Lecture 04 The Digital Marketing Opportunity
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Lecture 04 The Digital Marketing Opportunity

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Lecture 04 The Digital Marketing Opportunity Lecture 04 The Digital Marketing Opportunity Presentation Transcript

  • The Digital Marketing Opportunity
    5A3190 DMCM
    David Edmundson-Bird
  • The Digital Marketing Opportunity
    So what’s the problem?
    You have to produce a target market report which specifies the main audience for your product/service/offering
    You have to produce a viability report in which you compare suitable digital marketing approaches and make choices about which approaches you will use
    You have to produce an anti-viability report in which you discuss approaches that are not suitable for use on this occasion
  • The Digital Marketing Opportunity
    So what do you need to learn?
    What the market opportunity analytic framework is
    How the two “generic value types” work
    How we identify unmet and under-served needs
    How we segment and target digital customers
    What resources we have for evaluating digital market opportunities
  • The Market Opportunity Analytical Framework and “Value Types”
  • Market Opportunity Analytical Framework
    We have to workout where and howwe will compete
    See opportunity in (existing or new)value system
    NEW IMPACT OF NETWORK ECONOMY
    Horizontal competition across industries not within industries
    Industry value systems rapidly reconfiguring
    New speed of competitive behaviour
    Customer behaviour easy to influence at early stages
    The concept of“co-opetition”
    Reveal the heart of the opportunityIdentify unmet / underserved needs
    Identify target segments
    Identify organisation’s resources thatprovide opportunity for advantage
    Check competitive, financial & technicalopportunity attractiveness
    Decide whether to engage
  • 2 Types of Generic Value
    A value system is the linkage of processes and activities inside and between organisations that creates benefits for participants and end users
    VALUE THAT’S TRAPPED & UNTAPPED
    Create a more efficient marketplace
    Create a more efficient value system
    Wreck existing pricing
    Make it easier to access your offering
    Increase the reach of your offering
    Customise your offering
    Build a community around your offering
    HYBRID COMBINATION
    Introduce new functionality in your offering
    Introduce a new experience in your offering
    VALUE THAT’S NEW TO THE WORLD
  • Exploring Generic Value
    VALUE THAT’S TRAPPED & UNTAPPED
    More efficient markets lower search and transaction costs
    More efficient value systems compress or eliminate steps in an existing value system
    HYBRID COMBINATION
    Disrupt pricing and change pricing-power relationships
    Enable ease of access and help customers find products
    Extend reach and welcome distant customers
    VALUE THAT’S NEW TO THE WORLD
    Customizing offerings allows customers to add and remove features
    Build communities to leverage customers’ participation
    Introduce new functionality to transform all or part of an industry value chain
    Can you think of anyone that’s done any of this?
  • Spotting Value
    Think about horizontal and vertical dimensions
    Horizontal “value plays” improve functional operations that are common to multiple industries and types of value systems
    E.g. being good at managing retail operations within any industry
    Vertical “value plays” create value within activities that are central to a particular business
    Oil companies suck the oil out of the ground and deliver it to your vehicle (and do everything in between)
    Look for clues to trapped value
    Asymmetric information (The situation where one party in a bargain has information which is superior to that of the other )
    Poor access to information and advice
    Significant time and resources required to do something
    Little collaboration between key participants
  • The Customer Decision Process
    A framework to look for unmet or underserved needs
  • The Customer Decision Process (CDP)
    ProblemRecognition
    What causes the customer to engagein the first place?
    Search
    What are the things that influencea customer’s decision?
    PRE-PURCHASE
    Creating value is based on understanding and meeting customer needs
    Evaluation ofAlternatives
    What properties of an offering doesa customer consider?
    Choice
    What options do customers consider?What decisions do they make?
    PURCHASE
    Post-acquisitionEvaluation
    What does the customer do withthe decisions made?
    POST-PURCHASE
    Do you want to know more? Read J. Mowen “Consumer Behaviour” in the Library
  • CDP for Eating Out
    ProblemRecognition
    Social
    Hunger
    Search
    No. of diners& relationship
    With children?
    When & forhow long?
    Weighting
    Ambience, costwine list, quality
    PRE-PURCHASE
    Howclose?
    Cuisine
    Reviews
    Experience
    Dresscode
    Evaluation ofAlternatives
    Choice
    Stay home
    Fast Food
    Sit down
    Fine Dine
    Room serve
    PURCHASE
    Home made
    Takeaway
    Eat in
    Takeaway
    Post-acquisitionEvaluation
    Food
    Service
    Ambience
    Memorability
    POST-PURCHASE
    Likelihood of repeat or referral
  • Using CDP
    What is the customer’s ideal experience like? How does it change in the stages of decision-making?
    How closely does the real experience compare to the customer’s ideal? What are the key frustration points?
