e Marketing StrategyIntroductionA strategy is a long-term plan of action aimed at achieving a particular outcome. Tacticsrefer to the immediate actions taken to execute a strategy. the tactics that the Internet hasafforded to marketing, the essential first step to executing any online campaign is in theplanning: strategy.Strategy comes from the Greek stratēgos, which itself is derived from two words:- stratos for army, and ago for leading.Tactic also comes from Greek: taktika for deploying or arranging.How the Internet has changed the world we market inThe connected Internet has had a far greater impact on marketing and business than theubiquitous email newsletter and the need for search engine optimisation. It is not only theway in which products and services can be marketed that has changed, but new productsand services are being developed. It has changed the types of products that can be sold,changed the market for products in terms of geography, had a huge impact in the wayproducts are sold and marketed, and importantly has seen a significant shift in the balanceof power between businesses and consumers. Where marketing once was seen as a oneway broadcast channel, with customer wants and needs driven by focus groups, todayeffective marketing is based on a two-way conversation that happens person to person.However, the Internet does not necessarily mean throwing out the rule book of marketingand business foundations and principles. Instead, the Internet provides a new environmentin which to build on these principles. Profit is still revenue less cost. The Internet does notchange that.The Internet and the Marketing MixMcCarthy’s four Ps of marketing are Product, Price, Placement and Promotion. Developingtechnology, naturally, has an effect on all of these, and the Internet in particular has seenfundamental shifts not only in the means available to promote products, but also in theplacement, or distribution of products. Although tools for research, retention, distributionand product creation have changed dramatically, the fundamental principles of marketingstill guide strategy. 1. Products and Services Products and services are what a company sells. From fast moving consumer goods to digital products such as software to services such as consultancy, the Internet has allowed for Plethora of new products. Technology allows for mass customisation of products, seen in a growing trend of letting customers customise goods online before they are created. For example, computer products can be built to specifications, as the costs of offering this type of service to customers is reduced by the Internet.
Digital products can exist because of the Internet. The very framework of theInternet allows for products such as software and digital music to be distributed. TheInternet as a distribution medium is what makes these products possible.2. PriceWith customers able to easily access pricing information from a number of supplierswith relative ease, the Internet is growing a market of near perfect competition(Porter, 2001). The prevalence of search engines and of shopping comparisonwebsites, such as www.pricerunner.com and www.nextag.com, make it easy forcustomers to compare product prices across a number of retailers. The temptationfor companies to differentiate themselves on price has lead to decreased prices formany commodities, from the regularly reduced pricing of books on Amazon.com toticket prices on low cost airlines such as EasyJet in Europe.3. Placement or DistributionParticularly for digital products and services, the Internet gives companies access toa global marketplace. Product distribution and markets no longer have to be dictatedby location. With efficient delivery and shipping channels, products that are notdigital can also benefit from a far wider market place. The Internet allows the basicfoundations of mail order businesses to flourish online with a catalogue that ischeaper to produce and update, and cheaper to distribute: a website. In the travelindustry, travel agents stopped issuing paper tickets as of 31 May 2008. Nearly allaeroplane tickets are now e-tickets.Technology such as APIs, SOAP services, RSS and XML allow information and servicesto be distributed throughout the world. For example, the API for a hotel reservationsdatabase, Starfish Luxury Travel Distribution, allows a diverse range of websites tooffer instant online bookings for hotels in the inventory. Partners with bookingengines include http://starfishinteractive.com/, http://www.spaworld.tv/ andhttp://www.timesonline.co.uk/.[note: An API is an Application Programming Interface. Essentially, an API givesinstructions and rules for communicating with another programme or database. Thisallows, for example, different companies and developers to build different front-endsystems that all communicate with the same database.]This is both a huge opportunity and a huge challenge for businesses. On the onehand, it can allow niche products and markets to flourish in a global space. On theother hand, it can be tempting for a marketer to try to reach too many markets atonce. A global market place is also not yet fully supported by national banking andtax legislation.4. PromotionThe Internet as an information and entertainment medium naturally lends itself tobe used to promote products. The online promotional mix is an extension of theoffline, but with some significant differences: online promotion can be tracked,measured and targeted far more sophistically than offline. Advertising, personalsales, promotions based marketing and public relations can all be conducted through
