chapter

Introduction to Internet Marketing

HUA Ying
University of International Business and Economics

Introduction to Internet Marketing Todays Objectives

Objectives will be to:

Define the scope of Internet marketing Explore the stages of Internet marketing Discuss the relationship stages and the Marketspace Matrix Examine guidelines for success Outline the progression of the book

Chapter 1: Introduction to Internet Marketing

Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview of the Book Conclusion

Chapter 1: Introduction to Internet Marketing

Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview of the Book Conclusion

Definition and Scope of Internet Marketing

Definition and Scope of Internet Marketing

What is Marketing?
Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals. ---AMA

What is Internet Marketing?

Internet Marketing is the process of building and maintaining customer relationships through online activities to facilitate the exchange of ideas, products, and services that satisfy the goals of both parties.

Source: Wind, Jerry and Vijay Mahajan. Digital Marketing. New York: John Wiley and Sons, p.8.

Exhibit 1.1: Assessing the Impact of Internet Marketing

Marketing Resource Allocation
Offline Online

Location of Revenue Stream

Bricks-and- Mortar

Cell 4 Cell 4

Cell 2 Cell 2
ar ke tin g Im pa ct

Cell 3 Cell 3

In te rn et M

Online

Cell 1 Cell 1

Chapter 1: Introduction to Internet Marketing

Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview 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 Opportunity in Existing New Value System Seed Opportunity in Existing New Value System

Identify Unmet and Underserved Need(s) Identify Unmet and Underserved Need(s)

Identify Target Segment(s) Identify Target Segment(s)

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

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

Make Go // No-Go Assessment Make Go No-Go Assessment

Framework for Market Opportunity Microsoft CarPoint Example

Leverage the Internet to Improve the Leverage the Internet to Improve the Consumer Car-Buying Process Consumer Car-Buying Process
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

Car Buyers Are Dissatisfied With Current Car Buyers Are Dissatisfied With Current Retail Car-Buying Process Retail Car-Buying Process

Shoppers Who Feel Intimidated by Sales Shoppers Who Feel Intimidated by Sales People and Look for More Efficient Way People and Look for More Efficient Way

Microsofts Software and Free Placement on Microsofts Software and Free Placement on All Its Websites All Its Websites

How Big Is the Online Car-Buying Market? How Big Is the Online Car-Buying Market? Who Are CarPoints Main Competitors? Who Are CarPoints Main Competitors?

Make Go // No-Go Assessment Make Go No-Go Assessment

Exhibit 1.4: Corporate, Business-Unit and Marketing Strategy

Linkages
Corporate Strategy Corporate Strategy

Example
Amazon Amazon

Business Unit Strategy Business Unit Strategy

Tools and Hardware Tools and Hardware

Integrated Marketing Integrated Marketing Strategy for Unit Strategy for Unit

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

Internet Internet Marketing Marketing

Traditional Traditional Marketing Marketing

Online Online Marketing Mix Marketing Mix

Offline Offline Marketing Marketing Mix Mix

Chapter 1: Introduction to Internet Marketing

Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview 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

Exhibit 1.6: Four Key Stages of Customer Relationship by Level of Intensity

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

Community

Distribution

Individual

Exhibit 1.9: The Marketspace Matrix

Relationship Stages
Awareness Product Exploration Commitment Dissolution

Categories of Levers

Price

Communication

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

Community

Distribution

Branding

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

Chapter 1: Introduction to Internet Marketing

Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview of the Book Conclusion

Critical Success Factors for Internet Marketing Executives

Customer Advocacy and Insight Customer Advocacy and Insight

The willingness to understand customer needs and provide added value to each customer interaction

Integration Integration

The ability to have a holistic view of the customer and the enterprise in order to create a uniquely advantaged strategic plan

Balanced Thinking Balanced Thinking

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

Passion and Passion and Entrepreneurial Spirit Entrepreneurial Spirit

Willingness to Accept Willingness to Accept Risk and Ambiguity Risk and Ambiguity

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

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 Several One basic conceptual and process changes occur in online marketing 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 Differences Old Rules 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 marketing programs include mixing different marketing levers, both new and old: the master-mixer concept still remains

Segmentation

There

From

Successful

Chapter 1: Introduction to Internet Marketing

Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview of the Book Conclusion

Exhibit 1.11: Overview of the Chapters

1. Framing the 1. Framing the Market Market Opportunity Opportunity 2. Formulating 2. Formulating the Market the Market Strategy Strategy 3. Designing the 3. Designing the Customer Customer Experience Experience

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

5. Designing the 5. Designing the Marketing Marketing Program Program

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

7. Evaluating 7. Evaluating the Marketing the 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

Chapter 1: Introduction to Internet Marketing

Definition and Scope of Internet Marketing Seven-Stage Cycle of Internet Marketing Four Key Relationship Stages and the Marketspace Matrix Guidelines for Internet Marketing Success Overview 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