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  1. 1. Chaffey: Internet Marketing, 2nd edition Chapter 1 An introduction to Internet marketing Exercises (p. 36) Self-assessment exercises 1. Which measures can companies use to assess the significance of the Internet to their organisation? Further reference to Chapter 2 may assist with this question. • Level of Internet access amongst customer base. • Sales influenced directly or indirectly. • Competitor activity 2. Why have companies only started to widely use the Internet for marketing in the 1990s, given that is has been in existence for over thirty years? The recent dramatic growth in the use of the Internet has occurred because of the development of the World Wide Web. This became a commercial proposition in 1993 after development of the original concept by Tim Berners-Lee, a British scientist working at CERN in Switzerland in 1989. The World Wide Web changed the Internet from a difficult-to-use tool for academics and technicians to an easy-to-use tool for finding information for businesses and consumers. 3. Distinguish between Internet marketing and e-marketing. The objectives of each are similar – to support marketing activities towards their goals, i.e. customer acquisition and retention, cost reduction. E-marketing can be considered broader since it includes additional media of interactive digital TV and mobile networks. Internet marketing refers to the web, e-mail and databases. 4. Explain what is meant by electronic commerce and electronic business. How do they relate to the marketing function? E-commerce refers to transactions for the trading of goods and services conducted using the Internet and other digital media. E-business is broader, including electronically mediated transactions which are internal and with suppliers as well as those to buyers. They are both methods of supporting the marketing function. 5. What are the main differences and similarities between the Internet, intranets and extranets? Internet available to all, others restricted to those inside a company (intranet) and favoured third parties such as large customers, suppliers and distributors (extranet). 6. Summarise the differences between traditional media using the six Is. 1 © Pearson Education Limited 2003
  2. 2. Chaffey: Internet Marketing, 2nd edition • Interactivity – not solely a push medium (e-mail), but also pull (customers search for information). Information can be collected from customers via web pages (direct response). • Intelligence – can monitor customers’ interests and profile them. • Individualisation – it is possible to tailor e-mail and web communications (personalisation) • Integration of offline and online channels remains important • Intermediation – new intermediaries can be used as a route to market and there is also the opportunity to sell direct. • Independence of location – possible to reach a wider marketplace 7. How is the Internet used to develop new markets and penetrate existing markets? What types of new products can be delivered by the Internet? International markets can be targeted without the need for sales/promotional infrastructure. Fulfilment methods must enable delivery with minimal need for local servicing. The Internet may give opportunities for new market segments such as the youth market that may have been difficult to target previously. For existing markets, the Internet can be used to increase awareness, and add value to a company and its products. 2 © Pearson Education Limited 2003
  3. 3. Chaffey: Internet Marketing, 2nd edition Chapter 2 Key Internet marketing concepts Exercises (p. 81) Self-assessment exercises 1. Why is environmental scanning necessary? At a macro-level to understand new constraints on conducting business such as legal and technical constraints. These may also present opportunities. On a micro-level it is important to be responsive to customers’ needs and competitors’ actions. 2. Summarise how each of the macro-environment factors may directly drive the content and services provided by a web site. • social – localised content for different cultures • legal – privacy statement • economic – funding and awards may be possible from governmental sources • political – ditto • technological – the incorporation of personalisation 3. What are the main aspects of customer adoption of the Internet that managers should be aware of? • Consumer access % • Role in influencing sale and achieving direct sales • Role of different members of the buying decision in supporting the Internet. 4. What are the main changes to channel structures that are facilitated through the Internet? • Direct selling – disintermediation • New intermediaries – reintermediation • Countering new intermediaries – countermediation 5. What are the different elements and different types of business model? This is referred to in Fig 2.10. They are marketplace position, revenue model and commercial model. 6. How should a marketing manager benchmark the online performance of competitors? This is referred to in activity 2.5 –see above. 7. Describe two different models of online buyer behaviour. 3 © Pearson Education Limited 2003
