Internet Opportunities for Business
Author
A thesis in the field of e-business and e-marketing by Constantine Chatzichristofis  
Abstract
This thesis is the result of an in-depth research in the topics of Internet, e-business and e-marketing. Subsequently , examines the scope of e-business and the models it can follow, the internet and the requirements for usable e-commerce website design and the technology behind the Human-Computer Interaction of e-business. Then emphasises on Internet marketing; in other words the application of marketing principles and techniques via complex interactive digital media of internet. Explains the use of internet for promotion through search engine marketing, the public relations through the internet and the concept of the internet as a community. Finally answers the argument how the development of the global marketplace of the internet impacts on businesses and how they can take advantage of all these opportunities whilst meeting customer expectations.  
Table of Contents
E-business ............................................................................................................................1 Definitions ...............................................................................................................1 Benefits and Barriers ...............................................................................................3 Security and legislation ...........................................................................................6 Mode of communication ..........................................................................................9 E-commerce Site Design ................................................................................................... 11 Structure of web pages........................................................................................... 11 Effective web pages ...............................................................................................12 Website usability....................................................................................................15 Interactive Order Processing .................................................................................16 E-marketing .......................................................................................................................17 Elements of internet marketing..............................................................................17 Internet Marketing Mix .........................................................................................19 Online Customer ....................................................................................................22 Online Promotion and Communication Techniques ..............................................24 Conclusion ........................................................................................................................27 References .........................................................................................................................31 Reference List ........................................................................................................31 Bibliography ..........................................................................................................34 Appendices ............................................................................................................35
E-business
Definitions Everything started in October 1969, when the United States Department of Defense Advanced Research Projects Agency created the internet, which is a large computer network for information exchange around the world. Internet often called the network of networks because consists smaller networks which provide information and services to billion users worldwide. Why do we call internet network of networks. [ONLINE] Those networks can be and serve any type of scope, such as private, public, academic, government and of course business in local to global range. Twenty years later a British man called Tim Berners-Lee began making networks easier and found World Wide Web in 1991, which acts as part of the internet and contains websites, a linked webpage sets of multiple media such as text, images, audio etc. via the HyperText Markup Language (HTML). People can access websites from any device with a web browser application connected to the internet. HTML was made by Tim Berners-Lee’s organisation World Wide Web Consortium. Basically, it is a language code which describes the contents so a web browser can activate and display them appropriately. HTML may includes more futures such as meta information of webpages, it can be more stylish with Cascading Style Sheets (CSS) or more interactive with JavaScrip scripting language. About W3C. [ONLINE]. Network websites have many uses. In the 1990s two terms were created in order to describe applications of Internet technology with specific audiences. An intranet is a private network website for selected users, accessible with a username and password, while extranet acts as an extension which makes selective !1
information accessible to authorised third parties such as customers, suppliers and collaborators. For example an organisation may use intranet for information exchange between its employees and extranet to share some of those information to its suppliers. Kotler, Armstrong, Principles of Marketing 11th ed, Ch 18 vocab flashcards. [ONLINE] E-commerce is not only buying and selling using the internet. A wide definition is any information exchange thought electronic networks, involved at any stage in moving a product or service from supplier to customer (supply chain). So, e-commerce may includes all electronic information exchange between organisations and third parties (stakeholders), while e-business is similar to e-commerce and refers to the application of business processes (e.g. research and development, manufacturing, management) through the use of internet technologies and can include the use of e-commerce. There are four main e-commerce transaction types between an organisation and its stakeholders: The commercial transactions between an organisation and consumers, Business-to-consumer (B2C); or with another business, Business-to-business (B2B). Customer-to-customer (C2C) are the informational or financial transactions between consumers, but usually mediated through a business site; and Consumer-to-business (C2B) is when a consumers approach the business with an offer. Kotler, Armstrong, Principles of Marketing 11th ed, Ch 18 vocab flashcards. [ONLINE] There are also different e-business models involving business transactions and can be used to generate profit and development. Brokerage model is when a broker (e.g. eBay) brings together buyer and seller to conduct a transaction from which will usually charge a fee. Web advertising model is when a website with content and services provides a space for ads against a fee. Infomediary model is when an information intermediaries !2
(e.g. DoubleClick.com) provide or sell valuable data to marketers (e.g. for targeting marketing campaigns) or customers (e.g. products data for purchase consideration) for assisting them to understand a given market. Merchant model is the wholesaling and retailing of goods and services through list prices or auctions. Manufacturer or direct model is when a manufacturer using the internet to sell directly to customers, shortening the distribution process (e.g. avast.com). Affiliate model is when a charge is made based on the performance such as pay-per-click and percent-of-sale (e.g. Google Ads and Amazon Marketplace). Community model is based on users contributions (e.g. Wikipedia, Flickr). Profits may generated from donations, advertising, subscriptions and premium services, etc. Subscription model is when a user is charged periodically (e.g. Netflix). Sometimes subscription services are free while the profit is made through advertising (e.g. YouTube Channels). Utility or on-demand model is when a charge is made based on the usage, widely known as "pay as you go�. (e.g. helpouts.google.com). Business Models on the Web. [ONLINE] Lastly, the recent model group or collective buying is when customers enter their payment details and wait until or if a minimum number of people sign up for the same offer to complete the purchase (e.g. Groupon). Van Horn et al, T, 2007. Patent US7194427. [ONLINE]
Benefits and Barriers There are a lot of reasons a company to have an online presence. Internet has created a new economy, a global marketplace easily accessible from anywhere, anytime (24/7). It can increase company’s sales from new customers and markets, even from existing customers by providing them additional online services (cross-selling). Internet !3
