Online Marketing Strategy (McGill)

Where are we going? Friday, November 20, 2009

Nothing sells like Friday, November 20, 2009

Strategy without tactics is the slowest route to victory. Tactics without strategy is the Text noise before defeat. Friday, November 20, 2009

A strategy is a long term plan of action in order to achieve a particular outcome. Friday, November 20, 2009

A tactic is a speciﬁc method or action that Friday, November 20, 2009

Children as a business model? Ben Stein Friday, November 20, 2009

8 Keys to a business model Friday, November 20, 2009

1.Value Proposition The Why? Friday, November 20, 2009

Fresh food from the growers to the people Friday, November 20, 2009

• Webvan lost over 1 billion Friday, November 20, 2009

Fresh Direct founded in 2002 270 million in sales 40k orders a week $145 avg. Order Delivery $6.49 Friday, November 20, 2009

Fresh Technology Success Focus NO free shipping Friday, November 20, 2009

2. Revenue Model Friday, November 20, 2009

• Ad Revenue / AOL • Subscription / Netﬂix • Sales- Retail / AMAZON • Transaction Fee / Etrade • Afﬁliate / Linkshare Friday, November 20, 2009

Friday, November 20, 2009

US $160 Million Friday, November 20, 2009

3. Market Opportunity Friday, November 20, 2009

HSN TV OFFLINE CATALOG ONLINE 20% 43% 22% 16% Friday, November 20, 2009

Market opportunity analysis! Create More Efﬁcient Markets, e.g., eBay ! Enable Ease of Access, Liberate e.g., Gap ! Trapped Create More Efﬁcient Value! Systems, e.g., FedEx ! Look at Value Disrupt Current Pricing System to Power, e.g., Priceline ! Discover New Business Opportunities! Customize Offerings, e.g. MyYahoo ! Introduce Extend Reach and Access, e.g., keen.com! New-to- the- Build Community, e.g., MyFamily.com! World Value ! Enable Collaboration, e.g., ProjectPoint ! Introduce New Functionality/Expertise, e.g., C-Mode ! Friday, November 20, 2009

Market opportunity analysis! Customer! Competition! Company! Technology! Friday, November 20, 2009

Identify customer needs The “Customer Decision Process” framework: analyze and discover customer needs Gift Interested in Author/ Need for Activity/Class Problem Recognition ! Subject Matter Prepurchase Read Reviews Search for Availability Review Contents Information Gathering Evaluation Price Quality Availability Fits Needs Purchase Purchase Decision ! Purchase Online Purchase Offline Satisfaction Arrived on Time Good Quality of Contents Easy Buying Experience Postpurchase ! Repeat Purchases High Percentage of Loyalty Consumers’ Book ! Purchases Friday, November 20, 2009

4. Competitive Environment Friday, November 20, 2009

What do they have in common Friday, November 20, 2009

Strategic analysis When it comes to competitors, remember the Information Economy. Who is competing with you on CUSTOMER ATTENTION. It might not be the obvious candidate. Friday, November 20, 2009

Assess competitive advantages Direct competitors –! Firms offering products or services that are “close substitute” –! Rivals in the same industry Indirect competitors –! Substitute Producers •! Firms that, though they reside in different industries, offer products and services that perform the same function –! Adjacent Competitors •! Firms that have the potential to provide products or services that are substitutes Friday, November 20, 2009

5. Competitive Advantage Friday, November 20, 2009

First Mover Friday, November 20, 2009

Background • Founded in 1998 by now CEO Mark Vadon • Based in Seattle • Went public in May 2004 • Largest online retailer of diamonds and other jewelry • 159 employees Friday, November 20, 2009

Firm Statistics • Profits have risen 24% since 2005 • Current market value of $1 B • Online market share 50% • Stock valued at around $56 a share Friday, November 20, 2009

Technology • Offers unique programs through website – Ex. “Build Your Own Ring” • Point of sale system – Knowing their customer • Personal website – My Blue Nile Friday, November 20, 2009

Competitive Advantage • Exclusive contracts & distribution rights with diamond suppliers • Low acquisition costs – Creates barriers to entry for competitors • Purchases diamonds after customers pay – Allows for a negative working-capital cycle Friday, November 20, 2009