  4. 4. Chaffey: Internet Marketing, 2nd edition Behavioural traits, e.g. Lewis and Lewis (1997) (see Refs to Chapter 7 on p. 306) identified five different types of web users: • Directed information seekers. • Undirected information seekers. • Directed buyers. • Bargain hunters. • Entertainment seekers. A classification of behavioural traits developed by Bickerton is also given earlier in the chapter. By adoption of site (Breitenbach and van Doren, 1998 – see Refs to Chapter 7 on p. 306) as for stages in the buying decision • awareness; • interest; • evaluation; • trial; • adoption. 8. How can the Internet be used to support the different stages of the buying process? See the Breitenbach and van Doren, 1998 reference in the previous question. Essentially, online and offline promotion techniques described in Chapter 8 are used to raise awareness of the company and its web site, and the content and services on the web site then help users in selecting products. A web site can provide more depth of information than other media and also interactive tools to help users select the best service for them. For example, a cell-phone company could give a series of questions that suggest to a customer the best tariff for them. 4 © Pearson Education Limited 2003
  5. 5. Chaffey: Internet Marketing, 2nd edition Chapter 3 The Internet macro-environment Exercises (p. 127) Self-assessment exercises 1. Summarise the key elements of the macro-environment that should be scanned by an e- commerce manager. The most important are: • Legal – for updates on e-commerce legislation, see Marketing Law ( • Social – ethical issues can be assessed through searching on articles in the general press. E.g. the Guardian’s online channel ( • Economic – Government statistical sites such as can be used to monitor this. 3. Give an example of how each of the macro-environment factors may directly drive the content and services provided by a web site. • social – localised content for different cultures • legal – privacy statement • economic – funding and awards may be possible from governmental sources • political – ditto • technological – the incorporation of personalisation 4. What actions should e-commerce managers take to safeguard consumer privacy and security? Privacy statements should explain the actions taken to the customers. Firewalls should be maintained to minimise the risk of unauthorised access to customer data. Data should be backed up such that it cannot be deleted. The relevant data protection act in the country should be followed. 5. Give three examples of techniques web sites can use to protect the users’ privacy. Privacy protection is achieved through protecting the users’ data as follows: 1. Firewalls. 2. Backing up data. 3. Login/password. 6. How do governments attempt to control the use of the Internet? Through policies to promote its use and through monitoring messages through ISPs. Through lobbying groups that control the Internet. 7. Suggest approaches to managing technological innovation. 5 © Pearson Education Limited 2003
  6. 6. Chaffey: Internet Marketing, 2nd edition Frequent review of new opportunities. Achieving balance between adopting all new technologies and conservative non-adoption. Careful selection of technologies that will achieve competitive advantage. 6 © Pearson Education Limited 2003
  7. 7. Chaffey: Internet Marketing, 2nd edition Chapter 4 Internet marketing strategy Exercises (p. 178) Self-assessment exercises 1. Draw a diagram that summarises the stages through which a company’s web site may evolve. Refer to Quelch and Klein (1996) model for services offered at different stages for a startup or existing company, or could be based on five levels of sophistication given at the start of the text from: • Level 0. No web site. • Level 1. Company places an entry in a web site listing company names such as to make people searching the web aware of the existence of the company or its products. There is no web site at this stage. • Level 2. Simple static web site (brochureware). • Level 3. Simple interactive site. • Level 4. Interactive site supporting transactions with users. • Level 5. Fully interactive site providing relationship marketing with individual customers and facilitating the full range of marketing functions. 8. What is meant by the ‘Internet contribution’, and what is its relevance to strategy? An assessment of the extent to which the Internet contributes to sales is a key measure of the importance of the Internet to a company. It is a key measure used to control strategy since companies can: • use it to assess the current situation (their own percentage contribution) and that of their competitors; • use it to set future targets given the constraints of their marketplace; • use it to measure whether targets are achieved. 9. What is the role of monitoring in the strategic planning process? Monitoring of visits to the site and marketing outcomes is part of the process since it indicates whether strategic objectives have been achieved. How this can occur is discussed more in Chapter 9. 10. Summarise the main tangible and intangible business benefits of the Internet to a company. Refer to section on potential business benefits within Strategic Goal Setting. Specifically Table 4.2. The key benefits can be summarised as: • Tangible: customer acquisition (new sales); • Tangible: customer retention (incremental sales); • Tangible: cost reduction; • Intangible: image enhancement (corporate and brand). 7 © Pearson Education Limited 2003