Godin’s five marketing elements are reminiscent of The Cluetrain Manifesto’s premise that“markets are conversations”, and both highlight the importance of marketing as peopletalking to people. This is not a new phenomenon brought on by the World Wide Web.Instead, the Web has served to act as a global focus group, with participants eager to sharetheir thoughts, discoveries, likes, dislikes and any other sentiment.Mootee’s 4 Ps focus on what technology brings to the original marketing mix. Technologyhas allowed for mass customisation, not just in marketing messages, but in content andproduct creation. It has seen brands that allow customer participation in spreading and evencreating their messages and products succeed. The growth of social networks online, andthe recognised importance of product reviews in the buying cycle is reflected in peer-to-peer communities. Lastly, the Internet is useful in tracking and gathering data, which can bemined and analysed for opportunities for growth.What recent approaches to marketing strategy have in common is one growing theme:customer centric marketing.The strength of the Internet is demonstrated in the way it underlines connections. The veryfabric of the Internet is based on hyperlinks – being able to link from one document toanother. These technical connections are mirrored in the need for marketing to appeal tocustomer’s feeling of connection in the social sense.Customer centric marketingCustomer centric marketing infers that by understanding the needs of the customer firstand foremost, business outcomes will be achieved. Looking at the marketing mix from acustomer centric perspective should result in products and strategies that are meeting theneeds of potential customers, as opposed to a need to invest in expensive, interruptiveadvertising to convince customers of a need that they do not have.ProductsProducts and services should be designed from a customer perspective, based on theirneeds.PriceWhen considering pricing from a customer perspective, it is tempting to believe that lowestprice is best. While that can attract customers in the short-term, focusing on the value ofthe product and the services offered with it is a better strategy for long-term growth. Thecustomer approach to pricing considers value. The key is to build a long-term costadvantage.Placementthe customer centric approach to placement recognises that you cannot dictate the mannerin which customers find you online: from the search engine and keywords they could use tofind your service, to the browser and device they are using when accessing your website.PromotionThe Internet was not created as a marketing tool: it was created to share information. Thenumber of people accessing the Internet, the amount of time spent online and the
commerce that takes place online make it an attractive marketing environment.e Marketing Strategy: developing a marketing planAn e Marketing strategy should not be created in isolation to an offline strategy. Instead,marketers need to take a holistic view of all business objectives and marketingopportunities. Offline and online activities should complement each other, both having thepotential to reach different audiences in different ways. However, the Internet isexceptionally useful as a research and information tool in the strategy process.Step 1: Know yourself and know your marketThe starting point for any business and marketing strategy is to know who you are. “You”refers to the organisation as a whole (although, of course, a little bit of self discovery isalways advised). While this can, and should, be re-addressed periodically, start by looking atwhat the business problems are right now, so that a strategy can be developed that solvesthese problems. • What is the nature of the organisation now? • Who are the customers and what are their needs? How can the organisation fulfil the needs of the customer? • What is the social context that the organisation operates in?Step 2: Strategic AnalysisWith a solid understanding of where the organisation is right now, further analysissystematically evaluates the organisations environmental and social context, objectives andstrategies so as to identify weaknesses and opportunities.Porter’s Five Forces AnalysisPorter’s Five Forces Analysis is useful in understanding the attractiveness of the market inwhich an organisation is transacting. However, this framework for analysis was developedbefore the Internet, which has disrupted the markets in which we operate.Production and distribution costs in many industries have been drastically lowered; thebarriers to entry and costs of switching are reduced. This means that there are morecompetitors in the market as the barriers to entry for new organisations is reduced, and thatcost is less likely to inhibit customers from switching to a competing product as there areless likely to be high costs associated with doing so. Perhaps most importantly, thebargaining power of end users is increased as they have greater access to information whenmaking a purchase decision.Often, the Internet migrates competition primarily to price (Porter, 2001). This means thatorganisations seek to attract and retain customers solely through offering services andgoods at a lower price, though this is not necessarily the best strategy for companies tofollow. Strategic differentiation comes from the value that a company can provide to aconsumer.