helps the company to meet customer expectations by offering better service, improve its brand; and build a professional image to its stakeholders. Internet services can contribute to business administration, better support of partners or even identifying new partnerships that may lead company to success. It is also efficient for promoting by offering possibilities for more rapid and responsive marketing communications. The use of internet technology can improve immediately the collection of information and provide more efficient management of them, with more automatic and economic way. The collection of data is a very important and powerful tool for the development of businesses. There are different ways of collecting data. The overt way which is when the collection of information is clearly conspicuous, for example asking customers for feedback; and the covert way when the data are collected uninformed, for instance when how many middle aged buying video games. Some examples of useful data can be the demand of a product or service, sales reports and analytics, how effective is an advertisement, etc. Those information can benefit companies to learn for the future, improve their products and services and response to market needs. Using Overt and Covert Survey Traps to Maximize Data Quality - WebSM. [ONLINE]. The use of internet can reduce many kind of costs for a company. The online customer service (e.g. via email) may reduce the time of customer service. Online sales may reduce the need for more employees. It is so efficient that many business became successful without the need of physical store and its expenses. Online marketing may reduce the costs of printing and distribution of promotions. Advertising thought the internet often can be less expensive, considering the effectiveness of other kind of adverts. Business transactions and
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processes thought the internet are rapid, efficient, less expensive and sometimes can even transformed to automatic. Wherever there are advantages, there are also disadvantages. Starting an ebusiness or adding an existing business on the internet may sounds easy but there are several difficulties that need to be considered. Depending the type of business there are low to high set up and ongoing costs. For example some business might need to invest more money on the transactions security, customer service or traffic handling of their website. As any investments, e-business may end up wrong if approached inappropriately without a right business and marketing plan. The main reason of failure is customer unsatisfaction. There is a lot competition on the web and if customers are not satisfied with your service, your competitors are one click away from them. Some examples can be unprotected transactions, annoying advertising and delayed or lost orders that might result to legal issues and penalties. In addition, existing businesses may deal with difficulties on adapting to the requirements of their individual e-commerce operations and may need to change fundamentally the existing operational process, which will also impact the staff. Even if you make the required adaptions, you will need to be prepared for the next. Technology changes constantly which means your e-business and staff, need to keep up to date before be left behind the competition. Furthermore you need to be able manage a 24/7 global marketplace and the demand that comes with it, such as support in multiple languages or even managing logistic services. Another important issue is the trust of e-business transactions. Safe online transactions is one of the main things that customers look before make a purchase. Only one security concern can denigrate and damage the business dramatically. Trust can be achieved with the strength or familiarity !5
of a brand, the security and privacy policies via advertising, good reputation, guarantees, etc. In addition is important the navigation and presentation of well designed website with useful content for the buyer such as detailed information of the products and buyer’s guide. The recommendations by other customers through reviews, ratings, forums, etc. Finally the fulfilment of orders and the absence of errors. Customers must be sure of a satisfied overall experience, otherwise bankrupt is a matter of time. The risks of conducting business through the internet are many if you don not take the right decisions.
Security and legislation Strictly speaking, there are a lot of risks involved in e-commerce transactions. Some of them are steeling of personal details, passwords and credit cards during a transaction or through a merchant server. It can be anyone, a hacker, a fake customer, a fake merchant or even your employee. For this reason security it is a meaningful matter for both parties. Despite the fact that e-business operates electronically there are some physical stuff that need to be protected securely. The servers and administrative computers should be locked in a limited access room with appropriate environment and high availability hardware such as high quality components, power supplies, mirrored servers, error correcting memory, etc. The organisation should have a plan in case of fire, the room must contain a fire extinguisher and all the equipment have to be raised off from the floor. If a modem is installed in e-business servers should use features such as automatic call back and data encryption and must be disabled except when needed. In addition to the secure network access servers and sensitive computers should use switched network ports which must be as sheltered as possible. Documents and storage !6
devices with private details of customers such as passwords, credit card numbers, checks, phone numbers, etc. must be locked into secure equipments and areas that require individual permission to access. Backup media should be kept in a secure location, rotated and moved off-site frequently. Security Guidelines. e-Business Resource Group [ONLINE]. Electronic security is also essential technological part of e-business as it is a primary concern for the users of the internet. This can include the followings: Digital certificates are keys made up of large numbers that are used to identify individuals and consist by two main methods of encryption symmetric and asymmetric. Secret-key or symmetric encryption is when two parties have an identical key to encrypt and decrypt their communication while public-key or asymmetric encryption is when the key is different but also related by a numerical code in order the information exchange to be only between the users of keys. The asymmetric encryption is also used for digital signatures when individuals or companies need to prove their identification. Certificate is a valid copy of a public key of an individual or organisation combined with identification information, issued by a trusted third party (TTP) or certificate authority (CA) like VeriSign (verisign.com). Secure Sockets Layer protocol (SSL) is the most common security mechanism used to verify the identity of the certificate owner and enables encryption of sensitive information during online transactions using public-key infrastructure (PKI) and digital certificates to ensure privacy and authentication. SSL is more used than its competitor S-Secure Hypertext Transfer Protocol (S-HTTP), the method when ‘http://’ changes to ‘https://’ and a padlock appears to the browser. TRUSTe (truste.org), VeriSign (verisign.com), Macafee (macafee.com) and Avast (avast.com) are !7
some provider for encryption, antivirus software, firewalls, payment authentication, privacy and a range of protection services. An example of good security practices is Amazon for its customer guarantee, clear explanation of its SSL security measures, emphasising the infrequency of fraud with adverts like “ten million customers have shopped safely without credit card fraud”, etc. There are too many things to be considered for online transactions, this is why many merchants obverted to payment systems like PayPal, Amazon Payments, Google Wallet, ClickandBuy, Worldpay and more, which are trusted and does not require to invest money but a fee per a transaction. (Chaffey, D, 2012, p.137-142) Governments have created legislations about security in order to protect their citizens. Those national and international legislations impact e-businesses regarding the security of private information. Data protection legislation is enacted to protect individuals privacy and prevent misuse of their personal data. Data protection. [ONLINE]. For example in UK companies that processes personal data of customers or employees must be registered with a data protection registrar licence also known as notification process. Notification to process personal data. [ONLINE]. There are also legal constraints on cookies. One of the first limits of use of cookies introduced in 2003 by European law that states “a person shall not use an electronic communications network to store information, or to gain access to information stored, in the terminal equipment of a subscriber or user” unless meet some requirements. The Privacy and Electronic Communications (EC Directive) Regulations 2003. [ONLINE]. In December 2003, USA introduced a new law known as CAN-SPAM Act for the control of unsolicited e-mail that requires labelled commercial e-mail, opt-out instructions and sender’s !8