  8. 8. Chaffey: Internet Marketing, 2nd edition 11. What is the purpose of an Internet marketing audit? What should it involve? To assess the current marketing environment, internal and external. In particular market research is required to answer how effectively competitors are using the medium and how customers are using it. The audit also considers use within the current company customer base. 12. What does a company need in order to be able to state clearly in the mission statement its strategic position relative to the Internet? Essentially, the relative significance of the Internet as a mechanism for delivering customer service. 13. What are the market and product positioning opportunities offered by the Internet? Refer to Figure 1.5. The matrix can be applied for the Internet to identify whether it will be used to: • promote/sell existing products to existing customers/markets (a common application); • promote/sell existing products to new customers/markets, i.e sectors or geographically (may readily open new international markets for products that can be delivered and serviced remotely); • promote/sell new products to existing or new customers/markets (new products give the best opportunities for exploiting the new medium). 14. What are the distribution channel options for a manufacturing company? See Chapter 2, pp51–3. Direct sales (disintermediation); through traditional distributors (wholesalers and retailers) and through new online intermediaries (reintermediation). 8 © Pearson Education Limited 2003
  9. 9. Chaffey: Internet Marketing, 2nd edition Chapter 5 The Internet marketing mix Exercises Self-assessment exercises 1. Select the two most important changes introduced by the Internet for each of the 4Ps. • Varying core product characteristics and extended product characteristics. • Researching consumer needs for new products. 15. What types of product are most amenable to changes to the core and extended product? Digital products such as media and music or service products such as information services which can be delivered via the Internet. 16. Explain the differences in concept between online B2C and B2B auctions. B2C auctions are typically forward auctions and B2B auctions are typically reverse auctions. The volume of online users has made these practical. Forward auctions – Item purchased by highest bid made in bidding period. Reverse auctions – Item purchased from lowest bidding supplier in bidding period. 17. Explain the implications of the Internet for Price. The main implications of the Internet for the Price are: 1. Increased price transparency and its implications on differential pricing. 2. Downward pressure on price (including commoditisation). 3. New pricing approaches (including dynamic pricing and auctions) 4. Alternative pricing structure or policies. 18. What are the implications of the Internet for Place? The main implications of the Internet for the Place aspect of the mix are: 1. Place of purchase – vendor oriented, neutral or buyer oriented. 2. New channel structures e.g. disintermediation, reintermediation and countermediation 3. Channel conflicts with distributors or sales force 4. Virtual organisations. 9 © Pearson Education Limited 2003
  10. 10. Chaffey: Internet Marketing, 2nd edition Chapter 6 Relationship marketing using the Internet Exercises (p. 251) Self-assessment exercises 1. Why is the Internet a suitable medium for relationship marketing? The WWW provides a suitable method for collecting individual customer preferences and delivering tailored information for each customer. E-mail also provides a two-way method of interaction between company and customer. 19. Explain personalisation in an Internet marketing context. Personalisation is the delivery of information that is specific to an individual or group of similar individuals. This could be information about a specific product range or information for smaller customers. It can be delivered through specific web pages, or through personalised e-mail. 20. What is meant by ‘customer profiling’? The use of the web site to find out the customer’s specific interests and characteristics. It can be used for market segmentation. 21. What is ‘computer telephony integration’? CTI is where the call-centre phone system is integrated with the customer database. It can be used to identify inbound calls and access information about the customer. It can also be used to automatically dial customers in outbound telemarketing. 22. How can customer concerns about privacy be responded to when conducting one-to-one marketing using the Internet? Customers should be reassured about the privacy of their data. The key is openness. Companies should: • only send promotional e-mail or pass on details to other companies, if they opt-in to this arrangement; • allow customers to access their data if required (one of the provisions of the Data Protection Act); • explain why information is collected; how it will benefit the customer; • clearly describe techniques such as cookies that affect privacy. 23. Explain the relationship between database marketing, direct marketing and relationship marketing. 10 © Pearson Education Limited 2003