CompetitorsWhen analysing competitors, it is not only product and price that lead the discoveryprocess. While there may be obvious competitors in the same industry, an organisationneeds to consider what (or who) else may be vying for consumers’ attention and valuablesearch engine trafficIn identifying competitors, analyse the needs of your customers, and determine how elsecustomers might fulfil those needs. Products and services are not only competing forcustomers’ money: they are fundamentally competing for customers’ attention.Considering the customised Converse shoes: the customer needs are not likely to be thatthey have bare feet. Instead, the shoes are fulfilling a customer’s need for individuality andself-expression. NikeID is an obvious competitor, but so is a service like Face Your Mangathat allows Web users to create custom Manga avatars to use online.Step 3: Set Marketing ObjectivesMarketing objectives are the desired outcomes of the marketing plan. What are the specificgoals that will indicate the success of the marketing strategy?These should be unique to an organisation, and are based around the outcomes that willmake money for the organisation. This is a strategy, so the focus is on long-term success.Establish milestones that will indicate that the strategy is on the path to success.Step 4: Generate Strategies and Tactics for Achieving ObjectivesIt’s time to put into practice the tactics covered in this textbook. Based on your analysis ofyour organisation and its objectives, consider strategies and tactics that will help you tomeet these objectives.For example, an objective could be the acquisition of new customers. A tactic could bedisplay advertising on content websites that reflect your target market.If customer retention is the objective, an email newsletter strategy can help to buildrelationships with an existing interested database of prospects.Step 5: Evaluate StrategiesAfter having generated strategies, they need to be evaluated against the needs andresources of your organisation. At this stage, it can be useful to follow Humphrey’s SWOTanalysis for a full analysis of the strategies generated.For each strategy, a SWOT analysis reveals the Strengths, Weaknesses, Opportunities andThreats afforded by a strategy (and of course can be used to evaluate the plan in itsentirety).SWOT analysis will reveal the feasibility and the attractiveness of the strategies generated.
[diagram of SWOT analysis]The needs of the organisation include: • Long-term goals • Short-term objectives • ROIThe resources of the organisation include: • In house talent and staff • Budget • Contracted agenciesStep 6: ImplementYou know what you want, and you’ve made a plan for how to get it. Now do it.Step 7: Track, Analyse, OptimiseE Marketing’s chief advantage over offline marketing? It uses hyperlinks to spreadmessages. This means that e Marketing can be tracked, the data can be analysed and thiscan then feed back into the planning to optimise the marketing strategy.The Internet allows you to track each tactic on its own, and then intelligent analysis shouldallow you to consider how these tactics work together.e Marketing and MarketingeMarketing refers specifically to marketing using the Internet, but holistic strategies allowcompanies to make the most of their budget through integrating online and offlineactivities. eMarketing should not be seen as separate or an afterthought to a marketingstrategy. Instead, businesses should focus on their customers, and use the channels mostlikely to reach their target market based on budget.The cornerstone of a successful eMarketing strategy is flexibility. With near real-timereporting, the likely success of any campaign or channel can be gauged quickly. Flexibilityallows for focus to be shifted as new opportunities and challenges arise. • Tactic • Outcome • Email Marketing • Customer Retention • Online Advertising • Branding, Acquisition • Affiliate Marketing
• Sales, Branding • SEO • Customer Retention and Acquisition • PPC • Customer Retention and Acquisition • Social Media • Branding and Participation • Viral Marketing • Acquisition and Branding • ORM • Customer Retention, Branding, Participation • WebPR • Acquisition and BrandingOnline tools for gathering market intelligenceIn the chapter on online reputation management, many tools were detailed which allow anorganisation to gather information related to their business and those of competitors. Thesesame tools also prove invaluable for market research, especially when keywords monitoredare chosen to reflect industry trends.E-marketing strategy - Situation analysisIntroduction to E-marketing strategyThe importance of developing an effective e-marketing strategy is indicated by MichaelPorter (2001) who has said:‘The key question is not whether to deploy Internet technology – companies have no choiceif they want to stay competitive – but how to deploy it.’An e-marketing strategy is needed to provide consistent direction for an organisation’s e-marketing activities that integrates with its other marketing activities and supports theoverall objectives of the business.