address. PUBLIC LAW 108–187—DEC. 16, [ONLINE] Overall, companies should follow the guidelines of privacy and consumer protection in all local markets with security certification where available. Inform their customers about the company, the purpose and the type personal data collection and ask them before collecting. Assure their customers by providing clear and effective privacy information about the data collection. Let them know when software is used to collect information about them. How to opt-out from e-mail lists or cookies and how can obtain information held about them. Collect or keep data only when it is necessary. Enable correction for incorrect data. Use data for marketing purposes only if the customer has agreed to this. And lastly use appropriate security to protect the customer information. Security and data protection has to be taken into account seriously for avoiding legislative issues and customer disappointment which can lead to failure of an online business. (Chaffey, D, 2012, p.137-142)
Mode of communication The continuing development of technology have created many new ways to communicate with customers, employees, suppliers or anyone involved to an e-business. Either for personal contact between two employees or mass communication campaigns, electronic media is a significant part for productive and cost-effective e-business processes. This can include fixed or even portable devices which seems to be used increasingly from more people every day. Electronic transactions and communications can be made using mobile devices (m-commerce) such as laptops, PDAs and mobile phones usually connected to the internet. Mobile devices have extended this communication through text messages or apps. However, email remains the most !9
constant way of electronic communication. The flexibility of email allows individuals or groups to exchange text and files with any kind of information, from official to personal, having validity which can even be recognised as legal evidence from courts. Business communications can be made through its own or external websites and services such as blogs, virtual worlds like Second Life, rich media such as interactive ads, videos and contact forms. For instance, a customer may communicate with a business using a shopping cart by requesting to buy a product or a business with a customer through its FAQs page. Social Networking Media is another growing communication tool for marketing and promotion such as customer support and communication, promotion of events, discounts, finding new employes and more. Some examples are Facebook, Twitter and for business-to-business users LinkedIn. All these electronic media have enabled ebusinesses to use different types of communication: Mass communication (one-to-many), for example an advert from a company to many customers. Personal communication (one-to-one), for instance messaging with a customer. Many-to-one and many-to-many communication which referred to the use of internet such websites, blogs and communities where customers can chat and exchange information with other individuals or groups of customers. 3 Social Marketing Communication Methods: When & How to Use Them. [ONLINE]
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E-commerce Site Design
Structure of web pages Websites are structured by key elements that can be used by search engines (e.g. google) in order a web page to be founded by interested visitors using a browser which interpreted HTML and presenting the data to fit the user’s device screen (e.g. desktops and mobile devices). Those elements may be the metatags such as short description (description attribute) and reserved word (keywords) about the site content; download considerations (e.g. images, video, music, etc.) head title, body/content links; and site maps and navigation systems. There are two main options for creating a structure for a website depending the type and amount of content. Designers may create a home page with many links that require less clicks for the user to reach required content (Broad and Shallow navigation) or few links with more option inside (Narrow and Deep navigation). It must be noted that having a large navigation bar will limit the space for content. Many large e-commerce website have multiple home pages according to different types of audience and products. Lynch and Horton (1999) recommend a broad and shallow approach is more appropriate for this reason. It also has to taken in to consideration that many customers will not arrive on the home page of a website when they are redirected from another source (e.g. external link or advert). For this reason navigation should always be appropriate presented on all pages of a website. According to Nielsen (2000), this process is called ‘deep linking’. A combination of both approaches is might be more convenient in cases where is applicable, for ensuring that it takes no more than three clicks to find the required information which is also beneficial for SEO purposes, in other !11
words how much “Broad and Shallow” or “Narrow and Deep” should be the navigation of the website. Sites should highlight the current location and title of pages, the main menu which gives options for future operations and a task stage (e.g. current stage of completing an purchase). It is also useful the adoption of familiar standards such as Home, Main page, Search, Find, Browse, FAQ, Help and About Us; and the use of alternative tools such as search, advanced search, browse and site map facilities for allowing users to find the information they need quickly without any troubles. (Chaffey, D, 2011, p.615-622)
Effective web pages An effective websites have a style and personality depending its target audience and purpose. This can be made having relevant page design and layout. Some websites are informative others are intuitive but all of them have a target to engage the visitors and encourage them to return, displaying useful content appropriately. For instance a website with limited content will place the menu on the left for avoiding the page to look empty, on the contrary placing the menu on the top will provide more space for content, other websites may require additional abilities such as printing format, resizing based on screen resolution and more. The design features have to highlight a product or brand (e.g. using corporate colour scheme, images, typography, etc.) and meet the customer expectation about easy navigation and speed. Well-made professional website are more trusted for online transactions, on the other hand a fancy website can be more effective for presentations (e.g. service or portfolio). For example javari.co.uk has a simple design, it is easy read and browse with same menu on all pages for finding quickly what you are !12
looking for. It has to taken into consideration where the customer need to focus. A beautiful background image will make the web page look nice but it might also distract customers, except if you want to. In illustration, a web page that providing useful information about a video game may place a takeover ad for background in order to encourages visitors to buy the game. The website design process have been change over time and mobile commerce have taken important part of businesses on the web. Nowadays web designers have to create graphics for multiple screen sizes and devices such as desktops, tablets and smartphones. Website layouts should respond to a given screen size than creating several layouts for each screen size individually (responsive design). The navigation elements should be at a large size for being touch friendly while the website should also highlight the brand and products. For example a common mobile version of an e-commerce site may have a vertical navigation bar as opposed to horizontal and a large company logo may take place at the top of the site in order to be easily visible. All of those make a website present its content appropriately but after all the content is what will make visitors stay and keep visiting (site stickiness). The information displayed on the webpage have to be clear and easy to understand from anybody without the use of terminology, acronyms or too much details about the company, product or service. For this reason many websites having concise content, using features such as “expand text” or “read more”, hyperlinked lists with large headlines and breaking text into units of five to six lines which allows users to scan and find easier the information they want. The site organisation also takes important part. Content can be categorised by topic, task or audience; alphabetically, chronologically (e.g. blog posts) or even !13
