Assignment 2

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Part 2

Strategy and applications

Chapter 7

Digital marketing

Digital Business and E-Commerce Management Seventh Edition

Learning outcomes

Assess the need for separate digital business and digital marketing strategies

Create an outline digital marketing plan intended to implement the digital marketing strategy

Distinguish between marketing communication characteristics of traditional and new media

Management issues

How do we integrate traditional marketing approaches with digital marketing?

How can we use digital communications to differentiate our products and services?

How do we redefine our marketing and communications mixes to incorporate new media?

Digital 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.

Which e-marketing tools can assist?

Web, email, databases, wireless and digital television

Source: ‘Econsultancy’ (2008).

Operational and mangt processes of digital marketing

attracting customers reaching via search engines, advertising

converting web sight visitors to leads, sales or browsing

encouraging repeat usage of digital channels, repeat transactions eg sales

Figure 7.1 The operational and management processes of digital marketing (Continued)

Source: ‘Econsultancy’ (2008).

The digital marketing plan in the context of other plans

hierarchy of plans, digital marketing strategy informed by wider business and marketing objectives

Source: Smart Insights (2012).

Content Marketing Matrix

Review current use of content by plotting different content on the grid, do same for competitors, define criteria for choosing content options, choose options to invest in, action decisions and assess effectiveness

Source: Smith, P.R. (2018) SOSTAC® Guide to your Perfect Digital Marketing Plan, published by PR Smith Marketing Ltd. www.PRSmith.org. More information on PR Smith's SOSTAC® visit www.SOSTAC.org

PR Smith’s SOSTAC® Planning Framework

a generic framework for digital marketing planning, stages that could be involved in marketing strategy development and implementation

Inputs to the digital marketing plan from situation analysis

(SLEPT: social, legal, environmental, political, technological)

Demand analysis questions

What percentage of customer businesses have access to the Internet?

What percentage of members of the buying decision 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 is the popularity of different online customer engagement devices such as Web 2.0 features such as blogs, online communities and RSS feeds?

What are the barriers to adoption amongst customers of different channels and services and how can we encourage adoption?

Figure 7.7 Example of TOWS analysis

(Continued)

Activity Competitor analysis

You are an e-commerce manager within an airline:

Which criteria would you use to compare a competitor’s online offering?

Group them under five or six headings

Conduct an assessment of your services against competitors

Products – add on features

Financial performance – current profitability of digital channel activities

Marketplace performance – market share and sales trends and significantly the proportion of sales achieved through the Internet.

Business and revenue models – do these differ from other marketplace players?

Marketing communications techniques – is the customer value proposition of the site clear? Does the site support all stages of the buying decision from customers who are unfamiliar with the company through to existing customers? Are special promotions used on a monthly or periodic basis? Beyond the competitor’s site, how do they make use of intermediary sites to promote and deliver their services?

Benchmarking organisational digital marketing capabilities

Benchmarking organisational digital marketing capabilities (Continued)

Services offered – what is offered beyond brochureware? Is online purchase possible, what is the level of online customer support and how much technical information is available?

Implementation of services – these are the practical features of site design such as aesthetics, ease of use, personalisation, navigation and speed.

The 7Ps (product, place, price, promotion, people (right people delivering service, processes (delivery of service to customer), physical elements (mix of physical and intangible),

Customer demand analysis for the car market

(will vary by product and market, possibly by market segment)

Source: Bowen Craggs & Co (www.bowencraggs.com).

Figure 7.9 Benchmark comparison of corporate websites

(number represents a higher score, some criteria needs to be agreed to complete score calculation)

Assessment of the future online promotion contribution and online revenue for a B2B company, for Product A, Europe

Shows targets for improved performance, combination of online promotion, service needed to achieve revenue targets

Source: Chris Ridley – Internet Stock/Alamy Stock Photo

Figure 7.11 easyJet website

The relationship objectives, strategies and performance indicators for a B2B company (in order of priority)

(SEO= search engine optimization, CPA=cost per customer acquisition, AOV= average order value)

Table 7.3 The relationship objectives, strategies and performance indicators for a B2B company (in order of priority) (Continued)

Another approach to goal setting

Business effectiveness. Contribution of site to revenue (see objective setting), profitability and any indications of the corporate mission for the site. The costs of producing and updating the site will also be reviewed, that is cost-benefit analysis.

Marketing effectiveness. These measures may include:

leads; sales; retention; market share; brand enhancement and loyalty.

Customer service

These measures will be assessed for each of the different product lines delivered through the web site. The way in which the elements of the marketing mix are utilised will also be reviewed.

Another approach to goal setting (Continued)

Internet effectiveness. These are specific measures that are used to assess the way in which the web site is used, and the characteristics of the audience

Such measures include specialist terms such as:

hits and

page impressions that are collected from the log file, and also

more typical techniques such as focus groups and

questionnaires to existing customers.

From a marketing point of view, how clear the value proposition of the site is for the customer should be noted.

Table 7.4 Example of Internet marketing objectives within the balanced scorecard framework for a transactional e-commerce site

Examples of SMART digital marketing objectives

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% to 20%.

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

Examples of SMART digital marketing objectives (Continued)

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

Reduce costs of routine customer service by 10% to enable focus on delivery of specialised customer service.

