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