Competitive Advantage • Doesn’t keep inventory • Price transparency – Compare prices, can choose cheaper diamonds • Large selection – Over 60,000 diamonds to choose from Friday, November 20, 2009

Rival Firms • Traditional brick and mortar jewelers – Zale – Tiffany’s – Ice.com • eBay and Amazon • Department / Super stores – Macy’s – Wal-Mart Friday, November 20, 2009

Opportunities/Threats • Rising costs – online marketing, diamond prices • Diamonds as a commodity • Complexity of predicting future sale growth • Trying to expand in European market • Customers want to feel diamonds Friday, November 20, 2009

7. Market Strategy Search SEO/SEM Viral Social Email Comparison Afﬁliates Marketing Media Friday, November 20, 2009

Customers Spread the word Friday, November 20, 2009

7. Org. Development Friday, November 20, 2009

8. Management team Friday, November 20, 2009

Internet business models Friday, November 20, 2009

B2C B2B C2C C2B Friday, November 20, 2009

P PEOPLE Friday, November 20, 2009

Products • Products can be digital (e.g. software) • Technology aids with developing new products, whether digital or not Friday, November 20, 2009

Price • Easier access to comparative websites allows consumers to ﬁnd lowest price • Organisations need to differentiate themselves, but should not rely on price Friday, November 20, 2009

Placement • Digital products can be digitally distributed (e.g. download MP3) • Stores can be online (e.g. Amazon) Friday, November 20, 2009

Promotion • The Internet provides a wealth of promotional tools • Advertising, personal sales, promotions, public relations and more can be conducted online • Importantly: customers as promoters Friday, November 20, 2009

What about “new” Ps? Friday, November 20, 2009

Idris Mootee’s 4 New Ps Friday, November 20, 2009

1. Personalization • Internet allows for Mass Customization • Marketing • Products • Experience Friday, November 20, 2009

1. Personalization Text Converse allows customers to create their own shoes. Friday, November 20, 2009

2. Participation • Social media • Consumers collaborate with companies to create products • Rapid feedback loop Friday, November 20, 2009

2. Participation Friday, November 20, 2009

3. Predictive modeling Friday, November 20, 2009

Peer-to-Peer • Most trusted is “someone like me” • Social networks encourage interactions • Word of mouth can be more easily tracked • Equip engaged users with tools to promote Friday, November 20, 2009

What are their needs? What problems do they have that you can solve? Friday, November 20, 2009

Make the customer the centre of your marketing Friday, November 20, 2009

Price What is a cynic? A man who knows the price of everything and the value of nothing. Friday, November 20, 2009

Product • Does your product fulﬁll customer needs? Friday, November 20, 2009

Making money is a hobby that will complement any other hobbies you have Friday, November 20, 2009

Placement Friday, November 20, 2009

Promotion • The Internet was created to share information, not to market products • How can you harness customer needs online? Friday, November 20, 2009

Deve loping a mar keting plan Friday, November 20, 2009

1. Know yourself and your market • Internal audit and market review • Who are we? • Who are our customers and what are their needs? • What is the social context? Friday, November 20, 2009

2. Strategic analysis • Thorough market analysis • Strength’s, Weaknesses, Opportunities, Threat Friday, November 20, 2009

3. Set objectives • What are the desired outcomes? • What are the speciﬁc goals? • How will success be measured? Friday, November 20, 2009

4. Generate strategies and tactics • The nitty gritty: what are you actually going to do? Friday, November 20, 2009

5. Evaluate strategies • Budget and resources • Prioritize • SWOT Friday, November 20, 2009

helpful harmful external internal strengths weaknesses opportunities threats Friday, November 20, 2009

6. Implement Just do it Friday, November 20, 2009

7. Track, Analyze, Optimize • Online, be ﬂexible • Track, and adapt as required. Friday, November 20, 2009

What does what? Friday, November 20, 2009

Tactic Outcome Email Marketing Customer Retention Online Advertising Acquisition Branding Afﬁliate Marketing Acquisition Branding SEO /SEM Acquisition Branding Branding Social Media Participation Branding Viral marketing Participation Friday, November 20, 2009

Online Marketing Strategy (McGill)

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Notes on slide 1

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