Introducing Internet Marketing

Lecture 1
 Objectives
• Subject Overview
• The Internet and the marketing concept
• Benefits of the Internet for businesses
• The new marketing medium
• Internet marketing communications
• Internet Marketing strategies
 Subject Overview
• General Aim and Rationale – the utility of
the Internet as a tool for business to increase
efficiency, competitiveness, and
effectiveness.
• Objectives
• Content
• Assessment criteria
 The Internet and the Marketing
Concept
• Two distinct meaning for marketing
1. The range of specialist marketing functions
carried out by the firm (marketing research,
public relations..)
2. An approach or concept that can be used as
the guiding philosophy for all functions and
activities
• The modern marketing concept unites
these two meanings.
 The Internet and the Marketing
Concept
• The Internet can be applied by companies as an
integral part of the modern marketing concept
since:
– It can be used to support the full range of
organizational functions
– It is a powerful communication medium that integrates
the different parts of the organization
– It facilitates information management
– The future role of the Internet would form part of the
vision
 Internet Marketing Defined
The use of the Internet and related digital
technologies to achieve marketing
objectives and support the modern
marketing concept.

Electronic commerce transactions are the

trading of goods and services conducted
using the Internet and other digital media
 Business Benefits of the Internet
• Market penetration – sell more existing products
into existing markets
• Market development – Internet is used to sell into
new markets
• Product development – New products or services
developed which can be delivered over the
Internet
• Diversification – New products are developed
which are sold into new markets
Market and Product Strategic Grid
Conservative Innovative
Approach Approach
New

Market Diversification
Market

Development
Existing

Market penetration Product

development

Existing New
Product
Marketing Functions & The Internet
• Sales – achieve through increasing awareness of brands and
products, supporting buying decisions and enabling online
purchase
• Marketing communication – use of the web site for a range of
marketing communication
• Customer service – supplementing phone operators with
information available online
• Public relations – the Internet can be used as a new channel for
public relations (publish latest news on products)
• Marketing research – techniques of finding a range of
marketing information
 The 6 Cs’ of the Internet
• Cost reduction – reducing the need for sales and marketing enquiries
to be handled by telephone and producing printed marketing
communication material
• Capability – The internet provides new opportunities for new
products and services and for exploiting new markets
• Competitive advantage – First mover advantage
• Communications improvement – improved communications with
customers, staff, suppliers
• Control – Better marketing research through tracking customer
behavior
• Customer service improvements – Interactive queries of databases
containing stock availability or customer service questions
 The Internet – A New Marketing
Medium
• The Internet refers to the physical network that links computers
across the globe. It consists network servers and wide-area
communication links that are used to hold and transport
information.
• World Wide Web is a medium for publishing information on the
Internet.
• Intranet is a password protected network within a single company
which enables access to company information using the familiar
tools of the Internet such as web browsers.
• Extranet is formed by extending the intranet beyond a company to
customers, suppliers, collaborators or even competitors.
Level of management Internet Intranet and extranet

Strategic Environmental scanning Internet data analysis

Competitor analysis Management information
Market analysis Marketing information
Strategic decision making Database
Supply chain mgt Operations efficiency
Business planning
Monitoring and control
Simulation
Business intelligence (data
warehouses)

Tactical and operational Advertising/promotions Electronic mail

Direct marketing Data warehousing
Public relations Relationship marketing
Distribution/logistics Conference marketing
Workgroups Conferencing
Marketing research Training
Publishing Technology information
Product/service information
Customer service
Internet trading
Sponsorship
Internet Marketing Communications
• Characteristics inherent in digital medium:
– The customer initiates contact
– The customer is seeking information (pull)
– It is a high intensity medium – the marketer will have
100 per cent of the individual’s attention when he or
she is viewing a web site
– A company can gather and store the response of the
individual
– Individual needs of the customer can be addressed and
taken into account in future dialogues
 Old and New Media
Old media New media Comment
One-to many One-to-one or many-to- Hoffmann & Novak (1996)states that Internet is a many-
communication model many communication to-many medium, but for company to customer one-to-
model one
Mass marketing Individualized marketing Personalization possible because of technology to
or mass customization monitor preferences and tailor content (Deighton, 1996)

Monologue Dialogue Indicates the interactive nature of the WWW, with the
facility for feedback
Branding Communication Increased involvement of customer in defining brand
characteristics. Opportunities for adding value to brand

Supply-side thinking Demand-side thinking Customer pull becomes more important

Customer as target Customer as partner Customer has more input into products and services

Segmentation Communities Aggregation of like-minded consumers rather than

arbitrarily defined target segments
Internet marketing application in UK
Use Percent
PR/marketing information 70
Product contacts 40
Customer contacts 27
Facilitating customer feedback 20
Detailed product information 18
Distribution of paid-for reports 10
Online orders 8
Paid-for advertisements 5
Source: Business Computer World/Spikes Cavell, February 1997
 Avoiding Marketing Myopia
• Traps that should be avoided when embarking on Internet
marketing:
– Wrongly defining which business they are in
– Focusing on:
• Products rather than customer
• Production
• Technology (only an enabler, not an aim)
• Selling (the culture of the Internet is based on customer seeking
information to make informed buying decisions)
• Customer needs (the need for market orientation is a critical aspect of
web site design and Internet marketing strategy)
• Market opportunities (new opportunity for adding value rather than
just another channel)
 Avoiding Marketing Myopia
– Unwillingness to innovate and ‘creatively destruct’ existing
product/service lines
– Shortsightedness in terms of strategic thinking
– The lack of a strong and visionary CEO (Baker (1998) found that
this was important to companies’ using the Internet effectively)
– Giving marketing only ‘stepchild status’, behind finance,
production and technology.