Implementation of Internet Marketing Strategy

Stage Five: Designing the Marketing Program Entails designing a particular combination of

marketing actions (termed levers) to move target customers from awareness to commitment.

Framework used is the Marketspace Matrix.

Stage Five: Designing the Marketing ProgramTo understand the Marketspace Matrix, the four stages

of the customer relationship and the six associated classes of levers that can be employed must be defined first.

Four Stages of Customer Relationship:1. Awareness

2. Exploration

3. Commitment

4. Dissolution

Stage Five: Designing the Marketing Program Six Classes of Variables in the Internet Marketing

Mix:1. Product

2. Pricing

3. Communication

4. Community

5. Distribution

6. Branding

Stage Five: Designing the Marketing ProgramTwo more important concepts, Individualization

(customization) and Interactivity, need to be explored to fully understand the profound implications the Internet brings to business.

1. Individualization The Internet enables the firm to engage in customer-

specific actions – a broadcast to an audience of one. Equally important, the customer can control the degree of

customization by taking action to set the level of customization desired.

Stage Five: Designing the Marketing Program

2. Interactivity Defined as the extent to which a two-way

communication flow occurs between the firm and customers.

The Internet enables a level of customer dialogue that has not previously been experienced in the history of business.

Products and services can be designed in real time by the customer, maximizing both interactivity and customization.

Stage Five: Designing the Marketing Program

The Marketspace Matrix The Marketspace Matrix is a framework

illustrating the levers that the Internet marketer may choose to use at each stage of the customer relationship.

The Internet’s 2is The 2is allow firms to choose levers that can

move customers through the relationship phases faster and more effectively than ever possible.

The 2is affect each category of levers differently, but the end results remain consistent across all levers.

Product, Pricing, Communications, Community and Distribution.

The Marketplace Matrix

Awareness Exploration Commitment Dissolution

Product

Categories Price

of Levers Communication

Distribution

Community

Relationship Stages

Awareness Exploration Commitment Dissolution

Product

Categories Price

of Levers Communication

Distribution

Community

Relationship Stages

Two Integral Components of Implementation

ObjectivesDeliver the promised

customer experience

Turn strategic intent / concepts into results

ObjectivesMaintain fit between

Marketspace evolution and the company’s delivery system and product offering

Build theinfrastructure to

deliver on the brand promise

Innovate / Renew the customer experience

Source: Monitor Analysis

Source: Modified version of materials in The Marketing Edge by Thomas V. Bonoma. 1985. New York: The Free Press.

Why Does Implementation Matter?

Success

All that can be done to assure success has been done

Success

All that can be done to assure success has been done

Roulette

Good execution can mitigate poor strategy, forcing management to success

or Same good execution

can hasten failure

Roulette

Good execution can mitigate poor strategy, forcing management to success

or Same good execution

can hasten failure

Trouble

Poor execution hampers good strategy - Management may never become aware of strategic soundness because of execution inadequacies

Trouble

Poor execution hampers good strategy - Management may never become aware of strategic soundness because of execution inadequacies

Failure

Difficult to diagnose - bad strategy masked by poor execution

More difficult to fix - two things are wrong

Failure

Difficult to diagnose - bad strategy masked by poor execution

More difficult to fix - two things are wrong

Poor

Good

Appropriate Inappropriate

Strategy

Implementation

Guidelines for the Marketspace Matrix No single best strategy Best strategies provide superior customer

support Levers should emphasize the functional,

symbolic and experiential aspects of consumption experience.

Principles for Marketspace Matrix Design Which lever should be used?

Choose Levers to Effect a Change Determine Which Levers Have the Most Leverage Consider Barriers to Advancement Consider the Medium’s Effect on Desired Behavior Level of Involvement Matters Understand Consumer Learning Trends Credibility of the Channel Matters The Choice of Levers Must be Consistent with Positioning

Choice The Medium can be the Message – or the Product Matrix Design Must be Adaptive

How should Marketing Resources be Allocated on a lever-by-Lever Basis? How should Marketing Resources be Allocated on a

lever-by-Lever Basis? Consider Correlation of Effect

How do the Levers Interact? Beware of Segment Alienation Selected Levers Must be Integrated

How should the Levers be Sequenced? There is no one silver bullet Sequencing of Levers matters.

Basic Product Development Levers

Basic Product Packaging Attributes and Features Customer-Specified Attributes and Features Mass-Customized Product

Augmented Product Development Levers Customer Service Programs

Postsales support, customer care, & customer relationship management.