Geographically (e.g. local deals). The use of familiar metaphors of real-world (e.g. shopping basket, wallet, checkout) is also common but it has to be used carefully. Website design is a critical complicated process and involves professionals from IT staff to even psychologists that should take part in any large e-commerce projects. The creation of a user friendly website is determined by the tools provided to the user for exploring the site (site navigation scheme). The measurement of how easy it is for users to move inside the website, find the information they need and use interactive tools (e.g. registration form) is called site flow. Flow has an extended meaning. It was originally introduced by Mihály Csíkszentmihályi as psychological term for a person completely immersed in an activity. Csikszentmihaly, M. (2004). Flow, the secret to happiness. [Online Video]. Ruth Rettie describes the feeling of flow during an experience test of a website: “My mind isn’t wandering. I am not thinking of something else. I am totally involved in what I am doing. My body feels good. I don’t seem to hear anything. The world seems to be cut off from me. I am less aware of myself and my problems. My concentration is like breathing. I never think of it. I am really oblivious to my surroundings after I really get going. I think that the phone could ring, and the doorbell could ring, or the house burn down or something like that. When I start, I really do shut out the whole world. Once I stop, I can let it back in again. I am so involved in what I am doing, I don’t see myself as separate from what I am doing.“ There are many factors that can decrease the flow of a website such as loading time, plug-ins, unaesthetic designs, irrelevant advertising, uninteresting or complicated information, etc. Conversely, familiar navigation controls, interaction with external services (e.g. automatic completion of
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payment information and address using an amazon account), quickly responsiveness, etc. will improve the site flow. An exploration of flow during Internet use. [ONLINE]
Website usability It is important the design of a website to make the completion of tasks (e.g. finding a product or completing an order) easier for users, in other words its usability. According to The British Standard/ISO Standard (1999): Human Centred design processes for interactive systems usability is the extent to which a product can be used by specified users to achieve specified goals with effectiveness, efficiency and satisfaction in a specified context of use. ISO 13407:1999 - Human-centred design processes for interactive systems. [ONLINE]. A website can be easy for the visitor to use by having a good navigation, be available in multiple languages and providing accessibility based on the needs of different audiences such as parents and children, etc. Another important requirement is accessibility which is the allowing of users to access the website with different browsers and platform as well as those with disabilities. The continuing increased usage of mobile devices have made the consideration of accessibility necessary. All the above need to be tested from users and usability experts in order to fulfil visitors needs and keep them on the website; as well as abiding the legislation for website users with disabilities including visual impaired and colour blind (multi-sensory access). Many countries have specific accessibility legislation. According to the Disability and Discrimination Act (DDA) website accessibility is a legal requirement from 2002, especially for websites that providing services (e.g. flight reservation and bookings) with
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some exemptions such as small businesses. Disability Discrimination Act 1995. [ONLINE]
Interactive Order Processing The most important feature of e-commerce websites is their ability to handle and process orders interactively. This Human-Computer Interaction consists the following process. Firstly a customer chooses a supplier, then selects a product, checks its stock availability, places the order and the payment authorisation begins. Customer inputs the payment data and the data transferred to the payment system, the order processing through the system and an online confirmation with delivery information is sent to the customer. Finally the delivery company generates a reference/tracking number for the order and delivers the order to the customer. The creation of e-commerce website requires extended programming skills and equipment for making the technology works behind the scenes securely and efficiently. The design of a website is the interface which makes the tasks and their results understandable to the client (presentation tier). Then all the commands and data are processed through a server (Logic tier) and transferred from/to the database where all the information is stored (Data tier). This client-server-database model is called three-tier architecture. Many e-commerce platforms have been made available to users who can now build professional e-commerce website without the need of equipment or even programming, similar to website builders. There is a big number of e-commerce platforms and each of them has its advantages and disadvantages, from simplified (e.g. Shopify) to the more flexible/open-source (e.g. eBay’s Magento) and can be integrated with other services such as payment systems, logistics and other sale !16
channels. Those platforms are taken advantage increasingly from million of small and large businesses, because of their scalability, security and the supported integration that offered from plug-ins and third parties. Three-Tier Architecture | Linux Journal. [ONLINE]
E-marketing
Elements of internet marketing In the first chapter e-commerce identified as any electronic information exchange, involved at any stage of supply chain while e-business the application of business processes through the use of internet technologies. Now, digital marketing, also known as Internet/web marketing and e-marketing is the application of internet and other related digital technologies to achieve marketing objectives. So, e-commerce refers to the technology while e-business and e-marketing refers to the application of marketing or business process accordingly, using the digital/internet technology. In practice, digital marketing may includes the management of company websites and social media pages, online communications techniques including search engine marketing, social media marketing, online advertising, email marketing and “partnership� with other websites (sale channels). All of those help businesses to find new customers, support existing customers and improve the management of electronic customer relationship that can maximise sales by regular satisfied customers and increase the company reputation on the web which can also encourage new customers to buy. According to Chartered Institute of Marketing, !17
“Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably�. An Overview of Marketing [ONLINE]. Chaffey and Smith (2008), mentioned that e-marketing can benefit a business based on the same aims, by using the Internet for marketing research to find out customers’ needs and wants (Identifying), as an additional channel by which customers can access information and make purchases (Anticipating) and for achieving customer satisfaction through the electronic channel (Satisfying). (Chaffey, D, Smith, PR, 2008, p.18). They also indicated The 5 Ss of Internet Marketing, which describes how e-marketing can benefit businesses to grow sales (Sell), add value on products and services (Serve), get closer to customers (Speak), save costs (Save), extend the brand online (Sizzle). (Appendix A) Another important element of digital marketing is its environment. Porter referred that marketing environment consists of micro-environment and macro-environment. The micro-environment involves the stakeholders of the organisation (actors) such as suppliers, intermediaries, customers and competitors, which form the immediate trading environment with their actions. These stakeholders have to be taken in to account for creating a successful digital marketing plan and strategy. The macro-environment involves broad forces and constraints that affecting everyone in the micro-environment marketplace. These can be changes on technology, (e.g. innovation and trades) such as the turning to mobile devices. national and international factors (e.g. Economic, Legal, Cultural) such as the international free trade agreement of EU and Canada. EU, Canada agree free trade deal. [Online Video] Society (e.g public opinion, moral and ethnical) for example the British tax avoidance of Starbucks ending of a low Dutch tax rate, had a !18
result to move the headquarter from the Netherlands to London and pay more tax in the UK because of british citizens counteraction and sales reduce. Starbucks to move European HQ to UK. [Online Video] This means that macro-environment also have significant impact on organisational success. (Appendix B) After all, Internet Marketing has various categories under of its topic. Besides the difference between Digital Marketing, E-commerce and E-Business, Benefits of Internet Marketing and Internet Marketing Environment, also contain Adaptive and Closed Loop Marketing. Closed Loop Marketing is a process used to improve the effectiveness of sales and marketing interactions between the marketer itself and also the customers. So, basically Closed Loop Marketing focuses on customers feedback and their response for improving sales and sometimes this process can also be called Continuous Loop Marketing if improvements are continuous Closed Loop Marketing Defined. [ONLINE]. Taking everything into consideration marketers are changing constantly they way of doing business in order to attract more customers, this process is called Adaptive Loop Marketing. The adaption of new capabilities provided by internet technology can help to gain more profits through a better and more efficient system of management.