Notes on this post: This post was written for Whats New in Marketing by Dave Chaffeyaround 2004. For Daves latest updates on Emarketing Strategy see his Smart Insights portalfor his practical Emarketing strategy template Emarketing trends.For many companies, the first forays into e-marketing or Internet marketing are not theresult of a well-defined, integrated Internet strategy; rather, they are a response tocompetitors activities or customers demand.After a site has been in existence for a year or so, marketing staff and senior managers in acompany will naturally question its effectiveness. This is often the point at which the needfor a coherent Internet marketing strategy becomes apparent. As a result, the starting pointused in this summary of approaches to e-marketing strategy, is when a company that has anexisting site and it is reviewing the current site and its effectiveness with a view to futureimprovements.The e-marketing strategy processThere is no evidence to suggest that the approach to developing and implementing astrategy should be significantly different for e-marketing. Established frameworks forcorporate strategy development or strategic marketing planning should still be followed.These frameworks provided a logical sequence to follow which ensures inclusion of all keyactivities of strategy development. It can be argued, however, that with e-marketing there isan even greater need for a highly responsive strategy process model where rapid reactioncan occur to events in the marketplace. The use of Soviet-style 5 year planning does notseem appropriate, a preferable approach is an emergent e-marketing strategy process thatis part of a continuous improvement.Chaffey (2012) notes that e-business or e-marketing strategy process models tend to sharethe following characteristics: • Continuous internal and external environment scanning or analysis are required. • Clear statement of vision and objectives is required.
• Strategy development can be broken down into formulation and selection. • After strategy development, enactment of the strategy occurs as strategy implementation. • Control is required to detect problems and adjust the strategy accordingly. • They must be responsive to changes in the marketplace.In this article, we will use a four stage model for e-marketing strategy development. Thefour stages are:1. Strategic analysis. Continuous scanning of the micro and macro-environment of anorganization are required with particular emphasis on the changing needs of customers,actions and business models of competitor and opportunities afforded by new technologies.Techniques include resource analysis, demand analysis and competitor analysis, applicationsportfolio analysis, SWOT analysis and competitive environment analysis.2. Strategic objectives. Organisations must have a clear vision on whether digital media willcomplement or replace other media and their capacity for change. Clear objectives must bedefined and in particular goals for the online revenue contribution should be set.3. Strategy definition. We will discuss strategy definition by asking eight questions. Thesewill be considered in next month’s article: • Decision 1. Target market strategies. • Decision 2. Positioning and differentiation strategies. • Decision 3. Resourcing - Internet marketing priorities – significance to organization. • Decision 4. CRM focus and financial control • Decision 5. Market and product development strategies. • Decision 6. Business and revenue models including product development and pricing strategies.
