MKT 341 I: INTERNET MARKETING

COURSE STRUCTURE

This course is designed for you to develop an understanding to how organisation can use the Internet to support your marketing activities.

Course Description

On completing this course, you should be able to:◦ Explain the key similarities and differences between

marketing, using internet and other media;

◦ Show how innovative companies are moving beyond static brochure ware pages to dynamic, interactive content to build personalized relationships with customers;

◦ Explain the use of web site as a communication tool and further analyse the impact of the Internet on distribution channels, market places and relationship with business partners.

Learning Objectives

Successful students will be able to:◦ Use internet marketing as a marketing tool to

support their marketing activities.

Learning Outcome

Lectures – 3 hours per week

Tutorial and discussion – 1 hour per week

Course Format

Group Project – 15%

Individual Assignment – 10%

Group Presentation – 15%

Final Examination – 60%

Student Evaluation

Duration: 3 hours

7 Questions, answer only 4

Final Examination Format

See the course structure

Need to acquire a “C” grade and above to pass

To qualify for the resit examination, must obtain C- : MARK RANGE GRADE POINTRF 0 – 49 1.50RP 50-100 2.00

Grading Scale

Chaffey, Mayo, Johnston, Ellis-Chadwick. Internet Marketing, Financial Times, Prentice Hall

Basic Text

Expectations

An Introduction to Internet Marketing

The relative importance of the Internet for marketing for an organisation still largely depends on the nature of its products and services and the buyer behavior of its target audience.

For companies such as easyJet, the low cost European airline, the Internet is very significant for marketing its products – the Internet is now a vital part of the customer journey as consumers select the best supplier and make their purchase.

For organisations whose products are not generally appropriate for sale online, such as energy company BP or consumer brands such as Unilever, the Internet is less significant, but is still rapidly growing in importance.

Dramatic change in media consumption over the last 10 years towards digital media means that the Internet is becoming important for all product categories.

Internet is less used for sale of products by some organisations, it is still important in increasing awareness of their products and brand values through online advertising on third-party sites.

Once awareness is raised amongst different customer types, content and offers can be used to encourage them to start an online dialogue.

How significant is the Internet for marketing?

Internet-based media offer a range of opportunities for marketing products and services across the purchase cycle.

Companies such as easyJet and BP illustrate the applications of Internet marketing since they show organisations can use online communications such as their web site, third party web sites and e-mail marketing as:

◦ An advertising medium◦ A direct-response medium◦ A platform for sales transactions ◦ A lead-generation method◦ A distribution channel◦ A customer service mechanism◦ A relationship-building medium

Marketing applications of Internet marketing

Importance of the Internet varies for different organisations but share in terms of changing behavior in the stakeholder audiences (prospects, customers, media, shareholders or other partners.

Each of these audiences increased in their consumption of Internet media and there is a corresponding change in buy behavior.

In the UK, the Internet is the third most consumed medium following TV and radio (this figure excludes e-mail usage).

During the business day, the web is the most frequently consumed medium.

Nevertheless advertising expenditure for the Internet medium lags a long way behind expenditure on TV and press advertising (newspapers and magazines) although it has now overtaken radio and outdoor ad spend.

This disconnect or mismatch between medium consumption and TV/press advertising expenditure illustrates the core challenge of Internet marketing.

It is how organisations reallocate their resources to best maximise their returns from the Internet…..

Our changing Media Consumption

Research shows that there is a dramatic difference in online consumer behavior in different markets.

Majority of products such as travel and cinema and theatre tickets, people are researching and then buying online.

Bigger purchases such as cars and properties, people use the internet mainly as a research tool.

Therefore, the way companies should use digital technologies for marketing their products will vary markedly according to product type.

Cars and complex financial products such as mortgages, the main role of online marketing will be to support research, while for standardised products like books and CDs there will be a dual role for the web in supporting research and enabling purchase.

Our Changing Buyer Behavoir

So....WHAT IS INTERNET

MARKETING?

“ACHIEVING MARKETING OBJECTIVES THROUGH APPLYING DIGITAL TECHNOLOGIES.”

It is the application of the Internet and related digital technologies in conjunction with traditional communications to achieve marketing objectives.

The focus is on the results delivered by technology that should determine investment in Internet marketing, not the adoption of the technology!

These digital technologies include Internet media such as web sites and e-mail as well as other digital media such as wireless or mobile and media for delivering digital television such as cable and satellite.