Loyalty Programs and Privileges Availability of Complementary Products Upgrades Enabling Community Additional Functionality Fulfillment Capabilities

How Products Enable Customer Relationships Two primary techniques:

1. Deploying the product development levers that are appropriate for the existing relationship and

2. Emphasizing the elements of the value proposition that are most relevant at a given stage of the relationship.

How Product Enable Customer RelationshipsRelationship Stage Lever(s)

AWARENESS Packaging

EXPLORATION/ EXPANSION

PackagingProduct Attributes & FeaturesFulfillment CapabilitiesCustomer Experience

Availability of complementary productsCustomer-specified attributes and featuresMass CustomizationAdvanced Internet Functionality

COMMITMENT UpgradesCustomer-specified attributes and featuresMass CustomizationPostsales Support

Loyalty ProgramsCustomer ExperienceEnabling CommunityCustomer Relationship Management

DISSOLUTION Customer Care

Basic Pricing Strategies Cost Plus Target Profit Growth Target-Return Pricing Prestige Pricing Price as a Sign of Quality Cyclical Promotional Pricing (Hi-Lo) Everyday Low Pricing Fairness in Pricing Promotional Low-Cost Pricing

Dynamic Pricing Strategies Dynamic Pricing is one of the most significant

contributions the Internet and the 2Is have made to pricing strategy.

The Internet has enhanced dynamic pricing in two ways: Decreased Menu Costs Interactivity

Auction Types English Auctions

Reverse-Price English Auction

Dutch Auctions First Price Sealed-Bid Auctions Reverse First Price Sealed-Bid Auctions Group Buying Exchanges

Implementation Across the Four Relationship StagesRelationship Stage Pricing Levers

AWARENESS PromotionsBundlingFrenzy PricingPrestige Pricing

Price as a Sign of QualityHi-Lo PricingDynamic PricingEveryday Low Pricing

EXPLORATION/ EXPANSION

PromotionsJustify PricesLoyalty Programs

COMMITMENT PromotionsTiered Loyalty ProgramsWide Variety of Pricing Programs

AffiliatesProfit-Enhancing Opportunities

DISSOLUTION Discontinue Pricing PromotionsReconfigure Loyalty Programs

Adversely Affect Profit Programs

How the Internet Affects Communications Competition and Expectations Transformation of Communication The 2Is

Interactive Individual

Importance of Integrated Communication Goal of marketing and communication is to

convey relevant messages to the right consumers at the right time.

Synergy between messages is integrated communications.

Traditional and interactive marketing methods are converging.

Communication Types – Marketing Levers Marketing communications, which includes

all the points of contact that a firm has with its customers, can be grouped into four categories:

1. Mass offline

2. Personal offline

3. Mass online

4. Personal online

Communication Types – The Marketing Levers

Mass-Offline Marketing Levers: Broadcast Media: television, radio, outdoor & public

relations Print Media: newspapers, magazines, yellow pages,

brochures, newsletters Point-of-Purchase Displays

Communication Types – The Marketing Levers

Personal Offline Marketing Levers: Telemarketing Direct Mail Statement Stuffers Customer Service

Communication Types – The Marketing Levers

Mass Online: Basic Online Tools: banners, interstitials, search

engines, point-of-purchase displays Applications of Basic Online Tools: partnerships and

affiliate programs, sponsorships, chat rooms, serial marketing

Communication Types – The Marketing Levers

Personal Online: Personalized Commercial Websites E-mail Marketing: viral marketing, loyalty programs,

customer service

Communication Process

1. Identifying the Target Audience

2. Determining the Communication Objective

3. Developing the Media Plan

4. Creating the Message

5. Executing the Campaign

6. Evaluating the Effectiveness of the Campaign

Implementation Across the Four Relationship StagesRelationship Stage

Marketing Levers

AWARENESS Online levers: online billboards, search engines, e-mail, viral marketingOffline levers: television, magazines, radio, yellow pages, billboards/ outdoor

EXPLORATION/ EXPANSION

Online levers: online billboards, search engines, e-mail, viral marketing, website, permission marketing, serial marketingOffline levers: television, radio, newspapers, packaging

COMMITMENT Online levers: targeted email/ permission marketing, personalized pagesOnline/ Offline levers: loyalty programs, customer serviceOffline levers: telemarketing, direct mail permission marketing with personalized offers

DISSOLUTION Personalized pagesTermination

Is the Internet a Distribution Channel? A distribution channel is the system of

organizations involved in the process of making a product or service available for consumption or use.