    Does the customer’s experience yield the result that best meets his needs? What might help the customer achieve better results?
    Does the desired customer experience change at all?
    What are customer beliefs about the decision-making process and the options available for purchase?
    What barriers block participation by potential customers?
    What technological, communication or digital opportunities might enhance the customer experience?
    How do customers define value for critical steps in the process? Would they be willing to pay for certain elements of that value?
    Whenever you write an answer for these questions – ask yourself: “What’s my evidence?”
  • Segmenting & Targetting
  • Designing the Value Cluster
    WHO IS THE TARGET?
    VALUE
    WHAT ARE THE BENEFITS?
    WHY DO WE BELIEVE THIS?
  • Who is the Target?How can we segment Customers?
    Old fashioned
    Use just one segmentation type
    21st Century
    Increase number of segments used to 2 (or even 3, 4, 5……)
    Think about forgetting demographics
  • Forgetting Demographics
    Many commentators think demographics is irrelevant in the digital economy
    Demographics – age, gender, income, education
    Consider using alternative segmentation approaches
  • How can we segment digital customers?
  • Other segmentation ideas
    Children’s Toys
    Relationship to purchaser (e.g. self, peer, parent)
    Age of purchaser
    Reason for purchase (e.g. entertain, reward, educate)
    Online Trading
    Value of stock portfolio
    Frequency of trades
    Internet Service Providers
    Age of purchaser
    History of Internet use
    Primary online activities
    For each segment defined, how might you locate the customer?
    Remember to think of all the possibilities
  • Geographic Digital Segmentation GDS
    Divides market into distinct geographical units, such as nations, states or regions
    In Digital world, geographic barriers are often removed
    Still many industries where local relationships and distribution channels play key role, maintaining the need for local focus
    Example GDS:
    Country
    Region
    Urban vs. Rural
    Density
    Climate
  • Demographic Digital Segmentation DDS
    B2C Demographic
    Market division into groups based on customer demographic variables
    Most popular method for distinguishing customer groups, highly actionable
    Age
    Income
    Occupation
    Nationality
    B2B Organisational Demographic
    Market division into groups based on business demographic variables
    Highly actionable, since business demographic data is readily available
    Industry
    Company size
    Location
  • Needs-Based Digital Segmentation NBDS
    Consumers and businesses purchase goods and services because they satisfy their needs
    Same product may satisfy many different needs
    Why do people chew gum?
    Seeks to understand why a purchase is made (i.e., what needs are being satisfied) and to divide market into groups of buyers whose needs are homogenous
    Particularly compelling for technology companies
    Can prevent companies from developing new technology features because they are “cool” or possible
  • Behavioural Segmentation
    How do people behave in a digital world?
    Search terms and key phrases
    Abandoned shopping baskets
    People who buy once
    Converts & non-converts
    People who do “x” on the Internet
  • Does Segmentation Matter?
    No
    Everything can be customized for each individual customer
    Good Web businesses attract customers from all segments
    It doesn’t make sense to treat them the same way
    Back-office supply systems and infrastructure can easily accommodate every type of customer
    Why limit it to a few segments?
    Multiple storefronts can be constructed in a real-time basis
    Yes
    Segmentation happens, whether intentional or not
    Segmentation is needed to help companies identify which classes of customer are profitable and unprofitable
  • Requirements for Effective Digital Segmentation
    Customers must demonstrate needs, aspirations or behavioural patterns that are similar within segment and different across segments
    Distinction between a price-sensitive and a quality-seeking segment is meaningful, since the two segments demonstrate distinguishable sets of needs
    Organisation must be able to reach customers within segments through effective and targeted digital marketing programs
    Customer segment consisting of customers with blue eyes is not actionable, since it is very hard to identify and reach only customers with blue eyes
    Segments must be large and profitable enough to make the investment worthwhile
    Key characteristics of segments (e.g., size and spending patterns) must be easy to measure
  • What are the Benefits?
    Three classes of considerations for assessing the value proposition
    Customer Criteria
    Organisation Criteria
    Competitor Criteria
    • Do target customers understand the value proposition?
    • Is the value relevant to the target customers’ needs?
    • Do target customers believe the value proposition?
    • Will the value proposition provoke customer action?
    • Will the organisation support the proposition?
    • Does the organisation have the resources and capabilities to “own” the proposition?
    • Does selection of the proposition limit future growth into other markets?
    • Are competitors trying to provide a similar value proposition?
    • Do current competitors have the resources and capabilities to copy the proposition?
    • How easy is it for the required resources and capabilities to be developed?
    Caution: Wrecking two benefits is less valuable than fully delivering one.
  • What we’ve seen today
    • We’ve seen what the market opportunity analytic framework is
    • How the two “generic value types” work
    • How we identify unmet and under-served needs
    • How we segment and target digital customers
    • What resources we have for evaluating digital market opportunities