Internet Marketing Mix The marketing mix originally introduced in 1960 by Jerome McCarthy, used for the creation of marketing strategies. It contains the four key variables; Product, Price, Place and Promotion know as the 4 Ps. In 1981, Booms and Bitner proposed the 7 Ps adding three more elements regarding the delivery of service; People, Process and Physical Evidence. The key elements of marketing mix can be used on marketing strategy !19
plans as a strategic framework for products. For instance, a marketing strategy plan may include the price decrease of a product in order to increase sales, or a combination of additional or other elements. It is also used as a tool for comparing services between organisations as well for the creation of alternative strategies. The development of digital media have created new important opportunities under the elements of marketing mix that have to be taken into account by any kind of business. Borden, Neil, 1984. The Concept of the Marketing Mix. Marketing is still the art, and the marketing manager as head chef, must creatively master marshal all his marketing activities to advance the short and long term interests of terms, [Online]. According to Dave Chaffey (2012) identified the 7 Ps as follow: The product variable involves researching customers’ needs and developing appropriate products. The Price variable involves defining product prices and pricing models. (e.g. auctions) The Place variable involves distributing products to customers in line with demand and minimising cost of inventory, transport and storage. (e.g. eg sale channels, virtual organisations) The Promotion variable of the marketing mix that involves communication with customers and other stakeholders to inform them about the product and the organisation. The People variable involves the delivery of service to customers during interactions with customers. The Process variable involves the methods and procedures companies use to achieve all marketing functions. !20
The Physical evidence variable of the marketing mix that involves the tangible expression it is purchased and used. (Chaffey, D, 2012, p.264-300) The creation and development of a successful brand (branding) is a primarily matter for a business, especially if lives on the web where there is no physical present to convince customers. Brands are used for products, services and companies in order to be distinguished from competitors and recognised by customers. Brand recognition can increase sales, competitiveness and expedite transactions in the supply chain. The success of an online brand involves traditional and online measures of brand equity as mentioned by Aaker and Joachimsthaler, 2000 and Christodoulides and de Chernatony, 2004. Acording to de Chernatony and McDonald (1992) brand names should be simple, distinctive, meaningful and compatible with the product or service in order to be successful (Appendix D). Although, distinctiveness is also important characteristic (e.g. ASOS, Amazon, Yahoo!). According to Ries Pieces (2004) brand names should be short, simple, suggestive of the category, unique, alliterative, speakable, shocking and personalised, against generic which are poor and not distinctive. The 9 keys to naming success. [ONLINE] However, descriptive names may be a better option for some websites, as it is more likely to be founded by search engines. Branding is related to the product variable of marketing mix which refers to the development of existing or new products based on a research of customer needs. Internet can significantly affect a product by providing more information or transaction services, extending the use with additional and complementary services, gaining more profit and finally for product competitiveness. In addition some products can transformed completely into digital !21
services such as discs and publications (e.g. music, films, software, books, newspaper and magazines) as well as services and other various projects that can provided using the internet (e.g freelancer.com). Many products can also be customised to individual or groups of customers, such as personalised radio (e.g. Spotify), by letting customers to specify their requirements in a product. Companies may offer some or all products online on their own website and other sell channels. They can offer products with various purchase options and pricing by using the flexibility of e-business models and promotions. Internet can also be used for collecting important information about products, for example by customer feedback, online discussions and web analytics. Furthermore it is a great place for testing new product and ideas cheap and fast with expectations for rapid development and diffusion.