In practice, Internet marketing will include the use of a company web site in conjunction with online promotional techniques such as search engine marketing, interactive advertising, e-mail marketing and partnership arrangements with other web sites.

These techniques are used to support objectives of acquiring new customers and providing services to existing customers that help develop the customer relationship.

To be successful, there is still a necessity for integration of these techniques with traditional media such as print, TV and direct mail.

Internet Marketing can be simply defined as:

The role of e-marketing in supporting marketing is suggested by applying the definition of marketing by the Chartered Institute of Marketing:

“MARKETING IS THE MANAGEMENT PROCESS RESPONSIBLE FOR IDENTIFYING, ANTICIPATING AND SATISFYING CUSTOMER REQUIREMENTS PROFITABLY.”

This definition emphasises the focus of marketing on the customer, while at the same time implying a need to link to other business operations to achieve this profitability.

E-marketing can be used to support these aims:◦ Identifying – the Internet can be used for marketing research to find out

customers’ needs and wants;

◦ Anticipating – the Internet provides an additional channel by which customers can access information and make purchases – understanding this demand is key to governing resource allocation to e-marketing;

◦ Satisfying – a key success factor in e-marketing is achieving customer satisfaction through the electronic channel, which raises issues such as: is the site easy to use, does it perform adequately, what is the standard of associated customer service and how are physical products dispatched?

E-Marketing defined

Digital marketing is yet another term similar to Internet marketing.

According to the Institute of Direct Marketing (IDM), digital marketing involves 3 parts.

Digital Marketing Defined

“Web, e-mail, databases, plus mobile/wireless and digital TV.”

◦ Illustrates the range of access platforms and communications tools that form the online channels which e-marketers use to build and develop relationships with customers.

◦ The access platforms or hardware include PCs, PDAs, mobile phones and interactive digital TV and these deliver content and enable interaction through difference online communication tools such as organisation web sites, portals, search engines, blogs (Personal online diary, journal or news source compiled by one person or several people.), email, instant messaging and text messaging.

1. Applying these technologies which form online channels to market:

“Support marketing activities aimed at achieving profitable acquisition and retention of

customers….within a multi-channel buying process and customer lifecycle.”

◦ It should not be the technology that drives digital marketing, but the business returns from gaining new customers and maintaining relationships with existing customers.

◦ Also emphasises how digital marketing does not occur in isolation, but is most effective when it is integrated with other communications channels such as phone, direct mail or face-to-face.

◦ Online channels should also be used to support the whole buying process from pre-sale to sale to post sale and further development of customer relationships.

2. To achieve these objectives:

Recognising the strategic importance of digital technologies and developing a planned approach to reach and migrate customers to online services through e-communications and traditional communications.

Retention is achieved through improving our customer knowledge (of their profiles, behavior, value and loyalty drivers), then delivering integrated, targeted communications and online services that match their individual needs.

3. Through using these marketing tactics:

Shows how success online requires new customers by selecting the appropriate mix of e-communications and traditional communications.

Retention of online customers needs to be based on developing customer insight by researching their characteristics, behavior, what they value and what keeps them loyal, and then delivering tailored, relevant web and e-mail communications.

Summarizes approaches to customer-centric E-marketing

The terms “e-commerce” and “e-business are often used in a similar context to “Internet Marketing” but their scope is different.

Electronic commerce (e-commerce) is often though to simply refer to buying and selling using the Internet; people immediately think of consumer retail purchases from companies such as Amazon.

E-commerce also refers to both financial and informational electronically mediated transactions between an organisation and any third party it deals with.

Non-financial transactions such as inbound customer e-mail enquiries and outbound e-mail broadcasts to prospects and customers are also aspects of e-commerce that need management.

In order to evaluate the impact of e-commerce on an organisation’s marketing, it is instructive to identify the role of buy-side and sell-side e-commerce transactions:◦ SELL-SIDE e-commerce refers to transactions involved with selling products to an

organisation’s customers. Internet marketing is used directly to support sell-side e-commerce.

◦ BUY-SIDE e-commerce refers to business-to-business transactions to procure resources needed by an organisation from its suppliers.

◦ Typically the responsibility of those in the operational and procurement functions of an organisation.

E-commerce defined

IBM is one of the first suppliers to coin the term explains it as follows:

“E-business (e’biz’nis): The transformation of key business processes through the use of Internet technologies.”