Marketing channels therefore facilitate the exchange of goods and services between buyers and sellers.

How have the 2Is Revolutionized Distribution Channels

The Internet: Is a substitute for other forms of

communication. Has radically changed buyer-seller

relationships. Has changed the customer shopping

experience. Has increased the power of consumers.

Objectives of Channel Intermediaries

1. Efficiency: Distribution costs are reduced only if the retailers can perform the required functions more efficiently than the manufacturers could in the direct channel.

2. Effectiveness: the ability of the channel to perform functions that create value for customers.

Disintermediation A strategy that involves the elimination of a

channel intermediary. Internet has become a driving force for

disintermediation Overall result is positive because channel

works more closely to create value for customers.

Designing Channel Systems: The Distribution Levers Intermediary Type

Direct Traditional Retailers Virtual Shopping Malls Internet Exchange

Process: Designing Distribution Channels

1. Identify and evaluate consumer preferences by segment.

2. Design a customer-based channel system.

3. Modify channel strategy based on firm objectives and constraints.

4. Select channel intermediaries or partners.

5. Develop a channel feedback system.

Distribution Levers and the Four Key Stages of Customer Relationships Awareness

Number of Intermediaries Number of Channels/ Intermediary Type

Exploration/ Expansion Degree of Channel Integration Number of Channels/ Intermediary Type

Commitment Degree of Channel Integration Intermediary Type Number of Channels Intermediary Functions and Responsibilities

Dissolution Elimination of Channel Types Reduction in the Number of Intermediaries Reduction in Channel Integration

eBay’s Application of the Marketspace Matrix

eBay’s Application of the Marketspace Matrix (1995-98) eBay provides a logical first example of

Marketspace Matrix in action. Since the product – an online auction service

– was completely new, its brand had little value.

Thus branding levers were inapplicable at the start.

Yet, eBay, even in its nascent phases, developed levers in nearly every category.

eBay’s Application of the Marketspace Matrix (1995-98) Awareness

Novelty of internet based, dynamic, auction-based pricing system Benefits to both buyers and sellers Low cost Viral marketing and word-of-mouth Strong presence at trade shows

Exploration/ Expansion Focus in one key area: website itself Easy-to-use search engine and easy-to-explore community converted

visitors to customers. With more converted customers, eBay fostered exploration and expansion

by the community equity that arose. Commitment

Relied primarily upon the enabling community product lever to advance users into the commitment phase.

eBay’s Application of the Marketspace Matrix (1998-99) Once eBay had advanced a significant

number of users into the exploration/ expansion phase, the firm needed to focus on sustaining commitment.

As the firm’s needs changed, so did its Marketspace Matrix.

eBay’s Application of the Marketspace Matrix (1998-99)Awareness

Began first major advertising campaign in late 1998. Radio and print campaign with “You might just find it on eBay”

slogan Strategic alliances with AOL.com and the now defunct Go.com Sponsored auction of famous memorabilia for free media exposure

Exploration/ Expansion Added new attributes and features Offered complementary services Improved existing services Enhanced community offerings Forums where veteran eBay users will answer questions of new

users

eBay’s Application of the Marketspace Matrix (1998-99) Commitment

Community enabling remains a constant product lever to advance user to and sustain commitment.

Loyalty program where seller can earn “Power Seller” status.

Dissolution Needed to dissolve relationships with customers who

damaged the community. These were sellers who accepted bids and money and then

never delivered the goods as well as buyers who bid and never paid.

Relied on community and feedback forum to dissuade users from dealing with these miscreants.

eBay’s Application of the Marketspace Matrix (2000-present) Having nearly perfected its community and ability to retain

customers, eBay requires new buyers and sellers to continue its history of growth.

Pursued international strategy through building international sites and acquiring competitors.

To increase core business in the US, eBay has stepped up efforts to win new users.

Television campaign in late 2000. Promote ancillary services including a bill-paying service called

Billpoint which competes with PayPal, which allows anyone with an email to receive a payment.

eBay’s Application of the Marketspace Matrix (2000-present)

Awareness Offering price promotions to sellers to encourage them to list

items for the first time – for free, provided they sign up for and accept Billpoint.

Television ad campaign.

Exploration/ Expansion Expansion of product categories to include real estate and

cars. Added “buy it now” option. Augment offerings, e.g. deal to provide discounted UPS

shipping to all eBay users through Mail Boxes Etc.