Chapter 5

E-Marketing

Revised Date: 2/5/2012

Learning Outcomes

• Define e-marketing and its goals• Discuss e-marketing processes• Outline e-marketing strategy• Develop e-marketing plan

Examples…

What is marketing?

• The definition of marketing by the Chartered Institute of Marketing (http://www.cim.co.uk/) is:

‘Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably’

What is e-marketing?• Chaffey (2009) defined:

• e-business tools such as web, email, search engine marketing, etc.– To identify how to utilize the Internet for marketing research to

find out customers’ needs and wants• Anticipating – anticipating the demand for digital services

• Satisfying – how to achieve customer satisfaction through the electronic

channel

• Profitably

Achieving marketing objectives through the use of electronic communications technology

Achieving marketing objectives through the use of electronic communications technology

What is e-marketing?

Figure 8.1 The e-marketing plan in the context of other plans

E-marketing planning

• A e-marketing plan is needed to detail the specific objectives of the e-business strategy through marketing activities

• May use SOSTAC framework

E-marketing planning-SOSTAC

• Developed by Paul Smith (1999)

• Summarizes the different stages that should be involved in a marketing strategy from strategy development to implementation

Figure 8.2 SOSTAC™ – a generic framework for e-marketing planning

SOSTAC-Situation Analysis

• To understand the current and future environment in which the company operates

• Involves consideration of all of the related factors and will form the basis for defining objectives, strategies and tactics

Figure 8.4 Inputs to the e-marketing plan from situation analysis

SOSTAC-Situation Analysis

Situation Analysis-Methods

• Demand analysis

– What percentage of customer businesses have access to the Internet?

– What percentage of members of the buying unit in these businesses have access to the Internet?

– What percentage of customers are prepared to purchase your particular product online?

– What percentage of customers with access to the Internet are not prepared to purchase online, but are influenced by web-based information to buy products offline?

– What are the barriers to adoption amongst customers and how can we encourage adoption?

Figure 8.5 Customer demand analysis for the car market

Example

Situation Analysis-Methods

Situation Analysis-Methods• Competitor Analysis

– The monitoring of competitor use of e-commerce to acquire and retain customer

– Companies should review:• Well-known competitors• Well-known international competitors• New Internet companies locally and

worldwide

Situation Analysis-Methods

• Other methods– Intermediary analysis– Internal marketing audit

• Find out what need to be done for these two methods…

SOSTAC- Objective Setting

• SMART approach– Specific– Measurable– Achievable– Realistic– Time-constrained

Find any article about SMARTapproach!!!

Objective Setting-Examples• Start-ups – acquiring a specific number of new customers or to

sell advertising space to generate a specified revenue that will hopefully exceed investment in site creation and promotion!

• Established mobile-phone operator – increase customer retention by reducing churn from 25 per cent to 20 per cent.

• Established media company – increase online revenue, target of 20 per cent online contribution to revenue by offering new online services and media sales.

• Established business-to-business engineering company – increase overall revenue by 5 per cent, through targeting sales in new international markets.

• Reduce costs of routine customer service by 10 per cent to enable focus on delivery of specialized customer service.

SOSTAC- Strategy

• Define how e-marketing objectives will be achieved.• Evaluation and selection of appropriate market

segments and the development of appropriate offers• Refer to strategy definition – chapter 5 (text book)

chapter 4 (notes)

Figure 8.8 Stages in target marketing strategy development

Target market strategies

SOSTAC- Strategy

5 questions when developing strategy:

•Who are our customers?•How are their needs changing?•Which do we target?•How can we add value?•How do we become first choice?

Characteristics of new marketing communications tools – 6 Is

• Interactivity• Intelligence• Individualization• Integration• Industry restructuring• Independence of location

Figure 8.9 Summary of communication models for (a) traditional media,(b) new media

Characteristics- Interactivity

Characteristics- Intelligence

• Low cost method for market research • Create two ways interaction• Speed up communication process• Gather and disseminate information can

be done continuously• Ex. Nestle is able to profile their

customers based on the information received through questionnaire

Figure 8.10 Summary of degree of individualization for (a) traditional media (same message), (b) new media (unique messages and more information exchange between customers)

Characteristics- Individualization

Individualization- Example

Figure 8.11 Channels requiring integration as part of integrated e-marketing strategy

Characteristic-Integration

Integration- Example

Integration -Examples of integrated communication tools

• The internet can be used as a direct-response tool enabling customers to respond to offers and promotions publicized in other media

• The web site can have a direct response or callback facility built into it.

• The Internet can be used to support the buying decision even if the purchase does not occur via web site.

Figure 8.12 Channel integration required for e-marketing and mixed-mode buying

Integration- Example

Characteristic-Industry restructuring

• Disintermediation• Reintermediation• Countermediation

Key concepts- Find out howthese concepts can benefit your e-marketing plan

Characteristic-Independence of location

• Possibility to reach global market• How this affect your marketing plan?

SOSTAC-Tactics

• Cover the 7ps.• Self reading on this part, page 365-372.

Tactics

• Online value proposition– A clear differentiation of the proposition from competitors

based on product features or service quality.– Target market segment(s) that the proposition will appeal

to.– How the proposition will be communicated to site visitors

and in all marketing communications. Developing a tag line can help this.

– How the proposition is delivered across different parts of the buying process

– How the proposition will be delivered and supported by resources – is the proposition genuine? Will resources be internal or external?

Tactic- Example• ‘Compare. Buy. Save’. Kelkoo (www.kelkoo.com) • ‘Earth’s biggest selection’. Amazon (www.amazon.com)• ‘Search the largest inventory of cars and trucks on the Internet.