Online Customer Marketing mix is a great tool for marketing management for online and offline marketing strategy and development. However marketing mix mainly focuses on a product perspective of marketing approaches and does not include the customer needs. Lautenborn (1990) introduced the 4 Cs which considers the 4 Ps from a customer perspective. Marketers should consider the Customer needs and wants from the Product, how much does it Cost to customer (Price), if the Place is Convenience for the customer and finally the Communication through Promotions. Furthermore, it has to be taken in to account that customers needs may be different between the physical and digital environment as well as the different target markets, audiences and other individual needs. This means that the appropriate use of marketing mix requires a research on the market !22
and the use of internet for e-business. Considering the marketing grid of Ansoff (1957), Internet can be used to sell more existing products into existing markets (Market penetration), sell into new geographical markets, taking advantage of the low cost of advertising internationally without the necessity for a supporting sales infrastructure in the customers’ countries (Market development), develop new products or services which can be delivered by the Internet, typically digital products (Product development), support selling new products which are developed and sold into new markets (Diversification). The Ansoff Matrix. [ONLINE] The customer relationship management (CRM) is another important element for marketing strategy, which contributes to meeting customer needs by providing value to him, but also in business and employees thereof. In addition, the CRM is a strategic nature operational philosophy which admittedly, in modern society, gives the company a competitive and comparative advantage over the other companies operating in this sector. At this point it is worth noting that studies have shown that the profits of an enterprise posing with rates of 25% to 80 % increase, in a certain time period, if at the same time adopt a strongly customer-oriented approach. Of particular interest is the fact that keeping the customer not only positively affects the profitability of the company and the level of satisfaction of the customer, but also assist in developing a climate of success among the company's employees (Turban, 2012). As market conditions have changed substantially over the last few years, customer relationship management and customer evaluation have become one of the key concerns of executives. The value analysis of the behaviour of the customer has become a key issue in the development and maintenance of long-term profitable customer relationships. It is the customer who creates value and therefore !23
appears reasonable to assume as a strategic tool to assess the general course of business. In this way, each company will be able to get more competitive and efficient decisions which will prove beneficial for viability. Therefore one of the greatest challenges of our time, for the executives of a company, is to identify and locate customers who are most valuable to the business and strengthen the existing relationship of trust and confidence (Chaffey, 2009). Through having a CRM programs, the firm is able to correspond on the customers demand. CRM is able to recognise the needs of the online customers and to make the necessary actions so to expand into the global market. However there are many other elements of online public relations that have to be considered. This is a very big topic and may includes online partnerships and affiliation, viral marketing, social media tactics and the concept of internet as a community as well as offline techniques to support online media.
Online Promotion and Communication Techniques Dave Chaffey (2012) summarised online promotion and communication techniques as below: Online promotion techniques include: Search engine marketing – search engine optimisation (SEO) improves position in the natural listings and pay-per-click marketing features a company in the sponsored listings of a search engine or on the display network. Online Public Relections – including techniques such as influencer outreach, link building, blogging, and reputation management. Online partnerships – including affiliate marketing (commission-based referral), co-branding and sponsorship. Online advertising – using a range of formats including banners, skyscrapers and rich media such as !24
overlays. E-mail marketing – including rented lists, co-branded e-mails, event-triggered e-mails and ads in third-party e-newsletters for acquisition, and e-newsletters and campaign e-mails to house lists. Social media marketing – engaging audiences on different social networks and on a company’s own site through sharing content and developing great creative concepts which are transmitted by online word-of-mouth or viral marketing. Offline promotion involves promoting the website address, highlighting the value proposition of the website and achieving web response through traditional media advertisements in print or on television. Interactive marketing communications must be developed as part of integrated marketing communications for maximum cost effectiveness. Key characteristics of interactive communications are the combination of push and pull media, user-submitted content, personalisation, flexibility and, of course, interactivity to create a dialogue with consumers. Objectives for interactive communications include direct sales for transactional sites, but they also indirectly support brand awareness, favourability and purchase intent. Important decisions in the communications mix introduced by digital media include: the balance between spend on media and creative for digital assets and ad executions; the balance between spend in traditional and offline communications; the balance between investment in continuous and campaign-based digital activity; the balance of investment in different interactive communications tools. (Chaffey, D, 2012, p.546)
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Nowadays, search engines (e.g. google) have became the main source for finding information, products and services on the web. Users are typing a keyphrase on those websites and relevant results are displayed on the search engine results pages (SERPs). The increasing use of search engines have turned companies to Search engine marketing (SEM) which is the promotion of relevant searched content through search engines for encouraging searchers to click and redirect them to a destination site such as a product page with information and purchase options. Search engine marketing (SEM) consists two key techniques; Search Engine Optimisation (SEO) and paid search engine marketing. Paid search engine marketing (eg Google AdWords) is when a relevant text ad with a link to a page is displayed on the search engine results page (SERP) when a user types in a specific phrase into a search engine website while fee will be charged for every click on each link text ad. Additionally, these text ads may be displayed on a relevant third-party sites while the method of charge may vary. However pay-per-click remains the main method of charge of paid search engine marketing. The pay-per-click have encourage many companies to use paid search engine marketing as it is an effective way for advertising regardless of budget. Furthermore, optimised services can improve their campaigns for example by specifying a target group based on gender, location and age. Well-made campaigns can provide an important amount of interested customers to a company website for product purchases or other business purposes. The other key technique for search engine marketing (SEM) is the search engine optimisation (SEO) which is a structured approach for increasing the position or ranking in non sponsored results listings of search engines, based on keywords or phrases entered by searchers. (Chaffey, D, 2012, p.490-491) !26
Finally, the concept of the internet as community refers to social media. From a business perspective, is the use of communication technologies of the internet for marketing objectives. Businesses may communicate with customers through their own website or via social media presences such as Facebook and Twitter, blogs, forums, file sharing sites (e.g. YouTube and Flickr) and other related sites. Business can take advantage of benefits of social media by participating in customer conversations related to products, promotions as well as provide customer service and support. According to Dave Chaffey (2012), This procedure is called Social Media Marketing and involves monitoring and facilitating customer interaction and participation throughout the web to encourage positive engagement with a company and its brands. Interactions may occur on a company site, social networks and other third-party sites. (Chaffey, D, 2012, p.535)
Conclusion
Taking everything into consideration, the development of the global marketplace of the internet impacts on all businesses. Using the capabilities of the internet appropriately, they can take advantage of its opportunities and meet customer expectations. The internet has to present a number of benefits for the firms which are about to take advantage of this approach of doing business. One of the key advantages of the internet is that it allows a firm to approach a global audience something that that traditional trade can not do. This is due of the fact that the internet is a global mean of communication. According to Turban (2012) the Internet has changed the way that firms operate and expand into new markets. Till few years ago, the concept of going abroad !27
was out of question for small and medium firms. They would have to spend millions of dollars in order to communicate with the global audience while there was a need to built a global brand. With the internet this changes. If a company consider the features offered online, as was described in the previous chapters, such as a good website and other issues such as content marketing, online promotion using google adwords and more, then will be able to have a global presence and customers from all around the world. Lohse and Spiller (2008) claim that more and more consumers are scanning the internet so to find the ideal set of products which will match their needs. What is need to be done is to understand how the customers behave so to meet their expectations (Lohse, G., Spiller, P, 2008, p.81–87). Therefore, today’s markets are not isolated, as they were few years ago, but instead we have to work on global markets. Even more, there are some common characteristics of consumers, especially of young ones, which tend to convergent into global consumers. This is a latest trend which tends to contributes on the creation for the global markets. For a firm that seeks to become global based on the internet, it is important that consumers are able to have some common behaviours and needs all over the world, which helps firms a lot. According to Cheungk and Thadani (2010) social media and especially the word of mouth have contributed on the creation of global consumers who have the same needs and wants. (Cheungk, C., Thadani, D., 2010) Of course, it is well accepted that there are always to be some differences based on the country that someone lives. However, todays internet have made possible anyone buy from anywhere. Even if a company do not sell globally there are forwarding services (e.g MyUs.com) that allowing customers buy from any place in the world.