The key business processes in the IBM definition are the organisational processes or units.

They include research and development, marketing, manufacturing and inbound and outbound logistics.

The buy-side e-commerce processes with suppliers and the sell-side e-commerce processes involving exchanges with distributors and customers can also be considered to be the key business processes.

So E-commerce can best be conceived of as a subset of e-business.

E-Business defined

Internet Marketing can be described as an opportunities in terms of whether an organisation is transacting with consumers (business-to-consumer, B2C) or other businesses (business-to-business, B2B).

Business-to-Consumer (B2C):◦ Commercial transactions between an organisation and consumers.

Business-to-Business (B2B):◦ Commercial transactions between an organisation and other organisations

(inter-organisational marketing).

Consumer-to-Consumer (C2C):◦ Informational or financial transactions between consumers, but usually

mediated through a business site.

Consumer-to-Business (C2B):◦ Consumers approach the business with an offer.

E-Government◦ The use of Internet technologies to provide government services to citizens.

Business or Consumer Model?

What Benefits does the Internet provide for the marketers?

The 5 S’s of Internet Marketing suggested five broad benefits or reasons for adopting e-marketing which marketers can use to set objectives for e-marketing.

Benefits of e-marketing How benefit is delivered Typical objectives

Sell-Grow sales Achieved through wider distribution to customers you can’t readily service offline or perhaps through a wider product range than in-store, or lower prices compared to other channels.

• achieve 10% of sales online in market

•Increase online sales for product by 20% in year.

Serve-Add Value Achieved through giving customers extra benefits online or inform product development through online dialogue and feedback.

• Increase interaction with different content on site.•Increase dwell-time duration on site by 10% (sometimes known as “stickiness”)•Increasing number of customers actively using online services (at least once per month) to 30%

Speak-Get closer to customers

This is creating a two-way dialogue through web and e-mail forms and polls and conducting online market research through formal surveys and informally monitoring chat rooms to learn about them. Also speak through reaching them online through PR

• Grow e-mail coverage to 50% of current customer database•Survey 1000 customers online each month•Increase visitors to community site section by 5%.

Save-Save Costs Achieve through online e-mail communications, sales and service transactions to reduce staff, print and postage costs.

•Generate 10% more sales for same communications budget•Reduce cost of direct marketing by 15% through e-mail•Increase web self-service to 40% of all service enquiries and reduce overall cost-to-serve by 10%

Sizzle-Extend the brand online

Achieve through providing a new proposition and new experience online while at the same time appearing familiar

• improve branding metrics such as: brand awareness, reach, brand favourability and purchase intent.

Relative importance of the marketing benefits of the Internet depend upon the type of product and its market:

1. Transactional e-commerce site: Enable purchase of products online. Main business contribution of the site is through sale

of these products. Sites support the business by providing information for

consumers that prefer to purchase products offline. E.g. End-product manufacturer, Vauxhall (

www.vauxhall.co.uk) or an online retailer such as Amazon (www.amazon.com)

4 Main Types of Online Presence

Provides information to stimulate purchase and build relationships.

Products are not typically available for purchase online.

Information is provided through the web site and e-newsletters to inform purchase decisions.

The main business contribution is through encouraging offline sales and generating enquiries or leads from potential customers.

Such sites also add value to existing customers by providing them with detailed information to help them support them in their lives at work or at home.

E.g. B2B management consultants such as PricewaterhouseCooper (www.pwcglobal.com) and Accenture (www.accenture.com), B2C portal for energy supplier British Gas (www.house.co.uk).

2. Services-oriented relationship-building web site

Provide an experience to support the brand.

Products are not typically available for online purchase.

Their main focus is to support the brand by developing an online experience of the brand.

They are typical low-value, high-volume fast-moving consumer goods (FMCG) brands for consumers.

E.g. Tango (www.tango.com), Guinness (www.guinness.com)

3. Brand-Building Site

Provide information or news about a range of topics.

“Portal” refers to gateway of information.

Information both on the site and through links to other sites.

Portals have a diversity of options for generating revenue including advertising, commission-based sales, sales of customer data (lists).

E.g. Yahoo! (www.yahoo.com) (B2C) and Silicon (www.silicon.com) (B2B)

4. Portal or media site

A Strategic Approach to Internet Marketing