• Decision 7 Organisational restructuring required. • Decision 8. Channel structure modifications.4. Strategy implementationIncludes devising and executing the tactics needed to achieve strategic objectives. Thisincludes relaunching a web site, campaigns associated with promoting the site andmonitoring the effectiveness of the site. These issues have been dealt with in other articles.We will now examine specific issues of strategic analysis and objective setting that arerelated to e-marketing.1. Strategic analysis.In common with traditional marketing strategy, strategic analysis or situation analysis for e-marketing involves review of the:- internal resources and processes of the company and a review of its activity in themarketplace;- immediate competitive environment (micro-environment) including customer demand andbehaviour, competitor activity, marketplace structure and relationships with suppliers andpartners.- wider environment (macro-environment) in which a company operates including thesocial, legal, economic, political and technological factors.In this section we will highlight the key aspects of the internal and external environmentthat need to be assessed when developing an e-marketing strategy.Internal resourcesThese are of particular importance for e-marketing:
- Portfolio analysis and stage models – Considers the sophistication of online servicesoffered to prospects and customers. From basic ‘brochureware’ sites with no interactionthrough those offering online catalogues to fully transactional sites offering full support forall stages of the customer lifecycle from acquisition, retention to extension and all stages ofthe buying process.- E-marketing effectiveness – How effective is the organisation at converting browsers tovisitors and visitors to prospects and buyers? Analysis of web logs using diagnostics such asthose available from www.marketing-insights.co.uk is important here.- Financial resources and cost/benefit – in particular the breakdown for costs of running theonline presence between site development, promotion and maintenance. Manyorganisations still do not have good visibility of these costs and the benefits such as thosedescribed in the objective setting section.- Service quality – human resources and software assistance for answering customer queriesand dispatching goods.- Technology infrastructure resources – availability and performance (speed) of web site andservice level agreements with the ISP.- Structure – what are the responsibilities and control mechanisms used to co-ordinateInternet marketing across different departments and business units. We return to this topicnext month.- Strengths and Weaknesses – SWOT analysis can be readily applied to e-marketing specificissues.The Internet micro-environmentPertinent factors for the Internet include demand analysis, competitor analysis intermediaryanalysis, channel structure. Porter (2001) has written extensively about how the Internethas changed the dynamic of the marketplace and has reinterpreted his often-quoted fiveforces model in the Internet era.
Demand analysis or online customer activity is a key factor driving e-marketing and e-business strategy objectives. It assesses the current level and future projections of customerdemand for e-commerce services in different market segments. In a B2B context customeractivity can be determined by asking for each market:- What % of customer businesses have access to the Internet?- What % of members of the buying decision in these businesses have access to theInternet?- What % of customers are prepared to purchase your particular product online?- What % of customers with access to the Internet are not prepared to purchase online, butchoose or are influenced by web-based information to buy products offline?- What are the barriers to adoption and the facilitators amongst customers and how can weencourage adoption?Qualitative research is important to informing strategy since it identifies the differences inpsychographics between current online customers and those that are not offline.Resources for assessing the ratio of ‘Access : Choose : Buy’ online have been reviewed inWNIM 5 and 6.Competitor analysis or the monitoring of competitor use of e-commerce to acquire andretain customers is especially important in the e-marketplace due to the dynamic nature ofthe Internet medium. Chaffey (2002) suggests comparing the activity of an organisation andits competitors for their different channels by trying to answer these questions:1. Business contributionHow does Internet marketing contribute to the bottom line? What is the online revenuecontribution (direct and indirect), costs and profitability?2. Marketing outcomes
How many marketing outcomes are achieved online? For example, what proportion ofleads, sales, service contacts occur online? How effective is online marketing at acquiring,converting and retaining customers?3. Customer satisfactionWhat are the customers’ opinions of the online experience and how does this affect theirloyalty?4. Customer behaviour (Web analytics)This assesses how different customer segments interact with web site content and assesseshow the actions they take are influenced by usability, design, content, promotions andservices.5. Site promotionHow effective are the different promotional tools such as search engines, e-mail, directmarketing and advertising at driving quality traffic to the web site? Measures includeattraction efficiency, referrer efficiency, cost of acquisition, reach and the integrationbetween tools. Analysis of the use of intermediaries to build and service business is alsoimportant here.The Internet macro-environmentIt can be suggested that of the different Social, Legal, Economic, Political and Technologicalcharacteristics of the macro-environment, the three most significant factors described inmore depth in chapter 3 are legal constraints – What are the legal limitations to onlinepromotion and trade such as data protection and taxation, ethical constraints such asprivacy and technological constraints – what is the current availability and usage oftechnology to access the Internet and offer distinctive services and how is this likely to varyin the future?
