Senior
E-commerce and performance Marketing Online marketing
Location of e - management
maturity stage improvement integration focus
commerce buy-in
process

Stage 1. Uncontrolled Content:

Limited Limited Discrete
Unplanned experimentation Brochureware

Stage 2.
Stage 1. Low-level Common Traffic:
Diffuse Diffuse Aware
Unplanned objectives initiatives visitor acquisition
management
Stage 3. Specific Conversion &
Stage 1.
Centralised Annual planning
organisational Centralised Involved customer
Unplanned
management collaboration
objectives experience
Stage 4. Refined
Stage 1. Driving
Decentralised online channel Decentralised Partnership Retention
Unplanned performance
operations improvement
Stage 5. Integrated
Stage 1. Whole lifecycle
Integrated & multi-channel Integrated Integral Complete
optimisation
Unplanned improvement
optimised

Source: E-consultancy (2005) report ‘Managing an E-commerce team’ Author: Dave Chaffey

ƒ Legal, Ethical, and Technological

Environments
ƒ Demand analysis
ƒ Qualitative customer research
ƒ Competitor analysis
ƒ Intermediary analysis
ƒ SWOT analysis
External Factor Evaluation (EFE) Matrix

Summarize & Evaluate

Economic Demographic Governmental

Social Environmental Technological

Cultural Political Competitive

EFE Matrix - Opportunities

EFE Matrix-Threats

Internal Factor Evaluation (IFE)

Matrix – Strengths
Internal Factor Evaluation (IFE)
Matrix – Weaknesses

EFE & IFE Total Weighted Score

Total weighted score of 4.0

▪ Organization response is outstanding to threats
and weaknesses

Total weighted score of 1.0

▪ Firm’s strategies not capitalizing on
opportunities or avoiding threats
TOWS Strategies

Strategy-Formulation Analytical
Framework

Quantitative Strategic
The Decision Stage Planning Matrix
(QSPM)

To compare and evaluate strategic alternatives qualitatively

 QSPM Strategic Alternatives

Key External Factors Weight Strategy 1 Str. 2 Str.3

Economy Attractiveness
Political/Legal/Governmental scores (AS)
Social/Cultural/Demographic/ / Total AS
Environmental
Technological
Competitive
Key Internal Factors
Management High TAS Strategies should be proceeded and formulated.
Marketing Each selected strategies need to synchronize to ‘Objectives’,
Finance/Accounting Also no conflict between each selected strategies
Production/Operations
Research and Development
Computer Information
Systems
25

QSPM-verizon
Enter into a
joint venture
Invest capital
with MCI to
in fiber optic
offer a bundled
cable
wireless
package
Opportunities Weight AS TAS AS TAS
1. 141 million possible customers in Europe, UK, and Germany 0.06 2 0.12 4 0.24
2. Strengthening foreign currencies vs. dollar- Euro advantages 0.06 0 0.00 0 0.00
3. Increased usage of wireless services 0.02 4 0.08 2 0.04
4. Small wireless providers are consolidating with larger providers due
0.06 0 0.00 0 0.00
to increased competition
5. Increased desire for high-speed internet service 0.10 0 0.00 0 0.00

Threats Weight AS TAS AS TAS

1. New regulatory complaints (new phone # portability) 0.10 0 0.00 0 0.00
2. Rising costs of healthcare 0.07 0 0.00 0 0.00
3. Global unrest- economic monetary and financial 0.12 0 0.00 0 0.00
4. Consumer privacy rights under attack 0.02 3 0.06 2 0.04
5. Weak consumer spending 0.10 0 0.00 0 0.00
6. Decreasing demand for traditional voice lines and fixed lines 0.05 0 0.00 0 0.00
7. Increasing overlap of telecommunication territories 0.06 0 0.00 0 0.00
8. Increasing competition for providers of web search directories 0.02 2 0.04 3 0.06
9. Increasing providers of wireless services 0.06 0 0.00 0 0.00
10. Brand recognition 0.10 0 0.00 0 0.00
QSPM - verizon
Enter into a joint
Invest capital in venture with MCI
fiber optic cable to offer a bundled
wireless package

Strengths Weight AS TAS AS TAS

1. Top wireless provider in the U.S. serving 49 of the top 50 markets 0.17 2 0.34 3 0.51
2. High-speed data network in all major markets 0.13 2 0.26 4 0.52
3. Largest provider of local, long distance, data, and broadband services
0.10 2 0.20 3 0.30
in 2/3 of the top 100 markets in the U.S.
4. Leading print and on-line directory publisher with 2100 in U.S. and
0.10 4 0.40 2 0.20
13 other countries
5. Verizon invested $12 billion in 2002 in 400,000 miles of fiber-optic
0.15 4 0.60 2 0.30
cable.
6. Marketing campaign – brand awareness 0.10 2 0.20 3 0.30

Weaknesses Weight AS TAS AS TAS

1. $49 billion in long term debt 0.10 4 0.40 3 0.30
2. Lack of international presence 0.05 3 0.15 4 0.20
3. Revenue only increased 4 percent since year end 2000. 0.10 1 0.10 2 0.20
TOTALS 2.95 3.21

ƒ Specific
ƒ Measurable
ƒ Actionable
ƒ Relevant
ƒ Time-related/Timely
ƒ Achieve 10 per cent online revenue contribution within
two years
ƒ Cost reduction of 10 per cent in marketing
communications within two years
ƒ Increase retention of customers by 10 per cent
ƒ Increase by 20 per cent within one year the number of
sales arising from a certain target market, e.g. 18–25-
year-olds
ƒ Improve customer service by providing a response to a
query within two hours, 24 hours per day, seven days a
week

Objectives synchronize to the selected Strategies

Table 4.4 Example allocation of Internet marketing objectives within the balanced
scorecard framework for a transactional e-commerce site

Determine & select : 8 e-Marketing

Strategies Formulation Guideline

1. Market and product development

2. Business and revenue models
3. Target marketing
4. Positioning and differentiation
5. Multi-channel distribution
6. CRM
7. Online communications mix and budget
8. Organizational capabilities
 1)Market & Product
Development Strategies

Figure 4.10 Using the Internet to support different growth strategies

ƒ How will the company generate revenue?

ƒ “Early movers”
ƒ “Wait and see”
ƒ Transactional sites
ƒ Related services (e.g. Amazon servers)
ƒ Affiliate/commission programs
Figure 4.12 Stages in target marketing strategy development

ƒ Identify customer lifecycle groups

• Brand loyalists – convert online
• Not brand loyal – encourage trial
• Most profitable – deepen relationships
• Larger companies (B2B)
• Smaller companies (B2B)
• Key members of the buying unit (B2B)
• Difficult to reach using other media

4)Positioning & Differentiation

strategies
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)
4)Alternative positionings for online
services

Figure 4.16 Alternative positionings for online services

5)Channel structure modifications

Channel coverage map showing the company’s preferred strategy for

Figure 4.21
communications with different customer segments with different value
 6)CRM

Risk/reward analysis

Figure 4.26 Example of risk–reward analysis

7)Online comm. Mix and budget

Strategic options for a company in relation to the importance of the Internet

Figure 4.19
as a channel
 Flow chart

Figure 4.20 Flow chart for deciding on the significance of the Internet to a business
Source: After Kumar (1999)

8)Organisational structure
modifications

Summary of alternative organisational structures for e-commerce

Figure 4.23
suggested in Parsons et al. (1996)