  11. 11. Chaffey: Internet Marketing, 2nd edition Databases are necessary to store the details of customers, and their preferences such as order- history. The database content can then be used to tailor direct marketing by providing offers to customers that are consistent with their needs. This is the basis for relationship marketing – understanding customer needs and then responding to them. 24. What is a cookie? A ‘cookie’ is a data file placed on your computer that identifies an individual computer. The cookie is placed on the computer via the web browser by the web site you visit. This is a powerful technique from a marketing point of view since it is used to identify a particular customer and tailor the web session accordingly – a key goal of personalisation. 25. How can a web site integrate with telemarketing? A web site can be used to promote the use of telesales through the use of callback systems where the customer selects a time they can be phoned to discuss a pre-sales, sales or post-sales support question. 11 © Pearson Education Limited 2003
  12. 12. Chaffey: Internet Marketing, 2nd edition Chapter 7 Achieving online service quality Exercises (p. 305) Self-assessment exercises 1. Explain the term ‘prototyping’ in relation to web site creation. The production of a trial version to test the web site concept either internally, or preferably with a customer. 26. What tasks should managers undertake during initiation of a web site project? Should ensure: • analysis/market research is conducted in a structured way – ask the audience; • domain name is registered ASAP; • you review/assemble suitable suppliers and partners such as ISP, design agency; • suitable process for developing site involving a prototype and testing; • cost/benefit to set investment at right level; • buy in from senior management team and staff; • plan for online and offline promotion; • process for dealing with web-related enquiries or orders; • Internet marketing plan (Chapter 4) highlighting all these issues. 27. What is domain name registration? Reserving and paying for a web address URL for a company/product/promotion. 28. List the factors that determine web site ‘flow’. Navigation is dependent on: • Consistency. • Simplicity. • Context. • Interactivity. In a word, ‘control’. 29. Explain the structure of an HTML document and the concept of ‘tags’. HTML is explained briefly in Chapter 1. HTML is a markup language that is interpreted by the web browser program running on a user’s machine to display the graphics and text in a particular form. A tag is a specific instruction to display information in a particular way. For example a tag to display text in bold involves placing <B> at the start of text to be emboldened 12 © Pearson Education Limited 2003
  13. 13. Chaffey: Internet Marketing, 2nd edition and </B> at the end. A tag for a hyperlink is divided into the destination and accompanying text as follows: <A HREF="">Click to go to Marketing Online</A> An HTML document has a header defining its title and then the body which has the text and graphic images. 30. List the options for designing web site menu options. Some of the issues mentioned in the text are: 1. Text menus, buttons or images. 2. Rollovers. 3. Positioning. 4. Frames. 5. Number of levels. 6. Number of options. 31. What is a hierarchical web site structure? A tree-like structure as in Fig. 7.14(a), p296. 32. What are the factors that control the performance of a web site? These can be divided into: • On web site hardware – speed of hard disk, amount of memory. • On web site software – speed of web server. • On web site web page design – overuse of graphics or frames can reduce download time for a site. • Link between a company and ISP or ISP and Internet. • Congestion on the Internet itself. 13 © Pearson Education Limited 2003
  14. 14. Chaffey: Internet Marketing, 2nd edition Chapter 8 Interactive marketing communications Exercises (p. 369) Self-assessment exercises 1. Briefly explain and give examples of online promotion and offline promotion techniques. Online promotion techniques: • Search engine registration – companies should ensure their web sites are listed as high as possible in the most popular search engines. • Link-building campaigns – referring links from related sites are also important in building traffic to a site. • Banner advertising – used to drive traffic to sites by placing adverts on specific interest sites or displaying adverts when particular keywords are entered. When a user clicks on an advertisement (a click-through) they are taken to a web site with further