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The case of the creation of a global marketplace, created both positive and negative impacts on businesses. Chaffey (2009) has worked on producing a set of positive and negative impacts of the creation of the global marketplace due of the Internet (Chaffey, D., 2009). Internet has change the terms of competition and the traditional way of doing business, as it was made easier for companies to expand abroad. Although, it has to be mentioned that can also have a negative impact on traditional businesses (e.g. corner-shop, family business). In order to explain the above mentioned comment, we must look into the case of those small traditional shops. The positive impact is that they can promote their products abroad and allow to create a global audience. On the other hand, there is the case that small businesses may not have the knowledge needed to invest into this. Turban (2012) claims that having a global presence based on the internet is not a case of having funds and money but it is a case of being able to offers something unique to the audience which will help him to stay close with the website. (Turban, E., 2012). Chaffey (2009) has mentioned a number of cases where web sites and online businesses have failed. This includes the case of web sites which did not have security protocols, sending email to customers without asking for their permission, problems on the online orders and the delivery of products, the ability of not replying on customers’ emails which were asking for more information or making complains and many other issues and problems such as security, constant changes, high postage costs and the need of inbound and outbound logistics management, may turn the global presence through website into a disadvantage. (Chaffey, D., 2009) Nonetheless, there is a plethora of advantages. Turban (2012) argues that all it needs is to set up an extensive supply network and to be ready to reply on any demand !29
made from the global audience (Turban, E., 2012). This means that even if we refer to one-person’s firm, the presence into the global village will force the entrepreneur to act rather as a global firm even though it is just a one person firm. This feeling of becoming member of a global community will help the entrepreneur to gain self-esteem and to develop his business as he has dreamed. The electronic commerce is gaining more and more ground in entrepreneurship and especially during the crisis. It was and continues to be a fast and flexible way for young people and for those who want to expand their business on the Internet. Also, e-commerce has opened avenues for re vocational rehabilitation of those who are unemployed. The low cost to make one online store, avoiding other costs are high to erect a physical business and the rapid and unimpeded penetration anywhere in the world are some of the advantages of e-commerce. Thousands, therefore, have developed their online businesses and they are on the Internet and through those persons can find new opportunities into the global marketplace, as the domestic demand has fallen dramatically. In conclusion, any kind of business has risks and obstacles to solve. The appropriate use of the internet capabilities by considering the matters described above, will lead businesses on meeting customer expectations and online success.  
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Appendices OBJECTIVES
Appendix A Table 1.2
Objectives for the 5Ss of e-marketing
Benefit of e-marketing
How benefit is delivered
Typical objectives
Sell – Grow sales
Achieved through wider distribution to customers you can’t readily service offline or perhaps through a wider product range than in-store or lower prices compared to other channels.
• Achieve 10% of sales online in market • Increase online sales for product by 20% in year
Serve – Add value
Achieved through giving customers extra benefits online or inform product development through online dialogue and feedback.
• Increase interaction with different content on site • Increase dwell time duration on site by 10% (sometimes known as stickiness) • Increase number of customers actively using online services (at least once per month) to 30%
Speak – Get closer to customers
This is creating a two way dialogue through web and e-mail forms and polls and conducting online market research through formal surveys and informally monitoring chat rooms to learn about them. Also speak through reaching them online through PR.
• Grow e-mail coverage to 50% of current customer database • Survey 1000 customers online each month • Increase visitors to community site section or increase ratings/ reviews and discussions by 5%
Save – Save costs
Achieved through online e-mail communications, sales and service transactions to reduce staff, print and postage costs.
• Generate 10% more sales for same communications budget • Reduce cost of direct marketing by 15% through e-mail • Increase web self-service to 40% of all service enquiries and reduce overall cost-to-serve by 10%
Sizzle – Extend the brand online
Achieved through providing a new proposition and new experience online while at the same time appearing familiar.
• Add two new significant enhancements to the customer online experience • Rework online value proposition messaging • Improve branding metrics such as: Brand awareness, Reach, Brand favorability and Purchase intent
Source: p. 23, Chaffey, D, Smith, PR, 2008
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Online branding How online channels are used to support brands that, in essence, are the sum of the characteristics Appendix B of a product or service as perceived by a user.