2. Strategic objectives.Smith and Chaffey (2001) suggest there are five broad benefits, reasons or objectives of e-marketing. This framework is useful since it presents a comprehensive range of objectives.Marketers will decide whether all or only some will drive e-marketing: • Sell – Grow sales (through wider distribution to customers you can’t service offline or perhaps through a wider product range than in-store, or better prices) • Serve – Add value (give customers extra benefits online: or inform product development through online dialogue and feedback) • Speak – Get closer to customers by tracking them, asking them questions, conducting online interviews, creating a dialogue, monitoring chat rooms, learning about them • Save – Save costs - of service, sales transactions and administration, print and post. Can you reduce transaction costs and therefore either make online sales more profitable? Or use cost-savings to enable you to cut prices, which in turn could enable you to generate greater market share? • Sizzle – Extend the brand online. Reinforce brand values in a totally new medium. The Web scores very highly as a medium for creating brand awareness, recognition and involvement.Specific objectives should be created for each of the 5Ss. Consider Sales – a typical objectivemight be:‘To grow the business with online sales e.g. to generate at least 10% of sales online. Within6 months.’or‘To generate an extra £100,000 worth of sales online by December’.
These objectives can be further broken down according to CRM objectives of acquisition,conversion and retention, e.g. to achieve £100,000 of online sales means you have togenerate 1,000 online customers spending on average £100 in the time period. If, say, yourconversion rate of visitors to customers was 1% then this means you have to generate100,000 visitors to your site. Achieving repeat visits and sales would form further objectives.The online revenue contributionThe key objective for e-marketing is the online revenue contribution. This is a measure ofthe extent to which a companies online presence directly impacts the sales revenue of anorganisation. Online revenue contribution objectives can be specified for different types ofproducts, customer segments and geographic markets.Companies that can set a high online revenue contribution objective of say 25% for 2 yearstime will need to provide more resource allocation to the Internet than those companieswho anticipate a contribution of 2.5%. Cisco Systems Inc (www.cisco.com) maker ofcomputer networking gear, is now selling around 90% of its 20 billion dollars sales online.This was achieved since senior executives at Cisco identified the significance of the medium,setting aggressive targets for the online revenue contribution and resourcing the e-commerce initiative accordingly.A further example is provided by Sandvik Steel. The Financial Times reported in June 2001that around 20 per cent of all orders from Denmark are online and 31 per cent of those fromSweden. The proportion in the US, however, is only 3 per cent, since most business goesthrough distributors and is conducted by EDI (electronic data interchange), the pre-internetmeans of e-commerce. Over the next six months, the company hopes to raise the US figureto 40 per cent. Mr Fredriksson hopes that in two years, between 40 and 50 per cent of totalorders will come via the web.However, for some companies such as an FMCG manufacturer, it is unrealistic to expect ahigh direct online revenue contribution. In this case, an indirect online contribution can bestated. This considers the Internet as part of the promotional mix and its role in reachingand influencing a proportion of customers to purchase the product or in building the brand.
In this case a company could set an online promotion contribution of 5% of its target marketvisiting the web site and interacting with the brand. Where sales achieved offline are aconsequence of online selection of products this is referred to as the indirect revenuecontribution.Summary - E-marketing strategyWe have looked at the first two parts of a strategy process, key issues for these are:1. Situation analysis. Internal audit including review of services/portfolio analysis,cost/benefit analysis, e-marketing effectiveness analysis. External audit of which the macro-economic factors of demand analysis and competitor analysis are arguably most important.2. Objectives setting. The 5 S s of Sell, Speak, Serve, Save and Sizzle. The direct and indirectonline revenue contribution.ReferencesChaffey, D. (2012) E-business and e-commerce management. Financial Times/Prentice Hall.Harlow, UK. Fifth edition.Smith, P.R. and Chaffey, D. (2008) eMarketing eXcellence: at the heart of eBusiness.Butterworth Heinemann, Oxford, UK. 3rd editionPorter, M. (2001) Strategy and the Internet. Harvard Business Review. March 2001, 62-78.Note: This article is one of a series originally written between 2000 and 2003 for TheChartered Institute of Marketing Whats New in Marketing Newsletter. Many of theconcepts remain valid, but some more recent concepts such as Web 2.0 and social networksarent referenced.