information. Banner advertising can also be used for other purposes such as brand building or offering incentives. Banner adverts are usually paid for according to the cost per 1000 people viewing the advert (CPM). • Advertising in e-mail newsletters. • Co-branding and sponsorship. Offline promotion Promoting the web site address and highlighting the value proposition of the web site in: • Company stationery and promotional literature. • Traditional media adverts in print, or on TV. • Through PR. 33. Explain the different types of payment model for banner advertising. • Per exposure. Typically through advertisement impressions (CPM) or possibly through the length of time the user views an advertisement. May be per page, or for ‘run-of-site’. • Per response. Payment only occurs according to the number of click-throughs that occur. • Per action. This is payment according to a marketing outcome such as a download of a product factsheet, a new sales lead received when the user fills in an online form giving their name and address or an actual sale placed online. 34. Which factors are important in governing a successful online banner advertising campaign? • Targeting the correct location and timing for the audience. • Suitable creative to encourage click-through including incentive. • Good follow-up when user arrives on site. 35. How can a company promote itself through a search engine web site? 14 © Pearson Education Limited 2003
  15. 15. Chaffey: Internet Marketing, 2nd edition The company needs to register its web address at the search engine, either by manual submission or through software or outsourcing it to a search engine. As well as registration, the site must be designed such that relevant keywords are located by search engines. 36. Explain the value of co-branding. Co-branding can be compared with advertising, over which it has the following benefits: • it is usually over a longer period, giving time for an association to form; • the power of the different brands may be more than their sum if there is good synergy between companies; • it can be cheaper than banner advertising since it is often a reciprocal arrangement. 37. Explain how an online loyalty scheme may work. A customer who has subscribed to such a scheme receives additional tokens on each purchase which acts as an incentive. These tokens can be redeemed against future purchases, or possibly for cash. The loyalty scheme is administered by a broker who is paid by the retailers for the tokens they purchase to pass on to the customer at point of sale. 38. How should web sites be promoted offline? Offline promotion techniques are listed for Q1. 39. What do you think the relative importance of these Internet-based advertising techniques would be for an international chemical manufacturer? (a) Banner advertising. (b) Reciprocal links. (c) E-mail. To answer this question, we need to consider whether the advertising is targeting new or existing customers. Clearly e-mail is best used with existing customers, for which it is a powerful technique to inform the customer of new offers. Banner advertising could be an effective method for acquiring new customers who type in relevant keywords into search engines, or visit chemical industry portals. However, evidence suggests that advertising is not used much by business-to-business companies. Reciprocal links, from vertical portals and industry associations are a relatively low cost method of promotion. 15 © Pearson Education Limited 2003
  16. 16. Chaffey: Internet Marketing, 2nd edition Chapter 9 Maintaining and monitoring the online presence Exercises Self-assessment exercises 1. Why are standards necessary for controlling web site maintenance? What aspects of the site do standards seek to control? Content quality will be poor without standards. Poor quality may be manifested by: • brand and corporate identity inconsistent across site or compared to other channels; • inconsistent navigation making the site difficult to use; • poor copy with grammatical errors; • broken links. 40. Explain the difference between hits and page impressions. How are these measured? Page impressions are a more valuable indication of activity on a site than hits, since hits are dependent on the number of graphical items on each page that are downloaded. The values are measured in a ‘transaction log file’ on the web server that is added to for every piece of information that is downloaded. 41. Define and explain the purpose of test and live versions of a web site. A test version is used to trial a site to identify and remove errors before it becomes live. 42. Why should content development be distributed through a large organisation? By distributing content creation, the most knowledgeable people will be writing content. 43. What is the difference between online and offline metrics? Online metrics are those collected on the site. These are mainly quantitative and indicate patterns of use of different parts of the site. Offline measures are more typically qualitative and involve surveying users for their attitudes and views about the site. 44. How can focus groups and interviews be used to assess web site effectiveness? These can be administered online or offline. Offline focus groups are useful to discuss a prototype of a system. Online questionnaires are increasingly used to ask customers of their experience of using a web site. 45. Explain how a web log file analyser works. What are its limitations? 16 © Pearson Education Limited 2003