Figure 2.2
Appendix C
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The marketing mix – widely referred to as the 4 Ps of Product, Price, Place and Promotion – was originally proposed by Jerome McCarthy (1960) and is still used as an essential Chapter 2 Online marketplace analysis: micro-environment 57 part of formulating and implementing marketing strategy by many practitioners. The 4 Ps have since been extended to the 7 Ps, which include three further elements that better reflect service delivery: People, Process and Physical evidence (Booms and Bitner, 1981), although others argue that these are subsumed within the 4 Ps. Figure 5.1 summarises the different subelements of the 7 Ps. The marketing mix is applied frequently in discussion of marketing strategy since it provides a simple strategic framework for varying different elements of an organisation’s product offering to influence the demand for products within target markets. For example, if the aim is to increase sales of a product, options include decreasing the price and changing the amount or type of promotion, or some combination of these elements. Digital media provides many new opportunities for the marketer to vary the marketing mix, as suggested by Figure 5.1 and Activity 5.1. Digital media also have far-reaching implications for the relative importance of different elements of the mix for many markets, regardless of whether an organisation is involved directly in transactional e-commerce. Consequently, the marketing mix is a useful framework to inform strategy development. First, it gives a framework for comparing an organisation’s existing services with competitors’ in and out of sector as part of the benchmarking process described in Chapter 1. As well as a tool for benchmarking, it can also be used as a mechanism for generating alternative strategic approaches. Given the potential implications of the Internet on the marketing mix, a whole chapter is devoted to examining its impact and strategies that companies can develop to best manage this situation. Source: p. 57, Chaffey, D, 2012 The Internet marketing environment Using the Internet to vary the marketing mix
Macro-environment fied, along with the competitors, and suppliers. These groups of actors shape Product Promotion Price Place intermediaries People Process Physical evidence Broad forces affecting the online marketplace and a digital marketer needs to understand their behaviour and the uality arketing Positioning Trade Customer Sales/staff all organisations in the mage communications channels focus digital marketing contact strategy. implicationList of changes if an organisation is to develop an effective marketplace, including randing Personal Discounts Sales usiness-led social, technological, The macro-environment is sometimes activities known as ‘the remote environment’experience and consists of economic, political, promotion legal Features Credit support T-supported five key forces which can significantly affect organisational success. These forces originate and ecological influences. ariants Sales Payment Channel Design Product
274
which is largely beyond the immediate control of an organisation, e.g. ix promotionfrom the marketplace methods number contact features packaging economic conditions, changes to international trade legislation, technological developments Support PR F Segmented Recruitment Research Online Customer value- social change channels and are examples experience and innovations, and politicalCulture/ interventions. These of possible areas Environmental service Direct added image development of change which if ignored could have a significant impact on the future success of an organscanning Use marketing elements Training The process of isation. We study the macro-environment and its significance in Chapter 3. In this chapter, we Part two Digital marketing occasion continuously monitoring strategy development explore the actors in the micro-environment and the implications for marketing managers. Remuneration The trading environment can have a profound impact on performance; consequently an environment(s), which should continually monitor theand environment (microofand macro). This process Traditional measures of brand equity online measures brand Table 5.1organisation have implications for p. 258, Chaffey, D, 2012 planning. is oftenequity referred toSource: as environmental scanning. The elements of the marketing mix Figure 5.1 Appendix D Availability and analysing events in an organisation Warranties
Traditional measures of brand equity
Online measures of brand equity
Price premium
Online brand experience
Environmental scanning and2000) online marketplace analysis (Aaker and Joachimsthaler, (Christodoulides and de Chernatony, 2004) Analysis of the online marketplace or ‘marketspace’ is a key part of developing a long-term Click ecosystem Describes the customer Satisfaction/loyalty Interactivity strategic digital marketing plan and/or creating a shorter-term marketing communications behaviour or flow of online Marketplace analysis helps to define the nature of the competitive market or click Perceived campaign. quality Customisation visitors between search engines, media sites, of monitoring the online trading environment. In Chapter ecosystem Leadership popularity and provides a means Relevance other intermediaries to 1 we saw that there are a range of digital technology platforms within the mobile and desktop an organisation and its Perceived value Site design competitors. hardware platforms. Major online players such as Facebook, Google and Salesforce have Brand personality Customer service developed their own infrastructure or online market ecosystem which connects websites Organisational associations
Order fulfilment
Brand awareness
Quality of brand relationships
Market share
Communities
Market price and distribution coverage
Engagement measured through web analytics (see Chapter 9)
Source: p. 274, Chaffey, D, 2012 Internet Opportunities for Business
Success factors for brand sites In Chapter 1, we identified a ‘brand website’ as one of five classes of website or parts of sites which support different organisational goals. Although other types of sites we mentioned in Chapter 1 including transactional sites, relationship building sites, portals and social networks will all seek to provide a favourable brand experience. In the case of pure ‘brand sites’, the
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Table 9.4
Summary of the strengths and weaknesses of different communications tools for promoting an online presence
Appendix E
Promotion technique Main strengths
Main weaknesses
Search engine optimisation (SEO)
Highly targeted, relatively low cost of PPC. High traffic volumes if effective. Considered credible by searchers
Intense competition, may compromise look of site. Complexity of changes to ranking algorithm
Pay-per-click (PPC) marketing
Highly targeted with controlled Relatively costly in competitive sectors and low volume cost of acquisition. Extend reach through content network compared with SEO
Trusted feed
Update readily to reflect changes in product lines and prices
Online PR
Identifying online influencers Relatively low cost and good targeting. Can assist with SEO and setting up partnerships can be time-consuming. Need through creation of backlinks to monitor comments on thirdparty sites
Affiliate marketing
Payment is by results (e.g. 10% of sale or leads goes to referring site)
Costs of payments to affiliate networks for setup and management fees. Changes to ranking algorithm may affect volume from affiliates
Online sponsorship
Most effective if low-cost, long-term co-branding arrangement with synergistic site
May increase awareness, but does not necessarily lead directly to sales
Interactive advertising
Main intention to achieve visit, Response rates have declined i.e. direct response model. But historically because of banner blindness also role in branding through media multiplier effect
E-mail marketing
Push medium – can’t be ignored in user’s inbox. Can be used for direct response link to website. Integrates as a response mechanism with direct mail
Requires opt-in for effectiveness. Better for customer retention than for acquisition? Inbox cut-through – message diluted among other e-mails. Limits on deliverability
Social media marketing, viral and word-of-mouth marketing
With effective viral agent, possible to reach a large number at relatively low cost. Influencers in social networks significant
Difficult to create powerful viral concepts and control targeting. Risks damaging brand since unsolicited messages may be received
Traditional offline advertising (TV, print, etc.)
Larger reach than most online techniques. Greater creativity possible, leading to greater impact
Targeting arguably less easy than online. Typical high cost of acquisition
Relatively costly, mainly relevant for e-retailers. No longer widely available.
Source: p. 547, Chaffey, D, 2012
Internet Opportunities for Business
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