More than 1.5 million listings, updated daily’ (www.autotrader.com)

• The Citibank site design (www.citibank.com) uses a range of techniques to illustrate its core proposition and OVP. The main messages are:– Welcome to Citibank: The one-stop solution for all your financial needs.– Look for a product or service; Learn about a financial product; Find a

location.

Tactic-Product • Extend range of product (Tesco)• Narrow range of product (Apple)• Online-only products (banks)• Develop new brand (Maybank2u/ Click CIMB)• Migrate existing brand (HSBC/ Airasia)• Partner with online brand (Waterstones and

Amazon).

Tactic-Product (Example)

Tactic-Price• Differential pricing:

• Reduce online prices due to price transparency and competition (easyJet)

• Maintain price to avoid cannibalisation of offline sales (Dixon)

• New pricing options (software, music):• Rental• Pay per use• Reverse auctions (B2B)• Dynamic pricing (Concert tickets).

Tactic-Implications for price

• Increased price transparency • Downward pressure on price• New pricing approaches• Alternative pricing structure or policies

Tactic- Place• Place = avoiding channel/ marketplace

conflicts– Disintermediation – sell direct – Reintermediation – partner with new

intermediaries– Countermediation:

• Form new intermediaries• Partner with existing intermediaries• Distance from intermediaries.

Tactic-Implications on place

• Place of purchase• New channel structures• Channel conflicts• Virtual organizations

Tactic- Promotion• Selective use of new online tools for different

stages of the buying process and customer lifecycle

• Online only campaigns • Integrated campaigns – incorporating online

tools into communications mix.

Figure 8.14 Options for the online vs offline communications mix (a) online > offline, (b) similar online and offline, (c) offline > online

Tactic- Promotion

Tactic• People

– Automate – use web self-service, offer customer choice

• Process– Change process for service – contact

strategies• Physical evidence

– Site design – differentiate or support brand

– Fulfillment quality.

Online Branding

Materials:

http://www.youtube.com/watch?v=VWhbyjGtYWY

Online Branding- Class Activity• What comprises a successful online brand?

What do you think?– High traffic?– Good name recognition?– Sites with modest sales?– Profitable brand?– Good customer service?

• What does branding means in online context?• How important is branding to an existing

companies?

Online Branding

• A brand – the characteristic of product or services perceived by a user that uniquely meet their needs.

• Branding – a process of creating and evolving successful brands.

• Refer to definition given in page 373.

Online Branding• 3 characteristics highlighted by

this definition– Brand is dependent on

customer perception– Perception is influenced by

the added value characteristics of the product

– The added value characteristics need to be sustainable

Online Branding• Brand identity

– Anything about the brand including name and symbol that must be communicated to increase brand awareness.

NOW EVERYBODY CAN FLY

What does this tell you?

Online Branding

• Brand identity– Options for changing brand identity online

• Transfer traditional brand online• Extend traditional brand• Partner with existing digital brand• Create a new digital brand

– Self reading- Mini case study 8.1 : Napster.com brand identity, page 375-376.

Online branding

• Success factors:– Content quality– Adequate performance of web site architecture– After sales support– Quality of responses to enquiries and fulfillment– Acknowledgement of customer privacy– Reflecting and supporting the characteristics of

the offline brand

SOSTAC-Action

• Need to finalize the actions required to execute the plan, for example:– What level of investment in the Internet channel is sufficient to

deliver services?– What training of staff is required?– What new responsibilities are required for effective Internet

marketing?– Are changes in organizational restructuring required?– What activities are involved in creating and maintaining the web site?

• Refer to page 380 -381- an example of B2B e-marketing plan

SOSTAC- Control

• It can be achieved through a combination of traditional techniques such as– Conduct marketing research – Analysis of web-server log files – Intranets can be used to share information

• Read case study 8.2- page 381- Napster marketing mix

SOSTAC- Example• To launch a e-laundry business at UNITEN

Component What need to be doneSituation analysis (what is it?) • who is our potential customers? Students? Staff? Public?

• where we should operate?• how can we promote the service online? Any demand?

Objective (who are we? Where are we now? What we want to be?)

• vision : to deliver the best laundry services• mission• Objective: to gain profit 15% through online services

Strategy (what we should do to achieve the objective)

• promote the services to students and staff• fulfillment of services within 24 hours

Tactic (how we should execute the strategy)

• online marketing• member get member program• human resource for delivery and pickup

Action ( what need to be done) • online advertisement at Uniten’s website• incentive such as reward point for member get member program• hire students for delivery and pickup

Control (how to monitor and maintain)

• measure quality of work, man hour, punctuality

Issues with varying the mix online• Do we vary the mix online or replicate

offline?• Is the offer clear – brand proposition, online

offer• Is online differentiation defined?• Is online differentiation communicated?• Key online mix variables

– Product– Price– Place– Promotion– Service: People, Process, Physical evidence

Figure 8.13 The elements of the marketing mix

The Marketing Mix using 7Ps

Summary

• E- marketing – the application of technology to achieve marketing objectives

• It is how you want to market/sell your product and services online.

• SOSTAC framework can be used as a guideline to develop e-marketing plan.

Tutorial

• Define e-marketing• Describe SOSTAC framework• Summarize the opportunity to vary the

marketing mix.• Develop an e-marketing plan for the business

of your choice.

References

• Google Image, http://www.google.com accessed on 13 April 2011.

• Chaffey, D., (2007, 2009), E-Business and e-Commerce Management, 3rd and 4th Edition, Prentice Hall.