  17. 17. Chaffey: Internet Marketing, 2nd edition Software is used to review the ‘transaction log file’ on the web server that is added to for every piece of information that is downloaded. Limitations are that the review is a batch process rather than a real-time collection. 46. Why is it useful to integrate the collection of online and offline metrics? This enables both quantitative and qualitative market research. 17 © Pearson Education Limited 2003
  18. 18. Chaffey: Internet Marketing, 2nd edition Chapter 10 Business-to-consumer Internet marketing Exercises (p. 423) Self-assessment exercises 1. Explain the effect of the ‘dot com’ era on the growth of the Internet. The following can be suggested: • Increase in awareness of online retail option • Distrust through ‘scare stories’ • Mistrust as many companies failed • Exploration of new business models • Difficulty in funding for those seeking it after the era. 47. Describe the variables that a retailer might consider when trying to identify a target market. These are typical segmentation variables • Geography • Demographics • Lifestyle • Buyer behaviour 48. Describe the different types of business models an online retailer might follow. • Established retailers using the Internet retail market strategically or tactically as a marketing tool. • Virtual merchants designing their operating format to accommodate the demands of online trading. • Intermediaries who link Internet technology and the retail supplier with the consumer. • Manufacturers using the Internet to take their goods direct to the consumer. Any one of these types could become the archetypal model Internet retailer. 49. List the various activities a retailer might include in a customer facing website. The content and services of these web sites can occur using the categories listed in the chapter. • Product information. • Financial information. • Company information. • Educational information. • Press releases. • Recruitment information. • Marketing communication tool. • Direct communications. 18 © Pearson Education Limited 2003
  19. 19. Chaffey: Internet Marketing, 2nd edition • Marketing research tool. • Sales channel (total or partial). 19 © Pearson Education Limited 2003
  20. 20. Chaffey: Internet Marketing, 2nd edition Chapter 11 Business-to-business Internet marketing Exercises (p. 448) Self-assessment exercises 1. Summarise how a business might employ the Internet and the World Wide Web to assist customers at different stages of the procurement cycle. • Supplier search – listing in search engines or on vertical portals. • Product evaluation and selection – detailed product catalogues and interactive product selection guides. Independent product reviews. • Purchase – e-commerce. • Support – online customer support services. 50. How does business-to-business marketing on the Internet differ from business-to-consumer marketing? • Market structure – tendency for fewer buyers, placing larger orders, use of channel structure – selling to channel members. • Buying unit – targeting more people who are involved in the decision, with longer decision time for major purchases. • Purchase type – higher value, repeat orders more common. • Communications – often involve personal contact through sales staff. 51. What are the implications of wide-scale adoption of the Internet organisational markets? Can link this to previous question: • Site must appeal to a more diverse audience in buying unit. • Extranets are a good method of supporting the reps. • More expensive per client to develop content. • Market relevant content must be kept up-to-date. 52. To what extent can Internet technologies replace a human sales representative? This is a discussion question. It is dependent on the degree of interaction required. The following technologies can help reduce the need for sales representatives: • Frequently asked questions • Support knowledge bases • More detailed product information and technical information sheets For applications where the customer needs advice, interactive product selectors can be used. However, a sales rep may be required for non-standard questions, or simply because that is what the customer prefers or expects. 20 © Pearson Education Limited 2003
  21. 21. Chaffey: Internet Marketing, 2nd edition 53. Explain the meaning of the term ‘e-commerce’ and its role in organisational markets. E-commerce refers to all electronic transactions, whether financial or informational. In organisational markets it refers to different stages of the buying process such as: • Downloading product information • Asking a pre-sales support question by e-mail • Ordering a product online • Ordering and paying online • Post-sales support 21 © Pearson Education Limited 2003