Table 7.5 Summary of typical focus for main types of e-commerce-related strategic initiatives

Table 7.5 Summary of typical focus for main types of e-commerce-related strategic initiatives (Continued)

Figure 7.12 Stages in target marketing strategy development

de Kare-Silver ES Test

Product characteristics. Does the product need to be physically tried, or touched before it is bought?

Familiarity and confidence. Considers the degree the consumer recognises and trusts the product and brand.

Consumer attributes. These shape the buyer’s behaviour – are they amenable to online purchases in terms of access to the technology skills available and do they no longer wish to shop for a product in a traditional retail environment?

Table 7.6 Product scores in de Kare-Silver (2000), Electronic Shopping Potential Test

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.

Online value proposition (Continued)

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?

Example OVPs

‘Feel organized without the effort’. Evernote (www.evernote.com)

‘Everybody deserves the perfect start’. Eve Mattress (www.evemattress.co.uk)

‘The world’s most comfortable slipper. Now designed for all-day, everywhere’. Mahabis (www.mahbis.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.

Table 7.7 A range of targeting and segmentation approaches for a digital campaign

The extent to which different types of segmentation variables tend to be predictive of response

indicates the general improvement in campaign response dependent on the type of targeting variables used.

Source: Smart Insights (2011) The best tools and tracking techniques to save time on your social syndication. Dave Chaffey, 18 January 2011. http:www.smartinsights.com/blog/digital-marketing-strategy/tools-tracking-social-syndication

Content publication and syndication process

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

pull marketing, often customer initiated seeking information on web, email may also be used as a push medium

Figure 7.15 Summary of degree of individualisation for

(a) traditional media (same message) and (b) new media (unique messages and more information exchange between customers)

Channels requiring integration as part of integrated digital marketing strategy

internet is one channel of integrated marketing, media communications. The channels may also be offered by the intermediaries

Channel integration required for digital marketing and mixed-mode buying

Examples of how the internet can be used, sometimes in conjunction with offline

The elements of the marketing mix

used to develop marketing strategies, eg to increase sales, price can be decreased, or promotion changed etc

Issues with varying the mix online

Do we vary the mix digital or replicate offline?

Is the offer clear – brand proposition, online offer?

Is online differentiation defined?

Is online differentiation communicated?

Key digital mix variables

Product

Price

Place

Promotion

Service: People, Process, Physical evidence.

Online mix options

Product

Extend range (Tesco)

Narrow range (WH Smith iDTV)

Online-only products (i.e. Goldman Sachs launching an online-only retail bank called Marcus)

Develop new brand (i.e. Co-op bank ‘Smile’)

Migrate existing brand (HSBC)

Partner with online brand (Waterstones and Amazon).

Price

Differential pricing:

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

Maintain price to avoid cannibalisation of offline sales (Currys)

New pricing options (software, music):

Rental

Pay per use

Reverse auctions (B2B)

Dynamic pricing (Concert tickets).

Online mix options (Continued)

Place = avoiding channel conflicts

Disintermediation – sell direct

Reintermediation – partner with new intermediaries

Countermediation:

Form new intermediaries

Partner with existing intermediaries

Distance from intermediaries (TSB Bank).

Online mix options (Continued)

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.

Online mix options (Continued)

Service

People

Automate – use web self-service, offer customer choice

Process

Change process for service – contact strategies

Physical evidence

Site design – differentiate or support brand

Fulfilment quality.

Online mix options (Continued)

Branding

Leslie de Chernatony and Malcolm McDonald described ‘brand’ in their classic 1992 book, Creating Powerful Brands, as:

‘An identifiable product or service augmented in such a way that the buyer or user perceives relevant unique added values which match their needs most closely. Furthermore, its success results from being able to sustain these added values in the face of competition’.

Aaker – brand equity

Brand awareness

Perceived quality

Brand associations

Brand loyalty

How can these be enhanced online for the B2C Company?

How can these be enhanced online for the

B2C Company?

Table 7.9 Traditional measures of brand equity and online measures of brand equity

Zipf’s law, showing decrease in popularity of items within an ordered sequence

Eg books, Amazon can afford because of the huge reach to make low popularity books available, this would not be possible in a bricks and mortar shop

Figure 7.20 Price elasticity of demand for a relatively elastic product

Figure 7.21 Price elasticity of demand for a relatively inelastic product

Figure 7.22 Options for the online vs offline communications mix: (a) online > offline; (b) similar online and offline; and (c) offline > online

Summary

You should be able to assess the need for separate digital business and digital marketing strategies

You should be able to create an outline digital marketing plan intended to implement the digital marketing strategy

You should be able to distinguish between marketing communication characteristics of traditional and new media

Questions

Select a market sector and discuss how the internet has and will impact marketing

Choose a NZ based organisation and develop an outline strategic marketing plan.

Choose a NZ based organisation and develop a comparison between a digital marketing strategy and traditional marketing strategy. Compare and contrast the two strategies.

What are the advantages of digital marketing compared to traditional marketing?

What are the issues / problems of digital marketing compared to traditional marketing?

If you were responsible for digital marketing where would you initially focus your attention?